NEWS RELEASE
CONTACT: Thomas M. Lyons, SVP & CFO
Provident Financial Services, Inc.
(201) 915-5491
FOR RELEASE: 7:45 A.M. Eastern Time: January 29, 2010
Provident Financial Services, Inc. Announces Fourth Quarter and
Full-Year Operating Results for 2009 and Declares Quarterly Cash Dividend
JERSEY CITY, NJ, January 29, 2010---/PR Newswire/First Call/ - Provident
Financial Services, Inc. (NYSE:PFS) (the "Company") reported net income of $6.8
million, or $0.12 per basic and diluted share for the quarter ended December 31,
2009, compared to net income of $7.4 million, or $0.13 per basic and diluted
share for the quarter ended December 31, 2008. The Company reported operating
income, excluding a goodwill impairment charge recorded in the first quarter of
2009, of $30.7 million, or $0.55 per basic and diluted share for the year ended
December 31, 2009, compared to net income of $41.6 million, or $0.74 per basic
and diluted share for the year ended December 31, 2008.
The Company previously recognized a $152.5 million, or $2.71 per share goodwill
impairment charge during the quarter ended March 31, 2009. This accounting
charge resulted in a net loss of $121.8 million, or $2.16 per basic and diluted
share for the year ended December 31, 2009. The goodwill impairment charge was a
non-cash accounting adjustment to the Company's financial statements which did
not affect cash flows, liquidity, or tangible capital. As goodwill is excluded
from regulatory capital, the impairment charge did not impact the regulatory
capital ratios of the Company or its wholly owned subsidiary, The Provident
Bank, both of which remain "well-capitalized" under current regulatory
requirements.
Compared with the three months and year ended December 31, 2008, earnings and
per share data for the three months and year ended December 31, 2009 also
reflect an increase in the provision for loan losses due to the following: an
increase in non-performing loans; downgrades in credit risk ratings; an increase
in commercial loans as a percentage of the total loan portfolio; and the impact
of current macroeconomic conditions. The provision for loan losses was $12.2
million and $30.3 million for the three months and year ended December 31, 2009,
respectively, compared with $8.5 million and $15.1 million, respectively, for
the same periods in 2008. In addition, earnings and per share data for the year
ended December 31, 2009 were impacted by a special assessment imposed on the
banking industry by the FDIC as part of its plan to restore the deposit
insurance fund. The cost of this special assessment to the Company was $3.1
million, which resulted in a charge of $1.9 million, or $0.03 per basic and
diluted share, net of tax, recognized during the second quarter of 2009.
Christopher Martin, President and Chief Executive Officer, commented, "Despite
the unsettled economic environment, our fourth quarter and annual results,
excluding the first quarter goodwill impairment charge, were positive. However,
with unemployment at a 33-year high, the New Jersey economy remains under
duress. This continues to pressure our residential mortgage loan portfolio,
where delinquencies on conventional mortgage loans continued to increase. With
the prolonged recession and expectations of a modest recovery in the future, we
remain cautious, as reflected in our loan loss provision for the fourth
quarter."
Martin added, "It bears reiterating that we did not accept government assistance
in the form of TARP funds, due in part to our strong capital position. We are
encouraged by the sequential increase in our quarterly net interest income of
over 7%, with expansion in our margin of 15 basis points during the quarter.
Furthermore, we are taking steps to reduce costs through the consolidation and
sale of several underperforming branch locations and Bank-owned real estate,
which resulted in pre-tax charges of $1.3 million, or $0.01 per basic and
diluted share, net of tax, during the quarter. These actions will result in
improved efficiencies in the future."
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.11 per
common share payable on February 26, 2010, to stockholders of record as of the
close of business on February 12, 2010.
1
Balance Sheet Summary
Total assets increased $287.4 million, or 4.4%, to $6.84 billion at December 31,
2009, from $6.55 billion at December 31, 2008, due primarily to increases in
securities available for sale and cash and cash equivalents, partially offset by
decreases in loans and intangible assets.
Cash and cash equivalents increased $55.2 million to $123.7 million at December
31, 2009, from $68.5 million at December 31, 2008, as a result of deposit
inflows and proceeds from loan repayments and loan sales. The Company will
continue to deploy these cash balances to fund loan originations, investment
purchases and the repayment of maturing borrowings.
