Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Keefe, Bruyette & Woods Community Bank Investor Conference 2008
28 slides from Provident Financial Services's conference presentation, Jul 29, 2008
Slide 1: KBW Community Bank Investor Conference, July 29, 2008
KEEFE, BRUYETTE & WOODS COMMUNITY BANK INVESTOR C ONFERENCE JULY 29 TH , 2008 Exhibit 99.1
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: Paul M. Pantozzi, Chairman and Chief Executive Officer
Paul M. Pantozzi Chairman of the Board & Chief Executive Officer
Slide 4: Corporate Profile
• NYSE Symbol: PFS • Assets (6/30/08) : $6.4 billion • Shares Outstanding (6/30/08) : 59.7 million • Market Capitalization (7/18/08) : $930 million • 52 Week Price Range (7/18/08) : $11.62-$17.99 • Institutional Ownership (3/31/08): 59% Corporate Profile
Slide 5: Market Presence
• Primary market area: North & Central NJ • Share of NJ Deposit Market: – th overall – rd among banks headquartered in New Jersey • Strong demographics: – NJ Ranks 1 st among 50 states in 2007 median household income Market Presence
Slide 6: Current Retail Franchise
Current Retail Franchise MORRIS BERGEN ESSEX UNION SOMERSET MERCER MIDDLESEX MONMOUTH OCEAN HUDSON Branches in 10 New Jersey Counties
Slide 7: Branch Strategy
• Three additional de-novo branches currently under construction – Two urban; one suburban • Continuous monitoring and management of branch locations for profitable growth – New suburban branch opened Dec. ‘07 – Underperforming suburban branch sold Feb. ‘08 – Two closely situated urban branches cons
Slide 8: Of Interest to Investors
• No Subprime loans or CDO’s • No preferred or trust preferred equities • Solid capital position – Well-capitalized • All ratios at both holding company and bank levels exceed regulatory thresholds to be considered “well-capitalized” – Consistent payment of cash dividend – No additional capital rais
Slide 9: Of Interest to Investors
Of Interest to Investors • Diversified loan portfolio and capabilities • Prudent lending standards • Excellent in-market reputation and brand recognition • Longevity and experience • New Jersey’s oldest bank; established 1839 • Proven ability to integrate acquisitions • First Morris – $555 mil. – 9
Slide 10: Asset/Liability Strategies
• Maintain consistent loan pipeline • Preserve consistent loan-to-deposit ratio – Currently 102% • Diversify funding sources to expand margin prudently • Focus on core deposit relationships • Maintain rational pricing for both deposits and loans • Aggressively manage asset quality Asset/Liability St
Slide 11: Loan Originations
Loan Originations $87.7 $48.5 $47.9 $57.8 $57.8 $10.4 $97.8 $64.9 $58.2 $59.8 $65.1 $41.2 $167.9 $64.0 $70.0 $40.2 $33.2 $20.8 $114.7 $95.0 $48.3 $41.5 $34.1 $23.2 $117.0 $35.9 $68.5 $45.5 $49.2 $108.2 $0 $100 $200 $300 $400 $500 2Q07 3Q07 4Q07 1Q08 2Q08 COMMERCIAL CRE CONSTRUCTION CONSUMER RESIDENT
Slide 12: Diversified Loan Portfolio
Diversified Loan Portfolio 6/30/08 Consumer 15% Residential Mortgage 40% Construction 5% C.R.E. 24% Commercial 16% 6/30/07 Consumer 16% Residential Mortgage 41% Construction 7% C.R.E. 21% Commercial 15% Total Loans: $4.1 billion Total Loans: $4.3 billion Continued concentration on Commercial and C.R
Slide 13: Sources of Funds
• Competition for deposits has remained intense • Maintaining flexibility to fund growth with lower-cost borrowings Sources of Funds $4,225 $1,032 $4,274 $886 $4,225 $1,075 $4,235 $1,067 $4,175 $1,141 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 2Q07 3Q07 4Q07 1Q08 2Q08 Deposits B
Slide 14: Ongoing Concentration on Core Deposit Relationships
Ongoing Concentration on Core Deposit Relationships NIB SAV MMA NOW TIME 63% of Deposits in Lower-Cost Core ($ in millions at 6/30/08) $476.3 $466.5 $665.1 $946.0 $1,532.3 SAVINGS MMA NOW NON-INT DEMAND TIME DEPOSITS
Slide 15: Asset Quality
Asset Quality $562 $600 $1,041 $3,160 $5,883 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 2Q07 3Q07 4Q07 1Q08 2Q08 Non-Performing Loans Foreclosed Assets Disruption in economic conditions has increased non-performing assets ($ in thousands)
