Provident Financial Services, Inc. Announces First Quarter Earnings and Declares Quarterly Cash Dividend

Provident Financial Services, Inc. Announces First Quarter Earnings and Declares Quarterly Cash Dividend  ISELIN, N.J., April 25, 2014 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the "Company") reported net income of $17.0 million, or $0.30 per basic and diluted share for the three months ended March 31, 2014, compared to net income of $17.8 million, or $0.31 per basic and diluted share for the three months ended March 31, 2013.  Continued improvement in asset quality and the related reduction in the provision for loan losses coupled with growth in average loans outstanding and an improvement in securities yields have been the key contributors to earnings for the first quarter of 2014. Partially offsetting these items, commercial prepayment fees have declined and certain operating costs have increased, a portion of which were due to unusually high seasonal expenses resulting from the severe winter weather.  Christopher Martin, Chairman, President and Chief Executive Officer, commented, "We are pleased with our strong start to 2014, as loans grew at the best pace for a first quarter in several years and our net interest margin stabilized. Not surprisingly, earnings were impacted by costs associated with the difficult winter in the region. Although our loan pipeline remains robust, volume was constrained somewhat by our unwillingness to meet the aggressive pricing offered by certain competitors. We will remain true to our conservative credit standards and continue to carefully manage our interest rate risk position."  Declaration of Quarterly Dividend  The Company's Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on May 30, 2014, to stockholders of record as of the close of business on May 15, 2014.  Balance Sheet Summary  Total assets increased $13.5 million to $7.50 billion at March 31, 2014, from $7.49 billion at December 31, 2013, primarily due to an increase in total loans, partially offset by decreases in total investments and cash and cash equivalents.  The Company's loan portfolio increased $63.0 million, or 1.2%, to $5.26 billion at March 31, 2014, from $5.19 billion at December 31, 2013. Loan originations totaled $360.9 million and loan purchases totaled $8.5 million for the three months ended March 31, 2014. The loan portfolio had net increases of $34.2 million in commercial loans, $29.1 million in construction loans, primarily multi-family construction, $10.1 million in multi-family mortgage loans, and $3.8 million in commercial mortgage loans, which were partially offset by net decreases of $8.8 million and $5.5 million in residential mortgage and consumer loans, respectively. Commercial real estate, commercial and construction loans represented 67.0% of the loan portfolio at March 31, 2014, compared to 66.3% at December 31, 2013.  At March 31, 2014, the Company's unfunded loan commitments totaled $918.3 million, including $336.3 million in commercial loan commitments, $254.0 million in construction loan commitments and $51.5 million in commercial mortgage commitments. Unfunded loan commitments at December 31, 2013 were $910.1 million.  Total investments decreased $26.3 million, or 1.7%, to $1.55 billion at March 31, 2014, from $1.57 billion at December31, 2013, largely due to principal repayments on mortgage-backed securities, maturities of municipal and agency bonds and sales of certain mortgage-backed securities, partially offset by purchases of mortgage-backed and municipal securities.  Total deposits decreased $11.1 million during the three months ended March31, 2014 to $5.19 billion.Time deposits decreased $37.7 million, or 4.7%, to $769.1 million at March31, 2014, with the majority of the decrease occurring in the 12-, 24- and 60-month maturity categories.The decrease in time deposits was partially offset by a $26.6 million increase in core deposits.At March31, 2014, core deposits, which consist of savings and demand deposit accounts, totaled $4.42 billion, compared to $4.40 billion at December31, 2013.Within the core deposit category, non-interest bearing demand deposits increased $10.3 million, or 1.2%, to $875.5 million at March31, 2014.Core deposits represented 85.2% of total deposits at March31, 2014, compared to 84.5% at December31, 2013.  Borrowed funds increased $16.3 million, or 1.4% during the three months ended March31, 2014, to $1.22 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 16.3% of total assets at March31, 2014, an increase from 16.1% at December31, 2013.  Stockholders' equity increased $10.6 million, or 1.0% for the three months ended March31, 2014, to $1.02 billion, due to net income earned for the period and an increase in unrealized gains on securities available for sale, partially offset by dividends paid to stockholders.Common stock repurchases for the three months ended March31, 2014 totaled 231,575 shares at an average cost of $16.75 per share.At March31, 2014, 3.5 million shares remained eligible for repurchase under the current authorization.Book value per share and tangible book value per share^(1) at March31, 2014 were $17.06 and $11.11, respectively, compared with $16.87 and $10.92, respectively, at December31, 2013.  Results of Operations  Net Interest Income and Net Interest Margin  For the three months ended March31, 2014, net interest income increased $1.3 million, to $55.2 million, from $53.9 million for the same period in 2013.The improvement in the net interest income was due to the continued growth in average loans outstanding, which was partially offset by year-over-year compression in the net interest margin.  The Company's net interest margin increased 2 basis point to 3.28% for the quarter ended March31, 2014, from 3.26% for the trailing quarter ended December31, 2013.The weighted average yield on interest-earning assets increased 2 basis point to 3.84% for the quarter ended March31, 2014, compared with 3.82% for the quarter ended December31, 2013.The weighted average cost of interest-bearing liabilities decreased 1 basis point to 0.68% for the quarter ended March31, 2014, compared with 0.69% for the trailing quarter.The average cost of interest bearing deposits for the quarter ended March31, 2014 was 0.35%, compared with 0.37% for the quarter ended December 31, 2013.The average cost of borrowed funds for the quarter ended March31, 2014 was 1.87%, compared with 2.01% for the quarter ended December31, 2013.  