Provident
New York Bancorp
Provident New York Bancorp
News Release 400 Rella Boulevard
Montebello, NY 10901-4243
T 845.369.8040
F 845.369.8255
www.providentbanking.com
FOR IMMEDIATE RELEASE Stock Symbol: PBNY
April 25, 2007 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 $4.4 MILLION, OR $0.11 PER DILUTED SHARE
MONTEBELLO, NY - April 25, 2007 - Provident New York Bancorp (Nasdaq-Global
Select Market: PBNY), the parent company of Provident Bank, today announced that
for three months ended March 31, 2007, net income was $4.4 million, or $0.11 per
diluted share, the same as the three months ended March 31, 2006. For the six
months ended March 31, 2007, net income was $9.0 million, or $0.22 per diluted
share, compared to net income of $9.6 million, or $0.23 per diluted share, for
the six months ended March 31, 2006.
George Strayton, President and CEO commented: "With the stabilizing rate
environment and the strength of our loyal customer base, we have been able to
significantly reduce deposit migration as we had anticipated. We are pleased
that our interest income growth is now outpacing interest expense growth. Our
net interest margin of 3.50% for the second quarter of 2007 has shown growth
over both the previous quarter (3.28%) and the fourth quarter of 2006 (3.46%).
This improvement was fueled by our continued strong commercial loan growth, up
by $63 million, or 16% on an annualized basis over year end 2006.
Our ability to control interest expense was aided by our ongoing disciplined
deposit pricing applied across our customer base. The net income results were
achieved despite marketing-related costs required to implement our strategy for
long-term growth. As we seek to enhance revenues, we have strengthened our
opportunities through new revenue streams including our recently acquired
investment management firm, Hudson Valley Investment Advisors LLC, and through
new products launched during the quarter such as Remote Deposit capabilities to
broaden our customer base. In addition, we expect to see results from our
Service Excellence Program, enabling us to serve our customers more effectively
and efficiently - just a few of the programs and products that I believe
position us well for continued growth."
Second quarter operating summary:
- ---------------------------------
o Net interest margin increased 22 basis points compared to the linked
quarter ended December 31, 2006. This was mainly the result of
increases in yields on loans and investment securities outpacing the
costs of deposits and borrowings.
Provident New York Bancorp Press Release cont. 2
o Net interest income declined by $537,000, or 2.6% from the previous
year's quarter, and tax equivalent net interest margin declined by
24 basis points.
o Non-interest income increased $942,000, or 23.8%, compared to the
quarter ended March 31, 2006, as a result of investment management
fee growth, increases in deposit services fees and gains associated
with the Company's student loan portfolio.
o Non-interest expense increased $426,000, or 2.4%, compared to the
previous year's quarter, 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 ("HVIA").
Key Balance Sheet Changes at March 31, 2007 vs. September 30, 2006
- ------------------------------------------------------------------
o Total assets at March 31, 2007 decreased slightly to $2.8 billion,
down $40.0 million, or 1.4%, from September 30, 2006.
o Gross loans, excluding loans held for sale, grew $86.8 million to
$1.6 billion, largely due to a $63.0 million, or 8.0%, increase
in commercial loans.
o Securities decreased $116.4 million to $896.4 million, as the
Company paid down high-cost borrowings with maturing securities.
o Money market accounts and certificates of deposit increased by $25.4
million and $13.1 million, respectively, offsetting a decline in
savings accounts of $13.5 million. Transaction deposits decreased
$14.4 million to $506.2 million.
o The Company currently does not hold any subprime loans.
Non-performing assets increased $3.3 million from September 30, 2006
as payment on certain previously criticized loans ceased or slowed
further, resulting in their categorization as nonperforming. No
significant increase in loan loss reserves was required by this
classification.
o Stockholders' equity increased $7.4 million to $412.6 million
primarily due to net retentions of earnings of $5.2 million, $3.4
million in stock-based compensation and a decrease in other
comprehensive loss on available-for-sale securities (SFAS No.115) of
$3.5 million to $4.1 million. Offsetting these increases were
repurchases of 354,000 shares of stock at a cost of $4.8 million
under the Company's stock repurchase program, all of which occurred
during the quarter ended March 31, 2007.
