Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Sandler O'Neill West Coast Investor Conference 2004
30 slides from Provident Financial Services's conference presentation, Mar 3, 2004
Slide 1: Sandler O'Neill West Coast Investor Conference
SANDLER O’NEILL WEST COAST INVESTOR CONFERENCE March 10, 2004
Slide 2: Forward Looking Statements
Forward Looking Statements 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 S
Slide 3: Provident Financial Services, Inc. is the Holding Company for The Provident Bank
Provident Financial Services, Inc. is the Holding Company for The Provident Bank On January 15, 2003: • Provident Financial Services, Inc. issued an aggregate of 59.62 million shares and contributed cash and 1.92 million shares of its common stock to The Provident Bank Foundation. •$ 586.2 million i
Slide 4: Our Company Profile
Our Company Profile (as of December 31, 2003) •$ 4.3 billion in Assets •$ 2.7 billion in Deposits •$ 2.2 billion in Loans • 54 branches in 10 counties in northern and central New Jersey • A full-service bank: – Full Range of Retail and Commercial Deposit Products – Retail and Commercial Lending – Tr
Slide 5: Our Current Market
Our Current Market
Slide 6: Our Strengths: Tradition, Commitment, Focus
OUR STRENGTHS: Tradition, Commitment, Focus • Tradition of Safe & Sound Management – New Jersey’s Oldest Bank; Established 1839 • Commitment to Profitable Growth • Commitment to Prudently Deploy Capital • Commitment to Maintain Asset Quality • Unwavering Customer Focus
Slide 7: Our Strategic Initiatives
Our Strategic Initiatives • Grow the Balance Sheet and Market Share – M&A Activity, De Novo Branching, and Organic Growth • Sustain and Increase Brand Awareness • Customer Relationship Management • Maximize Net Interest Income without Compromising Asset Quality • Focus on Accelerating Revenue Growth
Slide 8: Our Business Drivers
Our Business Drivers • Reinforce Pay-for-Performance Sales Culture • Maintain Diversified Loan Portfolio Composition • Continue to Increase proportion of Core Deposits to Total Deposits • Customer Relationship Management Process: – Maximize Product Penetration among Current Households – Continually
Slide 9: Our Financial Performance
Our Financial Performance ($ in millions) 2003 2002 2001 Assets $ 4,284.9 $ 3,919.2 $ 2,869.7 Loans, net $ 2,216.7 $ 2,031.9 $ 1,994.6 Deposits $ 2,696.0 $ 3,243.3 $ 2,341.7 Capital $ 817.1 $ 326.0 $ 292.1 Net Income $ 18.7* $ 26.6 $ 24.1 Net Interest Margin 3.35% 3.98% 3.79% * includes $15.6 millio
Slide 10: Loan Diversification Strategy
Loan Diversification Strategy • Long-term Strategy—Maintain even balance between Retail Loan Portfolio and Commercial Loan Portfolio. • Substantially all Warehouse Lines of Credit have been sold. Assets re-deployed into 1-4 family residential loans. • Near-term Strategy will favor Retail Loans.
