FALSE2019Q30001178970--12-31P3YP1YP10YP10Y00011789702019-01-012019-09-30xbrli:shares00011789702019-11-01iso4217:USD00011789702019-09-3000011789702018-12-31iso4217:USDxbrli:shares00011789702019-07-012019-09-3000011789702018-07-012018-09-3000011789702018-01-012018-09-300001178970us-gaap:CommonStockMember2018-06-300001178970us-gaap:AdditionalPaidInCapitalMember2018-06-300001178970us-gaap:RetainedEarningsMember2018-06-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-06-300001178970us-gaap:TreasuryStockMember2018-06-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2018-06-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2018-06-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2018-06-3000011789702018-06-300001178970us-gaap:RetainedEarningsMember2018-07-012018-09-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-07-012018-09-300001178970us-gaap:AdditionalPaidInCapitalMember2018-07-012018-09-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2018-07-012018-09-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2018-07-012018-09-300001178970us-gaap:TreasuryStockMember2018-07-012018-09-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2018-07-012018-09-300001178970us-gaap:CommonStockMember2018-09-300001178970us-gaap:AdditionalPaidInCapitalMember2018-09-300001178970us-gaap:RetainedEarningsMember2018-09-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-09-300001178970us-gaap:TreasuryStockMember2018-09-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2018-09-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2018-09-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2018-09-3000011789702018-09-300001178970us-gaap:CommonStockMember2017-12-310001178970us-gaap:AdditionalPaidInCapitalMember2017-12-310001178970us-gaap:RetainedEarningsMember2017-12-310001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-310001178970us-gaap:TreasuryStockMember2017-12-310001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2017-12-310001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2017-12-310001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2017-12-3100011789702017-12-310001178970us-gaap:RetainedEarningsMember2018-01-012018-09-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-09-300001178970us-gaap:AdditionalPaidInCapitalMember2018-01-012018-09-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2018-01-012018-09-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2018-01-012018-09-300001178970us-gaap:TreasuryStockMember2018-01-012018-09-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2018-01-012018-09-300001178970us-gaap:CommonStockMember2019-06-300001178970us-gaap:AdditionalPaidInCapitalMember2019-06-300001178970us-gaap:RetainedEarningsMember2019-06-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001178970us-gaap:TreasuryStockMember2019-06-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2019-06-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2019-06-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2019-06-3000011789702019-06-300001178970us-gaap:RetainedEarningsMember2019-07-012019-09-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001178970us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2019-07-012019-09-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2019-07-012019-09-300001178970us-gaap:TreasuryStockMember2019-07-012019-09-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2019-07-012019-09-300001178970us-gaap:CommonStockMember2019-09-300001178970us-gaap:AdditionalPaidInCapitalMember2019-09-300001178970us-gaap:RetainedEarningsMember2019-09-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001178970us-gaap:TreasuryStockMember2019-09-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2019-09-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2019-09-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2019-09-300001178970us-gaap:CommonStockMember2018-12-310001178970us-gaap:AdditionalPaidInCapitalMember2018-12-310001178970us-gaap:RetainedEarningsMember2018-12-310001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001178970us-gaap:TreasuryStockMember2018-12-310001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2018-12-310001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2018-12-310001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2018-12-310001178970us-gaap:RetainedEarningsMember2019-01-012019-09-300001178970us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-09-300001178970us-gaap:AdditionalPaidInCapitalMember2019-01-012019-09-300001178970pfs:CommonStockAcquiredByDirectorsDeferredFeePlanMember2019-01-012019-09-300001178970us-gaap:DeferredCompensationShareBasedPaymentsMember2019-01-012019-09-300001178970us-gaap:TreasuryStockMember2019-01-012019-09-300001178970pfs:UnallocatedEmployeeStockOwnershipPlanMember2019-01-012019-09-300001178970pfs:TirschwellLoewyAcquisitionMember2019-04-012019-04-010001178970us-gaap:CustomerRelationshipsMemberpfs:TirschwellLoewyAcquisitionMember2019-04-010001178970us-gaap:OtherIntangibleAssetsMemberpfs:TirschwellLoewyAcquisitionMember2019-04-010001178970pfs:TirschwellLoewyAcquisitionMember2019-04-01pfs:security0001178970us-gaap:MortgageBackedSecuritiesMember2019-09-300001178970pfs:StateAndMunicipalObligationsMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMember2019-09-300001178970us-gaap:MortgageBackedSecuritiesMember2018-12-310001178970pfs:StateAndMunicipalObligationsMember2018-12-310001178970us-gaap:CorporateDebtSecuritiesMember2018-12-310001178970us-gaap:AvailableforsaleSecuritiesMember2019-01-012019-09-300001178970us-gaap:AvailableforsaleSecuritiesMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMember2018-09-30pfs:position0001178970us-gaap:MortgageBackedSecuritiesIssuedByPrivateEnterprisesMember2018-09-300001178970us-gaap:MortgageBackedSecuritiesIssuedByPrivateEnterprisesMember2019-09-300001178970pfs:AgencyObligationsMember2019-09-300001178970pfs:AgencyObligationsMember2018-12-310001178970us-gaap:HeldtomaturitySecuritiesMember2019-01-012019-09-300001178970us-gaap:HeldtomaturitySecuritiesMember2019-09-300001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberpfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2019-09-300001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberpfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberus-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberus-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMember2018-12-310001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ConsumerPortfolioSegmentMember2019-09-300001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ConsumerPortfolioSegmentMember2018-12-310001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMember2019-09-300001178970us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMember2018-12-310001178970us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember2019-09-300001178970us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember2018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970pfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMember2019-09-300001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970us-gaap:ConsumerPortfolioSegmentMember2019-09-300001178970us-gaap:FinancingReceivables30To59DaysPastDueMember2019-09-300001178970us-gaap:FinancingReceivables60To89DaysPastDueMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-310001178970pfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMember2018-12-310001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-310001178970us-gaap:ConsumerPortfolioSegmentMember2018-12-310001178970us-gaap:FinancingReceivables30To59DaysPastDueMember2018-12-310001178970us-gaap:FinancingReceivables60To89DaysPastDueMember2018-12-31pfs:SecurityLoanpfs:troubled_debt_restructuringpfs:borrower00011789702018-01-012018-12-31pfs:counterparty0001178970pfs:ResidentialMemberpfs:MortgagePortfolioMember2019-07-012019-09-300001178970pfs:ResidentialMemberpfs:MortgagePortfolioMember2018-07-012018-09-300001178970pfs:MortgagePortfolioMember2019-07-012019-09-300001178970pfs:MortgagePortfolioMember2018-07-012018-09-300001178970us-gaap:CommercialLoanMember2019-07-012019-09-300001178970us-gaap:CommercialLoanMember2018-07-012018-09-300001178970us-gaap:ConsumerPortfolioSegmentMember2019-07-012019-09-300001178970us-gaap:ConsumerPortfolioSegmentMember2018-07-012018-09-300001178970pfs:ResidentialMemberpfs:MortgagePortfolioMember2019-01-012019-09-300001178970pfs:ResidentialMemberpfs:MortgagePortfolioMember2018-01-012018-09-300001178970pfs:MortgagePortfolioMemberpfs:CommercialMember2019-01-012019-09-300001178970pfs:MortgagePortfolioMemberpfs:CommercialMember2018-01-012018-09-300001178970pfs:MortgagePortfolioMember2019-01-012019-09-300001178970pfs:MortgagePortfolioMember2018-01-012018-09-300001178970us-gaap:CommercialLoanMember2019-01-012019-09-300001178970us-gaap:CommercialLoanMember2018-01-012018-09-300001178970us-gaap:ConsumerPortfolioSegmentMember2019-01-012019-09-300001178970us-gaap:ConsumerPortfolioSegmentMember2018-01-012018-09-300001178970pfs:ImpairedLoansTroubledDebtRestructuringsMember2019-01-012019-09-300001178970pfs:ImpairedLoansTroubledDebtRestructuringsMember2019-07-012019-09-30xbrli:pure0001178970pfs:TeamCapitalBankMember2019-09-300001178970pfs:TeamCapitalBankMember2018-12-310001178970pfs:MortgagePortfolioSegmentMember2019-06-300001178970us-gaap:CommercialPortfolioSegmentMember2019-06-300001178970us-gaap:ConsumerPortfolioSegmentMember2019-06-300001178970pfs:MortgagePortfolioSegmentMember2019-07-012019-09-300001178970us-gaap:CommercialPortfolioSegmentMember2019-07-012019-09-300001178970pfs:MortgagePortfolioSegmentMember2018-06-300001178970us-gaap:CommercialPortfolioSegmentMember2018-06-300001178970us-gaap:ConsumerPortfolioSegmentMember2018-06-300001178970pfs:MortgagePortfolioSegmentMember2018-07-012018-09-300001178970us-gaap:CommercialPortfolioSegmentMember2018-07-012018-09-300001178970pfs:MortgagePortfolioSegmentMember2018-09-300001178970us-gaap:CommercialPortfolioSegmentMember2018-09-300001178970us-gaap:ConsumerPortfolioSegmentMember2018-09-300001178970pfs:MortgagePortfolioSegmentMember2019-01-012019-09-300001178970us-gaap:CommercialPortfolioSegmentMember2019-01-012019-09-300001178970pfs:MortgagePortfolioSegmentMember2017-12-310001178970us-gaap:CommercialPortfolioSegmentMember2017-12-310001178970us-gaap:ConsumerPortfolioSegmentMember2017-12-310001178970pfs:MortgagePortfolioSegmentMember2018-01-012018-09-300001178970us-gaap:CommercialPortfolioSegmentMember2018-01-012018-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2019-01-012019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2018-01-012018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2019-01-012019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2018-01-012018-12-310001178970pfs:MortgagePortfolioSegmentMember2018-01-012018-12-310001178970us-gaap:CommercialPortfolioSegmentMember2018-01-012018-12-310001178970us-gaap:ConsumerPortfolioSegmentMember2018-01-012018-12-3100011789702018-04-012018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:SpecialMentionMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2019-09-300001178970us-gaap:SpecialMentionMemberus-gaap:ConsumerPortfolioSegmentMember2019-09-300001178970us-gaap:SpecialMentionMember2019-09-300001178970us-gaap:SubstandardMemberus-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:SubstandardMemberpfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2019-09-300001178970us-gaap:SubstandardMemberpfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:SubstandardMemberus-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:SubstandardMemberpfs:MortgagePortfolioSegmentMember2019-09-300001178970us-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2019-09-300001178970us-gaap:SubstandardMemberus-gaap:ConsumerPortfolioSegmentMember2019-09-300001178970us-gaap:SubstandardMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:DoubtfulMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:DoubtfulMember2019-09-300001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:DoubtfulMember2019-09-300001178970us-gaap:DoubtfulMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberpfs:LossMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberpfs:LossMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberpfs:LossMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberpfs:LossMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:LossMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberpfs:LossMember2019-09-300001178970us-gaap:ConsumerPortfolioSegmentMemberpfs:LossMember2019-09-300001178970pfs:LossMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberpfs:TotalClassifiedAndCriticizedMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2019-09-300001178970us-gaap:ConsumerPortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2019-09-300001178970pfs:TotalClassifiedAndCriticizedMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:PassMember2019-09-300001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2019-09-300001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2019-09-300001178970pfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2019-09-300001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2019-09-300001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2019-09-300001178970us-gaap:PassMember2019-09-300001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:SpecialMentionMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberus-gaap:SpecialMentionMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2018-12-310001178970us-gaap:SpecialMentionMemberus-gaap:ConsumerPortfolioSegmentMember2018-12-310001178970us-gaap:SpecialMentionMember2018-12-310001178970us-gaap:SubstandardMemberus-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:SubstandardMemberpfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMember2018-12-310001178970us-gaap:SubstandardMemberpfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:SubstandardMemberus-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:SubstandardMemberpfs:MortgagePortfolioSegmentMember2018-12-310001178970us-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2018-12-310001178970us-gaap:SubstandardMemberus-gaap:ConsumerPortfolioSegmentMember2018-12-310001178970us-gaap:SubstandardMember2018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:DoubtfulMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberus-gaap:DoubtfulMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:DoubtfulMember2018-12-310001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:DoubtfulMember2018-12-310001178970us-gaap:DoubtfulMember2018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberpfs:LossMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberpfs:LossMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberpfs:LossMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberpfs:LossMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:LossMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberpfs:LossMember2018-12-310001178970us-gaap:ConsumerPortfolioSegmentMemberpfs:LossMember2018-12-310001178970pfs:LossMember2018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberpfs:TotalClassifiedAndCriticizedMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2018-12-310001178970us-gaap:ConsumerPortfolioSegmentMemberpfs:TotalClassifiedAndCriticizedMember2018-12-310001178970pfs:TotalClassifiedAndCriticizedMember2018-12-310001178970us-gaap:ResidentialMortgageMemberpfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberpfs:CommercialMortgageMemberus-gaap:PassMember2018-12-310001178970pfs:MultiFamilyMortgageLoanMemberpfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2018-12-310001178970us-gaap:ConstructionLoansMemberpfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2018-12-310001178970pfs:MortgagePortfolioSegmentMemberus-gaap:PassMember2018-12-310001178970us-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2018-12-310001178970us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2018-12-310001178970us-gaap:PassMember2018-12-3100011789702002-01-012002-12-3100011789702006-01-012006-12-310001178970us-gaap:PensionPlansDefinedBenefitMember2019-07-012019-09-300001178970us-gaap:PensionPlansDefinedBenefitMember2018-07-012018-09-300001178970us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2019-07-012019-09-300001178970us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2018-07-012018-09-300001178970us-gaap:PensionPlansDefinedBenefitMember2019-01-012019-09-300001178970us-gaap:PensionPlansDefinedBenefitMember2018-01-012018-09-300001178970us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2019-01-012019-09-300001178970us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2018-01-012018-09-300001178970us-gaap:AccountingStandardsUpdate201602Member2019-01-010001178970us-gaap:MeasurementInputCostToSellMemberus-gaap:MarketApproachValuationTechniqueMembersrt:MinimumMember2019-09-300001178970us-gaap:MeasurementInputCostToSellMemberus-gaap:MarketApproachValuationTechniqueMembersrt:MaximumMember2019-09-300001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001178970us-gaap:FairValueMeasurementsNonrecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-09-300001178970us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-09-300001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001178970us-gaap:FairValueMeasurementsNonrecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2018-12-310001178970us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2018-12-310001178970us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-09-300001178970us-gaap:EstimateOfFairValueFairValueDisclosureMember2019-09-300001178970us-gaap:FairValueInputsLevel1Member2019-09-300001178970us-gaap:FairValueInputsLevel2Member2019-09-300001178970us-gaap:FairValueInputsLevel3Member2019-09-300001178970us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:MortgageBackedSecuritiesMember2019-09-300001178970us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:MortgageBackedSecuritiesMember2019-09-300001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-09-300001178970us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMember2019-09-300001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel1Member2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel2Member2019-09-300001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel3Member2019-09-300001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-09-300001178970us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2019-09-300001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-09-300001178970us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2019-09-300001178970us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2019-09-300001178970us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2019-09-300001178970us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2019-09-300001178970us-gaap:FairValueInputsLevel3Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2019-09-300001178970us-gaap:CarryingReportedAmountFairValueDisclosureMember2018-12-310001178970us-gaap:EstimateOfFairValueFairValueDisclosureMember2018-12-310001178970us-gaap:FairValueInputsLevel1Member2018-12-310001178970us-gaap:FairValueInputsLevel2Member2018-12-310001178970us-gaap:FairValueInputsLevel3Member2018-12-310001178970us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:MortgageBackedSecuritiesMember2018-12-310001178970us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:MortgageBackedSecuritiesMember2018-12-310001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Member2018-12-310001178970us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMember2018-12-310001178970us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel1Member2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel2Member2018-12-310001178970pfs:StateAndMunicipalObligationsMemberus-gaap:FairValueInputsLevel3Member2018-12-310001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2018-12-310001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2018-12-310001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2018-12-310001178970us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2018-12-310001178970us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2018-12-310001178970us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2018-12-310001178970us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2018-12-310001178970us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2018-12-310001178970us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2018-12-310001178970us-gaap:FairValueInputsLevel3Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2018-12-310001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-06-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-06-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2019-06-300001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-06-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-06-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2018-06-300001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-07-012019-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-07-012019-09-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2019-07-012019-09-300001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-07-012018-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-07-012018-09-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2018-07-012018-09-300001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-09-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2019-09-300001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-09-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2018-09-300001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-12-310001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-12-310001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2018-12-310001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2017-12-310001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2017-12-310001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2017-12-310001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-01-012019-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-01-012019-09-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2019-01-012019-09-300001178970us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-01-012018-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-01-012018-09-300001178970us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2018-01-012018-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2018-07-012018-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2019-01-012019-09-300001178970us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2018-01-012018-09-30pfs:instrument0001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMember2019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMember2018-12-310001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMember2019-09-300001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMember2018-12-310001178970us-gaap:NondesignatedMember2019-09-300001178970us-gaap:NondesignatedMember2018-12-310001178970us-gaap:DesignatedAsHedgingInstrumentMember2019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:OtherAssetsMember2019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMember2019-09-300001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMemberus-gaap:OtherAssetsMember2019-09-300001178970us-gaap:OtherLiabilitiesMemberus-gaap:CreditRiskContractMemberus-gaap:NondesignatedMember2019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:OtherLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:OtherAssetsMember2018-12-310001178970us-gaap:InterestRateContractMemberus-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMember2018-12-310001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMemberus-gaap:OtherAssetsMember2018-12-310001178970us-gaap:OtherLiabilitiesMemberus-gaap:CreditRiskContractMemberus-gaap:NondesignatedMember2018-12-310001178970us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2018-12-310001178970us-gaap:InterestRateContractMemberus-gaap:OtherLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2018-12-310001178970us-gaap:DesignatedAsHedgingInstrumentMember2018-12-310001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2019-07-012019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2018-07-012018-09-300001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2019-07-012019-09-300001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2018-07-012018-09-300001178970us-gaap:NondesignatedMember2019-07-012019-09-300001178970us-gaap:NondesignatedMember2018-07-012018-09-300001178970us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherIncomeMember2019-07-012019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherIncomeMember2018-07-012018-09-300001178970us-gaap:DesignatedAsHedgingInstrumentMember2019-07-012019-09-300001178970us-gaap:DesignatedAsHedgingInstrumentMember2018-07-012018-09-300001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2019-01-012019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2018-01-012018-09-300001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2019-01-012019-09-300001178970us-gaap:CreditRiskContractMemberus-gaap:NondesignatedMemberus-gaap:OtherIncomeMember2018-01-012018-09-300001178970us-gaap:NondesignatedMember2019-01-012019-09-300001178970us-gaap:NondesignatedMember2018-01-012018-09-300001178970us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherIncomeMember2019-01-012019-09-300001178970us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherIncomeMember2018-01-012018-09-300001178970us-gaap:DesignatedAsHedgingInstrumentMember2019-01-012019-09-300001178970us-gaap:DesignatedAsHedgingInstrumentMember2018-01-012018-09-300001178970pfs:WealthManagementFeesMember2019-07-012019-09-300001178970pfs:WealthManagementFeesMember2018-07-012018-09-300001178970pfs:WealthManagementFeesMember2019-01-012019-09-300001178970pfs:WealthManagementFeesMember2018-01-012018-09-300001178970us-gaap:DepositAccountMember2019-07-012019-09-300001178970us-gaap:DepositAccountMember2018-07-012018-09-300001178970us-gaap:DepositAccountMember2019-01-012019-09-300001178970us-gaap:DepositAccountMember2018-01-012018-09-300001178970us-gaap:DebitCardMember2019-07-012019-09-300001178970us-gaap:DebitCardMember2018-07-012018-09-300001178970us-gaap:DebitCardMember2019-01-012019-09-300001178970us-gaap:DebitCardMember2018-01-012018-09-300001178970us-gaap:BankingMember2019-07-012019-09-300001178970us-gaap:BankingMember2018-07-012018-09-300001178970us-gaap:BankingMember2019-01-012019-09-300001178970us-gaap:BankingMember2018-01-012018-09-3000011789702019-01-0100011789702019-01-012019-01-010001178970pfs:TLMember2019-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

