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Provident Financial Services, Inc. Reports Second Quarter 2024 Results Inclusive of Merger-Related Costs and Declares Quarterly Cash Dividend

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Provident Financial Services, Inc. (NYSE:PFS) reported a net loss of $11.5 million for Q2 2024, influenced by significant merger-related costs from its merger with Lakeland Bancorp, Inc. completed on May 16, 2024. The merger added $10.91 billion in total assets, $7.91 billion in loans, and $8.62 billion in deposits.

Key impacts on earnings include an initial CECL provision for credit losses of $65.2 million and other merger transaction costs totaling $18.9 million. Despite these expenses, net interest income rose to $141.5 million, driven by the acquired assets.

The company saw improvements in its net interest margin to 3.21% and a significant increase in loans and deposits. Non-performing loans decreased, while wealth management and insurance agency income rose by 12.3% and 16.7%, respectively. However, total non-interest expenses grew substantially due to merger costs and increased compensation expenses.

The Board declared a quarterly cash dividend of $0.24 per share, payable on August 30, 2024.

Provident Financial Services, Inc. (NYSE:PFS) ha riportato una perdita netta di 11,5 milioni di dollari per il secondo trimestre del 2024, influenzata da significativi costi legati alla fusione con Lakeland Bancorp, Inc. completata il 16 maggio 2024. La fusione ha aggiunto 10,91 miliardi di dollari in attivi totali, 7,91 miliardi di dollari in prestiti e 8,62 miliardi di dollari in depositi.

Gli impatti principali sugli utili includono una provvigione iniziale CECL per perdite creditizie di 65,2 milioni di dollari e altri costi di transazione legati alla fusione che ammontano a 18,9 milioni di dollari. Nonostante queste spese, il reddito netto da interessi è aumentato a 141,5 milioni di dollari, sostenuto dagli attivi acquisiti.

L'azienda ha registrato miglioramenti nel suo margine di interesse netto, salito al 3,21%, e un significativo aumento di prestiti e depositi. I prestiti non performanti sono diminuiti, mentre il reddito dalla gestione patrimoniale e dall'agenzia di assicurazione è aumentato rispettivamente del 12,3% e del 16,7%. Tuttavia, le spese totali non relative agli interessi sono cresciute notevolmente a causa dei costi di fusione e dell'aumento delle spese per compensi.

Il Consiglio ha dichiarato un dividendo in contante trimestrale di 0,24 dollari per azione, pagabile il 30 agosto 2024.

Provident Financial Services, Inc. (NYSE:PFS) reportó una pérdida neta de 11,5 millones de dólares para el segundo trimestre de 2024, influenciada por costos significativos relacionados con la fusión con Lakeland Bancorp, Inc. que se completó el 16 de mayo de 2024. La fusión añadió 10,91 mil millones de dólares en activos totales, 7,91 mil millones de dólares en préstamos y 8,62 mil millones de dólares en depósitos.

Los principales impactos en las ganancias incluyen una provisión inicial CECL para pérdidas crediticias de 65,2 millones de dólares y otros costos de transacción de fusión que totalizan 18,9 millones de dólares. A pesar de estos gastos, los ingresos netos por intereses aumentaron a 141,5 millones de dólares, impulsados por los activos adquiridos.

La compañía vio mejoras en su margen de intereses netos, que ascendió al 3,21%, y un aumento significativo en préstamos y depósitos. Los préstamos no rentables disminuyeron, mientras que los ingresos por gestión patrimonial y agencia de seguros aumentaron en un 12,3% y un 16,7%, respectivamente. Sin embargo, los gastos totales no relacionados con intereses crecieron sustancialmente debido a los costos de fusión y al aumento de los gastos de compensación.

La Junta declaró un dividendo en efectivo trimestral de 0,24 dólares por acción, pagadero el 30 de agosto de 2024.

Provident Financial Services, Inc. (NYSE:PFS)는 2024년 2분기 동안 1,150만 달러의 순손실을 보고했으며, 이는 2024년 5월 16일 완료된 Lakeland Bancorp, Inc.와의 합병 관련 비용이 크게 영향을 미쳤습니다. 이번 합병으로 총 자산이 109억 달러, 대출이 79억 달러, 예금이 86억 달러가 추가되었습니다.

수익에 대한 주요 영향으로는 6,520만 달러의 신용 손실을 위한 초기 CECL 충당금과 총 1,890만 달러의 기타 합병 거래 비용이 포함됩니다. 이러한 비용에도 불구하고, 순이자 수익은 인수한 자산에 힘입어 1억 4,150만 달러로 증가했습니다.

회사는 순이자 마진이 3.21%로 개선되고 대출과 예금이 크게 증가하는 모습을 보였습니다. 부실 대출은 감소했으며, 자산 관리 및 보험 대리점에서의 수익은 각각 12.3% 및 16.7% 증가했습니다. 그러나 합병 비용과 증가한 보상 비용으로 인해 총 비이자 비용은 상당히 증가했습니다.

이사회는 2024년 8월 30일에 지급될 주당 0.24달러의 분기 현금 배당금을 선언했습니다.

Provident Financial Services, Inc. (NYSE:PFS) a enregistré une perte nette de 11,5 millions de dollars pour le deuxième trimestre 2024, influencée par des coûts significatifs liés à sa fusion avec Lakeland Bancorp, Inc. réalisée le 16 mai 2024. La fusion a ajouté 10,91 milliards de dollars en actifs totaux, 7,91 milliards de dollars en prêts et 8,62 milliards de dollars en dépôts.

Les principaux impacts sur les revenus comprennent une provision CECL initiale pour pertes de crédit de 65,2 millions de dollars et d'autres coûts de transaction liés à la fusion totalisant 18,9 millions de dollars. Malgré ces dépenses, le revenu d'intérêts net a augmenté à 141,5 millions de dollars, soutenu par les actifs acquis.

L'entreprise a constaté des améliorations de sa marge d'intérêt nette à 3,21% et une augmentation significative des prêts et des dépôts. Les prêts non performants ont diminué, tandis que les revenus de gestion de patrimoine et d'agence d'assurance ont augmenté de 12,3% et de 16,7% respectivement. Cependant, les dépenses totales hors intérêts ont considérablement augmenté en raison des coûts de fusion et des coûts de rémunération accrus.

Le Conseil a déclaré un dividende trimestriel en espèces de 0,24 dollar par action, payable le 30 août 2024.

Provident Financial Services, Inc. (NYSE:PFS) meldete für das zweite Quartal 2024 einen Nettoverlust von 11,5 Millionen Dollar, der durch erhebliche fusionsbedingte Kosten beeinflusst wurde, die mit der Fusion mit Lakeland Bancorp, Inc. verbunden sind, die am 16. Mai 2024 abgeschlossen wurde. Die Fusion fügte insgesamt 10,91 Milliarden Dollar an Vermögenswerten, 7,91 Milliarden Dollar an Krediten und 8,62 Milliarden Dollar an Einlagen hinzu.

Zentrale Auswirkungen auf das Ergebnis sind eine anfängliche CECL-Rückstellung für Kreditverluste von 65,2 Millionen Dollar und andere Fusionskosten, die insgesamt 18,9 Millionen Dollar betragen. Trotz dieser Ausgaben stieg das Nettozinseinkommen auf 141,5 Millionen Dollar, unterstützt durch die erworbenen Vermögenswerte.

Das Unternehmen verzeichnete Verbesserungen seiner Nettzinsmarge auf 3,21% und einen signifikanten Anstieg von Krediten und Einlagen. Die notleidenden Kredite nahmen ab, während die Einnahmen aus Vermögensverwaltung und Versicherungsagentur um 12,3% bzw. 16,7% stiegen. Allerdings wuchsen die gesamten nichtzinsbezogenen Ausgaben erheblich aufgrund von Fusionskosten und gestiegenen Vergütungskosten.

Der Vorstand erklärte eine vierteljährliche Bar-Dividende von 0,24 Dollar pro Aktie, die am 30. August 2024 zahlbar ist.

