PFS - Earnings call transcript Q4 2021 | Provident Financial Services, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Provident Financial Services, Inc. Fourth Quarter and Year-End Earnings Release. 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. to Relations. conference like Duarte to now Investor of would turn over the Adriano I ahead, go Please sir.

Adriano Duarte

earnings are Chuck. thank and Officer, us quarter Tom you you, Senior for Today's Thank Good and joining for morning, Executive Vice Lyons. our Chief Tony and CEO, President everyone President and call. Labozzetta; presenters Financial fourth

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

Our full in on this Investor release earnings our posted morning's page been to disclaimer is Relations contained which has website, provident.bank. the

Tony on Now it's Tony? quarter. introduce will offer Labozzetta, the to fourth his perspective my pleasure who

Tony Labozzetta

performance share. fourth $X.XX Thank earnings of for with you, and strong the morning, Adriano quarter per good everyone. Provident financial had

in with of metrics performance average by assets in driven solid average lines, liquidity and on in of a the our strong tangible on annualized return in our assets. of equity produced our of fee-based earning and revenue That average credit which resulting all excess quarterly XX.XX%. drove and a return was Our of increase X.XX% combined some improved the deployment increased businesses, key business growth expansion growth,

cash quarterly a dividend approved Board share. Our $X.XX of

During stock the shares at XXX,XXX $XX.XX quarter, common share. we also of an of our repurchased approximately per average price

and well levels. capitalized exceeds strong comfortably position remains Our capital

commercial focus growing Our especially business lending. on continues to be lines, our

quarter, of that credit refinanced XX% for commercial to below saw elevated exhibit underlying a the increase $XXX our partially from continues our PPP average increase productivity. fourth the of approximately our driven historical to were at group over an by adjusted in unacceptable nominal million XX%, loan production. utilization In us. our quarter, strong terms deemed and sale quarter. by lending prepayments commercial loans, the closed percentage Prepayments remain XX%. prior Approximately line still asset were of offset we the the new or of Our strong In fourth of we XX.X% of away

Our outpace pressures production the of operating environment. continues the to current

grew we rate an such, of portfolio, PPP, at As excluding commercial X.X%. annualized our loan

We commercial our during have in loan the fourth quarter. substantial pull-through pipeline

solid confident XXXX, we adjusted loans as $XXX move million. faces pipeline into on very closing, growth billion. our structure clients market providing remains and be pull-through from team activity our and is on these heading we pressure approximately pending and focus pipeline, with customer seeing rates banks The the XXXX. $X.XX Despite at The strong competitive our nonbanks. into loan challenges, about a our we including continues to and However, are best-in-class are experience, approximately lending

basis increased Our expected points rate pipeline last XX quarter. from

stable, good of pull-through and should prepayments strong first have our we expect if XXXX. the quarter in growth We loan are

comprise continues XX.X% market at improving our improve. to allowance the XX.X% stable to total and losses. an to And asset in our deposits, continue growth for observe of net deposits quality presently recoveries we noninterest-bearing quarter, of during rate We We to our Consequently, very particularly conditions. deposits. good had actually which our annualized core grew credit experienced

cost amongst remains the anticipate points basis peer stable is the the group. well the total in us will rates while asset for we low-cost best us in total to base interest moderately sensitive Provident rates our points remain -- We for rising XXXX. commence deposits positions Reserve of basis and interest a XX the which Federal hiking Our X constant. for declined deposit and our rates in quarter deposits event have that protecting

same SB with retention for quarter a quarter Insurance, continue revenue XX.X% ratio to One over year, notable SB are to driven compared XX.X% Beacon and revenue under same We momentum and largely increasing growth Beacon the the assets solid fee-based increasing our of synergy organic Trust they last enthusiastic with build grew management also One in organic quarter businesses, approximately performance had about XX.X%. bank. by XX.X% the and and strong the growth year. the Insurance last as Trust

developed build to During vision strove and this a build statement past for preserve we help This new of franchise. we investing guiding our and initiative people Provident our will the continue year, bank the in the plan future. our we principles. while, strategic a special we which made same values adopted core to We ensure that what time, mission has to and our with new at call value

assets optimize grow will our our we mix the synergies focus our XXXX, our fee-based our into interest net should and earning growing As our is move asset income. improve aim revenue sources, the which strengthen with on enhance we businesses To diversify bank. and and to margin further

