EX-99 3 form8k_071703ex99.txt EXHIBIT 99 PRESS RELEASE OF PROVIDENT FINANCIAL SERVICES, INC. Contact: Kenneth J. Wagner Investor Relations Provident Financial Services, Inc. 830 Bergen Avenue Jersey City, NJ 07306 201-915-5344 Provident Financial Services, Inc. Announces Quarterly Earnings; 9.1% Increase in Quarterly Earnings JERSEY CITY, NJ, July 17, 2003 - Provident Financial Services, Inc. (NYSE:PFS) the holding company for The Provident Bank reported net income of $8.8 million for the quarter ended June 30, 2003, an increase of $736,000 or 9.1% compared to net income of $8.1 million for the quarter ended June 30, 2002. For the six months ended June 30, 2003, Provident Financial reported net income of $2.4 million, a decrease of $12.6 million or 84.1% compared to net income of $15.0 million for the six months ended June 30, 2002. This reduction in net income for the six-month period is due to a one-time expense associated with the $15.6 million net of tax contribution to The Provident Bank Foundation. Provident Financial reported basic earnings per share of $0.15 for the quarter ended June 30, 2003 and basic earnings per share of $.02 for six months ended June 30, 2003, which includes the results of operations from January 15, 2003. "Our operating results for the second quarter are characterized by sustained growth in net interest income, moderate growth in core deposits and continued maintenance of asset quality," said Paul M. Pantozzi, Chairman of the Board, Chief Executive Officer and President of Provident Financial Services, Inc. and The Provident Bank. "While the continuation of low interest rates has resulted in some margin compression," he added, "our diversified balance sheet and our low cost of funds positioned us to show growth in net interest income in the second quarter." COMPARISON OF OPERATING RESULTS Total net interest income increased $6.0 million or 21.0% to $34.7 million for the quarter ended June 30, 2003 compared to $28.7 million for the quarter ended June 30, 2002. Interest income for the second quarter of 2003 increased $4.2 million or 9.4% to $48.8 million compared to $44.6 million for the comparable quarter in 2002. Interest expense decreased $1.7 million or 11.2% to $14.1 million for the quarter ended June 30, 2003 compared to $15.8 million for the quarter ended June 30, 2002. The average balance of investment securities held to maturity and securities available for sale increased $946.8 million or 122.94% to $1.72 billion for the quarter ended June 30, 2003 compared to $770.1 million for the comparable period in 2002. This increase is primarily due to the receipt of proceeds from the conversion of The Provident Bank from a mutual to stock savings bank and a leverage strategy that began in the fourth quarter of 2002 and was completed early in the second quarter of this year. The average balance of net loans increased $57.9 million or 3.0% to $1.99 billion for the quarter ended June 30, 2003 compared to $1.93 billion for the comparable quarter in 2002. The average yield on interest earning assets decreased 133 basis points to 5.00% for the quarter ended June 30, 2003 compared to 6.33% for the comparable quarter in 2002. The reduction in the yield on interest earning assets was primarily due to the reinvestment of cash flows from loan and mortgage- backed securities prepayments in lower yielding loans and investments and to the temporary investment of conversion account proceeds in short-term U.S. Government securities. Average core deposit account balances increased $229.5 million or 16.40% to $1.629 billion at June 30, 2003 compared to $1.399 billion at June 30, 2002. Core deposit accounts consist of all demand deposit and savings accounts. Average time deposit balances decreased $69.9 million or 6.94% to $1.01 billion for the quarter ended June 30, 2003 compared to $1.08 billion for the comparable quarter in 2002. Average borrowings increased $685.5 million or 197.89% to $580.4 million for the quarter ended June 30, 