Provident New York Bancorp Reports Operating Results (10-Q)
Provident New York Bancorp is a leading full-service independent community bank that helps families and businesses make the most of life\'s opportunities. By combining state-of-the-art technology with our own brand of local decision making we can deliver the quality financial products and services you need how when and where you need them. Provident New York Bancorp has a market cap of $380.8 million; its shares were traded at around $9.55 with a P/E ratio of 13.6 and P/S ratio of 2.3. The dividend yield of Provident New York Bancorp stocks is 2.5%. Provident New York Bancorp had an annual average earning growth of 28.6% over the past 5 years. Highlight of Business Operations: Net Loans as of June 30, 2009 were $1.7 billion, unchanged from September 30, 2008. Acquisition, Development and Construction (ADC) increased by $18.9 million, or 11.1%, over balances at September 30, 2008, primarily due to activity on newly approved loans. Commercial real estate and commercial business loans remained flat decreasing $1.1 million, or 0.1%, over balances at September 30, 2008. Consumer loans increased by $4.6 million, or 1.9%, during the nine month period ended June 30, 2009, while residential mortgage loans decreased by $39.5 million or 7.7% primarily due to new conforming fixed rate loan originations being sold in the secondary market. Total loan originations were $344.9 million for the nine months ended June 30, 2009 and repayments were $354.6 million during the same time period. While loan demand is softer than a year ago due to the economic slowdown, commercial loan originations during the nine months ending June 30, 2009 were $175.1 million. Provident Bank does not originate or hold subprime mortgage loans, which we consider to be loans to borrowers with subprime credit scores combined with either high loan-to-value or high debt-to-income ratios. We also hold no subprime loans through our investment portfolio. See footnote four.
Total securities decreased by $102.6 million, or 12.3%, to $732.1 million at June 30, 2009, compared to September 30, 2008 due to sales of securities. The Company executed a planned sale program beginning in February of 2009 of approximately $350 million in mortgage backed securities to realize a portion of the recent appreciation in its securities portfolio and reduce prepayment risk. Mortgage-backed securities at amortized cost decreased by $236.3 million primarily due to sales of $376.5 million and pay downs of $90.8 million, partially offset by purchases totaling $231.3 million. US Treasury notes increased $26.0 million and U.S. Government federal agency securities increased $77.0 million. The Company owns $12.1 million at cost of private label CMOs with a carrying value of $10.2 million. See note six for further discussion on determination of fair value for these securities.
Deposits as of June 30, 2009 were $1.9 billion, a decrease of $116.2 million, or 5.8%, from September 30, 2008. Retail and commercial transaction accounts were 28.8% of deposits at June 30, 2009 and 25.2% at September 30, 2008. An increase in retail and commercial transaction deposits of $37.2 million was offset by a decrease in municipal demand and NOW accounts of $243.7 million. Savings and Money market deposits increased by $33.4 million and $77.1 million, respectively. Certificates of Deposits decreased $20.2 million due to decreases in municipal certificates of deposits of $55.2 million. The increase experienced in retail deposits is due to seasonality. The decline in municipal deposits of $208.5 million results from seasonal tax collections at September 30, 2008.
Stockholders equity increased $21.6 million from September 30, 2008 to $420.8 million at June 30, 2009, primarily due to a $13.8 million increase in the Companys retained earnings and a $7.8 million improvement in accumulated other comprehensive income, after realizing securities gains in the fiscal year of $16.4 million. Stock based compensation transactions of $2.6 million added to the overall increase in capital. The Company resumed open market stock repurchases during the third fiscal quarter and has purchased a total of 328,951 shares for the fiscal year 2009 totaling $2.7 million. As of June 30, 2009, 836,950 shares remain available for repurchase under the Companys current stock repurchase program.
Net charge-offs for the quarter were $1.9 million (0.44% of average loans, on an annualized basis), down $2.4 million compared to $4.3 million (0.99% of average loans, on an annualized basis) in the prior linked quarter ended March 31, 2009. Net charge-offs for the quarter were up $1.1 million when compared to net charge-offs of $812,000 in the same period ending June 30, 2008. Net charge-offs of $1.3 million were in the community business loan portfolio which continues to be impacted by the ongoing sluggishness of the economy, on average outstandings of $101.9 million. The community business portfolio is showing signs of stabilization but the Company is experiencing further weakness in the ADC portfolio. Net charge- offs during the third fiscal quarter in the ADC portfolio and commercial real estate totaled $400,000 on average outstandings of $190.8 million.
Net income for the three months ended June 30, 2009 was $9.0 million, an increase of $2.6 million, compared to $6.3 million for the same period in fiscal 2008. Net interest income before provision for loan losses for the three months ended June 30, 2009, decreased by $1.5 million or 6.0%, to $22.7 million, compared to $24.2 million for the same period in the prior year. The provision for loan losses for the three months ended June 30, 2009 increased $2.1 million, or 150.0%, to $3.5 million, compared to $1.4 million for the same period in the prior year due to growth in the loan portfolio, weaker economic conditions and recent loss experience in the portfolios. Net interest margin on a tax equivalent basis for the three months ended June 30, 2009, decreased 30 basis points compared to the same period last year from 4.04% to 3.74%. The year-over-year comparison reflects the impact of the cuts in the federal funds target rate totaling 2.0%. The Company executed on its planned sale program, starting in February 2009, of approximately $350 million in mortgage backed securities with a book yield of 5.15% and an average life of 4.1 years, which were reinvested in securities having a yield of 3.34% and an average life of 3.2 years. As a result, the yield on total interest-earning assets declined 80 basis points. For the same period, the cost of interest-bearing deposits decreased 72 basis points to 1.04%, and the cost of borrowings increased 32 basis points to 3.96%, reflecting the carrying cost of term borrowings outstanding and repayment of short-term borrowings. The tax-equivalent yield on investments decreased 48 basis points compared to the same quarter in 2008. Non-interest income for the three months ended June 30, 2009, was $15.3 million, an increase of $10.2 million, compared to $5.0 million for the same period in fiscal 2008 due to increases in gains on sales of securities of $10.0 million. Non-interest expense increased $2.6 million, or 13.52%, to $21.5 million for the three months ended June 30, 2009, compared to $19.0 million for the same period in the prior year primarily due to increased FDIC assessments of $2.1 million ($1.4 million representing a special assessment) and higher salary and benefit costs of $813,000.
Read the The complete ReportPBNY is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Bruce Sherman of Private Capital Management.