Provident Financial Services, Inc. (NYSE:PFS) (the “Company”)
reported net income of $28.5 million, or $0.38 per basic and
diluted share for the three months ended September 30, 2023,
compared to $32.0 million, or $0.43 per basic and diluted share,
for the three months ended June 30, 2023 and $43.4 million, or
$0.58 per basic and diluted share, for the three months ended
September 30, 2022. For the nine months ended September 30, 2023,
net income totaled $101.1 million, or $1.35 per basic and diluted
share, compared to $126.6 million, or $1.69 per basic and diluted
share, for the nine months ended September 30, 2022. Compared with
the prior year period, net income for the three months ended
September 30, 2023 was negatively impacted by a decrease in net
interest income attributable to a decrease in lower-costing
deposits, as well as increased funding costs and resulting net
interest spread compression. Net income for the three and nine
months ended September 30, 2023 was further impacted by increased
provisions for credit losses due to a worsened economic forecast.
Transaction costs related to our pending merger with Lakeland
Bancorp, Inc. (“Lakeland”) totaled $2.3 million and $5.3 million
for the three and nine months ended September 30, 2023,
respectively, compared with transaction costs totaling $2.9 million
for the respective 2022 periods. In addition, prior year earnings
for the three and nine months ended September 30, 2022, included an
$8.6 million gain on the sale of a foreclosed property.
Performance Highlights for the
Third Quarter of
2023
- The Company’s total
loan portfolio increased $137.1 million, or 5.2% annualized, to
$10.67 billion at September 30, 2023, from $10.53 billion at
June 30, 2023.
- At
September 30, 2023, the Company's loan pipeline, consisting of
work-in-process and loans approved pending closing, totaled $1.70
billion, with a weighted average interest rate of 7.62%, compared
to $1.74 billion, with a weighted average interest rate of 7.23% at
June 30, 2023.
- The average yield
on total loans increased 13 basis points compared to the trailing
quarter, to 5.37% for the quarter ended September 30, 2023,
while the average cost of deposits, including non-interest bearing
deposits, increased 32 basis points from the trailing quarter, to
1.74% for the quarter ended September 30, 2023.
- Net interest income
decreased $2.9 million to $96.2 million for the three months ended
September 30, 2023, from $99.1 million for the trailing quarter as
a result of higher funding costs, which more than offset the
benefits of favorable loan repricing and loan growth.
- The net interest
margin decreased 15 basis points to 2.96% for the quarter ended
September 30, 2023, from 3.11% for the trailing quarter. The
weighted average yield on interest-earning assets for the quarter
ended September 30, 2023 increased 16 basis points to 4.89%,
compared to the trailing quarter, while the weighted average cost
of interest-bearing liabilities for the quarter ended
September 30, 2023 increased 37 basis points to 2.50%,
compared to the trailing quarter. The increase in funding costs
reflected a decrease in lower-costing deposits, an increase in
borrowings and unfavorable repricing in both deposits and
borrowings.
- During the three
months ended September 30, 2023, additional balances from
traditional non-interest and interest bearing demand deposits
transitioned into our insured cash sweep ("ICS") product, as a
method to increase the level of customers' deposit insurance in
light of recent banking turmoil. As of September 30, 2023 our
ICS deposits totaled $500.7 million, compared to $382.9 million at
June 30, 2023. Our estimated uninsured and uncollateralized
deposits at September 30, 2023 totaled $2.49 billion, or 25%
of deposits. At September 30, 2023, our total on-balance sheet
liquidity and borrowing capacity was $3.59 billion, representing
144% of estimated uninsured and uncollateralized deposits. All
borrowing capacity is immediately available.
- At
September 30, 2023, CRE loans related to office properties
totaled $483.3 million, compared to $487.9 million at June 30,
2023. This portfolio constitutes 4.5% of total loans. Approximately
35% of our office loans are to medical offices and we do not have
significant central business district exposure. Delinquencies in
the office portfolio at September 30, 2023 were limited to one
loan totaling $250,000. The portfolio is granular, with an average
size of $1.8 million and just three relationships greater than
$10.0 million.
- Asset quality
improved in the quarter, as non-performing loans at
September 30, 2023 declined to $39.5 million, or 0.37% of
total loans, compared to $45.9 million, or 0.44% of total loans at
June 30, 2023.
- The Company
recorded an $11.0 million provision for credit losses for the
quarter ended September 30, 2023, compared to a $10.4 million
provision for the trailing quarter. The provision for credit losses
in the quarter was primarily attributable to a weakened economic
forecast within our CECL model. The allowance for credit losses as
a percentage of loans increased to 1.01% at September 30,
2023, from 0.97% at June 30, 2023.
- Tangible book value
per share(1) decreased $0.25 to $15.41 at September 30, 2023,
compared to the trailing quarter, as unrealized losses on available
for sale debt securities increased $31.2 million for the
quarter.
- Annualized returns
on average assets, average equity and average tangible equity were
0.81%, 6.84% and 9.47%, respectively for the three months ended
September 30, 2023, compared with 0.93%, 7.76% and 10.75%,
respectively for the trailing quarter.
- The Company's
annualized adjusted pre-tax, pre-provision ("PTPP") return on
average assets(1) was 1.48% for the quarter ended
September 30, 2023, compared to 1.60% for the quarter ended
June 30, 2023.
Anthony J. Labozzetta, President and Chief
Executive Officer commented, “Provident produced good financial
results this quarter, despite challenging market conditions. We had
another strong quarter of growth in our loan portfolio, our loan
pipeline remains robust and we saw solid performance from our fee
businesses. Expenses were well managed and, while increases in
interest rates and a shift in the funding mix continued to impact
our net interest margin, our interest rate risk management remains
sound. While our asset quality remained strong and stable, we built
loan loss reserves largely due to changes in our CECL
forecast.”
Regarding the Company's pending merger with
Lakeland, Mr. Labozzetta added, “Provident continues to engage in
productive discussions with our regulators and we look forward to
closing our transaction as soon as we receive the required
regulatory approvals.”
Declaration of Quarterly
Dividend
The Company’s Board of Directors declared a
quarterly cash dividend of $0.24 per common share payable on
November 24, 2023 to stockholders of record as of the close of
business on November 10, 2023.
Results of Operations
Three months ended September 30, 2023
compared to the three months ended June 30, 2023
For the three months ended September 30, 2023,
net income was $28.5 million, or $0.38 per basic and diluted share,
compared to net income of $32.0 million, or $0.43 per basic and
diluted share, for the three months ended June 30, 2023.
Transaction costs related to our pending merger with Lakeland
totaled $2.3 million and $2.0 million for the three months ended
September 30, 2023 and June 30, 2023, respectively.
Net Interest Income and Net Interest
Margin
Net interest income decreased $2.9 million to
$96.2 million for the three months ended September 30, 2023, from
$99.1 million for the trailing quarter. The decrease in net
interest income was primarily due to a decrease in lower-costing
deposits and an increase in borrowings, combined with unfavorable
repricing of both deposits and borrowings, partially offset by
originations of new loans at current market rates and the favorable
repricing of adjustable-rate loans.
The Company’s net interest margin decreased 15
basis points to 2.96% for the quarter ended September 30,
2023, from 3.11% for the trailing quarter. The weighted average
yield on interest-earning assets for the quarter ended
September 30, 2023 increased 16 basis points to 4.89%,
compared to the trailing quarter. The weighted average cost of
interest-bearing liabilities for the quarter ended
September 30, 2023 increased 37 basis points from the trailing
quarter, to 2.50%. The average cost of interest-bearing deposits
for the quarter ended September 30, 2023 increased 37 basis
points to 2.22%, compared to 1.85% for the trailing quarter. The
average cost of total deposits, including non-interest-bearing
deposits, was 1.74% for the quarter ended September 30, 2023,
compared to 1.42% for the trailing quarter. The average cost of
borrowed funds for the quarter ended September 30, 2023 was
3.74%, compared to 3.41% for the quarter ended June 30,
2023.
Provision for Credit Losses
For the quarter ended September 30, 2023,
the Company recorded an $11.0 million provision for credit losses,
compared with a provision for credit losses of $10.4 million for
the quarter ended June 30, 2023. The provision for credit
losses in the quarter was primarily attributable to a worsened
economic forecast and related deterioration in the projected
commercial property price indices used in our CECL model. For the
three months ended September 30, 2023, net charge-offs totaled $5.5
million, or an annualized 21 basis points of average loans, which
was primarily attributable to one commercial loan.
Non-Interest Income and
Expense
For the three months ended September 30, 2023,
non-interest income totaled $19.3 million, a decrease of $67,000,
compared to the trailing quarter. Insurance agency income decreased
$623,000 to $3.2 million for the three months ended September 30,
2023, compared to the trailing quarter, mainly due to additional
new business activity in the prior quarter. Other income decreased
$144,000 to $1.1 million for the three months ended September 30,
2023, compared to the trailing quarter, primarily due to a
reduction in gains on the sale of SBA loans. Partially offsetting
these decreases to non-interest income, fee income increased
$357,000 to $6.1 million for the three months ended September 30,
2023, compared to the trailing quarter, primarily due to increases
in commercial loan prepayment fees and deposit fee income,
partially offset by a decrease in non-deposit investment fee
income. Additionally, BOLI income increased $286,000 for the three
months ended September 30, 2023, compared to the trailing quarter,
primarily due to an increase in benefit claims recognized,
partially offset by lower equity valuations.
Non-interest expense totaled $67.2 million for
the three months ended September 30, 2023, an increase of $2.7
million, compared to $64.5 million for the trailing quarter. For
the three months ended September 30, 2023, the Company recorded a
$1.5 million provision for credit losses for off-balance sheet
credit exposures, compared to a $647,000 provision benefit for the
trailing quarter. The $2.2 million increase in the provision for
credit losses for off-balance sheet exposures for the quarter was
primarily due to an increase in loans approved and awaiting
closing, combined with a decrease in line of credit utilization.
