0001628280-19-000779.txt : 20190201 0001628280-19-000779.hdr.sgml : 20190201 20190201114349 ACCESSION NUMBER: 0001628280-19-000779 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190131 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190201 DATE AS OF CHANGE: 20190201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVIDENT FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0001178970 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 421547151 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31566 FILM NUMBER: 19558485 BUSINESS ADDRESS: STREET 1: 830 BERGEN AVENUE CITY: JERSEY CITY STATE: NJ ZIP: 07306 BUSINESS PHONE: 2013331000 8-K 1 a8-k123118.htm Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 31, 2019 

PROVIDENT FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware001-3156642-1547151
(State or Other Jurisdiction of Incorporation)(Commission File No.)(I.R.S. Employer Identification No.)
239 Washington Street, Jersey City, New Jersey07302
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code 732-590-9200

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  




Item 2.02               Results of Operation and Financial Condition.
On February 1, 2019, Provident Financial Services, Inc. (the “Company”) issued a press release reporting its financial results for the quarter and year ended December 31, 2018. A copy of the press release is attached as Exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed “filed” for any purpose.
Item 7.01  Regulation FD Disclosure.
On February 1, 2019, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.23 per common share and a special cash dividend of $0.20 per share, each payable on February 28, 2019 to stockholders of record on February 15, 2019.  The Company also announced that its Board of Directors determined that the Annual Meeting of Stockholders shall be held on April 25, 2019 at the Renaissance Woodbridge Hotel, Iselin, New Jersey at 10:00 a.m. The date of March 1, 2019 was established as the record date for the determination of the stockholders entitled to notice of, and to vote at, the Annual Meeting.
These announcements were included as part of the press release reporting financial results for the quarter and year ended December 31, 2018 issued by the Company on February 1, 2019. A copy of the press release is attached as Exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed “filed” for any purpose.
Item 8.01  Other Events
On January 31, 2019, the Board of Directors of the Company adopted a policy on majority voting for directors in uncontested elections. Pursuant to the policy, any nominee for director in an uncontested election who receives a greater number of votes “WITHHELD” from his or her election than votes cast “FOR” such election shall tender his or her resignation to the Governance/Nominating Committee of the Board of Directors of the Company. The Governance/Nominating Committee shall recommend to the Board of Directors the action to be taken with respect to the resignation. Any director who tenders his or her resignation in connection with the policy shall not participate in the Governance/Nominating Committee’s or the Board of Directors’ deliberations as to whether to accept the resignation. The Board of Directors will publicly disclose its decision within 90 days of the certification of the election results.
Item 9.01.           Financial Statements and Exhibits
a.Financial statements of businesses acquired.  Not Applicable.
b.Pro forma financial information.  Not Applicable.
c.Shell company transactions: Not Applicable.
d.Exhibits.

Exhibit No. Description
   
 Press release issued by the Company on February 1, 2019 announcing its financial results for the quarter and year ended December 31, 2018, the declaration of a quarterly cash dividend, the declaration of a special cash dividend and the setting of the date for the annual meeting of stockholders.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

  
PROVIDENT FINANCIAL SERVICES, INC.
 
 
 
DATE: February 1, 2019By:By:/s/ Christopher Martin 
  Christopher Martin
  Chairman, President and Chief Executive Officer 




EXHIBIT INDEX


Exhibit Description
   
 Press release issued by the Company on February 1, 2019 announcing its financial results for the quarter and year ended December 31, 2018, the declaration of a quarterly cash dividend, the declaration of a special cash dividend and the setting of the date for the annual meeting of stockholders.


EX-99.1 2 a123118earningsrelease.htm Document


Provident Financial Services, Inc. Announces Record Fourth Quarter and Full Year Earnings, Declares Increased Quarterly Cash Dividend and Special Cash Dividend. 

