Provident New York Bancorp Announces Fourth Quarter 2012 Earnings of $0.17 per Diluted Share Excluding Merger Related Charges(1), or $0.06 per Diluted Share in GAAP Earnings(2)

MONTEBELLO, NY--(Marketwire - Oct 29, 2012) - Provident New York Bancorp (NYSE: PBNY), the parent company of Provident Bank, today announced fiscal fourth quarter results for the period ending September 30, 2012, as well as for the fiscal year ending September 30, 2012. Net income for the quarter was $6.9 million, or $0.17 per diluted share excluding merger related charges related to the acquisition of Gotham Bank of New York ("Gotham"), compared to a net loss of $493,000, or $(0.01) per diluted share for same quarter last year; and $6.2 million, or $0.17 per diluted share for the linked quarter ended June 30, 2012. For the fiscal year ending September 30, 2012, net income for the year was $24.4 million, or $0.64 per diluted share excluding merger related charges, as compared to net income of $11.7 million or $0.31(3) per diluted share for the year ending September 30, 2011.

President's Comments
Jack Kopnisky, President and CEO, commented: "The fiscal fourth quarter of 2012 continued to produce strong earnings for our Bank, yielding $0.17 per diluted share, excluding merger related charges for Gotham. This is a continuation of the solid earnings that we put forth for the third fiscal quarter ending June 30, 2012.

"We had earnings of $0.64 (excluding merger related charges) per diluted share for the fiscal year 2012 as compared to $0.31 per diluted share in the fiscal year 2011. This represents a 106 percent increase in earnings per share year over year. We have been able to grow earnings for our Bank based on strong commercial loan and deposit growth, expense controls, and improvement in credit quality. We implemented a team based approach in commercial banking that facilitated the significant growth in loans and deposits for the year. We reduced approximately $10 million in noninterest core expenses by reducing back office and retail costs and redeployed approximately $5 million to customer facing opportunities. The completion of the Gotham acquisition accelerated our entry into the New York City market, which is strategically beneficial for our Bank. We also raised $46.0 million in capital, which resulted in a Tier 1 Leverage Ratio of 8.9(4) percent based on average assets for the fourth quarter. We were able to significantly reduce our non-performing loans during the fourth quarter to $39.8 million, representing a 10 percent decrease in non-performing loans quarter over quarter. Net charge offs as a percentage of average loans stood at 57 basis points compared to 55 basis points last quarter, and 241 basis points for the fourth quarter last year.

"In terms of the balance sheet, we saw net loan growth of $415.3 million for 2012, a 24.8 percent increase over last year. We funded this loan growth with deposit base expansion, excluding more volatile municipal deposits of $527.5 million, or a 31.4 percent increase year over year."

Key items for the quarter

• Total loan originations were $205.7 million compared to $206.2 million in the linked quarter, and $180.6 million for the fourth fiscal quarter of 2011.
• Non-performing loans were reduced from $44.5 million at June 30, 2012, to $39.8 million at September 30, 2012.
• Our allowance for loan losses increased $695,000 significantly improving the ratio to non-performing loans increased to approximately 71 percent from 62 percent. Provision for loan losses increased by $1.2 million during the fourth quarter. For the fourth quarter of fiscal 2011, provision for loan losses was $8.8 million.
• Securities gains were $3.0 million after tax based on the period's effective tax rate, for the fourth quarter.

Gotham Bank Acquisition
On August 10, 2012 the Company accelerated its growth into the New York City market area with the completion of the Gotham Bank acquisition with $434.0 million of assets, $209.4 million of loans, and $368.5 million in deposits. Intangible assets increased $9.8 million due to good will and core deposit intangibles associated with the transaction. The fair value analysis of the assets resulted in a discount of 1.9 percent to the loan portfolio and a core deposit premium of 2.8 percent. Merger related costs related to this acquisition were $5.9 million or $4.5 million net of taxes.

Net Interest Income and Margin
Fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011
Net interest income was $25.2 million for the fourth quarter of fiscal 2012, up $2.4 million for the same quarter of fiscal 2011. Reflecting the current interest rate environment, the tax-equivalent yield on investments decreased 37 basis points and loan yields were down 25 basis points compared to the fourth quarter fiscal 2011. As a result, the yield on interest-earning assets declined 32 basis points. The cost of deposits increased 1basis point to 27 basis points, and the cost of borrowings decreased by 4 basis points to 3.65 percent.The resulting net interest margin on a tax-equivalent basis was 3.38 percent for the fourth quarter of fiscal 2012, compared to 3.58 percent for the same period a year ago. 