Total investments increased $491.9 million, or 40.6%, during the year ended
December 31, 2009. The increase included $84.9 million of residential mortgage
loan pools that were securitized by the Company in the first quarter of 2009,
which are held as securities available for sale. The loan securitization was
undertaken to enhance the liquidity and risk-based capital treatment of the
underlying loans. Securities purchases for the year ended December 31, 2009
consisted primarily of U.S. Government Agency guaranteed mortgage-backed
securities and obligations.
The Company's net loans decreased $155.6 million, or 3.5%, to $4.32 billion at
December 31, 2009, from $4.48 billion at December 31, 2008. This decrease was
partially attributable to the securitization of $84.9 million of residential
mortgage loans during the first quarter of 2009. Loan originations totaled $1.14
billion and loan purchases totaled $55.1 million for the year ended December 31,
2009. Compared with December 31, 2008, residential mortgage loans decreased
$301.8 million, consumer loans decreased $37.8 million, and construction loans
decreased $37.8 million, while commercial mortgage and multi-family loans
increased $205.1 million and commercial loans increased $32.6 million. In
addition to the securitization of $84.9 million of loans, total residential
mortgage loans decreased as a result of the sale of $98.7 million of primarily
newly originated 30-year fixed-rate loans as part of the Company's interest rate
risk management process. Commercial real estate, construction and commercial
loans represented 52.5% of the loan portfolio at December 31, 2009, compared to
46.5% at December 31, 2008.
At December 31, 2009, the Company's unfunded loan commitments totaled $767.9
million, including $312.0 million in commercial loan commitments, $95.7 million
in commercial mortgage commitments, and $69.7 million in construction loan
commitments. Unfunded loan commitments at September 30, 2009 were $776.2
million.
Intangible assets decreased $156.6 million to $358.1 million at December 31,
2009, from $514.7 million at December 31, 2008, primarily due to a $152.5
million goodwill impairment charge recognized in the first quarter of 2009.
Total deposits increased $672.8 million, or 15.9%, during the year ended
December 31, 2009, to $4.90 billion. Core deposits, consisting of savings and
demand deposit accounts, increased $697.7 million, or 25.9%, to $3.39 billion at
December 31, 2009. The majority of the core deposit increase was in municipal
money market and retail checking deposits. Time deposits decreased $24.9
million, or 1.6%, to $1.51 billion at December 31, 2009, with the majority of
the decrease occurring in the 9-month and shorter maturity categories. Core
deposits represented 69.2% of total deposits at December 31, 2009, compared to
63.7% at December 31, 2008.
Borrowed funds were reduced by $248.4 million, or 19.9%, during the year ended
December 31, 2009, to $999.2 million, as the Company deployed excess liquidity
arising from the increase in core deposit funding. Borrowed funds represented
14.6% of total assets at December 31, 2009, a reduction from 19.1% at December
31, 2008.
Common stock repurchases for the year ended December 31, 2009 totaled 11,000
shares at an average cost of $10.67 per share. At December 31, 2009, 2.1 million
shares remained eligible for repurchase under the current authorization. At
December 31, 2009, book value per share and tangible book value per share were
$14.79 and $8.80, respectively, compared with $17.09 and $8.45, respectively, at
December 31, 2008. Tangible common equity as a percentage of tangible assets was
8.1% at December 31, 2009, compared with 8.4% at December 31, 2008.
Results of Operations
Net Interest Margin
The net interest margin increased 15 basis points to 3.16% for the quarter ended
December 31, 2009, from 3.01% for the quarter ended September 30, 2009. The net
interest margin for the quarter ended December 31, 2009 decreased 4 basis points
from 3.20% for the quarter ended December 31, 2008. The increase in the net
interest margin for the three months ended December 31, 2009 versus the trailing
quarter was primarily attributable to an increase in average securities
available for sale, and a decrease in the average rates paid on interest-bearing
2
liabilities. The decrease in the net interest margin for the three months ended
December 31, 2009 versus the same period in 2008 was primarily attributable to
reductions in earning asset yields, an increase in the average balance of
lower-yielding interest-bearing deposits and short-term investments, a decrease
in average loans outstanding and an increase in the average balance of
non-performing loans. The weighted average yield on interest-earning assets was
4.79% for the three months ended December 31, 2009, compared with 4.84% for the
trailing quarter and 5.38% for the three months ended December 31, 2008. The
weighted average cost of interest-bearing liabilities was 1.83% for the quarter
ended December 31, 2009, compared with 2.07% for the trailing quarter and 2.47%
for the fourth quarter of 2008. The average cost of interest-bearing deposits
for the three months ended December 31, 2009 was 1.47%, compared with 1.73% for
the trailing quarter and 2.14% for the same period last year. The average cost
of borrowings for the three months ended December 31, 2009 was 3.43%, compared
with 3.50% for the trailing quarter and 3.45% for the same period last year.
