0001628280-16-015006.txt : 20160429 0001628280-16-015006.hdr.sgml : 20160429 20160429122305 ACCESSION NUMBER: 0001628280-16-015006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20160428 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Submission of Matters to a Vote of Security Holders ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160429 DATE AS OF CHANGE: 20160429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVIDENT FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0001178970 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 421547151 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31566 FILM NUMBER: 161604314 BUSINESS ADDRESS: STREET 1: 830 BERGEN AVENUE CITY: JERSEY CITY STATE: NJ ZIP: 07306 BUSINESS PHONE: 2013331000 8-K 1 a8-k033116.htm 8-K 8-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 28, 2016

PROVIDENT FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
 
Delaware
 
001-31566
 
42-1547151
(State or Other Jurisdiction of Incorporation)
 
(Commission File No.)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
239 Washington Street, Jersey City, New Jersey
 
07302
(Address of Principal Executive Offices)
 
(Zip Code)
 
 
 
 
 
Registrant's telephone number, including area code 732-590-9200

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))




Item 2.    02    Results of Operation and Financial Condition.

On April 29, 2016, Provident Financial Services, Inc. (the “Company”) issued a press release reporting its financial results for the three months ended March 31, 2016. A copy of the press release is attached as Exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed “filed” for any purpose.


Item 5.07    Submission of Matters to a Vote of Security Holders

The 2016 Annual Meeting of Stockholders was held on April 28, 2016 (the “Annual Meeting”). A total of 58,707,889 shares were present or represented by proxy at the Annual Meeting. The matters considered and voted on by the Company’s stockholders at the Annual Meeting and the votes of the stockholders were as follows:

Matter 1. The election of three directors, each for a three-year term.

Nominee
Shares Voted For
Shares Withheld
Broker Non-Votes
Thomas W. Berry
50,146,784
500,761
8,060,344
Frank L. Fekete
50,096,241
551,304
8,060,344
Matthew K. Harding
           50,208,549
                438,996
8,060,344

Matter 2. An advisory (non-binding) vote to approve the compensation paid to the named executive officers.

Shares Voted For
Shares Voted Against
Shares Voted Abstain
Broker Non-Votes
48,701,194
1,575,614
370,737
8,060,344

Matter 3. The ratification of the appointment of KPMG LLP as the Company’s independent public accounting firm for the year ending December 31, 2016.

Shares Voted For
Shares Voted Against
Shares Voted Abstain
Broker Non-Votes
         58,062,737
           374,005
                271,147
0


Item 7.01    Regulation FD Disclosure.

On April 29, 2016, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.18 per common share, payable on May 31, 2016 to stockholders of record on May 13, 2016. The dividend is an increase of 5.9% from the prior quarter’s regular cash dividend of $0.17 per share.
 
This announcement was included as part of the press release announcing financial results for the three months ended March 31, 2016 and attached as Exhibit 99.1 to this report. A copy of the press release is being furnished to the SEC and shall not be deemed “filed” for any purpose.


Item 9.01.    Financial Statements and Exhibits

(a)
Financial Statements of Businesses Acquired. Not applicable.

(b)
Pro Forma Financial Information. Not applicable.





(c)
Shell Company Transactions. Not applicable.


(d)
Exhibits.

Exhibit No.        Description

99.1
Press release issued by the Company on April 29, 2016 announcing its financial results for the three months ended March 31, 2016 and the declaration of a quarterly cash dividend.



                    


















EXHIBIT INDEX


Exhibit        Description

99.1
Press release issued by the Company on April 29, 2016 announcing its financial results for the three months ended March 31, 2016 and the declaration of a quarterly cash dividend.










SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

                    


 
 
PROVIDENT FINANCIAL SERVICES, INC.
 
 
 
 
DATE: April 29, 2016
 
By:/s/ Christopher Martin
 
 
 
Christopher Martin
 
 
 
Chairman, President and
 
 
 
Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

















 EX-99.1 2 a033116earningsrelease.htm EXHIBIT 99.1 Exhibit


Provident Financial Services, Inc. Announces First Quarter Earnings and Declares Increased Quarterly Cash Dividend

