• Provident Financial Services, Inc. Reports Third Quarter Earnings and Declares Quarterly Cash Dividend

    Источник: Nasdaq GlobeNewswire / 29 окт 2024 16:00:01   America/Chicago

    ISELIN, N.J., Oct. 29, 2024 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $46.4 million, or $0.36 per basic and diluted share for the three months ended September 30, 2024, compared to a net loss of $11.5 million, or $0.11 per basic and diluted share, for the three months ended June 30, 2024 and net income of $28.5 million, or $0.38 per basic and diluted share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, net income totaled $67.0 million, or $0.65 per basic and diluted share, compared to $101.1 million, or $1.35 per basic and diluted share, for the nine months ended September 30, 2023.

    The Company’s earnings for the three and nine months ended September 30, 2024 reflected the impact of the May 16, 2024 merger with Lakeland Bancorp, Inc. (“Lakeland”), which added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments.  The merger with Lakeland significantly impacted provisions for credit losses in the trailing quarter due to the initial CECL provisions recorded on acquired loans.  The results of operations for the three and nine months ended September 30, 2024 also included other transaction costs related to the merger with Lakeland, totaling $15.6 million and $36.7 million, respectively, compared with transaction costs totaling $2.3 million and $5.3 million for the respective 2023 periods. Additionally, the Company realized a $2.8 million loss related to the sale of subordinated debt issued by Lakeland from the Provident investment portfolio, during the nine months ended September 30, 2024.

    Anthony J. Labozzetta, President and Chief Executive Officer commented, “We achieved solid performance this quarter, and we are optimistic that our results will continue to improve as we further realize the synergies of the merger.  Provident generated strong earnings and core metrics, aided by robust performance in our fee-based businesses. We continue to expand our operations prudently and believe we are well-positioned for even greater success as market conditions improve.”

    Regarding the Company's merger with Lakeland, Mr. Labozzetta added, “We are proud to announce that, with the conversion of our core system in early September, our merger is complete and we are a unified organization. Our cultures are combining well and we are already experiencing the benefits of cost savings and enhanced revenue opportunities. We are grateful to the many team members whose hard work allowed for a smooth conversion and the retention of almost all legacy Lakeland customers.”

    Performance Highlights for the Third Quarter of 2024

    • Net interest income increased $42.2 million to $183.7 million for the three months ended September 30, 2024, from $141.5 million for the trailing quarter primarily due to the full quarter impact of net assets acquired from Lakeland, including the accretion of purchase accounting adjustments and four basis points of core margin expansion.  
    • The net interest margin increased ten basis points to 3.31% for the quarter ended September 30, 2024, from 3.21% for the trailing quarter. The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 17 basis points to 5.84%, compared to the trailing quarter, while the weighted average cost of interest-bearing liabilities for the quarter ended September 30, 2024 increased ten basis points to 3.19%, compared to the trailing quarter. The increases in the yields and costs on interest-earning assets and interest-bearing liabilities were primarily due to a full quarter of accretion of purchase accounting adjustments related to the Lakeland merger, which contributed approximately 53 basis points to the net interest margin in the current quarter.
    • Non-interest income increased $4.6 million to $26.9 million for the three months ended September 30, 2024, from $22.3 million for the trailing quarter, while non-interest expense increased $20.6 million to $136.0 million for the three months ended September 30, 2024, compared to $115.4 million for the trailing quarter.   The increases in both non-interest income and non-interest expense were reflective of a full quarter of combined operations with Lakeland.
    • Wealth management and insurance agency income increased 9.0% and 12.6%, respectively, versus the same period in 2023. The increase in wealth management income was primarily due to an increase in the average market value of assets under management during the period, while the increase in insurance agency income was largely due to an increase in business activity.
    • Adjusting for transaction costs related to the merger with Lakeland, net of tax, the Company's annualized adjusted returns on average assets, average equity and average tangible equity(1) were 0.95%, 8.62% and 14.53% for the quarter ended September 30, 2024, compared to 0.06%, 0.53% and 2.01% for the quarter ended June 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios are shown on page 13 of the earnings release.
    • The Company's annualized adjusted pre-tax, pre-provision returns on average assets, average equity and average tangible equity(2) were 1.48%, 13.48% and 19.77% for the quarter ended September 30, 2024, compared to 1.47%, 13.26% and 19.21% for the quarter ended June 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios are shown on page 14 of the earnings release.
    • As of September 30, 2024, the Company's loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.98 billion, with a weighted average interest rate of 7.18%, compared to $1.67 billion, with a weighted average interest rate of 7.53%, as of June 30, 2024.
    • The Company recorded a $9.6 million provision for credit losses on loans for the quarter ended September 30, 2024, compared to a $66.1 million provision for the trailing quarter. The provision for credit losses on loans in the quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration. The allowance for credit losses as a percentage of loans increased to 1.02% as of September 30, 2024, from 1.00% as of June 30, 2024.
    • As of September 30, 2024, CRE loans related to office properties totaled $921.1 million, compared to $953.5 million as of June 30, 2024. CRE loans secured by office properties constitutes only 4.9% of total loans and have an average loan size of $1.9 million, with just seven relationships greater than $10.0 million. There were four loans totaling $9.2 million on non-accrual as of September 30, 2024, however we do not expect to incur losses on any of these loans.
    • As of September 30, 2024, multi-family CRE loans secured by New York City properties totaled $226.6 million, compared to $227.7 million as of June 30, 2024. This portfolio constitutes only 1.2% of total loans and has an average loan size of $2.6 million. Loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.
    • Non-performing loans to total loans as of September 30, 2024 increased to 0.47%, compared to 0.36% as of June 30, 2024, while non-performing assets to total assets as of September 30, 2024 increased to 0.41%, compared to 0.33% as of June 30, 2024. The increase in non-performing loans, compared to the prior quarter was primarily attributable to one commercial real estate credit secured by an industrial property which has a loan-to-value ratio of approximately 39%. We anticipate a near-term resolution of this credit with no expected loss.   For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans. Of this total, $6.4 million was attributable to one previously identified commercial relationship that had a $4.4 million specific reserve as of June 30, 2024. This credit is expected to be fully resolved in the fourth quarter of 2024.

    Declaration of Quarterly Dividend

    The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on November 29, 2024 to stockholders of record as of the close of business on November 15, 2024.

    Results of Operations

    Three months ended September 30, 2024 compared to the three months ended June 30, 2024

    For the three months ended September 30, 2024, the Company reported net income of $46.4 million, or $0.36 per basic and diluted share, compared to a net loss of $11.5 million, or $0.11 per basic and diluted share, for the three months ended June 30, 2024. The Company’s earnings for the prior quarter were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. The results of operations for the three months ended September 30, 2024 included transaction costs related to the merger with Lakeland totaling $15.6 million, compared with transaction costs totaling $18.9 million in the trailing quarter. Additionally, the Company realized a $2.8 million loss in the trailing quarter related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland.

    Net Interest Income and Net Interest Margin

    Net interest income increased $42.2 million to $183.7 million for the three months ended September 30, 2024, from $141.5 million for the trailing quarter. Net interest income for the three months ended September 30, 2024 was favorably impacted by a full quarter of combined operations with Lakeland and accretion of purchase accounting adjustments, compared to a 45 days impact in the prior quarter.

