Provident New York Bancorp News Release Provident New York Bancorp
400 Rella Boulevard
Montebello, NY 10901-4243
T 845.369.8040
F 845.369.8255
www.providentbanking.com
FOR IMMEDIATE RELEASE Stock Symbol: PBNY
July 24, 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 $5.4 MILLION, OR $0.13 PER DILUTED SHARE
MONTEBELLO, NY - July 24, 2007 - Provident New York Bancorp (Nasdaq-Global
Select Market: PBNY), the parent company of Provident Bank, today announced that
for the three months ended June 30, 2007, net income was $5.4 million, or $0.13
per diluted share, compared to net income of $5.6 million, or $0.13 per diluted
share for the three months ended June 30, 2006. For the nine months ended June
30, 2007, net income was $14.5 million, or $0.35 per diluted share, compared to
net income of $15.1 million, or $0.36 per diluted share, for the nine months
ended June 30, 2006.
George Strayton, President and CEO commented: "Our continued strong loan growth
in all loan categories continues to strengthen our net interest margin resulting
in an increase in net income on a linked-quarter basis. Our annualized overall
loan growth is in excess of 12%, and is over 15% annualized in the commercial
loan category."
Key Balance Sheet Changes at June 30, 2007 vs. September 30, 2006
- -----------------------------------------------------------------
o Total assets at June 30, 2007 decreased slightly to $2.8 billion,
down $58.5 million, or 2.1%, from September 30, 2006.
o Gross loans, excluding loans held for sale, grew $140.3 million to
$1.6 billion, largely due to an $88.9 million, or 11.3%, increase in
commercial loans.
o Securities decreased $176.4 million to $836.4 million, as the
Company paid down high-cost borrowings with maturing securities and
funded loan growth.
o Money market accounts increased by $29.4 million, offsetting declines
in savings accounts and certificates of deposit of $8.5 million and
$2.0 million. Transaction accounts were unchanged in this total. NOW
accounts increased $7.2 million offsetting demand deposits, which
decreased $7.0 million to $359.9 million.
o The Company currently does not hold any subprime loans. Non-performing
assets increased $3.3 million from September 30, 2006, but was
unchanged from March 31, 2007. Since the beginning of our fiscal year
payments on certain previously criticized loans
Provident New York Bancorp Press Release cont. 2
or slowed further, resulting in their categorization as non-performing.
No significant increase in loan loss reserves was required by this
classification.
o Stockholders' equity decreased $3.0 million to $402.3 million. Net
retentions of earnings of $7.7 million, $4.8 million in stock-based
transactions mostly offset an increase in other comprehensive loss on
available-for-sale securities (SFAS No.115) of $1.2 million to $8.8
million, and repurchases of 1.1 million shares of common stock at a
cost of $15.2 million. We currently have 1,165,229 shares available for
repurchase under the Company's current stock repurchase program.
Key Operating Results - Quarter Ended June 30, 2007 vs. June 30, 2006
- ---------------------------------------------------------------------
Net interest income increased $647,000, or 3.0%, to $22.3 million primarily as a
result of an increase in interest income of $3.0 million more than offsetting an
increase in interest expense of $2.4 million. Tax equivalent net interest margin
increased from 3.69% for the three months ended June 30, 2006 to 3.8% for the
same period in 2007.
Average interest-earning assets increased by $19.5 million compared to the prior
year's quarter, including an increase of $159.4 million in loans, mostly offset
by a decrease of $140.0 million in securities. The overall tax equivalent yield
on earning assets increased 48 basis points to 6.37%. These factors led to an
increase of $3.0 million in gross interest income. The Company assumed certain
callable borrowings in connection with a previous acquisition and recorded
premiums related to the assumption of the liabilities. In 2006 several
borrowings were called and the Company recorded $1.0 million in reduced interest
expense as a result. Similar calls were also made in 2007, however, the
reduction in interest expense was $500,000 in 2007. The cost of interest-bearing
liabilities increased by 49 basis points to 3.16% inclusive of the
aforementioned effect of called borrowings. This, coupled with increases of
$11.2 million in average borrowings, resulted in increased interest expense of
$2.4 million, to $15.7 million inclusive of the $500,000 negative variance from
called borrowings. In addition the difference in the mix of deposits also
contributed to higher interest expense. Higher cost money market accounts grew,
on average, by $16.5 million, while the average balance of lower cost savings
accounts declined by $52.7 million.
