Provident Financial Services, Inc. Announces Quarterly Earnings and Declares Quarterly Cash Dividend
- Press Release
- Source: Provident Financial Services, Inc.
- On 7:43 am EDT, Thursday October 22, 2009
JERSEY CITY, N.J., Oct. 22 /PRNewswire-FirstCall/ -- Provident Financial Services, Inc. (NYSE: PFS - News; the "Company") reported net income of $8.7 million, or $0.15 per basic and diluted share for the quarter ended September 30, 2009, compared to net income of $13.2 million, or $0.23 per basic and diluted share for the quarter ended September 30, 2008. The Company reported operating income, excluding a non-cash goodwill impairment charge recorded in the first quarter of 2009, of $23.9 million, or $0.43 per basic and diluted share for the nine months ended September 30, 2009, compared to net income of $34.2 million, or $0.61 per basic and diluted share for the nine months ended September 30, 2008.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| PFS | 10.80 | 0.00 |
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 $128.6 million, or $2.29 per basic and diluted share for the nine months ended September 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 nine months ended September 30, 2008, earnings and per share data for the three and nine months ended September 30, 2009 also reflect an increase in the provision for loan losses due to the following: an increase in non-performing loans; downgrades in credit risk ratings; an increase in commercial loans as a percentage of the total loan portfolio; and the impact of current macroeconomic conditions. The provision for loan losses was $6.5 million and $18.1 million for the three and nine months ended September 30, 2009, respectively, compared with $3.8 million and $6.6 million, respectively, for the same periods in 2008. In addition, earnings and per share data for the nine months ended September 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 $3.1 million, which resulted in a charge of $1.9 million, or $0.03 per basic and diluted share, net of tax, recognized during the second quarter of 2009.
Christopher Martin, President and Chief Executive Officer, commented, "While the markets and the economy are showing signs of stabilization, the lingering effects of a prolonged recession remain. We will continue to assist our customers with the necessary financial tools to navigate these challenging times. Our capital levels remain strong and, although the level of required loan loss provisions has affected our results, we increased capital through earnings and maintained our quarterly cash dividend. Core deposits increased at a 32% annualized rate during the third quarter and we continue to be pragmatic when deploying these funds into quality loans and investments." Martin continued, "Consistent with our long history, we will continue to maintain a strong balance sheet, conservative credit outlook, and will focus our attention on risk management in each of our lines of business."
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on November 30, 2009, to stockholders of record as of the close of business on November 16, 2009.
Balance Sheet Summary
Total assets increased $267.6 million, or 4.1%, to $6.82 billion at September 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 $131.0 million to $199.5 million at September 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 $496.0 million, or 41.0%, during the nine months ended September 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. Securities purchases for the nine months ended September 30, 2009, consisted primarily of U.S. Government Agency guaranteed mortgage-backed securities and obligations.
The Company's net loans decreased $213.4 million, or 4.8%, to $4.27 billion at September 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 $843.0 million and loan purchases totaled $40.0 million for the nine months ended September 30, 2009. Compared with December 31, 2008, residential mortgage loans decreased $269.2 million, consumer loans decreased $30.5 million, and construction loans decreased $16.5 million, while commercial mortgage and multi-family loans increased $95.5 million and commercial loans increased $17.7 million. In addition to the securitization of $84.9 million of loans, total residential mortgage loans decreased as a result of the sale of $96.6 million of primarily 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 50.9% of the loan portfolio at September 30, 2009, compared to 46.5% at December 31, 2008.
At September 30, 2009, the Company's unfunded loan commitments totaled $776.2 million, including $269.5 million in commercial loan commitments, $87.8 million in construction loan commitments and $142.9 million in commercial mortgage commitments. Unfunded loan commitments at June 30, 2009 were $730.2 million.
Intangible assets decreased $155.6 million to $359.1 million at September 30, 2009, from $514.7 million at December 31, 2008, primarily due to a $152.5 million goodwill impairment charge recognized in the first quarter of 2009.
