Provident Financial Services, Inc. (NYSE:PFS) (the “Company”)
reported net income of $27.1 million, or $0.37 per basic and
diluted share, for the three months ended September 30, 2020,
compared to net income of $31.4 million, or $0.49 per basic and
diluted share, for the three months ended September 30, 2019.
For the nine months ended September 30, 2020, the Company reported
net income of $56.4 million, or $0.84 per basic and diluted share,
compared to net income of $86.7 million, or $1.34 per basic and
diluted share, for the same period last year.
On July 31, 2020, the Company completed its
acquisition of SB One Bancorp ("SB One"), which added $2.19 billion
to total assets, $1.77 billion to loans, and $1.76 billion to
deposits. The results of operations for the three and nine months
ended September 30, 2020 included pre-tax non-recurring charges
related to the acquisition of SB One totaling $2.0 million and $3.1
million, respectively.
The Company’s earnings for the three and nine
months ended September 30, 2020 were also impacted by 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”). The
acquisition of SB One and changing economic forecasts attributable
to the COVID-19 pandemic and projected economic recovery drove
provisions for credit losses and off-balance sheet credit exposures
totaling $6.7 million and $38.6 million for the three and nine
months ended September 30, 2020, respectively. The Company's
earnings were further impacted by COVID-19 related costs which
totaled $200,000 and $1.2 million for the three and nine months
ended September 30, 2020, respectively.
Christopher Martin, Chairman and Chief Executive
Officer commented: “We look forward to the opportunities that our
merger with SB One Bancorp provides our combined company, and we
welcome our new colleagues who joined us in the transaction.
Our team did a great job getting the acquisition completed on a
timely basis in a challenging operating environment.” Martin
added, “We continue to work with our borrowers who have been
impacted by this stressed economic environment and we are heartened
by the number of customers who have rebounded and resumed making
their full loan payments. In addition, our investments in
enhancing digital delivery channels have provided our customers
with a widely accepted and convenient platform for remote access to
their accounts and other services.”
Declaration of Quarterly
Dividend
The Company’s Board of Directors declared a
quarterly cash dividend of $0.23 per common share payable on
November 27, 2020, to stockholders of record as of the close of
business on November 13, 2020.
Balance Sheet Summary
Total assets at September 30, 2020 were
$12.87 billion, a $3.06 billion increase from December 31,
2019. The increase in total assets was primarily due to $2.19
billion of assets acquired from SB One, which includes $22.4
million of goodwill and $10.0 million of other intangible
assets, as well as an increase of $474.8 million related to
commercial loans made under the Paycheck Protection Program
("PPP").
The Company’s loan portfolio increased $2.42
billion to $9.76 billion at September 30, 2020, from $7.33
billion at December 31, 2019, which included $1.77 billion of
loans acquired from SB One and $474.8 million of commercial PPP
loans. For the nine months ended September 30, 2020, loan
originations, including advances on lines of credit, totaled $2.63
billion, compared with $2.04 billion for the same period in
2019. During the nine months ended September 30, 2020, the
loan portfolio had net increases of $1.17 billion in commercial
mortgage loans, $655.4 million in commercial loans, $319.2 million
in multi-family mortgage loans, $242.0 million in residential
mortgage loans, $32.3 million in construction loans and $15.1
million in consumer loans. Commercial real
estate, commercial and construction loans represented 82.3% of the
loan portfolio at September 30, 2020, compared to 80.0% at
December 31, 2019.
At September 30, 2020, the Company’s
unfunded loan commitments totaled $2.26 billion, including
commitments of $967.3 million in commercial loans, $697.4 million
in construction loans and $307.9 million in commercial mortgage
loans. Unfunded loan commitments at December 31, 2019
and September 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 $1.37 billion at
September 30, 2020, compared to $905.9 million and $1.09
billion at December 31, 2019 and September 30, 2019,
respectively.
Cash and cash equivalents were $510.1 million at
September 30, 2020, a $323.4 million increase from
December 31, 2019, largely due to increases in cash collateral
pledged to counterparties to secure loan-level swaps and short-term
investments and $78.1 million of cash and cash equivalents acquired
from SB One.
Total investments were $1.62 billion at
September 30, 2020, a $129.2 million increase from
December 31, 2019. This increase was mainly attributable
to investment securities acquired from SB One, partially offset by
repayments of mortgage-backed securities, maturities and calls of
certain municipal and agency bonds.
Banking premises and equipment increased $17.7
million for the nine months ended September 30, 2020, to $72.9
million, primarily due to assets acquired from SB One at a fair
value of $16.6 million.
Total deposits increased $2.46 billion during
the nine months ended September 30, 2020 to $9.56 billion.
The increase in total deposits consisted of $1.76 billion of
deposits acquired from SB One and additional net deposit growth of
$698.9 million. Total core deposits, consisting of savings and
demand deposit accounts, increased $2.05 billion to $8.41 billion
at September 30, 2020, while total time deposits increased
$410.7 million to $1.14 billion at September 30, 2020.
The increase in core deposits was largely attributable to an $821.6
million increase in non-interest bearing demand deposits, which
partially benefited from deposits retained from activity associated
with PPP loans and stimulus funding, a $511.1 million increase in
interest bearing demand deposits, a $386.7 million increase in
money market deposits and a $326.5 million increase in savings
deposits. The increase in time deposits was largely the
result of $577.3 million acquired from SB One, partially offset by
the outflow of time deposits totaling $166.6 million. Core
deposits represented 88.0% of total deposits at September 30,
2020, compared to 89.7% at December 31, 2019.
Borrowed funds increased $287.9 million during
the nine months ended September 30, 2020, to $1.41 billion.
The increase in borrowings for the period was primarily due to
$201.6 million acquired from SB One and asset funding
requirements. Borrowed funds represented 11.0% of total
assets at September 30, 2020, a decrease from 11.5% at
December 31, 2019.
Stockholders’ equity increased $187.7 million
during the nine months ended September 30, 2020, to $1.60 billion,
primarily due to common stock issued for the purchase of SB One,
net income earned for the period and an increase in unrealized
gains on available for sale debt securities, partially offset by
dividends paid to stockholders, 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, and common stock
repurchases. The Company issued 12,788,370 shares of common
stock from treasury stock in the acquisition of SB One. For
the three months ended September 30, 2020, common stock repurchases
totaled 69,549 shares at an average cost of $13.90, of which 1,045
shares, at an average cost of $12.86, were made in connection with
withholding to cover income taxes on the vesting of stock-based
compensation. For the nine months ended September 30, 2020,
common stock repurchases totaled 455,343 shares at an average cost
of $18.04, of which 49,461 shares, at an average cost of $19.69,
were made in connection with withholding to cover income taxes on
the vesting of stock-based compensation. At
September 30, 2020, 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, 2020 were $20.41 and $14.45,
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 September 30, 2020,
net interest income increased $8.5 million to $82.0 million, from
$73.5 million for the same period in 2019. Net interest
income for the nine months ended September 30, 2020 decreased $1.3
million to $223.8 million, from $225.1 million for the same period
in 2019. Both comparative periods were favorably impacted by
the net assets acquired from SB One, partially offset by
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. For
the nine months ended September 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.
