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Provident Financial Services, Inc. Announces Increased Core Earnings and an Increase in Its Quarterly Cash Dividend of 7.1%



Provident Financial Services, Inc. Announces Increased Core Earnings and an
Increase in Its Quarterly Cash Dividend of 7.1%

ISELIN, N.J., Oct. 25, 2013 (GLOBE NEWSWIRE) -- Provident Financial Services,
Inc. (NYSE:PFS) (the "Company") reported net income of $16.1 million, or $0.28
per basic and diluted share for the three months ended September 30, 2013,
compared to net income of $16.2 million, or $0.28 per basic and diluted share
for the three months ended September 30, 2012. For the nine months ended
September 30, 2013, the Company reported net income of $53.1 million, or $0.93
per basic and diluted share, compared to net income of $50.6 million, or $0.89
per basic share and $0.88 per diluted share for the same period last year.

Earnings for the three and nine months ended September 30, 2013 were adversely
impacted by the write-off of a deferred tax asset related to non-qualified
stock options issued shortly after the Company's 2003 initial public offering.
Those options expired unused in July 2013 and the related $3.9 million
deferred tax asset was written-off via a $3.2 million charge to income tax
expense and a $735,000 charge to equity. Excluding this write-off, core
earnings (a non-GAAP financial measure)^1 for the three and nine months ended
September 30, 2013 were $19.3 million, or $0.34 per basic and diluted share
and $56.3 million, or $0.98 per basic and diluted share, respectively.
 Conversely, earnings for the three and nine months ended September 30, 2013
were aided by a continued improvement in asset quality and a related reduction
in the provision for loan losses compared with the same periods last
year. Year-over-year growth in both average loans outstanding and average
non-interest bearing demand deposits has mitigated compression in the net
interest margin and the related adverse impact on net interest income. 

Christopher Martin, Chairman, President and Chief Executive Officer,
commented, "Our core earnings of $0.34 per share were the culmination of
strong loan originations during the quarter, complemented by continued growth
in non-interest bearing deposits and a stabilizing net interest
margin." Martin noted: "Our team has been successful at improving asset
quality, achieving a 23% decrease in non-performing loans from September of
last year, without resorting to deeply discounted bulk sales. Further, our
operating discipline during the quarter produced an efficiency ratio of
55.5%. In light of our performance, I'm pleased to report that our Board of
Directors has increased our quarterly dividend by over 7 percent." 

Declaration of Quarterly Dividend

The Company's Board of Directors declared a quarterly cash dividend of $0.15
per common share payable on November 29, 2013, to stockholders of record as of
the close of business on November 15, 2013. The dividend is an increase of
7.1% from the prior quarter's regular cash dividend of $0.14 per share.

Balance Sheet Summary

Total assets increased $57.3 million to $7.34 billion at September 30, 2013,
from $7.28 billion at December 31, 2012, primarily due to an increase in total
loans, partially offset by a decrease in total investments. 

The Company's loan portfolio increased $178.4 million, or 3.6%, to $5.08
billion at September 30, 2013, from $4.90 billion at December 31, 2012. Loan
originations totaled $1.3 billion and loan purchases totaled $22.0 million for
the nine months ended September 30, 2013. The loan portfolio had net increases
of $136.0 million in multi-family mortgage loans, $70.4 million in
construction loans, predominately multi-family apartment projects, $25.4
million in commercial mortgage loans, and $25.1 million in commercial loans,
which were partially offset by net decreases of $72.3 million and $4.5 million
in residential mortgage and consumer loans, respectively. Loan growth was
tempered somewhat by the repayment of $17.3 million on two shared national
credits during the nine months ended September 30, 2013. Commercial real
estate, commercial and construction loans represented 65.2% of the loan
portfolio at September 30, 2013, compared to 62.4% at December 31, 2012.

At September 30, 2013, the Company's unfunded loan commitments totaled $1.02
billion, including $389.8 million in commercial loan commitments, $264.8
million in construction loan commitments and $92.7 million in commercial
mortgage commitments. Unfunded loan commitments at June 30, 2013 were $1.00
billion.

