Provident Financial Services, Inc. Announces a 14% Increase in Quarterly Earnings and Declares Quarterly Cash Dividend

Fri Jul 27, 2012 8:01am EDT

* Reuters is not responsible for the content in this press release.

Provident Financial Services, Inc. Announces a 14% Increase in Quarterly Earnings and Declares Quarterly Cash Dividend

PR Newswire

JERSEY CITY, N.J., July 27, 2012 /PRNewswire/ -- Provident Financial Services, Inc. (NYSE:PFS) (the "Company") reported net income of $16.0 million, or $0.28 per basic and diluted share for the three months ended June 30, 2012, compared to net income of $14.0 million, or $0.25 per basic and diluted share for the three months ended June 30, 2011.

For the six months ended June 30, 2012, the Company reported net income of $34.4 million, or $0.60 per basic and diluted share, compared to net income of $26.9 million, or $0.47 per basic and diluted share for the same period last year. 

The increase in earnings for the second quarter and year-to-date period ended June 30, 2012, was largely attributable to improvements in asset quality and related reductions in the provision for loan losses.  Loan loss provisions decreased by $4.0 million and $6.9 million for the three and six months ended June 30, 2012, respectively, compared with the same periods in 2011.  In addition, net interest income increased $402,000 and $1.8 million for the three and six months ended June 30, 2012, respectively, primarily due to an increase in average loans outstanding, funded by growth in average core deposits.  Further contributing to the year-to-date improvement, the Company realized $2.2 million in gains during the first quarter from the sale of certain mortgage-backed securities identified as having a significant risk of accelerated prepayment.  Excluding this gain, non-interest income increased $1.3 million and $4.7 million for the three and six months ended June 30, 2012, respectively, compared with the same periods last year.  These improvements were partially offset by increases in non-interest expense of $1.8 million and $3.3 million for the three and six months ended June 30, 2012, respectively, compared with the same periods in 2011.  Also, income tax expense increased $1.9 million and $4.8 million for the three and six months ended June 30, 2012, respectively, compared with same periods last year.

Christopher Martin, Chairman, President and Chief Executive Officer, commented, "This quarter's strong financial results reflect the consistency of our business strategy and the strength within our balance sheet.  Our earnings improvement of 14% over the prior year's quarter reflects a combination of improving asset quality and continued growth in fee income, tempered somewhat by slight margin compression.  Both average loans and deposits increased year over year."  Martin continued: "While the pace of the economic recovery remains tepid, we are well positioned to take advantage of market opportunities, as we continue our focus on building client relationships.  Our commitment to our customers is the cornerstone of our corporate philosophy."

Declaration of Quarterly Dividend

The Company's Board of Directors declared a quarterly cash dividend of $0.13 per common share payable on August 31, 2012, to stockholders of record as of the close of business on August 15, 2012.

Balance Sheet Summary

Total assets increased $37.4 million to $7.13 billion at June 30, 2012, from $7.10 billion at December 31, 2011.  The increase was primarily due to an increase in net loans, partially offset by a decrease in securities. 

The Company's net loans increased $83.6 million, or 1.8%, during the six months ended June 30, 2012 to $4.66 billion.  Loan originations totaled $766.3 million and loan purchases totaled $49.0 million for the six months ended June 30, 2012.  The loan portfolio had net increases of $58.1 million in commercial and multi-family mortgage loans, $15.3 million in consumer loans, $5.2 million in commercial loans and $4.9 million in construction loans, which were partially offset by a $1.1 million decrease in residential mortgage loans.  Commercial real estate, commercial and construction loans represented 60.2% of the loan portfolio at June 30, 2012, compared to 59.8% at December 31, 2011.

At June 30, 2012, the Company's unfunded loan commitments totaled $797.1 million, including $306.5 million in commercial loan commitments, $137.7 million in construction loan commitments and $61.5 million in commercial mortgage commitments.  Unfunded loan commitments at December 31, 2011 were $770.4 million.