Commission File Number: 001-31566
PROVIDENT FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)  
Delaware
42-1547151
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
239 Washington Street Jersey City New Jersey 07302
(Address of Principal Executive Offices)
(City) (State)
(Zip Code)
(732) 590-9200
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Symbol(s)
Name of each exchange on which registered
Common
PFS
New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    NO  ¨

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  ý    NO  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☒
Accelerated Filer
☐
Non-Accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ☐    NO  ý
As of November 1, 2019 there were 83,209,293 shares issued and 65,989,245 shares outstanding of the Registrant’s Common Stock, par value $0.01 per share, including 219,281 shares held by the First Savings Bank Directors’ Deferred Fee Plan not otherwise considered outstanding under U.S. generally accepted accounting principles.

1

PROVIDENT FINANCIAL SERVICES, INC.
INDEX TO FORM 10-Q
 
Item Number
Page Number
1
Consolidated Statements of Financial Condition as of September 30, 2019 (unaudited) and December 31, 2018
3
Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018 (unaudited)
4
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018 (unaudited)
5
Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018 (unaudited)
6
Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)
8
10
2
37
3
45
4
47
1
48
1A.
48
2
48
3
Defaults Upon Senior Securities
48
4
48
5
48
6
48
50



2

PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
September 30, 2019 (Unaudited) and December 31, 2018
(Dollars in Thousands)
 
September 30, 2019 December 31, 2018
ASSETS
Cash and due from banks $ 178,573    $ 86,195   
Short-term investments 82,287    56,466   
Total cash and cash equivalents 260,860    142,661   
Available for sale debt securities, at fair value 1,052,995    1,063,079   
Held to maturity debt securities (fair value of $476,698 at September 30, 2019 (unaudited) and $479,740 at December 31, 2018)
461,738    479,425   
Equity securities, at fair value 728    635   
Federal Home Loan Bank stock 68,721    68,813   
Loans 7,266,994    7,250,588   
Less allowance for loan losses 57,344    55,562   
Net loans 7,209,650    7,195,026   
Foreclosed assets, net 1,534    1,565   
Banking premises and equipment, net 55,119    58,124   
Accrued interest receivable 29,091    31,475   
Intangible assets 437,585    418,178   
Bank-owned life insurance 195,451    193,085   
Other assets 144,925    73,703   
Total assets $ 9,918,397    $ 9,725,769   
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand deposits $ 5,131,103    $ 5,027,708   
Savings deposits 985,575    1,051,922   
Certificates of deposit of $100,000 or more 534,745    414,848   
Other time deposits 309,948    335,644   
Total deposits 6,961,371    6,830,122   
Mortgage escrow deposits 25,972    25,568   
Borrowed funds 1,380,063    1,442,282   
Other liabilities 153,158    68,817   
Total liabilities 8,520,564    8,366,789   
Stockholders’ Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued
—    —   
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,293 shares issued and 65,760,468 shares outstanding at September 30, 2019 and 66,325,458 outstanding at December 31, 2018
832    832   
Additional paid-in capital 1,028,131    1,021,533   
Retained earnings 682,540    651,099   
Accumulated other comprehensive income (loss) 6,762    (12,336)  
Treasury stock (292,868)   (272,470)  
Unallocated common stock held by the Employee Stock Ownership Plan (27,564)   (29,678)  
Common stock acquired by the Directors’ Deferred Fee Plan (4,001)   (4,504)  
Deferred compensation – Directors’ Deferred Fee Plan 4,001    4,504   
Total stockholders’ equity 1,397,833    1,358,980   
Total liabilities and stockholders’ equity $ 9,918,397    $ 9,725,769   
See accompanying notes to unaudited consolidated financial statements.
3

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and nine months ended September 30, 2019 and 2018 (Unaudited)
(Dollars in Thousands, except per share data)
 
Three months ended September 30, Nine months ended September 30,
2019 2018 2019 2018
Interest income:
Real estate secured loans $ 56,402    $ 54,532    $ 167,051    $ 158,798   
Commercial loans 20,104    20,230    63,788    58,706   
Consumer loans 4,648    5,095    14,216    14,945   
Available for sale debt securities, equity securities and Federal Home Loan Bank Stock 7,918    7,805    24,584    22,738   
Held to maturity debt securities 3,075    3,149    9,408    9,447   
Deposits, Federal funds sold and other short-term investments 879    450    2,038    1,273   
Total interest income 93,026    91,261    281,085    265,907   
Interest expense:
Deposits 11,730    7,856    33,940    21,087   
Borrowed funds 7,768    7,619    22,055    21,477   
Total interest expense 19,498    15,475    55,995    42,564   
Net interest income 73,528    75,786    225,090    223,343   
Provision for loan losses 500    1,000    10,200    21,900   
Net interest income after provision for loan losses 73,028    74,786    214,890    201,443   
Non-interest income:
Fees 7,634    7,455    20,617    20,706   
Wealth management income 6,084    4,570    16,406    13,572   
Bank-owned life insurance 1,272    2,083    4,253    4,640   
Net gain on securities transactions —    2    29    3   
Other income 3,057    1,806    4,764    4,139   
Total non-interest income 18,047    15,916    46,069    43,060   
Non-interest expense:
Compensation and employee benefits 29,376    27,546    86,735    83,398   
Net occupancy expense 6,413    5,924    19,629    19,052   
Data processing expense 4,114    3,630    12,447    10,862   
FDIC insurance —    967    1,167    2,920   
Amortization of intangibles 827    509    2,161    1,625   
Advertising and promotion expense 1,098    949    3,059    2,763   
Other operating expenses 7,910    7,134    22,650    21,755   
Total non-interest expense 49,738    46,659    147,848    142,375   
Income before income tax expense 41,337    44,043    113,111    102,128   
Income tax expense 9,938    8,575    26,429    19,504   
Net income $ 31,399    $ 35,468    $ 86,682    $ 82,624   
Basic earnings per share $ 0.49    $ 0.55    $ 1.34    $ 1.27   
Weighted average basic shares outstanding 64,511,956    65,037,779    64,720,642    64,907,210   
Diluted earnings per share $ 0.49    $ 0.54    $ 1.34    $ 1.27   
Weighted average diluted shares outstanding 64,632,285    65,183,881    64,852,983    65,078,627   

See accompanying notes to unaudited consolidated financial statements.
4

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
Three and nine months ended September 30, 2019 and 2018 (Unaudited)
(Dollars in Thousands)
 
Three months ended September 30, Nine months ended September 30,
2019 2018 2019 2018
Net income $ 31,399    $ 35,468    $ 86,682    $ 82,624   
Other comprehensive income (loss), net of tax:
Unrealized gains and losses on available for sale debt securities:
Net unrealized gains (losses) arising during the period 2,614    (4,820)   19,854    (17,897)  
Reclassification adjustment for gains included in net income —    —    —    —   
Total 2,614    (4,820)   19,854    (17,897)  
Unrealized gains (losses) on derivatives 137    46    (813)   724   
Amortization related to post-retirement obligations 35    75    57    211   
Total other comprehensive income (loss) 2,786    (4,699)   19,098    (16,962)  
Total comprehensive income $ 34,185    $ 30,769    $ 105,780    $ 65,662   

See accompanying notes to unaudited consolidated financial statements.

5

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders’ Equity
For the three and nine months ended September 30, 2018 (Unaudited)
(Dollars in Thousands)
For the three months ended September 30, 2018
COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE LOSS TREASURYSTOCK UNALLOCATED ESOP SHARES COMMON STOCK ACQUIRED BY DDFP DEFERRED COMPENSATION DDFP TOTAL STOCKHOLDERS’ EQUITY
Balance at June 30, 2018 $ 832    $ 1,017,256    $ 606,423    $ (19,912)   $ (260,908)   $ (32,429)   $ (4,840)   $ 4,840    $ 1,311,262   
Net income —    —    35,468    —    —    —    —    —    35,468   
Other comprehensive loss, net of tax —    —    (4,699)   —    —    —    —    (4,699)  
Cash dividends paid —    —    (14,090)   —    —    —    —    —    (14,090)  
Distributions from DDFP —    39    —    —    —    —    168    (168)   39   
Purchases of treasury stock —    —    —    —    (175)   —    —    —    (175)  
Purchase of employee restricted shares to fund statutory tax withholding —    —    —    (4)   —    —    —    (4)  
Shares issued dividend reinvestment plan —    137    —    —    298    —    —    —    435   
Stock option exercises —    (262)   —    —    1,029    —    —    —    767   
Allocation of ESOP shares —    366    —    —    —    704    —    —    1,070   
Allocation of Stock Award Plan ("SAP") shares —    1,468    —    —    —    —    —    —    1,468   
Allocation of stock options —    48    —    —    —    —    —    —    48   
Balance at September 30, 2018 $ 832    $ 1,019,052    $ 627,801    $ (24,611)   $ (259,760)   $ (31,725)   $ (4,672)   $ 4,672    $ 1,331,589   


For the nine months ended September 30, 2018
COMMONSTOCK ADDITIONAL
PAID-IN CAPITAL 		RETAINEDEARNINGS ACCUMULATED
OTHER
COMPREHENSIVE
LOSS 		TREASURYSTOCK UNALLOCATED
ESOP SHARES 		COMMON
STOCK
ACQUIRED
BY DDFP 		DEFERRED
COMPENSATION
DDFP 		TOTAL
STOCKHOLDERS’ EQUITY
Balance at December 31, 2017 $ 832    $ 1,012,908    $ 586,132    $ (7,465)   $ (259,907)   $ (33,839)   $ (5,175)   $ 5,175    $ 1,298,661   
Net income —    —    82,624    —    —    —    —    —    82,624   
Other comprehensive loss, net of tax —    —    —    (16,962)   —    —    —    —    (16,962)  
Cash dividends paid —    —    (41,139)   —    —    —    —    —    (41,139)  
Effect of adopting Accounting Standards Update ("ASU") No. 2016-01 —    —    184    (184)   —    —    —    —    —   
Distributions from DDFP —    120    —    —    —    —    503    (503)   120   
Purchases of treasury stock —    —    —    —    (175)   —    —    —    (175)  
Purchase of employee restricted shares to fund statutory tax withholding —    —    —    —    (1,851)   —    —    —    (1,851)  
Shares issued dividend reinvestment plan —    442    —    —    852    —    —    —    1,294   
Stock option exercises —    (347)   —    —    1,321    —    —    —    974   
Allocation of ESOP shares —    1,161    —    —    —    2,114    —    —    3,275   
Allocation of SAP shares —    4,627    —    —    —    —    —    —    4,627   
Allocation of stock options —    141    —    —    —    —    —    —    141   
Balance at September 30, 2018 $ 832    $ 1,019,052    $ 627,801    $ (24,611)   $ (259,760)   $ (31,725)   $ (4,672)   $ 4,672    $ 1,331,589   
See accompanying notes to unaudited consolidated financial statements.

6

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders’ Equity
For the three and nine months ended September 30, 2019 (Unaudited)
(Dollars in Thousands)

For the three months ended September 30, 2019
COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE INCOME TREASURY STOCK UNALLOCATED ESOP SHARES COMMON STOCK ACQUIRED BY DDFP DEFERRED COMPENSATION DDFP TOTAL STOCKHOLDERS’ EQUITY
Balance at June 30, 2019 832    1,025,855    666,415    3,976    (277,364)   (28,268)   (4,169)   4,169    1,391,446   
Net income —    —    31,399    —    —    —    —    —    31,399   
Other comprehensive income, net of tax —    —    —    2,786    —    —    —    —    2,786   
Cash dividends paid —    —    (15,274)   —    —    —    —    —    (15,274)  
Distributions from DDFP —    38    —    —    —    —    168    (168)   38   
Purchases of treasury stock —    —    —    —    (15,817)   —    —    —    (15,817)  
Purchase of employee restricted shares to fund statutory tax withholding —    —    —    —    (32)   —    —    —    (32)  
Shares issued dividend reinvestment plan —    116    —    —    345    —    —    —    461   
Stock option exercises —    —    —    —    —    —    —    —    —   
Allocation of ESOP shares —    298    —    —    —    704    —    —    1,002   
Allocation of SAP shares —    1,778    —    —    —    —    —    —    1,778   
Allocation of stock options —    46    —    —    —    —    —    —    46   
Balance at September 30, 2019 $ 832    $ 1,028,131    $ 682,540    $ 6,762    $ (292,868)   $ (27,564)   $ (4,001)   $ 4,001    $ 1,397,833   

For the nine months ended September 30, 2019
COMMONSTOCK ADDITIONAL
PAID-IN
CAPITAL 		RETAINED EARNINGS ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS) 		TREASURY
STOCK 		UNALLOCATED
ESOP
SHARES 		COMMON
STOCK
ACQUIRED
BY DDFP 		DEFERRED
COMPENSATION DDFP 		TOTAL STOCKHOLDERS’ EQUITY
Balance at December 31, 2018 $ 832    $ 1,021,533    $ 651,099    $ (12,336)   $ (272,470)   $ (29,678)   $ (4,504)   $ 4,504    $ 1,358,980   
Net income —    —    86,682    —    —    —    —    —    86,682   
Other comprehensive income, net of tax —    —    —    19,098    —    —    —    —    19,098   
Cash dividends paid —    —    (59,591)   —    —    —    —    —    (59,591)  
Effect of adopting Accounting Standards Update ("ASU") No. 2016-02 —    —    4,350    —    —    —    —    —    4,350   
Distributions from DDFP —    123    —    —    —    —    503    (503)   123   
Purchases of treasury stock —    —    —    —    (19,867)   —    —    —    (19,867)  
Purchase of employee restricted shares to fund statutory tax withholding —    —    —    —    (1,985)   —    —    —    (1,985)  
Shares issued dividend reinvestment plan —    545    —    —    1,219    —    —    —    1,764   
Stock option exercises —    (96)   —    —    235    —    —    —    139   
Allocation of ESOP shares —    1,007    —    —    —    2,114    —    —    3,121   
Allocation of SAP shares —    4,884    —    —    —    —    —    —    4,884   
Allocation of stock options —    135    —    —    —    —    —    —    135   
Balance at September 30, 2019 $ 832    $ 1,028,131    $ 682,540    $ 6,762    $ (292,868)   $ (27,564)   $ (4,001)   $ 4,001    $ 1,397,833   
See accompanying notes to unaudited consolidated financial statements.
7

