PROVIDENT FINANCIAL SERVICES, INC. 
By JERSEY CITY, N.J., Jan. 27, 2012 /PRNewswire/ -- Provident Financial Services, Inc. (NYSE:PFS) (the "Company") reported net income of $14.9 million, or $0.26 per basic and diluted share for the quarter ended December 31, 2011, compared to net income of $12.1 million, or $0.21 per basic and diluted share for the quarter ended December 31, 2010.
For the year ended December 31, 2011, the Company reported net income of $57.3 million, or $1.01 per basic and diluted share, compared to net income of $49.7 million, or $0.88 per basic and diluted share for the same period last year.
The fourth quarter and full year results for the period ended December 31, 2011 reflect actions taken to reduce funding costs, with net interest income increasing $890,000 and $7.0 million, respectively, compared with the same periods in 2010. In addition, the provision for loan losses decreased $2.9 million and $6.6 million for the quarter and the year ended December 31, 2011, respectively, compared with the same periods in 2010. These improvements were partially offset by increases in non-interest expense of $235,000 and $3.7 million for the three months and year ended December 31, 2011, respectively, compared with the same periods in 2010.
Christopher Martin, Chairman, President and Chief Executive Officer, commented: "Our record earnings for 2011 were attributable to improved asset generation, lower funding costs and an intense commitment from our officers and staff to attain new levels of efficiency, all while maintaining our already strong capital position. This was accomplished against the backdrop of a struggling economy, historically low interest rates pressuring our margin, and a challenging regulatory environment." Martin continued: "Improved revenues resulted from loan growth of 5.5% for the year, and continued expansion of our core deposits which now represent 78% of deposits. While asset quality stabilized over the last quarter, the resolution of troubled assets through the protracted New Jersey foreclosure process remains time-consuming."
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.12 per common share payable on February 29, 2012, to stockholders of record as of the close of business on February 15, 2012.
Balance Sheet Summary
Total assets increased $272.9 million, or 4.0%, to $7.10 billion at December 31, 2011, from $6.82 billion at December 31, 2010, primarily due to an increase in net loans outstanding.
Cash and cash equivalents increased $17.4 million to $69.6 million at December 31, 2011, from $52.2 million at December 31, 2010. The Company expects to deploy these cash balances to fund loan originations and investment purchases and repay maturing borrowings.
The Company's net loans increased $238.1 million, or 5.5%, to $4.58 billion at December 31, 2011, from $4.34 billion at December 31, 2010. Loan originations totaled $1.5 billion and loan purchases totaled $79.5 million for the year ended December 31, 2011. The loan portfolio had net increases of $177.0 million in multi-family mortgage loans, $93.5 million in commercial loans and $73.4 million in commercial mortgage loans, partially offset by net decreases of $77.7 million in residential mortgage loans, $10.4 million in construction loans and $8.6 million in consumer loans. Commercial real estate, commercial and construction loans represented 59.8% of the loan portfolio at December 31, 2011, compared to 55.6% at December 31, 2010.
At December 31, 2011, the Company's unfunded loan commitments totaled $770.4 million, including $288.5 million in commercial loan commitments, $112.2 million in construction loan commitments and $69.3 million in commercial mortgage commitments. Unfunded loan commitments at September 30, 2011 were $793.7 million.
Foreclosed assets increased $9.9 million, to $12.8 million at December 31, 2011, from $2.9 million at December 31, 2010. Foreclosed assets consisted of $5.5 million of residential real estate, $6.6 million of commercial real estate and $712,000 of marine vessels at December 31, 2011.
Total deposits increased $278.9 million, or 5.7%, during the year ended December 31, 2011 to $5.16 billion. Core deposits, consisting of savings and demand deposit accounts, increased $428.4 million, or 11.9%, to $4.03 billion at December 31, 2011. The majority of the core deposit increase was in commercial checking deposits, retail checking deposits and money market deposits, partially offset by a decline in savings deposits. Time deposits decreased $149.5 million, or 11.7%, to $1.13 billion at December 31, 2011, with the majority of the decrease occurring in the 15-month and shorter maturity categories. The Company remains focused on developing core deposit relationships, while strategically permitting the run-off of higher-cost time deposits. Core deposits represented 78.1% of total deposits at December 31, 2011, compared to 73.8% at December 31, 2010.
