Provident Financial Services Inc (PFS) Reports Q3 2023 Earnings and Declares Quarterly Cash Dividend
Provident Financial Services Inc (NYSE:PFS) reported a net income of $28.5 million or $0.38 per share for Q3 2023, compared to $32.0 million or $0.43 per share for Q2 2023.
The company's total loan portfolio increased by $137.1 million, or 5.2% annualized, to $10.67 billion at the end of Q3 2023.
Net interest income decreased by $2.9 million to $96.2 million for Q3 2023, due to higher funding costs.
The company declared a quarterly cash dividend of $0.24 per common share payable on November 24, 2023.
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Provident Financial Services Inc (NYSE:PFS) released its Q3 2023 earnings report on October 27, 2023. The company reported a net income of $28.5 million, or $0.38 per basic and diluted share for the quarter ended September 30, 2023. This is a decrease compared to the net income of $32.0 million, or $0.43 per basic and diluted share, for the quarter ended June 30, 2023. The net income for the nine months ended September 30, 2023, totaled $101.1 million, or $1.35 per basic and diluted share, compared to $126.6 million, or $1.69 per basic and diluted share, for the same period in 2022.
Financial Performance and Challenges
The decrease in net income for Q3 2023 was negatively impacted by a decrease in net interest income attributable to a decrease in lower-costing deposits, increased funding costs, and net interest spread compression. The net income was further impacted by increased provisions for credit losses due to a worsened economic forecast. Transaction costs related to the pending merger with Lakeland Bancorp, Inc. totaled $2.3 million for Q3 2023.
Financial Highlights
The company's total loan portfolio increased by $137.1 million, or 5.2% annualized, to $10.67 billion at the end of Q3 2023. The average yield on total loans increased 13 basis points compared to the trailing quarter, to 5.37% for Q3 2023. However, the average cost of deposits, including non-interest bearing deposits, increased 32 basis points from the trailing quarter, to 1.74% for Q3 2023.
Income Statement Details
Net interest income decreased by $2.9 million to $96.2 million for Q3 2023, from $99.1 million for the trailing quarter. This decrease was a result of higher funding costs, which more than offset the benefits of favorable loan repricing and loan growth. The net interest margin decreased 15 basis points to 2.96% for Q3 2023, from 3.11% for the trailing quarter.
Balance Sheet and Cash Flow Statement Highlights
At the end of Q3 2023, the company's loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.70 billion, with a weighted average interest rate of 7.62%. The company's total on-balance sheet liquidity and borrowing capacity was $3.59 billion, representing 144% of estimated uninsured and uncollateralized deposits. All borrowing capacity is immediately available.
Company's Analysis
Anthony J. Labozzetta, President and Chief Executive Officer, commented on the company's performance,
Provident produced good financial results this quarter, despite challenging market conditions. We had another strong quarter of growth in our loan portfolio, our loan pipeline remains robust and we saw solid performance from our fee businesses. Expenses were well managed and, while increases in interest rates and a shift in the funding mix continued to impact our net interest margin, our interest rate risk management remains sound. While our asset quality remained strong and stable, we built loan loss reserves largely due to changes in our CECL forecast.
Dividend Declaration
The company's Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on November 24, 2023 to stockholders of record as of the close of business on November 10, 2023.
Explore the complete 8-K earnings release (here) from Provident Financial Services Inc for further details.
This article first appeared on GuruFocus.