Total investments decreased $106.6 million, or 6.4%, to $1.55 billion at
September 30, 2013, from $1.66 billion at December 31, 2012, largely due to
principal repayments on mortgage-backed securities, maturities of municipal
and agency bonds, and sales of certain mortgage-backed securities which had a
heightened risk of prepayment, partially offset by purchases of
mortgage-backed and municipal securities.

Total deposits decreased $172.6 million, or 3.2%, during the nine months ended
September 30, 2013 to $5.26 billion. Core deposits, which consist of savings
and demand deposit accounts, decreased $61.0 million, or 1.4%, to $4.41
billion at September 30, 2013. Much of the core deposit decrease was in
government money market deposits, largely related to the cyclical outflow of
municipal deposits. It also included certain expected outflows resulting from
customer tax planning considerations earlier in the year. Time deposits
decreased $111.6 million, or 11.7%, to $845.9 million at September 30, 2013,
with the majority of the decrease occurring in the 9-, 12- and 60-month
maturity categories. Core deposits represented 83.9% of total deposits at
September 30, 2013, compared to 82.4% at December 31, 2012. 

Borrowed funds increased $213.2 million, or 26.5% during the nine months ended
September 30, 2013, to $1.02 billion, as longer-term wholesale funding was
added to mitigate interest rate risk, and shorter-term wholesale funding was
used to manage the cyclical outflow of municipal deposits. Borrowed funds
represented 13.8% of total assets at September 30, 2013, an increase from
11.0% at December 31, 2012.

Stockholders' equity increased $15.4 million, or 1.6% during the nine months
ended September 30, 2013, to $996.7 million, due to net income earned for the
period, partially offset by dividends paid to stockholders, common stock
repurchases and a decline in unrealized gains on securities available for
sale. Common stock repurchases for the nine months ended September 30, 2013
totaled 397,483 shares at an average cost of $14.80 per share. At September
30, 2013, 3.7 million shares remained eligible for repurchase under the
current authorization. At September 30, 2013, book value per share and
tangible book value per share were $16.64 and $10.69, respectively, compared
with $16.37 and $10.40, respectively, at December 31, 2012. 

Results of Operations

Net Interest Income and Net Interest Margin

For the three months ended September 30, 2013, net interest income increased
$282,000, to $54.0 million, from $53.7 million for the same period in
2012. Net interest income for the nine months ended September 30, 2013,
decreased $1.8 million, to $161.3 million, from $163.1 million for the same
period in 2012. Both comparative periods were impacted by compression in the
net interest margin, which was mitigated by an increase in average loans
outstanding, partially funded by growth in non-interest bearing demand
deposits. 

The Company's net interest margin decreased 1 basis point to 3.28% for the
quarter ended September 30, 2013, from 3.29% for the trailing quarter ended
June 30, 2013.   Compared with the trailing quarter, funding costs remained
stable and lower loan yields were offset by an increase in securities
yields. The weighted average yield on interest-earning assets declined 1 basis
point to 3.83% for the quarter ended September 30, 2013, compared with 3.84%
for the quarter ended June 30, 2013. The weighted average cost of
interest-bearing liabilities for the quarter ended September 30, 2013 was
unchanged versus the trailing quarter at 0.67%. The average cost of interest
bearing deposits for the quarter ended September 30, 2013 was 0.39%, compared
with 0.41% for the trailing quarter. The average cost of borrowed funds for
the quarter ended September 30, 2013 was 2.00%, compared with 2.03% for the
quarter ended June 30, 2013.  

The net interest margin for the quarter ended September 30, 2013 decreased 3
basis points to 3.28%, compared with 3.31% for the quarter ended September 30,
2012. The decrease in the net interest margin for the quarter ended September
30, 2013, compared with the same period last year, was primarily attributable
to reductions in the weighted average yield on interest-earning assets, which
declined 16 basis points to 3.83% for the quarter ended September 30, 2013,
compared with 3.99% for the quarter ended September 30, 2012. This outpaced a
reduction in the weighted average cost of interest bearing liabilities, which
declined 15 basis points to 0.67% for the quarter ended September 30, 2013,
compared with 0.82% for the third quarter of 2012. The average cost of
interest bearing deposits for the quarter ended September 30, 2013 was 0.39%,
compared with 0.54% for the same period last year. Average non-interest
bearing demand deposits totaled $844.2 million for the quarter ended September
30, 2013, compared with $771.4 million for the quarter ended September 30,
2012. The average cost of borrowed funds for the quarter ended September 30,
2013 was 2.00%, compared with 2.32% for the same period last year.  

