FSLA First Sentinel Bancorp (MM)

First Sentinel Bancorp, Inc. Announces Expected Restatement of Previous Financial Information, Impact on 2003 Financial Results and Amendment of Directors Deferred Fee Plan WOODBRIDGE, N.J., Dec. 22 /PRNewswire-FirstCall/ -- First Sentinel Bancorp, Inc. , ("First Sentinel" or the "Company"), parent company of First Savings Bank, announced that it will restate results for the nine months ended September 30, 2003, and the years ended December 31, 2002, 2001, and 2000 to conform its accounting for the Company's Directors Deferred Fee Plan in accordance with Emerging Issues Task Force (EITF) Issue No. 97-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in Rabbi Trust and Invested. In accordance with EITF Issue No. 97-14, the Company has determined that a deferred compensation obligation liability is required to be recognized for the fair value of the common stock held in the underlying rabbi trust, with changes in the fair value of the common stock being recorded as a periodic charge or credit to compensation cost. As a result, the Company expects to restate results for the nine months ended September 30, 2003, and the years ended December 31, 2002, 2001 and 2000. In addition, the Plan has been amended as to its operation and structure and in accordance with EITF Issue No. 97-14, the Company expects that the deferred compensation obligation will be reclassified from liabilities to a component of stockholders' equity effective in the fourth quarter of 2003, with no further changes in the fair value of the common stock required to be recognized as a periodic charge or credit to compensation costs. As more fully described in the table attached, the Company expects that the restatements will result in a reduction in reported net income of $2,144,000 for the nine-months ended September 30, 2003 and $1,169,000, $826,000, $1,271,000 for the years ended December 31, 2002, 2001 and 2000, respectively, as well as reported earnings per share (basic and diluted) for each of these periods. The restatements are also expected to result in the recognition of a deferred compensation obligation liability of $17,400,000, recognition of a deferred tax asset of $5,600,000 and a corresponding reduction to originally reported stockholders' equity at September 30, 2003 of $11,800,000. The Company expects to amend each of its Quarterly Reports on Form 10-Q for 2003, and its Annual Report on Form 10-K for 2002. The reclassification, due to the amendment of the Plan, is expected to result in an increase of $17,400,000 in the fourth quarter of 2003 to stockholders' equity (restated), or $5,600,000 from stockholders' equity (as originally reported) at September 30, 2003. First Sentinel announced its definitive agreement to merge into Provident Financial Services, Inc. ("Provident") on December 22, 2003. The amendment to the Plan and the expected restatement were disclosed to Provident during due diligence and will have no effect on the merger transaction. First Sentinel, through its subsidiary, First Savings Bank currently operates 22 branch offices in Middlesex, Monmouth, Somerset and Union Counties, New Jersey. Statements contained in this news release that are not historical fact are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those currently anticipated due to a large number of factors. Factors that may cause a difference include, but are not limited to, changes in interest rates, economic conditions, deposit and loan growth, real estate values, loan loss provisions, competition, customer retention and changes in legislation and regulation. First Sentinel Bancorp assumes no obligation for updating any such forward-looking statements at any time. Selected Financial Data (Dollars in thousands, except per share data) As As Dollar Percent Previously Restated Change Change Reported At and for the year ended December 31, 2000 Total Assets $1,968,709 $1,972,080 $3,371 0.17 % Total Liabilities 1,746,546 1,757,450 10,904 0.62 % Stockholders' Equity 222,163 214,630 (7,533) -3.39 % Tangible Book Value Per Share 6.59 6.55 (0.04) -0.61 % Net Income 22,968 21,697 (1,271) -5.53 % Basic Earnings Per Share 0.69 0.67 (0.02) -2.90 % Diluted Earnings Per Share 0.68 0.64 (0.04) -5.88 % At and for the year ended December 31, 2001 Total Assets 2,138,919 2,142,734 3,815 0.18 % Total Liabilities 1,883,792 1,896,031 12,239 0.65 % Stockholders' Equity 230,127 221,703 (8,424) -3.66 % Tangible Book Value Per Share 7.26 7.22 (0.04) -0.55 % Net Income 25,311 24,485 (826) -3.26 % Basic Earnings Per Share 0.84 0.84 0.00 0.00 % Diluted Earnings Per Share 0.82 0.79 (0.03) -3.66 % At and for the year ended December 31, 2002 Total Assets 2,257,034 2,261,479 4,445 0.20 % Total Liabilities 2,010,834 2,024,907 14,073 0.70 % Stockholders' Equity 221,200 211,572 (9,628) -4.35 % Tangible Book Value Per Share 7.62 7.54 (0.08) -1.05 % Net Income 26,073 24,904 (1,169) -4.48 % Basic Earnings Per Share 0.91 0.90 (0.01) -1.10 % Diluted Earnings Per Share 0.89 0.85 (0.04) -4.49 % At and for the nine months ended September 30, 2003 Total Assets 2,245,130 2,250,729 5,599 0.25 % Total Liabilities 2,002,867 2,020,289 17,422 0.87 % Stockholders' Equity 217,263 205,440 (11,823) -5.44 % Tangible Book Value Per Share 7.71 7.55 (0.16) -2.08 % Net Income $18,953 $16,809 $(2,144) -11.31 % Basic Earnings Per Share 0.66 0.60 (0.06) -9.09 % Diluted Earnings Per Share 0.64 0.57 (0.07) -10.94 % Dollars in thousands, except per share data Proforma Impact Proforma Impact of Plan of Plan Amendment on Restated Amendment on Previously Financial Information as Restated Reported Compared to Previously Financial Financial Reported Financial Information Information Information as of as of September as of September September 30, 2003 30, 2003 30, 2003 Total Assets $2,250,729 $2,245,130 $5,599 0.25% Total Liabilities 2,002,867 2,002,867 0 0.00% Stockholders' Equity 222,862 217,263 5,599 2.58% Tangible Book Value Per Share 7.92 7.71 0.21 2.72% DATASOURCE: First Sentinel Bancorp, Inc. CONTACT: Thomas M. Lyons Executive Vice President and Chief Financial Officer of First Sentinel Bancorp, Inc., +1-732-726-9700, or fax, +1-732-726-5542 Web site: http://www.firstsentinelbancorp.com/

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