Provident Financial Services, Inc. Announces Increased First Quarter Earnings and Declares Quarterly Cash Dividend


ISELIN, N.J., April 26, 2019 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $30.9 million, or $0.48 per basic and diluted share, for the three months ended March 31, 2019, compared to net income of $27.9 million, or $0.43 per basic and diluted share, for the three months ended March 31, 2018. 

The Company's earnings for the quarter ended March 31, 2019 were positively impacted by a lower provision for loan losses stemming from an improvement in asset quality and an increase in net interest income driven by the expansion of the net interest margin from the quarter ended March 31, 2018.  The improvement in the net interest margin was due to an increase in the yield on earning assets and a lagging increase in the Company's cost of funds.  The net inflow of average deposits in the period also contributed to the improvement in net interest income allowing the Company to favorably shift from higher-costing sources of funds. The improvement in net interest income for the period was partially offset by a decrease in average loans outstanding.

Chairman, President and Chief Executive Officer Christopher Martin reflected: “Our first quarter's earnings continued to benefit from solid asset quality and diligent expense management.  Our loan pipelines have increased and corresponding pull-through levels remained strong.  Conversely, our increased deposit costs for the quarter reflect our efforts to acquire new customers and retain existing relationships.”  Martin continued, “We completed the acquisition of Tirschwell & Loewy, Inc., a Manhattan-based registered investment advisor with approximately $750 million in assets on April 1, 2019, which will bring talent and depth to our wealth management subsidiary, Beacon Trust, and provide a physical presence in New York City."

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.23 per common share payable on May 31, 2019, to stockholders of record as of the close of business on May 15, 2019.

Balance Sheet Summary

Total assets at March 31, 2019 were $9.80 billion, a $76.8 million increase from December 31, 2018.  The increase in total assets was primarily due to a $55.2 million increase in cash and cash equivalents, a $37.8 million increase in other assets and a $13.0 million increase in total investments, partially offset by a $26.7 million decrease in total loans.  The increase in other assets was largely due to the Company's January 1, 2019 adoption of ASU 2016-02, "Leases (Topic 842).”  The Company recorded a right of use asset of $44.9 million, which was based on the present value of the expected remaining lease payments at January 1, 2019. 

The Company’s loan portfolio decreased $26.7 million to $7.22 billion at March 31, 2019, from $7.25 billion at December 31, 2018.  For the three months ended March 31, 2019, loan originations, excluding advances on lines of credit, totaled $293.9 million, compared with $280.3 million for the same period in 2018.  During the three months ended March 31, 2019, the loan portfolio had net decreases of $14.1 million in construction loans, $12.3 million in residential mortgage loans, $11.0 million in commercial mortgage loans and $10.1 million in consumer loans, partially offset by net increases of $17.4 million in multi-family mortgage loans and $3.1 million in commercial loans.  Commercial real estate, commercial and construction loans represented 79.1% of the loan portfolio at March 31, 2019, compared to 78.9% at December 31, 2018. 

At March 31, 2019, the Company’s unfunded loan commitments totaled $1.54 billion, including commitments of $693.7 million in commercial loans, $438.1 million in construction loans and $163.4 million in commercial mortgage loans.  Unfunded loan commitments at December 31, 2018 and March 31, 2018 were $1.49 billion and $1.56 billion, respectively.

The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.18 billion at March 31, 2019, compared to $973.4 million and $1.33 billion at December 31, 2018 and March 31, 2018, respectively.

Total investments were $1.62 billion at March 31, 2019, a $13.0 million increase from December 31, 2018.  This increase was largely due to purchases of mortgage-backed securities and an increase in unrealized gains on available for sale debt securities, partially offset by repayments of mortgage-backed securities and maturities and calls of certain municipal and agency bonds.