Total deposits increased $648.9 million, or 15.4%, during the nine months ended September 30, 2009, to $4.88 billion. Core deposits, consisting of savings and demand deposit accounts, increased $562.4 million, or 20.9%, to $3.26 billion at September 30, 2009. The majority of the core deposit increase was in municipal money market and retail checking deposits. Time deposits increased $86.5 million, or 5.6%, to $1.62 billion at September 30, 2009, with the majority of the increase occurring in the 18- and 15-month maturity categories. Core deposits represented 66.8% of total deposits at September 30, 2009, compared to 63.7% at December 31, 2008.
Borrowed funds were reduced by $243.1 million, or 19.5%, during the nine months ended September 30, 2009, to $1.00 billion, as the Company deployed excess liquidity arising from the increase in core deposit funding. Borrowed funds represented 14.7% of total assets at September 30, 2009, a reduction from 19.1% at December 31, 2008.
Common stock repurchases for the nine months ended September 30, 2009 totaled 11,000 shares at an average cost of $10.67 per share. At September 30, 2009, 2.1 million shares remained eligible for repurchase under the current authorization. At September 30, 2009, book value per share and tangible book value per share were $14.75 and $8.75, respectively, compared with $17.09 and $8.45, respectively, at December 31, 2008. Tangible common equity as a percentage of tangible assets was 8.1% at September 30, 2009, compared with 8.4% at December 31, 2008.
Results of Operations
Net Interest Margin
The net interest margin increased 5 basis points to 3.01% for the quarter ended September 30, 2009, from 2.96% for the quarter ended June 30, 2009. The net interest margin for the quarter ended September 30, 2009 decreased 26 basis points from 3.27% for the quarter ended September 30, 2008. The increase in the net interest margin for the three months ended September 30, 2009 versus the trailing quarter was primarily attributable to an increase in average securities available for sale, an increase in the average balance of lower-cost demand deposit accounts, and a decrease in the average rates paid on interest-bearing liabilities. The decrease in the net interest margin for the three months ended September 30, 2009 versus the same period in 2008 was primarily 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 4.84% for the three months ended September 30, 2009, compared with 4.96% for the trailing quarter and 5.51% for the three months ended September 30, 2008. The weighted average cost of interest-bearing liabilities was 2.07% for the quarter ended September 30, 2009, compared with 2.27% for the trailing quarter and 2.55% for the third quarter of 2008. The average cost of deposits for the three months ended September 30, 2009 was 1.73%, compared with 1.93% for the trailing quarter and 2.19% for the same period last year. The average cost of borrowings for the three months ended September 30, 2009 was 3.50%, compared with 3.60% for the trailing quarter and 3.62% for the same period last year.
For the nine months ended September 30, 2009, the net interest margin decreased 6 basis points to 3.02%, compared with 3.08% for the nine months ended September 30, 2008. The decrease in the net interest margin for the nine months ended September 30, 2009 versus the same period in 2008 was primarily 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 declined 54 basis points to 5.00% for the nine months ended September 30, 2009, compared with 5.54% for the nine months ended September 30, 2008. The weighted average cost of interest-bearing liabilities declined 56 basis points to 2.24% for the nine months ended September 30, 2009, compared with 2.80% for the same period in 2008. The average cost of deposits for the nine months ended September 30, 2009 was 1.90%, compared with 2.49% for the same period last year. The average cost of borrowings for the nine months ended September 30, 2009 was 3.52%, compared with 3.83% for the same period last year.
Non-Interest Income
Non-interest income totaled $8.6 million for the quarter ended September 30, 2009, an increase of $813,000 compared to the same period in 2008. Other income increased $864,000 for the quarter ended September 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 third quarter of 2009, compared with the same period in 2008, as a result of lower prevailing market interest rates that promoted increased refinancing activity. Gains on loan sales totaled $877,000 for the quarter ended September 30, 2009, compared with $56,000 for the same period in 2008. The Company recognized other-than-temporary impairment charges of $701,000 in the third quarter of 2009 related to investments in the common stock of three publicly traded financial institutions, compared with other-than-temporary impairment charges of $1.4 million recognized during the third quarter of 2008. In addition, income from the appreciation in the cash surrender value of Bank-owned life insurance increased $118,000, or 8.9% for the quarter ended September 30, 2009, compared with the same period in 2008. Partially offsetting these improvements, fee income for the quarter ended September 30, 2009 decreased $629,000, or 8.6%, compared to the same period in 2008, primarily as a result of fewer overdraft occurrences and lower income recorded from increases in the value of equity fund holdings. In addition, net gains on securities transactions totaled $195,000 for the quarter ended September 30, 2009, compared with net gains of $444,000 for the same quarter in 2008.
