Friday, Provident Financial Services, Inc. (PFS) reported a decline in profit for the fourth quarter, mainly due to higher provisions for loans losses as a result of an increase in non-performing loans, downgrades in credit risk ratings and an increase in commercial loans as a percentage of the total loan. Results for the quarter were also impacted by the current macroeconomic conditions.
Provident Financial's net income for the fourth quarter declined to $6.8 million or $0.12 per share from $7.4 million or $0.13 per share in the year-ago quarter.
On average, 6 analysts polled by Thomson Reuters expected the company to earn $0.17 per share for the quarter. Analysts' estimates typically exclude special items.
Total interest income for the quarter declined to $73.75 million from $75.68 million in the year-ago period.
Total interest expense declined to $25.14 million from $30.72 million from the year-ago period.
Net interest income increased to $48.61 million from $44.96 million in the year-ago period.
Net interest income after provision for loan losses for the quarter remained flat at $36.46 million for the latest quarter.
The net interest margin for the quarter ended December 31, 2009 decreased 4 basis points to 3.16% from 3.20% for the quarter ended December 31, 2008.
The decrease in the net interest margin for the quarter, compared with the same period in 2008 was primarily attributable to reductions in earning asset yields, an increase in the average balance of lower-yielding interest-bearing deposits and short-term investments, a decrease in average loans outstanding and an increase in the average balance of non-performing loans.
Provision for loan losses for the quarter was $12.15 million, compared with $8.50 million in the year-ago period.
The Company's net loans decreased by $155.6 million, or 3.5%, to $4.32 billion at December 31, 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. Total deposits increased by 15.9% to $4.89 billion from $4.22 billion a year-ago.
The company's net charge-offs at the end of the period was $7.1 million, compared with $4.1 million in the year-ago quarter. The allowance for loan losses at the end of the period increased by $13.0 million to $60.7 million from $47.7 million at December 31, 2008.
According to the company, the increase in the loan loss provision, compared with the same periods a year-ago, was attributable to an increase in non-performing loans, downgrades in credit risk ratings and an increase in commercial loans as a percentage of the total loan portfolio to 52.5% at December 31, 2009, from 46.5% a year-ago.
The total non-interest income for the quarter increased to $7.03 million from $6.98 million a year-ago and total non-interest expense increased to $37.11 million from $33.39 million a year-ago.
Common stock repurchases for the year totaled 11,000 shares at an average cost of $10.67 per share. According to the company, at December 31, 2.1 million shares remained eligible for repurchase under the current authorization.
Also, the company's Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on February 26, 2010, to stockholders of record as of the close of business on February 12, 2010.
For the full year, the company reported a net loss of $121.82 million or $2.16 per share, compared with a net income of $41.64 million or $0.74 per share a year-ago.
The company reported operating income, excluding a goodwill impairment charge recorded in the first quarter of 2009, of $30.7 million, or $0.55 per share for the year ended December 31, 2009, compared with a net income of $41.6 million or $0.74 per share for the year ended December 31, 2008.
Net interest income for the year increased to $181.01 million from $172.06 million in the year-ago period.
The Street estimated earnings of $0.62 per share on a revenue of $210.68 million for the year.
PFS is currently trading at $11.37, up $0.27 or 2.43%, on a volume of 0.32 million shares on the New York Stock Exchange.
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