Provident Financial Services(PFS) - 2022 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's analysis, market risk, and internal controls Financial Statements This section presents the unaudited consolidated financial statements, detailing the company's financial position and performance for Q1 2022 Consolidated Statements of Financial Condition This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $13,617,014 | $13,781,202 | | Net Loans | $9,586,607 | $9,500,884 | | Total Investments (AFS & HTM) | $2,494,295 | $2,494,001 | | Total Cash and Cash Equivalents | $433,146 | $712,463 | | Total Liabilities | $11,995,883 | $12,084,106 | | Total Deposits | $11,366,087 | $11,234,012 | | Borrowed Funds | $399,606 | $626,774 | | Total Stockholders' Equity | $1,621,131 | $1,697,096 | Consolidated Statements of Income This statement details the company's revenues, expenses, and net income over a specific period Consolidated Income Statement Summary (in thousands, except per share data) | Account | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net Interest Income | $94,526 | $90,000 | | Provision Benefit for Credit Losses | $(6,405) | $(15,001) | | Non-interest Income | $20,148 | $21,637 | | Non-interest Expense | $61,886 | $61,853 | | Net Income | $43,962 | $48,559 | | Diluted Earnings Per Share | $0.58 | $0.63 | Consolidated Statements of Comprehensive Income This statement presents the total change in equity from non-owner sources, including net income and other comprehensive income - Total comprehensive loss for Q1 2022 was $(30.8) million, a significant shift from a comprehensive income of $43.9 million in Q1 2021. This was primarily driven by a $(74.8) million other comprehensive loss, mainly from net unrealized losses on available for sale debt securities[12] Consolidated Statements of Changes in Stockholders' Equity This statement details the changes in the company's equity accounts over a period, including net income, dividends, and other comprehensive income - Stockholders' equity decreased from $1.70 billion at the end of 2021 to $1.62 billion at March 31, 2022. The decrease was primarily due to a $(74.8) million other comprehensive loss, $(29.0) million in treasury stock purchases, and $(18.7) million in cash dividends, partially offset by $44.0 million in net income[17] Consolidated Statements of Cash Flows This statement reports the cash generated and used by the company from operating, investing, and financing activities Summary of Cash Flows (in thousands) | Cash Flow Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $51,135 | $36,416 | | Net Cash used in Investing Activities | $(192,437) | $(90,596) | | Net Cash (used in) provided by Financing Activities | $(138,015) | $209,397 | | Net (Decrease) Increase in Cash | $(279,317) | $155,217 | Notes to Unaudited Consolidated Financial Statements This section provides detailed explanations and additional information regarding the figures presented in the financial statements - The notes provide detailed disclosures on significant accounting policies, including the Current Expected Credit Loss (CECL) methodology, which significantly influences the allowance for credit losses and earnings volatility. They also detail the composition of investment securities, loans, deposits, derivatives, and fair value measurements[24][29][91] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance and condition, explaining key drivers for changes in net income, assets, and equity Key Performance Indicators | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income | $44.0 million | $48.6 million | | Diluted EPS | $0.58 | $0.63 | | Net Interest Income | $94.5 million | $90.0 million | | Net Interest Margin | 3.02% | 3.05% | - The decrease in the provision benefit for credit losses on loans to $6.4 million in Q1 2022 from $15.0 million in Q1 2021 was a primary driver of lower net income. This change reflects the relative shift in the economic outlook compared to the significant favorable impact of the post-pandemic recovery in the prior year period[202] - Total assets decreased by $164.2 million from year-end 2021, mainly due to a $279.3 million decrease in cash and cash equivalents, which was used to fund an $81.3 million increase in total loans and repay borrowings[171] - Stockholders' equity decreased by $76.0 million in Q1 2022, driven by dividends, common stock repurchases totaling 1.28 million shares, and an increase in unrealized losses on available-for-sale debt securities[183] Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, primarily interest rate risk, and its strategies for managing these exposures - The company's interest rate risk strategy involves selling long-term (20-30 year) fixed-rate residential mortgages while retaining shorter-term loans. Commercial loans generally have rates that reset within five years or are tied to variable indices like Prime or SOFR (formerly LIBOR)[207] Net Interest Income Sensitivity (12-Month Projection) | Rate Change (bps) | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | +300 | $19,359 | 4.9% | | +200 | $13,052 | 3.3% | | +100 | $6,672 | 1.7% | | -100 | $(12,487) | (3.2)% | Economic Value of Equity Sensitivity (Immediate Shock) | Rate Change (bps) | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | +300 | $148,026 | 6.6% | | +200 | $109,752 | 4.9% | | +100 | $70,060 | 3.1% | | -100 | $(140,636) | (6.3)% | Controls and Procedures Management assessed the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of March 31, 2022 - The Principal Executive Officer and Principal Financial Officer have concluded that the company's disclosure controls and procedures are effective as of March 31, 2022[214] PART II—OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity security sales, and exhibits Legal Proceedings This section outlines the company's involvement in legal actions and claims, which are not expected to materially impact its financial condition - Ongoing legal actions are not expected to materially impact the company's financial condition[216] Risk Factors This section confirms that no material changes have occurred to the risk factors previously disclosed in the company's latest annual report - No changes were reported to the risk factors from the 2021 Form 10-K[217] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during Q1 2022 and the remaining shares authorized under its repurchase program Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2022 | 38,169 | $23.49 | | February 2022 | 163,423 | $23.12 | | March 2022 | 1,080,483 | $23.40 | | Total | 1,282,075 | $23.36 | - As of March 31, 2022, approximately 1.9 million shares remained available for repurchase under the company's ninth general repurchase program, which has no expiration date[183][219] Exhibits This section lists all documents filed as exhibits to the Form 10-Q, including required certifications and financial data formats - Key exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and financial data in iXBRL format[224]