The Company’s net interest margin increased four
basis points to 3.01% for the quarter ended September 30,
2020, from 2.97% for the trailing quarter, primarily due to
decreases in funding costs and growth in non-interest bearing
deposits. The weighted average yield on interest-earning
assets decreased three basis points to 3.44% for the quarter ended
September 30, 2020, compared to 3.47% for the quarter ended
June 30, 2020. The weighted average cost of
interest-bearing liabilities for the quarter ended
September 30, 2020 decreased 11 basis points to 0.57%,
compared to 0.68% for the trailing quarter. The average cost
of interest bearing deposits for the quarter ended
September 30, 2020 was 0.44%, compared to 0.54% for the
trailing quarter ended June 30, 2020. Average
non-interest bearing demand deposits totaled $2.21 billion for the
quarter ended September 30, 2020, compared with $1.85 billion
for the trailing quarter ended June 30, 2020. The
average cost of all deposits, including non-interest bearing
deposits, was 33 basis points for the quarter ended
September 30, 2020, compared with 41 basis points for the
trailing quarter. The average cost of borrowed funds for the
quarter ended September 30, 2020 was 1.19%, compared to 1.31%
for the trailing quarter.
The net interest margin decreased 22 basis
points to 3.01% for the quarter ended September 30, 2020,
compared to 3.23% for the quarter ended September 30,
2019. The weighted average yield on interest-earning assets
decreased 65 basis points to 3.44% for the quarter ended
September 30, 2020, compared to 4.09% for the quarter ended
September 30, 2019, while the weighted average cost of
interest bearing liabilities decreased 56 basis points for the
quarter ended September 30, 2020 to 0.57%, compared to the
third quarter of 2019. The average cost of interest bearing
deposits for the quarter ended September 30, 2020 was 0.44%,
compared to 0.87% for the same period last year. Average
non-interest bearing demand deposits totaled $2.21 billion for the
quarter ended September 30, 2020, compared to $1.51 billion
for the quarter ended September 30, 2019. The average
cost of all deposits, including non-interest bearing deposits, was
33 basis points for the quarter ended September 30, 2020,
compared with 68 basis points for the quarter ended
September 30, 2019. The average cost of borrowed funds
for the quarter ended September 30, 2020 was 1.19%, compared
to 2.13% for the same period last year.
For the nine months ended September 30, 2020,
the net interest margin decreased 29 basis points to 3.06%,
compared to 3.35% for the nine months ended September 30,
2019. The weighted average yield on interest earning assets
declined 59 basis points to 3.60% for the nine months ended
September 30, 2020, compared to 4.19% for the nine months ended
September 30, 2019, while the weighted average cost of interest
bearing liabilities decreased 38 basis points to 0.72% for the nine
months ended September 30, 2020, compared to 1.10% for the same
period last year. The average cost of interest bearing
deposits decreased 26 basis points to 0.58% for the nine months
ended September 30, 2020, compared to 0.84% for the same period
last year. Average non-interest bearing demand deposits
totaled $1.85 billion for the nine months ended September 30, 2020,
compared with $1.47 billion for the nine months ended September 30,
2019. The average cost of all deposits, including
non-interest bearing deposits, was 44 basis points for the nine
months ended September 30, 2020, compared with 61 basis points for
the nine months ended September 30, 2019. The average cost of
borrowings for the nine months ended September 30, 2020 was 1.42%,
compared to 2.13% for the same period last year.
Non-Interest Income
Non-interest income totaled $20.6 million for
the quarter ended September 30, 2020, an increase of $2.6
million, compared to the same period in 2019. Insurance
agency income, a new revenue opportunity for the Company resulting
from the SB One acquisition, totaled $1.7 million for the three
months ended September 30, 2020. Other income increased $1.6
million to $4.7 million for the three months ended September 30,
2020, compared to the quarter ended September 30, 2019,
primarily due to a $1.2 million increase in net fees on loan-level
interest rate swap transactions, a $171,000 increase in net gains
on the sale of foreclosed real estate and a $159,000 increase in
net gains on the sale of fixed assets. Wealth management
income increased $763,000 to $6.8 million for the three months
ended September 30, 2020. The increase was largely a function
of market improvements in the value of assets under management and
an increase in managed mutual fund fees. Also, income from
Bank-owned life insurance ("BOLI") increased $372,000 to $1.6
million for the three months ended September 30, 2020, compared to
the same period in 2019, primarily due to an increase in benefit
claims, partially offset by lower equity valuations.
Partially offsetting these increases, fee income decreased $1.9
million to $5.7 million for the three months ended September 30,
2020, compared to the same period in 2019, largely due to a $1.0
million decrease in commercial loan prepayment fees and an $850,000
decrease in deposit related fees. The decrease in fee income
is largely due to the effects of COVID-19 on consumer and business
activities.
For the nine months ended September 30, 2020,
non-interest income totaled $52.0 million, an increase of $5.9
million, compared to the same period in 2019. Other income
increased $4.9 million to $9.7 million for the nine months ended
September 30, 2020, compared to $4.8 million for the same period in
2019, due to a $3.9 million increase in net fees on loan-level
interest rate swap transactions, an $800,000 increase in net gains
on the sale of fixed assets and a $684,000 increase in net gains on
the sale of foreclosed real estate, partially offset by a $300,000
decrease in net gains from the sale of loans. Wealth
management income increased $2.7 million to $19.1 million for the
nine months ended September 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. Also, insurance agency income totaled $1.7 million
derived from the July 31, 2020 acquisition of SB One.
Partially offsetting these increases, fee income decreased $3.4
million, primarily due to a $2.1 million decrease in deposit
related fees, an $838,000 decrease in commercial loan prepayment
fees and a $100,000 decrease in non-deposit investment fee income,
all largely due to the effects of COVID-19 on consumer and business
activities.
Non-Interest Expense
For the three months ended September 30, 2020,
non-interest expense totaled $59.8 million, an increase of $10.0
million, compared to the three months ended September 30,
2019. Non-interest expense for the three months ended
September 30, 2020, included non-recurring costs related to the
acquisition of SB One and two months of expenses associated with
the operation of the former SB One franchise. Compensation
and benefits expense increased $6.3 million to $35.7 million for
the three months ended September 30, 2020, compared to $29.4
million for the same period in 2019. This increase was
principally due to an increase in salary expense associated with
the addition of former SB One employees, COVID-19 supplemental pay
for branch employees and an increase in severance expense,
partially offset by a decrease in stock-based compensation.
