MONTEBELLO, N.Y., April 25 /PRNewswire-FirstCall/ -- Provident New York Bancorp , the parent company of Provident Bank, today announced that for the three months ended March 31, 2006, net income was $4.4 million, or $0.11 per diluted share, compared to net income of $5.2 million, or $0.12 per diluted share, for the three months ended March 31, 2005. For the six months ended March 31, 2006 net income was $9.6 million, or $0.23 per diluted share, compared to net income of $10.2 million, or $0.23 per diluted share, for the six months ended March 31, 2005.
"While the rising rate environment impacted earnings as anticipated based on our projections, our investment and loan portfolios are structured with relatively short durations -- a strategy which I am confident will improve our earnings performance going forward," said George Strayton, President and CEO. "In addition, I am pleased with the strong growth of our non-interest income which increased by 7.8% including securities gains in 2005."
"Clearly, our quarterly earnings reflect that over the past year, the movement of core deposits from passbooks and statement savings accounts to higher yielding deposit products has occurred at a faster pace than the re- pricing of loans and investments," added Strayton. "We believe the imbedded strength of our balance sheet will emerge over time based on our projections of an initial reduction in net interest income followed by a stabilized and then increasing net interest margin. So as interest rate increases begin to peak, we expect interest income from our loan and investment portfolios will increase faster than our interest expense on deposits. When considering our changing balance sheet along with this quarter's short-term expense adjustments, I believe our earnings prospects will continue to strengthen."
Second quarter summary follows:
* 19.8% annualized increase in earning assets (4.9% for the quarter), with
an overall 5.7% increase in total assets
* 7.0% annualized growth in commercial loans (1.3% for the quarter)
* 7.8% increase in non-interest income
* 2.8% decrease in net interest income
* 53 basis-point increase in yield on earning assets
* 641,400 shares of common stock repurchased as part of the Company's
repurchase program
* 6.3% overall increase in non-interest expense primarily due to a 274.4%
increase in stock-based compensation expense due to:
-- The effect of implementing the Statement of Financial Accounting
Standards (SFAS) No. 123R, which requires the expensing of stock
option grants, resulting in a $232,000 expense for the quarter
-- The pre-tax expense of $388,000 for an adjustment to Employee Stock
Ownership Plan (ESOP) expense due to additional shares released (see
below).
-- A full quarter's expense of $452,000 related to restricted stock
awards, which were granted in March 2005.
The ESOP expense increase reflects the release of the same number of shares for fiscal 2005 as in the past years. The additional expense for the quarter reflects an increased average stock price and a prior expectation that fewer shares would be released during the calendar year 2005, than were actually released.
Key Balance Sheet Changes at March 31, 2006 vs. September 30, 2005
* Total assets at March 31, 2006, increased to $2.7 billion, up $148.3
million, or 5.7%, from September 30, 2005.
* Gross loans grew $43.5 million to $1.4 billion, largely due to a $24.8
million, or 3.5%, increase in commercial loans.
* Securities increased $99.5 million to $993.4 million, with mortgage-
backed securities primarily contributing to the increase.
* Interest bearing deposits grew $76.0 million to $1.4 billion and non-
interest bearing deposits decreased $23.1 million to $362.0 million,
reflecting the seasonality of our transaction account deposit base.
* Non-performing assets increased $2.5 million from September 30, 2005,
due primarily to two commercial loan relationships from the acquired
Ellenville National Bank portfolio. We also charged off $770,000 of one
of these relationships.
* Equity decreased $7.9 million to $387.3 million as current earnings of
$9.6 million were more than offset by the repurchase of 1,114,571 shares
and an increase in other comprehensive loss on available-for-sale
securities (SFAS #115) of $5.2 million to $13.6 million.
* $1.0 million was reclassified from the allowance for loan losses to
other liabilities, reflecting reserves required for contingent loan
commitments (lines and letters of credit). This occurred during the
second quarter in accordance with SFAS #114.
