NEWS RELEASE
CONTACT: Kenneth J. Wagner, SVP Investor Relations
Provident Financial Services, Inc.
(201) 915-5344
FOR RELEASE: 7:43 A.M. Eastern Time: July 24, 2008
Provident Financial Services, Inc. Announces Quarterly Earnings and Declares
Quarterly Cash Dividend
JERSEY CITY, NJ, July 24, 2008 ---/PRNewswire/First Call/- Provident Financial
Services, Inc. (NYSE:PFS) (the "Company") reported basic and diluted earnings
per share of $0.18 for the quarter ended June 30, 2008, compared to basic and
diluted earnings per share of $0.22 for the quarter ended June 30, 2007. Basic
and diluted earnings per share were $0.38 for the six months ended June 30,
2008, compared to basic and diluted earnings per share of $0.41 for the six
months ended June 30, 2007. Net income for the three months ended June 30, 2008
totaled $10.4 million, compared to $13.6 million reported for the same period in
2007. Net income was $21.0 million for the six months ended June 30, 2008,
compared to $24.4 million for the same period in 2007.
Earnings and per share data for the three and six months ended June 30, 2008,
reflected severance costs totaling $503,000, net of tax, recognized during the
second quarter of 2008. Results for the six months ended June 30, 2008, were
also impacted by a $180,000 net after-tax gain recorded in connection with the
ownership and mandatory redemption of a portion of the Company's Class B Visa,
Inc. shares as part of Visa's initial public offering in the first quarter of
2008, and a $175,000 net after-tax gain resulting from the sale of a branch
office in the first quarter of 2008.
Earnings and per share data for the three and six months ended June 30, 2007,
were impacted by the settlement of an insurance claim which resulted in a
recovery of $3.5 million, net of tax, related to a fraud loss that occurred and
was recognized in 2002, and one-time expenses of $246,000, net of tax, related
to the April 1, 2007 acquisition of First Morris Bank & Trust ("First Morris").
Paul M. Pantozzi, Chairman and Chief Executive Officer, commented, "In the
second quarter, our net interest margin continued to expand, as it had in the
previous quarter, due to lower funding costs. We also maintained our strategic
focus on expense management and preservation of a solid capital position. Our
principal concern in the current economic environment has been to maintain asset
quality. While the past quarter witnessed an increase in non-performing assets,
we remained diligent in monitoring all of our loan categories and making
appropriate additions to our allowance for loan losses. At the same time, credit
demand from quality borrowers remained steady during the quarter, and we
continued our conservative underwriting standards as we grew our loan portfolio
on a linked quarter basis."
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.11 per
common share payable on August 29, 2008, to stockholders of record as of the
close of business on August 15, 2008.
Balance Sheet Summary
Total assets increased to $6.38 billion at June 30, 2008, compared to $6.36
billion at December 31, 2007, due primarily to an increase in securities
available for sale.
Total investments increased $91.9 million, or 7.9%, during the six months ended
June 30, 2008. The increase included $55.2 million of residential mortgage loan
pools that were securitized by the Company in the first quarter of 2008 and are
held as securities available for sale.
The Company's net loans decreased $19.4 million, or 0.5%, to $4.24 billion at
June 30, 2008, from $4.26 billion at December 31, 2007, largely as a result of
the securitization of $55.2 million of conforming one- to four-family 30-year
fixed-rate residential mortgage loans during the first quarter of 2008. Loan
originations totaled $649.8 million and loan purchases totaled $131.4 million
for the six months ended June 30, 2008. Compared with December 31, 2007,
construction loans decreased $86.1 million, commercial loans decreased $26.9
million, and consumer loans decreased $22.8 million, while commercial mortgage
and multi-family loans increased $100.9 million, and residential mortgage loans
increased $15.7 million. Commercial real estate, construction and commercial
loans represented 45.1% of the loan portfolio at June 30, 2008, compared to
45.2% at December 31, 2007.
