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 25, 2007
Provident Financial Services, Inc. Announces Quarterly Earnings, Seventh Stock
Repurchase Program and Declares Quarterly Cash Dividend
JERSEY CITY, NJ, October 25, 2007 ---/ PRNewswire-First Call/ Provident
Financial Services, Inc. (NYSE:PFS) (the "Company") reported basic and diluted
earnings per share of $0.14 for the quarter ended September 30, 2007, compared
to basic and diluted earnings per share of $0.22 for the quarter ended September
30, 2006. Basic and diluted earnings per share were $0.55 for the nine months
ended September 30, 2007, compared to basic and diluted earnings per share of
$0.65 for the nine months ended September 30, 2006. Net income for the three
months ended September 30, 2007 totaled $8.3 million, compared to $13.0 million
reported for the same period in 2006. Net income was $32.7 million for the nine
months ended September 30, 2007, compared to $40.3 million for the same period
in 2006. Earnings and per share data for the three and nine months ended
September 30, 2007 reflect the impact of a previously announced voluntary
resignation program which resulted in a one-time charge of $1.9 million, net of
tax, or $0.03 per share. Earnings and per share data for the nine months ended
September 30, 2007 further reflect the impact of a settlement of an insurance
claim resulting in a recovery of $3.5 million, net of tax, related to a fraud
loss that occurred and was recognized in 2002, the Company's acquisition of
First Morris Bank and Trust ("First Morris") from April 1, 2007, the date the
acquisition was completed, and one-time expenses of $246,000, net of tax,
related to the merger and integration of First Morris' operations. The earnings
and per share data for the three and nine months ended September 30, 2006 were
impacted by a one-time executive severance payment which resulted in an
after-tax charge of $473,000.
Paul M. Pantozzi, Chairman and Chief Executive Officer, commented, "Our third
quarter financial results reflect our continued emphasis on loan growth, asset
quality maintenance and management of non-interest expense. Total loans grew
nearly 3% during the quarter, with most of the growth occurring in our
commercial loan portfolios. This performance is consistent with our migration to
a more commercial bank-like balance sheet and business model. At the same time,
asset quality remained stable, as evidenced by our ratio of non-performing
assets to total assets, unchanged from the prior quarter's end. Our asset
quality metrics continue to reflect our avoidance of subprime loans and other
high-risk assets." Pantozzi added, "We also continued to manage our operating
costs, as demonstrated by the voluntary resignation program that was implemented
in the third quarter to streamline our operating structure going forward. We
believe that, in concert, these actions and accomplishments will provide a
strong foundation for future earnings growth as we continue to position
ourselves for the return to a more normalized interest rate environment."
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.11 per
common share payable on November 30, 2007, to stockholders of record as of the
close of business on November 15, 2007.
Authorization of Seventh Stock Repurchase Program
The Company's Board of Directors authorized the Company's seventh stock
repurchase program. Under the new authorization, the Company may repurchase 5%
of the amount of shares of common stock currently outstanding, or approximately
3.1 million shares. Repurchases will be made from time to time and will be
effectuated through open market purchases, unsolicited negotiated transactions,
or in such other manner deemed appropriate by management. Completion of the
repurchase program will not be limited to a specific time period. The Company's
repurchase activities will take into account SEC safe harbor rules and guidance
for issuer repurchases.
Balance Sheet Summary
Total assets increased to $6.25 billion at September 30, 2007, compared to $5.74
billion at December 31, 2006, due primarily to the acquisition of First Morris.
The fair value of assets acquired in the First Morris transaction totaled $554.3
million at April 1, 2007. The fair value of deposits and borrowings assumed from
First Morris totaled $509.0 million and $12.8 million, respectively, at April 1,
2007.
1
<Page>
Total investments decreased $69.3 million, or 5.7%, during the nine months ended
September 30, 2007. The decrease was primarily attributable to paydowns on
mortgage-backed securities and maturities of debt securities. In addition, the
Company sold $40.8 million in mortgage-backed and debt securities acquired from
First Morris.