2003 compared to $194.8 million for the quarter ended June 30 2002. The average cost of interest bearing liabilities decreased 69 basis points to 1.92% for the quarter ended June 30, 2003 compared to 2.61% for the quarter ended June 30, 2002. The decrease in the average cost of interest-bearing liabilities can be attributed to the decrease in core deposit account rates and the continued decrease in rates on time deposits. Net interest margin decreased 52 basis points to 3.56% for the quarter ended June 30, 2003 compared to 4.08% for the quarter ended June 30, 2002, and the net interest margin decreased 57 basis points to 3.52% compared to 4.09% for the six months ended June 30, 2002. The interest rate spread decreased 64 basis points to 3.08% for the quarter ended June 30, 2003 compared to 3.72% for the comparable quarter in 2002, and the interest rate spread decreased 74 basis points to 3.00% from 3.74% for the six months ended June 30, 2002. Net interest margin and net interest spread have been negatively impacted by the current low interest rate environment. Cash flows from loans and investments related to refinance activity are being reinvested at lower current interest rates. Non-interest income decreased $2.5 million to $3.4 million for the quarter ended June 30, 2003 compared to $5.9 million for the comparable period in 2002. For the three months ended June 30, 2003, losses on securities transactions were $1.7 million compared to a net gain of $14,000 for the three months ended June 30, 2002. The losses on securities are attributable to the high level of principal repayments on mortgage-backed securities held in the investment portfolio as result of increased mortgage refinance activity. For the six months ended June 30, 2003, non-interest income decreased $3.5 million or 29.1% to $8.5 million compared to $12.0 million for the six months ended June 30, 2002. This decrease can be attributed to a net loss of $2.1 million on securities transactions for the six months ended June 30, 2003 compared with a net gain of $995,000 on securities transactions for the six months ended June 30, 2002. The net loss on security transactions in 2003 is primarily attributable to losses due to the high level of principal repayments on mortgage-backed securities. The gain on security transactions, is due to a gain of $959,000 in 2002 related to the receipt of stock as the result of an insurance company demutualization. Income on retail fees decreased $152,000 or 4.0% to $3.7 million for the quarter ended June 30, 2003 compared to $3.8 million for the quarter ended June 30, 2002. For the six months ended June 30, 2003, fees on retail accounts increased $235,000 or 3.1% to $7.7 million compared to $7.5 million for the six months ended June 30, 2002. Other income decreased $694,000 or 63.8% to $394,000 for the quarter ended June 30, 2003 compared to $1.09 million for the quarter ended June 30, 2002. For the six months ended June 30, 2003, other income decreased $556,000 or 36.94% to $949,000 compared to $1.5 million for six months ended June 30, 2002. This decrease is primarily attributable to a decrease of $355,000 or 55.0% arising from a net profit on the sale of loans for the quarter ended June 30, 2003 compared to net profit on the sale of loans in the related comparable time period in 2002. For the six months ended June 30, 2003 net profit on the sale of loans decreased $302,000 or 34.36% to $577,000 compared to $879,000 in the comparable time period in 2002. The reduction in net profits on the sale of loans is attributable to a balance sheet management decision to retain up to $75.0 million in long-term fixed rate residential loans in portfolio in lieu of selling those loans. Net gains on the sale of other assets decreased $185,000 to $53,000 compared to $238,000 in the comparable time period in 2002. For the six months ended June 30, 2003 net gains on the sale of other assets decreased $164,000 or 58.78% to $115,000 compared to $279,000 for the comparable period