Provident Financial Services, Inc. (NYSE:PFS) Q2 2021 Earnings Conference Call July 30, 2021 10:00 AM ET Company Participants John Kuntz – Chief Administrative Officer Chris Martin – Chairman and Chief Executive Officer Tony Labozzetta – President and Chief Operating Officer Tom Lyons – Senior Executive Vice President and Chief Financial Officer Conference Call Participants Michael Perito – KBW Mark Fitzgibbon – Piper Sandler Russell Gunther – D.A. Davidson Steven Duong – RBC Capital Markets Erik Zwick – Bo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-31566 PROVIDENT FINANCIAL SERVICES, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 42-1547151 (State or Other Jurisd ...

Financial Data and Key Metrics Changes - Earnings per share for Q1 2021 were $0.63, up from $0.23 in Q1 2020, driven by a negative provision for credit losses and improved revenue from the SB One acquisition [6][24] - Net income increased to $48.6 million from $40.6 million in the previous quarter [24] - Annualized return on average assets was 1.51% and return on average tangible equity was 16.8% [7] Business Line Data and Key Metrics Changes - Loan originations were strong at $539 million for the quarter, including $190 million of PPP 2 loans, but elevated payoffs impacted overall loan growth [28] - Non-interest income increased by $1.2 million to $22 million, driven by growth in insurance agency income and wealth management [33] - Operating expenses rose to $61.9 million, primarily due to the addition of compensation and occupancy expenses from the SB One acquisition [11] Market Data and Key Metrics Changes - The loan pipeline at the end of Q1 was approximately $1.3 billion, with a marginal improvement in average rates [23][28] - The company does not have significant exposure to pressured sectors such as office space in Manhattan and retail centers without grocery anchors [21] - The overall competition in the banking sector has intensified due to excess liquidity, leading to more aggressive pricing strategies [22] Company Strategy and Development Direction - The company is focusing on enhancing its commercial banking capabilities and optimizing its branch network [16][17] - Digital transformation is a key priority to streamline processes and improve customer experience [18] - Mergers and acquisitions will remain part of the growth strategy, with an emphasis on cultural compatibility [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued improvement as the economy recovers and vaccination rates increase [13] - The company anticipates solid loan growth for the remainder of the year, projecting a 5% to 6% increase in loans, net of PPP loan payoffs [90] - The effective tax rate is projected to be around 25% for the remainder of 2021 [34] Other Important Information - The efficiency ratio was reported at 56.19%, indicating operational efficiency [12] - Non-performing assets decreased to 65 basis points of total assets from 72 basis points at the end of the previous quarter [30] Q&A Session Summary Question: Can you break out the PPP fees and purchase accounting adjustments? - The core NIM is expected to be in the 3.01% to 3.05% range, with PPP contributing about 8 basis points [40] Question: Can expenses be reduced below $60 million per quarter? - A target of around $60 million is reasonable, with some non-recurring items expected to decrease [42] Question: What is the outlook for insurance agency income? - Insurance income is typically strong in Q1, with expectations for a cyclical pattern throughout the year [46] Question: What are the opportunities for organic loan growth? - The loan pipeline is solid, with a projected growth of 5% to 6% for the year, net of PPP loan payoffs [90]

PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) This section outlines the company's business, market, and key activities, including significant expansion from the 2020 SB One Bancorp acquisition - Provident Financial Services, Inc. became the holding company for Provident Bank on January 15, 2003, after the Bank's conversion to a New Jersey-chartered capital stock savings bank[14](index=14&type=chunk) - The **July 31, 2020 acquisition of SB One Bancorp** added **$2.20 billion to total assets**, **$1.77 billion to total loans**, and **$1.76 billion to total deposits**, plus 18 new banking offices and insurance brokerage services[15](index=15&type=chunk) Key Financial and Operational Highlights (2020) | Metric | Value | | :--------------------------------- | :--------------------------------- | | Non-performing assets | $91.6 million (0.71% of total assets) | | Core deposit accounts | $8.74 billion (88.9% of total deposits) | | Total non-interest