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| 8-K - 8-K - PROVIDENT FINANCIAL SERVICES INC | a8-k033115.htm |
Provident Financial Services, Inc. Announces First Quarter Earnings and Declares Quarterly Cash Dividend
ISELIN, NJ, April 24, 2015 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $19.8 million, or $0.32 per basic and diluted share for the three months ended March 31, 2015, compared to net income of $17.0 million, or $0.30 per basic and diluted share for the three months ended March 31, 2014.
Results of operations for the first quarter of 2015 benefited from growth in average loans outstanding, an increase in average non-interest bearing demand deposits and continued improvement in asset quality, partially offset by a reduction in average loan yields. The growth in average loans outstanding for the quarter ended March 31, 2015 reflected the May 30, 2014 acquisition of Team Capital Bank (“Team Capital”), together with organic loan originations.
Christopher Martin, Chairman, President and Chief Executive Officer, commented, “Our first quarter operating results were strong despite compression of the net interest margin largely due to a flattening yield curve. Strong loan originations during the quarter were diversified across all segments of the portfolio, particularly in Pennsylvania where we are adding lenders to existing teams to expand our loan product offerings in this market. While we continue to see extremely aggressive interest rates and credit terms being offered by our competitors, we remain committed to maintaining our conservative and prudent pricing and credit discipline.” Martin continued: “Beacon Trust closed on its acquisition of The MDE Group on April 1st and we look forward to adding their professional wealth advisors to the Beacon Trust team. Beacon Trust now has approximately $2.5 billion in assets under management.”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.16 per common share payable on May 29, 2015, to stockholders of record as of the close of business on May 15, 2015.
Balance Sheet Summary
Total assets increased $1.8 million to $8.53 billion at March 31, 2015, from $8.52 billion at December 31, 2014, primarily due to a $39.2 million increase in total loans, partially offset by decreases of $25.0 million and $12.9 million in total investments and cash and cash equivalents, respectively.
The Company’s loan portfolio increased $39.2 million, or 0.6%, to $6.12 billion at March 31, 2015, from $6.09 billion at December 31, 2014. Loan originations totaled $530.4 million and loan purchases totaled $23.7 million for the three months ended March 31, 2015. The loan portfolio had net increases of $52.9 million in construction loans and $28.7 million in multi-family mortgage loans, partially offset by net decreases of $19.8 million in commercial loans, $10.3 million in consumer loans, $6.5 million in commercial mortgage loans and $5.7 million in residential mortgage loans. Commercial real estate, commercial and construction loans represented 69.8% of the loan portfolio at March 31, 2015, compared to 69.4% at December 31, 2014.
At March 31, 2015, the Company’s unfunded loan commitments totaled $1.28 billion, including commitments of $496.8 million in commercial loans, $300.0 million in construction loans and $159.9 million in commercial mortgage loans. Unfunded loan commitments at December 31, 2014 and March 31, 2014 were $1.21 billion and $918.3 million, respectively.
Total investments decreased $25.0 million, or 1.5%, to $1.59 billion at March 31, 2015, from $1.61 billion at December 31, 2014, largely due to principal repayments on mortgage-backed securities and maturities of municipal and agency bonds, partially offset by purchases of mortgage-backed and municipal securities.
Total deposits increased $30.5 million during the three months ended March 31, 2015, to $5.82 billion. Total core deposits, which consist of savings and demand deposit accounts, increased $50.3 million to $5.02 billion at March 31, 2015, while time deposits decreased $19.8 million to $805.9 million at March 31, 2015. The increase in core deposits was largely attributable to growth in both non-interest bearing and interest bearing demand deposits. Non-
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interest bearing demand deposits increased $25.6 million to $1.08 billion at March 31, 2015. Core deposits represented 86.2% of total deposits at March 31, 2015, compared to 85.7% at December 31, 2014.
Borrowed funds decreased $41.4 million, or 2.7% during the three months ended March 31, 2015, to $1.47 billion, as shorter-term wholesale funding was replaced by the net inflow of deposits for the period. Borrowed funds represented 17.2% of total assets at March 31, 2015, a decrease from 17.7% at December 31, 2014.
