![]() 1 America’s Community Bankers Community Bank Investors Conference Community Bank Investors Conference November 2, 2006 November 2, 2006 Exhibit 99.1 |
![]() 2 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," "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 related to the economic environment, particularly in the market areas in which Provident Financial Services, Inc. (the “Company”) operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, 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, in particular, risks and uncertainties associated with the successful merger with, and integration of the operations of, First Morris Bank & Trust, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity. The Company wishes to caution readers not to place undue reliance on any such forward- looking statements, which speak only as of the date made. The Company wishes to advise 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 undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Forward Looking Statements |
![]() 3 Additional Information Provident will file with the Securities and Exchange Commission (SEC) a registration statement, a prospectus that will also serve as the proxy statement for the vote of the stockholders of First Morris, and other relevant documents concerning the proposed transaction. Stockholders of First Morris are urged to read the registration statement and the prospectus when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of the prospectus, as well as other filings containing information about Provident at the SEC’s Internet site (http://www.sec.gov). Copies of the prospectus and the SEC filings that will be incorporated by reference in the prospectus can be obtained, without charge, by directing a request to John F. Kuntz, General Counsel, Provident Financial Services, Inc., 830 Bergen Avenue, Jersey City, NJ 07306, tel: (201) 333-1000. |
![]() 4 Corporate Profile • A $5.8 billion community bank • Shares traded on NYSE: ticker symbol PFS • Market capitalization: $1.22 billion • 76 retail offices serving 10 counties in northern and central New Jersey • Third largest Bank headquartered in New Jersey • Announced Acquisition of First Morris Bank & Trust October 16, 2006 – $571 million in Assets – 9 Branches in affluent Morris County |
![]() 5 BALANCE SHEET: 9/30/06 12/31/05 Total assets $5,823,997 $6,052,374 Total loans $3,757,736 $3,739,122 Total deposits $3,946,233 $3,921,458 Total investments $1,269,890 $1,537,665 Total borrowings $809,696 $996,552 Total stockholders' equity $1,013,162 $1,076,295 Financial Highlights 3rd Quarter 2006 Comparisons 3rd Quarter 2006 Comparisons |
![]() 6 (Dollars in thousands) INCOME STATEMENT: 9/30/06 9/30/05 Net income $40,305 $43,728 Diluted earnings per share $0.65 $0.65 Return on equity 5.15% 5.28% Return on assets 0.92% 0.93% Net interest margin 3.28% 3.35% Efficiency ratio 60.58% 59.34% 9 months ended Financial Highlights 3rd Quarter 2006 Comparisons 3rd Quarter 2006 Comparisons |
![]() 7 Ongoing Strategies for Earnings-per-Share Growth • • Managing Our Franchise Managing Our Franchise – Resource Management Challenges – Balance Sheet Management and Positioning – Asset Quality Maintenance • • Managing Our Capital Managing Our Capital – Share Repurchase Programs – Cash Dividends – Focused and Rational Market Expansion |
![]() 8 Resource Management Core Revenue Driver is Net Interest Income Core Revenue Driver is Net Interest Income Flat Yield Curve Presents Challenges: Preserving NIM Flat Yield Curve Presents Challenges: Preserving NIM 3.38% 3.38% 3.43% 3.27% 3.31% 3.31% 3.34% 3.33% 3.17% 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Net Interest Margin (%) |
![]() 9 Resource Management $29.9 $30.1 $30.2 $29.5 $30.0 $33.2 $31.4 $32.3 $34.3 874 893 961 926 915 913 898 892 895 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Non-Interest Expense (in millions) # of FTEs Managing Overhead Costs Managing Overhead Costs Increasing Workforce Productivity Increasing Workforce Productivity Includes $1.4 million voluntary resignation initiative |
![]() 10 Balance Sheet Management Decreasing Dependence on Investment Decreasing Dependence on Investment Securities and Wholesale Borrowings* Securities and Wholesale Borrowings* ($ in millions) $1,900 $1,782 $1,708 $1,635 $1,538 $1,451 $1,327 $1,270 $1,239 $1,166 $1,109 $1,100 $970 $875 $822 $1,997 $1,048 $784 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Investment Securities Borrowings* * Excludes Subordinated Debentures |
![]() 11 Balance Sheet Management Originating Loans to Drive Revenue Originating Loans to Drive Revenue $3,712 $3,655 $3,660 $3,660 $3,661 $3,690 $3,406 $3,720 $3,716 70.9% 65.1% 65.8% 66.7% 67.7% 68.9% 62.6% 72.6% 73.9% 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Avg Net Loans (in millions) Loans as a % of Avg Earning Assets |
![]() 12 Balance Sheet Management Loan Portfolio Mix: Continuing Emphasis on Loan Portfolio Mix: Continuing Emphasis on Commercial Loans Commercial Loans 12/31/05 Residential Mortgage 47% Consumer 15% Construction 8% Commercial R.E. 19% Commercial & Industrial 11% 9/30/06 Residential Mortgage 44% Consumer 16% Construction 7% Commercial R.E. 22% Commercial & Industrial 11% |
![]() 13 Balance Sheet Management 12/31/05 Non-Interest DDA 12% Time Deposits 37% MMA 3% Savings 35% NOW 13% Deposit Mix: Re-affirming Core Customer Relationships/ Deposit Mix: Re-affirming Core Customer Relationships/ Defending our Market Share Defending our Market Share 9/30/06 Non-Interest DDA 11% Time Deposits 41% MMA 3% Savings 34% NOW 11% |