The Company's net loans increased $439.4 million, or 11.7%, to $4.19 billion at
September 30, 2007, from $3.75 billion at December 31, 2006, primarily due to
the acquisition of $335.3 million in loans from First Morris. For the nine
months ended September 30, 2007, loan originations of $911.1 million and loan
purchases of $58.4 million were partially offset by repayments of $841.0
million. Compared with December 31, 2006, and including loans acquired from
First Morris, commercial loans increased $149.9 million, commercial mortgage and
multi-family loans increased $148.9 million, residential mortgage loans
increased $85.5 million, consumer loans increased $58.8 million, and
construction loans increased $1.4 million. Commercial real estate, construction
and commercial loans represented 44.0% of the loan portfolio at September 30,
2007, compared to 41.3% at December 31, 2006.
At September 30, 2007, the Company's unfunded loan pipeline totaled $817.3
million, including $256.6 million in construction loan commitments, $242.9
million in commercial loan commitments and $87.4 million in commercial mortgage
commitments. The unfunded loan pipeline at June 30, 2007 was $816.5 million.
Intangible assets increased $92.2 million, to $521.9 million at September 30,
2007, from $429.7 million at December 31, 2006, as a result of $88.6 million of
goodwill and an $8.4 million core deposit intangible recorded in connection with
the acquisition of First Morris.
Total deposits increased $447.9 million, or 11.7%, during the nine months ended
September 30, 2007, including $509.0 million in deposits assumed from First
Morris. Total deposits were $4.27 billion at September 30, 2007, with core
deposits, consisting of savings and demand deposit accounts, representing 60.6%
of total deposits. In addition, borrowed funds increased $45.4 million, or 5.4%,
during the nine months ended September 30, 2007.
Common stock repurchases for the three and nine months ended September 30, 2007
totaled 1.6 million shares at an average cost of $15.46 per share, and 4.8
million shares at an average cost of $16.60 per share, respectively. At
September 30, 2007, book value per share and tangible book value per share were
$16.61 and $8.17, respectively, compared with $16.12 and $9.32, respectively, at
December 31, 2006.
Results of Operations
Net Interest Margin
The net interest margin decreased 5 basis points to 2.97% for the quarter ended
September 30, 2007, compared with 3.02% for the quarter ended June 30, 2007. The
net interest margin for the quarter ended September 30, 2007 decreased 20 basis
points compared with the net interest margin of 3.17% for the quarter ended
September 30, 2006. The weighted average yield on interest-earning assets was
5.87% for the three months ended September 30, 2007, compared with 5.81% for the
trailing quarter and 5.61% for the three months ended September 30, 2006. The
weighted average cost of interest-bearing liabilities was 3.34% for the quarter
ended September 30, 2007, compared with 3.23% for the trailing quarter and 2.88%
for the third quarter of 2006.
For the nine months ended September 30, 2007, the net interest margin was 3.00%.
This was a decrease of 28 basis points compared with the net interest margin of
3.28% for the nine months ended September 30, 2006. The weighted average yield
on interest-earning assets was 5.80% for the nine months ended September 30,
2007, compared with 5.51% for the nine months ended September 30, 2006. The
weighted average cost of interest-bearing liabilities was 3.25% for the nine
months ended September 30, 2007, compared with 2.64% for the same period in
2006.
The increased rates on interest-earning assets and interest-bearing liabilities
reflect the repricing to higher market interest rates experienced throughout
2006 and the first nine months of 2007. The compression in the net interest
margin for the nine months ended September 30, 2007 is reflective of the
prolonged flat or inverted yield curve that existed throughout 2006 and much of
the first nine months of 2007. Since the Board of Governors of the Federal
Reserve began tightening interest rates in June 2004, the Federal funds
borrowing rate was increased 17 times, for a total of 425 basis points, before
the Federal funds borrowing rate was decreased 50 basis points on September 18,
2007. These actions had an unfavorable impact on the repricing of deposits
through September 30, 2007. The average cost of deposits for the three months
ended September 30, 2007 was 3.17%, compared with 3.07% for the trailing quarter
and 2.63% for the same period last year. The average cost of borrowings for the
three months ended September 30, 2007 was 4.16%, compared with 4.09% for the
trailing quarter and 3.92% for the same period last year.
2
<Page>
Non-Interest Income
Non-interest income totaled $8.1 million for the quarter ended September 30,
2007, a decrease of $262,000, or 3.1%, compared to the same period in 2006. Net
gains on securities transactions totaled $2,000 for the quarter ended September
30, 2007, a decrease of $1.1 million compared to the same quarter in 2006. This
decrease was partially offset by a $747,000, or 13.1%, increase in fee income
for the quarter ended September 30, 2007, compared to the same period in 2006.