ISELIN, NJ, February 1, 2019 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $35.8 million, or $0.55 per basic and diluted share for the quarter ended December 31, 2018, compared to net income of $19.5 million, or $0.30 per basic and diluted share for the quarter ended December 31, 2017. For the year ended December 31, 2018, the Company reported net income of $118.4 million, or $1.82 per basic and diluted share, compared to net income of $93.9 million, or $1.46 per basic share and $1.45 per diluted share for 2017.
For the quarter and the year ended December 31, 2018, the Company’s earnings were positively impacted by lower Federal income tax rates, period over period growth in average loans outstanding, growth in both average non-interest and interest bearing deposits and the continued expansion of the net interest margin. The improvement in the net interest margin during these periods was driven by an increase in the yield on earning assets, growth in average non-interest bearing deposits and a less sensitive and lagging cost of funds. Included in both periods was a non-recurring $1.9 million tax benefit stemming from the Company's completion of a cost segregation study that assigned shorter taxable lives to certain fixed assets. This benefit contributed $0.03 per basic and diluted share for both the quarter and year ended December 31, 2018. In addition, the Company realized a $1.6 million, or $0.02 per share, net of tax gain on the sale of Visa Class B common shares in the fourth quarter of 2018.
Chairman, President and Chief Executive Officer Christopher Martin commented: “We achieved record earnings for the quarter, as our net interest margin expanded six basis points, contributing to growth in our net interest income. Expenses reflect investments in data analytics, customer experience and regulatory compliance, yet remain well controlled. Credit quality was strong, and capital levels increased despite $13.0 million of common stock repurchases in the quarter, executed during periods of stock market volatility.” Martin continued, “Our wealth management subsidiary, Beacon Trust Company recently announced its planned acquisition of Tirschwell & Loewy, Inc., a Manhattan-based registered investment adviser with approximately $750 million in assets under management. I am pleased to announce that our Board of Directors has approved an increase in our regular quarterly cash dividend as well as a special cash dividend. These dividend declarations reflect their confidence in our ability to generate strong earnings and profitability metrics, maintain our practice of sensible and measured growth, and our commitment to enhancing stockholder value.”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.23 per common share payable on February 28, 2019 to stockholders of record as of the close of business on February 15, 2019. This dividend is an increase of 9.5% from the prior quarter's regular cash dividend of $0.21 per common share.
Declaration of Special Cash Dividend
The Company’s Board of Directors also declared a special cash dividend of $0.20 per common share payable on February 28, 2019 to stockholders of record as of the close of business on February 15, 2019.
Annual Meeting Date Set
The Annual Meeting of Stockholders will be held on April 25, 2019 at the Renaissance Woodbridge Hotel, Iselin, New Jersey at 10:00 a.m. Eastern Time.  March 1, 2019 has been established as the record date for the determination of stockholders entitled to vote at the Annual Meeting. 
Balance Sheet Summary
Total assets at December 31, 2018 were $9.73 billion, a $119.5 million decrease from December 31, 2017. The decrease in total assets was primarily due to a $75.1 million decrease in total loans and a $48.2 million decrease in total cash and cash equivalents, partially offset by a $15.3 million increase in total investments.
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The Company’s loan portfolio decreased $75.1 million to $7.25 billion at December 31, 2018, from $7.33 billion at December 31, 2017.  For the year ended December 31, 2018, loan originations, including advances on lines of credit, totaled $3.16 billion, compared with $3.70 billion for 2017.  The loan portfolio had net decreases of $64.2 million in multi-family mortgage loans, $50.2 million in commercial loans, $42.9 million in residential mortgage loans and $3.6 million in construction loans, partially offset by a net increase of $128.2 million in commercial mortgage loans.  Commercial real estate, commercial and construction loans represented 78.9% of the total loan portfolio at December 31, 2018, compared to 77.9% at December 31, 2017.
At December 31, 2018, the Company’s unfunded loan commitments totaled $1.49 billion, including commitments of $683.0 million in commercial loans, $425.2 million in construction loans and $144.0 million in commercial mortgage loans. Unfunded loan commitments at September 30, 2018 and December 31, 2017 were $1.60 billion and $1.98 billion, respectively.
The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $973.4 million at December 31, 2018, compared to $1.13 billion and $1.12 billion at September 30, 2018 and December 31, 2017, respectively.
Total investments were $1.61 billion at December 31, 2018, a $15.3 million increase from the balance at December 31, 2017.  This increase was largely due to purchases of mortgage-backed and municipal securities, partially offset by repayments on mortgage-backed securities, maturities of municipal and agency bonds.
Total deposits increased $116.0 million during the year ended December 31, 2018 to $6.83 billion.  Total time deposits increased $115.7 million to $750.5 million at December 31, 2018, while total core deposits, consisting of savings and demand deposit accounts, increased $273,000 to $6.08 billion at December 31, 2018. The increase in time deposits was primarily the result of a 13-month certificate of deposit promotional campaign which provided the Company a lower-cost funding alternative to wholesale borrowings.  The increase in core deposits for the year ended December 31, 2018 was largely attributable to a $38.3 million increase in interest bearing demand deposits and a $28.8 million increase in non-interest bearing demand deposits, partially offset by a $35.7 million decrease in money market deposits and a $31.1 million decrease in savings deposits.  Core deposits represented 89.0% of total deposits at December 31, 2018, compared to 90.5% at December 31, 2017.
Borrowed funds decreased $300.2 million during the year ended December 31, 2018, to $1.44 billion.  The decrease in borrowings for the period was primarily a function of the inflow of lower-cost deposits and lower asset funding requirements.  Borrowed funds represented 14.8% of total assets at December 31, 2018, a decrease from 17.7% at December 31, 2017.
Stockholders’ equity increased $60.3 million during the year ended December 31, 2018, to $1.36 billion, primarily due to net income earned during the year, partially offset by cash dividends paid to stockholders, common stock repurchases and an increase in unrealized losses on available for sale debt securities.  Common stock repurchases for the year ended December 31, 2018, totaled 635,436 shares at an average cost of $23.69 per share. At December 31, 2018, 2.5 million shares remained eligible for repurchase under the current authorization.  Book value per share and tangible book value per share(1) at December 31, 2018 were $20.49 and $14.18, respectively, compared with $19.52 and $13.20, respectively, at December 31, 2017.