Total deposits increased $73.3 million during the three months ended March 31, 2019 to $6.90 billion, from $6.83 billion at December 31, 2018.  Total time deposits increased $54.1 million to $804.6 million at March 31, 2019, while total core deposits, consisting of savings and demand deposit accounts, increased $19.2 million to $6.10 billion at March 31, 2019.  The increase in time deposits was primarily the result of a $66.5 million increase in brokered deposits, partially offset by a $12.4 million decrease in retail time deposits primarily due to maturities of the Company's 13-month promotional certificate of deposit.  The increase in core deposits was largely attributable to a $96.2 million increase in money market deposits, partially offset by decreases of $47.1 million and $29.8 million in non-interest bearing demand deposits and interest bearing demand deposits, respectively.  Core deposits represented 88.3% of total deposits at March 31, 2019, compared to 89.0% at December 31, 2018.

Borrowed funds decreased $43.8 million during the three months ended March 31, 2019, to $1.40 billion.  The decrease in borrowings for the period was primarily a function of wholesale funding being partially replaced by the net inflows of deposits and lower asset funding requirements.  Borrowed funds represented 14.3% of total assets at March 31, 2019, a decrease from 14.8% at December 31, 2018.

Stockholders’ equity increased $14.8 million during the three months ended March 31, 2019, to $1.37 billion, primarily due to net income earned for the period and a decrease in unrealized losses on available for sale debt securities, partially offset by dividends paid to stockholders and common stock repurchases.  Common stock repurchases for the three months ended March 31, 2019 totaled 78,000 shares at an average cost of $26.85. These common stock repurchases were largely made in connection with withholding to cover income taxes on the vesting of stock-based compensation.  At March 31, 2019, 2.4 million shares remained eligible for repurchase under the current stock repurchase authorization.  Book value per share and tangible book value per share(1) at March 31, 2019 were $20.66 and $14.38, respectively, compared with $20.49 and $14.18, respectively, at December 31, 2018.

Results of Operations

Net Interest Income and Net Interest Margin

For the three months ended March 31, 2019, net interest income increased $1.7 million to $75.0 million from $73.3 million for the same period in 2018.  The increase in net interest income was due to the expansion of the net interest margin from the quarter ended March 31, 2018, which was largely a function of an increase in the yield on earning assets and a lagging increase in the Company's cost of funds.  Also contributing to the improvement, growth in average interest and non-interest bearing deposits mitigated the Company's use of higher-cost sources of funds.

For the three months ended March 31, 2019, the net interest margin expanded 10 basis points to 3.40%, compared to 3.30% for the three months ended March 31, 2018.  The weighted average yield on interest earning assets increased 31 basis points to 4.20% for the three months ended March 31, 2019, compared to 3.89% for the three months ended March 31, 2018, while the weighted average cost of interest bearing liabilities increased 28 basis points to 1.04% for the three months ended March 31, 2019, compared to 0.76% for the same period last year.  The average cost of interest bearing deposits for the three months ended March 31, 2019 was 0.78%, compared to 0.47% for the same period last year.  Average non-interest bearing demand deposits totaled $1.44 billion for the three months ended March 31, 2019, compared with $1.42 billion for the three months ended March 31, 2018.  The average cost of borrowings for the three months ended March 31, 2019 was 2.07%, compared to 1.70% for the same period last year.

The Company’s net interest margin decreased four basis points to 3.40% for the quarter ended March 31, 2019, from 3.44% for the trailing quarter.  The weighted average yield on interest-earning assets increased one basis point to 4.20% for the quarter ended March 31, 2019, compared to 4.19% for the quarter ended December 31, 2018.  The weighted average cost of interest-bearing liabilities for the quarter ended March 31, 2019 increased seven basis points to 1.04%, compared to 0.97% for the quarter ended December 31, 2018.  The average cost of interest bearing deposits for the quarter ended March 31, 2019 increased eight basis points to 0.78%, from 0.70% for the quarter ended December 31, 2018.  Average non-interest bearing demand deposits totaled $1.44 billion for the quarter ended March 31, 2019, compared to $1.48 billion for the quarter ended December 31, 2018.  The average cost of borrowed funds for the quarter ended March 31, 2019 was 2.07%, compared to 1.99% for the quarter ended December 31, 2018.