Slide 16: Credit Risk Management
Credit Risk Management -$61 $1,200 $473 $1,300 $539 $3,730 $1,200 $1,300 $1,200 $1,500 -$500 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2Q07 3Q07 4Q07 1Q08 2Q08 Net Charge-Offs Provision for Loan Losses Active credit risk identification with loan loss provisions exceeding net charge-of
Slide 17: Linda A. Niro, Executive Vice President and Chief Financial Officer
Linda A. Niro Executive Vice President & Chief Financial Officer
Slide 18: Financial Highlights: Income Statement
Financial Highlights (Dollars in thousands) INCOME STATEMENT: 6/30/08 3/31/08 Net interest income $42,569 $39,189 Provision for loan losses $1,500 $1,300 Non-interest expense $33,292 $31,952 Net income $10,353 $10,693 Diluted earnings per share $0.18 $0.19 Return on assets 0.66% 0.68% Net interest m
Slide 19: Financial Highlights: Balance Sheet
Financial Highlights (Dollars in thousands) BALANCE SHEET: 6/30/08 12/31/07 Total assets $6,384,944 $6,359,391 Total loans $4,277,202 $4,296,291 Total deposits $4,174,510 $4,224,820 Total investments $1,259,776 $1,167,870 Total borrowed funds $1,141,023 $1,075,104 Total stockholders' equity $1,009,7
Slide 20: Income Strategies
• Emphasis on interest-rate spread management • Complement interest income with fee- based financial services that meet customer needs – Wealth Management • $300+ million in assets under management – Mutual fund and annuity sales Income Strategies
Slide 21: Comparative Yield Curve
Comparative Yield Curve 2.00% 1.48% 1.91% 2.66% 2.97% 3.42% 4.11% 4.66% 4.04% 3.45% 3.07% 3.05% 3.49% 4.25% 3.36% 4.45% 4.70% 4.74% 4.82% 5.09% 5.02% 5.25% 4.71% 4.81% FF 3 mo 6 mo 2 yr. 3 yr. 5 yr. 10 yr. 30 yr. Current 7/18/2008 12/31/07 12/31/06 Fed rate reductions have contributed to return of p
Slide 22: Interest Rate Spread
Interest Rate Spread 4.40% 4.60% 4.80% 5.00% 5.20% 5.40% 5.60% 5.80% 6.00% 2Q07 3Q07 4Q07 1Q08 2Q08 2.60% 2.80% 3.00% 3.20% 3.40% 3.60% 3.80% 4.00% Spreads have widened as a result of lower funding costs
Slide 23: Net Interest Margin
$40.0 $39.3 $38.3 $39.2 $42.6 3.02% 2.97% 2.87% 3.10% 2.84% 2Q07 3Q07 4Q07 1Q08 2Q08 Net Interest Income (in millions) Net Interest Margin (%) Net Interest Margin Balance sheet positioned to benefit from positive yield curve
Slide 24: Expense Management
$33.3 $32.0 $33.8 $35.7 $34.1 2.15% 2.11% 2.03% 2.30% 2.21% 2Q07 3Q07 4Q07 1Q08 2Q08 Non Interest Expense (in millions) % of Average Assets Expense Management Consistent improvement of overhead to enhance efficiency Includes $3.2 million employee separation costs Includes $1.0 million employee separ
Slide 25: Expense Management: Assets per FTE
Integrating acquisitions to improve productivity Expense Management $6,280 $6,607 $6,751 $6,873 $6,903 $6,000 $6,200 $6,400 $6,600 $6,800 $7,000 $7,200 2Q07 3Q07 4Q07 1Q08 2Q08 Assets per FTE ($ in millions)
Slide 26: Capital Management
• Consistent quarterly cash dividend since becoming a stockholder-owned company in 2003 • Dividend increases 2003 - 2007 • Current dividend yield: 2.82% (as of 7/18/08) • Share repurchase activity curtailed in early 2008 to preserve capital position – 2.2 million shares remain available for repurcha
Slide 27: Looking Ahead: Near-Term Priorities
• Our near-term priorities: – Remain well-capitalized while maintaining cash dividend – Maintain asset quality via: • Prudent loan underwriting standards • Ongoing assessment and appropriate recognition of credit risk • Vigorous collection and outreach efforts – Continued improvement in net interest
Slide 28: Looking Ahead: Longer-Term Priorities
• Longer-term priorities remain: – Earnings per share growth via revenue enhancement and cost containment – Profitable franchise expansion • Continue to explore acquisition opportunities that: – are accretive to earnings within proscribed time parameters – fit within our strategic plan and corporate