Provident New York Bancorp Logo
Provident New York Bancorp
400 Rella Boulevard
News Release Montebello, NY 10901-4243
T 845.369.8040
F 845.369.8255
www.providentbanking.com
FOR IMMEDIATE RELEASE Stock Symbol: PBNY
January 29, 2006 Traded on NASDAQ Global Select Market
PROVIDENT BANK CONTACT:
Paul A. Maisch, EVP & Chief Financial Officer
Miranda Grimm, VP & Controller
845.369.8040
PROVIDENT NEW YORK BANCORP
ANNOUNCES
QUARTERLY EARNINGS OF $4.6 MILLION, OR $0.11 PER DILUTED SHARE
MONTEBELLO, NY - January 29, 2006 - Provident New York Bancorp (Nasdaq-Global
Select Market: PBNY), the parent company of Provident Bank, today announced that
for the three months ended December 31, 2006, net income was $4.6 million, or
$0.11 per diluted share, compared to net income of $5.2 million, or $0.12 per
diluted share, for the three months ended December 31, 2005.
George Strayton, President and CEO commented: "The flat yield curve continues to
motivate customers to migrate from lower cost deposits to higher cost deposits
without taking the risk of moving out on the time line. Although tax equivalent
interest income is up this quarter by 2.3%, interest expense is up by 11.6%,
putting pressure on net interest margin. Mitigating this continued margin
pressure are increases in commercial loan volume, up by over $25.6 million, or
12% on an annualized basis, and maturing investments of over $250,000,000 in the
next twelve months with an average yield of 3.66% which we expect to reinvest at
higher rates. At some point and we don't know when that point is, we believe
that the deposit migration will moderate and interest income growth will outpace
interest expense growth. Expenses have not increased, if the incremental
marketing expenses for fiscal 2007 are removed from the calculation. Given the
competition for core deposits and the major upheaval in the market place with
the JPMChase acquisition of the Bank of New York branches, Provident increased
its marketing efforts significantly for 2007."
First quarter operating summary:
- --------------------------------
o Net interest income declined by $1.7 million, or 7.8% from the previous
year, and tax equivalent net interest margin declined by 55 basis points.
Net interest margin also decreased 18 basis points compared to the linked
quarter ended September 30, 2006. This was mainly the result of higher
borrowing costs and higher rates paid on deposit accounts.
Provident New York Bancorp Press Release cont. 2
o Non-interest income increased $1.0 million, or 23.9%, as a result of
investment management fee growth, Bank-Owned Life Insurance and the sale of
real estate.
o Non-interest expense increased $515 thousand, or 3.0%, mainly due to
increased expenses associated with marketing the Company's loan and deposit
products and professional fees related to our investment management
subsidiary, Hudson Valley Investment Advisors.
Key Balance Sheet Changes at December 31, 2006 vs. September 30, 2006
- ---------------------------------------------------------------------
o Total assets at December 31, 2006 decreased to $2.8 billion, down $44.9
million, or 1.6%, from September 30, 2006. o Gross loans, excluding loans
held for sale, grew $32.8 million to $1.5 billion, largely due to a $25.6
million, or 3.3%, increase in commercial loans.
o Loans held for sale of $11.5 million represent student loans, which will be
purchased by a third party 60 days after annual advances have occurred.
o Securities decreased $74.9 million to $937.8 million, as the Company paid
down high-cost borrowings with maturing securities.
o Certificates of deposit increased by $34.4 million to $626 million,
offsetting a decline in savings and money market accounts of $21.8 million
to $595.5 million. Transaction deposits decreased $16.1 million to $504.5
million. These shifts reflect customers' continued migration into higher
rate interest-bearing products.
o Non-performing assets increased $1.4 million from September 30, 2006,
primarily due to one large commercial borrower.
o Stockholders' equity increased $6.0 million to $411.3 million primarily due
to net retentions of earnings of $2.9 million, $900,000 in stock-based
compensation and a decrease in other comprehensive loss on
available-for-sale securities (SFAS No.115) of $1.2 million to $6.4
million. There were no repurchases of stock under the Company's stock
repurchase program during the quarter.