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Nine months ended September 30, 2019 and 2018 (Unaudited)
(Dollars in Thousands)
 
Nine months ended September 30,
2019 2018
Cash flows from operating activities:
Net income $ 86,682    $ 82,624   
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles 7,962    7,613   
Provision for loan losses 10,200    21,900   
Deferred tax benefit (112)   (21,401)  
Amortization of operating lease right-of-use assets 6,303    —   
Income on Bank-owned life insurance (4,253)   (4,640)  
Net amortization of premiums and discounts on securities 5,619    6,614   
Accretion of net deferred loan fees (3,872)   (3,844)  
Amortization of premiums on purchased loans, net 584    677   
Net increase in loans originated for sale (14,414)   (9,310)  
Proceeds from sales of loans originated for sale 15,235    10,184   
Proceeds from sales and paydowns of foreclosed assets 1,063    3,250   
ESOP expense 3,121    3,275   
Allocation of stock award shares 4,884    4,627   
Allocation of stock options 135    141   
Net gain on sale of loans (821)   (1,125)  
Net gain on securities transactions (29)   (3)  
Net gain on sale of premises and equipment —    (25)  
Net gain on sale of foreclosed assets (182)   (713)  
Decrease (increase) in accrued interest receivable 2,384    (138)  
Increase in other assets (50,146)   (5,825)  
Increase in other liabilities 38,291    38,876   
Net cash provided by operating activities 108,634    132,757   
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of held to maturity debt securities 30,789    36,726   
Purchases of held to maturity debt securities (15,976)   (35,107)  
Proceeds from maturities and paydowns of available for sale debt securities 151,632    155,494   
Purchases of available for sale debt securities (116,972)   (189,669)  
Proceeds from redemption of Federal Home Loan Bank stock 125,894    109,929   
Purchases of Federal Home Loan Bank stock (125,802)   (100,654)  
Net cash paid in acquisition (15,022)   —   
BOLI claim benefits received 1,891    —   
Purchases of loans —    (1,344)  
Net (increase) decrease in loans (13,967)   77,016   
Proceeds from loans sold —    23,417   
Proceeds from sales of premises and equipment —    25   
Purchases of premises and equipment (2,796)   (1,958)  
Net cash provided by investing activities 19,671    73,875   
Cash flows from financing activities:
Net increase in deposits 131,249    5,575   
Increase (decrease) in mortgage escrow deposits 404    (420)  
Cash dividends paid to stockholders (59,591)   (41,139)  
8

Nine months ended September 30,
2019 2018
Shares issued dividend reinvestment plan 1,764    1,294   
Purchase of treasury stock (19,867)   (175)  
Purchase of employee restricted shares to fund statutory tax withholding (1,985)   (1,851)  
Stock options exercised 139    974   
Proceeds from long-term borrowings 1,009,000    610,000   
Payments on long-term borrowings (891,955)   (647,440)  
Net decrease in short-term borrowings (179,264)   (175,160)  
Net cash used in financing activities (10,106)   (248,342)  
Net increase (decrease) in cash and cash equivalents 118,199    (41,710)  
Cash and cash equivalents at beginning of period 142,661    190,834   
Cash and cash equivalents at end of period $ 260,860    $ 149,124   
Cash paid during the period for:
Interest on deposits and borrowings $ 55,474    $ 42,520   
Income taxes $ 21,137    $ 14,819   
Non-cash investing activities:
Initial recognition of operating lease right-of-use assets $ 44,946    $ —   
Initial recognition of operating lease liabilities $ 46,050    $ —   
Transfer of loans receivable to foreclosed assets $ 850    $ 1,673   
Acquisitions:
Non-cash assets acquired:
Goodwill and other intangible assets, net $ 21,562    $ —   
Other assets 71    —   
Total non-cash assets acquired $ 21,633    $ —   
See accompanying notes to unaudited consolidated financial statements.
9

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
A. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements include the accounts of Provident Financial Services, Inc. and its wholly owned subsidiary, Provident Bank (the “Bank,” together with Provident Financial Services, Inc., the “Company”).
In preparing the interim unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and the consolidated statements of income for the periods presented. Actual results could differ from these estimates. The allowance for loan losses and the valuation of deferred tax assets are material estimates that are particularly susceptible to near-term change.
The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results of operations that may be expected for all of 2019.
Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.
These unaudited consolidated financial statements should be read in conjunction with the December 31, 2018 Annual Report to Stockholders on Form 10-K.
B. Earnings Per Share
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2019 and 2018 (dollars in thousands, except per share amounts):
Three months ended September 30,
2019 2018
Net
Income 		Weighted
Average
Common
Shares
Outstanding 		Per
Share
Amount 		Net
Income 		Weighted
Average
Common
Shares
Outstanding 		Per
Share
Amount
Net income $ 31,399    $ 35,468   
Basic earnings per share:
Income available to common stockholders $ 31,399    64,511,956    $ 0.49    $ 35,468    65,037,779    $ 0.55   
Dilutive shares 120,329    146,102   
Diluted earnings per share:
Income available to common stockholders $ 31,399    64,632,285    $ 0.49    $ 35,468    65,183,881    $ 0.54   

10

Nine months ended September 30,
2019 2018
Net
Income 		Weighted
Average
Common
Shares
Outstanding 		Per
Share
Amount 		Net
Income 		Weighted
Average
Common Shares Outstanding 		Per
Share
Amount
Net income $ 86,682    $ 82,624   
Basic earnings per share:
Income available to common stockholders $ 86,682    64,720,642    $ 1.34    $ 82,624    64,907,210    $ 1.27   
Dilutive shares 132,341    171,417   
Diluted earnings per share:
Income available to common stockholders $ 86,682    64,852,983    $ 1.34    $ 82,624    65,078,627    $ 1.27   
Anti-dilutive stock options and awards at September 30, 2019 and 2018, totaling 678,583 shares and 429,878 shares, respectively, were excluded from the earnings per share calculations.
Note 2. Business Combinations
On April 1, 2019, Beacon Trust Company ("Beacon") completed its acquisition of certain assets of Tirschwell & Loewy, Inc. ("T&L"), a New York City-based independent registered investment adviser. Beacon is a wholly owned subsidiary of Provident Bank which, in turn, is wholly owned by the Company. This acquisition expanded the Company’s wealth management business by $822.4 million of assets under management at the time of acquisition.
The acquisition was accounted for under the acquisition method of accounting. The Company recorded goodwill of $8.2 million, a customer relationship intangible of $12.6 million and $800,000 of other identifiable intangibles related to the acquisition. In addition, the Company recorded a contingent consideration liability at its fair value of $6.6 million. The contingent consideration arrangement requires the Company to pay additional cash consideration to T&L's former stakeholders over a three-year period after the closing date of the acquisition if certain financial and business retention targets are met. The acquisition agreement limits the total additional payment to a maximum of $11.0 million, to be determined based on actual future results. Total cost of the acquisition was $21.6 million, which included cash consideration of $15.0 million and contingent consideration with a fair value of $6.6 million. Tangible assets acquired in the transaction were nominal. No liabilities were assumed in the acquisition. The goodwill recorded in the transaction is deductible for tax purposes.
The calculation of goodwill is subject to change for up to one year after the closing date of the transaction as additional information relative to closing date estimates and uncertainties becomes available. As the Company finalizes its analysis of these assets, there may be adjustments to the recorded carrying values.
Note 3. Investment Securities
At September 30, 2019, the Company had $1.05 billion and $461.7 million in available for sale debt securities and held to maturity debt securities, respectively. Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, regulatory actions, changes in the business environment or any changes in the competitive marketplace could have an adverse effect on the Company’s investment portfolio which could result in other-than-temporary impairment ("OTTI") in future periods. The total number of available for sale and held to maturity debt securities in an unrealized loss position at September 30, 2019 totaled 88, compared with 509 at December 31, 2018. All securities with unrealized losses at September 30, 2019 were analyzed for OTTI. Based upon this analysis, the Company believes that, as of September 30, 2019, such securities with unrealized losses do not represent impairments that are other-than-temporary.
11

Available for Sale Debt Securities
The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities at September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019
Amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Fair
value
Mortgage-backed securities $ 1,009,953    14,504    (916)   1,023,541   
State and municipal obligations 3,920    168    —    4,088   
Corporate obligations 25,034    344    (12)   25,366   
$ 1,038,907    15,016    (928)   1,052,995   

December 31, 2018
Amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Fair
value
Mortgage-backed securities $ 1,048,415    2,704    (16,150)   1,034,969   
State and municipal obligations 2,828    84    —    2,912   
Corporate obligations 25,039    268    (109)   25,198   
$ 1,076,282    3,056    (16,259)   1,063,079   
The amortized cost and fair value of available for sale debt securities at September 30, 2019, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.
September 30, 2019
Amortized
cost 		Fair
value
Due in one year or less $ —    —   
Due after one year through five years 3,004    3,079   
Due after five years through ten years 25,950    26,375   
Due after ten years —    —   
$ 28,954    29,454   
Mortgage-backed securities totaling $1.01 billion at amortized cost and $1.02 billion at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.
For the three and nine months ended September 30, 2019 and 2018, no securities were sold or called from the available for sale debt securities portfolio.
The following tables present the fair values and gross unrealized losses for available for sale debt securities with temporary impairment at September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019 Unrealized Losses
Less than 12 months 12 months or longer Total
Fair
value 		Gross
unrealized
losses 		Fair
value 		Gross
unrealized
losses 		Fair
value 		Gross
unrealized
losses
Mortgage-backed securities $ 98,998    (363)   69,399    (553)   168,397    (916)  
Corporate obligations 2,018    (12)   —    —    2,018    (12)  
$ 101,016    (375)   69,399    (553)   170,415    (928)  

12

December 31, 2018 Unrealized Losses
Less than 12 months 12 months or longer Total
Fair
value
 Gross
unrealized
losses
Fair
value
Gross
unrealized
losses 		Fair
value 		Gross
unrealized
losses
Mortgage-backed securities $ 218,175    (2,173)   545,880    (13,977)   764,055    (16,150)  
Corporate obligations 7,897    (109)   —    —    7,897    (109)  
$ 226,072    (2,282)   545,880    (13,977)   771,952    (16,259)  
The number of available for sale debt securities in an unrealized loss position at September 30, 2019 totaled 45, compared with 175 at December 31, 2018. The decrease in the number of securities in an unrealized loss position at September 30, 2019 was due to lower current market interest rates compared to rates at December 31, 2018. All temporarily impaired securities were investment grade at September 30, 2019. At September 30, 2019, there was one private label mortgage-backed security in an unrealized loss position, with an amortized cost of $18,000 and an unrealized loss of $1,000.
Based on its detailed review of the available for sale debt securities portfolio, the Company believes that as of September 30, 2019, securities with unrealized loss positions shown above do not represent impairments that are other-than-temporary. The Company does not have the intent to sell securities in a temporary loss position at September 30, 2019, nor is it more likely than not that the Company will be required to sell the securities before the anticipated recovery.
Held to Maturity Debt Securities
The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for held to maturity debt securities at September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019
Amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Fair
value
Agency obligations $ 4,948    11    (11)   4,948   
Mortgage-backed securities 134    3    —    137   
State and municipal obligations 445,896    15,035    (122)   460,809   
Corporate obligations 10,760    55    (11)   10,804   
$ 461,738    15,104    (144)   476,698   

December 31, 2018
Amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Fair
value
Agency obligations $ 4,989    1    (94)   4,896   
Mortgage-backed securities 187    3    —    190   
State and municipal obligations 463,801    4,329    (3,767)   464,363   
Corporate obligations 10,448    1    (158)   10,291   
$ 479,425    4,334    (4,019)   479,740   
The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair values may fluctuate during the investment period. There were no sales of securities from the held to maturity debt securities portfolio for the three and nine months ended September 30, 2019 and 2018. For the three and nine months ended September 30, 2019, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $14.4 million and $26.6 million, respectively. As to these calls of securities, for the three months ended September 30, 2019, there were no gross gains and no gross losses, while for the nine months ended September 30, 2019, there were $29,000 of gross gains and no gross losses. For the three and nine months ended September 30, 2018, proceeds from calls of securities in the held to maturity debt securities portfolio totaled $10.4 million and $30.9 million, respectively. There were gross gains on calls of securities of $3,000 and $4,000 for the three and nine months ended September 30, 2018, respectively, and a gross loss of $1,000 for both the three and nine month periods.
13

The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio at September 30, 2019 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.
September 30, 2019
Amortized
cost 		Fair
value
Due in one year or less $ 11,752    11,768   
Due after one year through five years 99,205    101,073   
Due after five years through ten years 252,531    261,072   
Due after ten years 98,116    102,648   
$ 461,604    476,561   
Mortgage-backed securities totaling $134,000 at amortized cost and $137,000 at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.
The following tables present the fair value and gross unrealized losses for held to maturity debt securities with temporary impairment at September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019 Unrealized Losses
Less than 12 months 12 months or longer Total
Fair
value 		Gross
unrealized
losses 		Fair
value 		Gross
unrealized
losses 		Fair
value 		Gross
unrealized
losses
Agency obligations $ 3,348    (11)   —    —    3,348    (11)  
State and municipal obligations 12,352    (52)   2,097    (70)   14,449    (122)  
Corporate obligations 4,327    (11)   —    —    4,327    (11)  
$ 20,027    (74)   2,097    (70)   22,124    (144)  

December 31, 2018 Unrealized Losses
Less than 12 months 12 months or longer Total
Fair
value 		Gross
unrealized
losses 		Fair
value 		Gross
unrealized
losses 		Fair
value 		Gross
unrealized
losses
Agency obligations $ —    —    4,525    (94)   4,525    (94)  
State and municipal obligations 96,412    (918)   81,663    (2,849)   178,075    (3,767)  
Corporate obligations —    —    9,004    (158)   9,004    (158)  
$ 96,412    (918)   95,192    (3,101)   191,604    (4,019)  
The number of held to maturity debt securities in an unrealized loss position at September 30, 2019 totaled 43, compared with 334 at December 31, 2018. The decrease in the number of securities in an unrealized loss position at September 30, 2019, was due to lower current market interest rates compared to rates at December 31, 2018. All temporarily impaired investment securities were investment grade at September 30, 2019.
Based on its detailed review of the held to maturity debt securities portfolio, the Company believes that as of September 30, 2019, securities with unrealized loss positions shown above do not represent impairments that are other-than-temporary. The Company does not have the intent to sell securities in a temporary loss position at September 30, 2019, nor is it more likely than not that the Company will be required to sell the securities before the anticipated recovery.
14

Note 4. Loans Receivable and Allowance for Loan Losses
Loans receivable at September 30, 2019 and December 31, 2018 are summarized as follows (in thousands):
September 30, 2019 December 31, 2018
Mortgage loans:
Residential $ 1,072,175    1,099,464   
Commercial 2,437,117    2,299,313   
Multi-family 1,298,630    1,339,677   
Construction 399,501    388,999   
Total mortgage loans 5,207,423    5,127,453   
Commercial loans 1,659,866    1,695,021   
Consumer loans 403,576    431,428   
Total gross loans 7,270,865    7,253,902   
Purchased credit-impaired ("PCI") loans 842    899   
Premiums on purchased loans 2,716    3,243   
Unearned discounts (26)   (33)  
Net deferred fees (7,403)   (7,423)  
Total loans $ 7,266,994    7,250,588   
The following tables summarize the aging of loans receivable by portfolio segment and class of loans, excluding PCI loans (in thousands):
September 30, 2019
30-59 Days 60-89 Days Non-accrual Recorded
Investment
> 90 days
accruing 		Total Past
Due 		Current Total Loans
Receivable
Mortgage loans:
Residential $ 6,013    2,333    6,456    —    14,802    1,057,373    1,072,175   
Commercial —    —    1,728    —    1,728    2,435,389    2,437,117   
Multi-family —    —    —    —    —    1,298,630    1,298,630   
Construction —    —    —    —    —    399,501    399,501   
Total mortgage loans 6,013    2,333    8,184    —    16,530    5,190,893    5,207,423   
Commercial loans 10    1,548    30,436    —    31,994    1,627,872    1,659,866   
Consumer loans 716    556    1,361    —    2,633    400,943    403,576   
Total gross loans $ 6,739    4,437    39,981    —    51,157    7,219,708    7,270,865   

December 31, 2018
30-59 Days 60-89 Days Non-accrual Recorded
Investment
> 90 days
accruing 		Total Past
Due 		Current Total Loans Receivable
Mortgage loans:
Residential $ 4,188    5,557    5,853    —    15,598    1,083,866    1,099,464   
Commercial —    —    3,180    —    3,180    2,296,133    2,299,313   
Multi-family —    —    —    —    —    1,339,677    1,339,677   
Construction —    —    —    —    —    388,999    388,999   
Total mortgage loans 4,188    5,557    9,033    —    18,778    5,108,675    5,127,453   
Commercial loans 425    13,565    15,391    —    29,381    1,665,640    1,695,021   
Consumer loans 1,238    610    1,266    —    3,114    428,314    431,428   
Total gross loans $ 5,851    19,732    25,690    —    51,273    7,202,629    7,253,902   

Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The principal amounts of these non-accrual loans were $40.0 million and $25.7 million at
15

September 30, 2019 and December 31, 2018, respectively. Included in non-accrual loans were $17.0 million and $11.1 million of loans which were less than 90 days past due at September 30, 2019 and December 31, 2018, respectively. There were no loans 90 days or greater past due and still accruing interest at September 30, 2019 or December 31, 2018.
The Company defines an impaired loan as a non-homogeneous loan greater than $1.0 million for which it is probable, based on current information, all amounts due under the contractual terms of the loan agreement will not be collected. Impaired loans also include all loans modified as troubled debt restructurings (“TDRs”). A loan is deemed to be a TDR when a loan modification resulting in a concession is made in an effort to mitigate potential loss arising from a borrower’s financial difficulty. Smaller balance homogeneous loans, including residential mortgages and other consumer loans, are evaluated collectively for impairment and are excluded from the definition of impaired loans, unless modified as a TDR. The Company separately calculates the reserve for loan losses on impaired loans. The Company may recognize impairment of a loan based upon: (1) the present value of expected cash flows discounted at the effective interest rate; (2) if a loan is collateral dependent, the fair value of collateral; or (3) the fair value of the loan. Additionally, if impaired loans have risk characteristics in common, those loans may be aggregated and historical statistics may be used as a means of measuring those impaired loans.
The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of collateral dependent impaired loans. A third-party appraisal is generally ordered as soon as a loan is designated as a collateral dependent impaired loan and is generally updated annually or more frequently, if required.
A specific allocation of the allowance for loan losses is established for each collateral dependent impaired loan with a carrying balance greater than the collateral’s fair value, less estimated costs to sell. Charge-offs are generally taken for the amount of the specific allocation when operations associated with the respective property cease and it is determined that collection of amounts due will be derived primarily from the disposition of the collateral. At each quarter end, if a loan is designated as a collateral dependent impaired loan and the third-party appraisal has not yet been received, Management makes an evaluation of all available collateral using the best information available at the time, including rent rolls, borrower financial statements and tax returns, prior appraisals, management’s knowledge of the market and collateral, and internally prepared collateral valuations based upon market assumptions regarding vacancy and capitalization rates, each as and where applicable. Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value. The Company believes there have been no significant time lapses in the recognition of changes in collateral values as a result of this process.
At September 30, 2019, there were 160 impaired loans totaling $71.3 million. Included in this total were 133 TDRs related to 129 borrowers totaling $44.2 million that were performing in accordance with their restructured terms and which continued to accrue interest at September 30, 2019. At December 31, 2018, there were 152 impaired loans totaling $50.7 million. Included in this total were 129 TDRs to 124 borrowers totaling $35.6 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2018.
The following table summarizes loans receivable by portfolio segment and impairment method, excluding PCI loans (in thousands):
September 30, 2019
Mortgage
loans 		Commercial
loans 		Consumer
loans 		Total Portfolio
Segments
Individually evaluated for impairment $ 36,378    32,824    2,069    71,271   
Collectively evaluated for impairment 5,171,045    1,627,042    401,507    7,199,594   
Total gross loans $ 5,207,423    1,659,866    403,576    7,270,865   

December 31, 2018
Mortgage
loans 		Commercial
loans 		Consumer
loans 		Total Portfolio
Segments
Individually evaluated for impairment $ 24,680    23,747    2,257    50,684   
Collectively evaluated for impairment 5,102,773    1,671,274    429,171    7,203,218   
Total gross loans $ 5,127,453    1,695,021    431,428    7,253,902   
16

The allowance for loan losses is summarized by portfolio segment and impairment classification as follows (in thousands):
September 30, 2019
Mortgage
loans 		Commercial loans Consumer loans Total
Individually evaluated for impairment $ 908    4,353    45    5,306   
Collectively evaluated for impairment 24,173    25,990    1,875    52,038   
Total gross loans $ 25,081    30,343    1,920    57,344   

December 31, 2018
Mortgage
loans 		Commercial loans Consumer
loans 		Total
Individually evaluated for impairment $ 1,026    92    47    1,165   
Collectively evaluated for impairment 26,652    25,601    2,144    54,397   
Total gross loans $ 27,678    25,693    2,191    55,562   
Loan modifications to borrowers experiencing financial difficulties that are considered TDRs generally involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, the Company attempts to obtain additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.
The following tables present the number of loans modified as TDRs during the three and nine months ended September 30, 2019 and 2018, along with their balances immediately prior to the modification date and post-modification as of September 30, 2019 and 2018 (dollars in thousands):
For the three months ended
September 30, 2019 September 30, 2018
Troubled Debt Restructurings Number of
Loans 		Pre-Modification
Outstanding
Recorded 
Investment 		Post-Modification
Outstanding
Recorded Investment 		Number of
Loans 		Pre-Modification
Outstanding
Recorded  Investment 		Post-Modification
Outstanding
Recorded  Investment
($ in thousands)
Mortgage loans:
Residential —    $ —    $ —    3    $ 693    $ 694   
Total mortgage loans —    —    —    3    693    694   
Commercial loans —    —    —    2    5,919    6,062   
Consumer loans 1    20    16    1    336    335   
Total restructured loans 1    $ 20    $ 16    6    $ 6,948    $ 7,091   

17

For the nine months ended
September 30, 2019 September 30, 2018
Troubled Debt Restructurings Number of
Loans 		Pre-Modification
Outstanding
Recorded 
Investment 		Post-Modification
Outstanding
Recorded  Investment 		Number of
Loans 		Pre-Modification
Outstanding
Recorded  Investment 		Post-Modification
Outstanding
Recorded  Investment
($ in thousands)
Mortgage loans:
Residential 2    $ 749    $ 716    4    $ 811    $ 797   
Commercial 1    14,010    14,010    —    —    —   
Total mortgage loans 3    14,759    14,726    4    811    797   
Commercial loans 7    2,707    1,878    6    12,545    8,752   
Consumer loans 1    20    16    1    336    335   
Total restructured loans 11    $ 17,486    $ 16,620    11    $ 13,692    $ 9,884   
All TDRs are impaired loans, which are individually evaluated for impairment. During the three and nine months ended September 30, 2019, $5.7 million and $7.7 million of charge-offs were recorded on collateral dependent impaired loans. During the three and nine months ended September 30, 2018, $6.3 million and $8.3 million of charge-offs were recorded on collateral dependent impaired loans, respectively. For the nine months ended September 30, 2019, the allowance for loan losses associated with the TDRs presented in the preceding tables totaled $141,000, while there was no allowance associated with TDR's for the three months ended September 30, 2019, respectively, and was included in the allowance for loan losses for loans individually evaluated for impairment.
For the three and nine months ended September 30, 2019, the TDRs presented in the preceding tables had a weighted average modified interest rate of approximately 5.63% and 3.83%, respectively, compared to a weighted average rate of 5.38% and 3.98% prior to modification, for the three and nine months ended September 30, 2019, respectively.
The following table presents loans modified as TDRs within the previous 12 months from September 30, 2019 and 2018, and for which there was a payment default (90 days or more past due) at the quarter ended September 30, 2019 and 2018.
September 30, 2019 September 30, 2018
Troubled Debt Restructurings Subsequently Defaulted Number of Loans Outstanding Recorded Investment Number of Loans Outstanding Recorded 
Investment
($ in thousands)
Mortgage loans:
Residential 1    $ 578    —    $ —   
Total mortgage loans 1    578    —    —   
Commercial loans —    $ —    3    $ 1,344   
Total restructured loans 1    $ 578    3    $ 1,344   
There was one loan which had a payment default (90 days or more past due) for loans modified as TDRs within the 12 month period ending September 30, 2019. There were three payment defaults (90 days or more past due) to one borrower for loans modified as TDRs within the 12 month period ending September 30, 2018. TDRs that subsequently default are considered collateral dependent impaired loans and are evaluated for impairment based on the estimated fair value of the underlying collateral less expected selling costs.
PCI loans are loans acquired at a discount primarily due to deteriorated credit quality. These loans are accounted for at fair value, based upon the present value of expected future cash flows, with no related allowance for loan losses. PCI loans totaled $842,000 at September 30, 2019 and $899,000 at December 31, 2018.
18

The activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands):
Three months ended September 30, Mortgage loans Commercial loans Consumer loans Total
2019
Balance at beginning of period $ 27,280    33,549    1,981    62,810   
Provision (credited) charged to operations (2,092)   2,880    (288)   500   
Recoveries of loans previously charged-off 24    126    343    493   
Loans charged-off (131)   (6,212)   (116)   (6,459)  
Balance at end of period $ 25,081    30,343    1,920    57,344   
2018
Balance at beginning of period $ 27,161    29,494    2,164    58,819   
Provision charged (credited) to operations 88    915    (3)   1,000   
Recoveries of loans previously charged-off 303    36    297    636   
Loans charged-off (57)   (6,302)   (186)   (6,545)  
Balance at end of period $ 27,495    24,143    2,272    53,910   

Nine months ended September 30, Mortgage
loans 		Commercial
loans 		Consumer
loans 		Total
2019
Balance at beginning of period $ 27,678    25,693    2,191    55,562   
Provision (credited) charged to operations (2,814)   13,337    (323)   10,200   
Recoveries of loans previously charged-off 361    291    596    1,248   
Loans charged-off (144)   (8,978)   (544)   (9,666)  
Balance at end of period $ 25,081    30,343    1,920    57,344   
2018
Balance at beginning of period $ 28,052    29,814    2,329    60,195   
Provision (credited) charged to operations (716)   22,740    (124)   21,900   
Recoveries of loans previously charged-off 435    268    689    1,392   
Loans charged-off (276)   (28,679)   (622)   (29,577)  
Balance at end of period $ 27,495    24,143    2,272    53,910   

19

The following table presents loans individually evaluated for impairment by class and loan category, excluding PCI loans (in thousands):
September 30, 2019 December 31, 2018
Unpaid Principal Balance Recorded Investment Related Allowance Average Recorded Investment Interest Income Recognized Unpaid Principal Balance Recorded Investment Related Allowance Average Recorded Investment Interest Income Recognized
Loans with no related allowance
Mortgage loans:
Residential $ 13,974    11,170    —    11,393    874    15,013    12,005    —    12,141    594   
Commercial —    —    —    —    —    1,550    1,546    —    1,546    —   
Total 13,974    11,170    —    11,393    874    16,563    13,551    —    13,687    594   
Commercial loans 7,508    6,274    —    6,564    52    21,746    16,254    —    17,083    328   
Consumer loans 1,714    1,159    —    1,357    59    1,871    1,313    —    1,386    90   
Total impaired loans $ 23,196    18,603    —    19,314    985    40,180    31,118    —    32,156    1,012   
Loans with an allowance recorded
Mortgage loans:
Residential $ 10,640    10,177    800    10,262    322    10,573    10,090    954    10,186    425   
Commercial 15,030    15,031    108    15,046    427    1,039    1,039    72    1,052    53   
Total 25,670    25,208    908    25,308    749    11,612    11,129    1,026    11,238    478   
Commercial loans 27,674    26,550    4,353    27,851    295    7,493    7,493    92    9,512    435   
Consumer loans 921    910    45    725    36    954    944    47    962    40   
Total impaired loans $ 54,265    52,668    5,306    53,884    1,080    20,059    19,566    1,165    21,712    953   
Total impaired loans
Mortgage loans:
Residential $ 24,614    21,347    800    21,655    1,196    25,586    22,095    954    22,327    1,019   
Commercial 15,030    15,031    108    15,046    427    2,589    2,585    72    2,598    53   
Total 39,644    36,378    908    36,701    1,623    28,175    24,680    1,026    24,925    1,072   
Commercial loans 35,183    32,824    4,353    34,415    347    29,239    23,747    92    26,595    763   
Consumer loans 2,635    2,069    45    2,082    95    2,825    2,257    47    2,348    130   
Total impaired loans $ 77,462    71,271    5,306    73,198    2,065    60,239    50,684    1,165    53,868    1,965   
Specific allocations of the allowance for loan losses attributable to impaired loans totaled $5.3 million at September 30, 2019 and $1.2 million at December 31, 2018. At September 30, 2019 and December 31, 2018, impaired loans for which there was no related allowance for loan losses totaled $18.6 million and $31.1 million, respectively. The average balance of impaired loans for the nine months ended September 30, 2019 and December 31, 2018 was $73.2 million and $53.9 million, respectively.
Management utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial, multi-family and construction loans are rated individually, and each lending officer is responsible for risk rating loans in their portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Department. The risk ratings are also confirmed through periodic loan review examinations which are currently performed by an independent third-party. Reports by the independent third-party are presented directly to the Audit Committee of the Board of Directors.
20

Loans receivable by credit quality risk rating indicator, excluding PCI loans, are as follows (in thousands):
At September 30, 2019
Residential Commercialmortgage Multi-family Construction Total
mortgages 		Commercial Consumer Total loans
Special mention $ 1,804    38,125    —    —    39,929    79,721    458    120,108   
Substandard 8,394    10,708    —    6,181    25,283    64,151    1,811    91,245   
Doubtful —    —    —    —    —    865    —    865   
Loss —    —    —    —    —    —    —    —   
Total classified and criticized 10,198    48,833    —    6,181    65,212    144,737    2,269    212,218   
Pass/Watch 1,061,977    2,388,284    1,298,630    393,320    5,142,211    1,515,129    401,307    7,058,647   
Total $ 1,072,175    2,437,117    1,298,630    399,501    5,207,423    1,659,866    403,576    7,270,865   
At December 31, 2018
Residential Commercialmortgage Multi-family Construction Total
mortgages 		Commercial Consumer Total loans
Special mention $ 5,071    14,496    228    —    19,795    67,396    610    87,801   
Substandard 7,878    13,292    —    6,181    27,351    45,180    1,711    74,242   
Doubtful —    —    —    —    —    923    —    923   
Loss —    —    —    —    —    —    —    —   
Total classified and criticized 12,949    27,788    228    6,181    47,146    113,499    2,321    162,966   
Pass/Watch 1,086,515    2,271,525    1,339,449    382,818    5,080,307    1,581,522    429,107    7,090,936   
Total $ 1,099,464    2,299,313    1,339,677    388,999    5,127,453    1,695,021    431,428    7,253,902   

Note 5. Deposits
Deposits at September 30, 2019 and December 31, 2018 are summarized as follows (in thousands):
September 30, 2019 December 31, 2018
Savings $ 985,575    1,051,922   
Money market 1,593,681    1,496,310   
NOW 1,853,650    2,049,645   
Non-interest bearing 1,683,772    1,481,753   
Certificates of deposit 844,693    750,492   
Total deposits $ 6,961,371    6,830,122   

Note 6. Components of Net Periodic Benefit Cost
The Bank has a noncontributory defined benefit pension plan covering its full-time employees who had attained age 21 with at least one year of service as of April 1, 2003. The pension plan was frozen on April 1, 2003. All participants in the Plan are 100% vested. The pension plan’s assets are invested in investment funds and group annuity contracts currently managed by the Principal Financial Group and Allmerica Financial.
In addition to pension benefits, certain health care and life insurance benefits are currently made available to certain of the Bank’s retired employees. The costs of such benefits are accrued based on actuarial assumptions from the date of hire to the date the employee is fully eligible to receive the benefits. Effective January 1, 2003, eligibility for retiree health care benefits was frozen as to new entrants, and benefits were eliminated for employees with less than ten years of service as of
21

