PFS - Earnings call transcript Q1 2021 | Provident Financial Services, Inc.

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Operator

Good day and welcome to the Provident Financial Services Incorporated First Quarter Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. President Relations. Vice Senior Gleason, of Investor Leonard Please sir. go ahead,

Leonard Gleason

presenters Good ladies you, first and Operating Chief Officer, Today's Executive and thank Lyons. and President Martin; Thank Officer, quarter Chairman gentlemen, Chris Executive call. Tony our you morning, Tom Chief for and and Chief Chuck. President Officer, and us for earnings Senior Labozzetta; are Vice joining Financial

to that any review of statements of standard our you ask please their we our course take beginning be Before caution may results, as forward-looking that the made of note financial during call. today's

is in With will quarter. perspective on page disclaimer on full introduce, it's earnings Chris? Our Relations posted offer his provident.bank. website, to contained who that, release, been which Martin, first has our Investor our my morning's the to pleasure this Chris

Christopher Martin

Len, Thanks, appreciate good We everyone. and today. your participation morning,

vastly massive of the PPP was a from year-to-date. the earnings liquidity the offset was The the $X.XX in from was is of the on Our average like is PPP the X.XX% quarter yields, core on return the revenue to and improvement need the via quickly strong checks primary period pandemic's institutions, with Loan production. One were improved the GDP invest of include stabilization the share challenge assets to in and financial perseverance the XX% vaccine liquidity yields a portfolio unprecedented equity deposits The due and And for how continue now and monies added combined impact to tenacity as potential growth. of rollout, are per in SB originations return awash manner for are the of the our augmenting borrowing, and business deposits. was prospects support as which same and resultant second growth for consumers The and the drivers and on forgiveness acquisition. the a period compared due when were economy decreased on quarter. average deposit in first to proceeds constrained This the event. of the to impact we its growth trailing quarter pipeline the first improved XXXX. And weather new being are tangible company stimulus felt. loan this while horizon. presents the government, negative consistent PPP full the deposits the Yields provision annualized robust Annualized XX.X%. approaching with to balances stimulus accretive last Originations Earnings where we runoff. remaining rebounding program year $X.XX owners with success sensitive both from previous alleviated quarter by is to so were meaningful asset during phase. an prepayments of total the most And increase in loan and same to

SB the gain of $XX.X the the increases fees improved due core the rate saves in having due from insurance cost in results We we newest management near increased in extract acquisition One credit. expenses SB expense loan to costs increased are income cost Operating wealth increase assessment and prior from One. sale to and these and expenses assets a revenue And and fees the company's the potential and increase Retail announced the Non-interest to - total envision X.XX% the Bank-owned largely margin loans. more X.XX% increase occupancy Non-interest and added to compensation versus on assessment mortgage points average with stability from exceeded along a margin the increased was combined basis insurance another and for to Insurance, me, XXXX. term. during bank year, year's residential with claim. of prepayment improved addition small life Trust about revenue. X FDIC Now, excuse sadly of assets One enthusiastic sources we SB quarter. net benefited million Beacon also we income from prior from the projected the when an

Our efficiency was XX.XX%. ratio

interest. As of deferrals $XXX.X will over loans. go improve And to detail. to this in that for are of asset more quarter, number, commercial down million, which quality, approximately trailing And are numbers from continued million are XX% $XXX paying Tom

improve. like results for that We color vaccinated, this of optimistic ask economy more the with would continue to time, Provident. Tony? to the to At I along plans as more success Tony up the will to opens people strategic are are combination further and add

Anthony Labozzetta

Thanks, Chris, everyone. good morning, and

start have our that by Bank. exceeded expectations regard financial SB to we with merger me achieved Let the noting or One with

principles. segments win. company, our make the Select where This our we we plan celebrated that accomplish and reorganizing include to us Our commercial of of group our was call in promote successful all for in in rollout well credit tenants of easier of enhanced competencies, into values, and along it shifted can our to core plan. culminated focus efficiency focus core This throughout is will and development building banking. company-wide about has which and of inspired cultural involves energized recent all new Presently, which our we strategic together. our expand to integration are us rollout guiding we commercial new administration, out our our it what compete can on new one better certain of book markets the

branch our on Clinton, note, quarter, New the Of and We our during also want office network. base Jersey. consolidated we build in optimize branch exceptional funding our to