Compensation and benefits expense increased $419,000 to $35.7
million for the three months ended September 30, 2023, compared to
$35.3 million for the trailing quarter. The increase in
compensation and benefit expense was primarily attributable to
increases in the accrual for incentive compensation and salary
expense, partially offset by a decrease in stock-based
compensation. Additionally, merger expenses related to our pending
combination with Lakeland increased $329,000 to $2.3 million for
the three months ended September 30, 2023, compared to the trailing
quarter. Partially offsetting these increases in non-interest
expense, FDIC insurance decreased $497,000 to $1.6 million for the
three months ended September 30, 2023, compared to the trailing
quarter, primarily due to a quarterly adjustment related to a
decrease in the assessment rate.
The Company’s annualized adjusted non-interest
expense as a percentage of average assets(1) was 1.80% for the
quarter ended September 30, 2023, compared to 1.83% for the
trailing quarter. The efficiency ratio (adjusted non-interest
expense divided by the sum of net interest income and non-interest
income)(1) was 54.81% for the three months ended September 30,
2023, compared to 53.29% for the trailing quarter.
Income Tax Expense
For the three months ended September 30,
2023, the Company's income tax expense was $8.8 million with an
effective tax rate of 23.7%, compared with income tax expense of
$11.6 million with an effective tax rate of 26.7% for the trailing
quarter. The decrease in tax expense for the three months ended
September 30, 2023, compared with the trailing quarter was
largely due to a decrease in taxable income, while the decrease in
the effective tax rate was due to a decrease in the proportion of
income derived from taxable sources.
Three months ended September 30, 2023
compared to the three months ended September 30, 2022
For the three months ended September 30, 2023,
net income was $28.5 million, or $0.38 per basic and diluted share,
compared to net income of $43.4 million, or $0.58 per basic and
diluted share, for the three months ended September 30, 2022.
Transaction costs related to our pending merger with Lakeland
totaled $2.3 million and $2.9 million for the three months ended
September 30, 2023 and September 30, 2022, respectively.
Net Interest Income and Net Interest
Margin
Net interest income decreased $13.3 million to
$96.2 million for the three months ended September 30, 2023, from
$109.5 million for same period in 2022. The decrease in net
interest income was primarily due to a decrease in lower-costing
deposits and an increase in borrowings, combined with unfavorable
repricing of both deposits and borrowings, partially offset by
originations of new loans and the favorable repricing of
adjustable-rate loans.
The Company’s net interest margin decreased 55
basis points to 2.96% for the quarter ended September 30,
2023, from 3.51% for the same period last year. The weighted
average yield on interest-earning assets for the quarter ended
September 30, 2023 increased 99 basis points to 4.89%,
compared to 3.90% for the quarter ended September 30, 2022.
The weighted average cost of interest-bearing liabilities increased
196 basis points for the quarter ended September 30, 2023 to
2.50%, compared to 0.54% for the third quarter of 2022. The average
cost of interest-bearing deposits for the quarter ended
September 30, 2023 was 2.22%, compared to 0.47% for the same
period last year. Average non-interest-bearing demand deposits
decreased $520.5 million to $2.23 billion for the quarter ended
September 30, 2023, compared to $2.75 billion for the quarter
ended September 30, 2022. The average cost of total deposits,
including non-interest-bearing deposits, was 1.74% for the quarter
ended September 30, 2023, compared with 0.35% for the quarter
ended September 30, 2022. The average cost of borrowed funds
for the quarter ended September 30, 2023 was 3.74%, compared
to 1.11% for the same period last year.
Provision for Credit Losses
For the quarter ended September 30, 2023,
the Company recorded an $11.0 million provision for credit losses,
compared with an $8.4 million provision for credit losses for the
quarter ended September 30, 2022. The increase in the
allowance for credit losses on loans was primarily attributable to
a worsened economic forecast and related deterioration in the
projected commercial property price indices used in our CECL model.
For the three months ended September 30, 2023, net charge-offs
totaled $5.5 million, or an annualized 21 basis points of average
loans, which was primarily attributable to one commercial loan.
Non-Interest Income and
Expense
Non-interest income totaled $19.3 million for
the quarter ended September 30, 2023, a decrease of $9.1
million, compared to the same period in 2022. Other income
decreased $9.2 million to $1.1 million for the three months ended
September 30, 2023, compared to the quarter ended
September 30, 2022, primarily due to an $8.6 million gain
realized in the prior year on the sale of a foreclosed commercial
office property, combined with a decrease in the gains on sales of
SBA loans. Fee income decreased $1.1 million to $6.1 million for
the three months ended September 30, 2023, compared to the prior
year quarter, primarily due to decreases in commercial loan
prepayment fees and deposit fee income. Partially offsetting these
decreases in non-interest income, BOLI income increased $583,000 to
$1.8 million three months ended September 30, 2023, compared to the
prior year quarter, primarily due to an increase in benefit claims
recognized. Additionally, insurance agency income increased
$359,000 to $3.2 million for the three months ended September 30,
2023, compared to the quarter ended September 30, 2022,
largely due to strong retention revenue and new business
activity.
For the three months ended September 30, 2023,
non-interest expense totaled $67.2 million, a decrease of $2.3
million, compared to the three months ended September 30, 2022.
Compensation and benefits expense decreased $2.4 million to $35.7
million for three months ended September 30, 2023, compared to
$38.1 million for the same period in 2022. The decrease was
principally due to decreases in the accrual for incentive
compensation, employee medical expense and stock-based
compensation, partially offset by an increase in salary expense.
Additionally, merger-related expenses related to our pending
combination with Lakeland decreased $597,000 to $2.3 million for
the three months ended September 30, 2023, compared to the same
period in 2022. Partially offsetting these decreases in
non-interest expense, FDIC insurance expense increased $228,000 to
$1.6 million for the three months ended September 30, 2023,
compared to the same period in 2022, primarily due to an increase
in the assessment rate.
The Company’s annualized adjusted non-interest
expense as a percentage of average assets(1) was 1.80% for the
quarter ended September 30, 2023, compared to 1.89% for the
same period in 2022. The efficiency ratio (adjusted non-interest
expense divided by the sum of net interest income and non-interest
income)(1) was 54.81% for the three months ended September 30, 2023
compared to 47.11% for the same respective period in 2022.
Income Tax Expense
For the three months ended September 30, 2023,
the Company's income tax expense was $8.8 million with an effective
tax rate of 23.7%, compared with $16.7 million with an effective
tax rate of 27.7% for the three months ended September 30, 2022.
The decrease in tax expense for the three months ended September
30, 2023, compared with the same period last year was largely the
result of a decrease in taxable income, while the decrease in the
effective tax rate for the three months ended September 30, 2023,
compared with the three months ended September 30, 2022, was
largely due to a decrease in the proportion of income derived from
taxable sources.
Nine Months Ended September 30,
2023 compared to the nine months ended September 30,
2022
For the nine months ended September 30, 2023,
net income totaled $101.1 million, or $1.35 per basic and diluted
share, compared to net income of $126.6 million, or $1.69 per basic
and diluted share, for the nine months ended September 30, 2022.
Transaction costs related to our pending merger with Lakeland
totaled $5.3 million and $2.9 million for the nine months ended
September 30, 2023 and 2022, respectively.
Net Interest Income and Net Interest
Margin
Net interest income increased $175,000 to $303.7
million for the nine months ended September 30, 2023, from $303.5
million for same period in 2022. The increase in net interest
income for the nine months ended September 30, 2023 was primarily
driven by the favorable repricing of adjustable rate loans, higher
market rates on new loan originations and the originations of
higher-yielding loans, partially offset by the unfavorable
repricing of both deposits and borrowings, a decrease in
lower-costing deposits and an increase in borrowings. Additionally,
fees related to the forgiveness of PPP loans, which are recognized
in interest income, were approximately $77,000 for the nine months
ended September 30, 2023, compared to $1.4 million for the nine
months ended September 30, 2022.
For the nine months ended September 30, 2023,
the net interest margin decreased five basis points to 3.19%,
compared to 3.24% for the nine months ended September 30, 2022. The
weighted average yield on interest earning assets increased 125
basis points to 4.76% for the nine months ended September 30, 2023,
compared to 3.51% for the nine months ended September 30, 2022,
while the weighted average cost of interest-bearing liabilities
increased 169 basis points to 2.07% for the nine months ended
September 30, 2023, compared to 0.38% for the same period last
year. The average cost of interest-bearing deposits increased 149
basis points to 1.82% for the nine months ended September 30, 2023,
compared to 0.33% for the same period last year. Average
non-interest-bearing demand deposits decreased $388.8 million to
$2.38 billion for the nine months ended September 30, 2023,
compared with $2.77 billion for the nine months ended September 30,
2022. The average cost of total deposits, including
non-interest-bearing deposits, was 1.40% for the nine months ended
September 30, 2023, compared with 0.25% for the nine months ended
September 30, 2022. The average cost of borrowings for the nine
months ended September 30, 2023 was 3.29%, compared to 0.97% for
the same period last year.
Provision for Credit Losses
For the nine months ended September 30, 2023,
the Company recorded a $27.4 million provision for credit losses
related to loans, compared with a provision for credit losses of
$5.0 million for the nine months ended September 30, 2022. The
increase in the allowance for credit losses on loans was primarily
attributable to a worsened economic forecast and related
deterioration in the projected commercial property price indices
used in our CECL model. For the nine months ended September 30,
2023, net charge-offs totaled $7.3 million, or an annualized 9
basis points of average loans, which was primarily attributable to
two commercial loans.