Key Operating Results - Quarter Ended December 31, 2006 vs. December 31, 2005
- -----------------------------------------------------------------------------
Net interest income decreased $1.7 million or 7.8%, to $19.7 million primarily
as a result of an increase in interest expense of $3.3 million for certificates
of deposit and $3.7 million for borrowings. This was offset in part by an
increase in interest income of $5.9 million over last year's quarter. Tax
equivalent net interest margin decreased from 3.83% for the three months ended
December 31, 2005 to 3.28% for the same period in 2006.
Average interest-earning assets increased by $212.8 million compared to the
prior year`s quarter, including $129.4 million in loans and $73.1 million in
securities. When coupled with the increase of 48 basis points in yield, $5.9
million ($6.2 million tax equivalent) increase in gross interest income to $37.3
million was achieved. The cost of interest-bearing liabilities increased by 121
basis points to 3.42%. When combined with increases of $171.5 million in average
borrowings and $68.8 million in average interest-bearing deposits, the result
was increased interest expense of $7.6 million, to $17.6 million. The increase
of $137.3 million in the average balance of higher-cost certificates of deposit
also contributed to the higher interest expense, more than offsetting reduced
interest expense due to a decline of $102.7 million in average savings account
balances from the previous year.
Provident New York Bancorp Press Release cont. 3
Non-interest income increased by $1.0 million, or 23.9% for the three months
ended December 31, 2006 compared to the same period the prior year. Investment
management fees increased by $365,000 primarily due to fees earned by our
investment management subsidiary, Hudson Valley Investment Advisors ("HVIA")
acquired in June of 2006. In addition, we received death benefit proceeds of
$350,000 from our Bank Owned Life Insurance and $200,000 in gains from
dispositions of real estate. Increases in deposit services fees of $175,000
offset a decline in title insurance fees of $150,000 due to a slowdown in the
real estate markets.
Non-interest expense increased by $515,000, or 3.0%, to $17.9 million primarily
due to increased marketing expenses of $292,000 and professional fees of
$135,000 (HVIA management fees). Compensation and benefits expense remained at
$7.8 million for the quarter as savings from retirement plan changes implemented
in the prior year offset staffing and merit increases. Stock-based compensation
declined by $136,000 due to lower acceleration of vesting of restricted stock
awards. Occupancy and office operations increases of $197,000 were offset by
lower data and check processing expenses of $227,000 as we took our data
processing operations in-house in November of 2005.
The Company's effective tax rate for the quarter ended December 31, 2006 was
28%, compared to 33% for the quarter ended December 31, 2005. The lower rate
reflects the higher utilization of tax-exempt securities and receipt of the
non-taxable BOLI death benefit proceeds.
Additional information
- ----------------------
At December 31, 2006 the Company had $256 million in investment securities that
will mature or reprice within the next 12 months. The average tax equivalent
yield of these investments is 3.66%. Depending on the market conditions at the
point of reinvestment, proceeds from the maturities will be either reinvested at
the current market rates or borrowings will be reduced.
The Company maintains two ESOP loans, which release a total of 188,000 shares
per year. The Company's first ESOP loan will be paid off as of December 31,
2007. As a result, after December 31, 2007, expense will be recorded on the
annual release of only 50,000 shares.
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 that have been outlined in
previously filed documents with the Securities and Exchange Commission, and
other factors that could cause the Company's actual results to differ materially
from those contemplated by such forward-looking statements. The Company
undertakes no obligation to publicly release the results of any revisions to
those forward-looking statements which may be made to reflect events or
circumstances after the date of this release or to reflect the occurrence of
unanticipated events.
