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Article Excerpt
JERSEY CITY, N.J., Oct. 22 /PRNewswire-FirstCall/ -- Provident Financial Services, Inc. (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.
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...
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