December 31, 2002. Effective January 1, 2007, eligibility for retiree life insurance benefits was frozen as to new entrants and retiree life insurance benefits were eliminated for employees with less than ten years of service as of December 31, 2006.
Net periodic (decrease) increase in benefit cost for pension benefits and other post-retirement benefits for the three and nine months ended September 30, 2019 and 2018 includes the following components (in thousands):
Three months ended September 30, Nine months ended September 30,
Pension benefits Other post-retirement benefits Pension benefits Other post-retirement benefits
2019 2018 2019 2018 2019 2018 2019 2018
Service cost $ —    —    20    29    $ —    —    60    87   
Interest cost 299    273    209    196    899    821    628    590   
Expected return on plan assets (640)   (693)   —    —    (1,922)   (2,079)   —    —   
Amortization of prior service cost —    —    —    —    —    —    —    —   
Amortization of the net loss (gain) 254    199    (206)   (99)   762    597    (620)   (297)  
Net periodic benefit (decrease) increase in benefit cost $ (87)   (221)   23    126    $ (261)   (661)   68    380   
In its consolidated financial statements for the year ended December 31, 2018, the Company previously disclosed that it does not expect to contribute to the pension plan in 2019. As of September 30, 2019, no contributions have been made to the pension plan.
The net periodic benefit (decrease) increase in benefit cost for pension benefits and other post-retirement benefits for the three and nine months ended September 30, 2019 were calculated using the January 1, 2019 pension and other post-retirement benefits actuarial valuations.
Note 7. Impact of Recent Accounting Pronouncements
Accounting Pronouncements Adopted in 2019
In October 2018, the Financial Accounting Standards Board ("FASB") issued ASU No. 2018-16, “Derivatives and Hedging (Topic 815) – Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.” This ASU permits the use of the OIS rate based upon SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Fed Funds Effective Rate, and the SIFMA Municipal Swap Rate. The amendments in ASU 2018-16 are required to be adopted concurrently with ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging," which was effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. ASU 2018-16 should be adopted on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after the date of adoption. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance had no impact on the Company’s consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging." The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 was effective for public business entities for fiscal years beginning after December 15, 2018. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance had no impact on the Company’s consolidated financial statements.
In March 2017, the FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This ASU shortens the amortization period for premiums on callable debt securities by requiring that premiums be amortized to the first (or earliest) call date instead of as an adjustment to the yield over the contractual life. This change more closely aligns the accounting with the economics of a callable debt security and the amortization period with expectations that already are included in market pricing on callable debt securities. This ASU does not change the accounting for discounts on callable debt securities, which will continue to be amortized to the maturity date. This guidance only includes instruments that are held at a premium and have explicit call features. It does not include instruments that contain prepayment features, such as mortgage backed securities; nor does it include call options that are contingent upon future events or in which the timing or amount to be paid is not fixed. This ASU was effective for fiscal
22

years beginning after December 15, 2018, including interim periods within the reporting period, with early adoption permitted. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance had no impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842).” This ASU requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. A modified retrospective approach must be applied for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU No. 2018-11, “Leases - Targeted Improvements” to provide entities with relief from the costs of implementing certain aspects of ASU No. 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. The amendments have the same effective date as ASU 2016-02. In the first quarter of 2018, the Company formed a working group to guide the implementation efforts, including the identification and review of all lease agreements within the scope of the guidance. The working group has identified the inventory of leases and actively accumulated the requisite lease data necessary to apply the guidance. Also, the working group purchased and implemented a software platform to properly record and track all leases, monitor right-of-use assets and lease liabilities and support all accounting and disclosure requirements of the guidance. The Company adopted both ASU No. 2016-02 and ASU No. 2018-11 effective January 1, 2019 and elected to apply the guidance as of the beginning of the period of adoption (January 1, 2019) and not restate comparative periods. The Company also elected certain optional practical expedients, which allow the Company to forego a reassessment of (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) the initial direct costs for any existing leases. The adoption of the new standard resulted in the Company recording a right-of-use and an additional lease liability on its consolidated statement of financial condition of $44.9 million and $46.1 million, respectively, based on the present value of the expected remaining lease payments at January 1, 2019. It also resulted in additional footnote disclosures (see Note 12 - "Leases").
Accounting Pronouncements Not Yet Adopted
In April 2019, the FASB issued ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments" which clarifies and improves areas of guidance related to the recently issued standards on credit losses, hedging, recognition and measurement. The most significant provisions of the ASU relate to how companies will estimate expected credit losses under Topic 326 by incorporating (1) expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (2) clarifying that contractual extensions or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured. ASU No. 2019-04 is effective for reporting periods beginning January 1, 2020. The Company continues to assess the impact that the guidance will have on the Company’s consolidated financial statements.
In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments - Credit Losses (Topic 326); Targeted Transition Relief.” This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05 has the same effective date as ASU 2016-13 (i.e., the first quarter of 2020). The Company continues to assess the impact that the guidance will have on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. Entities are also allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. The Company does not expect the adoption of this guidance to have a significant impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments by a reporting entity at each reporting date. The amendments in this ASU require financial assets
23

measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses would represent a valuation account that would be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement would reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses would be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity will be required to use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Furthermore, ASU 2016-13 will necessitate establishing an allowance for expected credit losses on held to maturity debt securities. The amendments in ASU 2016-13 are effective for fiscal years, including interim periods, beginning after December 15, 2019. Early adoption of this ASU is permitted for fiscal years beginning after December 15, 2018. As previously disclosed, the Company formed, in the first quarter of 2017, a cross-functional working group, under the direction of the Chief Credit Officer, Chief Financial Officer and Chief Risk Officer. The working group is comprised of individuals from various functional areas including credit, risk management, finance and information technology, among others. Management developed a detailed implementation plan which included an assessment of processes, portfolio segmentation, model development, model validation, system requirements, the identification of data and resource needs and the development of a governance and control structure, among other things. Management selected a system platform and has engaged with third-party vendors to assist with model development, data governance and financial and operational controls to support the adoption of this ASU. Recently, the Company identified and segmented the loan portfolio into several distinct portfolios for CECL modeling. The data sets for these portfolios have been identified, populated and are currently going through the validation process. During the remainder of 2019, the Company plans several parallel processing runs of our existing allowance for loan losses model compared to the CECL model, as well as model sensitivity analysis, determination of qualitative adjustments and the execution of the governance, data control, analytic and approval processes. The adoption of ASU 2016-13 may result in an increase in the allowance for loan losses as a result of changing from an "incurred loss" model, which encompasses allowances for current known and inherent losses within the portfolio, to an "expected loss" model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. While the Company is currently unable to reasonably estimate the impact of adopting ASU 2016-13, it is expected that the impact upon adoption will be significantly influenced by the composition, characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date.
Note 8. Fair Value Measurements
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. Where quoted market values in an active market are not readily available, Management utilizes various valuation techniques to estimate fair value.
Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. However, in many instances fair value estimates may not be substantiated by comparison to independent markets and may not be realized in an immediate sale of the financial instrument.
GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1:
Unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2:
Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3:
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
24

The valuation techniques are based upon the unpaid principal balance only, and exclude any accrued interest or dividends at the measurement date. Interest income and expense and dividend income are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The valuation techniques described below were used to measure fair value of financial instruments in the table below on a recurring basis as of September 30, 2019 and December 31, 2018.
Available for Sale Debt Securities, at Fair Value
For available for sale debt securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third-party data service providers or dealer market participants with whom the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark to comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As Management is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, Management compares the prices received from the pricing service to a secondary pricing source. Additionally, Management compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has generally not resulted in an adjustment in the prices obtained from the pricing service.
Equity Securities, at Fair Value
The Company holds equity securities that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.
Derivatives
The Company records all derivatives on the statements of financial condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related transaction and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. As such, all changes in fair value of the Company’s interest rate derivatives not used to manage interest rate risk are recognized directly in earnings.
The Company also uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges, and which satisfy hedge accounting requirements, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. These derivatives were used to hedge the variable cash outflows associated with Federal Home Loan Bank borrowings.
The fair value of the Company's derivatives is determined using discounted cash flow analysis using observable market-based inputs, which are considered Level 2 inputs.
Assets Measured at Fair Value on a Non-Recurring Basis
The valuation techniques described below were used to estimate fair value of financial instruments measured on a non-recurring basis as of September 30, 2019 and December 31, 2018.
Collateral Dependent Impaired Loans
For loans measured for impairment based on the fair value of the underlying collateral, fair value was estimated using a market approach. The Company measures the fair value of collateral underlying impaired loans primarily through obtaining independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include
25

adjustments, on an individual case-by-case basis, to comparable assets based on the appraisers’ market knowledge and experience, as well as adjustments for estimated costs to sell between 5% and 10%. Management classifies these loans as Level 3 within the fair value hierarchy.
Foreclosed Assets
Assets acquired through foreclosure or deed in lieu of foreclosure are carried at fair value, less estimated selling costs, which range between 5% and 10%. Fair value is generally based on independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case basis, to comparable assets based on the appraisers’ market knowledge and experience, and are classified as Level 3. When an asset is acquired, the excess of the loan balance over fair value less estimated selling costs is charged to the allowance for loan losses. A reserve for foreclosed assets may be established to provide for possible write-downs and selling costs that occur subsequent to foreclosure. Foreclosed assets are carried net of the related reserve. Operating results from real estate owned, including rental income, operating expenses, and gains and losses realized from the sales of real estate owned, are recorded as incurred.
There were no changes to the valuation techniques for fair value measurements as of September 30, 2019 and December 31, 2018.
The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair values as of September 30, 2019 and December 31, 2018, by level within the fair value hierarchy:
Fair Value Measurements at Reporting Date Using:
(In thousands) September 30, 2019 Quoted Prices in Active  Markets for Identical Assets (Level 1) Significant Other Observable  Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Available for sale debt securities:
Mortgage-backed securities $ 1,023,541    —    1,023,541    —   
State and municipal obligations 4,088    —    4,088    —   
Corporate obligations 25,366    —    25,366    —   
Total available for sale debt securities $ 1,052,995    —    1,052,995    —   
Equity securities 728    728    —    —   
Derivative assets 54,743    —    54,743    —   
$ 1,108,466    728    1,107,738    —   
Derivative liabilities $ 54,838    —    54,838    —   
Measured on a non-recurring basis:
Loans measured for impairment based on the fair value of the underlying collateral $ 19,025    —    —    19,025   
Foreclosed assets 1,534    —    —    1,534   
$ 20,559    —    —    20,559   

26

Fair Value Measurements at Reporting Date Using:
(In thousands) December 31, 2018 Quoted Prices in Active  Markets for Identical Assets (Level 1) Significant Other Observable  Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Available for sale debt securities:
Mortgage-backed securities $ 1,034,969    —    1,034,969    —   
State and municipal obligations 2,912    —    2,912    —   
Corporate obligations 25,198    —    25,198    —   
Total available for sale debt securities $ 1,063,079    —    1,063,079    —   
Equity Securities 635    635    —    —   
Derivative assets 15,634    —    15,634    —   
$ 1,079,348    635    1,078,713    —   
Derivative liabilities $ 14,766    —    14,766    —   
Measured on a non-recurring basis:
Loans measured for impairment based on the fair value of the underlying collateral $ 4,285    —    —    4,285   
Foreclosed assets 1,565    —    —    1,565   
$ 5,850    —    —    5,850   
There were no transfers between Level 1, Level 2 and Level 3 during the three and nine months ended September 30, 2019.
Other Fair Value Disclosures
The Company is required to disclose estimated fair value of financial instruments, both assets and liabilities on and off the balance sheet, for which it is practicable to estimate fair value. The following is a description of valuation methodologies used for those assets and liabilities.
Cash and Cash Equivalents
For cash and due from banks, federal funds sold and short-term investments, the carrying amount approximates fair value. Included in cash and cash equivalents at September 30, 2019 and December 31, 2018 was $27.3 million and $35.0 million, respectively, representing reserves required by banking regulations.
Held to Maturity Debt Securities
For held to maturity debt securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with whom the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark to comparable securities. Management evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As management is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, management compares the prices received from the pricing service to a secondary pricing source. Additionally, management compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has generally not resulted in adjustment in the prices obtained from the pricing service. The Company also holds debt instruments issued by the U.S. government and U.S. government agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 within the fair value hierarchy.
Federal Home Loan Bank of New York ("FHLBNY") Stock
The carrying value of FHLBNY stock is its cost. The fair value of FHLBNY stock is based on redemption at par value. The Company classifies the estimated fair value as Level 1 within the fair value hierarchy.
27

Loans
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial mortgage, residential mortgage, commercial, construction and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and into performing and non-performing categories. The fair value of performing loans was estimated using a combination of techniques, including a discounted cash flow model that utilizes a discount rate that reflects the Company’s current pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date (i.e. exit pricing). The rates take into account the expected yield curve, as well as an adjustment for prepayment risk, when applicable. The Company classifies the estimated fair value of its loan portfolio as Level 3.
The fair value for significant non-performing loans was based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. The Company classifies the estimated fair value of its non-performing loan portfolio as Level 3.
Deposits
The fair value of deposits with no stated maturity, such as non-interest bearing demand deposits and savings deposits, was equal to the amount payable on demand and classified as Level 1. The estimated fair value of certificates of deposit was based on the discounted value of contractual cash flows. The discount rate was estimated using the Company’s current rates offered for deposits with similar remaining maturities. The Company classifies the estimated fair value of its certificates of deposit portfolio as Level 2.
Borrowed Funds
The fair value of borrowed funds was estimated by discounting future cash flows using rates available for debt with similar terms and maturities and is classified by the Company as Level 2 within the fair value hierarchy.
Commitments to Extend Credit and Letters of Credit
The fair value of commitments to extend credit and letters of credit was estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value estimates of commitments to extend credit and letters of credit are deemed immaterial.
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.
Significant assets and liabilities that are not considered financial assets or liabilities include goodwill and other intangibles, deferred tax assets and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
28

The following tables present the Company’s financial instruments at their carrying and fair values as of September 30, 2019 and December 31, 2018. Fair values are presented by level within the fair value hierarchy.
Fair Value Measurements at September 30, 2019 Using:
(Dollars in thousands) Carrying value Fair value Quoted Prices in Active  Markets for Identical Assets (Level 1) Significant Other Observable  Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents $ 260,860    260,860    260,860    —    —   
Available for sale debt securities:
Mortgage-backed securities 1,023,541    1,023,541    —    1,023,541    —   
State and municipal obligations 4,088    4,088    —    4,088    —   
Corporate obligations 25,366    25,366    —    25,366    —   
Total available for sale debt securities $ 1,052,995    1,052,995    —    1,052,995    —   
Held to maturity debt securities:
Agency obligations 4,948    4,948    4,948    —    —   
Mortgage-backed securities 134    137    —    137    —   
State and municipal obligations 445,896    460,809    —    460,809    —   
Corporate obligations 10,760    10,804    —    10,804    —   
Total held to maturity debt securities $ 461,738    476,698    4,948    471,750    —   
FHLBNY stock 68,721    68,721    68,721    —    —   
Equity Securities 728    728    728    —    —   
Loans, net of allowance for loan losses 7,209,650    7,260,050    —    —    7,260,050   
Derivative assets 54,743    54,743    —    54,743    —   
Financial liabilities:
Deposits other than certificates of deposits $ 6,116,678    6,116,678    6,116,678    —    —   
Certificates of deposit 844,693    844,095    —    844,095    —   
Total deposits $ 6,961,371    6,960,773    6,116,678    844,095    —   
Borrowings 1,380,063    1,382,650    —    1,382,650    —   
Derivative liabilities 54,838    54,838    —    54,838    —   

29

Fair Value Measurements at December 31, 2018 Using:
(Dollars in thousands) Carrying value Fair value Quoted Prices in Active  Markets for Identical Assets (Level 1) Significant Other Observable  Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents $ 142,661    142,661    142,661    —    —   
Available for sale debt securities:
Mortgage-backed securities 1,034,969    1,034,969    —    1,034,969    —   
State and municipal obligations 2,912    2,912    —    2,912    —   
Corporate obligations 25,198    25,198    —    25,198    —   
Total available for sale debt securities $ 1,063,079    1,063,079    —    1,063,079    —   
Held to maturity debt securities:
Agency obligations $ 4,989    4,896    4,896    —    —   
Mortgage-backed securities 187    190    —    190    —   
State and municipal obligations 463,801    464,363    —    464,363    —   
Corporate obligations 10,448    10,291    —    10,291    —   
Total held to maturity debt securities $ 479,425    479,740    4,896    474,844    —   
FHLBNY stock 68,813    68,813    68,813    —    —   
Equity Securities 635    635    635    —    —   
Loans, net of allowance for loan losses 7,195,026    7,104,380    —    —    7,104,380   
Derivative assets 15,634    15,634    —    15,634    —   
Financial liabilities:
Deposits other than certificates of deposits $ 6,079,630    6,079,630    6,079,630    —    —   
Certificates of deposit 750,492    746,753    —    746,753    —   
Total deposits $ 6,830,122    6,826,383    6,079,630    746,753    —   
Borrowings 1,442,282    1,431,001    —    1,431,001    —   
Derivative liabilities 14,766    14,766    —    14,766    —   

30

Note 9. Other Comprehensive Income (Loss)
The following table presents the components of other comprehensive income (loss), both gross and net of tax, for the three and nine months ended September 30, 2019 and 2018 (in thousands):
Three months ended September 30,
2019 2018
Before
Tax 		Tax
Effect 		After
Tax 		Before
Tax 		Tax
Effect 		After
Tax
Components of Other Comprehensive Income:
Unrealized gains and losses on available for sale debt securities:
Net unrealized gains (losses) arising during the period $ 3,594    (980)   2,614    (6,547)   1,727    (4,820)  
Reclassification adjustment for gains included in net income —    —    —    —    —    —   
Total 3,594    (980)   2,614    (6,547)   1,727    (4,820)  
Unrealized gains on derivatives (cash flow hedges) 188    (51)   137    62    (16)   46   
Amortization related to post-retirement obligations 48    (13)   35    100    (25)   75   
Total other comprehensive income (loss) $ 3,830    (1,044)   2,786    (6,385)   1,686    (4,699)  

Nine months ended September 30,
2019 2018
Before
Tax 		Tax
Effect 		After
Tax 		Before
Tax 		Tax
Effect 		After
Tax
Components of Other Comprehensive Income:
Unrealized gains and losses on available for sale debt securities:
Net unrealized gains (losses) arising during the period $ 27,291    (7,437)   19,854    (24,310)   6,413    (17,897)  
Reclassification adjustment for gains included in net income —    —    —    —    —    —   
Total 27,291    (7,437)   19,854    (24,310)   6,413    (17,897)  
Unrealized (losses) gains on Derivatives (cash flow hedges) (1,119)   306    (813)   985    (261)   724   
Amortization related to post-retirement obligations 78    (21)   57    283    (72)   211   
Total other comprehensive income (loss) $ 26,250    (7,152)   19,098    (23,042)   6,080    (16,962)  
31