    The Company’s net interest margin increased ten basis points to 3.31% for the quarter ended September 30, 2024, from 3.21% for the trailing quarter. Accretion of purchase accounting adjustments related to the Lakeland merger contributed 53 basis points to the net interest margin in the current quarter. The current net interest margin reflects a full quarter of the acquisition of Lakeland’s interest-bearing assets and liabilities, the prior quarter sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the prior quarter issuance of subordinated debt.

    The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 17 basis points to 5.84%, compared to the trailing quarter. The weighted average cost of interest-bearing liabilities for the quarter ended September 30, 2024 increased ten basis points from the trailing quarter, to 3.19%. The average cost of interest-bearing deposits for the quarter ended September 30, 2024 increased 12 basis points to 2.96%, compared to 2.84% for the trailing quarter. The average cost of total deposits, including non-interest-bearing deposits, was 2.36% for the quarter ended September 30, 2024, compared to 2.27% for the trailing quarter. The average cost of borrowed funds for the quarter ended September 30, 2024 was 3.73%, compared to 3.83% for the quarter ended June 30, 2024. All yields and costs reflect a full quarter of combined operations with Lakeland.

    Provision for Credit Losses on Loans

    For the quarter ended September 30, 2024, the Company recorded a $9.6 million provision for credit losses on loans, compared with a provision for credit losses on loans of $66.1 million for the quarter ended June 30, 2024. The provision for credit losses on loans in the quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration, while the provision for credit losses on loans in the prior quarter was primarily attributable to an initial CECL provision for credit losses of $60.1 million, recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans.

    Non-Interest Income and Expense

    For the three months ended September 30, 2024, non-interest income totaled $26.9 million, an increase of $4.6 million, compared to the trailing quarter. Net gain on securities transactions increased $3.0 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to a $2.8 million loss realized on the sale from the Provident investment portfolio of subordinated debt issued by Lakeland in the prior quarter.   Fee income increased $1.1 million to $9.8 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to increases in deposit and debit card related fee income. The increases in fee income are primarily attributable to the addition of the Lakeland customer base. BOLI income increased $1.0 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to an increase in benefit claims recognized. Partially offsetting these increases in non-interest income, insurance agency income decreased $857,000 to $3.6 million for the three months ended September 30, 2024, compared to the trailing quarter, due to a seasonal decrease in business activity in the current quarter, while wealth management income decreased $149,000 to $7.6 million for the three months ended September 30, 2024, compared to the trailing quarter, mainly due to a seasonal decrease in tax preparation fees, partially offset by an increase in the average market value of assets under management during the period.

    Non-interest expense totaled $136.0 million for the three months ended September 30, 2024, an increase of $20.6 million, compared to $115.4 million for the trailing quarter. Compensation and benefits expense increased $8.6 million to $63.5 million for the three months ended September 30, 2024, compared to $54.9 million for the trailing quarter. The increase in compensation and benefits expense was primarily attributable to a full quarter of combined operations with Lakeland, compared to 45 days in the prior quarter.   Amortization of intangibles increased $5.7 million to $12.2 million for the three months ended September 30, 2024, compared to $6.5 million for the trailing quarter, largely due to a full quarter of core deposit intangible amortization related to Lakeland.   Other operating expenses increased $4.5 million to $15.8 million for the three months ended September 30, 2024, compared to $11.3 million for the trailing quarter, primarily due to increases in professional service expenses. Data processing expense increased $2.0 million to $10.5 million for the three months ended September 30, 2024, compared to $8.4 million for the trailing quarter, primarily due a full quarter of combined operations with Lakeland, while net occupancy expense increased $1.6 million to $12.8 million for the three months ended September 30, 2024, compared to $11.1 million for the trailing quarter, primarily due to increases in maintenance and depreciation expenses from the addition of Lakeland.   Additionally, FDIC insurance increased $1.1 million to $4.2 million for the three months ended September 30, 2024, primarily resulting from the impact of the Lakeland merger. Partially offsetting these increases, merger-related expenses decreased $3.3 million to $15.6 million for the three months ended September 30, 2024, compared to the trailing quarter.

    The Company’s annualized adjusted non-interest expense as a percentage of average assets(5) declined to 1.98% for the quarter ended September 30, 2024, compared to 2.02% for the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(6) improved to 57.20% for the three months ended September 30, 2024, compared to 57.86% for the trailing quarter.

    Income Tax Expense/Benefit

    For the three months ended September 30, 2024, the Company's income tax expense was $18.9 million, compared to an income tax benefit of $9.8 million for the trailing quarter. The increase in tax expense for the three months ended September 30, 2024 compared with the trailing quarter was largely due to an increase in taxable income in the current quarter as a result of the Lakeland merger and a $5.3 million tax benefit realized in the trailing quarter related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024.  

    Three months ended September 30, 2024 compared to the three months ended September 30, 2023

    For the three months ended September 30, 2024, the Company reported net income of $46.4 million, or $0.36 per basic and diluted share, compared to net income of $28.5 million, or $0.38 per basic and diluted share, for the three months ended September 30, 2023. The Company’s earnings for the quarter ended September 30, 2024 reflected the impact of the May 16, 2024 merger with Lakeland. The results of operations included transaction costs related to the merger with Lakeland totaling $15.6 million and $2.3 million for the three months ended September 30, 2024 and 2023, respectively.

    Net Interest Income and Net Interest Margin

    Net interest income increased $87.5 million to $183.7 million for the three months ended September 30, 2024, from $96.2 million for same period in 2023. Net interest income for the three months ended September 30, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by unfavorable repricing of both deposits and borrowings.

    The Company’s net interest margin increased 35 basis points to 3.31% for the quarter ended September 30, 2024, from 2.96% for the same period last year. Accretion of purchase accounting adjustments related to the Lakeland merger contributed 53 basis points to the net interest margin in the current quarter.   The current quarter net interest margin reflects the acquisition of Lakeland’s interest bearing assets and liabilities, the prior quarter sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the prior quarter issuance of subordinated debt.

    The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 95 basis points to 5.84%, compared to 4.89% for the quarter ended September 30, 2023. The weighted average cost of interest-bearing liabilities increased 69 basis points for the quarter ended September 30, 2024 to 3.19%, compared to 2.50% for the third quarter of 2023. The average cost of interest-bearing deposits for the quarter ended September 30, 2024 was 2.96%, compared to 2.22% for the same period last year. Average non-interest-bearing demand deposits increased $1.51 billion to $3.74 billion for the quarter ended September 30, 2024, compared to $2.23 billion for the quarter ended September 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.36% for the quarter ended September 30, 2024, compared with 1.74% for the quarter ended September 30, 2023. The average cost of borrowed funds for the quarter ended September 30, 2024 was 3.73%, compared to 3.74% for the same period last year.

    Provision for Credit Losses on Loans

    For the quarter ended September 30, 2024, the Company recorded a $9.6 million provision for credit losses on loans, compared with an $11.0 million provision for credit losses on loans for the quarter ended September 30, 2023.   The provision for credit losses on loans in the current quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration.   For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans.

