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

Published

ISELIN, N.J., April 18, 2024 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $32.1 million, or $0.43 per basic and diluted share for the three months ended March 31, 2024, compared to $27.3 million, or $0.36 per basic and diluted share, for the three months ended December 31, 2023 and $40.5 million, or $0.54 per basic and diluted share, for the three months ended March 31, 2023. Net income for the trailing quarter ended December 31, 2023 was negatively impacted by a $3.0 million charge for contingent litigation reserves and a $2.0 million write-down of a foreclosed property. Transaction costs related to our pending merger with Lakeland Bancorp, Inc. (“Lakeland”) totaled $2.2 million for the three months ended March 31, 2024, compared with $2.5 million in the trailing quarter and $1.1 million for the respective 2023 period. In addition, prior year earnings for the three months ended March 31, 2023, included a $2.0 million gain recognized from the sale of a foreclosed commercial property.

Performance Highlights for the First Quarter of 2024

  • The Company’s total commercial and industrial ("C&I") loan portfolio increased $72.1 million, or 11.5% annualized, to $2.51 billion as of March 31, 2024, from $2.44 billion as of December 31, 2023.
  • Net interest income decreased $2.1 million to $93.7 million for the three months ended March 31, 2024, from $95.8 million for the trailing quarter as a result of one fewer day in the current quarter and higher funding costs, which more than offset the benefits of favorable loan repricing.
  • The net interest margin decreased five basis points to 2.87% for the quarter ended March 31, 2024, from 2.92% for the trailing quarter.
  • The weighted average yield on interest-earning assets for the quarter ended March 31, 2024 increased two basis points to 5.06%, compared to the trailing quarter, while the weighted average cost of interest-bearing liabilities for the quarter ended March 31, 2024 increased nine basis points to 2.80%, compared to the trailing quarter. The increase in funding costs was attributable to a decrease in lower-costing deposits, an increase in average borrowings and unfavorable repricing of deposits, reflective of current market conditions.
  • As of March 31, 2024, the Company's loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.08 billion, with a weighted average interest rate of 7.42%, compared to $1.09 billion, with a weighted average interest rate of 7.08% as of December 31, 2023.
  • Asset quality improved in the quarter, as non-performing loans as of March 31, 2024 declined to $47.6 million, or 0.44% of total loans, compared to $49.6 million, or 0.46% of total loans as of December 31, 2023. Criticized and classified loans fell to $226.3 million, or 2.09% of loans as of March 31, 2024, from $241.3 million, or 2.22% of loans as of December 31, 2023.
  • As of March 31, 2024, CRE loans related to office properties totaled $483.9 million, compared to $483.1 million as of December 31, 2023. This portfolio constitutes only 4.5% of total loans and has an average loan size of $1.9 million, with just four relationships greater than $10.0 million. Approximately 41.0% of the Company's office loans are to medical offices and the portfolio does not have significant central business district exposure. Delinquencies in the office portfolio as of March 31, 2024 were limited to four loans totaling $5.9 million.
  • As of March 31, 2024, Multi-family CRE loans on New York City properties totaled $188.7 million, compared to $186.8 million as of December 31, 2023. This portfolio constitutes only 1.7% of total loans and has an average loan size of $2.8 million. Approximately $117.4 million of these loans are collateralized by rent stabilized apartments and all are performing.
  • The Company recorded a $200,000 provision for credit losses on loans for the quarter ended March 31, 2024, compared to a $500,000 provision for the trailing quarter. The decrease in the provision for credit losses for the quarter was primarily attributable to an improved economic forecast for the current quarter within our Current Expected Credit Loss ("CECL") model, partially offset by an increase in specific reserves on impaired credits. The allowance for credit losses as a percentage of loans decreased to 0.98% as of March 31, 2024, from 0.99% as of December 31, 2023.
  • Wealth Management and Insurance Agency income increased 8.3% and 16.9%, respectively, versus the same period in 2023. Total non-interest income was 18.2% of net revenue for the quarter ended March 31, 2024.
  • The Company's annualized adjusted pre-tax, pre-provision ("PTPP") return on average assets(1) was 1.28% for the quarter ended March 31, 2024, compared to 1.25% for the quarter ended December 31, 2023.
  • Annualized returns on average assets, average equity and average tangible equity(1) were 0.92%, 7.60% and 10.40%, respectively for the three months ended March 31, 2024, compared with 0.77%, 6.60% and 9.15%, respectively for the trailing quarter.

Anthony J. Labozzetta, President and Chief Executive Officer commented, “Our first quarter results reflect strong operating performance and returns despite continuing pressure on funding costs and the net interest margin. Our team has performed admirably to manage through these conditions and continued to deliver exceptional customer service. Additionally, our asset quality remains strong and our credit risk is well managed, with limited exposure to the market segments of greatest concern in the current operating environment.”

Regarding the Company's pending merger with Lakeland, Mr. Labozzetta added, “We are delighted that all regulatory approvals required for the merger have been obtained and we are diligently moving forward with our subordinated debt offering which is a required closing condition of the merger. We are excited to complete the closing of the merger promptly to bring together two prominent high performing banks with like-minded cultures, unwavering commitment to employee and customer experience, a dedication to serving our communities, and a keen focus on financial performance and stockholder returns.”

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on May 31, 2024 to stockholders of record as of the close of business on April 29, 2024.

Results of Operations

Three months ended March 31, 2024 compared to the three months ended December 31, 2023

For the three months ended March 31, 2024, net income was $32.1 million, or $0.43 per basic and diluted share, compared to net income of $27.3 million, or $0.36 per basic and diluted share, for the three months ended December 31, 2023. Transaction costs related to our pending merger with Lakeland totaled $2.2 million and $2.5 million for the three months ended March 31, 2024 and December 31, 2023, respectively.