For the year ended December 31, 2009, the net interest margin decreased 5 basis
points to 3.06%, compared with 3.11% for the year ended December 31, 2008. The
decrease in the net interest margin for the year ended December 31, 2009 versus
the same period in 2008 was primarily attributable to reductions in earning
asset yields, an increase in the average balance of lower-yielding
interest-bearing deposits and short-term investments, and an increase in the
average balance of non-performing loans. The weighted average yield on
interest-earning assets declined 55 basis points to 4.95% for the year ended
December 31, 2009, compared with 5.50% for the year ended December 31, 2008. The
weighted average cost of interest-bearing liabilities declined 59 basis points
to 2.13% for the year ended December 31, 2009, compared with 2.72% for 2008. The
average cost of interest-bearing deposits for the year ended December 31, 2009
was 1.79%, compared with 2.40% for 2008. The average cost of borrowings for the
year ended December 31, 2009 was 3.50%, compared with 3.73% for 2008.
Non-Interest Income
Non-interest income totaled $7.0 million for the quarter ended December 31,
2009, an increase of $49,000 compared to the same period in 2008. Fee income
increased $770,000 for the quarter ended December 31, 2009, compared with the
same period in 2008, primarily due to a year-over-year increase in the value of
equity fund holdings. In addition, income from the appreciation in the cash
surrender value of Bank-owned life insurance increased $131,000 for the quarter
ended December 31, 2009, compared with the same period in 2008. Largely
offsetting these improvements, the Company recognized other-than-temporary
impairment charges of $529,000 in the fourth quarter of 2009 related to
investments in two private-label mortgage-backed securities. Other income also
decreased $264,000 for the quarter ended December 31, 2009, compared with the
same period in 2008. In addition, net gains on securities transactions totaled
$24,000 for the quarter ended December 31, 2009, compared with net gains of
$83,000 for the same quarter in 2008.
For the year ended December 31, 2009, non-interest income totaled $31.5 million,
an increase of $1.2 million, or 4.1%, compared to the same period in 2008. Fee
income increased $830,000 for the year ended December 31, 2009, compared with
2008, primarily due to an increase in the value of equity fund holdings. In
addition, net gains on securities transactions increased $470,000 for the year
ended December 31, 2009, compared with 2008. Other income increased $454,000 for
the year ended December 31, 2009, compared with the same period in 2008,
primarily due to an increase in gains on loan sales. Income from the
appreciation in the cash surrender value of Bank-owned life insurance increased
$108,000 for the year ended December 31, 2009, compared with 2008. Partially
offsetting these improvements, the Company recognized other-than-temporary
impairment charges on securities of $2.0 million during the year ended December
31, 2009, compared with other-than-temporary impairment charges of $1.4 million
recognized in 2008.
Non-Interest Expense
For the three months ended December 31, 2009, non-interest expense increased
$3.7 million, or 11.1%, to $37.1 million, compared to $33.4 million for the
three months ended December 31, 2008. FDIC insurance expense increased $3.8
million for the three months ended December 31, 2009, compared with the same
period in 2008, as a result of deposit growth and increased premium rates. In
addition, other operating expenses increased $1.2 million for the quarter ended
December 31, 2009, compared with the same period last year, as a result of $1.3
million in charges associated with the consolidation of two branch locations,
the sale of deposits of a third leased branch location, and the pending sale of
a Bank-owned building. Partially offsetting these increases, compensation and
benefits expense decreased $782,000 for the three months ended December 31,
2009, compared with the same period in 2008, primarily due to reduced incentive
compensation accruals. In addition, for the three months ended December 31,
2009, compared with the same period in 2008, the Company realized reductions in
net occupancy expense totaling $283,000, and a $280,000 decrease in the
amortization of intangibles as a result of scheduled reductions in core deposit
amortization.
