Provident Financial Services, Inc. (NYSE:PFS) (the “Company”)
reported net income of $14.3 million, or $0.22 per basic and
diluted share, for the three months ended June 30, 2020, compared
to net income of $24.4 million, or $0.38 per basic and diluted
share, for the three months ended June 30, 2019. For the six months
ended June 30, 2020, the Company reported net income of $29.2
million, or $0.45 per basic and diluted share, compared to net
income of $55.3 million, or $0.85 per basic and diluted share, for
the same period last year.
The Company’s earnings for the three and six
months ended June 30, 2020 were adversely impacted by elevated
provisions for credit losses primarily related to the current weak
economic forecast attributable to the COVID-19 pandemic, combined
with the January 1, 2020 adoption of a new accounting standard that
requires the current recognition of allowances for losses expected
to be incurred over the life of covered assets (“CECL”). For the
three and six months ended June 30, 2020, provisions for credit
losses and off-balance sheet credit exposures totaled $16.2 million
and $31.9 million, respectively. The Company's earnings were
further impacted by expenses related to the Company's pending
acquisition of SB One Bancorp of $683,000 and $1.1 million, for the
three and six months ended June 30, 2020, respectively, and by
COVID-19 related costs which totaled $1.0 million for both the
three and six months ended June 30, 2020.
Christopher Martin, Chairman, President and
Chief Executive Officer commented: “While our markets continue to
be impacted by the COVID-19 pandemic, our dedicated employees have
worked diligently to deliver a high level of service to our
customers in a caring and safe manner. Our second quarter results
were adversely affected by an elevated provision for credit losses
driven by a negative economic outlook and net interest margin
pressure. Despite all this, we were able to deliver strong
pre-provision net revenues, and asset quality improved during the
quarter. Many of our borrowers granted principal and/or interest
deferrals in the first quarter have resumed making full payments.
Our strong capital base and favorable funding costs continue to be
a source of strength.” Martin further noted: “The closing of our
acquisition of SB One Bancorp is scheduled for tomorrow, and we
look forward to capitalizing on the growth opportunities, scale and
strong management that this strategic transaction affords us.”
Declaration of Quarterly
Dividend
The Company’s Board of Directors declared a
quarterly cash dividend of $0.23 per common share payable on August
28, 2020, to stockholders of record as of the close of business on
August 14, 2020.
Balance Sheet Summary
Total assets at June 30, 2020 were $10.51
billion, a $705.0 million increase from December 31, 2019. The
increase in total assets was primarily due to a $433.5 million
increase in total loans inclusive of commercial loans made under
the Paycheck Protection Program ("PPP"), a $267.0 million increase
in cash and cash equivalents and a $73.0 million increase in other
assets, partially offset by a $42.1 million decrease in total
investments.
The Company’s loan portfolio increased $433.5
million to $7.77 billion at June 30, 2020, from $7.33 billion
at December 31, 2019. For the six months ended June 30, 2020,
loan originations, including advances on lines of credit, totaled
$1.75 billion, compared with $1.35 billion for the same period in
2019. During the six months ended June 30, 2020, the loan portfolio
had net increases of $421.5 million in commercial loans, $98.0
million in commercial mortgage loans, $50.0 million in multi-family
mortgage loans and $47.7 million in residential mortgage loans,
partially offset by net decreases of $144.8 million in construction
loans and $29.7 million in consumer loans. At June 30, 2020,
the commercial loan portfolio included $400.3 million of PPP loans.
Commercial real estate, commercial and construction loans
represented 80.9% of the loan portfolio at June 30, 2020,
compared to 80.0% at December 31, 2019.
At June 30, 2020, the Company’s unfunded
loan commitments totaled $1.66 billion, including commitments of
$851.0 million in commercial loans, $386.3 million in construction
loans and $177.1 million in commercial mortgage loans. Unfunded
loan commitments at December 31, 2019 and June 30, 2019
were $1.47 billion and $1.65 billion, respectively.
The loan pipeline, consisting of work-in-process
and loans approved pending closing, totaled $1.30 billion at
June 30, 2020, compared to $905.9 million and $978.6 million
at December 31, 2019 and June 30, 2019, respectively.
Cash and cash equivalents were $453.8 million at
June 30, 2020, a $267.0 million increase from
December 31, 2019 primarily as a result of increases in cash
collateral pledged to counterparties to secure loan-level swaps and
short-term investments.
Total investments were $1.45 billion at
June 30, 2020, a $42.1 million decrease from December 31,
2019. 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.
Total deposits increased $557.5 million during
the six months ended June 30, 2020 to $7.66 billion. Total core
deposits, consisting of savings and demand deposit accounts,
increased $680.0 million to $7.05 billion at June 30, 2020,
while total time deposits decreased $122.6 million to $611.5
million at June 30, 2020. The increase in core deposits was
largely attributable to a $388.1 million increase in non-interest
bearing demand deposits, which benefited from deposits associated
with PPP loans and stimulus funding, a $130.3 million increase in
interest bearing demand deposits, a $94.5 million increase in money
market deposits and a $67.1 million increase in savings deposits.
The decrease in time deposits was primarily the result of a $73.7
million decrease in retail time deposits and a $48.9 million
decrease in brokered deposits. Core deposits represented 92.0% of
total deposits at June 30, 2020, compared to 89.7% at
December 31, 2019.
Borrowed funds increased $50.1 million during
the six months ended June 30, 2020, to $1.18 billion. The increase
in borrowings for the period was driven by asset funding
requirements. Borrowed funds represented 11.2% of total assets at
June 30, 2020, a decrease from 11.5% at December 31,
2019.
Stockholders’ equity decreased $3.4 million
during the six months ended June 30, 2020, to $1.41 billion,
primarily due to dividends paid to stockholders, the adoption of
CECL on January 1, 2020 and the related charge to equity of $8.3
million, net of tax, to establish initial allowances against credit
losses and off-balance sheet credit exposures under the new
accounting standard and common stock repurchases, partially offset
by net income earned for the period and an increase in unrealized
gains on available for sale debt securities. For the three months
ended June 30, 2020, common stock repurchases totaled 98,978 shares
at an average cost of $13.26, of which 378 shares, at an average
cost of $13.66, were made in connection with withholding to cover
income taxes on the vesting of stock-based compensation. For the
six months ended June 30, 2020, common stock repurchases totaled
385,794 shares at an average cost of $18.79, of which 48,416
shares, at an average cost of $19.84, were made in connection with
withholding to cover income taxes on the vesting of stock-based
compensation. At June 30, 2020, approximately 1.2 million
shares remained eligible for repurchase under the current stock
repurchase authorization. Book value per share and tangible book
value per share(1) at June 30, 2020 were $21.45 and $14.83,
respectively, compared with $21.49 and $14.85, respectively, at
December 31, 2019.
