Provident Financial Services(PFS) - 2024 Q4 - Annual Report

Merger and Acquisition - The Company completed its merger with Lakeland Bancorp, adding $10.59 billion in total assets,$7.91 billion in total loans, and $8.62 billion in total deposits[13]. - The total consideration paid for the acquisition of Lakeland was$876.8 million, with 54,356,954 shares converted at a ratio of 0.8319 shares of the Company's common stock per share of Lakeland[14]. Loan Portfolio and Performance - As of December 31, 2024, non-performing assets were $81.5 million, representing 0.34$15.46 billion as of December 31, 2024, accounting for 83.0% of total deposits, down from 89.4% the previous year[21]. - As of December 31, 2024, 57.73% of the Bank's loan portfolio had a term to maturity of one year or less or had adjustable interest rates[24]. - Total gross loans held for investment were $18,667,570 thousand, with a net total of$18,465,938 thousand after accounting for credit losses[39]. - The Bank originated $4.82 billion in loans during 2024, a significant increase from$3.33 billion in 2023[77]. - The Bank's total loan portfolio included $2.01 billion in residential real estate loans, representing 10.9$4.88 billion, compared to $2.68 billion in 2023[77]. Non-Performing Loans and Credit Losses - As of December 31, 2024, impaired loans totaled$55.4 million with related specific reserves of $7.5 million[91]. - The Bank classified$293.2 million of loans as "substandard," including $180.0 million in commercial loans and$107.3 million in commercial mortgage, construction, and multi-family mortgage loans[99]. - The allowance for credit losses was $83.6 million for the year ended December 31, 2024, with an overall coverage ratio of 104 basis points[117]. - The allowance for credit losses increased to$193.432 million in 2024 from $107.200 million in 2023, reflecting a significant rise in provisions due to economic conditions[127]. - The net charge-offs for 2024 were$14.560 million, compared to $8.129 million in 2023, indicating a higher level of credit losses[127]. Investment Strategy - The investment policy aims to generate favorable returns while maintaining liquidity and safety, with monthly reports to the board of directors[132]. - The investment strategy includes U.S. Treasury obligations, corporate debt, and mortgage-backed securities, focusing on maximizing returns while managing interest rate risk[135]. - The company does not permit the purchase of securities below investment grade, ensuring a focus on quality investments[134]. - Total available-for-sale debt securities reached$2.975695 billion with a fair value of $2.768915 billion as of December 31, 2024[142]. Capital and Regulatory Compliance - The Bank's Tier 1 leverage capital was$2,265,907, representing 9.72% of total assets, exceeding the required 4.00%[201]. - The common equity Tier 1 risk-based capital ratio was 11.42%, surpassing the minimum requirement of 4.50%[201]. - The total risk-based capital ratio was 12.40%, above the required 8.00%[201]. - The Company is subject to increased supervision and regulation due to exceeding $10 billion in total consolidated assets since 2020[186]. Employee and Workforce Management - The Company supports employee education through tuition assistance and student loan repayments after three months of employment[179]. - The Company promotes a diverse workforce, with women holding 64% of managerial positions[181]. - The Company increased its 401(k) plan company match to 50% on the first 8% of eligible compensation deferred, up from 25% on the first 6% for 2024[177]. Market and Economic Conditions - The preliminary unemployment rate in New Jersey was 4.6% as of December 31, 2024, a decrease from 4.8% in the previous year[26]. - The Bank had a market share of approximately 4.71% in New Jersey for bank deposits as of June 30, 2024[27].