Positive
  • Net interest income increased by $47.8 million to $141.5 million for Q2 2024.
  • Net interest margin improved to 3.21%.
  • Non-performing loans decreased to 0.36% of total loans.
  • Wealth management income increased by 12.3%.
  • Insurance agency income rose by 16.7%.
  • Declared a quarterly cash dividend of $0.24 per share.
Negative
  • Reported a net loss of $11.5 million for Q2 2024.
  • Initial CECL provision for credit losses totaled $65.2 million.
  • Merger-related costs amounted to $18.9 million.
  • Realized a $2.8 million loss from the sale of subordinated debt issued by Lakeland.
  • Non-interest expenses increased by $43.6 million due to the merger.

Insights

Provident Financial Services' Q2 2024 results show significant changes due to the Lakeland merger. The company reported a net loss of $11.5 million, largely due to merger-related costs including a $65.2 million CECL provision and $18.9 million in transaction costs. The merger expanded Provident's balance sheet substantially, adding $10.91 billion in assets. Net interest income increased 51% quarter-over-quarter to $141.5 million, with net interest margin expanding to 3.21%. While merger costs impacted short-term profitability, the expanded scale and improved margins suggest potential for stronger future earnings. Adjusted pre-tax, pre-provision returns improved, indicating underlying performance strength.

The Provident-Lakeland merger exemplifies ongoing consolidation trends in regional banking. The combined entity now has a much larger footprint in the Northeast market, allowing for potential cost synergies and revenue diversification. However, integration risks remain significant, as evidenced by substantial merger-related costs. The expanded loan portfolio ($18.76 billion) and deposit base ($18.35 billion) provide a stronger growth foundation but increase complexity. The increase in office CRE loans to $1.1 billion (5.7% of total loans) warrants monitoring given current market concerns. Successful integration and navigating the current banking environment will be key to realizing the merger's potential benefits.

ISELIN, N.J., July 25, 2024 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported a net loss of $11.5 million, or $0.11 per basic and diluted share for the three months ended June 30, 2024, compared to net income of $32.1 million, or $0.43 per basic and diluted share, for the three months ended March 31, 2024 and $32.0 million, or $0.43 per basic and diluted share, for the three months ended June 30, 2023. For the six months ended June 30, 2024, net income totaled $20.6 million, or $0.23 per basic and diluted share, compared to $72.5 million, or $0.97 per basic and diluted share, for the six months ended June 30, 2023.

On May 16, 2024, the Company completed its merger with Lakeland Bancorp, Inc. (“Lakeland”), which added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments. The Company’s earnings for the three and six months ended June 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. The results of operations for the three and six months ended June 30, 2024 also included other transaction costs related to the merger with Lakeland totaling $18.9 million and $21.1 million, respectively, compared with transaction costs totaling $2.0 million and $3.1 million for the respective 2023 periods. Additionally, the Company realized a $2.8 million loss related to the sale in the current quarter of subordinated debt issued by Lakeland from its investment portfolio.

Anthony J. Labozzetta, President and Chief Executive Officer commented, “We are pleased with our performance this quarter, which featured the completion of our merger with Lakeland. While financial results reflect merger-related expenses, our core businesses, credit quality and risk management remain strong. Our fee-based wealth management and insurance agency teams performed well and are positioned to take advantage of our strengths as a larger organization. Our solid core performance, as demonstrated by our pre-tax pre-provision return on average assets, shows that the combined entity has a solid foundation and compelling prospects for the future.”

Regarding the Company's merger with Lakeland, Mr. Labozzetta added, “It is an exciting time for us as we have successfully closed the merger and welcomed the Lakeland team into Provident. We are grateful to our employees for their diligent efforts in completing the merger. As we approach systems conversion in September, we are pleased with how our cultures are integrating. Our teams are working together to broaden and deepen our relationships across a larger customer base through our complementary platforms of banking, insurance and wealth management.”

Performance Highlights for the Second Quarter of 2024

  • The Company recorded a $66.1 million provision for credit losses on loans for the quarter ended June 30, 2024, compared to a $200,000 provision for the trailing quarter. The provision for credit losses on loans in the quarter was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million, recorded as part of the Lakeland merger. The allowance for credit losses as a percentage of loans increased to 1.00% as of June 30, 2024, from 0.98% as of March 31, 2024.
  • The Company's annualized adjusted pre-tax, pre-provision returns on average assets, average equity and average tangible equity(1) were 1.47%, 13.26% and 19.21% for the quarter ended June 30, 2024, compared to 1.28%, 10.62% and 14.54% for the quarter ended March 31, 2024. A reconciliation between GAAP and the above non-GAAP ratios are shown on page 13 of the earnings release.
  • The Company’s loans held for investment totaled $18.76 billion as of June 30, 2024, from $10.84 billion as of March 31, 2024. As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments.
  • The Company's deposits totaled $18.35 billion as of June 30, 2024, from $10.10 billion as of March 31, 2024. As part of the merger with Lakeland, we acquired $8.62 billion in deposits, net of purchase accounting adjustments. Excluding municipal and brokered deposits, organic deposits increased $123.0 million during the quarter.
  • Net interest income increased $47.8 million to $141.5 million for the three months ended June 30, 2024, from $93.7 million for the trailing quarter primarily due to the net assets acquired from Lakeland, including accretion of purchase accounting adjustments.
  • The net interest margin increased 34 basis points to 3.21% for the quarter ended June 30, 2024, from 2.87% for the trailing quarter. The weighted average yield on interest-earning assets for the quarter ended June 30, 2024 increased 61 basis points to 5.67%, compared to the trailing quarter, while the weighted average cost of interest-bearing liabilities for the quarter ended June 30, 2024 increased 29 basis points to 3.09%, compared to the trailing quarter. The increases in both the yield on interest-earning assets and cost of interest-bearing liabilities were primarily due to the net assets and liabilities acquired from Lakeland, including accretion of purchase accounting adjustments which contributed approximately 47 basis points to the net interest margin in the current quarter.
  • As of June 30, 2024, the Company's loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.67 billion, with a weighted average interest rate of 7.53%, compared to $1.08 billion, with a weighted average interest rate of 7.42%, as of March 31, 2024. The increase in pipeline was primarily attributable to the addition of Lakeland's pipeline.
  • As of June 30, 2024, CRE loans related to office properties totaled $1.1 billion, compared to $483.9 million as of March 31, 2024. The increase was attributable to the addition of Lakeland's loan portfolio. CRE loans secured by office properties constitutes only 5.7% of total loans and have an average loan size of $2.1 million, with just nine relationships greater than $10.0 million. Approximately 37% of the Company's office loans are to medical offices and the portfolio does not have significant central business district exposure. Delinquencies in the office portfolio as of June 30, 2024 were limited to one loan totaling $801,000.
  • As of June 30, 2024, multi-family CRE loans secured by New York City properties totaled $227.7 million, compared to $188.7 million as of March 31, 2024. The increase was attributable to the addition of Lakeland's loan portfolio. This portfolio constitutes only 1.2% of total loans and has an average loan size of $2.6 million. Approximately $113.6 million of these loans are collateralized by rent stabilized apartments and all are performing.
  • Wealth Management and Insurance Agency income increased 12.3% and 16.7%, respectively, versus the same period in 2023. The increase in wealth management income was primarily due to an increase in the average market value of assets under management during the period, while the increase in insurance agency income was largely due to an increase in business activity. Total non-interest income was 13.6% of net revenue for the quarter ended June 30, 2024.
  • On May 9, 2024, the Company issued $225.0 million of 9.00% Fixed-to-Floating Rate subordinated notes due 2034, resulting in net proceeds of $221.0 million.
  • Non-performing loans to total loans as of June 30, 2024 decreased to 0.36%, compared to 0.44% as of March 31, 2024, while non-performing assets to total loans as of June 30, 2024 decreased to 0.33%, compared to 0.42% as of March 31, 2024. For the three months ended June 30, 2024, net charge-offs totaled $1.3 million, or an annualized 4 basis points of average loans.

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on August 30, 2024 to stockholders of record as of the close of business on August 16, 2024.