Results of Operations
Net Interest Income and Net Interest Margin
For the quarter ended December 31, 2018, net interest income increased $5.4 million to $77.3 million, from $71.9 million for the same period in 2017.  Net interest income for the year ended December 31, 2018 increased $22.5 million, to $300.7 million, from $278.2 million for 2017. The improvement in net interest income for the comparative periods was largely due to growth in average loans outstanding resulting from organic originations and increases in both average interest bearing core deposits and average non-interest bearing demand deposits, combined with period-over-period expansion of the net interest margin.
The Company’s net interest margin for the quarter ended December 31, 2018 increased six basis points to 3.44%, compared with 3.38% for the trailing quarter ended September 30, 2018. The weighted average yield on
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interest-earning assets increased 12 basis points to 4.19% for the quarter ended December 31, 2018, compared with 4.07% for the trailing quarter. The weighted average cost of interest-bearing liabilities for the quarter ended December 31, 2018 increased seven basis points to 0.97%, compared to the trailing quarter. The average cost of interest-bearing deposits for the quarter ended December 31, 2018 increased 10 basis points to 0.70%, compared with 0.60% for the trailing quarter.  The average cost of borrowed funds for the quarter ended December 31, 2018 was 1.99%, compared with 1.93% for the quarter ended September 30, 2018.
The net interest margin increased 19 basis points to 3.44% for the quarter ended December 31, 2018, compared with 3.25% for the quarter ended December 31, 2017. The weighted average yield on interest-earning assets increased 41 basis points to 4.19% for the quarter ended December 31, 2018, compared with 3.78% for the quarter ended December 31, 2017, while the weighted average cost of interest-bearing liabilities increased 29 basis points to 0.97% for the quarter ended December 31, 2018, compared with 0.68% for the fourth quarter of 2017. The average cost of interest-bearing deposits for the quarter ended December 31, 2018 was 0.70%, compared with 0.40% for the same period last year. Average non-interest bearing demand deposits totaled $1.48 billion for the quarter ended December 31, 2018, compared with $1.45 billion for the quarter ended December 31, 2017. The average cost of borrowed funds for the quarter ended December 31, 2018 was 1.99%, compared with 1.63% for the same period last year.
For the year ended December 31, 2018, the net interest margin increased 18 basis points to 3.39%, compared with 3.21% for the year ended December 31, 2017. The weighted average yield on interest-earning assets increased 32 basis points to 4.06% for the year ended December 31, 2018, compared with 3.74% for the year ended December 31, 2017, while the weighted average cost of interest-bearing liabilities increased 19 basis points to 0.86% for the year ended December 31, 2018, compared with 0.67% for the same period in 2017. The average cost of interest-bearing deposits for the year ended December 31, 2018 was 0.58%, compared with 0.37% for the same period last year. Average non-interest bearing demand deposits increased $97.3 million to $1.46 billion for the year ended December 31, 2018, compared with $1.37 billion for the year ended December 31, 2017. The average cost of borrowings for the year ended December 31, 2018 was 1.85%, compared with 1.66% for the same period last year.
Non-Interest Income
Non-interest income totaled $15.6 million for the quarter ended December 31, 2018, an increase of $2.3 million, compared to the quarter ended December 31, 2017. The increase for the quarter was primarily due to a $2.2 million increase in net gains on securities transactions resulting from the Company's sale of Visa Class B common shares, and a $1.1 million increase in fee income, which was largely due to an increase in prepayment fees on commercial loans.  These increases were partially offset by a $560,000 and a $528,000 decrease in other income and income from Bank-owned life insurance ("BOLI"), respectively.  The decrease in other income was due to a $468,000 decrease in net gains recognized on loan sales and a $125,000 decrease in net fees on loan-level interest rate swap transactions.  The decrease in income from BOLI for the quarter ended December 31, 2018, was attributable to lower equity valuations compared to the same period in 2017.
For the year ended December 31, 2018, non-interest income totaled $58.7 million, an increase of $3.0 million, compared to the same period in 2017. Net gains on securities transactions increased $2.2 million for the year ended December 31, 2018, due to the sale of Visa Class B common shares.  Fee income increased $866,000 to $28.1 million, compared to the same period in 2017, largely due to a $287,000 increase in income from non-deposit investment products, a $248,000 increase in loan related fee income and a $238,000 increase in debit card revenue, partially offset by a $126,000 decrease in prepayment fees on commercial loans. Other income increased $775,000 to $4.9 million for the year ended December 31, 2018, primarily due to a $764,000 increase in net fees on loan-level interest rate swap transactions. Also, wealth management income increased $353,000 to $18.0 million for the year ended December 31, 2018, compared to $17.6 million for the same period in 2017, due to increased revenue from investment advisory fees, including revenue from two mutual funds that were established in October 2017. Partially offsetting these increases, income from BOLI decreased $1.2 million to $5.5 million for the year ended December 31, 2018, compared to the same period in 2017, due to a decrease in benefit claims and lower equity valuations.  
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Non-Interest Expense
For the three months ended December 31, 2018, non-interest expense increased $1.3 million to $49.4 million, compared to $48.1 million for the quarter ended December 31, 2017. Other operating expenses increased $1.8 million to $9.3 million for the three months ended December 31, 2018, compared to $7.5 million for the same period in 2017. This increase was largely due to increases in consulting, legal and examination fees, partially offset by a decrease in loan collection expense. Additionally, data processing expense increased $182,000 to $3.8 million for the three months ended December 31, 2018, compared to $3.6 million for the same period in 2017, principally due to an increase in online and mobile banking expenses. Partially offsetting these increases in non-interest expense, compensation and benefits expense decreased $169,000 to $28.1 million for the three months ended December 31, 2018, compared to $28.3 million for the three months ended December 31, 2017. This decrease was primarily due to a decrease in the accrual for incentive compensation and a decrease in stock-based compensation, partially offset by an increase in salary expense related to annual merit increases.  FDIC insurance expense decreased $260,000 to $562,000 for three months ended December 31, 2018, compared to $822,000 for the same period in 2017, primarily due to a reduction in the insurance assessment rate. Amortization of intangibles decreased $89,000 for the three months ended December 31, 2018, compared with the same period in 2017, as a result of scheduled reductions in amortization.
