Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Investor Presentation (November 2019)
24 slides from Provident Financial Services's investor presentation, Nov 4, 2019
Slide 1: Investor Presentation Autumn 2019
INVESTOR PRESENTATION AUTUMN 2019
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 Bank founded: 1839 Balance Sheet as of 9/30/19: • $9.9 Billion in Total Assets Stock symbol: PFS (NYSE) • $7.2 Billion in Net Loans • $6.9 Billion in Total Deposits Branches: 84 serving northern and central New Jersey and eastern Pennsylvania Strong core funding: • cost of deposits
Slide 4: Successful & Disciplined Acquirer
SUCCESSFUL & DISCIPLINED ACQUIRER Acquired Acquired First Sentinel First Morris Bank Acquired IPO NYSE Bancorp & Trust Team Capital Bank PFS Assets: $2.6B Assets: $554M Assets: $964M 1839 Founded 2003 2004 2007 2011 2014 2015 2019 Acquired Acquired Acquired Beacon Financial The MDE Group Tirschwell
Slide 5: Strong Presence in Attractive Markets
STRONG PRESENCE IN ATTRACTIVE MARKETS POPULATION Densely populated, lucrative markets (As of 2010 Census ) Highly educated & wealthy population NJ – 8,791,894 Diverse economy proximate to New York City and Philadelphia metro areas PA – 12,992,598 Bucks – 638,222 Lehigh – 371,118 Northamp
Slide 6: Strong Presence in Attractive Markets
STRONG PRESENCE IN ATTRACTIVE MARKETS Deposit Share* Average client tenure as of 9/30/19*** Provident ranks 9th in our footprint in NJ and 28th in PA Business < 1 year 10% 1 – 2 years 16% Businesses in market (excluding franchises) ** 3 – 5 years 18% NJ (13 counties where Provident has bra
Slide 7: Proven Consistent Performance
PROVEN CONSISTENT PERFORMANCE 1.40% 2.00% 1.29% 1.26% 1.22% 1.80% 1.72% 1.75% 1.68% 1.20% 1.62% 1.60% 1.53% 0.99% 1.00% 1.41% 0.95% 1.00% 1.40% 1.20% 0.80% 1.00% 0.60% 0.80% 0.40% 0.60% 0.40% 0.20% 0.20% 0.00% 0.00% 2016 2017 2018 2016 2017 2018 Q1 2019 Q1 2019 Q2 2019 Q3 Q1 2019 Q1 2019 Q2 2019 Q3
Slide 8: Proven Consistent Performance
PROVEN CONSISTENT PERFORMANCE 10.00% 14.00% 13.07% 13.09% 8.93% 9.11% 8.90% 12.97% 9.00% 12.00% 8.00% 10.86% 10.82% 7.28% 7.12% 7.03% 10.27% 7.00% 10.00% 6.00% 8.00% 5.00% 6.00% 4.00% 3.00% 4.00% 2.00% 2.00% 1.00% 0.00% 0.00% 2016 2017 2018 2016 2017 2018 Q1 2019 Q1 2019 Q2 2019 Q3 Q1 2019 Q1 2019 Q
Slide 9: Strong Track Record of Returns
STRONG TRACK RECORD OF RETURNS 2013 2014 2015 2016 2017 2018 $1.82 8% Diluted Earnings CAGR per Share $1.45 $1.33 $1.38 $1.23 $1.22 $14.18 5% $13.20 Tangible Book $12.54 Value per Share (1) $11.75 CAGR $10.92 $11.40 $0.21 $0.20 Regular Quarterly $0.19 +40% Cash Dividend per $0.17 $0.15 $0.15 Share (
Slide 10: Stable Core Funding Base
STABLE CORE FUNDING BASE At and for the Quarter Ended 9/30/19 AVERAGE $ in thousands DEPOSIT COMPOSITION # of Accts ($) Balance Total Deposits 211,703 6,894,211 Certificates Savings Average Branch Size 3,076 82,074 of deposits deposits Median Branch Size 2,133 73,377 12% 14% Non- interest Money bear
Slide 11: Diversified Loan Portfolio
DIVERSIFIED LOAN PORTFOLIO Consumer Loans As of 9/30/19 $403,576 ($ in thousands) 6% Residential Mortgage Loans Total Commercial $1,072,701 Gross Loans Loans 15% $1,659,965 Loan to Deposit: 23% $7,271,707 108.68% Commercial Commercial Construction Mortgage Loans Loans $2,437,210 $399,501 Multi-Famil
Slide 12: Solid Credit Posture
SOLID CREDIT POSTURE 2016 2017 2018 Q1 19 Q2 19 Q3 19 0.88% 0.86% Total allowance to total loans 0.82% 0.79% 0.77% 0.77% 0.72% Non-performing assets to loans + REO 0.57% 0.55% 0.57% 0.38% 0.36% 0.61% 0.55% 0.48% 0.53% Non-performing loans to total loans 0.35% 0.34% 0.53% 0.42% 0.40% 0.42% Non-perfor