Results of Operations

Three months ended June 30, 2024 compared to the three months ended March 31, 2024

For the three months ended June 30, 2024, the Company reported a net loss of $11.5 million, or $0.11 per basic and diluted share, compared to net income of $32.1 million, or $0.43 per basic and diluted share, for the three months ended March 31, 2024. The Company’s earnings for the three months ended June 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. The results of operations for the three months ended June 30, 2024 included transaction costs related to the merger with Lakeland totaling $18.9 million, compared with transaction costs totaling $2.2 million in the trailing quarter. Additionally, the Company realized a $2.8 million loss related to the sale in the current quarter of subordinated debt issued by Lakeland from its investment portfolio.

Net Interest Income and Net Interest Margin

Net interest income increased $47.8 million to $141.5 million for the three months ended June 30, 2024, from $93.7 million for the trailing quarter. Net interest income for the three months ended June 30, 2024 was favorably impacted by the net assets acquired from Lakeland, partially offset by unfavorable repricing of both deposits and borrowings.

The Company’s net interest margin increased 34 basis points to 3.21% for the quarter ended June 30, 2024, from 2.87% for the trailing quarter. Accretion of purchase accounting adjustments contributed 47 basis points to the net interest margin in the current quarter. The current net interest margin reflects the acquisition of Lakeland’s interest-bearing assets and liabilities, the sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the issuance of subordinated debt.

The weighted average yield on interest-earning assets for the quarter ended June 30, 2024 increased 61 basis points to 5.67%, compared to the trailing quarter. The weighted average cost of interest-bearing liabilities for the quarter ended June 30, 2024 increased 29 basis points from the trailing quarter, to 3.09%. The average cost of interest-bearing deposits for the quarter ended June 30, 2024 increased 24 basis points to 2.84%, compared to 2.60% for the trailing quarter. The average cost of total deposits, including non-interest-bearing deposits, was 2.27% for the quarter ended June 30, 2024, compared to 2.07% for the trailing quarter. The average cost of borrowed funds for the quarter ended June 30, 2024 was 3.83%, compared to 3.60% for the quarter ended March 31, 2024.

Provision for Credit Losses on Loans

For the quarter ended June 30, 2024, the Company recorded a $66.1 million provision for credit losses on loans, compared with a provision for credit losses on loans of $200,000 for the quarter ended March 31, 2024. The provision for credit losses on loans in the quarter was primarily attributable to an initial CECL provision for credit losses of $60.1 million, recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. For the three months ended June 30, 2024, net charge-offs totaled $1.3 million, or an annualized 4 basis points of average loans.

Non-Interest Income and Expense

For the three months ended June 30, 2024, non-interest income totaled $22.3 million, an increase of $1.5 million, compared to the trailing quarter. Fee income increased $2.8 million to $8.7 million for the three months ended June 30, 2024, compared to the trailing quarter, primarily due to increases in deposit fee income, debit card related fee income and commercial loan prepayment fees, resulting from the Lakeland merger. BOLI income increased $1.5 million for the three months ended June 30, 2024, compared to the trailing quarter, primarily due to an increase in benefit claims recognized, while wealth management income increased $281,000 to $7.8 million for the three months ended June 30, 2024, compared to the trailing quarter, mainly due to an increase in the average market value of assets under management during the period. Partially offsetting these increases in non-interest income, net gain on securities transactions decreased $3.0 million for the three months ended June 30, 2024, compared to the trailing quarter, primarily due to a $2.8 million loss on the sale of subordinated debt issued by Lakeland from the Provident investment portfolio prior to the merger. Additionally, insurance agency income decreased $305,000 to $4.5 million for the three months ended June 30, 2024, compared to the trailing quarter, mainly due to the receipt of contingent commissions in the prior quarter, partially offset by additional business in the current quarter. 

Non-interest expense totaled $115.4 million for the three months ended June 30, 2024, an increase of $43.6 million, compared to $71.8 million for the trailing quarter. Merger-related expenses increased $16.7 million to $18.9 million for the three months ended June 30, 2024, compared to the trailing quarter. Compensation and benefits expense increased $14.8 million to $54.9 million for the three months ended June 30, 2024, compared to $40.0 million for the trailing quarter. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Amortization of intangibles increased $5.8 million to $6.5 million for the three months ended June 30, 2024, compared to $705,000 for the trailing quarter, largely due to purchase accounting adjustments related to Lakeland. Net occupancy expense increased $2.6 million to $11.1 million for the three months ended June 30, 2024, compared to $8.5 million for the trailing quarter, primarily due to depreciation and maintenance expenses from the addition of Lakeland. Data processing expense increased $1.7 million to $8.4 million for the three months ended June 30, 2024, compared to $6.8 million for the trailing quarter, primarily due to additional software and hardware expenses needed for the addition of Lakeland. Other operating expenses increased $931,000 to $11.3 million for the three months ended June 30, 2024, compared to $10.3 million for the trailing quarter, while FDIC insurance increased $828,000 to $3.1 million for the three months ended June 30, 2024, compared to the trailing quarter, primarily due to the addition of Lakeland.

The Company’s annualized adjusted non-interest expense as a percentage of average assets(1) was 2.02% for the quarter ended June 30, 2024, compared to 1.99% for the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(1) was 57.86% for the three months ended June 30, 2024, compared to 60.83% for the trailing quarter.

Income Tax Expense

For the three months ended June 30, 2024, the Company's income tax benefit was $9.8 million, compared with income tax expense of $10.9 million for the trailing quarter. The decrease in tax expense for the three months ended June 30, 2024, compared with the trailing quarter was largely due to a $5.3 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the state of New Jersey of a 2.5% Corporate Transit Fee in the quarter, effective January 1, 2024, combined with a decrease in taxable income in the quarter as a result of additional expenses from the Lakeland merger.

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

For the three months ended June 30, 2024, the Company reported a net loss of $11.5 million, or $0.11 per basic and diluted share, compared to net income of $32.0 million, or $0.43 per basic and diluted share, for the three months ended June 30, 2023. The Company’s earnings for the three months ended June 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. The results of operations for the three months ended June 30, 2024 included transaction costs related to the merger with Lakeland totaling $18.9 million and $2.0 million for the three months ended June 30, 2024 and 2023, respectively. Additionally, the Company realized a $2.8 million loss on the sale in the current quarter of subordinated debt issued by Lakeland from its investment portfolio.

Net Interest Income and Net Interest Margin

Net interest income increased $42.4 million to $141.5 million for the three months ended June 30, 2024, from $99.1 million for same period in 2023. Net interest income for the three months ended June 30, 2024 were favorably impacted by the net assets acquired from Lakeland, partially offset by unfavorable repricing of both deposits and borrowings.

The Company’s net interest margin increased 10 basis points to 3.21% for the quarter ended June 30, 2024, from 3.11% for the same period last year. Accretion of purchase accounting adjustments contributed 47 basis points to the net interest margin in the current quarter. The current net interest margin reflects the acquisition of Lakeland’s interest bearing assets and liabilities, the sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the issuance of subordinated debt.

The weighted average yield on interest-earning assets for the quarter ended June 30, 2024 increased 94 basis points to 5.67%, compared to 4.73% for the quarter ended June 30, 2023. The weighted average cost of interest-bearing liabilities increased 96 basis points for the quarter ended June 30, 2024 to 3.09%, compared to 2.13% for the second quarter of 2023. The average cost of interest-bearing deposits for the quarter ended June 30, 2024 was 2.84%, compared to 1.85% for the same period last year. Average non-interest-bearing demand deposits increased $498.0 million to $2.87 billion for the quarter ended June 30, 2024, compared to $2.37 billion for the quarter ended June 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.27% for the quarter ended June 30, 2024, compared with 1.42% for the quarter ended June 30, 2023. The average cost of borrowed funds for the quarter ended June 30, 2024 was 3.83%, compared to 3.41% for the same period last year.

Provision for Credit Losses on Loans

For the quarter ended June 30, 2024, the Company recorded a $66.1 million provision for credit losses on loans, compared with a $10.4 million provision for credit losses on loans for the quarter ended June 30, 2023. The provision for credit losses on loans in the quarter was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million, recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. For the three months ended June 30, 2024, net charge-offs totaled $1.3 million, or an annualized 4 basis points of average loans.