income | $72.4 million | | Loan portfolio with adjustable rates/short-term maturity | 63.49% | | Securities portfolio | $1.62 billion (average life 3.93 years) | | Number of full-service banking offices | 99 | | Employees (full-time/part-time) | 1,155 / 45 | | Women in managerial positions | 62% | - The Bank emphasizes commercial real estate, multi-family, and commercial business loans to improve asset yields and manage interest rate risk, acknowledging their generally higher risk of loss[21](index=21&type=chunk)[53](index=53&type=chunk) - The Bank focuses on acquiring and retaining core deposit accounts and expanding customer relationships to ensure a stable, inexpensive funding source[23](index=23&type=chunk)[143](index=143&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company faces multiple risks in interest rate fluctuations, credit losses, regulatory changes, and operational vulnerabilities - Changes in market interest rates significantly affect net interest income; a rapid increase in short-term rates could negatively impact net interest margin if deposit costs rise faster than loan yields[279](index=279&type=chunk)[280](index=280&type=chunk) - The adoption of CECL (Current Expected Credit Loss) methodology may increase the allowance for credit losses and the volatility of provisions for credit losses, as it requires measuring projected credit losses over the estimated life of assets[282](index=282&type=chunk) - Commercial real estate, commercial & industrial, and construction loans, constituting **50.8%**, **26.4%**, and **5.6%** of the portfolio respectively at December 31, 2020, are considered higher risk and sensitive to economic conditions[283](index=283&type=chunk) - Exceeding **$10 billion in total assets** subjects the Company to increased regulation and supervision, including by the CFPB, higher FDIC premiums, and reduced debit card interchange fees, leading to increased operating costs[288](index=288&type=chunk) - The ongoing COVID-19 pandemic poses significant economic risks, including declining demand for services, increased loan delinquencies, reduced collateral values, and potential decreases in net interest margin and wealth management revenues[298](index=298&type=chunk)[301](index=301&type=chunk) - Uncertainty surrounding the future of LIBOR, used for **$2.27 billion of commercial loans**, may lead to operational risks and differences in interest rate calculations if discontinued after 2021[309](index=309&type=chunk)[310](index=310&type=chunk) - The Company is highly dependent on the security and efficacy of its technology systems, facing risks from cyber-attacks, data breaches, and technology failures that could disrupt business, lead to information misuse, and incur significant costs[324](index=324&type=chunk)[325](index=325&type=chunk)[328](index=328&type=chunk) [Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved comments from the staff of the SEC are reported - No unresolved comments from the staff of the SEC[333](index=333&type=chunk) [Properties](index=53&type=section&id=Item%202.%20Properties) The Bank operated 99 branch offices across three states, with $75.9 million in premises and equipment - The Bank operates 99 full-service branch offices and several satellite loan production offices across New Jersey, Pennsylvania, and New York[334](index=334&type=chunk) Banking Premises and Equipment (December 31, 2020) | Metric | Value (in thousands) | | :--------------------------------- | :------------------- | | Aggregate net book value | $75,900 | [Legal Proceedings](index=53&type=section&id=Item%203.%20Legal%20Proceedings) Management does not expect current legal actions and claims to materially impact the Company's financial condition or operations - Management believes current legal actions and claims will not materially impact the Company's financial condition or results of operations[336](index=336&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[337](index=337&type=chunk) PART II [Market for Common Equity and Stockholder Matters](index=53&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details common stock trading, dividend policy, stock performance, and issuer share repurchase activities - As of February 1, 2021, there were **83,209,012 issued** and **77,789,018 outstanding shares** of common stock, with approximately **4,859 stockholders of record**[339](index=339&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.23 per common share** on January 29, 2021, paid on February 26, 2021[340](index=340&type=chunk) Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Programs | | :----------------------------------- | :--------------------- | :--------------------------- | :--------------------------------------------------- | | October 