We number also initiatives that will processes. have certain a of digital modernize business

to comments objectives in value. our would commitment excited deliver like talented colleagues and achieving to to that, his the over on turn thank us enable which plan Tom long-term the our Tom? Lastly, financial our performance. effort to I will about their I'll dedication. for shareholder for With their I'm call

Tom Lyons

Thank you, Tony and good morning, everyone.

million were quarter assets drove average margin noted, for annualized our versus loan forgiveness PPP trailing second declined. cluster basis and consecutive point Average average trailing XX. funding interest points. as elevated $XXX,XXX $X.XX from interest exceeded fees strength the of $XX.X average totaled X.XX% million record another Meanwhile, again million we to was deposits of despite noninterest-bearing our basis at remaining quarter quarter income to recognized net million $XXX per net deposits and total $XXX million deposits on million increased net diluted just quarter. quarter or the and preprovision interest $XXX basis X share, an X increased million liquidity. increased the for Revenue the with the over points borrowings down or assets. increased earnings declined quarter costs As the Average the December XX and $X.X earning Pretax income. $XX trailing the versus for X.X% deferred Income quarter trailing and consistent the Tony to $X.X PPP the fell

and net to X.X% PPP were points growth strong. good basis purchase Loan at basis million than XX% trailing quarter adjustments, we're funding and quarter accounting origination points decreased last in quarter interest the greater fourth decreased loans increased activity quarter of the Excluding $XXX the X.XX%. pipeline December from from pipeline was and rate XXXX. XX% seeing the trailing trailing loan XXXX. to as the higher The XX than million start to pipeline core and quarter since XX the adjusted to margin closings $XXX X pull-through The impact loan of

totals at $XXX or annualized X.X% The total result million the versus a quarter of quarter. the annualized period-end pace increased this occurred loans, credit C&I $XXX,XXX and a $XXX,XXX increased on loans PPP as growing provision $XXX,XXX for in growth and of an XX. net allowance September for commercial X.X% an with Excluding CRE loans categories Loan loan primarily losses recoveries.

total September ratios assets classified versus basis at Asset and including assets improved quarter. points Nonperforming trailing XX points of delinquencies, related criticized and nonperforming quality total the metrics, basis levels, XX. decreased from loans loan to XX

the loans, loans, represented quarter. unchanged the trailing Excluding of PPP from X.XX% allowance

registered related and increased other gains by quarter purchase result in offset prepayment sale of million Loewy, reduction income & $XXX,XXX the loan fees, fees contingent investment noninterest increased a of from consideration REO. the on sales, adviser, trailing in $X.X of loan a purchases XXXX Tirschwell to as in the partially recorded reduction Excluding -- a gains

of for annualized Excluding extend expenses X.XX% provisions COVID and X.XX% to losses the were fourth XXXX quarter with quarter in for The operating fourth an credit the and fourth of and for commitments additionally quarter the was XX.XX% both in quarter periods in and on trailing of XXXX. current for XXXX. compared compared for average the efficiency ratio X.XX% expenses, trailing for credit merger-related the with XXXX, quarter quarter the XX.XX% of assets XX.XX%

for of XXXX to tax state related Our the XX.X% subject fourth state quarter. apportionment returns quarter additional income a income rate for XXXX, income trailing taxes. effective was was discrete the Upon tax item to the the expense filing the recorded XX.X% of in tax of versus

tax effective for remarks. would approximately rate our That concludes of questions. We XX.XX% happy projecting be are to XXXX. currently We respond to an prepared

Operator

question go first Please the will from come Sandler. Fitzgibbon Piper And with Instructions] ahead. [Operator Mark

Mark Fitzgibbon

good Hey morning. guys,

Tony Labozzetta

Mark. morning, Good

Mark Fitzgibbon

Tony. Hey

us share First, two the I quarters could you was the accretable last was? for what yield with wondering, Tom,

Tom Lyons

Yes.