Results of Operations
Net Interest Income and Net Interest
Margin
For the three months ended June 30, 2020, net
interest income decreased $6.7 million to $69.8 million, from $76.6
million for the same period in 2019. Net interest income for the
six months ended June 30, 2020 decreased $9.7 million to $141.8
million, from $151.6 million for the same period in 2019. The
decline in net interest income for the three and six months ended
June 30, 2020, compared with the three and six months ended June
30, 2019, was primarily due to period-over-period compression in
the net interest margin as the decrease in the yield on
interest-earning assets outpaced the decline in the Company's cost
of interest-bearing liabilities. This decline was tempered by
growth in both average loans outstanding and lower-costing average
interest-bearing and non-interest bearing core deposits. Net
interest income included $1.9 million in interest and fees on PPP
loans at an average rate of 2.35% and 2.34%, respectively, for the
three and six months ended June 30, 2020. Excluding the impact of
PPP loans from both net interest income and average
interest-earning assets would result in an increase in the net
interest margin of two basis points and one basis point for the
three and six months ended June 30, 2020, respectively. For the
three and six months ended June 30, 2019, the Company recognized
the acceleration of accretion of $2.2 million in interest income
upon the prepayment of loans which had been non-accruing. For the
three and six months ended June 30, 2019, the recognition of this
interest income resulted in a 10 and 5 basis point increase in the
net interest margin, respectively.
The Company’s net interest margin decreased 23
basis points to 2.97% for the quarter ended June 30, 2020,
from 3.20% for the trailing quarter. The yield on interest-earning
assets and net interest margin for the three months ended June 30,
2020, was negatively impacted by the downward repricing of certain
adjustable rate loans, combined with lower rates on newly
originated loans which included PPP loans. The weighted average
yield on interest-earning assets decreased 45 basis points to 3.47%
for the quarter ended June 30, 2020, compared to 3.92% for the
quarter ended March 31, 2020. The weighted average cost of
interest-bearing liabilities for the quarter ended June 30,
2020 decreased 27 basis points to 0.68%, compared to 0.95% for the
trailing quarter. The average cost of interest bearing deposits for
the quarter ended June 30, 2020 was 0.54%, compared to 0.78%
for the trailing quarter ended March 31, 2020. Average
non-interest bearing demand deposits totaled $1.85 billion for the
quarter ended June 30, 2020, compared with $1.50 billion for
the trailing quarter ended March 31, 2020. The average cost of
all deposits, including non-interest bearing deposits, was 41 basis
points for the quarter ended June 30, 2020, compared with 62
basis points for the trailing quarter. The average cost of borrowed
funds for the quarter ended June 30, 2020 was 1.31%, compared
to 1.80% for the trailing quarter.
The net interest margin decreased 45 basis
points to 2.97% for the quarter ended June 30, 2020, compared
to 3.42% for the quarter ended June 30, 2019. The weighted
average yield on interest-earning assets decreased 81 basis points
to 3.47% for the quarter ended June 30, 2020, compared to
4.28% for the quarter ended June 30, 2019, while the weighted
average cost of interest bearing liabilities decreased 44 basis
points for the quarter ended June 30, 2020 to 0.68%, compared
to the second quarter of 2019. The average cost of interest bearing
deposits for the quarter ended June 30, 2020 was 0.54%,
compared to 0.86% for the same period last year. Average
non-interest bearing demand deposits totaled $1.85 billion for the
quarter ended June 30, 2020, compared to $1.46 billion for the
quarter ended June 30, 2019. The average cost of all deposits,
including non-interest bearing deposits, was 41 basis points for
the quarter ended June 30, 2020, compared with 68 basis points
for the quarter ended June 30, 2019. The average cost of
borrowed funds for the quarter ended June 30, 2020 was 1.31%,
compared to 2.18% for the same period last year.
For the six months ended June 30, 2020, the net
interest margin decreased 32 basis points to 3.09%, compared to
3.41% for the six months ended June 30, 2019. The weighted average
yield on interest earning assets declined 54 basis points to 3.70%
for the six months ended June 30, 2020, compared to 4.24% for the
six months ended June 30, 2019, while the weighted average cost of
interest bearing liabilities decreased 27 basis points to 0.81% for
the six months ended June 30, 2020, compared to 1.08% for the same
period last year. The average cost of interest bearing deposits
decreased 16 basis points to 0.66% for the six months ended June
30, 2020, compared to 0.82% for the same period last year. Average
non-interest bearing demand deposits totaled $1.67 billion for the
six months ended June 30, 2020, compared with $1.45 billion for the
six months ended June 30, 2019. The average cost of all deposits,
including non-interest bearing deposits, was 51 basis points for
the six months ended June 30, 2020, compared with 65 basis points
for the six months ended June 30, 2019. The average cost of
borrowings for the six months ended June 30, 2020 was 1.55%,
compared to 2.12% for the same period last year.
Non-Interest Income
Non-interest income totaled $14.4 million for
the quarter ended June 30, 2020, a decrease of $1.5 million,
compared to the same period in 2019. Fee income decreased $2.0
million to $4.9 million for the three months ended June 30, 2020,
compared to the same period in 2019, largely due to a $1.1 million
decrease in deposit related fees, a $262,000 decrease in
non-deposit investment fees and a $208,000 decrease in debit card
revenue, partially offset by a $173,000 increase in commercial loan
prepayment fees. Overall fee income for the quarter was adversely
impacted by lower transaction volumes and reduced business
opportunities related to the COVID outbreak and related mitigation
efforts. Wealth management income decreased $266,000 to $6.0
million for the three months ended June 30, 2020. This decrease in
income was largely a function of market declines in the value of
assets under management and a decrease in managed mutual fund fees.
Partially offsetting these decreases, income from Bank-owned life
insurance ("BOLI") increased $574,000 to $1.9 million for the three
months ended June 30, 2020, compared to the same period in 2019,
primarily due to an increase in benefit claims and higher equity
valuations. Also, other income increased $180,000 to $1.6 million
for the three months ended June 30, 2020, compared to the quarter
ended June 30, 2019, primarily due to a $387,000 increase in
net gains on the sale of foreclosed real estate, partially offset
by a $206,000 decrease in net fees on loan-level interest rate swap
transactions.
For the six months ended June 30, 2020,
non-interest income totaled $31.4 million, an increase of $3.3
million, compared to the same period in 2019. Other income
increased $3.3 million to $5.0 million for the six months ended
June 30, 2020, compared to $1.7 million for the same period in
2019, due to a $2.8 million increase in net fees on loan-level
interest rate swap transactions and a $351,000 increase in net
gains on the sale of foreclosed real estate. Wealth management
income increased $1.9 million to $12.2 million for the six months
ended June 30, 2020, compared to the same period in 2019, primarily
due to fees earned on assets under management acquired in the April
1, 2019 Tirschwell & Loewy ("T&L") acquisition, partially
offset by a decrease in managed mutual fund fees. Partially
offsetting these increases, fee income decreased $1.5 million,
primarily due to a $1.2 million decrease in deposit related fees, a
$115,000 decrease in non-deposit investment fees and a $67,000
decrease in debit card income, all largely due to the effects of
COVID-19 and related mitigation efforts, while BOLI income
decreased $335,000 to $2.6 million for the six months ended June
30, 2020, compared to the same period in 2019, primarily due to a
decrease in equity valuations.
