ISELIN, N.J. — Provident Financial Services, Inc. (NYSE:PFS), the parent company of Provident Bank, announced a significant recovery in its financial performance for the third quarter ended September 30, 2024. The company reported net income of $46.4 million, or $0.36 per basic and diluted share, a substantial turnaround from a net loss of $11.5 million in the previous quarter.
This improvement reflects the full quarter impact of the May 16, 2024, merger with Lakeland Bancorp (NASDAQ:LBAI), Inc., which added $10.91 billion in total assets, $7.91 billion in loans, and $8.62 billion in deposits, net of purchase accounting adjustments. The merger also affected credit loss provisions due to the initial CECL provisions recorded on acquired loans.
Net interest income for the quarter increased by $42.2 million to $183.7 million, driven by the full quarter impact of the Lakeland merger and core margin expansion. The net interest margin also grew from 3.21% in the trailing quarter to 3.31%. Non-interest income rose by $4.6 million to $26.9 million, and non-interest expense increased by $20.6 million to $136.0 million, reflecting a full quarter of combined operations with Lakeland.
Provident's wealth management and insurance agency income saw increases of 9.0% and 12.6%, respectively, compared to the same period in 2023. The company also noted robust loan pipeline growth, with a total of $1.98 billion in loans approved pending closing at the end of the quarter.
The provision for credit losses on loans for the quarter was $9.6 million, primarily due to specific reserves on individually analyzed loans and some economic forecast deterioration. Non-performing loans to total loans ratio increased to 0.47% from 0.36% in the previous quarter.
The company's Board of Directors declared a quarterly cash dividend of $0.24 per common share, payable on November 29, 2024, to stockholders of record as of November 15, 2024.
President and CEO Anthony J. Labozzetta commented on the successful completion of the merger with Lakeland and the positive outlook for the company, highlighting the solid performance and the benefits of cost savings and enhanced revenue opportunities.
Provident Financial Services, Inc. bases this report on a press release statement and does not endorse any claims of being the "first," "leading," or "best" in the industry.
In other recent news, Provident Financial Services has settled a class action lawsuit over overdraft fees for $1.85 million, according to a recent SEC filing. The company has also appointed Vivin Varghese as its new Senior Vice President and Chief Information Security Officer, signaling a continued focus on robust information security. Financially, Provident Financial reported a Q2 net loss of $11.5 million due to merger-related expenses from its integration with Lakeland Bancorp, but adjusted earnings per diluted share remained at $0.44. The company also projects a return on average assets of approximately 1.1% and a return on tangible equity of around 15% by 2025.
RBC Capital Markets has raised the price target on Provident Financial Services shares to $21 from $18, maintaining an Outperform rating. This follows the company's robust margin expansion, controlled expenses, and strong credit quality post-merger. Meanwhile, several Wall Street firms, including TD Securities, BNY Mellon (NYSE:BK), and Truist, have agreed to pay a collective sum exceeding $470 million in settlements with U.S. regulators due to violations of recordkeeping rules. These are among the most recent developments affecting Provident Financial Services and the broader financial sector.
InvestingPro Insights
Complementing Provident Financial Services' (NYSE:PFS) robust third-quarter results, InvestingPro data reveals additional insights into the company's financial health and market performance. The company's market capitalization stands at $2.51 billion, reflecting its significant presence in the financial services sector.
One of the key InvestingPro Tips highlights that PFS has maintained dividend payments for 22 consecutive years, underscoring the company's commitment to shareholder returns. This aligns with the recent quarterly cash dividend declaration mentioned in the article. The current dividend yield is an attractive 4.97%, which may appeal to income-focused investors.
Another relevant InvestingPro Tip indicates that PFS has experienced a large price uptick over the last six months. This is corroborated by the InvestingPro data showing a 31.32% price total return over the same period. This positive momentum suggests that the market has responded favorably to the company's strategic moves, including the merger with Lakeland Bancorp, Inc.
The company's P/E ratio (adjusted) of 26.13 for the last twelve months as of Q2 2024 indicates that investors are willing to pay a premium for PFS shares, possibly due to expectations of future growth and synergies from the recent merger.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into Provident Financial Services' financial position and market outlook. There are 6 more InvestingPro Tips available for PFS, which could offer valuable perspective for those considering an investment in the company.
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