Non-Interest Income and Expense

Non-interest income totaled $22.3 million for the quarter ended June 30, 2024, an increase of $2.9 million, compared to the same period in 2023. Fee income increased $2.9 million to $8.7 million for the three months ended June 30, 2024, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card related fee income and commercial loan prepayment fees, resulting from the Lakeland merger. BOLI income increased $1.8 million to $3.3 million for the three months ended June 30, 2024, compared to the prior year quarter, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI. Wealth management fees increased $850,000 to $7.8 million for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, mainly due to an increase in the average market value of assets under management during the period, while insurance agency income increased $641,000 to $4.5 million for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, largely due to an increase in business activity. Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, primarily due to a loss on the sale of subordinated debt issued by Lakeland from the Provident investment portfolio prior to the merger. Additionally, other income decreased $314,000 to $969,000 for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, primarily due to a decrease in gains on the sales of foreclosed real estate.

For the three months ended June 30, 2024, non-interest expense totaled $115.4 million, an increase of $50.3 million, compared to the three months ended June 30, 2023. Compensation and benefits expense increased $19.6 million to $54.9 million for three months ended June 30, 2024, compared to $35.3 million for the same period in 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Additionally, merger-related expenses increased $17.0 million to $18.9 million for the three months ended June 30, 2024, compared to the same period in 2023. Amortization of intangibles increased $5.7 million to $6.5 million for the three months ended June 30, 2024, compared to $749,000 for the same period in 2023, largely due to purchase accounting adjustments. Data processing expense increased $2.7 million to $8.4 million for three months ended June 30, 2024, compared to $5.7 million for the same period in 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland. Net occupancy expense increased $3.2 million to $11.1 million for three months ended June 30, 2024, compared to $7.9 million for the same period in 2023, primarily due to an increase in depreciation and maintenance expenses because of the addition of Lakeland.

The Company’s annualized adjusted non-interest expense as a percentage of average assets(1) was 2.02% for the quarter ended June 30, 2024, compared to 1.83% for the same period in 2023. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(1) was 57.86% for the three months ended June 30, 2024 compared to 53.29% for the same respective period in 2023.

Income Tax Expense

For the three months ended June 30, 2024, the Company's income tax benefit was $9.8 million, compared with an income tax expense of $11.6 million for the three months ended June 30, 2023. The decrease in tax expense for the three months ended June 30, 2024, compared with the same period last year was largely due to a $5.3 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of NJ of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income in the quarter as a result of additional expenses from the Lakeland merger.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

For the six months ended June 30, 2024, net income totaled $20.6 million, or $0.23 per basic and diluted share, compared to net income of $72.5 million, or $0.97 per basic and diluted share, for the six months ended June 30, 2023. The Company’s earnings for the six months ended June 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. Transaction costs related to our merger with Lakeland totaled $21.1 million and $3.1 million for the six months ended June 30, 2024 and 2023, respectively. Additionally, the Company realized a $2.8 million loss related to the sale in the current quarter of subordinated debt issued by Lakeland from its investment portfolio.

Net Interest Income and Net Interest Margin

Net interest income increased $27.7 million to $235.2 million for the six months ended June 30, 2024, from $207.4 million for same period in 2023. Net interest income for the six months ended June 30, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by the unfavorable repricing of both deposits and borrowings.

For the six months ended June 30, 2024, the net interest margin decreased 21 basis points to 3.08%, compared to 3.29% for the six months ended June 30, 2023. The weighted average yield on interest earning assets increased 75 basis points to 5.43% for the six months ended June 30, 2024, compared to 4.68% for the six months ended June 30, 2023, while the weighted average cost of interest-bearing liabilities increased 113 basis points to 2.97% for the six months ended June 30, 2024, compared to 1.84% for the same period last year. The average cost of interest-bearing deposits increased 112 basis points to 2.74% for the six months ended June 30, 2024, compared to 1.62% for the same period last year. Average non-interest-bearing demand deposits increased $10.1 million to $2.47 billion for the six months ended June 30, 2024, compared with $2.46 billion for the six months ended June 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.19% for the six months ended June 30, 2024, compared with 1.24% for the six months ended June 30, 2023. The average cost of borrowings for the six months ended June 30, 2024 was 3.75%, compared to 3.01% for the same period last year.

Provision for Credit Losses on Loans

For the six months ended June 30, 2024, the Company recorded a $66.3 million provision for credit losses on loans, compared with a provision for credit losses on loans of $16.4 million for the six months ended June 30, 2023. The provision for credit losses on loans in the quarter was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, partially offset by an improved economic forecast for the current six-month period within our CECL model, compared to the same period last year. For the six months ended June 30, 2024, net charge-offs totaled $2.3 million, or an annualized 3 basis points of average loans.

Non-Interest Income and Expense

For the six months ended June 30, 2024, non-interest income totaled $43.1 million, an increase of $1.5 million, compared to the same period in 2023. Fee income increased $2.4 million to $14.6 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to increases in deposit fee income, debit card related fee income and commercial loan prepayment fees, resulting from the Lakeland merger. BOLI income increased $2.1 million to $5.1 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI, while wealth management income increased $1.4 million to $15.3 million for the six months ended June 30, 2024, compared to the same period in 2023, mainly due to an increase in the average market value of assets under management during the period. Insurance agency income increased $1.3 million to $9.3 million for the six months ended June 30, 2024, compared to $8.0 million for the same period in 2023, largely due to increases in contingent commissions, retention revenue and new business activity. Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the six months ended June 30, 2024, primarily due to a $2.8 million loss on the sale of subordinated debt issued by Lakeland from the Provident investment portfolio prior to the merger. Other income decreased $2.8 million to $1.8 million for the six months ended June 30, 2024, compared to $4.6 million for the same period in 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property recorded in the prior year, combined with a decrease in gains on sales of SBA loans.

Non-interest expense totaled $187.2 million for the six months ended June 30, 2024, an increase of $53.4 million, compared to $133.9 million for the six months ended June 30, 2023. Compensation and benefits expense increased $20.9 million to $94.9 million for the six months ended June 30, 2024, compared to $74.0 million for the six months ended June 30, 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Merger-related expenses increased $18.1 million to $21.1 million for the six months ended June 30, 2024, compared to $3.1 million for the six months ended June 30, 2023. Amortization of intangibles increased $5.7 million to $7.2 million for the six months ended June 30, 2024, compared to $1.5 million for the six months ended June 30, 2023, largely due to purchase accounting adjustments related to Lakeland. Additionally, net occupancy expense increased $3.3 million to $19.7 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to increased depreciation and maintenance expenses because of the addition of Lakeland.

Income Tax Expense
For the six months ended June 30, 2024, the Company's income tax expense was $1.1 million, compared with $26.1 million for the six months ended June 30, 2023. The decrease in tax expense for the six months ended June 30, 2024, compared with the same period last year was largely due to a $5.3 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of NJ of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of additional expenses from the Lakeland merger.

Asset Quality

The Company’s total non-performing loans as of June 30, 2024 were $67.9 million, or 0.36% of total loans, compared to $47.6 million, or 0.44% of total loans as of March 31, 2024 and $49.6 million, or 0.46% of total loans as of December 31, 2023. The $20.3 million increase in non-performing loans as of June 30, 2024, compared to the trailing quarter, consisted of an $11.7 million increase in non-performing construction loans, a $4.9 million increase in non-performing multi-family loans, a $2.8 million increase in non-performing commercial loans, a $2.8 million increase in non-performing residential mortgage loans and a $384,000 increase in non-performing consumer loans, partially offset by a $2.4 million decrease in non-performing commercial mortgage loans. These increases were due to the addition of Lakeland, which resulted in additional non-performing loans of $21.4 million. As of June 30, 2024, impaired loans totaled $54.6 million with related specific reserves of $7.7 million, compared with impaired loans totaling $40.1 million with related specific reserves of $8.2 million as of March 31, 2024. As of December 31, 2023, impaired loans totaled $42.8 million with related specific reserves of $2.4 million.

