Attached files
| file | filename |
|---|---|
| 8-K - PROVIDENT FINANCIAL SERVICES INC | a8-k093018nextgen.htm |
Provident Financial Services, Inc. Announces Record Third Quarter Earnings and Declares Quarterly Cash Dividend
ISELIN, NJ, October 26, 2018 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported record net income of $35.5 million, or $0.55 per basic share and $0.54 per diluted share, for the three months ended September 30, 2018, compared to net income of $26.6 million, or $0.41 per basic and diluted share, for the three months ended September 30, 2017. For the nine months ended September 30, 2018, the Company reported net income of $82.6 million, or $1.27 per basic and diluted share, compared to net income of $74.5 million, or $1.16 per basic share and $1.15 per diluted share, for the same period last year.
The Company's earnings for the quarter and the nine months ended September 30, 2018 were favorably impacted by lower Federal income tax rates, period over period growth in average loans outstanding, growth in average non-interest bearing deposits and the continued expansion of the net interest margin. The improvement in the net interest margin was driven by an increase in the yield on earning assets, growth in average non-interest bearing deposits and a lagging cost of funds.
Christopher Martin, Chairman, President and Chief Executive Officer commented: “Our third quarter results again reflected record revenue as our net interest margin further expanded. Combined with solid non-interest income performance and strong expense management, this drove record net income and impressive annualized returns of 1.45% on average assets and 15.47% on average tangible common equity.(1)”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.21 per common share payable on November 30, 2018, to stockholders of record as of the close of business on November 15, 2018.
Balance Sheet Summary
Total assets at September 30, 2018 were $9.71 billion, a $135.6 million decrease from December 31, 2017. The decline in total assets was primarily due to a $97.3 million decrease in total loans, a $41.7 million decrease in cash and cash equivalents and a $7.6 million decrease in total investments.
The Company’s loan portfolio decreased $97.3 million to $7.23 billion at September 30, 2018, from $7.33 billion at December 31, 2017. For the nine months ended September 30, 2018, loan originations, including advances on lines of credit, totaled $2.34 billion, compared with $2.56 billion for the same period in 2017. During the nine months ended September 30, 2018, the loan portfolio had net decreases of $111.4 million in commercial loans, $59.9 million in multi-family mortgage loans, $34.5 million in residential mortgage loans and $30.6 million in consumer loans, partially offset by net increases of $102.9 million in commercial mortgage loans and $36.7 million in construction loans. Net portfolio growth was constrained by elevated payoff activity and loan sales, including the sale of loans as part of the Company's wind down of its asset-based lending business. Commercial real estate, commercial and construction loans represented 78.5% of the loan portfolio at September 30, 2018, compared to 77.9% at December 31, 2017.
At September 30, 2018, the Company’s unfunded loan commitments totaled $1.60 billion, including commitments of $752.0 million in commercial loans, $447.4 million in construction loans and $147.3 million in commercial mortgage loans. Unfunded loan commitments at December 31, 2017 and September 30, 2017 were $1.98 billion and $2.11 billion, respectively.
The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.13 billion at September 30, 2018, compared to $1.12 billion and $1.51 billion at December 31, 2017 and September 30, 2017, respectively.
Total investments were $1.59 billion at September 30, 2018, a decrease of $7.6 million, compared to the balance at December 31, 2017, largely due to repayments of mortgage-backed securities, maturities and calls of certain municipal and agency bonds and an increase in unrealized losses on available for sale debt securities, partially offset by purchases of mortgage-backed and municipal securities.
1
Total deposits increased $5.6 million during the nine months ended September 30, 2018 to $6.72 billion. Total time deposits increased $43.0 million to $677.9 million at September 30, 2018, while total core deposits, consisting of savings and demand deposit accounts, decreased $37.5 million to $6.04 billion at September 30, 2018. The increase in time deposits was primarily the result of a 13- month certificate of deposit promotional campaign which provided the Company a lower-cost funding alternative to wholesale borrowings. The decrease in core deposits was largely attributable to a $69.0 million decrease in money market deposits and a $36.0 million decrease in savings deposits, partially offset by a $41.2 million increase in interest bearing demand deposits and a $26.4 million increase in non-interest bearing demand deposits. Core deposits represented 89.9% of total deposits at September 30, 2018, compared to 90.5% at December 31, 2017.
Borrowed funds decreased $212.6 million during the nine months ended September 30, 2018, to $1.53 billion. The decrease in borrowings for the period was primarily a function of lower asset funding requirements. Borrowed funds represented 15.8% of total assets at September 30, 2018, a decrease from 17.7% at December 31, 2017.
Stockholders’ equity increased $32.9 million during the nine months ended September 30, 2018, to $1.33 billion, primarily due to net income earned for the period, partially offset by dividends paid to stockholders and an increase in unrealized losses on available for sale debt securities. Common stock repurchases for the nine months ended September 30, 2018 totaled 77,766 shares at an average cost of $26.05. These common stock repurchases were largely made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At September 30, 2018, 3.1 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share(1) at September 30, 2018 were $19.92 and $13.65, respectively, compared with $19.52 and $13.20, respectively, at December 31, 2017.
Results of Operations
Net Interest Income and Net Interest Margin
For the three months ended September 30, 2018, net interest income increased $5.6 million to $75.8 million, from $70.2 million for the same period in 2017. Net interest income for the nine months ended September 30, 2018 increased $17.0 million to $223.3 million, from $206.3 million for the same period in 2017. The improvement in net interest income for the comparative periods was largely due to growth in average loans outstanding resulting from organic originations and period-over-period expansion of the net interest margin. The improvement in the net interest margin was a function of an increase in the yield on earning assets, which outpaced the rise in the Company's cost of funds. Also contributing to the improvement, growth in average non-interest bearing demand deposits mitigated the Company's need to utilize higher-cost sources to fund average loans outstanding.