The Company’s annualized non-interest expense as a percentage of average assets (1) was 2.01% for the quarter ended December 31, 2018, compared with 1.98% for the same period in 2017. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) (1) was 53.10% for the quarter ended December 31, 2018, compared with 56.43% for the same period in 2017.
Non-interest expense for the year ended December 31, 2018 was $191.7 million, an increase of $3.9 million from 2017. Other operating expenses increased $2.3 million to $31.1 million for the year ended December 31, 2018, compared to $28.8 million for the same period in 2017, largely due to increases in consulting, examination and debit card maintenance expenses, partially offset by decreases in loan collection expense and foreclosed real estate expense. Compensation and benefits expense increased $2.1 million to $111.5 million for the year ended December 31, 2018, compared to $109.4 million for the year ended December 31, 2017. This increase was primarily due to additional salary expense related to annual merit increases, combined with increases in severance, stock-based compensation and employee medical expenses, partially offset by a decrease in the accrual for incentive compensation. Data processing costs increased $742,000 to $14.7 million for the year ended December 31, 2018, compared with 2017, due to increases in software maintenance, online and mobile banking expenses. Partially offsetting these increases in non-interest expense, amortization of intangibles decreased $543,000 for the year ended December 31, 2018, compared with 2017, as a result of scheduled reductions in amortization. FDIC insurance expense decreased $405,000 to $3.5 million for year ended December 31, 2018, compared to $3.9 million for the same period in 2017, primarily due to a reduction in the insurance assessment rate. Additionally, net occupancy costs decreased $234,000, to $25.1 million for the year ended December 31, 2018, compared to 2017, primarily due to a decrease in building depreciation.   
Asset Quality
The Company’s total non-performing loans at December 31, 2018 were $25.7 million, or 0.35% of total loans, compared with $29.1 million, or 0.40% of total loans at September 30, 2018, and $34.9 million, or 0.48% of total loans at December 31, 2017. The $3.4 million decrease in non-performing loans at December 31, 2018, compared with the trailing quarter, was due to a $2.4 million decrease in non-performing commercial loans, a $610,000 decrease in non-performing residential mortgage loans and a $578,000 decrease in non-performing commercial mortgage loans, partially offset by a $201,000 increase in non-performing consumer loans. At December 31, 2018, impaired loans totaled $52.5 million with related specific reserves of $1.4 million, compared with impaired loans totaling $50.2 million with related specific reserves of $2.9 million at September 30, 2018. At December 31, 2017, impaired loans totaled $52.0 million with related specific reserves of $2.7 million.
At December 31, 2018, the Company’s allowance for loan losses was 0.77% of total loans, compared to 0.75% at September 30, 2018, and 0.82% of total loans at December 31, 2017. The allowance for loan losses decreased $4.6 million to $55.6 million at December 31, 2018, from $60.2 million at December 31, 2017. The
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Company recorded provisions for loan losses of $1.8 million and $23.7 million for the quarter and year ended December 31, 2018, respectively, compared with provisions of $1.9 million and $5.6 million for the quarter and year ended December 31, 2017, respectively. For the quarter and year ended December 31, 2018, the Company had net charge-offs of $147,000 and $28.3 million, respectively, compared with net charge-offs of $2.0 million and $7.3 million, respectively, for the same periods in 2017. Net charge-offs for year ended December 31, 2018 included a $14.9 million loss related to a commercial borrower that filed a Chapter 7 petition in bankruptcy on March 27, 2018 for a liquidation of assets.
At December 31, 2018, the Company held $1.6 million of foreclosed residential real estate assets, compared with $6.9 million at December 31, 2017. During the year ended December 31, 2018, there were nine additions to foreclosed assets with an aggregate carrying value of $2.0 million and 20 properties sold with an aggregate carrying value of $7.1 million. Total non-performing assets at December 31, 2018 declined $14.5 million, or 34.8%, to $27.3 million, or 0.28% of total assets, from $41.8 million, or 0.42% of total assets at December 31, 2017.  
Income Tax Expense
For the quarter and year ended December 31, 2018, the Company’s income tax expense was $6.0 million and $25.5 million, respectively, compared with $15.7 million and $46.5 million, for the quarter and year ended December 31, 2017, respectively. The Company’s effective tax rates were 14.4% and 17.7% for the quarter and year ended December 31, 2018, respectively, compared with 44.7% and 33.1% for the quarter and year ended December 31, 2017, respectively. The decrease in tax expense and the lower effective tax rates for both the quarter and year ended December 31, 2018, were favorably impacted by the Tax Cuts and Jobs Act (the "Tax Act"), which, effective January 1, 2018, reduced the statutory federal income tax rate from 35% to 21%; and the recognition of a non-recurring $1.9 million tax benefit related to the Company's completion of a cost segregation study that assigned shorter taxable lives to select fixed assets.  The tax rates for 2017 included an additional tax expense of $4.0 million related to the enactment of the Tax Act.   
About the Company
Provident Financial Services, Inc. is the holding company for Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania. The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company.
Post Earnings Conference Call
Representatives of the Company will hold a conference call for investors on Friday, February 1, 2019 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter and year ended December 31, 2018. The call may be accessed by dialing 1-888-336-7149 (Domestic), 1-412-902-4175 (International) or 1-855-669-9657 (Canada). Internet access to the call is also available (listen only) at www.Provident.Bank by going to Investor Relations and clicking on "Webcast."
Forward Looking Statements
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,” "project," "intend," “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 set forth in Item 1A of the Company's Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q, and those related to the economic environment, particularly in the market areas in which 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, credit risk management, asset
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-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company advises 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 have any obligation to update any forward-looking statements to reflect events or circumstances after the date of this statement.
Footnotes
(1) Tangible book value per share, annualized return on average tangible equity, annualized non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes following the Consolidated Financial Highlights which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.


