Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Merger or Acquisition (September 2022)
26 slides from Provident Financial Services's merger presentation, Sep 27, 2022
Slide 1: Provident + Lakeland: Creating a Premier Super-Community Bank
Provident + Lakeland Creating a Premier Super-Community Bank September 27, 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements This communication includes “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 amended, with respect to t
Slide 3: Additional Information and Where to Find It
Additional Information and Where to Find It In connection with the proposed transaction, Provident will file a registration statement on Form S-4 with the SEC. The registration statement will include a joint proxy statement of Provident and Lakeland, which alsoconstitutes a prospectus of Provident,
Slide 4: Participants in Solicitation
Participants in Solicitation Provident, Lakeland, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding Provident’s directors and execut
Slide 5: Today's Presenters
Today’s Presenters Experienced Executive Management Team Leveraging Two Best-in-Class Organizations Anthony Labozzetta Thomas Shara Jr. President, CEO & Director President, CEO & Director Provident Financial Services, Inc. Lakeland Bancorp, Inc. Christopher Martin Thomas Lyons Executive Chairman Sen
Slide 6: Combination of Two High-Performing, Like-Minded New Jersey Institutions
Combination of Two High-Performing, Like-Minded New Jersey Institutions Creating a Preeminent Super-Community Bank
Slide 7: Creating Scale and Enhancing Shareholder Value
Creating Scale and Enhancing Shareholder Value Creates a top-tier New Jersey/Tri-State area super-community bank with significant scale Drives even stronger financial results and better positions the company for the future Unlocks compelling revenue growth opportunities in commercial lending, wealth
Slide 8: The Premier New Jersey Super-Community Bank Franchise
The Premier New Jersey Super-Community Bank Franchise New York Connecticut Pennsylvania Assets Deposits Loans $25B $20B $18B Financially Compelling Transaction 2024E ROAA: 1.6% 2024E ROATCE: 21.0% PFS (95) 2024E Efficiency Ratio: <40% New Jersey LBAI (68) NYSE: PFS 8
Slide 9: Consolidates Presence in Highly Attractive New Jersey
Consolidates Presence in Highly Attractive New Jersey Highly Ranked Deposit Share in New Jersey for New Jersey Is Affluent, with Significant Economic Institutions with Less Than $100B in Assets Tailwinds Overall Institution (HQ State) Rank Deposits ($000s) Share (%) Projected Valley National Bancorp
Slide 10: Delivers a Broader Set of Products and Services
Delivers a Broader Set of Products and Services COMBINED Commercial Lending CRE Lending Multifamily Lending Asset-Based Lending Equipment Lease Financing Retail Banking Mortgage Warehouse Lending Wealth Management Insurance Services Residential / HELOC Por
Slide 11: Compelling Pro Forma Loan & Deposit Mix
Compelling Pro Forma Loan & Deposit Mix Consumer Consumer Other 1-4 Family Consumer Other 3.2% 1-4 Family 4.2% 1.8% 1-4 Family 8.4% 3.6% 0.7% 11.8% C&I 10.4% 8.9% C&I Loan Composition • Core competency in CRE C&I 21.9% C&D 16.4% Multifamily lending fortified via Multifamily 5.0% 15.3% Multifamily 14
Slide 12: Maintain Our Low Risk Credit Profile
Maintain Our Low Risk Credit Profile ✓ Low to no charge-offs trailing 5+ years PFS ✓ Minimal negative credit impact through the COVID-19 pandemic Credit Performance ✓ De minimis NPAs as of 6/30/22, including minimal NPAs / Loans in non-owner-occupied CRE LBAI ✓ Historically low charge-off rate throu
Slide 13: Robust and Thorough Two-Way Due Diligence
Robust and Thorough Two-Way Due Diligence Scope of Diligence Efforts • Comprehensive due diligence coordinated and led by key executives from Provident and Lakeland Both management teams are • Management-led review of all functional areas experienced acquirors • Full engagement of external consultan