Provident New York Bancorp Press Release cont. 4
Provident New York Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
December 31, September 30, December 31,
------------ ------------ ------------
2006 2006 2005
---- ---- ----
Assets:
Cash and due from banks $ 51,327 $ 57,293 $ 61,579
Total securities 937,846 1,012,716 898,528
Loans held for sale 11,458 7,473 833
Loans:
One- to four-family residential mortgage loans 465,578 462,996 461,218
Commercial real estate, commercial business
and construction loans 812,735 787,086 728,669
Consumer loans 228,067 223,476 197,261
---------- ---------- ---------
Total loans, gross 1,506,380 1,473,558 1,387,148
Allowance for loan losses (20,436) (20,373) (20,714)
---------- ---------- ---------
Total loans, net 1,485,944 1,453,185 1,366,434
--------- --------- ---------
Federal Home Loan Bank stock, at cost 30,854 33,518 26,677
Premises and equipment, net 30,074 31,739 32,739
Goodwill 159,828 159,817 157,656
Other amortizable intangibles 13,358 14,189 13,741
Bank owned life insurance 39,548 39,308 38,080
Other assets 36,217 32,099 34,673
--------- --------- -------
Total assets $2,796,454 $2,841,337 $2,630,940
========== ========== ==========
Liabilities:
Deposits:
Demand deposits $ 352,547 $ 366,847 $ 364,290
NOW deposits 151,931 153,732 150,413
--------- ---------- ---------
Total transaction accounts 504,478 520,579 514,703
Savings 364,934 378,337 459,665
Money market deposits 230,584 238,979 207,971
Certificates of deposit 626,190 591,766 492,977
--------- --------- ---------
Total deposits 1,726,186 1,729,659 1,675,316
Borrowings 623,250 682,739 533,843
Mortgage escrow funds and other 35,738 23,653 29,202
--------- --------- ---------
Total liabilities 2,385,174 2,436,051 2,238,361
Stockholders' equity 411,280 405,286 392,579
--------- --------- ---------
Total liabilities and stockholders' equity $2,796,454 $2,841,337 $2,630,940
========== ========== ==========
Shares of common stock outstanding at period end 42,716,253 42,699,046 43,044,299
Book value per share $9.63 $9.49 $9.12
Provident New York Bancorp Press Release cont. 5
Provident New York Bancorp and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except share and per share data)
Three Months Ended Three Months Ended
December 31, September 30,
2006 2005 2006
---- ---- ----
Interest and dividend income:
Loans and loan fees $26,289 $22,477 $25,690
Securities 10,501 8,628 10,373
Other earning assets 550 299 461
------ ------ ------
Total interest and dividend income 37,340 31,404 36,524
------ ------ ------
Interest expense:
Deposits 9,135 5,258 7,956
Borrowings 8,509 4,796 7,848
------ ------ ------
Total interest expense 17,644 10,054 15,804
------ ------ ------
Net interest income 19,696 21,350 20,720
Provision for loan losses 400 300 300
------ ------ ------
Net interest income after provision for loan losses 19,296 21,050 20,420
------ ------ ------
Non-interest income:
Deposit fees and service charges 2,845 2,670 2,791
Title insurance fees 266 416 493
Bank owned life insurance 774 413 416
Investment management fees 622 257 622
Other 527 308 434
------ ------ ------
Total non-interest income 5,034 4,064 4,756
------ ------ ------
Non-interest expense:
Compensation and employee benefits 7,808 7,840 8,181
Stock-based compensation plans 1,376 1,512 1,317
Occupancy and office operations 2,833 2,636 2,826
Advertising and promotion 884 592 547
Professional fees 989 854 924
Data and check processing 651 878 636
Amortization of intangible assets 803 837 832
ATM/debit card expense 443 344 423
Other 2,137 1,916 1,968
------ ------ ------
Total non-interest expense 17,924 17,409 17,654
------ ------ ------
Income before income tax expense 6,406 7,705 7,522
Income tax expense 1,795 2,545 2,452
------ ------ ------
Net income $ 4,611 $ 5,160 $ 5,070
======= ======= =======
Per common share:
Basic earnings $0.11 $0.13 $0.12
Diluted earnings 0.11 0.12 0.12