Stockholders’ equity increased $13.6 million, or 1.2% for the three months ended March 31, 2015, to $1.16 billion, due to net income earned for the period and an increase in unrealized gains on securities available for sale, partially offset by dividends paid to stockholders. Common stock repurchases made in connection with withholding to cover income taxes on stock-based compensation for the three months ended March 31, 2015 totaled 102,943 shares at an average cost of $18.27 per share. At March 31, 2015, 3.3 million shares remained eligible for repurchase under the current authorization. Book value per share and tangible book value per share(1) at March 31, 2015 were $17.76 and $11.57, respectively, compared with $17.63 and $11.40, respectively, at December 31, 2014.
Results of Operations
Net Interest Income and Net Interest Margin
For the three months ended March 31, 2015, net interest income increased $6.7 million to $61.9 million, from $55.2 million for the same period in 2014. The improvement in net interest income was due to growth in average loans outstanding from both loans acquired from Team Capital and organic originations, and an increase in average non-interest bearing demand deposits, partially offset by year-over-year compression in the net interest margin.
The Company’s net interest margin decreased 6 basis points to 3.24% for the quarter ended March 31, 2015, from 3.30% for the trailing quarter. The weighted average yield on interest-earning assets decreased 7 basis points to 3.78% for the quarter ended March 31, 2015, compared with 3.85% for the quarter ended December 31, 2014. The weighted average cost of interest-bearing liabilities for the quarter ended March 31, 2015 remained unchanged at 0.67%, from the trailing quarter. The average cost of interest bearing deposits for the quarter ended March 31, 2015 was 0.31%, compared with 0.32% for the trailing quarter. Average non-interest bearing demand deposits totaled $1.05 billion for the quarter ended March 31, 2015, compared with $1.03 billion for the quarter ended December 31, 2014. The average cost of borrowed funds for the quarter ended March 31, 2015 was 1.82%, compared with 1.81% for the trailing quarter.
The net interest margin decreased 4 basis points to 3.24% for the quarter ended March 31, 2015, compared with 3.28% for the quarter ended March 31, 2014. The weighted average yield on interest-earning assets decreased 6 basis points to 3.78% for the quarter ended March 31, 2015, compared with 3.84% for the quarter ended March 31, 2014, while the weighted average cost of interest bearing liabilities decreased one basis point to 0.67% for the quarter ended March 31, 2015, compared with 0.68% for the first quarter of 2014. The average cost of interest bearing deposits for the quarter ended March 31, 2015 was 0.31%, compared with 0.35% for the same period last year. Average non-interest bearing demand deposits totaled $1.05 billion for the quarter ended March 31, 2015, compared with $861.9 million for the quarter ended March 31, 2014. The average cost of borrowed funds for the quarter ended March 31, 2015 was 1.82%, compared with 1.87% for the same period last year.
Non-Interest Income
Non-interest income totaled $10.3 million for the quarter ended March 31, 2015, an increase of $2.2 million, or 26.9%, compared to the same period in 2014. Fee income increased $1.3 million, or 26.1%, to $6.1 million, from $4.8 million for the three months ended March 31, 2014, primarily due to a $1.1 million increase in commercial loan prepayment fee income. In addition, wealth management income increased $505,000, or 24.6%, to $2.6 million for the quarter ended March 31, 2015, due in part to revenue earned on assets under management from the Company’s October 31, 2014 acquisition of Suffolk Bancorp's wealth management business, and an improvement in client pricing. Also, net gains on securities transactions increased $352,000 for the three months ended March 31, 2015, compared to the same period in 2014, mainly due to a $350,000 loss on the sale of an impaired non-agency mortgage-backed security in the first quarter of 2014.
