Financial Data and Key Metrics Changes - Operating net income declined by $1.1 million in the first quarter due to seasonal declines in noninterest income lines, particularly in SBSL [18] - Pre-provision net revenue increased by almost $1.5 million on an operating basis compared to the first quarter of 2024, indicating improvement in core earning fundamentals [19] - Net interest income increased by approximately $480,000 in the first quarter, driven by loan growth and a reduction in the cost of funds [19] - Cost of funds for the quarter was 2.07%, a decline of 12 basis points from the previous quarter and 25 basis points from the third quarter of 2024 [20] - Margin increased by 9 basis points to 2.93%, up from 2.84% in the prior quarter [20] Business Line Data and Key Metrics Changes - First quarter annualized loan growth was 17%, with expectations for future quarters to be in the range of 8% to 12% [7][8] - Operating non-interest income decreased by about $1.7 million, primarily due to decreased activity in the SBSL division [21] - Revenues in the mortgage division were slightly higher, and expenses were slightly lower, resulting in profitability for the division [22] - Non-interest expenses decreased around $1 million, attributed to lower variable expenses and advertising costs [23] Market Data and Key Metrics Changes - Total deposits increased by $54.6 million in the quarter, with a focus on a deposit-first culture [29] - The company is experiencing cooling deposit competition, which is expected to help keep cost pressures minimal [30] - Cash to assets was a little over 7% at the end of the quarter, providing room for continued funding of loan growth [31] Company Strategy and Development Direction - The company is excited about the acquisition of Ellerbee Agency, which is expected to be EPS accretive and enhance the Insurance division [10][11] - A credit card program for both consumer and commercial credit cards was launched, aimed at generating significant noninterest income over time [12] - The company is maintaining a proactive approach to monitor market volatility and its impact on customers, especially in sectors exposed to trade dynamics [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the loan growth pipeline for the rest of the year, despite seasonal fluctuations [9][28] - There are no indicators of large-scale disruptions affecting credit quality, with isolated issues in agricultural production and trucking loans [26] - Management remains optimistic about the M&A environment in banking, with ongoing discussions with potential targets [15] Other Important Information - The effective tax rate for the quarter was a little over 20%, consistent with previous guidance [24] - The company repurchased 38,000 shares at an average price of $16.45 as part of its stock repurchase program [32] - A quarterly cash dividend of $0.115 per share was declared [33] Q&A Session Summary Question: What are the trends and expectations for SBSL, loan growth, and asset quality as well as pricing for the rest of the year? - Management is vigilant about the impact of tariffs and trade policy on customers, noting that many have become more aware of their supply chains post-COVID [36][39] - There is good activity in SBSL, with expectations to return to previous levels of production [43][44] Question: What net interest margin impacts do you expect from a 25 basis point rate cut? - Management feels well-positioned for potential rate cuts, expecting improved margins from repricing of assets and reduced costs [45][46] - The loan portfolio yield is around 6%, with new weighted average rates in the mid- to high-7s, indicating favorable conditions for margin improvement [47][50]

Financial Data and Key Metrics Changes - The company reported a first quarter annualized loan growth of 17%, which was better than expected, with future quarters likely to normalize to a range of 8% to 12% [5][6] - Total deposits increased by approximately $54.6 million during the quarter, reflecting an annualized growth of about 8.5% [6][21] - Operating net income declined by $1.1 million in the first quarter, primarily due to seasonal declines in noninterest income [14] - Net interest income increased by approximately $480,000, driven by loan growth and a reduction in the cost of funds [15] - The net interest margin increased by 9 basis points to 2.93% from 2.84% in the prior quarter [15] Business Line Data and Key Metrics Changes - Noninterest income decreased by about $1.7 million, largely due to reduced activity in the SBSL division [16] - Revenues in the mortgage division were slightly higher, and the division remained profitable [16] - The company is optimistic about the SPSL division, expecting a return to previous levels of activity as the year progresses [32] Market Data and Key Metrics Changes - The company noted that it has not seen significant impacts on its loan portfolio from recent market volatility and trade dynamics [10][11] - Nonperforming assets were reported at $12.4 million, with classified loans at $26.4 million, indicating historically low levels [19] Company Strategy and Development Direction - The company is focused on growing its noninterest income through acquisitions, such as the recent acquisition of the