Borrowed funds were reduced $49.5 million, or 5.1% during the year ended December 31, 2011, to $920.2 million, as wholesale funding was replaced with core deposit growth. Borrowed funds represented 13.0% of total assets at December 31, 2011, a reduction from 14.2% at December 31, 2010.
Stockholders' equity increased $30.8 million, or 3.3% during the year ended December 31, 2011, to $952.5 million, primarily due to net income earned for the period, partially offset by dividends paid to stockholders and common stock repurchases. Common stock repurchases for the year ended December 31, 2011 totaled 348,000 shares at an average cost of $11.90 per share. At December 31, 2011, 1.8 million shares remained eligible for repurchase under the current authorization. At December 31, 2011, book value per share and tangible book value per share were $15.88 and $9.87, respectively, compared with $15.38 and $9.47, respectively, at December 31, 2010.
Results of Operations
Net Interest Income and Net Interest Margin
For the three months ended December 31, 2011, net interest income increased $890,000, to $53.9 million, from $53.0 million for the same period in 2010. For the year ended December 31, 2011, net interest income increased $7.0 million, to $216.0 million, from $209.0 million for 2010. For both periods, the favorable effects of an increase in average loans outstanding and reductions in funding costs outpaced the impact of the downward repricing of earning assets and accelerated premium amortization on mortgage-backed securities.
The Company's net interest margin for the quarter ended December 31, 2011 was 3.39%, a decrease of 11 basis points from 3.50% for the quarter ended September 30, 2011, and a 5 basis point decrease from 3.44% for the same period last year. The weighted average yield on interest-earning assets was 4.24% for the three months ended December 31, 2011, compared with 4.45% for the trailing quarter, and 4.56% for the three months ended December 31, 2010. The weighted average cost of interest-bearing liabilities was 0.99% for the quarter ended December 31, 2011, compared with 1.10% for the trailing quarter and 1.29% for the fourth quarter of 2010. The average cost of interest-bearing deposits for the three months ended December 31, 2011 was 0.72%, compared with 0.81% for the trailing quarter and 0.94% for the same period last year. Average non-interest bearing deposits totaled $680.1 million for the three months ended December 31, 2011, compared with $605.8 million for the trailing quarter and $555.3 million for the same period last year. The average cost of borrowings for the three months ended December 31, 2011 was 2.34%, compared with 2.50% for the trailing quarter, and 2.92% for the same period last year.
For the year ended December 31, 2011, the net interest margin increased 4 basis points to 3.49%, compared with 3.45% for the year ended December 31, 2010. The weighted average yield on interest-earning assets declined 27 basis points to 4.46% for the year ended December 31, 2011, compared with 4.73% for the year ended December 31, 2010, however, the weighted average cost of interest bearing liabilities declined 33 basis points to 1.13% for the year ended December 31, 2011, compared with 1.46% for the same period in 2010. The average cost of interest-bearing deposits for the year ended December 31, 2011 was 0.83%, compared with 1.09% for the same period last year. Average non-interest bearing deposits totaled $605.8 million for the year ended December 31, 2011, compared with $528.1 million for the same period last year. The average cost of borrowings for the year ended December 31, 2011 was 2.55%, compared with 3.18% for the same period last year.
Non-Interest Income
Non-interest income totaled $8.7 million for the quarter ended December 31, 2011, an increase of $910,000 compared to the same period in 2010. Fee income for the quarter ended December 31, 2011 totaled $7.4 million, an increase of $1.3 million compared to the same period in 2010, largely due to an increase in wealth management fees attributable to the August 11, 2011 acquisition of Beacon Trust Company and Beacon Global Asset Management, Inc. ("Beacon"). This increase was offset by a $190,000 decrease in income related to Bank-owned life insurance for the three month period ended December 31, 2011, compared to the same period last year, due to a decline in investment yields. In addition, other income declined $194,000 for the three months ended December 31, 2011, compared to the same period in 2010, primarily as a result of losses incurred on the November 2011 sales of the Company's previously occupied administrative facilities, partially offset by net gains on the sale of foreclosed real estate.