ISELIN, NJ, April 29, 2016 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $21.0 million, or $0.33 per basic and diluted share for the three months ended March 31, 2016, compared to net income of $19.8 million, or $0.32 per basic and diluted share for the three months ended March 31, 2015.
Results of operations for the first quarter of 2016 were favorably impacted by growth in both average loans outstanding and average non-interest bearing deposits, along with growth in wealth management income. These factors helped mitigate the impact of compression in the net interest margin.
Christopher Martin, Chairman, President and Chief Executive Officer commented: “Our first quarter results were strong, as our core margin remained relatively stable, and we experienced solid loan and deposit growth. As we move into the second quarter, our loan pipeline remains at historically high levels with diversification among all loan types. With an increase in our cash dividend to $0.18 from $0.17 per share, Provident stockholders will be receiving a dividend yield of approximately 3.50%, based on our current stock price. We remain optimistic about the business climate for our markets as the regional economic outlook and local housing markets continue to show improvement.” Martin continued: “I applaud the efforts of our officers and employees who made it possible for Provident Bank to be named by Forbes as one of the best banks in America.”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.18 per common share payable on May 31, 2016, to stockholders of record as of the close of business on May 13, 2016. The dividend is an increase of 5.9% from the prior quarter's regular cash dividend of $0.17 per common share.
Balance Sheet Summary
Total assets increased $114.5 million to $9.03 billion at March 31, 2016, from $8.91 billion at December 31, 2015, primarily due to a $100.5 million increase in total loans and a $12.9 million increase in total investments.
The Company’s loan portfolio increased $100.5 million, or 1.5%, to $6.64 billion at March 31, 2016, from $6.54 billion at December 31, 2015. Loan originations totaled $646.8 million and loan purchases totaled $28.6 million for the three months ended March 31, 2016. The loan portfolio had net increases of $84.2 million in multi-family mortgage loans, $45.7 million in commercial loans and $8.5 million in residential mortgage loans, partially offset by net decreases of $22.0 million in construction loans, $10.1 million in consumer loans and $5.9 million in commercial mortgage loans. Commercial real estate, commercial and construction loans represented 72.6% of the loan portfolio at March 31, 2016, compared to 72.1% at December 31, 2015.
At March 31, 2016, the Company’s unfunded loan commitments totaled $1.24 billion, including commitments of $555.1 million in commercial loans, $237.3 million in construction loans and $145.2 million in commercial mortgage loans. Unfunded loan commitments at December 31, 2015 and March 31, 2015 were $1.15 billion and $1.28 billion, respectively.
Total investments increased $12.9 million, or 0.8%, to $1.53 billion at March 31, 2016, from $1.52 billion at December 31, 2015, largely due to purchases of mortgage-backed and municipal securities and an increase in unrealized gains on securities available for sale, partially offset by principal repayments on mortgage-backed securities, maturities of municipal and agency bonds and sales of certain mortgage-backed securities.
Total deposits increased $230.9 million, or 3.9%, during the three months ended March 31, 2016, to $6.15 billion. Total core deposits, which consist of savings and demand deposit accounts, increased $175.0 million to $5.36 billion at March 31, 2016, while time deposits increased $55.9 million to $795.6 million at March 31, 2016. The increase in core deposits was largely attributable to an $80.5 million increase in interest bearing demand deposits, a $78.3 million increase in money market deposits and a $20.0 million increase in savings deposits. The increase in time deposits was primarily due to a $54.5 million increase in brokered certificates of deposits. At March 31,