LOB agency [7][8] - A new credit card program for both consumer and commercial markets was launched, aimed at generating significant interest income over time [9] - The company is actively monitoring market conditions and is prepared to engage in M&A activities as opportunities arise [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current market conditions, emphasizing proactive communication with customers [10][11] - There is an expectation of continued loan growth, although it may not match the high levels seen in the first quarter [20] - Management remains optimistic about the long-term outlook despite short-term disruptions due to trade policies [31] Other Important Information - The company repurchased 38,000 shares at an average price of $16.45 as part of its stock repurchase program [23] - A quarterly cash dividend of 11.5¢ per share was declared by the board [23] - The company plans to establish an active shelf registration for future capital management flexibility [24] Q&A Session Summary Question: What are the trends and expectations for SPSL, loan growth, and asset quality? - Management noted that they are vigilant regarding the impact of tariffs and trade policies on customers, but customers have become more aware of their supply chains post-COVID, which is expected to mitigate disruptions [29][30][31] - There is good activity in the SPSL pipeline, and management expects a return to historical levels of production [32] Question: What net interest margin impact do you expect from a 25 basis point rate cut? - Management believes they are well-positioned for potential rate cuts, which could improve margins through repricing of assets and a reduction in the cost of funds [33][34] - The company anticipates that earning asset yields will increase while costs decrease, positively impacting overall margins [36]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $21.1 million or $0.17 per diluted common share, compared to $0.20 per diluted common share in Q4 2024 [6][7] - Net interest income after provision expense was $96 million, up 4% from $92 million in the previous quarter [7] - Non-interest expense excluding notable items was $81.3 million, reflecting typical first quarter increases in salary and employee benefits [7][16] Business Line Data and Key Metrics Changes - Total deposits as of March 31, 2025, were $14.5 billion, an increase of 1% from the previous quarter [9] - Loans receivable decreased by 2% to $13.3 billion, with residential mortgage loans increasing by 7% while commercial and industrial loans decreased by 5% [9][10] - Loan production increased by 11% year over year, despite elevated pay downs and payoffs [10] Market Data and Key Metrics Changes - The company noted aggressive market pricing competition and spread compression, impacting net loan growth [10] - The weighted average cost of deposits from the Territorial merger was 1.96% [8] Company Strategy and Development Direction - The company aims to strengthen its deposit mix and support prudent balance sheet growth [9] - The merger with Territorial Bancorp is expected to enhance growth opportunities and improve loan demand, particularly from Korean companies investing in the U.S. [11][23] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding macroeconomic volatility and the potential for a recession, but noted positive outlooks from Korean subsidiary sector customers [11] - The company expects annual loan growth in 2025 to be at a high single-digit percentage rate, with net interest income growth also expected in the high single-digit range [21][22] Other Important Information - The company declared a quarterly common stock dividend of $0.14 per share, payable on May 16, 2025 [8] - The merger with Territorial is expected to incur one-time pretax acquisition-related expenses of approximately $18 million in Q2 2025 [20] Q&A Session Summary Question: Impact of fewer rate cuts on NII growth outlook - Management indicated that fewer rate cuts would have a modest downward impact on NII due to offsetting factors [26][28] Question: Details on loan verticals for organic growth - Management highlighted positive momentum in pipelines for specialized commercial lending verticals, including healthcare and project finance [29][32] Question: Specific segments for loan growth in the second half - Management reiterated confidence in loan growth from Korean subsidiary sectors and specialized commercial lending teams [35][36] Question: Asset quality and points of stress - Management confirmed stable asset quality and proactive monitoring of the portfolio amidst economic uncertainties [39][40]