Net Interest Income and Net Interest Margin

Net interest income decreased $2.1 million to $93.7 million for the three months ended March 31, 2024, from $95.8 million for the trailing quarter. The decrease in net interest income reflected one fewer calendar day in the first quarter and a decrease in lower-costing deposits, combined with unfavorable repricing of deposits, partially offset by the favorable repricing of adjustable-rate loans.

The Company’s net interest margin decreased five basis points to 2.87% for the quarter ended March 31, 2024, from 2.92% for the trailing quarter. The weighted average yield on interest-earning assets for the quarter ended March 31, 2024 increased two basis points to 5.06%, compared to the trailing quarter. The weighted average cost of interest-bearing liabilities for the quarter ended March 31, 2024 increased nine basis points from the trailing quarter to 2.80%. The average cost of interest-bearing deposits for the quarter ended March 31, 2024 increased 13 basis points to 2.60%, compared to 2.47% for the trailing quarter. The average cost of total deposits, including non-interest-bearing deposits, was 2.07% for the quarter ended March 31, 2024, compared to 1.95% for the trailing quarter. The average cost of borrowed funds for the quarter ended March 31, 2024 was 3.60%, compared to 3.71% for the quarter ended December 31, 2023.

Provision for Credit Losses

For the quarter ended March 31, 2024, the Company recorded a $200,000 provision for credit losses on loans, compared with a provision for credit losses of $500,000 for the quarter ended December 31, 2023. The decrease in the provision for credit losses for the quarter was primarily attributable to an improved economic forecast for the current quarter within our CECL model, partially offset by an increase in specific reserves on impaired credits. For the three months ended March 31, 2024, net charge-offs totaled $971,000, or an annualized 4 basis points of average loans, compared with net charge-offs of $863,000, or an annualized 3 basis points of average loans, for the trailing quarter.

Non-Interest Income and Expense

For the three months ended March 31, 2024, non-interest income totaled $20.8 million, an increase of $1.8 million, compared to the trailing quarter. Insurance agency income increased $2.0 million to $4.8 million for the three months ended March 31, 2024, compared to the trailing quarter, mainly due to the receipt of contingent commissions and additional business in the current quarter. Wealth management income increased $645,000 to $7.5 million for the three months ended March 31, 2024, compared to the trailing quarter, mainly due to an increase in the average market value of assets under management during the period. Additionally, BOLI income increased $173,000 for the three months ended March 31, 2024, compared to the trailing quarter, primarily due to a benefit claim recognized in the current quarter. Partially offsetting these increases to non-interest income, other income decreased $829,000 to $798,000 for the three months ended March 31, 2024, compared to the trailing quarter, primarily due to a reduction in gains on the sale of SBA loans, while fee income decreased $190,000 to $5.9 million for the three months ended March 31, 2024, compared to the trailing quarter, primarily due to decreases in loan related fees and debit card income.

Non-interest expense totaled $71.3 million for the three months ended March 31, 2024, a decrease of $3.2 million, compared to $74.5 million for the trailing quarter. Other operating expense decreased $5.3 million to $10.3 million for the three months ended March 31, 2024, compared to $15.6 million for the trailing quarter, largely due to a prior quarter $3.0 million charge for contingent litigation reserves, combined with a prior quarter $2.0 million write-down of a foreclosed property. FDIC insurance decreased $618,000 to $2.3 million for the three months ended March 31, 2024, compared to the trailing quarter, primarily due to the FDIC special assessment of $775,000 recorded in the prior quarter, partially offset with a current quarter FDIC special assessment of $195,000. Additionally, merger expenses related to our pending merger with Lakeland decreased $275,000 to $2.2 million for the three months ended March 31, 2024, compared to the trailing quarter. Partially offsetting these decreases in non-interest expense, compensation and benefits expense increased $1.3 million to $40.0 million for the three months ended March 31, 2024, compared to $38.8 million for the trailing quarter. The increase in compensation and benefit expense was primarily due to increases in payroll taxes, employee medical benefits, stock-based compensation and salary expense, partially offset by a decrease in the accrual for incentive compensation. For the three months ended March 31, 2024, the Company recorded a $506,000 provision benefit for credit losses on off-balance sheet credit exposures, compared to a $1.4 million provision benefit for the trailing quarter. The provision benefits for credit losses on off-balance sheet credit exposures for both periods were primarily due to decreases in loans approved and awaiting closing. Additionally, net occupancy expense increased $723,000 to $8.5 million for the three months ended March 31, 2024, compared to the trailing quarter, largely due to seasonal increases in snow removal costs and Common Area Maintenance ("CAM") expense.

The Company’s annualized adjusted non-interest expense as a percentage of average assets(1) totaled 1.99% for both the quarter ended March 31, 2024 and the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(1) was 60.82% for the three months ended March 31, 2024, compared to 61.32% for the trailing quarter.

Income Tax Expense

For the three months ended March 31, 2024, the Company's income tax expense was $10.9 million with an effective tax rate of 25.3%, compared with income tax expense of $12.5 million with an effective tax rate of 31.3% for the trailing quarter. The decrease in tax expense for the three months ended March 31, 2024, compared with the trailing quarter was largely due to a decrease in taxable income, combined with a discrete item related to deferred taxes on stock-based compensation recorded in the prior quarter and the 2024 sunset of the 2.5% NJ Corporate Business Tax surcharge. This prior quarter discrete item and the sunset of the 2.5% NJ Corporate Business Tax surcharge were also the primary reasons for the decrease in the effective tax rate for the three months ended March 31, 2024, compared with the trailing quarter.