Fourth quarter fiscal 2012 compared with linked quarter ended June 30, 2012
Net interest income for the quarter ending September 30, 2012 increased $1.2 million to $25.2 million, compared to $24.1 million at the linked quarter ending June 30, 2012. The tax-equivalent net interest margin decreased to 3.38 percent from 3.59 percent in the linked quarter. Loan yields were 4.97 percent. Deposit costs increased by 5basis points mainly due to the inflow of Gotham deposits, while the cost of borrowings decreased 12 basis points.

Noninterest Income
Fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011
Noninterest income remained stable for the fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011. Increases in deposit fees, service charges and gain on sale of loans partly offset the decrease in the net gain on sale of securities.

Fourth quarter fiscal 2012 compared with linked quarter ended June 30, 2012
Noninterest income increased $1.0 million to $9.0 million for the fourth fiscal quarter of 2012 compared to the linked quarter ended June 30, 2012, primarily due to security gains.

Noninterest Expense
Fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011
Noninterest expense increased $4.4 million, when compared to the fourth quarter fiscal 2011, mostly due to merger related charges of $4.5 million net of tax incurred during the fourth quarter of fiscal 2012. The fourth quarter of fiscal 2011 includes $3.2 million of restructuring charges.

Fourth quarter fiscal 2012 compared with the linked quarter ended June 30, 2012
Noninterest expense increased $7.6 million, or 36.0 percent over the linked quarter. Increases of $4.5 million were seen in merger related costs related to the Gotham acquisition, totaling approximately $4.9 million. Compensation and benefits increased $2.0 million in part due to the Gotham acquisition, and incentive bonus accruals.

Income Taxes
The Company recorded income tax expense for the year 2012 at an effective tax rate of 23.6 percent compared to 19.3 percent for the same period in fiscal 2011. The difference is primarily due to an increased write-off of credits in 2011, as well as larger tax-exempt municipal security interest relative to pre-tax income for fiscal 2011.

Credit Quality
Nonperforming loans decreased to $39.8 million at September 30, 2012 compared to $44.5 million at June 30, 2012. We disposed of one ADC ("Acquisition, Development and Construction") loan of approximately $3.0 million and completed foreclosure on $1.5 million from the ADC portfolio. During the quarter, we also disposed of $2.0 million in foreclosed properties, reducing that balance from $7.3 million at June 30, 2012 to $6.4 million at September 30, 2012. Net charge-offs for the quarter were $2.8 million compared to $3.5 million in provision. For the year, net charge-offs were $10.2 million and the provision was $10.6 million. The allowance for loan losses at September 30, 2012 was $28.3 million, 71 percent of nonperforming loans and 1.47 percent of the Provident loan portfolio, excluding loans acquired from Gotham which are carried at fair value and are not assigned any reserves.

Key Balance Sheet Changes

• Assets increased $872.7 million or 27.7 percent compared to June 30, 2012 as a result of increases in investment securities of $267.8 million, net loans of $267.8 million, and cash balances of $326.5 million.
• Deposits increased $779.1 million compared to June 30, 2012, with growth experienced in all deposit categories. Municipal deposits increased $422.0 million compared to June 30, 2012, as a result of seasonal tax deposits.
• Securities increased $267.8 million over June 30, 2012 levels, primarily due to purchases of $462.8 million in securities during the fourth fiscal quarter partially offset by sales of $100.0million, with associated gains of $3.2 million, and $95.0 million in calls, maturities and principal pay downs.
• Foreclosed properties decreased by 12.2 percent from June 30, 2012 to $6.4 million at September 30, 2012, as we continue to actively manage our portfolios and the market moves towards a greater stability.

Capital and Liquidity
Provident Bank remained well capitalized at September 30, 2012 with a Tier 1 Leverage ratio of approximately 8.9 percent based on average assets. Tier 1 Leverage ratio based on period end assets was approximately 7.6 percent, which is still considered well capitalized. Tangible book value per share decreased to $7.30 at September 30, 2012 from $7.35 at June 30, 2012, due to the acquisition of Gotham. Total capital increased $49.0 million from June 30, 2012, to $492.2 million at September 30, 2012, due primarily to the capital raise announced previously.