For the nine months ended September 30, 2013, the net interest margin
decreased 8 basis points to 3.30%, compared with 3.38% for the nine months
ended September 30, 2012. The weighted average yield on interest earning
assets declined 24 basis points to 3.86% for the nine months ended September
30, 2013, compared with 4.10% for the nine months ended September 30, 2012,
while the weighted average cost of interest bearing liabilities declined 18
basis points to 0.68% for the nine months ended September 30, 2013, compared
with 0.86% for the same period in 2012. The average cost of interest bearing
deposits for the nine months ended September 30, 2013 was 0.41%, compared with
0.58% for the same period last year. Average non-interest bearing demand
deposits totaled $823.7 million for the nine months ended September 30, 2013,
compared with $710.5 million for the nine months ended September 30, 2012. The
average cost of borrowings for the nine months ended September 30, 2013 was
2.08%, compared with 2.26% for the same period last year.

Non-Interest Income

Non-interest income totaled $11.7 million for the quarter ended September 30,
2013, an increase of $1.9 million, or 19.8%, compared to the same period in
2012. For the quarter ended September 30, 2013, fee income increased $2.3
million to $9.8 million, from $7.5 million for the three months ended
September 30, 2012, due to increases in commercial loan prepayment fee income,
wealth management income and deposit fees. This was partially offset by a
$258,000 decrease in net gains on securities transactions for the three months
ended September 30, 2013, compared to the same period in 2012. 

For the nine months ended September 30, 2013, non-interest income totaled
$34.3 million, an increase of $2.5 million, or 7.7%, compared to the same
period in 2012. Fee income increased $3.1 million, to $26.1 million for the
nine months ended September 30, 2013, compared with the same period in 2012,
largely due to increases in prepayment fees on commercial loans and wealth
management income. BOLI income increased $1.5 million for the nine months
ended September 30, 2013, compared to the same period in the prior year,
principally due to the recognition of a policy claim. These increases were
partially offset by a $1.5 million decrease in net gains on securities
transactions for the nine months ended September 30, 2013, compared to the
same period in 2012.   In addition, other income decreased $553,000 for the
nine months ended September 30, 2013, compared with the same period in 2012,
primarily due to a decrease in gains on loan sales. 

Non-Interest Expense

For the three months ended September 30, 2013, non-interest expense decreased
$432,000, to $36.5 million, compared to the three months ended September 30,
2012. Other operating expenses decreased $847,000, largely as a result of
reduced non-performing asset related expenses. In addition, advertising
expense decreased $318,000, to $718,000. FDIC insurance costs declined
$204,000 as a result of a lower assessment rate, and the amortization of
intangibles decreased $193,000 for the three months ended September 30, 2013,
compared with the same period in 2012, as a result of scheduled reductions in
core deposit intangible amortization. Partially offsetting these reductions,
compensation and benefits expense increased $1.3 million for the quarter ended
September 30, 2013, compared to the quarter ended September 30, 2012, due to
an increases in salaries and related payroll taxes, increased severance
expense, and an increase in incentive compensation accruals.

The Company's annualized non-interest expense as a percentage of average
assets was 2.00% for the quarter ended September 30, 2013, compared with 2.04%
for the same period in 2012. The efficiency ratio (non-interest expense
divided by the sum of net interest income and non-interest income) was 55.48%
for the quarter ended September 30, 2013, compared with 58.10% for the same
period in 2012. 

Non-interest expense for the nine months ended September 30, 2013 was $111.2
million, a decrease of $220,000 from the nine months ended September 30,
2012. Other operating expenses decreased $1.1 million, largely as a result of
reduced non-performing asset related expenses. In addition, the amortization
of intangibles decreased $623,000 for the nine months ended September 30,
2013, compared with the same period in 2012, as a result of scheduled
reductions in core deposit intangible amortization. FDIC insurance costs
declined $350,000 as a result of a lower assessment rate, and advertising
expense decreased $108,000 to $2.7 million. Partially offsetting these
reductions, compensation and benefits expense increased $1.8 million for the
nine months ended September 30, 2013, compared to the same period last year,
due to increases in salaries and related payroll taxes, increased severance
expense, and an increase in incentive compensation accruals.