Other operating expenses increased $1.9 million to $9.8 million for
the three months ended September 30, 2020, compared to the same
period in 2019, largely due to increases in legal and consulting
expenses, which included $1.8 million related to the acquisition of
SB One. FDIC insurance increased $1.2 million due to the
addition of SB One, along with increases in both the insurance
assessment rate and total assets subject to assessment. Data
processing expense increased $912,000 to $5.0 million for the three
months ended September 30, 2020, compared with the same period in
2019, primarily due to increases in software subscription service
expense and on-line banking costs. Partially offsetting these
increases, credit loss expense for off-balance sheet credit
exposures under the CECL standard was reduced $575,000 in the
quarter, due to a decrease in loss factors associated with the
current economic forecast, partially offset by an increase in the
pipeline of loans approved awaiting closing, largely due to the
addition of the SB One loan pipeline.
Non-interest expense totaled $169.2 million for
the nine months ended September 30, 2020, an increase of $21.3
million, compared to $147.8 million for the nine months ended
September 30, 2019. Compensation and benefits expense
increased $9.4 million to $96.1 million for the nine months ended
September 30, 2020, compared to $86.7 million for the nine months
ended September 30, 2019, primarily due to an increase in salary
expense associated with the addition of former SB One and T&L
employees, an increase in severance expense and COVID 19
supplemental pay for branch employees, partially offset by the
increased deferral of salary expense related to PPP loan
originations. For the nine months ended September 30, 2020,
credit loss expense for off-balance sheet credit exposures was $5.7
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. Other operating
expenses increased $3.8 million to $26.4 million for the nine
months ended September 30, 2020, compared to the same period in
2019, largely due to an increase in legal and consulting expenses
related to the SB One transaction and a market valuation adjustment
on foreclosed real estate. Data processing expense increased
$2.0 million to $14.4 million for the nine months ended September
30, 2020, compared to $12.4 million for the same period in 2019,
principally due to increases in software subscription service
expense and on-line banking costs. FDIC insurance increased
$786,000 for the nine months ended September 30, 2020, primarily
due to the addition of SB One and increases in both the insurance
assessment rate and total assets subject to assessment.
Partially offsetting these increases, net occupancy expense
decreased $267,000 to $19.4 million for the nine months ended
September 30, 2020, compared to the same period in 2019, due to
reductions in snow removal, depreciation expenses and branch
closures, partially offset by additional occupancy expense related
to SB One.
The Company’s annualized adjusted non-interest
expense as a percentage of average assets(1) was 1.92% for the
quarter ended September 30, 2020, compared to 1.99% for the
same period in 2019, with the 2020 improvement driven by the
significant increase in average assets largely attributable to
assets acquired from SB One and PPP loans. For the nine
months ended September 30, 2020, the Company’s annualized adjusted
non-interest expense as a percentage of average assets(1) was
1.97%, compared to 2.01% 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 56.72% and
57.69% for the quarter and nine months ended September 30, 2020,
respectively, compared to 54.31% and 54.52% for the same respective
periods in 2019.
Asset Quality
The Company’s total non-performing loans at
September 30, 2020 were $49.0 million, or 0.50% of total
loans, compared to $35.5 million, or 0.46% of total loans at
June 30, 2020, and $40.2 million, or 0.55% of total loans at
December 31, 2019. The $13.5 million increase in
non-performing loans at September 30, 2020, compared to the
trailing quarter, included $11.5 million of non-performing loans
acquired from SB One and consisted of an $11.5 million increase in
non-performing commercial mortgage loans, a $2.6 million increase
in non-performing residential loans and a $347,000 increase in
non-performing consumer loans, partially offset by a $1.2 million
decrease in non-performing commercial loans. At
September 30, 2020, impaired loans totaled $65.8 million with
related specific reserves of $3.3 million, compared with impaired
loans totaling $63.1 million with related specific reserves of $3.6
million at June 30, 2020. At December 31, 2019,
impaired loans totaled $70.6 million with related specific reserves
of $5.1 million.
Loans that have been or are expected to be
granted COVID-19 related deferrals or modifications have decreased
from a peak level of $1.31 billion, or 16.8% of loans, to $310.8
million, or 3.2% of loans as of October 16, 2020. This $310.8
million of loans includes $47.5 million acquired from SB One and
consists of $27.0 million in a first 90-day deferral period, $84.9
million in a second 90-day deferral period, and $198.9 million that
have completed their initial deferral periods, but are expected to
require ongoing assistance. Included in the $310.8
million of loans, $92.4 million are secured by hotels, $43.7
million are secured by retail properties, $31.4 million are secured
by restaurants, $15.1 million are secured by suburban office space,
and $42.7 million are secured by residential mortgages, with the
balance comprised of diverse commercial loans.
At September 30, 2020, the Company’s
allowance for credit losses related to the loan portfolio was 1.09%
of total loans, compared to 1.11% and 0.76% at June 30, 2020
and December 31, 2019, respectively. The Company
recorded provisions for credit losses of $6.4 million and $32.0
million for the three and nine months ended September 30, 2020,
respectively, compared with provisions of $500,000 and $10.2
million for the three and nine months ended September 30, 2019,
respectively. For the three and nine months ended September
30, 2020, the Company had net recoveries of $59,000 and net
charge-offs of $2.7 million, respectively, compared to net
charge-offs of $6.0 million and $8.4 million, respectively, for the
same periods in 2019. The allowance for loan losses increased
$50.8 million to $106.3 million at September 30, 2020 from
$55.5 million at December 31, 2019. The increase in the
allowance for credit losses was attributable to elevated provisions
for credit losses primarily due to the current weak economic
forecast attributable to the COVID-19 pandemic and the adoption of
CECL, along with $15.5 million and $13.6 million additions to the
allowance for credit losses for loans and purchased credit
deteriorated ("PCD") loans, respectively, related to the
acquisition of the SB One loan portfolio. 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 September 30, 2020 and December 31,
2019, the Company held foreclosed assets of $4.7 million and $2.7
million, respectively. During the nine months ended September
30, 2020, there were three additions to foreclosed assets with a
carrying value of $2.6 million and 11 properties sold with a
carrying value of $2.5 million and valuation charges of
$556,000. Foreclosed assets acquired from SB One totaled $2.4
million. Foreclosed assets at September 30, 2020
consisted of $2.8 million of commercial real estate, $1.5 million
of commercial vehicles and $400,000 of residential real
estate. Total non-performing assets at September 30,
2020 increased $10.8 million to $53.7 million, or 0.42% 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 September 30, 2020,
the Company’s income tax expense was $9.3 million with an effective
tax rate of 25.5%, compared with income tax expense of $9.9 million
with an effective tax rate of 24.0% for the three months ended
September 30, 2019. For the nine months ended September 30,
2020, the Company's income tax expense was $18.3 million with an
effective tax rate of 24.5%, compared with $26.4 million with an
effective tax rate of 23.4% for the nine months ended September 30,
2019. The decreases in tax expense for the three and nine
months ended September 30, 2020 compared with the same periods in
2019 were largely the result of decreases in taxable income, while
the increases in the effective tax rates for the three and nine
months ended September 30, 2020 compared with the same periods in
2019 were primarily due to increased projections of taxable income
for the remainder of the year and decreases in the proportion of
income derived from tax exempt sources to total pre-tax income.