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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
December 31, 2018 (Unaudited) and December 31, 2017
(Dollars in Thousands)
AssetsDecember 31, 2018December 31, 2017
Cash and due from banks$86,195 $139,557 
Short-term investments56,466 51,277 
Total cash and cash equivalents142,661 190,834 
Available for sale debt securities, at fair value1,063,079 1,037,154 
Held to maturity debt securities (fair value of $479,740 and $485,039 at December 31, 2018 and December 31, 2017, respectively) 479,425 477,652 
Equity securities, at fair value635 658 
Federal Home Loan Bank Stock68,813 81,184 
Loans7,250,588 7,325,718 
Less allowance for loan losses55,562 60,195 
Net loans7,195,026 7,265,523 
Foreclosed assets, net1,565 6,864 
Banking premises and equipment, net58,124 63,185 
Accrued interest receivable31,475 29,646 
Intangible assets418,178 420,290 
Bank-owned life insurance193,085 189,525 
Other assets73,703 82,759 
Total assets$9,725,769 $9,845,274 
Liabilities and Stockholders' Equity
Deposits:
Demand deposits$5,027,708 $4,996,345 
Savings deposits1,051,922 1,083,012 
Certificates of deposit of $100,000 or more414,848 316,074 
Other time deposits335,644 318,735 
Total deposits6,830,122 6,714,166 
Mortgage escrow deposits25,568 25,933 
Borrowed funds1,442,282 1,742,514 
Other liabilities68,817 64,000 
Total liabilities8,366,789 8,546,613 
Stockholders’ Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued— — 
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,293 shares issued and 66,325,458 shares outstanding at December 31, 2018, and 83,209,293 shares issued and 66,535,017 shares outstanding at December 31, 2017, respectively 832 832 
Additional paid-in capital 1,021,533 1,012,908 
Retained earnings 651,099 586,132 
Accumulated other comprehensive loss (12,336)(7,465)
Treasury stock (272,470)(259,907)
Unallocated common stock held by the Employee Stock Ownership Plan (29,678)(33,839)
Common stock acquired by the Directors’ Deferred Fee Plan (4,504)(5,175)
Deferred compensation—Directors’ Deferred Fee Plan 4,504 5,175 
Total stockholders’ equity1,358,980 1,298,661 
Total liabilities and stockholders’ equity$9,725,769 $9,845,274 