1
At June 30, 2008, the Company's unfunded loan pipeline totaled $763.4 million,
including $211.8 million in commercial loan commitments, $134.0 million in
construction loan commitments and $105.3 million in commercial mortgage
commitments. The unfunded loan pipeline at March 31, 2008 was $671.9 million.
Total deposits decreased $50.3 million, or 1.2%, during the six months ended
June 30, 2008, howevercore deposits increased $56.8 million, or 2.2% to $2.64
billion at June 30, 2008. Total deposits were $4.17 billion at June 30, 2008,
with core deposits, consisting of savings and demand deposit accounts,
representing 63.3% of total deposits. Borrowed funds increased $65.9 million, or
6.1%, during the six months ended June 30, 2008.
Common stock repurchases for the six months ended June 30, 2008 totaled 35,000
shares at an average cost of $13.82 per share. At June 30, 2008, book value per
share and tangible book value per share were $16.92 and $8.25, respectively,
compared with $16.78 and $8.05, respectively, at December 31, 2007.
Results of Operations
Net Interest Margin
The net interest margin increased 23 basis points to 3.10% for the quarter ended
June 30, 2008, from 2.87% for the quarter ended March 31, 2008. The net interest
margin for the quarter ended June 30, 2008 increased 8 basis points compared
with the net interest margin of 3.02% for the quarter ended June 30, 2007. The
weighted average yield on interest-earning assets was 5.50% for the three months
ended June 30, 2008, compared with 5.63% for the trailing quarter and 5.81% for
the three months ended June 30, 2007. The weighted average cost of
interest-bearing liabilities was 2.74% for the quarter ended June 30, 2008,
compared with 3.14% for the trailing quarter and 3.23% for the second quarter of
2007.
For the six months ended June 30, 2008, the net interest margin was 2.98%. This
was a decrease of 4 basis points compared with the net interest margin of 3.02%
for the six months ended June 30, 2007. The weighted average yield on
interest-earning assets was 5.56% for the six months ended June 30, 2008,
compared with 5.76% for the six months ended June 30, 2007. The weighted average
cost of interest-bearing liabilities was 2.94% for the six months ended June 30,
2008, compared with 3.21% for the same period in 2007.
The average cost of deposits for the three months ended June 30, 2008 was 2.41%,
compared with 2.87% for the trailing quarter and 3.07% for the same period last
year. The average cost of borrowings for the three months ended June 30, 2008
was 3.84%, compared with 4.06% for the trailing quarter and 4.09% for the same
period last year.
The average cost of deposits for the six months ended June 30, 2008 was 2.64%,
compared with 3.00% for the same period last year. The average cost of
borrowings for the six months ended June 30, 2008 was 3.95%, compared with 4.17%
for the same period last year.
Non-Interest Income
Non-interest income totaled $6.7 million for the quarter ended June 30, 2008, a
decrease of $7.5 million compared to the same period in 2007. In 2007, 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 for the quarter ended June 30, 2008 decreased $1.8 million, or 27.4%,
compared to the same period in 2007, primarily as a result of decreases in the
value of equity fund holdings and lower loan prepayment income. Partially
offsetting these decreases, net gains on securities transactions totaled
$305,000 for the quarter ended June 30, 2008, compared with losses of $63,000
for the same quarter in 2007.
For the six months ended June 30, 2008, non-interest income totaled $15.5
million, a decrease of $6.5 million, or 29.5%, compared to the same period in
2007. In 2007, 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 decreased $1.2 million, or 9.5%, for the six months ended
June 30, 2008, compared to the same period in 2007, primarily as a result of
decreases in the value of equity fund holdings. Partially offsetting these
decreases, net gains on securities transactions totaled $401,000 for the six
months ended June 30, 2008, compared with losses of $63,000 for the same period
in 2007.