Total investments decreased $50.2 million, or 2.8%, to $1.71 billion at June 30, 2012, from $1.76 billion at December 31, 2011.  The decrease was primarily due to principal repayments on mortgage-backed securities, the sale of certain mortgage-backed securities which had a high risk of prepayment and maturities of municipal and agency bonds, partially offset by purchases of mortgage-backed securities.  A portion of the repayments on the investment portfolio were reinvested in higher-yielding loans, primarily commercial mortgage and commercial loans.

Total deposits increased $49.4 million, or 1.0%, during the six months ended June 30, 2012 to $5.21 billion.  Core deposits, consisting of savings and demand deposit accounts, increased $145.0 million, or 3.6%, to $4.17 billion at June 30, 2012.  Partially offsetting this increase, time deposits decreased $95.6 million, or 8.5%, to $1.03 billion at June 30, 2012, with the majority of the decrease occurring in the 18- and 24-month maturity categories.  The Company remains focused on developing core deposit relationships, while strategically permitting the run-off of time deposits.  Core deposits represented 80.2% of total deposits at June 30, 2012, compared to 78.1% at December 31, 2011.   

Borrowed funds were reduced $36.0 million, or 3.9% during the six months ended June 30, 2012, to $884.2 million, as core deposit growth continued to replace wholesale funding.  Borrowed funds represented 12.4% of total assets at June 30, 2012, a reduction from 13.0% at December 31, 2011.

Common stock repurchases for the three and six months ended June 30, 2012, totaled 268,000 and 408,000 shares at an average cost of $13.75 and $13.81 per share, respectively.  As of June 30, 2012, 1.4 million shares remained eligible for repurchase under the current authorization.  At June 30, 2012, book value per share and tangible book value per share were $16.20 and $10.23, respectively, compared with $15.88 and $9.87, respectively, at December 31, 2011. 

Results of Operations

Net Interest Income and Net Interest Margin

For the three months ended June 30, 2012, net interest income increased $402,000 from the same period in 2011, to $54.6 million.  Net interest income for the six months ended June 30, 2012, increased $1.8 million compared to the same period in 2011, to $109.4 million.  For both periods, the improvement in net interest income resulted from an increase in average interest-earning assets, primarily average loans outstanding, funded with growth in lower-cost core deposits.  This improvement in earning asset volume and funding mix was partially offset by compression in the net interest margin.

The Company's net interest margin for the quarter ended June 30, 2012 was 3.39%, a decrease of 3 basis points from 3.42% for the quarter ended March 31, 2012, and 14 basis points from 3.53% for the quarter ended June 30, 2011.  The decrease in the net interest margin was primarily attributable to the decline in yields on interest-earning assets, which outpaced the downward re-pricing of the Company's interest-bearing liabilities as longer-term market interest rates have declined and the yield curve has flattened.  The weighted average yield on interest-earning assets was 4.11% for the three months ended June 30, 2012, compared with 4.19% for the trailing quarter, and 4.56% for the three months ended June 30, 2011.  The weighted average cost of interest-bearing liabilities was 0.85% for the quarter ended June 30, 2012, compared with 0.90% for the trailing quarter and 1.19% for the second quarter of 2011.  The average cost of interest bearing deposits for the three months ended June 30, 2012 was 0.58%, compared with 0.62% for the trailing quarter and 0.89% for the same period last year.  Partially offsetting the effects of interest rate spread compression on the margin, average non-interest bearing demand deposits totaled $689.3 million for the quarter ended June 30, 2012, compared with $670.1 million for the trailing quarter and $580.5 million for the quarter ended June 30, 2011.  The average cost of borrowings for the three months ended June 30, 2012 was 2.20%, compared with 2.25% for the trailing quarter, and 2.65% for the same period last year. 

