Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Q3 2020 Earnings Presentation
29 slides from Provident Financial Services's earnings presentation, Nov 9, 2020
Slide 1: Q3 2020 Investor Presentation
Q3 2020 INVESTOR PRESENTATION
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements contained herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or
Slide 3: Corporate Profile
Corporate Profile (At or for the Quarter Ended 9/30/20) Bank founded: 1839 Stock symbol: PFS (NYSE) 101 serving northern and central New Jersey, eastern Pennsylvania & Branches: Queens County, NY Market capitalization: $1.075 Billion as of 11/6/20 $12.9 Billion in Total Assets Balance sheet: $9.7 Bi
Slide 4: Successful & Disciplined Acquirer
Successful & Disciplined Acquirer Acquired Acquired First Sentinel First Morris Bank & Acquired Acquired IPO NYSE Bancorp Trust Team Capital Bank SB One Bancorp PFS Assets: $2.6B Assets: $554M Assets: $964M Assets: $2.2B 1839 Founded 2003 2004 2007 2011 2014 2015 2019 2020 Acquired Acquired Acquired
Slide 5: Strong Presence in Attractive Markets
Strong Presence in Attractive Markets POPULATION Densely populated, lucrative (2021 Estimates) markets NJ – 8,883,587 Highly educated, wealthy population PA – 12,804,019 Diverse economy proximate Bucks – 628,796 to New York City and Lehigh – 372,203 Philadelphia metro areas Northampton –
Slide 6: Strong Presence in Attractive Markets
Strong Presence in Attractive Markets Provident’s NJ deposit share among NJ based Average client tenure institutions ranks 3rd pro forma including SB One* Business < 1 year 8% Businesses in market (excluding franchises) ** 1 – 2 years 14% NJ (13 counties where Provident has branches) has 318,8
Slide 7: Proven Consistent Performance
Proven Consistent Performance 1.40% 2.00% 1.26% 1.22% 1.80% 1.72% 1.68% 1.20% 1.15% 1.63% 1.60% 1.53% 1.05% 1.49% 1.47% 0.99% 1.46% 1.00% 1.38% 0.90% 1.40% 1.20% 0.80% 0.61% 1.00% 0.60% 0.55% 0.80% 0.40% 0.60% 0.40% 0.20% 0.20% 0.00% 0.00% 2017 2018 2019 2017 2018 2019 Q3 2019 Q3 2019 Q4 2020 Q1 202
Slide 8: Proven Consistent Performance
Proven Consistent Performance 10.00% 14.00% 13.07% 12.97% 8.93% 8.90% 9.00% 11.71% 8.07% 12.00% 8.00% 10.82% 10.56% 7.28% 7.29% 7.04% 10.05% 7.00% 10.00% 6.00% 8.00% 5.00% 6.10% 4.22% 4.08% 5.91% 6.00% 4.00% 3.00% 4.00% 2.00% 2.00% 1.00% 0.00% 0.00% 2017 2018 2019 2017 2018 2019 Q3 2019 Q3 2019 Q4 2
Slide 9: Historically Strong Track Record of Returns
Historically Strong Track Record of Returns 2014 2015 2016 2017 2018 2019 $1.82 7% $1.74 CAGR Diluted Earnings $1.45 per Share $1.33 $1.38 $1.22 5% $14.85 $14.18 CAGR Tangible Book $13.20 $12.54 Value per Share (1) $11.40 $11.75 $0.23 +53% $0.21 $0.20 Regular Quarterly $0.19 Cash Dividend per $0.17
Slide 10: Stable Core Funding Base
Stable Core Funding Base - at 9/30/20 AVERAGE DEPOSIT COMPOSITION $ in thousands ($) Balance Total Average Deposits 8,945,678 Certificates Savings Average Branch Size 88,571 of deposits deposits 14% 11% AVERAGE DEPOSIT COMPOSITION Non-interest Money Muni bearing market Deposits deposits accounts 1,2
Slide 11: Diversified Loan Portfolio
Diversified Loan Portfolio Consumer As of 9/30/20 Loans 4% Residential ($ in thousands) Mortgage Loans 14% Total Gross Loans Commercial Commercial $9,774,593 Loans Mortgage 23% Loans 38% Multi-Family Commercial Loans Construction 16% Loans 5% NYSE: PFS 11
Slide 12: Solid Credit Posture
Solid Credit Posture 2017 2018 2019 Q1 20 Q2 20 Q3 20 1.17% 1.16% 1.02% Total allowance to total loans 0.82% (excludes PPP) 0.77% 0.76% 0.57% 0.58% Non-performing assets to loans + REO 0.54% 0.50% 0.55% 0.38% 0.55% 0.50% 0.48% 0.48% 0.46% Non-performing loans to total loans 0.35% 0.44% 0.42% 0.39% 0
Slide 13: Solid Credit Posture: Non-Performing Assets
Solid Credit Posture Non-Performing Assets $ in thousands 2017 2018 2019 Q1 2020 Q2 2020 Q3 2020 Residential mortgage loans $8,105 $5,853 $8,543 $6,145 $6,806 $9,424 Commercial mortgage loans 7,090 3,180 5,270 5,264 5,048 16,568 Multi-family mortgage loans 0 0 0 0 0 0 Construction loans 0 0 0 0 0 15
Slide 14: COVID-19 Loan Payment Deferrals
COVID-19 Loan Payment Deferrals Composition by Segment ($ in Millions) $311M or 3.2% of loans $ in Deferral % of Portfolio Q3 20 Hotels $92 0.9% Retail 44 0.5% Peak levels $1.3B or Restaurants 31 0.3% 16.8% of loans Q2 20 Office 15 0.2% Other C&I & CRE 86 0.9% Approximately 67% Residential 43 0.4% m
Slide 15: Emphasis on Fee Income