in 2002. The gain recorded in 2002 was primarily attributable to a $200,000 gain associated with the sale of bank-owned property. Non-interest expense increased $2.1 million or 9.4% to $24.7 million for the quarter ended June 30, 2003 compared to $22.6 million for the comparable quarter in 2002. For the six months ended June 30, 2003, non-interest expense increased $27.6 million or 61.9% to $72.2 million as compared to $44.6 million at June 30, 2002. This increase is due to the one time expense associated with the $24 million dollar contribution to The Provident Bank Foundation that was recorded in the first quarter of 2003. Salary and benefit expense increased $958,000 or 8.2% to $12.6 million for the three months ended June 30, 2003 compared to $11.7 million for the three months ended June 30, 2002. For the six months ended June 30, 2003 salaries and benefits increased $1.5 million or 6.3% to $24.6 million compared to $23.2 million on June 30, 2002. Employee Stock Ownership Plan amortization expense in the amount of $1.2 million was recorded in the first six months of 2003. Data processing expense increased $182,000 or 12.4% to $1.7 million for the quarter ended June 30, 2003 compared to $1.5 million for the comparable quarter in 2002. For six months ended June 30, 2003 data processing expense increased $250,000 or 8.3% to $3.3 million compared to $3.0 million at June 30, 2002. Other operating expenses increased $839,000 or 19.7% to $5.1 million for the quarter ended June 30, 2003 compared to $4.3 million for the comparable quarter in 2002. For six months ended June 30, 2003 other operating expenses increased $1.4 million or 17.1% to $9.6 million compared to $8.2 million on June 30, 2002. This increase is primarily due to an increase of $861,000 or 296.9% in insurance premiums. The provision for loan losses for the three months ended June 30, 2003 was $300,000, a decrease of $300,000 or 50.0% compared to $600,000 for the three months ended June 30, 2002. For six months ended June 30, 2003, the provision for loan losses was $900,000 compared to $1.2 million in 2002. The allowance for loan losses was $21.5 million or 1.06% of total loans at June 30, 2003 compared to $21.9 million or 1.13% of total loans at June 30, 2002 and $21.0 million or 1.02% of total loans at December 31, 2002. At June 30, 2003, the allowance for loan losses as a percentage of non-performing loans decreased to 375.97% from 474.56% at June 30, 2002 and increased from 246.55% at December 31, 2002. COMPARISON OF FINANCIAL CONDITION Total assets at June 30, 2003 increased $266.0 million or 6.8% to $4.2 billion compared to $3.9 billion at December 31, 2002. Total loans at June 30, 2003 decreased $24.8 million or 1.2% to $2.03 billion compared to $2.05 billion at December 31, 2002. Residential mortgage loans increased $18.7 million or 2.67% to $718.1 million for the six months ended June 30, 2003 compared to $699.5 million at December 31, 2002. Residential mortgage loan originations totaled $192.2 million and 1-4 family loans purchased totaled $19.8 million at June 30, 2003. Residential loan payoffs totaled $172.2 million, excluding scheduled amortization, and loans sold totaled $2.2 million at June 30, 2003. Commercial real estate loans decreased $9.0 million or 2.1% to $428.7 million at June 30, 2003 compared to $437.7 million at December 31, 2002. Multi-family loans decreased $2.7 million to $74.3 million at June 30, 2003 compared to $77.0 million at December 31, 2002. Construction loans decreased $5.5 million or 5.7% to $90.5 million at June 30, 2003 compared to $96.0 million at December 31, 2002. Commercial loans increased $12.4 million or 6.5% to $202.4 million at June 30, 2003 compared to $190.0 million at December 31, 2002. Mortgage warehouse loans decreased $35.2 million or 12.74% to $241.2 million at June 30, 2003 compared to $276.4 million at December 31, 2002. Consumer loans decreased $3.7 million or 1.32% to $272.2 million at June 30, 2003 compared to $275.8 million