Slide 11: Loan Portfolio Diversification
Loan Portfolio Diversification to improve asset yields to reduce exposure to interest rate risk
Slide 12: Building the Commercial Loan Portfolio
Building the Commercial Loan Portfolio
Slide 13: Our Deposit Market Share
Our Deposit Market Share • As of June 30, 2003: • 13th of 135 FDIC-Insured Institutions in Provident’s 10-County Market Area • Increase for 12 Months ended June 30, 2003: – Core Deposits—Provident = 16.72% • Core Deposits are Provident’s ongoing Strategic Focus – Total Deposits—Provident = 5.74% – T
Slide 14: Core Deposit Emphasis
Core Deposit Emphasis to expand customer relationships to effectively manage interest rate expense
Slide 15: Building Core Customer Deposit Balances
Building Core Customer Deposit Balances
Slide 16: Dual Strategy of Loan Diversification and Core Deposit Emphasis
Dual Strategy of Loan Diversification and Core Deposit Emphasis has resulted in Net Interest Income Growth
Slide 17: Commitment to Asset Quality
Commitment to Asset Quality 0.48% 0.40% 0.41% 0.27% % of Non-performing Loans to Total Loans
Slide 18: Capital Management
Capital Management Strategies for Earnings per Share Growth • Declaration of Cash Dividend after first quarter of operation as a public company. Second increase recently announced. • Stock buy-backs commenced in 2003 to fund stockholder-approved benefit plans • Corporate stock buy-backs approved for
Slide 19: Our Vision
Our Vision Investors seek Financial Performance Which will be Driven by Customers seek Customer-Centricity Which will be Driven by Focused & Rewarded Employees seek Workforce
Slide 20: Strategic Growth in New Jersey's Most Attractive Markets
Strategic Growth in New Jersey’s Most Attractive Markets December 22, 2003
Slide 21: Additional Information
Additional Information The proposed transaction will be submitted to First Sentinel’s and Provident’s stockholders for their consideration. Provident and First Sentinel will file with the SEC a registration statement, a proxy statement/prospectus and other relevant documents concerning the proposed
Slide 22: A Compelling Combination
A Compelling Combination • The combination of Provident and First Sentinel creates: – 8th largest bank in New Jersey, $6.4 billion in assets(1) and a 76-branch retail footprint with $4.1 billion in deposits – #4 ranked bank by deposit market share (10.0% deposit market share) in highly attractive Mi
Slide 23: Summary of Significant Terms
Summary of Significant Terms $22.25 per share Value per First Sentinel Share: $642 million(1) Transaction Value: 60% stock / 40% cash Consideration: Fixed at 1.092 Provident shares for each First Sentinel share(2) Exchange Ratio: Tax-free exchange with election mechanism Transaction Structure: Appro
Slide 24: Summary of Significant Terms
Summary of Significant Terms Due Diligence: Completed Management Representation: Chris Martin, current President and CEO of First Sentinel, to become President of the combined company Other key First Sentinel managers to join Provident team Board Representation: 2 board seats initially, with additio
Slide 25: Transaction Pricing and Comparables
Transaction Pricing and Comparables Mid-Atlantic bank and thrift transactions with deal value between $200 million and $1 billion from January 2002 to present Mid-Atlantic PFS/FSLA (3) High Median Low Price / LTM Earnings 28.5 x 52.3 x 23.6 x 19.7 x Price / Forward Earnings (1) 21.4 25.5 22.2 18.5 P
Slide 26: Transaction Rationale
Transaction Rationale • In-market transaction Franchise Enhancing • Provides #4 deposit market share in one of New Jersey’s best banking markets • Enhances Provident’s organic growth profile • 22% accretion to GAAP EPS in 2005 Compelling Transaction • 23% accretion to cash EPS in 2005 Economics • Do
Slide 27: Solidifying Provident's Franchise in Central NJ
Solidifying Provident’s Franchise in Central NJ Provident Pro Forma Deposits (9/30/03) $4,076 mm Branches 76 Avg. Dep./Branch $53.6 mm Source: SNL Financial. Deposit data as of June 30, 2003.
Slide 28: GAAP and Cash EPS Impact
GAAP and Cash EPS Impact Projections for Fiscal Year 2004(1) 2005 Current GAAP EPS Estimate $0.75 $0.83(2) Pro Forma GAAP EPS 0.84 1.01 GAAP Accretion to Provident ($) $0.09 $0.18 GAAP Accretion to Provident (%) 11.4% 21.8% Stand-Alone Cash EPS Estimate $0.77 $0.85 Pro Forma Cash EPS 0.87 1.04 Cash
Slide 29: Manageable Execution Risk
Manageable Execution Risk • Straight-forward, transparent operations • No immediate branch closures anticipated – Minimizes customer disruption – Substantially all employees with customer interaction remain in place • Conservative cost saving assumptions • Revenue opportunities identified but not as
Slide 30: Summary
Summary • Adds highly attractive franchise in one of New Jersey’s best banking markets • Highly accretive to EPS with solid internal rate of return • In-market transaction with conservative cost savings assumptions • First Sentinel possesses strong fundamentals • Management additive • Effective depl
Provident Financial Services — Sandler O'Neill West Coast Investor Conference 2004 on 6ix