The following tables present the changes in the components of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2019 and 2018 (in thousands):
Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax
for the three months ended September 30,
2019 2018
Unrealized
Gains on
Available for Sale Debt Securities 		Post- Retirement
Obligations 		Unrealized (Losses) Gains on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Income 		Unrealized
Losses on
Available for Sale Debt Securities 		Post-  Retirement
Obligations 		Unrealized Gains on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Loss
Balance at
June 30, 		$ 7,635    (3,603)   (56)   3,976    (16,553)   (4,710)   1,351    (19,912)  
Current - period other comprehensive income (loss) 2,614    35    137    2,786    (4,820)   75    46    (4,699)  
Balance at September 30, $ 10,249    (3,568)   81    6,762    (21,373)   (4,635)   1,397    (24,611)  

Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax
for the nine months ended September 30,
2019 2018
Unrealized
Gains (Losses) on
Available for Sale Debt Securities 		Post-  Retirement
Obligations 		Unrealized Gains on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Income (Loss) 		Unrealized
Losses on
Available
 for 
Sale Debt Securities 		Post- Retirement
Obligations 		Unrealized Gains on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Loss
Balance at December 31, $ (9,605)   (3,625)   894    (12,336)   (3,292)   (4,846)   673    (7,465)  
Current - period other comprehensive income (loss) 19,854    57    (813)   19,098    (17,897)   211    724    (16,962)  
Reclassification of unrealized gains on equity securities due to the adoption of ASU No. 2016-01 $ —    —    —    —    (184)   —    —    (184)  
Balance at September 30, $ 10,249    (3,568)   81    6,762    (21,373)   (4,635)   1,397    (24,611)  
The following tables summarize the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 (in thousands):
Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Amount reclassified from AOCI for the three months ended September 30, Affected line item in the Consolidated
Statement of Income
2019 2018
Details of AOCI:
Post-retirement obligations:
Amortization of actuarial losses $ 48    100    Compensation and employee benefits (1)
(13)   (25)   Income tax expense
Total reclassification $ 35    75    Net of tax

32

Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Amount reclassified from AOCI for the nine months ended September 30, Affected line item in the Consolidated
Statement of Income
2019 2018
Details of AOCI:
Post-retirement obligations:
Amortization of actuarial losses $ 142    300    Compensation and employee benefits (1)
(39)   (78)   Income tax expense
Total reclassification $ 103    222    Net of tax
(1) This item is included in the computation of net periodic benefit cost. See Note 6. Components of Net Periodic Benefit Cost.

Note 10. Derivative and Hedging Activities
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through the management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities.
Non-designated Hedges. Derivatives not designated in qualifying hedging relationships are not speculative and result from a service the Company provides to certain qualified commercial borrowers in loan related transactions and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company executes interest rate swaps with qualified commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. The interest rate swap agreement which the Company executes with the commercial borrower is collateralized by the borrower's commercial real estate financed by the Company. As the Company has not elected to apply hedge accounting and these interest rate swaps do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. At September 30, 2019 and December 31, 2018, the Company had 82 and 62 interest rate swaps, respectively, with aggregate notional amounts of $1.41 billion and $1.01 billion, respectively.
The Company periodically enters into risk participation agreements ("RPAs") with the Company functioning as either the lead institution, or as a participant when another company is the lead institution on a commercial loan. These RPA's are entered into to manage the credit exposure on interest rate contracts associated with these loan participation agreements. Under the RPA's, the Company will either receive or make a payment if a borrower defaults on the related interest rate contract. At September 30, 2019 and December 31, 2018, the Company had 13 and 7 credit contracts, respectively, with aggregate notional amounts of $105.0 million and $66.8 million, respectively, from participations in interest rate swaps as part of these loan participation arrangements. At September 30, 2019 and December 31, 2018, the fair value of these credit derivatives were $61,000 and $251,000, respectively.
Cash Flow Hedges of Interest Rate Risk. The Company’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. 
Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three and nine months ended September 30, 2019 and 2018, such derivatives were used to hedge the variable cash outflows associated with Federal Home Loan Bank borrowings.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings. During the next twelve months, the Company estimates that $295,000 will be reclassified as an increase to interest expense. As of September 30, 2019, the Company had five outstanding interest rate derivatives with an aggregate notional amount of $130.0 million that were designated as a cash flow hedge of interest rate risk.
33

The tables below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition at September 30, 2019 and December 31, 2018 (in thousands):
At September 30, 2019
Asset Derivatives Liability Derivatives
Consolidated Statements of Financial Condition Fair
Value 		Consolidated Statements of Financial Condition Fair
Value
Derivatives not designated as a hedging instrument:
Interest rate products Other assets $ 54,571    Other liabilities 54,838   
Credit contracts Other assets 61    Other liabilities —   
Total derivatives not designated as a hedging instrument $ 54,632    54,838   
Derivatives designated as a hedging instrument:
Interest rate products Other assets $ 111    Other liabilities —   
Total derivatives designated as a hedging instrument $ 111    —   

At December 31, 2018
Asset Derivatives Liability Derivatives
Consolidated Statements of Financial Condition Fair
Value 		Consolidated Statements of Financial Condition Fair
Value
Derivatives not designated as a hedging instrument:
Interest rate products Other assets $ 14,154    Other liabilities 14,766   
Credit contracts Other assets 251    Other liabilities —   
Total derivatives not designated as a hedging instrument $ 14,405    14,766   
Derivatives designated as a hedging instrument:
Interest rate products Other assets $ 1,229    Other liabilities —   
Total derivatives designated as a hedging instrument $ 1,229    —   
The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three and nine months ended September 30, 2019 and 2018 (in thousands).
Gain (loss) recognized in income on derivatives for the three months ended
Consolidated Statements of Income September 30, 2019 September 30, 2018
Derivatives not designated as a hedging instrument:
Interest rate products Other income $ 2,307    27   
Credit contracts Other income (71)   (145)  
Total $ 2,236    (118)  
Derivatives designated as a hedging instrument:
Interest rate products Interest expense $ 157    105   
Total $ 157    105   

34

Gain (loss) recognized in income on derivatives for the nine months ended
Consolidated Statements of Income September 30, 2019 September 30, 2018
Derivatives not designated as a hedging instrument:
Interest rate products Other income $ 212    265   
Credit contracts Other income (56)   (64)  
Total $ 156    201   
Derivatives designated as a hedging instrument:
Interest rate products Interest expense $ 466    (185)  
Total $ 466    (185)  
The Company has agreements with certain of its dealer counterparties which contain a provision that if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.
In addition, the Company has agreements with certain of its dealer counterparties which contain a provision that if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.
At September 30, 2019, the Company had four dealer counterparties. The Company had a net liability position with respect to all four of the counterparties. The termination value for this net liability position, which includes accrued interest, was $54.7 million at September 30, 2019. The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $54.4 million against its obligations under these agreements. If the Company had breached any of these provisions at September 30, 2019, it could have been required to settle its obligations under the agreements at the termination value.
Note 11. Revenue Recognition
The Company generates revenue from several business channels. The guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) does not apply to revenue associated with financial instruments, including interest income on loans and investments, which comprise the majority of the Company's revenue. For the three months and nine months ended September 30, 2019, the out-of-scope revenue related to financial instruments was 83.8% and 85.9% of the Company's total revenue, respectively, compared to 85.1% and 86.1% for the three and nine months ended September 30, 2018, respectively. Revenue-generating activities that are within the scope of Topic 606, are components of non-interest income. These revenue streams are generally classified into two categories: wealth management revenue and banking service charges and other fees.
The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30, 2019 and 2018:
Three months ended September 30, Nine months ended September 30,
(in-thousands) 2019 2018 2019 2018
Non-interest income
In-scope of Topic 606:
Wealth management fees $ 6,084    4,570    16,406    13,572   
Banking service charges and other fees:
Service charges on deposit accounts 3,386    3,356    9,853    9,910   
Debit card and ATM fees 1,474    1,486    4,271    4,444   
Total banking service charges and other fees 4,860    4,842    14,124    14,354   
Total in-scope non-interest income 10,944    9,412    30,530    27,926   
Total out-of-scope non-interest income 7,103    6,504    15,539    15,134   
Total non-interest income $ 18,047    15,916    46,069    43,060   
35

Wealth management fee income represents fees earned from customers as consideration for asset management, investment advisory and trust services. The Company’s performance obligation is generally satisfied monthly and the resulting fees are recognized monthly. The fee is generally based upon the average market value of the assets under management ("AUM") for the month and the applicable fee rate. For customers acquired in the recently completed T&L transaction, the fee is based upon AUM at the end of the preceding quarter and the applicable fee rate. The monthly accrual of wealth management fees is recorded in other assets on the Company's Consolidated Statements of Financial Condition. Fees are received from the customer either on a monthly or quarterly basis. The Company does not earn performance-based incentives. Other optional services such as tax return preparation, financial planning and estate settlement are also available to existing customers. The Company’s performance obligation for these transaction-based services are generally satisfied, and related revenue recognized, at either a point in time when the service is completed, or in the case of estate settlement, over a relatively short period of time, as each service component is completed.
Service charges on deposit accounts include overdraft service fees, account analysis fees and other deposit related fees. These fees are generally transaction-based, or time-based services. The Company's performance obligation for these services are generally satisfied, and revenue recognized, at the time the transaction is completed, or the service rendered. Fees for these services are generally received from the customer either at the time of transaction, or monthly. Debit card and ATM fees are generally transaction-based. Debit card revenue is primarily comprised of interchange fees earned when a customer's Company card is processed through a card payment network. ATM fees are largely generated when a Company cardholder uses a non-Company ATM, or a non-Company cardholder uses a Company ATM. The Company's performance obligation for these services is satisfied when the service is rendered. Payment is generally received at time of transaction or monthly.
Out-of-scope non-interest income primarily consists of Bank-owned life insurance and net fees on loan level interest rate swaps, along with gains and losses on the sale of loans and foreclosed real estate, loan prepayment fees and loan servicing fees. None of these revenue streams are subject to the requirements of Topic 606.
Note 12. Leases
On January 1, 2019, the Company adopted ASU 2016-02, "Leases" (Topic 842) and all subsequent ASU's that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. The Company elected the modified retrospective transition option effective with the period of adoption, elected not to recast comparative periods presented when transitioning to the new leasing standard and adjustments, if required, are made at the beginning of the period through a cumulative-effect adjustment to opening retained earnings. The Company also elected practical expedients, which allowed the Company to forego a reassessment of (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) the initial direct costs for any existing leases. The adoption of the new standard resulted in the Company recording a right-of-use asset and an operating lease liability of $44.9 million and $46.1 million, respectively, based on the present value of the expected remaining lease payments at January 1, 2019.
Also, on January 1, 2019, the Company had $5.9 million of net deferred gains associated with several sale and leaseback transactions executed prior to the adoption of ASU 2016-02. In accordance with the guidance, these net deferred gains were adjusted, net of tax, as a cumulative-effect adjustment to opening retained earnings.
All of the leases in which the Company is the lessee are classified as operating leases and are primarily comprised of real estate property for branches and administrative offices with terms extending through 2040.
The following table represents the consolidated statements of financial condition classification of the Company’s right-of use-assets and lease liabilities at September 30, 2019 (in thousands):
Classification September 30, 2019
Lease Right-of-Use Assets:
Operating lease right-of-use assets Other assets $ 43,483   
Lease Liabilities:
Operating lease liabilities Other liabilities $ 44,562   
The calculated amount of the right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. Generally, the Company considers the first renewal option to be reasonably certain and includes it in the
36

calculation of the right-of use asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception based upon the term of the lease. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was applied.
At September 30, 2019, the weighted-average remaining lease term and the weighted-average discount rate for the Company's operating leases were 9.6 years and 3.45%, respectively.
The following table represents lease costs and other lease information for the Company's operating leases. The variable lease cost primarily represents variable payments such as common area maintenance and utilities (in thousands):
(in-thousands) Three months ended September 30, 2019 Nine months ended September 30, 2019
Lease Costs
Operating lease cost $ 2,127    $ 6,303   
Variable lease cost 727    2,083   
Total Lease Cost $ 2,854    $ 8,386   

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 6,179   
During the three months ended September 30, 2019, the Company did not enter into any new lease obligations. During the nine months ended September 30, 2019, the Company entered into one new lease obligation related to the T&L acquisition. The Company recorded a $1.9 million right-of-use asset for this lease obligation.
Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2019 were as follows:
(in-thousands) Operating Leases
Twelve months ended:
Remainder of 2019 $ 2,125   
2020 8,316   
2021 6,064   
2022 5,263   
2023 4,752   
Thereafter 26,541   
Total future minimum lease payments 53,061   
Amounts representing interest 8,499   
Present value of net future minimum lease payments $ 44,562   
At December 31, 2018, operating lease commitments under lessee arrangements were $8.0 million, $7.6 million, $5.4 million, $3.8 million and $3.4 million for 2019 through 2023, respectively, and $10.7 million in aggregate for all years thereafter.

Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
Certain statements contained herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” "project," "intend," “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q, and those related to the economic environment, particularly in the market areas in which the Company operates, competitive
37

products and pricing, fiscal and monetary policies of the U.S. Government, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not have any obligation to update any forward-looking statements to reflect events or circumstances after the date of this statement.
Acquisition
On April 1, 2019, Beacon Trust Company ("Beacon") completed its acquisition of certain assets of Tirschwell & Loewy, Inc. ("T&L"), a New York City-based independent registered investment adviser. Beacon is a wholly owned subsidiary of Provident Bank which, in turn, is wholly owned by the Company. This acquisition expanded the Company’s wealth management business by $822.4 million of assets under management at the time of acquisition.
The acquisition was accounted for under the acquisition method of accounting. The Company recorded goodwill of $8.2 million, a customer relationship intangible of $12.6 million and $800,000 of other identifiable intangibles related to the acquisition. In addition, the Company recorded a contingent consideration liability at its fair value of $6.6 million. The contingent consideration arrangement requires the Company to pay additional cash consideration to T&L's former stakeholders over a three-year period after the closing date of the acquisition if certain financial and business retention targets are met. The acquisition agreement limits the total additional payment to a maximum of $11.0 million, to be determined based on actual future results. Total cost of the acquisition was $21.6 million, which included cash consideration of $15.0 million and contingent consideration with a fair value of $6.6 million. Tangible assets acquired in the transaction were nominal. No liabilities were assumed in the acquisition. The goodwill recorded in the transaction is deductible for tax purposes.
The calculation of goodwill is subject to change for up to one year after the closing date of the transaction as additional information relative to closing date estimates and uncertainties becomes available. As the Company finalizes its analysis of these assets, there may be adjustments to the recorded carrying values.
Critical Accounting Policies
The Company considers certain accounting policies to be critically important to the fair presentation of its financial condition and results of operations. These policies require management to make complex judgments on matters which by their nature have elements of uncertainty. The sensitivity of the Company’s consolidated financial statements to these critical accounting policies, and the assumptions and estimates applied, could have a significant impact on its financial condition and results of operations. These assumptions, estimates and judgments made by management can be influenced by a number of factors, including the general economic environment. The Company has identified the following as critical accounting policies:
•Adequacy of the allowance for loan losses; and
•Valuation of deferred tax assets
The calculation of the allowance for loan losses is a critical accounting policy of the Company. The allowance for loan losses is a valuation account that reflects management’s evaluation of the probable losses in the loan portfolio. The Company maintains the allowance for loan losses through provisions for loan losses that are charged to income. Charge-offs against the allowance for loan losses are taken on loans where management determines that the collection of loan principal is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for loan losses.
Management's evaluation of the adequacy of the allowance for loan losses includes a review of all loans on which the collectability of principal may not be reasonably assured. For residential mortgage and consumer loans, this is determined primarily by delinquency status. For commercial mortgage, multi-family, construction and commercial loans, an extensive review of financial performance, payment history and collateral values is conducted on a quarterly basis.
As part of its evaluation of the adequacy of the allowance for loan losses, each quarter management prepares an analysis that categorizes the entire loan portfolio by certain risk characteristics such as loan type (residential mortgage, commercial mortgage, construction, commercial, etc.) and loan risk rating.
38