Asset Quality

The Company's total non-performing loans at September 30, 2013 were $81.6
million, or 1.60% of total loans, compared with $88.8 million, or 1.78% of
total loans at June 30, 2013, and $105.7 million, or 2.19% of total loans at
September 30, 2012. The $7.3 million decrease in non-performing loans at
September 30, 2013, compared with the trailing quarter, was due to a $3.6
million decrease in non-performing commercial loans, a $1.9 million decrease
in non-performing residential loans, a $1.2 million decrease in non-performing
commercial mortgage loans, a $416,000 decrease in non-performing consumer
loans and a $113,000 decrease in non-performing construction loans. At
September 30, 2013, impaired loans totaled $113.0 million with related
specific reserves of $10.7 million, compared with impaired loans totaling
$115.8 million with related specific reserves of $6.8 million at June 30,
2013. At September 30, 2012, impaired loans totaled $114.4 million with
related specific reserves of $8.4 million.

At September 30, 2013, the Company's allowance for loan losses was 1.30% of
total loans, a decrease from 1.34% at June 30, 2013, and a decrease from 1.46%
of total loans at September 30, 2012. The Company recorded provisions for loan
losses of $1.2 million and $3.7 million for the three and nine months ended
September 30, 2013, respectively, compared with provisions of $3.5 million and
$12.0 million for the three and nine months ended September 30, 2012,
respectively. For the three and nine months ended September 30, 2013, the
Company had net charge-offs of $2.2 million and $8.0 million, respectively,
compared with net charge-offs of $5.6 million and $16.1 million, respectively,
for the same periods in 2012. The allowance for loan losses decreased $4.3
million to $66.0 million at September 30, 2013, from $70.3 million at December
31, 2012 as the weighted average risk rating of the loan portfolio improved,
early stage delinquencies declined, certain non-performing asset resolutions
were completed, the allowance coverage of remaining non-performing loans
increased, and the reduced pace of new non-performing asset formation resulted
in accelerated net outflows. 

At September 30, 2013, the Company held $7.3 million of foreclosed assets,
compared with $12.5 million at December 31, 2012. Foreclosed assets at
September 30, 2013 consisted of $5.2 million of residential real estate, $2.0
million of commercial real estate and $65,000 of marine vessels. Total
non-performing assets at September 30, 2013 declined $22.6 million, or 20.3%,
to $88.9 million, or 1.21% of total assets, from $111.5 million, or 1.53% of
total assets at December 31, 2012.

Income Tax Expense

For the three and nine months ended September 30, 2013, the Company's income
tax expense was $12.0 million and $27.6 million, respectively, compared with
$7.0 million and $21.0 million, for the three and nine months ended September
30, 2012, respectively. The increase in income tax expense was primarily
attributable to the $3.2 million charge associated with the write-off of a
deferred tax asset related to expired non-qualified stock options and growth
in pre-tax income from taxable sources. The Company's effective tax rate was
42.7% and 34.2% for the three and nine months ended September 30, 2013,
respectively, compared with 30.1% and 29.3% for the three and nine months
ended September 30, 2012, 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, through its network of full service branches
throughout northern and central New Jersey.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors at
10:00 a.m. Eastern Time on Friday, October 25, 2013 regarding highlights of
the Company's third quarter 2013 financial results. The call may be accessed
by dialing 1-888-317-6016 (Domestic), 1-412-317-6016 (International) or
1-855-669-9657 (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 have
any obligation to update any forward-looking statements to reflect events or
circumstances after the date of this statement.

