Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — IPO Roadshow (May 2024)
49 slides from Provident Financial Services's IPO roadshow presentation, May 9, 2024
Slide 1: Investor Presentation May 2024
Investor Presentation May 2024 Filed Pursuant to Rule 433 Supplementing the Preliminary Prospectus Dated October 30, 2023 Registration No. 333-275213 May 9, 2024
Slide 2: Disclosures: Forward Looking Statements
Disclosures Forward Looking Statements Certain statements contained herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as am
Slide 3: Disclosures (Continued)
Disclosures (Continued) No Offer or Solicitation This presentation is neither an offer to sell nor a solicitation of an offer to purchase any securities of the Company or Lakeland. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful
Slide 4: Planned Offering Overview
Planned Offering Overview Issuer: Provident Financial Services, Inc. (NYSE: PFS) Security Offered: Fixed-to-Floating Rate Subordinated Notes Due 2034 Rating¹: BBB (Kroll) Format: SEC Registered Term: 10 Years Call: 5 Years Use of Proceeds: The purpose of the offering is to satisfy certain Regulatory
Slide 5: Topics for Discussion
Provident Financial Services Overview Financial Overview Loan Portfolio & Asset Quality Funding & Liquidity Management Regulatory Capital Appendix Topics for Discussion
Slide 6: Provident Financial Services Overview
Provident Financial Services Overview
Slide 7: Merger & Regulatory Update
Merger & Regulatory Update Provident has received regulatory approval from the FDIC, Federal Reserve and New Jersey Department of Banking & Insurance to complete the merger with Lakeland Bancorp and Lakeland Bank The regulatory approvals contain certain financial conditions and other commitments inc
Slide 8: The New Provident Financial Services, Inc.
The New Provident Financial Services, Inc. Total Assets $24.5 Gross Loans $18.8 Deposits $18.6 Total Equity $2.3 Consolidated Lev. Ratio 7.82% Consolidated CET 1 Ratio 9.31% Consolidated Tier 1 Ratio 9.31% Consolidated Total RBC Ratio 12.16% Pro Forma Financial Balance Sheet ($BN)¹ Joins together tw
Slide 9: Well Positioned in Highly Attractive Markets
Well Positioned in Highly Attractive Markets Highly Ranked Deposit Market Share in NJ for Institutions With Less Than $100BN in Assets New York Pennsylvania New Jersey Connecticut PFS (96) LBAI (69) Deposit data as of June 30th, 2023; Deposit Share analysis includes institutions with $100BN or less
Slide 10: Talent Accretive Transaction Adds Bench Strength
Talent Accretive Transaction Adds Bench Strength Pro Forma Management Team Board of Directors (Preliminary Named Directors) PFS LBAI Christopher Martin Executive Chairman Nadine Leslie Director Ursuline Foley Director Frank Fekete Director Edward Leppert Director John Pugliese Director James Dunigan
Slide 11: Growth Achieved Through Organic Strategy Augmented by Disciplined M&A
September 2022: Lakeland Bancorp $1.3BN value¹ $10.4BN assets¹ Growth Achieved Through an Organic Strategy Augmented by Disciplined M&A Experienced Bank Partners Adding Scale… …Supplemented by Fee Income Deals July 2020: SB One Bancorp $186MM value¹ $2.1BN assets¹ May 2014: Team Capital Bank $115MM
Slide 12: Historically Strong Credit Culture
Historically Strong Credit Culture Sourced from Federal Reserve Economic Data; Includes all Commercial Banks; Q1 2024 National Average is not yet available Reflects annualized metrics for Q1 2024 financials PFS and LBAI have a historically strong credit culture with average NCOs / Average Loans of 2
Slide 13: Investment Highlights
Investment Highlights Highly experienced and stable management team effectively executing a relationship banking strategy, delivering high quality banking services across customer base Long-standing commitments to serving the local community, employee engagement, and diversity and inclusion Robust r
Slide 14: Financial Overview
FINANCIAL OVERVIEW = Provident
Slide 15: History of Targeted Balance Sheet Growth
History of Targeted Balance Sheet Growth Total Assets ($BN) Total Gross Loans ($BN) Total Deposits ($BN) Tangible Common Equity ($BN)² Pro forma for the merger with Lakeland Bancorp, Inc. Represents a non-GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures
Slide 16: Track Record of Strong Performance
Track Record of Strong Performance Return on Average Assets Return on Average Equity Tangible Book Value Per Share² Reflects annualized metrics for Q1 2024 financials Represents a non-GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures Return on Average Tangible Common Equi
Slide 17: Track Record of Strong Performance (Continued)