Subsequent Events
During October the Company agreed to sell Hudson Valley Investment Advisors, LLC ("HVIA"), an investment advisory firm. The assets related to HVIA are shown on the balance sheet as assets held for sale at a fair value of $4.6 million which reflects deductions in goodwill of $3.3 million.

About Provident New York Bancorp
Headquartered in Montebello, N.Y., Provident Bank, with $4.0 billion in assets, specializes in the delivery of service and solutions to business owners, their families, and consumers in communities within the greater New York City marketplace through teams of dedicated and experienced relationship managers. Our franchise includes 35 Financial Centers. Provident Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Provident Bank web site at www.providentbanking.com.

(1) Earnings excluding merger charges are calculated using the effective tax rate. See table on pages 10 and 11 for reconciliation of GAAP earnings to earnings excluding merger related charges.

(2) GAAP earnings include merger related charges for Gotham, and include securities' gains.

(3) Includes $5 million pre-tax related to restructuring charges and defined benefit settlement charges.

(4) Tier 1 leverage based on period end assets equated to 7.6%, still well capitalized.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK FACTORS
In addition to historical information, this earnings release may contain forward-looking statements for purposes of applicable securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties. There are a number of important factors described in documents previously filed by the Company with the Securities and Exchange Commission, and other factors that could cause the Company's actual results to differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Financial information contained in this release should be considered to be an estimate pending completion of the annual audit of the Company's financial statements and the filing of its fiscal 2012 Annual Report on Form 10-K with the Securities and Exchange Commission. While the Company is not aware of any need to revise the results disclosed in this release, the Company's auditors currently are reviewing the Company's testing of the carrying amount of goodwill on its financial statements in view of the relationship between the Company's book value per share and the market price of its common stock at the end of the fiscal year. Moreover, accounting literature may require adverse information received by management between the date of this release and the filing of the 10-K to be reflected in the results of fiscal 2012, even though the new information was received by management in fiscal 2013 subsequent to the date of this release.

Provident New York Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
					September 30,				September 30,				June 30,
					2012				2011				2012
Assets:
Cash and due from banks					$	437,982			$	281,512			$	111,400
Total securities						1,153,248				849,884				885,433
Loans held for sale						7,505				4,176				5,369
HVIA assets held for sale						4,550				--				--
Loans:
	One- to four-family residential mortgage loans					350,022				389,765				357,943
	Commercial real estate, commercial business					1,415,811				913,279				1,114,764
	Acquisition, development and construction loans					144,061				175,931				165,125
	Consumer loans					209,578				224,824				213,195
			Total loans, gross			2,119,472				1,703,799				1,851,027
	Allowance for loan losses					(28,282	)			(27,917	)			(27,587	)
			Total loans, net			2,091,190				1,675,882				1,823,440
Federal Home Loan Bank stock, at cost						19,249				17,584				18,207
Premises and equipment, net						38,483				40,886				38,877
Goodwill						162,631				160,861				160,861
Other amortizable intangibles						7,164				4,629				3,718
Bank owned life insurance						59,017				56,967				58,506
Foreclosed properties						6,403				5,391				7,292
Other assets						35,359				39,630				36,937
			Total assets		$	4,022,781			$	3,137,402			$	3,150,040
Liabilities:
	Deposits
		Retail			$	167,050			$	194,299			$	167,527
		Commercial				412,630				296,505				320,849
		Municipal				367,624				160,422				15,936
		Personal NOW deposits				213,755				164,637				203,290
		Business NOW deposits				38,486				37,092				39,170
		Municipal NOW deposits				195,882				200,773				180,433
			Total transaction accounts			1,395,427				1,053,728				927,205
		Savings				506,538				429,825				476,349
		Money market deposits				821,704				509,483				673,498
		Certificates of deposit				387,482				303,659				255,039
			Total deposits			3,111,151				2,296,695				2,332,091
	Borrowings					345,176				323,522				314,154
	Borrowings Senior Note					-				51,499				-
	Mortgage escrow funds and other liabilities					74,286				34,552				60,667
			Total liabilities			3,530,613				2,706,268				2,706,912
Stockholders' equity						492,168				431,134				443,128
			Total liabilities and stockholders' equity		$	4,022,781			$	3,137,402			$	3,150,040
Shares of common stock outstanding at period end						44,173,470				37,864,008				37,899,007
Book value per share					$	11.14			$	11.39			$	11.69
Tangible book value per share					$	7.30			$	7.02			$	7.35