1

2016, total brokered deposits were $153.2 million. Core deposits represented 87.1% of total deposits at March 31, 2016, compared to 87.5% at December 31, 2015.
Borrowed funds decreased $137.5 million, or 8.1% during the three months ended March 31, 2016, to $1.57 billion, as shorter-term wholesale fundings were replaced by net inflows of deposits for the period. Borrowed funds represented 17.4% of total assets at March 31, 2016, a decrease from 19.2% at December 31, 2015.
Stockholders’ equity increased $18.1 million, or 1.5% for the three months ended March 31, 2016, to $1.21 billion, due to net income earned for the period and an increase in unrealized gains on securities available for sale, partially offset by dividends paid to stockholders. For the three months ended March 31, 2016, 146,245 shares of common stock were repurchased at an average cost of $18.45 per share, a portion of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At March 31, 2016, 3.2 million shares remained eligible for repurchase under the current authorization. Book value per share and tangible book value per share(1) at March 31, 2016 were $18.47 and $12.00, respectively, compared with $18.26 and $11.75, respectively, at December 31, 2015.
Results of Operations
Net Interest Income and Net Interest Margin
For the three months ended March 31, 2016, net interest income increased $1.1 million to $63.1 million, from $61.9 million for the same period in 2015. The improvement in net interest income for the three months ended March 31, 2016 was primarily attributable to growth in average loans outstanding resulting from organic originations and an increase in average non-interest bearing demand deposits, partially offset by period-over-period compression in the net interest margin.
The Company’s net interest margin decreased six basis points to 3.11% for the quarter ended March 31, 2016, from 3.17% for the trailing quarter. The weighted average yield on interest-earning assets decreased four basis points to 3.66% for the quarter ended March 31, 2016, compared with 3.70% for the quarter ended December 31, 2015. The average yield on earning assets and net interest margin for the trailing quarter were favorably impacted by five basis points due to the accelerated recognition of $1.0 million of deferred income on a prepaid commercial loan. The weighted average cost of interest-bearing liabilities for the quarter ended March 31, 2016 was 0.68%, a two basis point increase from the trailing quarter. The average cost of interest bearing deposits for the quarter ended March 31, 2016 was 0.32%, a one basis point increase from the quarter ended December 31, 2015. Average non-interest bearing demand deposits totaled $1.19 billion for the quarter ended March 31, 2016, compared with $1.17 billion for the quarter ended December 31, 2015. The average cost of borrowed funds for the quarter ended March 31, 2016 was 1.71%, compared with 1.65% for the trailing quarter.
The net interest margin decreased 13 basis points to 3.11% for the quarter ended March 31, 2016, compared with 3.24% for the quarter ended March 31, 2015. The weighted average yield on interest-earning assets decreased 12 basis points to 3.66% for the quarter ended March 31, 2016, compared with 3.78% for the quarter ended March 31, 2015, while the weighted average cost of interest bearing liabilities increased one basis point to 0.68% for the quarter ended March 31, 2016, compared with 0.67% for the first quarter of 2015. The average cost of interest bearing deposits for the quarter ended March 31, 2016 was 0.32%, compared with 0.31% for the same period last year. Average non-interest bearing demand deposits increased $133.6 million to $1.19 billion for the quarter ended March 31, 2016, compared with $1.05 billion for the quarter ended March 31, 2015. The average cost of borrowed funds for the quarter ended March 31, 2016 was 1.71%, compared with 1.82% for the same period last year.
Non-Interest Income
Non-interest income totaled $13.0 million for the quarter ended March 31, 2016, an increase of $2.7 million, or 26.4%, compared to the same period in 2015. Wealth management income increased $1.8 million to $4.3 million for the three months ended March 31, 2016, compared to $2.6 million for the same period in 2015. The increase in wealth management income was primarily attributable to fees earned from assets under management acquired in the MDE transaction, which closed on April 1, 2015. Other income increased $477,000 for the three months ended March 31, 2016, compared to the same period in 2015, primarily due to a $204,000 gain recognized on the sale of deposits resulting from a strategic branch divestiture and an increase in net gains on loan sales, partially


