2008-07-28 07:00:00
Provident New York Bancorp: 23% Increase in Quarterly EPS to $0.16
MONTEBELLO, N.Y., July 28 /EMWNews/ -- Provident New York Bancorp (Nasdaq: PBNY), the parent company of Provident Bank today announced third quarter results for the fiscal year ending September 30, 2008. Net income for the quarter was $6.3 million, or $0.16 per diluted share, compared to net income of $5.4 million, or $0.13 per diluted share for the third quarter of fiscal 2007. On a year-to-date basis, net income was $17.3 million or $0.44 per diluted share for fiscal 2008, compared to $14.5 million or $0.35 per diluted share in fiscal 2007. This represents increases of 19.4% and 25.7% respectively over the same period for fiscal 2007. Highlights for the quarter include: -- Net interest margin on a fully tax-equivalent basis was 4.04% for the third quarter of fiscal 2008, as compared to 3.80% for the third quarter of fiscal 2007, and 3.89% for the linked quarter ended March 31, 2008. -- The Company experienced 3.6% and 3.1% deposit growth over both fiscal year-end 2007 and the second quarter of fiscal 2008, respectively. Transaction accounts of $584.1 million have grown 11.0% since September 30, 2007. -- Loans grew $49.8 million or 3.0% over year end 2007, mainly in the Commercial sector. -- Expense control continues to be strong as non-interest expense decreased in the prior year quarterly comparison, and increased by less than 1% on an annual basis. As a result the quarter's efficiency ratio continued to improve from 69.7% in the third quarter of fiscal 2007 to 64.9% in the current year. -- Net charge-offs for the quarter were down to $812,000 from $1.9 million for the linked quarter and were up from $136,000 for the third quarter of fiscal 2007. President's Comments George Strayton, President and CEO commented: "Our business model is performing well in this challenging economic environment as evidenced by the significant increase in earnings. During the quarter, we grew our commercial loans by $31 million, or 3%, and our transaction account balances increased by $56 million, or 11% and continue to average 31% of our quarterly deposits. While achieving this growth, we are beginning to benefit from the absence of the loan conduits and institutional lenders, enabling us to obtain improved loan terms and conditions. Consistent with its longstanding credit policies, Provident Bank does not originate or invest in subprime loans, although we will continue to build loan loss reserves in light of the current slowing of the economy. Disciplined management of interest expense, coupled with our loan growth, enabled us to return to a 4% net interest margin. Solid fee income, coupled with expense control, has led to an overall improvement in our efficiency ratio of almost five percentage points compared to the same quarter last year." Net Interest Income and Margin Third quarter of fiscal 2008 compared with third quarter of fiscal 2007 Net interest income was $24.2 million for the third quarter of fiscal 2008, a $1.9 million increase from the same quarter of fiscal 2007. The net interest margin on a tax-equivalent basis was 4.04% for the third quarter of fiscal 2008, compared to 3.80% for the prior year's third quarter. The third quarter of fiscal 2007 included a $500,000 reduction in interest expense associated with repayment of borrowings connected to prior acquisitions. Due to decreases in the federal funds target rate, the yield on loan balances declined 85 basis points. For the same period, the cost of interest bearing deposits decreased 84 basis points to 1.76% and the cost of borrowings decreased 86 basis points to 3.64%. The tax-equivalent yield on investments increased 31 basis points compared to the same quarter in 2007. Third quarter fiscal 2008 compared with linked quarter ended March 31, 2008 Net interest income increased $947,000 from the quarter ended March 31, 2008. The tax-equivalent net interest margin increased 15 basis points from 3.89% for the quarter