Provident New York Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited, in thousands, except share and per share data)
										Three
			Quarter Ended							Months Ended			Twelve Months Ended
			September 30,							June 30,			September 30,
			2012			2011				2012			2012			2011
Interest and dividend income:
	Loans and loan fees		$	24,396		$	21,995			$	22,312		$	91,010		$	89,500
	Securities taxable			3,909			3,825				4,224			16,538			14,493
	Securities non-taxable			1,543			1,786				1,581			6,497			7,441
	Other earning assets			265			211				228			992			1,180
Total interest income				30,113			27,817				28,345			115,037			112,614
Interest expense:
	Deposits			1,789			1,384				1,262			5,581			6,104
	Borrowings			3,085			3,642				3,001			12,992			15,220
Total interest expense				4,874			5,026				4,263			18,573			21,324
Net interest income				25,239			22,791				24,082			96,464			91,290
Provision for loan losses				3,500			8,784				2,312			10,612			16,584
Net interest income after provision for loan losses				21,739			14,007				21,770			85,852			74,706
Non-interest income:
	Deposit fees and service charges		$	3,065		$	2,727			$	2,816		$	11,377		$	10,811
	Net gain on sales of securities			3,152			4,519				2,412			10,452			10,011
	Other than temporary loss on securities			(3	)		(251	)			(6	)		(47	)		(278	)
	Title insurance fees			332			275				249			1,106			1,224
	Bank owned life insurance			512			514				518			2,050			2,049
	Gain on sale of loans			429			166				578			1,897			1,027
	Gain on sale of premises and equipment			70			-				-			75			-
	Loss on sale of HVIA			(135	)		-				-			(135	)		-
	Investment management fees			776			733				802			3,143			3,080
	Fair value loss on interest rate caps			(6	)		(170	)			(14	)		(63	)		(197	)
	Other			834			543				624			2,297			2,224
Total non-interest income				9,026			9,056				7,979			32,152			29,951
Non-interest expense:
	Compensation and benefits			12,873			10,129				10,845			46,038			43,662
	Stock-based compensation plans			302			303				326			1,187			1,162
	Merger related expenses			4,928			-				451			5,925			255
	Defined benefit settlement charge/CEO transition			-			-				-			-			1,772
	Restructuring charge(severance/branch relocation)			-			3,201				-			-			3,201
	Occupancy and office operations			3,959			3,693				3,388			14,457			14,508
	Advertising and promotion			369			677				440			1,849			3,328
	Professional fees			1,136			1,147				1,128			4,247			4,389
	Data and check processing			715			718				705			2,802			2,763
	Amortization of intangible assets			334			338				283			1,245			1,426
	FDIC insurance and regulatory assessments			843			636				782			3,096			2,910
	ATM/debit card expense			438			425				437			1,711			1,584
	Foreclosed property expense			573			677				428			1,618			1,171
	Other			2,314			2,438				1,949			7,782			7,980
Total non-interest expense				28,784			24,382				21,162			91,957			90,111
Income before income tax expense				1,981			(1,319	)			8,587			26,047			14,546
Income tax expense (benefit)				(280	)		(826	)			2,378			6,159			2,807
Net income (loss)			$	2,261		$	(493	)		$	6,209		$	19,888		$	11,739
	Basic earnings (loss) per common share		$	0.06		$	(0.01	)		$	0.17		$	0.52		$	0.31
	Diluted earnings (loss) per common share			0.06			(0.01	)			0.17			0.52			0.31
	Dividends declared			0.06			0.06				0.06			0.24			0.24
Weighted average common shares:
	Basic			41,054,458			37,332,121				37,302,693			38,227,653			37,452,596
	Diluted			41,099,237			37,332,245				37,330,467			38,248,046			37,453,542