at December 31, 2002. Retail loans, which consist of 1-4 family residential mortgages and consumer loans, such as fixed-rate home equity loans and lines of credit, totaled $990.3 million and accounted for 48.85% of the loan portfolio at June 30, 2003 compared to $975.3 million or 47.53% of the portfolio at December 31, 2002. Commercial loans, consisting of commercial real estate, multi-family, construction, mortgage warehouse and commercial loans, totaled $1.037 billion, accounting for 51.15which includes the results of operations from January 15, 2003% of the loan portfolio at June 30, 2003 compared to $1.1 billion or 52.47% at December 31, 2002. Investment securities held to maturity increased $307.8 million or 142.42% to $523.9 million at June 30, 2003, compared to $216.1 million at December 31, 2002. The increase in investment securities held to maturity was the result of a strategy to leverage a portion of our capital. Securities available for sale decreased $52.1 million or 4.20% to $1.19 billion at June 30, 2003 compared to $1.24 billion at December 31, 2002. Other Real Estate Owned increased $1.8 million in the quarter ended June 30, 2003 representing a commercial real estate loan. This loan was originated in 1989 and was performing until August of 2002 when it was placed into non-accrual status. After exhausting all collection efforts, a deed in lieu of foreclosure was taken and we are marketing the property for sale. Bank owned Life Insurance increased $21.8 million or 45.7% to $69.5 million at June 30, 2003 compared to $47.7 million at December 31, 2002. This increase was due primarily to an additional $20.0 million purchase of bank owned life insurance in the first quarter of 2003. Total non-performing loans totaled $5.7 million at June 30, 2003 compared to $8.5 million at December 31, 2002 and $4.6 million at June 30, 2002. Non-performing assets were $7.5 million and $8.5 million at June 30, 2003 and December 31, 2002, respectively, compared to $4.8 million at June 30, 2002. Total non-performing loans as a percentage of total loans were 0.28% at June 30, 2003 compared to 0.41% at December 31, 2002 and 0.24% at June 30, 2002. The allowance for loan losses as a percentage of non-performing loans was 375.97% at June 30, 2003 compared to 246.55% at December 31, 2002 and 474.56% at June 30, 2002. The allowance for loan losses as a percentage of total loans was 1.06% at June 30, 2003 compared to 1.02% at December 31, 2002 and decreased 7 basis points from 1.13% at June 30, 2002. Total deposits decreased $571.7 million or 17.6% to $2.7 billion at June 30, 2003 from $3.2 billion at December 31, 2002. The largest decrease was in demand deposit accounts, which decreased $551.5 million to $718.0 million at June 30, 2003 from $1.27 billion at December 31, 2002. This decrease is primarily attributable to the funds held in the conversion escrow account totaling $526.0 million that were held for the purchase of Provident Financial Services, Inc., common stock. Savings deposits increased $39.9 million or 4.32% to $962.3 million at June 30, 2003 compared to $922.4 million at December 31, 2002. Time deposits decreased $60.2 million or 5.72% to $991.3 million at June 30, 2003 from $1.05 billion at December 31, 2002 Total borrowed funds increased $289.6 million or 89.6% to $612.6 million at June 30, 2003 from $323.1 million at December 31, 2002. Federal Home Loan Bank borrowings increased $295.8 million or 110.74% to $562.9 million at June 30, 2003 compared to $267.1 million at December 31, 2002. The increase in borrowed funds was due primarily to a leverage strategy. The Provident Bank maintains its corporate offices in Jersey City, New Jersey. The Provident Bank currently operates 50 full service branches throughout northern and central New Jersey. 