Dividends declared 0.05 0.05 0.05
Weighted average common shares:
Basic 41,168,880 41,193,958 40,945,185
Diluted 41,861,538 41,670,008 41,407,390
Provident New York Bancorp Press Release cont. 6
Selected Financial Condition Data: Three Months Ended
---------------------------------------------------------------------------------
(in thousands except share and per share data) 12/31/06 09/30/06 06/30/06 03/31/06 12/31/05
-------------- -------------- -------------- -------------- -------------
(In thousands)
End of Period
- -------------
Total assets $ 2,796,454 $ 2,841,337 $ 2,780,419 $ 2,745,628 $ 2,630,940
Loans, gross (1) 1,506,380 1,473,558 1,450,348 1,405,596 1,387,148
Securities available for sale 881,106 951,729 916,752 926,037 832,578
Securities held to maturity 56,740 60,987 64,631 67,364 65,949
Bank owned life insurance 39,548 39,308 38,892 38,475 38,080
Goodwill 159,828 159,817 159,093 157,526 157,656
Other amortizable intangibles 13,358 14,189 15,030 12,983 13,741
Deposits 1,726,186 1,729,659 1,750,780 1,779,289 1,675,316
Borrowings 623,250 682,739 605,523 546,210 533,843
Equity 411,280 405,286 391,492 387,293 392,579
Average Balances
- ----------------
Total assets $ 2,813,257 $ 2,795,917 $ 2,756,664 $ 2,664,774 $ 2,604,713
Loans, gross:
Real estate- residential mortgage 463,285 465,231 465,703 457,030 453,018
Real estate- commercial mortgage 529,781 528,225 518,538 514,089 502,435
Real estate- construction & land development 101,769 91,280 80,894 78,176 69,314
Commercial and industrial 165,120 156,737 150,605 147,775 146,116
Consumer loans 233,155 221,880 209,970 199,014 192,819
Loans total 1,493,110 1,463,353 1,425,710 1,396,084 1,363,702
Securities (taxable) 824,657 850,929 871,878 825,284 797,115
Securities (non-taxable) 139,876 128,257 112,282 100,693 94,324
Total earning assets 2,472,425 2,456,228 2,421,497 2,330,822 2,259,617
Non earning assets 340,832 339,689 335,167 333,952 344,160
Non-interest bearing checking 341,259 356,651 357,992 362,955 382,009
Interest bearing NOW accounts 149,311 153,653 153,848 141,064 138,273
Total transaction accounts 490,570 510,304 511,840 504,019 520,282
Savings (including mortgage escrow funds) 375,325 418,942 436,611 448,084 478,002
Money market deposits 238,079 246,471 240,071 222,169 214,930
Certificates of deposit 625,781 565,111 577,219 521,399 488,517
Total deposits 1,729,755 1,740,828 1,765,741 1,695,671 1,701,731
Total interest bearing deposits 1,388,496 1,384,177 1,407,749 1,332,716 1,319,722
Borrowings 657,269 631,760 582,294 556,201 485,800
Equity 406,927 396,263 388,398 390,958 392,037
Other comprehensive loss (SFAS 115),
reflected in equity (6,013) (13,203) (14,280) (9,992) (10,269)
Selected Operating Data:
Condensed Tax Equivalent Income Statement
- -----------------------------------------
Interest and dividend income $ 37,340 $ 36,524 $ 34,946 $ 32,742 $ 31,404
Tax equivalent adjustment* 720 677 592 508 477
Interest expense 17,644 15,804 13,262 11,739 10,054
------------- ------------- ------------- ------------- ------------
Net interest income (tax equivalent) 20,416 21,397 22,276 21,511 21,827
Provision for loan losses 400 300 300 300 300
------------- ------------- ------------- ------------- ------------
Net interest income after provision for loan
losses 20,016 21,097 21,976 21,211 21,527
Non-interest income 5,034 4,756 4,361 3,964 4,064
Non-interest expense 17,924 17,654 18,041 18,144 17,409
------------- ------------- ------------- ------------- ------------
Income before income tax expense 7,126 8,199 8,296 7,031 8,182
Income tax expense (tax equivalent) 2,515 3,129 2,735 2,626 3,022
------------- ------------- ------------- ------------- ------------
Net income $ 4,611 $ 5,070 $ 5,561 $ 4,405 $ 5,160
============= ============= ============= ============= ============
(1) Does not reflect allowance for loan losses of $20,436, $20,373, $20,360,
$20,093 and $20,714.