The net interest margin for the quarter ended March31, 2014 decreased 5 basis points to 3.28%, compared with 3.33% for the quarter ended March31, 2013.The decrease in the net interest margin for the quarter ended March31, 2014, compared with the same period last year, was primarily attributable to reductions in the weighted average yield on loans, which declined 25 basis points to 4.26% for the quarter ended March31, 2014, compared with 4.51% for the quarter ended March31, 2013.Securities yields improved, however, resulting in a net decrease in the earning asset yield of 8 basis points, to 3.84%.This decrease in earning asset yield outpaced the reduction in the weighted average cost of interest bearing liabilities, which declined 3 basis points to 0.68% for the quarter ended March31, 2014, compared with 0.71% for the first quarter of 2013.The average cost of interest bearing deposits for the quarter ended March31, 2014 was 0.35%, compared with 0.44% for the same period last year.Average non-interest bearing demand deposits totaled $861.9 million for the quarter ended March31, 2014, compared with $819.5 million for the quarter ended March31, 2013.The average cost of borrowed funds for the quarter ended March31, 2014 was 1.87%, compared with 2.24% for the same period last year.  Non-Interest Income  Non-interest income totaled $8.1 million for the quarter ended March31, 2014, a decrease of $1.8 million, or 18.4%, compared to the same period in 2013.For the quarter ended March31, 2014, fee income decreased $1.1 million to $6.9 million, from $8.0 million for the three months ended March31, 2013, due to a decrease in commercial loan prepayment fees, partially offset by increases in wealth management income and deposit fees.In addition, net gains on securities transactions declined $861,000, with losses totaling $350,000 for the three months ended March31, 2014, mainly due to the sale of a previously impaired non-agency mortgage-backed security, compared to gains totaling $511,000 for the same period in 2013.  Non-Interest Expense  For the three months ended March31, 2014, non-interest expense increased $1.2 million, to $38.2 million, compared to the three months ended March31, 2013.Compensation and benefits expense increased $550,000 for the quarter ended March31, 2014, compared to the quarter ended March31, 2013, due to an increase in stock-based compensation, higher salary expense resulting from annual merit increases and increased employee medical costs, partially offset by decreased severance costs and lower retirement benefit costs.Net occupancy expense increased $883,000 for the quarter ended March31, 2014, compared to the same period in 2013, principally due to significant increases in seasonal expenses resulting from the harsh winter weather conditions.In addition, advertising expense increased $319,000, to $1.1 million for the three months ended March31, 2014, compared to the same period in 2013, due to the introduction of the Company's new branding initiative, updated logo and the related marketing campaigns.Partially offsetting these increases, other operating expenses decreased $341,000 for the quarter ended March31, 2014, compared to the quarter ended March31, 2013, largely due to lower costs associated with foreclosed real estate.FDIC insurance costs declined $114,000 due to a lower assessment rate, and the amortization of intangibles decreased $228,000 for the three months ended March31, 2014, compared with the same period in 2013, as a result of scheduled reductions in core deposit intangible amortization.  The Company's annualized non-interest expense as a percentage of average assets was 2.07% for the quarter ended March31, 2014, compared with 2.08% for the same period in 2013.The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) was 60.32% for the quarter ended March31, 2014, compared with 57.87% for the same period in 2013.  Asset Quality  The Company's total non-performing loans at March31, 2014 were $64.1 million, or 1.22% of total loans, compared with $76.7 million, or 1.48% of total loans at December31, 2013, and $99.1 million, or 2.02% of total loans at March31, 2013.The $12.6 million decrease in non-performing loans at March31, 2014, compared with the trailing quarter, was due to an $8.4 million decrease in non-performing construction loans, a $2.9 million decrease in non-performing commercial loans, a $1.0 million decrease in non-performing residential loans and a $529,000 decrease in non-performing consumer loans, partially offset by a $256,000 increase in non-performing commercial mortgage loans.At March31, 2014, impaired loans totaled $94.6 million with related specific reserves of $7.1 million, compared with impaired loans totaling $106.4 million with related specific reserves of $10.2 million at December31, 2013.At March31, 2013, impaired loans totaled $112.0 million with related specific reserves of $6.6 million.  At March31, 2014, the Company's allowance for loan losses was 1.21% of total loans, a decrease from 1.24% at December31, 2013, and a decrease from 1.43% of total loans at March31, 2013.The Company recorded provisions for loan losses of $400,000 for the three months ended March31, 2014, compared with $1.5 million for the three months ended March31, 2013.For the three months ended March31, 2014, the Company had net charge-offs of $1.6 million, compared with net charge-offs of $1.8 million for the same period in 2013.The allowance for loan losses decreased $1.2 million to $63.4 million at March31, 2014, from $64.7 million at December31, 2013, as the weighted average risk rating of the loan portfolio improved, 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 of non-performing assets.  