7


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three Months (Unaudited) and Year Ended December 31, 2018 (Unaudited) and 2017
(Dollars in Thousands, except per share data)
Three Months EndedYear Ended
December 31,December 31,
2018 2017 2018 2017 
Interest income:
Real estate secured loans$56,433 $49,184 $215,231 $189,896 
Commercial loans20,665 19,023 79,371 72,907 
Consumer loans4,961 5,008 19,906 20,301 
Available for sale debt securities and Federal Home Loan Bank stock8,243 6,794 30,981 26,445 
Held to maturity debt securities3,159 3,215 12,606 13,027 
Deposits, Federal funds sold and other short-term investments461 372 1,734 1,270 
Total interest income93,922 83,596 359,829 323,846 
Interest expense:
Deposits9,606 5,348 30,693 19,441 
Borrowed funds6,983 6,348 28,460 26,203 
Total interest expense16,589 11,696 59,153 45,644 
Net interest income77,333 71,900 300,676 278,202 
Provision for loan losses1,800 1,900 23,700 5,600 
Net interest income after provision for loan losses75,533 70,000 276,976 272,602 
Non-interest income:
Fees7,378 6,278 28,084 27,218 
Bank-owned life insurance874 1,402 5,514 6,693 
Wealth management income4,385 4,290 17,957 17,604 
Net gain on securities transactions2,218 10 2,221 57 
Other income761 1,321 4,900 4,125 
Total non-interest income15,616 13,301 58,676 55,697 
Non-interest expense:
Compensation and employee benefits28,098 28,267 111,496 109,353 
Net occupancy expense6,004 6,035 25,056 25,290 
Data processing expense3,802 3,620 14,664 13,922 
FDIC Insurance562 822 3,482 3,887 
Amortization of intangibles502 591 2,127 2,670 
Advertising and promotion expense1,073 1,195 3,836 3,904 
Other operating expenses9,319 7,548 31,074 28,796 
Total non-interest expense49,360 48,078 191,735 187,822 
Income before income tax expense41,789 35,223 143,917 140,477 
Income tax expense6,026 15,740 25,530 46,528 
Net income$35,763 $19,483 $118,387 $93,949 
Basic earnings per share$0.55 $0.30 $1.82 $1.46 
Average basic shares outstanding65,048,753 64,554,617 64,942,886 64,384,851 
Diluted earnings per share$0.55 $0.30 $1.82 $1.45 
Average diluted shares outstanding65,175,345 64,749,297 65,103,097 64,579,222 


8


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Financial Highlights
(Dollars in Thousands, except share data) (Unaudited)
At or for theAt or for the
Three Months EndedYear Ended
December 31,December 31,
2018 2017 2018 2017 
STATEMENTS OF INCOME:
Net interest income$77,333 $71,900 $300,676 $278,202 
Provision for loan losses1,800 1,900 23,700 5,600 
Non-interest income15,616 13,301 58,676 55,697 
Non-interest expense49,360 48,078 191,735 187,822 
Income before income tax expense41,789 35,223 143,917 140,477 
Net income35,763 19,483 118,387 93,949 
Diluted earnings per share$0.55 $0.30 $1.82 $1.45 
Interest rate spread3.22 %3.10 %3.20 %3.07 %
Net interest margin3.44 %3.25 %3.39 %3.21 %
PROFITABILITY:
Annualized return on average assets1.46 %0.80 %1.22 %0.99 %
Annualized return on average equity 
10.53 %5.90 %8.93 %7.28 %
Annualized return on average tangible equity (1)
15.27 %8.69 %13.07 %10.82 %
Annualized core non-interest expense to average assets (1)
2.01 %1.98 %1.97 %1.97 %
Efficiency ratio (1)
53.10 %56.43 %53.36 %56.25 %
ASSET QUALITY:
Non-accrual loans$25,690 $34,929 
90+ and still accruing— — 
Non-performing loans25,690 34,929 
Foreclosed assets1,565 6,864 
Non-performing assets27,255 41,793 
Non-performing loans to total loans0.35 %0.48 %
Non-performing assets to total assets0.28 %0.42 %
Allowance for loan losses$55,562 $60,195 
Allowance for loan losses to total non-performing loans216.28 %172.34 %
Allowance for loan losses to total loans0.77 %0.82 %
AVERAGE BALANCE SHEET DATA:
Assets$9,729,008 $9,618,177 $9,736,449 $9,534,785 
Loans, net7,204,254 7,075,373 7,208,420 6,971,512 
Earning assets8,859,139 8,739,182 8,865,076 8,649,286 
Core deposits6,138,343 6,071,705 6,109,836 5,944,870 
Borrowings1,393,965 1,545,665 1,535,906 1,581,964 
Interest-bearing liabilities6,804,187 6,793,648 6,853,751 6,809,675 
Stockholders' equity1,347,630 1,310,193 1,325,211 1,289,973 
Average yield on interest-earning assets4.19 %3.78 %4.06 %3.74 %
Average cost of interest-bearing liabilities0.97 %0.68 %0.86 %0.67 %
LOAN DATA:
Mortgage loans:
Residential$1,100,009 $1,142,914 
Commercial2,299,417 2,171,174 
Multi-family1,339,800 1,404,005 
Construction388,999 392,580 
Total mortgage loans5,128,225 5,110,673 
Commercial loans1,695,148 1,745,301 
Consumer loans431,428 473,958 
Total gross loans7,254,801 7,329,932 
Premium on purchased loans3,243 4,029 
Unearned discounts(33)(36)
Net deferred(7,423)(8,207)
Total loans$7,250,588 $7,325,718 

(1) Refer to: Notes - Reconciliation of GAAP to Non-GAAP Measures.