^1  Core earnings is a non-GAAP financial measure used to reflect the impact
on net income of the $3.2 million charge to income tax expense associated with
the $3.9 million write-off of a deferred tax asset related to the July 2013
expiration of non-qualified stock options. The remaining $735,000 was charged
against the additional paid-in capital pool component of stockholders' equity.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
September 30, 2013 (Unaudited) and December 31, 2012
(Dollars in Thousands)
                                                              
Assets                                    September 30, 2013 December 31, 2012
                                                              
Cash and due from banks                    $ 92,971           $ 101,850
Short-term investments                    2,315              1,973
Total cash and cash equivalents           95,286             103,823
                                                              
Securities available for sale, at fair    1,146,144          1,264,002
value
Investment securities held to maturity
(fair value of $358,846 at September 30,  358,641            359,464
2013 (unaudited) and $374,916 at December
31, 2012)
Federal Home Loan Bank Stock              49,645             37,543
                                                              
Loans                                     5,083,100          4,904,699
Less allowance for loan losses            66,008             70,348
Net loans                                 5,017,092          4,834,351
Foreclosed assets, net                    7,282              12,473
Banking premises and equipment, net       67,406             66,120
Accrued interest receivable               21,302             24,002
Intangible assets                         356,708            357,907
Bank-owned life insurance                 149,269            147,286
Other assets                              72,240             76,724
Total assets                               $ 7,341,015        $ 7,283,695
                                                              
Liabilities and Stockholders' Equity                          
                                                              
Deposits:                                                     
Demand deposits                            $ 3,488,066        $ 3,556,011
Savings deposits                          921,685            914,787
Certificates of deposit of $100,000 or    283,084            324,901
more
Other time deposits                       562,838            632,572
Total deposits                            5,255,673          5,428,271
                                                              
Mortgage escrow deposits                  21,953             21,238
Borrowed funds                            1,016,446          803,264
Other liabilities                         50,251             49,676
Total liabilities                         6,344,323          6,302,449
                                                              
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 59,887,025 outstanding  832                832
at September 30, 2013, and 59,937,955
outstanding at December 31, 2012
Additional paid-in capital                1,024,589          1,021,507
Retained earnings                         417,716            389,549
Accumulated other comprehensive (loss)    (5,600)            7,716
income
Treasury stock                            (390,881)          (386,270)
Unallocated common stock held by the      (49,964)           (52,088)
Employee Stock Ownership Plan
Common Stock acquired by the Directors'   (7,228)            (7,298)
Deferred Fee Plan
Deferred Compensation - Directors'        7,228              7,298
Deferred Fee Plan
Total stockholders' equity                996,692            981,246
Total liabilities and stockholders'        $ 7,341,015        $ 7,283,695
equity

 
 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and Nine Months Ended September 30, 2013 and 2012 (Unaudited)
(Dollars in Thousands, except per share data)
                                                                     
                                   Three Months Ended    Nine Months Ended
                                   September 30,         September 30,
                                   2013       2012       2013       2012
Interest income:                                                     
Real estate secured loans           $ 38,238   $ 38,544   $ 114,158  $ 116,175
Commercial loans                   10,092     10,242     30,118     30,817
Consumer loans                     5,918      6,343      17,750     18,967
Securities available for sale and  6,033      6,599      18,345     22,743
Federal Home Loan Bank stock
Investment securities held to      2,694      2,987      8,300      8,896
maturity
Deposits, Federal funds sold and   9          42         30         58
other short-term investments
Total interest income              62,984     64,757     188,701    197,656
                                                                     
Interest expense:                                                    
Deposits                           4,354      6,155      13,917     19,660
Borrowed funds                     4,633      4,887      13,481     14,866
Total interest expense             8,987      11,042     27,398     34,526
Net interest income                53,997     53,715     161,303    163,130
Provision for loan losses          1,200      3,500      3,700      12,000
Net interest income after          52,797     50,215     157,603    151,130
provision for loan losses
                                                                     
Non-interest income:                                                 
Fees                               9,792      7,532      26,070     23,018
Bank-owned life insurance          1,201      1,273      5,355      3,895
Net gain on securities             40         298        974        2,482
transactions
Other income                       697        687        1,913      2,466
Total non-interest income          11,730     9,790      34,312     31,861
                                                                     
Non-interest expense:                                                
Compensation and employee benefits 21,106     19,838     62,103     60,317
Net occupancy expense              5,072      5,142      15,322     15,330
Data processing expense            2,644      2,712      7,913      7,762
FDIC Insurance                     1,073      1,277      3,547      3,897
Amortization of intangibles        318        511        1,345      1,968
Advertising and promotion expense  718        1,036      2,741      2,849
Other operating expenses           5,533      6,380      18,252     19,320
Total non-interest expenses        36,464     36,896     111,223    111,443
Income before income tax expense   28,063     23,109     80,692     71,548
Income tax expense                 11,987     6,955      27,560     20,963
Net income                          $ 16,076   $ 16,154   $ 53,132   $ 50,585
                                                                     