Non-Interest Expense
For the three months ended June 30, 2020,
non-interest expense totaled $55.3 million, an increase of $5.6
million, compared to the three months ended June 30, 2019. For the
three months ended June 30, 2020, credit loss expense for
off-balance sheet credit exposures under the CECL standard
accounted for $5.3 million of the $5.6 million increase, due to an
increase in loss factors associated with the current economic
forecast, an increase in the pipeline of loans approved awaiting
closing and an increase in availability on committed lines of
credit due to below average utilization. Data processing expense
increased $619,000 to $5.0 million for the three months ended June
30, 2020, compared with the same period in 2019, primarily due to
increases in software subscription service expense and on-line
banking costs. In addition, FDIC insurance increased $340,000 due
to increases in both the insurance assessment rate and total assets
subject to assessment, partially offset by the receipt of the small
bank assessment credit for the first quarter of 2020. Compensation
and benefits expense increased $210,000 to $29.2 million for the
three months ended June 30, 2020, compared to $29.0 million for the
same period in 2019, largely due to an increase in salary expense
related to annual merit increases and COVID-19 supplemental pay for
branch employees, partially offset by a decrease in stock-based
compensation and the increased deferral of salary expense related
to PPP loan originations. Partially offsetting these increases,
other operating expenses decreased $113,000 to $7.5 million for the
three months ended June 30, 2020, compared to the same period in
2019, largely due to decreases in business development and debit
card expenses, partially offset by increases in legal and
consulting expenses, which included $683,000 related to the pending
acquisition of SB One Bancorp.
Non-interest expense totaled $109.4 million for
the six months ended June 30, 2020, an increase of $11.3 million,
compared to $98.1 million for the six months ended June 30, 2019.
For the six months ended June 30, 2020, credit loss expense for
off-balance sheet credit exposures was $6.3 million related to the
January 1, 2020 adoption of CECL, and the subsequent increase in
loss factors due to the current economic forecast, increase in the
pipeline of loans approved awaiting closing and an increase in
availability on committed lines of credit due to below average
utilization. Compensation and benefits expense increased $3.0
million to $60.4 million for the six months ended June 30, 2020,
compared to $57.4 million for the six months ended June 30, 2019,
primarily due to additional compensation expense associated with
the acquisition of T&L, an increase in executive severance
costs and COVID 19 supplemental pay for branch employees, partially
offset by the increased deferral of salary expense related to PPP
loan originations. Other operating expenses increased $1.9 million
to $16.7 million for the six months ended June 30, 2020, compared
to the same period in 2019, largely due to an increase in
professional service expenses related to the SB One transaction and
a market valuation adjustment on foreclosed real estate. Data
processing expense increased $1.1 million to $9.4 million for the
six months ended June 30, 2020, compared to $8.3 million for the
same period in 2019, principally due to increases in software
subscription service expense and on-line banking costs. Partially
offsetting these increases, net occupancy expense decreased
$847,000 to $12.4 million for the six months ended June 30, 2020,
compared to the same period in 2019, due to reductions in snow
removal and depreciation expenses.
The Company’s annualized adjusted non-interest
expense as a percentage of average assets(1) was 1.86% for the
quarter ended June 30, 2020, compared to 2.03% for the same
period in 2019, with the 2020 improvement driven by the significant
increase in average assets largely attributable to PPP loans. For
the six months ended June 30, 2020, the Company’s annualized
adjusted non-interest expense as a percentage of average assets(1)
was 1.99%, compared to 2.03% for the same period in 2019. The
efficiency ratio (adjusted non-interest expense divided by the sum
of net interest income and non-interest income)(1) was 57.35% and
58.27% for the quarter and six months ended June 30, 2020,
respectively, compared to 53.79% and 54.63% for the same respective
periods in 2019.
Asset Quality
The Company’s total non-performing loans at
June 30, 2020 were $35.5 million, or 0.46% of total loans,
compared to $35.3 million, or 0.48% of total loans at
March 31, 2020, and $40.2 million, or 0.55% of total loans at
December 31, 2019. The $128,000 increase in non-performing
loans at June 30, 2020, compared to the trailing quarter, was
due to a $661,000 increase in non-performing residential loans and
a $350,000 increase in non-performing consumer loans, partially
offset by a $667,000 decrease in non-performing commercial loans
and a $216,000 decrease in non-performing commercial mortgage
loans. At June 30, 2020, impaired loans totaled $63.1 million
with related specific reserves of $3.6 million, compared with
impaired loans totaling $65.7 million with related specific
reserves of $5.7 million at March 31, 2020. At
December 31, 2019, impaired loans totaled $70.6 million with
related specific reserves of $5.1 million.
The balance of loans with short-term COVID-19
payment deferrals has been reduced from a peak level of $1.31
billion, or 16.8% of loans, to $394.7 million, or 5.1% of loans. Of
the total original $1.31 billion of loans with payment deferrals,
$51.5 million are still in the first 90-day deferral period, while
$343.2 million have been, or are expected to be, granted a second
90-day deferral. $911.7 million of loans have completed their
deferral period, with $380.2 million of those loans having resumed
regular contractual payments, and the majority of the remainder
expected to do so at their August 1, 2020 due date. Of the $394.7
million of loans granted or expected to be granted deferrals,
$129.9 million are secured by hotels with a pre-COVID weighted
average loan-to-value of 53%, $123.8 million are secured by retail
properties with a pre-COVID weighted average loan-to-value of 66%,
and $24.9 million are secured by restaurants with a pre-COVID
weighted average loan-to-value of 59%.
At June 30, 2020, the Company’s allowance
for credit losses related to the loan portfolio was 1.11% of total
loans, compared to 1.02% and 0.76% at March 31, 2020 and
December 31, 2019, respectively. The Company recorded
provisions for credit losses of $10.9 million and $25.6 million for
the three and six months ended June 30, 2020, respectively,
compared with provisions of $9.5 million and $9.7 million for the
three and six months ended June 30, 2019, respectively. For the
three and six months ended June 30, 2020, the Company had net
recoveries of $215,000 and net charge-offs of $2.8 million,
respectively, compared to net charge-offs of $2.0 million and $2.5
million, respectively, for the same periods in 2019. The allowance
for loan losses increased $30.7 million to $86.3 million at
June 30, 2020 from $55.5 million at December 31, 2019.