As of June 30, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.00% of total loans, compared to 0.98% and 0.99% as of March 31, 2024 and December 31, 2023, respectively. The allowance for credit losses increased $81.1 million to $188.3 million as of June 30, 2024, from $107.2 million as of December 31, 2023. The increase in the allowance for credit losses on loans as of June 30, 2024 compared to December 31, 2023 was due to a $66.3 million provision for credit losses and a $17.2 million allowance recorded through goodwill related to Purchased Credit Deteriorated loans acquired from Lakeland, partially offset by net charge-offs of $2.3 million.

The following table sets forth accruing past due loans and non-accrual loans on the dates indicated, as well as delinquency statistics and certain asset quality ratios.

  June 30, 2024 March 31, 2024 December 31, 2023
  Number
of
Loans
 Principal
Balance
of Loans		 Number
of
Loans
 Principal
Balance
of Loans		 Number
of
Loans
 Principal
Balance
of Loans
  (Dollars in thousands)
Accruing past due loans:               
30 to 59 days past due:               
Commercial mortgage loans 3  $1,707  3  $5,052  1  $825 
Multi-family mortgage loans —   —  4   12,069  1   3,815 
Construction loans —   —  —   —  —   — 
Residential mortgage loans 9   1,714  11   3,568  13   3,429 
Total mortgage loans 12   3,421  18   20,689  15   8,069 
Commercial loans 20   3,444  11   4,493  6   998 
Consumer loans 38   2,891  22   803  31   875 
Total 30 to 59 days past due 70  $9,756  51  $25,985  52  $9,942 
                
60 to 89 days past due:               
Commercial mortgage loans 3  $1,231  3  $1,148  —  $— 
Multi-family mortgage loans —   —  —   —  1   1,635 
Construction loans —   —  —   —  —   — 
Residential mortgage loans 10   2,193  6   804  8   1,208 
Total mortgage loans 13   3,424  9   1,952  9   2,843 
Commercial loans 6   1,146  3   332  3   198 
Consumer loans 9   648  8   755  5   275 
Total 60 to 89 days past due 28   5,218  20   3,039  17   3,316 
Total accruing past due loans 98  $14,974  71  $29,024  69  $13,258 
                
Non-accrual:               
Commercial mortgage loans 10  $3,588  8  $5,938  7  $5,151 
Multi-family mortgage loans 5   7,276  2   2,355  1   744 
Construction loans 1   11,698  —   —  1   771 
Residential mortgage loans 20   4,447  10   1,647  7   853 
Total mortgage loans 36   27,009  20   9,940  16   7,519 
Commercial loans 58   39,715  21   36,892  26   41,487 
Consumer loans 24   1,144  11   760  10   633 
Total non-accrual loans 118  $67,868  52  $47,592  52  $49,639 
                
Non-performing loans to total loans     0.36%     0.44%     0.46%
Allowance for loan losses to total non-performing loans     277.50%     223.63%     215.96%
Allowance for loan losses to total loans     1.00%     0.98%     0.99%
                      

As of June 30, 2024 and December 31, 2023, the Company held foreclosed assets of $11.1 million and $11.7 million, respectively. During the six months ended June 30, 2024, there were three properties sold with an aggregate carrying value of $532,000. Foreclosed assets as of June 30, 2024 consisted primarily of commercial real estate. Total non-performing assets as of June 30, 2024 increased $17.7 million to $79.0 million, or 0.33% of total assets, from $61.3 million, or 0.43% of total assets as of December 31, 2023.

Balance Sheet Summary

Total assets as of June 30, 2024 were $24.07 billion, a $9.86 billion increase from December 31, 2023. The increase in total assets was primarily due to the addition of Lakeland.

The Company’s loan portfolio totaled $18.76 billion as of June 30, 2024 and $10.87 billion as of December 31, 2023. The loan portfolio consisted of the following:

 June 30, 2024 March 31, 2024 December 31, 2023
 (Dollars in thousands)
Mortgage loans:     
Commercial$7,337,742  $4,353,799  $4,512,411 
Multi-family 3,189,808   1,825,888   1,812,500 
Construction 970,244   711,417   653,246 
Residential 2,024,027   1,152,185   1,164,956 
Total mortgage loans 13,521,821   8,043,289   8,143,113 
Commercial loans 4,617,232   2,514,550   2,442,406 
Consumer loans 626,016   295,125   299,164 
Total gross loans 18,765,069   10,852,964   10,884,683 
Premiums on purchased loans 1,410   1,439   1,474 
Net deferred fees and unearned discounts (7,149)  (11,696)  (12,456)
Total loans$18,759,330  $10,842,707  $10,873,701 
            

As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments. As of June 30, 2024, the acquired Lakeland loan portfolio, net of fair value marks totaled $7.97 billion, which included $3.02 billion in commercial mortgage loans, $1.49 billion in commercial loans, $1.36 billion in multi-family loans, $878.2 million in residential loans, $564.5 million in specialty lending, $327.3 million in construction loans and $327.2 million in consumer loans. Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio as of June 30, 2024, compared to 86.5% as of December 31, 2023.

For the six months ended June 30, 2024, loan funding, including advances on lines of credit, totaled $1.84 billion, compared with $1.79 billion for the same period in 2023.

As of June 30, 2024, the Company’s unfunded loan commitments totaled $3.01 billion, including commitments of $1.51 billion in commercial loans, $664.7 million in construction loans and $186.6 million in commercial mortgage loans. Unfunded loan commitments as of December 31, 2023 and June 30, 2023 were $2.09 billion and $2.02 billion, respectively.

The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.67 billion as of June 30, 2024, compared to $1.09 billion and $1.74 billion as of December 31, 2023 and June 30, 2023, respectively.

Total investment securities were $3.10 billion as of June 30, 2024, a $963.0 million increase from December 31, 2023. This increase was primarily due to the addition of Lakeland.

Total deposits increased $8.06 billion during the six months ended June 30, 2024, to $18.35 billion. Total savings and demand deposit accounts increased $6.07 billion to $15.27 billion as of June 30, 2024, while total time deposits increased $1.99 billion to $3.08 billion as of June 30, 2024. The increase in savings and demand deposits was largely attributable to a $2.88 billion increase in interest bearing demand deposits, a $1.51 billion increase in non-interest bearing demand deposits, a $1.12 billion increase in money market deposits and a $569.5 million increase in savings deposits. The Company's Insured Cash Sweep deposits increased $619.8 million to $1.14 billion as of June 30, 2024, from $520.2 million as of December 31, 2023. The increase in time deposits consisted of a $2.09 billion increase in retail time deposits, partially offset by a $100.5 million decrease in brokered time deposits.

Borrowed funds increased $332.0 million during the six months ended June 30, 2024, to $2.30 billion. The increase in deposits and borrowings was largely due to the addition of Lakeland. Borrowed funds represented 9.6% of total assets as of June 30, 2024, a decrease from 13.9% as of December 31, 2023.

Stockholders’ equity increased $865.1 million during the six months ended June 30, 2024, to $2.56 billion, primarily due to common stock issued for the purchase of Lakeland and net income earned for the period, partially offset by an increase in unrealized losses on available for sale debt securities and cash dividends paid to stockholders. For the three and six months ended June 30, 2024, common stock repurchases totaled 527 shares at an average cost of $15.17 per share and 86,852 shares at an average cost of $14.84 per share, respectively, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. As of June 30, 2024, approximately 1.0 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share(1) as of June 30, 2024 were $19.60 and $13.07, respectively, compared with $22.38 and $16.32, respectively, as of December 31, 2023.

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 New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Orange, Queens and Nassau Counties in New York. Provident Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company and insurance services through its wholly owned subsidiary, Provident Protection Plus, Inc.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors on Friday, July 26, 2024 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended June 30, 2024. The call may be accessed by dialing 1-888-412-4131 (United States Toll Free) and 1-646-960-0134 (United States Local). Speakers will need to enter conference ID code (3610756) before being met by a live operator. Internet access to the call is also available (listen only) at provident.bank by going to Investor Relations and clicking on "Webcast."

Forward Looking Statements

Certain statements contained herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” "project," "intend," “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and those related to the economic environment, particularly in the market areas in which the Company operates, inflation and unemployment, competitive products and pricing, real estate values, 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, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, any failure to realize the anticipated benefits of the merger transaction when expected or at all; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected conditions, factors or events, potential adverse reactions or changes to business, employee, customer and/or counterparty relationships, including those resulting from the completion of the merger and integration of the companies; and the impact of a potential shutdown of the federal government.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not assume any duty, and does not undertake, to update any forward-looking statements to reflect events or circumstances after the date of this statement.

