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Provident Financial Services, Inc. Announces First Quarter Earnings and Declares Increased Quarterly Cash Dividend

ISELIN, N.J., April 29, 2016 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $21.0 million, or $0.33 per basic and diluted share for the three months ended March 31, 2016, compared to net income of $19.8 million, or $0.32 per basic and diluted share for the three months ended March 31, 2015.

Results of operations for the first quarter of 2016 were favorably impacted by growth in both average loans outstanding and average non-interest bearing deposits, along with growth in wealth management income. These factors helped mitigate the impact of compression in the net interest margin.

Christopher Martin, Chairman, President and Chief Executive Officer commented: “Our first quarter results were strong, as our core margin remained relatively stable, and we experienced solid loan and deposit growth. As we move into the second quarter, our loan pipeline remains at historically high levels with diversification among all loan types. With an increase in our cash dividend to $0.18 from $0.17 per share, Provident stockholders will be receiving a dividend yield of approximately 3.50%, based on our current stock price. We remain optimistic about the business climate for our markets as the regional economic outlook and local housing markets continue to show improvement.” Martin continued: “I applaud the efforts of our officers and employees who made it possible for Provident Bank to be named by Forbes as one of the best banks in America.”

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.18 per common share payable on May 31, 2016, to stockholders of record as of the close of business on May 13, 2016. The dividend is an increase of 5.9% from the prior quarter's regular cash dividend of $0.17 per common share.

Balance Sheet Summary

Total assets increased $114.5 million to $9.03 billion at March 31, 2016, from $8.91 billion at December 31, 2015, primarily due to a $100.5 million increase in total loans and a $12.9 million increase in total investments.

The Company’s loan portfolio increased $100.5 million, or 1.5%, to $6.64 billion at March 31, 2016, from $6.54 billion at December 31, 2015. Loan originations totaled $646.8 million and loan purchases totaled $28.6 million for the three months ended March 31, 2016. The loan portfolio had net increases of $84.2 million in multi-family mortgage loans, $45.7 million in commercial loans and $8.5 million in residential mortgage loans, partially offset by net decreases of $22.0 million in construction loans, $10.1 million in consumer loans and $5.9 million in commercial mortgage loans. Commercial real estate, commercial and construction loans represented 72.6% of the loan portfolio at March 31, 2016, compared to 72.1% at December 31, 2015.

At March 31, 2016, the Company’s unfunded loan commitments totaled $1.24 billion, including commitments of $555.1 million in commercial loans, $237.3 million in construction loans and $145.2 million in commercial mortgage loans. Unfunded loan commitments at December 31, 2015 and March 31, 2015 were $1.15 billion and $1.28 billion, respectively.

Total investments increased $12.9 million, or 0.8%, to $1.53 billion at March 31, 2016, from $1.52 billion at December 31, 2015, largely due to purchases of mortgage-backed and municipal securities and an increase in unrealized gains on securities available for sale, partially offset by principal repayments on mortgage-backed securities, maturities of municipal and agency bonds and sales of certain mortgage-backed securities.

Total deposits increased $230.9 million, or 3.9%, during the three months ended March 31, 2016, to $6.15 billion. Total core deposits, which consist of savings and demand deposit accounts, increased $175.0 million to $5.36 billion at March 31, 2016, while time deposits increased $55.9 million to $795.6 million at March 31, 2016. The increase in core deposits was largely attributable to an $80.5 million increase in interest bearing demand deposits, a $78.3 million increase in money market deposits and a $20.0 million increase in savings deposits. The increase in time deposits was primarily due to a $54.5 million increase in brokered certificates of deposits. At March 31, 2016, total brokered deposits were $153.2 million. Core deposits represented 87.1% of total deposits at March 31, 2016, compared to 87.5% at December 31, 2015.

Borrowed funds decreased $137.5 million, or 8.1% during the three months ended March 31, 2016, to $1.57 billion, as shorter-term wholesale fundings were replaced by net inflows of deposits for the period. Borrowed funds represented 17.4% of total assets at March 31, 2016, a decrease from 19.2% at December 31, 2015.

Stockholders’ equity increased $18.1 million, or 1.5% for the three months ended March 31, 2016, to $1.21 billion, due to net income earned for the period and an increase in unrealized gains on securities available for sale, partially offset by dividends paid to stockholders. For the three months ended March 31, 2016, 146,245 shares of common stock were repurchased at an average cost of $18.45 per share, a portion of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At March 31, 2016, 3.2 million shares remained eligible for repurchase under the current authorization. Book value per share and tangible book value per share(1) at March 31, 2016 were $18.47 and $12.00, respectively, compared with $18.26 and $11.75, respectively, at December 31, 2015.