Key Operating Results - Quarter Ended March 31, 2007 vs. March 31, 2006
- -----------------------------------------------------------------------
Net interest income decreased $537,000, or 2.6%, to $20.5 million primarily as a
result of an increase in interest expense of $2.7 million for deposits and $2.3
million for borrowings. This was offset in part by an increase in interest
income of $4.5 million over last year's quarter. Tax equivalent net interest
margin decreased from 3.74% for the three months ended March 31, 2006 to 3.50%
for the same period in 2007. In the quarter ended March 31, 2006 interest
expense was reduced by $225,000 due to accretion recorded on a called borrowing.
Average interest-earning assets increased by $130.5 million compared to the
prior year's quarter, including an increase of $145.2 million in loans,
partially offset by a decrease of $19.7 million in securities. The overall tax
equivalent yield on earning assets increased 47 basis points to 6.26%. These
factors led an increase of $4.5 million in gross interest income. The cost of
interest-bearing liabilities increased by 87 basis points to 3.39%. Increases of
$81.3 million in average borrowings and $39.9 million in average
interest-bearing deposits resulted in increased interest expense of $5.1
million, to $16.8 million. The difference in the mix of deposits also
contributed to higher interest expense. Higher cost certificates of deposit
grew, on average, by $79.6 million, while the average balance of lower cost
savings accounts declined by $79.9 million.
Provident New York Bancorp Press Release cont. 3
Non-interest income increased by $942,000, or 23.8% for the three months ended
March 31, 2007 compared to the same period the prior year. Investment management
fees increased by $514,000 primarily due to fees earned by our investment
management subsidiary, HVIA acquired in June of 2006. An increase in deposit
services charges and fees of $253,000, or 10.0%, offset a decline in title
insurance fees of $109,000 due to a slowdown in the real estate markets. Other
non-interest income increased $271,000 due to gains associated with the
Company's student loan portfolio. The Company expects to cease student loan
originations by the end of 2007.
Total non-interest expense increased by $426,000, or 2.4%, to $18.6 million
primarily due to increased marketing expenses of $472,000 and professional fees
of $284,000 (HVIA management fees). Compensation and benefits expense declined
$209,000 for the quarter due to savings from retirement plan changes implemented
in the prior year. Stock-based compensation declined by $193,000 mainly due to
an ESOP expenses adjustment in the prior year resulting from changes in vesting
assumptions. ATM/debit card expense increased $113,000 due to volume increases,
which was more than offset by lower data and check processing expenses of
$150,000 (in telecommunication costs) and proof of delivery costs. Other
expenses increased by $150,000 primarily due to business development and
training expense increases.
The Company's effective tax rate for the quarter ended March 31, 2007 was 30.8%,
compared to 32.5% for the quarter ended March 31, 2006. The lower rate reflects
the higher utilization of tax-exempt securities.
Key Operating Results - Six Months Ended March 31, 2007 vs. March 31, 2006
- --------------------------------------------------------------------------
Net interest income decreased $2.2 million or 5.2%, to $40.2 million primarily
as a result of an increase in interest expense of $6.6 million for deposits and
$6.0 million for borrowings. This was offset in part by an increase in interest
income of $10.5 million over last year's period. Tax equivalent net interest
margin decreased from 3.79% for the six months ended March 31, 2006 to 3.39% for
the same period in 2007.
Average interest-earning assets increased by $170.7 million compared to the
prior year, including an increase of $137.2 million in loans and $33.5 million
in securities and other earning assets. This resulted in an increase in yield on
earning assets of 49 basis points to 6.18%. The cost of interest-bearing
liabilities increased by 104 basis points to 3.41%. Short-term borrowing rates
increased 108 basis points, compounded by the increase of $108.7 million in the
average balance of higher-cost certificates of deposit, offsetting a decline of
$91.4 million in average savings account balances from the previous year. When
combined with increases of $126.9 million in average borrowings and $54.5
million in average interest-bearing deposits, the result was increased interest
expense of $12.6 million, to $34.4 million. The difference in the mix of
deposits also contributed to higher interest expense.