At March31, 2014, the Company held $6.6 million of foreclosed assets, compared with $5.5 million at December31, 2013.Foreclosed assets at March31, 2014 consisted primarily of $4.0 million of commercial real estate and $2.5 million of residential real estate.Total non-performing assets at March31, 2014 declined $11.6 million, or 14.1%, to $70.6 million, or 0.94% of total assets, from $82.2 million, or 1.10% of total assets at December31, 2013.  Income Tax Expense  For the three months ended March31, 2014, the Company's income tax expense was $7.7 million, compared with $7.6 million for the same period in 2013.The increase in income tax expense was a function of growth in pre-tax income from taxable sources.The Company's effective tax rate was 31.1% and 29.8% for the three months ended March31, 2014 and 2013, respectively.  About the Company  Provident Financial Services, Inc. is the financial 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,April 25, 2014 regarding highlights of the Company's first quarter 2014 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)(2) Tangible equity, tangible book value per share and return on average tangible equity are non-GAAP financial measures.Please refer to page 8 of thisrelease for the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.  PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Consolidated Statements of Financial Condition March 31, 2014 (Unaudited) and December 31, 2013 (Dollars in Thousands)                                                             Assets                                        March 31, 2014 December 31, 2013                                                             Cash and due from banks                       $80,273      $100,053 Short-term investments                        1,385          1,171 Total cash and cash equivalents               81,658         101,224                                                             Securities available for sale, at fair value  1,130,141      1,157,594 Investment securities held to maturity (fair value of $362,264 at March 31, 2014           357,602        357,500 (unaudited) and $355,913 at December 31, 2013) Federal Home Loan Bank Stock                  59,132         58,070                                                             Loans                                         5,257,774      5,194,813 Less allowance for loan losses                63,420         64,664 Net loans                                     5,194,354      5,130,149 Foreclosed assets, net                        6,558          5,486 Banking premises and equipment, net           68,513         66,448 Accrued interest receivable                   21,740         22,956 Intangible assets                             356,153        356,432 Bank-owned life insurance                     151,813        150,511 Other assets                                  73,162         80,958 Total assets                                  $7,500,826   $7,487,328                                                             Liabilities and Stockholders' Equity                                                                                     Deposits:                                                    Demand deposits                               $3,494,124   $3,473,724 Savings deposits                              928,240        921,993 Certificates of deposit of $100,000 or more   255,165        270,631 Other time deposits                           513,891        536,123 Total deposits                                5,191,420      5,202,471                                                             Mortgage escrow deposits                      22,228         20,376 Borrowed funds                                1,220,212      1,203,879 Other liabilities                             45,625         49,849 Total liabilities                             6,479,485      6,476,575                                                             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 59,857,822 shares outstanding at          832            832 March31, 2014 and 59,917,649 outstanding at December31, 2013 Additional paid-in capital                    1,023,595      1,026,144 Retained earnings                             435,602        427,763 Accumulated other comprehensive (loss) income (973)          (4,851) Treasury stock                                (389,674)      (390,380) Unallocated common stock held by the Employee (48,041)       (48,755) Stock Ownership Plan Common Stock acquired by the Directors'       (7,182)        (7,205) Deferred Fee Plan Deferred Compensation - Directors' Deferred   7,182          7,205 Fee Plan Total stockholders' equity                    1,021,341      1,010,753 Total liabilities and stockholders' equity    $7,500,826   $7,487,328                                                              PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Consolidated Statements of Income Three Months Ended March 31, 2014 and 2013 (Unaudited) (Dollars in Thousands, except per share data)                                                                                                                            Three Months Ended                                                         March 31,                                                         2014       2013 Interest income:                                                    Real estate secured loans                                $38,552  $38,335 Commercial loans                                         10,547     9,971 Consumer loans                                           5,662      5,957 Securities available for sale and Federal Home Loan Bank 7,082      6,192 stock Investment securities held to maturity                   2,670      2,839 Deposits, Federal funds sold and other short-term        10         10 investments Total interest income                                    64,523     63,304                                                                    Interest expense:                                                   Deposits                                                 3,738      4,956 Borrowed