Selected Financial Condition Data:				Three Months Ended
(in thousands except share and per share data)				09/30/12			06/30/12			03/31/12			12/31/11			09/30/11
End of Period
Total assets				$	4,022,781		$	3,150,040		$	3,210,871		$	3,084,166		$	3,137,402
Loans, gross (1)					2,119,472			1,851,027			1,799,112			1,775,893			1,703,799
Securities available for sale					1,010,872			714,200			852,717			785,462			739,844
Securities held to maturity					142,376			171,233			174,824			182,076			110,040
Bank owned life insurance					59,017			58,506			57,987			57,485			56,967
Goodwill					162,631			160,861			160,861			160,861			160,861
Other amortizable intangibles					7,164			3,718			4,001			4,306			4,629
Other non-earning assets					80,245			83,106			80,020			78,710			85,907
Deposits					3,111,151			2,332,091			2,368,988			2,135,555			2,296,695
Borrowings					345,176			314,154			313,849			468,543			375,021
Equity					492,168			443,128			439,699			437,682			431,134
Other comprehensive income related to investment securities reflected in stockholders' equity					15,066			14,141			13,780			15,823			13,604
Average Balances
Total assets				$	3,451,055		$	3,133,958		$	3,131,854		$	3,062,520		$	2,978,273
Loans, gross:
	Real estate- residential mortgage				352,724			360,487			374,498			385,269			398,420
	Real estate- commercial mortgage				989,349			868,963			838,935			752,325			681,165
	Real estate- Acquisition, Development & Construction				156,726			165,442			163,116			172,155			186,398
	Commercial and industrial				263,922			205,051			197,507			203,929			208,181
	Consumer loans				210,650			215,555			220,537			224,422			226,687
Loans total (1)					1,973,371			1,815,498			1,794,593			1,738,100			1,700,851
Securities (taxable)					841,373			778,782			799,753			696,293			717,893
Securities (non-taxable)					181,540			182,003			185,062			205,366			208,692
Total earning assets					3,070,315			2,797,093			2,792,042			2,715,027			2,634,941
Non earning assets					380,740			336,865			339,812			347,493			343,332
Non-interest bearing checking					592,962			483,589			503,539			500,621			486,504
Interest bearing NOW accounts					398,493			412,072			389,846			398,885			309,729
Total transaction accounts					991,455			895,661			893,385			899,506			796,233
Savings (including mortgage escrow funds)					539,904			493,234			463,971			445,236			461,566
Money market deposits					756,655			697,342			654,013			577,387			504,476
Certificates of deposit					303,788			265,375			284,737			302,713			371,907
Total deposits and mortgage escrow					2,591,802			2,351,612			2,296,106			2,224,842			2,134,182
Total interest bearing deposits (including escrow)					1,998,840			1,868,023			1,792,567			1,724,221			1,647,678
Borrowings					336,217			320,237			375,766			392,785			391,391
Equity					475,652			441,956			439,384			431,129			433,841
Selected Operating Data:
Condensed Tax Equivalent Income (Loss) Statement
Interest and dividend income				$	30,113		$	28,345		$	28,411		$	28,168		$	27,817
Tax equivalent adjustment*					830			852			861			955			962
Interest expense					4,874			4,263			4,506			4,930			5,026
		Net interest income (tax equivalent)			26,069			24,934			24,766			24,193			23,753
Provision for loan losses					3,500			2,312			2,850			1,950			8,784
		Net interest income after provision for loan losses			22,569			22,622			21,916			22,243			14,969
Non-interest income					9,026			7,979			7,971			7,176			9,056
Non-interest expense					28,784			21,162			21,290			20,721			24,382
Income (loss) before income tax expense					2,811			9,439			8,597			8,698			(357	)
Income tax expense (tax equivalent)*					550			3,230			2,896			2,981			136
		Net income (loss)		$	2,261		$	6,209		$	5,701		$	5,717		$	(493	)
(1) Does not reflect allowance for loan losses of $28,282, $27,587, $27,787, $28,245, and $27,917.
* Tax exempt income assumed at a statutory 35% federal rate