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Non-Interest Expense
For the three months ended March 31, 2015, non-interest expense increased $5.2 million to $43.4 million, compared to the three months ended March 31, 2014. The quarter ended March 31, 2015 includes additional costs associated with operating in the acquired Team Capital markets. Compensation and employee benefits expense increased $2.8 million to $24.2 million for the three months ended March 31, 2015, compared to the three months ended March 31, 2014, largely due to a $1.3 million increase in salary expense associated with the addition of former Team Capital employees, higher salary expense resulting from annual merit increases and increased employee medical and retirement benefit costs, partially offset by lower stock-based compensation. Net occupancy costs increased $1.1 million, to $7.2 million for the quarter ended March 31, 2015, compared to the same quarter in 2014, predominately due to additional facilities costs related to Team Capital and increased equipment maintenance costs. In addition, other operating expenses increased $704,000 to $6.1 million for the three months ended March 31, 2015, compared to $5.4 million for the same period in 2014, due to increases in consultant and attorney fees, a portion of which were related to the Company's loan workout and asset recovery activities. The amortization of intangibles increased $644,000 for the three months ended March 31, 2015, compared with the same period in 2014, largely due to the increase in core deposit intangible amortization related to the Team Capital acquisition, while data processing expense increased $230,000 to $3.0 million for the three months ended March 31, 2015, compared to $2.8 million for the same period in 2014, principally due to increased software maintenance cost and telecommunication expense required to support the Team Capital locations. Partially offsetting these increases, advertising and promotional expenses decreased $304,000 to $761,000 for the quarter ended March 31, 2015, due to costs incurred in the first quarter of 2014 related to the introduction of the Company's new branding initiative, updated logo and the related marketing campaigns.
The Company’s annualized non-interest expense as a percentage of average assets(1) was 2.07% for the quarter ended March 31, 2015, unchanged from the same period in 2014. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income)(1) was 60.14% for the quarter ended March 31, 2015, compared with 60.32% for the same period in 2014.
Asset Quality
The Company’s total non-performing loans at March 31, 2015 were $50.9 million, or 0.83% of total loans, compared with $53.9 million, or 0.88% of total loans at December 31, 2014, and $64.1 million, or 1.22% of total loans at March 31, 2014. The $3.0 million decrease in non-performing loans at March 31, 2015, compared with the trailing quarter, was due to a $1.8 million decrease in non-performing commercial mortgage loans, a $529,000 decrease in non-performing consumer loans, a $308,000 decrease in non-performing residential mortgages and a $307,000 decrease in non-performing commercial loans. At March 31, 2015, impaired loans totaled $90.8 million with related specific reserves of $6.7 million, compared with impaired loans totaling $85.4 million with related specific reserves of $7.1 million at December 31, 2014. At March 31, 2014, impaired loans totaled $94.6 million with related specific reserves of $7.1 million. Non-performing loans do not include purchased credit impaired ("PCI") loans acquired from Team Capital. At March 31, 2015, PCI loans totaled $4.3 million, compared to $4.5 million at December 31, 2014.
At March 31, 2015, the Company’s allowance for loan losses was 1.00% of total loans, a decrease from 1.01% at December 31, 2014, and a decrease from 1.21% of total loans at March 31, 2014. The decline in the allowance coverage of total loans from the quarter ended March 31, 2014 was largely the result of Team Capital loans recorded at fair value at the date of acquisition, with no corresponding allowance. The Company recorded provisions for loan losses of $600,000 for the three months ended March 31, 2015, compared with provisions of $400,000 for the three months ended March 31, 2014. For the three months ended March 31, 2015, the Company had net charge-offs of $1.2 million, compared with net charge-offs of $1.6 million for the same period in 2014. The allowance for loan losses decreased $624,000 to $61.1 million at March 31, 2015, from $61.7 million at December 31, 2014.
At March 31, 2015, the Company held $5.9 million of foreclosed assets, compared with $5.1 million at December 31, 2014. Foreclosed assets at March 31, 2015 consisted of $3.0 million of residential real estate, $2.9 million of commercial real estate and $44,000 of marine vessels. Total non-performing assets at March 31, 2015 declined $2.1 million, or 3.6%, to $56.8 million, or 0.67% of total assets, from $59.0 million, or 0.69% of total assets at December 31, 2014.
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Income Tax Expense
For the three months ended March 31, 2015, the Company’s income tax expense was $8.4 million, compared with $7.7 million, for the three months ended March 31, 2014. The increase in income tax expense was a function of growth in pre-tax income. The Company’s effective tax rates were 29.8% and 31.1% for the three months ended March 31, 2015 and 2014, respectively.
About the Company
Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. The Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania. The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company.
Post Earnings Conference Call
Representatives of the Company will hold a conference call for investors at 10:00 a.m. Eastern Time on Friday, April 24, 2015 regarding highlights of the Company’s first quarter 2015 financial results. The call may be accessed by dialing 1-888-336-7149 (Domestic), 1-412-902-4175 (International) or 1-855-669-9657 (Canada). Internet access to the call is also available (listen only) at www.providentnj.com by going to Investor Relations and clicking on Webcast.