Results of Operations

Net Interest Income and Net Interest Margin

For the three months ended March 31, 2016, net interest income increased $1.1 million to $63.1 million, from $61.9 million for the same period in 2015. The improvement in net interest income for the three months ended March 31, 2016 was primarily attributable to growth in average loans outstanding resulting from organic originations and an increase in average non-interest bearing demand deposits, partially offset by period-over-period compression in the net interest margin.

The Company’s net interest margin decreased six basis points to 3.11% for the quarter ended March 31, 2016, from 3.17% for the trailing quarter. The weighted average yield on interest-earning assets decreased four basis points to 3.66% for the quarter ended March 31, 2016, compared with 3.70% for the quarter ended December 31, 2015. The average yield on earning assets and net interest margin for the trailing quarter were favorably impacted by five basis points due to the accelerated recognition of $1.0 million of deferred income on a prepaid commercial loan. The weighted average cost of interest-bearing liabilities for the quarter ended March 31, 2016 was 0.68%, a two basis point increase from the trailing quarter. The average cost of interest bearing deposits for the quarter ended March 31, 2016 was 0.32%, a one basis point increase from the quarter ended December 31, 2015. Average non-interest bearing demand deposits totaled $1.19 billion for the quarter ended March 31, 2016, compared with $1.17 billion for the quarter ended December 31, 2015. The average cost of borrowed funds for the quarter ended March 31, 2016 was 1.71%, compared with 1.65% for the trailing quarter.

The net interest margin decreased 13 basis points to 3.11% for the quarter ended March 31, 2016, compared with 3.24% for the quarter ended March 31, 2015. The weighted average yield on interest-earning assets decreased 12 basis points to 3.66% for the quarter ended March 31, 2016, compared with 3.78% for the quarter ended March 31, 2015, while the weighted average cost of interest bearing liabilities increased one basis point to 0.68% for the quarter ended March 31, 2016, compared with 0.67% for the first quarter of 2015. The average cost of interest bearing deposits for the quarter ended March 31, 2016 was 0.32%, compared with 0.31% for the same period last year. Average non-interest bearing demand deposits increased $133.6 million to $1.19 billion for the quarter ended March 31, 2016, compared with $1.05 billion for the quarter ended March 31, 2015. The average cost of borrowed funds for the quarter ended March 31, 2016 was 1.71%, compared with 1.82% for the same period last year.

Non-Interest Income

Non-interest income totaled $13.0 million for the quarter ended March 31, 2016, an increase of $2.7 million, or 26.4%, compared to the same period in 2015. Wealth management income increased $1.8 million to $4.3 million for the three months ended March 31, 2016, compared to $2.6 million for the same period in 2015. The increase in wealth management income was primarily attributable to fees earned from assets under management acquired in the MDE transaction, which closed on April 1, 2015. Other income increased $477,000 for the three months ended March 31, 2016, compared to the same period in 2015, primarily due to a $204,000 gain recognized on the sale of deposits resulting from a strategic branch divestiture and an increase in net gains on loan sales, partially offset by a decrease in net fees on loan-level interest rate swap transactions. Also contributing to the increase in non-interest income, fee income for the three months ended March 31, 2016 increased $407,000 to $6.5 million, compared to $6.1 million for the same period in 2015. This increase was largely due to a $481,000 increase in ATM and debit card revenue and a $343,000 increase in deposit related fees, partially offset by a $548,000 decrease in prepayment fees on commercial loans. Net gains on securities transactions increased $94,000 for the three months ended March 31, 2016, compared to the same period in 2015.