2
Non-Interest Expense
For the three months ended June 30, 2008, non-interest expense decreased
$844,000, or 2.5%, to $33.3 million, compared to $34.1 million for the three
months ended June 30, 2007. For the three months ended June 30, 2008,
compensation and benefits expense decreased $308,000, compared with the same
period in 2007. Compensation and benefits expense decreased despite the
recognition of $773,000 in pre-tax severance costs during the second quarter of
2008, as a result of previous staff reductions and lower stock-based
compensation costs. Data processing and advertising costs decreased $366,000 and
$153,000, respectively, for the quarter ended June 30, 2008, compared with the
same period in 2007, as prior year costs included charges related to the First
Morris acquisition. Amortization of intangibles decreased $312,000 for the three
months ended June 30, 2008, compared with the same period in 2007, as a result
of scheduled reductions in the amortization of core deposit intangibles.
For the six months ended June 30, 2008, non-interest expense increased $1.8
million, or 2.8%, to $65.2 million, compared to $63.5 million for the six months
ended June 30, 2007. Other operating expenses increased $1.0 million for the six
months ended June 30, 2008, compared with the same period in 2007, due to
increases in several categories, including $356,000 in expense associated with
the Company's proportionate share of a litigation reserve established by Visa,
as well as increases in attorney fees and costs associated with foreclosed
assets. Net occupancy expense increased $918,000 due primarily to the addition
of nine branch locations in connection with the acquisition of First Morris.
Compensation and benefits expense increased $235,000, primarily as a result of
$773,000 in pre-tax severance costs incurred during the second quarter of 2008.
Partially offsetting these increases, advertising and data processing costs
decreased $423,000 and $57,000, respectively, for the six months ended June 30,
2008, compared with the same period in 2007, as prior year costs included
charges related to the First Morris acquisition.
Asset Quality
Total non-performing loans at June 30, 2008 were $36.7 million, or 0.86% of
total loans, compared with $34.6 million, or 0.81% of total loans at December
31, 2007, and $11.1 million, or 0.27% of total loans at June 30, 2007. At June
30, 2008, non-performing loans included a $16.0 million loan secured by a
64-unit condominium project which was greater than 90 days past due and still
accruing interest. Subsequent to June 30, 2008, the borrower closed on the sale
of the first unit, brought the loan current and reduced the outstanding
principal balance. The loan is now performing in accordance with its original
contractual terms. At June 30, 2008 the Company's allowance for loan losses was
0.96% of total loans, compared with 0.95% of total loans at December 31, 2007
and 0.89% of total loans at June 30, 2007. The Company recorded provisions for
loan losses of $1.5 million and $2.8 million for the three and six months ended
June 30, 2008, respectively, compared with provisions of $1.2 million and $1.5
million for the three and six months ended June 30, 2007, respectively. For the
three and six months ended June 30, 2008, the Company had net charge-offs of
$1.2 million and $2.5 million, respectively, compared with net recoveries of
$61,000 and net charge-offs of $5,000 for the same periods in 2007. The
allowance for loan losses increased $336,000 to $41.1 million at June 30, 2008,
from $40.8 million at December 31, 2007. The increase in the loan loss provision
for the three and six months ended June 30, 2008, compared with the same periods
in 2007, was attributable to an increase in non-performing loans, growth in the
loan portfolio and an increase in commercial loans as a percentage of the loan
portfolio to 45.1% at June 30, 2008, from 43.4% at June 30, 2007, as well as
ongoing uncertainty with respect to general economic conditions. At June 30,
2008, the Company held $5.9 million of foreclosed assets, compared with $1.0
million at December 31, 2007. The increase in foreclosed assets is primarily
attributable to one commercial real estate line of credit secured by a number of
properties that was previously classified as impaired. During the six months
ended June 30, 2008, the Company obtained title to five properties with a fair
value of $4.8 million in connection with this line of credit.
