-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L7lvSVPBL/trFwDVQRFdqZoIFVvEMOVRe36sjO/BBCpUCEfMvsrug7o5XtAoT64V YTsKIw/bsScWNlKebH6Hjw== 0000943374-09-000088.txt : 20090129 0000943374-09-000088.hdr.sgml : 20090129 20090129093552 ACCESSION NUMBER: 0000943374-09-000088 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20090129 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090129 DATE AS OF CHANGE: 20090129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVIDENT FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0001178970 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 421547151 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31566 FILM NUMBER: 09553053 BUSINESS ADDRESS: STREET 1: 830 BERGEN AVENUE CITY: JERSEY CITY STATE: NJ ZIP: 07306 BUSINESS PHONE: 2013331000 8-K 1 form8k_012909.txt FORM 8-K ANNOUNCING EARNINGS RELEASE JANUARY 29, 2009 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 29, 2009 ---------------- PROVIDENT FINANCIAL SERVICES, INC. ---------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 001-31566 42-1547151 - ------------------------------ ----------------------- ---------- (State or Other Jurisdiction) (Commission File No.) (I.R.S. Employer of Incorporation) Identification No.) 830 Bergen Avenue, Jersey City, New Jersey 07306-4599 - ------------------------------------------ ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (201) 333-1000 -------------- Not Applicable -------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operation and Financial Condition. --------------------------------------------- On January 29, 2009, Provident Financial Services, Inc. (the "Company") issued a press release reporting its financial results for the three months and full year ended December 31, 2008. A copy of the press release is attached as Exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed "filed" for any purpose. Item 7.01 Regulation FD Disclosure. ------------------------- The Company's Board of Directors declared a $0.11 per common share cash dividend payable on February 27, 2009 to stockholders of record on February 13, 2009, which is consistent with the prior quarter's cash dividend. This announcement was included as part of the press release announcing financial results for the quarter and full year ended December 31, 2008 issued by the Company on January 29, 2009 and attached as Exhibit 99.1 to this report. A copy of the press release is being furnished to the SEC and shall not be deemed "filed" for any purpose. Item 9.01. Financial Statements and Exhibits --------------------------------- (a) Financial Statements of Businesses Acquired. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Shell Company Transactions. Not applicable. (d) Exhibits. Exhibit No. Description ----------- ----------- 99.1 Press release issued by the Company on January 29, 2009 announcing its financial results for the three months and full year ended December 31, 2008 and the declaration of a quarterly cash dividend. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. PROVIDENT FINANCIAL SERVICES, INC. DATE: January 29, 2009 By: /s/ Paul M. Pantozzi ------------------------ Paul M. Pantozzi Chairman and Chief Executive Officer 3 EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 Press release issued by the Company on January 29, 2009 announcing its financial results for the three months and full year ended December 31, 2008 and the declaration of a quarterly cash dividend. EX-99.1 2 form8kexh_012909.txt PRESS RELEASE DATED JANUARY 29, 2009 NEWS RELEASE CONTACT: Kenneth J. Wagner, SVP Investor Relations Provident Financial Services, Inc. (201) 915-5344 FOR RELEASE: 7:43 A.M. Eastern Time: January 29, 2009 Provident Financial Services, Inc. Announces Fourth Quarter and Full-Year Earnings for 2008 and Declares Quarterly Cash Dividend JERSEY CITY, NJ, January 29, 2009 ---/PRNewswire/First Call/ - Provident Financial Services, Inc. (NYSE:PFS) (the "Company") reported basic and diluted earnings per share of $0.13 for the quarter ended December 31, 2008, compared to basic and diluted earnings per share of $0.08 for the quarter ended December 31, 2007. Basic and diluted earnings per share were $0.74 for the year ended December 31, 2008, compared to basic and diluted earnings per share of $0.63 for the year ended December 31, 2007. Net income for the three months ended December 31, 2008 totaled $7.4 million, compared to $4.7 million reported for the same period in 2007. Net income was $41.6 million for the year ended December 31, 2008, compared to $37.4 million for the same period in 2007. Earnings and per share data for the