The three and six months ended June 30, 2020 included elevated
provisions for credit losses primarily due to the current weak
economic forecast attributable to the COVID-19 pandemic and the
adoption of CECL. In addition, a gross allowance for credit losses
of $7.9 million and a related deferred tax asset were recorded
against equity upon the January 1, 2020 adoption of CECL. Future
credit loss provisions are subject to significant uncertainty given
the undetermined nature of prospective changes in economic
conditions, as the impact of the COVID-19 pandemic continues to
unfold. The effectiveness of medical advances, government programs,
and the resulting impact on consumer behavior and employment
conditions will have a material bearing on future credit conditions
and reserve requirements.
At June 30, 2020 and December 31,
2019, the Company held foreclosed assets of $3.3 million and $2.7
million, respectively. During the six months ended June 30, 2020,
there were three additions to foreclosed assets with a carrying
value of $2.5 million and six properties sold with a carrying value
of $1.4 million and valuation charges of $548,000. Foreclosed
assets at June 30, 2020 consisted of $1.7 million of
commercial vehicles, $1.1 million of residential real estate and
$449,000 of commercial real estate. Total non-performing assets at
June 30, 2020 decreased $4.2 million to $38.7 million, or
0.37% of total assets, from $42.9 million, or 0.44% of total assets
at December 31, 2019.
Income Tax Expense
For the three months ended June 30, 2020, the
Company’s income tax expense was $3.7 million with an effective tax
rate of 20.6%, compared with income tax expense of $8.8 million
with an effective tax rate of 26.5%, for the three months ended
June 30, 2019. The decreases in tax expense and the effective tax
rate for the current quarter compared with the same period last
year were largely the result of a decrease in income derived from
taxable sources. In addition, the 2019 quarter was impacted by the
publication of a technical bulletin by the New Jersey Division of
Taxation that specifies the treatment of real estate investment
trusts in connection with combined reporting for New Jersey
corporate business purposes.
For the six months ended June 30, 2020, the
Company's income tax expense was $9.0 million with an effective tax
rate of 23.5%, compared with $16.5 million with an effective tax
rate of 23.0% for the six months ended June 30, 2019. The decrease
in tax expense for the six months ended June 30, 2020 was largely
the result of a decrease in income derived from taxable sources.
The increase in the effective tax rate for the current year
compared to the same period last year was attributable to a
discrete item in the first quarter 2020 related to the vesting of
stock awards at a market value below the fair value used for
expense recognition.
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, as well as Bucks, Lehigh and Northampton counties in
Pennsylvania. The Bank also provides fiduciary and wealth
management services through its wholly owned subsidiary, Beacon
Trust Company.
Post Earnings Conference
Call
Representatives of the Company will hold a
conference call for investors on Thursday, July 30, 2020 at
10:00 a.m. Eastern Time to discuss the Company’s financial results
for the quarter ended June 30, 2020. The call may be accessed
by dialing 1-888-336-7149 (Domestic), 1-412-902-4175
(International) or 1-855-669-9657 (Canada). 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 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 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.
In addition, the COVID-19 pandemic is having an
adverse impact on the Company, its customers and the communities it
serves. Given its ongoing and dynamic nature, it is difficult to
predict the full impact of the COVID-19 outbreak on our business.
The extent of such impact will depend on future developments, which
are highly uncertain, including when the coronavirus can be
controlled and abated, and the extent to which the economy can
remain open. As the result of the COVID-19 pandemic and the related
adverse local and national economic consequences, we could be
subject to any of the following risks, any of which could have a
material, adverse effect on our business, financial condition,
liquidity, and results of operations: the demand for our products
and services may decline, making it difficult to grow assets and
income; if the economy is unable to remain substantially open, and
high levels of unemployment continue for an extended period of
time, loan delinquencies, problem assets, and foreclosures may
increase, resulting in increased charges and reduced income;
collateral for loans, especially real estate, may decline in value,
which could cause loan losses to increase; our allowance for loan
losses may increase if borrowers experience financial difficulties,
which will adversely affect our net income; the net worth and
liquidity of loan guarantors may decline, impairing their ability
to honor commitments to us; as the result of the decline in the
Federal Reserve Board’s target federal funds rate to near 0%, the
yield on our assets may decline to a greater extent than the
decline in our cost of interest-bearing liabilities, reducing our
net interest margin and spread and reducing net income; our wealth
management revenues may decline with continuing market turmoil; we
may face the risk of a goodwill write-down due to stock price