Non-Interest Income and
Expense
For the nine months ended September 30, 2023,
non-interest income totaled $60.9 million, a decrease of $8.7
million, compared to the same period in 2022. Other income
decreased $7.8 million to $5.7 million for the nine months ended
September 30, 2023, compared to $13.5 million for the same period
in 2022, primarily due to an $8.6 million gain realized in the
prior year on the sale of a foreclosed commercial office property,
a decrease in net fees on loan-level interest rate swap
transactions and a decrease in the gains on sales of SBA loans,
partially offset by a $2.0 million gain related to the resolution
of certain post-closing conditions following the September 2022
sale of a foreclosed commercial property. Fee income decreased $3.2
million to $18.3 million for the nine months ended September 30,
2023, compared to the same period in 2022, primarily due to a
decrease in commercial loan prepayment fees, while wealth
management income decreased $448,000 to $20.8 million for the nine
months ended September 30, 2023, compared to the same period in
2022, primarily due to a decrease in the market value of assets
under management. Partially offsetting these decreases to
non-interest income, insurance agency income increased $2.0 million
to $11.2 million for the nine months ended September 30, 2023,
compared to $9.1 million for the same period in 2022, largely due
to increases in contingent commissions, retention revenue and new
business activity. Additionally, BOLI income increased $860,000 to
$4.8 million for the nine months ended September 30, 2023, compared
to the same period in 2022, primarily due to greater equity
valuations.
Non-interest expense totaled $201.1 million for
the nine months ended September 30, 2023, an increase of $5.9
million, compared to $195.2 million for the nine months ended
September 30, 2022. The Company recorded a $1.6 million provision
for credit losses for off-balance sheet credit exposures for the
nine months ended September 30, 2023, compared to a $1.8 million
provision benefit for the same period in 2022. The $3.4 million
increase in the provision for credit losses for off-balance sheet
credit exposures was primarily the result of the period-over-period
relative change in line of credit utilization and an increase in
projected loss factors as a result of a worsened economic forecast.
Other operating expense increased $3.2 million to $31.8 million for
the nine months ended September 30, 2023, compared to $28.5 million
for the nine months ended September 30, 2022, largely due to
increases in professional fees, combined with an increase in debit
card expense. Merger-related expenses increased $2.4 million to
$5.3 million for the nine months ended September 30, 2023, compared
to $2.9 million for the nine months ended September 30, 2022. FDIC
insurance expense increased $1.7 million to $5.7 million for the
nine months ended September 30, 2023, compared to the same period
in 2022, primarily due to an increase in the assessment rate.
Partially offsetting these increases, compensation and benefits
expense decreased $2.9 million to $109.7 million for the nine
months ended September 30, 2023, compared to $112.6 million for the
nine months ended September 30, 2022, primarily due to decreases in
the accrual for incentive compensation, employee medical expenses
and stock-based compensation, partially offset by an increase in
salary expense. Additionally, net occupancy expense decreased $1.8
million to $24.5 million for the nine months ended September 30,
2023, compared to the same period in 2022, mainly due to decreases
in maintenance and depreciation expenses.
Income Tax Expense
For the nine months ended September 30, 2023,
the Company's income tax expense was $34.9 million with an
effective tax rate of 25.7%, compared with $46.2 million with an
effective tax rate of 26.7% for the nine months ended September 30,
2022. The decrease in tax expense for the nine months ended
September 30, 2023, compared with the same period last year was
largely the result of a decrease in taxable income, while the
decrease in the effective tax rate for the nine months ended
September 30, 2023, compared with the prior year period was largely
due to a decrease in the proportion of income derived from taxable
sources.
Asset Quality
The Company’s total non-performing loans at
September 30, 2023 were $39.5 million, or 0.37% of total
loans, compared to $45.9 million, or 0.44% of total loans at
June 30, 2023 and $58.5 million, or 0.57% of total loans at
December 31, 2022. The $6.4 million decrease in non-performing
loans at September 30, 2023, compared to the trailing quarter,
consisted of a $10.0 million decrease in non-performing commercial
loans, a $383,000 decrease in non-performing consumer loans, a
$369,000 decrease in non-performing residential mortgage loans and
a $56,000 decrease in non-performing multi-family loans, partially
offset by a $4.4 million increase in non-performing commercial
mortgage loans. At September 30, 2023, impaired loans totaled
$30.4 million with related specific reserves of $3.4 million,
compared with impaired loans totaling $37.1 million with related
specific reserves of $4.5 million at June 30, 2023. At
December 31, 2022, impaired loans totaled $42.8 million with
related specific reserves of $2.4 million.
At September 30, 2023, the Company’s
allowance for credit losses related to the loan portfolio was 1.01%
of total loans, compared to 0.97% and 0.86% at June 30, 2023
and December 31, 2022, respectively. The allowance for credit
losses increased $19.5 million to $107.6 million at
September 30, 2023, from $88.0 million at December 31,
2022. The increase in the allowance for credit losses on loans at
September 30, 2023 compared to December 31, 2022 was due
to a $27.4 million provision for credit losses, partially offset by
net charge-offs of $7.3 million and a gross reduction of the
allowance for credit losses of $594,000 which was recorded against
equity upon the January 1, 2023 adoption of ASU 2022-02, related to
troubled debt restructurings. The increase in the allowance for
credit losses on loans was primarily attributable to a worsened
economic forecast and related deterioration in the projected
commercial property price indices used in our CECL model, combined
with an increase in total loans outstanding.
The following table sets forth accruing past due
loans and non-accrual loans on the dates indicated, as well as
certain asset quality ratios.
|
|
September 30, 2023 |
|
June 30, 2023 |
|
December 31, 2022 |
|
|
Number of
Loans |
|
PrincipalBalanceof
Loans |
|
Number of
Loans |
|
PrincipalBalanceof
Loans |
|
Number of
Loans |
|
PrincipalBalanceof
Loans |
|
|
(Dollars in thousands) |
Accruing past due
loans: |
|
|
|
|
|
|
|
|
|
|
|
|
30 to 59 days past due: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage loans |
|
— |
|
$ |
— |
|
|
2 |
|
$ |
1,445 |
|
|
2 |
|
$ |
2,300 |
|
Multi-family mortgage loans |
|
2 |
|
|
5,473 |
|
|
1 |
|
|
3,853 |
|
|
1 |
|
|
790 |
|
Construction loans |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
905 |
|
Residential mortgage loans |
|
9 |
|
|
1,588 |
|
|
11 |
|
|
1,427 |
|
|
10 |
|
|
1,411 |
|
Total mortgage loans |
|
11 |
|
|
7,061 |
|
|
14 |
|
|
6,725 |
|
|
14 |
|
|
5,406 |
|
Commercial loans |
|
6 |
|
|
1,959 |
|
|
10 |
|
|
3,021 |
|
|
5 |
|
|
964 |
|
Consumer loans |
|
27 |
|
|
1,207 |
|
|
15 |
|
|
957 |
|
|
18 |
|
|
885 |
|
Total 30 to 59 days past due |
|
44 |
|
$ |
10,227 |
|
|
39 |
|
$ |
10,703 |
|
|
37 |
|
$ |
7,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60 to 89 days past due: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage loans |
|
2 |
|
$ |
587 |
|
|
2 |
|
$ |
1,137 |
|
|
2 |
|
$ |
412 |
|
Multi-family mortgage loans |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Construction loans |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
1,097 |
|
Residential mortgage loans |
|
7 |
|
|
936 |
|
|
6 |
|
|
1,171 |
|
|
9 |
|
|
1,114 |
|
Total mortgage loans |
|
9 |
|
|
1,523 |
|
|
8 |
|
|
2,308 |
|
|
12 |
|
|
2,623 |
|
Commercial loans |
|
4 |
|
|
228 |
|
|
2 |
|
|
90 |
|
|
5 |
|
|
1,014 |
|
Consumer loans |
|
4 |
|
|
168 |
|
|
3 |
|
|
147 |
|
|
4 |
|
|
147 |
|
Total 60 to 89 days past due |
|
17 |
|
|
1,919 |
|
|
13 |
|
|
2,545 |
|
|
21 |
|
|
3,784 |
|
Total accruing past due loans |
|
61 |
|
$ |
12,146 |
|
|
52 |
|
$ |
13,248 |
|
|
58 |
|
$ |
11,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage loans |
|
9 |
|
$ |
11,667 |
|
|
7 |
|
$ |
7,279 |
|
|
10 |
|
$ |
28,212 |
|
Multi-family mortgage loans |
|
2 |
|
|
2,258 |
|
|
2 |
|
|
2,314 |
|
|
1 |
|
|
1,565 |
|
Construction loans |
|
2 |
|
|
1,868 |
|
|
2 |
|
|
1,874 |
|
|
2 |
|
|
1,878 |
|
Residential mortgage loans |
|
11 |
|
|
1,329 |
|
|
12 |
|
|
1,698 |
|
|
14 |
|
|
1,928 |
|
Total mortgage loans |
|
24 |
|
|
17,122 |
|
|
23 |
|
|
13,165 |
|
|
27 |
|
|
33,583 |
|
Commercial loans |
|
27 |
|
|
21,912 |
|
|
30 |
|
|
31,885 |
|
|
34 |
|
|
24,188 |
|
Consumer loans |
|
7 |
|
|
495 |
|
|
8 |
|
|
878 |
|
|
10 |
|
|
738 |
|
Total non-accrual loans |
|
58 |
|
$ |
39,529 |
|
|
61 |
|
$ |
45,928 |
|
|
71 |
|
$ |
58,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans to total
loans |
|
|
|
|
0.37 |
% |
|
|
|
|
0.44 |
% |
|
|
|
|
0.57 |
% |
Allowance for loan losses to
total non-performing loans |
|
|
|
|
272.11 |
% |
|
|
|
|
222.25 |
% |
|
|
|
|
150.44 |
% |
Allowance for loan losses to
total loans |
|
|
|
|
1.01 |
% |
|
|
|
|
0.97 |
% |
|
|
|
|
0.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2023 and December 31,
2022, the Company held foreclosed assets of $16.5 million and $2.1
million, respectively. During the nine months ended September 30,
2023, there were four additions to foreclosed assets with an
aggregate carrying value of $15.1 million, and three properties
sold with an aggregate carrying value of $768,000. Foreclosed
assets at September 30, 2023 consisted primarily of commercial
real estate. Total non-performing assets at September 30, 2023
decreased $4.6 million to $56.0 million, or 0.40% of total assets,
from $60.6 million, or 0.44% of total assets at December 31,
2022.