    Non-Interest Income and Expense

    Non-interest income totaled $26.9 million for the quarter ended September 30, 2024, an increase of $7.5 million, compared to the same period in 2023. Fee income increased $3.7 million to $9.8 million for the three months ended September 30, 2024, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card related fee income and loan related fee income, resulting from the Lakeland merger.   BOLI income increased $2.5 million to $4.3 million for the three months ended September 30, 2024, compared to the prior year quarter, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI. Wealth management fees increased $628,000 to $7.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, mainly due to an increase in the average market value of assets under management during the period, while insurance agency income increased $407,000 to $3.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, largely due to an increase in business activity. Additionally, other income increased $339,000 to $1.5 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, primarily due to increases in gains on the sale of SBA and mortgage loans.

    For the three months ended September 30, 2024, non-interest expense totaled $136.0 million, an increase of $70.4 million, compared to the three months ended September 30, 2023. Compensation and benefits expense increased $27.8 million to $63.5 million for the three months ended September 30, 2024, compared to $35.7 million for the same period in 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Additionally, merger-related expenses increased $13.3 million to $15.6 million for the three months ended September 30, 2024, compared to the same period in 2023. Amortization of intangibles increased $11.5 million to $12.2 million for the three months ended September 30, 2024, compared to $720,000 for the same period in 2023, largely due to core deposit intangible amortization related to Lakeland in the current quarter. Data processing expenses increased $5.2 million to $10.5 million for three months ended September 30, 2024, compared to $5.3 million for the same period in 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland. Net occupancy expense increased $4.7 million to $12.8 million for three months ended September 30, 2024, compared to $8.1 million for the same period in 2023, primarily due to an increase in depreciation and maintenance expenses due to the addition of Lakeland.   Other operating expenses increased $5.0 million to $15.8 million for the three months ended September 30, 2024, compared to $10.7 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance increased $2.6 million to $4.2 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

    The Company’s annualized adjusted non-interest expense as a percentage of average assets(5) was 1.98% for the quarter ended September 30, 2024, compared to 1.80% for the same period in 2023. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(6) was 57.20% for the three months ended September 30, 2024 compared to 54.81% for the same respective period in 2023.

    Income Tax Expense

    For the three months ended September 30, 2024, the Company's income tax expense was $18.9 million with an effective tax rate of 28.9%, compared with an income tax expense of $8.8 million with an effective tax rate of 23.7% for the three months ended September 30, 2023. The increase in tax expense for the three months ended September 30, 2024, compared with the same period last year was largely due to an increase in taxable income in the quarter, as a result of the Lakeland merger and the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee in the prior quarter.

    Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

    For the nine months ended September 30, 2024, net income totaled $67.0 million, or $0.65 per basic and diluted share, compared to net income of $101.1 million, or $1.35 per basic and diluted share, for the nine months ended September 30, 2023. The Company’s earnings for the nine months ended September 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. Transaction costs related to our merger with Lakeland totaled $36.7 million and $5.3 million for the nine months ended September 30, 2024 and 2023, respectively. Additionally, the Company realized a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland, during the nine months ended September 30, 2024.

    Net Interest Income and Net Interest Margin

    Net interest income increased $115.2 million to $418.9 million for the nine months ended September 30, 2024, from $303.7 million for same period in 2023. Net interest income for the nine months ended September 30, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by the unfavorable repricing of both deposits and borrowings.

    For the nine months ended September 30, 2024, our net interest margin decreased one basis point to 3.18%, compared to 3.19% for the nine months ended September 30, 2023. The weighted average yield on interest earning assets increased 85 basis points to 5.61% for the nine months ended September 30, 2024, compared to 4.76% for the nine months ended September 30, 2023, while the weighted average cost of interest-bearing liabilities increased 99 basis points to 3.06% for the nine months ended September 30, 2024, compared to 2.07% for the same period last year. The average cost of interest-bearing deposits increased 102 basis points to 2.84% for the nine months ended September 30, 2024, compared to 1.82% for the same period last year. Average non-interest-bearing demand deposits increased $514.3 million to $2.90 billion for the nine months ended September 30, 2024, compared with $2.38 billion for the nine months ended September 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.27% for the nine months ended September 30, 2024, compared with 1.40% for the nine months ended September 30, 2023. The average cost of borrowings for the nine months ended September 30, 2024 was 3.73%, compared to 3.29% for the same period last year.

    Provision for Credit Losses on Loans

    For the nine months ended September 30, 2024, the Company recorded a $75.9 million provision for credit losses on loans, compared with a provision for credit losses on loans of $27.4 million for the nine months ended September 30, 2023. The increased provision for credit losses on loans for the nine months ended September 30, 2024 was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, partially offset by an improved economic forecast for the current nine-month period within our CECL model, compared to the same period last year. For the nine months ended September 30, 2024, net charge-offs totaled $9.1 million or an annualized eight basis points of average loans.

    Non-Interest Income and Expense

    For the nine months ended September 30, 2024, non-interest income totaled $69.9 million, an increase of $9.1 million compared to the same period in 2023. Fee income increased $6.1 million to $24.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in deposit fee income, debit and credit card related fee income and loan related fee income resulting from the Lakeland merger. BOLI income increased $4.6 million to $9.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI, while wealth management income increased $2.1 million to $22.9 million for the nine months ended September 30, 2024, compared to the same period in 2023, mainly due to an increase in the average market value of assets under management during the period. Additionally, insurance agency income increased $1.7 million to $12.9 million for the nine months ended September 30, 2024, compared to $11.2 million for the same period in 2023, largely due to increases in contingent commissions, retention revenue and new business activity. Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the nine months ended September 30, 2024, primarily due to a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland. Other income decreased $2.4 million to $3.2 million for the nine months ended September 30, 2024, compared to $5.7 million for the same period in 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property recorded in the prior year, combined with a decrease in gains on sales of SBA loans.

    Non-interest expense totaled $323.2 million for the nine months ended September 30, 2024, an increase of $123.7 million, compared to $199.5 million for the nine months ended September 30, 2023. Compensation and benefits expense increased $48.7 million to $158.4 million for the nine months ended September 30, 2024, compared to $109.7 million for the nine months ended September 30, 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland.   Merger-related expenses increased $31.3 million to $36.7 million for the nine months ended September 30, 2024, compared to $5.3 million for the nine months ended September 30, 2023. Amortization of intangibles increased $17.2 million to $19.4 million for the nine months ended September 30, 2024, compared to $2.2 million for the nine months ended September 30, 2023, largely due to core deposit intangible amortization related to Lakeland. Data processing expense increased $9.2 million to $25.7 million for the nine months ended September 30, 2024, compared to $16.5 million for the nine months ended September 30, 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland, while net occupancy expense increased $8.0 million to $32.5 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland. Other operating expenses increased $5.6 million to $37.4 million for the three months ended September 30, 2024, compared to $31.8 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance increased $3.9 million to $9.6 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

    Income Tax Expense
    For the nine months ended September 30, 2024, the Company's income tax expense was $19.9 million with an effective tax rate of 22.9%, compared with $34.9 million with an effective tax rate of 25.7% for the nine months ended September 30, 2023. The decrease in tax expense for the nine months ended September 30, 2024 compared with the same period last year was largely due to a $5.8 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of the initial CECL provision for credit losses on loans of $60.1 million recorded in accordance with GAAP requirements for accounting for business combinations and additional expenses from the Lakeland merger.