I was think basis points. impact about margin X on the

points Let me see, quarter. purchase this basis points last accounting X -- quarter, X basis

Mark Fitzgibbon

great. And I us you secondly, help then forward. if Okay, think wondered could margin going about the

Tom Lyons

Yes.

depending X.XX% does. year, on the range we're looking for Fed what at think end, top of I the probably the a to on X.XX% about kind X.XX%,

Mark Fitzgibbon

And so rate year? X% that bakes increases this in

Tom Lyons

the X.XX% X.XX%, say, X% when, X% one kind us approximately X% there's range kind number. give Yes. increase to if is and a X.XX% to of would of in

Mark Fitzgibbon

coming down to expense pipe you historically, disciplined been on expense year the front. unusual higher? then that's And nudge pretty guys Okay. Anything this have that growth likely the

Tom Lyons

mean say total a we're in close for I to I'd business make all-in which continuing about what But will so million the probably investments think to was us $XXX year, I No. returns. It's give costs payroll removal. seasonal because part snow year and around of $XX the reset bit the roughly and of quarter. to the skewed a usually million little heavier some first tax utilities

Mark Fitzgibbon

know big shoes. Tony, heavily areas you your have to on new excuse most to are priorities some then, new mean guess, first key me, focus role. shoes of, role? I small What in some And fill, your you off, your I Okay. congratulations on? -- I are What likely

Tony Labozzetta

going the we into lines us executives, need, aligning I so getting XXXX production the business that on our we all future. all that think the focused is the for and are into I'm most sure integrated organizational humming table, and move thing the can making designing

bit spending decisioning a can digitalization, the we're on also better give good for I little group of think affect performance outcome better. our us our some time that and analytics

up the both of they trying certainly, with looking to a and those relativity So fee-based at the maintain some Beacon bank. level. are And that we're scale our so businesses, are that them some at Insurance can things high and

I upon that. most think touched of I

this what's think for year. that I for me important

Mark Fitzgibbon

SB then And guess are complete that about thinking -- Okay. how acquisitions? you've I'm is integration future curious with One, you I now the also

Tony Labozzetta

on think, what process. I I would Future of call, always mean, part our, are pretty I process. acquisitions are I Chris aligned strategic thought and always thought this

However, them for sake just the we're doing not of scale.

we within continually have it so certainly, But don't culture We that's who first. make want think a that of at. we are fits create we're that will of in look the doing culture about parameters something think how too to terms that sure I and disruption. much we we we number what around

is well at them as to our around One. also scale looking with In M&A which addition, look our is which earlier, I both -- and Insurance we And activities SB business. fee-based as to that businesses, Beacon we're group mentioned would -- up we wealth

Mark Fitzgibbon

you. Thank

Tony Labozzetta

welcome. You're

Operator

from will question with KBW. go Perito Please next Michael come The ahead.

Michael Perito

Hey, good taking for questions. my Thanks morning.

Tony Labozzetta

Mike. morning, Good

Michael Perito

guys seem you a we like I feel about kind and wanted rebound seems just there's room that up of Is quickly you still fair elevated. in the to pipeline start think little commentary. the of as curious, X% loan the think XXXX? growth out down I'm could think with as you quarter-on-quarter the Or that I the outlook. level guys pretty it prepayments pick the on year, fourth kind about stepping cadence do good progresses It the the year of mean, to quarter? for annualized growth that off put to pretty the

Tony Labozzetta

to of optimistic loans being so written at with screen We have side. were I teams put deals pipeline lot activity that's of an said, committees. calories and deal some the And our number statement. amount of basis, more that's the our our is think at are a in within will pretty closed are tends the there the focus what's look That a be seeing rapidly. heightened, commercial replenish that comments discuss on we still X.X% the annualized the we I'm our funding have we that the group that we when going Mike, expectation on now we tremendous why to I where of right through quarter. I'm being when good end actually It's and our happening, directed. on the do

production growth the see we good expect any didn't caveat So is quarter if us $X expect, closed would of year, that activity the of in that our prepayments only bank. that. commercial But nearly have just through that to we first a that the which this mean we -- come that offset if you at for quarter unknown impressive with our I quite prepayments be billion be production. we the look the is It's constraint.

going And as to so we're bank down, of commercial that in be highly a slows loan terms productive growth.