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 and Queens County, New York. The
Bank also provides fiduciary and wealth management services through
its wholly owned subsidiary, Beacon Trust Company and insurance
brokerage services through its wholly owned subsidiary, SB One
Insurance Agency, Inc.
Post Earnings Conference
Call
Representatives of the Company will hold a
conference call for investors on Friday, October 30, 2020 at
10:00 a.m. Eastern Time to discuss the Company’s financial results
for the quarter ended September 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 the Company's
business, financial condition or results of operations. 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, the Company 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
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 Statements of Financial Condition |
September 30, 2020 (Unaudited) and December 31, 2019 |
(Dollars in Thousands) |
|
|
|
|
Assets |
September 30, 2020 |
|
December 31, 2019 |
|
|
|
|
Cash and due from banks |
$ |
382,014 |
|
|
$ |
131,555 |
|
Short-term investments |
128,124 |
|
|
55,193 |
|
Total cash and cash equivalents |
510,138 |
|
|
186,748 |
|
|
|
|
|
Available for sale debt
securities, at fair value |
1,100,391 |
|
|
976,919 |
|
Held to maturity debt
securities, net (fair value of $467,769 at September 30, 2020
(unaudited) and $467,966 at December 31, 2019) |
446,591 |
|
|
453,629 |
|
Equity securities, at fair
value |
869 |
|
|
825 |
|
Federal Home Loan Bank
stock |
69,975 |
|
|
57,298 |
|
Loans |
9,756,809 |
|
|
7,332,885 |
|
Less allowance for credit losses |
106,314 |
|
|
55,525 |
|
Net loans |
9,650,495 |
|
|
7,277,360 |
|
Foreclosed assets, net |
4,720 |
|
|
2,715 |
|
Banking premises and
equipment, net |
72,909 |
|
|
55,210 |
|
Accrued interest
receivable |
43,967 |
|
|
29,031 |
|
Intangible assets |
467,128 |
|
|
437,019 |
|
Bank-owned life insurance |
234,410 |
|
|
195,533 |
|
Other assets |
269,729 |
|
|
136,291 |
|
Total assets |
$ |
12,871,322 |
|
|
$ |
9,808,578 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Deposits: |
|
|
|
Demand deposits |
$ |
7,104,322 |
|
|
$ |
5,384,868 |
|
Savings deposits |
1,310,231 |
|
|
983,714 |
|
Certificates of deposit of $100,000 or more |
627,041 |
|
|
438,551 |
|
Other time deposits |
517,647 |
|
|
295,476 |
|
Total deposits |
9,559,241 |
|
|
7,102,609 |
|
Mortgage escrow deposits |
27,510 |
|
|
26,804 |
|
Borrowed funds |
1,413,029 |
|
|
1,125,146 |
|
Subordinated debentures |
25,099 |
|
|
— |
|
Other liabilities |
244,874 |
|
|
140,179 |
|
Total liabilities |
11,269,753 |
|
|
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
78,481,159 shares outstanding at September 30, 2020 and 65,787,900
outstanding at December 31, 2019 |
832 |
|
|
832 |
|
Additional paid-in
capital |
960,863 |
|
|
1,007,303 |
|
Retained earnings |
694,240 |
|
|
695,273 |
|
Accumulated other
comprehensive income |
13,331 |
|
|
3,821 |
|
Treasury stock |
(45,118 |
) |
|
(268,504 |
) |
Unallocated common stock held
by the Employee Stock Ownership Plan |
(22,579 |
) |
|
(24,885 |
) |
Common Stock acquired by the
Directors' Deferred Fee Plan |
(3,330 |
) |
|
(3,833 |
) |
Deferred Compensation -
Directors' Deferred Fee Plan |
3,330 |
|
|
3,833 |
|
Total stockholders' equity |
1,601,569 |
|
|
1,413,840 |
|
Total liabilities and stockholders' equity |
$ |
12,871,322 |
|
|
$ |
9,808,578 |
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Consolidated Statements of Income |
Three and Nine Months Ended September 30, 2020 and 2019
(Unaudited) |
(Dollars in Thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Interest income: |
|
|
|
|
|
|
|
Real estate secured loans |
$ |
58,897 |
|
|
$ |
56,402 |
|
|
$ |
162,635 |
|
|
$ |
167,051 |
|
Commercial loans |
20,622 |
|
|
20,104 |
|
|
58,238 |
|
|
63,788 |
|
Consumer loans |
4,305 |
|
|
4,648 |
|
|
12,024 |
|
|
14,216 |
|
Available for sale debt securities, equity securities and Federal
Home Loan Bank stock |
6,321 |
|
|
7,918 |
|
|
19,669 |
|
|
24,584 |
|
Held to maturity debt securities |
2,836 |
|
|
3,075 |
|
|
8,661 |
|
|
9,408 |
|
Deposits, federal funds sold and other short-term investments |
472 |
|
|
879 |
|
|
1,932 |
|
|
2,038 |
|
Total interest income |
93,453 |
|
|
93,026 |
|
|
263,159 |
|
|
281,085 |
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
Deposits |
7,400 |
|
|
11,730 |
|
|
26,000 |
|
|
33,940 |
|
Borrowed funds |
3,862 |
|
|
7,768 |
|
|
13,120 |
|
|
22,055 |
|
Subordinated debt |
206 |
|
|
— |
|
|
206 |
|
|
— |
|
Total interest expense |
11,468 |
|
|
19,498 |
|
|
39,326 |
|
|
55,995 |
|
Net interest income |
81,985 |
|
|
73,528 |
|
|
223,833 |
|
|
225,090 |
|
Provision for credit
losses |
6,400 |
|
|
500 |
|
|