Balance Sheet Summary
Total assets at September 30, 2023 were
$14.09 billion, a $303.4 million increase from December 31,
2022. The increase in total assets was primarily due to a $418.7
million increase in total loans, partially offset by a
$132.0 million decrease in total investments.
The Company’s loan portfolio totaled $10.67
billion at September 30, 2023 and $10.25 billion at
December 31, 2022. The loan portfolio consisted of the
following:
|
September 30, 2023 |
|
June 30, 2023 |
|
December 31, 2022 |
|
(Dollars in thousands) |
Mortgage loans: |
|
|
|
|
|
Commercial |
$ |
4,411,099 |
|
|
$ |
4,373,436 |
|
|
$ |
4,316,185 |
|
Multi-family |
|
1,790,039 |
|
|
|
1,645,770 |
|
|
|
1,513,818 |
|
Construction |
|
667,462 |
|
|
|
707,234 |
|
|
|
715,494 |
|
Residential |
|
1,167,570 |
|
|
|
1,166,159 |
|
|
|
1,177,698 |
|
Total mortgage loans |
|
8,036,170 |
|
|
|
7,892,599 |
|
|
|
7,723,195 |
|
Commercial loans |
|
2,340,080 |
|
|
|
2,348,447 |
|
|
|
2,233,670 |
|
Consumer loans |
|
302,769 |
|
|
|
301,306 |
|
|
|
304,780 |
|
Total gross loans |
|
10,679,019 |
|
|
|
10,542,352 |
|
|
|
10,261,645 |
|
Premiums on purchased loans |
|
1,413 |
|
|
|
1,374 |
|
|
|
1,380 |
|
Net deferred fees and unearned
discounts |
|
(12,820 |
) |
|
|
(13,195 |
) |
|
|
(14,142 |
) |
Total loans |
$ |
10,667,612 |
|
|
$ |
10,530,531 |
|
|
$ |
10,248,883 |
|
During the nine months ended September 30, 2023,
the loan portfolio had net increases of $276.2 million in
multi-family loans, $106.4 million in commercial loans and $94.9
million in commercial mortgage loans, partially offset by net
decreases in construction, residential mortgage and consumer loans
of $48.0 million, $10.1 million and $2.0 million, respectively.
Commercial loans, consisting of commercial real estate,
multi-family, commercial and construction loans, represented 86.2%
of the loan portfolio at September 30, 2023, compared to 85.6%
at December 31, 2022.
For the nine months ended September 30, 2023,
loan funding, including advances on lines of credit, totaled $2.53
billion, compared with $3.05 billion for the same period in
2022.
At September 30, 2023, the Company’s
unfunded loan commitments totaled $2.18 billion, including
commitments of $1.21 billion in commercial loans, $533.9 million in
construction loans and $105.7 million in commercial mortgage loans.
Unfunded loan commitments at December 31, 2022 and
September 30, 2022 were $2.06 billion and $2.17 billion,
respectively.
The loan pipeline, consisting of work-in-process
and loans approved pending closing, totaled $1.70 billion at
September 30, 2023, compared to $1.29 billion and $1.46
billion at December 31, 2022 and September 30, 2022,
respectively.
Total investment securities were $2.13 billion
at September 30, 2023, a $132.0 million decrease from
December 31, 2022. This decrease was primarily due to
repayments of mortgage-backed securities, an increase in unrealized
losses on available for sale debt securities and maturities and
calls of certain municipal and agency bonds, partially offset by
purchases of mortgage-backed and municipal securities.
Total deposits decreased $421.6 million during
the nine months ended September 30, 2023, to $10.14 billion. Total
savings and demand deposit accounts decreased $738.3 million to
$9.07 billion at September 30, 2023, while total time deposits
increased $316.7 million to $1.07 billion at September 30,
2023. The decrease in savings and demand deposits was largely
attributable to a $456.2 million decrease in non-interest bearing
demand deposits, a $324.7 million decrease in money market deposits
and a $238.2 million decrease in savings deposits, partially offset
by a $280.8 million increase in interest bearing demand deposits.
During the nine months ended September 30, 2023, deposit balances
from traditional non-interest and interest bearing demand deposits
transitioned into our ICS product, as a method to increase the
level of customers' deposit insurance in light of recent bank
deposit turmoil. The Bank's ICS deposits increased $441.8 million
to $500.7 million at September 30, 2023, from $58.9 million at
December 31, 2022. The increase in time deposits consisted of
a $322.4 million increase in retail time deposits, partially offset
by a $5.7 million decrease in brokered time deposits.
Borrowed funds increased $684.9 million during
the nine months ended September 30, 2023, to $2.02 billion. The
increase in borrowings was largely due to asset funding
requirements. Borrowed funds represented 14.4% of total assets at
September 30, 2023, an increase from 9.7% at December 31,
2022.
Stockholders’ equity increased $25.3 million
during the nine months ended September 30, 2023, to $1.62 billion,
primarily due to net income earned for the period, partially offset
by an increase in unrealized losses on available for sale debt
securities and cash dividends paid to stockholders. For the three
months ended September 30, 2023, the Company did not repurchase
shares under its stock repurchase program. For the nine months
ended September 30, 2023, common stock repurchases totaled 71,357
shares at an average cost of $23.32 per share, all of which were
made in connection with withholding to cover income taxes on the
vesting of stock-based compensation. At September 30, 2023,
approximately 1.1 million shares remained eligible for repurchase
under the current stock repurchase authorization. Book value per
share and tangible book value per share(1) at September 30,
2023 were $21.49 and $15.41, respectively, compared with $21.25 and
$15.12, respectively, at December 31, 2022. The Company
completed its most recent annual goodwill impairment test as of
July 1, 2023. At September 30, 2023, the Company performed an
interim goodwill impairment analysis and concluded that no
triggering considerations were met and therefore a test for
impairment between annual tests was not required.
About the Company
Provident Financial Services, Inc. is the
holding company for Provident Bank, a community-oriented bank
offering "commitment you can count on" since 1839. Provident Bank
provides a comprehensive array of financial products and services
through its network of branches throughout northern and central New
Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as
well as Queens and Nassau Counties in New York. The Bank also
provides fiduciary and wealth management services through its
wholly owned subsidiary, Beacon Trust Company and insurance
services through its wholly owned subsidiary, Provident Protection
Plus, Inc.
Post Earnings Conference
Call
Representatives of the Company will hold a
conference call for investors on Friday, October 27, 2023 at 10:00
a.m. Eastern Time to discuss the Company’s financial results for
the quarter ended September 30, 2023. The call may be accessed
by dialing 1-888-412-4131 (United States Toll Free) and
1-646-960-0134 (United States Local). Speakers will need to enter
conference ID code (3610756) before being met by a live operator.
Internet access to the call is also available (listen only) at
provident.bank by going to Investor Relations and clicking on
"Webcast."
Forward Looking Statements
Certain statements contained herein are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. 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 products and pricing, fiscal and monetary
policies of the U.S. Government, the effects of the recent turmoil
in the banking industry (including the closing of three financial
institutions), 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, potential
goodwill impairment, acquisitions and the integration of acquired
businesses, credit risk management, asset-liability management, the
financial and securities markets, the availability of and costs
associated with sources of liquidity, the ability to complete, or
any delays in completing, the pending merger between the Company
and Lakeland; any failure to realize the anticipated benefits of
the transaction when expected or at all; certain restrictions
during the pendency of the transaction that may impact the
Company’s ability to pursue certain business opportunities or
strategic transactions; the possibility that the transaction may be
more expensive to complete than anticipated, including as a result
of unexpected factors or events, diversion of management’s
attention from ongoing business operations and opportunities;
potential adverse reactions or changes to business or employee
relationships, including those resulting from the completion of the
merger and integration of the companies; and the impact of a
potential shutdown of the federal government.
The Company cautions readers not to place undue
reliance on any such forward-looking statements which speak only as
of the date they are 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 assume any duty, and does not undertake, to
update any forward-looking statements to reflect events or
circumstances after the date of this statement.
Footnotes
(1) Annualized adjusted
pre-tax, pre-provision return on average assets, annualized return
on average tangible equity, tangible book value per share,
annualized adjusted non-interest expense as a percentage of average
assets and the efficiency ratio are non-GAAP financial measures.