Footnotes

(1) Annualized adjusted pre-tax, pre-provision return on average assets, average equity and average tangible equity, tangible book value per share, annualized adjusted non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes following the Consolidated Financial Highlights which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.

          
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Financial Highlights
(Dollars in Thousands, except share data) (Unaudited)
    
 At or for the
Three Months ended		 At or for the
Six Months Ended
 June 30, March 31, June 30, June 30, June 30,
 2024 2024 2023 2024 2023
Statement of Income         
Net interest income$141,506  $93,670  $99,106  $235,176  $207,430 
Provision for credit losses 69,705   (320)  9,750   69,385   16,490 
Non-interest income 22,275   20,807   19,387   43,081   41,540 
Non-interest expense 115,394   71,827   65,110   187,221   133,858 
(Loss) income before income tax expense (21,318)  42,970   43,633   21,651   98,622 
Net (loss) income (11,485)  32,082   32,003   20,596   72,539 
Diluted earnings per share$(0.11) $0.43  $0.43  $0.23  $0.97 
Interest rate spread 2.58%  2.26%  2.60%  2.46%  2.84%
Net interest margin 3.21%  2.87%  3.11%  3.08%  3.29%
          
Profitability         
Annualized return on average assets(0.24)%  0.92%  0.93%  0.25%  1.06%
Annualized return on average equity(2.17)%  7.60%  7.76%  2.17%  8.92%
Annualized return on average tangible equity(3)(3.15)%  10.40%  10.75%  3.06%  12.40%
Annualized adjusted non-interest expense to average assets(4) 2.02%  1.99%  1.83%  2.01%  1.91%
Efficiency ratio(5) 57.86%  60.83%  53.29%  59.06%  52.54%
          
Asset Quality         
Non-accrual loans  $47,592    $67,868  $45,928 
90+ and still accruing   —     —   — 
Non-performing loans   47,592     67,868   45,928 
Foreclosed assets   11,324     11,119   13,697 
Non-performing assets   58,916     78,987   59,625 
Non-performing loans to total loans   0.44%    0.36%  0.44%
Non-performing assets to total assets   0.42%    0.33%  0.42%
Allowance for loan losses  $106,429    $188,331  $102,073 
Allowance for loan losses to total non-performing loans   223.63%    277.50%  222.25%
Allowance for loan losses to total loans   0.98%    1.00%  0.97%
Net loan charge-offs$1,340  $971  $1,085  $2,311  $1,756 
Annualized net loan charge-offs to average total loans 0.04%  0.04%  0.04%  0.04%  0.03%
          
Average Balance Sheet Data         
Assets$19,197,041  $14,093,767  $13,833,055  $16,645,404  $13,783,159 
Loans, net 14,649,413   10,668,992   10,238,224   12,659,202   10,166,439 
Earning assets 17,385,819   12,862,910   12,575,967   15,093,217   12,497,684 
Core deposits 12,257,244   9,129,244   9,297,058   10,693,244   9,507,756 
Borrowings 2,158,193   1,940,981   1,658,809   2,049,587   1,442,744 
Interest-bearing liabilities 13,856,039   10,074,106   9,565,814   11,965,072   9,416,020 
Stockholders' equity 2,127,469   1,698,170   1,653,677   1,912,820   1,640,099 
Average yield on interest-earning assets 5.67%  5.06%  4.73%  5.43%  4.68%
Average cost of interest-bearing liabilities 3.09%  2.80%  2.13%  2.97%  1.84%
          


 
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) Annualized adjusted pre-tax, pre-provision ("PTPP") returns on average assets, average equity and average tangible equity          
  Three Months Ended Six Months Ended
  June 30, March 31, June 30, June 30, June 30,
  2024 2024 2023 2024 2023
Net (loss) income $(11,485) $32,082  $32,003  $20,596  $72,539 
Adjustments to net (loss) income:          
Provision for credit losses  69,705   (320)  9,750   69,385   16,490 
Net loss on Lakeland bond sale  2,839   —   —   2,839   — 
Merger-related transaction costs  18,915   2,202   1,960   21,117   3,060 
Income tax (benefit) expense  (9,833)  10,888   11,630   1,055   26,083 
PTPP income $70,141  $44,852  $55,343  $114,992  $118,172 
           
Annualized PTPP income $282,106  $180,394  $221,980  $231,248  $238,303 
Average assets $19,197,041  $14,093,767  $13,833,055  $16,645,404  $13,783,160 
Average equity $2,127,469  $1,698,170  $1,653,677  $1,912,820  $1,640,099 
Average tangible equity $1,468,630  $1,240,475  $1,193,812  $1,354,553  $1,179,853 
           
Annualized PTPP return on average assets  1.47%  1.28%  1.60%  1.39%  1.73%
Annualized PTPP return on average equity  13.26%  10.62%  13.42%  12.09%  14.53%
Annualized PTPP return on average tangible equity  19.21%  14.54%  18.59%  17.07%  20.20%
           
(2) Book and Tangible Book Value per Share    
        June 30, December 31,
        2024 2023
Total stockholders' equity       $2,555,646  $1,690,596 
Less: total intangible assets        851,507   457,942 
Total tangible stockholders' equity       $1,704,139  $1,232,654 
           
Shares outstanding        130,380,393   75,537,186 
           
Book value per share (total stockholders' equity/shares outstanding)       $19.60  $22.38 
Tangible book value per share (total tangible stockholders' equity/shares outstanding)       $13.07  $16.32 
           
(3) Annualized Return on Average Tangible Equity          
  Three Months Ended Six Months Ended
  June 30, March 31, June 30, June 30, June 30,
  2024 2024 2023 2024 2023
Total average stockholders' equity $2,127,469  $1,698,170  $1,653,677  $1,912,820  $1,640,099 
Less: total average intangible assets  658,839   457,695   459,865   558,267   460,246 
Total average tangible stockholders' equity $1,468,630  $1,240,475  $1,193,812  $1,354,553  $1,179,853 
           
Net (loss) income $(11,485) $32,082  $32,003  $20,596  $72,539 
           
Annualized return on average tangible equity (net income/total average tangible stockholders' equity) (3.15)%  10.40%  10.75%  3.06%  12.40%
           
           
(4) Annualized Adjusted Non-Interest Expense to Average Assets          
  Three Months Ended Six Months Ended
  June 30, March 31, June 30, June 30, June 30,
  2024 2024 2023 2024 2023
Reported non-interest expense $115,394  $71,827  $65,110  $187,221  $133,858 
Adjustments to non-interest expense:          
Merger-related transaction costs  18,915   2,202   1,960   21,117   3,060 
Adjusted non-interest expense $96,479  $69,625  $63,150  $166,104  $130,798 
           
Annualized adjusted non-interest expense $388,036  $280,030  $253,294  $334,033  $263,764 
           
Average assets $19,197,041  $14,093,767  $13,833,055  $16,645,404  $13,783,160 
           
Annualized adjusted non-interest expense/average assets  2.02%  1.99%  1.83%  2.01%  1.91%
           
(5) Efficiency Ratio Calculation          
  Three Months Ended Six Months Ended
  June 30, March 31, June 30, June 30, June 30,
  2024 2024 2023 2024 2023
Net interest income $141,506  $93,670  $99,106  $235,176  $207,430 
Reported non-interest income  22,275   20,807   19,387   43,081   41,540 
Adjustments to non-interest income:          
Net loss (gain) on securities transactions  2,973   (24)  1   2,974   (24)
Adjusted non-interest income  25,248   20,783   19,388   46,055   41,516 
Total income $166,754  $114,453  $118,494  $281,231  $248,946 
           
Adjusted non-interest expense $96,479  $69,625  $63,150  $166,104  $130,798 
           
Efficiency ratio (adjusted non-interest expense/income)  57.86%  60.83%  53.29%  59.06%  52.54%
           


 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
June 30, 2024 (Unaudited) and December 31, 2023
(Dollars in Thousands)
    