ended March 31, 2008. As a result of the recent reductions in the federal funds target rate, the tax-equivalent yield on average interest earning assets decreased by 23 basis points compared to the quarter ended March 31, 2008. The cost of average interest bearing liabilities decreased 48 basis points from the same linked quarter end. We attribute a substantial portion of this decrease to a continuing disciplined approach of pricing interest-bearing deposits. Year-to-date comparison fiscal 2008 to fiscal 2007 On a year-to-date basis, net interest income increased $7.3 million for the nine-month period ended June 30, 2008 as compared to the same period in 2007, with the tax-equivalent net interest margin increasing from 3.52% to 3.89%. Non-Interest Income Third quarter of fiscal 2008 compared with third quarter of fiscal 2007 Non-interest income increased $36,000 to $5.0 million, relatively unchanged from the third quarter of fiscal 2007. Deposit service charges and fees increased $252,000, or 8.8%, which were offset by a decline in title insurance fees associated with a lower level of mortgage loan originations and lower "other" non-interest income, due to $235,000 in interest recorded on an IRS refund received in the third quarter of fiscal 2007. Third quarter fiscal 2008 compared with linked quarter ended March 31, 2008 Non-interest income decreased $729,000 due to a net gain on the sale of securities of $961,000 realized in the linked quarter. Deposit service charges and fees, title insurance fees and investment management fees all increased over the linked quarter. Year-to-date comparison fiscal 2008 to fiscal 2007 Non-interest income increased 5.4% compared to the same period in 2007. The largest increases were seen in deposit fees and service charges, investment management fees and net gains on security sales. Declines were seen in title insurance fees, and bank owned life insurance (due to a death benefit received in 2007) and "other" non-interest income (due to an IRS interest refund and exiting the student loan business in 2007). Non-Interest Expense Third quarter of fiscal 2008 compared with third quarter of fiscal 2007 Non-interest expense decreased $95,000 over the third quarter of fiscal 2007. The primary reason for the decrease was the maturity of the Company's first step ESOP loan in December 2007, in addition to lower advertising and promotion expense. Compensation and employee benefits increased due to employee related benefits and additional employees hired, as the Company added resources to its municipality business and opened a branch location in Tarrytown, Westchester County. Occupancy expense increased as the Company invested in branch relocations and recorded closure costs of $175,000. Third quarter fiscal 2008 compared with linked quarter ended March 31, 2008 On a quarter-to-quarter basis, non-interest expense remained relatively unchanged with modest increases seen in compensation and benefits, and advertising and promotion, which were offset by declines in occupancy, professional fees, and data and check processing. Year-to-date comparison fiscal 2008 to fiscal 2007 Non-interest expense increased by $457,000 or 0.8%, over year-to-date 2007 primarily due to compensation and benefits, and occupancy expense from indexed increases in rental costs and the costs of branch relocations and closures. These categories were partially offset by decreases in stock based compensation, the ESOP loan maturity, professional fees and advertising and promotion. Income Taxes The company's effective tax rate was 28.8% for the third quarter of fiscal 2008, compared to 30.9% for the same period last year. The decrease was due to increased investment in tax-exempt securities as compared to the prior period and the maturity of the first step ESOP loan which was primarily non- deductible expense, as well as the Company recording a tax expense credit for expired reserves. The Company's effective tax rate for the linked quarter ended March 31, 2008 