For the six months ended June 30, 2012, the net interest margin decreased 11 basis points to 3.41%, compared with 3.52% for the six months ended June 30, 2011.  The weighted average yield on interest-earning assets declined 42 basis points to 4.15% for the six months ended June 30, 2012, compared with 4.57% for the six months ended June 30, 2011, while the weighted average cost of interest-bearing liabilities declined 34 basis points to 0.87% for the six months ended June 30, 2012, compared with 1.21% for the same period in 2011.  The average cost of interest bearing deposits for the six months ended June 30, 2012 was 0.60%, compared with 0.90% for the same period last year.  Average non-interest bearing demand deposits totaled $679.7 million for the six months ended June 30, 2012, compared with $568.1 million for the six months ended June 30, 2011.  The average cost of borrowings for the six months ended June 30, 2012 was 2.22%, compared with 2.67% for the same period last year.

Non-Interest Income

Non-interest income totaled $9.3 million for the quarter ended June 30, 2012, an increase of $1.3 million, or 16.2%, compared to the same period in 2011.  Fee income increased $1.6 million to $7.4 million for the three months ended June 30, 2012, compared with the three months ended June 30, 2011, due primarily to increased wealth management fees attributable to Beacon Trust Company ("Beacon"), acquired in August 2011, and an increase in commercial loan prepayment fees.  These increases were partially offset by lower deposit-based fee revenue.  The Company did not experience any other-than-temporary impairment on its securities portfolio in 2012, compared with a $302,000 charge recognized in the same period last year associated with an investment in a non-Agency mortgage-backed security.  Additionally, other income decreased $485,000 for the three months ended June 30, 2012, compared to the same period in 2011, resulting from a decrease in gains related to loan sales and increased net losses on the sale of foreclosed real estate. 

For the six months ended June 30, 2012, non-interest income totaled $22.1 million, an increase of $6.9 million, or 45.1%, compared to the same period in 2011.  Fee income totaled $15.5 million for the six months ended June 30, 2012, an increase of $4.1 million compared with the same period in 2011, largely due to an increase in wealth management fees related to the Beacon acquisition and increased prepayment fees on commercial loans, which were partially offset by lower deposit-based fee income, primarily overdraft fees.  Net gains on securities transactions totaled $2.2 million for the six months ended June 30, 2012, compared to $28,000 for the same period in 2011.  During the period, the Company identified and sold certain mortgage-backed securities which had a high risk of accelerated prepayment.  The proceeds from the sales were reinvested in similar securities with more stable projected cash flows.  Also contributing to the increase in non-interest income, other income increased $435,000 for the six months ended June 30, 2012, compared with the same period in 2011, primarily due to income associated with the termination of the Company's debit card rewards program and an increase in gains related to loan sales, partially offset by increased net losses on the sale of foreclosed real estate.  Other-than-temporary impairment charges on investment securities declined $302,000 for the six months ended June 30, 2012, compared to the same period last year, as the Company did not experience any other-than-temporary impairment on its securities portfolio in 2012.

Non-Interest Expense

For the three months ended June 30, 2012, non-interest expense increased $1.8 million, or 5.1%, to $37.8 million, compared to the three months ended June 30, 2011.  Compensation and benefits increased $1.7 million for the quarter ended June 30, 2012, to $20.4 million, compared to the quarter ended June 30, 2011.  This increase was due to higher salary expense associated with annual merit increases, personnel added as a result of the Beacon acquisition, an increased incentive compensation accrual, and increased employee health and medical costs and retirement benefit costs.  Other operating expenses increased $279,000, to $6.6 million for the quarter ended June 30, 2012, from the same period in 2011, due mainly to a $213,000 charge related to the termination of a software contract in connection with the Beacon integration. 

The Company's annualized non-interest expense as a percentage of average assets was 2.13% for the quarter ended June 30, 2012, compared to 2.11% for the same period in 2011.  The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) was 59.07% for the quarter ended June 30, 2012, compared with 57.75% for the same period in 2011. 

