JERSEY CITY, N.J., July 23 /PRNewswire-FirstCall/ -- Provident
Financial Services, Inc. (NYSE:PFS) (the "Company") reported net
income of $6.3 million, or $0.11 per basic and diluted share for
the quarter ended June 30, 2009, compared to net income of $10.4
million, or $0.18 per basic and diluted share for the quarter ended
June 30, 2008. The Company reported operating income, excluding a
non-cash goodwill impairment charge recorded in the first quarter
of 2009, of $15.2 million, or $0.27 per basic and diluted share for
the six months ended June 30, 2009, compared to net income of $21.0
million, or $0.38 per basic and diluted share for the six months
ended June 30, 2008. The Company previously recognized a $152.5
million, or $2.71 per share goodwill impairment charge during the
quarter ended March 31, 2009. This accounting charge resulted in a
net loss of $137.3 million, or $2.44 per basic and diluted share
for the six months ended June 30, 2009. The goodwill impairment
charge was a non-cash accounting adjustment to the Company's
financial statements which did not affect cash flows, liquidity, or
tangible capital. As goodwill is excluded from regulatory capital,
the impairment charge did not impact the regulatory capital ratios
of the Company or its wholly owned subsidiary, The Provident Bank,
both of which remain "well-capitalized" under regulatory
requirements. Compared with the three and six months ended June 30,
2008, earnings and per share data for the three and six months
ended June 30, 2009 also reflect an increase in the provision for
loan losses due to the following: an increase in non-performing
loans; downgrades in risk ratings; year-over-year growth in the
loan portfolio; an increase in commercial loans as a percentage of
the loan portfolio; and the impact of current macroeconomic
conditions. The provision for loan losses was $5.8 million and
$11.6 million for the three and six months ended June 30, 2009,
respectively, compared with $1.5 million and $2.8 million,
respectively, for the same periods in 2008. In addition, earnings
and per share data for the three and six months ended June 30, 2009
were impacted by a special assessment imposed on the banking
industry by the FDIC as part of a plan to restore the deposit
insurance fund. The cost of this special assessment to the Company
was $1.9 million, or $0.03 per basic and diluted share, net of tax.
Paul M. Pantozzi, Chairman and Chief Executive Officer, commented,
"During the second quarter, we continued to address the challenges
posed by the recessionary economy by making requisite loan
charge-offs and appropriate additions to the allowance for
potential loan losses. As a result, our ratio of non-performing
loans to total loans remained essentially unchanged from the level
reported at the end of the prior quarter, and our ratio of loan
loss allowance to total loans remained stable. Our deposits
increased during the second quarter as consumers and businesses
continued to seek a secure and reputable repository for their
funds. We remained cautious in deploying this excess liquidity,
however, as we sought to meet loan demand from quality borrowers
and to select investments that would return a meaningful
longer-term revenue stream while managing our interest rate risk.
This posture resulted in a decrease in our net interest margin as
compared to both the matched and trailing quarters." Pantozzi
continued, "These factors, coupled with the special FDIC
assessment, had an impact on net earnings for the quarter, but our
long-term focus on balance sheet management, expense control, asset
quality maintenance and a solid capital position have helped ensure
that our core operating capabilities remain strong." Declaration of
Quarterly Dividend The Company's Board of Directors declared a
quarterly cash dividend of $0.11 per common share payable on August
31, 2009, to stockholders of record as of the close of business on
August 17, 2009. Balance Sheet Summary Total assets increased
$120.1 million, or 1.8%, to $6.67 billion at June 30, 2009, from
$6.55 billion at December 31, 2008, due primarily to increases in
securities available for sale and cash and cash equivalents,
partially offset by decreases in loans and intangible assets. Cash
and cash equivalents increased $135.8 million to $204.3 million at
June 30, 2009, from $68.5 million at December 31, 2008, as a result
of deposit inflows and proceeds from repayments and sales of loans.