Basic earnings per share            $ 0.28     $ 0.28     $ 0.93     $ 0.89
Average basic shares outstanding   57,241,270 57,194,046 57,205,175 57,133,164
                                                                     
Diluted earnings per share          $ 0.28     $ 0.28     $ 0.93     $ 0.88
Average diluted shares outstanding 57,357,344 57,238,819 57,279,935 57,169,844

 
 
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        Nine Months Ended
                           September 30,             September 30,
                           2013         2012         2013         2012
STATEMENTS OF INCOME:                                              
Net interest income         $ 53,997     $ 53,715     $ 161,303    $ 163,130
Provision for loan losses  1,200        3,500        3,700        12,000
Non-interest income        11,730       9,790        34,312       31,861
Non-interest expense       36,464       36,896       111,223      111,443
Income before income tax   28,063       23,109       80,692       71,548
expense
Net income                 16,076       16,154       53,132       50,585
Diluted earnings per share $0.28        $0.28        $0.93        $0.89
Interest rate spread        3.16%        3.17%        3.18%        3.24%
Net interest margin         3.28%        3.31%        3.30%        3.38%
                                                                   
PROFITABILITY:                                                     
Annualized return on        0.88%        0.90%        0.98%        0.95%
average assets
Annualized return on        6.43%        6.53%        7.16%        6.95%
average equity
Annualized return on        10.04%       10.29%       11.19%       11.03%
average tangible equity
Annualized non-interest     2.00%        2.04%        2.06%        2.09%
expense to average assets
Efficiency ratio (1)        55.48%       58.10%       56.86%       57.15%
                                                                   
ASSET QUALITY:                                                     
Non-accrual loans                                     $ 81,583     $ 105,686
90+ and still accruing                               —            —
Non-performing loans                                 81,583       105,686
Foreclosed assets                                    7,282        13,900
Non-performing assets                                88,865       119,586
Non-performing loans to                               1.60%        2.19%
total loans
Non-performing assets to                              1.21%        1.65%
total assets
Allowance for loan losses                             $ 66,008     $ 70,280
Allowance for loan losses to total                    80.91%       66.50%
non-performing loans
Allowance for loan losses                             1.30%        1.46%
to total loans
                                                                   
AVERAGE BALANCE SHEET                                              
DATA:
Assets                      $ 7,249,273  $ 7,179,112  $ 7,228,735  $ 7,137,854
Loans, net                 4,954,204    4,658,208    4,881,172    4,620,253
Earning assets             6,507,968    6,435,616    6,487,678    6,399,917
Core deposits              4,410,427    4,275,493    4,413,095    4,161,283
Borrowings                 918,840      837,728      865,144      880,376
Interest-bearing           5,349,098    5,360,329    5,351,551    5,393,121
liabilities
Stockholders' equity       992,163      983,731      991,974      972,850
Average yield on            3.83%        3.99%        3.86%        4.10%
interest-earning assets
Average cost of
interest-bearing            0.67%        0.82%        0.68%        0.86%
liabilities
                                                                   
LOAN DATA:                                                         
Mortgage loans:                                                    
Residential                                           $ 1,192,762  $ 1,289,316
Commercial                                           1,375,372    1,293,143
Multi-family                                         859,908      687,485
Construction                                         190,526      125,408
Total mortgage loans                                 3,618,568    3,395,352
Commercial loans                                     891,510      839,253
Consumer loans                                       574,678      583,554
Total gross loans                                    5,084,756    4,818,159
Premium on purchased loans                           4,220        5,327
Unearned discounts                                   (63)         (83)
Net deferred                                         (5,813)      (4,546)
Total loans                                           $ 5,083,100  $ 4,818,857
                                                                   
Notes:                                                             
                                                                   