For the nine months ended September 30, 2009, non-interest income totaled $24.4 million, an increase of $1.2 million, or 5.1%, compared to the same period in 2008. Other income increased $718,000 for the nine months ended September 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 year-to-date 2009, compared with the same period in 2008, as a result of lower prevailing market interest rates that promoted increased refinancing activity. Gains on loan sales totaled $1.7 million for the nine months ended September 30, 2009, compared with net losses of $6,000 for the same period in 2008. In addition, net gains on securities transactions totaled $1.4 million for the nine months ended September 30, 2009, compared with net gains of $845,000 for the same period in 2008. Partially offsetting these improvements, the Company recognized other-than-temporary impairment charges on securities of $1.5 million during the nine months ended September 30, 2009, compared with other-than-temporary impairment charges of $1.4 million recognized during the same period in 2008.
Non-Interest Expense
For the three months ended September 30, 2009, non-interest expense increased $4.0 million, or 12.6%, to $36.0 million, compared to $32.0 million for the three months ended September 30, 2008. FDIC insurance expense increased $2.3 million for the three months ended September 30, 2009, compared with the same period in 2008, as a result of deposit growth and increased premium rates. Compensation and benefits expense increased $1.7 million for the three months ended September 30, 2009, compared with the same period in 2008, primarily due to the recognition of $1.2 million in severance costs during the third quarter of 2009. Severance included previously disclosed costs associated with the retirements of two senior executives. In addition, other operating expenses increased $543,000 for the quarter ended September 30, 2009, compared with the same period last year. These increases were partially offset by a $258,000 decrease in the amortization of intangibles as a result of scheduled reductions in core deposit amortization, and reductions in net occupancy expense totaling $229,000.
Excluding the $152.5 million non-cash goodwill impairment charge recorded in the first quarter of 2009, non-interest expense increased $10.2 million, or 10.5%, to $107.4 million for the nine months ended September 30, 2009, compared to $97.2 million for the nine months ended September 30, 2008. FDIC insurance expense increased $7.4 million for the nine months ended September 30, 2009, compared with the same period in 2008, as a result of deposit growth, increased premium rates and the FDIC 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, which was accrued during the quarter ended June 30, 2009 and paid on September 30, 2009. Other operating expenses increased $1.9 million for the nine months ended September 30, 2009, compared with the same period in 2008, due primarily to costs associated with the dissolution of a real estate development joint venture. Compensation and benefits expense increased $1.8 million for the nine months ended September 30, 2009, compared with the same period in 2008, primarily due to the recognition of $1.8 million in severance costs during the nine months ended September 30, 2009. Severance included previously disclosed costs associated with the retirements of two senior executives in the third quarter of 2009. These increases were partially offset by a $686,000 decrease in the amortization of intangibles as a result of scheduled reductions in core deposit amortization, and reductions in net occupancy expense totaling $356,000.
Asset Quality
Total non-performing loans at September 30, 2009 were $78.2 million, or 1.81% of total loans, compared with $63.9 million, or 1.47% of total loans at June 30, 2009, $59.1 million, or 1.31% of total loans at December 31, 2008, and $35.3 million, or 0.81% of total loans at September 30, 2008. At September 30, 2009, impaired loans totaled $46.0 million with related specific reserves of $6.8 million. The increase in non-performing loans at September 30, 2009 compared with the trailing quarter was largely attributable to the addition of an $11.2 million senior participation interest in a $283.0 million Shared National Credit. Proceeds from this construction loan facility are being used to convert an existing 35-story, 631,000 square foot office building in New York City into a mixed-use 349-unit residential condominium and 251-room hotel. The project has been impacted by additional costs and a decline in sales activity. While this loan has been classified as non-accrual, the hotel construction is nearing completion and the loan was current as to principal and interest at September 30, 2009. The Company estimates a loan-to-value ratio of approximately 77% at September 30, 2009, and therefore, in accordance with Generally Accepted Accounting Principles, no specific reserve has been allocated to this loan.