![]() 14 Consistent Performance Consistent Performance Non-performing Assets as a % of Total Assets 0.26% 0.25% 0.23% 0.22% 0.22% 0.22% 0.23% 0.19% 0.12% 0.10% 0.10% 0.11% 0.11% 0.13% 0.09% 0.10% 0.08% 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Mid-Atlantic Banks & Thrifts* PFS Asset Quality Maintenance * SNL Quarterly Bank and Thrift Digest |
![]() 15 • • Completed first program 4th Quarter 2004: Completed first program 4th Quarter 2004: – approximately 4.0 million shares repurchased • • Completed second program 3rd Quarter 2005: Completed second program 3rd Quarter 2005: – approximately 3.7 million shares repurchased • • Third program authorized July, 2005: Third program authorized July, 2005: – approximately 3.6 million shares authorized for repurchase • • Fourth program authorized April, 2006: Fourth program authorized April, 2006: – approximately 3.4 million shares authorized for repurchase – approximately 0.2 million shares left for repurchase as of September 30, 2006 • • Fifth program authorized July, 2006: Fifth program authorized July, 2006: – approximately 3.3 million shares authorized for repurchase • • 18.2% of issued and outstanding shares repurchased since IPO 18.2% of issued and outstanding shares repurchased since IPO Capital Management Share Repurchases |
![]() 16 Stockholder Value via steady Cash Dividend Increases Stockholder Value via steady Cash Dividend Increases Cash Dividend Declared $0.04 $0.05 $0.06 $0.07 $0.08 $0.09 $0.10 Apr-03 July-03 Jan-04 Jan-05 Apr-05 Oct-05 Apr-06 Current Dividend Yield = 2.15% (based on 10/23/06 share price of $18.58) Capital Management Cash Dividends |
![]() 17 Disciplined Approach to Market Expansion Continuing to Seek Out Accretive Acquisition Continuing to Seek Out Accretive Acquisition Opportunities Opportunities • focus on existing footprint and contiguous markets • evaluating potential transactions that are additive to the franchise and earnings • must add long-term stockholder value |
![]() 18 Current Footprint Current Footprint 76 Branch Offices Serving 10 Counties in 76 Branch Offices Serving 10 Counties in Northern and Central New Jersey Northern and Central New Jersey Enhancing Franchise Value |
![]() 19 Enhancing Franchise Value Acquisition of First Morris Bank & Trust Adds 9 Branches in Morris County |
![]() 20 Focusing on Markets with Strong Demographics 2006 Median Household Income ($)* Projected Growth 2006 - 2011 (%)* Middlesex 75,672 16.62 Monmouth 78,682 19.07 Morris 96,695 19.53 NJ State Median 66,848 17.05 U.S. National Median 51,546 17.77 Middlesex Monmouth Morris New Jersey Provident Deposit Market Share Rank* # 9 of 155 Institutions # 5 of 45 Institutions # 11 of 32 Institutions # 8 of 34 Institutions (Pro-Forma) * Source: SNL Financial/ESRI Source: SNL Financial as per FDIC/SOD at 6/30/06. Data is pro-forma for pending mergers and excludes brokerage/institutional deposits. |
![]() 21 Strategic Expansion into Highly Strategic Expansion into Highly Attractive Morris County Attractive Morris County |
![]() 22 Summary of Significant Terms FMJE’s 60.2% loan to deposit ratio provides opportunity to substitute higher yielding loans for lower yielding securities Potential Revenue From Potential Revenue From Incremental Lending Synergies: Incremental Lending Synergies: Fixed at 2.1337 Provident shares for each FMJE share Exchange Ratio: Exchange Ratio: Tax-free exchange with election mechanism Transaction Structure: Transaction Structure: 39% of FMJE’s expenses Estimated Cost Savings: Estimated Cost Savings: $124.1 million Transaction Value: Transaction Value: 50% stock / 50% cash Consideration: Consideration: $39.75 Purchase Price per Share: Purchase Price per Share: 1 Quarter 2007 Expected Close: Expected Close: FMJE shareholders Customary regulatory approvals Required Approvals: Required Approvals: st |
![]() 23 • Accretive to both GAAP and Cash EPS without assumed asset substitution • Double digit internal rate of return without assumed asset substitution • Significantly expands Provident’s presence in demographically attractive Morris County Market • Moves Provident from 26 to 8 position with a 4.5% market share in one of New Jersey’s best banking markets • Enhances Provident’s organic growth profile • Commercial / CRE orientation of loan portfolio continues Provident’s transition to a more commercial-like balance sheet Compelling Transaction Economics Franchise Enhancing Transaction Rationale • Cash portion of consideration to be funded from cash and low- yielding short-term securities • Strong pro forma tangible common equity ratio of 9.6% will support continued share repurchases, de novo expansion and accretive franchise-enhancing acquisitions Effective Deployment of Conversion Proceeds th th |
![]() 24 • • Positioned to take advantage of return to Positioned to take advantage of return to normalized yield curve normalized yield curve • • Anticipate increased new branch activity in Anticipate increased new branch activity in conjunction with branch rationalization conjunction with branch rationalization • • Redoubling efforts to expand small-business Redoubling efforts to expand small-business customer relationships customer relationships • • Ongoing expense management Ongoing expense management • • Ongoing asset quality maintenance Ongoing asset quality maintenance Looking Ahead |
![]() 25 America’s Community Bankers Community Bank Investors Conference Community Bank Investors Conference November 2, 2006 November 2, 2006 |