Non-Interest Income

Non-interest income totaled $12.2 million for the quarter ended March 31, 2019, a decrease of $1.1 million, compared to the same period in 2018.  Other income decreased $687,000 to $316,000 for the three months ended March 31, 2019, compared to the quarter ended March 31, 2018, primarily due to a $762,000 decrease in net fees on loan-level interest rate swap transactions and a $139,000 decrease in net gains on the sale of loans, partially offset by a $211,000 insurance recovery of ATM losses from the prior year.  Fee income decreased $542,000 to $6.1 million for the three months ended March 31, 2019, compared to the same period in 2018, largely due to a $223,000 decrease in commercial loan prepayment fee income, a $104,000 decrease in loan related fee income and a $100,000 decrease in deposit related fee income.  Also, wealth management income decreased $321,000 largely due to a change in the investment mix of assets under management.  Partially offsetting these decreases in non-interest income, income from Bank-owned life insurance ("BOLI") increased $432,000 to $1.7 million for the three months ended March 31, 2019, compared to $1.3 million for the same period in 2018, primarily due to an increase in benefit claims in the current period.

Non-Interest Expense

For the three months ended March 31, 2019, non-interest expense totaled $48.4 million, an increase of $1.5 million, compared to the three months ended March 31, 2018.  Other operating expenses increased $1.0 million to $7.1 million for the three months ended March 31, 2019, compared to the same period in 2018, primarily due to increases in consulting costs and attorney fees.  Compensation and benefits expense increased $500,000 to $28.4 million for the three months ended March 31, 2019, compared to $27.9 million for the same period in 2018.  This increase was principally due to increases in stock-based compensation and the accrual for incentive compensation.  Data processing expense increased $363,000 to $4.0 million for the three months ended March 31, 2019, primarily due to an increase in software maintenance expense, along with increases in mobile and on-line banking expenses.  Partially offsetting these increases in non-interest expense, FDIC insurance decreased $314,000 to $739,000 for the three months ended March 31, 2019, compared to the same period in 2018, primarily due to both a lower insurance assessment rate for the current quarter and a decrease in total average assets subject to assessment.

The Company’s annualized non-interest expense as a percentage of average assets(1) was 2.02% for the quarter ended March 31, 2019, compared to 1.95% for the same period in 2018.  The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income)(1) was 55.53% for the quarter ended March 31, 2019, compared to 54.18% for the same period in 2018. 

Asset Quality

The Company’s total non-performing loans at March 31, 2019 were $24.8 million, or 0.34% of total loans, compared to $25.7 million, or 0.35% of total loans at December 31, 2018, and $45.9 million, or 0.63% of total loans at March 31, 2018.  The $893,000 decrease in non-performing loans at March 31, 2019, compared to the trailing quarter, was due to a $1.7 million decrease in non-performing commercial mortgage loans and a $606,000 decrease in non-performing commercial loans, partially offset by a $956,000 increase in non-performing residential loans and a $421,000 increase in non-performing consumer loans.  At March 31, 2019, impaired loans totaled $49.4 million with related specific reserves of $1.7 million, compared with impaired loans totaling $50.7 million with related specific reserves of $1.2 million at December 31, 2018.  At March 31, 2018, impaired loans totaled $68.3 million with related specific reserves of $4.5 million.

The Company’s allowance for loan losses at March 31, 2019 and December 31, 2018 was 0.77% of total loans and 0.86% of total loans at March 31, 2018.  The Company recorded a provision for loan losses of $200,000 for the three months ended March 31, 2019, compared with a provision of $5.4 million for the three months ended March 31, 2018.  For the three months ended March 31, 2019, the Company had net charge-offs of $409,000 compared to net charge-offs of $3.1 million for the same period in 2018.  The provision for loan losses and net charge-offs for the first quarter of 2018 were impacted by a deterioration in commercial credits in the quarter, including a $15.4 million credit to a commercial borrower that filed a Chapter 7 petition in bankruptcy for a liquidation of assets.  A specific reserve of $2.5 million was established in the prior year quarter for this impaired loan, and this credit was subsequently charged off in the second quarter of 2018.  The allowance for loan losses decreased $209,000 to $55.4 million at March 31, 2019 from $55.6 million at December 31, 2018.