32,017 |
|
|
10,200 |
|
Net interest income after provision for credit losses |
75,585 |
|
|
73,028 |
|
|
191,816 |
|
|
214,890 |
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
Fees |
5,736 |
|
|
7,634 |
|
|
17,179 |
|
|
20,617 |
|
Wealth management income |
6,847 |
|
|
6,084 |
|
|
19,075 |
|
|
16,406 |
|
Insurance agency income |
1,711 |
|
|
— |
|
|
1,711 |
|
|
— |
|
Bank-owned life insurance |
1,644 |
|
|
1,272 |
|
|
4,290 |
|
|
4,253 |
|
Net gain on securities transactions |
— |
|
|
— |
|
|
55 |
|
|
29 |
|
Other income |
4,688 |
|
|
3,057 |
|
|
9,672 |
|
|
4,764 |
|
Total non-interest income |
20,626 |
|
|
18,047 |
|
|
51,982 |
|
|
46,069 |
|
|
|
|
|
|
|
|
|
Non-interest expense: |
|
|
|
|
|
|
|
Compensation and employee benefits |
35,700 |
|
|
29,376 |
|
|
96,095 |
|
|
86,735 |
|
Net occupancy expense |
6,993 |
|
|
6,413 |
|
|
19,362 |
|
|
19,629 |
|
Data processing expense |
5,026 |
|
|
4,114 |
|
|
14,439 |
|
|
12,447 |
|
FDIC Insurance |
1,185 |
|
|
— |
|
|
1,953 |
|
|
1,167 |
|
Amortization of intangibles |
918 |
|
|
827 |
|
|
2,373 |
|
|
2,161 |
|
Advertising and promotion expense |
773 |
|
|
1,098 |
|
|
2,774 |
|
|
3,059 |
|
Credit loss (benefit) expense for off-balance sheet credit
exposures |
(575 |
) |
|
— |
|
|
5,714 |
|
|
— |
|
Other operating expenses |
9,763 |
|
|
7,910 |
|
|
26,447 |
|
|
22,650 |
|
Total non-interest expense |
59,783 |
|
|
$ |
49,738 |
|
|
169,157 |
|
|
147,848 |
|
Income before income tax expense |
36,428 |
|
|
$ |
41,337 |
|
|
74,641 |
|
|
113,111 |
|
Income tax expense |
9,285 |
|
|
9,938 |
|
|
18,257 |
|
|
26,429 |
|
Net income |
$ |
27,143 |
|
|
$ |
31,399 |
|
|
$ |
56,384 |
|
|
$ |
86,682 |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.37 |
|
|
$ |
0.49 |
|
|
$ |
0.84 |
|
|
$ |
1.34 |
|
Average basic shares
outstanding |
72,519,123 |
|
|
64,511,956 |
|
|
67,093,442 |
|
|
64,720,642 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.37 |
|
|
$ |
0.49 |
|
|
$ |
0.84 |
|
|
$ |
1.34 |
|
Average diluted shares
outstanding |
72,604,298 |
|
|
64,632,285 |
|
|
67,173,876 |
|
|
64,852,983 |
|
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 September 30, |
|
Nine months ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Statement of
Income |
|
|
|
|
|
|
|
Net interest income |
$ |
81,985 |
|
|
|
$ |
73,528 |
|
|
$ |
223,833 |
|
|
|
$ |
225,090 |
|
|
Provision for credit losses |
6,400 |
|
|
|
500 |
|
|
32,017 |
|
|
|
10,200 |
|
|
Non-interest income |
20,626 |
|
|
|
18,047 |
|
|
51,982 |
|
|
|
46,069 |
|
|
Non-interest expense |
59,783 |
|
|
|
49,738 |
|
|
169,157 |
|
|
|
147,848 |
|
|
Income before income tax expense |
36,428 |
|
|
|
41,337 |
|
|
74,641 |
|
|
|
113,111 |
|
|
Net income |
27,143 |
|
|
|
31,399 |
|
|
56,384 |
|
|
|
86,682 |
|
|
Diluted earnings per share |
$ |
0.37 |
|
|
|
$ |
0.49 |
|
|
$ |
0.84 |
|
|
|
$ |
1.34 |
|
|
Interest rate spread |
2.87 |
|
% |
|
2.96 |
% |
|
2.88 |
|
% |
|
3.09 |
|
% |
Net interest margin |
3.01 |
|
% |
|
3.23 |
% |
|
3.06 |
|
% |
|
3.35 |
|
% |
|
|
|
|
|
|
|
|
Profitability |
|
|
|
|
|
|
|
Annualized return on average assets |
0.90 |
|
% |
|
1.26 |
% |
|
0.70 |
|
% |
|
1.18 |
|
% |
Annualized return on average equity |
7.04 |
|
% |
|
8.90 |
% |
|
5.18 |
|
% |
|
8.34 |
|
% |
Annualized return on average tangible equity (2) |
10.05 |
|
% |
|
12.97 |
% |
|
7.45 |
|
% |
|
12.11 |
|
% |
Annualized non-interest expense to average assets (3) |
1.92 |
|
% |
|
1.99 |
% |
|
1.97 |
|
% |
|
2.01 |
|
% |
Efficiency ratio (4) |
56.72 |
|
% |
|
54.31 |
% |
|
57.69 |
|
% |
|
54.52 |
|
% |
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
Non-accrual loans |
|
|
|
|
$ |
48,953 |
|
|
|
$ |
39,981 |
|
|
90+ and still accruing |
|
|
|
|
— |
|
|
|
— |
|
|
Non-performing loans |
|
|
|
|
48,953 |
|
|
|
39,981 |
|
|
Foreclosed assets |
|
|
|
|
4,720 |
|
|
|
1,534 |
|
|
Non-performing assets |
|
|
|
|
53,673 |
|
|
|
41,515 |
|
|
Non-performing loans to total loans |
|
|
|
|
0.50 |
|
% |
|
0.55 |
|
% |
Non-performing assets to total assets |
|
|
|
|
0.42 |
|
% |
|
0.42 |
|
% |
Allowance for loan losses |
|
|
|
|
$ |
106,314 |
|
|
|
$ |
57,344 |
|
|
Allowance for loan losses to total non-performing loans |
|
|
|
|
217.18 |
|
% |
|
143.43 |
|
% |
Allowance for loan losses to total loans |
|
|
|
|
1.09 |
|
% |
|
0.79 |
|
% |
Net loan (recoveries) charge-offs |
$ |
(59 |
) |
|
|
5,966 |
|
|
$ |
2,727 |
|
|
|
8,418 |
|
|
Annualized net loan (recoveries) charge offs to average total
loans |
— |
|
% |
|
0.33 |
% |
|
0.05 |
|
% |
|
0.16 |
|
% |
|
|
|
|
|
|
|
|
Average Balance Sheet
Data |
|
|
|
|
|
|
|
Assets |
$ |
12,063,681 |
|
|
|
$ |
9,899,693 |
|
|
$ |
10,811,585 |
|
|
|
$ |
9,811,371 |
|
|
Loans, net |
8,931,927 |
|
|
|
7,199,945 |
|
|
7,929,687 |
|
|
|
7,169,099 |