Non-Interest Expense

For the three months ended March 31, 2016, non-interest expense increased $1.4 million to $44.9 million, compared to the three months ended March 31, 2015. Compensation and benefits expense increased $1.8 million to $26.0 million for the three months ended March 31, 2016, compared to $24.2 million for the same period in 2015. This increase was principally due to an increase in salary expense associated with new employees added as a result of the MDE acquisition, additional salary expense related to annual merit increases and an increase in employee medical and retirement benefit costs, partially offset by lower stock-based compensation expense. Data processing expenses increased $218,000 to $3.2 million for the three months ended March 31, 2016, compared to the same period in 2015, largely due to an increase in software maintenance expense and electronic banking costs. Partially offsetting these increases in non-interest expense, net occupancy costs decreased $738,000 to $6.4 million for the three months ended March 31, 2016, compared to $7.2 million for the three months ended March 31, 2015, primarily due to a decrease in seasonal expenses resulting from a milder winter, combined with decreases in facilities and equipment maintenance expenses. Also, other operating expenses decreased $168,000 to $6.0 million for the three months ended March 31, 2016, compared to the same period in 2015, principally due to a decrease in attorney fees, a portion of which were related to the Company's loan asset recovery activities, partially offset by increases in business development and personnel recruitment expenses.

The Company’s annualized non-interest expense as a percentage of average assets(1) was 2.01% for the quarter ended March 31, 2016, compared with 2.07% for the same period in 2015. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income)(1) was 58.98% for the quarter ended March 31, 2016, compared with 60.14% for the same period in 2015.

Asset Quality

The Company’s total non-performing loans at March 31, 2016 were $50.6 million, or 0.76% of total loans, compared with $44.5 million, or 0.68% of total loans at December 31, 2015 and $50.9 million, or 0.83% of total loans at March 31, 2015. The $6.1 million increase in non-performing loans at March 31, 2016, compared with the trailing quarter, was due to a $4.5 million increase in non-performing commercial loans, a $2.0 million increase in non-performing residential mortgages and a $499,000 increase in non-performing multi-family loans, partially offset by a $1.1 million decrease in non-performing consumer loans. The increase in non-performing commercial loans was largely attributable to a single relationship secured by business assets. At March 31, 2016, impaired loans totaled $54.2 million with related specific reserves of $5.1 million, compared with impaired loans totaling $50.9 million with related specific reserves of $2.3 million at December 31, 2015. At March 31, 2015, impaired loans totaled $90.8 million with related specific reserves of $6.7 million.

At March 31, 2016, the Company’s allowance for loan losses remained unchanged at 0.94% of total loans from December 31, 2015, and decreased from 1.00% of total loans at March 31, 2015. The Company recorded a provision for loan losses of $1.5 million for the three months ended March 31, 2016, compared with a provision of $600,000 for the three months ended March 31, 2015. For the three months ended March 31, 2016, the Company had net charge-offs of $734,000, compared with net charge-offs of $1.2 million for the same period in 2015. The allowance for loan losses increased $767,000 to $62.2 million at March 31, 2016, from $61.4 million at December 31, 2015.

At March 31, 2016, the Company held $11.0 million of foreclosed assets, compared with $10.5 million at December 31, 2015. During the quarter, there were eight additions to foreclosed assets with a carrying value of $1.5 million and ten properties sold with a carrying value of $1.0 million. Foreclosed assets at March 31, 2016 consisted of $5.8 million of residential real estate, $5.1 million of commercial real estate and $156,000 of marine vessels. Total non-performing assets at March 31, 2016 increased $6.6 million, or 12.0%, to $61.7 million, or 0.68% of total assets, from $55.1 million, or 0.62% of total assets at December 31, 2015.

Income Tax Expense

For the three months ended March 31, 2016, the Company’s income tax expense was $8.7 million, compared with $8.4 million for the three months ended March 31, 2015. The increase in income tax expense was a function of growth in pre-tax income for the three months ended March 31, 2016. The Company’s effective tax rates were 29.4% and 29.8% for the three months ended March 31, 2016 and 2015, respectively.