Non-interest income increased by $627,000, or 14.4% for the three months ended
June 30, 2007 compared to the same period the prior year. Investment management
fees increased by $360,000 primarily due to fees earned by our investment
management subsidiary, HVIA acquired in June of 2006. An increase in deposit
service charges and fees of $149,000, or 5.5%, offset a decline in title
insurance fees of $91,000 due to a slowdown in the real estate markets. Other
non-interest income increased $195,000 due to interest recorded on an IRS refund
of $235,000.
Total non-interest expense increased by $1.0 million, or 5.6%, to $19.1 million.
Marketing expenses increased $362,000. Compensation and benefits expense
increased by $757,000 for the quarter due to annual salary increases and fewer
actual staff vacancies and changes to the retirement plans effected in the prior
year. Stock-based compensation increased by $106,000, mainly due to expenses
associated with additional stock option expense and ESOP expense associated with
the Company's higher stock price in 2007 as compared to 2006.
The Company's effective tax rate for the quarter ended June 30, 2007 was 30.9%,
compared to 27.8% for the quarter ended June 30, 2006. The higher rate in 2007
reflects the tax benefit of $241,000 on donated property in 2006 more than
offsetting the higher utilization of tax-exempt securities.
Provident New York Bancorp Press Release cont. 3
Key Operating Results - Nine Months Ended June 30, 2007 vs. June 30, 2006
- -------------------------------------------------------------------------
Net interest income decreased $1.5 million or 2.4%, to $62.5 million primarily
as a result of an increase in interest expense of $8.1 million for deposits and
$6.9 million for borrowings. This was offset in part by an increase in interest
income of $13.5 million over last year's period. Tax equivalent net interest
margin decreased from 3.75% for the nine months ended June 30, 2006 to 3.52% for
the same period in 2007.
Average interest-earning assets increased by $121,000 compared to the prior
year. This resulted in an increase in yield on earning assets of 49 basis points
to 6.25% with the addition of higher yielding assets. The cost of
interest-bearing liabilities increased by 87 basis points to 3.33%. Short-term
borrowing rates increased 81 basis points on average compared to the same period
in 2006. When combined with increases of $88.3 million in average borrowings and
$19.9 million in average interest-bearing deposits, the result was increased
interest expense of $15.0 million, to $50.1 million. Similar to the quarter,
borrowings assumed in a previous acquisition were called, which reduced interest
expense by $1.3 million in 2006 and $500,000 in 2007. The difference in the mix
of deposits also contributed to higher interest expense.
Non-interest income increased by $2.5 million, or 20.4% for the nine months
ended June 30, 2007 compared to the same period the prior year. Investment
management fees increased by $1.2 million primarily due to fees earned by our
investment management subsidiary, HVIA. Increases in deposit service fees of
$580,000 offset a decline in title insurance fees of $351,000 which reflected a
slowdown in our local real estate markets. Income from Bank-owned Life Insurance
(BOLI) increased by $388,000 due to death benefit proceeds received in the first
fiscal quarter of 2007. Other non-interest income increased $677,000 due to
gains on the disposition of real estate of $212,000 in the first quarter of
2007, gains associated with the Company's student loan portfolio of $326,000 and
interest on a tax refund receivable of $235,000.
Total non-interest expense increased by $1.9 million, or 3.6%, to $55.5 million
primarily due to increased marketing expenses of $1.1 million and professional
fees of $456,000 (HVIA management fees). Compensation and benefits expense
increased $516,000 from the prior year due to savings from retirement plan
changes implemented in the prior year being more than offset by scheduled salary
increases. Stock-based compensation declined by $223,000 due to lower
acceleration of vesting of restricted stock awards and prior year ESOP
adjustments. The ATM/debit card expense increase of $223,000 was offset by lower
data and check processing expenses of $502,000 as we took our data processing
operations in-house in November of 2005.
Other non-interest expenses increased by $420,000 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 nine months ended June 30, 2007 was
30.0%, compared to 31.0% for the nine months ended June 30, 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 June 30, 2007, the Company had $200.2 million in investment securities that
will mature or reprice within the next 12 months. The average tax equivalent
yield of these investments is 3.8%. 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.
Provident New York Bancorp Press Release cont. 4
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 from U.S. Internal Revenue
Service 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
have resulted in a reduction of a refund receivable. In May the Company agreed
to settle this matter and recorded $591,000 in increased goodwill reflecting the
effects of the settlement. Further, as a result of the agreement, the Company
recorded, as interest due on the remaining $3.7 million refund, $235,000 in
other income.