    Asset Quality

    The Company’s total non-performing loans as of September 30, 2024 were $89.9 million, or 0.47% of total loans, compared to $67.9 million, or 0.36% of total loans as of June 30, 2024 and $49.6 million, or 0.46% of total loans as of December 31, 2023. The $22.1 million increase in non-performing loans as of September 30, 2024, compared to the trailing quarter, consisted of a $10.4 million increase in non-performing commercial mortgage loans, an $8.9 million increase in non-performing commercial loans, a $1.5 million increase in non-performing construction loans, a $764,000 increase in non-performing residential mortgage loans, a $302,000 increase in non-performing multi-family loans and a $289,000 increase in non-performing consumer loans. As of September 30, 2024, impaired loans totaled $74.0 million with related specific reserves of $7.2 million, compared with impaired loans totaling $54.6 million with related specific reserves of $7.7 million as of June 30, 2024. As of December 31, 2023, impaired loans totaled $42.8 million with related specific reserves of $2.4 million.

    As of September 30, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.02% of total loans, compared to 1.00% and 0.99% as of June 30, 2024 and December 31, 2023, respectively. The allowance for credit losses increased $84.0 million to $191.2 million as of September 30, 2024, from $107.2 million as of December 31, 2023. The increase in the allowance for credit losses on loans as of September 30, 2024 compared to December 31, 2023 was due to a $75.9 million provision for credit losses, which included an initial CECL provision of $60.1 million on loans acquired from Lakeland, and a $17.2 million allowance recorded through goodwill related to Purchased Credit Deteriorated loans acquired from Lakeland, partially offset by net charge-offs of $9.1 million.

    The following table sets forth accruing past due loans and non-accrual loans on the dates indicated, as well as delinquency statistics and certain asset quality ratios.

      September 30, 2024 June 30, 2024 December 31, 2023
      Number
    of
    Loans    		 Principal
    Balance
    of Loans    		 Number
    of
    Loans    		 Principal
    Balance
    of Loans    		 Number
    of
    Loans    		 Principal
    Balance
    of Loans
      (Dollars in thousands)
    Accruing past due loans:            
    30 to 59 days past due:            
    Commercial mortgage loans 2 $430  3 $1,707  1 $825 
    Multi-family mortgage loans —  —  —  —  1  3,815 
    Construction loans —  —  —  —  —  — 
    Residential mortgage loans 23  5,020  9  1,714  13  3,429 
    Total mortgage loans 25  5,450  12  3,421  15  8,069 
    Commercial loans 14  1,952  20  3,444  6  998 
    Consumer loans 53  4,073  38  2,891  31  875 
    Total 30 to 59 days past due 92 $11,475  70 $9,756  52 $9,942 
                 
    60 to 89 days past due:            
    Commercial mortgage loans 1 $641  3 $1,231  — $— 
    Multi-family mortgage loans —  —  —  —  1  1,635 
    Construction loans —  —  —  —  —  — 
    Residential mortgage loans 11  1,991  10  2,193  8  1,208 
    Total mortgage loans 12  2,632  13  3,424  9  2,843 
    Commercial loans 9  1,240  6  1,146  3  198 
    Consumer loans 10  606  9  648  5  275 
    Total 60 to 89 days past due 31  4,478  28  5,218  17  3,316 
    Total accruing past due loans 123 $15,953  98 $14,974  69 $13,258 
                 
    Non-accrual:            
    Commercial mortgage loans 17 $13,969  10 $3,588  7 $5,151 
    Multi-family mortgage loans 6  7,578  5  7,276  1  744 
    Construction loans 2  13,151  1  11,698  1  771 
    Residential mortgage loans 24  5,211  20  4,447  7  853 
    Total mortgage loans 49  39,909  36  27,009  16  7,519 
    Commercial loans 69  48,592  58  39,715  26  41,487 
    Consumer loans 32  1,433  24  1,144  10  633 
    Total non-accrual loans 150 $89,934  118 $67,868  52 $49,639 
                 
    Non-performing loans to total loans    0.47%    0.36%    0.46%
    Allowance for loan losses to total non-performing loans    217.09%    277.50%    215.96%
    Allowance for loan losses to total loans    1.02%    1.00%    0.99%
                       

    As of September 30, 2024 and December 31, 2023, the Company held foreclosed assets of $9.8 million and $11.7 million, respectively. During the nine months ended September 30, 2024, there were three properties sold with an aggregate carrying value of $532,000 and one write-down of a foreclosed commercial property of $1.3 million. Foreclosed assets as of September 30, 2024 consisted primarily of commercial real estate. Total non-performing assets as of September 30, 2024 increased $36.6 million to $97.9 million, or 0.41% of total assets, from $61.3 million, or 0.43% of total assets as of December 31, 2023.

    Balance Sheet Summary

    Total assets as of September 30, 2024 were $24.04 billion, a $9.83 billion increase from December 31, 2023. The increase in total assets was primarily due to the addition of Lakeland.

    The Company’s loans held for investment portfolio totaled $18.79 billion as of September 30, 2024 and $10.87 billion as of December 31, 2023. The loan portfolio consisted of the following:

     September 30, 2024 June 30, 2024 December 31, 2023
     (Dollars in thousands)
    Mortgage loans:     
    Commercial$7,342,456  $7,337,742  $4,512,411 
    Multi-family 3,226,918   3,189,808   1,812,500 
    Construction 873,509   970,244   653,246 
    Residential 2,032,671   2,024,027   1,164,956 
    Total mortgage loans 13,475,554   13,521,821   8,143,113 
    Commercial loans 4,710,601   4,617,232   2,440,621 
    Consumer loans 623,709   626,016   299,164 
    Total gross loans 18,809,864   18,765,069   10,882,898 
    Premiums on purchased loans 1,362   1,410   1,474 
    Net deferred fees and unearned discounts (16,617)  (7,149)  (12,456)
    Total loans$18,794,609  $18,759,330  $10,871,916 
                

    As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments.   Compared to the prior quarter, during the three months ended September 30, 2024, the loan portfolio had net increases of $93.4 million of commercial loans, $37.1 million of multi-family loans, $8.6 million of residential mortgage loans, and $4.7 million of commercial mortgage loans, partially offset by net decreases of $96.7 million of construction loans and $2.3 million of consumer loans.   Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio as of September 30, 2024, compared to 86.5% as of December 31, 2023.

    For the nine months ended September 30, 2024, loan funding, including advances on lines of credit, totaled $2.78 billion, compared with $2.53 billion for the same period in 2023.

    As of September 30, 2024, the Company’s unfunded loan commitments totaled $2.97 billion, including commitments of $1.84 billion in commercial loans, $231.0 million in construction loans and $225.7 million in commercial mortgage loans. Unfunded loan commitments as of December 31, 2023 and September 30, 2023 were $2.09 billion and $2.18 billion, respectively.