For the year ended December 31, 2011, non-interest income totaled $32.5 million, an increase of $990,000, or 3.1%, compared to the same period in 2010. Fee income totaled $25.4 million for the year ended December 31, 2011, an increase of $1.7 million compared with the same period in 2010, largely due to increased wealth management fees related to the Beacon acquisition, an increase in revenue from loan related activity and increased revenue associated with annuity sales. These increases were partially offset by a reduction in overdraft fees. Other income increased $266,000 for the year ended December 31, 2011, compared with the same period in 2010, primarily as a result of net gains recognized on the sale of foreclosed real estate and an increase in gains resulting from a larger number of loan sales, partially offset by the losses incurred on the sales of the Company's previously occupied administrative facilities. Offsetting these increases, income related to Bank-owned life insurance decreased $706,000 for the year ended December 31, 2011, compared to the same period last year, primarily due to the receipt of policy claim proceeds in the second quarter of 2010. Additionally, net gains on securities transactions declined $177,000 for the year ended December 31, 2011, compared with the same period in 2010. These net gains on securities transactions totaled $708,000 for the year ended December 31, 2011, compared with net gains of $885,000 for the same period in 2010. The Company recognized net other-than-temporary impairment charges of $302,000 and $170,000 for the years ended December 31, 2011 and December 31, 2010, respectively, related to an investment in a non-Agency mortgage-backed security.
Non-Interest Expense
For the three months ended December 31, 2011, non-interest expense increased $235,000, or 0.7%, to $36.2 million, compared to $36.0 million for the three months ended December 31, 2010. Compensation and benefits expense increased $1.2 million for the three months ended December 31, 2011, compared with the same period in 2010, as a result of higher salary expense and personnel added as a result of the Beacon acquisition, increased employee health and medical costs and increased incentive compensation. Net occupancy expense increased $485,000, to $5.3 million for the three months ended December 31, 2011, compared to $4.8 million for the same period in 2010, primarily due to expenses associated with the Company's consolidation of facilities into its newly leased administrative offices in April of this year and expenses related to the Beacon acquisition. Other operating expenses increased $398,000, to $6.5 million for the three months ended December 31, 2011, compared to same period in the prior year, due to increased loan collection and workout expenses and costs associated with the Beacon acquisition. Additionally, data processing expense increased $221,000, to $2.5 million for the three months ended December 31, 2011, compared with the same period in 2010, because of increased software maintenance and core processing fees. Partially offsetting these increases, impairment of premises and equipment declined $1.5 million for the three months ended December 31, 2011, compared to the same period last year, due to the impairment charge incurred in the prior year quarter related to the then planned disposition of the Company's former administrative office. Additionally, FDIC insurance expense decreased $564,000, to $1.4 million for the three months ended December 31, 2011, compared with $2.0 million for the same period in 2010, due to the change in assessment methodology from deposit-based to one which is based upon assets. Amortization of intangibles decreased $149,000 for the three months ended December 31, 2011, compared with the same period in 2010, 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.