3
Excluding the $152.5 million goodwill impairment charge recorded in the first
quarter of 2009, non-interest expense increased $13.9 million, or 10.7%, to
$144.5 million for the year ended December 31, 2009, compared to $130.6 million
for the year ended December 31, 2008. FDIC insurance expense increased $11.1
million for the year ended December 31, 2009, compared with 2008, as a result of
deposit growth, increased premium rates and the FDIC special assessment imposed
on the industry as part of its plan to restore the deposit insurance fund. The
cost of the FDIC special assessment was $3.1 million. Other operating expenses
increased $3.1 million for the year ended December 31, 2009, compared with 2008,
due primarily to $1.3 million of charges related to the consolidation and
divestiture of premises and costs associated with the dissolution of a real
estate development joint venture. Compensation and benefits expense increased
$968,000 for the year ended December 31, 2009, compared with 2008, primarily due
to a $1.5 million increase in severance costs during the year ended December 31,
2009. Severance included costs associated with the retirements of two senior
executives in the third quarter of 2009. These increases were partially offset
by a $966,000 decrease in the amortization of intangibles as a result of
scheduled reductions in core deposit amortization, and reductions in net
occupancy expense totaling $639,000.
Asset Quality
Total non-performing loans at December 31, 2009 were $84.5 million, or 1.93% of
total loans, compared with $78.2 million, or 1.81% of total loans at September
30, 2009, and $59.1 million, or 1.31% of total loans at December 31, 2008. At
December 31, 2009, impaired loans totaled $41.1 million with related specific
reserves of $12.5 million. The increase in non-performing loans at December 31,
2009, compared with the trailing quarter was due to a $6.7 million increase in
non-performing commercial loans and a $6.0 million increase in non-performing
residential mortgage loans, partially offset by reductions in non-performing
construction and consumer loans. The increase in non-performing commercial loans
was primarily attributable to the addition of a $4.8 million relationship with a
consumer products distributor and a $1.3 million relationship with an industrial
supplies distributor.
At December 31, 2009, the Company's allowance for loan losses was 1.39% of total
loans, compared with 1.29% of total loans at September 30, 2009, and 1.05% of
total loans at December 31, 2008. The Company recorded provisions for loan
losses of $12.2 million and $30.3 million for the three months and year ended
December 31, 2009, respectively, compared with provisions of $8.5 million and
$15.1 million for the three months and year ended December 31, 2008,
respectively. For the three months and year ended December 31, 2009, the Company
had net charge-offs of $7.1 million and $17.2 million, respectively, compared
with net charge-offs of $4.1 and $8.2 million, respectively, for the same
periods in 2008. The allowance for loan losses increased $13.0 million to $60.7
million at December 31, 2009, from $47.7 million at December 31, 2008. The
increase in the loan loss provision for the three months and year ended December
31, 2009, compared with the same periods in 2008, was attributable to an
increase in non-performing loans, downgrades in credit risk ratings and an
increase in commercial loans as a percentage of the total loan portfolio to
52.5% at December 31, 2009, from 46.5% at December 31, 2008. At December 31,
2009, the Company held $6.4 million of foreclosed assets, compared with $7.0
million at September 30, 2009 and $3.4 million at December 31, 2008.
Income Tax Expense
For the three months ended December 31, 2009, the Company recorded an income tax
benefit of $395,000, compared with an income tax expense of $2.6 million for the
same period in 2008. For the year ended December 31, 2009, the Company's income
tax expense was $7.0 million, compared with $14.9 million for the same period in
2008. The decrease in income tax expense was attributable to lower pre-tax
income and a lower effective tax rate. Excluding the impact of the goodwill
impairment charge recognized in the first quarter of 2009, which is not tax
deductible, the Company's effective tax rates were (6.2%) and 18.6%,
respectively, for the three months and year ended December 31, 2009, compared
with 26.0% and 26.4% for the three months and year ended December 31, 2008,
respectively. Fourth quarter and full-year 2009 pre-tax income was significantly
lower than previously projected, primarily as a result of increased provisions
for loan losses. As a result, the Company recorded a tax benefit in the fourth
quarter to reduce its previously recorded estimate of income tax liability. The
reduction in the effective tax rates was attributable to a larger proportion of
the Company's income being derived from tax-exempt sources.