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

For the three months ended March 31, 2024, net income was $32.1 million, or $0.43 per basic and diluted share, compared to net income of $40.5 million, or $0.54 per basic and diluted share, for the three months ended March 31, 2023. Transaction costs related to our pending merger with Lakeland totaled $2.2 million and $1.1 million for the three months ended March 31, 2024 and March 31, 2023, respectively.

Net Interest Income and Net Interest Margin

Net interest income decreased $14.7 million to $93.7 million for the three months ended March 31, 2024, from $108.3 million for same period in 2023. The decrease in net interest income was primarily due to a decrease in lower-costing deposits and an increase in borrowings, combined with unfavorable repricing of both deposits and borrowings, partially offset by originations of new loans and the favorable repricing of adjustable-rate loans.

The Company’s net interest margin decreased 61 basis points to 2.87% for the quarter ended March 31, 2024, from 3.48% for the same period last year. The weighted average yield on interest-earning assets for the quarter ended March 31, 2024 increased 43 basis points to 5.06%, compared to 4.63% for the quarter ended March 31, 2023. The weighted average cost of interest-bearing liabilities increased 126 basis points for the quarter ended March 31, 2024 to 2.80%, compared to 1.54% for the first quarter of 2023. The average cost of interest-bearing deposits for the quarter ended March 31, 2024 was 2.60%, compared to 1.39% for the same period last year. Average non-interest-bearing demand deposits decreased $478.8 million to $2.07 billion for the quarter ended March 31, 2024, compared to $2.55 billion for the quarter ended March 31, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.07% for the quarter ended March 31, 2024, compared with 1.05% for the quarter ended March 31, 2023. The average cost of borrowed funds for the quarter ended March 31, 2024 was 3.60%, compared to 2.48% for the same period last year.

Provision for Credit Losses

For the quarter ended March 31, 2024, the Company recorded a $200,000 provision for credit losses on loans, compared with a $6.0 million provision for credit losses for the quarter ended March 31, 2023. The decrease in the provision for credit losses was largely a function of the period-over-period improvement in the economic forecast. For the three months ended March 31, 2024, net charge-offs totaled $971,000, or an annualized 4 basis points of average loans, compared with net charge-offs of $671,000, or an annualized 3 basis points of average loans, for the quarter ended March 31, 2023.

Non-Interest Income and Expense

Non-interest income totaled $20.8 million for the quarter ended March 31, 2024, a decrease of $1.3 million, compared to the same period in 2023. Other income decreased $2.5 million to $798,000 for the three months ended March 31, 2024, compared to the quarter ended March 31, 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property which was recorded in the prior year, combined with a decrease in gains on sales of SBA loans. Fee income decreased $475,000 to $5.9 million for the three months ended March 31, 2024, compared to the prior year quarter, primarily due to decreases in commercial loan prepayment fees and deposit fee income. Partially offsetting these decreases in non-interest income, insurance agency income increased $691,000 to $4.8 million for the three months ended March 31, 2024, compared to the quarter ended March 31, 2023, largely due to an increase in business activity. Wealth management income increased $573,000 to $7.5 million for the three months ended March 31, 2024, compared to the quarter ended March 31, 2023, mainly due to an increase in the average market value of assets under management during the period, combined with an increase in mutual fund fees. Additionally, BOLI income increased $333,000 to $1.8 million three months ended March 31, 2024, compared to the prior year quarter, primarily due a benefit claim recognized in the current quarter, combined with an increase in equity valuations.

For the three months ended March 31, 2024, non-interest expense totaled $71.3 million, an increase of $1.8 million, compared to the three months ended March 31, 2023. Compensation and benefits expense increased $1.3 million to $40.0 million for three months ended March 31, 2024, compared to $38.7 million for the same period in 2023. The increase was primarily due to an increase in salary expense associated with Company-wide annual merit increases, combined with increases in the accrual for incentive compensation, payroll taxes and employee insurance, partially offset by a decrease in stock-based compensation. Data processing expense increased $1.3 million to $6.8 million for three months ended March 31, 2024, compared to $5.5 million for the same period in 2023. The increase in data processing expense was primarily due to increases in software service, telecommunication and electronic business banking expenses. Merger-related expenses related to our pending combination with Lakeland increased $1.1 million to $2.2 million for the three months ended March 31, 2024, compared to the same period in 2023. Additionally, FDIC insurance expense increased $335,000 to $2.3 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to a current quarter FDIC special assessment of $195,000, combined with an increase in the assessment rate. Partially offsetting these increases in non-interest expense, other operating expense decreased $729,000 to $10.3 million for the three months ended March 31, 2024, compared to $11.1 million for the three months ended March 31, 2023, largely due to a decrease in professional fees, partially offset by additional expenses related to foreclosed commercial real estate properties. For the three months ended March 31, 2024, the Company recorded a $506,000 provision benefit for credit losses on off-balance sheet credit exposures, compared to a $739,000 provision charge for the same period in 2023. The $1.2 million decrease in the provision for credit losses on off-balance sheet credit exposures for the current quarter was primarily due to a decrease in loans approved and awaiting closing.

The Company’s annualized adjusted non-interest expense as a percentage of average assets(1) was 1.99% for the quarter ended March 31, 2024, compared to 2.00% 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)(1) was 60.82% for the three months ended March 31, 2024 compared to 51.85% for the same respective period in 2023.

Income Tax Expense

For the three months ended March 31, 2024, the Company's income tax expense was $10.9 million with an effective tax rate of 25.3%, compared with $14.5 million with an effective tax rate of 26.3% for the three months ended March 31, 2023. The decrease in tax expense for the three months ended March 31, 2024, compared with the same period last year was largely the result of a decrease in taxable income and the 2024 sunset of the 2.5% NJ Corporate Business Tax surcharge, while the decrease in the effective tax rate for the three months ended March 31, 2024, compared with the three months ended March 31, 2023, was largely due to the 2024 sunset of the 2.5% NJ Corporate Business Tax surcharge and a decrease in the proportion of income derived from taxable sources.