The Company’s net interest margin expanded five basis points to 3.38% for the quarter ended September 30, 2018, from 3.33% for the trailing quarter. The weighted average yield on interest-earning assets increased ten basis points to 4.07% for the quarter ended September 30, 2018, compared to 3.97% for the quarter ended June 30, 2018. The weighted average cost of interest-bearing liabilities for the quarter ended September 30, 2018 increased eight basis points to 0.90%, compared to 0.82% for the trailing quarter. The average cost of interest bearing deposits for the quarter ended September 30, 2018 increased seven basis points to 0.60%, from 0.53% for the quarter ended June 30, 2018. Average non-interest bearing demand deposits increased $33.3 million to $1.50 billion for the quarter ended September 30, 2018, from $1.46 billion for the trailing quarter ended June 30, 2018. The average cost of borrowed funds for the quarter ended September 30, 2018 was 1.93%, compared to 1.82% for the trailing quarter.
The net interest margin expanded 16 basis points to 3.38% for the quarter ended September 30, 2018, compared to 3.22% for the quarter ended September 30, 2017. The weighted average yield on interest-earning assets increased 32 basis points to 4.07% for the quarter ended September 30, 2018, compared to 3.75% for the quarter ended September 30, 2017, while the weighted average cost of interest bearing liabilities increased 22 basis points for the quarter ended September 30, 2018 to 0.90%, compared to the third quarter of 2017. The average cost of interest bearing deposits for the quarter ended September 30, 2018 was 0.60%, compared to 0.38% for
2
the same period last year. Average non-interest bearing demand deposits increased $134.8 million to $1.50 billion for the quarter ended September 30, 2018, from $1.36 billion for the quarter ended September 30, 2017. The average cost of borrowed funds for the quarter ended September 30, 2018 was 1.93%, compared to 1.71% for the same period last year.
For the nine months ended September 30, 2018, the net interest margin expanded 14 basis points to 3.33%, compared to 3.19% for the nine months ended September 30, 2017. The weighted average yield on interest earning assets increased 26 basis points to 3.98% for the nine months ended September 30, 2018, compared to 3.72% for the nine months ended September 30, 2017, while the weighted average cost of interest bearing liabilities increased 16 basis points to 0.83% for the nine months ended September 30, 2018, compared to 0.67% the same period last year. The average cost of interest bearing deposits for the nine months ended September 30, 2018 was 0.53%, compared to 0.36% for the same period last year. Average non-interest bearing demand deposits increased $119.0 million to $1.46 billion for the nine months ended September 30, 2018, from $1.34 billion for the nine months ended September 30, 2017. The average cost of borrowings for the nine months ended September 30, 2018 was 1.81%, compared to 1.67% for the same period last year.
Non-Interest Income
Non-interest income totaled $15.9 million for the quarter ended September 30, 2018, an increase of $804,000, compared to the same period in 2017. Income from Bank-owned life insurance ("BOLI") increased $730,000 to $2.1 million for the three months ended September 30, 2018, compared to $1.4 million for the same period in 2017. This increase was primarily due to the recognition of higher benefit claims in the current period. Other income increased $355,000 to $1.8 million for the three months ended September 30, 2018, compared to the quarter ended September 30, 2017, primarily due to a $228,000 increase in net fees on loan-level interest rate swap transactions and a $147,000 increase in net gains on the sale of loans, including the sale of loans as part of the wind down of the asset-based lending business, partially offset by a $104,000 decrease in net gains on the sale of foreclosed real estate. Partially offsetting these increases in non-interest income, fee income decreased $225,000 to $7.5 million for the three months ended September 30, 2018, compared to the same period in 2017, largely due to a $473,000 decrease in commercial loan prepayment fee income, partially offset by a $175,000 increase in income from the sale of non-deposit investment products.
For the nine months ended September 30, 2018, non-interest income totaled $43.1 million, an increase of $664,000, compared to the same period in 2017. Other income increased $1.3 million to $4.1 million for the nine months ended September 30, 2018, compared to $2.8 million for the same period in 2017, due to an $888,000 increase in net fees on loan-level interest rate swap transactions and a $362,000 increase in net gains on the sale of loans. Also, wealth management income increased $258,000 to $13.6 million for the nine months ended September 30, 2018, resulting from growth in assets under management, higher incremental fees on new asset management relationships and increased revenue from mutual fund offerings. BOLI income decreased $651,000 to $4.6 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to a decrease in the recognition of benefit claims from the prior year.
Non-Interest Expense
For the three months ended September 30, 2018, non-interest expense totaled $46.7 million, an increase of $379,000, compared to the three months ended September 30, 2017. Data processing expense increased $316,000 to $3.6 million for the three months ended September 30, 2018, principally due to increases in software maintenance and telecommunication expenses. Compensation and benefits expense increased $218,000 to $27.5 million for the three months ended September 30, 2018, compared to $27.3 million for the same period in 2017. This increase was principally due to additional salary expense related to annual merit increases and an increase in stock-based compensation, partially offset by a decrease in the accrual for incentive compensation. Other operating expenses increased $107,000 to $7.1 million for the three months ended September 30, 2018, compared to the same period in 2017, largely due to increases in consulting costs and loan collection expenses, partially offset by a decrease in attorney fees. Partially offsetting these increases, net occupancy costs decreased $181,000 to $5.9 million for the three months ended September 30, 2018, compared to the same period in 2017, principally due to decreases in depreciation, real estate taxes and facilities maintenance expenses, partially offset by an increase in rent expense. A portion of these variances are
3
associated with the Company's sale and leaseback of certain facilities in December 2017. Also, amortization of intangibles decreased $123,000 for the three months ended September 30, 2018, compared with the same period in 2017, as a result of scheduled reductions in amortization.