three months and year ended December 31, 2008 reflect significant increases to the provision for loan losses as a result of growth in the loan portfolio, an increase in non-performing loans, an increase in commercial loans as a percentage of the loan portfolio, and ongoing concerns about general economic conditions. The provision for loans losses totaled $8.5 million and $15.1 million for the three months and year ended December 31, 2008, respectively, compared with provisions of $3.7 million and $6.5 million for the three months and year ended December 31, 2007, respectively. Earnings and per share data for the year ended December 31, 2008 reflect severance costs totaling $503,000, net of tax, recognized during the second quarter of 2008. In addition, the Company recorded other-than-temporary impairment charges on investments in a debt security issued by Lehman Brothers Holdings, Inc. and the common stock of two publicly-traded financial institutions totaling $869,000, net of tax, during the quarter ended September 30, 2008. Results for the year ended December 31, 2008, were also impacted by a $180,000 net after-tax gain recorded in connection with the ownership and mandatory redemption of a portion of the Company's Class B Visa, Inc. shares as part of Visa's initial public offering in the first quarter of 2008, and a $175,000 net after-tax gain resulting from the sale of a branch office in the first quarter of 2008. Earnings and per share data for the three months and year ended December 31, 2007 reflect the impact of an executive separation agreement which resulted in a one-time charge of $655,000, net of tax. Earnings and per share data for the three months and year ended December 31, 2007 also reflect the impact of a securities impairment charge of $1.0 million, net of tax, and losses recognized on sales of securities in connection with portfolio repositioning totaling $632,000, net of tax. Earnings and per share data for the year ended December 31, 2007 further reflect the impact of a voluntary resignation program which resulted in a one-time charge of $2.1 million, net of tax. In addition, earnings and per share data for the year ended December 31, 2007 reflect the impact of a settlement of an insurance claim resulting in a recovery of $3.5 million, net of tax, related to a fraud loss that occurred and was recognized in 2002, the Company's acquisition of First Morris from April 1, 2007, the date the acquisition was completed, and one-time expenses of $246,000, net of tax, related to the merger and integration of First Morris' operations. Paul M. Pantozzi, Chairman and Chief Executive Officer, commented, "In the fourth quarter our loan portfolio grew substantially as we continued to meet the credit needs of our customers and communities, and we funded this expansion primarily through deposit growth. Growth in the loan portfolio, however, necessitated additions to our provision for possible loan losses, as did an increase in our non-performing loans. This impacted net earnings for the quarter, but prudent management of credit risk has remained our top priority during the current severe economic downturn." Pantozzi continued, "We remain well-capitalized, as defined by our regulators, and believe that our liquidity and capital position, coupled with our ongoing commitments to expense management and conservative lending practices, support our ability to grow profitably despite challenging economic conditions." Declaration of Quarterly Dividend The Company's Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on February 27, 2009, to stockholders of record as of the close of business on February 13, 2009. 1 Balance Sheet Summary Total assets increased $194.9 million, or 3.1%, to $6.55 billion at December 31, 2008, compared to $6.36 billion at December 31, 2007, due primarily to increases in loans and securities available for sale. Total investments increased $42.8 million, or 3.7%, during the year ended December 31, 2008. The increase included $55.2 million of residential mortgage loan pools that were securitized by the Company in the first quarter of 2008 and are held as securities available for sale. The Company's net loans increased $223.5 million, or 5.3%, to $4.48 billion at December 31, 2008, from $4.26 billion at December 31, 2007, as year-to-date loan originations and purchases more than offset repayments, sales and the securitization of $55.2 million of conforming one- to four-family 30-year fixed-rate residential mortgage loans during the first quarter of 2008. Loan originations totaled $1.33 billion and loan purchases totaled $267.8 million for the year