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Provident Financial Services(PFS) - 2020 Q1 - Earnings Call Transcript

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]