The Company will continue to deploy these balances to fund loan
originations, investment purchases and the repayment of maturing
borrowings. Total investments increased $299.2 million, or 24.7%,
during the six months ended June 30, 2009. The increase included
$84.9 million of residential mortgage loan pools that were
securitized by the Company in the first quarter of 2009 and are
held as securities available for sale. The loan securitization was
undertaken to enhance the liquidity and risk-based capital
treatment of the underlying loans. The Company's net loans
decreased $173.4 million, or 3.9%, to $4.31 billion at June 30,
2009, from $4.48 billion at December 31, 2008. This decrease was
partially attributable to the securitization of $84.9 million of
residential mortgage loans during the first quarter of 2009. Loan
originations totaled $572.5 million and loan purchases totaled
$28.6 million for the six months ended June 30, 2009. Compared with
December 31, 2008, residential mortgage loans decreased $189.1
million, consumer loans decreased $26.0 million, construction loans
decreased $5.0 million, and commercial loans decreased $797,000,
while commercial mortgage and multi-family loans increased $53.5
million. In addition to the securitization of $84.9 million of
loans, total residential mortgage loans decreased as a result of
the sale of newly originated 30-year fixed-rate loans as part of
the Company's interest rate risk management process. Commercial
real estate, construction and commercial loans represented 49.4% of
the loan portfolio at June 30, 2009, compared to 46.5% at December
31, 2008. At June 30, 2009, the Company's unfunded loan commitments
totaled $730.2 million, including $241.3 million in commercial loan
commitments, $100.9 million in construction loan commitments and
$97.2 million in commercial mortgage commitments. Unfunded loan
commitments at March 31, 2009 were $708.7 million. Intangible
assets decreased $154.9 million to $359.8 million at June 30, 2009,
from $514.7 million at December 31, 2008, primarily due to a $152.5
million goodwill impairment charge previously recognized in the
first quarter of 2009. Total deposits increased $483.0 million, or
11.4%, during the six months ended June 30, 2009, to $4.71 billion.
Core deposits, consisting of savings and demand deposit accounts,
increased $321.0 million, or 11.9%, to $3.01 billion at June 30,
2009. The majority of the core deposit increase was in municipal
money market and retail checking deposits. Time deposits increased
$162.0 million, or 10.6%, to $1.69 billion at June 30, 2009, with
the majority of the increase occurring in the 18- and 15-month
maturity categories. Core deposits represented 64.0% of total
deposits at June 30, 2009, compared to 63.7% at December 31, 2008.
Borrowed funds were reduced by $219.9 million, or 17.6%, during the
six months ended June 30, 2009, to $1.03 billion, as the Company
deployed excess liquidity arising from the increase in core deposit
funding. Borrowed funds represented 15.4% of total assets at June
30, 2009, a reduction from 19.1% at December 31, 2008. Common stock
repurchases for the six months ended June 30, 2009 totaled 6,000
shares at an average cost of $11.31 per share. At June 30, 2009,
2.1 million shares remained eligible for repurchase under the
current authorization. At June 30, 2009, book value per share and
tangible book value per share were $14.59 and $8.57, respectively,
compared with $17.09 and $8.45, respectively, at December 31, 2008.
Results of Operations Net Interest Margin The net interest margin
decreased 14 basis points to 2.96% for the quarter ended June 30,
2009, from 3.10% for each of the quarters ended March 31, 2009 and
June 30, 2008. The decrease in the net interest margin for the
three months ended June 30, 2009 versus the trailing quarter and
the quarter ended June 30, 2008 was attributable to reductions in
earning asset yields, an increase in the average balance of
lower-yielding interest-bearing deposits and short-term investments
and an increase in the average balance of non-performing loans. The
weighted average yield on interest-earning assets was 4.96% for the
three months ended June 30, 2009, compared with 5.21% for the
trailing quarter and 5.50% for the three months ended June 30,
2008. The weighted average cost of interest-bearing liabilities was
2.27% for the quarter ended June 30, 2009, compared with 2.39% for
the trailing quarter and 2.74% for the second quarter of 2008. The
average cost of deposits for the three months ended June 30, 2009
was 1.93%, compared with 2.06% for the trailing quarter and 2.41%
for the same period last year. The average cost of borrowings for
the three months ended June 30, 2009 was 3.60%, compared with 3.47%
for the trailing quarter and 3.84% for the same period last year.