2

offset by a decrease in net fees on loan-level interest rate swap transactions. Also contributing to the increase in non-interest income, fee income for the three months ended March 31, 2016 increased $407,000 to $6.5 million, compared to $6.1 million for the same period in 2015. This increase was largely due to a $481,000 increase in ATM and debit card revenue and a $343,000 increase in deposit related fees, partially offset by a $548,000 decrease in prepayment fees on commercial loans. Net gains on securities transactions increased $94,000 for the three months ended March 31, 2016, compared to the same period in 2015.
Non-Interest Expense
For the three months ended March 31, 2016, non-interest expense increased $1.4 million to $44.9 million, compared to the three months ended March 31, 2015. Compensation and benefits expense increased $1.8 million to $26.0 million for the three months ended March 31, 2016, compared to $24.2 million for the same period in 2015. This increase was principally due to an increase in salary expense associated with new employees added as a result of the MDE acquisition, additional salary expense related to annual merit increases and an increase in employee medical and retirement benefit costs, partially offset by lower stock-based compensation expense. Data processing expenses increased $218,000 to $3.2 million for the three months ended March 31, 2016, compared to the same period in 2015, largely due to an increase in software maintenance expense and electronic banking costs. Partially offsetting these increases in non-interest expense, net occupancy costs decreased $738,000 to $6.4 million for the three months ended March 31, 2016, compared to $7.2 million for the three months ended March 31, 2015, primarily due to a decrease in seasonal expenses resulting from a milder winter, combined with decreases in facilities and equipment maintenance expenses. Also, other operating expenses decreased $168,000 to $6.0 million for the three months ended March 31, 2016, compared to the same period in 2015, principally due to a decrease in attorney fees, a portion of which were related to the Company's loan asset recovery activities, partially offset by increases in business development and personnel recruitment expenses.
The Company’s annualized non-interest expense as a percentage of average assets(1) was 2.01% for the quarter ended March 31, 2016, compared with 2.07% for the same period in 2015. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income)(1) was 58.98% for the quarter ended March 31, 2016, compared with 60.14% for the same period in 2015.
Asset Quality
The Company’s total non-performing loans at March 31, 2016 were $50.6 million, or 0.76% of total loans, compared with $44.5 million, or 0.68% of total loans at December 31, 2015 and $50.9 million, or 0.83% of total loans at March 31, 2015. The $6.1 million increase in non-performing loans at March 31, 2016, compared with the trailing quarter, was due to a $4.5 million increase in non-performing commercial loans, a $2.0 million increase in non-performing residential mortgages and a $499,000 increase in non-performing multi-family loans, partially offset by a $1.1 million decrease in non-performing consumer loans. The increase in non-performing commercial loans was largely attributable to a single relationship secured by business assets. At March 31, 2016, impaired loans totaled $54.2 million with related specific reserves of $5.1 million, compared with impaired loans totaling $50.9 million with related specific reserves of $2.3 million at December 31, 2015. At March 31, 2015, impaired loans totaled $90.8 million with related specific reserves of $6.7 million.
At March 31, 2016, the Company’s allowance for loan losses remained unchanged at 0.94% of total loans from December 31, 2015, and decreased from 1.00% of total loans at March 31, 2015. The Company recorded a provision for loan losses of $1.5 million for the three months ended March 31, 2016, compared with a provision of $600,000 for the three months ended March 31, 2015. For the three months ended March 31, 2016, the Company had net charge-offs of $734,000, compared with net charge-offs of $1.2 million for the same period in 2015. The allowance for loan losses increased $767,000 to $62.2 million at March 31, 2016, from $61.4 million at December 31, 2015.
At March 31, 2016, the Company held $11.0 million of foreclosed assets, compared with $10.5 million at December 31, 2015. During the quarter, there were eight additions to foreclosed assets with a carrying value of $1.5 million and ten properties sold with a carrying value of $1.0 million. Foreclosed assets at March 31, 2016 consisted of $5.8 million of residential real estate, $5.1 million of commercial real estate and $156,000 of marine vessels. Total non-performing assets at March 31, 2016 increased $6.6 million, or 12.0%, to $61.7 million, or 0.68% of total assets, from $55.1 million, or 0.62% of total assets at December 31, 2015.


3

Income Tax Expense
For the three months ended March 31, 2016, the Company’s income tax expense was $8.7 million, compared with $8.4 million for the three months ended March 31, 2015. The increase in income tax expense was a function of growth in pre-tax income for the three months ended March 31, 2016. The Company’s effective tax rates were 29.4% and 29.8% for the three months ended March 31, 2016 and 2015, respectively.
About the Company
Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. The 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 Friday, April 29, 2016 at 10:00 a.m. Eastern Time to discuss highlights of the Company’s financial results for the quarter ended March 31, 2016. 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 www.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,” “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, or 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 government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not have any obligation to update any forward-looking statements to reflect events or circumstances after the date of this statement.
Footnotes
(1) Tangible book value per share, return on average tangible equity, annualized core non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes on page 8 which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.



4

 
 
 
 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
March 31, 2016 (Unaudited) and December 31, 2015
(Dollars in Thousands)
 
 
 
 
Assets
March 31, 2016
 
December 31, 2015
 
 
 
 
Cash and due from banks
$
107,252

 
$
100,899

Short-term investments
859

 
1,327

Total cash and cash equivalents
108,111

 
102,226

 
 
 
 
Securities available for sale, at fair value
984,206

 
964,534

Investment securities held to maturity (fair value of $491,349 at
March 31, 2016 (unaudited) and $488,331 at December 31, 2015)
472,934

 
473,684

Federal Home Loan Bank Stock
72,135

 
78,181

Loans
6,638,127

 
6,537,674

Less allowance for loan losses
62,191

 
61,424

Net loans
6,575,936

 
6,476,250

Foreclosed assets, net
11,029

 
10,546

Banking premises and equipment, net
88,249

 
88,987

Accrued interest receivable
25,399

 
25,766

Intangible assets
425,260

 
426,277

Bank-owned life insurance
184,389

 
183,057

Other assets
78,526

 
82,149

Total assets
$
9,026,174

 
$
8,911,657

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
Deposits:
 
 
 
