Earnings call transcript Q1 2023

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

Operator

Good morning. Thank you for attending today's Provident Financial Services Inc.

First Quarter Earnings Conference Call. My name is Frances, and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. Instructions]. [Operator

like with conference go Provident now host, to ahead. pass Duarte Adriano Financial to would over the our I Services. Please

Adriano Duarte

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

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

Our release, investor full posted disclaimers relations contained has our in this provident.bank. morning's to website, which earnings page our on been

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

Tony Labozzetta

welcome Call. Services Thank the to you, Adriano. Provident Earnings Good and everyone, Financial morning,

was and that banking event the resulted been for industry. the First extraordinary flight deposit high a in banks the properly caused time disruption idiosyncratic prices. banking system, profile described an quarter can What an be regional termed as a two failure of has to

appears that the remains the Provident including and it strong, moderated has liquid, industry capitalized. fundamentally banking well and volatility Presently,

on-balance prudently banking measures Given caution, insurance. and sources this programs of provide of to deposit increasing that we cash This liquidity. the more an higher recent maximize abundance out system, cost funding included disruption to our our sheet using took position, higher costing

demonstrates the management our current Provident talented results of Despite quarter, produced resiliency conditions, market which model, financial the franchise strong good business team. and deposit this

of return on average $X.XX XX.X%. As equity such, a of an assets reported X.X% per annualized share, tangible and on of earnings we average return

on $X.XX value and to the the quarter of XX.XX, X.X% in loss well Our our earnings capitalized capital exceeds during securities and portfolio. is levels. or improvement unrealized our Tangible strength the on book the strong expanded comfortably

Our tangible X.XX. at equity March ratio was XXst common

these previously approved payable response mentioned, on the disruption cash $X.XX May a I Board by As dividend I'm that to received robust our outreach pleased will a Directors quarterly customer of In report well XX. such, customers. program. our efforts that we of instituted per share to

limited approximately were the a amount our or Presently, deposit are billion XX% identified We deposit associated outflows deposits. Our of directly uninsured flight $X.X total with of deposits prices. that

balance our $X.X or XXX% bowering plus sheet on Our liquidity is uninsured billion deposits. capacity of

deposits core our valuable a Our are component franchise. of

we quarter, the normal which business During core rates million customers the disruption. some X.X%, attribute to seeking activity, deposits $XXX outflow liquidity or our decreased and related higher market to

quarter, was and was when previously rising the while cost margin our points. the deposit of total For cost of points basis XX beta beta deposits our to about X.XX% XX%. XX%, XX increased Consequently, funds total drove deposit compressed our excess the first net cycle and basis mentioned up liquidity to-date our interest rate with combined

the approximately closed of team lending commercial during loans Our quarter. new $XXX commercial first million

However, to trailing prepayments Approximately the $XXX XX% due refinanced XX% quarter. to were increased A [Indiscernible] payoffs. or -- underlying increased $XXX sale elsewhere. of the to the million remainder represented as or compared desired million

standards, underwriting first metrics we continue CRE in quarter, credit prudent maintain in particularly Our and the improved our to lending.

with have our addition, risks. level targeted been CRE monitoring loan to enhanced processes and portfolio initiatives In evaluate in-depth

credits construction office focus well maturing the loan the Areas resets. portfolio that rate portfolio, reviews level and upcoming as include as of or for property are

trailing decreased percentage of our first XX%. approximately average in utilization X% XX% credit line Our the of historical quarter to

$X.X loan utilization, billion. of the in quarter pipeline flat line our the and at heightened relatively commercial the first quarter. trailing result loans payoffs our a The decreased was strong during remain good, the remains and gross As versus pull-through pipeline commercial approximately

pipeline And million. at pending loans, X.XX%. closing, rate approximately pull-through projected $XXX remained The is including adjusted pipeline our unchanged

to expect strength encouraged We with targets. and the achieve of normal we pipeline payoffs, by our our are growth

potential a of mindful slowdown. However, we economic remain

a year. performed fee-based which growth, last increase in Plus the same resulted revenue quarter. this a compared in Protection quarter and profit to well a XX% increase Our first in with strong businesses organic XX% XX% had Provident operating quarter as

the first trailing were Trust Beacon's the quarter. assets more in a related in the fee result, managed value Beacon as markets as financial conditions to X.X% compared And in market $XXX,XXX increased under and stable experienced The income fee of income. growth the or quarter.

obtaining previously Bancorp, announced Lakeland work regulatory towards our merger to two with diligently to the Regarding our companies. continues team combine approvals our

combination, this communities. serve to about customers excited ability are our our and enhance which our We will

merger believe principles remain Looking our management Lakeland we create growing to we integrating stakeholders. Bancorp, for on the with which focused of value business, and will our our risk forward, staying committed all

I'll to Tom? our on the performance. over for call Tom comments financial turn Now, his

Tom Lyons

morning, good and Tony, you, Thank everyone.