Forward Looking Statements
Certain statements contained herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not have any obligation to update any forward-looking statements to reflect events or circumstances after the date of this statement.
(1) Tangible book value per share, return on average tangible equity, annualized non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes on page 8 which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.
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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||
Consolidated Statements of Financial Condition | |||||||
March 31, 2015 (Unaudited) and December 31, 2014 | |||||||
(Dollars in Thousands) | |||||||
Assets | March 31, 2015 | December 31, 2014 | |||||
Cash and due from banks | $ | 89,760 | $ | 102,484 | |||
Short-term investments | 1,114 | 1,278 | |||||
Total cash and cash equivalents | 90,874 | 103,762 | |||||
Securities available for sale, at fair value | 1,047,559 | 1,074,395 | |||||
Investment securities held to maturity (fair value of $487,671 at March 31, 2015 (unaudited) and $482,473 at December 31, 2014) | 473,704 | 469,528 | |||||
Federal Home Loan Bank Stock | 67,455 | 69,789 | |||||
Loans | 6,124,699 | 6,085,505 | |||||
Less allowance for loan losses | 61,110 | 61,734 | |||||
Net loans | 6,063,589 | 6,023,771 | |||||
Foreclosed assets, net | 5,924 | 5,098 | |||||
Banking premises and equipment, net | 92,498 | 92,990 | |||||
Accrued interest receivable | 24,542 | 25,228 | |||||
Intangible assets | 403,505 | 404,422 | |||||
Bank-owned life insurance | 179,060 | 177,712 | |||||
Other assets | 76,427 | 76,682 | |||||
Total assets | $ | 8,525,137 | $ | 8,523,377 | |||
Liabilities and Stockholders' Equity | |||||||
Deposits: | |||||||
Demand deposits | $ | 4,031,665 | $ | 3,971,487 | |||
Savings deposits | 985,464 | 995,347 | |||||
Certificates of deposit of $100,000 or more | 342,506 | 342,072 | |||||
Other time deposits | 463,416 | 483,617 | |||||
Total deposits | 5,823,051 | 5,792,523 | |||||
Mortgage escrow deposits | 23,653 | 21,649 | |||||
Borrowed funds | 1,468,404 | 1,509,851 | |||||
Other liabilities | 52,358 | 55,255 | |||||
Total liabilities | 7,367,466 | 7,379,278 | |||||
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, 83,209,285 shares issued and 65,171,983 outstanding at March 31, 2015 and 64,905,905 outstanding at December 31, 2014 | 832 | 832 | |||||
Additional paid-in capital | 996,382 | 995,053 | |||||
Retained earnings | 474,280 | 465,276 | |||||
Accumulated other comprehensive income | 3,735 | 29 | |||||
Treasury stock | (272,895 | ) | (271,779 | ) | |||
Unallocated common stock held by the Employee Stock Ownership Plan | (44,663 | ) | (45,312 | ) | |||
Common Stock acquired by the Directors' Deferred Fee Plan | (7,090 | ) | (7,113 | ) | |||
Deferred Compensation - Directors' Deferred Fee Plan | 7,090 | 7,113 | |||||
Total stockholders' equity | 1,157,671 | 1,144,099 | |||||
Total liabilities and stockholders' equity | $ | 8,525,137 | $ | 8,523,377 | |||
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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||
Consolidated Statements of Income | |||||||
Three months ended March 31, 2015 and 2014 (Unaudited) | |||||||
(Dollars in Thousands, except per share data) | |||||||
Three months ended | |||||||
March 31, | |||||||
2015 | 2014 | ||||||
Interest income: | |||||||
Real estate secured loans | $ | 43,289 | $ | 38,552 | |||