decline; and our cyber security risks are increased as the result
of an increase in the number of employees working remotely.
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.
Footnotes
(1) Tangible book value per
share, annualized return on average tangible equity, annualized
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 Statements of Financial Condition |
June 30, 2020 (Unaudited) and December 31, 2019 |
(Dollars in Thousands) |
|
|
|
|
Assets |
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
Cash and due from banks |
$ |
318,141 |
|
|
$ |
131,555 |
|
Short-term investments |
135,622 |
|
|
55,193 |
|
Total cash and cash equivalents |
453,763 |
|
|
186,748 |
|
|
|
|
|
Available for sale debt
securities, at fair value |
948,614 |
|
|
976,919 |
|
Held to maturity debt
securities, net (fair value of $460,674 at June 30, 2020
(unaudited) and $467,966 at December 31, 2019) |
439,303 |
|
|
453,629 |
|
Equity securities, at fair
value |
806 |
|
|
825 |
|
Federal Home Loan Bank
Stock |
57,880 |
|
|
57,298 |
|
Loans |
7,766,391 |
|
|
7,332,885 |
|
Less allowance for credit losses |
86,259 |
|
|
55,525 |
|
Net loans |
7,680,132 |
|
|
7,277,360 |
|
Foreclosed assets, net |
3,272 |
|
|
2,715 |
|
Banking premises and
equipment, net |
54,548 |
|
|
55,210 |
|
Accrued interest
receivable |
33,809 |
|
|
29,031 |
|
Intangible assets |
435,578 |
|
|
437,019 |
|
Bank-owned life insurance |
196,552 |
|
|
195,533 |
|
Other assets |
209,282 |
|
|
136,291 |
|
Total assets |
$ |
10,513,539 |
|
|
$ |
9,808,578 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Deposits: |
|
|
|
Demand deposits |
$ |
5,997,792 |
|
|
$ |
5,384,868 |
|
Savings deposits |
1,050,813 |
|
|
983,714 |
|
Certificates of deposit of $100,000 or more |
338,411 |
|
|
438,551 |
|
Other time deposits |
273,050 |
|
|
295,476 |
|
Total deposits |
7,660,066 |
|
|
7,102,609 |
|
Mortgage escrow deposits |
30,960 |
|
|
26,804 |
|
Borrowed funds |
1,175,289 |
|
|
1,125,146 |
|
Other liabilities |
236,817 |
|
|
140,179 |
|
Total liabilities |
9,103,132 |
|
|
8,394,738 |
|
|
|
|
|
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
65,741,182 shares outstanding at June 30, 2020 and 65,787,900
outstanding at December 31, 2019 |
832 |
|
|
832 |
|
Additional paid-in
capital |
1,009,978 |
|
|
1,007,303 |
|
Retained earnings |
685,509 |
|
|
695,273 |
|
Accumulated other
comprehensive income |
12,794 |
|
|
3,821 |
|
Treasury stock |
(275,359 |
) |
|
(268,504 |
) |
Unallocated common stock held
by the Employee Stock Ownership Plan |
(23,347 |
) |
|
(24,885 |
) |
Common Stock acquired by the
Directors' Deferred Fee Plan |
(3,498 |
) |
|
(3,833 |
) |
Deferred Compensation -
Directors' Deferred Fee Plan |
3,498 |
|
|
3,833 |
|
Total stockholders' equity |
1,410,407 |
|
|
1,413,840 |
|
Total liabilities and stockholders' equity |
$ |
10,513,539 |
|
|
$ |
9,808,578 |
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Consolidated Statements of Income |
Three and Six Months Ended June 30, 2020 and 2019
(Unaudited) |
(Dollars in Thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Interest income: |
|
|
|
|
|
|
|
Real estate secured loans |
$ |
49,297 |
|
|
$ |
55,643 |
|
|
$ |
103,738 |
|
|
$ |
110,649 |
|
Commercial loans |
18,944 |
|
|
23,174 |
|
|
37,616 |
|
|
43,684 |
|
Consumer loans |
3,547 |
|
|
4,785 |
|
|
7,719 |
|
|
9,568 |
|
Available for sale debt securities, equity securities and Federal
Home Loan Bank stock |
6,279 |
|
|
8,257 |
|
|
13,348 |
|
|
16,666 |
|
Held to maturity debt securities |
2,885 |
|
|
3,171 |
|
|
5,825 |
|
|
6,333 |
|
Deposits, federal funds sold and other short-term investments |
585 |
|
|
618 |
|
|
1,460 |
|
|
1,159 |
|
Total interest income |
81,537 |
|
|
95,648 |
|
|
169,706 |
|
|
188,059 |
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
Deposits |
7,641 |
|
|
11,716 |
|
|
18,599 |
|
|
22,210 |
|
Borrowed funds |
4,068 |
|
|
7,377 |
|
|
9,258 |
|
|
14,287 |
|
Total interest expense |
11,709 |
|
|
19,093 |
|
|
27,857 |
|
|
36,497 |
|
Net interest income |
69,828 |
|
|
76,555 |
|
|
141,849 |
|
|
151,562 |
|
Provision for credit
losses |
10,900 |
|
|
9,500 |
|
|
25,617 |
|
|
9,700 |
|
Net interest income after provision for credit losses |
58,928 |
|
|
67,055 |
|
|
116,232 |
|
|
141,862 |
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
Fees |
4,914 |
|
|
6,886 |
|
|
11,443 |
|
|
12,983 |
|
Wealth management income |
5,977 |
|
|
6,243 |
|
|
12,228 |
|
|
10,322 |
|
Bank-owned life insurance |
1,859 |
|
|
1,285 |
|
|
2,646 |
|
|
2,981 |
|
Net gain on securities transactions |
44 |
|
|
29 |
|
|
55 |
|
|
29 |
|
Other income |
1,571 |
|
|
1,391 |
|
|
4,984 |
|
|
1,707 |
|
Total non-interest income |
14,365 |
|
|
15,834 |
|
|
31,356 |
|
|
28,022 |
|
|
|
|
|
|
|
|
|
Non-interest expense: |
|
|
|
|
|
|
|
Compensation and employee benefits |
29,200 |
|
|
28,990 |
|
|
60,395 |
|
|
57,359 |
|
Net occupancy expense |
6,166 |
|
|
6,359 |
|
|
12,369 |
|
|
13,216 |
|
Data processing expense |
4,983 |
|
|
4,364 |
|
|
9,413 |
|
|
8,333 |
|
FDIC Insurance |
768 |
|
|
428 |
|
|
768 |
|
|
1,167 |
|
Amortization of intangibles |
711 |
|
|
844 |
|
|
1,455 |
|
|
1,334 |
|
Advertising and promotion expense |
632 |
|
|
1,078 |
|
|
2,001 |
|
|
1,961 |
|
Credit loss expense for off-balance sheet credit exposures |
5,289 |
|
|
— |
|
|
6,289 |
|
|
— |
|
Other operating expenses |
7,518 |
|
|
7,631 |
|
|
16,684 |
|
|
14,740 |
|
Total non-interest expense |
55,267 |
|
|
49,694 |
|
|
109,374 |