Non-interest expense for the year ended December 31, 2011 was $142.4 million. Non-interest expense increased $3.7 million, or 2.7%, from $138.7 million for the year ended December 31, 2010. Compensation and benefits expense increased $5.0 million, to $74.9 million for the year ended December 31, 2011 compared to $69.9 million for the year ended December 31, 2010, due to higher salary expense related to annual merit increases and personnel added as a result of the Beacon acquisition, increased employee health and medical costs, and increased stock-based compensation expense resulting from shares granted in connection with the Company's incentive compensation and Employee Stock Ownership plans and the higher average share price of the Company's common stock in 2011 compared with 2010. In addition, net occupancy expense increased $1.4 million, to $21.1 million, compared to $19.8 million for the same period in 2010, due to expenses associated with the relocation of the Company's administrative offices and carrying costs on previously occupied facilities owned by the Company, which were sold in November 2011. In addition, approximately $227,000 in damages attributable to Hurricane Irene were also included in occupancy expense for the year ended December 31, 2011. Data processing expense totaled $9.5 million for the year ended December 31, 2011, compared to $9.0 million for the same period in 2010. The $516,000 increase was primarily due to higher software maintenance and core processing fees. Other operating expenses increased $157,000 for the year ended December 31, 2011, compared with the same period last year, due to increased loan collection expense and costs associated with the Beacon acquisition. Partially offsetting these increases, FDIC insurance expense decreased $1.7 million to $5.9 million for the year ended December 31, 2011, compared with $7.6 million for the same period in 2010. The decrease was primarily due to a lower assessment rate charged on deposits in the first quarter of 2011 and a change in assessment methodology from a deposit-based to an asset-based assessment, effective in the second quarter of 2011. Additionally, amortization of intangibles decreased $801,000 for the year ended December 31, 2011, compared with the same period of 2010, 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. Impairment of premises and equipment declined $721,000, for the year ended December 31, 2011, compared to the same period last year, as the Company recognized a $1.5 million impairment charge in the fourth quarter of 2010 related to the then anticipated sale and relocation of its administrative office, compared to an $807,000 impairment charge in the first quarter of 2011 related to the then anticipated sale and relocation of its former loan administration center. Advertising and promotions expense decreased $98,000 for the year ended December 31, 2011, compared with the same period last year.
Asset Quality
Total non-performing loans at December 31, 2011 were $122.5 million, or 2.63% of total loans, compared with $125.3 million, or 2.74% of total loans at September 30, 2011, and $97.3 million, or 2.21% of total loans at December 31, 2010. The $2.8 million decrease in non-performing loans at December 31, 2011, compared with the trailing quarter, consisted of a $6.4 million decrease in commercial mortgages and a $130,000 decrease in construction loans, partially offset by a $2.4 million increase in commercial loans, a $997,000 increase in multi-family mortgages, a $338,000 increase in residential loans and a $95,000 increase in consumer loans. At December 31, 2011, impaired loans totaled $103.2 million with related specific reserves of $9.3 million, compared with impaired loans totaling $105.1 million with related specific reserves of $6.6 million at September 30, 2011. At December 31, 2010, impaired loans totaled $47.7 million with related specific reserves of $2.3 million. At December 31, 2011, the Company's allowance for loan losses was 1.60% of total loans, compared with 1.61% of total loans at September 30, 2011 and 1.56% of total loans at December 31, 2010.
The Company recorded provisions for loan losses of $6.0 million and $28.9 million for the three months and year ended December 31, 2011, respectively, compared with provisions of $8.9 million and $35.5 million for the three months and year ended December 31, 2010, respectively. For the three months and year ended December 31, 2011, the Company had net charge-offs of $5.3 million and $23.3 million, respectively, compared with net charge-offs of $8.9 million and $27.5 million, respectively, for the same periods in 2010. The allowance for loan losses increased $5.6 million to $74.4 million at December 31, 2011, from $68.7 million at December 31, 2010. At December 31, 2011, the Company held $12.8 million of foreclosed assets, compared with $2.9 million at December 31, 2010.
Income Tax Expense
For the three months ended December 31, 2011, the Company's income tax expense was $5.5 million, compared with $3.8 million for the same period in 2010. For the year ended December 31, 2011, the Company's income tax expense was $19.8 million, compared with $16.6 million for the same period in 2010. The increase in income tax expense was primarily attributable to an increase in pre-tax income. The Company's effective tax rates were 27.0% and 25.7%, respectively, for the three months and year ended December 31, 2011, compared with 23.9% and 25.0% for the three months and year ended December 31, 2010, respectively. The effective tax rates for the 2011 periods were affected by an increase in the effective rate attributable to an increase in taxable income for the full year of 2011, partially offset by the reduction of a valuation allowance against subsidiary company New Jersey state net operating losses.
About the Company
Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering a full range of retail and commercial loan and deposit products. The Bank currently operates 82 full service branches throughout northern and central New Jersey.