* Tax exempt income assumed at a 35% federal rate.
Provident New York Bancorp Press Release cont. 7
Three Months Ended
-------------------------------------------------------------------------------
12/31/06 09/30/06 06/30/06 03/31/06 12/31/05
----------- ----------- ---------- ----------- --------
Performance Ratios (annualized)
- -------------------------------
Return on Average Assets 0.65% 0.72% 0.81% 0.67% 0.79%
Return on Average Equity 4.50% 5.08% 5.72% 4.57% 5.22%
Non-Interest Income to Average Assets 0.71% 0.67% 0.63% 0.60% 0.62%
Non-Interest Expense to Average Assets 2.53% 2.51% 2.62% 2.76% 2.65%
Operating efficiency 72.5% 69.3% 69.3% 72.7% 68.5%
Analysis of Net Interest Income
- -------------------------------
Yield on:
Loans 7.08% 7.06% 6.92% 6.82% 6.65%
Investment Securities- Tax Equivalent 4.62% 4.48% 4.44% 4.28% 4.06%
Earning Assets- Tax Equivalent 6.11% 6.01% 5.89% 5.79% 5.60%
Cost of:
Interest Bearing Deposits 2.61% 2.28% 2.13% 1.86% 1.58%
Borrowings 5.14% 4.93% 3.97% 4.11% 3.92%
Interest Bearing Liabilities 3.42% 3.11% 2.67% 2.52% 2.21%
Net Interest Tax Equivalent:
Net Interest Rate Spread- Tax Equivalent Basis 2.69% 2.90% 3.21% 3.27% 3.39%
Net Interest Margin- tax Equivalent Basis 3.28% 3.46% 3.69% 3.74% 3.83%
Capital Information Data
- ------------------------
Tier 1 Leverage Ratio- Bank Only 8.27% 7.82% 7.54% 7.43% 8.37%
Tier 1 Risk-Based Capital- Bank Only $ 216,820 $ 208,820 $ 196,957 $ 191,775 $ 206,062
Total Risk-Based Capital- Bank Only 237,256 229,193 217,317 211,868 227,713
Tangible Capital Consolidated $ 238,943 $ 233,121 $ 218,255 $ 217,645 $ 221,990
Tangible Capital as a % of Tangible Assets 9.11% 8.74% 8.37% 8.45% 9.03%
Shares Outstanding $ 42,716,253 $ 42,699,046 $ 42,623,299 42,424,255 43,044,299
Shares Repurchased Per Stock
Repurchase Program - 35,623 11,700 641,400 473,171
Basic weighted common shares outstanding 41,168,880 40,945,185 40,730,064 40,939,326 41,193,958
Diluted common shares oustanding 41,861,358 41,407,390 41,276,806 41,406,485 41,670,008
Per Common Share:
Basic Earnings $ 0.11 $ 0.12 $ 0.14 $ 0.11 $ 0.13
Diluted Earnings 0.11 0.12 0.13 0.11 0.12
Dividends Paid 0.05 0.05 0.05 0.05 0.05
Book Value 9.63 9.49 9.18 9.13 9.12
Tangible Book Value 5.59 5.46 5.12 5.13 5.16
Asset Quality Measurements
- --------------------------
Non-performing loans (NPLs) $ 6,449 $ 5,024 $ 4,674 $ 4,144 $ 5,054
Non-performing assets (NPAs) 6,536 5,111 4,762 4,234 5,145
Net Charge-offs (recoveries) 337 (35) 33 992 489
Net Charge-offs (recoveries) as %
of average loans (annualized) 0.09% (0.01%) 0.05% 0.28% 0.14%
NPLs as % of total loans 0.43% 0.34% 0.32% 0.29% 0.36%
NPAs as % of total assets 0.23% 0.18% 0.17% 0.15% 0.20%
Allowance for loan losses as % of NPLs 317% 406% 436% 485% 410%
Allowance for loan losses as % of total loans 1.38% 1.40% 1.43% 1.43% 1.49%