9


Notes - Reconciliation of GAAP to Non-GAAP Financial Measures - (Dollars in Thousands, except share data)
(1) Book and Tangible Book Value per Share
At December 31,
2018 2017 
Total stockholders' equity$1,358,980 $1,298,661 
Less: total intangible assets418,178 420,290 
Total tangible stockholders' equity$940,802 $878,371 
Shares outstanding 66,325,458 66,535,017 
Book value per share (total stockholders' equity/shares outstanding)$20.49 $19.52 
Tangible book value per share (total tangible stockholders' equity/shares outstanding)$14.18 $13.20 
(2) Annualized Return on Average Tangible Equity
Three Months EndedYear Ended
December 31,December 31,
2018 2017 2018 2017 
Total average stockholders' equity$1,347,630 $1,310,193 $1,325,211 $1,289,973 
Less: total average intangible assets418,501 420,667 419,271 421,628 
Total average tangible stockholders' equity$929,129 $889,526 $905,940 $868,345 
Net income $35,763 $19,483 $118,387 $93,949 
Annualized return on average tangible equity (net income/total average stockholders' equity)15.27 %8.69 %13.07 %10.82 %
(3) Annualized Non-Interest Expense to Average Assets
Three Months EndedYear Ended
December 31,December 31,
2018 2017 2018 2017 
Total annualized non-interest expense $195,830 $190,744 $191,735 $187,822 
Average assets9,729,008 9,618,177 9,736,449 9,534,785 
Annualized non-interest expense/average assets2.01 %1.98 %1.97 %1.97 %
(4) Efficiency Ratio
Three Months EndedYear Ended
December 31,December 31,
2018 2017 2018 2017 
Net interest income$77,333 $71,900 $300,676 $278,202 
Non-interest income 15,616 13,301 58,676 55,697 
Total income$92,949 $85,201 $359,352 $333,899 
Non-interest expense$49,360 $48,078 $191,735 $187,822 
Efficiency ratio (non-interest expense/total income) 53.10 %56.43 %53.36 %56.25 %



10


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Unaudited) (Dollars in Thousands)
December 31, 2018September 30, 2018
AverageAverageAverageAverage
BalanceInterestYield/CostBalanceInterestYield/Cost
Interest-Earning Assets:
Deposits$14,253 $81 2.28%  $13,552 $69 2.04%  
Federal funds sold and other short-term investments48,787 380 3.09%  50,600 381 2.97%  
Held to maturity debt securities (1)
475,815 3,159 2.66%  473,291 3,149 2.66%  
Available for sale debt securities, at fair value1,049,645 6,962 2.65%  1,049,933 6,577 2.51%  
Equity securities, at fair value700 —  — %  706 —  — %  
Federal Home Loan Bank stock65,685 1,281 7.80%  73,787 1,228 6.66%  
Net loans: (2)
Total mortgage loans5,160,375 56,433 4.31%  5,098,281 54,532 4.22%  
Total commercial loans1,607,528 20,665 5.06%  1,650,039 20,230 4.82%  
Total consumer loans436,351 4,961 4.51%  446,986 5,095 4.52%  
Total net loans7,204,254 82,059 4.49%  7,195,306 79,857 4.38%  
Total Interest Earning Assets
$8,859,139 $93,922 4.19%  $8,857,175 $91,261 4.07%  
Non-Interest Earning Assets:
Cash and due from banks92,040 93,082 
Other assets777,829 777,348 
Total Assets$9,729,008 $9,727,605 
Interest-Bearing Liabilities:
Demand deposits$3,608,524 $6,262 0.69%  $3,515,583 5,319 0.60%  
Savings deposits1,050,832 473 0.18%  1,056,382 460 0.17%  
Time deposits750,866 2,871 1.52%  653,641 2,077 1.26%  
Total Deposits5,410,222 9,606 0.70%  5,225,606 7,856 0.60%  
Borrowed funds1,393,965 6,983 1.99%  1,569,176 7,619 1.93%  
Total Interest Bearing Liabilities
6,804,187 16,589 0.97%  6,794,782 15,475 0.90%  
Non-Interest Bearing Liabilities:
Non-interest bearing deposits1,478,987 1,495,138 
Other non-interest bearing liabilities98,204 109,340 
Total Non-interest Bearing Liabilities1,577,191 1,604,478 
Total Liabilities8,381,378 8,399,260 
Stockholders' equity1,347,630 1,328,345 
Total Liabilities and Stockholders' Equity$9,729,008 $9,727,605 
Net interest income$77,333 $75,786 
Net interest rate spread3.22%  3.17%  
Net interest-earning assets$2,054,952 $2,062,393 
Net interest margin (3)
3.44%  3.38%  
Ratio of interest-earning assets to
total interest-bearing liabilities
1.30x 1.30x 
(1) Average outstanding balance amounts shown are amortized cost.
(2) Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
(3) Annualized net interest income divided by average interest-earning assets.