About the Company

Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. The 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, April 29, 2016 at 10:00 a.m. Eastern Time to discuss highlights of the Company’s financial results for the quarter ended March 31, 2016. 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 www.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,” “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 set forth in Item 1A of the Company's Annual Report on Form 10-K, or 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, return on average tangible equity, annualized core non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes on page 8 which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
March 31, 2016 (Unaudited) and December 31, 2015
(Dollars in Thousands)
AssetsMarch 31, 2016 December 31, 2015
Cash and due from banks$107,252 $100,899
Short-term investments859 1,327
Total cash and cash equivalents108,111 102,226
Securities available for sale, at fair value984,206 964,534
Investment securities held to maturity (fair value of $491,349 at March 31, 2016 (unaudited) and $488,331 at December 31, 2015)472,934 473,684
Federal Home Loan Bank Stock72,135 78,181
Loans6,638,127 6,537,674
Less allowance for loan losses62,191 61,424
Net loans6,575,936 6,476,250
Foreclosed assets, net11,029 10,546
Banking premises and equipment, net88,249 88,987
Accrued interest receivable25,399 25,766
Intangible assets425,260 426,277
Bank-owned life insurance184,389 183,057
Other assets78,526 82,149
Total assets$9,026,174 $8,911,657
Liabilities and Stockholders' Equity
Deposits:
Demand deposits$4,353,814 $4,198,788
Savings deposits1,005,430 985,478
Certificates of deposit of $100,000 or more389,985 324,215
Other time deposits405,633 415,506
Total deposits6,154,862 5,923,987
Mortgage escrow deposits25,636 23,345
Borrowed funds1,570,141 1,707,632
Other liabilities61,413 60,628
Total liabilities7,812,052 7,715,592
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 65,732,579 outstanding at March 31, 2016 and 65,489,354 outstanding at December 31, 2015832 832
Additional paid-in capital1,001,919 1,000,810
Retained earnings517,365 507,713
Accumulated other comprehensive income (loss)4,169 (2,546)
Treasury stock(269,105) (269,014)
Unallocated common stock held by the Employee Stock Ownership Plan(41,058) (41,730)
Common Stock acquired by the Directors' Deferred Fee Plan(6,350) (6,517)
Deferred Compensation - Directors' Deferred Fee Plan6,350 6,517
Total stockholders' equity1,214,122 1,196,065
Total liabilities and stockholders' equity$9,026,174 $8,911,657


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three Months Ended March 31, 2016 and 2015 (Unaudited)
(Dollars in Thousands, except per share data)
Three Months Ended
March 31,
2016 2015
Interest income:
Real estate secured loans $44,233 $43,289
Commercial loans 14,952 13,439
Consumer loans 5,636 5,794
Securities available for sale and Federal Home Loan Bank stock 5,780 6,301
Investment securities held to maturity 3,331 3,396
Deposits, federal funds sold and other short-term investments 42 12
Total interest income 73,974 72,231
Interest expense:
Deposits 3,821 3,588
Borrowed funds 7,084 6,715
Total interest expense 10,905 10,303
Net interest income 63,069 61,928
Provision for loan losses 1,500 600
Net interest income after provision for loan losses 61,569 61,328
Non-interest income:
Fees 6,461 6,054
Wealth management income 4,311 2,558
Bank-owned life insurance 1,332 1,348
Net gain on securities transactions 96 2
Other income 818 341
Total non-interest income 13,018 10,303
Non-interest expense:
Compensation and employee benefits 26,030 24,201
Net occupancy expense 6,434 7,172
Data processing expense 3,245 3,027
FDIC Insurance 1,322 1,218
Amortization of intangibles 1,005 927
Advertising and promotion expense 879 761
Other operating expenses 5,963 6,131
Total non-interest expense 44,878 43,437
Income before income tax expense 29,709 28,194
Income tax expense 8,736 8,392
Net income $20,973 $19,802
Basic earnings per share $0.33 $0.32
Average basic shares outstanding 63,351,093 62,673,887
Diluted earnings per share $0.33 $0.32
Average diluted shares outstanding 63,519,755 62,840,951