Slide 13: Solid Credit Posture
SOLID CREDIT POSTURE $ in thousands Non-performing Loans 2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 Residential mortgage $12,021 $8,105 $5,853 $6,809 $6,490 $6,456 Commercial mortgage 7,493 7,090 3,180 1,516 1,753 1,728 Multi-family mortgage 553 0 0 0 0 0 Construction 2,517 0 0 0 0 0 Commercial 16,787 1
Slide 14: Emphasis on Fee Income
EMPHASIS ON FEE INCOME Non-Interest Income $ in thousands $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 Fees $26,047 $27,218 $28,084 $6,097 $6,886 $7,634 Wealth management income 17,556 17,604 17,957 4,079 6,243 6,084 Bank-owned life insurance 5,470 6,693
Slide 15: Focus on Wealth Management Business
FOCUS ON WEALTH MANAGEMENT BUSINESS FEES 2019 Revenue (actual YTD thru September 2019) Trust & Estate Advisory $ 14,539,358 9% Trust & Estate $ 1,455,085 Tax $ 412,245 Private Banking Private Banking $ 314,162 * 2% Total $ 16,720,850 Advisory 87% Tax 2% *Represents interest on lines of credit to Bea
Slide 16: Focus on Wealth Management Business
FOCUS ON WEALTH MANAGEMENT BUSINESS AVERAGE EBITDA & NET INCOME CLIENT SIZE EBITDA (YTD thru September 2019) $ 6,976,000 Net Income (YTD thru September 2019) $ 3,989,000 CROSSOVER PROVIDENT/BEACON $3,335,000 (HOW MANY PROVIDENT CUSTOMERS ARE BEACON CLIENTS) As of September 2019, based on AUM of $3.2
Slide 17: Adoption of Digital Channels & a Future Architecture
ADOPTION OF DIGITAL CHANNELS & A FUTURE ARCHITECTURE Technology & Transformational Investments Delivering an engaging digital experience Transformation towards a more flexible architecture Using FinTechs to build scale and compete Creating a competitive advantage with data Efficiencies through robot
Slide 18: Appendix
APPENDIX
Slide 19: Loan Type Outstanding by Geography – 9/30/19
LOAN TYPE OUTSTANDING BY GEOGRAPHY – 9/30/19 6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 0 NJ PA NY MD All Other States Grand Total 5,507,993,362 1,030,283,170 234,520,141 117,167,192 386,238,585 % of Total Portfolio 75.70% 14.16% 3.22% 1.61% 5.31% Residential
Slide 20: Loans by NAICS Sector – 9/30/19
LOANS BY NAICS SECTOR – 9/30/19 C & I - (Includes owner occupied) CRE NAICS Sector Loan Count ($) Exposure ($) Balance NAICS Sector Loan Count ($) Exposure ($) Balance Real Estate and Rental and Leasing 338 409,561,573 327,972,075 Real Estate and Rental and Leasing 1,340 3,417,633,850 3,306,221,560
Slide 21: CRE Investment by Property Type
CRE INVESTMENT BY PROPERTY TYPE As of 9/30/19 ($ in thousands) % Property Type Count Outstanding Outstanding WARR WALTV Multi-Family 321 1,298,772 34.75% 2.96 52.91% Retail 339 973,755 26.05% 3.18 50.81% Office 223 481,214 12.88% 3.61 56.94% Industrial 132 389,435 10.42% 3.18 46.98% Mixed 185 180,53
Slide 22: CRE to Total Risk-Based Capital
CRE TO TOTAL RISK-BASED CAPITAL Guideline is 300% of Regulatory Capital 500% 452.4% 430.0% 451.5% 438.3% 432.6% 422.2% 450% 438.6% 428.6% 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 06/30/19 09/30/19 22
Slide 23: Performance Ratios - Capital
PERFORMANCE RATIOS - CAPITAL Tier 1 leverage capital Tier 1 risk-based capital Total risk-based capital 16.00% 14.00% 12.00% 13.39% 13.27% 13.17% 13.05% 12.67% 10.00% 12.66% 12.54% 12.50% 12.43% 12.24% 11.87% 11.64% 8.00% 10.34% 10.24% 10.14% 9.65% 10.08% 9.25% 6.00% 4.00% 2.00% 0.00% 2016 2017 2018
Slide 24: Reconciliation of GAAP to Non-GAAP Financial Measures
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Note: The Company has presented the following non-GAAP (Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of o
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