At September 30, 2009, the Company's allowance for loan losses was 1.29% of total loans, compared with 1.05% of total loans at December 31, 2008, and 0.99% of total loans at September 30, 2008. The Company recorded provisions for loan losses of $6.5 million and $18.1 million for the three and nine months ended September 30, 2009, respectively, compared with provisions of $3.8 million and $6.6 million for the three and nine months ended September 30, 2008, respectively. For the three and nine months ended September 30, 2009, the Company had net charge-offs of $2.8 million and $10.1 million, respectively, compared with net charge-offs of $1.6 and $4.1 million, respectively, for the same periods in 2008. Net charge-offs for the nine months ended September 30, 2009 included $3.0 million related to an equipment lease financing company that was recognized in the second quarter of 2009. The allowance for loan losses increased $8.0 million to $55.7 million at September 30, 2009, from $47.7 million at December 31, 2008. The increase in the loan loss provision for the three and nine months ended September 30, 2009, compared with the same periods in 2008, was attributable to an increase in non-performing loans, downgrades in credit risk ratings and an increase in commercial loans as a percentage of the total loan portfolio to 50.9% at September 30, 2009, from 44.7% at September 30, 2008. At September 30, 2009, the Company held $7.0 million of foreclosed assets, compared with $3.4 million at December 31, 2008.
Income Tax Expense
For the three months ended September 30, 2009, the Company's income tax expense was $2.8 million, compared with $4.2 million for the same period in 2008. For the nine months ended September 30, 2009, the Company's income tax expense was $7.4 million, compared with $12.3 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 24.1% and 23.6%, respectively, for the three and nine months ended September 30, 2009, compared with 24.2% and 26.5% for the three and nine months ended September 30, 2008, respectively. The reduction in the effective tax rate was 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 84 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 October 22, 2009 regarding highlights of the Company's third 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 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 also 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 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
September 30, 2009 (Unaudited) and December 31, 2008
(Dollars in Thousands)
Assets September 30, December 31,
2009 2008
------------ ------------
Cash and due from banks $196,001 $66,315
Short-term investments 3,527 2,231
----- -----
Total cash
and cash
equivalents 199,528 68,546
------- ------
Investment securities held to
maturity (market value of
$354,424 at September 30, 2009
(unaudited) and $351,623 at
December 31, 2008) 338,940 347,484
Securities available for
sale, at fair value 1,333,042 820,329
Federal Home Loan Bank
stock 34,675 42,833
Loans 4,321,364 4,526,748
Less allowance for
loan losses 55,731 47,712
Net loans 4,265,633 4,479,036
--------- ---------
Foreclosed assets, net 7,044 3,439
Banking premises and
equipment, net 76,611 75,750
Accrued interest receivable 24,864 23,866
Intangible assets 359,129 514,684
Bank-owned life insurance 130,913 126,956
Other assets 45,930 45,825
------ ------
Total assets $6,816,309 $6,548,748
========== ==========
Liabilities and Stockholders'
Equity
Deposits:
Demand deposits $2,385,809 $1,821,437
