Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Debt Investor Presentation (May 2024)
47 slides from Provident Financial Services's debt investor presentation, May 6, 2024
Slide 1: Investor Presentation May 2024
Exhibit 99.1 Investor Presentation May 2024
Slide 2: Disclosures: Forward-Looking Statements
DISCLOSURES ForwardLookingStatements Certain statements contained herein are “forward‐looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amen
Slide 3: Disclosures (Continued)
DISCLOSURES(CONTINUED) NoOfferorSolicitation This presentation is neither an offer to sell nor a solicitation of an offer topurchaseanysecuritiesoftheCompanyorLakeland.Therewillbenosaleof securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registrat
Slide 4: Topics for Discussion
TOPICS FORDISCUSSION Provident Financial Services Overview Financial Overview Loan Portfolio & Asset Quality Funding & Liquidity Management Regulatory Capital Appendix 4
Slide 5: Provident Financial Services Overview
PROVIDENTFINANCIALSERVICESOVERVIEW
Slide 6: Merger & Regulatory Update
MERGER& REGULATORYUPDATE Provident has received regulatory approval from the FDIC, Federal Reserve and New Jersey Department of Banking & Insurance to complete the merger with Lakeland Bancorp and Lakeland Bank The regulatory approvals contain certain financial conditions and other commitments inclu
Slide 7: The New Provident Financial Services, Inc.
THENEWPROVIDENTFINANCIALSERVICES, INC. PROFORMAFINANCIALBALANCESHEET($BN)¹ Second largest bank headquartered in New Jersey Relationship lender with diversified and Total Assets Gross Loans Deposits Total Equity granular commercial loan portfolio $24.5 $18.8 $18.6 $2.3 Strong deposit base in the most
Slide 8: Well Positioned in Highly Attractive Markets
WELLPOSITIONED INHIGHLYATTRACTIVEMARKETS HIGHLY RANKED DEPOSIT MARKET SHARE INNJ FOR Connecticut New York INSTITUTIONS WITH LESS THAN$100B INASSETS Overall Institution (HQ State) Rank Deposits ($000s)¹ Share (%)¹ Pennsylvania 1 Valley National Bancorp (NJ) $30,314,708 6.82% Pro Forma PFS & LBAI $18,
Slide 9: Talent Accretive Transaction Adds Bench Strength
TALENTACCRETIVETRANSACTIONADDSBENCHSTRENGTH PROFORMAMANAGEMENTTEAM BOARD OFDIRECTORS(PRELIMINARYNAMEDDIRECTORS) Anthony J. Labozzetta President & CEO PFS LBAI Christopher Martin Thomas SharaJr. Thomas Lyons Jim Christy Executive Chairman Executive Vice Chairman Chief Financial Officer Chief Risk Off
Slide 10: Growth Achieved Through Organic Strategy Augmented by Disciplined M&A
GROWTHACHIEVEDTHROUGH ANORGANICSTRATEGY AUGMENTED BYDISCIPLINEDM&A EXPERIENCEDBANKPARTNERSADDINGSCALE… …SUPPLEMENTED BYFEEINCOMEDEALS Consistent organic growth has been supplemented by select, Lakeland Bancorp acquisition will provide asset‐based lending and opportunistic whole bank acquisitions tha
Slide 11: Historically Strong Credit Culture
HISTORICALLYSTRONGCREDITCULTURE PFS and LBAI have a historically strong credit culture with average NCOs / Average Loans of 21 and 39 bps since 2008, respectively The combined platform will continue using the strong underwriting and review methods of the legacy companies Each party reviewed ~50% of
Slide 12: Investment Highlights