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.
The Company has renegotiated the earn-out provisions regarding HVIA and paid
$750,000 to eliminate a five year payout of up to $1.0 million. The payment was
recorded as an addition to goodwill of the HVIA acquisition.
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)
June 30, September 30, June 30,
2007 2006 2006
---- ---- ----
Assets:
Cash and due from banks $ 43,029 $ 57,293 $ 55,758
Total securities 836,365 1,012,716 981,383
Loans held for sale - 7,473 752
Loans:
One- to four-family residential mortgage loans 501,795 462,996 467,064
Commercial real estate, commercial business
and construction loans 876,023 787,086 767,514
Consumer loans 236,023 223,476 215,770
---------- ----------- -----------
Total loans, gross 1,613,841 1,473,558 1,450,348
Allowance for loan losses (20,699) (20,373) (20,360)
---------- ----------- -----------
Total loans, net 1,593,142 1,453,185 1,429,988
Federal Home Loan Bank stock, at cost 29,827 33,518 30,021
Premises and equipment, net 30,004 31,739 31,943
Goodwill 161,154 159,817 159,093
Other amortizable intangibles 11,782 14,189 15,030
Bank owned life insurance 40,387 39,308 38,892
Other assets 37,111 32,099 37,559
---------- ----------- -----------
Total assets $ 2,782,801 $ 2,841,337 $ 2,780,419
========== =========== ===========
Liabilities:
Deposits
Demand deposits $ 359,885 $ 366,847 $ 367,109
NOW deposits 160,895 153,732 161,614
---------- ----------- -----------
Total transaction accounts 520,780 520,579 528,723
Savings 369,886 378,337 418,746
Money market deposits 268,424 238,977 247,883
Certificates of deposit 589,737 591,766 555,428
---------- ----------- -----------
Total deposits 1,748,827 1,729,659 1,750,780
Borrowings 595,411 682,739 605,523
Mortgage escrow funds and other 36,244 23,653 32,624
---------- ----------- -----------
Total liabilities 2,380,482 2,436,051 2,388,927
Stockholders' equity 402,319 405,286 391,492
---------- ---------- -----------
Total liabilities and stockholders' equity $ 2,782,801 $ 2,841,337 $ 2,780,419
========== =========== ===========
Shares of common stock outstanding at period end 41,666,538 42,699,046 42,623,299
Book value per share $ 9.66 $ 9.49 $ 9.18
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 Nine Months Ended
June 30, June 30,
2007 2006 2007 2006
---- ---- ---- ----
Interest and dividend income:
Loans and loan fees $ 27,896 $ 24,247 $ 80,847 $ 69,842
Securities 9,449 10,297 29,923 28,192
Other earning assets 641 402 1,819 1,058
Total interest and dividend income 37,986 34,946 112,589 99,092
Interest expense:
Deposits 9,001 7,492 26,964 18,846
Borrowings 6,654 5,770 23,132 16,209
-------- -------- -------- ---------
Total interest expense 15,655 13,262 50,096 35,055
-------- -------- -------- ---------
Net interest income 22,331 21,684 62,493 64,037
Provision for loan losses 400 300 1,200 900
-------- -------- -------- ---------
Net interest income after provision for loan losses 21,931 21,384 61,293 63,137
-------- -------- -------- ---------
Non-interest income:
Deposit fees and service charges 2,848 2,699 8,478 7,898
Title insurance fees 308 399 855 1,206
Bank owned life insurance 432 418 1,613 1,225
Investment Management Fees 759 399 2,107 868
Other 641 446 1,875 1,198
-------- -------- -------- ---------
Total non-interest income 4,988 4,361 14,928 12,395
-------- -------- -------- ---------
Non-interest expense:
Compensation and employee benefits 8,567 7,810 24,517 24,001
Stock-based compensation plans 1,433 1,327 4,286 4,509
Occupancy and office operations 2,827 2,957 8,670 8,609
Advertising and promotion 1,267 905 3,024 1,899
Professional fees 914 877 2,982 2,526
Data and check processing 659 785 1,949 2,451
Amortization of intangible assets 746 808 2,323 2,456
ATM/debit card expense 471 460 1,365 1,142
Other 2,166 2,112 6,428 6,008
-------- -------- -------- ---------
Total non-interest expense 19,050 18,041 55,544 53,601
-------- -------- -------- ---------
Income before income tax expense 7,869 7,704 20,677 21,931
Income tax expense 2,433 2,143 6,199 6,806
-------- -------- -------- ---------
Net income $ 5,436 $ 5,561 $ 14,478 $ 15,125