Savings deposits 870,375 872,388
Time deposits of
$100,000 or more 511,008 445,466
Other time deposits 1,108,019 1,087,045
--------- ---------
Total deposits 4,875,211 4,226,336
Mortgage escrow deposits 17,928 20,074
Borrowed funds 1,004,623 1,247,681
Other liabilities 35,927 36,067
------ ------
Total
liabilities 5,933,689 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
59,824,710 shares outstanding at
September 30, 2009, and 59,610,623
shares outstanding at December 31,
2008 832 832
Additional paid-in capital 1,014,556 1,013,293
Retained earnings 305,940 454,444
Accumulated other comprehensive
income (loss) 8,840 (485)
Treasury stock at cost (384,972) (384,854)
Unallocated common stock
held by Employee Stock
Ownership Plan (62,576) (64,640)
Common Stock acquired by the
Directors' Deferred Fee Plan (7,598) (7,667)
Deferred compensation -
Directors' Deferred Fee Plan 7,598 7,667
----- -----
Total
stockholders'
equity 882,620 1,018,590
------- ---------
Total
liabilities
and
stockholders'
equity $6,816,309 $6,548,748
========== ==========
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2009 and 2008 (Unaudited)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30 September 30,
------------------- -------------------
2009 2008 2009 2008
---- ---- ---- ----
Interest income:
Real estate
secured loans $39,286 $42,465 $119,566 $124,406
Commercial loans 11,108 10,665 32,176 32,568
Consumer loans 7,722 9,106 23,819 27,932
Investment
securities 3,327 3,606 10,119 10,860
Securities
available for
sale 11,497 10,770 32,876 32,372
Other short-term
investments 1 26 13 329
Deposits 98 - 215 -
Federal funds - - 24 164
--- --- --- ---
Total
interest
income 73,039 76,638 218,808 228,631
------ ------ ------- -------
Interest expense:
Deposits 18,807 20,133 58,136 68,945
Borrowed
funds 8,922 11,154 28,266 32,577
----- ------ ------ ------
Total
interest
expense 27,729 31,287 86,402 101,522
------ ------ ------ -------
Net
interest
income 45,310 45,351 132,406 127,109
Provision for loan
losses 6,500 3,800 18,100 6,600
----- ----- ------ -----
Net
interest
income
after
provision
for loan
losses 38,810 41,551 114,306 120,509
------ ------ ------- -------
Non-interest income:
Fees 6,652 7,281 18,347 18,287
Bank-owned life
insurance 1,438 1,320 3,957 3,980
Net gain on
securities
transactions 195 444 1,374 845
Other-than-temporary
impairment losses
on securities (701) (1,410) (6,167) (1,410)
Portion of loss
recognized in
other
comprehensive
income (before
taxes) - - 4,665 -
--- --- ----- ---
Net impairment
losses on
securities
recognized in
earnings (701) (1,410) (1,502) (1,410)
Other income 1,004 140 2,243 1,525
----- --- ----- -----
Total
non-interest
income 8,588 7,775 24,419 23,227
----- ----- ------ ------
Non-interest
expense:
Goodwill
impairment - - 152,502 -
Compensation and
employee
benefits 18,257 16,591 52,518 50,768
FDIC Insurance 2,450 173 7,810 458
Net occupancy
expense 4,966 5,195 15,270 15,626
Data processing
expense 2,354 2,296 7,010 6,903
Advertising and
promotion 1,117 1,160 3,147 2,989
Amortization of
intangibles 1,115 1,373 4,020 4,706
Other operating
expenses 5,713 5,170 17,644 15,752
----- ----- ------ ------
Total
non-interest
expense 35,972 31,958 259,921 97,202
------ ------ ------- ------
Income (loss)
before
income tax
expense 11,426 17,368 (121,196) 46,534
Income tax
expense 2,750 4,205 7,402 12,325
----- ------ ----- ------
Net income
(loss) $8,676 $13,163 $(128,598) $34,209
====== ======= ========= =======
Basic earnings
(loss) per
share $0.15 $0.23 $(2.29) $0.61
