Provident New York Bancorp Reports Operating Results (10-K)

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Dec 13, 2010
Provident New York Bancorp (PBNY, Financial) filed Annual Report for the period ended 2010-09-30.

Provident New York Bancorp has a market cap of $392.57 million; its shares were traded at around $10.26 with a P/E ratio of 19.36 and P/S ratio of 2.67. The dividend yield of Provident New York Bancorp stocks is 2.34%. Provident New York Bancorp had an annual average earning growth of 13.9% over the past 10 years. GuruFocus rated Provident New York Bancorp the business predictability rank of 3-star.PBNY is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Private Capital of Private Capital Management, Columbia Wanger of Columbia Wanger Asset Management, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Provident New York Bancorp (“Provident Bancorp” or the “Company”) is a Delaware corporation that owns all of the outstanding shares of common stock of Provident Bank (the “Bank”). At September 30, 2010, Provident Bancorp had, on a consolidated basis, assets of $3.0 billion, deposits of $2.1 billion and stockholders equity of $431.0 million. As of September 30, 2010, Provident Bancorp had 38,262,288 shares of common stock outstanding.

In addition to Provident Bank, the Company owns Hardenburgh Abstract Company, Inc. (“Hardenburgh”) that was acquired in connection with the acquisition of Warwick Community Bancorp (“WSB”) and Hudson Valley Investment Advisors, LLC, an investment advisory firm that generates investment management fees. Hardenburgh had gross revenue from title insurance policies and abstracts of $1.2 million and net income of $214,000 in 2010, Hudson Valley Investment Advisors, LLC generated $2.4 million in fee income in 2010 and net income of $369,000 and Provident Risk Management, Inc. a captive insurance company generated $441,000 in intercompany revenues and $353,000 in net income.

Commercial Real Estate Lending. We originate real estate loans secured predominantly by first liens on commercial real estate. The commercial properties are predominantly non-residential properties such as office buildings, shopping centers, retail strip centers, industrial and warehouse properties and, to a lesser extent, more specialized properties such as churches, mobile home parks, restaurants and motel/hotels. We may, from time to time, purchase commercial real estate loan participations. We target commercial real estate loans with initial principal balances between $1.0 million and $15.0 million. At September 30, 2010, loans secured by commercial real estate totaled $582.0 million, or 34.2% of our total loan portfolio and consisted of 1,041 loans outstanding, although there are a large number of loans with balances substantially greater than the average. Substantially all of our commercial real estate loans are secured by properties located in our primary market area.

We currently offer several ARM loan products secured by residential properties with rates that are fixed for a period ranging from six months to ten years. After the initial term, if the loan is not already refinanced, the interest rate on these loans generally reset every year based upon a contractual spread or margin above the average yield on U.S. Treasury securities, adjusted to a constant maturity of one year, as published weekly by the Federal Reserve Board and subject to certain periodic and lifetime limitations on interest rate changes. Many of the borrowers who select these loans have shorter-term credit needs than those who select long-term, fixed-rate loans. ARM loans generally pose different credit risks than fixed-rate loans primarily because the underlying debt service payments of the borrowers rise as interest rates rise, thereby increasing the potential for default. At September 30, 2010, our ARM portfolio included $1.3 million in loans that re-price every six months, $34.3 million in loans that re-price once a year, $5.8 million in loans that re-price periodically after an initial fixed-rate period of one year or more and $456,000 that re-price based upon other miscellaneous re-pricing terms. Our adjustable rate loans do not have interest-only or negative amortization features. We do not nor have we in the past originated “subprime” loans, loans to borrowers with subprime credit scores combined with either high loan-to-value or high debt-to-income ratios.

At September 30, 2010, the largest group of consumer loans consisted of $225.1 million of loans secured by junior liens on residential properties. We offer fixed-rate, fixed-term second mortgage loans, referred to as homeowner loans, and we also offer adjustable-rate home equity lines of credit. As of September 30, 2010, homeowner loans totaled $48.9 million or 2.9% of our total loan portfolio. The disbursed portion of home equity lines of credit totaled $176.1 million, or 10.3% of our total loan portfolio at September 30, 2010, with $147.3 million remaining undisbursed.

Other consumer loans include personal loans and loans secured by new or used automobiles. As of September 30, 2010, these loans totaled $13.1 million, or 0.8% of our total loan portfolio. We originate consumer loans directly to our customers or on an indirect basis through selected dealerships. We require borrowers to maintain collision insurance on automobiles securing consumer loans, with us listed as loss payee. Personal loans also include secured and unsecured installment loans for other purposes. Unsecured installment loans, which include most personal loans, generally have shorter terms than secured consumer loans, and generally have higher interest rates than rates charged on secured installment loans with comparable terms. We also offer overdraft lines of credit on an unsecured basis, outstanding balances on these loans totaled $4.8 million with additional undrawn lines totaling $15.4 million.

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