Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Merger or Acquisition (October 2006)
19 slides from Provident Financial Services's merger presentation, Oct 16, 2006
Slide 1: Strategic Expansion into Highly Attractive Morris County
Strategic Expansion into Highly Attractive Morris County October 16, 2006 Exhibit 99.2
Slide 2: Forward-looking statements
2 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about (i) the benefits of the merger between Provident Financial Services, Inc. ("Provident
Slide 3: Additional Information
3 Provident will file with the Securities and Exchange Commission (SEC) a registration statement, a prospectus that will also serve as the proxy statement for the vote of the stockholders of First Morris, and other relevant documents concerning the proposed transaction. Stockholders of First Morris
Slide 4: Summary of Significant Terms
4 Complete Due Diligence: FMJE’s 60.2% loan to deposit ratio provides opportunity to substitute higher yielding loans for lower yielding securities Potential Revenue From Incremental Lending Synergies: Fixed at 2.1337 Provident shares for each FMJE share Exchange Ratio: $4 million (3.2% of aggregate
Slide 5: Summary of Significant Terms (Continued)
5 1 Quarter 2007 Expected Close: Provident to form an advisory board to include all current FMJE directors Provident has agreed to add one member of FMJE’s current board to its board in 2007 Director Matters: FMJE shareholders Customary regulatory approvals Required Approvals: All FMJE directors (re
Slide 6: Transaction Pricing and Comparables
6 Source: Implied multiples based on FMJE financial data per FMJE management, as adjusted per PFS management. Cost savings / synergies estimates per PFS management. Implied premiums for selected transactions based on closing price on trading day prior to deal announcement. (a) Transactions announced
Slide 7: Compelling Transaction Economics
7 Accretive to both GAAP and Cash EPS without assumed asset substitution Double digit internal rate of return without assumed asset substitution FMJE present efficiency ratio of 76.1% Estimated cost savings of 39% of FMJE’s annualized core operating expenses FMJE’s low loan to deposit ratio (60.2%)
Slide 8: Transaction Rationale
8 Cash portion of consideration to be funded from cash and low-yielding short- term securities Strong pro forma tangible common equity ratio of 9.6% will support continued share repurchases, de novo expansion and accretive franchise- enhancing acquisitions FMJE’s assets equate to less than 10% of th
Slide 9: Attractive Community Banking Franchise
9 NPAs / Assets: 0.0%; Reserves / Loans: 0.98%; YTD NCOs / Average Loans: 0.04% Recently restructured securities portfolio and selective expense savings initiatives $1.1 million one-time charge in the first half of 2006 Marketing budget to be reduced to more normalized run rate Increased infrastruct
Slide 10: Provident Financial Services, Inc. & First Morris Bank & Trust
PROVIDENT FINANCIAL SERVICES. INC. & First Morris Bank & Trust
Slide 11: Morris County Deposit Market Overview
11 Source: SNL Financial. Note: Deposit data as of 6/30/2005. ($ in millions) Total Total Percent of Total Total Percent of Branch Deposits Market Parent Branch Deposits Market Parent Rank Institution Count in Market Share Deposits Rank Institution Count in Market Share Deposits 1 JPMorgan Chase & C
Slide 12: Demographics Profile
12 MEDIAN HOUSEHOLD INCOME (2006) PROJECTED HOUSEHOLD INCOME GROWTH (2006 – 2011) PROJECTED POPULATION GROWTH (2006 – 2011) Source: SNL Financial. $66,945 $96,965 $70,268 $66,848 40,000 60,000 80,000 $100,000 Provident First Morris Pro Forma NJ 16.7% 19.2% 16.9% 17.1% 8.0 12.0 16.0 20.0% Provident F
Slide 13: Realistic and Achievable Cost Savings
13 ($ in millions) Projected Fully Sources of Cost Savings Phased-In (%) Salaries, Benefits and Personnel $3.3 60% Occupancy & Equipment $0.3 6% Insurance, Legal & Regulatory $0.4 8% Other $1.4 26% Total Cost Savings (Pre-tax) $5.5 100% Total Cost Savings (After-tax) $3.6 Percent of FMJE's 2007 Expe
Slide 14: Potential Revenue from Asset Substitution
14 FMJE’s low loan to deposit ratio (60.2%) produces the potential to leverage excess deposits Ability to significantly increase earnings through asset substitution Potential incremental lending opportunity based on Provident’s 95% loan to deposit ratio Approximately $200 million in loans may be sub
Slide 15: Anticipated Integration / Restructuring Costs
15 ($ in millions) Pre-Tax Integration Charges ($) (%) Professional fees $2.2 21% Employee-related expenses $3.9 36% Systems integration $3.9 37% Customer communications / Marketing expense $0.7 6% Total Pre-Tax Integration Charges $10.8 100% Total after-tax cost of $7.8 million, $6.9 million capita
Slide 16: Pro Forma Impact Assumptions
16 FMJE earnings based on FMJE projections as adjusted by Provident, grown at 10% per annum thereafter Provident earnings based on IBES median 2007 estimate, grown at 10% per annum thereafter Assumes estimated cost savings equivalent to 39% of FMJE expense base. Cost savings are phased in 56% in 200
Slide 17: Pro Forma Financial Impact
17 Breakeven to GAAP EPS in 2007 and accretive to GAAP EPS in 2008 while being accretive to Cash EPS in both years without the benefit of incremental lending revenue from potential asset substitution Double-digit internal rate of return without the benefit of incremental lending revenue from potenti
Slide 18: Summary
18 Adds highly attractive franchise in one of New Jersey’s best banking markets Opportunity for significant cost savings Potential for significant revenue from incremental lending to better leverage FMJE’s deposit base Accretive to GAAP and Cash EPS with solid internal rate of return Continued effec
Slide 19: Strategic Expansion into Highly Attractive Morris County
Strategic Expansion into Highly Attractive Morris County
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