1, 2020 - October 31, 2020 | — | $— | — | | November 1, 2020 - November 30, 2020 | 517,215 | $14.86 | 517,215 | | December 1, 2020 - December 31, 2020 | 359,246 | $17.24 | 359,246 | | **Total** | **876,461** | **$15.84** | **876,461** | - The Company repurchased **1.3 million shares** of common stock at an average cost of **$16.59**, totaling **$22.1 million in 2020**; a new stock repurchase program was authorized for up to **3.9 million shares**[18](index=18&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk) [Selected Financial Data](index=55&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents selected five-year financial data, highlighting 2020 asset and deposit growth from acquisition and decreased net income Selected Financial Condition Data (2016-2020, in thousands) | Metric | 2020 | 2019 | 2018 | 2017 | 2016 | | :----------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total assets | $12,919,741 | $9,808,578 | $9,725,769 | $9,845,274 | $9,500,465 | | Loans, net | 9,721,424 | 7,277,360 | 7,195,026 | 7,265,523 | 6,941,603 | | Deposits | 9,837,829 | 7,102,609 | 6,830,122 | 6,714,166 | 6,553,629 | | Stockholders' equity | 1,619,797 | 1,413,840 | 1,358,980 | 1,298,661 | 1,251,781 | Selected Operations Data (2016-2020, in thousands, except per share data) | Metric | 2020 | 2019 | 2018 | 2017 | 2016 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Interest income | $363,309 | $371,470 | $359,829 | $323,846 | $302,315 | | Net interest income | 312,570 | 297,973 | 300,676 | 278,202 | 258,567 | | Provision for loan losses | 29,719 | 13,100 | 23,700 | 5,600 | 5,400 | | Non-interest income | 72,431 | 63,794 | 58,676 | 55,697 | 55,393 | | Non-interest expense | 227,728 | 201,579 | 191,735 | 187,822 | 183,778 | | Net income | $96,951 | $112,633 | $118,387 | $93,949 | $87,802 | | Basic earnings per share | $1.39 | $1.74 | $1.82 | $1.46 | $1.38 | Selected Financial and Other Data (Performance Ratios, 2016-2020) | Metric | 2020 | 2019 | 2018 | 2017 | 2016 | | :--------------------------------------- | :----- | :----- | :----- | :----- | :----- | | Return on average assets | 0.86 % | 1.15 % | 1.22 % | 0.99 % | 0.95 % | | Return on average equity | 6.49 | 8.07 | 8.93 | 7.28 | 7.12 | | Net interest margin | 3.09 | 3.35 | 3.39 | 3.21 | 3.11 | | Efficiency ratio | 59.15 | 55.72 | 53.36 | 56.25 | 58.54 | | Non-performing loans to total loans | 0.89 | 0.55 | 0.35 | 0.48 | 0.61 | | Allowance for credit losses to total loans | 1.03 | 0.76 | 0.77 | 0.82 | 0.88 | | Leverage capital | 9.30 | 10.34 | 10.24 | 9.65 | 9.25 | | Total risk based capital | 11.94 | 13.47 | 13.27 | 12.67 | 12.50 | [Management's Discussion and Analysis](index=57&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and the impact of the SB One acquisition, CECL, and COVID-19 on credit losses and capital - The Company's strategy focuses on profitable growth through credit quality, expanding market share, and managing interest rate risk, with an emphasis on commercial mortgage, multi-family, construction, and commercial loans[354](index=354&type=chunk)[355](index=355&type=chunk) - The **SB One Bancorp acquisition on July 31, 2020**, significantly increased total assets by **$2.20 billion**, total loans by **$1.77 billion** (including **$294.2 million in PCD loans**), and total deposits by **$1.76 billion**, adding 18 banking offices[358](index=358&type=chunk) - The acquisition of Tirschwell & Loewy, Inc. on April 1, 2019, expanded the Company's wealth management business by **$822.4 million in assets under management**[361](index=361&type=chunk) - The adoption of ASU 2016-13 (CECL) on January 1, 2020, resulted in a **$7.9 million increase** to the allowance for credit losses and a **$3.2 million liability** for off-balance sheet credit exposures, recorded as an **$8.3 million cumulative effect adjustment** (net of taxes) to retained earnings[364](index=364&type=chunk)[366](index=366&type=chunk) Net Interest Income and Margin (2018-2020, in thousands) | Metric | 2020 | 2019 | 2018 | | :-------------------- | :----------- | :----------- | :----------- | | Net interest income | $312,570 | $297,973 | $300,676 | | Net interest rate spread | 2.92 % | 3.10 % | 3.20 % | | Net interest margin | 3.09 % | 3.35 % | 3.39 % | - Total assets increased by **$3.11 billion to $12.92 billion** at December 31, 2020, primarily due to the SB One acquisition and **$473.2 million in PPP loans**[395](index=395&type=chunk) - The allowance for credit losses on loans increased by **$45.9 million to $101.5 million** at December 31, 2020 (**1.03% of total loans**), driven by CECL adoption, the