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 82 full service branches
throughout northern and central New Jersey.
4
Post Earnings Conference Call
Representatives of the Company will hold a conference call for investors at
10:00 a.m. Eastern Time on January 29, 2010 regarding highlights of the
Company's fourth quarter and full year 2009 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 cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The Company
also advises 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.
5
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Condition
December 31, 2009 (Unaudited) and December 31, 2008
(Dollars in Thousands)
Assets December 31, 2009 December 31, 2008
--------------------------------- ----------------------------
Cash and due from banks $ 120,823 $ 66,315
Short-term investments 2,920 2,231
--------------------------------- ----------------------------
Total cash and cash equivalents 123,743 68,546
--------------------------------- ----------------------------
Investment securities held to maturity (market value of
$344,385 at December 31, 2009 (unaudited) and
$351,623 at December 31, 2008) 335,074 347,484
Securities available for sale, at fair value 1,333,163 820,329
Federal Home Loan Bank stock 34,276 42,833
Loans 4,384,194 4,526,748
Less allowance for loan losses 60,744 47,712
--------------------------------- ----------------------------
Net loans 4,323,450 4,479,036
--------------------------------- ----------------------------
Foreclosed assets, net 6,384 3,439
Banking premises and equipment, net 76,280 75,750
Accrued interest receivable 25,797 23,866
Intangible assets 358,058 514,684
Bank-owned life insurance 132,346 126,956
Other assets 87,601 45,825
--------------------------------- ----------------------------
Total assets $ 6,836,172 $ 6,548,748
================================= ============================
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $ 2,522,732 $ 1,821,437
Savings deposits 868,835 872,388
Time deposits of $100,000 or more 469,313 445,466
Other time deposits 1,038,297 1,087,045
--------------------------------- ----------------------------
Total deposits 4,899,177 4,226,336
Mortgage escrow deposits 18,713 20,074
Borrowed funds 999,233 1,247,681
Other
liabilities 34,494 36,067
--------------------------------- ----------------------------
Total liabilities 5,951,617 5,530,158
--------------------------------- ----------------------------
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 59,821,850 shares outstanding at
December 31, 2009, and 59,610,623 shares outstanding at
December 31, 2008 832 832
Additional paid-in capital 1,014,856 1,013,293
Retained earnings 307,751 454,444
Accumulated other comprehensive income (loss) 7,731 (485)
Treasury stock at cost (384,973) (384,854)
Unallocated common stock held by Employee Stock
Ownership Plan (61,642) (64,640)
Common Stock acquired by the Directors' Deferred Fee Plan (7,575) (7,667)
Deferred compensation - Directors' Deferred Fee Plan 7,575 7,667
-------------------------------- ----------------------------
Total stockholders' equity 884,555 1,018,590
-------------------------------- ----------------------------
Total liabilities and stockholders'
equity $ 6,836,172 $ 6,548,748
================================ ============================
6
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Three Months and Year Ended December 31, 2009 and 2008 (Unaudited)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Year Ended
December 31, December 31,
------------------------------ ---------------------------------
2009 2008 2009 2008
------------- --------------- -------------- ----------------
Interest income:
Real estate secured loans $ 39,528 42,657 159,094 167,063
Commercial loans 10,881 10,431 43,057 42,999
Consumer loans 7,643 8,795 31,462 36,727
Investment securities held to maturity 3,300 3,571 13,419 14,431
Securities available for sale 12,310 10,218 45,186 42,590
Other short-term investments -- 15 13 344
Deposits 89 -- 304 --
Federal funds -- 2 24 166