Non-interest income increased by $1.9 million, or 23.7% for the six months ended
March 31, 2007 compared to the same period the prior year. Investment management
fees increased by $879,000 primarily due to fees earned by our investment
management subsidiary, HVIA. Increases in deposit services fees of $431,000
offset a decline in title insurance fees of $260,000 due to a slowdown in the
real estate markets. Income from Bank-owned Life Insurance increased by $374,000
due to death benefit proceeds received in the first fiscal quarter of 2007.
Other non-interest income increased $482,000 due to gains on the disposition of
real estate of $212,000 in the first quarter of 2007 and gains associated with
the Company's student loan portfolio of $326,000.
Provident New York Bancorp Press Release cont. 4
Total non-interest expense increased by $933,000, or 2.6%, to $36.5 million
primarily due to increased marketing expenses of $763,000 and professional fees
of $419,000 (HVIA management fees). Compensation and benefits expense declined
$240,000 from the prior year due to savings from retirement plan changes
implemented in the prior year. Stock-based compensation declined by $329,000 due
to lower acceleration of vesting of restricted stock awards and prior year ESOP
adjustments. The ATM/debit card expense increase of $211,000 was offset by lower
data and check processing expenses of $375,000 as we took our data processing
operations in-house in November of 2005. Other non-interest expenses increased
by $363,000 mainly due to increases in business development and training
expenses, courier and correspondent expenses, and regulatory assessments.
The Company's effective tax rate for the six months ended March 31, 2007 was
29.4%, compared to 32.8% for the six months ended March 31, 2006. The lower rate
reflects the higher utilization of tax-exempt securities and receipt of the
non-taxable BOLI death benefit proceeds.
Additional information
- ----------------------
At March 31, 2007, the Company had $237.4 million in investment securities that
will mature or reprice within the next 12 months. The average tax equivalent
yield of these investments is 3.96%. 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.
On March 30, 2007, the Company received notice of the disallowance of certain
expenses related to Warwick Community Bancorp, Inc.'s disposition of assets
prior to its acquisition by the Company. This disallowance of $2.3 million in
federal income taxes, if realized, would result in a reduction of a refund
receivable. The Company intends to vigorously contest the disallowance. After
further research, since filing Form 8-K (April 5, 2007) on this matter, the
Company believes that any disallowance realized would adjust goodwill recorded
in connection with the acquisition.
Consistent with its long-standing credit policies, Provident Bank does not
originate or hold any subprime mortgage loans, which we consider to be loans to
borrowers with subprime credit scores combined with either high loan-to-value or
high debt-to-income ratios. We also hold no subprime loans in our investment
portfolio.