	Three Months Ended
	09/30/12			06/30/12			03/31/12			12/31/11			09/30/11
Performance Ratios (annualized)
Return on Average Assets		0.26	%		0.80	%		0.73	%		0.74	%		-0.07	%
Return on Average Equity		1.89	%		5.65	%		5.22	%		5.26	%		-0.45	%
Non-Interest Income to Average Assets		1.04	%		1.02	%		1.02	%		0.93	%		1.21	%
Non-Interest Expense to Average Assets		3.32	%		2.72	%		2.73	%		2.68	%		3.25	%
Operating Efficiency Adjusted (2)		71.98	%		65.53	%		67.86	%		67.80	%		70.24	%
Analysis of Net Interest Income
Yield on Loans		4.97	%		5.01	%		5.03	%		5.13	%		5.22	%
Yield on Investment Securities- Tax Equivalent		2.44	%		2.79	%		2.81	%		2.96	%		2.81	%
Yield on Earning Assets- Tax Equivalent		4.01	%		4.20	%		4.22	%		4.26	%		4.33	%
Cost of Deposits		0.27	%		0.22	%		0.21	%		0.23	%		0.26	%
Cost of Borrowings		3.65	%		3.77	%		3.52	%		3.65	%		3.69	%
Cost of Interest Bearing Liabilities		0.83	%		0.78	%		0.84	%		0.92	%		0.98	%
Net Interest Rate Spread- Tax Equivalent Basis		3.18	%		3.42	%		3.38	%		3.34	%		3.35	%
Net Interest Margin- Tax Equivalent Basis		3.38	%		3.59	%		3.57	%		3.54	%		3.58	%
Capital Information Data
Tier 1 Leverage Ratio- Bank Only (Preliminary)		7.57	%		8.67	%		8.30	%		8.51	%		8.14	%
Tier 1 Risk-Based Capital- Bank Only (Preliminary)		290,056			257,621			252,586			247,433			241,196
Total Risk-Based Capital- Bank Only (Preliminary)		315,338			283,033			277,512			273,911			265,307
Tangible Capital Consolidated (3)		322,373			278,549			274,837			272,515			265,644
Tangible Capital as a % of Tangible Assets Consolidated (3)		8.37	%		9.33	%		9.02	%		9.34	%		8.94	%
Shares Outstanding		44,173,470			37,899,007			37,899,007			37,883,008			37,864,008
Shares Repurchased during qrtr(open market)		-			-			-			-			183,000
Basic weighted common shares outstanding		41,054,458			37,302,693			37,280,651			37,252,464			37,332,121
Diluted common shares outstanding		41,099,237			37,330,467			37,316,778			37,252,464			37,332,245
Basic earnings (loss) per common share	$	0.06		$	0.17		$	0.15		$	0.15		$	(0.01	)
Diluted earnings (loss) per common share		0.06			0.17			0.15			0.15			(0.01	)
Dividends Paid per common share		0.06			0.06			0.06			0.06			0.06
Book Value per common share		11.14			11.69			11.60			11.55			11.39
Tangible Book Value per common share (3)		7.30			7.35			7.25			7.19			7.02
Asset Quality Measurements
Non-performing loans (NPLs): non-accrual	$	35,444		$	41,048		$	47,269		$	40,777		$	36,477
Non-performing loans (NPLs): still accruing		4,370			3,450			4,693			5,136			4,090
Other Real Estate Owned		6,403			7,292			5,828			5,625			5,391
Non-performing assets (NPAs)		46,217			51,790			57,790			51,538			45,958
Net Charge-offs		2,805			2,512			3,308			1,622			10,252
Net Charge-offs as % of average loans (annualized)		0.57	%		0.55	%		0.74	%		0.37	%		2.41	%
NPLs as % of total loans		1.88	%		2.40	%		2.89	%		2.59	%		2.38	%
NPAs as % of total assets		1.15	%		1.64	%		1.80	%		1.67	%		1.46	%
Allowance for loan losses as % of NPLs		71	%		62	%		53	%		62	%		69	%
Allowance for loan losses as % of Provident only loans		1.47	%		1.49	%		1.54	%		1.59	%		1.64	%
Special mention loans		42,422			37,555			37,379			18,424			23,026
Substandard / doubtful loans		88,662			88,395			89,135			99,383			93,989
(2) The operating efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income. As in the case of net interest income,generally, net interest income as utilized in calculating the operating efficiency ratio is typically expressed on a tax-equivalent basis. Moreover, most institutions, in calculating thethe operating efficiency ratio, also adjust both noninterest expense and noninterest income to exclude from these items (as calculated under generally accepted accountingprinciples) certain component elements, such as non-recurring charges, other real estate expense and amortization of intangibles (deducted from non interest expense)and security transactions and other non-recurring items (excluded from non interest income). We follow these practices.
(3) Provident Bank provides supplemental reporting of Non-GAAP tangible equity ratios as management believes this information is useful to investors.