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 wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise 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 June 30, 2003 (Unaudited) and December 31, 2002 (Dollars in Thousands) Assets June 30, 2003 December 31, 2002 ----------------------------- ----------------------- Cash and due from banks $ 122,837 101,352 Federal funds sold 58,500 73,000 Short-term investments 70,503 90,503 ----------------------------- ----------------------- Total cash and cash equivalents 251,840 264,855 ----------------------------- ----------------------- Investment securities (market value of $533,951 523,921 216,119 (unaudited) and $221,435 at June 30, 2003 and December 31, 2002) Securities available for sale, at fair value 1,189,989 1,242,118 Federal Home Loan Bank stock 28,147 13,356 Loans 2,028,101 2,052,855 Less allowance for loan losses 21,517 20,986 ----------------------------- ----------------------- Net loans 2,006,584 2,031,869 ----------------------------- ----------------------- Other real estate owned, net 1,834 -- Banking premises and equipment, net 44,966 44,005 Accrued interest receivable 17,105 15,842 Intangible assets 23,655 25,405 Bank owned life insurance 69,453 47,659 Other assets 27,680 17,980 ----------------------------- ----------------------- Total assets $ 4,185,174 3,919,208 ============================= ======================= Liabilities and Equity Deposits: Demand deposits $ 717,971 1,269,421 Savings deposits 962,287 922,404 Certificates of deposit of $100,000 or more 157,446 160,867 Other time deposits 833,895 890,642 ----------------------------- ----------------------- Total deposits 2,671,599 3,243,334 Mortgage escrow deposits 10,405 9,582 Borrowed funds 612,639 323,081 Other liabilities 17,214 17,202 ----------------------------- ----------------------- Total liabilities 3,311,857 3,593,199 ----------------------------- ----------------------- 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, 61,538,300 shares issued and 61,538,300 and 0 shares outstanding at June 30, 2003 and December 31, 2002. respectively 615 Additional paid-in capital 606,081 Retained earnings 314,044 314,111 Accumulated other comprehensive income 8,740 11,898 Less: Unallocated common stock held by Employee Stock Ownership Plan (56,163) ----------------------------- ----------------------- ----------------------------- ----------------------- Total stockholders' equity 873,317 326,009 ----------------------------- ----------------------- Total liabilities and stockholders equity $ 4,185,174 3,919,208 ============================= =======================
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Consolidated Statements of Operations Three Months and Six Months Ended June 30, 2003 and 2002 (Unaudited) (Dollars in Thousands) Three Months Ended Six Months Ended June 30 June 30 June 30 June 30 2003 2002 2003 2002 Interest income: Real estate secured loans $ 20,815 24,031 42,192 48,960 Commercial loans 5,504 4,310 11,058 8,274 Consumer loans 4,577 5,400 9,389 10,915 Investment securities 5,151 1,325 8,839 2,693 Securities available for sale 12,166 8,987 23,919 16,540 Other short-term investments 176 100 244 128 ---------- ---------- ---------- ---------- Federal funds 379 426 693 762 Total interest income 48,768 44,579 96,334 88,272 ---------- ---------- ---------- ---------- Interest expense: Deposits 10,019 13,820 22,170 27,984 Borrowed funds 4,044 2,021 6,812 4,109 ---------- ---------- ---------- ---------- Total interest expense 14,063 15,841 28,982 32,093 ---------- ---------- ---------- ---------- Net interest income 34,705 28,738 67,352 56,179 Provision for loan losses 300 600 900 1,200 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 34,405 28,138 66,452 54,979 ---------- ---------- ---------- ---------- Non-interest income: Fees 3,657 3,809 7,710 7,475 Net gain (loss) on securities transactions (1,724) 14 (2,116) 995 Commissions 87 324 158 598 Bank owned life insurance 992 708 1,794 1,405 Other income 394 1,088 949 1,505 ---------- ---------- ---------- ---------- Total non-interest income 3,406 5,943 8,495 11,978 ---------- ---------- ---------- ---------- Non-interest expense: Salaries