Provident Financial Services(US:PFS)2022-04-29 23:28Financial Data and Key Metrics Changes - The company reported earnings of $0.58 per share for Q1 2022, an increase from $0.49 per share in the previous quarter but a decrease from $0.63 per share in Q1 2021 [14] - Net income for the quarter was $44 million, compared to $37.3 million in the previous quarter and $49.8 million in the same quarter last year [14] - The annualized return on average assets was 1.3% and return on average tangible equity was 14.58% [5] Business Line Data and Key Metrics Changes - The commercial lending group closed approximately $502 million in new loans, a 61% increase from the same quarter last year [6] - The commercial loan portfolio, excluding PPP loans, grew at an annualized rate of 8.3% [7] - Non-interest bearing deposits grew at an annualized rate of 8.7%, comprising about 25% of total deposits [8] Market Data and Key Metrics Changes - The total cost of deposits declined by 2 basis points to 19 basis points, which is among the best in the peer group [8] - The company anticipates continued interest rate hikes by the Federal Reserve in 2022, positioning itself well for rising rates [9] Company Strategy and Development Direction - The company aims to enhance customer experience and grow all business lines, particularly in commercial lending [6] - Digital initiatives are being implemented to modernize business processes and improve efficiency [11] - The company is focused on improving its asset mix and expects rising interest rates to positively impact net interest income [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance driven by a healthy economic forecast and improvements in credit metrics [5] - The company expects solid loan growth throughout 2022 despite competitive market conditions and rising interest rates [7] - Management noted that the economic forecast from Moody's showed further improvement, suggesting potential for additional smaller releases in provisions for credit losses [41] Other Important Information - The company repurchased approximately 1.3 million shares of common stock at an average price of $23.36 per share [5] - The efficiency ratio for Q1 2022 was 56.05%, compared to 54.74% in the previous quarter [21] Q&A Session Summary Question: Impact of accretable yield this quarter and last quarter - Last quarter was 7 basis points and the current quarter is 6 basis points [27] Question: Assets under management and net flows - Assets under management at the end of the quarter were $3.9 billion, with an average decline of $59,000 [31] Question: Margin outlook with PPP income declining - Management expects the margin to continue to build into Q2, with a projected NIM of 3.12 to 3.15 for next quarter [32] Question: Loan growth outlook for the year - The company anticipates solid loan growth, with a significant portion of growth expected in the first half of the year [60] Question: Operating expense run rate and digital investments - The expected expense run rate for the next quarter is in the $63 million to $64 million range [43] Question: Noninterest income run rate going forward - A safe number for noninterest income is projected to be $20 million to $21 million, with potential for upside [73] Question: Corporate culture and ESG initiatives - Management emphasized the importance of corporate culture and is actively looking at ESG disclosures [76] Question: Deposit beta perspective and margin expectations - The all-in deposit beta is about 23%, with potential for upside as rates increase [83] Question: Acquisitive appetite in wealth management or insurance - The company is actively looking for strategic fits in wealth management and insurance [87]