|
|
Earning assets |
10,749,395 |
|
|
|
8,955,859 |
|
|
9,672,290 |
|
|
|
8,889,786 |
|
|
Core deposits |
7,988,166 |
|
|
|
6,067,107 |
|
|
7,103,221 |
|
|
|
6,095,784 |
|
|
Borrowings |
1,292,646 |
|
|
|
1,445,112 |
|
|
1,233,580 |
|
|
|
1,386,349 |
|
|
Interest-bearing liabilities |
8,046,751 |
|
|
|
6,825,203 |
|
|
7,269,066 |
|
|
|
6,812,752 |
|
|
Stockholders' equity |
1,533,771 |
|
|
|
1,399,583 |
|
|
1,455,235 |
|
|
|
1,388,838 |
|
|
Average yield on interest-earning assets |
3.44 |
|
% |
|
4.09 |
% |
|
3.60 |
|
% |
|
4.19 |
|
% |
Average cost of interest-bearing liabilities |
0.57 |
|
% |
|
1.13 |
% |
|
0.72 |
|
% |
|
1.10 |
|
% |
|
|
|
|
|
|
|
|
Loan
Data |
|
|
|
|
|
|
|
Mortgage loans: |
|
|
|
|
|
|
|
Residential |
|
|
|
|
$ |
1,320,222 |
|
|
|
$ |
1,072,701 |
|
|
Commercial |
|
|
|
|
3,750,639 |
|
|
|
2,437,210 |
|
|
Multi-family |
|
|
|
|
1,544,924 |
|
|
|
1,298,754 |
|
|
Construction |
|
|
|
|
462,161 |
|
|
|
399,501 |
|
|
Total mortgage loans |
|
|
|
|
7,077,947 |
|
|
|
5,208,166 |
|
|
Commercial loans |
|
|
|
|
2,290,196 |
|
|
|
1,659,965 |
|
|
Consumer loans |
|
|
|
|
406,451 |
|
|
|
403,576 |
|
|
Total gross loans |
|
|
|
|
9,774,593 |
|
|
|
7,271,707 |
|
|
Premium on purchased loans |
|
|
|
|
1,514 |
|
|
|
2,716 |
|
|
Unearned discounts |
|
|
|
|
(26 |
) |
|
|
(26 |
) |
|
Net deferred |
|
|
|
|
(19,272 |
) |
|
|
(7,403 |
) |
|
Total loans |
|
|
|
|
$ |
9,756,809 |
|
|
|
$ |
7,266,994 |
|
|
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 September 30, |
|
At December 31, |
|
|
|
|
2020 |
|
2019 |
|
2019 |
|
Total stockholders' equity |
|
|
$ |
1,601,569 |
|
|
$ |
1,397,833 |
|
|
$ |
1,413,840 |
|
|
Less: total intangible assets |
|
|
467,128 |
|
|
437,585 |
|
|
437,019 |
|
|
Total tangible stockholders' equity |
|
|
$ |
1,134,441 |
|
|
$ |
960,248 |
|
|
$ |
976,821 |
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding |
|
|
78,481,159 |
|
|
65,760,468 |
|
|
65,787,900 |
|
|
|
|
|
|
|
|
|
|
|
Book value per share (total stockholders' equity/shares
outstanding) |
|
|
$ |
20.41 |
|
|
$ |
21.26 |
|
|
$ |
21.49 |
|
|
Tangible book value per share (total tangible stockholders'
equity/shares outstanding) |
|
|
$ |
14.45 |
|
|
$ |
14.60 |
|
|
$ |
14.85 |
|
|
|
|
|
|
|
|
|
|
|
(2) Annualized Return
on Average Tangible Equity |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Total average stockholders' equity |
$ |
1,533,771 |
|
|
|
$ |
1,399,583 |
|
|
$ |
1,455,235 |
|
|
$ |
1,388,838 |
|
|
Less: total average intangible assets |
459,002 |
|
|
|
438,906 |
|
|
443,975 |
|
|
431,802 |
|
|
Total average tangible stockholders' equity |
$ |
1,074,769 |
|
|
|
$ |
960,677 |
|
|
$ |
1,011,260 |
|
|
$ |
957,036 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
27,143 |
|
|
|
$ |
31,399 |
|
|
$ |
56,384 |
|
|
$ |
86,682 |
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average tangible equity (net income/total
average stockholders' equity) |
10.05 |
|
% |
|
12.97 |
% |
|
7.45 |
% |
|
12.11 |
% |
|
|
|
|
|
|
|
|
|
|
(3) Annualized
Adjusted Non-Interest Expense to Average Assets |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Reported non-interest expense |
$ |
59,783 |
|
|
|
$ |
49,738 |
|
|
$ |
169,157 |
|
|
$ |
147,848 |
|
|
Adjustments to non-interest expense: |
|
|
|
|
|
|
|
|
Credit loss expense for off-balance sheet credit exposures |
(575 |
) |
|
|
— |
|
|
5,714 |
|
|
— |
|
|
Merger-related transaction costs and COVID-19 expenses |
2,157 |
|
|
|
— |
|
|
4,318 |
|
|
— |
|
|
Adjusted non-interest expense |
$ |
58,201 |
|
|
|
$ |
49,738 |
|
|
$ |
159,125 |
|
|
$ |
147,848 |
|
|
Annualized adjusted non-interest expense |
$ |
231,539 |
|
|
|
$ |
197,330 |
|
|
$ |
212,554 |
|
|
$ |
197,672 |
|
|
|
|
|
|
|
|
|
|
|
Average assets |
$ |
12,063,681 |
|
|
|
$ |
9,899,693 |
|
|
$ |
10,811,585 |
|
|
9,811,371 |
|
|
|
|
|
|
|
|
|
|
|
Annualized adjusted non-interest expense/average assets |
1.92 |
|
% |
|
1.99 |
% |
|
1.97 |
% |
|
2.01 |
% |
|
|
|
|
|
|
|
|
|
|
(4) Efficiency Ratio
Calculation |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net interest income |
$ |
81,985 |
|
|
|
$ |
73,528 |
|
|
$ |
223,833 |
|
|
$ |
225,090 |
|
|
Non-interest income |
20,626 |
|
|
|
18,047 |
|
|
51,982 |
|
|
46,069 |
|
|
Total income |
$ |
102,611 |
|
|
|
$ |
91,575 |
|
|
$ |
275,815 |
|
|
$ |
271,159 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted non-interest expense |
$ |
58,201 |
|
|
|
$ |
49,738 |
|
|
$ |
159,125 |
|
|
$ |
147,848 |
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (adjusted non-interest expense/income) |
56.72 |
|
% |
|
54.31 |
% |
|
57.69 |
% |
|
54.52 |
% |
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Net Interest Margin Analysis |
Quarterly Average Balances |
