Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Sandler O'Neill & Partners Financial Services Conference 2006
25 slides from Provident Financial Services's conference presentation, Nov 16, 2006
Slide 1: Sandler O'Neill & Partners, L.P. Financial Services Conference
Sandler O’Neill & Partners,L.P. Financial Services Conference Financial Services Conference November 16, 2006 November 16, 2006 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: Additional Information
Additional Information 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. Stockhol
Slide 4: Corporate Profile
Corporate Profile • A $5.8 billion community bank • Shares traded on NYSE: ticker symbol PFS • Market capitalization: $1.22 billion • 76 retail offices serving 10 counties in northern and central New Jersey • Third largest Bank headquartered in New Jersey • Announced Acquisition of First Morris Bank
Slide 5: Financial Highlights
Financial Highlights BALANCE SHEET: 9/30/06 12/31/05 % Change Total assets $5,823,997 $6,052,374 -3.77% Total loans $3,757,736 $3,739,122 0.50% Total deposits $3,946,233 $3,921,458 0.63% Total investments $1,269,890 $1,537,665 -17.41% Total borrowings $809,696 $996,552 -18.75% Total stockholders' eq
Slide 6: Financial Highlights
Financial Highlights 3rd Quarter 2006 Comparisons 3rd Quarter 2006 Comparisons (Dollars in thousands) INCOME STATEMENT: 9/30/06 9/30/05 Net income $40,305 $43,728 Diluted earnings per share $0.65 $0.65 Return on equity 5.15% 5.28% Return on assets 0.92% 0.93% Net interest margin 3.28% 3.35% Efficien
Slide 7: Ongoing Strategies for Earnings-per-Share Growth
Ongoing Strategies for Earnings-per-Share Growth • • Managing Our Franchise Managing Our Franchise – Managing Revenue Growth Challenges – Managing Resources and Non-Interest Expense – Balance Sheet Management and Positioning – Asset Quality Maintenance • • Managing Our Capital Managing Our Capital –
Slide 8: Revenue Management
Revenue Management Core Revenue Driver is Net Interest Income Core Revenue Driver is Net Interest Income Flat Yield Curve Presents Challenges: Preserving NIM Flat Yield Curve Presents Challenges: Preserving NIM and Preserving Market Share and Preserving Market Share 3.38% 3.38% 3.43% 3.27% 3.31% 3.3
Slide 9: Resource Management
Resource Management $29.9 $30.1 $30.2 $29.5 $30.0 $33.2 $31.4 $32.3 $34.3 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Non-Interest Expense (in millions) # of FTEs Managing Overhead Costs Managing Overhead Costs Increasing Workforce Productivity Increasing Workforce Productivity Includes $1.4 millio
Slide 10: Balance Sheet Management
Balance Sheet Management Decreasing Dependence on Investment Decreasing Dependence on Investment Securities and Wholesale Borrowings* Securities and Wholesale Borrowings* ($ in millions) $1,900 $1,782 $1,708 $1,635 $1,538 $1,451 $1,327 $1,270 $1,239 $1,166 $1,109 $1,100 $970 $875 $822 $1,997 $1,048
Slide 11: Balance Sheet Management
Balance Sheet Management Originating Loans to Drive Revenue Originating Loans to Drive Revenue $3,712 $3,655 $3,660 $3,660 $3,661 $3,690 $3,406 $3,720 $3,716 70.9% 65.1% 65.8% 66.7% 67.7% 68.9% 62.6% 72.6% 73.9% 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Avg Net Loans (in millions) Loans as a % of
Slide 12: Balance Sheet Management
Balance Sheet Management 9/30/06 Residential Mortgage 44% Consumer 16% Construction 7% Commercial R.E 22% Commercial & Industrial 11% Loan Portfolio Mix: Continuing Emphasis on Loan Portfolio Mix: Continuing Emphasis on Commercial Loans Commercial Loans Residential Mortgage 12/31/05 47% Consumer 15%
Slide 13: Balance Sheet Management