Non-interest expense for the six months ended June 30, 2012 was $74.5 million, an increase of $3.3 million, or 4.6%, from the six months ended June 30, 2011.  Compensation and benefits expense increased $3.7 million, to $41.0 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011, due to higher salary expense associated with annual merit increases, personnel added as a result of the Beacon acquisition, an increased incentive compensation accrual and increased employee health and medical costs and retirement benefit costs.  In addition, other operating expense increased $929,000 for the six months ended June 30, 2012, compared to the same period in 2011, due primarily to increased loan collection and administration expense, a $213,000 charge related to the termination of a software contract in connection with the Beacon integration, and $162,000 in charges related to the consolidation of underperforming branches.  Data processing expense increased $437,000 for the six months ended June 30, 2012, compared to the same period in 2011, because of increased software maintenance and core processing fees.  Partially offsetting these increases, impairment of premises and equipment declined $807,000 for the six months ended June 30, 2012, compared to the same period last year, due to the impairment charge incurred in the first quarter of 2011 related to the then planned sale and relocation of the Company's former loan center.  FDIC insurance expense decreased $544,000 to $2.6 million for the six months ended June 30, 2012, compared with the same period in 2011.  The decrease was primarily due to a lower assessment rate and a change in assessment methodology from a deposit-based to an asset-based assessment, effective in the second quarter of 2011.  Net occupancy expense decreased $337,000 to $10.2 million, compared to the same period last year, due to the consolidation and relocation of the Company's administrative offices in April 2011 and the elimination of prior year carrying costs on previously occupied facilities owned by the Company that were sold in November 2011.  Additionally, amortization of intangibles decreased $149,000 for the six months ended June 30, 2012, compared with the same period of 2011, as a result of scheduled reductions in core deposit intangible amortization, partially offset by the amortization of the customer relationship intangible arising from the Beacon acquisition and increased amortization of mortgage servicing rights.

Asset Quality

The Company's total non-performing loans at June 30, 2012 improved to $115.2 million, or 2.43% of total loans, compared with $120.3 million, or 2.58% of total loans at March 31, 2012, $122.5 million, or 2.63% of total loans at December 31, 2011, and $121.3 million, or 2.72% of total loans at June 30, 2011.   The decrease in non-performing loans at June 30, 2012, compared with the trailing quarter, was largely due to a $4.9 million decrease in non-performing residential loans, a $1.1 million decrease in non-performing commercial loans and a $1.1 million decrease in non-performing consumer loans, partially offset by a $2.2 million increase in non-performing commercial mortgage loans.  At June 30, 2012, impaired loans totaled $115.5 million with related specific reserves of $8.6 million, compared with impaired loans totaling $111.6 million with related specific reserves of $8.0 million at March 31, 2012. 

At June 30, 2012, the Company's allowance for loan losses was 1.53% of total loans, compared with 1.59% of total loans at March 31, 2012, 1.60% of total loans at December 31, 2011, and 1.62% of total loans at June 30, 2011.  The Company recorded provisions for loan losses of $3.5 million and $8.5 million for the three and six months ended June 30, 2012, respectively, compared with provisions of $7.5 million and $15.4 million for the three and six months ended June 30, 2011, respectively.  For the three and six months ended June 30, 2012, the Company had net charge-offs of $5.1 million and $10.5 million, respectively, compared with net charge-offs of $7.9 million and $11.8 million, respectively, for the same periods in 2011.  The allowance for loan losses decreased $2.0 million to $72.4 million at June 30, 2012, from $74.4 million at December 31, 2011 as the weighted average risk rating of the loan portfolio improved, early stage delinquencies declined and non-performing asset formation decreased. 

At June 30, 2012, the Company held $13.9 million of foreclosed assets, compared with $12.8 million at December 31, 2011.  Foreclosed assets at June 30, 2012 consisted of $6.9 million of residential real estate, $6.4 million of commercial real estate and $600,000 of marine vessels.

Income Tax Expense

For the three and six months ended June 30, 2012, the Company's income tax expense was $6.7 million and $14.0 million, respectively, compared with $4.8 million and $9.2 million, for the three and six months ended June 30, 2011, respectively.  The increase in income tax expense was primarily a function of growth in pre-tax income from taxable sources. The Company's effective tax rates were 29.4% and 28.9% for the three and six months ended June 30, 2012, respectively, compared with 25.6% for both the three and six months ended June 30, 2011, 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 a network of full service branches throughout 11 counties in 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 Friday, July 27, 2012 regarding highlights of the Company's second quarter 2012 financial results.  The call may be accessed by dialing 1-877-317-6789 (Domestic), 1-412-317-6789 (International) or 1-866-605-3852 (Canada).  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 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.