======== ======== ======== =========
Per common share:
Basic earnings $ 0.13 $ 0.14 $ 0.35 $ 0.37
Diluted earnings 0.13 0.13 0.35 0.36
Dividends declared 0.05 0.05 0.15 0.15
Weighted average common shares:
Basic 40,722,093 40,728,939 41,012,030 40,956,393
Diluted 41,223,958 41,254,819 41,551,464 41,514,055
Provident New York Bancorp Press Release cont. 7
Selected Financial Condition Data: Three Months Ended
---------------------------------------------------------------------------------
(in thousands except share and per share data) 06/30/07 03/31/07 12/31/06 09/30/06 06/30/06
------------ ------------ ------------ ------------ ------------
(In thousands)
End of Period
- -------------
Total assets $ 2,782,801 $ 2,801,365 $ 2,796,454 $ 2,841,337 $ 2,780,419
Loans, gross (1) 1,613,841 1,560,393 1,506,380 1,473,558 1,450,348
Securities available for sale 794,949 844,271 881,106 951,729 916,752
Securities held to maturity 41,416 52,080 56,740 60,987 64,631
Bank owned life insurance 40,387 39,954 39,548 39,308 38,892
Goodwill 161,154 159,813 159,828 159,817 159,093
Other amortizable intangibles 11,782 12,556 13,358 14,189 15,030
Other non-earning assets 67,115 72,987 66,291 63,838 40,495
Deposits 1,748,827 1,740,305 1,726,186 1,729,659 1,750,780
Borrowings 595,411 618,643 623,250 682,739 605,523
Equity 402,318 412,638 411,280 405,286 391,492
Average Balances
- ----------------
Total assets $ 2,779,780 $ 2,786,727 $ 2,813,257 $ 2,795,917 $ 2,756,664
Loans, gross:
Real estate- residential mortgage 489,998 470,741 463,285 465,231 465,703
Real estate- commercial mortgage 541,364 535,178 529,781 528,225 518,538
Real estate- construction & land development 123,774 111,671 101,769 91,280 80,894
Commercial and industrial 197,493 181,204 165,120 156,737 150,605
Consumer loans 232,508 242,464 233,155 221,880 209,970
Loans total 1,585,137 1,541,258 1,493,110 1,463,353 1,425,710
Securities (taxable) 695,016 765,255 824,657 850,929 871,878
Securities (non-taxable) 149,125 140,987 139,876 128,257 112,282
Total earning assets 2,441,036 2,461,371 2,472,425 2,456,228 2,421,497
Non earning assets 338,744 325,356 340,832 339,689 335,167
Non-interest bearing checking 348,698 341,016 341,259 356,651 357,992
Interest bearing NOW accounts 160,187 153,105 149,311 153,653 153,848
Total transaction accounts 508,885 494,121 490,570 510,304 511,840
Savings (including mortgage escrow funds) 383,955 368,171 375,325 418,942 436,611
Money market deposits 256,541 250,347 238,079 246,471 240,071
Certificates of deposit 589,733 600,956 625,781 565,111 577,219
Total deposits 1,739,114 1,713,595 1,729,755 1,740,828 1,765,741
Total interest bearing deposits 1,390,416 1,372,579 1,388,496 1,384,177 1,407,749
Borrowings 593,467 637,472 657,269 631,760 582,294
Equity 409,528 411,611 406,927 396,263 388,398
Other comprehensive loss (SFAS 115),
reflected in stockholders' equity (4,696) (5,583) (6,013) (13,203) (14,280)
Selected Operating Data:
Condensed Tax Equivalent Income Statement
- -----------------------------------------
Interest and dividend income $ 37,986 $ 37,265 $ 37,340 $ 36,524 $ 34,946
Tax equivalent adjustment* 807 756 720 677 592
Interest expense 15,655 16,797 17,644 15,804 13,262
-------------- -------------- -------------- -------------- -------------
Net interest income (tax equivalent) 23,138 21,224 20,416 21,397 22,276
Provision for loan losses 400 400 400 300 300
-------------- -------------- -------------- -------------- -------------
Net interest income after provision for loan
losses 22,738 20,824 20,016 21,097 21,976
Non-interest income 4,988 4,905 5,034 4,756 4,361
Non-interest expense 19,050 18,571 17,924 17,654 18,041
-------------- -------------- -------------- -------------- -------------
Income before income tax expense 8,676 7,158 7,126 8,199 8,296
Income tax expense (tax equivalent) 3,240 2,726 2,515 3,129 2,735
-------------- -------------- -------------- -------------- -------------
Net income $ 5,436 $ 4,432 $ 4,611 $ 5,070 $ 5,561
============== ============== ============== ============== =============
(1) Does not reflect allowance for loan losses of $20,699, $20,435, $20,436,
$20,373 and $20,360.