The increase in the average cost of borrowings for the quarter
ended June 30, 2009 versus the trailing quarter was attributable to
a reduction in lower-cost overnight borrowings resulting from
increased deposit levels. For the six months ended June 30, 2009,
the net interest margin increased 5 basis points to 3.03%, compared
with 2.98% for the six months ended June 30, 2008. The weighted
average yield on interest-earning assets declined 48 basis points
to 5.08% for the six months ended June 30, 2009, compared with
5.56% for the six months ended June 30, 2008, however the weighted
average cost of interest-bearing liabilities declined 61 basis
points to 2.33% for the six months ended June 30, 2009, compared
with 2.94% for the same period in 2008. The average cost of
deposits for the six months ended June 30, 2009 was 1.99%, compared
with 2.64% for the same period last year. The average cost of
borrowings for the six months ended June 30, 2009 was 3.53%,
compared with 3.95% for the same period last year. Non-Interest
Income Non-interest income totaled $8.9 million for the quarter
ended June 30, 2009, an increase of $2.2 million compared to the
same period in 2008. Fee income for the quarter ended June 30, 2009
increased $1.6 million, or 32.2%, compared to the same period in
2008, primarily as a result of increases in the value of equity
fund holdings. In addition, net gains on securities transactions
totaled $992,000 for the quarter ended June 30, 2009, compared with
net gains of $305,000 for the same quarter in 2008. Other income
increased $740,000 for the quarter ended June 30, 2009, compared
with the same period in 2008, primarily due to an increase in gains
on loan sales. The Company experienced an increase in the
origination and sale of 30-year fixed-rate residential mortgage
loans during the first half of 2009 as a result of lower prevailing
market interest rates that promoted increased refinancing activity.
Partially offsetting these increases, the Company recognized net
other-than-temporary impairment charges of $801,000 in the second
quarter of 2009 related to investments in a non-Agency
mortgage-backed security and the common stock of two publicly
traded financial institutions. For the six months ended June 30,
2009, non-interest income totaled $15.8 million, an increase of
$379,000, or 2.5%, compared to the same period in 2008. Fee income
increased $689,000, or 6.3%, for the six months ended June 30,
2009, compared to the same period in 2008, primarily as a result of
increases in the value of equity fund holdings. In addition, net
gains on securities transactions totaled $1.2 million for the six
months ended June 30, 2009, compared with net gains of $401,000 for
the same period in 2008. Partially offsetting these increases, the
Company recognized net other-than-temporary impairment charges of
$801,000 in the second quarter of 2009 related to investments in a
non-Agency mortgage-backed security and the common stock of two
publicly traded financial institutions. Other income also declined
for the six months ended June 30, 2009, compared with the same
period in 2008, primarily as a result of $660,000 of non-recurring
income realized last year in connection with Visa's initial public
offering. Non-Interest Expense For the three months ended June 30,
2009, non-interest expense increased $4.9 million, or 14.6%, to
$38.2 million, compared to $33.3 million for the three months ended
June 30, 2008. FDIC insurance expense increased $4.8 million for
the three months ended June 30, 2009, compared with the same period
in 2008, as a result of deposit growth, changes in premium rates
and a special assessment imposed on the industry as part of a plan
to restore the deposit insurance fund. The cost of the FDIC special
assessment was $3.1 million, accrued during the quarter ended June
30, 2009 and payable September 30, 2009. In addition, other
operating expenses increased $964,000 for the quarter ended June
30, 2009, compared with the same period last year, primarily as a
result of costs associated with the dissolution of a real estate
development joint venture. Partially offsetting these increases,