Asset Quality

The Company’s total non-performing loans as of March 31, 2024 were $47.6 million, or 0.44% of total loans, compared $49.6 million, or 0.46% of total loans as of December 31, 2023 and $35.5 million, or 0.35% of total loans as of March 31, 2023. The $2.0 million decrease in non-performing loans as of March 31, 2024, compared to the trailing quarter, consisted of a $4.6 million decrease in non-performing commercial loans and a $771,000 decrease in non-performing construction loans, partially offset by a $1.6 million increase in non-performing multi-family loans, a $794,000 increase in non-performing residential mortgage loans, a $787,000 increase in non-performing commercial mortgage loans and a $127,000 increase in non-performing consumer loans. As of March 31, 2024, impaired loans totaled $40.1 million with related specific reserves of $8.2 million, compared with impaired loans totaling $42.3 million with related specific reserves of $2.9 million as of December 31, 2023. As of March 31, 2023, impaired loans totaled $27.5 million with related specific reserves of $1.4 million.

As of March 31, 2024, the Company’s allowance for credit losses related to the loan portfolio was 0.98% of total loans, compared to 0.99% and 0.91% as of December 31, 2023 and March 31, 2023, respectively. The allowance for credit losses decreased $771,000 to $106.4 million as of March 31, 2024, from $107.2 million as of December 31, 2023. The decrease in the allowance for credit losses on loans at March 31, 2024 compared to December 31, 2023 was due to net charge-offs of $971,000, partially offset by a $200,000 provision for credit losses.

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

 March 31, 2024 December 31, 2023 March 31, 2023
 Number of Loans PrincipalBalanceof Loans Number of Loans PrincipalBalanceof Loans Number of Loans PrincipalBalanceof Loans
 (Dollars in thousands)
Accruing past due loans:              
30 to 59 days past due:              
Commercial mortgage loans        3  $        5,052           1  $        825           1  $        3,000  
Multi-family mortgage loans        4           12,069           1           3,815           1           3,875  
Construction loans        —           —           —           —           —           —  
Residential mortgage loans        11           3,568           13           3,429           9           2,064  
Total mortgage loans        18           20,689           15           8,069           11           8,939  
Commercial loans        11           4,493           6           998           4           1,070  
Consumer loans        22           803           31           875           22           2,106  
Total 30 to 59 days past due        51  $        25,985           52  $        9,942           37  $        12,115  
               
60 to 89 days past due:              
Commercial mortgage loans        3  $        1,148           —  $        —           4  $        1,528  
Multi-family mortgage loans        —           —           1           1,635           1           785  
Construction loans        —           —           —           —           —           —  
Residential mortgage loans        6           804           8           1,208           6           639  
Total mortgage loans        9           1,952           9           2,843           11           2,952  
Commercial loans        3           332           3           198           2           3,028  
Consumer loans        8           755           5           275           1           150  
Total 60 to 89 days past due        20           3,039           17           3,316           14           6,130  
Total accruing past due loans        71  $        29,024           69  $        13,258           51  $        18,245  
               
Non-accrual:              
Commercial mortgage loans        8  $        5,938           7  $        5,151           5  $        6,815  
Multi-family mortgage loans        2           2,355           1           744           1           1,548  
Construction loans        —           —           1           771           2           1,874  
Residential mortgage loans        10           1,647           7           853           12           1,744  
Total mortgage loans        20           9,940           16           7,519           20           11,981  
Commercial loans        21           36,892           26           41,487           30           23,129  
Consumer loans        11           760           10           633           10           346  
Total non-accrual loans        52  $        47,592           52  $        49,639           60  $        35,456  
               
Non-performing loans to total loans            0.44 %             0.46 %             0.35 %
Allowance for loan losses to total non-performing loans            223.63 %             215.96 %             261.61 %
Allowance for loan losses to total loans            0.98 %             0.99 %             0.91 %

As of March 31, 2024 and December 31, 2023, the Company held foreclosed assets of $11.3 million and $11.7 million, respectively. During the three months ended March 31, 2024, there were two properties sold with an aggregate carrying value of $327,000. Foreclosed assets as of March 31, 2024 consisted primarily of commercial real estate. Total non-performing assets as of March 31, 2024 decreased $2.4 million to $58.9 million, or 0.42% 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 March 31, 2024 were $14.13 billion, a $79.9 million decrease from December 31, 2023. The decrease in total assets was primarily due to a $33.6 million decrease in total investments and a $31.0 million decrease in total loans.

The Company’s loan portfolio totaled $10.84 billion as of March 31, 2024 and $10.87 billion as of December 31, 2023. The loan portfolio consisted of the following:

 March 31, 2024 December 31, 2023
 (Dollars in thousands)
Mortgage loans:   
Commercial$        4,353,799  $        4,512,411 
Multi-family         1,825,888           1,812,500 
Construction         711,417           653,246 
Residential         1,152,185           1,164,956 
Total mortgage loans         8,043,289           8,143,113 
Commercial loans         2,514,550           2,442,406 
Consumer loans         295,125           299,164 
Total gross loans         10,852,964           10,884,683 
Premiums on purchased loans         1,439           1,474 
Net deferred fees and unearned discounts         (11,696)          (12,456)
Total loans$        10,842,707  $        10,873,701 

During the three months ended March 31, 2024, the loan portfolio had net decreases of $158.6 million of commercial mortgage loans, $12.8 million of residential mortgage loans, and $4.0 million of consumer loans, partially offset by net increases of $72.1 million of commercial loans, $58.2 million of construction loans, and $13.4 million of multi-family loans. All commercial loans, which consist of commercial real estate, multi-family, commercial and construction loans, represented 86.7% of the loan portfolio as of March 31, 2024, compared to 86.5% as of December 31, 2023.