|
|
98,110 |
|
Income before income tax expense |
18,026 |
|
|
33,195 |
|
|
38,214 |
|
|
71,774 |
|
Income tax expense |
3,715 |
|
|
8,802 |
|
|
8,972 |
|
|
16,491 |
|
Net income |
$ |
14,311 |
|
|
$ |
24,393 |
|
|
$ |
29,242 |
|
|
$ |
55,283 |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.22 |
|
|
$ |
0.38 |
|
|
$ |
0.45 |
|
|
$ |
0.85 |
|
Average basic shares
outstanding |
64,315,547 |
|
64,886,149 |
|
64,350,790 |
|
64,826,714 |
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.22 |
|
|
$ |
0.38 |
|
|
$ |
0.45 |
|
|
$ |
0.85 |
|
Average diluted shares
outstanding |
64,400,548 |
|
65,016,724 |
|
64,428,854 |
|
64,965,062 |
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Consolidated Financial Highlights |
(Dollars in Thousands, except share data) (Unaudited) |
|
|
|
|
|
At or for the |
|
At or for the |
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Statement of
Income |
|
|
|
|
|
|
|
Net interest income |
$ |
69,828 |
|
|
$ |
76,555 |
|
|
$ |
141,849 |
|
|
$ |
151,562 |
|
Provision for credit losses |
10,900 |
|
|
9,500 |
|
|
25,617 |
|
|
9,700 |
|
Non-interest income |
14,365 |
|
|
15,834 |
|
|
31,356 |
|
|
28,022 |
|
Non-interest expense |
55,267 |
|
|
49,694 |
|
|
109,374 |
|
|
98,110 |
|
Income before income tax expense |
18,026 |
|
|
33,195 |
|
|
38,214 |
|
|
71,774 |
|
Net income |
14,311 |
|
|
24,393 |
|
|
29,242 |
|
|
55,283 |
|
Diluted earnings per share |
$ |
0.22 |
|
|
$ |
0.38 |
|
|
$ |
0.45 |
|
|
$ |
0.85 |
|
Interest rate spread |
2.79 |
% |
|
3.16 |
% |
|
2.89 |
% |
|
3.16 |
% |
Net interest margin |
2.97 |
% |
|
3.42 |
% |
|
3.09 |
% |
|
3.41 |
% |
|
|
|
|
|
|
|
|
Profitability |
|
|
|
|
|
|
|
Annualized return on average assets |
0.55 |
% |
|
1.00 |
% |
|
0.58 |
% |
|
1.14 |
% |
Annualized return on average equity |
4.08 |
% |
|
7.03 |
% |
|
4.15 |
% |
|
8.06 |
% |
Annualized return on average tangible equity (2) |
5.91 |
% |
|
10.27 |
% |
|
6.01 |
% |
|
11.67 |
% |
Annualized non-interest expense to average assets (3) |
1.86 |
% |
|
2.03 |
% |
|
1.99 |
% |
|
2.03 |
% |
Efficiency ratio (4) |
57.35 |
% |
|
53.79 |
% |
|
58.27 |
% |
|
54.63 |
% |
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
Non-accrual loans |
|
|
|
|
$ |
35,467 |
|
|
$ |
38,555 |
|
90+ and still accruing |
|
|
|
|
— |
|
|
— |
|
Non-performing loans |
|
|
|
|
35,467 |
|
|
38,555 |
|
Foreclosed assets |
|
|
|
|
3,272 |
|
|
1,688 |
|
Non-performing assets |
|
|
|
|
38,739 |
|
|
40,243 |
|
Non-performing loans to total loans |
|
|
|
|
0.46 |
% |
|
0.53 |
% |
Non-performing assets to total assets |
|
|
|
|
0.37 |
% |
|
0.40 |
% |
Allowance for loan losses |
|
|
|
|
$ |
86,259 |
|
|
$ |
62,810 |
|
Allowance for loan losses to total non-performing loans |
|
|
|
|
243.21 |
% |
|
162.91 |
% |
Allowance for loan losses to total loans |
|
|
|
|
1.11 |
% |
|
0.86 |
% |
Net loan (recoveries) charge-offs |
$ |
(215 |
) |
|
2,043 |
|
|
$ |
2,786 |
|
|
2,452 |
|
Annualized net loan (recoveries) charge offs to average total
loans |
(0.01 |
)% |
|
0.11 |
% |
|
0.07 |
% |
|
0.07 |
% |
|
|
|
|
|
|
|
|
Average Balance Sheet
Data |
|
|
|
|
|
|
|
Assets |
$ |
10,433,858 |
|
|
$ |
9,811,981 |
|
|
$ |
10,178,658 |
|
|
$ |
9,766,477 |
|
Loans, net |
7,588,015 |
|
|
7,172,944 |
|
|
7,423,061 |
|
|
7,153,421 |
|
Earning assets |
9,357,520 |
|
|
8,892,213 |
|
|
9,124,989 |
|
|
8,857,523 |
|
Core deposits |
6,920,905 |
|
|
6,127,033 |
|
|
6,655,886 |
|
|
6,110,359 |
|
Borrowings |
1,249,741 |
|
|
1,360,235 |
|
|
1,203,723 |
|
|
1,356,481 |
|
Interest-bearing liabilities |
6,929,323 |
|
|
6,830,849 |
|
|
6,875,951 |
|
|
6,806,425 |
|
Stockholders' equity |
1,409,324 |
|
|
1,391,276 |
|
|
1,415,536 |
|
|
1,383,376 |
|
Average yield on interest-earning assets |
3.47 |
% |
|
4.28 |
% |
|
3.70 |
% |
|
4.24 |
% |
Average cost of interest-bearing liabilities |
0.68 |
% |
|
1.12 |
% |
|
0.81 |
% |
|
1.08 |
% |
|
|
|
|
|
|
|
|
Loan
Data |
|
|
|
|
|
|
|
Mortgage loans: |
|
|
|
|
|
|
|
Residential |
|
|
|
|
$ |
1,125,946 |
|
|
$ |
1,076,441 |
|
Commercial |
|
|
|
|
2,676,513 |
|
|
2,362,859 |
|
Multi-family |
|
|
|
|
1,275,712 |
|
|
1,351,884 |
|
Construction |
|
|
|
|
284,980 |
|
|
383,233 |
|
Total mortgage loans |
|
|
|
|
5,363,152 |
|
|
5,174,417 |
|
Commercial loans |
|
|
|
|
2,056,213 |
|
|
1,713,127 |
|
Consumer loans |
|
|
|
|
361,653 |
|
|
410,993 |
|
Total gross loans |
|
|
|
|
7,781,018 |
|
|
7,298,537 |
|
Premium on purchased loans |
|
|
|
|
2,032 |
|
|
2,959 |
|
Unearned discounts |
|
|
|
|
(26 |
) |
|
(33 |
) |
Net deferred |
|
|
|
|
(16,632 |
) |
|
(7,728 |
) |
Total loans |
|
|
|
|
$ |
7,766,392 |
|
|
$ |
7,293,735 |
|
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 |
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At December 31, |
|
|
|
2020 |
|
2019 |
|
2019 |
Total stockholders' equity |
|
|
$ |
1,410,407 |
|
|
$ |
1,391,446 |
|
|
$ |
1,413,840 |
|
Less: total intangible assets |
|
|
435,578 |
|
|
437,606 |
|
|
437,019 |
|
Total tangible stockholders' equity |
|
|
$ |
974,829 |
|
|
$ |
953,840 |
|
|
$ |
976,821 |
|
|
|
|
|
|
|
|
|
Shares outstanding |
|
|
65,741,182 |
|
|
66,405,320 |
|
|
65,787,900 |
|
|
|
|
|
|
|
|
|
Book value per share (total stockholders' equity/shares
outstanding) |
|
|
$ |
21.45 |
|
|
$ |
20.95 |
|
|
$ |
21.49 |
|
Tangible book value per share (total tangible stockholders'
equity/shares outstanding) |
|
|
$ |
14.83 |
|
|
$ |
14.36 |
|
|
$ |
14.85 |
|
|
|
|
|
|
|
|
|
(2) Annualized Return
on Average Tangible Equity |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Total average stockholders' equity |