compensation and benefits expense decreased $680,000 for the three
months ended June 30, 2009, compared with the same period in 2008,
primarily due to the recognition of $773,000 in severance costs
during the second quarter of 2008. Excluding the $152.5 million
non-cash goodwill impairment charge recorded in the first quarter
of 2009, non-interest expense increased $6.2 million, or 9.5%, to
$71.4 million for the six months ended June 30, 2009, compared to
$65.2 million for the six months ended June 30, 2008. FDIC
insurance expense increased $5.1 million for the six months ended
June 30, 2009, compared with the same period in 2008, as a result
of deposit growth, changes in premium rates and the $3.1 million
FDIC special assessment discussed previously. Other operating
expenses increased $1.0 million for the six months ended June 30,
2009, compared with the same period in 2008, due primarily to costs
associated with the dissolution of a real estate development joint
venture. Asset Quality Total non-performing loans at June 30, 2009
were $63.9 million, or 1.47% of total loans, compared with $63.8
million, or 1.46% of total loans at March 31, 2009, $59.1 million,
or 1.31% of total loans at December 31, 2008, and $36.7 million, or
0.86% of total loans at June 30, 2008. At June 30, 2009, impaired
loans totaled $37.0 million with related specific reserves of $4.7
million. At June 30, 2009, the Company's allowance for loan losses
was 1.19% of total loans, compared with 1.05% of total loans at
December 31, 2008 and 0.96% of total loans at June 30, 2008. The
Company recorded provisions for loan losses of $5.8 million and
$11.6 million for the three and six months ended June 30, 2009,
respectively, compared with provisions of $1.5 million and $2.8
million for the three and six months ended June 30, 2008,
respectively. For the three and six months ended June 30, 2009, the
Company had net charge-offs of $6.2 million and $7.3 million,
respectively, compared with net charge-offs of $1.2 and $2.5
million, respectively, for the same periods in 2008. Net
charge-offs for the three and six months ended June 30, 2009
included $3.0 million related to an equipment lease financing
company. The allowance for loan losses increased $4.3 million to
$52.0 million at June 30, 2009, from $47.7 million at December 31,
2008. The increase in the loan loss provision for the three and six
months ended June 30, 2009, compared with the same periods in 2008,
was attributable to an increase in non-performing loans, downgrades
in risk ratings, year-over-year growth in the loan portfolio and an
increase in commercial loans as a percentage of the loan portfolio
to 49.4% at June 30, 2009, from 45.1% at June 30, 2008. At June 30,
2009, the Company held $5.5 million of foreclosed assets, compared
with $3.4 million at December 31, 2008. Income Tax Expense For the
three months ended June 30, 2009, the Company's income tax expense
was $1.7 million, compared with $4.1 million for the same period in
2008. For the six months ended June 30, 2009, the Company's income
tax expense was $4.7 million, compared with $8.1 million for the
same period in 2008. The decrease in income tax expense was
attributable to lower pre-tax income and a lower effective tax
rate. Excluding the impact of the goodwill impairment charge
recognized in the first quarter of 2009, which is not tax
deductible, the Company's effective tax rates were 21.5% and 23.4%,
respectively, for the three and six months ended June 30, 2009,
compared with 28.3% and 27.8% for the three and six months ended
June 30, 2008, respectively. The reduction in the effective tax
rate is attributable to reduced projections of taxable income and a
larger proportion of the Company's income being derived from
tax-exempt sources. 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
81 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 July 23, 2009 regarding highlights of the Company's
second quarter 2009 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 http://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. PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Condition June 30, 2009 (Unaudited) and