funds                                           5,584      4,453 Total interest expense                                   9,322      9,409 Net interest income                                      55,201     53,895 Provision for loan losses                                400        1,500 Net interest income after provision for loan losses      54,801     52,395                                                                    Non-interest income:                                                Fees                                                     6,855      7,960 Bank-owned life insurance                                1,302      1,210 Net gain on securities transactions                      (350)      511 Other income                                             309        264 Total non-interest income                                8,116      9,945                                                                    Non-interest expense:                                               Compensation and employee benefits                       21,393     20,843 Net occupancy expense                                    6,089      5,206 Data processing expense                                  2,797      2,622 FDIC Insurance                                           1,136      1,250 Advertising and promotion expense                        1,065      746 Amortization of intangibles                              283        511 Other operating expenses                                 5,427      5,768 Total non-interest expenses                              38,190     36,946 Income before income tax expense                         24,727     25,394 Income tax expense                                       7,698      7,566 Net income                                               $17,029  $17,828                                                                    Basic earnings per share                                 $0.30    $0.31 Average basic shares outstanding                         57,369,039 57,167,198                                                                    Diluted earnings per share                               $0.30    $0.31 Average diluted shares outstanding                       57,528,419 57,337,215                                                                     PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Consolidated Financial Highlights (Dollars in Thousands, except share data) (Unaudited)                                                                                                                      At or for the                                                     Three Months Ended                                                     March 31,                                                     2014         2013 STATEMENTS OF INCOME:                                             Net interest income                                  $55,201    $53,895 Provision for loan losses                            400          1,500 Non-interest income                                  8,116        9,945 Non-interest expense                                 38,190       36,946 Income before income tax expense                     24,727       25,394 Net income                                           17,029       17,828 Diluted earnings per share                           $0.30        $0.31 Interest rate spread                                 3.16%        3.21% Net interest margin                                  3.28%        3.33%                                                                  PROFITABILITY:                                                    Annualized return on average assets                  0.92%        1.00% Annualized return on average equity                  6.74%        7.32% Annualized return on average tangible equity ^(2)    10.34%       11.47% Annualized non-interest expense to average assets    2.07%        2.08% Efficiency ratio ^ (3)                               60.32%       57.87%                                                                  ASSET QUALITY:                                                    Non-accrual loans                                    $64,056    $99,059 90+ and still accruing                               —            — Non-performing loans                                 64,056       99,059 Foreclosed assets                                    6,558        12,192 Non-performing assets                                70,614       111,251 Non-performing loans to total loans                  1.22%        2.02% Non-performing assets to total assets                0.94%        1.55% Allowance for loan losses                            $63,420    $70,034 Allowance for loan losses to total non-performing    99.01%       70.70% loans Allowance for loan losses to total loans             1.21%        1.43%                                                                  AVERAGE BALANCE SHEET DATA:                                       Assets                                               $7,473,956 $7,220,211 Loans, net                                           5,153,685    4,829,796 Earning assets                                       6,740,086    6,479,902 Core deposits                                        4,390,199    4,434,375 Borrowings                                           1,212,617    804,919 Interest-bearing liabilities                         5,528,390    5,350,792 Stockholders'equity                                 1,024,100    987,984 Average yield on interest-earning assets             3.84%        3.92% Average cost of interest-bearing liabilities         0.68%        0.71%                                                                  LOAN DATA:                                                        Mortgage loans:                                                   Residential                                          $1,165,196 $1,234,173 Commercial                                           1,404,466    1,349,565 Multi-family                                         939,018      743,356 Construction                                         212,419      135,611 