Income Tax Expense
For the three months ended June 30, 2008, the Company's income tax expense was
$4.1 million, compared with $5.3 million for the same period in 2007. For the
six months ended June 30, 2008, the Company's income tax expense was $8.1
million, compared with $9.8 million for the same period in 2007. The decrease in
income tax expense was primarily attributable to reduced income before income
taxes. For the three and six months ended June 30, 2008, the Company's effective
tax rates were 28.3% and 27.8%, respectively, compared with 28.0% and 28.7% for
the three and six months ended June 30, 2007, respectively.
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. The Bank currently operates 83 full service branches
throughout northern and central New Jersey.
3
Post Earnings Conference Call
Representatives of the Company will hold a conference call for investors at
10:00 a.m. Eastern Time on July 24, 2008 regarding highlights of the Company's
second quarter 2008 financial results. The call may be accessed by dialing
1-800-860-2442 (Domestic) or 1-412-858-4600 (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
June 30, 2008 (Unaudited) and December 31, 2007
(Dollars in Thousands)
Assets June 30, 2008 December 31, 2007
--------------------------------- ----------------------------
Cash and due from banks $ 82,652 $ 83,737
Federal funds sold -- 18,000
Short-term investments 5,003 38,892
--------------------------------- ----------------------------
Total cash and cash equivalents 87,655 140,629
--------------------------------- ----------------------------
Investment securities held to maturity (market value of
$352,983 at June 30, 2008 (unaudited) and $359,699
at December 31, 2007) 355,020 358,491
Securities available for sale, at fair value 868,067 769,615
Federal Home Loan Bank stock 36,689 39,764
Loans 4,277,202 4,296,291
Less allowance for loan losses 41,118 40,782
--------------------------------- ----------------------------
Net loans 4,236,084 4,255,509
--------------------------------- ----------------------------
Foreclosed assets, net 5,883 1,041
Banking premises and equipment, net 77,280 79,138
Accrued interest receivable 24,104 24,665
Intangible assets 517,371 520,722
Bank-owned life insurance 124,334 121,674
Other assets 52,457 48,143
--------------------------------- ----------------------------
Total assets $ 6,384,944 $ 6,359,391
================================= ============================
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $ 1,696,188 $ 1,553,625
Savings deposits 945,951 1,031,725
Certificates of deposit of $100,000 or more 455,633 480,362
Other time deposits 1,076,738 1,159,108
--------------------------------- ----------------------------
Total deposits 4,174,510 4,224,820
Mortgage escrow deposits 20,761 18,075
Borrowed funds 1,141,023 1,075,104
Other
liabilities 38,905 40,598
--------------------------------- ----------------------------
Total liabilities 5,375,199 5,358,597
--------------------------------- ----------------------------
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 59,674,626 shares outstanding at
June 30, 2008, and 59,646,936 shares outstanding at
December 31, 2007 832 832
Additional paid-in capital 1,012,265 1,009,120
Retained earnings 445,305 437,503
Accumulated other comprehensive income 1,453 4,335
Treasury stock at cost (383,891) (383,407)
Unallocated common stock held by Employee Stock
Ownership Plan (66,219) (67,589)
Common Stock acquired by the Directors' Deferred Fee Plan (7,713) (7,759)
Deferred compensation - Directors' Deferred Fee Plan 7,713 7,759
-------------------------------- ----------------------------
Total stockholders' equity 1,009,745 1,000,794
-------------------------------- ----------------------------
Total liabilities and stockholders'
equity $ 6,384,944 $ 6,359,391