Demand deposits
$
4,353,814

 
$
4,198,788

Savings deposits
1,005,430

 
985,478

Certificates of deposit of $100,000 or more
389,985

 
324,215

Other time deposits
405,633

 
415,506

Total deposits
6,154,862

 
5,923,987

Mortgage escrow deposits
25,636

 
23,345

Borrowed funds
1,570,141

 
1,707,632

Other liabilities
61,413

 
60,628

Total liabilities
7,812,052

 
7,715,592

 
 
 
 
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 65,732,579 outstanding at March 31, 2016 and 65,489,354 outstanding at December 31, 2015
832

 
832

Additional paid-in capital
1,001,919

 
1,000,810

Retained earnings
517,365

 
507,713

Accumulated other comprehensive income (loss)
4,169

 
(2,546
)
Treasury stock
(269,105
)
 
(269,014
)
Unallocated common stock held by the Employee Stock Ownership Plan
(41,058
)
 
(41,730
)
Common Stock acquired by the Directors' Deferred Fee Plan
(6,350
)
 
(6,517
)
Deferred Compensation - Directors' Deferred Fee Plan
6,350

 
6,517

Total stockholders' equity
1,214,122

 
1,196,065

Total liabilities and stockholders' equity
$
9,026,174

 
$
8,911,657



5

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three Months Ended March 31, 2016 and 2015 (Unaudited)
(Dollars in Thousands, except per share data)
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Interest income:
 
 
 
 
Real estate secured loans
 
$
44,233

 
$
43,289

Commercial loans
 
14,952

 
13,439

Consumer loans
 
5,636

 
5,794

Securities available for sale and Federal Home Loan Bank stock
 
5,780

 
6,301

Investment securities held to maturity
 
3,331

 
3,396

Deposits, federal funds sold and other short-term investments
 
42

 
12

Total interest income
 
73,974

 
72,231

 
 
 
 
 
Interest expense:
 
 
 
 
Deposits
 
3,821

 
3,588

Borrowed funds
 
7,084

 
6,715

Total interest expense
 
10,905

 
10,303

Net interest income
 
63,069

 
61,928

Provision for loan losses
 
1,500

 
600

Net interest income after provision for loan losses
 
61,569

 
61,328

 
 
 
 
 
Non-interest income:
 
 
 
 
Fees
 
6,461

 
6,054

Wealth management income
 
4,311

 
2,558

Bank-owned life insurance
 
1,332

 
1,348

Net gain on securities transactions
 
96

 
2

Other income
 
818

 
341

Total non-interest income
 
13,018

 
10,303

 
 
 
 
 
Non-interest expense:
 
 
 
 
Compensation and employee benefits
 
26,030

 
24,201

Net occupancy expense
 
6,434

 
7,172

Data processing expense
 
3,245

 
3,027

FDIC Insurance
 
1,322

 
1,218

Amortization of intangibles
 
1,005

 
927

Advertising and promotion expense
 
879

 
761

Other operating expenses
 
5,963

 
6,131

Total non-interest expense
 
44,878

 
43,437

Income before income tax expense
 
29,709

 
28,194

Income tax expense
 
8,736

 
8,392

Net income
 
$
20,973

 
$
19,802

 
 
 
 
 
Basic earnings per share
 
$
0.33

 
$
0.32

Average basic shares outstanding
 
63,351,093

 
62,673,887

 
 
 
 
 
Diluted earnings per share
 
$
0.33

 
$
0.32

Average diluted shares outstanding
 
63,519,755

 
62,840,951



6

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Financial Highlights
(Dollars in Thousands, except share data) (Unaudited)
 
 
 
 
 
At or for the
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
STATEMENTS OF INCOME:
 
 
 
 
Net interest income
 
$
63,069

 
$
61,928

Provision for loan losses
 
1,500

 
600

Non-interest income
 
13,018

 
10,303

Non-interest expense
 
44,878

 
43,437

Income before income tax expense
 
29,709

 
28,194

Net income
 
20,973

 
19,802

Diluted earnings per share
 

$0.33

 

$0.32

Interest rate spread
 
2.98
%
 
3.11
%
Net interest margin
 
3.11
%
 
3.24
%
 
 
 
 
 
PROFITABILITY:
 
 
 
 
Annualized return on average assets
 
0.94
%
 
0.94
%
Annualized return on average equity
 
6.97
%
 
6.94
%
Annualized return on average tangible equity (2)
 
10.76
%
 
10.67
%
Annualized non-interest expense to average assets (3)
 