------------- --------------- -------------- ----------------
Total interest income 73,751 75,689 292,559 304,320
------------- --------------- -------------- ----------------
Interest expense:
Deposits 16,419 19,942 74,555 88,887
Borrowed funds 8,721 10,787 36,987 43,364
------------- --------------- -------------- ----------------
Total interest expense 25,140 30,729 111,542 132,251
------------- --------------- -------------- ----------------
Net interest income 48,611 44,960 181,017 172,069
Provision for loan losses 12,150 8,500 30,250 15,100
------------- --------------- -------------- ----------------
Net interest income after
provision for loan losses 36,461 36,460 150,767 156,969
------------- --------------- -------------- ----------------
Non-interest income:
Fees 5,874 5,104 24,221 23,391
Bank-owned life insurance 1,433 1,302 5,390 5,282
Net gain on securities transactions 24 83 1,398 928
Other-than-temporary impairment losses on
securities (4,876) -- (11,043) (1,410)
Portion of loss recognized in other
comprehensive income (before taxes) 4,347 -- 9,012 --
------------- --------------- -------------- ----------------
Net impairment losses on securities recognized (529) -- (2,031) (1,410)
in earnings
Other income 231 495 2,474 2,020
------------- --------------- -------------- ----------------
Total non-interest income 7,033 6,984 31,452 30,211
------------- --------------- -------------- ----------------
Non-interest expense:
Goodwill impairment -- -- 152,502 --
Compensation and employee benefits 16,220 17,002 68,738 67,770
FDIC Insurance 3,968 176 11,778 634
Net occupancy expense 4,900 5,183 20,170 20,809
Data processing expense 2,315 2,291 9,325 9,194
Advertising and promotion 1,144 1,117 4,291 4,106
Amortization of intangibles 1,091 1,371 5,111 6,077
Other operating expenses 7,477 6,259 25,121 22,011
------------- --------------- -------------- ----------------
Total non-interest expense 37,115 33,399 297,036 130,601
------------- --------------- -------------- ----------------
Income (loss) before income 6,379 10,045 (114,817) 56,579
tax expense
Income tax (benefit) expense (395) 2,612 7,007 14,937
------------- --------------- -------------- ----------------
7
Net income (loss) $ 6,774 $7,433 (121,824) $41,642
============= =============== ============== ================
Basic earnings (loss) per share $ 0.12 $ 0.13 (2.16) $ 0.74
Average basic shares outstanding 56,380,653 56,106,027 56,275,694 56,031,273
Diluted earnings (loss) per share $ 0.12 $ 0.13 (2.16) $ 0.74
Average diluted shares outstanding 56,380,653 56,106,027 56,275,694 56,031,318
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data) (Unaudited)
At or for the Three
Months Ended At or for the Year Ended
December 31, December 31,
----------------------------------------------------------------
2009 2008 2009 2008
---- ---- ---- ----
OPERATING RESULTS:
Net interest income $48,611 $44,960 $181,017 $172,069
Provision for loan losses 12,150 8,500 30,250 15,100
Non-interest income 7,033 6,984 31,452 30,211
Non-interest expense (1) 37,115 33,399 144,534 130,601
Operating income before income tax (benefit)
expense (2) 6,379 10,045 37,685 56,579
Operating income (2) 6,774 7,433 30,678 41,642
Goodwill impairment charge -- -- 152,502 --
Net income (loss) 6,774 7,433 (121,824) 41,642
Operating basic and diluted earnings per share (1) $0.12 $0.13 $0.55 $0.74
Per share impact of goodwill impairment charge -- -- $(2.71) --
Basic and diluted earnings (loss) per share $0.12 $0.13 $(2.16) $0.74
Interest rate spread 2.96% 2.91% 2.82% 2.78%
Net interest margin 3.16% 3.20% 3.06% 3.11%
PROFITABILITY:
Annualized return on average assets (1) 0.39% 0.46% 0.46% 0.65%
Annualized return on average equity (1) 3.03% 2.91% 3.36% 4.12%
Annualized non-interest expense to average assets (1) 2.14% 2.05% 2.17% 2.04%
Efficiency ratio (1), (3) 66.70% 64.30% 68.03% 64.56%
ASSET QUALITY:
Non-accrual loans $84,477 $59,118
90+ and still accruing loans -- --
Non-performing loans 84,477 59,118
Foreclosed assets 6,384 3,439
Non-performing loans to
total loans 1.93% 1.31%
Non-performing assets to
total assets 1.33% 0.96%