When assigning a risk rating to a loan, management utilizes a nine point internal risk rating system. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, multi-family, construction and commercial loans are rated individually and each lending officer is responsible for risk rating loans in their portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and the Credit Department. The risk ratings are also confirmed through periodic loan review examinations, which are currently performed by an independent third party, and periodically by the Credit Committee in the credit renewal or approval process. In addition, the Bank requires an annual review be performed for commercial and commercial real estate loans above certain dollar thresholds, depending on loan type, to help determine the appropriate risk rating.
Management estimates the amount of loan losses for groups of loans by applying quantitative loss factors to loan segments at the risk rating level, and applying qualitative adjustments to each loan segment at the portfolio level. Quantitative loss factors give consideration to historical loss experience by loan type based upon an appropriate look-back period and adjusted for a loss emergence period. Quantitative loss factors are evaluated at least annually. Management completed its annual evaluation of the quantitative loss factors for the quarter ended September 30, 2018. Qualitative adjustments give consideration to other qualitative or environmental factors such as trends and levels of delinquencies, impaired loans, charge-offs, recoveries and loan volumes, as well as national and local economic trends and conditions. Qualitative adjustments reflect risks in the loan portfolio not captured by the quantitative loss factors and, as such, are evaluated from a risk level perspective relative to the risk levels present over the look-back period. Qualitative adjustments are recalibrated at least annually and evaluated at least quarterly. The reserves resulting from the application of both of these sets of loss factors are combined to arrive at the allowance for loans collectively evaluated for impairment.
Management believes the primary risks inherent in the portfolio are a general decline in the economy, a decline in real estate market values, rising unemployment or a protracted period of elevated unemployment, increasing vacancy rates in commercial investment properties and possible increases in interest rates in the absence of economic improvement. Any one or a combination of these events may adversely affect borrowers’ ability to repay the loans, resulting in increased delinquencies, loan losses and future levels of provisions. Accordingly, the Company has provided for loan losses at the current level to address the current risk in its loan portfolio. Management considers it important to maintain the ratio of the allowance for loan losses to total loans at an acceptable level given current economic conditions, interest rates and the composition of the portfolio.
Although management believes that the Company has established and maintained the allowance for loan losses at appropriate levels, additions may be necessary if future economic and other conditions differ substantially from the current operating environment. Management evaluates its estimates and assumptions on an ongoing basis giving consideration to historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. Illiquid credit markets, volatile securities markets, and declines in the housing and commercial real estate markets and the economy generally have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. In addition, various regulatory agencies periodically review the adequacy of the Company’s allowance for loan losses as an integral part of their examination process. Such agencies may require the Company to recognize additions to the allowance or additional write-downs based on their judgments about information available to them at the time of their examination. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change.
The determination of whether deferred tax assets will be realizable is predicated on the reversal of existing deferred tax liabilities and estimates of future taxable income. Such estimates are subject to management’s judgment. A valuation allowance is established when management is unable to conclude that it is more likely than not that it will realize deferred tax assets based on the nature and timing of these items. The Company did not require a valuation allowance at September 30, 2019 or December 31, 2018.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2019 AND DECEMBER 31, 2018
Total assets at September 30, 2019 were $9.92 billion, a $192.6 million increase from December 31, 2018. The increase in total assets was primarily due to a $118.2 million increase in cash and cash equivalents, a $71.2 million increase in other assets, a $19.4 million increase in intangible assets and a $16.4 million increase in total loans, partially offset by a $27.8 million decrease in total investments.
39

The increase in other assets was largely due to the Company's January 1, 2019 adoption of a new lease accounting standard. The Company recorded a right of use asset ("ROU") of $44.9 million, which was based on the present value of the expected remaining lease payments at January 1, 2019. At September 30, 2019 the ROU was $43.5 million.
The Company’s loan portfolio increased $16.4 million to $7.27 billion at September 30, 2019, from $7.25 billion at December 31, 2018. For the nine months ended September 30, 2019, loan originations, including advances on lines of credit, totaled $2.04 billion, compared with $2.34 billion for the same period in 2018. During the nine months ended September 30, 2019, the loan portfolio had net increases of $137.8 million in commercial mortgage loans and $10.5 million in construction loans, partially offset by net decreases of $41.0 million in multi-family mortgage loans, $35.2 million in commercial loans, $27.9 million in consumer loans and $27.3 million in residential mortgage loans. Commercial real estate, commercial and construction loans represented 79.7% of the loan portfolio at September 30, 2019, compared to 78.9% at December 31, 2018.
The Company participates in loans originated by other banks, including participations designated as Shared National Credits (“SNCs”). The Company’s gross commitments and outstanding balances as a participant in SNCs were $233.6 million and $123.2 million, respectively, at September 30, 2019, compared to $266.8 million and $146.0 million, respectively, at December 31, 2018. No SNCs were 90 days or more delinquent at September 30, 2019.
The Company had outstanding junior lien mortgages totaling $151.7 million at September 30, 2019. Of this total, 13 loans totaling $566,000 were 90 days or more delinquent. These loans were allocated total loss reserves of $99,000.
The following table sets forth information regarding the Company’s non-performing assets as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019 December 31, 2018
Mortgage loans:
Residential $ 6,456    5,853   
Commercial 1,728    3,180   
Total mortgage loans 8,184    9,033   
Commercial loans 30,436    15,391   
Consumer loans 1,361    1,266   
Total non-performing loans 39,981    25,690   
Foreclosed assets 1,534    1,565   
Total non-performing assets $ 41,515    27,255   
The following table sets forth information regarding the Company’s 60-89 day delinquent loans as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019 December 31, 2018
Mortgage loans:
Residential $ 2,333    5,557   
Commercial —    —   
Total mortgage loans 2,333    5,557   
Commercial loans 1,548    13,565   
Consumer loans 556    610   
Total 60-89 day delinquent loans $ 4,437    19,732   
At September 30, 2019, the allowance for loan losses totaled $57.3 million, or 0.79% of total loans, compared to $55.6 million, or 0.77% of total loans at December 31, 2018. Total non-performing loans were $40.0 million, or 0.55% of total loans at September 30, 2019, compared to $25.7 million, or 0.35% of total loans at December 31, 2018. The $14.3 million increase in non-performing loans consisted of a $15.0 million increase in non-performing commercial loans, a $603,000 increase in non-performing residential mortgage loans and a $95,000 increase in non-performing consumer loans, partially offset by a $1.5 million decrease in non-performing commercial mortgage loans. Non-performing loans do not include $842,000 of purchased credit impaired ("PCI") loans acquired from Team Capital Bank in 2014.
At September 30, 2019 and December 31, 2018, the Company held $1.5 million and $1.6 million of foreclosed assets, respectively. During the nine months ended September 30, 2019, there were five additions to foreclosed assets with a carrying value of $850,000, and five properties sold with a carrying value of $881,000. Foreclosed assets at September 30, 2019 consisted of $1.4 million of residential real estate, $130,000 of marine assets and $48,000 of commercial real estate.
40

Non-performing assets totaled $41.5 million, or 0.42% of total assets at September 30, 2019, compared to $27.3 million, or 0.28% of total assets at December 31, 2018.
Total investments were $1.58 billion at September 30, 2019, a $27.8 million decrease from December 31, 2018. This decrease was largely due to repayments of mortgage-backed securities, maturities and calls of certain municipal and agency bonds, partially offset by purchases of mortgage-backed and municipal securities and an increase in unrealized gains on available for sale debt securities.
Intangible assets increased $19.4 million to $437.6 million at September 30, 2019. The increase in intangible assets was primarily related to the Company's April 1, 2019 acquisition of T&L, partially offset by scheduled amortization.
Total deposits increased $131.2 million during the nine months ended September 30, 2019 to $6.96 billion. Total time deposits increased $94.2 million to $844.7 million at September 30, 2019, while total core deposits, consisting of savings and demand deposit accounts, increased $37.0 million to $6.12 billion at September 30, 2019. The increase in time deposits was primarily the result of a $159.9 million increase in brokered deposits, partially offset by a $65.7 million decrease in retail time deposits. The increase in core deposits was largely attributable to a $202.0 million increase in non-interest bearing demand deposits and a $97.4 million increase in money market deposits, partially offset by a $196.0 million decrease in interest bearing demand deposits and a $66.3 million decrease in savings deposits. Core deposits represented 87.9% of total deposits at September 30, 2019, compared to 89.0% at December 31, 2018.
Borrowed funds decreased $62.2 million during the nine months ended September 30, 2019, to $1.38 billion. The decrease in borrowings for the period was primarily the result of wholesale funding being partially replaced by the net inflows of deposits. Borrowed funds represented 13.9% of total assets at September 30, 2019, a decrease from 14.8% at December 31, 2018.
Stockholders’ equity increased $38.9 million during the nine months ended September 30, 2019, to $1.40 billion, primarily due to net income earned for the period and an increase in unrealized gains on available for sale debt securities, partially offset by dividends paid to stockholders and common stock repurchases. For the nine months ended September 30, 2019, common stock repurchases totaled 916,326 shares at an average cost of $23.81, of which 73,311 shares, at an average cost of $27.08, were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At September 30, 2019, 1.6 million shares remained eligible for repurchase under the current stock repurchase authorization.
Book value per share and tangible book value per share at September 30, 2019 were $21.26 and $14.60, respectively, compared with $20.49 and $14.18, respectively, at December 31, 2018. Tangible book value per share is a non-GAAP financial measure. The following table reconciles book value per share to tangible book value per share and the associated calculations (in thousands, except per share data):
September 30, 2019 December 31, 2018
Total stockholders' equity $ 1,397,833    1,358,980   
Less: Total intangible assets 437,585    418,178   
Total tangible stockholders' equity $ 960,248    940,802   
Shares outstanding at September 30, 2019 and December 31, 2018 65,760,468    66,325,458   
Book value per share (total stockholders' equity/shares outstanding) $ 21.26    20.49   
Tangible book value per share (total tangible stockholders' equity/shares outstanding) $ 14.60    14.18   
Liquidity and Capital Resources. Liquidity refers to the Company’s ability to generate adequate amounts of cash to meet financial obligations to its depositors, to fund loans and securities purchases, deposit outflows and operating expenses. Sources of funds include scheduled amortization of loans, loan prepayments, scheduled maturities of investments, cash flows from mortgage-backed securities and the ability to borrow funds from the FHLBNY and approved broker-dealers.
Cash flows from loan payments and maturing investment securities are fairly predictable sources of funds. Changes in interest rates, local economic conditions and the competitive marketplace can influence loan prepayments, prepayments on mortgage-backed securities and deposit flows.
The Federal Deposit Insurance Corporation and the other federal bank regulatory agencies issued a final rule that revised the leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act, that were effective January 1, 2015. Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), adopted a uniform minimum leverage capital ratio at 4%, increased the minimum
41

Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on non-accrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The rule also required unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital unless a one-time opt-out was exercised. The Company exercised the option to exclude unrealized gains and losses from the calculation of regulatory capital. Additional constraints were also imposed on the inclusion in regulatory capital of mortgage-servicing assets, deferred tax assets and minority interests. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer,” of 2.5% in addition to the amount necessary to meet its minimum risk-based capital requirements.
As of September 30, 2019, the Bank and the Company exceeded all current minimum regulatory capital requirements as follows:
September 30, 2019
Required Required with Capital Conservation Buffer Actual
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
Bank:(1)
Tier 1 leverage capital $ 378,631    4.00  % $ 378,631    4.00  % $ 904,796    9.56  %
Common equity Tier 1 risk-based capital 345,567    4.50    537,549    7.00    904,796    11.78   
Tier 1 risk-based capital 460,756    6.00    652,738    8.50    904,796    11.78   
Total risk-based capital 614,341    8.00    806,323    10.50    962,282    12.53   
Company:
Tier 1 leverage capital $ 378,497    4.00  % $ 378,497    4.00  % $ 953,799    10.08  %
Common equity Tier 1 risk-based capital 345,438    4.50    537,348    7.00    953,799    12.43   
Tier 1 risk-based capital 460,584    6.00    652,494    8.50    953,799    12.43   
Total risk-based capital 614,112    8.00    806,022    10.50    1,011,285    13.17   
(1) Under the FDIC's prompt corrective action provisions, the Bank is considered well capitalized if it has: a leverage (Tier 1) capital ratio of at least 5.00%; a common equity Tier 1 risk-based capital ratio of 6.50%; a Tier 1 risk-based capital ratio of at least 8.00%; and a total risk-based capital ratio of at least 10.00%.
COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
General. The Company reported net income of $31.4 million, or $0.49 per basic and diluted share for the three months ended September 30, 2019, compared to net income of $35.5 million, or $0.55 per basic and $0.54 per diluted share for the three months ended September 30, 2018. For the nine months ended September 30, 2019, the Company reported net income of $86.7 million, or $1.34 per basic and diluted share, compared to net income of $82.6 million, or $1.27 per basic and diluted share, for the same period last year.
Net Interest Income. Total net interest income decreased $2.3 million to $73.5 million for the quarter ended September 30, 2019, from $75.8 million for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, total net interest income increased $1.7 million to $225.1 million, from $223.3 million for the same period in 2018. Interest income for the quarter ended September 30, 2019 increased $1.8 million to $93.0 million, from $91.3 million for the same period in 2018. For the nine months ended September 30, 2019, interest income increased $15.2 million to $281.1 million, from $265.9 million for the nine months ended September 30, 2018. Interest expense increased $4.0 million to $19.5 million for the quarter ended September 30, 2019, from $15.5 million for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, interest expense increased $13.4 million to $56.0 million, from $42.6 million for the nine months ended September 30, 2018. The decline in net interest income for the three months ended September 30, 2019, compared with three months ended September 30, 2018, was primarily due to the period-over-period compression in the net interest margin as the increase in the cost of the Company’s average interest-bearing deposits and borrowings outpaced the improvement in the yield on average total loans. This was tempered by the net inflow of deposits and growth in average non-interest bearing deposits, which mitigated the Company’s need to utilize higher-cost sources to fund average interest earning assets. The improvement in net interest income for the nine months ended September 30, 2019, compared to the same period in 2018, was driven by an increase in the net interest margin. The improvement in net interest margin for the nine months ended September 30, 2019 was aided by the
42

recognition of $2.2 million in interest income, in the second quarter of 2019, upon the prepayment of loans which had previously been non-accruing.
The net interest margin decreased 15 basis points to 3.23% for the quarter ended September 30, 2019, compared to 3.38% for the quarter ended September 30, 2018. The weighted average yield on interest-earning assets increased two basis points to 4.09% for the quarter ended September 30, 2019, compared with 4.07% for the quarter ended September 30, 2018, while the weighted average cost of interest bearing liabilities increased 23 basis points to 1.13% for the quarter ended September 30, 2019, compared to the third quarter of 2018. The average cost of interest bearing deposits for the quarter ended September 30, 2019 was 0.87%, compared with 0.60% for the same period last year. Average non-interest bearing demand deposits totaled $1.51 billion for the quarter ended September 30, 2019, compared to $1.50 billion at September 30, 2018. The average cost of borrowed funds for the quarter ended September 30, 2019 was 2.13%, compared to 1.93% for the same period last year.
For the nine months ended September 30, 2019, the net interest margin increased two basis points to 3.35%, compared to 3.33% for the nine months ended September 30, 2018. The yield on interest-earning assets and net interest margin for the nine months ended September 30, 2019 were enhanced by three basis points as a result of the recognition in the second quarter of $2.2 million in interest income upon the prepayment of loans which had previously been non-accruing. Excluding the impact of the receipt of this non-accrual loan interest in the prior quarter, the net interest margin compressed one basis point for the nine months ended September 30, 2019, compared with the prior year period. The weighted average yield on interest earning assets increased 21 basis points to 4.19% for the nine months ended September 30, 2019, compared to 3.98% for the nine months ended September 30, 2018, while the weighted average cost of interest bearing liabilities increased 27 basis points for the nine months ended September 30, 2019 to 1.10%, compared to the nine months ended September 30, 2018. The average cost of interest bearing deposits for the nine months ended September 30, 2019 was 0.84%, compared to 0.53% for the same period last year. Average non-interest bearing demand deposits totaled $1.47 billion for the nine months ended September 30, 2019, compared with $1.46 billion for the nine months ended September 30, 2018. The average cost of borrowings for the nine months ended September 30, 2019 was 2.13%, compared with 1.81% for the same period last year.
Interest income on loans secured by real estate increased $1.9 million to $56.4 million for the three months ended September 30, 2019, from $54.5 million for the three months ended September 30, 2018. Commercial loan interest income decreased $126,000 to $20.1 million for the three months ended September 30, 2019, from $20.2 million for the three months ended September 30, 2018. Consumer loan interest income decreased $447,000 to $4.6 million for the three months ended September 30, 2019, from $5.1 million for the three months ended September 30, 2018. For the three months ended September 30, 2019, the average balance of total loans increased $4.6 million to $7.20 billion, compared to the same period in 2018. The average yield on total loans for the three months ended September 30, 2019 increased six basis points to 4.44%, from 4.38% for the same period in 2018.
Interest income on loans secured by real estate increased $8.3 million to $167.1 million for the nine months ended September 30, 2019, from $158.8 million for the nine months ended September 30, 2018. Commercial loan interest income increased $5.1 million to $63.8 million for the nine months ended September 30, 2019, from $58.7 million for the nine months ended September 30, 2018. Consumer loan interest income decreased $729,000 to $14.2 million for the nine months ended September 30, 2019, from $14.9 million for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, the average balance of total loans decreased $40.7 million to $7.17 billion, from $7.21 billion for the same period in 2018. The average yield on total loans for the nine months ended September 30, 2019 increased 26 basis points to 4.53%, from 4.27% for the same period in 2018.
Interest income on held to maturity debt securities decreased $74,000 to $3.1 million for the quarter ended September 30, 2019, compared to the same period last year. Average held to maturity debt securities decreased $8.7 million to $464.6 million for the quarter ended September 30, 2019, from $473.3 million for the same period last year. Interest income on held to maturity debt securities decreased $39,000 to $9.4 million for the nine months ended September 30, 2019, compared to the same period in 2018. Average held to maturity debt securities decreased $823,000 to $470.8 million for the nine months ended September 30, 2019, from $471.6 million for the same period last year.
Interest income on available for sale debt securities and FHLBNY stock increased $113,000 to $7.9 million for the quarter ended September 30, 2019, from $7.8 million for the quarter ended September 30, 2018. The average balance of available for sale debt securities and FHLBNY stock increased $36.9 million to $1.16 billion for the three months ended September 30, 2019, compared to the same period in 2018. Interest income on available for sale debt securities and FHLBNY stock increased $1.8 million to $24.6 million for the nine months ended September 30, 2019, from $22.7 million for the same period last year. The average balance of available for sale debt securities and FHLBNY stock increased $35.7 million to $1.16 billion for the nine months ended September 30, 2019.
43