AssetsJune 30, 2024 December 31, 2023
Cash and due from banks$290,528  $180,241 
Short-term investments 33   14 
Total cash and cash equivalents 290,561   180,255 
Available for sale debt securities, at fair value 2,626,783   1,690,112 
Held to maturity debt securities, net (fair value of $352,167 as of June 30, 2024 (unaudited) and $352,601 as of December 31, 2023) 350,528   363,080 
Equity securities, at fair value 19,250   1,270 
Federal Home Loan Bank stock 100,068   79,217 
Loans held for sale 4,450   1,785 
Loans held for investment 18,759,330   10,871,916 
Less allowance for credit losses 188,331   107,200 
Net loans 18,575,449   10,766,501 
Foreclosed assets, net 11,119   11,651 
Banking premises and equipment, net 127,396   70,998 
Accrued interest receivable 93,843   58,966 
Intangible assets 851,507   457,942 
Bank-owned life insurance 404,605   243,050 
Other assets 619,358   287,768 
Total assets$24,070,467  $14,210,810 
    
Liabilities and Stockholders' Equity   
Deposits:   
Demand deposits$13,526,094  $8,020,889 
Savings deposits 1,745,158   1,175,683 
Certificates of deposit of $250,000 or more 871,842   218,549 
Other time deposits 2,210,150   877,393 
Total deposits 18,353,244   10,292,514 
Mortgage escrow deposits 50,694   36,838 
Borrowed funds 2,302,058   1,970,033 
Subordinated debentures 412,766   10,695 
Other liabilities 396,059   210,134 
Total liabilities 21,514,821   12,520,214 
    
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, 137,565,966 shares issued and 130,380,393 shares outstanding as of June 30, 2024 and 75,537,186 outstanding as of December 31, 2023. 1,376   832 
Additional paid-in capital 1,868,643   989,058 
Retained earnings 957,979   974,542 
Accumulated other comprehensive loss (139,964)  (141,115)
Treasury stock (129,115)  (127,825)
Unallocated common stock held by the Employee Stock Ownership Plan (3,273)  (4,896)
Common Stock acquired by the Directors' Deferred Fee Plan (2,398)  (2,694)
Deferred Compensation - Directors' Deferred Fee Plan 2,398   2,694 
Total stockholders' equity 2,555,646   1,690,596 
Total liabilities and stockholders' equity$24,070,467  $14,210,810 
        


 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three months ended June 30, 2024, March 31, 2024 and June 30, 2023, and six months ended June 30, 2024 and 2023 (Unaudited)
(Dollars in Thousands, except per share data)
          
 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30, June 30,
 2024 2024 2023
 2024 2023
Interest and dividend income:         
Real estate secured loans$156,318  $107,456  $99,302  $263,774  $195,290 
Commercial loans 58,532   36,100   31,426   94,632   60,109 
Consumer loans 8,351   4,523   4,431   12,874   8,673 
Available for sale debt securities, equity securities and Federal Home Loan Bank stock 20,394   12,330   11,432   32,724   22,862 
Held to maturity debt securities 2,357   2,268   2,357   4,625   4,725 
Deposits, federal funds sold and other short-term investments 1,859   1,182   948   3,041   1,793 
Total interest income 247,811   163,859   149,896   411,670   293,452 
          
Interest expense:         
Deposits 81,058   52,534   36,447   133,592   63,957 
Borrowed funds 20,566   17,383   14,088   37,949   21,564 
Subordinated debt 4,681   272   255   4,953   501 
Total interest expense 106,305   70,189   50,790   176,494   86,022 
Net interest income 141,506   93,670   99,106   235,176   207,430 
Provision charge (benefit) for credit losses 69,705   (320)  9,750   69,385   16,490 
Net interest income after provision for credit losses 71,801   93,990   89,356   165,791   190,940 
          
Non-interest income:         
Fees 8,699   5,912   5,775   14,611   12,162 
Wealth management income 7,769   7,488   6,919   15,257   13,834 
Insurance agency income 4,488   4,793   3,847   9,281   7,950 
Bank-owned life insurance 3,323   1,817   1,534   5,140   3,018 
Net (loss) gain on securities transactions (2,973)  (1)  29   (2,974)  24 
Other income 969   798   1,283   1,766   4,552 
Total non-interest income 22,275   20,807   19,387   43,081   41,540 
          
Non-interest expense:         
Compensation and employee benefits 54,888   40,048   35,283   94,936   74,021 
Net occupancy expense 11,142   8,520   7,949   19,662   16,360 
Data processing expense 8,433   6,783   5,716   15,217   11,224 
FDIC Insurance 3,100   2,272   2,125   5,372   4,061 
Amortization of intangibles 6,483   705   749   7,188   1,511 
Advertising and promotion expense 1,171   966   1,379   2,137   2,589 
Merger-related expenses 18,915   2,202   1,960   21,117   3,060 
Other operating expenses 11,262   10,331   9,949   21,592   21,032 
Total non-interest expense 115,394   71,827   65,110   187,221   133,858 
(Loss) Income before income tax expense (21,318)  42,970   43,633   21,651   98,622 
Income tax (benefit) expense (9,833)  10,888   11,630   1,055   26,083 
Net (loss) income$(11,485) $32,082  $32,003  $20,596  $72,539 
          
Basic earnings per share$(0.11) $0.43  $0.43  $0.23  $0.97 
Average basic shares outstanding 102,957,521   75,260,029   74,823,272   89,108,775   74,734,795 
          
Diluted earnings per share$(0.11) $0.43  $0.43  $0.23  $0.97 
Average diluted shares outstanding 102,957,521   75,275,660   74,830,187   89,116,590   74,766,848 
                    


 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Dollars in Thousands) (Unaudited)
 June 30, 2024 March 31, 2024 June 30, 2023
 Average Balance Interest Average
Yield/Cost		 Average Balance Interest Average
Yield/Cost		 Average Balance Interest Average
Yield/Cost
Interest-Earning Assets:                 
Deposits$40,228 $1,859 5.38% $87,848 $1,182 5.41% $73,470 $947 5.17%
Federal funds sold and other short-term investments —  — —%  21  — —%  88  1 6.75%
Available for sale debt securities 2,244,725  17,646 3.14%  1,673,950  10,022 2.39%  1,801,050  10,290 2.29%
Held to maturity debt securities, net(1) 352,216  2,357 2.68%  357,246  2,268 2.54%  379,958  2,357 2.48%
Equity securities, at fair value 10,373  — —%  1,099  — —%  1,006  — —%
Federal Home Loan Bank stock 88,864  2,747 12.36%  73,754  2,308 12.52%  82,171  1,142 5.56%
Net loans:(2)                 
Total mortgage loans 10,674,109  156,318 5.81%  7,990,218  107,456 5.33%  7,701,072  99,302 5.11%
Total commercial loans 3,514,602  58,532 6.62%  2,381,965  36,100 6.03%  2,234,043  31,426 5.59%
Total consumer loans 460,702  8,351 7.29%  296,809  4,523 6.13%  303,109  4,431 5.86%
Total net loans 14,649,413  223,201 6.05%  10,668,992  148,079 5.51%  10,238,224  135,159 5.24%
Total interest-earning assets$17,385,819 $247,810 5.67% $12,862,910 $163,859 5.06% $12,575,967 $149,896 4.73%
                  
Non-Interest Earning Assets:                 
Cash and due from banks 37,621      116,563      129,979    
Other assets 1,773,601      1,114,294      1,127,109    
Total assets$19,197,041     $14,093,767     $13,833,055    
                  
Interest-Bearing Liabilities:                 
Demand deposits$7,935,543 $58,179 2.95% $5,894,062 $41,566 2.84% $5,620,268 $28,613 2.04%
Savings deposits 1,454,784  832 0.23%  1,163,181  637 0.22%  1,307,830  537 0.16%
Time deposits 2,086,433  22,047 4.25%  1,065,170  10,331 3.90%  968,344  7,297 3.02%
Total Deposits 11,476,760  81,058 2.84%  8,122,413  52,534 2.60%  7,896,442  36,447 1.85%
                  