ended December 31, 2008. Compared with December 31, 2007, commercial mortgage and multi-family loans increased $197.1 million, residential mortgage loans increased $87.4 million and commercial loans increased $41.1 million, while construction loans decreased $75.8 million and consumer loans decreased $19.9 million. Commercial real estate, construction and commercial loans represented 46.5% of the loan portfolio at December 31, 2008, compared to 45.2% at December 31, 2007. At December 31, 2008, the Company's unfunded loan commitments totaled $699.7 million, including $241.5 million in commercial loan commitments, $100.8 million in construction loan commitments and $91.6 million in commercial mortgage commitments. Unfunded loan commitments at September 30, 2008 were $728.9 million. Total deposits increased $1.5 million during the year ended December 31, 2008 to $4.23 billion. Core deposits increased $108.5 million, or 4.2%, to $2.69 billion at December 31, 2008, from $2.59 billion at December 31, 2007. Core deposits, consisting of savings and demand deposit accounts, represented 63.7% of total deposits at December 31, 2008, compared with 61.2% of total deposits at December 31, 2007. Borrowed funds increased $172.6 million, or 16.1%, during the year ended December 31, 2008. Common stock repurchases for the year ended December 31, 2008 totaled 101,000 shares at an average cost of $14.30 per share. At December 31, 2008, book value per share and tangible book value per share were $17.17 and $8.54, respectively, compared with $16.78 and $8.05, respectively, at December 31, 2007. Results of Operations Net Interest Margin The net interest margin decreased 7 basis points to 3.20% for the quarter ended December 31, 2008, from 3.27% for the quarter ended September 30, 2008. The net interest margin for the quarter ended December 31, 2008 increased 36 basis points compared with the net interest margin of 2.84% for the quarter ended December 31, 2007. The weighted average yield on interest-earning assets was 5.38% for the three months ended December 31, 2008, compared with 5.51% for the trailing quarter and 5.76% for the three months ended December 31, 2007. The weighted average cost of interest-bearing liabilities was 2.47% for the quarter ended December 31, 2008, compared with 2.55% for the trailing quarter and 3.33% for the fourth quarter of 2007. The weighted average yield on interest earning assets and the net interest margin for the three months ended December 31, 2008, were adversely impacted by 3 basis points as a result of the reversal of interest income associated with the transfer of loans to non-accrual status during the quarter. For the year ended December 31, 2008, the net interest margin was 3.11%. This was an increase of 15 basis points compared with the net interest margin of 2.96% for the year ended December 31, 2007. The weighted average yield on interest-earning assets was 5.50% for the year ended December 31, 2008, compared with 5.79% for the year ended December 31, 2007. The weighted average cost of interest-bearing liabilities was 2.72% for the year ended December 31, 2008, compared with 3.27% for 2007. The average cost of interest-bearing deposits for the three months ended December 31, 2008 was 2.14%, compared with 2.19% for the trailing quarter and 3.11% for the same period last year. The average cost of borrowings for the three months ended December 31, 2008 was 3.45%, compared with 3.62% for the trailing quarter and 4.19% for the same period last year. The average cost of interest-bearing deposits for the year ended December 31, 2008 was 2.40%, compared with 3.07% for 2007. The average cost of borrowings for the year ended December 31, 2008 was 3.73%, compared with 4.17% for 2007. 2 Non-Interest Income Non-interest income totaled $7.0 million for the quarter ended December 31, 2008, an increase of $1.4 million compared to the same period in 2007. Net gains on securities transactions totaled $83,000 for the quarter ended December 31, 2008, compared with net losses of $1.9 million for the same period last year, including other-than temporary impairment charges recorded in the quarter ended December 31, 2007. Partially offsetting the net securities gains, fee income for the quarter ended December 31, 2008 decreased $835,000, or 14.1%, compared to the same period in 2007, primarily due to reductions in income on funds underlying outstanding official checks as a result of lower short-term interest rates, decreases in the value of equity fund holdings, and lower overdraft fee income. For the year ended December 31, 2008, non-interest income totaled $30.2 