For the nine months ended September 30, 2007, non-interest income totaled $30.0
million, an increase of $7.0 million, or 30.7%, compared to the same period in
2006. The Company recorded a one-time gain on an insurance settlement of $5.9
million, before taxes, related to the resolution of previously disclosed
litigation. Fee income increased $1.4 million, or 8.0%, for the nine months
ended September 30, 2007, compared to the same period in 2006. Other income
decreased $431,000, or 22.4%, for the nine months ended September 30, 2007,
compared to the same period in 2006, due primarily to gains recorded on the call
of FHLB advances during the same period in 2006.
Non-Interest Expense
For the three months ended September 30, 2007, non-interest expense increased
$5.6 million, or 18.7%, to $35.7 million, compared to $30.1 million for the
three months ended September 30, 2006. For the three months ended September 30,
2007, compensation and benefits expense increased $4.1 million compared with the
same period in 2006, primarily as a result of one-time severance costs totaling
$3.2 million in connection with a previously announced voluntary resignation
program, which was accepted by 25 of 52 eligible employees, as well as the
addition of branch and lending staff from First Morris and the addition of small
business and middle market relationship managers to support the Company's
business lending and deposit gathering initiatives. Amortization of intangibles
increased $303,000 for the quarter ended September 30, 2007, compared with the
same period in 2006, primarily as a result of the amortization of the core
deposit intangible recorded in connection with the First Morris acquisition.
Additional increases in occupancy expense of $476,000 and advertising expense of
$292,000 for the quarter ended September 30, 2007, compared with the same period
in 2006, are also due primarily to the acquisition and integration of First
Morris' operations. Other operating expenses increased $454,000 due to increases
in several categories, including debit card expense, employee development costs,
grants for the origination of mortgages to low- and moderate-income borrowers,
loan collection expense and attorney fees.
For the nine months ended September 30, 2007, non-interest expense increased
$8.9 million, or 9.9%, to $99.2 million, compared to $90.2 million for the nine
months ended September 30, 2006. Compensation and benefits expense increased
$5.6 million, primarily as a result of one-time severance costs totaling $3.2
million in connection with a previously announced voluntary resignation program,
as well as the addition of branch and lending staff from First Morris and the
addition of small business and middle market relationship managers. Data
processing expense increased $831,000 due primarily to merger-related charges
recorded in connection with the acquisition of First Morris. Amortization of
intangibles increased $403,000 for the nine months ended September 30, 2007,
compared with the same period in 2006, primarily as a result of the amortization
of the core deposit intangible recorded in connection with the First Morris
acquisition. Additional increases in occupancy expense of $719,000 and
advertising expense of $278,000 for the nine months ended September 30, 2007,
compared with the same period in 2006, are also due primarily to the acquisition
and integration of First Morris' operations. Other operating expenses increased
$1.1 million for the nine months ended September 30, 2007, compared with the
same period in 2006, due to increases in several categories, including grants
for the origination of mortgages to low- and moderate-income borrowers, employee
development costs, loan collection expense and miscellaneous losses.
Asset Quality
Total non-performing loans at September 30, 2007 were $11.0 million, or 0.26% of
total loans, compared with $7.5 million, or 0.20% of total loans at December 31,
2006, and $6.8 million, or 0.18% of total loans at September 30, 2006. At
September 30, 2007 the Company's allowance for loan losses was 0.89% of total
loans, compared with 0.86% of total loans at December 31, 2006 and September 30,
2006. The Company recorded provisions for loan losses of $1.3 million and $2.8
million for the three and nine months ended September 30, 2007, respectively,
compared with provisions of $100,000 and $1.2 million for the three and nine
months ended September 30, 2006. For the three and nine months ended September
30, 2007, the Company had net charge-offs of $473,000 and $468,000,
respectively, compared with net charge-offs of $158,000 and $1.0 million for the
same periods in 2006. The allowance for loan losses increased $5.2 million to
$37.6 million at September 30, 2007, from $32.4 million at December 31, 2006.