The Company’s annualized non-interest expense as a percentage of average assets(1) was 1.90% for the quarter ended September 30, 2018, compared to 1.93% for the same period in 2017. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income)(1) was 50.88% for the quarter ended September 30, 2018, compared to 54.24% for the same period in 2017.
Non-interest expense totaled $142.4 million for the nine months ended September 30, 2018, an increase of $2.6 million, compared to $139.7 million for the nine months ended September 30, 2017. Compensation and benefits expense increased $2.3 million to $83.4 million for the nine months ended September 30, 2018, compared to $81.1 million for the nine months ended September 30, 2017, primarily due to additional salary expense related to annual merit increases and an increase in stock-based compensation, partially offset by a decrease in the accrual for incentive compensation. Data processing expense increased $560,000 to $10.9 million for the nine months ended September 30, 2018, compared to $10.3 million for the same period in 2017, principally due to increases in software maintenance expense, partially offset by lower telecommunication expense. In addition, other operating expenses increased $507,000 to $21.8 million for the nine months ended September 30, 2018, compared to the same period in 2017, largely due to an increase in consulting expenses, partially offset by a decrease in attorney fees and a valuation charge related to foreclosed real estate recognized in the prior year. Partially offsetting these increases in non-interest expense, amortization of intangibles decreased $454,000 for the nine months ended September 30, 2018, compared with the same period in 2017, as a result of scheduled reductions in amortization.
Asset Quality
The Company’s total non-performing loans at September 30, 2018 were $29.1 million, or 0.40% of total loans, compared to $32.6 million, or 0.45% of total loans at June 30, 2018, and $34.9 million, or 0.48% of total loans at December 31, 2017. The $3.5 million decrease in non-performing loans at September 30, 2018, compared to the trailing quarter, was due to a $2.5 million decrease in non-performing residential loans, an $895,000 decrease in non-performing consumer loans and a $391,000 decrease in non-performing commercial mortgage loans, partially offset by a $263,000 increase in non-performing commercial loans. At September 30, 2018, impaired loans totaled $52.5 million with related specific reserves of $1.4 million, compared with impaired loans totaling $55.5 million with related specific reserves of $2.1 million at June 30, 2018. At December 31, 2017, impaired loans totaled $52.0 million with related specific reserves of $2.7 million.
At September 30, 2018, the Company’s allowance for loan losses was 0.75% of total loans, a decrease from 0.81% at June 30, 2018 and 0.82% at December 31, 2017. The Company recorded provisions for loan losses of $1.0 million and $21.9 million for the three and nine months ended September 30, 2018, respectively, compared with provisions of $500,000 and $3.7 million for the three and nine months ended September 30, 2017, respectively. For the three and nine months ended September 30, 2018, the Company had net charge-offs of $5.9 million and $28.2 million, respectively, compared to net charge-offs of $3.1 million and $5.3 million, respectively, for the same periods in 2017. The allowance for loan losses decreased $6.3 million to $53.9 million at September 30, 2018 from $60.2 million at December 31, 2017.
Charge-offs in the third quarter of 2018 were impacted by the write down of an impaired asset-based loan that was sold following the quarter-end. The reduction in the allowance for loan losses as a percentage of total loans was attributable to asset-based loan sales and further improvements in asset quality of the remaining loan portfolio.
At September 30, 2018 and December 31, 2017, the Company held $5.9 million and $6.9 million of foreclosed assets, respectively. During the nine months ended September 30, 2018, there were six additions to foreclosed assets with a carrying value of $1.7 million, and 13 properties sold with a carrying value of $2.4 million. Foreclosed assets at September 30, 2018 consisted of $3.7 million of commercial real estate and $2.2 million of residential real estate. Total non-performing assets at September 30, 2018 decreased $6.8 million, or 16.3%, to $35.0 million, or 0.36% of total assets, from $41.8 million, or 0.42% of total assets at December 31, 2017.
4
Income Tax Expense
For the three and nine months ended September 30, 2018, the Company’s income tax expense was $8.6 million and $19.5 million, respectively, compared with $12.0 million and $30.8 million, for the three and nine months ended September 30, 2017, respectively. The Company’s effective tax rates were 19.5% and 19.1% for the three and nine months ended September 30, 2018, respectively, compared to 31.1% and 29.3% for the three and nine months ended September 30, 2017, respectively. The decreases in tax expense and the effective tax rates were the result of the enactment of the Tax Cuts and Jobs Act on December 22, 2017.
About the Company
Provident Financial Services, Inc. is the holding company for Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. 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 on Friday, October 26, 2018 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended September 30, 2018. 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 provident.bank 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,” "project," "intend," “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 described in the "Risk Factors" section of our Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q, and 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.
Footnotes
(1) Tangible book value per share, annualized 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 following the Consolidated Financial Highlights which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.