Commercial loans | 13,439 | 10,547 | |||||
Consumer loans | 5,794 | 5,662 | |||||
Securities available for sale and Federal Home Loan Bank stock | 6,301 | 7,082 | |||||
Investment securities held to maturity | 3,396 | 2,670 | |||||
Deposits, federal funds sold and other short-term investments | 12 | 10 | |||||
Total interest income | 72,231 | 64,523 | |||||
Interest expense: | |||||||
Deposits | 3,588 | 3,738 | |||||
Borrowed funds | 6,715 | 5,584 | |||||
Total interest expense | 10,303 | 9,322 | |||||
Net interest income | 61,928 | 55,201 | |||||
Provision for loan losses | 600 | 400 | |||||
Net interest income after provision for loan losses | 61,328 | 54,801 | |||||
Non-interest income: | |||||||
Fees | 6,054 | 4,802 | |||||
Wealth management income | 2,558 | 2,053 | |||||
Bank-owned life insurance | 1,348 | 1,302 | |||||
Net gain (loss) on securities transactions | 2 | (350 | ) | ||||
Other income | 341 | 309 | |||||
Total non-interest income | 10,303 | 8,116 | |||||
Non-interest expense: | |||||||
Compensation and employee benefits | 24,201 | 21,393 | |||||
Net occupancy expense | 7,172 | 6,089 | |||||
Data processing expense | 3,027 | 2,797 | |||||
FDIC Insurance | 1,218 | 1,136 | |||||
Amortization of intangibles | 927 | 283 | |||||
Advertising and promotion expense | 761 | 1,065 | |||||
Other operating expenses | 6,131 | 5,427 | |||||
Total non-interest expense | 43,437 | 38,190 | |||||
Income before income tax expense | 28,194 | 24,727 | |||||
Income tax expense | 8,392 | 7,698 | |||||
Net income | $ | 19,802 | $ | 17,029 | |||
Basic earnings per share | $ | 0.32 | $ | 0.30 | |||
Average basic shares outstanding | 62,673,887 | 57,369,039 | |||||
Diluted earnings per share | $ | 0.32 | $ | 0.30 | |||
Average diluted shares outstanding | 62,840,951 | 57,528,419 | |||||
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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | ||||||||
Consolidated Financial Highlights | ||||||||
(Dollars in Thousands, except share data) (Unaudited) | ||||||||
At or for the | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
STATEMENTS OF INCOME: | ||||||||
Net interest income | $ | 61,928 | $ | 55,201 | ||||
Provision for loan losses | 600 | 400 | ||||||
Non-interest income | 10,303 | 8,116 | ||||||
Non-interest expense | 43,437 | 38,190 | ||||||
Income before income tax expense | 28,194 | 24,727 | ||||||
Net income | 19,802 | 17,029 | ||||||
Diluted earnings per share | $0.32 | $0.30 | ||||||
Interest rate spread | 3.11 | % | 3.16 | % | ||||
Net interest margin | 3.24 | % | 3.28 | % | ||||
PROFITABILITY: | ||||||||
Annualized return on average assets | 0.94 | % | 0.92 | % | ||||
Annualized return on average equity | 6.94 | % | 6.74 | % | ||||
Annualized return on average tangible equity (2) | 10.67 | % | 10.34 | % | ||||
Annualized non-interest expense to average assets (3) | 2.07 | % | 2.07 | % | ||||
Efficiency ratio (4) | 60.14 | % | 60.32 | % | ||||
ASSET QUALITY: | ||||||||
Non-accrual loans | $ | 50,888 | $ | 64,056 | ||||
90+ and still accruing | — | — | ||||||
Non-performing loans | 50,888 | 64,056 | ||||||
Foreclosed assets | 5,924 | 6,558 | ||||||
Non-performing assets | 56,812 | 70,614 | ||||||
Non-performing loans to total loans | 0.83 | % | 1.22 | % | ||||
Non-performing assets to total assets | 0.67 | % | 0.94 | % | ||||
Allowance for loan losses | $ | 61,110 | $ | 63,420 | ||||
Allowance for loan losses to total non-performing loans | 120.09 | % | 99.01 | % | ||||