focused building non-spread our also income. We on are

activities, and relevant, our will Mergers employees. the make reduce net wealth channels excess streamline sources having us journey of make easy. our In continue remain simple, on to acquisitions be our addition our our of as strategy and bank, will and with improve of the Scale and are friction comprise of processes SB management and our we non-spread cost reduced income. efficient and To customers' for evaluate growth fast and part customers the transformation banking of become expanding more concentrating This our more digital all Beacon successful groups, a to cover future. through we has further to digital XX% business our One margins to other increasingly income and well revenue of in insurance Trust investing of offset for Insurance. long-term for of goal important will experience higher as and of our

have as office Those with see or quickly We and we the particularly sectors to COVID improving continue will remain pressure steadfast at that and our approach end economic centers that companies retail comparable herd don't Shifting that Manhattan, quickly a to in exhibit space, have grocery of the Many shutdown light anchor. in recovered deals and the immunity. loosens markets, store partnering we largely tunnel. cultures. strategic the pursuing our sectors

have to Fortunately, Provident on are utilize balance concentration banks does best the the presently sectors. with note excess of in not liquidity a power either dealing these of Most their sheet.

we or activity includes our competition, with only heightened result, the are periods increased interest credit our remain At good aggressive quality committed and we are leverage. we pricing sacrificing culture, elongated to more a As structure higher not seeing competition quantity. within firmly Provident, for lending which Despite seeing team.

been and $XXX approximately we At This we pull-through pipeline, loans, seeing payoffs improvement see remains rate strong the have of in have our the call billion, net a excluding end, his with and at With growth PPP underlying a I'll of for experience new strong advances million of Tom? This average reduction the high credit loan activity. for we good should our unanticipated associated for on and quarter level prepayments, not performance. large The in $X.X for financial the properties are that sale the quarter payoffs remainder rate over would funded the in our the offset if in the a we to that, turn loan. If comments quarter solid pipeline. year. line a marginal the or part the originated of loan growth. we're to pipeline doing of us Tom

Thomas Lyons

morning, and Tony, you, Thank everyone. good

X.XX%. quarter provisions and excluding which COVID or our loans costs. million. pre-provision favorably negative in earnings commitments to of for trailing the by provisions noted exposures, impacted $X.XX losses were while trailing negative loans consistent pre-tax As or of quarter. diluted the $XX.X X.XX% net the credit $XX.X is with million $XX.X reflected for $X.X compared the earlier, million, quarter, per with million were merger-related This share losses of $XX.X for or quarter off sheet and current response credit Earnings charges and pre-tax excluded on $X.XX Core income trailing per credit $XX.X million ROA was also provisions pre-provision share, on credit for diluted a million extend balance for

points Our net to the expanded trailing quarter margin interest versus basis X X.XX%.

by loan PPP yielding excess a reduced forgiveness, steeper costs partially yield from funding curve offset and lower benefits As liquidity. were

forgiveness. bearing for the billion million, March basis borrowed quarter Payoffs billion; basis increased points advances however, decreased to $XX trailing stable total versus of Average X fell quarter, PPP average trailing of We the rate at million quarter. or $X.X totals PPP $XXX XX, originations continue deposits deposit and since growth. of the of expect were deposits a this while including credit from million loan approximately in non-interest levels maintain million to at the core XXX securities, excess downward to X.XX%. at XX. and although, million for the quarter into liquidity XX pipeline excluding of were non-interest cost addition, the versus quarter-end cost quarter. quarter, average loan and borrowing the from of X% bearing the increased decreased quarter million deposits, funding loans loan X $X.X X loans. non-interest The trailing to deploy XX% to quarter. slightly as points at Loan Including repricing margin emphasize continuing basis loans points bearing trailing $XX total increased March last decreased to funds for including Average we X.XX% our XX $XXX the line deposits pipeline quarter in elevated, basis points to strong were Average $XXX X of

Our current quarter. $X.X a $XX benefit on a trailing million benefit the loans million provision for credit of in of the was compared quarter losses for with

XX all points We for loans of total weighted December XX a assets as XX metrics percentage improved grading Non-performing stage levels, quality and to basis average the compared points total annualized basis and versus assets classified X quarter trailing loan quarter. trailing at portfolio averages of decreased charge-offs the had basis points net non-performing of XX. basis loans points delinquencies, quarter. this Asset including criticizing the with from early

