Provident Financial Services, Inc. (NYSE:PFS) Q2 2022 Earnings Conference Call July 29, 2022 10:00 AM ET

Company Participants

Adriano Duarte - Investor Relations

Tony Labozzetta - President and Chief Executive Officer

Tom Lyons - Senior Executive Vice President and Chief Financial Officer

Conference Call Participants

Mark Fitzgibbon - Piper Sandler

Michael Perito - KBW

Billy Young - RBC

Manuel Navas - DA Davidson

Operator

Good morning and welcome to today’s Provident Financial Services, Inc. Second Quarter Earnings Release Conference Call. My name is Candice and I'll be your operator for today’s call. [Operator Instructions]

I will now like to hand the conference call over to your host, Adriano Duarte, Head of Investor Relations. Please go ahead.

Adriano Duarte

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

Before beginning their review of our financial results, we ask that you please take note of our standard caution as to any forward-looking statements that may be made during the course of today's call. Our full disclaimer is contained in this morning's earnings release which has been posted to the Investor Relations page on our website www.provident.bank.

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

Tony Labozzetta

Thank you, Adriano. And good morning, everyone. Provident had strong financial performance for the second quarter, record revenue produced earnings of $0.53 per share. Our performance was driven in large part by solid growth in commercial loans. The growth combined with an expanding net interest margin drove a 5.2% increase in net interest income over the trailing quarter. This resulted in an annualized rate of return on average assets of 1.16% and a return on average tangible equity of 13.82%. Our Board approved their quarterly cash dividend of $0.24 per share. During the quarter, we also repurchase approximately 706,000 shares of our common stock at an average price of $23 per share. Capital position remains strong and comfortably exceeds well capitalized levels.

We've remained dedicated to fostering a best-in-class customer experience, which will help build all of our business lines. Commercial lending continues to be our primary focus. And in the second quarter, we closed approximately $821 million of new loans, a 103% increase from the same quarter last year. Our line of credit utilization percentage increased 5% in the second quarter to 36%, which is approaching our historical average of about 40%. In addition, prepayments declined approximately 23% as compared to the first quarter. As a result of a robust productivity and lower pre payments, we grew our commercial loan portfolio excluding PPP at an annualized rate of 17.3%. We had good pull through in our commercial loan pipeline during the second quarter, yet, we replenished our gross pipeline, which remains strong at approximately $1.4 billion. The pull through adjusted pipeline, including loans pending closing is approximately $825 million. And our projected pipeline rates increased 40 -- at 84 basis points from the last quarter to 4.99%. Despite a competitive market and rising interest rates, lending and business activity remains vibrant. We expect substantial pull through in the pipeline, and as such, we expect to have strong long growth for fiscal 2022.