The increase in the allowance was attributable to the addition of First Morris'
loan portfolio and the related $2.8 million of allowance for loan losses, as
well as the current provision of $2.8 million. The increase in the loan loss
provision for the three and nine months ended September 30, 2007, compared with
the same periods in 2006, was attributable to an increase in non-performing
loans, growth in the commercial loan portfolio and the continued shift in the
mix of the portfolio to a greater percentage of commercial loans.
3
<Page>
Income Tax Expense
For the three months ended September 30, 2007, the Company's income tax expense
was $2.1 million. This compared with $5.1 million for the same period in 2006.
The decrease in income tax expense was attributable to reduced income before
income taxes and a lower effective tax rate. For the three months and nine
months ended September 30, 2007, the Company's effective tax rates were 20.2%
and 26.7%, compared with 28.1% and 29.9% for the three and nine months ended
September 30, 2006. The reduction in the Company's effective tax rate was
primarily a result of a larger proportion of the Company's income being derived
from tax-exempt interest and Bank-owned life insurance appreciation.
Acquisition of First Morris Bank & Trust
On April 1, 2007, First Morris was merged with and into the Company's
subsidiary, The Provident Bank. Consideration was paid to First Morris
stockholders in a combination of Company common stock and cash. The merger added
nine branches to The Provident Bank in Morris County, New Jersey.
About the Company
Provident Financial Services, Inc. is the holding company for The Provident
Bank, a community-oriented bank offering a full range of retail and commercial
loan and deposit products. At September 30, 2007, the Bank operated 84 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 25, 2007 regarding highlights of the
Company's third quarter 2007 financial results. The call may be accessed by
dialing 1-877-407-8035 (Domestic) or 1-201-689-8035 (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.
4
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Condition
September 30, 2007 (Unaudited) and December 31, 2006
(Dollars in Thousands)
Assets September 30, 2007 December 31, 2006
--------------------------------- ----------------------------
Cash and due from banks $ 107,995 $ 89,390
Short-term investments 2,954 2,667
--------------------------------- ----------------------------
Total cash and cash equivalents 110,949 92,057
--------------------------------- ----------------------------
Investment securities (market value of $363,272
at September 30, 2007 (unaudited) and $386,380
at December 31, 2006) 365,539 389,656
Securities available for sale, at fair value 747,921 790,894
Federal Home Loan Bank stock 33,152 35,335
Loans 4,228,264 3,783,664
Less allowance for loan losses 37,591 32,434
--------------------------------- ----------------------------
Net loans 4,190,673 3,751,230
--------------------------------- ----------------------------
Foreclosed assets, net 600 528
Banking premises and equipment, net 79,004 59,811
Accrued interest receivable 24,976 21,705
Intangible assets 521,901 429,718
Bank-owned life insurance 120,297 116,271
Other assets 54,852 55,759
--------------------------------- ----------------------------
Total assets $ 6,249,864 $ 5,742,964
================================= ============================
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $ 1,491,024 $ 1,005,679
Savings deposits 1,099,070 1,261,282
Certificates of deposit of $100,000 or more 476,139 393,834
Other time deposits 1,208,134 1,165,668
--------------------------------- ----------------------------
Total deposits 4,274,367 3,826,463
Mortgage escrow deposits 17,517 17,616
Borrowed funds 886,361 840,990
Other liabilities 45,244 38,739
--------------------------------- ----------------------------
Total liabilities 5,223,489 4,723,808
--------------------------------- ----------------------------
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,
83,209,293 shares issued and 61,806,837 shares outstanding at
September 30, 2007, and 79,879,017 shares issued and
63,233,548 shares outstanding at December 31, 2006 832 799
Additional paid-in capital 1,007,940 937,616