Post Earnings Conference Call
Representatives of the Company will hold a conference call for investors at 10:00 a.m. Eastern Time on Friday, January 27, 2012 regarding highlights of the Company's quarter and year ended December 31, 2011 financial results. The call may be accessed by dialing 1-877-317-6789 (Domestic) or 1-412-317-6789 (International). Internet access to the call is also available (listen only) at www.providentnj.com by going to Investor Relations and clicking on Webcast.
Forward Looking Statements
Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company 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 Condition
December 31, 2011 (Unaudited) and December 31, 2010
(Dollars in Thousands)
December
Assets 31, December 31,
2011 2010
---- ----
Cash and due from banks $68,553 $51,345
Short-term investments 1,079 884
----- ---
Total cash and cash equivalents 69,632 52,229
------ ------
Securities available for sale, at fair
value 1,376,119 1,378,927
Investment securities held to maturity
(fair value of $366,296 at
December 31, 2011 (unaudited) and
$351,680 at December 31, 2010) 348,318 346,022
Federal Home Loan Bank of New York
("FHLB-NY") stock 38,927 38,283
Loans 4,653,509 4,409,813
Less allowance for loan losses 74,351 68,722
------ ------
Net loans 4,579,158 4,341,091
--------- ---------
Foreclosed assets, net 12,802 2,858
Banking premises and equipment, net 66,260 74,257
Accrued interest receivable 24,653 25,257
Intangible assets 360,714 354,220
Bank-owned life insurance 142,010 136,768
Other assets 78,810 74,616
------ ------
Total assets $7,097,403 $6,824,528
========== ==========
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $3,136,129 $2,706,204
Savings deposits 891,742 893,268
Certificates of deposit of $100,000 or
more 383,174 412,155
Other time deposits 745,552 866,107
------- -------
Total deposits 5,156,597 4,877,734
Mortgage escrow deposits 20,955 19,558
Borrowed funds 920,180 969,683
Other liabilities 47,194 35,866
------ ------
Total liabilities 6,144,926 5,902,841
--------- ---------
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 59,968,195 outstanding at
December 31, 2011, and 59,921,065
outstanding at December 31, 2010 832 832
Additional paid-in capital 1,019,253 1,017,315
Retained earnings 363,011 332,472
Accumulated other comprehensive income 9,571 14,754
Treasury
stock (384,725) (385,094)
Unallocated common stock held by the
Employee Stock Ownership Plan ("ESOP") (55,465) (58,592)
Common Stock acquired by the Directors'
Deferred Fee Plan ("DDFP") (7,390) (7,482)
Deferred Compensation - DDFP 7,390 7,482
----- -----
Total stockholders' equity 952,477 921,687
------- -------
Total liabilities and stockholders'
equity $7,097,403 $6,824,528
========== ==========
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three Months and Year Ended December 31, 2011 and 2010
(Dollars in Thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Interest income:
Real estate secured loans $39,306 $40,100 $158,731 $160,460
Commercial loans 10,892 10,463 42,759 41,427
Consumer loans 6,348 6,992 25,793 28,479
Securities available for sale and
FHLB-NY stock 7,689 9,494 36,157 43,143
Investment securities 2,991 3,145 12,160 12,778
Deposits, Federal funds sold and
other short-term investments 38 25 119 247
--- --- --- ---
Total interest income 67,264 70,219 275,719 286,534
------ ------ ------- -------
Interest expense:
Deposits 8,113 10,364 36,552 47,705