Balance Sheet Management 12/31/05 Non-Interest DDA 12% Time Deposits 37% MMA 3% Savings 35% NOW 13% Deposit Mix: Re-affirming Core Customer Relationships/ Deposit Mix: Re-affirming Core Customer Relationships/ Defending our Market Share Defending our Market Share 9/30/06 Non-Interest DDA 11% Time De
Slide 14: Asset Quality Maintenance
Asset Quality Maintenance Consistent Performance Consistent Performance Non-performing Assets as a % of Total Assets 0.26% 0.25% 0.23% 0.22% 0.22% 0.22% 0.23% 0.19% 0.12% 0.10% 0.10% 0.11% 0.11% 0.13% 0.09% 0.10% 0.08% 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Mid-Atlantic Banks & Thrifts* PFS *
Slide 15: Capital Management Share Repurchases
Capital Management Share Repurchases • • Completed first program 4th Quarter 2004: Completed first program 4th Quarter 2004: – approximately 4.0 million shares repurchased • • Completed second program 3rd Quarter 2005: Completed second program 3rd Quarter 2005: – approximately 3.7 million shares rep
Slide 16: Capital Management Cash Dividends
Capital Management Cash Dividends Stockholder Value via steady Cash Dividend Increases Stockholder Value via steady Cash Dividend Increases Cash Dividend Declared $0.04 $0.05 $0.06 $0.07 $0.08 $0.09 $0.10 Apr-03 July-03 Jan-04 Jan-05 Apr-05 Oct-05 Apr-06 Current Dividend Yield = 2.17% (based on 11/8
Slide 17: Disciplined Approach to Market Expansion
Disciplined Approach to Market Expansion Continuing to Seek Out Accretive Acquisition Continuing to Seek Out Accretive Acquisition Opportunities Opportunities • focus on existing footprint and contiguous markets • evaluating potential transactions that are additive to the franchise and earnings • mu
Slide 18: Enhancing Franchise Value
Enhancing Franchise Value Current Footprint Current Footprint 76 Branch Offices Serving 10 Counties in 76 Branch Offices Serving 10 Counties in Northern and Central New Jersey Northern and Central New Jersey
Slide 19: Enhancing Franchise Value
Enhancing Franchise Value Acquisition of First Morris Bank & Trust Adds 9 Branches in Morris County
Slide 20: Focusing on Markets with Strong Demographics
Focusing on Markets with Strong Demographics 2006 Median Household Income ($)* Projected Growth 2006 - 2011 (%)* Middlesex 75,672 16.62 Monmouth 78,682 19.07 Morris 96,695 19.53 NJ State Median 66,848 17.05 U.S. National Median 51,546 17.77 Middlesex Monmouth Morris New Jersey Provident Deposit Mark
Slide 21: Strategic Expansion into Highly Attractive Morris County
Strategic Expansion into Highly Strategic Expansion into Highly Attractive Morris County Attractive Morris County
Slide 22: Summary of Significant Terms
Summary of Significant Terms FMJE’s 60.2% loan to deposit ratio provides opportunity to substitute higher yielding loans for lower yielding securities Potential Revenue From Potential Revenue From Incremental Lending Synergies: Incremental Lending Synergies: Fixed at 2.1337 Provident shares for each
Slide 23: Transaction Rationale
Transaction Rationale • Accretive to both GAAP and Cash EPS without assumed asset substitution • Double digit internal rate of return without assumed asset substitution • Significantly expands Provident’s presence in demographically attractive Morris County Market • Moves Provident from to th positi
Slide 24: Looking Ahead
Looking Ahead • • Positioned to take advantage of return to Positioned to take advantage of return to normalized yield curve normalized yield curve • • Anticipate increased new branch activity in Anticipate increased new branch activity in conjunction with branch rationalization conjunction with bra
Slide 25: Sandler O'Neill & Partners, L.P. Financial Services Conference
Sandler O’Neill & Partners,L.P. Financial Services Conference Financial Services Conference November 16, 2006 November 16, 2006
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