 

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

June 30, 2012 (Unaudited) and December 31, 2011

(Dollars in Thousands)










Assets



June 30, 
2012


December 31, 2011










Cash and due from banks


$

75,233

$

68,553

Short-term investments



2,012


1,079




Total cash and cash equivalents



77,245


69,632










Securities available for sale, at fair value



1,309,262


1,376,119

Investment securities held to maturity (fair value of $379,325 at







June 30, 2012 (unaudited) and $366,296 at December 31, 2011)



363,210


348,318

Federal Home Loan Bank of New York ("FHLB-NY") stock



40,689


38,927










Loans





4,735,130


4,653,509


Less allowance for loan losses



72,352


74,351




Net loans



4,662,778


4,579,158










Foreclosed assets, net



13,925


12,802

Banking premises and equipment, net



67,258


66,260

Accrued interest receivable



23,878


24,653

Intangible assets




359,405


360,714

Bank-owned life insurance



144,631


142,010

Other assets





72,570


78,810




Total assets


$

7,134,851

$

7,097,403










Liabilities and Stockholders' Equity















Deposits:









Demand deposits


$

3,251,349

$

3,136,129


Savings deposits



921,571


891,742


Certificates of deposit of $100,000 or more



349,056


383,174


Other time deposits



684,037


745,552




Total deposits



5,206,013


5,156,597










Mortgage escrow deposits



24,263


20,955

Borrowed funds



884,204


920,180

Other liabilities



45,825


47,194




Total liabilities



6,160,305


6,144,926










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 60,141,128 outstanding at June 30, 2012, and 59,968,195







outstanding at December 31, 2011



832


832

Additional paid-in capital



1,019,493


1,019,253

Retained earnings



382,234


363,011

Accumulated other comprehensive income



9,650


9,571

Treasury stock





(383,599)


(384,725)

Unallocated common stock held by the Employee Stock Ownership Plan ("ESOP")



(54,064)


(55,465)

Common Stock acquired by the Directors' Deferred Fee Plan ("DDFP")



(7,344)


(7,390)

Deferred Compensation - DDFP



7,344


7,390




Total stockholders' equity



974,546


952,477




Total liabilities and stockholders' equity


$

7,134,851

$

7,097,403


 













PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

Three and Six Months Ended June 30, 2012 and 2011 (Unaudited)

(Dollars in Thousands, except per share data)


















Three Months Ended


Six Months Ended






June 30


June 30,






2012


2011


2012


2011

Interest income:











Real estate secured loans

$

38,672

$

39,669

$

77,631

$

79,959


Commercial loans


10,205


10,775


20,575


20,857


Consumer loans


6,335


6,490


12,624


13,009


Securities available for sale and FHLB-NY stock


7,812


9,800


16,144


19,294


Investment securities


2,991


3,031


5,909


6,124


Deposits, Federal funds sold and other short-term investments


4


46


16


55



Total interest income


66,019


69,811


132,899


139,298













Interest expense:











Deposits




6,503


9,625


13,505


19,455


Borrowed funds


4,938


6,010


9,979


12,220



Total interest expense


11,441


15,635


23,484


31,675



Net interest income


54,578


54,176


109,415


107,623













Provision for loan losses


3,500


7,500


8,500


15,400



Net interest income after provision for loan losses


51,078


46,676


100,915


92,223













Non-interest income:










Fees




7,411


5,859


15,486


11,421


Bank owned life insurance


1,260


1,316


2,622


2,724


Other-than-temporary impairment losses on securities



(1,661)



(1,661)


Portion of loss recognized in OCI (before taxes)



1,359



1,359


Net impairment losses recognized in earnings



(302)



(302)