Please refer to the Notes following the Consolidated Financial
Highlights which contain the reconciliation of GAAP to non-GAAP
financial measures and the associated calculations.
|
|
|
|
|
|
|
|
|
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Consolidated Financial Highlights |
(Dollars in Thousands, except share data) (Unaudited) |
|
|
|
|
|
At or for the Three months
ended |
|
At or for the Nine Months
Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Statement of
Income |
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
96,236 |
|
|
$ |
99,106 |
|
|
$ |
109,489 |
|
|
$ |
303,666 |
|
|
$ |
303,491 |
|
Provision for credit losses |
|
11,009 |
|
|
|
10,397 |
|
|
|
8,413 |
|
|
|
27,407 |
|
|
|
5,004 |
|
Non-interest income |
|
19,320 |
|
|
|
19,387 |
|
|
|
28,445 |
|
|
|
60,861 |
|
|
|
69,523 |
|
Non-interest expense |
|
67,157 |
|
|
|
64,463 |
|
|
|
69,443 |
|
|
|
201,109 |
|
|
|
195,173 |
|
Income before income tax expense |
|
37,390 |
|
|
|
43,633 |
|
|
|
60,078 |
|
|
|
136,011 |
|
|
|
172,837 |
|
Net income |
|
28,547 |
|
|
|
32,003 |
|
|
|
43,421 |
|
|
|
101,086 |
|
|
|
126,613 |
|
Diluted earnings per share |
$ |
0.38 |
|
|
$ |
0.43 |
|
|
$ |
0.58 |
|
|
$ |
1.35 |
|
|
$ |
1.69 |
|
Interest rate spread |
|
2.39 |
% |
|
|
2.60 |
% |
|
|
3.36 |
% |
|
|
2.69 |
% |
|
|
3.13 |
% |
Net interest margin |
|
2.96 |
% |
|
|
3.11 |
% |
|
|
3.51 |
% |
|
|
3.19 |
% |
|
|
3.24 |
% |
|
|
|
|
|
|
|
|
|
|
Profitability |
|
|
|
|
|
|
|
|
|
Annualized return on average assets |
|
0.81 |
% |
|
|
0.93 |
% |
|
|
1.26 |
% |
|
|
0.98 |
% |
|
|
1.24 |
% |
Annualized return on average equity |
|
6.84 |
% |
|
|
7.76 |
% |
|
|
10.68 |
% |
|
|
8.22 |
% |
|
|
10.36 |
% |
Annualized return on average tangible equity(1) |
|
9.47 |
% |
|
|
10.75 |
% |
|
|
14.96 |
% |
|
|
11.40 |
% |
|
|
14.46 |
% |
Annualized adjusted non-interest expense to average assets(3) |
|
1.80 |
% |
|
|
1.83 |
% |
|
|
1.89 |
% |
|
|
1.87 |
% |
|
|
1.91 |
% |
Efficiency ratio(4) |
|
54.81 |
% |
|
|
53.29 |
% |
|
|
47.11 |
% |
|
|
53.26 |
% |
|
|
52.03 |
% |
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
|
Non-accrual loans |
|
|
$ |
45,928 |
|
|
|
|
$ |
39,529 |
|
|
$ |
59,501 |
|
90+ and still accruing |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
Non-performing loans |
|
|
|
45,928 |
|
|
|
|
|
39,529 |
|
|
|
59,501 |
|
Foreclosed assets |
|
|
|
13,697 |
|
|
|
|
|
16,487 |
|
|
|
2,053 |
|
Non-performing assets |
|
|
|
59,625 |
|
|
|
|
|
56,016 |
|
|
|
61,554 |
|
Non-performing loans to total loans |
|
|
|
0.44 |
% |
|
|
|
|
0.37 |
% |
|
|
0.59 |
% |
Non-performing assets to total assets |
|
|
|
0.42 |
% |
|
|
|
|
0.40 |
% |
|
|
0.45 |
% |
Allowance for loan losses |
|
|
$ |
102,073 |
|
|
|
|
$ |
107,563 |
|
|
$ |
88,633 |
|
Allowance for loan losses to total non-performing loans |
|
|
|
222.25 |
% |
|
|
|
|
272.11 |
% |
|
|
148.96 |
% |
Allowance for loan losses to total loans |
|
|
|
0.97 |
% |
|
|
|
|
1.01 |
% |
|
|
0.88 |
% |
Net loan charge-offs (recoveries) |
$ |
5,510 |
|
|
$ |
1,085 |
|
|
$ |
(1,216 |
) |
|
$ |
7,266 |
|
|
$ |
(2,893 |
) |
Annualized net loan charge-offs (recoveries) to average total
loans |
|
0.21 |
% |
|
|
0.04 |
% |
|
(0.05)% |
|
|
0.09 |
% |
|
(0.04)% |
|
|
|
|
|
|
|
|
|
|
Average Balance Sheet
Data |
|
|
|
|
|
|
|
|
|
Assets |
$ |
13,976,610 |
|
|
$ |
13,833,055 |
|
|
$ |
13,622,554 |
|
|
$ |
13,848,351 |
|
|
$ |
13,618,804 |
|
Loans, net |
|
10,470,843 |
|
|
|
10,238,224 |
|
|
|
9,914,831 |
|
|
|
10,269,022 |
|
|
|
9,694,816 |
|
Earning assets |
|
12,735,938 |
|
|
|
12,575,967 |
|
|
|
12,390,107 |
|
|
|
12,574,437 |
|
|
|
12,414,917 |
|
Core deposits |
|
9,212,202 |
|
|
|
9,297,058 |
|
|
|
10,173,351 |
|
|
|
9,408,156 |
|
|
|
10,394,240 |
|
Borrowings |
|
1,780,655 |
|
|
|
1,658,809 |
|
|
|
908,841 |
|
|
|
1,556,619 |
|
|
|
663,366 |
|
Interest-bearing liabilities |
|
9,826,064 |
|
|
|
9,565,814 |
|
|
|
9,011,492 |
|
|
|
9,554,204 |
|
|
|
8,978,775 |
|
Stockholders' equity |
|
1,654,920 |
|
|
|
1,653,677 |
|
|
|
1,613,522 |
|
|
|
1,645,093 |
|
|
|
1,633,430 |
|
Average yield on interest-earning assets |
|
4.89 |
% |
|
|
4.73 |
% |
|
|
3.90 |
% |
|
|
4.76 |
% |
|
|
3.51 |
% |
Average cost of interest-bearing liabilities |
|
2.50 |
% |
|
|
2.13 |
% |
|
|
0.54 |
% |
|
|
2.07 |
% |
|
|
0.38 |
% |
|
|
|
|
|
|
|
|
|
|
Notes and Reconciliation of GAAP and
Non-GAAP Financial Measures(Dollars in Thousands, except
share data)
The Company has presented the following non-GAAP
(U.S. Generally Accepted Accounting Principles) financial measures
because it believes that these measures provide useful and
comparative information to assess trends in the Company’s results
of operations and financial condition. Presentation of these
non-GAAP financial measures is consistent with how the Company
evaluates its performance internally and these non-GAAP financial
measures are frequently used by securities analysts, investors and
other interested parties in the evaluation of companies in the
Company’s industry. Investors should recognize that the Company’s
presentation of these non-GAAP financial measures might not be
comparable to similarly-titled measures of other companies. These
non-GAAP financial measures should not be considered a substitute
for GAAP basis measures and the Company strongly encourages a
review of its condensed consolidated financial statements in their
entirety.