economic forecast related to COVID-19, and additions from the SB One loan portfolio[400](index=400&type=chunk) - Total non-performing loans increased to **$87.1 million (0.89% of total loans)** at December 31, 2020, from **$40.2 million (0.55%) in 2019**, reflecting the pandemic's impact on borrower repayment ability[401](index=401&type=chunk) - Net income for 2020 was **$97.0 million ($1.39 EPS)**, down from **$112.6 million ($1.74 EPS) in 2019**, largely due to increased provisions for credit losses related to CECL and COVID-19, partially offset by the SB One acquisition[411](index=411&type=chunk)[412](index=412&type=chunk) - Total deposits increased by **$2.74 billion to $9.84 billion in 2020**, including **$1.76 billion from SB One** and **$977.4 million in net organic growth**, benefiting from PPP loan proceeds and government stimulus[407](index=407&type=chunk) - Stockholders' equity increased by **$206.0 million to $1.62 billion in 2020**, driven by common stock issuance for SB One, net income, and unrealized gains on available-for-sale securities, partially offset by dividends and CECL adjustment[410](index=410&type=chunk) [Market Risk Disclosures](index=72&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's interest rate risk management is detailed, including projected impacts on net interest income and economic value of equity - The Company manages interest rate risk by originating adjustable-rate and shorter-term loans, investing in securities with shorter maturities, and using interest rate swaps[443](index=443&type=chunk) - The Asset/Liability Committee (ALCO) reviews the impact of interest rate changes on net interest income, net interest margin, net income, and economic value of equity monthly[444](index=444&type=chunk) Projected Net Interest Income Sensitivity (December 31, 2020, in thousands) | Change in Interest Rates (Basis Points) | Amount | Change | Percent Change | | :-------------------------------------- | :----------- | :----------- | :------------- | | -100 | $327,641 | $(9,514) | (2.8)% | | Static | $337,155 | — | — | | 100 | $339,812 | $2,657 | 0.8 | | 200 | $342,848 | $5,693 | 1.7 | | 300 | $345,963 | $8,808 | 2.6 | Economic Value of Equity Sensitivity (December 31, 2020, in thousands) | Change in Interest Rates (Basis Points) | Present Value of Equity | Change | Percent Change | | :-------------------------------------- | :---------------------- | :----------- | :------------- | | -100 | $1,198,562 | $(203,796) | (14.5)% | | Flat | $1,402,358 | — | — | | 100 | $1,470,471 | $68,113 | 4.9 % | | 200 | $1,519,475 | $117,117 | 8.4 % | | 300 | $1,554,020 | $151,662 | 10.8 % | [Financial Statements and Supplementary Data](index=74&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Includes audited consolidated financial statements, independent auditor reports, and detailed notes on accounting policies, business combinations, and credit losses - KPMG LLP issued an unqualified opinion on the consolidated financial statements for the three-year period ended December 31, 2020, and on the effectiveness of internal control over financial reporting as of December 31, 2020[455](index=455&type=chunk)[456](index=456&type=chunk)[470](index=470&type=chunk)[471](index=471&type=chunk) - The Company changed its method of accounting for credit losses as of January 1, 2020, due to the adoption of ASC Topic 326, Financial Instruments – Credit Losses (CECL)[457](index=457&type=chunk) - Critical audit matters identified include the assessment of the allowance for credit losses on loans evaluated on a collective basis and the fair value measurement of loans acquired in the SB One Bancorp acquisition, both involving significant subjective judgment[460](index=460&type=chunk)[461](index=461&type=chunk)[465](index=465&type=chunk) Consolidated Statements of Financial Condition (December 31, 2020 & 2019, in thousands) | Metric | 2020 | 2019 | | :--------------------------------------- | :----------- | :----------- | | Total assets | $12,919,741 | $9,808,578 | | Net loans | 9,721,424 | 7,277,360 | | Total deposits | 9,837,829 | 7,102,609 | | Total liabilities | 11,299,944 | 8,394,738 | | Total stockholders' equity | 1,619,797 | 1,413,840 | Consolidated Statements of Income (Years Ended December 31, 2020, 2019 & 2018, in thousands) | Metric | 2020 | 2019 | 2018 | | :--------------------------------------- | :----------- | :----------- | :----------- | | Total interest income | $363,309 | $371,470 | $359,829 | | Total interest expense | 50,739 | 73,497 | 59,153 | | Net interest income | 312,570 | 297,973 | 300,676 | | Provision for credit losses | 29,719 | 13,100 | 23,700 | | Total non-interest income | 72,431 | 63,794 | 58,676 | | Total non-interest expenses | 227,728 | 201,579 | 191,735 | | Net income | $96,951 | $112,633 | $118,387 | Consolidated Statements of Cash Flows (Years Ended December 31, 2020, 2019 & 2018, in thousands) | Metric | 2020 | 2019 | 2018 | | :--------------------------------------- | :----------- | :----------- | :----------- | | Net cash provided by operating activities | $106,911 | $136,925 | $155,719 | | Net cash provided by (used in) investing activities | $(507,984) | $42,867 | $46,705 | | Net cash (used in) provided by financing activities | $746,678 | $(135,705) | $(250,597) | | Net increase (decrease) in cash and cash equivalents | $345,605 | $44,087 | $(48,173) | [Changes in Accountants and Disclosures](index=145&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure are reported - No changes in or disagreements with accountants on accounting and financial disclosure[788](index=788&type=chunk) [Controls and Procedures](index=145&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls and internal control over financial reporting were effective as of December 31, 2020, with no material changes reported - The Company's disclosure controls and procedures were evaluated as effective as of December 31, 2020[788](index=788&type=chunk) - Management assessed and believes the Company's internal control over financial reporting was effective as of December 31, 2020, based on COSO criteria[792](index=792&type=chunk) - No material changes in internal control over financial reporting occurred during the last quarter of 2020[794](index=794&type=chunk) [Other Information](index=146&type=section&id=Item%209B.%20Other%20Information) No other information is reported for disclosure - No other information to disclose[795](index=795&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=153&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Stockholders[797](index=797&type=chunk) [Executive Compensation](index=153&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Stockholders[798](index=798&type=chunk) [Security Ownership and Related Stockholder Matters](index=153&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and related stockholder matters are incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Stockholders[799](index=799&type=chunk) Equity Compensation Plans (December 31, 2020) | Plan | Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights | Weighted Average Exercise Price | Number of Securities Remaining Available For Issuance Under Plan | | :------------------------------------------ | :---------------------------------------------------------------- | :------------------------------ | :------------------------------------------------------------- | | Equity compensation plans approved by stockholders | 596,441 | $17.96 | 2,009,578 | [Related Transactions and Director Independence](index=153&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Stockholders[803](index=803&type=chunk) [Principal Accountant Fees and Services](index=153&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Stockholders[804](index=804&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=154&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) Lists financial statements, schedules, and exhibits filed as part of the Form 10-K, including auditor reports and corporate documents - Includes reports of Independent Registered Public Accounting Firm on financial statements and internal control over financial reporting[807](index=807&type=chunk) - Consolidated Financial Statements (Statements of Financial Condition, Income, Comprehensive Income, Changes in Stockholders' Equity, Cash Flows) and Notes to Consolidated Financial Statements are included[807](index=807&type=chunk) - Various exhibits are filed, including the Agreement and Plan of Merger with SB One Bancorp, Certificate of Incorporation, Bylaws, Employment Agreements, and certifications[810](index=810&type=chunk)[811](index=811&type=chunk)[814](index=814&type=chunk) [Form 10-K Summary](index=156&type=section&id=Item%2016.%20Form%2010-K%20Summary) A Form 10-K Summary is not applicable for this report - Not applicable[813](index=813&type=chunk)

Provident Financial Services, Inc. (NYSE:PFS) Q4 2020 Earnings Conference Call January 28, 2021 10:00 AM ET Company Participants Leonard Gleason - Senior Vice President & Investor Relation Officer Chris Martin - Chairman, President & Chief Executive Officer Thomas Lyons - Senior Executive Vice President & Chief Financial Officer Tony Labozzetta - President & Chief Operating Officer Conference Call Participants Mark Fitzgibbon - Piper Sandler Erik Zwick - Boenning and Scattergood Steven Duong - RBC Capital M ...