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. 5
Provident New York Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
March 31, September 30, March 31,
--------- ------------ ---------
2007 2006 2006
---- ---- ----
Assets:
Cash and due from banks $ 48,397 $ 57,293 $ 55,110
Total securities 896,351 1,012,716 993,401
Loans held for sale 689 7,473 460
Loans:
One- to four-family residential mortgage loans 479,022 462,996 463,003
Commercial real estate, commercial business
and construction loans 850,039 787,086 738,276
Consumer loans 231,332 223,476 204,317
---------- ---------- -------
Total loans, gross 1,560,393 1,473,558 1,405,596
Allowance for loan losses (20,435) (20,373) (20,093)
---------- ---------- --------
Total loans, net 1,539,958 1,453,185 1,385,503
---------- ---------- ---------
Federal Home Loan Bank stock, at cost 30,660 33,518 27,260
Premises and equipment, net 29,718 31,739 32,461
Goodwill 159,813 159,817 157,526
Other amortizable intangibles 12,556 14,189 12,122
Bank owned life insurance 39,954 39,308 38,475
Other assets 43,269 32,099 43,310
---------- ---------- ------
Total assets $2,801,365 $2,841,337 $2,745,628
========== ========== ==========
Liabilities:
Deposits:
Demand deposits $ 349,352 $ 366,847 378,182
NOW deposits 156,875 153,732 143,381
---------- ---------- -------
Total transaction accounts 506,227 520,579 521,563
Savings 364,808 378,337 433,306
Money market deposits 264,417 238,977 235,652
Certificates of deposit 604,853 591,766 588,768
---------- ---------- -------
Total deposits 1,740,305 1,729,659 1,779,289
Borrowings 618,643 682,739 546,210
Mortgage escrow funds and other 29,779 23,653 32,836
---------- ---------- ------
Total liabilities 2,388,727 2,436,051 2,358,335
Stockholders' equity 412,638 405,286 387,293
---------- ---------- -------
Total liabilities and stockholders' equity $2,801,365 $2,841,337 $2,745,628
========== ========== ==========
Shares of common stock outstanding at period end 42,376,905 42,699,046 42,424,255
Book value per share $9.74 $9.49 $9.13
Provident New York Bancorp Press Release cont. 6
Provident New York Bancorp and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except share and per share data)
Three Months Ended Six Months Ended
March 31, March 31,
2007 2006 2007 2006
---- ---- ---- ----
Interest and dividend income:
Loans and loan fees $26,663 $23,119 $52,951 45,596
Securities 9,974 9,267 20,474 17,896
Other earning assets 628 358 1,179 656
------- ------ ------ ------
Total interest and dividend income 37,265 32,744 74,604 64,148
------- ------- ------- ------
Interest expense:
Deposits 8,829 6,096 17,963 11,354
Borrowings 7,968 5,643 16,478 10,439
------- ------ ------ ------
Total interest expense 16,797 11,739 34,441 21,793
------- ------ ------ ------
Net interest income 20,468 21,005 40,163 42,355
Provision for loan losses 400 300 800 600
------- ------ ------ ------
Net interest income after provision for loan losses 20,068 20,705 39,363 41,755
------- ------ ------ ------
Non-interest income:
Deposit fees and service charges 2,784 2,531 5,630 5,199
Title insurance fees 281 390 547 807
Bank owned life insurance 407 394 1,181 807
Investment management fees 726 212 1,348 469
Other 707 436 1,234 752
------- ------ ------ ------
Total non-interest income 4,905 3,963 9,940 8,034
------- ------ ------ ------
Non-interest expense:
Compensation and employee benefits 8,142 8,351 15,951 16,191
Stock-based compensation plans 1,477 1,670 2,853 3,182
Occupancy and office operations 3,011 3,015 5,844 5,652
Advertising and promotion 874 402 1,757 994
Professional fees 1,079 795 2,068 1,649
Data and check processing 639 789 1,291 1,666
Amortization of intangible assets 774 811 1,577 1,648
ATM/debit card expense 451 338 894 683
Other 2,124 1,974 4,260 3,897
------- ------ ------ ------
Total non-interest expense 18,571 18,145 36,495 35,562
------- ------ ------ ------
Income before income tax expense 6,402 6,523 12,808 14,227
Income tax expense 1,970 2,118 3,765 4,663
------- ------ ------ ------
Net income $ 4,432 $4,405 $9,043 9,564