|
|
|
|
|
|
|
|
|
|
|
(1) Book and Tangible
Book Value per Share |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
At December 31, |
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
Total stockholders' equity |
|
|
|
|
|
|
|
$ |
1,622,970 |
|
|
$ |
1,597,703 |
|
Less: total intangible assets |
|
|
|
|
|
|
|
|
458,663 |
|
|
|
460,892 |
|
Total tangible stockholders' equity |
|
|
|
|
|
|
|
$ |
1,164,307 |
|
|
$ |
1,136,811 |
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding |
|
|
|
|
|
|
|
|
75,531,884 |
|
|
|
75,169,196 |
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share (total stockholders' equity/shares
outstanding) |
|
|
|
|
|
|
|
$ |
21.49 |
|
|
$ |
21.25 |
|
Tangible book value per share (total tangible stockholders'
equity/shares outstanding) |
|
|
|
|
|
|
|
$ |
15.41 |
|
|
$ |
15.12 |
|
|
|
|
|
|
|
|
|
|
|
|
(2) Annualized Return
on Average Tangible Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total average stockholders' equity |
|
$ |
1,654,920 |
|
|
$ |
1,653,677 |
|
|
$ |
1,613,522 |
|
|
$ |
1,645,093 |
|
|
$ |
1,633,430 |
|
Less: total average intangible assets |
|
|
459,133 |
|
|
|
459,865 |
|
|
|
462,180 |
|
|
|
459,871 |
|
|
|
463,030 |
|
Total average tangible stockholders' equity |
|
$ |
1,195,787 |
|
|
$ |
1,193,812 |
|
|
$ |
1,151,342 |
|
|
$ |
1,185,222 |
|
|
$ |
1,170,400 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
28,547 |
|
|
$ |
32,003 |
|
|
$ |
43,421 |
|
|
$ |
101,086 |
|
|
$ |
126,613 |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average tangible equity (net income/total
average tangible stockholders' equity) |
|
|
9.47 |
% |
|
|
10.75 |
% |
|
|
14.96 |
% |
|
|
11.40 |
% |
|
|
14.46 |
% |
|
|
|
|
|
|
|
|
|
|
|
(3) Annualized
Pre-Tax, Pre-Provision ("PTPP") Return on Average
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
|
$ |
28,547 |
|
|
$ |
32,003 |
|
|
$ |
43,421 |
|
|
$ |
101,086 |
|
|
$ |
126,613 |
|
Adjustments to net income: |
|
|
|
|
|
|
|
|
|
|
Provision for credit losses |
|
|
11,009 |
|
|
|
10,397 |
|
|
|
8,413 |
|
|
|
27,407 |
|
|
|
5,004 |
|
Credit loss (benefit) expense for off-balance sheet credit
exposure |
|
|
1,532 |
|
|
|
(647 |
) |
|
|
1,575 |
|
|
|
1,624 |
|
|
|
(1,788 |
) |
Merger-related transaction costs |
|
|
2,289 |
|
|
|
1,961 |
|
|
|
2,886 |
|
|
|
5,349 |
|
|
|
2,886 |
|
Income tax expense |
|
|
8,843 |
|
|
|
11,630 |
|
|
|
16,657 |
|
|
|
34,925 |
|
|
|
46,224 |
|
PTPP income |
|
$ |
52,220 |
|
|
$ |
55,344 |
|
|
$ |
72,952 |
|
|
$ |
170,391 |
|
|
$ |
178,939 |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized PTPP income |
|
$ |
207,177 |
|
|
$ |
221,984 |
|
|
$ |
289,429 |
|
|
$ |
227,812 |
|
|
$ |
239,241 |
|
Average assets |
|
$ |
13,976,610 |
|
|
$ |
13,833,055 |
|
|
$ |
13,622,554 |
|
|
$ |
13,848,351 |
|
|
$ |
13,618,804 |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized PTPP return on average assets |
|
|
1.48 |
% |
|
|
1.60 |
% |
|
|
2.12 |
% |
|
|
1.65 |
% |
|
|
1.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Annualized
Adjusted Non-Interest Expense to Average Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reported non-interest expense |
|
$ |
67,157 |
|
|
$ |
64,463 |
|
|
$ |
69,443 |
|
|
$ |
201,109 |
|
|
$ |
195,173 |
|
Adjustments to non-interest expense: |
|
|
|
|
|
|
|
|
|
|
Credit loss (benefit) expense for off-balance sheet credit
exposures |
|
|
1,532 |
|
|
|
(647 |
) |
|
|
1,575 |
|
|
|
1,624 |
|
|
|
(1,788 |
) |
Merger-related transaction costs |
|
|
2,289 |
|
|
|
1,961 |
|
|
|
2,886 |
|
|
|
5,349 |
|
|
|
2,886 |
|
Adjusted non-interest expense |
|
$ |
63,336 |
|
|
$ |
63,149 |
|
|
$ |
64,982 |
|
|
$ |
194,136 |
|
|
$ |
194,075 |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized adjusted non-interest expense |
|
$ |
251,279 |
|
|
$ |
253,290 |
|
|
$ |
257,809 |
|
|
$ |
259,559 |
|
|
$ |
259,478 |
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
13,976,610 |
|
|
$ |
13,833,055 |
|
|
$ |
13,622,554 |
|
|
$ |
13,848,351 |
|
|
$ |
13,618,804 |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized adjusted non-interest expense/average assets |
|
|
1.80 |
% |
|
|
1.83 |
% |
|
|
1.89 |
% |
|
|
1.87 |
% |
|
|
1.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
(5) Efficiency Ratio
Calculation |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net interest income |
|
$ |
96,236 |
|
|
$ |
99,106 |
|
|
$ |
109,489 |
|
|
$ |
303,666 |
|
|
$ |
303,491 |
|
Non-interest income |
|
|
19,320 |
|
|
|
19,387 |
|
|
|
28,445 |
|
|
|
60,861 |
|
|
|
69,523 |
|
Total income |
|
$ |
115,556 |
|
|
$ |
118,493 |
|
|
$ |
137,934 |
|
|
$ |
364,527 |
|
|
$ |
373,014 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted non-interest expense |
|
$ |
63,336 |
|
|
$ |
63,149 |
|
|
$ |
64,982 |
|
|
$ |
194,136 |
|
|
$ |
194,075 |
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (adjusted non-interest expense/income) |
|
|
54.81 |
% |
|
|
53.29 |
% |
|
|
47.11 |
% |
|
|
53.26 |
% |
|
|
52.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Consolidated Statements of Financial Condition |
September 30, 2023 (Unaudited) and December 31, 2022 |
(Dollars in Thousands) |
|
|
|
|
Assets |
September 30, 2023 |
|
December 31, 2022 |
Cash and due from banks |
$ |
188,573 |
|
|
$ |
186,490 |
|
Short-term investments |
|
696 |
|
|
|
18 |
|
Total cash and cash equivalents |
|
189,269 |
|
|
|
186,508 |
|
Available for sale debt
securities, at fair value |
|
1,656,305 |
|
|
|
1,803,548 |
|
Held to maturity debt securities, net (fair value of $343,082 at
September 30, 2023 (unaudited) and $373,468 at December 31,
2022) |
|
370,416 |
|
|
|
387,923 |
|
Equity securities, at fair
value |
|
1,210 |
|
|
|
1,147 |
|
Federal Home Loan Bank
stock |
|
101,250 |
|
|
|
68,554 |
|
Loans |
|
10,667,612 |
|
|
|
10,248,883 |
|
Less allowance for credit losses |
|
107,563 |
|
|
|
88,023 |
|
Net loans |
|
10,560,049 |
|
|
|
10,160,860 |
|
Foreclosed assets, net |
|
16,487 |
|
|
|
2,124 |
|
Banking premises and
equipment, net |
|
71,453 |
|
|
|
79,794 |
|
Accrued interest
receivable |
|
55,741 |
|
|
|
51,903 |
|
Intangible assets |
|
458,663 |
|
|
|
460,892 |
|
Bank-owned life insurance |
|
241,406 |
|
|
|
239,040 |
|
Other assets |
|
364,576 |
|
|
|
341,143 |
|
Total assets |
$ |
14,086,825 |
|
|
$ |
13,783,436 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Deposits: |
|
|
|
Demand deposits |
$ |
7,872,901 |
|
|
$ |
8,373,005 |
|
Savings deposits |
|
1,200,377 |
|
|
|
1,438,583 |
|
Certificates of deposit of $100,000 or more |
|
699,880 |
|
|
|
504,627 |
|
Other time deposits |
|
368,241 |
|
|
|
246,809 |
|
Total deposits |
|
10,141,399 |
|
|
|
10,563,024 |
|
Mortgage escrow deposits |
|
41,319 |
|
|
|
35,705 |
|
Borrowed funds |
|
2,022,249 |
|
|
|
1,337,370 |
|
Subordinated debentures |
|
10,646 |
|
|
|
10,493 |
|
Other liabilities |
|
248,242 |
|
|
|
239,141 |
|
Total liabilities |
|
12,463,855 |
|
|
|
12,185,733 |
|
|
|
|
|
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,
83,209,012 shares issued and 75,531,884 shares outstanding at
September 30, 2023 and 76,169,196 outstanding at December 31,
2022. |
|
832 |
|
|
|
832 |
|
Additional paid-in
capital |
|
988,001 |
|
|
|
981,138 |
|
Retained earnings |
|
964,802 |
|
|
|
918,158 |
|
Accumulated other
comprehensive loss |
|
(195,056 |
) |
|
|
(165,045 |
) |
Treasury stock |
|
(127,818 |
) |
|
|
(127,154 |
) |
Unallocated common stock held
by the Employee Stock Ownership Plan |
|
(7,791 |
) |
|
|
(10,226 |
) |
Common Stock acquired by the
Directors' Deferred Fee Plan |
|
(3,013 |
) |
|
|
(3,427 |
) |
Deferred Compensation -
Directors' Deferred Fee Plan |
|
3,013 |
|
|
|
3,427 |
|