Borrowed funds 2,158,193  20,565 3.83%  1,940,981  17,383 3.60%  1,658,809  14,088 3.41%
Subordinated debentures 221,086  4,681 8.52%  10,712  272 10.23%  10,563  255 9.66%
Total interest-bearing liabilities 13,856,039  106,304 3.09%  10,074,106  70,189 2.80%  9,565,814  50,790 2.13%
                  
Non-Interest Bearing Liabilities:                 
Non-interest bearing deposits 2,866,917      2,072,001      2,368,960    
Other non-interest bearing liabilities 346,616      249,490      244,604    
Total non-interest bearing liabilities 3,213,533      2,321,491      2,613,564    
Total liabilities 17,069,572      12,395,597      12,179,378    
Stockholders' equity 2,127,469      1,698,170      1,653,677    
Total liabilities and stockholders' equity$19,197,041     $14,093,767     $13,833,055    
                  
Net interest income  $141,506     $93,670     $99,106  
                  
Net interest rate spread    2.58%     2.26%     2.60%
Net interest-earning assets$3,529,780     $2,788,804     $3,010,153    
                  
Net interest margin(3)    3.21%     2.87%     3.11%
                  
Ratio of interest-earning assets to total interest-bearing liabilities1.25x     1.28x     1.31x    


  
(1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2) Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
(3) Annualized net interest income divided by average interest-earning assets.
   


The following table summarizes the quarterly net interest margin for the previous five quarters.   
 6/30/24 3/31/24 12/31/23 9/30/23 6/30/23
 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
Interest-Earning Assets:         
Securities3.40% 2.87% 2.79% 2.67% 2.53%
Net loans6.05% 5.51% 5.50% 5.37% 5.24%
Total interest-earning assets5.67% 5.06% 5.04% 4.89% 4.73%
          
Interest-Bearing Liabilities:         
Total deposits2.84% 2.60% 2.47% 2.22% 1.85%
Total borrowings3.83% 3.60% 3.71% 3.74% 3.41%
Total interest-bearing liabilities3.09% 2.80% 2.71% 2.50% 2.13%
          
Interest rate spread2.58% 2.26% 2.33% 2.39% 2.60%
Net interest margin3.21% 2.87% 2.92% 2.96% 3.11%
          
Ratio of interest-earning assets to interest-bearing liabilities1.25x 1.28x 1.28x 1.30x 1.31x
          


 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Dollars in Thousands) (Unaudited)
            
 June 30, 2024 June 30, 2023
 Average   Average Average   Average
 Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-Earning Assets:           
Deposits$32,901 $3,041 5.38% $72,750 $1,791 4.97%
Federal funds sold and other short term investments —  — —%  59  2 6.00%
Available for sale debt securities 1,959,549  27,669 2.82%  1,804,814  20,692 2.29%
Held to maturity debt securities, net(1) 354,731  4,625 2.61%  381,921  4,725 2.47%
Equity securities, at fair value 5,525  — —%  999  — —%
Federal Home Loan Bank stock 81,309  5,055 12.43%  70,702  2,170 6.14%
Net loans:(2)           
Total mortgage loans 9,326,838  263,774 5.61%  7,671,493  195,290 5.07%
Total commercial loans 2,953,842  94,632 6.39%  2,191,222  60,109 5.49%
Total consumer loans 378,522  12,874 6.84%  303,724  8,673 5.76%
Total net loans 12,659,202  371,280 5.83%  10,166,439  264,072 5.18%
Total interest-earning assets$15,093,217 $411,670 5.43% $12,497,684 $293,452 4.68%
            
Non-Interest Earning Assets:           
Cash and due from banks 108,229      136,431    
Other assets 1,443,958      1,149,044    
Total assets$16,645,404     $13,783,159    
            
Interest-Bearing Liabilities:           
Demand deposits$6,914,802 $99,745 2.90% $5,695,507 $50,533 1.79%
Savings deposits 1,308,983  1,469 0.23%  1,352,874  990 0.15%
Time deposits 1,575,801  32,378 4.13%  914,358  12,434 2.74%
Total deposits 9,799,586  133,592 2.74%  7,962,739  63,957 1.62%
Borrowed funds 2,049,587  37,949 3.75%  1,442,744  21,564 3.01%
Subordinated debentures 115,899  4,953 8.59%  10,537  501 9.58%
Total interest-bearing liabilities$11,965,072 $176,494 2.97% $9,416,020 $86,022 1.84%
            
Non-Interest Bearing Liabilities:           
Non-interest bearing deposits 2,469,459      2,459,375    
Other non-interest bearing liabilities 298,053      267,666    
Total non-interest bearing liabilities 2,767,512      2,727,041    
Total liabilities 14,732,584      12,143,061    
Stockholders' equity 1,912,820      1,640,099    
Total liabilities and stockholders' equity$16,645,404     $13,783,160    
            
Net interest income  $235,176     $207,430  
            
Net interest rate spread    2.46%     2.84%
Net interest-earning assets$3,128,145     $3,081,664    
            
Net interest margin(3)    3.08%     3.29%
            
Ratio of interest-earning assets to total interest-bearing liabilities1.26x     1.33x    
            
            
(1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans.
(3) Annualized net interest income divided by average interest-earning assets.
 


The following table summarizes the year-to-date net interest margin for the previous three years.
      
 Six Months Ended
 June 30, 2024 June 30, 2023 June 30, 2022
Interest-Earning Assets:     
Securities3.14% 2.52% 1.59%
Net loans5.83% 5.18% 3.84%
Total interest-earning assets5.43% 4.68% 3.33%
      
Interest-Bearing Liabilities:     
Total deposits2.74% 1.62% 0.26%
Total borrowings3.75% 3.01% 0.85%
Total interest-bearing liabilities2.97% 1.84% 0.30%
      
Interest rate spread2.46% 2.84% 3.03%
Net interest margin3.08% 3.29% 3.11%
      
Ratio of interest-earning assets to interest-bearing liabilities1.26x 1.33x 1.39x
      

SOURCE: Provident Financial Services, Inc.

CONTACT: Investor Relations, 1-732-590-9300

Web Site: http://www.Provident.Bank


FAQ

What was Provident Financial Services' net loss for Q2 2024?

Provident Financial Services reported a net loss of $11.5 million for Q2 2024.

What were the merger-related costs for Provident Financial Services in Q2 2024?

Merger-related costs totaled $18.9 million for Q2 2024.

How did the merger with Lakeland Bancorp affect Provident Financial Services' assets?

The merger added $10.91 billion in total assets, $7.91 billion in loans, and $8.62 billion in deposits.

What was the initial CECL provision for credit losses for Provident Financial Services in Q2 2024?

The initial CECL provision for credit losses was $65.2 million.

What was the net interest income for Provident Financial Services in Q2 2024?

Net interest income was $141.5 million for Q2 2024.

What was Provident Financial Services' net interest margin for Q2 2024?

The net interest margin improved to 3.21% for Q2 2024.

What was the dividend declared by Provident Financial Services for Q2 2024?

Provident Financial Services declared a quarterly cash dividend of $0.24 per share, payable on August 30, 2024.

Stock PFS logo
Provident Financial Services, Inc.

NYSE:PFS

PFS Rankings

#1755 Ranked by Market Cap
#628 Ranked by Dividends

PFS Latest News

Nov 19, 2024
Provident Expands Commercial Lending Team as Part of Regional Growth Strategy for Eastern Pennsylvania
Nov 12, 2024
Provident Bank Expands Mortgage Warehouse Lending Team Adding Vice President to Support Growth Strategy
Oct 29, 2024
Provident Financial Services, Inc. Reports Third Quarter Earnings and Declares Quarterly Cash Dividend
Oct 15, 2024
Provident Bank’s First-Time Home Buyer Survey Reveals That While Homeownership Continues to Be Challenging, Many Americans Are Finding Their Home in Less Than a Year
Oct 1, 2024
Provident Financial Services, Inc. Schedules Third Quarter Earnings Conference Call

PFS Stock Data

2.70B
126.43M
2.87%
69.45%
2.19%
Banks - Regional
Savings Institution, Federally Chartered
Link
United States of America
JERSEY CITY