Average basic
shares
outstanding 56,311,141 56,078,691 56,240,746 56,006,174
Diluted earnings
(loss) per share $0.15 $0.23 $(2.29) $0.61
Average diluted
shares
outstanding 56,311,141 56,078,870 56,240,746 56,006,234
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data) (Unaudited)
At or for the Three At or for the Nine
Months Ended Months Ended
September 30, September 30,
---------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
STATEMENTS OF OPERATIONS:
Net interest income $45,310 $45,351 $132,406 $127,109
Provision for loan
losses 6,500 3,800 18,100 6,600
Non-interest income 8,588 7,775 24,419 23,227
Non-interest expense (1) 35,972 31,958 107,419 97,202
Operating income before
income tax expense (2) 11,426 17,368 31,306 46,534
Operating income (2) 8,676 13,163 23,904 34,209
Goodwill impairment
charge - - 152,502 -
Net income (loss) 8,676 13,163 (128,598) 34,209
Operating basic and
diluted earnings per
share (1) $0.15 $0.23 $0.43 $0.61
Per share impact of
goodwill impairment
charge - - $(2.71) -
Basic and diluted
earnings (loss) per
share $0.15 $0.23 $(2.29) $0.61
Interest rate spread 2.77% 2.96% 2.76% 2.74%
Net interest margin 3.01% 3.27% 3.02% 3.08%
PROFITABILITY:
Annualized return on
average assets (1) 0.51% 0.82% 0.48% 0.72%
Annualized return on
average equity (1) 3.92% 5.17% 3.46% 4.53%
Annualized non-interest
expense to average
assets (1) 2.12% 1.98% 2.17% 2.04%
Efficiency ratio (1), (3) 66.74% 60.16% 68.50% 64.66%
ASSET QUALITY:
Non-accrual loans $78,232 $35,281
90+ and still
accruing loans - -
Non-performing loans 78,232 35,281
Foreclosed assets 7,044 3,556
Non-performing loans to
total loans 1.81% 0.81%
Non-performing assets to
total assets 1.25% 0.61%
Allowance for loan losses $55,731 $43,329
Allowance for loan losses
to non-performing loans 71.24% 122.81%
Allowance for loan losses
to total loans 1.29% 0.99%
AVERAGE BALANCE SHEET
DATA:
Assets $6,727,683 $6,419,753 $6,605,478 $6,365,479
Loans, net 4,285,034 4,293,132 4,308,987 4,244,900
Earning assets 6,007,418 5,548,275 5,841,099 5,501,514
Core deposits 3,122,561 2,636,521 2,909,058 2,611,346
Borrowings 1,012,184 1,227,084 1,072,858 1,136,553
Interest-bearing
liabilities 5,318,038 4,889,180 5,162,803 4,837,484
Stockholders' equity 877,875 1,012,422 923,357 1,009,190
Average yield on
interest-earning
assets 4.84% 5.51% 5.00% 5.54%
Average cost of
interest-bearing
liabilities 2.07% 2.55% 2.24% 2.80%
Notes
(1) Excluding a $152.2 million non-cash goodwill impairment charge
(2) Operating Income Reconciliation
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
Net income (loss) $8,676 $13,163 $(128,598) $34,209
Goodwill impairment - - 152,502 -
--- --- ------- ---
Operating income $8,676 $13,163 $23,904 $34,209
====== ======= ======= =======
(3) Efficiency Ratio Calculation
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
2009 2008 2009 2008
Net interest ---- ---- ---- ----
income $45,310 $45,351 $132,406 $127,109
Non-interest
income 8,588 7,775 24,419 23,227
----- ----- ------ ------
Total income $53,898 $53,126 $156,825 150,336
======= ======= ======== =======
Non-interest
expense (1) $35,972 $31,958 $107,419 $97,202
======= ======= ======== =======
Expense/Income: 66.74% 60.16% 68.50% 64.66%
====== ====== ====== ======
Average Quarterly Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands)
September 30, 2009
---------------------------------
Average Average
Balance Interest Yield/Cost
-------- -------- ----------
Interest-Earning
Assets:
Deposits $156,046 $98 0.25 %
Federal Funds Sold and Other