The following table shows the reconciliation of tangible equity and the tangible equity ratio:
		09/30/12			06/30/12			03/31/12			12/31/11			09/30/11
Total Assets		$	4,022,781		$	3,150,040		$	3,210,871		$	3,084,166		$	3,137,402
Goodwill and other amortizable intangibles			(169,795	)		(164,579	)		(164,862	)		(165,167	)		(165,490	)
Tangible Assets		$	3,852,986		$	2,985,461		$	3,046,009		$	2,918,999		$	2,971,912
Stockholders' equity			492,168			443,128			439,699			437,682			431,134
Goodwill and other amortizable intangibles			(169,795	)		(164,579	)		(164,862	)		(165,167	)		(165,490	)
Tangible Stockholders' equity		$	322,373		$	278,549		$	274,837		$	272,515		$	265,644
Outstanding Shares			44,173,470			37,899,007			37,899,007			37,883,008			37,864,008
Tangible capital as a % of tangible assets (consolidated)			8.37	%		9.33	%		9.02	%		9.34	%		8.94	%
Tangible book value per share		$	7.30		$	7.35		$	7.25		$	7.19		$	7.02

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding merger related expenses 2012:
			Excluding Merger Expense YTD			Including Merger Expense As Reported YTD			Excluding Merger Expense QTD			Including Merger Expense As Reported QTD
(in thousands except share and per share data)			09/30/12			09/30/12			09/30/12			09/30/12
Average Balances
Total assets			$	3,195,299		$	3,195,299		$	3,451,055		$	3,451,055
Loans, gross:
	Real estate- residential mortgage			368,264			368,264			352,724			352,724
	Real estate- commercial mortgage			862,439			862,439			989,349			989,349
	Real estate- Acquisition, Development & Construction			164,360			164,360			156,726			156,726
	Commercial and industrial			217,198			217,198			263,922			263,922
	Consumer loans			217,789			217,789			210,650			210,650
Loans total (1)				1,830,050			1,830,050			1,973,371			1,973,371
Securities (taxable)				778,994			778,994			841,373			841,373
Securities (non-taxable)				188,520			188,520			181,540			181,540
Total earning assets				2,843,902			2,843,902			3,070,315			3,070,315
Non earning assets				351,397			351,397			380,740			380,740
Non-interest bearing checking				520,265			520,265			592,962			592,962
Interest bearing NOW accounts				399,819			399,819			398,493			398,493
Total transaction accounts				920,084			920,084			991,455			991,455
Savings (including mortgage escrow funds)				485,624			485,624			539,904			539,904
Money market deposits				671,325			671,325			756,655			756,655
Certificates of deposit				289,230			289,230			303,788			303,788
Total deposits and mortgage escrow				2,366,263			2,366,263			2,591,802			2,591,802
Total interest bearing deposits (including escrow)				1,845,998			1,845,998			1,998,840			1,998,840
Borrowings				356,296			356,296			336,217			336,217
Equity				446,112			447,065			472,100			475,652
Selected Operating Data:
Condensed Tax Equivalent Income (Loss) Statement
Interest and dividend income			$	115,037		$	115,037		$	30,113		$	30,113
Tax equivalent adjustment*				3,498			3,498			830			830
Interest expense				18,573			18,573			4,874			4,874
Net interest income (tax equivalent)				99,962			99,962			26,069			26,069
Provision for loan losses				10,612			10,612			3,500			3,500
Net interest income after provision for loan
losses				89,350			89,350			22,569			22,569
Non-interest income				32,152			32,152			9,026			9,026
Non-interest expense				86,032			91,957			23,856			28,784
Income (loss) before income tax expense				35,470			29,545			7,739			2,811
Income tax expense (tax equivalent)*				11,079			9,657			848			550
Net income (loss)			$	24,391		$	19,888		$	6,891		$	2,261
(1) Does not reflect allowance for loan losses of $28,282.
* Tax exempt income assumed at a statutory 35% federal rate

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding merger related expenses for 2012:
		Year to Date				Year to Date				Quarter to Date				Quarter to Date
		Excluding				Including				Excluding				Including
		Merger				Merger				Merger				Merger
		Expense				Expense				Expense				Expense
(in thousands except share and per share data)		09/30/12				09/30/12				09/30/12				09/30/12
Performance Ratios1
Return on Average Assets			0.76	%			0.62	%			0.79	%			0.26	%
Return on Average Equity			5.47	%			4.45	%			5.76	%			1.89	%
Non-Interest Income to Average Assets			1.01	%			1.01	%			1.04	%			1.04	%
Non-Interest Expense to Average Assets			2.69	%			2.88	%			2.75	%			3.32	%
Earnings Per Share Information
Merger expense net of tax			4,503				4,503				4,630				4,630
Tax rate			24.00	%			24.00	%			6.00	%			6.00	%
Non interest expense			86,032				91,957				23,856				28,784
Net Income			24,391				19,888				6,891				2,261
Basic weighted common shares outstanding			38,227,653				38,227,653				41,054,458				41,054,458
Diluted common shares outstanding			38,248,046				38,248,046				41,099,237				41,099,237
Basic (loss) earnings per common share		$	0.64			$	0.52			$	0.17			$	0.06
1 Annualized for quarterly data