2.01
%
 
2.07
%
Efficiency ratio (4)
 
58.98
%
 
60.14
%
 
 
 
 
 
ASSET QUALITY:
 
 
 
 
Non-accrual loans
 
$
50,649

 
$
50,888

90+ and still accruing
 
—

 
—

Non-performing loans
 
50,649

 
50,888

Foreclosed assets
 
11,029

 
5,924

Non-performing assets
 
61,678

 
56,812

Non-performing loans to total loans
 
0.76
%
 
0.83
%
Non-performing assets to total assets
 
0.68
%
 
0.67
%
Allowance for loan losses
 
$
62,191

 
$
61,110

Allowance for loan losses to total non-performing loans
 
122.79
%
 
120.09
%
Allowance for loan losses to total loans
 
0.94
%
 
1.00
%
 
 
 
 
 
AVERAGE BALANCE SHEET DATA:
 
 
 
 
Assets
 
$
8,960,605

 
$
8,510,326

Loans, net
 
6,503,275

 
6,028,265

Earning assets
 
8,054,107

 
7,662,592

Core deposits
 
5,230,345

 
4,981,618

Borrowings
 
1,688,892

 
1,492,714

Interest-bearing liabilities
 
6,485,777

 
6,229,529

Stockholders' equity
 
1,210,210

 
1,157,078

Average yield on interest-earning assets
 
3.66
%
 
3.78
%
Average cost of interest-bearing liabilities
 
0.68
%
 
0.67
%
 
 
 
 
 
LOAN DATA:
 
 
 
 
Mortgage loans:
 
 
 
 
Residential
 
$
1,263,699

 
$
1,246,809

Commercial
 
1,710,182

 
1,689,287

Multi-family
 
1,318,251

 
1,070,926

Construction
 
309,656

 
274,001

Total mortgage loans
 
4,601,788

 
4,281,023

Commercial loans
 
1,480,002

 
1,243,783

Consumer loans
 
556,056

 
601,323

Total gross loans
 
6,637,846

 
6,126,129

Premium on purchased loans
 
6,011

 
5,386

Unearned discounts
 
(40
)
 
(47
)
Net deferred
 
(5,690
)
 
(6,769
)
Total loans
 
$
6,638,127

 
$
6,124,699



7

Notes - Reconciliation of GAAP to Non-GAAP Financial Measures - (Dollars in Thousands, except share data)
 
 
 
 
 
 
 
 
 
(1) Book and Tangible Book Value per Share
 
 
 
 
 
 
At March 31,
 
 
2016
 
2015
Total stockholders' equity
 
$
1,214,122

 
$
1,157,671

Less: total intangible assets
 
425,260

 
403,505

Total tangible stockholders' equity
 
$
788,862

 
$
754,166

 
 
 
 
 
Shares outstanding
 
65,732,579

 
65,171,983

 
 
 
 
 
Book value per share (total stockholders' equity/shares outstanding)
 

$18.47

 

$17.76

Tangible book value per share (total tangible stockholders' equity/shares outstanding)
 

$12.00

 

$11.57

 
 
 
 
 
(2) Return on Average Tangible Equity
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Total average stockholders' equity
 
$
1,210,210

 
$
1,157,078

Less: total average intangible assets
 
425,897

 
404,091

Total average tangible stockholders' equity
 
$
784,313

 
$
752,987

 
 
 
 
 
Net income
 
$
20,973

 
$
19,802

 
 
 
 
 
Annualized return on average tangible equity (net income/total average stockholders' equity)
 
10.76
%
 
10.67
%
 
 
 
 
 
(3) Annualized Non-Interest Expense/Average Assets Calculation
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
 
 
 
 
 
Annualized non-interest expense
 
$
180,498

 
$
176,161

Average assets
 
8,960,605

 
8,510,326

 Non-interest expense/average assets
 
2.01
%
 
2.07
%
 
 
 
 
 
(4) Efficiency Ratio Calculation
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Net interest income
 
$
63,069

 
$
61,928

Non-interest income
 
13,018

 
10,303

Total income
 
76,087

 
72,231

 
 
 
 
 
Non-interest expense 
 
44,878

 
43,437

 Expense/income
 
58.98
%
 
60.14
%
 
 
 
 
 
 
 
 
 
 



8


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Unaudited) (Dollars in Thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2016
 
December 31, 2015
 
Average
 
 
 
Average
 
Average
 
 
 