Key Operating Results -- Quarter
Net interest income decreased by 2.8%, or $595,000, to $20.8 million primarily as a result of a decrease in net interest margin, from 3.96% to 3.71%, and the additional cost from borrowings utilized to fund balance sheet changes and stock repurchases (net interest margin for the linked quarter ended December 31, 2005 was 3.78%). Income from loans and investments grew by $4.3 million, primarily due to increases in average balances, while additional borrowings utilized to fund loan and investment securities growth and stock repurchases, in addition to deposit migration into higher rate products, increased interest expense by $4.9 million.
Moreover, we continue our efforts to improve non-interest income, which increased by $301,000, or 7.8%. Such increases reflect our focus on generating additional sources of non-interest income, which tend to be less vulnerable to interest rate cycles and fluctuations.
Non-interest expense increased by $1.1 million from the prior year's quarter due primarily to a $1.2 million increase in stock-based compensation expense, as previously described. As a result of shifting our data processing operations in-house, which was a cost-control initiative, certain costs have been redistributed to salaries and benefits as well as occupancy and equipment. We continue to review opportunities to increase our operating efficiencies.
The Company's effective tax rate for the quarter ended March 31, 2006 was 32.5%, compared to 35.6% for the quarter ended March 31, 2005, reflecting higher utilization of tax-advantaged assets such as bank-owned life insurance and tax-exempt securities.
Key Operating Results -- Year to Date
Net interest income for the six-month period ended March 31, 2006 decreased by $1.2 million, or 2.9%, compared to the same period last year. Net interest income was negatively impacted due to a decline of 28 basis points in net interest margin.
The provision for loan losses was $600,000 for the six-month period this year compared to $300,000 for the six-month period ended March 31, 2005. The increase in the provision was made in order to maintain the allowance for loan losses at a level to absorb probable loan losses inherent in the existing portfolio.
The Company's focus on improving non-interest income, which is less susceptible to interest-rate fluctuations, is reflected in the increase of $638,000, or 8.1%, in this area. Income from our title insurance subsidiary and from our BOLI investments increased by $149,000 and $196,000, respectively.
Non-interest expense for the current year-to-date increased by $787,000, or 2.3%, compared to the same period last year. Stock-based compensation increased by $1.9 million, or 147%, of which $388,000 was the additional ESOP charge previously mentioned and $368,000 was for the acceleration of certain restricted stock awards, as well as stock option expenses under new accounting rules of $599,000. The movement of our data processing operations in-house in November 2005 is primarily responsible for a $740,000 decrease in data and check processing costs, which is offset by related increases in compensation and occupancy costs.
The Company's effective tax rate for the six months ended March 31, 2006 was 32.8%, compared to 35.9% for the six-month period ended March 31, 2005. A key factor in the lower rate is the shifting to tax-exempt securities, which represented 10.7% of the average securities portfolio for the current six- month period, compared to 5.5% of the average securities portfolio for the prior fiscal year's period.
Subsequent Event
On April 13, 2006, the Company entered into a definitive agreement to acquire substantially all the assets of an investment management company for which it will pay $5 million, 50% of which will be in stock. We expect this acquisition to enhance our non-interest income. The transaction is expected to close during the third quarter of the Company's fiscal year.
Note:
In addition to historical information, this earnings release may contain forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. There are a number of important factors that have been outlined in previously filed documents 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.