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Financial Highlights
(Dollars in Thousands, except share data) (Unaudited)
At or for the
Three Months Ended
March 31,
2016 2015
STATEMENTS OF INCOME:
Net interest income $63,069 $61,928
Provision for loan losses 1,500 600
Non-interest income 13,018 10,303
Non-interest expense 44,878 43,437
Income before income tax expense 29,709 28,194
Net income 20,973 19,802
Diluted earnings per share $0.33 $0.32
Interest rate spread 2.98% 3.11%
Net interest margin 3.11% 3.24%
PROFITABILITY:
Annualized return on average assets 0.94% 0.94%
Annualized return on average equity 6.97% 6.94%
Annualized return on average tangible equity (2) 10.76% 10.67%
Annualized non-interest expense to average assets (3) 2.01% 2.07%
Efficiency ratio (4) 58.98% 60.14%
ASSET QUALITY:
Non-accrual loans $50,649 $50,888
90+ and still accruing
Non-performing loans 50,649 50,888
Foreclosed assets 11,029 5,924
Non-performing assets 61,678 56,812
Non-performing loans to total loans 0.76% 0.83%
Non-performing assets to total assets 0.68% 0.67%
Allowance for loan losses $62,191 $61,110
Allowance for loan losses to total non-performing loans 122.79% 120.09%
Allowance for loan losses to total loans 0.94% 1.00%
AVERAGE BALANCE SHEET DATA:
Assets $8,960,605 $8,510,326
Loans, net 6,503,275 6,028,265
Earning assets 8,054,107 7,662,592
Core deposits 5,230,345 4,981,618
Borrowings 1,688,892 1,492,714
Interest-bearing liabilities 6,485,777 6,229,529
Stockholders' equity 1,210,210 1,157,078
Average yield on interest-earning assets 3.66% 3.78%
Average cost of interest-bearing liabilities 0.68% 0.67%
LOAN DATA:
Mortgage loans:
Residential $1,263,699 $1,246,809
Commercial 1,710,182 1,689,287
Multi-family 1,318,251 1,070,926
Construction 309,656 274,001
Total mortgage loans 4,601,788 4,281,023
Commercial loans 1,480,002 1,243,783
Consumer loans 556,056 601,323
Total gross loans 6,637,846 6,126,129
Premium on purchased loans 6,011 5,386
Unearned discounts (40) (47)
Net deferred (5,690) (6,769)
Total loans $6,638,127 $6,124,699


Notes - Reconciliation of GAAP to Non-GAAP Financial Measures - (Dollars in Thousands, except share data)
(1) Book and Tangible Book Value per Share
At March 31,
2016 2015
Total stockholders' equity$1,214,122 $1,157,671
Less: total intangible assets 425,260 403,505
Total tangible stockholders' equity$788,862 $754,166
Shares outstanding 65,732,579 65,171,983
Book value per share (total stockholders' equity/shares outstanding)$18.47 $17.76
Tangible book value per share (total tangible stockholders' equity/shares outstanding)$12.00 $11.57
(2) Return on Average Tangible Equity
Three Months Ended
March 31,
2016 2015
Total average stockholders' equity$1,210,210 $1,157,078
Less: total average intangible assets 425,897 404,091
Total average tangible stockholders' equity$784,313 $752,987
Net income$20,973 $19,802
Annualized return on average tangible equity (net income/total average stockholders' equity) 10.76% 10.67%
(3) Annualized Non-Interest Expense/Average Assets Calculation
Three Months Ended
March 31,
2016 2015
Annualized non-interest expense$180,498 $176,161
Average assets 8,960,605 8,510,326
Non-interest expense/average assets 2.01% 2.07%
(4) Efficiency Ratio Calculation
Three Months Ended
March 31,
2016 2015
Net interest income$63,069 $61,928
Non-interest income 13,018 10,303
Total income 76,087 72,231
Non-interest expense 44,878 43,437
Expense/income 58.98% 60.14%


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Unaudited) (Dollars in Thousands)
March 31, 2016 December 31, 2015
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-Earning Assets:
Deposits$33,239 $42 0.50% $21,688 $17 0.28%
Federal funds sold and other short-term investments1,437 0.06% 1,528 0.03%
Investment securities (1)474,130 3,331 2.81% 473,007 3,344 2.83%
Securities available for sale965,490 4,886 2.02% 979,724 4,922 2.01%
Federal Home Loan Bank stock76,536 894 4.70% 76,431 768 3.99%
Net loans: (2)
Total mortgage loans4,543,468 44,233 3.87% 4,498,133 45,290 3.98%
Total commercial loans1,399,478 14,952 4.25% 1,327,394 14,472 4.30%
Total consumer loans560,329 5,636 4.04% 571,186 5,536 3.85%
Total net loans6,503,275 64,821 3.97% 6,396,713 65,298 4.03%
Total Interest-Earning Assets$8,054,107 $73,974 3.66% $7,949,091 $74,349 3.70%
Non-Interest Earning Assets:
Cash and due from banks98,510 91,341
Other assets807,988 805,875
Total Assets$8,960,605 $8,846,307
Interest-Bearing Liabilities:
Demand deposits$3,051,598 $2,191 0.29% $2,991,192 $2,109 0.28%
Savings deposits991,038 285 0.12% 978,615 271 0.11%
Time deposits774,249 1,345 0.70% 760,504 1,290 0.67%
Total Deposits4,816,885 3,821 0.32% 4,730,311 3,670 0.31%
Borrowed funds1,668,892 7,084 1.71% 1,674,876 6,948 1.65%
Total Interest-Bearing Liabilities6,485,777 10,905 0.68% 6,405,187 10,618 0.66%
Non-Interest Bearing Liabilities:
Non-interest bearing deposits1,187,709 1,170.255
Other non-interest bearing liabilities76,909 76,082
Total non-interest bearing liabilities1,264,618 1,246,337
Total Liabilities7,750,395 7,651,524
Stockholders' equity1,210,210 1,194,783
Total Liabilities and Stockholders' Equity$8,960,605 $8,846,307
Net interest income $63,069 $63,731
Net interest rate spread 2.98% 3.04%
Net interest-earning assets$1,568,330 $1,543,904
Net interest margin (3) 3.11% 3.17%
Ratio of interest-earning assets to
total interest-bearing liabilities1.24x 1.24x