================================ ============================
5
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and Six Months Ended June 30, 2008 and 2007 (Unaudited)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ---------------------------------
2008 2007 2008 2007
------------- --------------- -------------- ----------------
(Unaudited) (Unaudited)
Interest income:
Real estate secured loans $ 40,554 $ 42,322 $ 81,941 $ 82,524
Commercial loans 10,621 10,660 21,903 18,333
Consumer loans 9,147 9,922 18,826 18,834
Investment securities 3,601 3,877 7,254 7,862
Securities available for sale 11,315 9,988 21,602 19,196
Other short-term investments 77 35 303 78
Federal funds 16 101 164 105
------------- --------------- -------------- ----------------
Total interest income 75,331 76,905 151,993 146,932
------------- --------------- -------------- ----------------
Interest expense:
Deposits 22,222 29,229 48,812 53,356
Borrowed funds 10,540 7,638 21,423 16,264
------------- --------------- -------------- ----------------
Total interest expense 32,762 36,867 70,235 69,620
------------- --------------- -------------- ----------------
Net interest income 42,569 40,038 81,758 77,312
Provision for loan losses 1,500 1,200 2,800 1,500
------------- --------------- -------------- ----------------
Net interest income after
provision for loan losses 41,069 38,838 78,958 75,812
------------- --------------- -------------- ----------------
Non-interest income:
Fees 4,892 6,738 11,006 12,164
Gain on insurance settlement -- 5,947 -- 5,947
Bank-owned life insurance 1,352 1,355 2,660 2,687
Net gain (loss) on securities transactions 305 (63) 401 (63)
Other income 118 225 1,385 1,193
------------- --------------- -------------- ----------------
Total non-interest income 6,667 14,202 15,452 21,928
------------- --------------- -------------- ----------------
Non-interest expense:
Compensation and employee benefits 17,464 17,772 34,177 33,942
Net occupancy expense 5,174 4,970 10,431 9,513
Data processing expense 2,244 2,610 4,607 4,664
Amortization of intangibles 1,557 1,869 3,333 3,238
Advertising and promotion 1,312 1,465 1,829 2,252
Other operating expenses 5,541 5,450 10,867 9,859
------------- --------------- -------------- ----------------
Total non-interest expense 33,292 34,136 65,244 63,468
------------- --------------- -------------- ----------------
Income before income tax 14,444 18,904 29,166 34,272
expense
Income tax expense 4,091 5,287 8,120 9,847
------------- --------------- -------------- ----------------
Net income $ 10,353 $ 13,617 $ 21,046 $ $24,425
============= =============== ============== ================
Basic earnings per share $ 0.18 $ 0.22 $ 0.38 $ 0.41
Average basic shares outstanding 56,014,455 61,339,380 55,969,517 60,202,164
Diluted earnings per share $ 0.18 $ 0.22 0.38 $ 0.41
Average diluted shares outstanding 56,014,455 61,339,380 55,969,517 60,202,164
6
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data) (Unaudited)
At or for the Three At or for the Six
Months Ended Months Ended
June 30, June 30,
----------------------------------------------------------------
2008 2007 2008 2007
---- ---- ---- ----
INCOME STATEMENT:
Net interest income $42,569 $40,038 $81,758 $77,312
Provision for loan losses 1,500 1,200 2,800 1,500
Non-interest income 6,667 14,202 15,452 21,928
Non-interest expense 33,292 34,136 65,244 63,468
Income before income tax expense 14,444 18,904 29,166 34,272
Net income 10,353 13,617 21,046 24,425
Basic earnings per share $0.18 $0.22 $0.38 $0.41
Diluted earnings per share $0.18 $0.22 $0.38 $0.41
Interest rate spread 2.76% 2.58% 2.62% 2.55%
Net interest margin 3.10% 3.02% 2.98% 3.02%
PROFITABILITY:
Annualized return on average assets 0.66% 0.88% 0.67% 0.83%
Annualized return on average equity 4.13% 5.14% 4.20% 4.74%
Annualized non-interest expense to average assets 2.11% 2.21% 2.07% 2.16%