    The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.98 billion as of September 30, 2024, compared to $1.09 billion and $1.70 billion as of December 31, 2023 and September 30, 2023, respectively.

    Total investment securities were $3.17 billion as of September 30, 2024, a $1.04 billion increase from December 31, 2023. This increase was primarily due to the addition of Lakeland.

    Total deposits increased $8.08 billion during the nine months ended September 30, 2024, to $18.38 billion, due primarily to the addition of Lakeland. Total savings and demand deposit accounts increased $6.02 billion to $15.22 billion as of September 30, 2024, while total time deposits increased $2.06 billion to $3.16 billion as of September 30, 2024. The increase in savings and demand deposits was largely attributable to a $2.92 billion increase in interest bearing demand deposits, a $1.58 billion increase in non-interest bearing demand deposits, a $1.03 billion increase in money market deposits and a $495.5 million increase in savings deposits. The increase in time deposits consisted of a $2.01 billion increase in retail time deposits and a $46.5 million increase in brokered time deposits.

    Borrowed funds increased $244.5 million during the nine months ended September 30, 2024, to $2.21 billion. The increase in deposits and borrowings was largely due to the addition of Lakeland. Borrowed funds represented 9.2% of total assets as of September 30, 2024, a decrease from 13.9% as of December 31, 2023.

    Stockholders’ equity increased $930.5 million during the nine months ended September 30, 2024, to $2.62 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and an improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders. For the three and nine months ended September 30, 2024, common stock repurchases totaled 1,969 shares at an average cost of $16.36 per share and 88,821 shares at an average cost of $14.87 per share, respectively, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. As of September 30, 2024, approximately 1.0 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share(1) as of September 30, 2024 were $20.09 and $13.66, respectively, compared with $22.38 and $16.32, respectively, as of December 31, 2023.

    About the Company

    Provident Financial Services, Inc. is the holding company for Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Orange, Queens and Nassau Counties in New York. Provident Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company and insurance services through its wholly owned subsidiary, Provident Protection Plus, Inc.

    Post Earnings Conference Call

    Representatives of the Company will hold a conference call for investors on Wednesday, October 30, 2024 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended September 30, 2024. The call may be accessed by dialing 1-888-412-4131 (United States Toll Free) and 1-646-960-0134 (United States Local). Speakers will need to enter conference ID code (3610756) before being met by a live operator. Internet access to the call is also available (listen only) at provident.bank by going to Investor Relations and clicking on "Webcast."

    Forward Looking Statements

    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 amended. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” "project," "intend," “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and those related to the economic environment, particularly in the market areas in which the Company operates, inflation and unemployment, competitive products and pricing, real estate values, fiscal and monetary policies of the U.S. Government, the effects of any turmoil or negative news in the banking industry, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, any failure to realize the anticipated benefits of the merger transaction when expected or at all; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected conditions, factors or events, potential adverse reactions or changes to business, employee, customer and/or counterparty relationships, including those resulting from the completion of the merger and integration of the companies; and the impact of a potential shutdown of the federal government.

    The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not assume any duty, and does not undertake, to update any forward-looking statements to reflect events or circumstances after the date of this statement.

    Footnotes

    (1) Annualized adjusted return on average assets, average equity and average tangible equity, annualized adjusted pre-tax pre-provision return on average assets, average equity and average tangible equity, tangible book value per share, annualized adjusted non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes following the Consolidated Financial Highlights which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.

              
    PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
    Consolidated Financial Highlights
    (Dollars in Thousands, except share data) (Unaudited)
        
     At or for the
    Three Months Ended     		 At or for the
    Nine Months Ended
     September 30, June 30, September 30, September 30, September 30,
      2024   2024   2023   2024   2023 
    Statement of Income         
    Net interest income$183,701  $141,506  $96,236  $418,877  $303,666 
    Provision for credit losses 9,299   69,705   12,541   78,684   29,031 
    Non-interest income 26,855   22,275   19,320   69,937   60,861 
    Non-interest expense 136,002   115,394   65,625   323,224   199,485 
    Income (loss) before income tax expense 65,255   (21,318)  37,390   86,906   136,011 
    Net income (loss) 46,405   (11,485)  28,547   67,001   101,086 
    Diluted earnings per share$0.36  $(0.11) $0.38  $0.65  $1.35 
    Interest rate spread 2.65%  2.58%  2.39%  2.55%  2.69%
    Net interest margin 3.31%  3.21%  2.96%  3.18%  3.19%
              
    Profitability         
    Annualized return on average assets 0.76% (0.24)%  0.81%  0.47%  0.98%
    Annualized adjusted return on average assets (1) 0.95% 0.06%  0.86%  0.66%  1.02%
    Annualized return on average equity 6.94% (2.17)%  6.84%  4.14%  8.22%
    Annualized adjusted return on average equity (1) 8.62% 0.53%  7.30%  5.83%  8.59%
    Annualized return on average tangible equity (4) 12.06% (3.15)%  9.47%  7.13%  11.40%
    Annualized adjusted return on average tangible equity (1) 14.53%  2.01%  10.24%  9.56%  12.07%
    Annualized adjusted non-interest expense to average assets (4) 1.98%  2.02%  1.80%  1.99%  1.87%
    Efficiency ratio (6) 57.20%  57.86%  54.81%  58.27%  53.26%
              
    Asset Quality         
    Non-accrual loans  $67,868    $89,934  $39,529 
    90+ and still accruing   —     —   — 
    Non-performing loans   67,868     88,061   39,529 
    Foreclosed assets   11,119     9,801   16,487 
    Non-performing assets   78,987     97,862   56,016 
    Non-performing loans to total loans   0.36%    0.47%  0.37%
    Non-performing assets to total assets   0.33%    0.41%  0.40%
    Allowance for loan losses  $188,331    $191,175  $107,563 
    Allowance for loan losses to total non-performing loans   277.50%    217.09%  272.11%
    Allowance for loan losses to total loans   1.00%    1.02%  1.01%
    Net loan charge-offs$6,756  $1,340  $5,510  $9,067  $7,266 
    Annualized net loan charge-offs to average total loans 0.14%  0.04%  0.21%  0.08%  0.09%
              
    Average Balance Sheet Data          
    Assets$24,248,038  $19,197,041  $13,976,610  $19,198,113  $13,848,351 
    Loans, net 18,531,939   14,649,413   10,470,843   14,631,071   10,269,022 
    Earning assets 21,809,226   17,385,819   12,735,938   17,305,446   12,574,437 
    Core deposits 15,394,715   12,257,244   9,212,202   12,271,839   9,408,156 
    Borrowings 2,125,149   2,158,193   1,780,655   2,074,958   1,556,619 
    Interest-bearing liabilities 17,304,569   13,856,039   9,826,064   13,757,895   9,554,204 
    Stockholders' equity 2,660,470   2,127,469   1,654,920   2,163,856   1,645,093 
    Average yield on interest-earning assets 5.84%  5.67%  4.89%  5.61%  4.76%
    Average cost of interest-bearing liabilities 3.19%  3.09%  2.50%  3.06%  2.07%
              

    Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
    (Dollars in Thousands, 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 information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.