Slide 14: The Impact of the Current Interest Rate Environment on Purchase Accounting
The Impact of the Current Interest Rate Environment on Purchase Accounting • The recent rise in interest rates has impacted the reported financial metrics in M&A transactions • Interest rate marks on the securities and loan portfolios of acquired companies have the following impacts: – Increased ini
Slide 15: Shared Values & Benefits for All Stakeholders
Shared Values & Benefits for All Stakeholders Expand Products and Retain commitment to 10,000+ Volunteer Hours for Complementary Values Services to better serve Community Development Combined Organization in Based Cultures and robust customers and Corporate Citizenship communities where we live risk
Slide 16: Transaction Detail
TRANSACTION DETAIL
Slide 17: Transaction Overview
Transaction Overview Structure & Exchange • Lakeland Bancorp, Inc. to merge into Provident Financial Services, Inc.; Lakeland Bank to merge into Provident Bank • 100% stock consideration Ratio • 0.8319x of a Provident share for each Lakeland share • Aggregate transaction value of $1.3bn ¹ Leadership
Slide 18: Transaction Multiples
Transaction Multiples Provident / Lakeland Recent Comparable M&A Transaction Pricing Transaction Pricing⁵ Price / TBVPS 154% 162% Price / LTM EPS 12.4x 15.7x Price / 2022E EPS ¹ 11.4x 15.7x Price / 2022E EPS + Cost Savings ¹ ² 8.0x -- Core Deposit Premium ³ 5.7% 6.7% Current Market Premium ⁴ 18% 18%
Slide 19: Key Financial Assumptions
Key Financial Assumptions Earnings Projections • Based on consensus estimates for remaining reporting periods of 2022 and 2023 with 6.0% annual long-term net income growth Merger Costs • $95 million pre-tax one-time merger expenses, reflected 100% in tangible book value impact at close Targeted Cost
Slide 20: Compelling Pro Forma Financial Impact
Compelling Pro Forma Financial Impact With Without Interest Rate Marks Interest Rate Marks Provident Accretion / (Dilution) 2024E EPS Accretion / (Di l ution) 24.1% 9.4% TBVPS Accretion / (Di l ution) (17.3%) (3.6%) TBV Ea rnba ck Peri od (Cros s over Method) 3.60 Yrs 1.65 Yrs Pro Forma Profitabilit
Slide 21: Attractive Pro Forma Profitability Metrics
Attractive Pro Forma Profitability Metrics 21.0 % Median: 16.0% 16.8 % 15.5 % 14.0 % ROATCE (%) PFS + PFS + PFS LBAI LBAI LBAI (ex rate marks) 1.6 % Median: 1.2% 1.4 % 1.2 % 1.2 % ROAA (%) PFS + PFS + PFS LBAI LBAI LBAI (ex rate marks) 49.8 % 50.5 % Median: 51.3% 39.0 % 41.8 % Efficiency Ratio (%) P
Slide 22: Pro Forma Net Income and EPS Accretion Reconciliation
Pro Forma Net Income and EPS Accretion Reconciliation Earnings per Share Earnings Buildup 2024E ($ in millions, except per share) Pro Forma $424 PFS Net Income Es tima te ¹ $198 LBAI Net Income Es tima te ¹ $137 $53 PFS EPS Es tima te $2.64 $36 LBAI EPS Es tima te 2.11 After-Tax Transaction Adjustme
Slide 23: Tangible Book Value & TCE Impact
Tangible Book Value & TCE Impact $mm TCE / TA Basic Shares $ per Share PFS Equi ty a s of June 30, 2022 $1,585 Les s : Goodwi l l a nd other i ntangi bl e a s s ets (462) PFS Ta ngi bl e Book Va l ue / TCE Ra tio a s of June 30, 2022 $1,123 8.8% 75.2 $14.95 Pl us : Three qua rters of cons ens us net
Slide 24: Rapid Capital Generation Post Closing
Rapid Capital Generation Post Closing Dollars in millions Projected Balances as of 3/31/2023 12/31/2023 12/31/2024 Tangible Common Equity Build Reconciliation Starting Tangible Common Equity $1,724 $1,952 PFS & LBAI Consensus Net Income¹ 239 335 After-Tax Cost Savings (75% phase-in in 2023) 28 51 Af
Slide 25: In Summary
In Summary Creates a premier super-community bank Financially compelling: size and scale creates unparalleled strategic positioning in the Tri-State area Ability to deliver greater value to all constituents: employees, customers, communities & ultimately shareholders Internal rate of return of appro
Slide 26: Thank You
Thank You
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