Efficiency ratio (1) 67.62% 62.94% 67.12% 63.95%
ASSET QUALITY:
Non-accrual loans $20,726 $11,060
90+ and still accruing loans 15,990 --
Non-performing loans 36,716 11,060
Foreclosed assets 5,883 562
Non-performing loans to
total loans 0.86% 0.27%
Non-performing assets to
total assets 0.67% 0.19%
Allowance for loan losses $41,118 $36,764
Allowance for loan losses to
non-performing loans 111.99% 332.41%
Allowance for loan losses to
total loans 0.96% 0.89%
AVERAGE BALANCE SHEET DATA:
Assets $6,351,308 $6,181,643 $6,338,041 $5,931,470
Loans, net 4,203,838 4,065,358 4,220,519 3,903,432
Earning assets 5,492,015 5,305,200 5,477,877 5,119,020
Core deposits 2,618,253 2,594,023 2,598,620 2,412,311
Borrowings 1,102,742 749,421 1,090,790 785,573
Interest-bearing liabilities 4,817,702 4,571,325 4,811,352 4,374,542
Stockholders' equity 1,009,273 1,063,526 1,007,553 1,039,485
Average yield on interest-earning assets 5.50% 5.81% 5.56% 5.76%
Average cost of interest-bearing liabilities 2.74% 3.23% 2.94% 3.21%
7
Notes
(1) Efficiency Ratio Calculation
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2008 2007 2008 2007
---- ---- ---- ----
Net interest income $42,569 $40,038 $81,758 $77,312
Non-interest income 6,667 14,202 15,452 21,928
----- ------ ------ ------
Total income $49,236 $54,240 $97,210 $99,240
======= ======= ======= =======
Non-interest expense $33,292 $34,136 $65,244 $63,468
======= ======= ======= =======
Expense/Income: 67.62% 62.94% 67.12% 63.95%
====== ====== ====== ======
8
Average Quarterly Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands) June 30, 2008 March 31, 2008
------------------------------------------ ----------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------------------------------------------ ----------------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term
Investments $ 12,227 $ 93 3.05 % $ 43,839 $ 374 3.44 %
Investment Securities (1) 354,012 3,601 4.07 355,354 3,653 4.11
Securities Available for Sale 887,401 10,557 4.76 788,221 9,531 4.84
Federal Home Loan Bank Stock 34,537 758 8.83 39,125 756 7.78
Net Loans (2)
Total Mortgage Loans 2,901,165 40,554 5.60 2,897,029 41,387 5.73
Total Commercial Loans 679,636 10,621 6.29 701,802 11,282 6.47
Total Consumer Loans 623,037 9,147 5.90 638,369 9,679 6.08
------------- ----------- -------------- ----------
Total Interest-Earning Assets 5,492,015 75,331 5.50 5,463,739 76,662 5.63
----------- -------------- ---------- --------------
Non-Interest Earning Assets:
Cash and Due from Banks 74,823 81,323
Other Assets 784,470 779,712
------------- --------------
Total Assets $ 6,351,308 $ 6,324,774
============= ==============
Interest-Bearing Liabilities:
Demand Deposits $ 1,178,700 5,110 1.74 % $ 1,115,920 6,480 2.34 %
Savings Deposits 965,877 2,446 1.02 997,689 3,111 1.25
Time Deposits 1,570,383 14,666 3.76 1,612,555 16,999 4.24
------------- ----------- -------------- ----------
Total Deposits 3,714,960 22,222 2.41 3,726,164 26,590 2.87
----------- ----------
Total Borrowings 1,102,742 10,540 3.84 1,078,838 10,883 4.06
------------- ----------- -------------- ----------
Total Interest-Bearing Liabilities 4,817,702 32,762 2.74 4,805,002 37,473 3.14
----------- -------------- ---------- --------------
Non-Interest Bearing Liabilities 524,333 513,939
------------- --------------
Total Liabilities 5,342,035 5,318,941
Stockholders' Equity 1,009,273 1,005,833
------------- --------------
Total Liabilities & $ 6,351,308 $ 6,324,774
Stockholders' Equity
============= ==============
Net interest income $ 42,569 $ 39,189
=========== ==========
Net interest rate spread 2.76 % 2.49 %
==== ====
Net interest-earning assets $ 674,313 $ 658,737
============= ==============
Net interest margin (3) 3.10 % 2.87 %
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.14 x 1.14 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.
