Provident New York Bancorp Reports First Quarter 2010 Earnings

New York Bancorp, the parent company of Provident Bank, announced first quarter results for the fiscal year ending September 30, 2010.

In a January 20 release, New York Bancorp said net income for the quarter was $6.2 million, or $0.16 per diluted share, compared to net income of $5.1 million, or $0.13 per diluted share for the linked quarter ended September 30, and net income of $6.3 million or $0.16 per diluted share for the first quarter of fiscal 2009.

"I am pleased to report our financial performance for the first quarter of the new fiscal year reflects continued earnings generation, supported by solid performance in our core business, continued realization of securities gains, management of discretionary expenses and fairy stable credit quality indicators," said George Strayton, President and CEO. "Although commercial loan demand in our legacy markets is soft as compared to last year at the same time we are encouraged by the good results seen from our expansion into Westchester County. Clearly, tax incentives, low interest rates and declining home prices resulted in an increase in home mortgage originations since the last quarter. Although our gross loan balances are down $26 million as compared to September 30, balances, this reduction is primarily driven by our strategy of selling current production fixed rate, long-term conforming mortgages to the secondary market or securitizing them. We continue to attract commercial transaction accounts, the core of our franchise value, as we focus on developing total banking relationships with our customers."

Net charge-offs for the quarter were $2.6 million compared to $2.5 million last quarter and $2.0 million during the first fiscal quarter of 2009. Charge-off's continue to be concentrated in the community business loan portfolio, which accounted for net charge off's of $1.6 million on average outstandings of $99.4 million.

Substandard loans at December 31 were $100.5 million compared to $89.9 million at September 30, while special mention loans were $48.1 million and $47.8 million, respectively. Non-performing loans, however, remained approximately flat at $26.7 million compared to $26.5 million at September 30, while non performing assets went from $28.9 million to $29.4 million for the same period.

We continue to actively review our loan portfolio and work with our borrowers. Based on our analysis we have added $2.5 million to our allowance for loan loss and after recording $2.6 million in net charge offs this quarter our allowance for loan losses remained at $30.0 million, or 112 percent of non performing loans. This compares to 114 percent at September 30.

Net interest income for the quarter ended December 31, increased to $22.9 million from $22.5 million at quarter ended September 30. The tax-equivalent net interest margin decreased 1 basis point from 3.71 percent for the same period. During the quarter the Bank sold $136.8 million in securities and purchased $246.4 million. The overall yield of the investment portfolio and other earning assets declined 11 basis points during the first quarter, while interest bearing deposit costs declined 12 basis points.

Noninterest income totaled $8.1 million for the fiscal first quarter, an increase of $2.3 million from $5.8 million in the first quarter of fiscal 2009. The increase was due to gains of $2.4 million resulting from the company's decision to realize a portion of the recent appreciation in its securities portfolio, monetizing other comprehensive income and reducing prepayment risk. Other factors contributing to the increase were gains on the sale of $15.5 million of loans with gains of $283,000. The Bank has been selling current production of conforming fixed rate residential mortgage loans in the secondary market to control interest rate risk. A fair value gain of $380,000 on interest rate caps that the company purchased in the first quarter of fiscal 2010 was recorded. These increases were offset by a gain recorded on sales of premises in the first quarter of fiscal 2009.

The company remained focused on controlling operating expenses, and as a result, non interest expense remained relatively unchanged increasing $659,000 when compared to the first quarter fiscal 2009. The increase is due primarily to increased medical and pension expense, FDIC insurance and occupancy expense. Occupancy expense increased due primarily to maintenance expense on buildings and equipment.

The company's effective tax rate was 28.2 percent for the first quarter of fiscal 2010 and 30.7 percent for the first quarter of fiscal 2009. For the linked quarter ended September 30, the company's effective tax rate was 20.8 percent due to a BOLI payment received during that quarter.

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