was 28.1%. The effective tax rate for year-to-date 2008 was 29.3% compared to 30.0% for fiscal 2007. Key Balance Sheet Changes at June 30, 2008 vs. September 30, 2007 -- Gross loans grew $49.8 million to $1.7 billion, largely due to a 4.6% increase in commercial loans and a 2.0% increase in residential mortgage loans. -- Securities decreased $13.8 million to $818.6 million, primarily due to the maturity of government agency securities. -- Period end deposits increased $62.0 million at June 30, 2008, as compared to September 30, 2007, primarily due to increases in transaction accounts of $57.8 million or 11.0%, which in turn has benefited net interest income. -- The Company invested an additional $5.0 million in bank owned life insurance during the quarter. Capital Capital decreased $3.9 million from September 30, 2007 to $401.1 million at June 30, 2008, due to purchases of treasury stock. Treasury stock repurchases during the third quarter of fiscal 2008 totaled 306,443 shares and 1,570,757 shares fiscal year-to-date, at a cost of $3.9 million and $19.8 million, respectively. These purchases were partially offset by increases in the Company's net income of $17.3 million, after dividends of $7.1 million, stock based compensation credits of $4.1 million and an improvement in other comprehensive income (loss) of $1.2 million, net of a reduction during the quarter of $8.3 million. As of June 30, 2008, 1,165,901 shares remain available for repurchase under the Company's current stock repurchase program. Credit Quality Net charge-offs for the quarter were $812,000, down from $1.9 million in the prior linked quarter and up from $136,000 for the quarter ended June 30, 2007. Net charge-offs year-to-date are $3.5 million or an annualized 0.28% of the average loan portfolio. Losses continue to be concentrated in the credit- scored community business loan portfolio. Net charge-offs in this portfolio for the third quarter were $731,800 on average outstandings of $99.2 million. During the quarter the Company provided $1.4 million in loan loss provisions, which was $588,000 in excess of net charge-offs. This resulted in an increase in the allowance for loan losses to $22.0 million, or 1.30% of loans outstanding, and 154% of non-performing loans. The primary reasons for increasing the allowance for loan losses were growth in the commercial and industrial and construction loan portfolios, and to a lesser degree an increase in classified loans. Nonperforming assets increased $692,000 to $14.4 million compared to March 31, 2008. Additional Information The Company does not hold any preferred stock of either FNMA or FHLMC (Fannie Mae or Freddie Mac) and currently has 120 shares of FNMA common stock. The Company holds $5 million in FNMA debentures in its securities portfolio and holds $615.7 million in mortgage backed securities issued by FHLMC and FNMA. Note: In addition to historical information, this earnings release may contain forward-looking statements for purposes of applicable securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties. There are a number of important factors described in documents previously filed by the Company with the Securities and Exchange Commission, and other factors that could cause the Company's actual results to differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Headquartered in Montebello, New York, Provident Bank is an independent full-service community bank. Provident Bank operates 33 branches that serve the Hudson Valley region and Bergen County, New Jersey. The bank offers a complete line of commercial, retail and investment management and trust services. Visit the Provident Bank web site at http://www.providentbanking.com.