Michael Perito

and few to the hear. And run noninterest head as guys good the around where of give ranges around mentioned then rate That's wealth if kind focuses growth the income you thoughts could at you insurance 'XX, that little our a bit around the conceptually And a the I just about business. of fee of or half wondering financials income XXXX? on context any realistic in your we look what side, more that. could for back was

Tom Lyons

can for growth we're XX.X% 'XX. terms -- XX.X% in in XX just tax out the in the to about a better than in income I basis points. revenue, fully months about revenue. wealth start. allocated net business. historical XX% runs about comment last with for Net change of the AUM on XX everything from about the Good year, last end strong effect period year-over-year performance about And results close is margin is in so the margin, The of $X.X XX%. rate profitability billion. us is fee Net to solid at of the and

Tony Labozzetta

would color coming side production. referrals which integration to production business another bank pretty the the the to XX% was of I Beacon that from I generated side. year And from Beacon bank build. strong they in Sure. new -- add think with had I continues the new The is mean

we're So dynamics good some there. seeing

With that broader caution possibly had of that happens banner is it's Insurance, would One terms again, the business And only on Beacon the valuations. in thing is happens can the what they strong. a the But year. what profitability, to only SB -- the negative market, to a it's think and put I I only be the market. growing regards broader to

think I XX% ended for fourth continue on the we upcoming to growth them year. strong. very the to that that put XX% They can quarter

First of quarter tends best their to be quarters. one performing

business a expecting expecting -- So I'm do the in first the again certainly, company insurance this seasonal-type we're -- it's quarter. is well not and will that

Tom Lyons

growth, clients that XX, that add work as broaden time. I year-over-year that on to Generally, additional to so over relationship able One was a clients. we assets well future as final too, also, Beacon new little you mention bit deep change bodes the metric wanted in for were we to acquire new

Tony Labozzetta

last is, of commercial comment heightened level insurance high the terms seeing insurance. on make et same referrals and in Beacon, And Exactly. they're retail -- and cetera. mean activity a I'll level with of I banks from

So I to integrated good business we're pickup there. our like and that approach seeing some

Michael Perito

on line, year. of as could the to a it that too nitty-gritty not bit a bit get of year? around And but helpful. That's just maybe thoughts settle where past any we next kind little BOLI And jumped this more look to

Tom Lyons

claims. to Difficult unfortunately, predict is Yes. benefit because the [indiscernible],

Tony Labozzetta

in... Especially

Michael Perito

I of... what trying it's little a back you sense the to guess little understanding just little maybe But asking a 'XX a a expected? little to relative of half you of as a predict. better Or kind of elevated to bit difficult view get differently, did

Tom Lyons

Yes, a I ex think of half of the was more benefit claims. first 'XX representative run rate

Michael Perito

bit the guys of authorization. I'm just then little thinking the a curious here? repurchases you perfect. got lastly, of at appetite left are can it room how about And XXXX. start it, just just guys Got on rehash You the you on

Tom Lyons

the same our dilution. methodology points We look for good earnback much that a return entry supplied. give the Pretty book always tangible us on on we've

we the a last purchases. basis. below we made that That's were analyze continuing us So something in at on That sense $XX.XX quarter's point. for

regularly. point opportunistic our in be to continue we position. stay price we evaluate and that We So

Michael Perito

thoughts. Okay. you, Thank guys. Appreciate the

Tony Labozzetta

Thanks, Mike.

Operator

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

Russell Gunther

Hey, good morning, guys.

Tony Labozzetta

Good morning, Russell.

Russell Gunther

would like color growth But I bracket in I loan you wondering terms as Good very be XXXX. It for growth the commercial much weighted. if contributions to would willing -- be up verticals very to discussions; to or of wanted loan expectations in any it sounds geographic additional helpful constructive. sounds morning. organic well. wanted on follow start I'm guys

Tony Labozzetta

Again, I comfortable high. X% Sure. as would growth productivity probably that something feel putting doable. that X%, on very is is our

X%, So question. good I to seeing Russell, didn't now prepayments your comfortable it? get second a That But could I'm repeating based Do reduced of percentage is you be level. are that that higher. model. dynamics a mind that much much part, the on I'm X% thing

Russell Gunther

of mix, out. drivers that the in change It's just the within the anticipated X% to of footprint of any X% to any call strength pockets or terms

Tony Labozzetta

Yes.

of I which most in we were lot where C&I -- think if a a than you did look is at pacing. our XX% little higher year, loans this we about production,