$X.X a secured third X.X% this of X.XX% granted by trailing secured by payment of diverse $X.X loans received billion, Loans that in increased related quarter. comprised $XXX paying represented are of properties, are that properties, trailing million X.X% million in that $XX million in of hotels, allowance $XX the deferral, been This with housing XX% total of loans. or $XXX in This including a commercial loans student deferrals loans second loans and in loans, Included million secured Non-interest the compares period, Of of $XX retail December $XXX,XXX deferral. by XX. peak PPP to $X from a $XX million and million million have loans of deferral further secured million are have $XXX declined $XXX the COVID-XX million period, with million. multifamily interest. XX.X% million $X million were X.XX% to balanced at of residential to or still income by of $XX Excluding their XX-day that quarter their $XX loans by initial compared loans. related, short-term restaurants, the million with or of versus mortgages deferral consists commercial $X million secured loans of

fees, Bank-owned As swaps loan wealth gains in offset loan life insurance partially level was and net in insurance agency income growth deposit on profits on and and by income reductions income, sales. management loan

assets average for quarter merger-related The institution utilities, and COVID-related were extend in of an rates, the charges our of an is and attributable the change to the non-interest X.XX% compared the the FDIC trailing credit removal credit large seasonal in in quarter quarter. increases employer and losses costs, trailing provisions to the to primarily on for to in share and annualized reset commitments in insurance current to of first X.XX% due a quarter increase Excluding payroll of costs, annual XXXX occupancy asset taxes. increase size increased assessment and including snow expenses

of Our income increase XX.X% rate effective to sources. tax proportion quarter, increased result trailing for derived from as taxable XX.X% the the from of in a an

effective rate an projecting of remainder tax We XXXX. approximately the are of currently XX% for

Operator

Thank you.

first Fitzgibbon [Operator begin the will now Piper ahead. will session. from Please We the come go And Sandler. with Mark question question-and-answer Instructions]

Mark Fitzgibbon

good morning. guys, Hey,

Christopher Martin

Good morning.

Anthony Labozzetta

morning. Good

Mark Fitzgibbon

break and the if what Tom, quarter, that curious, help adjustments flow NIM was out I about look purchase you through think fees coming the PPP quarters. accounting for the in could us might the this core us and margin like

Thomas Lyons

think the in the because about on and purchase see PPP points on points. a indication I are benefit range that be to we're rates I X.XX% that funding think X.XX% going core are so there we're X.XX% X current Yeah, Mark, a to basis no this was go going to to about market, basis. core of up, in disappearing, basis the quarter, accounting re-pricing those adjustments is which so The range. benefit purchase of somewhere X.XX% I don't really basis, it's accounting adjustments, X the the

Mark Fitzgibbon

little Okay. And XQ. high expenses bit a then, in were secondly, your

non-recurring your going Tom? belt you get back there. you quarter like forward think, had Sound expenses tighten some per do Can you items and sub-$XX-million in

Thomas Lyons

elevated. But over down well. larger costs snow That probably the $XX in there's Mark, have number. January a and further. stock-based to I you that market element some was we in we've of reset that removal We reasonable a trickles had couple with won't next recur. a the as expect The bit seen to million And price. were the quarters couple there contracts. said, payroll improvement is noted see compensation because February a facilities. as fixed items, plan, those manage bit do ESOP a on tax just variable little do elevate Obviously, we

of part X also billion. bank are jump large I to to the think the rates that now over was switch we assessment $XX quarters

bit an a be of challenge. that'll ongoing So

Mark Fitzgibbon

bit first you third for quarter? the sort it's was lot income down off then, a obviously the of the I that fall Tony. of taper insurance a quarter. the renewals And Okay. second in Or question in Maybe it the you'd Does assume do then quarter in little strong, which more typically? get because agency and a XQ is in see

Anthony Labozzetta

will, has which quarter look solid of have wasn't Mark. Sure. And high. it income the year good. bad commission-based it The best does it one for insurance. the COVID think as a because cycles Contingency-based market adjusted, income the as we're doing in really year, link the was good was so historically quarter business, premiums year and quarter been high the the obviously I it it Hi, insurance at was look a way real thing, It source, was on not last for same not quarter, contingency. income is it From a because right, last on at basis. this normal to is the to over

expect quarter. ramp tends the kind you'll of all - up. typically fourth been That's little So inch I again, first the George the second history. be see to so is quarter a strong, third And the the to lighter. we quarter building, again be But, in up quarters

Mark Fitzgibbon

Okay.