Provident New York Bancorp and Subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (unaudited, in thousands, except share and per share data) June 30, September 30, June 30, 2008 2007 2007 Assets: Cash and due from banks $46,208 $47,291 $44,485 Total securities 818,603 832,443 836,365 Loans: One- to four-family residential mortgage loans 510,832 500,825 501,795 Commercial real estate, commercial business and construction loans 936,567 895,233 876,023 Consumer loans 240,452 242,000 236,023 Total loans, gross 1,687,851 1,638,058 1,613,841 Allowance for loan losses (22,001) (20,389) (20,699) Total loans, net 1,665,850 1,617,669 1,593,142 Federal Home Loan Bank stock, at cost 31,823 32,801 29,827 Premises and equipment, net 34,625 30,079 30,004 Goodwill 160,861 161,154 161,154 Other amortizable intangibles 8,966 11,041 11,782 Bank owned life insurance 47,135 40,818 40,387 Other assets 36,483 28,803 35,655 Total assets $2,850,554 $2,802,099 $2,782,801 Liabilities: Deposits Demand deposits $384,381 $363,731 $355,990 NOW deposits 199,681 162,537 164,790 Total transaction accounts 584,062 526,268 520,780 Savings 351,431 346,430 369,886 Money market deposits 300,919 277,793 268,424 Certificates of deposit 539,308 563,193 589,737 Total deposits 1,775,720 1,713,684 1,748,827 Borrowings 635,596 661,242 595,411 Mortgage escrow funds and other 38,097 22,084 36,244 Total liabilities 2,449,413 2,397,010 2,380,482 Stockholders' equity 401,141 405,089 402,319 Total liabilities and stockholders' equity $2,850,554 $2,802,099 $2,782,801 Shares of common stock outstanding at period end 39,839,335 41,230,618 41,666,538 Book value per share $10.07 $9.82 $9.66 Provident New York Bancorp and Subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited, in thousands, except share and per share data) Quarter Quarter Year to Date Ended June 30, Ended March 31, Ended June 30, 2008 2007 2008 2008 2007 Interest and dividend income: Loans and loan fees $25,630 $27,896 $26,840 $81,101 $80,847 Securities 9,774 9,449 9,799 29,123 29,923 Other earning assets 662 641 726 2,052 1,819 36,066 37,986 37,365 112,276 112,589 Interest expense: Deposits 6,187 9,010 7,785 22,895 26,985 Borrowings 5,691 6,645 6,339 19,578 23,111 Total interest expense 11,878 15,655 14,124 42,473 50,096 Net interest income 24,188 22,331 23,241 69,803 62,493 Provision for loan losses 1,400 400 3,000 5,100 1,200 Net interest income after provision for loan losses 22,788 21,931 20,241 64,703 61,293 Non-interest income: Deposit fees and service charges 3,100 2,848 3,061 9,183 8,478 Net gain on sales of securities 22 0 961 983 4 Title insurance fees 274 308 76 619 855 Bank owned life insurance 455 432 428 1,317 1,613 Investment management fees 750 759 729 2,242 2,107 Other 423 641 498 1,392 1,871 Total non-interest income 5,024 4,988 5,753 15,736 14,928 Non-interest expense: Compensation and benefits 9,245 8,567 9,061 26,936 24,517 Stock-based compensation plans 973 1,433 924 2,893 4,286 Occupancy and office operations 3,090 2,827 3,294 9,309 8,670 Advertising and promotion 933 1,267 828 2,628 3,024 Professional fees 813 914 892 2,588 2,982 Data and check processing 646 659 694 1,913 1,949 Amortization of intangible assets 636 746 662 1,988 2,323 ATM/debit card expense 456 471 455 1,412 1,365 Other 2,163 2,166 2,114 6,334 6,428 Total non-interest expense 18,955 19,050 18,924 56,001 55,544 Income before income tax expense 8,857 7,869 7,070 24,438 20,677 Income tax expense 2,551 2,433 1,987 7,155 6,199 Net income $6,306 $5,436 $5,083 $17,283 $14,478 Per common share: Basic earnings $0.16 $0.13 $0.13 $0.44 $0.35 Diluted earnings 0.16 0.13 0.13 0.44 0.35 Dividends declared 0.06 0.05 0.06 0.18 0.15 Weighted average common shares: Basic 38,719,917 40,722,093 38,847,528 39,014,150 41,012,030 Diluted 39,110,353 41,223,958 39,214,041 39,402,248 41,551,464 Selected Financial Condition Data: (in thousands except share Three Months Ended and per share data) 06/30/2008 03/31/2008 12/31/2007 (In thousands) End of Period Total assets $2,850,554 $2,823,506 $2,799,342 Loans, gross (1) 1,687,851 1,653,638 1,655,437 Securities available for sale 777,161 801,784 780,714 Securities held to maturity 41,442 35,484 35,573 Bank owned life insurance 47,135 41,680 41,252 Goodwill 160,861 161,214 161,154 Other amortizable intangibles 