======== ====== ====== ======
Per common share:
Basic earnings $0.11 $0.11 $0.22 $0.23
Diluted earnings 0.11 0.11 0.22 0.23
Dividends declared 0.05 0.05 0.10 0.10
Weighted average common shares:
Basic 41,144,852 40,939,326 41,156,998 41,069,557
Diluted 41,672,245 41,406,485 41,717,290 41,541,154
Selected Financial Condition Data: Three Months Ended
----------------------------------------------------------------------------------
(in thousands except share and per share data) 03/31/07 12/31/06 09/30/06 06/30/06 03/31/06
--------------- --------------- --------------- --------------- --------------
(In thousands)
End of Period
- -------------
Total assets $ 2,801,365 $ 2,796,454 $ 2,841,337 $ 2,780,419 $ 2,745,628
Loans, gross (1) 1,560,393 1,506,380 1,473,558 1,450,348 1,405,596
Securities available for sale 844,271 881,106 951,729 916,752 926,037
Securities held to maturity 52,080 56,740 60,987 64,631 67,364
Bank owned life insurance 39,954 39,548 39,308 38,892 38,475
Goodwill 159,813 159,828 159,817 159,093 157,526
Other amortizable intangibles 12,556 13,358 14,189 15,030 12,983
Deposits 1,740,305 1,726,186 1,729,659 1,750,780 1,779,289
Borrowings 618,643 623,250 682,739 605,523 546,210
Equity 412,638 411,280 405,286 391,492 387,293
Average Balances
- ----------------
Total assets $ 2,786,727 $ 2,813,257 $ 2,795,917 $ 2,756,664 $ 2,664,774
Loans, gross:
Real estate- residential mortgage 470,741 463,285 465,231 465,703 457,030
Real estate- commercial mortgage 535,178 529,781 528,225 518,538 514,089
Real estate- construction & land development 111,671 101,769 91,280 80,894 78,176
Commercial and industrial 181,204 165,120 156,737 150,605 147,775
Consumer loans 242,464 233,155 221,880 209,970 199,014
Loans total 1,541,258 1,493,110 1,463,353 1,425,710 1,396,084
Securities (taxable) 765,255 824,657 850,929 871,878 825,284
Securities (non-taxable) 140,987 139,876 128,257 112,282 100,693
Total earning assets 2,461,371 2,472,425 2,456,228 2,421,497 2,330,822
Non earning assets 325,356 340,832 339,689 335,167 333,952
Non-interest bearing checking 341,016 341,259 356,651 357,992 362,955
Interest bearing NOW accounts 153,105 149,311 153,653 153,848 141,064
Total transaction accounts 494,121 490,570 510,304 511,840 504,019
Savings (including mortgage escrow funds) 368,171 375,325 418,942 436,611 448,084
Money market deposits 250,347 238,079 246,471 240,071 222,169
Certificates of deposit 600,956 625,781 565,111 577,219 521,399
Total deposits 1,713,595 1,729,755 1,740,828 1,765,741 1,695,671
Total interest bearing deposits 1,372,579 1,388,496 1,384,177 1,407,749 1,332,716
Borrowings 637,472 657,269 631,760 582,294 556,201
Equity 411,611 406,927 396,263 388,398 390,958
Other comprehensive loss (SFAS 115),
reflected in equity (5,583) (6,013) (13,203) (14,280) (9,992)
Selected Operating Data:
Condensed Tax Equivalent Income Statement
- -----------------------------------------
Interest and dividend income $ 37,265 $ 37,340 $ 36,524 $ 34,946 $ 32,744
Tax equivalent adjustment* 756 720 677 592 509
Interest expense 16,797 17,644 15,804 13,262 11,739
-------------- -------------- -------------- -------------- -------------
Net interest income (tax equivalent) 21,224 20,416 21,397 22,276 21,514
Provision for loan losses 400 400 300 300 300
-------------- -------------- -------------- -------------- -------------
Net interest income after provision for loan
losses 20,824 20,016 21,097 21,976 21,214
Non-interest income 4,905 5,034 4,756 4,361 3,963
Non-interest expense 18,571 17,924 17,654 18,041 18,145
-------------- -------------- -------------- -------------- -------------
Income before income tax expense 7,158 7,126 8,199 8,296 7,031
Income tax expense (tax equivalent) 2,726 2,515 3,129 2,735 2,627
-------------- -------------- -------------- -------------- -------------
Net income $ 4,432 $ 4,611 $ 5,070 $ 5,561 $ 4,405
============== ============== ============== ============== =============
(1) Does not reflect allowance for loan losses of $20,435, $20,436, $20,373,
$20,360 and $20,093.