Average
 
Balance
 
Interest
 
Yield/Cost
 
Balance
 
Interest
 
Yield/Cost
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
33,239

 
$
42

 
0.50%
 
$
21,688

 
$
17

 
0.28%
Federal funds sold and other short-term investments
1,437

 
—

 
0.06%
 
1,528

 
—

 
0.03%
Investment securities  (1)
474,130

 
3,331

 
2.81%
 
473,007

 
3,344

 
2.83%
Securities available for sale
965,490

 
4,886

 
2.02%
 
979,724

 
4,922

 
2.01%
Federal Home Loan Bank stock
76,536

 
894

 
4.70%
 
76,431

 
768

 
3.99%
Net loans: (2)
 
 
 
 
 
 
 
 
 
 
 
Total mortgage loans
4,543,468

 
44,233

 
3.87%
 
4,498,133

 
45,290

 
3.98%
Total commercial loans
1,399,478

 
14,952

 
4.25%
 
1,327,394

 
14,472

 
4.30%
Total consumer loans
560,329

 
5,636

 
4.04%
 
571,186

 
5,536

 
3.85%
Total net loans
6,503,275

 
64,821

 
3.97%
 
6,396,713

 
65,298

 
4.03%
Total Interest-Earning Assets
$
8,054,107

 
$
73,974

 
3.66%
 
$
7,949,091

 
$
74,349

 
3.70%
 
 
 
 
 
 
 
 
 
 
 
 
Non-Interest Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
98,510

 
 
 
 
 
91,341

 
 
 
 
Other assets
807,988

 
 
 
 
 
805,875

 
 
 
 
Total Assets
$
8,960,605

 
 
 
 
 
$
8,846,307

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
$
3,051,598

 
$
2,191

 
0.29%
 
$
2,991,192

 
$
2,109

 
0.28%
Savings deposits
991,038

 
285

 
0.12%
 
978,615

 
271

 
0.11%
Time deposits
774,249

 
1,345

 
0.70%
 
760,504

 
1,290

 
0.67%
Total Deposits
4,816,885

 
3,821

 
0.32%
 
4,730,311

 
3,670

 
0.31%
 
 
 
 
 
 
 
 
 
 
 
 
Borrowed funds
1,668,892

 
7,084

 
1.71%
 
1,674,876

 
6,948

 
1.65%
Total Interest-Bearing Liabilities
6,485,777

 
10,905

 
0.68%
 
6,405,187

 
10,618

 
0.66%
 
 
 
 
 
 
 
 
 
 
 
 
Non-Interest Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
1,187,709

 
 
 
 
 
1,170.255

 
 
 
 
Other non-interest bearing liabilities
76,909

 
 
 
 
 
76,082

 
 
 
 
Total non-interest bearing liabilities
1,264,618

 
 
 
 
 
1,246,337

 
 
 
 
Total Liabilities
7,750,395

 
 
 
 
 
7,651,524

 
 
 
 
Stockholders' equity
1,210,210

 
 
 
 
 
1,194,783

 
 
 
 
Total Liabilities and Stockholders' Equity
$
8,960,605

 
 
 
 
 
$
8,846,307

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
63,069

 
 
 
 
 
$
63,731

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread
 
 
 
 
2.98%
 
 
 
 
 
3.04%
Net interest-earning assets
$
1,568,330

 
 
 
 
 
$
1,543,904

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin  (3)
 
 
 
 
3.11%
 
 
 
 
 
3.17%
Ratio of interest-earning assets to
 
 
 
 
 
 
 
 
 
 
 
total interest-bearing liabilities
1.24x

 
 
 
 
 
1.24x

 
 
 
 
 
 
(1)
Average outstanding balance amounts shown are amortized cost.
(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.


9

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Unaudited) (Dollars in Thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2016
 
March 31, 2015
 
Average
 
 
 
Average
 
Average
 
 
 
Average
 
Balance
 
Interest
 
Yield/Cost
 
Balance
 
Interest
 
Yield/Cost
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
33,239

 
$
42

 
0.50%
 
$
18,842

 
$
12

 
0.25%
Federal funds sold and other short term investments
1,437

 
—

 
0.06%
 
1,149

 
—

 
0.03%
Investment securities (1)
474,130

 
3,331

 
2.81%
 
473,374

 
3,396

 
2.87%
Securities available for sale
965,490

 
4,886

 
2.02%
 
1,071,853

 
5,437

 
2.03%
Federal Home Loan Bank stock
76,536

 
894

 
4.70%
 
69,109

 
864

 
5.07%
Net loans:  (2)
 
 
 
 
 
 
 
 
 
 
 