Thomas Lyons

mentioned having guess, expenses the saved its customers. on are with use in to branch, things his the Flemington. $XXX,XXX of within new if because of Hey, the we've It's the that the of side only $XX avoided, lease that's, able reduction, hires. was We Clinton did resources that make retained expense compensation, XX it's will, of location. those annually, Mark, Tony to in about away an to we about $XXX,XXX expenses end about But deposits been in organizations so XX% terms about you underperforming remarks, and close in those to I note, million. other transferred term. it We when one miles reached It item

Mark Fitzgibbon

more I'm involved sort of is for for important. of a I the of Jersey? be and I like obviously, accelerates that feels likely New in more Jersey. and had And that? banks lot in question to guess, ripe you some little you to looking in midsized in you've a given PFS are scale maybe seen lot consolidation is, think of last that New might we've consolidation Jersey the then, grow do northeast, less And so a Okay. New be to consolidation, curious, really got It be seems

Christopher Martin

is Chris. this Well,

most invited. all back I and market, at the to when always It myself, that relationships. we're what market. the how Boards, We goes know think look involved everybody Tony between have they in they're certainly, their thinking,

certainly we're if And so, part to then, also, that open of up, it. And done are they look with to and for have join we to always like that those make of how our one our business. the few be in like sense that we the because idea. well at And to conversation and have run we also culture, the that business we wealth would vernacular

to can continue vehicle another maybe at expand. we Beacon look we So where as Trust

Mark Fitzgibbon

Thank you.

Operator

question with next Markets. Please The RBC ahead. go Capital Duong Steven come will from

Steven Duong

morning, good guys. Hey,

Christopher Martin

Good morning.

Steven Duong

insurance Just full-year and just can year chance back the what by would do full-year on you last revenue, for so be? this the gauge have what year expectation the we revenue was

Thomas Lyons

Steve, in $X.X don't of it but have to think I number $X the I me, million exact front was million.

Anthony Labozzetta

correct. that. year XX% to next increase our for That's is And XX% roughly on expectation

Steven Duong

Okay.

the to right? for XXXX, XX% is XX% So that

Anthony Labozzetta

Correct.

Steven Duong

Okay, quarter? average PPP great. PPP, back the you balance And the then, have just loans do this on for

Thomas Lyons

me, of Let's line average the but, there. is the were don't see, year. can $XXX have end yeah, you I total million, period of a million at end we at $XXX in the do the front an straight of

Christopher Martin

of than a the batch nature the definitely Steve, of batch first second smaller is PPP.

the definitely size, average smaller. it's So definitely not it's

Steven Duong

dollar have in remaining? Okay. quarter you amount was And much have that the the in you accreted fees do and how

Thomas Lyons

million. with recognized were quarter Again, during the I Fees PPPX. $X Remaining guess, $X.X are million. refueled, fees were they

Steven Duong

and talked there Are of or let's your deposits just and you roll-off as guys that. do I you liquidity, that guess, those? borrowings the another in. just coming maturities you kind I assume year borrowings opportunities great. and have X to the Okay, have of let quarter then, and CDs about And CDs, progresses, of the guess,

Thomas Lyons

it's $X.X low next XX billion, basis point over there's up to pick months, Yeah, about XX and rates. current the the about a probably

Steven Duong

that... or the that Is CDs is

Thomas Lyons

Steve. want. if you of I That's you I a combination find... can both, pieces give can

Steven Duong

Yeah, that'd be you great if have that.

Thomas Lyons

Sure.

Anthony Labozzetta

Time deposits XXX. decreased

Thomas Lyons

go. basis Yeah, are for the are by or million; billion. Steve $X.XXX of we I million next favorable are total total about months. overall. a XX it's give the quarter, XX I $XXX borrowings a CDs $XXX for CDs said, point - Here as And you

Steven Duong

XX basis points.

Okay, that's in you last or the we rebound the swap me, from a going-run great. this And rate? income then should just the expect do income, one expect as

Thomas Lyons

it's going-run Steve. think rate the moved away kind from I risk position. our of least rate We've the near-term, at for interest swaps, of because

of We curve steepness products to attractive the made are the swapping for sensitive. The variable us. has rate asset the less

current taking we're at on fee - the income the point yielding this holding the than income higher So rather the assets. and spread

Anthony Labozzetta

[indiscernible] yeah, sort so. of holding own it's a margin, quite its it's

Thomas Lyons

saw pipeline of closer about. we as one also, Yeah. getting we just rate we're that's the the to the reasons talked The continuing portfolio liabilities reprice as combination rate, that's why and And to happening.

rate going and on April fact, a negotiated should all that rate range. bring basis is kind another on instruments our $X.X and we X.XX% non-maturity to annualized additional that's stabilize In of some to X.XX% the on margin in an so core that around deposits into the made in reductions factored position million basis, savings

Steven Duong

accounting? or X.XX% does not purchase And purchase X.XX% did that includes include Right. accounting say to you that

Thomas Lyons

gone, that the position because isn't are the It to I'm accounting those purchase liabilities the does. downward roll-off repricing levels. once is Again, to taking it's going

Steven Duong

there. Got I appreciate color right. you. the it. in All all Thank

Thomas Lyons

you. Thank

Operator

Please next Gunther Davidson with will Russell D.A. ahead. from come & The Co. go question

Russell Gunther

I guys. morning, comments... your appreciate good Hey,

Anthony Labozzetta

Good morning.