8,966 9,633 10,324 Other non-earning assets 71,108 63,906 58,033 Deposits 1,775,720 1,722,101 1,672,538 Borrowings 635,596 664,115 686,508 Equity 401,141 408,163 401,923 Average Balances Total assets $2,822,885 $2,813,448 $2,780,360 Loans, gross: Real estate- residential mortgage 510,383 500,930 499,915 Real estate- commercial mortgage 528,308 530,267 537,440 Real estate- construction & land development 150,900 153,816 152,615 Commercial and industrial 229,122 219,782 210,425 Consumer loans 240,488 243,552 243,456 Loans total (1) 1,659,201 1,648,347 1,643,851 Securities (taxable) 653,292 661,947 644,336 Securities (non-taxable) 177,933 168,968 164,144 Total earning assets 2,503,004 2,494,913 2,467,655 Non earning assets 319,881 318,535 312,705 Non-interest bearing checking 357,515 370,843 357,246 Interest bearing NOW accounts 189,629 169,187 143,396 Total transaction accounts 547,144 540,030 500,642 Savings (including mortgage escrow funds) 364,763 342,412 348,670 Money market deposits 311,120 267,310 259,931 Certificates of deposit 545,413 561,935 581,204 Total deposits and mortgage escrow 1,768,440 1,711,687 1,690,447 Total interest bearing deposits 1,410,925 1,340,844 1,333,201 Borrowings 629,325 675,150 665,380 Equity 405,692 405,326 403,146 Other comprehensive income / (loss) (SFAS 115), reflected in stockholders' equity (2,708) 5,638 1,477 Selected Operating Data: Condensed Tax Equivalent Income Statement Interest and dividend income $36,066 $37,365 $38,845 Tax equivalent adjustment* 929 918 880 Interest expense 11,878 14,124 16,471 Net interest income (tax equivalent) 25,117 24,159 23,254 Provision for loan losses 1,400 3,000 700 Net interest income after provision for loan losses 23,717 21,159 22,554 Non-interest income 5,024 5,753 4,959 Non-interest expense 18,955 18,924 18,122 Income before income tax expense 9,786 7,988 9,391 Income tax expense (tax equivalent)* 3,480 2,905 3,497 Net income $6,306 $5,083 $5,894 Selected Financial Condition Data: (in thousands except share Three Months Ended and per share data) 09/30/2007 06/30/2007 End of Period Total assets $2,802,099 $2,782,801 Loans, gross (1) 1,638,058 1,613,841 Securities available for sale 794,997 794,949 Securities held to maturity 37,446 41,416 Bank owned life insurance 40,818 40,387 Goodwill 161,154 161,154 Other amortizable intangibles 11,041 11,782 Other non-earning assets 58,882 65,659 Deposits 1,713,684 1,748,827 Borrowings 661,242 595,411 Equity 405,089 402,319 Average Balances Total assets $2,783,640 $2,772,666 Loans, gross: Real estate- residential mortgage 500,261 489,998 Real estate- commercial mortgage 539,618 541,364 Real estate- construction & land development 144,615 123,774 Commercial and industrial 205,832 197,493 Consumer loans 238,073 232,508 Loans total (1) 1,628,399 1,585,137 Securities (taxable) 660,937 695,016 Securities (non-taxable) 156,328 149,125 Total earning assets 2,458,422 2,441,036 Non earning assets 325,218 331,630 Non-interest bearing checking 360,705 348,698 Interest bearing NOW accounts 152,926 160,187 Total transaction accounts 513,631 508,885 Savings (including mortgage escrow funds) 380,749 383,955 Money market deposits 266,714 256,541 Certificates of deposit 585,115 589,733 Total deposits and mortgage escrow 1,746,209 1,739,114 Total interest bearing deposits 1,385,504 1,390,416 Borrowings 612,274 593,467 Equity 401,617 409,528 Other comprehensive income / (loss) (SFAS 115), reflected in stockholders' equity (3,917) (4,696) Selected Operating Data: Condensed Tax Equivalent Income Statement Interest and dividend income $39,035 $37,986 Tax equivalent adjustment* 832 807 Interest expense 16,792 15,655 Net interest income (tax equivalent) 23,075 23,138 Provision for loan losses 600 400 Net interest income after provision for loan losses 22,475 22,738 Non-interest income 4,918 4,988 Non-interest expense 19,045 19,050 Income before income tax expense 8,348 8,676 Income tax expense (tax equivalent)* 3,200 3,240 Net income $5,148 $5,436 (1) Does