At March 31, 2019 and December 31, 2018, the Company held $1.3 million and $1.6 million of foreclosed assets, respectively.  During the three months ended March 31, 2019, there was one addition to foreclosed assets with a carrying value of $227,000, and three properties sold with an aggregate carrying value of $528,000.  Foreclosed assets at March 31, 2019 consisted of $1.3 million of residential real estate.  Total non-performing assets at March 31, 2019 decreased $1.2 million, or 4.4%, to $26.1 million, or 0.27% of total assets, from $27.3 million, or 0.28% of total assets at December 31, 2018.

Income Tax Expense

For the three months ended March 31, 2019, the Company’s income tax expense was $7.7 million compared with $6.4 million for the three months ended March 31, 2018.  The Company’s effective tax rate was 19.9% for the three months ended March 31, 2019, compared to 18.6% for the three months ended March 31, 2018.  The increase in tax expense and the effective tax rate were largely the result of an increase in income derived from taxable sources.

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 northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania.  The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors on Friday, April 26, 2019 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended March 31, 2019.  The call may be accessed by dialing 1-888-336-7149 (Domestic), 1-412-902-4175 (International) or 1-855-669-9657 (Canada).  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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  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 those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, 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, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date 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 have any obligation to update any forward-looking statements to reflect events or circumstances after the date of this statement.

Footnotes

(1) Tangible book value per share, annualized return on average tangible equity, annualized 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 Statements of Financial Condition
March 31, 2019 (Unaudited) and December 31, 2018
(Dollars in Thousands)
    
AssetsMarch 31, 2019 December 31, 2018
    
Cash and due from banks$141,658  $86,195 
Short-term investments56,196  56,466 
Total cash and cash equivalents197,854  142,661 
    
Available for sale debt securities, at fair value1,083,601  1,063,079 
Held to maturity debt securities (fair value of $479,827 at March 31, 2019 (unaudited) and $479,740 at December 31, 2018)472,039  479,425 
Equity securities, at fair value724  635 
Federal Home Loan Bank Stock68,634  68,813 
Loans7,223,844  7,250,588 
Less allowance for loan losses55,353  55,562 
Net loans7,168,491  7,195,026 
Foreclosed assets, net1,264  1,565 
Banking premises and equipment, net56,733  58,124 
Accrued interest receivable31,180  31,475 
Intangible assets417,688  418,178 
Bank-owned life insurance192,894  193,085 
Other assets111,512  73,703 
Total assets$9,802,614  $9,725,769 
    
Liabilities and Stockholders' Equity   
    
Deposits:   
Demand deposits$5,046,950  $5,027,708 
Savings deposits1,051,904  1,051,922 
Certificates of deposit of $100,000 or more478,043  414,848 
Other time deposits326,559  335,644 
Total deposits6,903,456  6,830,122 
Mortgage escrow deposits27,363  25,568 
Borrowed funds1,398,490  1,442,282 
Other liabilities99,489  68,817 
Total liabilities8,428,798  8,366,789 
    
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, 83,209,293 shares issued and 66,502,750 shares outstanding at March 31, 2019 and 66,325,458 outstanding at December 31, 2018832  832 
Additional paid-in capital1,023,671  1,021,533 
Retained earnings657,375  651,099 
Accumulated other comprehensive loss(5,084) (12,336)
Treasury stock(274,005) (272,470)
Unallocated common stock held by the Employee Stock Ownership Plan(28,973) (29,678)
Common Stock acquired by the Directors' Deferred Fee Plan(4,337) (4,504)
Deferred Compensation - Directors' Deferred Fee Plan4,337  4,504 
Total stockholders' equity1,373,816  1,358,980 
Total liabilities and stockholders' equity$9,802,614  $9,725,769 


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three Months Ended March 31, 2019 and 2018 (Unaudited)
(Dollars in Thousands, except per share data)
     
 Three Months Ended 
 March 31, 
 2019 2018 
Interest income:    
Real estate secured loans$55,006 $51,510 
Commercial loans20,510 19,126 
Consumer loans4,783 4,905 
Available for sale debt securities, equity securities and Federal Home Loan Bank stock8,409 7,251 
Investment securities held to maturity3,162 3,144 
Deposits, federal funds sold and other short-term investments541 395 
Total interest income92,411 86,331 
     