Russell Gunther

I ongoing you comments strategic on the appreciate moment. the morning. the plan are Good at

potentially talking what curious banking the could new contemplating Is different outlined this entering looking in markets. segments was there? provide you you're there color into So, tenet and expanding that time I at additional of about any commercial at on you terms

Anthony Labozzetta

Sure, you I'll give some around color that.

way lending deepen through makes that us to Philadelphia expand we're markets it levels. looking our not only as we we C&I for reorganized total the how business. more the new SBA the think to around The of Rockland, or structured a our How the but Westchester capacity increasing percentage do of that, credits on the efficient, exciting be things would bank, that at to area, the we are One our ourselves at potential potentially authority is - markets book? expand our island. our Looking more Greater we in get we us

in there. upon we're a touched to expand I not think position And I things some that So it. of just of all good the

process So there, hopefully that Russell. gives you a thought good

Russell Gunther

another talked extract Yeah, additional here that's the forever. you, you remarks just and potential so about Tony. more. then and exceeding from closures, Thank the prepared mentioned the thinking saves great also to also cost about And question, potential deal

initiatives the would the your So that thoughts to the forward. that set to that really expense as line or other to the is just what are is opportunity plan, of kind base the tenet as bottom curious focus to transformation? drop going reduce self-fund of digital And those on

Anthony Labozzetta

it's think right. little of both, a can if start, I I bit

a our and to digitalization up make I rid process tend more manual of get lot think is going time. us over of build that the of processes certainly to mundane efficient

In more us, this are for a in do in at our look in some the money and I future. - more to investing rationalizing of the it some it consistent give and of going process to an there. make time. expect not you that network, expenses that's as re-shift can't bottom re-shift our But I that's into terms percentage extract those line. can our to of we areas We going some costs so work at would exact

Russell Gunther

Yeah, of that's been my have asked answered. rest also very and helpful guys. questions The

So much. very you thank

Anthony Labozzetta

Thank you.

Operator

actually there's ahead. more with Please Scattergood. I session. Boenning and the came to would question-and-answer Erik through, back come will that from turn Martin X for the conference question that to just - over excuse like closing concludes Christopher any go remarks & question This me, Zwick

Erik Zwick

it good morning the right wire. made guys, I at Hey,

Anthony Labozzetta

Erik. morning, Good

Erik Zwick

net maybe the quarter-over-quarter. growth up commitments billion, potential question on going loan Just a healthy pipeline around unfunded thoughts and was loan and forward the quick for for $X growth your organic got loan

be you are to play out So those the and it forgiven year that enough as runoff remaining just from might might through whether loans the down? how and PPP offset curious think paid

Anthony Labozzetta

colleagues Yeah, jump I'll in. and my there then start

loan on - based getting we The pipeline I loans So we would as rates right, we're at, look this some that probably of see today is pull-through the what - is solid rational time, XX%. losing out some structures pretty we for hate at word, use to every what our mentioned. there. I and That say means we maybe to this touch more

about through XX% pulling we're that of stock. So

math, success be the the our percentage of project we back loan should in the I growth. in Given napkin math, of and year between net are don't the our - X% out see if we X% we prepayments, through end to the still sometimes control, good unanticipated same which still have that of at pull we

Erik Zwick

is as inclusive well? PPP X% to X%, And the running off that of that loans

Anthony Labozzetta

would looking it net. say I we're at

Erik Zwick

Thanks, today. great. Tony. Okay, That's all I had

Anthony Labozzetta

Okay.

You got it.

Operator

go for back This to remarks. sir. Christopher concludes Martin turn any to would conference Please our like closing I the question-and-answer session. over ahead, And

Christopher Martin

great you we as much. back thank and for continued we and appreciate Thank you time your today in you again, a Well, have PFS, will confidence very hope we weekend. go your

Anthony Labozzetta

Thank you.

Operator

Thank The conference attending today's has concluded. for presentation. now you

now may disconnect. You

Provident Financial Services (PFS) 1 May 212021 Q1 Earnings call transcript