(Dollars in Thousands) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
|
June 30, 2020 |
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
|
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
Interest-Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
$ |
80,120 |
|
|
$ |
50 |
|
|
0.25 |
% |
|
$ |
157,980 |
|
|
$ |
98 |
|
|
0.25 |
% |
|
Federal funds sold and other short-term investments |
134,319 |
|
|
421 |
|
|
1.25 |
% |
|
134,362 |
|
|
487 |
|
|
1.46 |
% |
|
Available for sale debt securities |
1,091,524 |
|
|
5,299 |
|
|
1.94 |
% |
|
970,639 |
|
|
5,417 |
|
|
2.23 |
% |
|
Held to maturity debt securities, net (1) |
444,240 |
|
|
2,836 |
|
|
2.55 |
% |
|
444,317 |
|
|
2,885 |
|
|
2.60 |
% |
|
Equity securities, at fair value |
845 |
|
|
— |
|
|
— |
% |
|
746 |
|
|
— |
|
|
— |
% |
|
Federal Home Loan Bank stock |
66,420 |
|
|
1,023 |
|
|
6.16 |
% |
|
61,461 |
|
|
862 |
|
|
5.61 |
% |
|
Net loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loans |
6,392,105 |
|
|
58,897 |
|
|
3.64 |
% |
|
5,261,323 |
|
|
49,297 |
|
|
3.72 |
% |
|
Total commercial loans |
2,150,787 |
|
|
20,622 |
|
|
3.78 |
% |
|
1,960,322 |
|
|
18,944 |
|
|
3.85 |
% |
|
Total consumer loans |
389,035 |
|
|
4,305 |
|
|
4.40 |
% |
|
366,370 |
|
|
3,547 |
|
|
3.89 |
% |
|
Total net loans |
8,931,927 |
|
|
83,824 |
|
|
3.71 |
% |
|
7,588,015 |
|
|
71,788 |
|
|
3.76 |
% |
|
Total interest-earning assets |
$ |
10,749,395 |
|
|
$ |
93,453 |
|
|
3.44 |
% |
|
$ |
9,357,520 |
|
|
$ |
81,537 |
|
|
3.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
301,500 |
|
|
|
|
|
|
|
|
|
164,086 |
|
|
|
|
|
|
|
|
|
Other assets |
1,012,786 |
|
|
|
|
|
|
|
|
|
912,252 |
|
|
|
|
|
|
|
|
|
Total assets |
$ |
12,063,681 |
|
|
|
|
|
|
|
|
|
$ |
10,433,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
$ |
4,557,172 |
|
|
$ |
5,065 |
|
|
0.44 |
% |
|
$ |
4,047,493 |
|
|
5,156 |
|
|
0.51 |
% |
|
Savings deposits |
1,223,004 |
|
|
439 |
|
|
0.14 |
% |
|
1,026,325 |
|
|
391 |
|
|
0.15 |
% |
|
Time deposits |
957,512 |
|
|
1,896 |
|
|
0.79 |
% |
|
605,764 |
|
|
2,095 |
|
|
1.39 |
% |
|
Total Deposits |
6,737,688 |
|
|
7,400 |
|
|
0.44 |
% |
|
5,679,582 |
|
|
7,642 |
|
|
0.54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowed funds |
1,292,646 |
|
|
3,862 |
|
|
1.19 |
% |
|
1,249,741 |
|
|
4,069 |
|
|
1.31 |
% |
|
Subordinated debentures |
16,417 |
|
|
206 |
|
|
4.99 |
% |
|
— |
|
|
— |
|
|
— |
% |
|
Total interest-bearing liabilities |
8,046,751 |
|
|
11,468 |
|
|
0.57 |
% |
|
6,929,323 |
|
|
11,711 |
|
|
0.68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
2,207,990 |
|
|
|
|
|
|
|
|
|
1,847,087 |
|
|
|
|
|
|
|
|
|
Other non-interest bearing liabilities |
275,169 |
|
|
|
|
|
|
|
|
|
248,124 |
|
|
|
|
|
|
|
|
|
Total non-interest bearing liabilities |
2,483,159 |
|
|
|
|
|
|
|
|
|
2,095,211 |
|
|
|
|
|
|
|
|
|
Total liabilities |
10,529,910 |
|
|
|
|
|
|
|
|
|
9,024,534 |
|
|
|
|
|
|
|
|
|
Stockholders' equity |
1,533,771 |
|
|
|
|
|
|
|
|
|
1,409,324 |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
12,063,681 |
|
|
|
|
|
|
|
|
|
$ |
10,433,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income |
|
|
|
|
$ |
81,985 |
|
|
|
|
|
|
|
|
|
$ |
69,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread |
|
|
|
|
|
|
|
|
2.87 |
% |
|
|
|
|
|
|
|
|
|
2.79 |
% |
|
Net
interest-earning assets |
$ |
2,702,644 |
|
|
|
|
|
|
|
|
|
$ |
2,428,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin (3) |
|
|
|
|
|
|
|
|
3.01 |
% |
|
|
|
|
|
|
|
|
|
2.97 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of
interest-earning assets to total interest-bearing liabilities |
1.34x |
|
|
|
|
|
|
|
|
|
1.35x |
|
|
|
|
|
|
|
|
(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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/20 |
|
6/31/20 |
|
3/31/20 |
|
12/31/19 |
|
9/30/19 |
|
3rd Qtr. |
|
2nd Qtr. |
|
1st Qtr. |
|
4th Qtr. |
|
3rd Qtr. |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
Securities |
2.12 |
% |
|
2.21 |
% |
|
2.57 |
% |
|
2.62 |
% |
|
2.71 |
% |
Net loans |
3.71 |
% |
|
3.76 |
% |
|
4.23 |
% |
|
4.32 |
% |
|
4.44 |
% |
Total interest-earning assets |
3.44 |
% |
|
3.47 |
% |
|
3.92 |
% |
|
3.99 |
% |
|
4.09 |
% |
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
Total deposits |
0.44 |
% |
|
0.54 |
% |
|
0.78 |
% |
|
0.83 |
% |
|
0.87 |
% |
Total borrowings |
1.19 |
% |
|
1.31 |
% |
|
1.80 |
% |
|
1.98 |
% |
|
2.13 |
% |
Total interest-bearing liabilities |
0.57 |
% |
|
0.68 |
% |
|
0.95 |
% |
|
1.04 |
% |
|
1.13 |
% |
|
|
|
|
|
|
|
|
|
|
Interest rate spread |
2.87 |
% |
|
2.79 |
% |
|
2.97 |
% |
|
2.95 |
% |
|
2.96 |
% |
Net interest margin |
3.01 |
% |
|
2.97 |
% |
|
3.20 |
% |
|
3.21 |
% |
|
3.23 |
% |
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to interest-bearing liabilities |