Tony $XX million merger or share Lakeland current noted, $X.XX or the $XX the per or in share, for quarter. was $X.X $X.XX with of XXXX. million quarter, for net and the in $X.X totaled first quarter tax $XX.X compared the quarter deductible to million $X.XX the for As income Non trailing per Bancorp our pending related charges trailing our share million and million quarter, of per

these million merger million quarter quarter million quarter, of the X.XX% the to compared totaled or charges, and annualized first the Revenue current of quarter $XXX average for related $XX.X Excluding for for million the an $XXX $XXX for pre-tax was assets. XXXX. pre-provisioned earnings trailing

yield points basis in favorably floating basis repriced trailing margin rates. loan to adjustable rate earning in the on market originations quarter quarter by versus XX points X.XX%. The as and new Our improved loans decreased higher net assets reflected trailing interest XX the

in cost market conditions, a decrease quarter. trailing interest improvement in the basis increase borrowings in costs XX by more accompanied asset deposits. than versus points funding reflected This however, current funding Increased an which was an resulted in yields, in of by offset bearing increase

order bearing cash non-interest obtain to balances Certain increased deposit in move also insurance. to bearing our interest sweep product insured

X.XX%. demand costing is deposits. points savings cost-of-deposits lower to basis shifted costing time total The addition, balance XX higher In and average increased to

average interest bearing for quarter, the XX basis rate to increased quarter current XX% from points and X.XX%. to cost XX% basis date. total rising the deposit This of the trailing of for liabilities represents The cycle

liquidity resulting investment competitive and and alternatives security depositor industry and increase recent an sensitivity. in costs While environment increased the of increase failures, concerns funding in altered have price attractiveness bank an anticipated, the was

As for we decreasing XXXX. and million margin million for the balance to net see respectively and a quarter. result, $XX stable, some and compression loans of continued largely interest commercial Period expect total were $XX the

rate worsened due million forecast. economic provision million current to quarter increased loan quarter for pull-through X.XX%. versus increased with for $X.X $XXX $XXX on to our last Our adjusted average portfolio X.XX% loans weighted yield a the The pipeline of losses million credit of or $X million from

for to increased March points December basis the total As allowance losses basis credit of XXst a XX loans on XXst. at result, from points XX at loans

with an points criticized and non-performing -- for quarter. annualized delinquencies falling total improved basis credit Current XXst. assets the metrics, Net classified declining X to assets charge-offs March and at and assets of points on XX however basis loans

Non-interest versus quarter. million income the upon prior $X gain was the an a sale increased $X.X REO of satisfaction million of realized as of on trailing quarter the current quarter conditions additional closing

addition, the income and fee insurance agency well quarter. increased trailing with In lines performed based both wealth management our business

of operating on expenses Including for compared related X.XX% quarter the credit to merger commitments in to provisions and credit extend the XXXX. the the first assets for of losses the charges, efficiency for of quarter compared quarter average X% were current XXXX. of XX.XX% trailing the quarter ratio trailing for an XXXX for annualized The and quarter was quarter XX.XX% X.XX% and with in first XX.XX% first

income employer Security tax reset limits first quarter year. by expense calendar and impacted Social increased The of payroll is every year each

projections achievement to In tax non-recurring related addition, compensation performance the charges $XXX,XXX stock a the quarter current approximately to and on of multiyear included sales $XXX,XXX based conclusion of audit. related

questions. respond be happy That concludes remarks. our prepared We'd to to

Operator

first Piper Thank of Sandler. the from Mark go comes question Instructions] Please Mark. with Our line [Operator you. ahead, Fitzgibbon

Mark Fitzgibbon

Hey guys, good morning.

Tony Labozzetta

Good morning.

Tom Lyons

Mark. morning, Good

Mark Fitzgibbon

like what I Tom, could with today? us share deposit if spot you the look wonder rates

Tom Lyons

me Don't spot front have rates the of in more.