and employee benefits 12,621 11,663 24,646 23,190 Net occupancy expense 3,425 3,279 6,835 6,578 Federal deposit insurance 126 103 234 207 Data processing expense 1,655 1,473 3,273 3,023 Advertising and promotion expense 835 988 1,492 1,706 Amortization of intangibles 939 812 2,134 1,715 Other operating expenses 5,096 4,257 9,612 8,207 Contribution to The Provident Bank Foundation -- -- 24,000 -- ---------- ---------- ---------- ---------- Total non-interest expenses 24,697 22,575 72,226 44,626 ---------- ---------- ---------- ---------- Income before income tax expense and the cumulative effect of a change in accounting principle $ 13,114 11,506 2,721 22,331 Income tax expense 4,276 3,404 326 6,786 ---------- ---------- ---------- ---------- Income before the cumulative effect of a change in accounting 8,838 8,102 2,395 15,545 principle Cumulative effect of a change in accounting principle, net of tax of $0 -- -- -- (519) ---------- ---------- ---------- ---------- Net income $ 8,838 8,102 2,395 15,026 ========== ========== ========== ========== Basic Earnings Per Share $0.15 $0.02 Average basic shares outstanding 59,257,827 59,655,159
PROVIDENT FINANACIAL SERVICES, INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL HIGHLIGHTS (dollars in thousands, except share data)(unaudited) For the For the 3 Months Ended 6 Months Ended June 30 June 30 2003 2002 2003 2002 --------- --------- --------- --------- INCOME STATEMENT: Net Interest Income $ 34,705 28,738 $ 67,352 56,179 Provision for Loan Losses 300 600 900 1,200 Non-interest Income 3,406 5,943 8,495 11,978 Non-interest Expense 24,697 22,575 72,226 44,626 Income before income tax expense and the cumulative effect of a change in accounting principle 13,114 11,506 2,721 22,331 Cumulative effect of a change in accounting principle 0 0 0 (519) Net Income 8,838 8,102 2,395 15,026 Basic Earnings Per Share (1) $0.15 - $0.02 - Interest Rate Spread 3.08% 3.72% 3.00% 3.74% Net Interest Margin 3.56% 4.08% 3.52% 4.09% PROFITABILITY: Return on average assets 0.86% 1.08% 0.12% 1.02% Return on average equity 3.97% 11.01% 0.59% 10.24% Operating expense to average assets 2.39% 3.00% 3.57% 3.02% Efficiency ratio (net of foundation expense) (2) 62.00% 65.12% 61.86% 66.45% ASSET QUALITY: Non-performing loans 5,723 4,627 Other Real Estate Owned 1,834 123 Non-performing loans to total loans 0.28% 0.24% Non-performing assets to total 0.18% 0.15% assets Allowance for loan losses 21,517 21,958 Allowance for loan losses to non-performing loans 375.97% 474.56% Allowance for loan losses to total loans 1.06% 1.13% AVERAGE BALANCE SHEET DATA: Assets $4,134,273 $3,011,080 $4,049,687 $2,959,833 Loans, net $1,985,482 $1,927,536 $1,984,339 $1,951,522 Earnings Assets $3,904,091 $2,814,872 $3,823,370 $2,743,950 Core Deposits $1,628,895 $1,399,420 $1,648,440 $1,362,112 Borrowings $ 580,374 $ 194,830 $ 498,662 $ 191,195 Interest Bearing Liabilities $2,929,071 $2,429,173 $2,839,937 $2,382,986 Stockholders Equity $ 889,518 $ 294,416 $ 808,624 $ 293,499 Average yield on interest earning assets 5.00% 6.33% 5.04% 6.43% Average cost of interest bearing liabilities 1.92% 2.61% 2.04% 2.69% CAPITAL: Leverage Capital 20.49% 9.39% 20.49% 9.39% Total risk based capital 36.78% 14.93% 36.78% 14.93% Average equity to average assets 21.52% 9.78% 19.97% 9.92% Notes (1) Basic Earnings per share for six months includes the results of operations from January 15, 2003, the date we completed our Plan of Conversion, in the amount of $1,415,000, for the six months ended June 30, 2003. (2) Efficiency Ratio Calculation 6/30/03 6/30/02 6/30/03 6/30/02 Net Interest Income 34,705 28,738 67,352 56,179 Non Interest Income 3,406 5,943 8,495 11,978 (Less) gains/plus losses on securities 1,724 -14 2,116 -995 Total Income: 39,835 34,667 77,963 67,162 Non Interest Expense: 24,697 22,575 72,226 44,626 LESS: Provident Bank Charitable Foundation Donation 0 0 -24,000 0 Adjusted Non Interest Expense 24,697 22,575 48,226 44,626 Expense/Income: 62.00% 65.12% 61.86% 66.45%