For the three months ended March 31, 2024, loan funding, including advances on lines of credit, totaled $622.7 million, compared with $809.2 million for the same period in 2023.

As of March 31, 2024, the Company’s unfunded loan commitments totaled $1.97 billion, including commitments of $1.14 billion in commercial loans, $486.9 million in construction loans and $49.9 million in commercial mortgage loans. Unfunded loan commitments as of December 31, 2023 and March 31, 2023 were $2.09 billion and $2.05 billion, respectively.

The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.08 billion as of March 31, 2024, compared to $1.09 billion and $1.54 billion as of December 31, 2023 and March 31, 2023, respectively.

Total investment securities were $2.10 billion as of March 31, 2024, a $33.6 million decrease from December 31, 2023. This decrease was primarily due to repayments of mortgage-backed securities, an increase in unrealized losses on available for sale debt securities and maturities and calls of certain municipal and agency bonds, partially offset by purchases of mortgage-backed and municipal securities.

Total deposits decreased $193.6 million during the three months ended March 31, 2024, to $10.10 billion. The decrease in total deposits was primarily due to a decrease in brokered deposits of $98.0 million and a decrease in municipal deposits of $57.0 million. Total savings and demand deposit accounts decreased $129.7 million to $9.07 billion as of March 31, 2024, while total time deposits decreased $64.0 million to $1.03 billion as of March 31, 2024. The decrease in savings and demand deposits consisted of a $149.1 million decrease in non-interest-bearing demand deposits and a $14.7 million decrease in savings deposits, partially offset by a $28.6 million increase in interest bearing demand deposits and a $5.5 million increase in money market deposits. The decrease in time deposits consisted of an $84.8 million decrease in brokered time deposits, partially offset by a $20.9 million increase in retail time deposits.

Borrowed funds increased $88.1 million during the three months ended March 31, 2024, to $2.06 billion. The increase in borrowings was largely due to asset funding requirements. Borrowed funds represented 14.6% of total assets as of March 31, 2024, an increase from 13.9% as of December 31, 2023.

Stockholders’ equity increased $4.6 million during the three months ended March 31, 2024, to $1.70 billion, primarily due to net income earned for the period, partially offset by an increase in unrealized losses on available for sale debt securities and cash dividends paid to stockholders. For the three months ended March 31, 2024, common stock repurchases totaled 86,325 shares at an average cost of $14.84 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. As of March 31, 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 March 31, 2024 were $22.33 and $16.30, 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 northern and central New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Queens and Nassau Counties in New York. The 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 Friday, April 19, 2024 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended March 31, 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 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, the effects of the recent turmoil 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, the ability to complete, or any delays in completing, the pending merger between the Company and Lakeland; any failure to realize the anticipated benefits of the pending merger transaction when expected or at all; certain restrictions during the pendency of the transaction that may impact the Company’s ability to pursue certain business opportunities or strategic transactions; the possibility that the pending merger transaction may be more expensive to complete than anticipated, including as a result of conditions imposed by regulators, unexpected conditions, factors or events, diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee 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 pre-tax, pre-provision return on average assets, annualized return on 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)
  
 As of or for the Three months ended
 March 31, December 31, March 31,
  2024  2023  2023
Statement of Income     
Net interest income$        93,670   $        95,788   $        108,324  
Provision for credit losses         186            497            6,001  
Non-interest income         20,807            18,968            22,152  
Non-interest expense         71,321            74,491            69,485  
Income before income tax expense         42,970            39,768            54,990  
Net income         32,082            27,312            40,536  
Diluted earnings per share$        0.43   $        0.36   $        0.54  
Interest rate spread         2.26 %          2.33 %          3.09 %
Net interest margin         2.87 %          2.92 %          3.48 %
      
Profitability     
Annualized return on average assets         0.92 %          0.77 %          1.20 %
Annualized return on average equity         7.60 %          6.60 %          10.11 %
Annualized return on average tangible equity (1)         10.40 %          9.15 %          14.10 %
Annualized adjusted non-interest expense to average assets (3)         1.99 %          1.98 %          2.00 %
Efficiency ratio (4)         60.82 %          61.32 %          51.85 %
      
Asset Quality     
Non-accrual loans$        47,592   $        49,639   $        35,456  
90+ and still accruing         —            —            —  
Non-performing loans         47,592            49,639            35,456  
Foreclosed assets         11,324            11,651            13,743  
Non-performing assets         58,916            61,290            49,199  
Non-performing loans to total loans         0.44 %          0.46 %          0.35 %
Non-performing assets to total assets         0.42 %          0.43 %          0.36 %
Allowance for loan losses$        106,429   $        107,200   $        92,758  
Allowance for loan losses to total non-performing loans         223.63 %          215.96 %          261.61 %
Allowance for loan losses to total loans         0.98 %          0.99 %          0.91 %
Net loan charge-offs$        971   $        863   $        671  
Annualized net loan charge-offs to average total loans         0.04 %          0.03 %          0.03 %
      
Average Balance Sheet Data      
Assets$        14,093,767   $        14,114,626   $        13,732,708  
Loans, net         10,668,992            10,660,201            10,093,856  
Earning assets         12,862,910            12,823,541            12,418,530  
Core deposits         9,129,244            9,210,315            9,720,797  
Borrowings         1,940,981            1,873,822            1,224,279  
Interest-bearing liabilities         10,074,106            10,020,726            9,264,564  
Stockholders' equity         1,698,170            1,642,854            1,626,370  
Average yield on interest-earning assets         5.06 %          5.04 %          4.63 %
Average cost of interest-bearing liabilities         2.80 %          2.71 %          1.54 %
      