Provident New York Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
March 31, September 30, March 31,
2006 2005 2005
Assets:
Cash and due from banks $55,110 $64,117 $50,039
Total securities 993,401 893,901 898,610
Loans held for sale 460 --- 653
Loans:
One-to-four family residential
mortgage loans 463,003 456,794 437,386
Commercial real estate,
commercial business and
construction loans 738,276 713,471 697,110
Consumer loans 204,317 191,808 167,721
Total gross loans 1,405,596 1,362,073 1,302,217
Allowance for loan losses (20,093) (22,008) (22,249)
Total loans, net 1,385,503 1,340,065 1,279,96
Federal Home Loan Bank stock,
at cost 27,260 21,333 20,569
Premises and equipment, net 32,461 32,101 29,081
Goodwill 157,526 157,656 158,132
Core deposit intangible 12,122 13,770 13,902
Bank owned life insurance 38,475 37,667 27,176
Other assets 43,310 36,752 39,983
Total assets $2,745,628 $2,597,362 $2,518,113
Liabilities:
Deposits:
Demand deposits $378,182 $407,662 $362,098
NOW deposits 143,381 143,363 135,780
Total transaction accounts 521,563 551,025 497,878
Savings and money market
deposits 668,958 703,765 771,458
Certificates of deposit 588,768 471,611 414,943
Total deposits 1,779,289 1,726,401 1,684,279
Borrowings 546,210 442,203 395,452
Mortgage escrow funds and other 32,836 33,601 29,612
Total liabilities 2,358,335 2,202,205 2,109,343
Stockholders' equity 387,293 395,157 408,770
Total liabilities and
stockholders' equity $2,745,628 $2,597,362 $2,518,113
Shares of common stock
outstanding at period end 42,424,255 43,505,659 45,505,378
Book value per share $9.13 $9.08 $8.98
Provident New York Bancorp and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except share and per share data)
Three Months Ended Six Months Ended
March 31, March 31,
2006 2005 2006 2005
Interest and dividend income:
Loans $22,940 $19,506 45,126 $38,919
Securities 9,267 8,641 17,896 17,027
Other earning assets 358 137 656 350
Total interest and dividend
income 32,565 28,284 63,678 56,296
Interest expense:
Deposits 6,096 3,494 11,354 6,913
Borrowings 5,643 3,369 10,439 6,261
Total interest expense 11,739 6,863 21,793 13,174
Net interest income 20,826 21,421 41,885 43,122
Provision for loan losses 300 150 600 300
Net interest income after
provision for loan losses 20,526 21,271 41,285 42,822
Non-interest income:
Deposit fees and service
charges 2,531 2,405 5,199 4,940
Loan fees and late charges 312 248 712 631
Net gain on sales of securities
available for sale --- 263 --- 317
Net gain on sales of loans 86 21 67 80
Title insurance fees 390 300 807 658
Bank owned life insurance 394 295 807 611
Other 429 309 912 629
Total non-interest income 4,142 3,841 8,504 7,866
Non-interest expense:
Compensation and employee
benefits 8,351 7,955 16,191 15,787
Stock-based compensation
plans 1,670 446 3,182 1,286
Occupancy and office
operations 3,015 2,459 5,652 4,607
Advertising and promotion 402 650 994 1,812
Professional fees 795 610 1,649 1,279
Data and check processing 789 1,158 1,666 2,406
Merger integration costs --- 341 --- 721
Amortization of intangible
assets 811 990 1,648 2,117
ATM/debit card expense 338 304 683 630
Other 1,974 2,155 3,897 4,130
Total non-interest expense 18,145 17,068 35,562 34,775
Income before income tax
expense 6,523 8,044 14,227 15,913
Income tax expense 2,118 2,864 4,663 5,718
Net income $4,405 $5,180 $9,564 $10,195