Mark Fitzgibbon

can with feel the circle you about on you a roughly you of that. XXXX. back And your the I will Do curve? down forward the have comments that bottom for I trending follow assuming think we heard balance over margin where Okay.

Tony Labozzetta

Yes. and little bit the of but in typical I have we projections this net continue as interest of I'm March something that of the range QX, offer the that in for can a our number year down X.XX see less probably little bit drift to I perhaps the market and margin continuing thinking was to because deposit X.XX%. of volatility, balance moving a and mean, pickup. I confidence in lag the over parts data

Mark Fitzgibbon

Great. Okay.

Tom Lyons

was Mark, company, think I overall average XXXX. going the I back a to X.XX, think public as

Mark Fitzgibbon

just the approximate might not you enough. and but color timing have transaction any then great – Fair when you Okay. on secondly, have happen? And Lakeland this, sense for the I do of may

Tony Labozzetta

FDIC information comments we time see absolute as application, submitted Mark, don't we're to in required if Tony. this closer. final close know, and and approval an an requirements as And the getting clear soon. the should We've We they're and get have they is processing that out that all you hopefully, but us our speak. that

our put had I that. if I internal May. are caveat -- on expectations So, obviously, to But have

Mark Fitzgibbon

Okay. in your lot you justify grow about How growth? spreads feel growing attractive like are point to to thinking look really want saw at And Do you balance they pipelines then, in cycle? the the environment? a Tony, this this I sheet are like you Do nicely. enough strengthened the

Tony Labozzetta

justify that. what think I does seeking we're

risk not adjusted those if we think getting I pricing basis, generally transactions. a would especially from on we're walk the

I screens, are think if that and that everything in we you we our discuss is are deal Provident bankable, pipeline, deals our that think will. in

We're have we comprised up assets very in but our where to the growth. in retail. multifamily of answer which space, our is we're classes our have and some to the desirable come yes, momentarily think pipeline is seeing asset growth to that industrial event and will rational question we're what the looking desire, not So outsize largely I in growth looking the that the

we're in So been, has and on. that's growth our largely that's what focusing where

Mark Fitzgibbon

to last Okay. up Signature And opportunities or pick places? from Are other or question. like Republic seeing places teams any First then you

Tony Labozzetta

been on as yes. other If fully as leaders staffed as from has not a is Island RMs of regional and We example, well answer [ph] a fully places. of number talented and have Long Signature, staffed. open a The an with come office that team them just office number now almost

looking happens we're talent the of the team. for. we're not but yes, usually a up wholesale be picking In just one-offs. case, yes, the that members this to it's numerous is hiring. But it So answer It's it's

Mark Fitzgibbon

Thank you.

Tom Lyons

Mark, it's Tom.

cost March, points, your for on deposit question. follow-up at If average the look basis a I it XXX was cost Just X.X%.

Mark Fitzgibbon

Thanks, Tom.

Tom Lyons

You're welcome.

Operator

for with Capital your The Markets. Billy. Billy RBC Please question next comes questions. go you ahead, Young from Thank

Billy Young

Hey. Good are guys. you? How morning,

Tony Labozzetta

morning, Good Bill.

Tom Lyons

Bill. Hi,

Billy Young

and mid rates a to you're you more growth higher still to -- guess, just, in a trend lower you -- the going growth is where Just this your us the your confidence how year? single payoff was in, not I it the help with digit confidence loan what see on higher or continuation activity gives going of -- question. how Or timing and that of follow-up utilization the it and forward? payoffs saw quarter Can kind first more utilization just you hitting

Tom Lyons

saying, those levels of our Of start I'll we something course. portfolio, CRE portfolio, with our had by payoffs. part loan manage of -- to particularly do how off that

my As a are in portion from. I annualized assets equate payoffs, adjust or it exit those you desired growth rate million that to written remarks, that. of were which an about that would probably we nearly over And there payoffs if $XXX X% alone, little of to mentioned looking means were

given So, number should enough normal still we're the pull-throughs. seeing meet able be that pipeline, We we're to big pipeline in we X% what if that targeting. have the yes, that is

not payoffs, lot seeing of we're to terms repricing. of payoffs a In related

place. don't see alone to it. taking in all our of balance, management continued that. a of may we But on are here our assets from or of sales But not or ton of exit CRE time-to-time our we portfolio Some loans, renew expect