5
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||
| Consolidated Statements of Financial Condition | |||||||||||
| September 30, 2018 (Unaudited) and December 31, 2017 | |||||||||||
| (Dollars in Thousands) | |||||||||||
| Assets | September 30, 2018 | December 31, 2017 | |||||||||
| Cash and due from banks | $ | 103,684 | $ | 139,557 | |||||||
| Short-term investments | 45,440 | 51,277 | |||||||||
| Total cash and cash equivalents | 149,124 | 190,834 | |||||||||
| Available for sale debt securities, at fair value | 1,042,320 | 1,037,154 | |||||||||
| Held to maturity debt securities (fair value of $469,861 at September 30, 2018 (unaudited) and $485,039 at December 31, 2017) | 474,092 | 477,652 | |||||||||
| Equity securities, at fair value | 722 | 658 | |||||||||
| Federal Home Loan Bank Stock | 71,909 | 81,184 | |||||||||
| Loans | 7,228,373 | 7,325,718 | |||||||||
| Less allowance for loan losses | 53,910 | 60,195 | |||||||||
| Net loans | 7,174,463 | 7,265,523 | |||||||||
| Foreclosed assets, net | 5,932 | 6,864 | |||||||||
| Banking premises and equipment, net | 59,155 | 63,185 | |||||||||
| Accrued interest receivable | 29,784 | 29,646 | |||||||||
| Intangible assets | 418,674 | 420,290 | |||||||||
| Bank-owned life insurance | 192,212 | 189,525 | |||||||||
| Other assets | 91,246 | 82,759 | |||||||||
| Total assets | $ | 9,709,633 | $ | 9,845,274 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Deposits: | |||||||||||
| Demand deposits | $ | 4,994,862 | $ | 4,996,345 | |||||||
| Savings deposits | 1,047,021 | 1,083,012 | |||||||||
| Certificates of deposit of $100,000 or more | 351,169 | 316,074 | |||||||||
| Other time deposits | 326,689 | 318,735 | |||||||||
| Total deposits | 6,719,741 | 6,714,166 | |||||||||
| Mortgage escrow deposits | 25,513 | 25,933 | |||||||||
| Borrowed funds | 1,529,914 | 1,742,514 | |||||||||
| Other liabilities | 102,876 | 64,000 | |||||||||
| Total liabilities | 8,378,044 | 8,546,613 | |||||||||
| 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 66,857,212 shares outstanding at September 30, 2018 and 66,535,017 outstanding at December 31, 2017 | 832 | 832 | |||||||||
| Additional paid-in capital | 1,019,052 | 1,012,908 | |||||||||
| Retained earnings | 627,801 | 586,132 | |||||||||
| Accumulated other comprehensive loss | (24,611) | (7,465) | |||||||||
| Treasury stock | (259,760) | (259,907) | |||||||||
| Unallocated common stock held by the Employee Stock Ownership Plan | (31,725) | (33,839) | |||||||||
| Common Stock acquired by the Directors' Deferred Fee Plan | (4,672) | (5,175) | |||||||||
| Deferred Compensation - Directors' Deferred Fee Plan | 4,672 | 5,175 | |||||||||
| Total stockholders' equity | 1,331,589 | 1,298,661 | |||||||||
| Total liabilities and stockholders' equity | $ | 9,709,633 | $ | 9,845,274 | |||||||
6
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||||||
| Consolidated Statements of Income | |||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2018 and 2017 (Unaudited) | |||||||||||||||||||||||
| (Dollars in Thousands, except per share data) | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||
| Real estate secured loans | $ | 54,532 | $ | 47,692 | $ | 158,798 | $ | 140,712 | |||||||||||||||
| Commercial loans | 20,230 | 18,964 | 58,706 | 53,884 | |||||||||||||||||||
| Consumer loans | 5,095 | 5,083 | 14,945 | 15,293 | |||||||||||||||||||
| Available for sale debt securities, equity securities and Federal Home Loan Bank stock | 7,805 | 6,540 | 22,738 | 19,651 | |||||||||||||||||||
| Investment securities held to maturity | 3,149 | 3,272 | 9,447 | 9,812 | |||||||||||||||||||
| Deposits, federal funds sold and other short-term investments | 450 | 343 | 1,273 | 898 | |||||||||||||||||||
| Total interest income | 91,261 | 81,894 | 265,907 | 240,250 | |||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||
| Deposits | 7,856 | 4,988 | 21,087 | 14,093 | |||||||||||||||||||
| Borrowed funds | 7,619 | 6,694 | 21,477 | 19,855 | |||||||||||||||||||
| Total interest expense | 15,475 | 11,682 | 42,564 | 33,948 | |||||||||||||||||||
| Net interest income | 75,786 | 70,212 | 223,343 | 206,302 | |||||||||||||||||||
| Provision for loan losses | 1,000 | 500 | 21,900 | 3,700 | |||||||||||||||||||
| Net interest income after provision for loan losses | 74,786 | 69,712 | 201,443 | 202,602 | |||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||
| Fees | 7,455 | 7,680 | 20,706 | 20,940 | |||||||||||||||||||
| Wealth management income | 4,570 | 4,592 | 13,572 | 13,314 | |||||||||||||||||||
| Bank-owned life insurance | 2,083 | 1,353 | 4,640 | 5,291 | |||||||||||||||||||
| Net gain on securities transactions | 2 | 36 | 3 | 47 | |||||||||||||||||||