* Tax exempt income assumed at a 35% federal rate.
Provident New York Bancorp Press Release cont. 8
Three Months Ended
--------------------------------------------------------------------------------
06/30/07 03/31/07 12/31/06 09/30/06 06/30/06
--------------- -------------- -------------- --------------- -----------
Performance Ratios (annualized)
- -------------------------------
Return on Average Assets 0.78% 0.64% 0.65% 0.72% 0.81%
Return on Average Equity 5.32% 4.37% 4.50% 5.08% 5.72%
Non-Interest Income to Average Assets 0.72% 0.71% 0.71% 0.67% 0.63%
Non-Interest Expense to Average Assets 2.75% 2.70% 2.53% 2.51% 2.62%
Operating Efficiency 66.4% 73.2% 72.5% 69.3% 69.3%
Analysis of Net Interest Income
- -------------------------------
Yield on:
Loans 7.15% 7.11% 7.08% 7.06% 6.92%
Investment Securities- Tax Equivalent 4.87% 4.80% 4.62% 4.48% 4.44%
Earning Assets- Tax Equivalent 6.37% 6.26% 6.11% 6.01% 5.89%
Cost of:
Interest Bearing Deposits 2.60% 2.61% 2.61% 2.28% 2.13%
Borrowings 4.50% 5.07% 5.14% 4.93% 3.97%
Interest Bearing Liabilities 3.16% 3.39% 3.42% 3.11% 2.67%
Net Interest Tax Equivalent:
Net Interest Rate Spread- Tax Equivalent Basis 3.21% 2.88% 2.69% 2.90% 3.21%
Net Interest Margin- tax Equivalent Basis 3.80% 3.50% 3.28% 3.46% 3.69%
Capital Information Data
- ------------------------
Tier 1 Leverage Ratio- Bank Only 8.16% 8.55% 8.27% 7.82% 7.54%
Tier 1 Risk-Based Capital- Bank Only $ 212,906 $ 224,694 $ 216,820 $ 208,820 $ 196,957
Total Risk-Based Capital- Bank Only 233,605 245,129 237,256 229,193 217,317
Tangible Capital Consolidated $ 230,175 $ 240,269 $ 238,943 $ 233,121 $ 218,255
Tangible Capital as a % of Tangible
Assets Consolidated 8.75% 9.14% 9.11% 8.74% 8.37%
Shares Outstanding 41,666,538 42,376,905 42,716,253 42,699,046 42,623,299
Shares Repurchased Per Stock
Repurchase Program 757,500 354,400 - 35,623 11,700
Basic weighted common shares outstanding 40,722,093 41,144,852 41,168,880 40,945,185 40,728,939
Diluted common shares oustanding 41,223,958 41,672,245 41,861,358 41,407,390 41,254,819
Per Common Share:
Basic Earnings $ 0.13 $ 0.11 $ 0.11 $ 0.12 $ 0.14
Diluted Earnings 0.13 0.11 0.11 0.12 0.13
Dividends Paid 0.05 0.05 0.05 0.05 0.05
Book Value 9.66 9.74 9.63 9.49 9.18
Tangible Book Value 5.52 5.67 5.59 5.46 5.12
Asset Quality Measurements
- --------------------------
Non-performing loans (NPLs): non-accrual $ 3,956 4,840 4,278 3,442 1,887
Non-performing loans (NPLs): still accruing 3,716 3,484 2,171 1,582 2,787
Non-performing assets (NPAs) 8,377 8,411 6,536 5,111 4,762
Net Charge-offs (recoveries) 136 401 337 (35) 33
Net Charge-offs (recoveries) as %
of average loans (annualized) 0.03% 0.10% 0.09% (0.01%) 0.05%
NPLs as % of total loans 0.48% 0.53% 0.43% 0.34% 0.32%
NPAs as % of total assets 0.30% 0.30% 0.23% 0.18% 0.17%
Allowance for loan losses as % of NPLs 270% 245% 317% 406% 436%
Allowance for loan losses as % of total loans 1.28% 1.31% 1.36% 1.38% 1.40%