Short-Term Investments 6,724 1 0.07
Investment Securities (1) 338,381 3,327 3.93
Securities Available for Sale 1,186,336 10,998 3.71
Federal Home Loan Bank Stock 34,897 499 5.67
Net Loans (2)
Total Mortgage Loans 2,945,927 39,286 5.32
Total Commercial Loans 746,535 11,108 5.90
Total Consumer Loans 592,572 7,722 5.17
------- -----
Total
Interest-Earning Assets 6,007,418 73,039 4.84
------ ----
Non-Interest-Earning
Assets:
Cash and Due from Banks 90,058
Other Assets 630,207
-------
Total Assets $6,727,683
==========
Interest-Bearing
Liabilities:
Demand Deposits $1,765,127 5,883 1.32 %
Savings Deposits 878,130 1,557 0.70
Time Deposits 1,662,597 11,367 2.71
--------- ------
Total Deposits 4,305,854 18,807 1.73
------
Total Borrowings 1,012,184 8,922 3.50
--------- -----
Total Interest-Bearing
Liabilities 5,318,038 27,729 2.07
------ ----
Non-Interest-Bearing Liabilities 531,770
-------
Total Liabilities 5,849,808
Stockholders' Equity 877,875
-------
Total Liabilities & Stockholders'
Equity $6,727,683
==========
Net interest
income $45,310
=======
Net interest
rate spread 2.77 %
====
Net
interest-earning
assets $689,380
========
Net interest
margin (3) 3.01 %
====
Ratio of
interest-earning
assets to
interest-bearing
liabilities 1.13 x
June 30, 2009
---------------------------------
Average Average
Balance Interest Yield/Cost
-------- -------- -----------
Interest-Earning Assets:
Deposits $187,257 $117 0.25 %
Federal Funds Sold
and Other Short-Term
Investments 52,783 16 0.12
Investment Securities (1) 338,409 3,343 3.95
Securities Available for
Sale 939,576 10,135 4.31
Federal Home Loan Bank
Stock 35,727 533 5.98
Net Loans (2)
Total Mortgage Loans 2,959,822 39,675 5.37
Total Commercial Loans 716,468 10,570 5.92
Total Consumer Loans 604,021 7,923 5.26
------- -----
Total Interest-Earning
Assets 5,834,063 72,312 4.96
------ ----
Non-Interest-Earning
Assets:
Cash and Due from Banks 90,947
Other Assets 623,894
-------
Total Assets $6,548,904
==========
Interest-Bearing
Liabilities:
Demand Deposits $1,532,855 5,612 1.47 %
Savings Deposits 877,220 1,681 0.77
Time Deposits 1,698,389 12,466 2.94
--------- ------
Total Deposits 4,108,464 19,759 1.93
------
Total Borrowings 1,044,909 9,388 3.60
--------- -----
Total
Interest-Bearing
Liabilities 5,153,373 29,147 2.27
------ ----
Non-Interest-Bearing
Liabilities 521,012
-------
Total Liabilities 5,674,385
Stockholders'
Equity 874,519
-------
Total Liabilities &
Stockholders' Equity $6,548,904
==========
Net interest income $43,165
=======
Net interest rate spread 2.69 %
====
Net interest-earning
assets $680,690
========
Net interest margin (3) 2.96 %
====
Ratio of interest-earning
assets to interest-bearing
liabilities 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.
9/30/09 6/30/09 3/31/09 12/31/08 9/30/08
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
-------- --------- -------- --------- --------
Interest-Earning
Assets:
Securities 3.47% 3.64% 4.31% 4.50% 4.59%
Net Loans 5.40% 5.44% 5.48% 5.63% 5.78%
Total Interest-
Earning
Assets 4.84% 4.96% 5.21% 5.38% 5.51%
Interest-Bearing
Liabilities
Total Deposits 1.73% 1.93% 2.06% 2.14% 2.19%
Total Borrowings 3.50% 3.60% 3.47% 3.45% 3.62%
Total Interest-
Bearing
Liabilities 2.07% 2.27% 2.39% 2.47% 2.55%
Interest Rate
Spread 2.77% 2.69% 2.82% 2.91% 2.96%
Net Interest
Margin 3.01% 2.96% 3.10% 3.20% 3.27%
Ratio of Interest-
Earning Assets to
Interest-Bearing
Liabilities 1.13x 1.13x 1.13x 1.13x 1.13x
Average YTD Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands)
September 30, 2009