Allowance for loan losses to total loans | 1.00 | % | 1.21 | % | ||||
AVERAGE BALANCE SHEET DATA: | ||||||||
Assets | $ | 8,510,326 | $ | 7,473,956 | ||||
Loans, net | 6,028,265 | 5,153,685 | ||||||
Earning assets | 7,662,592 | 6,740,086 | ||||||
Core deposits | 4,981,618 | 4,390,199 | ||||||
Borrowings | 1,492,714 | 1,212,617 | ||||||
Interest-bearing liabilities | 6,229,529 | 5,528,390 | ||||||
Stockholders' equity | 1,157,078 | 1,024,100 | ||||||
Average yield on interest-earning assets | 3.78 | % | 3.84 | % | ||||
Average cost of interest-bearing liabilities | 0.67 | % | 0.68 | % | ||||
LOAN DATA: | ||||||||
Mortgage loans: | ||||||||
Residential | $ | 1,246,809 | $ | 1,165,196 | ||||
Commercial | 1,689,287 | 1,404,466 | ||||||
Multi-family | 1,070,926 | 939,018 | ||||||
Construction | 274,001 | 212,419 | ||||||
Total mortgage loans | 4,281,023 | 3,721,099 | ||||||
Commercial loans | 1,243,783 | 966,444 | ||||||
Consumer loans | 601,323 | 572,136 | ||||||
Total gross loans | 6,126,129 | 5,259,679 | ||||||
Premium on purchased loans | 5,386 | 4,187 | ||||||
Unearned discounts | (47 | ) | (57 | ) | ||||
Net deferred | (6,769 | ) | (6,035 | ) | ||||
Total loans | $ | 6,124,699 | $ | 5,257,774 | ||||
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Notes - Reconciliation of GAAP to Non-GAAP Financial Measures - (Dollars in Thousands, except share data) | |||||||||
(1) Book and Tangible Book Value per Share | |||||||||
At March 31, | |||||||||
2015 | 2014 | ||||||||
Total stockholders' equity | $ | 1,157,671 | $ | 1,021,341 | |||||
Less: Total intangible assets | 403,505 | 356,153 | |||||||
Total tangible stockholders' equity | $ | 754,166 | $ | 665,188 | |||||
Shares outstanding | 65,171,983 | 59,857,822 | |||||||
Book value per share (total stockholders' equity/shares outstanding) | $17.76 | $17.06 | |||||||
Tangible book value per share (total tangible stockholders' equity/shares outstanding) | $11.57 | $11.11 | |||||||
(2) Return on Average Tangible Equity | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Total average stockholders' equity | $ | 1,157,078 | $ | 1,024,100 | |||||
Less: Total average intangible assets | 404,091 | 356,333 | |||||||
Total average tangible stockholders' equity | $ | 752,987 | $ | 667,767 | |||||
Net income | $ | 19,802 | $ | 17,029 | |||||
Annualized return on average tangible equity (net income/total average stockholders' equity) | 10.67 | % | 10.34 | % | |||||
(3) Annualized Non-Interest Expense/Average Assets Calculation | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Annualized core non-interest expense | 150,757 | $ | 176,161 | $ | 154,882 | ||||
Average assets | 7,218,296 | 8,510,326 | 7,473.956 | ||||||
Non-interest expense/average assets | 2.07 | % | 2.07 | % | |||||
(4) Efficiency Ratio Calculation | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Net interest income | $ | 61,928 | $ | 55,201 | |||||
Non-interest income | 10,303 | 8,116 | |||||||
Total core income | $ | 72,231 | $ | 63,317 | |||||
Non-interest expense | $ | 43,437 | $ | 38,190 | |||||
Non-interest expense/non-interest income | 60.14 | % | 60.32 | % | |||||
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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||
Net Interest Margin Analysis | |||||||||||||||||||
Quarterly Average Balances | |||||||||||||||||||
(Unaudited) (Dollars in Thousands) | |||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||
Balance | Interest | Yield | Balance | Interest | Yield | ||||||||||||||