Total mortgage loans
4,543,468

 
44,233

 
3.87%
 
4,210,152

 
43,289

 
4.11%
Total commercial loans
1,399,478

 
14,952

 
4.25%
 
1,212,557

 
13,439

 
4.46%
Total consumer loans
560,329

 
5,636

 
4.04%
 
605,556

 
5,794

 
3.88%
Total net loans
6,503,275

 
64,821

 
3.97%
 
6,028,265

 
62,522

 
4.16%
Total Interest-Earning Assets
$
8,054,107

 
$
73,974

 
3.66%
 
$
7,662,592

 
$
72,231

 
3.78%
 
 
 
 
 
 
 
 
 
 
 
 
Non-Interest Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
98,510

 
 
 
 
 
76,024

 
 
 
 
Other assets
807,988

 
 
 
 
 
771,710

 
 
 
 
Total Assets
$
8,960,605

 
 
 
 
 
$
8,510,326

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
$
3,051,598

 
$
2,191

 
0.29%
 
$
2,944,909

 
$
1,912

 
0.26%
Savings deposits
991,038

 
285

 
0.12%
 
982,592

 
245

 
0.10%
Time deposits
774,249

 
1,345

 
0.70%
 
809,314

 
1,431

 
0.72%
Total Deposits
4,816,885

 
3,821

 
0.32%
 
4,736,815

 
3,588

 
0.31%
Borrowed funds
1,668,892

 
7,084

 
1.71%
 
1,492,714

 
6,715

 
1.82%
Total Interest-Bearing Liabilities
$
6,485,777

 
$
10,905

 
0.68%
 
$
6,229,529

 
$
10,303

 
0.67%
 
 
 
 
 
 
 
 
 
 
 
 
Non-Interest Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
1,187,709

 
 
 
 
 
1,054.117

 
 
 
 
Other non-interest bearing liabilities
76,909

 
 
 
 
 
69.602

 
 
 
 
Total non-interest bearing liabilities
1,264,618

 
 
 
 
 
1,123,719

 
 
 
 
Total Liabilities
7,750,395

 
 
 
 
 
7,353,248

 
 
 
 
Stockholders' equity
1,210,210

 
 
 
 
 
1,157,078

 
 
 
 
Total Liabilities and Stockholders' Equity
$
8,960,605

 
 
 
 
 
$
8,510,326

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
63,069

 
 
 
 
 
$
61,928

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread
 
 
 
 
2.98%
 
 
 
 
 
3.11%
Net interest-earning assets
$
1,568,330

 
 
 
 
 
$
1,433,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin  (3)
 
 
 
 
3.11%
 
 
 
 
 
3.24%
Ratio of interest-earning assets to
 
 
 
 
 
 
 
 
 
 
 
total interest-bearing liabilities
1.24x

 
 
 
 
 
1.23x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Average outstanding balance amounts shown are amortized cost.
 
 
 
 
 
 
 
 
 
 
 
 
(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.


10

 
 
 
 
 
 
The following table summarizes the quarterly net interest margin for the previous five quarters.
 
 
 
 
 
 
 
 
 
 
 
 
 
3/31/16
 
12/31/15
 
9/30/15
 
06/30/15
 
3/31/15
 
1st Qtr.
 
4th Qtr.
 
3rd Qtr.
 
2nd Qtr.
 
1st Qtr.
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
Securities
2.36
%
 
2.33
%
 
2.26
%
 
2.28
%
 
2.38
%
Net loans
3.97
%
 
4.03
%
 
4.02
%
 
4.08
%
 
4.16
%
Total interest-earning assets
3.66
%
 
3.70
%
 
3.66
%
 
3.71
%
 
3.78
%
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
Total deposits
0.32
%
 
0.31
%
 
0.31
%
 
0.31
%
 
0.31
%
Total borrowings
1.71
%
 
1.65
%
 
1.61
%
 
1.77
%
 
1.82
%
Total interest-bearing liabilities
0.68
%
 
0.66
%
 
0.65
%
 
0.67
%
 
0.67
%
 
 
 
 
 
 
 
 
 
 
Interest rate spread
2.98
%
 
3.04
%
 
3.01
%
 
3.04
%
 
3.11
%
Net interest margin
3.11
%
 
3.17
%
 
3.13
%
 
3.17
%
 
3.24
%
 
 
 
 
 
 
 
 
 
 
Ratio of interest-earning assets to interest-bearing liabilities
1.24x

 
1.24x

 
1.24x

 
1.23x

 
1.23x




11