Borrowed funds 5,240 6,834 23,177 29,864
----- ----- ------ ------
Total interest expense 13,353 17,198 59,729 77,569
------ ------ ------ ------
Net interest income 53,911 53,021 215,990 208,965
Provision for loan losses 6,000 8,900 28,900 35,500
----- ----- ------ ------
Net interest income after provision
for loan losses 47,911 44,121 187,090 173,465
------ ------ ------- -------
Non-interest income:
Fees 7,366 6,042 25,418 23,679
Other-than-temporary impairment
losses on securities - - (1,661) (3,116)
Portion of loss recognized in OCI
(before taxes) - - 1,359 2,946
--- --- ----- -----
Net impairment losses recognized in
earnings - - (302) (170)
Bank owned life insurance 1,244 1,434 5,242 5,948
Net gain on securities transactions 22 52 708 885
Other income 45 239 1,476 1,210
--- --- ----- -----
Total non-interest income 8,677 7,767 32,542 31,552
----- ----- ------ ------
Non-interest expense:
Compensation and employee benefits 18,428 17,276 74,904 69,865
Net occupancy expense 5,320 4,835 21,131 19,777
Data processing expense 2,506 2,285 9,500 8,984
FDIC Insurance 1,400 1,964 5,883 7,631
Amortization of intangibles 716 865 3,030 3,831
Impairment of premises and
equipment - 1,528 807 1,528
Advertising and promotion expense 1,346 1,126 3,951 4,049
Other operating expenses 6,493 6,095 23,240 23,083
----- ----- ------ ------
Total non-interest expenses 36,209 35,974 142,446 138,748
------ ------ ------- -------
Income before income tax expense 20,379 15,914 77,186 66,269
Income tax expense 5,509 3,799 19,842 16,564
----- ----- ------ ------
Net income $14,870 $12,115 $57,344 $49,705
Basic earnings per share $0.26 $0.21 $1.01 $0.88
Average basic shares outstanding 56,898,336 56,687,652 56,856,083 56,572,040
Diluted earnings per share $0.26 $0.21 $$1.01 $0.88
Average diluted shares outstanding 56,910,915 56,687,652 56,868,524 56,572,040
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 Year Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
STATEMENTS OF INCOME:
Net interest income $53,911 $53,021 $215,990 $208,965
Provision for loan
losses 6,000 8,900 28,900 35,500
Non-interest income 8,677 7,767 32,542 31,552
Non-interest expense 36,209 35,974 142,446 138,748
Income before income tax
expense 20,379 15,914 77,186 66,269
Net
income $14,870 $12,115 $57,344 $49,705
Basic and diluted
earnings per share $0.26 $0.21 $1.01 $0.88
Interest rate spread 3.25% 3.27% 3.33% 3.27%
Net interest margin 3.39% 3.44% 3.49% 3.45%
PROFITABILITY:
Annualized return on
average assets 0.84% 0.70% 0.83% 0.73%
Annualized return on
average equity 6.18% 5.19% 6.09% 5.46%
Annualized non-interest
expense to average
assets 2.04% 2.09% 2.07% 2.05%
Efficiency ratio (1) 57.85% 59.18% 57.31% 57.69%
ASSET QUALITY:
Non-accrual loans $122,549 $97,264
90+ and still accruing - -
Non-performing loans 122,549 97,264
Foreclosed assets 12,802 2,858
Non-performing assets 135,351 100,122
Non-performing loans to
total loans 2.63% 2.21%
Non-performing assets
to total assets 1.91% 1.47%
Allowance for loan
losses $74,351 $68,722
Allowance for loan
losses to total non-
performing loans 60.67% 70.66%
Allowance for loan
losses to total loans 1.60% 1.56%
AVERAGE BALANCE SHEET
DATA:
Assets $7,041,992 $6,825,936 $6,893,107 $6,783,472
Loans,
net 4,528,380 4,298,726 4,423,125 4,274,549
Earnings assets 6,289,331 6,107,423 6,158,329 6,057,358
Core deposits 3,992,536 3,638,660 3,777,647 3,511,324