----------------------------------
Average Average
Balance Interest Yield
--------- -------- --------
Interest-Earning Assets:
Deposits $115,006 $215 0.25 %
Federal Funds Sold and
Other Short-Term Investments 33,258 37 0.15
Investment Securities (1) 340,032 10,119 3.97
Securities Available for Sale 1,007,469 31,520 4.17
Federal Home Loan Bank Stock 36,347 1,356 4.99
Net Loans (2)
Total Mortgage Loans 2,975,721 119,566 5.36
Total Commercial Loans 729,263 32,176 5.90
Total Consumer Loans 604,003 23,819 5.27
------- ------
Total Interest-Earning Assets 5,841,099 218,808 5.00
------- ----
Non-Interest-Earning Assets:
Cash and Due from Banks 87,762
Other Assets 676,617
-------
Total Assets $6,605,478
==========
Interest-Bearing Liabilities:
Demand Deposits $1,561,951 17,012 1.46 %
Savings Deposits 875,710 5,119 0.78
Time Deposits 1,652,284 36,005 2.91
--------- ------
Total Deposits 4,089,945 58,136 1.90
------
Total Borrowings 1,072,858 28,266 3.52
--------- ------
Total Interest-Bearing
Liabilities 5,162,803 86,402 2.24
------ ----
Non-Interest-Bearing
Liabilities 519,318
-------
Total Liabilities 5,682,121
Stockholders' Equity 923,357
-------
Total Liabilities &
Stockholders' Equity $6,605,478
==========
Net interest income $132,406
========
Net interest rate spread 2.76 %
====
Net interest-earning assets $678,296
========
Net interest margin (3) 3.02 %
====
Ratio of interest-
earning assets to
interest-bearing
liabilities 1.13 X
September 30, 2008
-------------------------------
Average Average
Balance Interest Yield
------- -------- -----
Interest-Earning Assets:
Deposits $ - $ - - %
Federal Funds Sold and
Other Short-Term Investments 20,182 493 3.27
Investment Securities (1) 354,656 10,860 4.08
Securities Available for Sale 843,576 30,300 4.79
Federal Home Loan Bank Stock 38,200 2,072 7.25
Net Loans (2)
Total Mortgage Loans 2,933,316 124,406 5.66
Total Commercial Loans 683,942 32,568 6.36
Total Consumer Loans 627,642 27,932 5.93
------- ------
Total Interest-Earning Assets 5,501,514 228,631 5.54
------- ----
Non-Interest-Earning Assets:
Cash and Due from Banks 80,175
Other Assets 783,790
-------
Total Assets $6,365,479
==========
Interest-Bearing Liabilities:
Demand Deposits $1,181,644 17,315 1.96 %
Savings Deposits 961,161 7,830 1.09
Time Deposits 1,558,126 43,800 3.75
--------- ------
Total Deposits 3,700,931 68,945 2.49
------
Total Borrowings 1,136,553 32,577 3.83
--------- ------
Total Interest-Bearing
Liabilities 4,837,484 101,522 2.80
------- ----
Non-Interest-Bearing
Liabilities 518,805
-------
Total Liabilities 5,356,289
Stockholders' Equity 1,009,190
---------
Total Liabilities &
Stockholders' Equity $6,365,479
==========
Net interest income $127,109
========
Net interest rate spread 2.74 %
====
Net interest-earning assets $664,030
========
Net interest margin (3) 3.08 %
====
Ratio of interest-earning
assets to
interest-bearing liabilities 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.
Nine Months Ended
-------------------------------
9/30/09 9/30/08 9/30/07
------- ------- -------
Interest-Earning Assets:
Securities 3.76% 4.64% 4.50%
Net Loans 5.44% 5.81% 6.19%
Total Interest-Earning Assets 5.00% 5.54% 5.80%
Interest-Bearing Liabilities:
Total Deposits 1.90% 2.49% 3.06%
Total Borrowings 3.52% 3.83% 4.17%
Total Interest-Bearing
Liabilities 2.24% 2.80% 3.25%
Interest Rate Spread 2.76% 2.74% 2.55%
Net Interest Margin 3.02% 3.08% 3.00%
Ratio of Interest-Earning
Assets to
Total Interest-Bearing 1.13x 1.14x 1.16x
Liabilities
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