Per common share:
Basic earnings $0.11 $0.12 $0.23 $0.23
Diluted earnings 0.11 0.12 $0.23 0.23
Dividends declared 0.05 0.045 $0.10 0.08
Weighted average common
shares:
Basic 40,939,326 43,868,765 41,069,557 44,098,312
Diluted 41,406,485 44,439,229 41,541,154 44,687,028
Selected Financial Condition Data:
(in 000's except share and per share data)
Three Months Ended
3/31/2006 12/31/05 09/30/05 06/30/05 03/31/05
(In thousands)
End of Period
Total
assets $2,745,628 $2,629,835 $2,597,362 $2,559,378 $2,518,113
Loans,
gross(1) 1,405,596 1,387,148 1,362,073 1,314,716 1,302,217
Securities
available
for sale 926,037 832,578 822,952 845,451 833,828
Securities
held to
maturity 67,364 65,949 70,949 71,194 64,782
Bank owned
life
insurance 38,475 38,080 37,667 37,256 27,176
Goodwill and
core deposit
intangibles 169,648 170,589 171,426 172,880 172,034
Other
non-earning
assets 75,771 68,190 68,853 66,795 69,064
Deposits 1,779,289 1,675,312 1,726,401 1,748,270 1,684,279
Borrowings 546,210 533,843 442,203 377,626 395,452
Equity 387,293 392,579 395,157 399,694 408,770
Average Balances
Total
assets $2,664,774 $2,603,777 $2,568,851 $2,524,925 $2,532,840
Loans,
gross:
Real
estate-
residential
mortgage 457,030 453,018 439,242 433,938 435,208
Real estate-
commercial
mortgage 514,089 502,435 490,107 492,760 486,587
Real estate-
construction
& land
development 78,176 69,314 75,434 72,778 69,326
Commercial
and
industrial 147,775 146,116 146,982 139,115 137,658
Consumer
loans 199,014 192,819 183,750 169,801 165,172
Loans total 1,396,084 1,363,702 1,335,515 1,308,392 1,293,951
Securities
(taxable) 825,284 797,115 808,057 833,718 874,647
Securities
(non-taxable)100,693 94,324 86,258 65,239 50,687
Total earning
assets 2,330,822 2,259,617 2,227,680 2,204,193 2,217,679
Non earning
assets 333,952 344,160 341,171 320,732 315,161
Non-interest
bearing
checking 362,955 382,009 374,432 348,387 337,622
Interest
bearing NOW
accounts 141,064 138,273 149,061 160,234 156,838
Total
transaction
accounts 504,019 520,282 523,493 508,621 494,460
Savings and
money market
accounts 670,253 692,932 742,938 764,071 788,528
Certificates
of deposit 521,399 488,517 472,081 458,023 393,508
Total
deposits 1,695,671 1,701,731 1,738,512 1,730,715 1,676,496
Total
interest
bearing
deposits 1,332,716 1,319,722 1,364,080 1,382,328 1,338,874
Borrowings 556,201 485,800 409,596 384,073 417,952
Equity 390,958 392,037 397,645 394,827 419,859
Other
comprehensive
loss
(SFAS 115),
reflected in
equity (9,992) (10,269) (5,370) (6,012) (3,319)
Selected Operating Data:
Condensed Tax Equivalent Income Statement
Interest
and dividend
income $32,565 $31,113 $30,062 $28,911 $28,284
Tax
equivalent
adjustment* 508 477 417 321 259
Interest
expense 11,739 10,054 8,584 7,643 6,863
Net interest
income (tax
equivalent) 21,334 21,536 21,895 21,589 21,680
Provision for
loan losses 300 300 225 225 150
Net interest
income after
provision
for loan
losses 21,034 21,236 21,670 21,364 21,530
Non-interest
income 4,142 4,355 4,610 5,433 3,841
Non-interest
expense 18,145 17,409 17,665 18,141 17,068
Income before
income tax
expense 7,031 8,182 8,615 8,656 8,303
Income tax
expense (tax
equivalent) 2,626 3,022 3,227 2,997 3,123
Net income $4,405 $5,160 $5,388 $5,659 $5,180
(1) Does not reflect allowance for loan losses of $20,093, $21,819,
$22,008 $22,252 and $22,249.
* Tax exempt income assumed at a 35% federal rate.