December 31, 2008 (Dollars in Thousands) Assets June 30, 2009
December 31, 2008 Cash and due from banks $195,754 $66,315
Short-term investments 8,570 2,231 Total cash and cash equivalents
204,324 68,546 Investment securities held to maturity (market value
of $344,743 at June 30, 2009 (unaudited) and $351,623 at December
31, 2008) 339,307 347,484 Securities available for sale, at fair
value 1,134,818 820,329 Federal Home Loan Bank stock 35,732 42,833
Loans 4,357,657 4,526,748 Less allowance for loan losses 51,994
47,712 Net loans 4,305,663 4,479,036 Foreclosed assets, net 5,459
3,439 Banking premises and equipment, net 76,429 75,750 Accrued
interest receivable 25,004 23,866 Intangible assets 359,790 514,684
Bank-owned life insurance 129,475 126,956 Other assets 52,843
45,825 Total assets $6,668,844 $6,548,748 Liabilities and
Stockholders' Equity Deposits: Demand deposits $2,137,915
$1,821,437 Savings deposits 876,935 872,388 Certificates of deposit
of $100,000 or more 541,951 445,466 Other time deposits 1,152,579
1,087,045 Total deposits 4,709,380 4,226,336 Mortgage escrow
deposits 19,795 20,074 Borrowed funds 1,027,762 1,247,681 Other
liabilities 39,334 36,067 Total liabilities 5,796,271 5,530,158
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
59,836,673 shares outstanding at June 30, 2009, and 59,610,623
shares outstanding at December 31, 2008 832 832 Additional paid-in
capital 1,014,162 1,013,293 Retained earnings 303,892 454,444
Accumulated other comprehensive income 1,875 (485) Treasury stock
at cost (384,924) (384,854) Unallocated common stock held by
Employee Stock Ownership Plan (63,264) (64,640) Common Stock
acquired by the Directors' Deferred Fee Plan (7,621) (7,667)
Deferred compensation - Directors' Deferred Fee Plan 7,621 7,667
Total stockholders' equity 872,573 1,018,590 Total liabilities and
stockholders' equity $6,668,844 $6,548,748 PROVIDENT FINANCIAL
SERVICES, INC. AND SUBSIDIARY Consolidated Statements of Operations
Three and Six Months Ended June 30, 2009 and 2008 (Unaudited)
(Dollars in Thousands, Except Per Share Data) Three Months Ended
Six Months Ended June 30, June 30, 2009 2008 2009 2008 (Unaudited)
(Unaudited) Interest income: Real estate secured loans $39,675
$40,554 $80,280 $81,941 Commercial loans 10,570 10,621 21,068
21,903 Consumer loans 7,923 9,147 16,097 18,826 Investment
securities 3,343 3,601 6,792 7,254 Securities available for Sale
10,668 11,315 21,379 21,602 Other short-term investments 5 77 12
303 Deposits 117 - 117 - Federal funds 11 16 24 164 Total interest
income 72,312 75,331 145,769 151,993 Interest expense: Deposits
19,759 22,222 39,329 48,812 Borrowed funds 9,388 10,540 19,344
21,423 Total interest expense 29,147 32,762 58,673 70,235 Net
interest income 43,165 42,569 87,096 81,758 Provision for loan
losses 5,800 1,500 11,600 2,800 Net interest income after provision
for loan losses 37,365 41,069 75,496 78,958 Non-interest income:
Fees 6,466 4,892 11,695 11,006 Bank-owned life insurance 1,350
1,352 2,519 2,660 Net gain on securities transactions 992 305 1,179
401 Other-than-temporary impairment losses on securities (5,466) -
(5,466) - Portion of loss recognized in other comprehensive income
(before taxes) 4,665 - 4,665 - Net impairment losses on securities
recognized in earnings (801) - (801) - Other income 858 118 1,239
1,385 Total non-interest income 8,865 6,667 15,831 15,452
Non-interest expense: Goodwill impairment - - 152,502 -
Compensation and employee benefits 16,784 17,464 34,261 34,177 FDIC
Insurance 4,934 141 5,360 285 Net occupancy expense 4,912 5,174
10,304 10,431 Data processing expense 2,300 2,244 4,656 4,607
Advertising and promotion 1,356 1,312 2,030 1,829 Amortization of
intangibles 1,311 1,557 2,905 3,333 Insurance 559 456 1,104 938
Printing and supplies 545 457 1,048 890 Other operating expenses
5,451 4,487 9,779 8,754 Total non-interest expense 38,152 33,292
223,949 65,244 Income (loss) before income tax expense 8,078 14,444
(132,622) 29,166 Income tax expense 1,733 4,091 4,652 8,120 Net