| Other income | 1,806 | 1,451 | 4,139 | 2,804 | |||||||||||||||||||
| Total non-interest income | 15,916 | 15,112 | 43,060 | 42,396 | |||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||
| Compensation and employee benefits | 27,546 | 27,328 | 83,398 | 81,086 | |||||||||||||||||||
| Net occupancy expense | 5,924 | 6,105 | 19,052 | 19,255 | |||||||||||||||||||
| Data processing expense | 3,630 | 3,314 | 10,862 | 10,302 | |||||||||||||||||||
| FDIC Insurance | 967 | 967 | 2,920 | 3,065 | |||||||||||||||||||
| Amortization of intangibles | 509 | 632 | 1,625 | 2,079 | |||||||||||||||||||
| Advertising and promotion expense | 949 | 907 | 2,763 | 2,709 | |||||||||||||||||||
| Other operating expenses | 7,134 | 7,027 | 21,755 | 21,248 | |||||||||||||||||||
| Total non-interest expense | 46,659 | 46,280 | 142,375 | 139,744 | |||||||||||||||||||
| Income before income tax expense | 44,043 | 38,544 | 102,128 | 105,254 | |||||||||||||||||||
| Income tax expense | 8,575 | 11,969 | 19,504 | 30,788 | |||||||||||||||||||
| Net income | $ | 35,468 | $ | 26,575 | $ | 82,624 | $ | 74,466 | |||||||||||||||
| Basic earnings per share | $ | 0.55 | $ | 0.41 | $ | 1.27 | $ | 1.16 | |||||||||||||||
| Average basic shares outstanding | 65,037,779 | 64,454,684 | 64,907,210 | 64,327,640 | |||||||||||||||||||
| Diluted earnings per share | $ | 0.54 | $ | 0.41 | $ | 1.27 | $ | 1.15 | |||||||||||||||
| Average diluted shares outstanding | 65,183,881 | 64,645,278 | 65,078,627 | 64,519,710 | |||||||||||||||||||
7
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||||||
| Consolidated Financial Highlights | |||||||||||||||||||||||
| (Dollars in Thousands, except share data) (Unaudited) | |||||||||||||||||||||||
| At or for the | At or for the | ||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| STATEMENTS OF INCOME: | |||||||||||||||||||||||
| Net interest income | $ | 75,786 | $ | 70,212 | $ | 223,343 | $ | 206,302 | |||||||||||||||
| Provision for loan losses | 1,000 | 500 | 21,900 | 3,700 | |||||||||||||||||||
| Non-interest income | 15,916 | 15,112 | 43,060 | 42,396 | |||||||||||||||||||
| Non-interest expense | 46,659 | 46,280 | 142,375 | 139,744 | |||||||||||||||||||
| Income before income tax expense | 44,043 | 38,544 | 102,128 | 105,254 | |||||||||||||||||||
| Net income | 35,468 | 26,575 | 82,624 | 74,466 | |||||||||||||||||||
| Diluted earnings per share | $ | 0.54 | $ | 0.41 | $ | 1.27 | $ | 1.15 | |||||||||||||||
| Interest rate spread | 3.17 | % | 3.07 | % | 3.15 | % | 3.05 | % | |||||||||||||||
| Net interest margin | 3.38 | % | 3.22 | % | 3.33 | % | 3.19 | % | |||||||||||||||
| PROFITABILITY: | |||||||||||||||||||||||
| Annualized return on average assets | 1.45 | % | 1.11 | % | 1.13 | % | 1.05 | % | |||||||||||||||
| Annualized return on average equity | 10.59 | % | 8.11 | % | 8.38 | % | 7.76 | % | |||||||||||||||
Annualized return on average tangible equity (2) | 15.47 | % | 12.00 | % | 12.30 | % | 11.56 | % | |||||||||||||||
| Annualized non-interest expense to average assets (3) | 1.90 | % | 1.93 | % | 1.95 | % | 1.97 | % | |||||||||||||||
Efficiency ratio (4) | 50.88 | % | 54.24 | % | 53.44 | % | 56.19 | % | |||||||||||||||
| ASSET QUALITY: | |||||||||||||||||||||||
| Non-accrual loans | $ | 29,066 | $ | 36,448 | |||||||||||||||||||
| 90+ and still accruing | — | — | |||||||||||||||||||||
| Non-performing loans | 29,066 | 36,448 | |||||||||||||||||||||
| Foreclosed assets | 5,932 | 5,703 | |||||||||||||||||||||
| Non-performing assets | 34,998 | 42,151 | |||||||||||||||||||||
| Non-performing loans to total loans | 0.40 | % | 0.52 | % | |||||||||||||||||||
| Non-performing assets to total assets | 0.36 | % | 0.44 | % | |||||||||||||||||||
| Allowance for loan losses | $ | 53,910 | $ | 60,276 | |||||||||||||||||||
| Allowance for loan losses to total non-performing loans | 185.47 | % | 165.38 | % | |||||||||||||||||||
| Allowance for loan losses to total loans | 0.75 | % | 0.86 | % | |||||||||||||||||||
| AVERAGE BALANCE SHEET DATA: | |||||||||||||||||||||||
| Assets | $ | 9,727,605 | $ | 9,496,733 | $ | 9,738,958 | $ | 9,506,682 | |||||||||||||||
| Loans, net | 7,195,306 | 6,937,467 | 7,209,823 | 6,936,512 | |||||||||||||||||||
| Earning assets | 8,857,175 | 8,617,728 | 8,867,081 | 8,620,994 | |||||||||||||||||||
| Core deposits | 6,067,103 | 5,933,299 | 6,100,229 | 5,902,127 | |||||||||||||||||||
| Borrowings | 1,569,176 | 1,553,365 | 1,583,740 | 1,594,197 | |||||||||||||||||||
| Interest-bearing liabilities | 6,794,782 | 6,766,182 | 6,870,454 | 6,815,077 | |||||||||||||||||||
| Stockholders' equity | 1,328,345 | 1,299,810 | 1,317,656 | 1,283,158 | |||||||||||||||||||