6/30/08 3/31/08 12/31/07 9/30/07 6/30/07
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
-------- -------- -------- -------- --------
Interest-Earning Assets:
Securities 4.66% 4.67% 4.55% 4.55% 4.52%
Net Loans 5.76% 5.90% 6.09% 6.24% 6.20%
Total Interest-Earning Assets 5.50% 5.63% 5.76% 5.87% 5.81%
Interest-Bearing Liabilities
Total Deposits 2.41% 2.87% 3.11% 3.17% 3.07%
Total Borrowings 3.84% 4.06% 4.19% 4.16% 4.09%
Total Interest-Bearing Liabilities 2.74% 3.14% 3.33% 3.34% 3.23%
Interest Rate Spread 2.76% 2.49% 2.43% 2.53% 2.58%
Net Interest Margin 3.10% 2.87% 2.84% 2.97% 3.02%
Ratio of Interest-Earning Assets to
Interest-Bearing Liabilities 1.14x 1.14x 1.14x 1.15x 1.16x
10
Average YTD Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands) June 30, 2008 June 30, 2007
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Average Average Average Average
Balance Interest Yield Balance Interest Yield
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Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term Investments $ 28,033 $ 467 3.35 % $ 6,712 $ 183 5.50 %
Investment Securities (1) 354,683 7,254 4.09 381,591 7,862 4.12
Securities Available for Sale 837,811 20,088 4.80 796,377 17,980 4.52
Federal Home Loan Bank Stock 36,831 1,514 8.27 30,908 1,216 7.94
Net Loans (2)
Total Mortgage Loans 2,899,097 81,941 5.67 2,770,745 82,524 5.98
Total Commercial Loans 690,719 21,903 6.38 518,451 18,333 7.13
Total Consumer Loans 630,703 18,826 5.99 614,236 18,834 6.18
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Total Interest-Earning Assets 5,477,877 151,993 5.56 5,119,020 146,932 5.76
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Non-Interest Earning Assets:
Cash and Due from Banks 78,073 87,931
Other Assets 782,091 724,519
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Total Assets $ 6,338,041 $ 5,931,470
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Interest-Bearing Liabilities:
Demand Deposits $ 1,147,310 11,590 2.03 % $ 697,190 7,473 2.16 %
Savings Deposits 981,783 5,557 1.14 1,249,665 10,233 1.65
Time Deposits 1,591,469 31,665 4.00 1,642,114 35,650 4.38
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Total Deposits 3,720,562 48,812 2.64 3,588,969 53,356 3.00
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Total Borrowings 1,090,790 21,423 3.95 785,573 16,264 4.17
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Total Interest-Bearing Liabilities 4,811,352 70,235 2.94 4,374,542 69,620 3.21
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Non-Interest Bearing Liabilities 519,136 517,443
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Total Liabilities 5,330,488 4,891,985
Stockholders' Equity 1,007,553 1,039,485
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Total Liabilities &
Stockholders' Equity $ 6,338,041 $ 5,931,470
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Net interest income $ 81,758 $ 77,312
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Net interest rate spread 2.62 % 2.55 %
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Net interest-earning assets $ 666,525 $ 744,478
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Net interest margin (3) 2.98 % 3.02 %
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.14 X 1.17 x
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(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.
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The following table summarizes the YTD net interest margin for the previous
three years, inclusive.
Six Months Ended
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6/30/08 6/30/07 6/30/06
Interest-Earning Assets: ------- ------- -------
Securities 4.67% 4.48% 4.22%
Net Loans 5.83% 6.16% 5.94%
Total Interest-Earning Assets 5.56% 5.76% 5.45%
Interest-Bearing Liabilities:
Total Deposits 2.64% 3.00% 2.20%
Total Borrowings 3.95% 4.17% 3.71%
Total Interest-Bearing Liabilities 2.94% 3.21% 2.52%
Interest Rate Spread 2.62% 2.55% 2.93%
Net Interest Margin 2.98% 3.02% 3.33%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.14x 1.17x 1.19x
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