Net gain on securities transactions


1


14


2,184


28


Other income


671


1,156


1,779


1,344



Total non-interest income


9,343


8,043


22,071


15,215













Non-interest expense:










Compensation and employee benefits


20,445


18,767


40,953


37,250


Net occupancy expense


5,162


5,251


10,188


10,525


Data processing expense


2,462


2,349


5,050


4,613


FDIC Insurance


1,230


1,284


2,620


3,164


Amortization of intangibles


718


766


1,457


1,606


Impairment of premises and equipment





807


Advertising and promotion expense


1,128


1,184


1,813


1,782


Other operating expenses


6,611


6,332


12,466


11,537



Total non-interest expenses


37,756


35,933


74,547


71,284



Income before income tax expense


22,665


18,786


48,439


36,154

Income tax expense


6,662


4,809


14,008


9,246



Net income

$

16,003

$

13,977

$

34,431

$

26,908













Basic earnings per share

$

0.28

$

0.25

$

0.60

$

0.47

Average basic shares outstanding


57,152,952


56,846,186


57,102,389


56,808,747













Diluted earnings per share

$

0.28

$

0.25

$

0.60

$

0.47

Average diluted shares outstanding


57,187,413


56,867,788


57,135,022


56,819,547


 

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Financial Highlights

(Dollars in Thousands, except share data) (Unaudited)





















At or for the 



At or for the 






Three Months Ended



Six Months Ended






June 30,



June 30,






2012



2011



2012



2011

STATEMENTS OF INCOME:












Net interest income


$

54,578


$

54,176


$

109,415


$

107,623

Provision for loan losses



3,500



7,500



8,500



15,400

Non-interest income



9,343



8,043



22,071



15,215

Non-interest expense



37,756



35,933



74,547



71,284

Income before income tax expense


22,665



18,786



48,439



36,154

Net income




16,003



13,977



34,431



26,908

Basic and diluted earnings per share


$0.28



$0.25



$0.60



$0.47

Interest rate spread



3.26%



3.37%



3.28%



3.36%

Net interest margin



3.39%



3.53%



3.41%



3.52%
















PROFITABILITY:













Annualized return on average assets


0.90%



0.82%



0.97%



0.80%

Annualized return on average equity


6.61%



6.00%



7.16%



5.82%

Annualized non-interest expense to average assets


2.13%



2.11%



2.11%



2.11%

Efficiency ratio (1)



59.07%



57.75%



56.70%



58.03%
















ASSET QUALITY:













Non-accrual loans








$

115,216


$

121,347

90+ and still accruing











Non-performing loans









115,216



121,347

Foreclosed assets









13,925



6,803

Non-performing assets









129,141



128,150

Non-performing loans to total loans








2.43%



2.72%

Non-performing assets to total assets








1.81%



1.86%

Allowance for loan losses








$

72,352


$

72,294

Allowance for loan losses to total non-performing loans








62.80%



59.58%

Allowance for loan losses to total loans








1.53%



1.62%
















AVERAGE BALANCE SHEET DATA:












Assets



$

7,132,142


$

6,832,077


$

7,116,998


$

6,815,692

Loans, net




4,617,622



4,394,446



4,601,067



4,374,096

Earning assets


6,404,882



6,107,184



6,381,872



6,095,336

Core deposits


4,138,914



3,691,972



4,103,550



3,662,376

Borrowings




903,084



909,916



901,935



921,719

Interest-bearing liabilities



5,410,410



5,267,409



5,409,697



5,267,789

Stockholders'  equity



973,562



935,121



967,349



931,719

Average yield on interest-earning assets


4.11%



4.56%



4.15%



4.57%

Average cost of interest-bearing liabilities


0.85%



1.19%



0.87%



1.21%
















LOAN DATA:












Mortgage loans:














Residential







$

1,307,578


$

1,375,225


Commercial








1,277,342



1,202,487


Multi-family









598,476



427,128


Construction









119,678



90,837

Total mortgage loans









3,303,074



3,095,677


Commercial loans









854,257



797,719


Consumer loans









576,291



555,644

Total gross loans









4,733,622



4,449,040


Premium on purchased loans








5,571



6,599


Unearned discounts









(77)