Total mortgage loans                                 3,721,099    3,462,705 Commercial loans                                     966,444      874,880 Consumer loans                                       572,136      573,784 Total gross loans                                    5,259,679    4,911,369 Premium on purchased loans                           4,187        4,683 Unearned discounts                                   (57)         (73) Net deferred                                         (6,035)      (5,624) Total loans                                          $5,257,774 $4,910,355                                                                   Notes - Reconciliation of GAAP to Non-GAAP Financial Measures (Dollars in Thousands, except share data)                                                                    (1) Book and Tangible Book Value per Share                                                       Three Months Ended                                                       March 31,                                                       2014         2013 Total stockholders' equity                             $1,021,341 $990,445 Less: total intangible assets                          356,153      357,477 Total tangible stockholders' equity                    $665,188   $632,968                                                                    Shares outstanding at December 31, 2013                59,857,822   59,968,621                                                                    Book value per share (total stockholders'              $17.06       $16.52 equity/shares outstanding) Tangible book value per share (total tangible          $11.11       $10.55 stockholders' equity/shares outstanding)                                                                    (2) Return on Average Tangible Equity                                                       Three Months Ended                                                       March 31,                                                       2014         2013 Total average stockholders' equity                     $1,024,100 $987,984 Less: total average intangible assets                  356,333      357,755 Total average tangible stockholders' equity            $667,767   $630,229                                                                    Net income                                             $17,029    $17,828 Annualized return on average tangible equity (net      10.34%       11.47% income/total average stockholders' equity)                                                                    (3) Efficiency Ratio Calculation                                                       Three Months Ended                                                       March 31,                                                       2014         2013 Net interest income                                    55,201       53,895 Non-interest income                                    8,116        9,945 Total income:                                          63,317      63,840                                                                    Non-interest expense:                                  38,190      36,946                                                                    Expense/income:                                        60.32%       57.87%                                                                     PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Net Interest Margin Analysis Quarterly Average Balances (Unaudited) (Dollars in Thousands)                                                                                      March 31, 2014                 December 31, 2013                    Average               Average Average            Average                    Balance      Interest  Yield   Balance   Interest  Yield Interest-Earning                                                   Assets: Deposits            $16,589    $10     0.25%   $18,161 $9      0.17% Federal funds sold and other           1,189        —         0.03%   1,559     —         0.02% short-term investments Investment          357,852      2,670     2.98%   359,805   2,687     2.99% securities ^(1) Securities          1,151,959    6,478     2.25%   1,161,822 6,451     2.22% available for sale Federal Home Loan   58,812       604       4.16%   50,533    454       3.57% Bank stock Net Loans: ^(2)                                                    Total mortgage      3,665,286    38,552    4.21%   3,607,080 38,271    4.19% loans Total commercial    915,105      10,547    4.64%   864,255   10,310    4.70% loans Total consumer      573,294      5,662     4.01%   572,792   5,894     4.08% loans Total Net Loans     5,153,685    54,761    4.26%   5,044,127 54,475    4.27% Total                                              $ Interest-Earning    $6,740,086 $64,523 3.84%   6,636,007 $64,076 3.82% Assets                                                                   Non-Interest                                                       Earning Assets: Cash and due from   63,167                       68,745              banks Other assets        670,703                      664,810             Total Assets        $7,473,956                 $                                                                     7,369,562                                                                   Interest-Bearing                                                   Liabilities: Demand deposits     $2,609,846 $1,716  0.27%   $        $1,800  0.27%                                                    2,629,850 Savings deposits    918,452      211       0.09%   924,935   247       0.11% Time deposits       787,475      1,811     0.93%   823,195   2,067     1.00% Total Deposits      4,315,773    3,738     0.35%   4,377,980 4,114     0.37%                                                                   Borrowed funds      1,212,617    5,584     1.87%   1,038,257 5,255     2.01% Total Interest-Bearing    5,528,390    9,322     0.68%   5,416,237 9,369     0.69% Liabilities                                                                   