Financial Data and Key Metrics Changes - The company reported a loan growth of $300 million, or 5.1%, and a deposit growth of $465 million, or 7.8% [4][10] - The net interest margin (NIM) expanded by two basis points to 3.68% from 3.66% in the prior quarter, marking the sixth consecutive quarter of margin expansion [5][12] - Earnings per share (EPS) was reported at $1.45, down $0.43 from the prior period, with net income at $16.3 million, down $5 million [13][14] - Tangible book value per share increased by more than 2.3% to $65.8, marking the ninth consecutive quarter of book value accretion [6] Business Line Data and Key Metrics Changes - Total loan originations and draws were approximately $490 million at a weighted average coupon of about 7.84%, while payoffs and paydowns totaled approximately $185 million at a weighted average coupon of 7.44% [10] - The provision expense for the first quarter was $4.5 million, supporting continued loan growth [7][15] Market Data and Key Metrics Changes - The company has not identified any broad-based negative trends in any loan segment, geography, or sector impacting its portfolio [7] - The company reported a decline in the cost of interest-bearing deposits by 32 basis points and a decline in the cost of total deposits by six basis points [12] Company Strategy and Development Direction - The company aims to capture additional market share through traditional channels while positioning itself for potential strategic opportunities to increase shareholder value [8] - The full integration of a new technology stack is expected to be completed by the end of the year, which will support the company's diversified and growing commercial bank [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainties, citing strong liquidity, capital, and earnings [3] - The company anticipates loan growth of 10% to 12% for the year, with a full-year NIM expected to be between 3.7% and 3.75% [17][18] Other Important Information - The effective tax rate for the quarter was approximately 30% [17] - The company has been actively discussing the potential for introducing a small dividend to broaden the shareholder base [30] Q&A Session Summary Question: Clarification on expense numbers and future operating expenses - The CFO indicated that second-quarter operating expenses are expected to be closer to $45 million, including IT spend adjustments [23][24] Question: Impact of Gold Card program on EB-5 business - Management believes the Gold Card program could be a complementary product to the existing EB-5 program without disrupting core business [26][27] Question: Seasonal patterns in deposit growth - Management confirmed there are no significant seasonal patterns affecting deposit growth [28][29] Question: Competitive pressures on loans and deposits - Management stated there is no significant competition in New York City [38] Question: Loan pipeline status and future growth - Management confirmed the loan pipeline is strong and in line with historical performance, with good growth expected [42] Question: EB-5 related deposits and potential program changes - The company has approximately $400 million in EB-5 related deposits and does not foresee immediate risks from potential program changes [46][48]

Financial Data and Key Metrics Changes - The company reported a loan growth of $300 million, or 5.1%, and a deposit growth of $465 million, or 7.8% [4][10] - The net interest margin (NIM) expanded by two basis points to 3.68% from 3.66% in the prior quarter, marking the sixth consecutive quarter of margin expansion [5][12] - Earnings per share (EPS) was reported at $1.45, down $0.43 from the prior period, while tangible book value per share increased by more than 2.3% to $65.8 [6][13] Business Line Data and Key Metrics Changes - Total loan originations and draws were approximately $490 million at a weighted average coupon of about 7.84%, while payoffs and paydowns totaled approximately $185 million at a weighted average coupon of 7.44% [10] - The provision expense for the first quarter was $4.5 million, supporting continued loan growth [7][15] Market Data and Key Metrics Changes - The company experienced a decline in the cost of interest-bearing deposits by 32 basis points and a decline in the total cost of deposits by six basis points [12] - The company noted that the first quarter increase in deposits was net of $35 million in GPG deposit outflows [12] Company Strategy and Development Direction - The company is focused on maintaining discipline and supporting clients through economic fluctuations, with a strategy to capture additional market share and explore strategic opportunities to increase shareholder value [8][59] - The company is investing in a franchise-wide new technology stack, with full integration expected by the end of the year [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate uncertainties and highlighted strong asset quality with no broad-based negative trends identified [3][7] - The company anticipates loan growth guidance to be higher than previous estimates, now projected at 10% to 12% for the year [17] Other Important Information - Non-interest expense increased by $4.5 million to $42.7 million, primarily due to seasonal increases in compensation and benefits, as well as professional fees [16] - The effective tax rate for the quarter was approximately 30% [17] Q&A Session Summary Question: Clarification on total operating expenses for the second quarter - The CFO indicated that total operating expenses for the second quarter will be closer to $45 million, including $11 million of IT spend [23][24] Question: Any remaining GPT-related expense or income items - The CFO confirmed that there will be no fee-related income or expenses going forward, although some reserve balances remain [25] Question: Implications of the Gold Card program on EB-5 business - Management believes the Gold Card