not reflect allowance for loan losses of $22,001, $21,413, $20,325, $20,389 and $20,699 * Tax exempt income assumed at a 35% federal rate Three Months Ended 06/30/08 03/31/08 12/31/07 Performance Ratios (annualized) Return on Average Assets 0.90% 0.73% 0.84% Return on Average Equity 6.25% 5.04% 5.80% Non-Interest Income to Average Assets 0.72% 0.82% 0.71% Non-Interest Expense to Average Assets 2.70% 2.71% 2.59% Operating Efficiency 64.9% 65.3% 66.3% Analysis of Net Interest Income Yield on: Loans 6.30% 6.63% 7.00% Investment Securities- Tax Equivalent 5.18% 5.19% 5.12% Earning Assets- Tax Equivalent 5.94% 6.17% 6.39% Cost of: Interest Bearing Deposits 1.76% 2.34% 2.66% Borrowings 3.64% 3.78% 4.50% Interest Bearing Liabilities 2.34% 2.82% 3.27% Net Interest Tax Equivalent: Net Interest Rate Spread- Tax Equivalent Basis 3.60% 3.35% 3.12% Net Interest Margin- Tax Equivalent Basis 4.04% 3.89% 3.74% Capital Information Data Tier 1 Leverage Ratio- Bank Only 8.32% 8.14% 8.22% Tier 1 Risk-Based Capital- Bank Only 223,391 215,420 215,920 Total Risk-Based Capital- Bank Only 245,392 236,833 236,245 Tangible Capital Consolidated 231,314 237,316 231,186 Tangible Capital as a % of Tangible Assets Consolidated 8.63% 8.95% 8.80% Shares Outstanding 39,839,335 40,086,491 40,125,457 Shares Repurchased Per Stock Repurchase Program 306,443 147,514 1,116,800 Basic weighted common shares outstanding 38,719,917 38,847,528 39,469,995 Diluted common shares outstanding 39,110,353 39,214,041 39,805,026 Per Common Share: Basic Earnings $0.16 $0.13 $0.15 Diluted Earnings 0.16 0.13 0.15 Dividends Paid 0.06 0.06 0.06 Book Value 10.07 10.18 10.02 Tangible Book Value 5.81 5.92 5.76 Asset Quality Measurements Non-performing loans (NPLs): non-accrual 9,595 9,014 6,053 Non-performing loans (NPLs): still accruing 4,647 4,536 3,317 Non-performing assets (NPAs) 14,380 13,688 9,507 Net Charge-offs 812 1,912 764 Net Charge-offs as % of average loans (annualized) 0.20% 0.46% 0.19% NPLs as % of total loans 0.84% 0.82% 0.57% NPAs as % of total assets 0.50% 0.48% 0.34% Allowance for loan losses as % of NPLs 154% 158% 217% Allowance for loan losses as % of total loans 1.30% 1.29% 1.23% Three Months Ended 09/30/07 06/30/07 Performance Ratios (annualized) Return on Average Assets 0.73% 0.78% Return on Average Equity 5.09% 5.32% Non-Interest Income to Average Assets 0.70% 0.72% Non-Interest Expense to Average Assets 2.71% 2.75% Operating Efficiency 70.1% 69.7% Analysis of Net Interest Income Yield on: Loans 7.18% 7.15% Investment Securities- Tax Equivalent 4.94% 4.87% Earning Assets- Tax Equivalent 6.43% 6.37% Cost of: Interest Bearing Deposits 2.70% 2.60% Borrowings 4.76% 4.50% Interest Bearing Liabilities 3.33% 3.16% Net Interest Tax Equivalent: Net Interest Rate Spread- Tax Equivalent Basis 3.10% 3.21% Net Interest Margin- Tax Equivalent Basis 3.72% 3.80% Capital Information Data Tier 1 Leverage Ratio- Bank Only 8.07% 8.16% Tier 1 Risk-Based Capital- Bank Only 212,497 212,906 Total Risk-Based Capital- Bank Only 232,886 233,605 Tangible Capital Consolidated 233,662 230,175 Tangible Capital as a % of Tangible Assets Consolidated 8.88% 8.75% Shares Outstanding 41,230,618 41,666,538 Shares Repurchased Per Stock Repurchase Program 460,490 757,500 Basic weighted common shares outstanding 40,101,720 40,722,093 Diluted common shares outstanding 40,543,035 41,223,958 Per Common Share: Basic Earnings $0.13 $0.13 Diluted Earnings 0.13 0.13 Dividends Paid 0.05 0.05 Book Value 9.82 9.66 Tangible Book Value 5.67 5.52 Asset Quality Measurements Non-performing loans (NPLs): non-accrual 3,509 3,956 Non-performing loans (NPLs): still accruing 3,749 3,716 Non-performing assets (NPAs) 7,397 8,377 Net Charge-offs 910 136 Net Charge-offs as % of average loans (annualized) 0.22% 0.03% NPLs as % of total loans 0.44% 0.48% NPAs as % of total assets 0.26% 0.30% Allowance for loan losses as % of NPLs 281% 270% Allowance for loan losses as % of total loans 1.26% 1.28%
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