(1) Efficiency Ratio                                               
Calculation
                           Three Months Ended        Nine Months Ended
                           September 30,             September 30,
                           2013         2012         2013         2012
Net interest income         $ 53,997     $ 53,715     $ 161,303    $ 163,130
Non-interest income        11,730       9,790        34,312       31,861
Total income:               $ 65,727     $ 63,505     $ 195,615    $ 194,991
                                                                   
Non-interest expense:       $ 36,464     $ 36,896     $ 111,223    $ 111,443
                                                                   
Expense/income:             55.48%       58.10%       56.86%       57.15%

 
 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Unaudited) (Dollars in Thousands)
 
                      September 30, 2013           June 30, 2013
                      Average   Interest  Average  Average   Interest  Average
                      Balance             Yield    Balance             Yield
Interest-Earning                                                        
Assets:
Deposits               $ 11,867  $ 9      0.29%     $ 14,314  $ 11     0.25%
Federal funds sold
and other short-term  1,862     —         0.03%    1,392     —         0.08%
investments
Investment            352,641   2,694     3.06%    351,690   2,767     3.15%
securities (1)
Securities available  1,142,321 5,607     1.96%    1,206,625 5,745     1.90%
for sale
Federal Home Loan     45,073    426       3.75%    42,684    375       3.53%
Bank stock
Net loans: (2)                                                          
Total mortgage loans  3,538,523 38,238    4.27%    3,447,241 37,585    4.34%
Total commercial      845,847   10,092    4.70%    840,827   10,055    4.76%
loans
Total consumer loans  569,834   5,918     4.12%    570,080   5,875     4.13%
Total net loans       4,954,204 54,248    4.33%    4,858,148 53,515    4.39%
Total                  $                            $
Interest-Earning      6,507,968  $ 62,984 3.83%    6,474,853  $ 62,413 3.84%
Assets
                                                                        
Non-Interest Earning                                                    
Assets:
Cash and due from     70,610                       67,732               
banks
Other assets          670,695                      673,816              
Total Assets           $                            $                   
                      7,249,273                    7,216,401
                                                                        
Interest-Bearing                                                        
Liabilities:
Demand deposits        $         $ 1,836  0.28%     $         $ 1,866  0.28%
                      2,634,950                    2,649,414
Savings deposits      931,299   227       0.10%    938,110   218       0.09%
Time deposits         864,009   2,291     1.05%    896,838   2,523     1.13%
Total Deposits        4,430,258 4,354     0.39%    4,484,362 4,607     0.41%
                                                                        
Borrowed funds        918,840   4,633     2.00%    870,421   4,395     2.03%
Total
Interest-Bearing      5,349,098 8,987     0.67%    5,354,783 9,002     0.67%
Liabilities
                                                                        
Non-Interest Bearing  908,012                      865,889              
Liabilities
Total Liabilities     6,257,110                    6,220,672            
Stockholders' equity  992,163                      995,729              
Total Liabilities and  $                            $                   
Stockholders' Equity  7,249,273                    7,216,401
                                                                        
Net interest income              $ 53,997                     $ 53,411  
                                                                        
Net interest rate                         3.16%                        3.17%
spread
Net interest-earning   $                            $                   
assets                1,158,870                    1,120,070
                                                                        
Net interest                              3.28%                        3.29%
margin (3)
Ratio of
interest-earning
assets to total       1.22 x                       1.21 x               
interest-bearing
liabilities
 
 
(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.
                                                                      
                            9/30/2013 6/30/2013 3/31/2013 12/31/2012 9/30/2012
                            3rd Qtr.  2nd Qtr.  1st Qtr.  4th Qtr.   3rd Qtr.
Interest-Earning Assets:                                              
Securities                   2.25%     2.20%     2.19%     2.13%      2.17%
Net loans                    4.33%     4.39%     4.51%     4.58%      4.68%
Total interest-earning       3.83%     3.84%     3.92%     3.92%      3.99%
assets
                                                                      
Interest-Bearing                                                      
Liabilities:
Total deposits               0.39%     0.41%     0.44%     0.50%      0.54%
Total borrowings             2.00%     2.03%     2.24%     2.29%      2.32%
Total interest-bearing       0.67%     0.67%     0.71%     0.77%      0.82%
liabilities
                                                                      
Interest rate spread         3.16%     3.17%     3.21%     3.15%      3.17%
Net interest margin          3.28%     3.29%     3.33%     3.29%      3.31%
                                                                      