Allowance for loan losses $60,744 $47,712
Allowance for loan losses to
non-performing loans 71.91% 80.71%
Allowance for loan losses to
total loans 1.39% 1.05%
8
AVERAGE BALANCE SHEET DATA:
Assets $6,871,063 $6,469,192 $6,672,420 $6,391,549
Loans, net 4,288,440 4,386,439 4,303,808 4,280,478
Earning assets 6,135,321 5,612,630 5,915,259 5,529,445
Core deposits 3,366,514 2,654,797 3,024,362 2,622,268
Borrowings 1,008,844 1,243,879 1,056,723 1,163,531
Interest-bearing liabilities 5,440,707 4,948,704 5,232,850 4,865,441
Stockholders' equity 887,099 1,016,255 914,218 1,010,966
Average yield on interest-earning assets 4.79% 5.38% 4.95% 5.50%
Average cost of interest-bearing liabilities 1.83% 2.47% 2.13% 2.72%
Notes
(1) Excluding a $152.5 million goodwill impairment charge recorded in the
quarter ended March 31, 2009
(2) Operating Income Reconciliation
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net income (loss) $6,774 $7,433 $(121,824) $41,642
Goodwill impairment -- -- 152,502 --
-- -- ------- --
Operating income $6,774 $7,433 $30,678 $41,642
====== ====== ======= =======
(3) Efficiency Ratio Calculation
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net interest income $48,611 $44,960 $181,017 $172,069
Non-interest income 7,033 6,984 31,452 30,211
----- ----- ------ ------
Total income $55,644 $51,944 $212,469 202,280
======= ======= ======== =======
Non-interest expense (1) $37,115 $33,399 $144,534 $130,601
======= ======= ======== ========
Expense/Income: 66.70% 64.30% 68.03% 64.56%
====== ====== ====== ======
9
Average Quarterly Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands)
December 31, 2009 September 30, 2009
------------------------------------------ ----------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------------------------------------------ ----------------------------------------
Interest-Earning Assets:
Deposits $ 140,996 $ 89 0.25 % $ 156,046 $ 98 0.25 %
Federal Funds Sold and
Other Short-Term Investments 3,630 -- 0.01 6,724 1 0.07
Investment Securities (1) 336,549 3,300 3.92 338,381 3,327 3.93
Securities Available for Sale 1,331,061 11,817 3.55 1,186,336 10,998 3.71
Federal Home Loan Bank Stock 34,645 493 5.64 34,897 499 5.67
Net Loans (2)
Total Mortgage Loans 2,955,138 39,528 5.33 2,945,927 39,286 5.32
Total Commercial Loans 742,443 10,881 5.81 746,535 11,108 5.90
Total Consumer Loans 590,859 7,643 5.13 592,572 7,722 5.17
------------- ----------- -------------- --------
Total Interest-Earning Assets 6,135,321 73,751 4.79 6,007,418 73,039 4.84
----------- -------------- -------- -----------
Non-Interest-Earning Assets:
Cash and Due from Banks 106,075 90,058
Other Assets 629,667 630,207
------------- --------------
Total Assets $ 6,871,063 $ 6,727,683
============= ==============
Interest-Bearing Liabilities:
Demand Deposits $ 2,000,062 5,698 1.13 % $ 1,765,127 5,883 1.32 %
Savings Deposits 870,041 1,165 0.53 878,130 1,557 0.70
Time Deposits 1,561,760 9,556 2.43 1,662,597 11,367 2.71
------------- ----------- -------------- ----------
Total Deposits 4,431,863 16,419 1.47 4,305,854 18,807 1.73
----------- ----------
Total Borrowings 1,008,844 8,721 3.43 1,012,184 8,922 3.50
------------- ----------- -------------- ----------
Total Interest-Bearing Liabilities 5,440,707 25,140 1.83 5,318,038 27,729 2.07
----------- -------------- ---------- --------------
Non-Interest-Bearing Liabilities 543,257 531,770
------------- --------------
Total Liabilities 5,983,964 5,849,808
Stockholders' Equity 887,099 877,875
------------- --------------
Total Liabilities & Stockholders'
Equity $ 6,871,063 $ 6,727,683
============= ==============
Net interest income $ 48,611 $ 45,310
=========== ==========
Net interest rate spread 2.96 % 2.77 %
==== ====
Net interest-earning assets $ 694,614 $ 689,380
============= ==============
Net interest margin (3) 3.16 % 3.01 %
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.13 x 1.13 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.
10
The following table summarizes average yield, cost and net interest margin
information for the previous five quarters.