$ |
1,409,324 |
|
|
$ |
1,391,276 |
|
|
$ |
1,415,536 |
|
|
$ |
1,383,376 |
|
Less: total average intangible assets |
436,021 |
|
|
438,269 |
|
|
436,389 |
|
|
428,190 |
|
Total average tangible stockholders' equity |
$ |
973,303 |
|
|
$ |
953,007 |
|
|
$ |
979,147 |
|
|
$ |
955,186 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
14,311 |
|
|
$ |
24,393 |
|
|
$ |
29,242 |
|
|
$ |
55,283 |
|
|
|
|
|
|
|
|
|
Annualized return on average tangible equity (net income/total
average stockholders' equity) |
5.91 |
% |
|
10.27 |
% |
|
6.01 |
% |
|
11.67 |
% |
|
|
|
|
|
|
|
|
(3) Annualized
Adjusted Non-Interest Expense to Average Assets |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Reported non-interest expense |
$ |
55,267 |
|
|
$ |
49,694 |
|
|
$ |
109,374 |
|
|
$ |
98,110 |
|
Adjustments to non-interest expense: |
|
|
|
|
|
|
|
Credit loss expense for off-balance sheet credit exposures |
5,289 |
|
|
— |
|
|
6,289 |
|
|
— |
|
Merger-related transaction costs and COVID-19 expenses |
1,691 |
|
|
— |
|
|
2,161 |
|
|
— |
|
Adjusted non-interest expense |
$ |
48,287 |
|
|
$ |
49,694 |
|
|
$ |
100,924 |
|
|
$ |
98,110 |
|
Annualized adjusted non-interest expense |
$ |
194,209 |
|
|
$ |
199,322 |
|
|
$ |
202,957 |
|
|
$ |
197,846 |
|
|
|
|
|
|
|
|
|
Average assets |
$ |
10,433,858 |
|
|
$ |
9,811,981 |
|
|
$ |
10,178,658 |
|
|
9,766,477 |
|
|
|
|
|
|
|
|
|
Annualized adjusted non-interest expense/average assets |
1.86 |
% |
|
2.03 |
% |
|
1.99 |
% |
|
2.03 |
% |
|
|
|
|
|
|
|
|
(4) Efficiency Ratio
Calculation |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net interest income |
$ |
69,828 |
|
|
$ |
76,555 |
|
|
$ |
141,849 |
|
|
$ |
151,562 |
|
Non-interest income |
14,365 |
|
|
15,834 |
|
|
31,356 |
|
|
28,022 |
|
Total income |
$ |
84,193 |
|
|
$ |
92,389 |
|
|
$ |
173,205 |
|
|
$ |
179,584 |
|
|
|
|
|
|
|
|
|
Adjusted non-interest expense |
$ |
48,287 |
|
|
$ |
49,694 |
|
|
$ |
100,924 |
|
|
$ |
98,110 |
|
|
|
|
|
|
|
|
|
Efficiency ratio (adjusted non-interest expense/income) |
57.35 |
% |
|
53.79 |
% |
|
58.27 |
% |
|
54.63 |
% |
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Net Interest Margin Analysis |
Quarterly Average Balances |
(Unaudited) (Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
March 31, 2020 |
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
|
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
$ |
157,980 |
|
|
$ |
98 |
|
|
0.25 |
% |
|
$ |
76,080 |
|
|
$ |
269 |
|
|
1.42 |
% |
Federal funds sold and other short-term investments |
134,362 |
|
487 |
|
|
1.46 |
% |
|
104,050 |
|
606 |
|
|
2.34 |
% |
Available for sale debt securities |
970,639 |
|
5,417 |
|
2.23 |
% |
|
1,004,282 |
|
6,106 |
|
2.43 |
% |
Held to maturity debt securities, net (1) |
444,317 |
|
2,885 |
|
2.60 |
% |
|
449,107 |
|
2,940 |
|
2.62 |
% |
Equity Securities, at fair value |
746 |
|
|
— |
|
|
— |
% |
|
806 |
|
|
— |
|
|
— |
% |
Federal Home Loan Bank stock |
61,461 |
|
862 |
|
5.61 |
% |
|
58,455 |
|
963 |
|
6.59 |
% |
Net loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loans |
5,261,323 |
|
49,297 |
|
3.72 |
% |
|
5,263,048 |
|
54,441 |
|
4.11 |
% |
Total commercial loans |
1,960,322 |
|
18,944 |
|
3.85 |
% |
|
1,611,993 |
|
18,672 |
|
4.61 |
% |
Total consumer loans |
366,370 |
|
3,547 |
|
3.89 |
% |
|
383,064 |
|
4,172 |
|
4.38 |
% |
Total net loans |
7,588,015 |
|
71,788 |
|
3.76 |
% |
|
7,258,105 |
|
77,285 |
|
4.23 |
% |
Total interest-earning assets |
$ |
9,357,520 |
|
|
$ |
81,537 |
|
|
3.47 |
% |
|
$ |
8,950,885 |
|
|
$ |
88,169 |
|
|
3.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
164,086 |
|
|
|
|
|
108,901 |
|
|
|
|
Other assets |
912,252 |
|
|
|
|
|
|
863,671 |
|
|
|
|
Total Assets |
$ |
10,433,858 |
|
|
|
|
|
|
$ |
9,923,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
$ |
4,047,493 |
|
|
$ |
5,156 |
|
|
0.51 |
% |
|
$ |
3,901,940 |
|
|
7,399 |
|
0.76 |
% |
Savings deposits |
1,026,325 |
|
391 |
|
0.15 |
% |
|
991,750 |
|
368 |
|
0.15 |
% |
Time deposits |
605,764 |
|
2,095 |
|
1.39 |
% |
|
771,183 |
|
3,191 |
|
1.66 |
% |
Total Deposits |
5,679,582 |
|
7,642 |
|
0.54 |
% |
|
5,664,873 |
|
10,958 |
|
0.78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Borrowed funds |
1,249,741 |
|
4,069 |
|
1.31 |
% |
|
1,157,705 |
|
5,190 |
|
1.80 |
% |
Total interest-bearing liabilities |
6,929,323 |
|
11,711 |
|
0.68 |
% |
|
6,822,578 |
|
16,148 |
|
0.95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
1,847,087 |
|
|
|
|
|
1,497,177 |
|
|
|
|
Other non-interest bearing liabilities |
248,124 |
|
|
|
|
|
181,954 |
|
|
|
|
Total non-interest bearing liabilities |
2,095,211 |
|
|
|
|
|
1,679,131 |
|
|
|
|
Total Liabilities |
9,024,534 |
|
|
|
|
|
8,501,709 |
|
|
|
|
Stockholders' equity |
1,409,324 |
|
|
|
|
|
1,421,748 |
|
|
|
|
Total Liabilities and Stockholders' Equity |
$ |
10,433,858 |
|
|
|
|
|
|
$ |
9,923,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
69,826 |
|
|
|
|
|
|
$ |
72,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread |
|
|
|
|
2.79 |
% |
|
|
|
|
|
2.97 |
% |
Net interest-earning
assets |
$ |
2,428,197 |
|
|
|
|
|
|
$ |
2,128,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin (3) |
|
|
|
|
2.97 |
% |
|
|
|
|
|
3.20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to total interest-bearing liabilities |
1.35x |
|
|
|
|
|
1.31x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
6/31/20 |
|
3/31/20 |
|
12/31/19 |
|
9/30/19 |
|
6/30/19 |
|