Three Months Ended
03/31/06 12/31/05 09/30/05
Performance Ratios (annualized)
Return on Average Assets 0.67% 0.79% 0.83%
Return on Average Equity 4.57% 5.22% 5.38%
Non-Interest Income to Average Assets 0.62% 0.66% 0.71%
Non-Interest Expense to Average Assets 2.72% 2.65% 2.73%
Operating efficiency 72.7% 68.5% 67.7%
Analysis of Net Interest Income
Yield on:
Loans 6.77% 6.56% 6.51%
Investment Securities -- Tax Equivalent 4.28% 4.06% 3.85%
Earning Assets -- Tax Equivalent 5.75% 5.55% 5.43%
Cost of:
Interest Bearing Deposits 1.86% 1.58% 1.40%
Borrowings 4.11% 3.92% 3.64%
Interest Bearing Liabilities 2.52% 2.21% 1.92%
Net Interest Tax Equivalent:
Net Interest Rate Spread -- Tax
Equivalent Basis 3.23% 3.34% 3.51%
Net Interest Margin -- Tax Equivalent
Basis 3.71% 3.78% 3.90%
Capital Information Data
Tier 1 Leverage Ratio -- Bank Only 7.43% 8.37% 8.20%
Tier 1 Risk-Based Capital --
Bank Only $191,775 $206,062 $198,828
Total Risk-Based Capital -- Bank Only 211,868 227,713 220,122
Tangible Capital Consolidated $217,645 $221,990 $223,731
Tangible Capital as a % of Tangible
Assets 8.45% 9.03% 9.22%
Shares Outstanding 42,424,255 43,044,299 43,505,659
Shares Repurchased Per Stock
Repurchase Program 641,400 473,171 343,200
Basic weighted common shares
outstanding 40,939,326 41,193,958 41,513,219
Diluted common shares outstanding 41,406,485 41,670,008 42,141,403
Per Common Share:
Basic Earnings $0.11 $0.13 $0.13
Diluted Earnings 0.11 0.12 0.13
Dividends Paid 0.05 0.05 0.045
Book Value 9.13 9.12 9.08
Tangible Book Value 5.13 5.16 5.14
Asset Quality Measurements
Non-performing loans (NPLs) $4,144 $5,054 $1,641
Non-performing assets (NPAs) 4,234 5,145 1,733
Net Charge-offs 992 489 469
Net Charge-offs as % of average
loans (annualized) 0.28% 0.14% 0.14%
NPLs as % of total loans 0.29% 0.36% 0.12%
NPAs as % of total assets 0.15% 0.20% 0.07%
Allowance for loan losses as % of NPLs 485% 432% 1341%
Allowance for loan losses as % of
total loans 1.43% 1.57% 1.62%
Three Months Ended
06/30/05 03/31/05
Performance Ratios (annualized)
Return on Average Assets 0.90% 0.83%
Return on Average Equity 5.75% 5.00%
Non-Interest Income to Average Assets 0.86% 0.62%
Non-Interest Expense to Average Assets 2.88% 2.73%
Operating efficiency 67.9% 67.6%
Analysis of Net Interest Income
Yield on:
Loans 6.33% 6.22%
Investment Securities -- Tax Equivalent 3.88% 3.90%
Earning Assets -- Tax Equivalent 5.32% 5.22%
Cost of:
Interest Bearing Deposits 1.27% 1.06%
Borrowings 3.43% 3.27%
Interest Bearing Liabilities 1.74% 1.58%
Net Interest Tax Equivalent:
Net Interest Rate Spread -- Tax Equivalent
Basis 3.58% 3.64%
Net Interest Margin -- Tax Equivalent Basis 3.93% 3.96%
Capital Information Data
Tier 1 Leverage Ratio -- Bank Only 8.30% 8.20%
Tier 1 Risk-Based Capital -- Bank Only $198,535 $193,042
Total Risk-Based Capital -- Bank Only 219,271 213,410
Tangible Capital Consolidated $226,814 $236,736
Tangible Capital as a % of Tangible Assets 9.50% 10.09%
Shares Outstanding 43,848,778 45,505,378
Shares Repurchased Per Stock Repurchase
Program 1,656,600 1,187,800
Basic weighted common shares outstanding 42,440,624 43,868,765
Diluted common shares outstanding 43,073,358 44,439,229
Per Common Share:
Basic Earnings $0.13 $0.12
Diluted Earnings 0.13 0.12
Dividends Paid 0.045 0.04
Book Value 9.11 8.98
Tangible Book Value 5.17 5.20
Asset Quality Measurements
Non-performing loans (NPLs) $3,249 $2,767
Non-performing assets (NPAs) 3,342 2,860
Net Charge-offs 222 66
Net Charge-offs as % of average loans
(annualized) 0.07% 0.02%
NPLs as % of total loans 0.25% 0.21%
NPAs as % of total assets 0.13% 0.11%
Allowance for loan losses as % of NPLs 685% 804%
Allowance for loan losses as % of total loans 1.69% 1.71%
