Key questions and answers from the second quarter fiscal year 2008 earnings call as presented by Provident Financial Services, Inc. (PFS: chart) on July 24, 2008
Mark Fitzgibbon (Sandler O’Neill):
What is your deposit strategy?
Linda Niro: It is a combination of both on the deposit side and our preferred method of funding loan growth to expand our deposit base and our market share.
We have a strategic business plan to expand core account relationships, not only on the retail side, but on the commercial and small business side by offering new products, by enhancing our Web site and internet banking capabilities.
While de novo branching will be in the mix, where it makes sense, from a geographic location and market share, primarily it is going to be through expanding relationships with our customers and improving our core deposit mix.
Paul Pantozzi: We have several locations, de novo locations in the pipeline, they are not going to be coming online until much later this year and really into the first and second quarters of 2009, but again, very selective locations hopefully to assist in the process.
Mark Fitzgibbon (Sandler O’Neill):
Comment on that $16 million credit that you have that you secured at the end of the quarter?
Chris Martin: That building had just been finished. We had some delays and the process that takes and now that everything is completed, there were some sales just waiting to get the COs to close the unit.
Definitely, in a decent market and also there is more affordability index in this building. So, things are slow, but they have progressed and we're closing contracts as we speak.
Mark Fitzgibbon (Sandler O’Neill):
Can you hold the margin here given what you see going on with liability pricing and the yield curve?
Linda Niro: We are going to still be able to reduce our costs of funds, probably not as strongly as what occurred in the second quarter and we are looking for a pick up in asset yield as well.
Damon DelMonte (KBW):
How are you looking at the provision and charge-offs going forward?
Linda Niro: It is going to be determined by our monthly and quarterly evaluations of the lending portfolio and the risks that we see at the end of the quarter determined by growth in the portfolio, the mix, and its commercial loans, increased to an extent and also what happens with non-performing loans.
Right now, we are not seeing any significant change in that number. The one $16 million loan really was just out there and non-performing really a timing issue. So, it is just a result of our analysis and what we see when we get to quarter-end.
Damon DelMonte (KBW):
If we exclude that $773,000 severance related charge, is that a good run rate going forward?
Linda Niro: Probably be a little bit less, but you definitely want to pull that $773,000 out.
Rick Weiss (Janney Montgomery Scott):
What is your perception of economic credit conditions?
Linda Niro: This is somewhat worse than the late 1980s and early 1990s cycle because it is so widespread in terms of it being not just residential, but you have home equity of credit cards and those sorts of things, but it looks from our standpoint hopefully things are turning around a little bit in our market area.
Chris Martin: Just to add to expand upon it, really would be the declining dollar, oil, the global environment, and the liquidity issues that have surfaced from all this. It is not just the United States having a problem, it is everybody that has bought into the paper and now, we have to undo and it is going to be a little bit longer process.
Paul Pantozzi: In the last 1980s, early 1990s, we were not as diversified as we are today. We were in the early stages of getting into commercial lending back then and as the market was turning, we were sitting on the sidelines for maybe a year and a half to two years waiting for it to improve.