      
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) Book and Tangible Book Value per ShareThree Months Ended
 March 31, December 31, March 31,
  2024  2023  2023
Total stockholders' equity$        1,695,162   $        1,690,596   $        1,640,080  
Less: total intangible assets         457,239            457,942            460,132  
Total tangible stockholders' equity$        1,237,923   $        1,232,654   $        1,179,948  
      
Shares outstanding         75,928,193            75,537,186            75,467,890  
      
Book value per share (total stockholders' equity/shares outstanding)$        22.33   $        22.38   $        21.73  
               
Tangible book value per share (total tangible stockholders' equity/shares outstanding)$        16.30   $        16.32   $        15.64  
      
      
(2) Annualized Return on Average Tangible Equity     
 Three Months Ended
 March 31, December 31, March 31,
  2024  2023  2023
Total average stockholders' equity$        1,698,170   $        1,642,854   $        1,626,370  
Less: total average intangible assets         457,695            458,410            460,631  
Total average tangible stockholders' equity$        1,240,475   $        1,184,444   $        1,165,739  
      
Net income$        32,082   $        27,312   $        40,536  
      
Annualized return on average tangible equity (net income/total average tangible stockholders' equity)         10.40 %          9.15 %          14.10 %
      
      
(3) Annualized Pre-Tax, Pre-Provision ("PTPP") Return on Average Assets      
 Three Months Ended
 March 31, December 31, March 31,
  2024  2023  2023
Net income$        32,082   $        27,312   $        40,536  
Adjustments to net income:     
Provision for credit losses         186            497            6,001  
Credit loss (benefit) expense for off-balance sheet credit exposure         (506)           (1,360)           739  
Merger-related transaction costs         2,202            2,477            1,100  
Contingent litigation reserves         —            3,000            —  
Income tax expense         10,888            12,456            14,454  
PTPP income$        44,852   $        44,382   $        62,830  
      
Annualized PTPP income$        180,394   $        176,081   $        254,811  
Average assets$        14,093,767   $        14,114,626   $        13,732,708  
      
Annualized PTPP return on average assets         1.28 %          1.25 %          1.86 %
      
      
(4) Annualized Adjusted Non-Interest Expense to Average Assets     
 Three Months Ended
 March 31, December 31, March 31,
  2024  2023  2023
Reported non-interest expense$        71,321   $        74,491   $        69,485  
Adjustments to non-interest expense:     
Credit loss (benefit) expense for off-balance sheet credit exposures         (506)           (1,360)           739  
Merger-related transaction costs         2,202            2,477            1,100  
Contingent litigation reserves$        —   $        3,000   $        —  
Adjusted non-interest expense$        69,625   $        70,374   $        67,646  
      
Annualized adjusted non-interest expense$        280,030   $        279,201   $        274,342  
      
Average assets$        14,093,767   $        14,114,626   $        13,732,708  
      
Annualized adjusted non-interest expense/average assets         1.99 %          1.98 %          2.00 %
      
      
(5) Efficiency Ratio Calculation     
 Three Months Ended
 March 31, December 31, March 31,
  2024  2023  2023
Net interest income$        93,670   $        95,788   $        108,324  
Non-interest income         20,807            18,968            22,152  
Total income$        114,477   $        114,756   $        130,476  
      
Adjusted non-interest expense$        69,625   $        70,374   $        67,646  
      
Efficiency ratio (adjusted non-interest expense/income)         60.82 %          61.32 %          51.85 %

 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
March 31, 2024 (Unaudited) and December 31, 2023
(Dollars in Thousands)
    
AssetsMarch 31, 2024 December 31, 2023
Cash and due from banks$        158,306  $        180,241 
Short-term investments         46           14 
Total cash and cash equivalents         158,352           180,255 
Available for sale debt securities, at fair value         1,666,306           1,690,112 
Held to maturity debt securities, net (fair value of $341,459 as of March 31, 2024 (unaudited) and $352,601 as of December 31, 2023)         354,671           363,080 
Equity securities, at fair value         1,341           1,270 
Federal Home Loan Bank stock         77,750           79,217 
Loans         10,842,707           10,873,701 
Less allowance for credit losses         106,429           107,200 
Net loans         10,736,278           10,766,501 
Foreclosed assets, net         11,324           11,651 
Banking premises and equipment, net         69,487           70,998 
Accrued interest receivable         58,677           58,966 
Intangible assets         457,239           457,942 
Bank-owned life insurance         243,513           243,050 
Other assets         295,980           287,768 
Total assets$        14,130,918  $        14,210,810 
    
Liabilities and Stockholders' Equity   
Deposits:   
Demand deposits$        7,905,961  $        8,020,889 
Savings deposits         1,160,951           1,175,683 
Certificates of deposit of $250,000 or more         223,639           218,549 
Other time deposits         808,341           877,393 
Total deposits         10,098,892           10,292,514 
Mortgage escrow deposits         43,881           36,838 
Borrowed funds         2,058,098           1,970,033 
Subordinated debentures         10,744           10,695 
Other liabilities         224,141           210,134 
Total liabilities         12,435,756           12,520,214 
    
Stockholders' equity:   
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued         —           — 
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,012 shares issued and 75,928,193 shares outstanding as of March 31, 2024 and 75,537,186 outstanding as of December 31, 2023.         832           832 
Additional paid-in capital         990,582           989,058 
Retained earnings         988,480           974,542 
Accumulated other comprehensive loss         (151,585)          (141,115)
Treasury stock         (129,062)          (127,825)
Unallocated common stock held by the Employee Stock Ownership Plan         (4,085)          (4,896)
Common Stock acquired by the Directors' Deferred Fee Plan         (2,546)          (2,694)
Deferred Compensation - Directors' Deferred Fee Plan         2,546           2,694 
Total stockholders' equity         1,695,162           1,690,596 
Total liabilities and stockholders' equity$        14,130,918  $        14,210,810 

