Provident Financial Services, Inc · NYSE:PFS
Provident Financial Services — Merger or Acquisition (February 2004)
30 slides from Provident Financial Services's merger presentation, Feb 2, 2004
Slide 1: Investor Presentations, Week of February 2, 2004
INVESTOR PRESENTATIONS Week of February 2, 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 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 6: Our Strategic Initiatives
Our Strategic Initiatives • Grow the Balance Sheet • Grow Market Share • Sustain and Increase Brand Awareness • Customer Relationship Management • Reinforce Pay-for-Performance Sales Culture • Maximize Net Interest Income without Compromising Asset Quality • Focus on Accelerating Revenue Growth and
Slide 7: 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 8: Our Business Drivers
Our Business Drivers • Assess Merger & Acquisition Opportunities • Continue De Novo Branching • Maintain Diversified Loan Portfolio Composition • Continue to Increase proportion of Core Deposits to Total Deposits • Customer Relationship Management Process: – Maximize Product Penetration among Curren
Slide 9: Loan Portfolio Diversification
Loan Portfolio Diversification to improve asset yields to reduce exposure to interest rate risk Residential Real Estate and Consumer Loans Commercial Real Estate, Mortgage Warehouse and Business Loans
Slide 10: Building the Commercial Loan Portfolio
Building the Commercial Loan Portfolio $ in millions Commercial & Industrial Commercial Real Estate
Slide 11: 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 12: Our Current Market
Our Current Market PROVIDENT FINANCIAL SERVICES, INC.
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 Time Deposits Core Deposits
Slide 15: Building Core Customer Deposit Balances
Building Core Customer Deposit Balances $ in millions Demand Deposits Savings Deposits
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 $ in millions Interest Income Interest Expense Net Interest Income
Slide 17: Commitment to Asset Quality
Commitment to Asset Quality % of Non-performing Loans to Total Loans
Slide 18: Capital Management Strategies for Earnings per Share Growth
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.
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 — Merger or Acquisition (February 2004) on 6ix