INVESTMENTHIGHLIGHTS Highly experienced and stable management team effectively executing a relationship banking strategy, delivering high quality banking services across customer base Well positioned in highly attractive and stable markets with a diversified loan portfolio and strong fee income from
Slide 13: Financial Overview
FINANCIAL OVERVIEW =Provident
Slide 14: History of Targeted Balance Sheet Growth
HISTORY OFTARGETEDBALANCESHEETGROWTH TOTALASSETS($BN) TOTALGROSSLOANS($BN) TOTALDEPOSITS($BN) TANGIBLECOMMONEQUITY($BN)² 1) Pro forma for the merger with Lakeland Bancorp, Inc. 14 2) Represents a non‐GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures
Slide 15: Track Record of Strong Performance
TRACKRECORD OFSTRONGPERFORMANCE RETURN ONAVERAGEASSETS RETURN ONAVERAGEEQUITY RETURN ONAVERAGETANGIBLECOMMONEQUITY² TANGIBLEBOOKVALUEPERSHARE² 1) Reflects annualized metrics for Q1 2024 financials 15 2) Represents a non‐GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures
Slide 16: Track Record of Strong Performance (Continued)
TRACKRECORD OFSTRONGPERFORMANCE(CONTINUED) NETINTERESTMARGIN EFFICIENCYRATIO² NONINTERESTINCOME/ OPERATINGREVENUE NONINTERESTEXPENSE/ AVERAGEASSETS 1) Reflects annualized metrics for Q1 2024 financials 16 2) Represents a non‐GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measur
Slide 17: Strong and Growing Fee Income Businesses
STRONG ANDGROWINGFEEINCOMEBUSINESSES Provident’stwo ancillary fee‐based business lines in insurance and wealth management and Lakeland’s growing asset‐ based lending provide opportunities for additional growth and relationship expansion PFS REVENUECOMPOSITION(2010) ($MM) PFS REVENUECOMPOSITION(LTM Q
Slide 18: Consolidated Capital Ratios
CONSOLIDATEDCAPITALRATIOS TCE / TA¹ LEVERAGERATIO TIER1 CAPITALRATIO TOTALCAPITALRATIO 1) Represents a non‐GAAP measure. See Appendix for corresponding Reconciliations to GAAP Measures 2) Pro forma for the $200 million of subordinated debt required to be raised by Provident prior to the completion o
Slide 19: Bank Capital Ratios
BANKCAPITALRATIOS LEVERAGERATIO TIER1 CAPITALRATIO TOTALCAPITALRATIO 1) Pro forma for the $200 million of subordinated debt required to be raised by Provident prior to the completion of the merger with Lakeland Bancorp, Inc. pursuant to the conditions to the bank regulatory approvals for the merger;
Slide 20: Pro Forma Financial Snapshot
PROFORMAFINANCIALSNAPSHOT Pro Forma Regulatory Capital Ratios INCLUDINGInterest Rate Purchase Accounting Marks Total Pre‐Tax Purchase PF Leverage PF CET1 PF Tier 1 PF Total Capital Accounting Interest Rate Marks Ratio Ratio Ratio Ratio Consolidated: $543MM 7.82% 9.31% 9.31% 12.16% Bank: $498MM 8.92%
Slide 21: Loan Portfolio & Asset Quality
LOANPORTFOLIO& ASSETQUALITY
Slide 22: Loan Underwriting Policy and Disciplined Credit Culture
LOANUNDERWRITINGPOLICY ANDDISCIPLINEDCREDITCULTURE Striking a Balance Between: Prudence Disciplined Underwriting Portfolio Management / Analytics In Our Decision Making and Responsiveness to Customers Provident employs a conservative lending approach with processes that allow for the prompt and thor
Slide 23: Diversified Loan Portfolio
DIVERSIFIEDLOANPORTFOLIO PRO FORMA¹ $ Millions $ Millions $ Millions $10.8BN $8.3BN $19.2BN Total Total Total 1Q’24 Yield: 5.51% 1Q’24 Yield: 5.48% 1Q’24 Yield: 5.50% Reserves / Gross Loans: 0.98% Reserves / Gross Loans: 0.92% Reserves / Gross Loans: 0.99% C&D / Total RBC: 50.5% C&D / Total RBC: 26.