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding restructuring and defined benefit settlement ("DBS") charges for 2011:
		Year to Date				Year to Date				Quarter to Date				Quarter to Date
		Excluding				Including				Excluding				Including
		Restructuring				Restructuring				Restructuring				Restructuring
		DBS charges				DBS charges				DBS charges				DBS charges
(in thousands except share and per share data)		09/30/11				09/30/11				09/30/11				09/30/11
Performance Ratios1
Return on Average Assets			0.76	%			0.40	%			0.34	%			-0.07	%
Return on Average Equity			3.69	%			2.75	%			5.76	%			-0.45	%
Non-Interest Income to Average Assets			1.02	%			1.02	%			1.21	%			1.21	%
Non-Interest Expense to Average Assets			2.89	%			3.06	%			2.82	%			3.25	%
Earnings Per Share Information
Restructuring and defined benefit settlement
charge net of taxes			4,028				4,028				3,009				3,009
Tax rate			19.00	%			19.00	%			6.00	%			6.00	%
Non interest expense			85,138				90,111				21,181				24,382
Net Income			15,767				11,739				2,516				(493	)
Basic weighted common shares outstanding			37,452,596				37,452,596				41,054,458				41,054,458
Diluted common shares outstanding			37,453,542				37,453,542				41,099,237				41,099,237
Basic (loss) earnings per common share		$	0.42			$	0.31			$	0.06			$	(0.01	)
1 Annualized for quarterly data

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding restructuring and defined benefit settlement charges for 2011:
			Excluding Merger Expense YTD			Including Merger Expense As Reported YTD			Excluding Merger Expense QTD				Including Merger Expense As Reported QTD
(in thousands except share and per share data)			09/30/11			09/30/11			09/30/11				09/30/11
Average Balances
Total assets			$	2,949,251		$	2,949,251		$	2,978,273			$	2,978,273
Loans, gross:
	Real estate- residential mortgage			392,509			392,509			398,420				398,420
	Real estate- commercial mortgage			638,928			638,928			681,165				681,165
	Real estate- Acquisition, Development & Construction			207,026			207,026			186,398				186,398
	Commercial and industrial			224,056			224,056			208,181				208,181
	Consumer loans			231,384			231,384			226,687				226,687
Loans total (1)				1,693,903			1,693,903			1,700,851				1,700,851
Securities (taxable)				695,961			695,961			717,893				717,893
Securities (non-taxable)				213,450			213,450			208,692				208,692
Total earning assets				2,609,748			2,609,748			2,634,941				2,634,941
Non earning assets				339,503			339,503			343,332				343,332
Non-interest bearing checking				472,388			472,388			486,504				486,504
Interest bearing NOW accounts				315,623			315,623			309,729				309,729
Total transaction accounts				788,011			788,011			796,233				796,233
Savings (including mortgage escrow funds)				432,227			432,227			461,566				461,566
Money market deposits				489,347			489,347			504,476				504,476
Certificates of deposit				373,142			373,142			371,907				371,907
Total deposits and mortgage escrow				2,082,727			2,082,727			2,134,182				2,134,182
Total interest bearing deposits (including escrow)				1,610,339			1,610,339			1,647,678				1,647,678
Borrowings				422,816			422,816			391,391				391,391
Equity				426,913			427,290			433,841				433,841
Selected Operating Data:
Condensed Tax Equivalent Income (Loss) Statement
Interest and dividend income			$	112,614		$	112,614		$	27,817			$	27,817
Tax equivalent adjustment*				4,007			4,007			962				962
Interest expense				21,324			21,324			5,026				5,026
Net interest income (tax equivalent)				95,297			95,297			23,753				23,753
Provision for loan losses				16,584			16,584			8,784				8,784
Net interest income after provision for loan
losses				78,713			78,713			14,969				14,969
Non-interest income				29,951			29,951			9,056				9,056
Non-interest expense				90,111			90,111			24,382				24,382
Income (loss) before income tax expense				18,553			18,553			(357	)			(357	)
Income tax expense (tax equivalent)*				6,814			6,814			136				136
Net income (loss)			$	11,739		$	11,739		$	(493	)		$	(493	)
(1) Does not reflect allowance for loan losses of $27,917.
* Tax exempt income assumed at a statutory 35% federal rate