million, a decrease of $5.3 million, or 15.0%, compared to 2007. In 2007, the Company recorded a non-recurring gain on an insurance settlement of $5.9 million, before taxes, related to the resolution of previously disclosed litigation. In addition, fee income declined $1.1 million, or 4.7% for the year ended December 31, 2008, compared with 2007, due to decreased loan fees, reductions in income on funds underlying outstanding official checks as a result of lower short-term interest rates, and reductions in the market value of equity fund holdings. Partially offsetting these decreases in non-interest income, net losses on securities transactions, including other-than-temporary impairment charges, declined to $482,000 for the year ended December 31, 2008, compared with net losses of $2.0 million for 2007. Non-Interest Expense For the three months ended December 31, 2008, non-interest expense decreased $435,000, or 1.3%, to $33.4 million, compared to $33.8 million for the three months ended December 31, 2007. For the three months ended December 31, 2008, advertising and promotions expense decreased $484,000, compared with the same period in 2007. For the three months ended December 31, 2008, compensation and benefits expense decreased $397,000, compared with the same period in 2007, as a result of previous staff reductions and lower stock-based compensation costs. Amortization of intangibles decreased $300,000 for the three months ended December 31, 2008, compared with the same period in 2007, as a result of scheduled reductions in the amortization of core deposit intangibles. Partially offsetting these decreases, other operating expenses increased $445,000 for the quarter ended December 31, 2008, compared with the same period in 2007, due primarily to expenses related to foreclosed assets. In addition, net occupancy costs increased $203,000 for the three months ended December 31, 2008, compared with the same period in 2007. For the year ended December 31, 2008, non-interest expense decreased $2.4 million, or 1.8%, to $130.6 million, compared to $133.0 million for 2007. Compensation and benefits expense decreased $4.4 million, as a result of previous staff reductions and lower stock-based compensation costs. The Company incurred $878,000 in pre-tax severance costs during 2008, compared with $4.5 million in severance charges recognized in 2007. Advertising costs decreased $836,000 for the year ended December 31, 2008, compared with 2007, as prior year costs included charges related to the First Morris acquisition. Amortization of intangibles decreased $509,000 for the year ended December 31, 2008, compared with 2007, as a result of scheduled reductions in the amortization of core deposit intangibles. Partially offsetting these decreases, other operating expenses increased $1.9 million for the year ended December 31, 2008, compared with 2007, due to increases in several categories, including an expense of $426,000 associated with the Company's proportionate share of a litigation reserve established by Visa, as well as increases in attorneys fees and costs associated with foreclosed assets. Net occupancy expense increased $1.4 million for the year ended December 31, 2008, compared with 2007, due in part to the addition of nine branch locations in connection with the acquisition of First Morris. The Company's annualized non-interest expense as a percentage of average assets improved to 2.05% for the quarter ended December 31, 2008, compared with 2.15% for the same period in 2007. For the year ended December 31, 2008, non-interest expense as a percentage of average assets was 2.04%, compared with 2.19% for 2007. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) improved to 64.30% for the quarter ended December 31, 2008, compared with 77.21% for the same period in 2007. For the year ended December 31, 2008, the efficiency ratio was 64.56%, compared with 69.85% for 2007. Asset Quality Total non-performing loans at December 31, 2008 were $59.1 million, or 1.31% of total loans, compared with $34.6 million, or 0.81% of total loans at December 31, 2007. During the fourth quarter of 2008, two land improvement loans to one borrower were classified as impaired and moved to non-accrual status. The Company has established specific reserves for these loans based on current collateral valuations. At December 31, 2008, impaired loans totaled $37.8 million with related specific reserves of $6.0 million. Within total impaired loans, there were $13.2 million of loans with an average loan-to-value ratio of 3 68.3% based on current collateral valuations for which no specific reserves were