C&I continue the growth. expect to side I So little see to higher a

In terms still serve markets we're Geographically, I of that the there, our markets lot We're things that to historically them. observed. of the some in of clients in we'll we that CRE industrial. to space, we outside multi, order nature. seeing like time, from follow a of time think our And activity

Russell Gunther

in And assume What in I then appreciate rate terms deposit do of margin you Tom, just the guidance, expectations follow-up, there. that hike in rate betas of scenario? the terms a within guys

Tom Lyons

Yes.

recall, I Russell, around think, were that. mentioned conducting might study some we deposit I last of I time assumptions reevaluating and the

We have brought those betas down.

a average what more like our during rising all think, this rate weighted which more saw I basis, model XX% with at in we point in, consistent is cycle. the last it's on

Russell Gunther

great. your one additional driving that terms a bit expenses of of color the the rate, little any from thinking outlook about on A But Okay, obviously, the inflationary million step-up $XX in last then, for average pressures. what's step-up per a current year for run just is in 'XX? of quarter. me terms And of kind for

Tom Lyons

origination business doing. system there's are lending in -- business There some small a enhancements cost It's platform new things, that some contract loan we're investments like there, system. on some

that a think will are overtime. a us cost give So that we taking nice IT-related that return items number there's of of some

Russell Gunther

so thanks one. the for good help. Have much a Guys, Great.

Tony Labozzetta

Thanks, Russell.

Operator

Please Scattergood. go Zwick The from next with question ahead. & come Boenning will Erik

Erik Zwick

good Hey, morning, guys.

Tony Labozzetta

Good morning.

Erik Zwick

have previous kind of an expected deposit for betas much on I'm there curious, that tables does first increase. you rate cycle you your say how on just in your a follow-up like that just plus of maybe the your basis a XXX you've show XX-Q? numbers, those If impact maybe compared to point sensitivity the that commentary have modeling. your lowered interest Tom, for

Tom Lyons

base basis Yes. ramped the Net about up from is X.X%. income change percentage points. favorable The XXX case

Erik Zwick

in And yield then loans do that thinking the about yield as then, curious, level and I Great, the helpful. pipeline guess, average loans is And that's first, pipeline the you originated to have of weighted the similar I guess, today, well? XQ?

Tom Lyons

Almost exactly. We're cases. about X.XX% both right in

Erik Zwick

X-X-X? was That

Tom Lyons

Yes, X.X%, X-XX.

Erik Zwick

thoughts 'XX? on what around, in XX% Great. Any think And then in rate tax let's see the effective 'XX? what, you're else. I

Tom Lyons

Yes.

'XX. see up little change a a looking that of think we at for with in XX.XX% apportionment We I year acquisition reflected bit in that we're saw QX. bump from last the

So some of persists play. into put planning do we tax have that some but we strategies

lower to little rate is and the up bit so the exempt that well, income think this therefore, a items tax I the little -- XX.XX%. to year rate of drives as effective make taxable relative going proportion less bit a

Erik Zwick

If me. then look And portfolio one $X.X for of Perfect. I or about so, the billion at securities last today, XX% investment assets. about total

how curious that loans see of other? commensurate we that one you with should you'd And kind and with or hold think that comfortable if percentage Just it any the way change level level? or today, you're about to if grow make look

Tom Lyons

loan investments. then will month And about on so investment new million, Really, we less million sheet. done the the balance of cash If loans could do another that a that and deploy at liquidity an throws be to liquidity portfolio on level. That had $XXX in shift up portfolio a maintain said, we about funding. could think, still adequate a in flow. than desire investment deployment play We it we have mix excess certainly growth, $XX we average,

mix time and shift funding over can to after as well. we loans So the use

Erik Zwick

taking Thanks questions Great. my for today.

Tom Lyons

Thank you.

Tony Labozzetta

you. Thank

Operator

ahead. to any question-and-answer the over go Tony our I turn remarks. like to session. Labozzetta Mr. conference for closing back This would concludes Please

Tony Labozzetta

Thank us forward like look to thank call of to you. to everyone I year. talking on joining many throughout for the the would we and you

on and in snowstorm. thank have much great a you're If day. Coast, you stay safe the And the East very

Operator

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

You may now disconnect.

Provident Financial Services (PFS) 28 Jan 222021 Q4 Earnings call transcript