Retained earnings 437,749 424,958
Accumulated other comprehensive loss (4,851) (7,150)
Treasury stock at cost (346,862) (266,587)
Unallocated common stock held by Employee Stock
Ownership Plan (68,433) (70,480)
Common Stock acquired by the Directors' Deferred Fee Plan (12,844) (13,010)
Deferred compensation - Directors' Deferred Fee Plan 12,844 13,010
-------------------------------- ----------------------------
Total stockholders' equity 1,026,375 1,019,156
-------------------------------- ----------------------------
Total liabilities and stockholders'
equity $ 6,249,864 $ 5,742,964
================================ ============================
5
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and Nine Months Ended September 30, 2007 and 2006 (Unaudited)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ---------------------------------
---------------------------------
2007 2006 2007 2006
------------- --------------- -------------- ----------------
(Unaudited)
(Unaudited)
Interest income:
Real estate secured loans $ 42,791 40,188 125,315 119,917
Commercial loans 11,547 7,382 29,880 20,318
Consumer loans 10,227 9,023 29,061 25,821
Investment securities 3,802 4,197 11,664 12,713
Securities available for sale 9,418 10,045 28,614 32,207
Other short-term investments 37 32 115 127
Federal funds 5 -- 110 52
------------- --------------- -------------- ----------------
Total interest income 77,827 70,867 224,759 211,155
------------- --------------- -------------- ----------------
Interest expense:
Deposits 30,307 22,669 83,663 59,907
Borrowed funds 8,237 7,843 24,501 23,997
Subordinated debentures -- 436 -- 1,255
------------- --------------- -------------- ----------------
Total interest expense 38,544 30,948 108,164 85,159
------------- --------------- -------------- ----------------
Net interest income 39,283 39,919 116,595 125,996
Provision for loan losses 1,300 100 2,800 1,220
------------- --------------- -------------- ----------------
Net interest income after
provision for loan losses 37,983 39,819 113,795 124,776
------------- --------------- -------------- ----------------
Non-interest income:
Fees 6,435 5,688 18,599 17,220
Gain on insurance settlement -- -- 5,947 --
Bank-owned life insurance 1,339 1,329 4,026 3,858
Net gain (loss) on securities transactions 2 1,093 (61) (47)
Other income 297 225 1,490 1,921
------------- --------------- -------------- ----------------
Total non-interest income 8,073 8,335 30,001 22,952
------------- --------------- -------------- ----------------
Non-interest expense:
Compensation and employee benefits 20,842 16,765 54,784 49,196
Net occupancy expense 4,938 4,462 14,451 13,732
Data processing expense 2,249 2,229 6,913 6,082
Amortization of intangibles 1,677 1,374 4,915 4,512
Advertising and promotion 1,089 797 3,341 3,063
Other operating expenses 4,916 4,462 14,775 13,652
------------- --------------- -------------- ----------------
Total non-interest expense 35,711 30,089 99,179 90,237
------------- --------------- -------------- ----------------
Income before income tax 10,345 18,065 44,617 57,491
expense
Income tax expense 2,085 5,080 11,932 17,186
------------- --------------- -------------- ----------------
Net income $ 8,260 12,985 32,685 $40,305
============= =============== ============== ================
Basic earnings per share $ 0.14 $ 0.22 0.55 $ 0.65
Average basic shares outstanding 58,968,076 59,568,556 59,787,076 61,688,564
Diluted earnings per share $ 0.14 $ 0.22 0.55 $ 0.65
Average diluted shares outstanding 58,968,076 60,296,944 59,787,076 62,424,568
6
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,
----------------------------------------------------------------
----------------------------------------------------------------
2007 2006 2007 2006
---- ---- ---- ----
INCOME STATEMENT:
Net interest income $39,283 $39,919 $116,595 $125,996
Provision for loan losses 1,300 100 2,800 1,220
Non-interest income 8,073 8,335 30,001 22,952
Non-interest expense 35,711 30,089 99,179 90,237
Income before income tax expense 10,345 18,065 44,617 57,491
Net income 8,260 12,985 32,685 40,305
Basic earnings per share $0.14 $0.22 $0.55 $0.65
Diluted earnings per share $0.14 $0.22 $0.55 $0.65
Interest rate spread 2.53% 2.73% 2.55% 2.87%
Net interest margin 2.97% 3.17% 3.00% 3.28%