required in accordance with Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan." At December 31, 2008, the Company's allowance for loan losses was 1.05% of total loans, compared with 0.95% of total loans at December 31, 2007. The Company recorded provisions for loan losses of $8.5 million and $15.1 million for the three months and year ended December 31, 2008, respectively, compared with provisions of $3.7 million and $6.5 million for the three months and year ended December 31, 2007, respectively. For the three months and year ended December 31, 2008, the Company had net charge-offs of $4.1 million and $8.2 million, respectively, compared with net charge-offs of $539,000 and $1.0 million for the same periods in 2007. The allowance for loan losses increased $6.9 million, to $47.7 million at December 31, 2008, from $40.8 million at December 31, 2007. The increase in the loan loss provision for the three months and year ended December 31, 2008, compared with the same periods in 2007, was attributable to growth in the loan portfolio, an increase in non-performing loans, and an increase in commercial loans as a percentage of the loan portfolio to 46.5% at December 31, 2008, from 45.2% at December 31, 2007, as well as ongoing uncertainty with respect to general economic conditions. Of the $8.5 million provision for loan losses recorded for the three months ended December 31, 2008, $2.0 million was attributable to growth in the loan portfolio. At December 31, 2008, the Company held $3.4 million of foreclosed assets, compared with $1.0 million at December 31, 2007. The increase in foreclosed assets at December 31, 2008, compared with December 31, 2007, was primarily attributable to one commercial real estate line of credit secured by a number of properties that was previously classified as impaired. Income Tax Expense For the three months ended December 31, 2008, the Company's income tax expense was $2.6 million, compared with $1.6 million for the same period in 2007. For the year ended December 31, 2008, the Company's income tax expense was $14.9 million, compared with $13.5 million for 2007. The increase in income tax expense was primarily attributable to increased income before income taxes. For the three months and year ended December 31, 2008, the Company's effective tax rates were 26.0% and 26.4%, respectively, compared with 24.9% and 26.5% for the three months and year ended December 31, 2007, respectively. About the Company Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering a full range of retail and commercial loan and deposit products. The Bank currently operates 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 January 29, 2009 regarding highlights of the Company's fourth quarter and full year 2008 financial results. The call may be accessed by dialing 1-800-860-2442 (Domestic) or 1-412-858-4600 (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 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. 4 PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Consolidated Statements of Condition December 31, 2008 (Unaudited) and December 31, 2007 (Dollars in Thousands)
Assets December 31, 2008 December 31, 2007 --------------------------------- ---------------------------- Cash and due from banks $ 66,315 $ 83,737 Federal funds sold -- 18,000 Short-term investments 2,231 38,892 --------------------------------- ---------------------------- Total cash and cash equivalents 68,546 140,629 --------------------------------- ---------------------------- Investment securities held to maturity (market value of $351,623 at December 31, 2008 (unaudited) and $359,699 at December 31, 2007) 347,484 358,491 Securities available for sale, at fair value 820,329 769,615 Federal Home Loan Bank stock 42,833 39,764 Loans 4,526,748 4,296,291 Less allowance for loan losses 47,712 40,782 --------------------------------- ---------------------------- Net loans 4,479,036 4,255,509 --------------------------------- ---------------------------- Foreclosed assets, net 3,439 1,041 Banking premises and equipment, net 75,750 79,138 Accrued interest receivable 23,866 24,665 Intangible assets 514,684 520,722 Bank-owned life insurance 126,956 121,674 Other assets 51,343 48,143 --------------------------------- ---------------------------- Total assets $ 6,554,266 $ 6,359,391 ================================= ============================ Liabilities and Stockholders' Equity Deposits: Demand deposits $ 1,821,437 $ 1,553,625 Savings deposits 872,388 1,031,725 Certificates of deposit of $100,000 or more 445,466 480,362 Other time deposits 1,087,045 1,159,108 --------------------------------- ---------------------------- Total deposits 4,226,336 4,224,820 Mortgage escrow deposits 20,074 18,075 Borrowed funds 1,247,681 1,075,104 Other liabilities 36,483 40,598 --------------------------------- ---------------------------- Total liabilities 5,530,574 5,358,597 --------------------------------- ---------------------------- 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 59,610,623 shares outstanding at December 31, 2008, and 59,646,936 shares outstanding at December 31, 2007 832 832 Additional paid-in capital 1,013,292 1,009,120 Retained earnings 454,444 437,503 Accumulated other comprehensive income 4,618 4,335 Treasury stock at cost (384,854) (383,407) Unallocated common stock held by Employee Stock Ownership Plan (64,640) (67,589) Common Stock acquired by the Directors' Deferred Fee Plan (7,667) (7,759) Deferred compensation - Directors' Deferred Fee Plan 7,667 7,759 -------------------------------- ---------------------------- Total stockholders' equity 1,023,692 1,000,794 -------------------------------- ---------------------------- Total liabilities and stockholders' equity $ 6,554,266 $ 6,359,391 ================================ ============================
5 PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY Consolidated Statements of Income Three Months and Year Ended December 31, 2008 and 2007 (Unaudited) (Dollars in Thousands, Except Per Share Data)
Three Months Ended Year Ended December 31, December 31, ------------------------------ --------------------------------- 2008 2007 2008 2007 ------------- --------------- -------------- ---------------- (Unaudited) (Unaudited) Interest income: Real estate secured loans $ 42,657 42,191 167,063 167,506 Commercial loans 10,431 12,271 42,999 42,151 Consumer loans 8,795 10,071 36,727 39,132 Investment securities 3,571 3,742 14,431 15,406 Securities available for sale 10,218 9,493 42,590 38,107 Other short-term investments 15 38 344 153 Federal funds 2 12 166 122 ------------- --------------- -------------- ---------------- Total interest income 75,689 77,818 304,320 302,577 ------------- --------------- -------------- ---------------- Interest expense: Deposits 19,942 29,260 88,887 112,923 Borrowed funds 10,787 10,275 43,364 34,776 ------------- --------------- -------------- ---------------- Total interest expense 30,729 39,535 132,251 147,699 ------------- --------------- -------------- ---------------- Net interest income 44,960 38,283 172,069 154,878 Provision for loan losses 8,500 3,730 15,100 6,530 ------------- --------------- -------------- ---------------- Net interest income after provision for loan losses 36,460 34,553 156,969 148,348 ------------- --------------- -------------- ---------------- Non-interest income: Fees 5,104 5,939 23,391 24,538 Gain on insurance settlement -- -- -- 5,947 Bank-owned life insurance 1,302 1,377 5,282 5,403 Impairment charge on securities -- (1,003) (1,410) (1,003) Net gain (loss) on securities transactions 83 (923) 928 (984) Other income 495 146 2,020 1,636 ------------- --------------- -------------- ---------------- Total non-interest income 6,984 5,536 30,211 35,537 ------------- --------------- -------------- ---------------- Non-interest expense: Compensation and employee benefits 17,002 17,399 67,770 72,183 Net occupancy expense 5,183 4,980 20,809 19,431 Data processing expense 2,291 2,193 9,194 9,106 Amortization of intangibles 1,371 1,671 6,077 6,586 Advertising and promotion 1,117 1,601 4,106 4,942 Other operating expenses 6,435 5,990 22,645 20,765 ------------- --------------- -------------- ---------------- Total non-interest expense 33,399 33,834 130,601 133,013 ------------- --------------- -------------- ---------------- Income before income tax 10,045 6,255 56,579 50,872 expense Income tax expense 2,612 1,560 14,937 13,492 ------------- --------------- -------------- ---------------- Net income $ 7,433 $4,695 41,642 $37,380 ============= =============== ============== ================ Basic earnings per share $ 0.13 $ 0.08 0.74 $ 0.63 Average basic shares outstanding 56,106,027 56,931,990 56,031,273 59,067,438 Diluted earnings per share $ 0.13 $ 0.08 0.74 $ 0.63 Average diluted shares outstanding 56,106,027 56,931,990 56,031,318 59,067,438
6 PROVIDENT FINANCIAL SERVICES, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except share data) (Unaudited)