Non-Interest        921,466                      945,327             Bearing Liabilities Total Liabilities   6,449,856                    6,361,564           Stockholders'       1,024,100                    1,007,998           equity Total Liabilities                                  $ and Stockholders'   $7,473,956                 7,369,562           Equity                                                                   Net interest income             $55,201                 $54,707                                                                    Net interest rate                        3.16%                     3.13% spread Net                                                $ interest-earning    $1,211,696                 1,219,770           assets                                                                   Net interest margin                      3.28%                     3.26% ^(3) Ratio of interest-earning assets to total     1.22x                        1.23x               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.      PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Net Interest Margin Analysis Average Year to Date Balances (Unaudited) (Dollars in Thousands)                                                                                   March 31, 2014                 March 31, 2013                 Average               Average Average               Average                 Balance      Interest  Yield   Balance      Interest  Yield Interest-Earning                                                   Assets: Deposits         $16,589    $10     0.25%   $16,639    $10     0.25% Federal funds sold and other   1,189        —         0.03%   1,424        —         0.01% short term investments Investment       357,852      2,670     2.98%   350,326      2,839     3.24% securities ^(1) Securities available for    1,151,959    6,478     2.25%   1,243,647    5,764     1.85% sale Federal Home     58,812       604       4.16%   38,070       428       4.56% Loan Bank stock Net Loans: ^(2)                                                    Total mortgage   3,665,286    38,552    4.21%   3,418,532    38,335    4.49% loans Total commercial 915,105      10,547    4.64%   839,389      9,971     4.78% loans Total consumer   573,294      5,662     4.01%   571,875      5,957     4.22% loans Total Net Loans  5,153,685    54,761    4.26%   4,829,796    54,263    4.51% Total Interest-Earning $6,740,086 $64,523 3.84%   $6,479,902 $63,304 3.92% Assets                                                                   Non-Interest                                                       Earning Assets: Cash and due     63,167                       75,239                 from banks Other assets     670,703                      665,070                Total Assets     $7,473,956                 $7,220,211                                                                             Interest-Bearing                                                   Liabilities: Demand deposits  $2,609,846 $1,716  0.27%   $2,696,385 $1,954  0.29% Savings deposits 918,452      211       0.09%   918,535      267       0.12% Time deposits    787,475      1,811     0.93%   930,953      2,735     1.19% Total Deposits   4,315,773    3,738     0.35%   4,545,873    4,956     0.44% Borrowed funds   1,212,617    5,584     1.87%   804,919      4,453     2.24% Total Interest-Bearing $5,528,390 $9,322  0.68%   $5,350,792 $9,409  0.71% Liabilities                                                                   Non-Interest Bearing          921,466                      881,435                Liabilities Total            6,449,856                    6,232,227              Liabilities Stockholders'    1,024,100                    987,984                equity Total Liabilities and  $7,473,956                 $7,220,211           Stockholders' Equity                                                                   Net interest                 55,201                       53,895     income                                                                   Net interest                          3.16%                        3.21% rate spread Net interest-earning $1,211,696                 $1,129,110           assets                                                                   Net interest                          3.28%                        3.33% margin ^(3)                                                                   Ratio of interest-earning assets to total  1.22x                        1.21x                  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.                                                                                                    3/31/14  12/31/13    9/30/13  6/30/13 3/31/13                                 1st      4th Quarter 3rd      2nd     1st                                  Quarter              Quarter  Quarter Quarter Interest-Earning Assets:                                            Securities                       2.46%    2.41%       2.25%    2.20%   2.19% Net loans                        4.26%    4.27%       4.33%    4.39%   4.51% Total interest-earning assets    3.84%    3.82%       3.83%    3.84%   3.92%                                                                    Interest-Bearing Liabilities:                                       Total deposits                   0.35%    0.37%       0.39%    0.41%   0.44% Total borrowings                 1.87%    2.01%       2.00%    2.03%   2.24% Total interest-bearing           0.68%    0.69%       0.67%    0.67%   0.71% liabilities                                                                    Interest rate spread             3.16%    3.13%       3.16%    3.17%   3.21% Net interest margin              3.28%    3.26%       3.28%    3.29%   3.33%                                                                    Ratio of interest-earning assets 1.22x    1.23x       1.22x    1.21x   1.21x to interest-bearing liabilities  CONTACT: Investor Relations, Provident Financial Services, Inc.,          1-732-590-9300          Web Site: http://www.providentnj.com  company logo