PROFITABILITY:
Annualized return on average assets 0.53% 0.89% 0.73% 0.92%
Annualized return on average equity 3.18% 5.07% 4.22% 5.15%
Annualized non-interest expense to average assets 2.30% 2.06% 2.21% 2.05%
Efficiency ratio (1) 75.41% 62.36% 67.65% 60.58%
ASSET QUALITY:
Non-accrual loans $11,023 $6,373
90+ and still accruing loans -- 429
Non-performing loans 11,023 6,802
Foreclosed assets 600 443
Non-performing loans to
total loans 0.26% 0.18%
Non-performing assets to
total assets 0.19% 0.12%
Allowance for loan losses $37,591 $32,197
Allowance for loan losses to
non-performing loans 341.02% 473.35%
Allowance for loan losses to
total loans 0.89% 0.86%
AVERAGE BALANCE SHEET DATA:
Assets $6,159,799 $5,784,477 $6,008,416 $5,873,409
Loans, net 4,117,244 3,715,945 3,975,486 3,708,593
Earning assets 5,283,844 5,030,293 5,174,565 5,120,163
Core deposits 2,580,743 2,327,983 2,469,072 2,365,358
Borrowings 785,760 837,252 785,636 893,110
Interest-bearing liabilities 4,580,544 4,258,833 4,443,964 4,313,041
Stockholders' equity 1,029,610 1,015,316 1,036,157 1,046,867
Average yield on interest-earning assets 5.87% 5.61% 5.80% 5.51%
Average cost of interest-bearing liabilities 3.34% 2.88% 3.25% 2.64%
7
Notes
(1) Efficiency Ratio Calculation
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2007 2006 2007 2006
---- ---- ---- ----
Net interest income $39,283 $39,919 $116,595 $125,996
Non-interest income 8,073 8,335 30,001 22,952
----- ----- ------ ------
Total income $47,356 $48,254 $146,596 $148,948
======= ======= ======== ========
Non-interest expense $35,711 $30,089 $99,179 $90,237
======= ======= ======= =======
Expense/Income: 75.41% 62.36% 67.65% 60.58%
====== ====== ====== ======
8
Average Quarterly Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands) September 30, 2007 June 30, 2007
----------------------------------------- ----------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------------------------------------------ ----------------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term
Investments $ 3,297 $ 42 4.97 % $ 10,096 $ 136 5.37 %
Investment Securities (1) 369,457 3,802 4.12 377,024 3,877 4.11
Securities Available for Sale 765,546 8,897 4.65 824,530 9,364 4.54
Federal Home Loan Bank Stock 28,300 521 7.31 28,192 624 8.88
Net Loans (2)
Total Mortgage Loans 2,844,111 42,791 6.00 2,782,900 42,322 6.09
Total Commercial Loans 626,069 11,547 7.32 640,152 10,660 6.68
Total Consumer Loans 647,064 10,227 6.27 642,306 9,922 6.19
------------- ----------- -------------- ----------
Total Interest-Earning Assets 5,283,844 77,827 5.87 5,305,200 76,905 5.81
----------- -------------- ---------- --------------
Non-Interest Earning Assets:
Cash and Due from Banks 91,551 97,505
Other Assets 784,404 778,938
------------- --------------
Total Assets $ 6,159,799 $ 6,181,643
============= ==============
Interest-Bearing Liabilities:
Demand Deposits $ 965,442 6,679 2.74 % $ 843,211 5,120 2.44 %
Savings Deposits 1,123,319 4,523 1.60 1,255,224 5,258 1.68
Time Deposits 1,706,023 19,105 4.44 1,723,469 18,851 4.39
------------- ----------- -------------- ----------
Total Deposits 3,794,784 30,307 3.17 3,821,904 29,229 3.07
----------- ----------
Total Borrowings 785,760 8,237 4.16 749,421 7,638 4.09
------------- ----------- -------------- ----------
Total Interest-Bearing Liabilities 4,580,544 38,544 3.34 4,571,325 36,867 3.23
----------- -------------- ---------- --------------
Non-Interest Bearing Liabilities 549,645 546,792
------------- --------------
Total Liabilities 5,130,189 5,118,117
Stockholders' Equity 1,029,610 1,063,526
------------- --------------
Total Liabilities &
Stockholders' Equity $ 6,159,799 $ 6,181,643
============= ==============
Net interest income $ 39,283 $ 40,038
=========== ==========
=========== ==========
Net interest rate spread 2.53 % 2.58 %
==== ====
Net interest-earning assets $ 703,300 $ 733,875
============= ==============
Net interest margin (3) 2.97 % 3.02 %
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.15 x 1.16 x
- ------------------------------------------------------------------------------------------------------------------------------------
(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.
9
The following table summarizes the net interest margin for the previous year,
inclusive.