Interest expense:    
Deposits10,494 6,235 
Borrowed funds6,910 6,819 
Total interest expense17,404 13,054 
Net interest income75,007 73,277 
Provision for loan losses200 5,400 
Net interest income after provision for loan losses74,807 67,877 
     
Non-interest income:    
Fees6,097 6,639 
Wealth management income4,079 4,400 
Bank-owned life insurance1,696 1,264 
Net gain on securities transactions 1 
Other income316 1,003 
Total non-interest income12,188 13,307 
     
Non-interest expense:    
Compensation and employee benefits28,369 27,869 
Net occupancy expense6,857 6,745 
Data processing expense3,969 3,606 
FDIC Insurance739 1,053 
Amortization of intangibles490 570 
Advertising and promotion expense883 967 
Other operating expenses7,109 6,100 
Total non-interest expense48,416 46,910 
Income before income tax expense38,579 34,274 
Income tax expense7,689 6,361 
Net income$30,890 $27,913 
     
Basic earnings per share$0.48 $0.43 
Average basic shares outstanding64,766,619 64,768,977 
     
Diluted earnings per share$0.48 $0.43 
Average diluted shares outstanding64,912,738 64,949,442 



PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY 
Consolidated Financial Highlights 
(Dollars in Thousands, except share data) (Unaudited) 
   
 At or for the 
 Three months ended March 31, 
 2019  2018  
STATEMENTS OF INCOME:    
Net interest income$75,007  $73,277  
Provision for loan losses200  5,400  
Non-interest income12,188  13,307  
Non-interest expense48,416  46,910  
Income before income tax expense38,579  34,274  
Net income30,890  27,913  
Diluted earnings per share$0.48  $0.43  
Interest rate spread 3.16%   3.13%  
Net interest margin 3.40%   3.30%  
     
PROFITABILITY:    
Annualized return on average assets 1.29%   1.16%  
Annualized return on average equity 9.11%   8.65%  
Annualized return on average tangible equity (2)
 13.09%   12.73%  
Annualized non-interest expense to average assets (3)
 2.02%   1.95%  
Efficiency ratio (4)
 55.53%   54.18%  
     
ASSET QUALITY:    
Non-accrual loans$24,797  $45,938  
90+ and still accruing    
Non-performing loans24,797  45,938  
Foreclosed assets1,264  7,252  
Non-performing assets26,061  53,190  
Non-performing loans to total loans 0.34%   0.63%  
Non-performing assets to total assets 0.27%   0.55%  
Allowance for loan losses$55,353  $62,521  
Allowance for loan losses to total non-performing loans 223.22%   136.10%  
Allowance for loan losses to total loans 0.77%   0.86%  
     
AVERAGE BALANCE SHEET DATA:    
Assets$9,720,467  $9,763,813  
Loans, net7,133,680  7,243,724  
Earning assets8,822,447  8,895,306  
Core deposits6,093,500  6,115,793  
Borrowings1,352,685  1,628,684  
Interest-bearing liabilities6,781,729  6,957,785  
Stockholders' equity1,375,388  1,309,310  
Average yield on interest-earning assets 4.20%   3.89%  
Average cost of interest-bearing liabilities 1.04%   0.76%  
     
LOAN DATA:    
Mortgage loans:    
Residential$1,087,722  $1,128,308  
Commercial2,288,443  2,185,217  
Multi-family1,357,161  1,423,955  
Construction374,900  370,999  
Total mortgage loans5,108,226  5,108,479  
Commercial loans1,698,261  1,725,932  
Consumer loans421,370  460,740  
Total gross loans7,227,857  7,295,151  
Premium on purchased loans3,106  3,848  
Unearned discounts(33)  (35)  
Net deferred(7,086)  (7,826)  
Total loans$7,223,844  $7,291,138  


Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
(Dollars in Thousands, except share data)

The Company has presented the following non-GAAP (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) Book and Tangible Book Value per Share       
  At March 31, At December 31, 
  2019 2018 2018 
Total stockholders' equity $1,373,816 $1,304,886 $1,358,980 
Less: total intangible assets 417,688 419,721 418,178 
Total tangible stockholders' equity $956,128 $885,165 $940,802 
        