Interest-Earning Assets: | |||||||||||||||||||
Deposits | $ | 18,842 | $ | 12 | 0.25% | $ | 16,319 | $ | 9 | 0.25% | |||||||||
Federal funds sold and other short-term investments | 1,149 | — | 0.03% | 1,447 | — | 0.02% | |||||||||||||
Investment securities (1) | 473,374 | 3,396 | 2.87% | 466,467 | 3,364 | 2.89% | |||||||||||||
Securities available for sale | 1,071,853 | 5,437 | 2.03% | 1,099,446 | 5,644 | 2.05% | |||||||||||||
Federal Home Loan Bank stock | 69,109 | 864 | 5.07% | 66,854 | 676 | 4.01% | |||||||||||||
Net loans: (2) | |||||||||||||||||||
Total mortgage loans | 4,210,152 | 43,289 | 4.11% | 4,133,797 | 43,930 | 4.20% | |||||||||||||
Total commercial loans | 1,212,557 | 13,439 | 4.46% | 1,199,465 | 14,059 | 4.62% | |||||||||||||
Total consumer loans | 605,556 | 5,794 | 3.88% | 610,417 | 6,118 | 3.98% | |||||||||||||
Total net loans | 6,028,265 | 62,522 | 4.16% | 5,943,679 | 64,107 | 4.27% | |||||||||||||
Total Interest-Earning Assets | $ | 7,662,592 | $ | 72,231 | 3.78% | $ | 7,594,212 | $ | 73,800 | 3.85% | |||||||||
Non-Interest Earning Assets: | |||||||||||||||||||
Cash and due from banks | 76,024 | 79,221 | |||||||||||||||||
Other assets | 771,710 | 775,147 | |||||||||||||||||
Total Assets | $ | 8,510,326 | $ | 8,448,580 | |||||||||||||||
Interest-Bearing Liabilities: | |||||||||||||||||||
Demand deposits | $ | 2,944,909 | $ | 1,912 | 0.26% | $ | 2,944,393 | $ | 2,017 | 0.27% | |||||||||
Savings deposits | 982,592 | 245 | 0.10% | 986,650 | 261 | 0.10% | |||||||||||||
Time deposits | 809,314 | 1,431 | 0.72% | 827,425 | 1,575 | 0.76% | |||||||||||||
Total Deposits | 4,736,815 | 3,588 | 0.31% | 4,758,468 | 3,853 | 0.32% | |||||||||||||
Borrowed funds | 1,492,714 | 6,715 | 1.82% | 1,451,680 | 6,629 | 1.81% | |||||||||||||
Total Interest-Bearing Liabilities | 6,229,529 | 10,303 | 0.67% | 6,210,148 | 10,482 | 0.67% | |||||||||||||
Non-Interest Bearing Liabilities | 1,123,719 | 1,093,956 | |||||||||||||||||
Total Liabilities | 7,353,248 | 7,304,104 | |||||||||||||||||
Stockholders' equity | 1,157,078 | 1,144,476 | |||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 8,510,326 | $ | 8,448,580 | |||||||||||||||
Net interest income | $ | 61,928 | $ | 63,318 | |||||||||||||||
Net interest rate spread | 3.11% | 3.18% | |||||||||||||||||
Net interest-earning assets | $ | 1,433,063 | $ | 1,384,064 | |||||||||||||||
Net interest margin (3) | 3.24% | 3.30% | |||||||||||||||||
Ratio of interest-earning assets to total interest-bearing liabilities | 1.23x | 1.22x | |||||||||||||||||
(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
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||
Net Interest Margin Analysis | |||||||||||||||||||
Average Year to Date Balances | |||||||||||||||||||
(Unaudited) (Dollars in Thousands) | |||||||||||||||||||
March 31, 2015 | March 31, 2014 | ||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||
Balance | Interest | Yield | Balance | Interest | Yield | ||||||||||||||
Interest-Earning Assets: | |||||||||||||||||||
Deposits | $ | 18,842 | $ | 12 | 0.25% | $ | 16,589 | $ | 10 | 0.25% | |||||||||
Federal funds sold and other short term investments | 1,149 | — | 0.03% | 1,189 | — | 0.03% | |||||||||||||
Investment securities (1) | 473,374 | 3,396 | 2.87% | 357,852 | 2,670 | 2.98% | |||||||||||||
Securities available for sale | 1,071,853 | 5,437 | 2.03% | 1,151,959 | 6,478 | 2.25% | |||||||||||||
Federal Home Loan Bank stock | 69,109 | 864 | 5.07% | 58,812 | 604 | 4.16% | |||||||||||||