Emphasis on Fee Income Non-Interest Income $60,000 $ in thousands $50,000 Other income $40,000 Net gain on securities transactions $30,000 Bank-owned life insurance Insurance agency income $20,000 Wealth management income $10,000 Fees $0 20172017 20182018 20192019 Q1 2020Q1 2020 Q2 2020Q2 2020 Q3 20
Slide 16: Focus on Wealth Management Business
Focus on Wealth Management Business 2020 Revenue Trust & Estate (actual YTD thru September 30, 2020) 9% Private Banking Advisory $ 17,022,868 1% Trust & Estate $ 1,637,614 Advisory Tax $ 414,453 88% Tax Private Banking $ 193,315 * 2% Total $ 19,268,250 $3.4 Billion AUM For 950 family relationships N
Slide 17: Focus on Wealth Management Business
Focus on Wealth Management Business AVERAGE EBITDA & NET INCOME CLIENT SIZE EBITDA (YTD thru September 30, 2020) $ 9,012,129 Net Income (YTD thru September 30, 2020) $ 5,547,549 CROSSOVER PROVIDENT/BEACON $3,600,000 (HOW MANY PROVIDENT CUSTOMERS ARE BEACON CLIENTS) As of September 2020, based on AUM
Slide 18: SB One Insurance Agency
SB One Insurance Agency • Provident acquired SB One Insurance Agency as part of the July 31, 2020 merger with SB One Bancorp • SB One Insurance provides insurance agency services including business, personal and employee benefits insurance products. • The insurance agency’s primary source of revenue
Slide 19: Adoption of Digital Channels & A Future Architecture
Adoption of Digital Channels & A Future Architecture Technology & Transformational Investments 2020 continues to be a transformational year for digital banking and payments at Provident Bank with new records being set monthly Since the new solution was implemented in March, Online/Mobile Banking rat
Slide 20: Appendix
APPENDIX
Slide 21: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures ($ in thousands, except per share data) 2017 2018 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Core PTPP ROAA: Net Income $ 93,949 $ 118,387 $ 112,633 $ 31,399 $ 25,951 $ 14,931 $ 14,311 $ 27,143 Add: provision for credit losses 5,600 23,700 13,1
Slide 22: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures ($ in thousands, except per share data) Annualized Adjusted Non-Interest Expense to Average Assets Three Months Ended September 2020 Reported non-interest expense $ 59,783 Adjustments to non-interest expense: Credit loss expense for off-balance s
Slide 23: Loans by NAICS Sector – C&I
Loans by NAICS Sector – 9/30/20 C & I – (Includes owner occupied) NAICS Sector Loan Count Exposure Balance Real Estate and Rental and Leasing 732 726,636,300 656,685,284 Health Care and Social Assistance 539 422,928,608 367,580,551 Construction 434 347,214,241 162,753,527 Manufacturing 303 290,691,5
Slide 24: Loans by NAICS Sector – CRE
Loans by NAICS Sector – 9/30/20 CRE NAICS Sector Loan Count Exposure Balance Real Estate and Rental and Leasing 2,074 4,534,241,118 4,414,288,468 Accommodation and Food Services 48 216,332,150 206,233,543 Construction 33 164,301,878 162,092,268 Other Services (except Public Administration) 41 32,059
Slide 25: Loans by NAICS Sector – Construction
Loans by NAICS Sector – 9/30/20 Construction NAICS Sector Loan Count Exposure Balance Real Estate and Rental and Leasing 80 732,999,140 330,282,249 Construction 63 181,574,692 88,557,390 Health Care and Social Assistance 1 22,080,375 17,410,884 Accommodation and Food Services 2 19,050,000 12,882,306
Slide 26: CRE Investment By Property Type
CRE Investment By Property Type As of 9/30/20 (In thousands) PROPERTY TYPE Count $ Outstanding % Outstanding WARR WALTV Multi-Family 514 1,573,067 32.24% 3.08 59.52% Retail 441 1,164,011 23.86% 3.44 52.83% Industrial 200 595,062 12.20% 3.19 57.50% Office 255 542,979 11.13% 3.66 49.28% Mixed 235 302,
Slide 27: CRE To Total Risk-Based Capital
CRE To Total Risk-Based Capital Guideline is 300% of Regulatory Capital 500% 451.5% 452.4% 454.9% 438.6% 438.8% 450% 430.0% 438.3% 432.6% 428.6% 430.6% 436.9% 422.2% 418.4% 425.9% 400% 350% 300% 250% 200% 150% 100% 50% 0% 12/31/15 12/31/16 12/31/17 03/31/18 06/30/18 09/30/18 12/31/18 03/31/19 06/30/
Slide 28: Performance Ratios - Capital
Performance Ratios - Capital Tier 1 leverage capital Tier 1 risk-based capital Common equity Tier 1 risk-based capital Total risk-based capital 16.00 14.00 12.00 13.47 13.27 13.12 12.74 12.74 12.67 12.54 12.54 12.42 12.31 10.00 12.31 11.94 11.87 11.87 11.53 11.53 10.93 10.81 10.34 10.24 10.21 9.65 1
Slide 29: Q3 2020
Q3 2020 INVESTOR PRESENTATION
Provident Financial Services — Q3 2020 Earnings Presentation on 6ix