Shares outstanding 66,502,750 66,729,095 66,325,458 
        
Book value per share (total stockholders' equity/shares outstanding) $20.66 $19.55 $20.49 
Tangible book value per share (total tangible stockholders' equity/shares outstanding) $14.38 $13.27 $14.18 
        
(2) Annualized Return on Average Tangible Equity       
  Three Months Ended   
  March 31,   
  2019 2018   
Total average stockholders' equity $1,375,388 $1,309,310   
Less: total average intangible assets 418,000 420,086   
Total average tangible stockholders' equity $957,388 $889,224   
        
Net income $30,890 $27,913   
        
Annualized return on average tangible equity (net income/total average stockholders' equity) 13.09% 12.73%   
        
(3) Annualized Non-Interest Expense to Average Assets       
  Three Months Ended   
  March 31,   
  2019 2018   
Total annualized non-interest expense 196,354 190,246   
Average assets $9,720,467 $9,763,813   
        
Annualized non-interest expense/average assets 2.02% 1.95%   
        
(4) Efficiency Ratio Calculation       
  Three Months Ended   
  March 31,   
  2019 2018   
Net interest income $75,007 $73,277   
Non-interest income 12,188 13,307   
Total income $87,195 $86,584   
        
Non-interest expense $48,416 $46,910   
        
Efficiency ratio (non-interest expense/income) 55.53% 54.18%   


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY 
Net Interest Margin Analysis 
Quarterly Average Balances 
(Unaudited) (Dollars in Thousands) 
             
 March 31, 2019 December 31, 2018 
 Average   Average Average   Average 
 Balance Interest Yield/Cost Balance Interest Yield/Cost 
Interest-Earning Assets:            
Deposits$14,090 $88 2.50% $14,253 $81 2.28% 
Federal funds sold and other short-term investments56,283 453 3.28% 48,787 380 3.09% 
Investment securities  (1)
473,778 3,162 2.67% 475,815 3,159 2.66% 
Securities available for sale1,077,581 7,266 2.70% 1,049,645 6,962 2.65% 
Equity Securities, at fair value679  —% 700  —% 
Federal Home Loan Bank stock66,356 1,143 6.89% 65,685 1,281 7.80% 
Net loans:  (2)
            
Total mortgage loans5,051,528 55,006 4.36% 5,160,375 56,433 4.31% 
Total commercial loans1,654,594 20,510 4.98% 1,607,528 20,665 5.06% 
Total consumer loans427,558 4,783 4.54% 436,351 4,961 4.51% 
Total net loans7,133,680 80,299 4.51% 7,204,254 82,059 4.49% 
Total Interest-Earning Assets$8,822,447 $92,411 4.20% $8,859,139 $93,922 4.19% 
             
Non-Interest Earning Assets:            
Cash and due from banks93,168     92,040     
Other assets804,852     777,829     
Total Assets$9,720,467     $9,729,008     
             
Interest-Bearing Liabilities:            
Demand deposits$3,599,670 $6,831 0.77% $3,608,524 $6,262 0.69% 
Savings deposits1,051,951 480 0.19% 1,050,832 473 0.18% 
Time deposits777,423 3,183 1.66% 750,866 2,871 1.52% 
Total Deposits5,429,044 10,494 0.78% 5,410,222 9,606 0.70% 
             
Borrowed funds1,352,685 6,910 2.07% 1,393,965 6,983 1.99% 
Total Interest-Bearing Liabilities6,781,729 17,404 1.04% 6,804,187 16,589 0.97% 
             
Non-Interest Bearing Liabilities:            
Non-interest bearing deposits1,441,879     1,478,987     
Other non-interest bearing liabilities121,471     98,204     
Total non-interest bearing liabilities1,563,350     1,577,191     
Total Liabilities8,345,079     8,381,378     
Stockholders' equity1,375,388     1,347,630     
Total Liabilities and Stockholders' Equity$9,720,467     $9,729,008     
             
Net interest income  $75,007     $77,333   
             
Net interest rate spread    3.16%     3.22% 
Net interest-earning assets$2,040,718     $2,054,952     
             
Net interest margin  (3)
    3.40%     3.44% 
             
Ratio of interest-earning assets to total interest-bearing liabilities1.30x     1.30x     


  
(1)Average outstanding balance amounts shown are amortized cost.
(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.