Net loans: (2) | |||||||||||||||||||
Total mortgage loans | 4,210,152 | 43,289 | 4.11% | 3,665,286 | 38,552 | 4.21% | |||||||||||||
Total commercial loans | 1,212,557 | 13,439 | 4.46% | 915,105 | 10,547 | 4.64% | |||||||||||||
Total consumer loans | 605,556 | 5,794 | 3.88% | 573,294 | 5,662 | 4.01% | |||||||||||||
Total net loans | 6,028,265 | 62,522 | 4.16% | 5,153,685 | 54,761 | 4.26% | |||||||||||||
Total Interest-Earning Assets | $ | 7,662,592 | $ | 72,231 | 3.78% | $ | 6,740,086 | $ | 64,523 | 3.84% | |||||||||
Non-Interest Earning Assets: | |||||||||||||||||||
Cash and due from banks | 76,024 | 63,167 | |||||||||||||||||
Other assets | 771,710 | 670,703 | |||||||||||||||||
Total Assets | $ | 8,510,326 | $ | 7,473,956 | |||||||||||||||
Interest-Bearing Liabilities: | |||||||||||||||||||
Demand deposits | $ | 2,944,909 | $ | 1,912 | 0.26% | $ | 2,609,846 | $ | 1,716 | 0.27% | |||||||||
Savings deposits | 982,592 | 245 | 0.10% | 918,452 | 211 | 0.09% | |||||||||||||
Time deposits | 809,314 | 1,431 | 0.72% | 787,475 | 1,811 | 0.93% | |||||||||||||
Total Deposits | 4,736,815 | 3,588 | 0.31% | 4,315,773 | 3,738 | 0.35% | |||||||||||||
Borrowed funds | 1,492,714 | 6,715 | 1.82% | 1,212,617 | 5,584 | 1.87% | |||||||||||||
Total Interest-Bearing Liabilities | $ | 6,229,529 | $ | 10,303 | 0.67% | $ | 5,528,390 | $ | 9,322 | 0.68% | |||||||||
Non-Interest Bearing Liabilities | 1,123,719 | 921,466 | |||||||||||||||||
Total Liabilities | 7,353,248 | 6,449,856 | |||||||||||||||||
Stockholders' equity | 1,157,078 | 1,024,100 | |||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 8,510,326 | $ | 7,473,956 | |||||||||||||||
Net interest income | $ | 61,928 | $ | 55,201 | |||||||||||||||
Net interest rate spread | 3.11% | 3.16% | |||||||||||||||||
Net interest-earning assets | $ | 1,433,063 | $ | 1,211,696 | |||||||||||||||
Net interest margin (3) | 3.24% | 3.28% | |||||||||||||||||
Ratio of interest-earning assets to | |||||||||||||||||||
total interest-bearing liabilities | 1.23x | 1.22x | |||||||||||||||||
(1) Average outstanding balance amounts shown are amortized cost. | |||||||||||||||||||
(2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans. | |||||||||||||||||||
(3) Annualized net interest income divided by average interest-earning assets. | |||||||||||||||||||
10
The following table summarizes the quarterly net interest margin for the previous five quarters. | ||||||||||||||
3/31/15 | 12/31/14 | 9/30/14 | 06/30/14 | 3/31/14 | ||||||||||
1st Qtr. | 4th Qtr. | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | ||||||||||
Interest-Earning Assets: | ||||||||||||||
Securities | 2.38 | % | 2.35 | % | 2.32 | % | 2.35 | % | 2.46 | % | ||||
Net loans | 4.16 | % | 4.27 | % | 4.30 | % | 4.25 | % | 4.26 | % | ||||
Total interest-earning assets | 3.78 | % | 3.85 | % | 3.86 | % | 3.81 | % | 3.84 | % | ||||
Interest-Bearing Liabilities: | ||||||||||||||
Total deposits | 0.31 | % | 0.32 | % | 0.34 | % | 0.33 | % | 0.35 | % | ||||
Total borrowings | 1.82 | % | 1.81 | % | 1.87 | % | 1.97 | % | 1.87 | % | ||||
Total interest-bearing liabilities | 0.67 | % | 0.67 | % | 0.68 | % | 0.69 | % | 0.68 | % | ||||
Interest rate spread | 3.11 | % | 3.18 | % | 3.18 | % | 3.12 | % | 3.16 | % | ||||
Net interest margin | 3.24 | % | 3.30 | % | 3.30 | % | 3.24 | % | 3.28 | % | ||||
Ratio of interest-earning assets to interest-bearing liabilities | 1.23x | 1.22x | 1.22x | 1.22x | 1.22x | |||||||||
11