The average yield on total securities decreased to 2.71% for the three months ended September 30, 2019, compared with 2.75% for the same period in 2018. For the nine months ended September 30, 2019, the average yield on total securities increased to 2.80%, compared with 2.69% for the same period in 2018.
Interest expense on deposit accounts increased $3.9 million to $11.7 million for the quarter ended September 30, 2019, compared with $7.9 million for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, interest expense on deposit accounts increased $12.9 million to $33.9 million, from $21.1 million for the same period last year. The average cost of interest bearing deposits increased to 0.87% for the third quarter of 2019 and 0.84% for the nine months ended September 30, 2019, from 0.60% and 0.53% for the three and nine months ended September 30, 2018, respectively. The average balance of interest bearing core deposits for the quarter ended September 30, 2019 decreased $19.0 million to $4.55 billion. For the nine months ended September 30, 2019, average interest bearing core deposits decreased $17.7 million, to $4.62 billion, from $4.64 billion for the same period in 2018. Average time deposit account balances increased $173.5 million, to $827.1 million for the quarter ended September 30, 2019, from $653.6 million for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, average time deposit account balances increased $157.4 million, to $802.4 million, from $645.0 million for the same period in 2018.
Interest expense on borrowed funds increased $149,000 to $7.8 million for the quarter ended September 30, 2019, from $7.6 million for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, interest expense on borrowed funds increased $578,000 to $22.1 million, from $21.5 million for the nine months ended September 30, 2018. The average cost of borrowings increased to 2.13% for the three months ended September 30, 2019, from 1.93% for the three months ended September 30, 2018. The average cost of borrowings increased to 2.13% for the nine months ended September 30, 2019, from 1.81% for the same period last year. Average borrowings decreased $124.1 million to $1.45 billion for the quarter ended September 30, 2019, from $1.57 billion for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, average borrowings decreased $197.4 million to $1.39 billion, compared to $1.58 billion for the nine months ended September 30, 2018.
Provision for Loan Losses. Provisions for loan losses are charged to operations in order to maintain the allowance for loan losses at a level management considers necessary to absorb probable credit losses inherent in the loan portfolio. In determining the level of the allowance for loan losses, management considers past and current loss experience, evaluations of real estate collateral, current economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay the loan and the levels of non-performing and other classified loans. The amount of the allowance is based on estimates, and the ultimate losses may vary from such estimates as more information becomes available or later events change. Management assesses the adequacy of the allowance for loan losses on a quarterly basis and makes provisions for loan losses, if necessary, in order to maintain the adequacy of the allowance.
The Company recorded provisions for loan losses of $500,000 and $10.2 million for the three and nine months ended September 30, 2019, respectively. This compared with provisions for loan losses of $1.0 million and $21.9 million recorded for the three and nine months ended September 30, 2018, respectively. For the nine months ended September 30, 2019, the provision for loan losses was largely driven by deterioration in several commercial credit relationships. This included fully providing for a $5.7 million relationship with a commercial contractor, $3.3 million in connection with a $14.1 million interest in an impaired syndicated credit to a franchise restaurant owner/operator and $1.2 million related to a $3.7 million commercial relationship with a charter bus company. The $5.7 million relationship related to the commercial contractor was charged-off in the third quarter. For the three and nine months ended September 30, 2019, the Company had net charge-offs of $6.0 million and $8.4 million, respectively, compared to net charge-offs of $5.9 million and $28.2 million, respectively, for the same periods in 2018. At September 30, 2019, the Company’s allowance for loan losses was $57.3 million, or 0.79% of total loans, compared with $55.6 million, or 0.77% of total loans at December 31, 2018.
For the nine months ended September 30, 2018, the provision for loan losses and loan charge-offs were negatively impacted by several commercial credits, including a $15.4 million credit to an asset-based lending borrower and two credits totaling $4.0 million to another commercial borrower. For the nine months ended September 30, 2018, the Company recorded charge-offs of $18.9 million on these commercial credits. The Company exited the asset-based lending business in the latter part of 2018.
Non-Interest Income. Non-interest income totaled $18.0 million for the quarter ended September 30, 2019, an increase of $2.1 million, compared to the same period in 2018. Wealth management income increased $1.5 million to $6.1 million for the three months ended September 30, 2019, primarily due to fees earned from assets under management acquired in the T&L transaction. Other income increased $1.3 million to $3.1 million for the three months ended September 30, 2019, compared to the quarter ended September 30, 2018, primarily due to a $1.8 million increase in net customer swap fee income, partially offset by a $383,000 decrease in net gains on the sale of loans. Fee income increased $179,000 to $7.6 million for the three months ended September 30, 2019, compared to the same period in 2018, largely due to a $264,000 increase in commercial loan prepayment fees, partially offset by a $124,000 decrease in income from the sale of non-deposit investment products. Partially
44

offsetting these increases, income from Bank-owned life insurance ("BOLI") decreased $811,000 to $1.3 million for the three months ended September 30, 2019, compared to the same period in 2018, primarily due to a decrease in benefit claims and lower equity valuations.
For the nine months ended September 30, 2019, non-interest income totaled $46.1 million, an increase of $3.0 million, compared to the same period in 2018. Wealth management income increased $2.8 million to $16.4 million for the nine months ended September 30, 2019, primarily due to fees of $3.5 million earned from approximately $822.0 million of assets under management acquired in the T&L transaction, partially offset by a decrease in managed mutual fund fees. Other income increased $625,000 to $4.8 million for the nine months ended September 30, 2019, compared to $4.1 million for the same period in 2018, due to a $1.5 million increase in net customer swap fee income, partially offset by a $573,000 decrease in net gains on the sale of foreclosed real estate and a $304,000 decrease in net gains on the sale of loans. Partially offsetting these increases, BOLI income decreased $387,000 to $4.3 million for the nine months ended September 30, 2019, compared to the same period in 2018, primarily due to a decrease in benefit claims, partially offset by an increase in equity valuations.
Non-Interest Expense. For the three months ended September 30, 2019, non-interest expense totaled $49.7 million, an increase of $3.1 million, compared to the three months ended September 30, 2018. Compensation and benefits expense increased $1.8 million to $29.4 million for the three months ended September 30, 2019, compared to $27.5 million for the same period in 2018. This increase was principally due to additional compensation expense associated with the T&L acquisition, an increase in salary expense related to annual merit increases and an increase in severance costs. Other operating expenses increased $776,000 to $7.9 million for the three months ended September 30, 2019, compared to the same period in 2018, largely due to increases in attorney fees and a change in the vesting schedule of stock-based director fees. Data processing expense increased $484,000 to $4.1 million for the three months ended September 30, 2019, primarily due to increases in software subscription service expense and implementation costs, while the amortization of intangibles increased $318,000 for the three months ended September 30, 2019, compared with the same period in 2018, mainly due to an increase in the customer relationship intangible amortization attributable to the acquisition of T&L. Partially offsetting these increases, FDIC insurance decreased $967,000 largely due to the receipt of the small bank assessment credit for the second quarter of 2019 and the discontinuance of the FICO assessment. The FICO assessment was used to pay interest on the Financing Corporation bonds issued in the late 1980s to recapitalize the former Federal Savings and Loan Insurance Corporation.
Non-interest expense totaled $147.8 million for the nine months ended September 30, 2019, an increase of $5.5 million, compared to $142.4 million for the nine months ended September 30, 2018. Compensation and benefits expense increased $3.3 million to $86.7 million for the nine months ended September 30, 2019, compared to $83.4 million for the nine months ended September 30, 2018, primarily due to additional compensation expense associated with the T&L acquisition, an increase in the accrual for incentive compensation and an increase in stock-based compensation. Data processing expense increased $1.6 million to $12.4 million for the nine months ended September 30, 2019, compared to $10.9 million for the same period in 2018, principally due to increases in software subscription service expense and software implementation costs, partially offset by a decrease in software maintenance expense. Other operating expenses increased $895,000 to $22.7 million for the nine months ended September 30, 2019, compared to the same period in 2018, primarily due to an increase in attorney fees and consulting expenses, partially offset by the impact of the change in the vesting schedule of stock-based director fees. The increase in attorney fees and consulting expenses was largely attributable to the acquisition of T&L and asset recovery efforts. In addition, amortization of intangibles increased $536,000 for the nine months ended September 30, 2019, compared with the same period in 2018, due to an increase in the customer relationship intangible amortization attributable to the T&L acquisition. Partially offsetting these increases, FDIC insurance decreased $1.8 million due to the receipt of the small bank assessment credit for the second quarter of 2019, the discontinuance of the FICO assessment and an overall reduction in the insurance assessment rate.
Income Tax Expense. For the three and nine months ended September 30, 2019, the Company’s income tax expense was $9.9 million and $26.4 million, respectively, compared with $8.6 million and $19.5 million, for the three and nine months ended September 30, 2018, respectively. The Company’s effective tax rates were 24.0% and 23.4% for the three and nine months ended September 30, 2019, respectively, compared to 19.5% and 19.1% for the three and nine months ended September 30, 2018, respectively. The increase in the Company's effective tax rate for both the three and nine months ended September 30, 2019 was attributable to the publication of a technical bulletin by the New Jersey Division of Taxation in the second quarter of 2019 that specifies treatment of real estate investment trusts in connection with combined reporting for New Jersey corporate business tax purposes.

Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Qualitative Analysis. Interest rate risk is the exposure of a bank’s current and future earnings and capital arising from adverse movements in interest rates. The guidelines of the Company’s interest rate risk policy seek to limit the exposure to changes in interest rates that affect the underlying economic value of assets and liabilities, earnings and capital. To minimize interest rate
45

risk, the Company generally sells all 20- and 30-year fixed-rate mortgage loans at origination. Commercial real estate loans generally have interest rates that reset in five years, and other commercial loans such as construction loans and commercial lines of credit reset with changes in the Prime rate, the Federal Funds rate or LIBOR. Investment securities purchases generally have maturities of five years or less, and mortgage-backed securities have weighted average lives between three and five years.
The Asset/Liability Committee meets on at least a monthly basis to review the impact of interest rate changes on net interest income, net interest margin, net income and the economic value of equity. The Asset/Liability Committee reviews a variety of strategies that project changes in asset or liability mix and the impact of those changes on projected net interest income and net income.
The Company’s strategy for liabilities has been to maintain a stable core-funding base by focusing on core deposit account acquisition and increasing products and services per household. The Company’s ability to retain maturing time deposit accounts is the result of its strategy to remain competitively priced within its marketplace. The Company’s pricing strategy may vary depending upon current funding needs and the ability of the Company to fund operations through alternative sources, primarily by accessing short-term lines of credit with the FHLBNY during periods of pricing dislocation.
Quantitative Analysis. Current and future sensitivity to changes in interest rates are measured through the use of balance sheet and income simulation models. The analysis captures changes in net interest income using flat rates as a base, a most likely rate forecast and rising and declining interest rate forecasts. Changes in net interest income and net income for the forecast period, generally twelve to twenty-four months, are measured and compared to policy limits for acceptable change. The Company periodically reviews historical deposit repricing activity and makes modifications to certain assumptions used in its income simulation model regarding the interest rate sensitivity of deposits without maturity dates. These modifications are made to more closely reflect the most likely results under the various interest rate change scenarios. Since it is inherently difficult to predict the sensitivity of interest bearing deposits to changes in interest rates, the changes in net interest income due to changes in interest rates cannot be precisely predicted. There are a variety of reasons that may cause actual results to vary considerably from the predictions presented below which include, but are not limited to, the timing, magnitude, and frequency of changes in interest rates, interest rate spreads, prepayments, and actions taken in response to such changes.
Specific assumptions used in the simulation model include:
•Parallel yield curve shifts for market rates;
•Current asset and liability spreads to market interest rates are fixed;
•Traditional savings and interest-bearing demand accounts move at 10% of the rate ramp in either direction;
•Retail Money Market and Business Money Market accounts move at 25% and 75% of the rate ramp in either direction respectively; and
•Higher-balance demand deposit tiers and promotional demand accounts move at 50% to 75% of the rate ramp in either direction.
The following table sets forth the results of a twelve-month net interest income projection model as of September 30, 2019 (dollars in thousands):
Change in interest rates (basis points) - Rate Ramp Net Interest Income
Dollar Amount Dollar Change Percent Change
-100 $ 287,997    $ (1,748)   (0.6) %
Static 289,745    —    —  %
+100
289,159    (586)   (0.2) %
+200
287,908    (1,837)   (0.6) %
+300
286,126    (3,619)   (1.2) %
The preceding table indicates that, as of September 30, 2019, in the event of a 300 basis point increase in interest rates, whereby rates ramp up evenly over a twelve-month period, net interest income would decrease 1.2%, or $3.6 million. In the event of a 100 basis point decrease in interest rates, net interest income would decrease 0.6%, or $1.7 million over the same period.

Another measure of interest rate sensitivity is to model changes in economic value of equity through the use of immediate and sustained interest rate shocks. The following table illustrates the result of the economic value of equity model as of September 30, 2019 (dollars in thousands):
46

   Present Value of Equity Present Value of Equity as Percent of Present Value of Assets
Change in interest rates (basis points) Dollar Amount Dollar Change Percent
Change 		Present Value
 Ratio 		Percent
Change
-100 $ 1,447,213    $ 12,191    0.8  % 14.2  % (1.5) %
Flat 1,435,022    —    —  % 14.4  % —  %
+100
1,390,451    (44,571)   (3.1) % 14.3  % (0.8) %
+200
1,332,740    (102,282)   (7.1) % 14.0  % (2.6) %
+300
1,272,861    (162,161)   (11.3) % 13.7  % (4.7) %
The preceding table indicates that as of September 30, 2019, in the event of an immediate and sustained 300 basis point increase in interest rates, the present value of equity is projected to decrease 11.3%, or $162.2 million. If rates were to decrease 100 basis points, the present value of equity would increase 0.8%, or $12.2 million.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes in net interest income requires the use of certain assumptions regarding prepayment and deposit decay rates, which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. While management believes such assumptions are reasonable, there can be no assurance that assumed prepayment rates and decay rates will approximate actual future loan prepayment and deposit withdrawal activity. Moreover, the net interest income table presented assumes that the composition of interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the net interest income table provides an indication of the Company’s interest rate risk exposure at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on the Company’s net interest income and will differ from actual results.
 


47

Item 4.
CONTROLS AND PROCEDURES.
Under the supervision and with the participation of management, including the Principal Executive Officer and the Principal Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) were evaluated at the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective. There has been no change in the Company’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION
 

Item 1.
Legal Proceedings
The Company is involved in various legal actions and claims arising in the normal course of business. In the opinion of management, these legal actions and claims are not expected to have a material adverse impact on the Company’s financial condition.

Item 1A.
Risk Factors
There were no changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
Period (a) Total Number of Shares
Purchased 		(b) Average
Price Paid per Share
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
(d) Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)
July 1, 2019 through July 31, 2019 20,000    $ 23.60    20,000    2,247,145   
August 1, 2019 through August 31, 2019 578,777    23.52    578,777    1,668,368   
September 1, 2019 through September 30, 2019 73,637    23.65    73,637    1,594,731   
Total 672,414    —    672,414   
(1) On December 20, 2012, the Company’s Board of Directors approved the purchase of up to 3,017,770 shares of its common stock under an eighth general repurchase program which commenced upon completion of the previous repurchase program. The repurchase program has no expiration date.

Item 3.
Defaults Upon Senior Securities.
Not Applicable 

Item 4.
Mine Safety Disclosures
Not Applicable

Item 5.
Other Information.
None


48

Item 6.
Exhibits.
The following exhibits are filed herewith:
3.1   
3.2   
4.1   
31.1   
31.2   
32   
101   
The following financial statements from the Company’s Quarterly Report to Stockholders on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Labels Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104   
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, has been formatted in Inline XBRL.

49

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
PROVIDENT FINANCIAL SERVICES, INC.
Date: November 8, 2019 By: /s/ Christopher Martin
Christopher Martin
Chairman, President and Chief Executive Officer (Principal Executive Officer)
Date: November 8, 2019 By: /s/ Thomas M. Lyons
Thomas M. Lyons
Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date: November 8, 2019 By: /s/ Frank S. Muzio
Frank S. Muzio
Executive Vice President and Chief Accounting Officer

50
Provident Financial Serv... (NYSE:PFS)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Provident Financial Serv... Charts.
Provident Financial Serv... (NYSE:PFS)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Provident Financial Serv... Charts.