(113)


Net deferred









(3,986)



(1,634)

Total loans









$

4,735,130


$

4,453,892


















Notes:











(1) Efficiency Ratio Calculation











 


















Three Months Ended



Six Months Ended






June 30,



June 30,






2012



2011



2012



2011


Net interest income

$

54,578


$

54,176


$

109,415


$

107,623


Non-interest income


9,343



8,043



22,071



15,215


Total income

$

63,921


$

62,219


$

131,486


$

122,838

















Non-interest expense

$

37,756


$

35,933


$

74,547


$

71,284

















Expense/income

$

59.07%


$

57.75%



56.70%



58.03%
















 

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Net Interest Margin Analysis

Quarterly Average Balances

(Unaudited) (Dollars in Thousands)










































June 30, 2012




March 31, 2012






Average




Average




Average




Average






Balance


Interest


Yield




Balance


Interest


Yield


Interest-Earning Assets:

















Deposits


$

5,477

$

3


0.25%



$

19,412

$

12


0.25%



Federal funds sold and

















     other short-term investments     


1


0.16%




1,264



0.03%



Investment securities  (1)


357,248


2,991


3.35%




343,703


2,918


3.40%



Securities available for sale


1,381,968


7,376


2.13%




1,370,978


7,852


2.29%



Federal Home Loan Bank stock


41,277


436


4.25%




38,991


480


4.95%



Net loans   (2)

















     Total mortgage loans


3,250,352


38,672


4.73%




3,201,705


38,959


4.84%



     Total commercial loans


797,182


10,205


5.10%




818,192


10,370


5.05%



     Total consumer loans


570,088


6,335


4.47%




564,615


6,289


4.48%



  Total Net loans


4,617,622


55,212


4.76%




4,584,512


55,618


4.83%



  Total Interest-Earning Assets

$

6,404,882

$

66,019


4.11%



$

6,358,860

$

66,880


4.19%




















Non-Interest Earning Assets:

















Cash and due from banks      


66,450








79,586







Other assets


660,810








663,407







Total Assets

$

7,132,142







$

7,101,853
























Interest-Bearing Liabilities:

















Demand deposits

$

2,540,421

$

2,674


0.42%



$

2,507,930

$

2,783


0.45%



Savings deposits


909,157


372


0.16%




890,165


374


0.17%



Time deposits


1,057,748


3,457


1.31%




1,110,105


3,845


1.39%



Total Deposits


4,507,326


6,503


0.58%




4,508,200


7,002


0.62%





















Borrowed funds


903,084


4,938


2.20%




900,785


5,041


2.25%



   Total Interest-Bearing Liabilities

$

5,410,410

$

11,441


0.85%



$

5,408,985

$

12,043


0.90%




















Non-Interest Bearing Liabilities


748,172








731,732







Total Liabilities


6,158,582








6,140,717







Stockholders' equity


973,562








961,136







Total Liabilities and Stockholders' Equity

7,132,144







$

7,101,853
























Net interest income



$

54,578







$

54,837






















Net interest rate spread






3.26%








3.29%


Net interest-earning assets

$

994,472







$

949,875
























Net interest margin    (3)






3.39%








3.42%


Ratio of interest-earning assets to
















      total interest-bearing liabilities


1.18

x







1.18

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.

 

The following table summarizes the quarterly net interest margin for the previous five quarters.

















6/30/12


3/31/12


12/31/11


9/30/11


6/30/11




2nd Qtr.


1st Qtr.


4th Qtr.


3rd Qtr.


2nd Qtr.