| Average yield on interest-earning assets | 4.07 | % | 3.75 | % | 3.98 | % | 3.72 | % | |||||||||||||||
| Average cost of interest-bearing liabilities | 0.90 | % | 0.68 | % | 0.83 | % | 0.67 | % | |||||||||||||||
| LOAN DATA: | |||||||||||||||||||||||
| Mortgage loans: | |||||||||||||||||||||||
| Residential | $ | 1,108,396 | $ | 1,157,888 | |||||||||||||||||||
| Commercial | 2,274,059 | 2,022,698 | |||||||||||||||||||||
| Multi-family | 1,344,066 | 1,335,103 | |||||||||||||||||||||
| Construction | 429,248 | 324,692 | |||||||||||||||||||||
| Total mortgage loans | 5,155,769 | 4,840,381 | |||||||||||||||||||||
| Commercial loans | 1,633,894 | 1,709,015 | |||||||||||||||||||||
| Consumer loans | 443,340 | 481,262 | |||||||||||||||||||||
| Total gross loans | 7,233,003 | 7,030,658 | |||||||||||||||||||||
| Premium on purchased loans | 3,433 | 4,229 | |||||||||||||||||||||
| Unearned discounts | (34) | (36) | |||||||||||||||||||||
| Net deferred | (8,029) | (6,799) | |||||||||||||||||||||
| Total loans | $ | 7,228,373 | $ | 7,028,052 | |||||||||||||||||||
8
| Notes and Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||||||||||||
| (Dollars in Thousands, except share data) | ||||||||||||||||||||||||||
| (1) Book and Tangible Book Value per Share | ||||||||||||||||||||||||||
| At September 30, | At December 31, | |||||||||||||||||||||||||
| 2018 | 2017 | 2017 | ||||||||||||||||||||||||
| Total stockholders' equity | $ | 1,331,589 | $ | 1,300,172 | $ | 1,298,661 | ||||||||||||||||||||
| Less: total intangible assets | 418,674 | 420,877 | 420,290 | |||||||||||||||||||||||
| Total tangible stockholders' equity | $ | 912,915 | $ | 879,295 | $ | 878,371 | ||||||||||||||||||||
| Shares outstanding | 66,857,212 | 66,467,819 | 66,535,017 | |||||||||||||||||||||||
| Book value per share (total stockholders' equity/shares outstanding) | $ | 19.92 | $ | 19.56 | $ | 19.52 | ||||||||||||||||||||
| Tangible book value per share (total tangible stockholders' equity/shares outstanding) | $ | 13.65 | $ | 13.23 | $ | 13.20 | ||||||||||||||||||||
| (2) Annualized Return on Average Tangible Equity | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
| Total average stockholders' equity | $ | 1,328,345 | $ | 1,299,810 | $ | 1,317,656 | $ | 1,283,158 | ||||||||||||||||||
| Less: total average intangible assets | 418,997 | 421,272 | 419,530 | 421,952 | ||||||||||||||||||||||
| Total average tangible stockholders' equity | $ | 909,348 | $ | 878,538 | $ | 898,126 | $ | 861,206 | ||||||||||||||||||
| Net income | $ | 35,468 | $ | 26,575 | $ | 82,624 | $ | 74,466 | ||||||||||||||||||
| Annualized return on average tangible equity (net income/total average stockholders' equity) | 15.47 | % | 12.00 | % | 12.30 | % | 11.56 | % | ||||||||||||||||||
| (3) Annualized Non-Interest Expense to Average Assets | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
| Total annualized non-interest expense | 185,115 | 183,611 | 190,355 | 186,837 | ||||||||||||||||||||||
| Average assets | $ | 9,727,605 | $ | 9,496,733 | $ | 9,738,958 | $ | 9,506,682 | ||||||||||||||||||
| Annualized non-interest expense/average assets | 1.90 | % | 1.93 | % | 1.95 | % | 1.97 | % | ||||||||||||||||||
| (4) Efficiency Ratio Calculation | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
| Net interest income | $ | 75,786 | $ | 70,212 | $ | 223,343 | $ | 206,302 | ||||||||||||||||||
| Non-interest income | 15,916 | 15,112 | 43,060 | 42,396 | ||||||||||||||||||||||
| Total income | $ | 91,702 | $ | 85,324 | $ | 266,403 | $ | 248,698 | ||||||||||||||||||
| Non-interest expense | $ | 46,659 | $ | 46,280 | $ | 142,375 | $ | 139,744 | ||||||||||||||||||
| Efficiency ratio (non-interest expense/income) | 50.88 | % | 54.24 | % | 53.44 | % | 56.19 | % | ||||||||||||||||||
9
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||||||||||||||||||
| Net Interest Margin Analysis | |||||||||||||||||||||||||||||||||||
| Quarterly Average Balances | |||||||||||||||||||||||||||||||||||
| (Unaudited) (Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
| September 30, 2018 | June 30, 2018 | ||||||||||||||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||||||||||||||
| Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||||||||||||||||||||
| Interest-Earning Assets: | |||||||||||||||||||||||||||||||||||
| Deposits | $ | 13,552 | $ | 69 | 2.04 | % | $ | 11,083 | $ | 50 | 1.80 | % | |||||||||||||||||||||||
| Federal funds sold and other short-term investments | 50,600 | 381 | 2.97 | % | 51,006 | 378 | 2.98 | % | |||||||||||||||||||||||||||
Investment securities (1) | 473,291 | 3,149 | 2.66 | % | 471,807 | 3,154 | 2.67 | % | |||||||||||||||||||||||||||