Borrowings 888,027 927,209 909,531 939,311
Interest-bearing
liabilities 5,352,132 5,301,793 5,294,623 5,299,718
Stockholders' equity 954,563 926,439 941,428 910,516
Average yield on
interest-earning
assets 4.24% 4.56% 4.46% 4.73%
Average cost on
interest-bearing
liabilities 0.99% 1.29% 1.13% 1.46%
LOAN DATA:
Mortgage loans:
Residential $1,308,635 $1,386,326
Commercial 1,253,542 1,180,147
Multi-family 564,147 387,189
Construction 114,817 125,191
------- -------
Total mortgage loans 3,241,141 3,078,853
Commercial loans 849,009 755,487
Consumer loans 560,970 569,597
------- -------
Total gross loans $4,651,120 $4,403,937
Premium on purchased
loans 5,823 6,771
Unearned discounts (100) (104)
Net deferred (3,334) (791)
------ ----
Total
loans $4,653,509 $4,409,813
========== ==========
Notes
-----
(1) Efficiency Ratio
Calculation
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Net interest income $53,911 $53,021 215,990 208,965
Non-interest income 8,677 7,767 32,542 31,552
----- ----- ------ ------
Total income: $62,588 $60,788 248,532 240,517
======= ======= ======= =======
Non-interest expense: $36,209 $35,974 142,446 138,748
======= ======= ======= =======
Expense/income: $57.85% $59.18% 57.31% 57.69%
====== ====== ===== =====
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Unaudited) (Dollars in Thousands)
December 31, 2011 September 30, 2011
----------------- ------------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
------- -------- ----- ------- -------- -----
Interest-
Earning
Assets:
Deposits $60,052 $38 0.25% $42,620 $26 0.25%
Federal
funds sold
and
other short-
term
investments 1,423 - 0.01% 1,243 - 0.01%
Investment
securities
(1) 348,128 2,991 3.45% 348,802 3,045 3.47%
Securities
available
for sale 1,313,249 7,295 2.22% 1,305,115 8,739 2.67%
Federal Home
Loan Bank
stock 38,099 394 4.11% 39,147 435 4.41%
Net loans
(2) .
Total
mortgage
loans 3,175,644 39,306 4.90% 3,088,464 39,466 5.06%
Total
commercial
loans 798,981 10,892 5.37% 773,807 11,010 5.60%
Total
consumer
loans 553,755 6,348 4.55% 552,061 6,436 4.63%
------- ----- ------- -----
Total Net
loans 4,528,380 56,546 4.94% 4,414,332 56,912 5.10%
--------- ------ --------- ------
Total
Interest-
Earning
Assets $6,289,331 $67,264 4.24% $6,151,259 $69,157 4.45%
Non-
Interest
Earning
Assets:
Cash and due
from banks 89,835 85,021
Other assets 662,826 660,250
------- -------
Total
Assets $7,041,992 $6,896,530
Interest-
Bearing
Liabilities:
Demand
deposits $2,430,323 $3,341 0.55% $2,277,126 $3,788 0.66%
Savings
deposits 882,074 543 0.24% 906,601 687 0.30%
Time
deposits 1,151,708 4,229 1.46% 1,199,128 4,509 1.49%
--------- ----- --------- -----
Total
Deposits 4,464,105 8,113 0.72% 4,382,855 8,984 0.81%
--------- ----- --------- -----
Borrowed
funds 888,027 5,240 2.34% 907,055 5,717 2.50%
------- ----- ------- -----
Total
Interest-
Bearing
Liabilities $5,352,132 $13,353 0.99% $5,289,910 $14,701 1.10%
Non-
Interest
Bearing
Liabilities 735,297 659,226
------- -------
Total
Liabilities 6,087,429 5,949,136
Stockholders'
equity 954,563 947,394
------- -------
Total
Liabilities
and
Stockholders'
Equity 7,041,992 $6,896,530
========= ==========
Net interest
income $53,911 $54,456
======= =======
Net interest
rate spread 3.25% 3.35%
Net
interest-
earning
assets $937,199 $861,349
Net interest
margin (3) 3.39% 3.50%
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 quarterly net
interest margin for the previous five quarters.