At or for the Three At or for the Year Months Ended Ended December 31, December 31, ---------------------------------------------------------------- 2008 2007 2008 2007 ---- ---- ---- ---- INCOME STATEMENT: Net interest income $44,960 $38,283 $172,069 $154,878 Provision for loan losses 8,500 3,730 15,100 6,530 Non-interest income 6,984 5,536 30,211 35,537 Non-interest expense 33,399 33,834 130,601 133,013 Income before income tax expense 10,045 6,255 56,579 50,872 Net income 7,433 4,695 41,642 37,380 Basic earnings per share $0.13 $0.08 $0.74 $0.63 Diluted earnings per share $0.13 $0.08 $0.74 $0.63 Interest rate spread 2.91% 2.43% 2.78% 2.52% Net interest margin 3.20% 2.84% 3.11% 2.96% PROFITABILITY: Annualized return on average assets 0.46% 0.30% 0.65% 0.62% Annualized return on average equity 2.91% 1.85% 4.12% 3.63% Annualized non-interest expense to average assets 2.05% 2.15% 2.04% 2.19% Efficiency ratio (1) 64.30% 77.21% 64.56% 69.85% ASSET QUALITY: Non-accrual loans $59,118 $34,644 Non-performing loans 59,118 34,644 Foreclosed assets 3,439 1,041 Non-performing loans to total loans 1.31% 0.81% Non-performing assets to total assets 0.95% 0.56% Allowance for loan losses $47,712 $40,782 Allowance for loan losses to non-performing loans 80.71% 117.72% Allowance for loan losses to total loans 1.05% 0.95% AVERAGE BALANCE SHEET DATA: Assets $6,469,192 $6,255,688 $6,391,549 $6,070,742 Loans, net 4,386,439 4,216,335 4,280,478 4,036,193 Earning assets 5,612,630 5,384,310 5,529,445 5,227,432 Core deposits 2,654,797 2,572,351 2,622,268 2,495,104 Borrowings 1,243,879 973,393 1,163,531 832,961 Interest-bearing liabilities 4,948,704 4,705,625 4,865,441 4,509,917 Stockholders' equity 1,016,255 1,006,790 1,010,966 1,028,755 Average yield on interest-earning assets 5.38% 5.76% 5.50% 5.79% Average cost of interest-bearing liabilities 2.47% 3.33% 2.72% 3.27%
7 Notes (1) Efficiency Ratio Calculation
Three Months Ended Year Ended December 31, December 31, ------------ ------------ 2008 2007 2008 2007 ---- ---- ---- ---- Net interest income $44,960 $38,283 $172,069 $154,878 Non-interest income 6,984 5,536 30,211 35,537 ----- ----- ------ ------ Total income $51,944 $43,819 $202,280 $190,415 ======= ======= ======== ======== Non-interest expense $33,399 $33,834 $130,601 $133,013 ======= ======= ======== ======== Expense/Income: 64.30% 77.21% 64.56% 69.85% ====== ====== ====== ======
8
Average Quarterly Balance NET INTEREST MARGIN ANALYSIS (Unaudited) (Dollars in thousands) December 31, 2008 September 30, 2008 ------------------------------------------ --------------------------------------- Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost ------------------------------------------ --------------------------------------- Interest-Earning Assets: Federal Funds Sold and Other Short-Term Investments $ 4,490 $ 17 1.37 % $ 4,651 $ 26 2.28 % Investment Securities (1) 352,361 3,571 4.05 354,603 3,606 4.07 Securities Available for Sale 826,271 9,859 4.77 854,981 10,212 4.78 Federal Home Loan Bank Stock 43,069 359 3.32 40,908 558 5.43 Net Loans (2) Total Mortgage Loans 3,088,659 42,657 5.51 3,001,010 42,465 5.65 Total Commercial Loans 672,103 10,431 6.17 670,535 10,665 6.33 Total Consumer Loans 625,677 8,795 5.59 621,587 9,106 5.83 ------------- ----------- ------------- ---------- Total Interest-Earning Assets 5,612,630 75,689 5.38 5,548,275 76,638 5.51 ----------- -------------- ---------- ------------ Non-Interest Earning Assets: Cash and Due from Banks 70,890 84,333 Other Assets 785,672 787,145 ------------- -------------- Total Assets $ 6,469,192 $ 6,419,753 ============= ============== Interest-Bearing Liabilities: Demand Deposits $ 1,314,577 5,958 1.80 % $ 1,249,566 5,725 1.82 % Savings Deposits 881,182 2,086 0.94 920,365 2,273 0.98 Time Deposits 1,509,066 11,898 3.14 1,492,165 12,135 3.24 ------------- ----------- -------------- ---------- Total Deposits 3,704,825 19,942 2.14 3,662,096 20,133 2.19 Total Borrowings 1,243,879 10,787 3.45 1,227,084 11,154 3.62 ------------- ----------- -------------- ---------- Total Interest-Bearing Liabilities 4,948,704 30,729 2.47 4,889,180 31,287 2.55 ----------- -------------- ---------- ------------ Non-Interest Bearing Liabilities 504,233 518,151 ------------- -------------- Total Liabilities 5,452,937 5,407,330 Stockholders Equity 1,016,255 1,012,422 ------------- -------------- Total Liabilities & Stockholders' Equity $ 6,469,192 $ 6,419,753 ============= ============== Net interest income $ 44,960 $ 45,351 =========== ========== Net interest rate spread 2.91 % 2.96 % ==== ==== Net interest-earning assets $ 663,878 $ 659,095 ============= ============== Net interest margin (3) 3.20 % 3.27 % ==== ==== Ratio of interest-earning assets to interest-bearing liabilities 1.13 x 1.13 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. 9 The following table summarizes the net interest margin for the previous year, inclusive.