income (loss) $6,345 $10,353 $(137,274) $21,046 Basic earnings
(loss) per share $0.11 $0.18 $(2.44) $0.38 Average basic shares
outstanding 56,240,798 56,014,455 56,205,182 55,969,517 Diluted
earnings (loss) per share $0.11 $0.18 $(2.44) $0.38 Average diluted
shares outstanding 56,240,798 56,014,455 56,205,182 55,969,517
PROVIDENT FINANCIAL SERVICES, INC. CONSOLIDATED FINANCIAL
HIGHLIGHTS (Dollars in thousands, except share data) (Unaudited) At
or for the Three At or for the Six Months Ended Months Ended June
30, June 30, 2009 2008 2009 2008 STATEMENTS OF OPERATIONS: Net
interest income $43,165 $42,569 $87,096 $81,758 Provision for loan
losses 5,800 1,500 11,600 2,800 Non-interest income 8,865 6,667
15,831 15,452 Non-interest expense (1) 38,152 33,292 71,447 65,244
Operating income before income tax expense (2) 8,078 14,444 19,880
29,166 Operating income (2) 6,345 10,353 15,228 21,046 Goodwill
impairment charge - - 152,502 - Net income (loss) 6,345 10,353
(137,274) 21,046 Operating basic and diluted earnings per share (1)
$0.11 $0.18 $0.27 $0.38 Per share impact of goodwill impairment
charge - - $(2.71) - Basic and diluted earnings (loss) per share
$0.11 $0.18 $(2.44) $0.38 Interest rate spread 2.69% 2.76% 2.75%
2.62% Net interest margin 2.96% 3.10% 3.03% 2.98% PROFITABILITY:
Annualized return on average assets (1) 0.39% 0.66% 0.47% 0.67%
Annualized return on average equity (1) 2.91% 4.13% 3.24% 4.20%
Annualized non-interest expense to average assets (1) 2.34% 2.11%
2.20% 2.07% Efficiency ratio (1), (3) 73.33% 67.62% 69.42% 67.12%
ASSET QUALITY: Non-accrual loans $63,880 $20,726 90+ and still
accruing loans - 15,990 Non-performing loans 63,880 36,716
Foreclosed assets 5,459 5,883 Non-performing loans to total loans
1.47% 0.86% Non-performing assets to total assets 1.04% 0.67%
Allowance for loan losses $51,994 $41,118 Allowance for loan losses
to non-performing loans 81.39% 111.99% Allowance for loan losses to
total loans 1.19% 0.96% AVERAGE BALANCE SHEET DATA: Assets
$6,548,904 $6,351,308 $6,543,363 $6,338,041 Loans, net 4,280,311
4,203,838 4,321,162 4,220,519 Earning assets 5,834,063 5,492,015
5,756,561 5,477,877 Core deposits 2,885,324 2,618,253 2,800,537
2,598,620 Borrowings 1,044,909 1,102,742 1,103,698 1,090,790
Interest-bearing liabilities 5,153,373 4,817,702 5,083,899
4,811,352 Stockholders' equity 874,519 1,009,273 946,475 1,007,553
Average yield on interest-earning assets 4.96% 5.50% 5.08% 5.56%
Average cost of interest- bearing liabilities 2.27% 2.74% 2.33%
2.94% Notes (1) Excluding a $152.2 million non-cash goodwill
impairment charge (2) Operating Income Reconciliation Three Months
Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Net
income (loss) $6,345 $10,353 $(137,274) $21,046 Goodwill impairment
- - 152,502 - Operating income $6,345 $10,353 $15,228 $21,046 (3)
Efficiency Ratio Calculation Three Months Ended Six Months Ended
June 30, June 30, 2009 2008 2009 2008 Net interest income $43,165
$42,569 $87,096 $81,758 Non-interest income 8,865 6,667 15,831
15,452 Total income $52,030 $49,236 $102,927 $97,210 Non-interest
expense (1) $38,152 $33,292 $71,447 $65,244 Expense/Income: 73.33%
67.62% 69.42% 67.12% Average Quarterly Balance NET INTEREST MARGIN
ANALYSIS (Unaudited) (Dollars in thousands) June 30, 2009 March 31,
2009 Average Average Average Yield Average Yield Balance Interest
/Cost Balance Interest /Cost Interest-Earning Assets: Deposits
$187,257 $117 0.25% $- $- -% Federal Funds Sold and Other
Short-Term Investments 52,783 16 0.12 40,640 20 0.20 Investment
Securities (1) 338,409 3,343 3.95 343,360 3,449 4.02 Securities
Available for Sale 939,576 10,135 4.31 893,274 10,386 4.65 Federal
Home Loan Bank Stock 35,727 533 5.98 38,456 325 3.42 Net Loans (2)
Total Mortgage Loans 2,959,822 39,675 5.37 3,022,253 40,605 5.40
Total Commercial Loans 716,468 10,570 5.92 724,545 10,498 5.88
Total Consumer Loans 604,021 7,923 5.26 615,669 8,174 5.38 Total
Interest-Earning Assets 5,834,063 72,312 4.96 5,678,197 73,457 5.21
Non-Interest-Earning Assets: Cash and Due from Banks 90,947 82,195
Other Assets 623,894 777,368 Total Assets $6,548,904 $6,537,760
Interest-Bearing Liabilities: Demand Deposits $1,532,855 5,612