 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three months ended March 31, 2024, December 31, 2023 and March 31, 2023
(Dollars in Thousands, except per share data) (Unaudited)
      
 Three Months Ended
 March 31, December 31, March 31,
  2024   2023   2023 
Interest and dividend income:     
Real estate secured loans$        107,456  $        109,112  $        95,988 
Commercial loans         36,100           34,939           28,683 
Consumer loans         4,523           5,020           4,242 
Available for sale debt securities, equity securities and Federal Home Loan Bank stock         12,330           12,042           11,430 
Held to maturity debt securities         2,268           2,303           2,368 
Deposits, federal funds sold and other short-term investments         1,182           755           845 
Total interest income         163,859           164,171           143,556 
      
Interest expense:     
Deposits         52,534           50,579           27,510 
Borrowed funds         17,383           17,527           7,476 
Subordinated debt         272           277           246 
Total interest expense         70,189           68,383           35,232 
Net interest income         93,670           95,788           108,324 
Provision charge for credit losses         186           497           6,001 
Net interest income after provision for credit losses         93,484           95,291           102,323 
      
Non-interest income:     
Fees         5,912           6,102           6,387 
Wealth management income         7,488           6,843           6,915 
Insurance agency income         4,793           2,759           4,102 
Bank-owned life insurance         1,817           1,644           1,484 
Net gain on securities transactions         (1)          (7)          (5)
Other income         798           1,627           3,269 
Total non-interest income         20,807           18,968           22,152 
      
Non-interest expense:     
Compensation and employee benefits         40,048           38,773           38,737 
Net occupancy expense         8,520           7,797           8,410 
Data processing expense         6,783           6,457           5,508 
FDIC Insurance         2,272           2,890           1,937 
Amortization of intangibles         705           721           762 
Advertising and promotion expense         966           1,100           1,232 
Credit loss (benefit) expense for off-balance sheet exposures         (506)          (1,360)          739 
Merger-related expenses         2,202           2,477           1,100 
Other operating expenses         10,331           15,636           11,060 
Total non-interest expense         71,321           74,491           69,485 
Income before income tax expense         42,970           39,768           54,990 
Income tax expense         10,888           12,456           14,454 
Net income$        32,082  $        27,312  $        40,536 
      
Basic earnings per share$        0.43  $        0.36  $        0.54 
Average basic shares outstanding 75,260,029   74,995,705   74,645,336 
      
Diluted earnings per share$        0.43  $        0.36  $        0.54 
Average diluted shares outstanding 75,275,660   75,041,545   74,702,527 

 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Dollars in Thousands) (Unaudited)
 March 31, 2024 December 31, 2023 March 31, 2023
 Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost
Interest-Earning Assets:                 
Deposits$        87,848  $        1,182          5.41 % $        54,998  $        745          5.37 % $        72,022  $        845          4.76 %
Federal funds sold and other short-term investments 21           —          — %  838           10          4.39 %  29           —          3.70 %
Available for sale debt securities 1,673,950   10,022          2.39 %  1,647,906           9,858          2.39 %  1,808,619   10,402          2.30 %
Held to maturity debt securities, net (1) 357,246   2,268          2.54 %  364,433           2,303          2.53 %  383,907   2,368          2.47 %
Equity securities, at fair value         1,099           —          — %          1,016           —          — %          991           —          — %
Federal Home Loan Bank stock 73,754   2,308          12.52 %  94,149   2,184          9.28 %  59,106   1,028          6.96 %
Net loans: (2)                 
Total mortgage loans 7,990,218   107,456          5.33 %  8,028,300   109,112          5.34 %  7,643,140   95,988          5.02 %
Total commercial loans 2,381,965   36,100          6.03 %  2,329,430   34,939          5.90 %  2,146,658   28,683          5.37 %
Total consumer loans 296,809   4,523          6.13 %  302,471   5,020          6.58 %  304,058   4,242          5.66 %
Total net loans 10,668,992   148,079          5.51 %  10,660,201   149,071          5.50 %  10,093,856   128,913          5.12 %
Total interest-earning assets$        12,862,910  $        163,859          5.06 % $        12,823,541  $        164,171          5.04 % $        12,418,530  $        143,556          4.63 %
                  
Non-Interest Earning Assets:                 
Cash and due from banks 116,563       111,610       142,953     
Other assets         1,114,294               1,179,475       1,171,225     
Total assets$        14,093,767      $        14,114,626      $        13,732,708     
                  
Interest-Bearing Liabilities:                 
Demand deposits$        5,894,062  $        41,566          2.84 % $        5,856,916  $        39,648          2.69 % $        5,771,582  $        21,920          1.54 %
Savings deposits 1,163,181   637          0.22 %  1,183,857   602          0.20 %  1,398,419   453          0.13 %
Time deposits 1,065,170   10,331          3.90 %  1,095,468   10,329          3.74 %  859,773   5,137          2.42 %
Total Deposits 8,122,413   52,534          2.60 %  8,136,241   50,579          2.47 %  8,029,774   27,510          1.39 %
                  
Borrowed funds 1,940,981   17,383          3.60 %  1,873,822   17,527          3.71 %  1,224,279   7,476          2.48 %
Subordinated debentures         10,712           272          10.23 %          10,663           277          10.27 %          10,511           246          9.51 %
Total interest-bearing liabilities 10,074,106   70,189          2.80 %  10,020,726   68,383          2.71 %  9,264,564   35,232          1.54 %
                  