Track Record of Strong Performance (Continued) Net Interest Margin Efficiency Ratio² Reflects annualized metrics for Q1 2024 financials Represents a non-GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures Noninterest Income / Operating Revenue Noninterest Expense / Average
Slide 18: Strong and Growing Fee Income Businesses
Strong and Growing Fee Income Businesses PFS Revenue Composition (2010) ($MM) PFS Insurance Agency Fee Income ($MM) Non-Interest Income: $78MM As a % of Revenue: 17% PFS Revenue Composition (LTM Q1 2024¹) ($MM) PFS Wealth Management Fee Income ($MM) Provident’s two ancillary fee-based business lines
Slide 19: Consolidated Capital Ratios
Consolidated Capital Ratios TCE / TA¹ Leverage Ratio Tier 1 Capital Ratio Represents a non-GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures Pro forma for the $200 million of subordinated debt required to be raised by Provident prior to the completion of the merger with L
Slide 20: Bank Capital Ratios
Bank Capital Ratios Tier 1 Capital Ratio Pro forma for the $200 million of subordinated debt required to be raised by Provident prior to the completion of the merger with Lakeland Bancorp, Inc. pursuant to the conditions to the bank regulatory approvals for the merger; Assumes gross offering of $200
Slide 21: Pro Forma Financial Snapshot
Pro Forma Financial Snapshot Pro Forma Regulatory Capital Ratios INCLUDING Interest Rate Purchase Accounting Marks Total Pre-Tax Purchase Accounting Interest Rate Marks $543MM $588MM PF Leverage Ratio 7.82% 8.92% PF CET1 Ratio 9.31% 10.62% PF Tier 1 Ratio 9.31% 10.62% PF Total Capital Ratio 12.16% 1
Slide 22: Loan Portfolio & Asset Quality
Loan Portfolio & Asset Quality
Slide 23: Loan Underwriting Policy and Disciplined Credit Culture
Loan Underwriting Policy and Disciplined Credit Culture Provident employs a conservative lending approach with processes that allow for the prompt and thorough underwriting and approval/decline of loan requests consistent with our established risk appetite Provident’s Board of Directors has granted
Slide 24: Diversified Loan Portfolio
Diversified Loan Portfolio 1Q’24 Yield: 5.48% $8.3BN Total 1Q’24 Yield: 5.51% $10.8BN Total 1Q’24 Yield: 5.50% $19.2BN Total Reserves / Gross Loans: 0.98% CRE (Excl. Multi-Family) / Total RBC: 348% CRE (Incl. Multi-Family) / Total RBC: 472% Reserves / Gross Loans: 0.92% CRE (Excl. Multi-Family) / To
Slide 25: Loan Portfolio Concentrations
Loan Portfolio Concentrations PFS CRE / Total RBC LBAI CRE / Total RBC PFS C&D / Total RBC LBAI C&D / Total RBC Pro forma for the $200 million of subordinated debt required to be raised by Provident prior to the completion of the merger with Lakeland Bancorp, Inc. pursuant to the conditions to the b
Slide 26: Overview of Commercial Real Estate Portfolio
$4.6BN Overview of Commercial Real Estate Portfolio CRE Investment By Property Type (Incl. Multi-Family) As Of March 31, 2024 ($MM) $6.2BN Note: Loan data represents principle balances not inclusive of the impact of purchase account marks associated with previous acquisitions
Slide 27: Pro Forma Multifamily (NY and Rent Stabilized Sectors)
Pro Forma Multifamily (NY and Rent Stabilized Sectors) [ ] [ ] [ ] NY Multifamily Loans As Of March 31, 2024 ($MM) $388MM $229MM (89 loans) of Loans on NY Multifamily Properties are Located in New York City Total Multifamily Loan Portfolio: $3.2 Billion Multifamily Balances By Origination Year ($MM)
Slide 28: CRE Office Portfolio Overview
CRE Office Portfolio Overview PFS CRE Office Portfolio As Of March 31, 2024 ($MM) $484MM LBAI CRE Office Portfolio As Of March 31, 2024 ($MM) $47MM maturing or repricing in 2024 $265MM maturing in repricing in 2025 to 2028 $171MM maturing or repricing in 2029 & beyond LTVs > 70%: ~$23MM, or ~5% of t
Slide 29: Overview of C&I Portfolio
Overview of C&I Portfolio C&I Portfolio By Industry As Of March 31, 2024 ($MM) $2.5BN $1.9BN Note: Loan data represents principle balances not inclusive of the impact of purchase account marks associated with previous acquisitions
Slide 30: Top Largest Borrower Relationships
Top 30 Largest Borrower Relationships Total loans are pro forma for the merger with Lakeland Bancorp, Inc. ($MM) Bank Loan Type Number of Total Loans Total Exposure Total Balance As a (%) of Total Loans¹ Borrower 1 PFS Multi 6 $134.3 $117.5 0.61% Borrower 2 PFS Other Mtg Invest-Retail/Industrial 14
Slide 31: PFS: Historically Strong Asset Quality & Credit Fundamentals
PFS: Historically Strong Asset Quality & Credit Fundamentals NCOs / Average Loans (%) Reserve / Loans (%) & Reserves / NPLs (%) NPA Trends ($MM) Our Conservative Credit Culture Shows Through in Reserve Coverage and Limited Historical Charge-Offs Reflects annualized metrics for Q1 2024 financials Sou
Slide 32: LBAI: Historically Strong Asset Quality & Credit Fundamentals