               
    (1) Annualized Adjusted Return on Average Assets, Equity and Tangible Equity          
      Three Months Ended Nine Months Ended
      September 30, June 30, September 30, September 30, September 30,
       2024   2024   2023   2024   2023 
    Net Income $46,405  $(11,485) $28,547  $67,001  $101,086 
    Merger-related transaction costs  15,567   18,915   2,289   36,684   5,349 
    Less: income tax expense  (4,306)  (4,625)  (486)  (9,274)  (1,015)
    Annualized adjusted net income $57,666  $2,805  $30,350  $94,411  $105,420 
    Less: Amortization of Intangibles (net of tax) $8,551  $4,532  $503  $13,577  $1,560 
    Annualized adjusted net income for annualized adjusted return on average tangible equity $66,217  $7,337  $30,853  $107,988  $106,980 
               
    Annualized Adjusted Return on Average Assets  0.95%  0.06%  0.86%  0.66%  1.02%
    Annualized Adjusted Return on Average Equity  8.62%  0.53%  7.30%  5.83%  8.59%
    Annualized Adjusted Return on Average Tangible Equity  14.53%  2.01%  10.24%  9.56%  12.07%
               
    (2) Annualized adjusted pre-tax, pre-provision ("PTPP") returns on average assets, average equity and average tangible equity           
      Three Months Ended Nine Months Ended
      September 30, June 30, September 30, September 30, September 30,
       2024   2024   2023   2024   2023 
    Net income (loss) $46,405  $(11,485) $28,547  $67,001  $101,086 
    Adjustments to net income (loss):          
    Provision for credit losses  9,299   69,705   12,541   78,684   29,031 
    Net loss on Lakeland bond sale  —   2,839   —   —   — 
    Merger-related transaction costs  15,567   18,915   2,289   36,684   5,349 
    Income tax expense (benefit)  18,850   (9,833)  8,843   19,905   34,925 
    PTPP income $90,121  $70,141  $52,220  $202,274  $170,391 
               
    Annualized PTPP income $358,525  $282,106  $207,177  $270,191  $227,812 
    Average assets $24,248,038  $19,197,041  $13,976,610  $19,198,113  $13,848,351 
    Average equity $2,660,470  $2,127,469  $1,654,920  $2,163,856  $1,645,093 
    Average tangible equity $1,813,327  $1,468,630  $1,195,787  $1,508,594  $1,185,222 
               
    Annualized PTPP return on average assets  1.48%  1.47%  1.48%  1.41%  1.65%
    Annualized PTPP return on average equity  13.48%  13.26%  12.52%  12.49%  13.85%
    Annualized PTPP return on average tangible equity  19.77%  19.21%  17.33%  17.91%  19.22%
               
    (3) Book and Tangible Book Value per Share    
          September 30, June 30, December 31,
           2024   2024   2023 
    Total stockholders' equity     $2,621,058  $2,555,646  $1,690,596 
    Less: total intangible assets      839,223   851,507   457,942 
    Total tangible stockholders' equity     $1,781,835  $1,704,139  $1,232,654 
               
    Shares outstanding      130,448,599   130,380,393   75,537,186 
               
    Book value per share (total stockholders' equity/shares outstanding)     $20.09  $19.60  $22.38 
    Tangible book value per share (total tangible stockholders' equity/shares outstanding)     $13.66  $13.07  $16.32 
               
    (4) Annualized Return on Average Tangible Equity          
      Three Months Ended Nine Months Ended
      September 30, June 30, September 30, September 30, September 30,
       2024   2024   2023   2024   2023 
    Total average stockholders' equity $2,660,470  $2,127,469  $1,654,920  $2,163,856  $1,645,093 
    Less: total average intangible assets  847,143   658,839   459,133   655,262   459,871 
    Total average tangible stockholders' equity $1,813,327  $1,468,630  $1,195,787  $1,508,594  $1,185,222 
               
    Net income (loss) $46,405  $(11,485) $28,547  $67,001  $101,086 
    Less: Amortization of Intangibles, net of tax  8,551   4,532   503   13,577   1,560 
    Total net income (loss) $54,956  $(6,953) $29,050  $80,578  $102,646 
               
    Annualized return on average tangible equity (net income/total average tangible stockholders' equity)  12.06% (1.90)        %  9.64%  7.13%  11.58%
               
    (5) Annualized Adjusted Non-Interest Expense to Average Assets          
      Three Months Ended Nine Months Ended
      September 30, June 30, September 30, September 30, September 30,
       2024   2024   2023   2024   2023 
    Reported non-interest expense $136,002  $115,394  $65,625  $323,224  $199,485 
    Adjustments to non-interest expense:          
    Merger-related transaction costs  15,567   18,915   2,289   36,684   5,349 
    Adjusted non-interest expense $120,435  $96,479  $63,336  $286,540  $194,136 
               
    Annualized adjusted non-interest expense $479,122  $388,036  $251,279  $382,751  $259,559 
               
    Average assets $24,248,038  $19,197,041  $13,976,610  $19,198,113  $13,848,351 
               
    Annualized adjusted non-interest expense/average assets  1.98%  2.02%  1.80%  1.99%  1.87%
               
    (6) Efficiency Ratio Calculation          
      Three Months Ended Nine Months Ended
      September 30, June 30, September 30, September 30, September 30,
       2024   2024   2023   2024   2023 
    Net interest income $183,701  $141,506  $96,236  $418,877  $303,666 
    Reported non-interest income  26,855   22,275   19,320   69,937   60,861 
    Adjustments to non-interest income:          
    Net (gain) loss on securities transactions  (2)  2,973   13   2,972   (37)
    Adjusted non-interest income  26,853   25,248   19,333   72,909   60,824 
    Total income $210,554  $166,754  $115,569  $491,786  $364,490 
               
    Adjusted non-interest expense $120,435  $96,479  $63,336  $286,540  $194,136 
               
    Efficiency ratio (adjusted non-interest expense/income)  57.20%  57.86%  54.80%  58.27%  53.26%
               


    PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
    Consolidated Statements of Financial Condition
    September 30, 2024 (Unaudited) and December 31, 2023
    (Dollars in Thousands)
        
    AssetsSeptember 30, 2024 December 31, 2023
    Cash and due from banks$244,064  $180,241 
    Short-term investments 25   14 
    Total cash and cash equivalents 244,089   180,255 
    Available for sale debt securities, at fair value 2,725,110   1,690,112 
    Held to maturity debt securities, net of allowance (fair value of $322,427 as of September 30, 2024 (unaudited) and $352,601 as of December 31, 2023) 332,021   363,080 
    Equity securities, at fair value 20,044   1,270 
    Federal Home Loan Bank stock 96,219   79,217 
    Loans held for sale 5,757   1,785 
    Loans held for investment 18,794,609   10,871,916 
    Less allowance for credit losses 191,175   107,200 
    Net loans 18,609,191   10,766,501 
    Foreclosed assets, net 9,801   11,651 
    Banking premises and equipment, net 124,955   70,998 
    Accrued interest receivable 89,866   58,966 
    Intangible assets 839,223   457,942 
    Bank-owned life insurance 403,648   243,050 
    Other assets 548,348   287,768 
    Total assets$24,042,515  $14,210,810 
        