1.47% $1,387,566 5,518 1.61% Savings Deposits 877,220 1,681 0.77
867,822 1,880 0.88 Time Deposits 1,698,389 12,466 2.94 1,595,124
12,172 3.09 Total Deposits 4,108,464 19,759 1.93 3,850,512 19,570
2.06 Total Borrowings 1,044,909 9,388 3.60 1,163,140 9,956 3.47
Total Interest-Bearing Liabilities 5,153,373 29,147 2.27 5,013,652
29,526 2.39 Non-Interest-Bearing Liabilities 521,012 504,877 Total
Liabilities 5,674,385 5,518,529 Stockholders' Equity 874,519
1,019,231 Total Liabilities & Stockholders' Equity $6,548,904
$6,537,760 Net interest income $43,165 $43,931 Net interest rate
spread 2.69% 2.82% Net interest-earning assets $680,690 $664,545
Net interest margin (3) 2.96% 3.10% 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. The following table
summarizes the net interest margin for the previous year,
inclusive. 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 2nd Qtr. 1st
Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. Interest-Earning Assets: Securities
3.64% 4.31% 4.50% 4.59% 4.66% Net Loans 5.44% 5.48% 5.63% 5.78%
5.76% Total Interest-Earning Assets 4.96% 5.21% 5.38% 5.51% 5.50%
Interest-Bearing Liabilities Total Deposits 1.93% 2.06% 2.14% 2.19%
2.41% Total Borrowings 3.60% 3.47% 3.45% 3.62% 3.84% Total
Interest-Bearing Liabilities 2.27% 2.39% 2.47% 2.55% 2.74% Interest
Rate Spread 2.69% 2.82% 2.91% 2.96% 2.76% Net Interest Margin 2.96%
3.10% 3.20% 3.27% 3.10% Ratio of Interest-Earning Assets to
Interest-Bearing Liabilities 1.13x 1.13x 1.13x 1.13x 1.14x Average
YTD Balance NET INTEREST MARGIN ANALYSIS (Unaudited) (Dollars in
thousands) June 30, 2009 June 30, 2008 Average Average Average
Average Balance Interest Yield Balance Interest Yield
Interest-Earning Assets: Deposits $94,146 $117 0.25% $- $- -%
Federal Funds Sold and Other Short-Term Investments 46,745 36 0.15
28,033 467 3.35 Investment Securities (1) 340,871 6,792 3.99
354,683 7,254 4.09 Securities Available for Sale 916,553 20,522
4.48 837,811 20,088 4.80 Federal Home Loan Bank Stock 37,084 857
4.66 36,831 1,514 8.27 Net Loans (2) Total Mortgage Loans 2,990,865
80,280 5.39 2,899,097 81,941 5.67 Total Commercial Loans 720,484
21,068 5.90 690,719 21,903 6.38 Total Consumer Loans 609,813 16,097
5.32 630,703 18,826 5.99 Total Interest-Earning Assets 5,756,561
145,769 5.08 5,477,877 151,993 5.56 Non-Interest-Earning Assets:
Cash and Due from Banks 86,595 78,073 Other Assets 700,207 782,091
Total Assets $6,543,363 $6,338,041 Interest-Bearing Liabilities:
Demand Deposits $1,458,679 11,130 1.54% $1,147,310 11,590 2.03%
Savings Deposits 874,480 3,562 0.82 981,783 5,557 1.14 Time
Deposits 1,647,042 24,637 3.02 1,591,469 31,665 4.00 Total Deposits
3,980,201 39,329 1.99 3,720,562 48,812 2.64 Total Borrowings
1,103,698 19,344 3.53 1,090,790 21,423 3.95 Total Interest-Bearing
Liabilities 5,083,899 58,673 2.33 4,811,352 70,235 2.94
Non-Interest-Bearing Liabilities 512,989 519,136 Total Liabilities
5,596,888 5,330,488 Stockholders' Equity 946,475 1,007,553 Total
Liabilities & Stockholders' Equity $6,543,363 $6,338,041 Net
interest income $87,096 $81,758 Net interest rate spread 2.75%
2.62% Net interest-earning assets $672,663 $666,525 Net interest
margin (3) 3.03% 2.98% Ratio of interest-earning assets to
interest-bearing liabilities 1.13 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
YTD net interest margin for the previous three years, inclusive.
Six Months Ended 6/30/09 6/30/08 6/30/07 Interest-Earning Assets:
Securities 3.95% 4.67% 4.48% Net Loans 5.46% 5.83% 6.16% Total
Interest-Earning Assets 5.08% 5.56% 5.76% Interest-Bearing
Liabilities: Total Deposits 1.99% 2.64% 3.00% Total Borrowings
3.53% 3.95% 4.17% Total Interest-Bearing Liabilities 2.33% 2.94%
3.21% Interest Rate Spread 2.75% 2.62% 2.55% Net Interest Margin
3.03% 2.98% 3.02% Ratio of Interest-Earning Assets to Total
Interest-Bearing Liabilities 1.13x 1.14x 1.17x DATASOURCE:
Provident Financial Services, Inc. CONTACT: Kenneth J. Wagner, SVP
Investor Relations of Provident Financial Services, Inc.,
+1-201-915-5344 Web Site: http://www.providentnj.com/
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