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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. (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)
       
Assets March 31, 2019   December 31, 2018
       
Cash and due from banks $ 141,658     $ 86,195  
Short-term investments 56,196     56,466  
Total cash and cash equivalents 197,854     142,661  
       
Available for sale debt securities, at fair value 1,083,601     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 value 724     635  
Federal Home Loan Bank Stock 68,634     68,813  
Loans 7,223,844     7,250,588  
Less allowance for loan losses 55,353     55,562  
Net loans 7,168,491     7,195,026  
Foreclosed assets, net 1,264     1,565  
Banking premises and equipment, net 56,733     58,124  
Accrued interest receivable 31,180     31,475  
Intangible assets 417,688     418,178  
Bank-owned life insurance 192,894     193,085  
Other assets 111,512     73,703  
Total assets $ 9,802,614     $ 9,725,769  
       
Liabilities and Stockholders' Equity      
       
Deposits:      
Demand deposits $ 5,046,950     $ 5,027,708  
Savings deposits 1,051,904     1,051,922  
Certificates of deposit of $100,000 or more 478,043     414,848  
Other time deposits 326,559     335,644  
Total deposits 6,903,456     6,830,122  
Mortgage escrow deposits 27,363     25,568  
Borrowed funds 1,398,490     1,442,282  
Other liabilities 99,489     68,817  
Total liabilities 8,428,798     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, 2018 832     832  
Additional paid-in capital 1,023,671     1,021,533  
Retained earnings 657,375     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 Plan 4,337     4,504  
Total stockholders' equity 1,373,816     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 loans 20,510   19,126  
Consumer loans 4,783   4,905  
Available for sale debt securities, equity securities and Federal Home Loan Bank stock 8,409   7,251  
Investment securities held to maturity 3,162   3,144  
Deposits, federal funds sold and other short-term investments 541   395  
Total interest income 92,411   86,331  
         
Interest expense:        
Deposits 10,494   6,235  
Borrowed funds 6,910   6,819  
Total interest expense 17,404   13,054  
Net interest income 75,007   73,277  
Provision for loan losses 200   5,400  
Net interest income after provision for loan losses 74,807   67,877  
         
Non-interest income:        
Fees 6,097   6,639  
Wealth management income 4,079   4,400  
Bank-owned life insurance 1,696   1,264  
Net gain on securities transactions   1  
Other income 316   1,003  
Total non-interest income 12,188   13,307  
         
Non-interest expense:        
Compensation and employee benefits 28,369   27,869  
Net occupancy expense 6,857   6,745  
Data processing expense 3,969   3,606  
FDIC Insurance 739   1,053  
Amortization of intangibles 490   570  
Advertising and promotion expense 883   967  
Other operating expenses 7,109   6,100  
Total non-interest expense 48,416   46,910  
Income before income tax expense 38,579   34,274  
Income tax expense 7,689   6,361  
Net income $ 30,890   $ 27,913  
         
Basic earnings per share $ 0.48   $ 0.43  
Average basic shares outstanding 64,766,619   64,768,977  
         
Diluted earnings per share $ 0.48   $ 0.43  
Average diluted shares outstanding 64,912,738   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 losses 200     5,400    
Non-interest income 12,188     13,307    
Non-interest expense 48,416     46,910    
Income before income tax expense 38,579     34,274    
Net income 30,890     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 loans 24,797     45,938    
Foreclosed assets 1,264     7,252    
Non-performing assets 26,061     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, net 7,133,680     7,243,724    
Earning assets 8,822,447     8,895,306    
Core deposits 6,093,500     6,115,793    
Borrowings 1,352,685     1,628,684    
Interest-bearing liabilities 6,781,729     6,957,785    
Stockholders' equity 1,375,388     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    
Commercial 2,288,443     2,185,217    
Multi-family 1,357,161     1,423,955    
Construction 374,900     370,999    
Total mortgage loans 5,108,226     5,108,479    
Commercial loans 1,698,261     1,725,932    
Consumer loans 421,370     460,740    
Total gross loans 7,227,857     7,295,151    
Premium on purchased loans 3,106     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 investments 56,283   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 sale 1,077,581   7,266   2.70%   1,049,645   6,962   2.65%  
Equity Securities, at fair value 679     —%   700     —%  
Federal Home Loan Bank stock 66,356   1,143   6.89%   65,685   1,281   7.80%  
Net loans:  (2)
                       
Total mortgage loans 5,051,528   55,006   4.36%   5,160,375   56,433   4.31%  
Total commercial loans 1,654,594   20,510   4.98%   1,607,528   20,665   5.06%  
Total consumer loans 427,558   4,783   4.54%   436,351   4,961   4.51%  
Total net loans 7,133,680   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 banks 93,168           92,040          
Other assets 804,852           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 deposits 1,051,951   480   0.19%   1,050,832   473   0.18%  
Time deposits 777,423   3,183   1.66%   750,866   2,871   1.52%  
Total Deposits 5,429,044   10,494   0.78%   5,410,222   9,606   0.70%  
                         
Borrowed funds 1,352,685   6,910   2.07%   1,393,965   6,983   1.99%  
Total Interest-Bearing Liabilities 6,781,729   17,404   1.04%   6,804,187   16,589   0.97%  
                         
Non-Interest Bearing Liabilities:                        
Non-interest bearing deposits 1,441,879           1,478,987          
Other non-interest bearing liabilities 121,471           98,204          
Total non-interest bearing liabilities 1,563,350           1,577,191          
Total Liabilities 8,345,079           8,381,378          
Stockholders' equity 1,375,388           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 liabilities 1.30x           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 investments 56,283   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 sale 1,077,581   7,266   2.70%   1,036,236   6,071   2.35%  
Equity securities, at fair value 679     —%   658   5   3.31%  
Federal Home Loan Bank stock 66,356   1,143   6.89%   77,186   1,175   6.17%  
Net loans:  (2)
                       
Total mortgage loans 5,051,528   55,006   4.36%   5,096,047   51,510   4.04%  
Total commercial loans 1,654,594   20,510   4.98%   1,680,143   19,126   4.57%  
Total consumer loans 427,558   4,783   4.54%   467,534   4,905   4.26%  
Total net loans 7,133,680   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 banks 93,168           90,710          
Other assets 804,852           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 deposits 1,051,951   480   0.19%   1,088,783   493   0.18%  
Time deposits 777,423   3,183   1.66%   630,957   1,538   0.99%  
Total Deposits 5,429,044   10,494   0.78%   5,329,101   6,235   0.47%  
Borrowed funds 1,352,685   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 deposits 1,441,879           1,417,649          
Other non-interest bearing liabilities 121,471           79,069          
Total non-interest bearing liabilities 1,563,350           1,496,718          
Total Liabilities 8,345,079           8,454,503          
Stockholders' equity 1,375,388           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 liabilities 1.30x           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