Ratio of interest-earning
assets to interest-bearing  1.22x     1.21x     1.21x     1.21x      1.20x
liabilities

 
 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Unaudited) (Dollars in Thousands)
                                                                        
                   September 30, 2013             September 30, 2012
                   Average    Interest   Average  Average   Interest   Average
                   Balance               Yield    Balance              Yield
Interest-Earning                                                        
Assets:
Deposits            $ 14,256   $ 30      0.28%     $ 30,440  $ 57      0.25%
Federal funds sold
and other short    1,561      —          0.04%    1,339     1          0.07%
term investments
Investment         351,561    8,300      3.15%    352,348   8,896      3.37%
securities (1)
Securities         1,197,160  17,116     1.91%    1,355,955 21,365     2.10%
available for sale
Federal Home Loan  41,968     1,229      3.91%    39,582    1,378      4.65%
Bank stock
Net loans: (2)                                                          
Total mortgage     3,468,538  114,158    4.36%    3,237,581 116,175    4.75%
loans
Total commercial   842,045    30,118     4.75%    812,524   30,817     5.02%
loans
Total consumer     570,589    17,750     4.16%    570,148   18,967     4.44%
loans
Total net loans    4,881,172  162,026    4.41%    4,620,253 165,959    4.76%
Total               $                              $
Interest-Earning   6,487,678   $ 188,701 3.86%    6,399,917  $ 197,656 4.10%
Assets
                                                                        
Non-Interest                                                            
Earning Assets:
Cash and due from  71,177                         76,319                
banks
Other assets       669,880                        661,618               
Total Assets        $                              $                    
                   7,228,735                      7,137,854
                                                                        
Interest-Bearing                                                        
Liabilities:
Demand deposits     $          $ 5,656   0.28%     $         $ 7,998   0.42%
                   2,660,025                      2,550,181
Savings deposits   929,361    713        0.10%    900,600   1,111      0.16%
Time deposits      897,021    7,548      1.13%    1,061,964 10,551     1.33%
Total Deposits     4,486,407  13,917     0.41%    4,512,745 19,660     0.58%
Borrowed funds     865,144    13,481     2.08%    880,376   14,866     2.26%
Total               $                              $
Interest-Bearing   5,351,551   $ 27,398  0.68%    5,393,121  $ 34,526  0.86%
Liabilities
                                                                        
Non-Interest
Bearing            885,210                        771,883               
Liabilities
Total Liabilities  6,236,761                      6,165,004             
Stockholders'      991,974                        972,850               
equity
Total Liabilities   $                              $
and Stockholders'  7,228,735                      7,137,854             
Equity
                                                                        
Net interest                   $ 161,303                     $ 163,130  
income
                                                                        
Net interest rate                        3.18%                         3.24%
spread
Net                 $                              $
interest-earning   1,136,127                      1,006,796             
assets
                                                                        
Net interest                             3.30%                         3.38%
margin (3)
Ratio of
interest-earning                                                        
assets to
total
interest-bearing   1.21 x                         1.19 x                
liabilities
 
(1) Average outstanding balance amounts shown are amortized cost.
(2) Average outstanding balance are net of the allowance for loan losses,
deferred loan fees and expenses, loan premium 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.
                                                                     
                                             Nine Months Ended
                                             9/30/13     9/30/12    9/30/11
Interest-Earning Assets:                                             
Securities                                    2.22%       2.37%      2.91%
Net loans                                     4.41%       4.76%      5.17%
Total interest-earning assets                 3.86%       4.10%      4.53%
                                                                     
Interest-Bearing Liabilities:                                        
Total deposits                                0.41%       0.58%      0.87%
Total borrowings                              2.08%       2.26%      2.62%
Total interest-bearing liabilities            0.68%       0.86%      1.18%
                                                                     
Interest rate spread                          3.18%       3.24%      3.35%
Net interest margin                           3.30%       3.38%      3.51%
                                                                     
Ratio of interest-earning assets to          1.21x       1.19x      1.16x
interest-bearing liabilities

CONTACT: Investor Relations, Provident Financial Services, Inc.
         1-732-590-9300
         Web Site: http://www.providentnj.com

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