1.34x |
|
|
1.35x |
|
|
1.31x |
|
|
1.34x |
|
|
1.31x |
|
PROVIDENT FINANCIAL SERVICES, INC. AND
SUBSIDIARY |
Net Interest Margin Analysis |
Average Year to Date Balances |
(Dollars in Thousands) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
|
September 30, 2019 |
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
|
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
Interest-Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
$ |
87,111 |
|
|
$ |
418 |
|
|
0.64 |
% |
|
$ |
29,089 |
|
|
$ |
527 |
|
|
2.42 |
% |
Federal funds sold and other short term investments |
124,280 |
|
|
1,514 |
|
|
1.63 |
% |
|
64,086 |
|
|
1,511 |
|
|
3.15 |
% |
Available for sale debt securities |
1,022,402 |
|
|
16,821 |
|
|
2.19 |
% |
|
1,087,683 |
|
|
21,337 |
|
|
2.62 |
% |
Held to maturity debt securities, net (1) |
445,882 |
|
|
8,661 |
|
|
2.59 |
% |
|
470,814 |
|
|
9,408 |
|
|
2.66 |
% |
Equity securities, at fair value |
800 |
|
|
— |
|
|
— |
% |
|
717 |
|
|
— |
|
|
— |
% |
Federal Home Loan Bank stock |
62,128 |
|
|
2,848 |
|
|
6.11 |
% |
|
68,298 |
|
|
3,247 |
|
|
6.34 |
% |
Net loans: (2) |
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loans |
5,641,574 |
|
|
162,635 |
|
|
3.81 |
% |
|
5,094,641 |
|
|
167,051 |
|
|
4.34 |
% |
Total commercial loans |
1,908,588 |
|
|
58,238 |
|
|
4.04 |
% |
|
1,657,138 |
|
|
63,788 |
|
|
5.10 |
% |
Total consumer loans |
379,525 |
|
|
12,024 |
|
|
4.23 |
% |
|
417,320 |
|
|
14,216 |
|
|
4.55 |
% |
Total net loans |
7,929,687 |
|
|
232,897 |
|
|
3.88 |
% |
|
7,169,099 |
|
|
245,055 |
|
|
4.53 |
% |
Total interest-earning assets |
$ |
9,672,290 |
|
|
$ |
263,159 |
|
|
3.60 |
% |
|
$ |
8,889,786 |
|
|
$ |
281,085 |
|
|
4.19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Earning
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
209,423 |
|
|
|
|
|
|
96,914 |
|
|
|
|
|
Other assets |
929,872 |
|
|
|
|
|
|
824,671 |
|
|
|
|
|
Total assets |
$ |
10,811,585 |
|
|
|
|
|
|
$ |
9,811,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
$ |
4,170,286 |
|
|
$ |
17,621 |
|
|
0.56 |
% |
|
$ |
3,599,349 |
|
|
$ |
21,944 |
|
|
0.82 |
% |
Savings deposits |
1,080,880 |
|
|
1,197 |
|
|
0.15 |
% |
|
1,024,693 |
|
|
1,287 |
|
|
0.17 |
% |
Time deposits |
778,808 |
|
|
7,182 |
|
|
1.23 |
% |
|
802,361 |
|
|
10,709 |
|
|
1.78 |
% |
Total Deposits |
6,029,974 |
|
|
26,000 |
|
|
0.58 |
% |
|
5,426,403 |
|
|
33,940 |
|
|
0.84 |
% |
Borrowed funds |
1,233,580 |
|
|
13,120 |
|
|
1.42 |
% |
|
1,386,349 |
|
|
22,055 |
|
|
2.13 |
% |
Subordinated debentures |
$ |
5,512 |
|
|
$ |
206 |
|
|
4.99 |
% |
|
$ |
— |
|
|
$ |
— |
|
|
— |
% |
Total interest-bearing liabilities |
$ |
7,269,066 |
|
|
$ |
39,326 |
|
|
0.72 |
% |
|
$ |
6,812,752 |
|
|
$ |
55,995 |
|
|
1.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
1,852,055 |
|
|
|
|
|
|
1,471,742 |
|
|
|
|
|
Other non-interest bearing liabilities |
235,229 |
|
|
|
|
|
|
138,039 |
|
|
|
|
|
Total non-interest bearing liabilities |
2,087,284 |
|
|
|
|
|
|
1,609,781 |
|
|
|
|
|
Total liabilities |
9,356,350 |
|
|
|
|
|
|
8,422,533 |
|
|
|
|
|
Stockholders' equity |
1,455,235 |
|
|
|
|
|
|
1,388,838 |
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
10,811,585 |
|
|
|
|
|
|
$ |
9,811,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
223,833 |
|
|
|
|
|
|
$ |
225,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread |
|
|
|
|
2.88 |
% |
|
|
|
|
|
3.09 |
% |
Net interest-earning
assets |
$ |
2,403,224 |
|
|
|
|
|
|
$ |
2,077,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin (3) |
|
|
|
|
3.06 |
% |
|
|
|
|
|
3.35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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. |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
September 30, 2020 |
|
September 30, 2019 |
|
September 30, 2018 |
|
Interest-Earning
Assets: |
|
|
|
|
|
|
Securities |
2.31 |
% |
|
2.80 |
% |
|
2.69 |
% |
|
Net loans |
3.88 |
% |
|
4.53 |
% |
|
4.27 |
% |
|
Total interest-earning assets |
3.60 |
% |
|
4.19 |
% |
|
3.98 |
% |
|
|
|
|
|
|
|
|
Interest-Bearing
Liabilities: |
|
|
|
|
|
|
Total deposits |
0.58 |
% |
|
0.84 |
% |
|
0.53 |
% |
|
Total borrowings |
1.42 |
% |
|
2.13 |
% |
|
1.81 |
% |
|
Total interest-bearing liabilities |
0.72 |
% |
|
1.10 |
% |
|
0.83 |
% |
|
|
|
|
|
|
|
|
Interest rate spread |
2.88 |
% |
|
3.09 |
% |
|
3.15 |
% |
|
Net interest margin |
3.06 |
% |
|
3.35 |
% |
|
3.33 |
% |
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to interest-bearing liabilities |
1.33x |
|
|
1.30x |
|
|
1.29x |
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT: Investor Relations, 1-732-590-9300
Web Site: http://www.Provident.Bank
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