Non-Interest Bearing Liabilities:                 
Non-interest bearing deposits 2,072,001       2,169,542       2,550,796     
Other non-interest bearing liabilities 249,490       281,504       290,978     
Total non-interest bearing liabilities 2,321,491       2,451,046       2,841,774     
Total liabilities 12,395,597       12,471,772       12,106,338     
Stockholders' equity 1,698,170       1,642,854       1,626,370     
Total liabilities and stockholders' equity$        14,093,767      $        14,114,626      $        13,732,708     
                  
Net interest income  $        93,670      $        95,788      $        108,324   
                  
Net interest rate spread            2.26 %             2.33 %             3.09 %
Net interest-earning assets$        2,788,804      $        2,802,815      $        3,153,966     
                  
Net interest margin (3)             2.87 %             2.92 %             3.48 %
                  
Ratio of interest-earning assets to total interest-bearing liabilities1.28x     1.28x     1.34x    

(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.

 3/31/24 12/31/23 9/30/23 6/30/23 3/31/23
 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Interest-Earning Assets:         
Securities        2.87 %         2.79 %         2.67 %         2.53 %         2.52 %
Net loans        5.51 %         5.50 %         5.37 %         5.24 %         5.12 %
Total interest-earning assets        5.06 %         5.04 %         4.89 %         4.73 %         4.63 %
          
Interest-Bearing Liabilities:         
Total deposits        2.60 %         2.47 %         2.22 %         1.85 %         1.39 %
Total borrowings        3.60 %         3.71 %         3.74 %         3.41 %         2.48 %
Total interest-bearing liabilities        2.80 %         2.71 %         2.50 %         2.13 %         1.54 %
          
Interest rate spread        2.26 %         2.33 %         2.39 %         2.60 %         3.09 %
Net interest margin        2.87 %         2.92 %         2.96 %         3.11 %         3.48 %
          
Ratio of interest-earning assets to interest-bearing liabilities1.28x 1.28x 1.30x 1.31x 1.34x

 
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Dollars in Thousands) (Unaudited)
            
 March 31, 2024 March 31, 2023
 Average   Average Average   Average
 Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-Earning Assets:           
Deposits$        87,848  $        1,182          5.41 % $        72,022  $        845          4.76 %
Federal funds sold and other short term investments         21           —          — %          29           —          3.70 %
Available for sale debt securities         1,673,950           10,022          2.39 %          1,808,619           10,402          2.30 %
Held to maturity debt securities, net (1)         357,246           2,268          2.54 %          383,907           2,368          2.47 %
Equity securities, at fair value         1,099           —          — %          991           —          — %
Federal Home Loan Bank stock         73,754           2,308          12.52 %          59,106           1,028          6.96 %
Net loans: (2)           
Total mortgage loans         7,990,218           107,456          5.33 %          7,643,140           95,988          5.02 %
Total commercial loans         2,381,965           36,100          6.03 %          2,146,658           28,683          5.37 %
Total consumer loans         296,809           4,523          6.13 %          304,058           4,242          5.66 %
Total net loans         10,668,992           148,079          5.51 %          10,093,856           128,913          5.12 %
Total interest-earning assets$        12,862,910  $        163,859          5.06 % $        12,418,530  $        143,556          4.63 %
            
Non-Interest Earning Assets:           
Cash and due from banks         116,563               142,953     
Other assets         1,114,294               1,171,225     
Total assets$        14,093,767      $        13,732,708     
            
Interest-Bearing Liabilities:           
Demand deposits$        5,894,062  $        41,566          2.84 % $        5,771,582  $        21,920          1.54 %
Savings deposits         1,163,181           637          0.22 %          1,398,419           453          0.13 %
Time deposits         1,065,170           10,331          3.90 %          859,773           5,137          2.42 %
Total deposits         8,122,413           52,534          2.60 %          8,029,774           27,510          1.39 %
Borrowed funds         1,940,981           17,383          3.60 %          1,224,279           7,476          2.48 %
Subordinated debentures         10,712           272          10.23 %          10,511           246          9.51 %
Total interest-bearing liabilities$        10,074,106  $        70,189          2.80 % $        9,264,564  $        35,232          1.54 %
            
Non-Interest Bearing Liabilities:           
Non-interest bearing deposits         2,072,001               2,550,796     
Other non-interest bearing liabilities         249,490               290,978     
Total non-interest bearing liabilities         2,321,491               2,841,774     
Total liabilities         12,395,597               12,106,338     
Stockholders' equity         1,698,170               1,626,370     
Total liabilities and stockholders' equity$        14,093,767      $        13,732,708     
            
Net interest income  $        93,670      $        108,324   
            
Net interest rate spread            2.26 %             3.09 %
Net interest-earning assets$        2,788,804      $        3,153,966     
            
Net interest margin (3)             2.87 %             3.48 %
            
Ratio of interest-earning assets to total interest-bearing liabilities1.28x     1.34x    

(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.

 Three Months Ended
 March 31, 2024 March 31, 2023 March 31, 2022
Interest-Earning Assets:     
Securities        2.87 %         2.52 %         1.47 %
Net loans        5.51 %         5.12 %         3.80 %
Total interest-earning assets        5.06 %         4.63 %         3.23 %
      
Interest-Bearing Liabilities:     
Total deposits        2.60 %         1.39 %         0.25 %
Total borrowings        3.60 %         2.48 %         0.86 %
Total interest-bearing liabilities        2.80 %         1.54 %         0.29 %
      
Interest rate spread        2.26 %         3.09 %         2.94 %
Net interest margin        2.87 %         3.48 %         3.02 %
      
Ratio of interest-earning assets to interest-bearing liabilities1.28x 1.34x 1.39x

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

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Source: Provident Financial Services, Inc.

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