Total stockholders' equity |
|
1,622,970 |
|
|
|
1,597,703 |
|
Total liabilities and stockholders' equity |
$ |
14,086,825 |
|
|
$ |
13,783,436 |
|
|
|
|
|
|
|
|
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Consolidated Statements of Income |
Three months ended September 30, 2023, June 30, 2023 and
September 30, 2022, and nine months ended September 30,
2023 and 2022 (Unaudited) |
(Dollars in Thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Interest income: |
|
|
|
|
|
|
|
|
|
Real estate secured loans |
$ |
104,540 |
|
$ |
99,302 |
|
|
$ |
80,273 |
|
|
$ |
299,830 |
|
$ |
213,181 |
|
Commercial loans |
|
33,806 |
|
|
31,426 |
|
|
|
25,201 |
|
|
|
93,915 |
|
|
70,385 |
|
Consumer loans |
|
4,746 |
|
|
4,431 |
|
|
|
3,785 |
|
|
|
13,419 |
|
|
10,268 |
|
Available for sale debt securities, equity securities and Federal
Home Loan Bank stock |
|
11,886 |
|
|
11,432 |
|
|
|
9,560 |
|
|
|
34,748 |
|
|
25,966 |
|
Held to maturity debt securities |
|
2,334 |
|
|
2,357 |
|
|
|
2,416 |
|
|
|
7,059 |
|
|
7,501 |
|
Deposits, federal funds sold and other short-term investments |
|
885 |
|
|
948 |
|
|
|
496 |
|
|
|
2,678 |
|
|
1,705 |
|
Total interest income |
|
158,197 |
|
|
149,896 |
|
|
|
121,731 |
|
|
|
451,649 |
|
|
329,006 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
Deposits |
|
44,923 |
|
|
36,447 |
|
|
|
9,560 |
|
|
|
108,880 |
|
|
20,322 |
|
Borrowed funds |
|
16,765 |
|
|
14,088 |
|
|
|
2,518 |
|
|
|
38,329 |
|
|
4,790 |
|
Subordinated debt |
|
273 |
|
|
255 |
|
|
|
164 |
|
|
|
774 |
|
|
403 |
|
Total interest expense |
|
61,961 |
|
|
50,790 |
|
|
|
12,242 |
|
|
|
147,983 |
|
|
25,515 |
|
Net interest income |
|
96,236 |
|
|
99,106 |
|
|
|
109,489 |
|
|
|
303,666 |
|
|
303,491 |
|
Provision charge for credit
losses |
|
11,009 |
|
|
10,397 |
|
|
|
8,413 |
|
|
|
27,407 |
|
|
5,004 |
|
Net interest income after provision for credit losses |
|
85,227 |
|
|
88,709 |
|
|
|
101,076 |
|
|
|
276,259 |
|
|
298,487 |
|
|
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
Fees |
|
6,132 |
|
|
5,775 |
|
|
|
7,203 |
|
|
|
18,294 |
|
|
21,516 |
|
Wealth management income |
|
6,992 |
|
|
6,919 |
|
|
|
6,785 |
|
|
|
20,826 |
|
|
21,274 |
|
Insurance agency income |
|
3,224 |
|
|
3,847 |
|
|
|
2,865 |
|
|
|
11,175 |
|
|
9,135 |
|
Bank-owned life insurance |
|
1,820 |
|
|
1,534 |
|
|
|
1,237 |
|
|
|
4,838 |
|
|
3,978 |
|
Net gain on securities transactions |
|
13 |
|
|
29 |
|
|
|
(3 |
) |
|
|
37 |
|
|
154 |
|
Other income |
|
1,139 |
|
|
1,283 |
|
|
|
10,358 |
|
|
|
5,691 |
|
|
13,466 |
|
Total non-interest income |
|
19,320 |
|
|
19,387 |
|
|
|
28,445 |
|
|
|
60,861 |
|
|
69,523 |
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense: |
|
|
|
|
|
|
|
|
|
Compensation and employee benefits |
|
35,702 |
|
|
35,283 |
|
|
|
38,079 |
|
|
|
109,724 |
|
|
112,582 |
|
Net occupancy expense |
|
8,113 |
|
|
7,949 |
|
|
|
8,452 |
|
|
|
24,474 |
|
|
26,262 |
|
Data processing expense |
|
5,312 |
|
|
5,716 |
|
|
|
5,575 |
|
|
|
16,536 |
|
|
16,551 |
|
FDIC Insurance |
|
1,628 |
|
|
2,125 |
|
|
|
1,400 |
|
|
|
5,688 |
|
|
3,955 |
|
Amortization of intangibles |
|
720 |
|
|
749 |
|
|
|
779 |
|
|
|
2,231 |
|
|
2,511 |
|
Advertising and promotion expense |
|
1,133 |
|
|
1,379 |
|
|
|
1,366 |
|
|
|
3,722 |
|
|
3,692 |
|
Credit loss expense (benefit) for off-balance sheet exposures |
|
1,532 |
|
|
(647 |
) |
|
|
1,575 |
|
|
|
1,624 |
|
|
(1,788 |
) |
Merger-related expenses |
|
2,289 |
|
|
1,960 |
|
|
|
2,886 |
|
|
|
5,349 |
|
|
2,886 |
|
Other operating expenses |
|
10,728 |
|
|
9,949 |
|
|
|
9,331 |
|
|
|
31,761 |
|
|
28,522 |
|
Total non-interest expense |
|
67,157 |
|
|
64,463 |
|
|
|
69,443 |
|
|
|
201,109 |
|
|
195,173 |
|
Income before income tax expense |
|
37,390 |
|
|
43,633 |
|
|
|
60,078 |
|
|
|
136,011 |
|
|
172,837 |
|
Income tax expense |
|
8,843 |
|
|
11,630 |
|
|
|
16,657 |
|
|
|
34,925 |
|
|
46,224 |
|
Net income |
$ |
28,547 |
|
$ |
32,003 |
|
|
$ |
43,421 |
|
|
$ |
101,086 |
|
$ |
126,613 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.38 |
|
$ |
0.43 |
|
|
$ |
0.58 |
|
|
$ |
1.35 |
|
$ |
1.69 |
|
Average basic shares
outstanding |
|
74,909,083 |
|
|
74,823,272 |
|
|
|
74,297,237 |
|
|
|
74,793,530 |
|
|
74,808,358 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.38 |
|
$ |
0.43 |
|
|
$ |
0.58 |
|
|
$ |
1.35 |
|
$ |
1.69 |
|
Average diluted shares
outstanding |
|
74,914,205 |
|
|
74,830,187 |
|
|
|
74,393,380 |
|
|
|
74,816,606 |
|
|
74,896,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Net Interest Margin Analysis |
Quarterly Average Balances |
(Dollars in Thousands) (Unaudited) |
|
September 30, 2023 |
|
June 30, 2023 |
|
September 30, 2022 |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
$ |
74,183 |
|
$ |
884 |
|
4.73 |
% |
|
$ |
73,470 |
|
$ |
947 |
|
5.17 |
% |
|
$ |
30,231 |
|
$ |
201 |
|
2.67 |
% |
Federal funds sold and other short-term investments |
|
57 |
|
|
1 |
|
4.00 |
% |
|
|
88 |
|
|
1 |
|
6.75 |
% |
|
|
46,707 |
|
|
295 |
|
2.54 |
% |
Available for sale debt securities |
|
1,724,833 |
|
|
10,127 |
|
2.35 |
% |
|
|
1,801,050 |
|
|
10,290 |
|
2.29 |
% |
|
|
1,948,721 |
|
|
9,115 |
|
2.42 |
% |
Held to maturity debt securities, net (1) |
|
373,681 |
|
|
2,334 |
|
2.50 |
% |
|
|
379,958 |
|
|
2,357 |
|
2.48 |
% |
|
|
399,370 |
|
|
2,416 |
|
1.87 |
% |
Equity securities, at fair value |
|
1,068 |
|
|
— |
|
— |
% |
|
|
1,006 |
|
|
— |
|
— |
% |
|
|
949 |
|
|
— |
|
— |
% |
Federal Home Loan Bank stock |
|
91,273 |
|
|
1,759 |
|
7.71 |
% |
|
|
82,171 |
|
|
1,142 |
|
5.56 |
% |
|
|
49,298 |
|
|
445 |
|
3.61 |
% |
Net loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loans |
|
7,881,193 |
|
|
104,540 |
|
5.21 |
% |
|
|
7,701,072 |
|
|
99,302 |
|
5.11 |
% |
|
|
7,443,268 |
|
|
80,273 |
|
4.28 |
% |
Total commercial loans |
|
2,289,267 |
|
|
33,806 |
|
5.81 |
% |
|
|
2,234,043 |
|
|
31,426 |
|
5.59 |
% |
|
|
2,151,512 |
|
|
25,201 |
|
4.66 |
% |
Total consumer loans |
|
300,383 |
|
|
4,746 |
|
6.27 |
% |
|
|
303,109 |
|
|
4,431 |
|
5.86 |
% |
|
|
320,051 |
|
|
3,785 |
|
4.74 |
% |
Total net loans |
|
10,470,843 |
|
|
143,092 |
|
5.37 |
% |
|
|
10,238,224 |
|
|
135,159 |
|
5.24 |
% |
|
|
9,914,831 |
|
|
109,259 |
|
4.38 |
% |
Total interest-earning assets |
$ |
12,735,938 |
|
$ |
158,197 |
|
4.89 |
% |
|
$ |
12,575,967 |
|
$ |
149,896 |
|
4.73 |
% |
|
$ |
12,390,107 |
|
$ |
121,731 |
|
3.90 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
82,522 |
|
|
|
|
|
|
129,979 |
|
|
|
|
|
|
126,330 |
|
|
|
|
Other assets |
|
1,158,150 |
|
|
|
|
|
|
1,127,109 |
|
|
|
|
|
|
1,106,117 |
|
|
|
|
Total assets |
$ |
13,976,610 |
|
|
|
|
|
$ |
13,833,055 |
|
|
|
|
|
$ |
13,622,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
$ |
5,741,052 |
|
$ |
35,290 |
|
2.44 |
% |
|
$ |
5,620,268 |
|
$ |
28,613 |
|
2.04 |
% |
|
$ |
5,906,679 |
|
$ |
7,990 |
|
0.54 |
% |
Savings deposits |
|
1,240,951 |
|
|
592 |
|
0.19 |
% |
|
|
1,307,830 |
|
|
537 |
|
0.16 |
% |
|
|
1,515,926 |
|
|
296 |
|
0.08 |
% |
Time deposits |
|
1,052,793 |
|
|
9,041 |
|
3.41 |
% |
|
|
968,344 |
|
|
7,297 |
|
3.02 |
% |
|
|
669,639 |
|
|
1,274 |
|
0.76 |
% |
Total Deposits |
|
8,034,796 |
|
|
44,923 |
|
2.22 |
% |
|
|
7,896,442 |
|
|
36,447 |
|
1.85 |
% |
|
|
8,092,244 |
|
|
9,560 |
|
0.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowed funds |
|
1,780,655 |
|
|
16,765 |
|
3.74 |
% |
|
|
1,658,809 |
|
|
14,088 |
|
3.41 |
% |
|
|
908,841 |
|
|
2,518 |
|
1.11 |
% |
Subordinated debentures |
|
10,613 |
|
|
273 |
|
10.24 |
% |
|
|
10,563 |
|
|
255 |
|
9.66 |
% |
|
|
10,407 |
|
|
164 |
|
6.35 |
% |
Total interest-bearing liabilities |
|
9,826,064 |
|
|
61,961 |
|
2.50 |
% |
|
|
9,565,814 |
