Profile: Provident Financial Services Inc (PFS.N)
7 Mar 2014
Provident Financial Services, Inc., incorporated on August 13, 2002, is a holding company of The Provident Bank (the Bank). The Bank is a New Jersey-chartered capital stock savings bank. As of December 31, 2012, it operated 78 full-service branch offices in the New Jersey counties of Hudson, Bergen, Essex, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Union. The Bank attracts deposits from the general public and businesses primarily in the areas surrounding its banking offices and uses those funds, together with funds generated from operations and borrowings, to originate commercial real estate loans, residential mortgage loans, commercial business loans and consumer loans. The Bank also invests in mortgage-backed securities and other permissible investments.
The Bank originates commercial real estate loans, commercial business loans, fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate and other consumer loans, for borrowers generally located within its primary market area. The Bank originates commercial real estate loans that are secured by income-producing properties, such as multi-family apartment buildings, office buildings, and retail and industrial properties. Generally, these loans have terms of either 5 to 10 years. The Bank underwrites most construction loans for a term of three years or less. The Bank originates consumer loans that are secured, in most cases, by a borrower’s assets. Home equity loans and home equity lines of credit that are secured by a first or second mortgage lien on the borrower’s residence consists of the category of the Bank’s consumer loan portfolio.
Commercial loans are made to businesses of varying size and type within the Bank’s market. The Bank lends to established businesses, and the loans are generally secured by business assets, such as equipment, receivables, inventory, real estate or marketable securities. On a limited basis, the Bank makes unsecured commercial loans. Most commercial lines of credit are made on a floating interest rate basis and most term loans are made on a fixed interest rate basis, usually with terms of five years or less. The Bank originates residential mortgage loans secured by first mortgages on one- to four-family residences, generally located in the State of New Jersey. The Bank originates residential mortgages primarily through commissioned mortgage representatives, the Internet and its branch offices. The Bank originates both fixed-rate and adjustable-rate mortgages. As of December 31, 2012, $1.27 billion or 26.2% of the total portfolio consisted of residential real estate loans.
The Company does not originate or purchase sub-prime or option ARM loans. During the year ended December 31, 2012, $36.7 million, or 19.9% of residential real estate loans originated were sold into the secondary market. All of the loans sold during 2012 were long-term, fixed-rate mortgages. The Bank originates loans secured by mortgages on various commercial income producing properties, including multi-family apartment buildings, office buildings and retail and industrial properties. Commercial real estate loans were 27.9% of the loan portfolio as of December 31, 2012. The Bank originates commercial real estate loans with adjustable rates and with fixed interest rates for a period that is generally 5 to 10 years or less, which may adjust after the initial period.
The Bank underwrites loans secured by apartment buildings that have five or more units. The Bank considers multi-family lending a component of the commercial real estate lending portfolio. The Bank originates commercial construction loans. Commercial construction lending includes both new construction of residential and commercial real estate projects and the reconstruction of existing structures. The Bank’s commercial construction financing takes two forms: projects for sale (single family/condominiums) and projects that are constructed for investment purposes (rental property). Commercial loans represented 17.9% of the loan portfolio as of December 31, 2012.
The Bank offers commercial loans for equipment purchases, lines of credit for working capital purposes, letters of credit and real estate loans where the borrower is the primary occupant of the property. The Bank also underwrites Small Business Administration (SBA) guaranteed loans and guaranteed or assisted loans through various state, county and municipal programs. The Bank offers a range of consumer loans to individuals. Consumer loans represented 12.0% of the loan portfolio as of December 31, 2012. Home equity loans and home equity lines of credit constituted 90.8% of the consumer loan portfolio and indirect marine loans constituted 7.2% of the consumer loan portfolio as of December 2012.
Securities in the investment portfolio are classified as held to maturity, available for sale or held for trading. Available for sale securities include United States Treasury and Agency obligations, United States Agency and privately-issued collateralized mortgage obligations (CMOs), corporate debt obligations and equities. As of December 31, 2012, the Bank held $42.0 million in privately-issued CMOs in the investment portfolio. The Bank and the Company do not invest in collateralized debt obligations, mortgage-related securities secured by sub-prime loans, or any preferred equity securities.
Sources of Funds
Primary sources of funds consist of principal and interest cash flows received from loans and mortgage-backed securities, contractual maturities on investments, deposits, Federal Home Loan Bank of New York (FHLB) advances and proceeds from sales of loans and investments. These sources of funds are used for lending, investing and general corporate purposes, including acquisitions and common stock repurchases. The Bank offers a range of deposits for retail and business accounts. Deposit products include savings accounts, checking accounts, interest-bearing checking accounts, money market deposit accounts and certificate of deposit accounts at varying interest rates and terms.
The Bank also offers IRA and KEOGH accounts. Business customers are offered several checking account and savings plans, cash management services, remote deposit capture services, payroll origination services, escrow account management and business credit cards. As of December 31, 2012, the Bank had $803.3 million of borrowed funds. Borrowed funds consist primarily of FHLB advances and repurchase agreements.
Wealth Management Services
The Bank’s Wealth Management Group is a provider of asset management services in New Jersey. It offers a range of asset management services to individuals, municipalities, non-profits, corporations and pension funds. These services include investment management, asset allocation, trust and fiduciary services, financial planning, family office services, estate settlement services and custody.
PFS Insurance Services, Inc., formerly Provident Investment Services, Inc., is a wholly owned subsidiary of the Bank, and a New Jersey licensed insurance producer that sells insurance and investment products, including annuities to customers through a third-party networking arrangement. Dudley Investment Corporation is a wholly owned subsidiary of the Bank, which operates as a New Jersey Investment Company. Dudley Investment Corporation owns all of the outstanding common stock of Gregory Investment Corporation. PSB Funding Corporation is a majority owned subsidiary of Gregory Investment Corporation. It was established as a New Jersey corporation to engage in the business of a real estate investment trust for the purpose of acquiring mortgage loans and other real estate related assets from the Bank. TPB Realty, LLC, is a wholly owned subsidiary of the Bank formed to invest in real estate development joint ventures. Bergen Avenue Realty, LLC, is a wholly owned subsidiary of the Bank.
Provident Financial Services Inc
239 Washington Street
JERSEY CITY NJ 07302