3rd Qtr. |
|
1st Qtr. |
|
4th Qtr. |
|
3rd Qtr. |
|
2nd Qtr. |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
Securities |
2.21 |
% |
|
2.57 |
% |
|
2.62 |
% |
|
2.71 |
% |
|
2.80 |
% |
Net loans |
3.76 |
% |
|
4.23 |
% |
|
4.32 |
% |
|
4.44 |
% |
|
4.63 |
% |
Total interest-earning assets |
3.47 |
% |
|
3.92 |
% |
|
3.99 |
% |
|
4.09 |
% |
|
4.28 |
% |
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
Total deposits |
0.54 |
% |
|
0.78 |
% |
|
0.83 |
% |
|
0.87 |
% |
|
0.86 |
% |
Total borrowings |
1.31 |
% |
|
1.80 |
% |
|
1.98 |
% |
|
2.13 |
% |
|
2.18 |
% |
Total interest-bearing liabilities |
0.68 |
% |
|
0.95 |
% |
|
1.04 |
% |
|
1.13 |
% |
|
1.12 |
% |
|
|
|
|
|
|
|
|
|
|
Interest rate spread |
2.79 |
% |
|
2.97 |
% |
|
2.95 |
% |
|
2.96 |
% |
|
3.16 |
% |
Net interest margin |
2.97 |
% |
|
3.20 |
% |
|
3.21 |
% |
|
3.23 |
% |
|
3.42 |
% |
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to interest-bearing liabilities |
1.35x |
|
1.31x |
|
1.34x |
|
1.31x |
|
1.30x |
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Net Interest Margin Analysis |
Average Year to Date Balances |
(Unaudited) (Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
June 30, 2019 |
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
|
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
$ |
87,814 |
|
|
$ |
368 |
|
|
0.84 |
% |
|
$ |
17,953 |
|
|
$ |
222 |
|
|
2.50 |
% |
Federal funds sold and other short term investments |
119,206 |
|
|
1,093 |
|
|
1.84 |
% |
|
57,835 |
|
|
937 |
|
|
3.27 |
% |
Available for sale debt securities |
987,461 |
|
|
11,522 |
|
|
2.33 |
% |
|
1,086,800 |
|
|
14,486 |
|
|
2.67 |
% |
Held to maturity debt securities, net (1) |
446,712 |
|
|
5,825 |
|
|
2.61 |
% |
|
473,993 |
|
|
6,333 |
|
|
2.67 |
% |
Equity securities, at fair value |
777 |
|
|
— |
|
|
— |
% |
|
701 |
|
|
— |
|
|
— |
% |
Federal Home Loan Bank stock |
59,958 |
|
|
1,825 |
|
|
6.09 |
% |
|
66,820 |
|
|
2,180 |
|
|
6.53 |
% |
Net loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loans |
5,262,186 |
|
|
103,738 |
|
|
3.91 |
% |
|
5,066,950 |
|
|
110,649 |
|
|
4.35 |
% |
Total commercial loans |
1,786,158 |
|
|
37,616 |
|
|
4.19 |
% |
|
1,663,910 |
|
|
43,684 |
|
|
5.25 |
% |
Total consumer loans |
374,717 |
|
|
7,719 |
|
|
4.14 |
% |
|
422,561 |
|
|
9,568 |
|
|
4.57 |
% |
Total net loans |
7,423,061 |
|
|
149,073 |
|
|
3.99 |
% |
|
7,153,421 |
|
|
163,901 |
|
|
4.57 |
% |
Total interest-earning assets |
$ |
9,124,989 |
|
|
$ |
169,706 |
|
|
3.70 |
% |
|
$ |
8,857,523 |
|
|
$ |
188,059 |
|
|
4.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
165,710 |
|
|
|
|
|
|
92,010 |
|
|
|
|
|
Other assets |
887,959 |
|
|
|
|
|
|
816,944 |
|
|
|
|
|
Total Assets |
$ |
10,178,658 |
|
|
|
|
|
|
$ |
9,766,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
$ |
3,974,717 |
|
|
$ |
12,556 |
|
|
0.64 |
% |
|
$ |
3,619,955 |
|
|
$ |
14,483 |
|
|
0.81 |
% |
Savings deposits |
1,009,037 |
|
|
758 |
|
|
0.15 |
% |
|
1,040,204 |
|
|
900 |
|
|
0.17 |
% |
Time deposits |
688,474 |
|
|
5,285 |
|
|
1.54 |
% |
|
789,785 |
|
|
6,827 |
|
|
1.74 |
% |
Total Deposits |
5,672,228 |
|
|
18,599 |
|
|
0.66 |
% |
|
5,449,944 |
|
|
22,210 |
|
|
0.82 |
% |
Borrowed funds |
1,203,723 |
|
|
9,258 |
|
|
1.55 |
% |
|
1,356,481 |
|
|
14,287 |
|
|
2.12 |
% |
Total interest-bearing liabilities |
$ |
6,875,951 |
|
|
$ |
27,857 |
|
|
0.81 |
% |
|
$ |
6,806,425 |
|
|
$ |
36,497 |
|
|
1.08 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
1,672,132 |
|
|
|
|
|
|
1,450,200 |
|
|
|
|
|
Other non-interest bearing liabilities |
215,039 |
|
|
|
|
|
|
126,476 |
|
|
|
|
|
Total non-interest bearing liabilities |
1,887,171 |
|
|
|
|
|
|
1,576,676 |
|
|
|
|
|
Total Liabilities |
8,763,122 |
|
|
|
|
|
|
8,383,101 |
|
|
|
|
|
Stockholders' equity |
1,415,536 |
|
|
|
|
|
|
1,383,376 |
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
$ |
10,178,658 |
|
|
|
|
|
|
$ |
9,766,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
141,849 |
|
|
|
|
|
|
$ |
151,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread |
|
|
|
|
2.89 |
% |
|
|
|
|
|
3.16 |
% |
Net interest-earning
assets |
$ |
2,249,038 |
|
|
|
|
|
|
$ |
2,051,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin (3) |
|
|
|
|
3.09 |
% |
|
|
|
|
|
3.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to total interest-bearing liabilities |
1.33x |
|
|
|
|
|
1.30x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
|
|
|
|
|
|
Six Months Ended |
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2018 |
Interest-Earning
Assets: |
|
|
|
|
|
Securities |
2.42 |
% |
|
2.84 |
% |
|
2.67 |
% |
Net loans |
3.99 |
% |
|
4.57 |
% |
|
4.22 |
% |
Total interest-earning assets |
3.70 |
% |
|
4.24 |
% |
|
3.93 |
% |
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
Total deposits |
0.66 |
% |
|
0.82 |
% |
|
0.50 |
% |
Total borrowings |
1.55 |
% |
|
2.12 |
% |
|
1.76 |
% |
Total interest-bearing liabilities |
0.81 |
% |
|
1.08 |
% |
|
0.79 |
% |
|
|
|
|
|
|
Interest rate spread |
2.89 |
% |
|
3.16 |
% |
|
3.14 |
% |
Net interest margin |
3.09 |
% |
|
3.41 |
% |
|
3.31 |
% |
|
|
|
|
|
|
Ratio of interest-earning
assets to interest-bearing liabilities |
1.33x |
|
1.30x |
|
1.28x |
SOURCE: Provident Financial Services, Inc.
CONTACT: Investor Relations, 1-732-590-9300
Web Site: http://www.Provident.Bank
Provident Financial Serv... (NYSE:PFS)
Historical Stock Chart
From Apr 2024 to May 2024
Provident Financial Serv... (NYSE:PFS)
Historical Stock Chart
From May 2023 to May 2024