(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.


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Unaudited) (Dollars in Thousands)
March 31, 2016 March 31, 2015
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-Earning Assets:
Deposits$33,239 $42 0.50% $18,842 $12 0.25%
Federal funds sold and other short term investments1,437 0.06% 1,149 0.03%
Investment securities (1)474,130 3,331 2.81% 473,374 3,396 2.87%
Securities available for sale965,490 4,886 2.02% 1,071,853 5,437 2.03%
Federal Home Loan Bank stock76,536 894 4.70% 69,109 864 5.07%
Net loans: (2)
Total mortgage loans4,543,468 44,233 3.87% 4,210,152 43,289 4.11%
Total commercial loans1,399,478 14,952 4.25% 1,212,557 13,439 4.46%
Total consumer loans560,329 5,636 4.04% 605,556 5,794 3.88%
Total net loans6,503,275 64,821 3.97% 6,028,265 62,522 4.16%
Total Interest-Earning Assets$8,054,107 $73,974 3.66% $7,662,592 $72,231 3.78%
Non-Interest Earning Assets:
Cash and due from banks98,510 76,024
Other assets807,988 771,710
Total Assets$8,960,605 $8,510,326
Interest-Bearing Liabilities:
Demand deposits$3,051,598 $2,191 0.29% $2,944,909 $1,912 0.26%
Savings deposits991,038 285 0.12% 982,592 245 0.10%
Time deposits774,249 1,345 0.70% 809,314 1,431 0.72%
Total Deposits4,816,885 3,821 0.32% 4,736,815 3,588 0.31%
Borrowed funds1,668,892 7,084 1.71% 1,492,714 6,715 1.82%
Total Interest-Bearing Liabilities$6,485,777 $10,905 0.68% $6,229,529 $10,303 0.67%
Non-Interest Bearing Liabilities:
Non-interest bearing deposits1,187,709 1,054.117
Other non-interest bearing liabilities76,909 69.602
Total non-interest bearing liabilities1,264,618 1,123,719
Total Liabilities7,750,395 7,353,248
Stockholders' equity1,210,210 1,157,078
Total Liabilities and Stockholders' Equity$8,960,605 $8,510,326
Net interest income $63,069 $61,928
Net interest rate spread 2.98% 3.11%
Net interest-earning assets$1,568,330 $1,433,063
Net interest margin (3) 3.11% 3.24%
Ratio of interest-earning assets to
total interest-bearing liabilities1.24x 1.23x
(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.


The following table summarizes the quarterly net interest margin for the previous five quarters.
3/31/16 12/31/15 9/30/15 06/30/15 3/31/15
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Interest-Earning Assets:
Securities2.36% 2.33% 2.26% 2.28% 2.38%
Net loans3.97% 4.03% 4.02% 4.08% 4.16%
Total interest-earning assets3.66% 3.70% 3.66% 3.71% 3.78%
Interest-Bearing Liabilities:
Total deposits0.32% 0.31% 0.31% 0.31% 0.31%
Total borrowings1.71% 1.65% 1.61% 1.77% 1.82%
Total interest-bearing liabilities0.68% 0.66% 0.65% 0.67% 0.67%
Interest rate spread2.98% 3.04% 3.01% 3.04% 3.11%
Net interest margin3.11% 3.17% 3.13% 3.17% 3.24%
Ratio of interest-earning assets to interest-bearing liabilities1.24x 1.24x 1.24x 1.23x 1.23x


CONTACT: Investor Relations 1-732-590-9300 Web Site: http://www.Provident.Bank

Source:Provident Financial Services, Inc.