program could be a complementary product to the existing EB-5 program without disrupting core business [26][27] Question: Seasonal patterns in deposit growth - Management stated there are no seasonal patterns affecting deposit growth [28][29] Question: Discussion on potential dividends - Management confirmed that discussions regarding a potential small dividend are ongoing [30] Question: Trends in non-owner occupied CRE customer occupancy - Management reported that the non-owner occupied CRE portfolio remains stable and diversified [35] Question: Incremental competitive pressures on loans or deposits - Management indicated that there is no significant competition in New York City [38] Question: Loan pipeline status and potential dampening in Q2 - Management stated that the loan pipeline is strong and in line with historical performance [42] Question: Opportunities within various deposit verticals - Management emphasized the importance of diversification across deposit verticals and ongoing efforts to drive new deposit opportunities [44] Question: Update on EB-5 related deposits - The CFO reported that EB-5 related deposits are approximately $500 million, with a recent increase of $100 million [46] Question: Balancing buyback and growth opportunities - Management expressed a desire to maintain a capital ratio above 9% while pursuing growth opportunities [50]

Financial Data and Key Metrics Changes - The company reported net income of $69.5 million for Q1 2025, a 13.3% decrease from $80.2 million in Q4 2024 [10] - Earnings per share decreased by 12.5% to $0.98 for Q1 2025 compared to $1.12 in Q4 2024 [10] - The interest margin increased to 3.25% for Q1 2025 from 3.07% in Q4 2024 [23] - Non-interest income for Q1 decreased by 4.3% to $11.2 million compared to $15.5 million in Q4 2024 [25] - Non-interest expense increased by 0.5% to $85.7 million in Q1 2025 from $85.2 million in Q4 2024 [25] Business Line Data and Key Metrics Changes - Total gross loans decreased by $23 million or 0.5% annualized, driven by a $100 million decrease in commercial loans and a $65 million decrease in residential loans, offset by increases in CRE loans and construction loans [11] - The company repurchased 876,906 shares at an average cost of $46.83 per share, completing a $125 million stock repurchase program [11] Market Data and Key Metrics Changes - Total deposits increased by $131 million or 2.7% annualized during Q1 2025, primarily due to a net increase in core deposits [19] - As of March 31, 2025, total uninsured deposits were $8.5 billion, representing 42.7% of total deposits [20] Company Strategy and Development Direction - The company widened its 2025 loan growth guidance to 1% to 4% from the previous guidance of 3% to 4% due to economic uncertainties [11] - The management is closely monitoring the impact of tariffs on borrowers and the loan portfolio, estimating that about 1.4% of total loans could be adversely impacted [8] Management Comments on Operating Environment and Future Outlook - Management expressed concerns about the current economic environment, particularly regarding the impact of tariffs on commercial clients and the potential for loan paydowns [42][43] - There is a noted shift in customer behavior, with some clients pausing growth plans and focusing on managing their balance sheets [40] Other Important Information - The effective tax rate for Q1 2025 was 19.82%, an increase from 7.57% in Q4 2024, primarily due to a decrease in solar tax credit fund investment [27] - The Tier 1 leverage capital ratio increased to 11.06% from 10.97% as of December 31, 2024 [28] Q&A Session Summary Question: Margin sensitivity to interest rate cuts - Management indicated that for every rate cut, the margin would be affected by about four basis points on a full-year basis, with two basis points if it occurs in July [31] Question: Changes in loan growth guidance - Management noted that the pipeline for commercial loans remains strong, but the guidance was revised due to uncertainties related to tariffs and customer behavior [36][38] Question: Specific commercial credit and tariff impact - The reserve built for a specific commercial credit was not related to trade finance, and management is hopeful that the provisions cover most exposure related to tariffs [48] Question: Non-interest expense outlook - Management discussed major expense categories, indicating that salaries and benefits would see an increase due to excess bonus accruals, while consulting expenses are expected to decrease in the second half of the year [54] Question: Deposit growth seasonality - Management confirmed that the Lunar New Year promotion contributed to deposit growth, estimating about $200 million from this seasonal factor [57]

Provident Financial Services (PFS) Q4 2024 Earnings Call January 29, 2025 10:00 AM ET Company Participants Adriano Duarte - Executive VP, Chief Accounting Officer & Investor Relations OfficerAnthony Labozzetta - President & CEOThomas M. Lyons - Senior EVP & CFOMark Fitzgibbon - Head of FSG ResearchTim Switzer - Vice PresidentFeddie Strickland - Director Conference Call Participants Billy Young - AnalystManuel Navas - MD & Senior Research Analyst Operator Good morning, and welcome everyone to the Provident F ...