LBAI: Historically Strong Asset Quality & Credit Fundamentals NCOs / Average Loans (%) Reserve / Loans (%) & Reserves / NPLs (%) NPA Trends ($MM) Our Conservative Credit Culture Shows Through in Reserve Coverage and Limited Historical Charge-Offs Reflects annualized metrics for Q1 2024 financials So
Slide 33: Funding & Liquidity Management
Funding & Liquidity Management
Slide 34: Attractive Deposit Base Funds Diversified Loan Portfolio
Attractive Deposit Base Funds Diversified Loan Portfolio 1Q’24 Cost of Total Deposits¹ : 2.56% 1Q’24 Cost of Total Deposits¹: 2.07% 1Q’24 Cost of Total Deposits1: 2.29% $8.5BN Total $10.1BN Total $18.6BN Total Non-Interest Bearing Deposits: 20.3% Non-Interest Bearing Deposits: 19.8% Non-Interest Bea
Slide 35: Attractive Deposit Base: Core Deposit Trends
Attractive Deposit Base Funds Diversified Loan Portfolio Core deposits are total deposits less jumbo time deposits greater than $100,000 Fed fund rate represents average rate throughout each period Cost of total deposits reflects an annualized metric for Q1 2024 LBAI Core¹ Deposit Trends LBAI Histor
Slide 36: Liquidity Overview
Liquidity Overview PFS’ cash flows from loan payments and maturing investment securities are fairly predictable sources of funds. Changes in interest rates, local economic conditions and the competitive marketplace can influence loan prepayments, prepayments on mortgage-backed securities and deposit
Slide 37: Top Largest Depositor Relationships
Top 30 Largest Depositor Relationships Total deposits are pro forma for the merger with Lakeland Bancorp, Inc. ($MM) Bank Depositor Type Number of Total Deposits Number of Total Loans Tenure of Relationship Total Balance As a ( % ) of Total Deposits ¹ Depositor 1 LBAI Public 54 0 20 Years $233.6 1.2
Slide 38: Conservative Securities Portfolio
Conservative Securities Portfolio Held To Maturity Securities ($MM) Available For Sale Securities ($MM) $1.7BN $355MM Q1 2024 AOCI Associated with AFS Portfolio: ($164.4MM) 9.9% of Total AFS Portfolio At March 31, 2024, the portfolio had a modified duration of 4.6 years and weighted average life of
Slide 39: PFS: Interest Rate Sensitivity
PFS: Interest Rate Sensitivity Note: Financial information is not pro forma for Lakeland Bancorp, Inc. No material change in interest rate positioning is expected from pending acquisition with Lakeland Bancorp, Inc.
Slide 40: Regulatory Capital
REGULATORY CAPITAL = Provident
Slide 41: Consolidated Regulatory Capital Composition
Consolidated Regulatory Capital Composition Total RBC Tier 2 Tier 1 / CET1 Common Equity Trust Preferred Allowable ALLL & Other Subordinated Debt 0.11% 0.85% 11.75% 0.86% 1.02% 0.86% 1.98% 9.31% 9.31% Tier 1 Leverage Ratio Tier 1 Leverage Ratio Total Risk- Based Capital Total Risk- Based Capital Tot
Slide 42: Bank Regulatory Capital Composition
Bank Regulatory Capital Composition Total RBC Tier 2 Tier 1 / CET1 Common Equity Allowable ALLL & Other Tier 1 Leverage Ratio Total Risk- Based Capital Total Risk- Based Capital 11.50% 9.66% 10.62% 0.85% 0.86% 0.86% Well-Capitalized w / Conservation Buffer¹ Tier 1 Leverage Ratio: 5.00% CET1 Ratio: 7
Slide 43: Historical Double Leverage and Interest Coverage
Historical Double Leverage and Interest Coverage Pro forma for the $200 million of subordinated debt required to be raised by Provident prior to the completion of the merger with Lakeland Bancorp, Inc. pursuant to the conditions to the bank regulatory approvals for the merger; Assumes gross offering
Slide 44: Appendix
APPENDIX = Provident
Slide 45: Our Board Has A Robust Approach To Overseeing Risk Management
Our Board Has A Robust Approach To Overseeing Risk Management Board’s Role in Oversight of Risk Audit Committee Compensation and Human Capital Committee Governance & Nominating Committee Risk Committee Technology Committee Sole authority for retaining, overseeing, and evaluating a firm of independen
Slide 46: Provident Historical Financial Profile
Provident Historical Financial Profile Represents a non-GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures
Slide 47: Lakeland Historical Financial Profile
Lakeland Historical Financial Profile Represents a non-GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures
Slide 48: Provident Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
Provident Notes and Reconciliation of GAAP and Non-GAAP Financial Measures (Dollars in Thousands, except share data) The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparat
Slide 49: Lakeland Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
Lakeland Notes and Reconciliation of GAAP and Non-GAAP Financial Measures (Dollars in Thousands, except share data) The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparati
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