12/31/09 9/30/09 6/30/09 3/31/09 12/31/08
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
Interest-Earning Assets:
Securities 3.40% 3.47% 3.64% 4.31% 4.50%
Net Loans 5.39% 5.40% 5.44% 5.48% 5.63%
Total Interest-Earning Assets 4.79% 4.84% 4.96% 5.21% 5.38%
Interest-Bearing Liabilities
Total Deposits 1.47% 1.73% 1.93% 2.06% 2.14%
Total Borrowings 3.43% 3.50% 3.60% 3.47% 3.45%
Total Interest-Bearing Liabilities 1.83% 2.07% 2.27% 2.39% 2.47%
Interest Rate Spread 2.96% 2.77% 2.69% 2.82% 2.91%
Net Interest Margin 3.16% 3.01% 2.96% 3.10% 3.20%
Ratio of Interest-Earning Assets to
Interest-Bearing Liabilities 1.13x 1.13x 1.13x 1.13x 1.13x
11
Average YTD Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands)
December 31, 2009 December 31, 2008
------------------------------------------ ----------------------------------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
------------------------------------------ ----------------------------------------
Interest-Earning Assets:
Deposits $ 121,557 $ 304 0.25 % $ -- $ -- --%
Federal Funds Sold and
Other Short-Term Investments 25,790 37 0.14 16,238 510 3.14
Investment Securities (1) 339,154 13,419 3.96 354,079 14,431 4.08
Securities Available for Sale 1,089,032 43,338 3.98 839,226 40,158 4.79
Federal Home Loan Bank Stock 35,918 1,848 5.15 39,424 2,432 6.17
Net Loans (2)
Total Mortgage Loans 2,970,533 159,094 5.36 2,972,364 167,063 5.62
Total Commercial Loans 732,585 43,057 5.88 680,966 42,999 6.31
Total Consumer Loans 600,690 31,462 5.24 627,148 36,727 5.86
------------- ------------ --------------- ----------
Total Interest-Earning Assets 5,915,259 292,559 4.95 5,529,445 304,320 5.50
------------ -------------- ---------- ---------
Non-Interest-Earning Assets:
Cash and Due from Banks 92,378 77,841
Other Assets 664,783 784,263
------------- ---------------
Total Assets $ 6,672,420 $ 6,391,549
============= ===============
Interest-Bearing Liabilities:
Demand Deposits $ 1,672,379 22,710 1.36 % $ 1,215,059 23,273 1.92%
Savings Deposits 874,281 6,284 0.72 941,057 9,915 1.05
Time Deposits 1,629,467 45,561 2.80 1,545,794 55,699 3.60
------------- ------------ --------------- ----------
Total Deposits 4,176,127 74,555 1.79 3,701,910 88,887 2.40
------------ ----------
Total Borrowings 1,056,723 36,987 3.50 1,163,531 43,364 3.73
------------- ------------ --------------- ----------
Total Interest-Bearing Liabilities 5,232,850 111,542 2.13 4,865,441 132,251 2.72
------------- ------------- ---------- -----------
Non-Interest-Bearing Liabilities 525,352 515,142
------------- ---------------
Total Liabilities 5,758,202 5,380,583
Stockholders' Equity 914,218 1,010,966
------------- ---------------
Total Liabilities & Stockholders'
Equity $ 6,672,420 $ 6,391,549
============= ===============
Net interest income $ 181,017 $ 172,069
============ ==========
Net interest rate spread 2.82 % 2.78
==== ====
Net interest-earning assets $ 682,409 $ 664,004
============= ===============
Net interest margin (3) 3.06 % 3.11%
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.13 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.
12
The following table summarizes average yield, cost and net interest margin
information for the previous three years.
Year Ended
----------------------------------------
12/31/09 12/31/08 12/31/07
-------- -------- --------
Interest-Earning Assets:
Securities 3.66% 4.61% 4.52%
Net Loans 5.43% 5.77% 6.16%
Total Interest-Earning Assets 4.95% 5.50% 5.79%
Interest-Bearing Liabilities:
Total Deposits 1.79% 2.40% 3.07%
Total Borrowings 3.50% 3.73% 4.17%
Total Interest-Bearing Liabilities 2.13% 2.72% 3.27%
Interest Rate Spread 2.82% 2.78% 2.52%
Net Interest Margin 3.06% 3.11% 2.96%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.13x 1.14x 1.16x
13