Financial Data and Key Metrics Changes - Earnings per share increased to $0.37 from $0.22 in the previous quarter, including merger-related expenses of $2 million [7][22] - Total assets rose to $12.9 billion, with loan deferral levels decreasing to 3.2% of loans as of October 16 [8][9] - Net income for the quarter was $27.1 million compared to $14.3 million in the trailing quarter [22] Business Line Data and Key Metrics Changes - The loan portfolio increased by $1.77 billion due to the SB One acquisition and organic growth of $218 million [13][26] - Non-interest income rose by $6.3 million to $21 million, driven by increased swap fee income and contributions from SB One Insurance Agency [30] - Core deposits represented 88% of total deposits, with a total cost of deposits falling to 33 basis points from 41 basis points [15][24] Market Data and Key Metrics Changes - The pipeline of loan opportunities improved, increasing to $1.4 billion, with the pipeline rate rising to 3.55% [26] - Non-performing assets slightly increased to 42 basis points of total assets from 37 basis points [28] - The allowance for credit losses on loans included $13.6 million recorded as part of the amortized cost of PCD loans acquired from SB One [28] Company Strategy and Development Direction - The company aims to utilize its strong capital position for stock repurchases, viewing it as an effective use of capital [17] - The integration of SB One is expected to enhance non-interest income and operational efficiencies [19][21] - The company is focusing on disciplined credit risk management and proactive identification of potential credit issues [12][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic recovery and its impact on credit quality, noting that the first half of 2021 will be critical [10][12] - The company is monitoring the potential impact of government assistance on troubled businesses and consumers [9] - Management highlighted the importance of maintaining underwriting discipline and conservative loan structures [12] Other Important Information - The company anticipates a decrease in operating expenses following the integration of SB One into its data systems [21] - The effective tax rate increased to 25.5% from 20.6% in the previous quarter, with a projection of approximately 24% for the remainder of 2020 [31] Q&A Session Summary Question: What percentage of the $199 million of loans that have completed their initial deferral period are making partial payments? - Approximately two-thirds of the deferred loans are currently paying interest [37] Question: How long will it take to deploy the $500 million liquidity? - The company aims to deploy the liquidity into the highest earning assets, preferably loans [38] Question: What are the expectations for the margin pressure? - The margin is expected to face pressure, but there are levers available to mitigate this, with an estimated impact of one to three basis points per quarter [43][44] Question: When will operating expenses normalize post-SB One acquisition? - The company expects operating expenses to be in the low 60s per quarter, around 62% to 64% [46] Question: What is the target payout ratio for dividends? - The company targets a payout ratio between 50% and 55% [51] Question: What is the expected fee growth outlook? - Fee growth is expected to be in the range of $17 million to $20 million, with contributions from the insurance business [92]

Financial Data and Key Metrics Changes - Net income for Q2 2020 was $14.3 million or $0.22 per share, down from $24.4 million or $0.38 per share in Q2 2019 and $14.9 million or $0.23 per share in the trailing quarter [19][20] - Net interest margin decreased by 23 basis points linked quarter to 2.97% and decreased by 45 basis points compared to the same period last year [7][22] - The provision for credit losses was $10.9 million for the current quarter, down from $14.7 million in the trailing quarter [27] Business Line Data and Key Metrics Changes - The loan portfolio saw a peak of 90-day deferrals at approximately $1.3 billion or 16.8% of loans, which has since reduced to $395 million or 5.1% of loans [13][29] - Noninterest income decreased by $2.6 million versus the trailing quarter to $14 million, impacted by reduced deposit and wealth fees [31] - Noninterest-bearing deposits averaged $1.8 billion or 25% of total average deposits for the quarter, an increase from $1.5 billion in the trailing quarter [24] Market Data and Key Metrics Changes - The average cost to borrow funds decreased by 49 basis points versus the trailing quarter to 1.31% [24] - The loan pipeline remained robust at $1.3 billion, with loan originations excluding line of credit advances totaling $774 million for the quarter [10][26] - The allowance for credit losses on loans to total loans increased to 1.11% from 1.02% in the trailing quarter [28] Company Strategy and Development Direction - The company is focused on managing liability costs as the rate environment evolves and is placing interest rate floors on most commercial loans [10][24] - The planned acquisition of SB One is expected to enhance long-term growth and stockholder value, with cost savings anticipated from the merger [6][18] - The company is adapting to the new work environment with increased residential mortgage originations due to historically low rates [11] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued pressure on credit due to the pandemic and is closely monitoring exposures to vulnerable sectors such as hotels and retail [16][18] - The economic recovery is expected to be uneven, with some industries taking years to recover, while others may not survive [95] - Management expressed confidence in the capital structure and balance sheet strength, maintaining a strong capital ratio [6] Other Important Information - The company incurred costs related to COVID-19 response, including supplemental pay for customer-facing employees and PPE equipment [20] - The effective tax rate decreased to 20.6% from 26% for the trailing quarter, with a projected rate of approximately 23% for the remainder of 2020 [33][34] Q&A Session Summary Question: Update on asset flows in wealth management - AUM at March 31 was $2.8 billion and at the end of June was $3.2 billion, indicating recovery [39] Question: Expectations for loan mark and CECL assumptions with SB One transaction - No updates were available on loan mark and CECL assumptions at this time [54] Question: Current occupancy rates for hotel loans - Occupancies are averaging in the 30% to 50% range, with a mix of business and leisure [61] Question: Strategy for loans needing accommodation post-deferral - Loans are being risk-rated appropriately, with potential TDRs for those unable to return to normal status [65] Question: Economic activity with reopening - Retail exposure is supported by essential businesses, but restaurants and hotels continue to struggle [84]

Financial Data and Key Metrics Changes - The company reported earnings of $0.23 per share, down from $0.48 per share in Q1 2019 and $0.40 per share in the trailing quarter [17] - Net income for the current quarter was $14.9 million compared to $30.9 million in Q1 2019 [17] - The provision for credit losses was $15.7 million, reflecting a negative economic outlook due to the pandemic [15][18] Business Line Data and Key Metrics Changes - Total assets increased to $10.1 billion as of March 31, 2020 [8] - Outstanding loan balances were $7.37 billion, with loan originations of $355 million for the quarter, a 21% increase compared to Q1 2019 [20][21] - Non-interest income decreased by $734,000 from the trailing quarter to $17 million [24] Market Data and Key Metrics Changes - The company processed 363 payment deferral requests on commercial loans totaling $820 million in principal balances [11] - The average cost of deposits decreased to 62 basis points [19] - Non-performing assets declined to 39 basis points of total assets from 44 basis points at year-end [23] Company Strategy and Development Direction - The company is focused on the planned merger with SB One Bancorp, with integration teams meeting virtually [7] - There is an emphasis on managing liability costs and attracting non-interest bearing deposits [19] - The company aims to maintain its cash dividend for shareholders, evaluating it on a quarter-to-quarter basis [37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment due to the pandemic but expressed confidence in the company's strong capital position [42] - The economic forecast used in the CECL model is expected to worsen in the second quarter [15] - Management remains optimistic about the merger with SB One Bancorp, viewing it as a solid transaction [40] Other Important Information - The company has seen a rise in requests for loan deferrals, particularly in the retail, hotel, and restaurant sectors [9][10] - The effective tax rate increased to 26% from 23.6% in the trailing quarter [26] Q&A Session Summary Question: Update on asset flows in wealth management business - The ending balance in AUM at 12/31 was $2.4 billion, declining to $2.8 billion at 3/31, with market conditions driving the decrease [28] Question: Breakdown of payment deferrals by category - CRE loans accounted for about $548 million, C&I for $217 million, and residential and consumer loans for about $69 million [30] Question: Commitment to maintaining cash dividend - The Board evaluates the cash dividend quarterly, emphasizing its importance to shareholders, with a strong capital position supporting stability [37] Question: Material adverse change clause in merger agreement - There is a material adverse impact clause in the merger agreement, but management remains confident in the transaction's strength [40]

Provident Financial Services, Inc. (NYSE:PFS) Q4 2019 Results Earnings Conference Call January 31, 2020 10:00 AM ET Company Participants Len Gleason - Investor Relations Officer Chris Martin - Chairman, President and CEO Tom Lyons - Senior Executive Vice President and CFO Conference Call Participants Mark Fitzgibbon - Piper Sandler Russell Gunther - D.A. Davidson Collyn Gilbert - KBW Operator Good day. And welcome to Provident Financial Services Incorporated Fourth Quarter Conference Call. All participants ...

Provident Financial Services, Inc. (NYSE:PFS) Q2 2019 Earnings Conference Call October 25, 2019 10:00 AM ET Company Participants Len Gleeson - Investor Relations John Kuntz - Corporate Secretary Chris Martin - Chairman, President and CEO Tom Lyons - SVP and CFO Conference Call Participants Mark Fitzgibbon - Sandler O'Neill and Partners Russell Gunther - D.A. Davidson Collyn Gilbert - KBW Steven Duong - RBC Capital Markets Operator Good morning, welcome to the Provident Financial Services, Inc. Third Quarter ...