We be I with X% And expect we're that that guiding the still mentioned to as stable. earlier. to pull-through,

Billy Young

color evolved saw that the the trends, the you on Understood. March. as post, any limited on, customers, a pre March? amount that Thank of if outflows given and a maybe that you. mid little give over of bit drove month, pricing happened everything Can as And of at little deposit saw just some of the into how little you and call drilling color just in types bit well you down on a commonalities bit

Tony Labozzetta

sure I'm start. I'll Sure. me. will help Tom

into it quarter Just categories. little typical. macro run saw a the put color a break at I'll first a first can on that's the deposit picture, to municipal look to categories, If of couple we and out try we in a

of all happened second quarter, what's enter at look as you the has come that almost If we back.

So, and at secured sector that I usual. as as being look business

that on stabilized As of categories, went did in is to we the small was a we liquidity there out saw another terms our if of customers What see insured which That early But crisis, the ICS in side. a handful business that will. break number points program, this passing adds in we business you moving as whole terms has customers. we XX deposit possible, down class the basis into and through see where are repricing that of the we're the program.

this has with side. that demand I consumer you're is associated was lastly, business even think on of crisis more area I out flight I surprising, interest on the the think more seeing non-interest think bit the industry that's bearing wide consumer, into because think sensitivity on what a awakened pricing bearing little also side. a the the of probably I And

saw money to securities markets CDs. we between terms costing treasury into on more products moving and consumer flow behavior our or either side lower within in So higher or even cost bank outs of

So dynamic there was more of there. a

doing people And have more we extraordinarily move has not deposits of attitude uncharted that because Internally, some cost taken is happened, presuming we're action, a we response. a more is what out of large that expect to chasing is as the deposits, that still to we're it of to prepare expecting but waters. chase that percentage around forward our But analysis we're it in kind overall levels high. We're and happen. But lot

we defensive make largely thereby pricing don't sure margin. of and is a have amount tremendous that and our cost strategy incremental our preserve So

Billy Young

Thank back. guys. step I'll understood. you, I

Tony Labozzetta

Thank you.

Operator

Thank you go question comes Please questions. Manuel from for next your with A. D. The Davidson. Navas ahead.

Manuel Navas

you NIM assuming pressure Hi. more new Good what kind expected, of are morning. With for kind assumption deposit of beta?

Tom Lyons

through cycle. Overall, the the modeling we're still XX%

to a predictions little have pretty confidence. a But with bit as state environment and earlier, stressed challenging mentioned it's that. We I volatile more

of So, shortened horizon our on we kind time our expectations.

Manuel Navas

book the some And the, staffing being any M&A guess, pipeline I from in prior for more Okay. any can of some on businesses? of general of That disruption? there Signature. Island give from makes there's Long Is With hires you sense. color their in if

Tom Lyons

- C&I to staff mixed type some I out some that of say team so will first, think there. position, it's pre in that lending both lending open I fill needed the the pre and we

solid, do classes appears sponsors last – I then I characterize a right? From seek our a We the time, the the onset, there. the with potential we and caught to if of -- to and whether the – have And we're same strength leverage thrilled always positive we're But I think by as complement. talent, operating right? forward asset don't know our progress process, that's there's other at on get will chasing enhance into that part and move never we investment we there's go markets. was So look I desire the the more. to be to the of that need

the I on kind answer hopefully, So that. of gave you

Manuel Navas

type from core run appreciate kind we rate the the on Any here just of What color. should expect expenses? of I on update No. basis?

Tom Lyons

Yes.

basis sense, thinking of of the there. that I million to the I'm On back nonrecurring $XX million if to items makes and of the some kind in $XX.X some normalize the QX seasonal were items core range

Manuel Navas

you. Thank you. I it. Thank appreciate

Tony Labozzetta

You're welcome.

Operator

back over time, are no to conference I'll the for remarks. pass any you Thank There Labozzetta question. questions this waiting so your additional at for Mr.

Tony Labozzetta

We at you. speaking with call, have quarterly Thank a our have attending Thanks nice to everyone day. a call. and very for next look earnings our you forward

Operator

Inc. Services call. That you conference Thank concludes the participation. Provident quarter first your earnings Financial for

now may disconnect line. your You

Provident Financial Services (PFS) 28 Apr 232023 Q1 Earnings call transcript