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY 
Net Interest Margin Analysis 
Average Year to Date Balances 
(Unaudited) (Dollars in Thousands) 
             
 March 31, 2019 March 31, 2018 
 Average   Average Average   Average 
 Balance Interest Yield/Cost Balance Interest Yield/Cost 
Interest-Earning Assets:            
Deposits$14,090 $88 2.50% $16,696 $63 1.53% 
Federal funds sold and other short term investments56,283 453 3.28% 51,032 332 2.64% 
Investment securities  (1)
473,778 3,162 2.67% 469,774 3,144 2.68% 
Securities available for sale1,077,581 7,266 2.70% 1,036,236 6,071 2.35% 
Equity securities, at fair value679  —% 658 5 3.31% 
Federal Home Loan Bank stock66,356 1,143 6.89% 77,186 1,175 6.17% 
Net loans:  (2)
            
Total mortgage loans5,051,528 55,006 4.36% 5,096,047 51,510 4.04% 
Total commercial loans1,654,594 20,510 4.98% 1,680,143 19,126 4.57% 
Total consumer loans427,558 4,783 4.54% 467,534 4,905 4.26% 
Total net loans7,133,680 80,299 4.51% 7,243,724 75,541 4.18% 
Total Interest-Earning Assets$8,822,447 $92,411 4.20% $8,895,306 $86,331 3.89% 
             
Non-Interest Earning Assets:            
Cash and due from banks93,168     90,710     
Other assets804,852     777,797     
Total Assets$9,720,467     $9,763,813     
             
Interest-Bearing Liabilities:            
Demand deposits$3,599,670 $6,831 0.77% $3,609,361 $4,204 0.47% 
Savings deposits1,051,951 480 0.19% 1,088,783 493 0.18% 
Time deposits777,423 3,183 1.66% 630,957 1,538 0.99% 
Total Deposits5,429,044 10,494 0.78% 5,329,101 6,235 0.47% 
Borrowed funds1,352,685 6,910 2.07% 1,628,684 6,819 1.70% 
Total Interest-Bearing Liabilities$6,781,729 $17,404 1.04% $6,957,785 $13,054 0.76% 
             
Non-Interest Bearing Liabilities:            
Non-interest bearing deposits1,441,879     1,417,649     
Other non-interest bearing liabilities121,471     79,069     
Total non-interest bearing liabilities1,563,350     1,496,718     
Total Liabilities8,345,079     8,454,503     
Stockholders' equity1,375,388     1,309,310     
Total Liabilities and Stockholders' Equity$9,720,467     $9,763,813     
             
Net interest income  $75,007     $73,277   
             
Net interest rate spread    3.16%     3.13% 
Net interest-earning assets$2,040,718     $1,937,521     
             
Net interest margin  (3)
    3.40%     3.30% 
             
Ratio of interest-earning assets to total interest-bearing liabilities1.30x     1.28x     
             
(1)  Average outstanding balance amounts shown are amortized cost. 
(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 quarterly net interest margin for the previous five quarters.  
           
  3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Interest-Earning Assets:          
Securities 2.87% 2.87% 2.75% 2.72% 2.62%
Net loans 4.51% 4.49% 4.38% 4.26% 4.18%
Total interest-earning assets 4.20% 4.19% 4.07% 3.97% 3.89%
           
Interest-Bearing Liabilities:        
Total deposits 0.78% 0.70% 0.60% 0.53% 0.47%
Total borrowings 2.07% 1.99% 1.93% 1.82% 1.70%
Total interest-bearing liabilities 1.04% 0.97% 0.90% 0.82% 0.76%
           
Interest rate spread 3.16% 3.22% 3.17% 3.15% 3.13%
Net interest margin 3.40% 3.44% 3.38% 3.33% 3.30%
           
Ratio of interest-earning assets to interest-bearing liabilities 1.30x 1.30x 1.30x 1.29x 1.28x


CONTACT:  Investor Relations, 1-732-590-9300