12/31/08 9/30/08 6/30/08 3/31/08 12/31/07 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. -------- -------- -------- -------- -------- Interest-Earning Assets: Securities 4.50% 4.59% 4.66% 4.67% 4.55% Net Loans 5.63% 5.78% 5.76% 5.90% 6.09% Total Interest-Earning Assets 5.38% 5.51% 5.50% 5.63% 5.76% Interest-Bearing Liabilities Total Deposits 2.14% 2.19% 2.41% 2.87% 3.11% Total Borrowings 3.45% 3.62% 3.84% 4.06% 4.19% Total Interest-Bearing Liabilities 2.47% 2.55% 2.74% 3.14% 3.33% Interest Rate Spread 2.91% 2.96% 2.76% 2.49% 2.43% Net Interest Margin 3.20% 3.27% 3.10% 2.87% 2.84% Ratio of Interest-Earning Assets to Interest-Bearing Liabilities 1.13x 1.13x 1.14x 1.14x 1.14x
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Average YTD Balance NET INTEREST MARGIN ANALYSIS (Unaudited) (Dollars in thousands) December 31, 2008 December 31, 2007 ------------------------------------------ ---------------------------------------- Average Average Average Average Balance Interest Yield Balance Interest Yield ------------------------------------------ ---------------------------------------- Interest-Earning Assets: Federal Funds Sold and Other Short-Term Investments $ 16,238 $ 510 3.14 % $ 5,200 $ 275 5.28 % Investment Securities (1) 354,079 14,431 4.08 373,733 15,406 4.12 Securities Available for Sale 839,226 40,158 4.79 780,836 35,794 4.58 Federal Home Loan Bank Stock 39,424 2,432 6.17 31,470 2,313 7.35 Net Loans (2) Total Mortgage Loans 2,972,364 167,063 5.62 2,820,350 167,506 5.94 Total Commercial Loans 680,966 42,999 6.31 585,567 42,151 7.20 Total Consumer Loans 627,148 36,727 5.86 630,276 39,132 6.21 ------------- ------------ ------------- ---------- Total Interest-Earning Assets 5,529,445 304,320 5.50 5,227,432 302,577 5.79 ------------ -------------- ---------- ---------- Non-Interest Earning Assets: Cash and Due from Banks 77,841 88,124 Other Assets 784,263 755,186 ------------- --------------- Total Assets $ 6,391,549 $ 6,070,742 ============= =============== Interest-Bearing Liabilities: Demand Deposits $ 1,215,059 23,273 1.92 % $ 849,235 21,269 2.50 % Savings Deposits 941,057 9,915 1.05 1,168,530 18,674 1.60 Time Deposits 1,545,794 55,699 3.60 1,659,191 72,980 4.40 ------------- ------------ --------------- ---------- Total Deposits 3,701,910 88,887 2.40 3,676,956 112,923 3.07 Total Borrowings 1,163,531 43,364 3.73 832,961 34,776 4.17 ------------- ------------ --------------- ---------- Total Interest-Bearing Liabilities 4,865,441 132,251 2.72 4,509,917 147,699 3.27 ------------ ------------- ---------- ----------- Non-Interest Bearing Liabilities 515,142 532,070 ------------- --------------- Total Liabilities 5,380,583 5,041,987 Stockholders' Equity 1,010,966 1,028,755 ------------- --------------- Total Liabilities & Stockholders' Equity $ 6,391,549 $ 6,070,742 ============= =============== Net interest income $ 172,069 $ 154,878 ============ ========== Net interest rate spread 2.78 % 2.52 % ==== ==== Net interest-earning assets $ 664,004 $ 717,515 ============= =============== Net interest margin (3) 3.11 % 2.96 % ==== ==== Ratio of interest-earning assets to interest-bearing liabilities 1.14 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. 11 The following table summarizes the YTD net interest margin for the previous three years, inclusive.
Year Ended ---------------------------------------- 12/31/08 12/31/07 12/31/06 Interest-Earning Assets: 4.61% Securities 4.52% 4.30% Net Loans 5.77% 6.16% 6.00% Total Interest-Earning Assets 5.50% 5.79% 5.54% Interest-Bearing Liabilities: Total Deposits 2.40% 3.07% 2.46% Total Borrowings 3.73% 4.17% 3.82% Total Interest-Bearing Liabilities 2.72% 3.27% 2.74% Interest Rate Spread 2.78% 2.52% 2.80% Net Interest Margin 3.11% 2.96% 3.23% Ratio of Interest-Earning Assets to Interest-Bearing Liabilities 1.14x 1.16x 1.18x
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