Slide 24: Loan Portfolio Concentrations
LOANPORTFOLIOCONCENTRATIONS LBAI CRE / TOTALRBC PFS CRE / TOTALRBC PFS C&D / TOTALRBC LBAI C&D / TOTALRBC 1) Pro forma for the $200 million of subordinated debt required to be raised by Provident prior to the completion of the merger with Lakeland Bancorp, Inc. pursuant 24 to the conditions to the b
Slide 25: Overview of Commercial Real Estate Portfolio
OVERVIEW OFCOMMERCIALREALESTATEPORTFOLIO CRE INVESTMENTBYPROPERTYTYPE(INCL. MULTI‐FAMILY) ASOFMARCH31, 2024 ($MM) $6.2BN $4.6BN PFS Portfolio Characteristics LBAI Portfolio Characteristics 16% 12% 10 Largest CRE Relationships as a % of CRE Portfolio 10 Largest CRE Relationships as a % of CRE Portfol
Slide 26: Pro Forma Multifamily (NY and Rent Stabilized Sectors)
PROFORMAMULTIFAMILY(NY ANDRENTSTABILIZEDSECTORS) NY MULTIFAMILYLOANSASOFMARCH31, 2024 ($MM) RENTSTABILIZEDLOANSASOFMARCH31, 2024 PFS LBAI Total Rent Stabilized Portfolio ($MM) $119.1 $14.9 Rent Stabilized Portfolio as a % of Multifamily Portfolio 6.51% 1.06% Average Loan Size of Rent Stabilized Port
Slide 27: CRE Office Portfolio Overview
CRE OFFICEPORTFOLIOOVERVIEW PFS CRE OFFICEPORTFOLIOASOFMARCH31, 2024 ($MM) LBAI CRE OFFICEPORTFOLIOASOFMARCH31, 2024 ($MM) $484MM $456MM $47MM maturing or repricing in 2024 $118MM maturing or repricing in 2024 $265MM maturing in repricing in 2025 to 2028 $274MM maturing in repricing in 2025 to 2028
Slide 28: Overview of C&I Portfolio
OVERVIEW OFC&I PORTFOLIO C&I PORTFOLIOBYINDUSTRYASOFMARCH31, 2024 ($MM) $2.5BN $1.9BN PFS Portfolio Characteristics LBAI Portfolio Characteristics 10 Largest C&I Relationships as a % of C&I Portfolio 14% 10 Largest C&I Relationships as a % of C&I Portfolio 16% 3% 4% 10 Largest C&I Relationships as a
Slide 29: Top 30 Largest Borrower Relationships
TOP30 LARGESTBORROWERRELATIONSHIPS ($MM) Bank Loan Type Number of Total Loans Total Exposure Total Balance As a (%) of Total Loans¹ Borrower 1 PFS Multi 6 $134.3 $117.5 0.61% Borrower 2 PFS Other Mtg Invest‐Retail/Industrial 14 $113.5 $113.5 0.59% Borrower 3 PFS Other Mtg Invest‐Retail 38 $113.4 $10
Slide 30: PFS: Historically Strong Asset Quality & Credit Fundamentals
PFS: HISTORICALLYSTRONGASSETQUALITY& CREDITFUNDAMENTALS Our Conservative Credit Culture Shows Through in Reserve Coverage and Limited Historical Charge‐Offs NPA TRENDS($MM) NCOS/ AVERAGELOANS(%) RESERVE/ LOANS(%) & RESERVES/ NPLS(%) 1) Reflects annualized metrics for Q1 2024 financials 30 2) Sourced
Slide 31: LBAI: Historically Strong Asset Quality & Credit Fundamentals
LBAI: HISTORICALLYSTRONGASSETQUALITY& CREDITFUNDAMENTALS Our Conservative Credit Culture Shows Through in Reserve Coverage and Limited Historical Charge‐Offs NPA TRENDS($MM) NCOS/ AVERAGELOANS(%) RESERVE/ LOANS(%) & RESERVES/ NPLS(%) 1) Reflects annualized metrics for Q1 2024 financials 31 2) Source
Slide 32: Funding & Liquidity Management
FUNDING& LIQUIDITYMANAGEMENT
Slide 33: Attractive Deposit Base Funds Diversified Loan Portfolio
ATTRACTIVEDEPOSITBASEFUNDSDIVERSIFIEDLOANPORTFOLIO 4 PRO FORMA $ Millions $ Millions $ Millions $10.1BN $8.5BN $18.6BN Total Total Total 1 1Q’24 Cost of Total Deposits¹: 2.07% 1Q’24 Cost of Total Deposits¹ : 2.56% 1Q’24 Cost of Total Deposits : 2.29% Non‐Interest Bearing Deposits: 19.8% Non‐Interest
Slide 34: Attractive Deposit Base: Core Deposit Trends
ATTRACTIVEDEPOSITBASEFUNDSDIVERSIFIEDLOANPORTFOLIO PFS CORE¹ DEPOSITTRENDS LBAI CORE¹ DEPOSITTRENDS Stable Core Deposit Base Stable Core Deposit Base PFS HISTORICALCOST OFDEPOSITS LBAI HISTORICALCOST OFDEPOSITS 1) Core deposits are total deposits less jumbo time deposits greater than $100,000 34 2)
Slide 35: Liquidity Overview