| Securities available for sale | 1,049,933 | 6,577 | 2.51 | % | 1,050,806 | 6,461 | 2.46 | % | |||||||||||||||||||||||||||
| Equity Securities, at fair value | 706 | — | — | % | 667 | — | — | % | |||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 73,787 | 1,228 | 6.66 | % | 72,909 | 1,221 | 6.70 | % | |||||||||||||||||||||||||||
Net loans: (2) | |||||||||||||||||||||||||||||||||||
| Total mortgage loans | 5,098,281 | 54,532 | 4.22 | % | 5,077,790 | 52,756 | 4.13 | % | |||||||||||||||||||||||||||
| Total commercial loans | 1,650,039 | 20,230 | 4.82 | % | 1,657,283 | 19,350 | 4.64 | % | |||||||||||||||||||||||||||
| Total consumer loans | 446,986 | 5,095 | 4.52 | % | 455,899 | 4,945 | 4.35 | % | |||||||||||||||||||||||||||
| Total net loans | 7,195,306 | 79,857 | 4.38 | % | 7,190,972 | 77,051 | 4.26 | % | |||||||||||||||||||||||||||
| Total Interest-Earning Assets | $ | 8,857,175 | $ | 91,261 | 4.07 | % | $ | 8,849,250 | $ | 88,315 | 3.97 | % | |||||||||||||||||||||||
| Non-Interest Earning Assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | 93,082 | 98,477 | |||||||||||||||||||||||||||||||||
| Other assets | 777,348 | 778,660 | |||||||||||||||||||||||||||||||||
| Total Assets | $ | 9,727,605 | $ | 9,726,387 | |||||||||||||||||||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||||||||||||||
| Demand deposits | $ | 3,515,583 | $ | 5,319 | 0.60 | % | $ | 3,568,420 | $ | 4,665 | 0.52 | % | |||||||||||||||||||||||
| Savings deposits | 1,056,382 | 460 | 0.17 | % | 1,088,052 | 497 | 0.18 | % | |||||||||||||||||||||||||||
| Time deposits | 653,641 | 2,077 | 1.26 | % | 650,101 | 1,834 | 1.13 | % | |||||||||||||||||||||||||||
| Total Deposits | 5,225,606 | 7,856 | 0.60 | % | 5,306,573 | 6,996 | 0.53 | % | |||||||||||||||||||||||||||
| Borrowed funds | 1,569,176 | 7,619 | 1.93 | % | 1,554,013 | 7,039 | 1.82 | % | |||||||||||||||||||||||||||
| Total Interest-Bearing Liabilities | 6,794,782 | 15,475 | 0.90 | % | 6,860,586 | 14,035 | 0.82 | % | |||||||||||||||||||||||||||
| Non-Interest Bearing Liabilities: | |||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 1,495,138 | 1,461,855 | |||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 109,340 | 88,842 | |||||||||||||||||||||||||||||||||
| Total non-interest bearing liabilities | 1,604,478 | 1,550,697 | |||||||||||||||||||||||||||||||||
| Total Liabilities | 8,399,260 | 8,411,283 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 1,328,345 | 1,315,104 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 9,727,605 | $ | 9,726,387 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 75,786 | $ | 74,280 | |||||||||||||||||||||||||||||||
| Net interest rate spread | 3.17 | % | 3.15 | % | |||||||||||||||||||||||||||||||
| Net interest-earning assets | $ | 2,062,393 | $ | 1,988,664 | |||||||||||||||||||||||||||||||
Net interest margin (3) | 3.38 | % | 3.33 | % | |||||||||||||||||||||||||||||||
| Ratio of interest-earning assets to total interest-bearing liabilities | 1.30x | 1.29x | |||||||||||||||||||||||||||||||||
| (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. | ||||
10
| The following table summarizes the quarterly net interest margin for the previous five quarters. | |||||||||||||||||||||||||||||
| 9/30/18 | 6/30/18 | 3/31/18 | 12/31/17 | 9/30/17 | |||||||||||||||||||||||||
| 3rd Qtr. | 2nd Qtr. | 1st Qtr. | 4th Qtr. | 3rd Qtr. | |||||||||||||||||||||||||
| Interest-Earning Assets: | |||||||||||||||||||||||||||||
| Securities | 2.75 | % | 2.72 | % | 2.62 | % | 2.49 | % | 2.41 | % | |||||||||||||||||||
| Net loans | 4.38 | % | 4.26 | % | 4.18 | % | 4.08 | % | 4.08 | % | |||||||||||||||||||
| Total interest-earning assets | 4.07 | % | 3.97 | % | 3.89 | % | 3.78 | % | 3.75 | % | |||||||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||||||||
| Total deposits | 0.60 | % | 0.53 | % | 0.47 | % | 0.40 | % | 0.38 | % | |||||||||||||||||||
| Total borrowings | 1.93 | % | 1.82 | % | 1.70 | % | 1.63 | % | 1.71 | % | |||||||||||||||||||
| Total interest-bearing liabilities | 0.90 | % | 0.82 | % | 0.76 | % | 0.68 | % | 0.68 | % | |||||||||||||||||||
| Interest rate spread | 3.17 | % | 3.15 | % | 3.13 | % | 3.10 | % | 3.07 | % | |||||||||||||||||||
| Net interest margin | 3.38 | % | 3.33 | % | 3.30 | % | 3.25 | % | 3.22 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.30x | 1.29x | 1.28x | 1.29x | 1.27x | ||||||||||||||||||||||||
11
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||||||||||||||||||
| Net Interest Margin Analysis | |||||||||||||||||||||||||||||||||||
| Average Year to Date Balances | |||||||||||||||||||||||||||||||||||
| (Unaudited) (Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
| September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||||||||||||||
| Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||||||||||||||||||||
| Interest-Earning Assets: | |||||||||||||||||||||||||||||||||||
| Deposits | $ | 13,742 | $ | 183 | 1.78 | % | $ | 20,166 | $ | 124 | 0.82 | % | |||||||||||||||||||||||
| Federal funds sold and other short term investments | 50,878 | 1,090 | 2.86 | % | 51,993 | 774 | 1.99 | % | |||||||||||||||||||||||||||
Investment securities (1) | 471,637 | 9,447 | 2.67 | % | 490,008 | 9,812 | 2.67 | % | |||||||||||||||||||||||||||
| Securities available for sale | 1,045,709 | 19,113 | 2.44 | % | 1,046,951 | 16,681 | 2.13 | % | |||||||||||||||||||||||||||
| Equity securities, at fair value | 677 | — | — | % | 570 | — | — | % | |||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 74,615 | 3,625 | 6.48 | % | 74,794 | 2,970 | 8.01 | % | |||||||||||||||||||||||||||
Net loans: (2) | |||||||||||||||||||||||||||||||||||
| Total mortgage loans | 5,090,736 | 158,798 | 4.13 | % | 4,811,312 | 140,712 | 3.87 | % | |||||||||||||||||||||||||||
| Total commercial loans | 1,662,356 | 58,706 | 4.68 | % | 1,626,939 | 53,884 | 4.39 | % | |||||||||||||||||||||||||||
| Total consumer loans | 456,731 | 14,945 | 4.37 | % | 498,261 | 15,293 | 4.10 | % | |||||||||||||||||||||||||||
| Total net loans | 7,209,823 | 232,449 | 4.27 | % | 6,936,512 | 209,889 | 4.01 | % | |||||||||||||||||||||||||||
| Total Interest-Earning Assets | $ | 8,867,081 | $ | 265,907 | 3.98 | % | $ | 8,620,994 | $ | 240,250 | 3.72 | % | |||||||||||||||||||||||
| Non-Interest Earning Assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | 94,122 | 91,161 | |||||||||||||||||||||||||||||||||
| Other assets | 777,755 | 794,527 | |||||||||||||||||||||||||||||||||
| Total Assets | $ | 9,738,958 | $ | 9,506,682 | |||||||||||||||||||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||||||||||||||
| Demand deposits | $ | 3,564,111 | $ | 14,188 | 0.53 | % | $ | 3,455,533 | $ | 8,724 | 0.34 | % | |||||||||||||||||||||||
| Savings deposits | 1,077,620 | 1,450 | 0.18 | % | 1,107,143 | 1,584 | 0.19 | % | |||||||||||||||||||||||||||
| Time deposits | 644,983 | 5,449 | 1.13 | % | 658,204 | 3,785 | 0.77 | % | |||||||||||||||||||||||||||
| Total Deposits | 5,286,714 | 21,087 | 0.53 | % | 5,220,880 | 14,093 | 0.36 | % | |||||||||||||||||||||||||||
| Borrowed funds | 1,583,740 | 21,477 | 1.81 | % | 1,594,197 | 19,855 | 1.67 | % | |||||||||||||||||||||||||||
| Total Interest-Bearing Liabilities | $ | 6,870,454 | $ | 42,564 | 0.83 | % | $ | 6,815,077 | $ | 33,948 | 0.67 | % | |||||||||||||||||||||||
| Non-Interest Bearing Liabilities: | |||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 1,458,498 | 1,339,451 | |||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 92,350 | 68,996 | |||||||||||||||||||||||||||||||||
| Total non-interest bearing liabilities | 1,550,848 | 1,408,447 | |||||||||||||||||||||||||||||||||
| Total Liabilities | 8,421,302 | 8,223,524 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 1,317,656 | 1,283,158 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 9,738,958 | $ | 9,506,682 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 223,343 | $ | 206,302 | |||||||||||||||||||||||||||||||
| Net interest rate spread | 3.15 | % | 3.05 | % | |||||||||||||||||||||||||||||||
| Net interest-earning assets | $ | 1,996,627 | $ | 1,805,917 | |||||||||||||||||||||||||||||||
Net interest margin (3) | 3.33 | % | 3.19 | % | |||||||||||||||||||||||||||||||
| Ratio of interest-earning assets to total interest-bearing liabilities | 1.29x | 1.26x | |||||||||||||||||||||||||||||||||
| (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. | |||||||||||||||||||||||||||||||||||
12
| The following table summarizes the year-to-date net interest margin for the previous three years. | ||||||||||||||||||||
| Nine Months Ended | ||||||||||||||||||||
| September 30, 2018 | September 30, 2017 | September 30, 2016 | ||||||||||||||||||
| Interest-Earning Assets: | ||||||||||||||||||||
| Securities | 2.69 | % | 2.53 | % | 2.28 | % | ||||||||||||||
| Net loans | 4.27 | % | 4.01 | % | 3.96 | % | ||||||||||||||
| Total interest-earning assets | 3.98 | % | 3.72 | % | 3.63 | % | ||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||||
| Total deposits | 0.53 | % | 0.36 | % | 0.33 | % | ||||||||||||||
| Total borrowings | 1.81 | % | 1.67 | % | 1.71 | % | ||||||||||||||
| Total interest-bearing liabilities | 0.83 | % | 0.67 | % | 0.66 | % | ||||||||||||||
| Interest rate spread | 3.15 | % | 3.05 | % | 2.97 | % | ||||||||||||||
| Net interest margin | 3.33 | % | 3.19 | % | 3.10 | % | ||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.29x | 1.26x | 1.24x | |||||||||||||||||
13