Interest-Earning Assets:












Securities



2.42%


2.54%


2.44%


2.81%


3.01%

Net Loans



4.76%


4.83%


4.94%


5.10%


5.16%

    Total Interest-Earning Assets



4.11%


4.19%


4.24%


4.45%


4.56%













Interest-Bearing Liabilities:












Total Deposits



0.58%


0.62%


0.72%


0.81%


0.89%

Total Borrowings



2.20%


2.25%


2.34%


2.50%


2.65%

    Total Interest-Bearing   Liabilities



0.85%


0.90%


0.99%


1.10%


1.19%













Interest Rate Spread



3.26%


3.29%


3.25%


3.35%


3.37%

Net Interest Margin



3.39%


3.42%


3.39%


3.50%


3.53%













Ratio of Interest-Earning Assets to Interest-Bearing Liabilities

1.18x


1.18x


1.18x


1.16x


1.15x

 

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Net Interest Margin Analysis

Average Year to Date Balances

(Unaudited) (Dollars in Thousands)



































June 30, 2012




June 30, 2011





Average



Average




Average



Average





Balance


Interest

Yield




Balance


Interest

Yield

Interest-Earning Assets:














Deposits

$

12,445

$

15

0.25%



$

44,057

$

55

0.25%


Federal funds sold and














     other short-term investments     


1,277


1

0.10%




1,582


0.01%


Investment securities  (1)


350,476


5,909

3.37%




342,542


6,124

3.58%


Securities available for sale


1,376,473


15,227

2.21%




1,295,169


18,359

2.83%


Federal Home Loan Bank stock


40,134


917

4.59%




37,890


935

4.97%


Net loans   (2)









.





     Total mortgage loans


3,226,028


77,631

4.79%




3,072,784


79,959

5.19%


     Total commercial loans


807,687


20,575

5.08%




743,712


20,857

5.61%


     Total consumer loans


567,352


12,624

4.47%




557,600


13,009

4.70%


  Total Net loans


4,601,067


110,830

4.80%




4,374,096


113,825

5.20%


  Total Interest-Earning Assets

$

6,381,872

$

132,899

4.15%



$

6,095,336

$

139,298

4.57%
















Non-Interest Earning Assets:














Cash and due from banks      


73,018







68,059





Other assets


662,108







652,297





Total Assets

$

7,116,998






$

6,815,692



















Interest-Bearing Liabilities:














Demand deposits

$

2,524,175

$

5,456

0.43%



$

2,190,494

$

8,039

0.74%


Savings deposits


899,661


746

0.17%




903,781


1,736

0.39%


Time deposits


1,083,926


7,303

1.35%




1,251,795


9,680

1.56%


Total Deposits


4,507,762


13,505

0.60%




4,346,070


19,455

0.90%

















Borrowed funds


901,935


9,979

2.22%




921,719


12,220

2.67%


   Total Interest-Bearing Liabilities

$

5,409,697

$

23,484

0.87%



$

5,267,789

$

31,675

1.21%
















Non-Interest Bearing Liabilities


739,952







616,184





Total Liabilities


6,149,649







5,883,973





Stockholders' equity


967,349







931,719





Total Liabilities and Stockholders' Equity

7,116,998






$

6,815,692



















Net interest income



$

109,415






$

107,623

















Net interest rate spread





3.28%







3.36%

Net interest-earning assets

$

972,175






$

827,547



















Net interest margin    (3)





3.41%







3.52%

Ratio of interest-earning assets to













      total interest-bearing liabilities


1.18

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.


 

The following table summarizes the year-to-date net interest margin for the previous three years.
















Six Months Ended








6/30/12


6/30/11


6/30/10





Interest-Earning Assets:












Securities



2.48%


2.96%


3.35%





Net Loans



4.80%


5.20%


5.40%





    Total Interest-Earning Assets



4.15%


4.57%


4.80%

















Interest-Bearing Liabilities:












Total Deposits



0.60%


0.90%


1.19%





Total Borrowings



2.22%


2.67%


3.32%





    Total Interest-Bearing Liabilities



0.87%


1.21%


1.58%

















Interest Rate Spread



3.28%


3.36%


3.22%





Net Interest Margin



3.41%


3.52%


3.42%

















Ratio of Interest-Earning Assets to Interest-Bearing Liabilities

1.18x


1.16x


1.14x





 

SOURCE Provident Financial Services, Inc.

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