9/30/07 6/30/07 3/31/07 12/31/06 9/30/06
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
-------- -------- -------- -------- --------
Interest-Earning Assets:
Securities 4.55% 4.52% 4.45% 4.43% 4.34%
Net Loans 6.24% 6.20% 6.12% 6.08% 6.06%
Total Interest-Earning Assets 5.87% 5.81% 5.72% 5.66% 5.61%
Interest-Bearing Liabilities
Total Deposits 3.17% 3.07% 2.92% 2.81% 2.63%
Total Borrowings 4.16% 4.09% 4.26% 3.95% 3.92%
Total Interest-Bearing Liabilities 3.34% 3.23% 3.18% 3.03% 2.88%
Interest Rate Spread 2.53% 2.58% 2.54% 2.63% 2.73%
Net Interest Margin 2.97% 3.02% 3.02% 3.08% 3.17%
Ratio of Interest-Earning Assets to
Interest-Bearing Liabilities 1.15x 1.16x 1.18x 1.18x 1.18x
10
Average YTD Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands) September 30, 2007 September 30, 2006
------------------------------------------ ----------------------------------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
------------------------------------------ ----------------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term Investments $ 5,561 $ 225 5.40 % $ 5,300 $ 179 4.51 %
Investment Securities (1) 377,502 11,664 4.12 408,933 12,713 4.14
Securities Available for Sale 785,987 26,876 4.56 960,519 30,623 4.25
Federal Home Loan Bank Stock 30,029 1,738 7.74 36,818 1,584 5.75
Net Loans (2)
Total Mortgage Loans 2,795,469 125,315 5.98 2,748,999 119,917 5.82
Total Commercial Loans 554,718 29,880 7.20 386,464 20,318 7.03
Total Consumer Loans 625,299 29,061 6.21 573,130 25,821 6.02
------------- ------------ --------------- ----------
Total Interest-Earning Assets 5,174,565 224,759 5.80 5,120,163 211,155 5.51
-------------- ----------- ---------- -------
Non-Interest Earning Assets:
Cash and Due from Banks 89,151 78,271
Other Assets 774,700 674,975
------------- ---------------
Total Assets $ 6,008,416 $ 5,873,409
============= ===============
Interest-Bearing Liabilities:
Demand Deposits $ 787,590 14,152 2.40 % $ 582,891 5,572 1.28 %
Savings Deposits 1,207,087 14,757 1.63 1,321,277 13,016 1.32
Time Deposits 1,663,651 54,754 4.40 1,515,763 41,319 3.64
------------- ------------ --------------- ----------
Total Deposits 3,658,328 83,663 3.06 3,419,931 59,907 2.34
------------ ---------- ------------ ----------
Total Borrowings 785,636 24,501 4.17 893,110 25,252 3.78
------------- ------------ --------------- ----------
Total Interest-Bearing Liabilities 4,443,964 108,164 3.25 4,313,041 85,159 2.64
-------------------------- ---------- -----------
Non-Interest Bearing Liabilities 528,295 513,501
------------- ---------------
Total Liabilities 4,972,259 4,826,542
Stockholders' Equity 1,036,157 1,046,867
------------- ---------------
Total Liabilities &
Stockholders' Equity $ 6,008,416 $ 5,873,409
============= ===============
Net interest income $ 116,595 $ 125,996
============ ==========
Net interest rate spread 2.55 % 2.87 %
==== ====
Net interest-earning assets $ 730,601 $ 807,122
============= ===============
Net interest margin (3) 3.00 % 3.28 %
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.16 X 1.19 x
- ------------------------------------------------------------------------------------------------------------------------------------
(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.
11
The following table summarizes the YTD net interest margin for the previous
three years, inclusive.
Nine Months Ended
----------------------------------------
9/30/07 9/30/06 9/30/05
------- ------- -------
Interest-Earning Assets:
Securities 4.50% 4.26% 3.88%
Net Loans 6.19% 5.98% 5.60%
Total Interest-Earning Assets 5.80% 5.51% 5.03%
Interest-Bearing Liabilities:
Total Deposits 3.06% 2.34% 1.63%
Total Borrowings 4.17% 3.78% 3.13%
Total Interest-Bearing Liabilities 3.25% 2.64% 1.99%
Interest Rate Spread 2.55% 2.87% 3.04%
Net Interest Margin 3.00% 3.28% 3.35%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.16x 1.19x 1.18x
12