    Liabilities and Stockholders' Equity   
    Deposits:   
    Demand deposits$13,548,480  $8,020,889 
    Savings deposits 1,671,209   1,175,683 
    Certificates of deposit of $250,000 or more 800,005   218,549 
    Other time deposits 2,356,491   877,393 
    Total deposits 18,376,185   10,292,514 
    Mortgage escrow deposits 48,007   36,838 
    Borrowed funds 2,214,512   1,970,033 
    Subordinated debentures 414,184   10,695 
    Other liabilities 368,569   210,134 
    Total liabilities 21,421,457   12,520,214 
        
    Stockholders' equity:   
    Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued —   — 
    Common stock, $0.01 par value, 200,000,000 shares authorized, 137,565,966 shares issued and 130,448,599 shares outstanding as of September 30, 2024 and 75,537,186 outstanding as of December 31, 2023. 1,376   832 
    Additional paid-in capital 1,871,343   989,058 
    Retained earnings 972,997   974,542 
    Accumulated other comprehensive loss (93,049)  (141,115)
    Treasury stock (129,148)  (127,825)
    Unallocated common stock held by the Employee Stock Ownership Plan (2,461)  (4,896)
    Common Stock acquired by the Directors' Deferred Fee Plan (2,247)  (2,694)
    Deferred Compensation - Directors' Deferred Fee Plan 2,247   2,694 
    Total stockholders' equity 2,621,058   1,690,596 
    Total liabilities and stockholders' equity$24,042,515  $14,210,810 
            


    PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
    Consolidated Statements of Income
    Three months ended September 30, 2024, June 30, 2024 and September 30, 2023, and nine months ended September 30, 2024 and 2023 (Unaudited)
    (Dollars in Thousands, except per share data)
              
     Three Months Ended Nine Months Ended
     September 30, June 30, September 30, September 30, September 30,
      2024  2024   2023  2024   2023
    Interest and dividend income:         
    Real estate secured loans$197,857 $156,318  $104,540 $461,632  $299,830
    Commercial loans 81,183  58,532   33,806  175,815   93,915
    Consumer loans 12,947  8,351   4,746  25,820   13,419
    Available for sale debt securities, equity securities and Federal Home Loan Bank stock 25,974  20,394   11,886  58,698   34,748
    Held to maturity debt securities 2,136  2,357   2,334  6,761   7,059
    Deposits, federal funds sold and other short-term investments 2,425  1,859   885  5,466   2,678
    Total interest income 322,522  247,811   158,197  734,192   451,649
              
    Interest expense:         
    Deposits 110,009  81,058   44,923  243,602   108,880
    Borrowed funds 19,923  20,566   16,765  57,871   38,329
    Subordinated debt 8,889  4,681   273  13,842   774
    Total interest expense 138,821  106,305   61,961  315,315   147,983
    Net interest income 183,701  141,506   96,236  418,877   303,666
    Provision charge for credit losses 9,299  69,705   12,541  78,684   29,031
    Net interest income after provision for credit losses 174,402  71,801   83,695  340,193   274,635
              
    Non-interest income:         
    Fees 9,816  8,699   6,132  24,426   18,294
    Wealth management income 7,620  7,769   6,992  22,878   20,826
    Insurance agency income 3,631  4,488   3,224  12,912   11,175
    Bank-owned life insurance 4,308  3,323   1,820  9,448   4,838
    Net gain (loss) on securities transactions 2  (2,973)  13  (2,972)  37
    Other income 1,478  969   1,139  3,245   5,691
    Total non-interest income 26,855  22,275   19,320  69,937   60,861
              
    Non-interest expense:         
    Compensation and employee benefits 63,468  54,888   35,702  158,404   109,724
    Net occupancy expense 12,790  11,142   8,113  32,452   24,474
    Data processing expense 10,481  8,433   5,312  25,698   16,536
    FDIC Insurance 4,180  3,100   1,628  9,553   5,688
    Amortization of intangibles 12,231  6,483   720  19,420   2,231
    Advertising and promotion expense 1,524  1,171   1,133  3,661   3,722
    Merger-related expenses 15,567  18,915   2,289  36,684   5,349
    Other operating expenses 15,761  11,262   10,728  37,352   31,761
    Total non-interest expense 136,002  115,394   65,625  323,224   199,485
    Income (loss) before income tax expense 65,255  (21,318)  37,390  86,906   136,011
    Income tax expense (benefit) 18,850  (9,833)  8,843  19,905   34,925
    Net income (loss)$46,405 $(11,485) $28,547 $67,001  $101,086
              
    Basic earnings per share$0.36 $(0.11) $0.38 $0.65  $1.35
    Average basic shares outstanding 129,941,845  102,957,521   74,909,083  102,819,042   74,793,530
              
    Diluted earnings per share$0.36 $(0.11) $0.38 $0.65  $1.35
    Average diluted shares outstanding 130,004,870  102,957,521   74,914,205  102,845,261   74,816,606
                     


    PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
    Net Interest Margin Analysis
    Quarterly Average Balances
    (Dollars in Thousands) (Unaudited)
     September 30, 2024 June 30, 2024 September 30, 2023
     Average Balance Interest Average
    Yield/Cost    		 Average Balance Interest Average
    Yield/Cost    		 Average Balance Interest Average
    Yield/Cost
    Interest-Earning Assets:                 
    Deposits$179,313 $2,425 5.38% $40,228 $1,859 5.38% $74,183 $884 4.73%
    Federal funds sold and other short-term investments —  — —%  0  — —%  57  1 4.00%
    Available for sale debt securities 2,644,262  24,884 3.72%  2,244,725  17,647 3.14%  1,724,833  10,127 2.35%
    Held to maturity debt securities, net (1) 342,217  2,136 2.50%  352,216  2,357 2.68%  373,681  2,334 2.50%
    Equity securities, at fair value 19,654  — —%  10,373  — —%  1,068  — —%
    Federal Home Loan Bank stock 91,841  1,090 4.75%  88,864  2,747 12.36%  91,273  1,759 7.71%
    Net loans: (2)                 
    Total mortgage loans 13,363,265  197,857 5.83%  10,674,109  156,318 5.81%  7,881,193  104,540 5.21%
    Total commercial loans 4,546,088  81,183 7.05%  3,514,602  58,532 6.62%  2,289,267  33,806 5.81%
    Total consumer loans 622,586  12,947 8.27%  460,702  8,351 7.29%  300,383  4,746 6.27%
    Total net loans 18,531,939  291,987 6.21%  14,649,413  223,201 6.05%  10,470,843  143,092 5.37%
    Total interest-earning assets$21,809,226 $322,522 5.84% $17,385,819 $247,811 5.67% $12,735,938 $158,197 4.89%
                      
    Non-Interest Earning Assets:                 
    Cash and due from banks 341,505      37,621      82,522    
    Other assets 2,097,307      1,773,601      1,158,150    
    Total assets$24,248,038     $19,197,041     $13,976,610    
                      