LIQUIDITYOVERVIEW PFS’ cash flows from loan payments and maturing investment securities are fairly predictable sources of funds. Changes in interest rates, local economic conditions and the competitive marketplace can influence loan prepayments, prepayments on mortgage‐backed securities and deposit
Slide 36: Top 30 Largest Depositor Relationships
TOP30 LARGESTDEPOSITORRELATIONSHIPS ($MM) Bank Depositor Type Number of Total Deposits Number of Total Loans Tenure of Relationship Total Balance As a (%) of Total Deposits¹ Depositor 1 LBAI Public 54 0 20 Years $233.6 1.24% Depositor 2 PFS Public 32 5 14 Years $177.1 0.94% Depositor 3 PFS Public 32
Slide 37: Conservative Securities Portfolio
CONSERVATIVESECURITIESPORTFOLIO AVAILABLEFORSALESECURITIES($MM) HELDTOMATURITYSECURITIES($MM) At March 31, 2024, the portfolio had a modified duration of 4.6 years and weighted average life of 5.5 years At March 31, 2024, the allowance for credit losses on held to maturity securities totaled $17,000
Slide 38: PFS: Interest Rate Sensitivity
PFS: INTERESTRATESENSITIVITY Calculated Increase (Decrease) in Projected Annual Net Interest Income ($000) March 31, 2024 March 31, 2023 $ Change % Change $ Change % Change +100 bps $511 0.1% $3,684 0.9% ‐100 bps ($3,666) (1.0%) ($3,987) (1.0%) ‐200 bps ($7,410) (1.9%) ($8,303) (2.0%) No material ch
Slide 39: Regulatory Capital
REGULATORY CAPITAL =Provident
Slide 40: Consolidated Regulatory Capital Composition
CONSOLIDATEDREGULATORYCAPITALCOMPOSITION Total Risk‐ Well‐Capitalized w / Conservation Buffer¹ Total Risk‐ Based Capital Tier 1 Leverage Ratio: 5.00% Based Capital CET1 Ratio: 7.00% Total RBC Total Risk‐ Tier 1 Ratio: 8.50% Subordinated Tier 1 Tier 1 0.85% Total Risk‐Based Capital Ratio: 10.50% Base
Slide 41: Bank Regulatory Capital Composition
BANKREGULATORYCAPITALCOMPOSITION Total Risk‐ Well‐Capitalized w / Conservation Buffer¹ Based Capital Tier 1 Leverage Ratio: 5.00% CET1 Ratio: 7.00% Total RBC Total Risk‐ Tier 1 Ratio: 8.50% Based Capital Tier 1 Tier 1 Total Risk‐Based Capital Ratio: 10.50% Total Risk‐ Leverage Leverage 0.85% FDIC Re
Slide 42: Appendix
APPENDIX =Provident
Slide 43: Board's Role in Oversight of Risk
BOARD’SROLE INOVERSIGHT OFRISK OURBOARDHASA ROBUSTAPPROACHTOOVERSEEINGRISKMANAGEMENT Compensation and HumanCapital Governance & Nominating Audit Committee Risk Committee Technology Committee Committee Committee Sole authority for retaining, Reviewing the performance of, Evaluating and making Maintai
Slide 44: Provident Historical Financial Profile
PROVIDENTHISTORICALFINANCIALPROFILE For the Calendar Year Ended For the Quarter Ended 2019Y 2020Y 2021Y 2022Y 2023Y Q1 2024 Balance Sheet ($000) Total Assets $9,808,578 $12,919,741 $13,781,202 $13,783,436 $14,210,810 $14,130,918 Annualized Growth 0.9% 31.7% 6.7% 0.0% 3.1% (2.2%) Gross Loans HFI 7,33
Slide 45: Lakeland Historical Financial Profile
LAKELANDHISTORICALFINANCIALPROFILE For the Calendar Year Ended For the Quarter Ended 2019Y 2020Y 2021Y 2022Y 2023Y Q1 2024 Balance Sheet ($000) Total Assets $6,711,236 $7,664,297 $8,198,056 $10,783,840 $11,138,567 $10,964,884 Annualized Growth 15.6% 14.2% 7.0% 31.5% 3.3% (6.1%) Gross Loans HFI 5,137
Slide 46: Provident Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
PROVIDENTNOTES ANDRECONCILIATION OFGAAP ANDNON‐GAAP FINANCIALMEASURES (DOLLARS INTHOUSANDS, EXCEPT SHARE DATA) The Company has presented the following non‐GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative in
Slide 47: Lakeland Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
LAKELANDNOTES ANDRECONCILIATION OFGAAP ANDNON‐GAAP FINANCIALMEASURES (DOLLARS INTHOUSANDS, EXCEPT SHARE DATA) The Company has presented the following non‐GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative inf
Provident Financial Services — Debt Investor Presentation (May 2024) on 6ix