12/31/11 9/30/11 6/30/11 3/31/11 12/31/10
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
-------- -------- -------- -------- --------
Interest-
Earning
Assets:
Securities 2.44% 2.81% 3.01% 2.91% 2.80%
Net
Loans 4.94% 5.10% 5.16% 5.24% 5.30%
Total
Interest-
Earning
Assets 4.24% 4.45% 4.56% 4.58% 4.56%
Interest-
Bearing
Liabilities:
Total
Deposits 0.72% 0.81% 0.89% 0.92% 0.94%
Total
Borrowings 2.34% 2.50% 2.65% 2.70% 2.92%
Total
Interest-
Bearing
Liabilities 0.99% 1.10% 1.19% 1.23% 1.29%
Interest
Rate
Spread 3.25% 3.35% 3.37% 3.35% 3.27%
Net
Interest
Margin 3.39% 3.50% 3.53% 3.51% 3.44%
Ratio
of
Interest-
Earning
Assets
to
Interest-
Bearing
Liabilities 1.18x 1.16x 1.15x 1.15x 1.15x
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Unaudited) (Dollars in Thousands)
December 31, 2011 December 31, 2010
----------------- -----------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
------- -------- ----- ------- -------- -----
Interest-
Earning
Assets:
Deposits $47,727 $119 0.25% $98,940 $247 0.25%
Federal funds
sold and
other short-
term
investments 1,457 0 0.01% 1,951 - 0.01%
Investment
securities
(1) 345,528 12,160 3.52% 335,080 12,778 3.81%
Securities
available for
sale 1,302,233 34,393 2.64% 1,311,859 41,322 3.15%
Federal Home
Loan Bank
stock 38,259 1,764 4.61% 34,979 1,821 5.21%
Net loans (2) . .
Total mortgage
loans 3,102,662 158,731 5.08% 2,984,736 160,460 5.38%
Total
commercial
loans 765,228 42,759 5.56% 719,722 41,427 5.76%
Total consumer
loans 555,235 25,793 4.64% 570,091 28,479 5.00%
------- ------ ------- ------
Total Net
loans 4,423,125 227,283 5.11% 4,274,549 230,366 5.39%
--------- ------- --------- -------
Total
Interest-
Earning
Assets $6,158,329 $275,719 4.46% $6,057,358 $286,534 4.73%
Non-Interest
Earning
Assets:
Cash and due
from banks 77,823 79,024
Other assets 656,955 647,090
------- -------
Total Assets $6,893,107 $6,783,472
Interest-
Bearing
Liabilities:
Demand
deposits $2,272,780 $15,168 0.67% $2,096,259 $18,369 0.88%
Savings
deposits 899,020 2,971 0.33% 886,963 4,061 0.46%
Time deposits 1,213,292 18,413 1.52% 1,377,185 25,275 1.84%
--------- ------ --------- ------
Total Deposits 4,385,092 36,552 0.83% 4,360,407 47,705 1.09%
--------- ------ --------- ------
Borrowed funds 909,531 23,177 2.55% 939,311 29,864 3.18%
------- ------ ------- ------
Total
Interest-
Bearing
Liabilities $5,294,623 $59,729 1.13% $5,299,718 $77,569 1.46%
Non-Interest
Bearing
Liabilities 657,056 573,238
------- -------
Total
Liabilities 5,951,679 5,872,956
Stockholders'
equity 941,428 910,516
------- -------
Total
Liabilities
and
Stockholders'
Equity 6,893,107 $6,783,472
========= ==========
Net interest
income $215,990 $208,965
======== ========
Net interest
rate spread 3.33% 3.27%
Net
interest-
earning
assets $863,706 $757,640
Net interest
margin (3) 3.49% 3.45%
Ratio of
interest-
earning
assets to
total
interest-
bearing
liabilities 1.16 x 1.14 x
(1) Average outstanding balance amounts shown are amortized cost.
(2) Average outstanding balances are net of the allowance for loan
losses, deferred loan fees and expenses, loan premiums and discounts
and include non-accrual loans
(3) Annualized net interest income divided by average interest-earning
assets
The following table summarizes the year ended net interest margin for the
previous three years.
Year Ended
----------
12/31/11 12/31/10 12/31/09
-------- -------- --------
Interest-Earning Assets:
Securities 2.79% 3.15% 3.66%
Net Loans 5.11% 5.39% 5.43%
Total Interest-Earning
Assets 4.46% 4.73% 4.95%
Interest-Bearing Liabilities:
Total Deposits 0.83% 1.09% 1.79%
Total Borrowings 2.55% 3.18% 3.50%
Total Interest-Bearing
Liabilities 1.13% 1.46% 2.13%
Interest Rate Spread 3.33% 3.27% 2.82%
Net Interest Margin 3.49% 3.45% 3.06%
Ratio of Interest-Earning
Assets to Interest-Bearing
Liabilities 1.16x 1.14x 1.13x
SOURCE Provident Financial Services, Inc.