11


The following table summarizes the quarterly net interest rate spread and net interest margin for the previous five quarters.
12/31/189/30/186/30/1803/31/1812/31/17
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 
Interest-Earning Assets:
Securities2.87 %2.75 %2.72 %2.62 %2.49 %
Net loans4.49 %4.38 %4.26 %4.18 %4.08 %
Total interest-earning assets4.19 %4.07 %3.97 %3.89 %3.78 %
Interest-Bearing Liabilities:
Total deposits0.70 %0.60 %0.53 %0.47 %0.40 %
Total borrowings1.99 %1.93 %1.82 %1.70 %1.63 %
Total interest-bearing liabilities0.97 %0.90 %0.82 %0.76 %0.68 %
Interest rate spread3.22 %3.17 %3.15 %3.13 %3.10 %
Net interest margin3.44 %3.38 %3.33 %3.30 %3.25 %
Ratio of interest-earning assets to interest-bearing liabilities1.30x1.30x1.29x1.28x1.29x


12


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Unaudited) (Dollars in Thousands)
December 31, 2018December 31, 2017
AverageAverageAverageAverage
BalanceInterestYield/CostBalanceInterestYield/Cost
Interest-Earning Assets:
Deposits$13,867 $269 1.91%  $19,670 $199 1.00%  
Federal funds sold and other short term investments50,351 1,465 2.92%  51,790 1,071 2.07%  
Held to maturity debt securities (1)
472,690 12,606 2.67%  487,616 13,027 2.67%  
Available for sale debt securities, at fair value1,046,701 26,074 2.49%  1,044,116 22,384 2.14%  
Equity securities, at fair value683 —  — %  587 —  — %  
Federal Home Loan Bank stock72,364 4,907 6.78%  73,995 4,061 5.49%  
Net loans: (2)
Total mortgage loans5,108,289 215,231 4.21%  4,838,342 189,896 3.92%  
Total commercial loans1,648,537 79,371 4.81%  1,640,198 72,907 4.44%  
Total consumer loans451,594 19,906 4.41%  492,972 20,301 4.12%  
Total net loans7,208,420 314,508 4.36%  6,971,512 283,104 4.06%  
Total Interest Earning Assets$8,865,076 $359,829 4.06%  $8,649,286 $323,846 3.74%  
Non-Interest Earning Assets:
Cash and due from banks93,601 93,894 
Other assets777,772 791,605 
Total Assets$9,736,449 $9,534,785 
Interest-Bearing Liabilities:
Demand deposits$3,575,306 $20,450 0.57%  $3,477,413 $12,205 0.35%  
Savings deposits1,070,868 1,923 0.18%  1,101,103 2,092 0.19%  
Time deposits671,671 8,320 1.24%  649,195 5,144 0.79%  
Total Deposits5,317,845 30,693 0.58%  5,227,711 19,441 0.37%  
Borrowed funds1,535,906 28,460 1.85%  1,581,964 26,203 1.66%  
Total Interest Bearing Liabilities$6,853,751 59,153 0.86%  $6,809,675 45,644 0.67%  
Non-Interest Bearing Liabilities:
Non-interest bearing deposits1,463,662 1,366,354 
Other non-interest bearing liabilities93,825 68,783 
Total Non-interest Bearing Liabilities1,557,487 1,435,137 
Total Liabilities8,411,238 8,244,812 
Stockholders' equity1,325,211 1,289,973 
Total Liabilities and Stockholders' Equity$9,736,449 $9,534,785 
Net interest income$300,676 $278,202 
Net interest rate spread3.20%  3.07%  
Net interest-earning assets$2,011,325 $1,839,611 
Net interest margin (3)
3.39%  3.21%  
Ratio of interest-earning assets to
total interest-bearing liabilities
1.29x 1.27 x 
(1) Average outstanding balance amounts shown are amortized cost.
(2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans.
(3) Annualized net interest income divided by average interest-earning assets.

13


The following table summarizes the year-to-date net interest rate spread and net interest margin for the previous three years.
Years Ended
12/31/1812/31/1712/31/16
Interest-Earning Assets:
Securities2.74 %2.43 %2.24 %
Net loans4.36 %4.06 %3.98 %
Total interest-earning assets4.06 %3.74 %3.64 %
Interest-Bearing Liabilities:
Total deposits0.58 %0.37 %0.33 %
Total borrowings1.85 %1.66 %1.70 %