* Tax exempt income assumed at a 35% federal rate.
Three Months Ended
-------------------------------------------------------------------------------------
03/31/07 12/31/06 09/30/06 06/30/06 03/31/06
--------------- ---------------- --------------- ---------------- --------------
Performance Ratios (annualized)
- -------------------------------
Return on Average Assets 0.64% 0.65% 0.72% 0.81% 0.67%
Return on Average Equity 4.37% 4.50% 5.08% 5.72% 4.57%
Non-Interest Income to Average Assets 0.71% 0.71% 0.67% 0.63% 0.60%
Non-Interest Expense to Average Assets 2.70% 2.53% 2.51% 2.62% 2.76%
Operating efficiency 73.2% 72.5% 69.3% 69.3% 72.7%
Analysis of Net Interest Income
- -------------------------------
Yield on:
Loans 7.11% 7.08% 7.06% 6.92% 6.82%
Investment Securities- Tax Equivalent 4.80% 4.62% 4.48% 4.44% 4.28%
Earning Assets- Tax Equivalent 6.26% 6.11% 6.01% 5.89% 5.79%
Cost of:
Interest Bearing Deposits 2.61% 2.61% 2.28% 2.13% 1.86%
Borrowings 5.07% 5.14% 4.93% 3.97% 4.11%
Interest Bearing Liabilities 3.39% 3.42% 3.11% 2.67% 2.52%
Net Interest Tax Equivalent:
Net Interest Rate Spread- Tax Equivalent Basis 2.88% 2.69% 2.90% 3.21% 3.27%
Net Interest Margin- tax Equivalent Basis 3.50% 3.28% 3.46% 3.69% 3.74%
Capital Information Data
- ------------------------
Tier 1 Leverage Ratio- Bank Only 8.55% 8.27% 7.82% 7.54% 7.43%
Tier 1 Risk-Based Capital- Bank Only $ 224,694 $ 216,820 $ 208,820 $ 196,957 $ 191,775
Total Risk-Based Capital- Bank Only 245,129 237,256 229,193 217,317 211,868
Tangible Capital Consolidated $ 240,269 $ 238,943 $ 233,121 $ 218,255 $ 217,645
Tangible Capital as a % of Tangible
Assets Consolidated 9.14% 9.11 8.74% 8.37% 8.45%
Shares Outstanding 42,376,905 42,716,253 42,699,046 42,623,299 42,424,255
Shares Repurchased Per Stock
Repurchase Program 354,400 - 35,623 11,700 641,400
Basic weighted common shares outstanding 41,144,852 41,168,880 40,945,185 40,730,064 40,939,326
Diluted common shares oustanding 41,672,245 41,861,358 41,407,390 41,276,806 41,406,485
Per Common Share:
Basic Earnings $ 0.11 $ 0.11 $ 0.12 $ 0.14 $ 0.11
Diluted Earnings 0.11 0.11 0.12 0.13 0.11
Dividends Paid 0.05 0.05 0.05 0.05 0.05
Book Value 9.74 9.63 9.49 9.18 9.13
Tangible Book Value 5.67 5.59 5.46 5.12 5.13
Asset Quality Measurements
- --------------------------
Non-performing loans (NPLs): non-accrual $ 4,840 4,278 3,442 1,887 1,746
Non-performing loans (NPLs): still accruing 3,484 2,171 1,582 2,787 2,398
Non-performing assets (NPAs) 8,411 6,536 5,111 4,762 4,234
Net Charge-offs (recoveries) 401 337 (35) 33 992
Net Charge-offs (recoveries) as %
of average loans (annualized) 0.10% 0.09% (0.01%) 0.05% 0.28%
NPLs as % of total loans 0.53% 0.43% 0.34% 0.32% 0.29%
NPAs as % of total assets 0.30% 0.23% 0.18% 0.17% 0.15%
Allowance for loan losses as % of NPLs 245% 317% 406% 436% 485%
Allowance for loan losses as % of total loans 1.33% 1.38% 1.40% 1.43% 1.43%