    Interest-Bearing Liabilities:                 
    Demand deposits$9,942,053 $74,864 3.00% $7,935,543 $58,179 2.95% $5,741,052 $35,290 2.44%
    Savings deposits 1,711,502  1,006 0.23%  1,454,784  832 0.23%  1,240,951  592 0.19%
    Time deposits 3,112,598  34,139 4.36%  2,086,433  22,047 4.25%  1,052,793  9,041 3.41%
    Total deposits 14,766,153  110,009 2.96%  11,476,760  81,058 2.84%  8,034,796  44,923 2.22%
                      
    Borrowed funds 2,125,149  19,923 3.73%  2,158,193  20,566 3.83%  1,780,655  16,765 3.74%
    Subordinated debentures 413,267  8,889 8.56%  221,086  4,681 8.52%  10,613  273 10.24%
    Total interest-bearing liabilities 17,304,569  138,821 3.19%  13,856,039  106,305 3.09%  9,826,064  61,961 2.50%
                      
    Non-Interest Bearing Liabilities:                 
    Non-interest bearing deposits 3,741,160      2,866,917      2,230,199    
    Other non-interest bearing liabilities 541,839      346,616      265,427    
    Total non-interest bearing liabilities 4,282,999      3,213,533      2,495,626    
    Total liabilities 21,587,568      17,069,572      12,321,690    
    Stockholders' equity 2,660,470      2,127,469      1,654,920    
    Total liabilities and stockholders' equity$24,248,038     $19,197,041     $13,976,610    
                      
    Net interest income  $183,701     $141,506     $96,236  
                      
    Net interest rate spread    2.65%     2.58%     2.39%
    Net interest-earning assets$4,504,657     $3,529,780     $2,909,874    
                      
    Net interest margin (3)     3.31%     3.21%     2.96%
                      
    Ratio of interest-earning assets to total interest-bearing liabilities1.26x     1.25x     1.30x    


      
    (1)Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
    (2)Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
    (3)Annualized net interest income divided by average interest-earning assets.
       


    The following table summarizes the quarterly net interest margin for the previous five quarters.   
     9/30/24 6/30/24 3/31/24 12/31/23 9/30/23
     3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
    Interest-Earning Assets:         
    Securities3.69% 3.40% 2.87% 2.79% 2.67%
    Net loans6.21% 6.05% 5.51% 5.50% 5.37%
    Total interest-earning assets5.84% 5.67% 5.06% 5.04% 4.89%
              
    Interest-Bearing Liabilities:         
    Total deposits2.96% 2.84% 2.60% 2.47% 2.22%
    Total borrowings3.73% 3.83% 3.60% 3.71% 3.74%
    Total interest-bearing liabilities3.19% 3.09% 2.80% 2.71% 2.50%
              
    Interest rate spread2.65% 2.58% 2.26% 2.33% 2.39%
    Net interest margin3.31% 3.21% 2.87% 2.92% 2.96%
              
    Ratio of interest-earning assets to interest-bearing liabilities1.26x 1.25x 1.28x 1.28x 1.30x
              


    PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
    Net Interest Margin Analysis
    Average Year to Date Balances
    (Dollars in Thousands) (Unaudited)
                
     September 30, 2024 September 30, 2023
     Average   Average Average   Average
     Balance Interest Yield/Cost Balance Interest Yield/Cost
    Interest-Earning Assets:           
    Deposits$39,280 $5,466 5.38% $69,696 $2,676 5.13%
    Federal funds sold and other short term investments —  — —%  58  2 5.34%
    Available for sale debt securities 2,189,671  52,553 3.19%  1,777,861  30,819 2.31%
    Held to maturity debt securities, net (1) 350,529  6,761 2.57%  379,144  7,059 2.48%
    Equity securities, at fair value 10,050  — —%  1,022  — —%
    Federal Home Loan Bank stock 84,845  6,145 9.66%  77,634  3,929 6.75%
    Net loans: (2)           
    Total mortgage loans 10,682,974  461,632 5.70%  7,740,591  299,830 5.12%
    Total commercial loans 3,487,600  175,815 6.69%  2,225,725  93,915 5.60%
    Total consumer loans 460,497  25,820 7.49%  302,706  13,419 5.93%
    Total net loans 14,631,071  663,267 5.99%  10,269,022  407,164 5.25%
    Total interest-earning assets$17,305,446 $734,192 5.61% $12,574,437 $451,649 4.76%
                
    Non-Interest Earning Assets:           
    Cash and due from banks 229,336      121,801    
    Other assets 1,663,331      1,152,113    
    Total assets$19,198,113     $13,848,351    
                
    Interest-Bearing Liabilities:           
    Demand deposits$7,931,251 $174,609 2.94% $5,710,855 $85,822 2.01%
    Savings deposits 1,444,135  2,476 0.23%  1,315,157  1,582 0.16%
    Time deposits 2,091,806  66,517 4.25%  961,010  21,476 2.99%
    Total deposits 11,467,192  243,602 2.84%  7,987,022  108,880 1.82%
    Borrowed funds 2,074,958  57,871 3.73%  1,556,619  38,329 3.29%
    Subordinated debentures 215,745  13,842 8.57%  10,563  774 9.80%
    Total interest-bearing liabilities$13,757,895 $315,315 3.06% $9,554,204 $147,983 2.07%
                
    Non-Interest Bearing Liabilities:           
    Non-interest bearing deposits 2,896,453      2,382,144    
    Other non-interest bearing liabilities 379,909      266,910    
    Total non-interest bearing liabilities 3,276,362      2,649,054    
    Total liabilities 17,034,257      12,203,258    
    Stockholders' equity 2,163,856      1,645,093    
    Total liabilities and stockholders' equity$19,198,113     $13,848,351    
                
    Net interest income  $418,877     $303,666  
                
    Net interest rate spread    2.55%     2.69%
    Net interest-earning assets$3,547,551     $3,020,233    
                
    Net interest margin (3)     3.18%     3.19%
                
    Ratio of interest-earning assets to total interest-bearing liabilities1.26x     1.32x    
                
                
    (1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
    (2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans.
    (3) Annualized net interest income divided by average interest-earning assets.
     


    The following table summarizes the year-to-date net interest margin for the previous three years.
           
     Nine Months Ended 
     September 30, 2024 September 30, 2023 September 23, 2022 
    Interest-Earning Assets:      
    Securities3.33% 2.57% 1.72% 
    Net loans5.99% 5.25% 4.01% 
    Total interest-earning assets5.61% 4.76% 3.51% 
           
    Interest-Bearing Liabilities:      
    Total deposits2.84% 1.82% 0.33% 
    Total borrowings3.73% 3.29% 0.97% 
    Total interest-bearing liabilities3.06% 2.07% 0.38% 
           
    Interest rate spread2.55% 2.69% 3.13% 
    Net interest margin3.18% 3.19% 3.24% 
           
    Ratio of interest-earning assets to interest-bearing liabilities1.26x 1.32x 1.38x 

    SOURCE: Provident Financial Services, Inc.

    CONTACT: Investor Relations, 1-732-590-9300 Web Site: http://www.Provident.Bank



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