|
|
50,790 |
|
2.13 |
% |
|
|
9,011,492 |
|
|
12,242 |
|
0.54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
|
2,230,199 |
|
|
|
|
|
|
2,368,960 |
|
|
|
|
|
|
2,750,746 |
|
|
|
|
Other non-interest bearing liabilities |
|
265,427 |
|
|
|
|
|
|
244,604 |
|
|
|
|
|
|
246,794 |
|
|
|
|
Total non-interest bearing liabilities |
|
2,495,626 |
|
|
|
|
|
|
2,613,564 |
|
|
|
|
|
|
2,997,540 |
|
|
|
|
Total liabilities |
|
12,321,690 |
|
|
|
|
|
|
12,179,378 |
|
|
|
|
|
|
12,009,032 |
|
|
|
|
Stockholders' equity |
|
1,654,920 |
|
|
|
|
|
|
1,653,677 |
|
|
|
|
|
|
1,613,522 |
|
|
|
|
Total liabilities and stockholders' equity |
$ |
13,976,610 |
|
|
|
|
|
$ |
13,833,055 |
|
|
|
|
|
$ |
13,622,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
96,236 |
|
|
|
|
|
$ |
99,106 |
|
|
|
|
|
$ |
109,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread |
|
|
|
|
2.39 |
% |
|
|
|
|
|
2.60 |
% |
|
|
|
|
|
3.36 |
% |
Net interest-earning
assets |
$ |
2,909,874 |
|
|
|
|
|
$ |
3,010,153 |
|
|
|
|
|
$ |
3,378,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (3) |
|
|
|
|
2.96 |
% |
|
|
|
|
|
3.11 |
% |
|
|
|
|
|
3.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to total interest-bearing liabilities |
1.30x |
|
|
|
|
|
1.31x |
|
|
|
|
|
1.37x |
|
|
|
|
|
|
(1 |
) |
Average outstanding balance amounts shown are amortized cost, net
of allowance for credit losses. |
(2 |
) |
Average outstanding balances
are net of the allowance for loan losses, deferred loan fees and
expenses, loan premiums and discounts and include non-accrual
loans. |
(3 |
) |
Annualized net interest income divided by average interest-earning
assets. |
The following
table summarizes the quarterly net interest margin for the previous
five quarters. |
|
|
|
|
9/30/23 |
|
6/30/23 |
|
3/31/23 |
|
12/31/22 |
|
9/30/22 |
|
3rd Qtr. |
|
2nd Qtr. |
|
1st Qtr. |
|
4th Qtr. |
|
3rd Qtr. |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
Securities |
2.67 |
% |
|
2.53 |
% |
|
2.52 |
% |
|
2.32 |
% |
|
2.36 |
% |
Net loans |
5.37 |
% |
|
5.24 |
% |
|
5.12 |
% |
|
4.82 |
% |
|
4.38 |
% |
Total interest-earning assets |
4.89 |
% |
|
4.73 |
% |
|
4.63 |
% |
|
4.36 |
% |
|
3.90 |
% |
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
Total deposits |
2.22 |
% |
|
1.85 |
% |
|
1.39 |
% |
|
0.90 |
% |
|
0.47 |
% |
Total borrowings |
3.74 |
% |
|
3.41 |
% |
|
2.48 |
% |
|
1.74 |
% |
|
1.11 |
% |
Total interest-bearing liabilities |
2.50 |
% |
|
2.13 |
% |
|
1.54 |
% |
|
1.00 |
% |
|
0.54 |
% |
|
|
|
|
|
|
|
|
|
|
Interest rate spread |
2.39 |
% |
|
2.60 |
% |
|
3.09 |
% |
|
3.36 |
% |
|
3.36 |
% |
Net interest margin |
2.96 |
% |
|
3.11 |
% |
|
3.48 |
% |
|
3.62 |
% |
|
3.51 |
% |
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to interest-bearing liabilities |
1.30 |
x |
|
1.31 |
x |
|
1.34 |
x |
|
1.35 |
x |
|
1.37 |
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Net Interest Margin Analysis |
Average Year to Date Balances |
(Dollars in Thousands) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2023 |
|
September 30, 2022 |
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
|
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
$ |
69,696 |
|
$ |
2,676 |
|
5.13 |
% |
|
$ |
126,439 |
|
$ |
499 |
|
0.53 |
% |
Federal funds sold and other short term investments |
|
58 |
|
|
2 |
|
5.34 |
% |
|
|
113,498 |
|
|
1,206 |
|
1.42 |
% |
Available for sale debt securities |
|
1,777,861 |
|
|
30,819 |
|
2.31 |
% |
|
|
2,028,645 |
|
|
24,786 |
|
1.63 |
% |
Held to maturity debt securities, net (1) |
|
379,144 |
|
|
7,059 |
|
2.48 |
% |
|
|
413,136 |
|
|
7,501 |
|
2.42 |
% |
Equity securities, at fair value |
|
1,022 |
|
|
— |
|
— |
% |
|
|
1,020 |
|
|
— |
|
— |
% |
Federal Home Loan Bank stock |
|
77,634 |
|
|
3,929 |
|
6.75 |
% |
|
|
37,363 |
|
|
1,180 |
|
4.21 |
% |
Net loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loans |
|
7,740,591 |
|
|
299,830 |
|
5.12 |
% |
|
|
7,253,822 |
|
|
213,181 |
|
3.89 |
% |
Total commercial loans |
|
2,225,725 |
|
|
93,915 |
|
5.60 |
% |
|
|
2,119,637 |
|
|
70,385 |
|
4.40 |
% |
Total consumer loans |
|
302,706 |
|
|
13,419 |
|
5.93 |
% |
|
|
321,357 |
|
|
10,268 |
|
4.27 |
% |
Total net loans |
|
10,269,022 |
|
|
407,164 |
|
5.25 |
% |
|
|
9,694,816 |
|
|
293,834 |
|
4.01 |
% |
Total interest-earning assets |
$ |
12,574,437 |
|
$ |
451,649 |
|
4.76 |
% |
|
$ |
12,414,917 |
|
$ |
329,006 |
|
3.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
121,801 |
|
|
|
|
|
|
126,392 |
|
|
|
|
Other assets |
|
1,152,113 |
|
|
|
|
|
|
1,077,495 |
|
|
|
|
Total assets |
$ |
13,848,351 |
|
|
|
|
|
$ |
13,618,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
$ |
5,710,855 |
|
$ |
85,822 |
|
2.01 |
% |
|
$ |
6,126,916 |
|
$ |
16,643 |
|
0.36 |
% |
Savings deposits |
|
1,315,157 |
|
|
1,582 |
|
0.16 |
% |
|
|
1,496,355 |
|
|
871 |
|
0.08 |
% |
Time deposits |
|
961,010 |
|
|
21,476 |
|
2.99 |
% |
|
|
681,783 |
|
|
2,808 |
|
0.55 |
% |
Total deposits |
|
7,987,022 |
|
|
108,880 |
|
1.82 |
% |
|
|
8,305,054 |
|
|
20,322 |
|
0.33 |
% |
Borrowed funds |
|
1,556,619 |
|
|
38,329 |
|
3.29 |
% |
|
|
663,366 |
|
|
4,790 |
|
0.97 |
% |
Subordinated debentures |
|
10,563 |
|
|
774 |
|
9.80 |
% |
|
|
10,355 |
|
|
403 |
|
5.21 |
% |
Total interest-bearing liabilities |
$ |
9,554,204 |
|
$ |
147,983 |
|
2.07 |
% |
|
$ |
8,978,775 |
|
$ |
25,515 |
|
0.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
|
2,382,144 |
|
|
|
|
|
|
2,770,969 |
|
|
|
|
Other non-interest bearing liabilities |
|
266,910 |
|
|
|
|
|
|
235,630 |
|
|
|
|
Total non-interest bearing liabilities |
|
2,649,054 |
|
|
|
|
|
|
3,006,599 |
|
|
|
|
Total liabilities |
|
12,203,258 |
|
|
|
|
|
|
11,985,374 |
|
|
|
|
Stockholders' equity |
|
1,645,093 |
|
|
|
|
|
|
1,633,430 |
|
|
|
|
Total liabilities and stockholders' equity |
$ |
13,848,351 |
|
|
|
|
|
$ |
13,618,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
303,666 |
|
|
|
|
|
$ |
303,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread |
|
|
|
|
2.69 |
% |
|
|
|
|
|
3.13 |
% |
Net interest-earning
assets |
$ |
3,020,233 |
|
|
|
|
|
$ |
3,436,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (3) |
|
|
|
|
3.19 |
% |
|
|
|
|
|
3.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to total interest-bearing liabilities |
1.32x |
|
|
|
|
|
1.38x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Average
outstanding balance amounts shown are amortized cost, net of
allowance for credit losses. |
(2) Average
outstanding balance are net of the allowance for loan losses,
deferred loan fees and expenses, loan premium and discounts and
include non-accrual loans. |
(3) Annualized
net interest income divided by average interest-earning
assets. |
The following
table summarizes the year-to-date net interest margin for the
previous three years. |
|
|
|
|
|
|
|
Nine Months Ended |
|
September 30, 2023 |
|
September 30, 2022 |
|
September 30, 2021 |
Interest-Earning
Assets: |
|
|
|
|
|
Securities |
2.57 |
% |
|
1.72 |
% |
|
1.47 |
% |
Net loans |
5.25 |
% |
|
4.01 |
% |
|
3.78 |
% |
Total interest-earning assets |
4.76 |
% |
|
3.51 |
% |
|
3.31 |
% |
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
Total deposits |
1.82 |
% |
|
0.33 |
% |
|
0.34 |
% |
Total borrowings |
3.29 |
% |
|
0.97 |
% |
|
1.13 |
% |
Total interest-bearing liabilities |
2.07 |
% |
|
0.38 |
% |
|
0.43 |
% |
|
|
|
|
|
|
Interest rate spread |
2.69 |
% |
|
3.13 |
% |
|
2.88 |
% |
Net interest margin |
3.19 |
% |
|
3.24 |
% |
|
2.99 |
% |
|
|
|
|
|
|
Ratio of interest-earning
assets to interest-bearing liabilities |
1.32 |
x |
|
1.38 |
x |
|
1.36 |
x |
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