Provident Financial Services Q3 2024 Earnings Report

Provident Financial Services EPS Results

• Actual EPS: $0.36
• Consensus EPS: $0.47
• Beat/Miss: Missed by -$0.11
• One Year Ago EPS: $0.38

Provident Financial Services Revenue Results

• Actual Revenue: $349.38 million
• Expected Revenue: $211.25 million
• Beat/Miss: Beat by +$138.13 million
• YoY Revenue Growth: N/A

Provident Financial Services Announcement Details

• Quarter: Q3 2024
• Date: 10/29/2024
• Time: After Market Closes
• Conference Call Date: Wednesday, October 30, 2024
• Conference Call Time: 10:00AM ET

Provident Financial Services (NYSE:PFS). is the bank holding company for Provident Bank, a regional commercial bank headquartered in Jersey City, New Jersey. The company operates a network of full-service branches across New Jersey, the New York metropolitan area and eastern Pennsylvania, offering a range of personal and business banking solutions.

Its core products and services include checking and savings accounts, consumer and residential mortgage loans, commercial real estate financing and small-business lending. The company also provides treasury and cash management services, merchant services and online and mobile banking platforms to support both individual and corporate clients.

In addition to traditional banking, Provident Financial Services delivers trust and wealth management services through its fiduciary division, offering retirement planning, investment management and estate-planning solutions. These advisory services are tailored to high-net-worth individuals, families and institutions seeking customized financial guidance.

Headquartered in Jersey City, Provident Financial Services traces its roots to one of New Jersey’s oldest financial institutions. David P. Chase serves as President and Chief Executive Officer, overseeing the company’s strategic initiatives, risk management and community banking efforts.

Provident Financial Services Q3 2024 Earnings Call Transcript

Key Takeaways

• Merger integration completed on September 3 with Lakeland Bank’s core system conversion, retaining virtually all legacy customers and delivering immediate cost savings, margin expansion, and revenue enhancement opportunities.
• Reported net earnings of $46.4 million (EPS $0.36), achieving an adjusted ROA of 0.95%, ROTCE of 14.53%, and pre-tax pre-provision ROA of 1.48% in Q3.
• Net interest margin rose 10 basis points to 3.31% despite a 9 basis point increase in deposit costs to 2.36%, with guidance for NIM to trend toward 3.45% by 2025.
• Closed $489 million of new commercial loans in Q3, grew the total loan pipeline to approximately $2.0 billion (pull-through $1.2 billion at a 7.18% rate), and expects robust loan growth over the next two quarters.
• Fee-based businesses outperformed, with Provident Protection Plus delivering 13% organic growth in Q3 and Beacon Trust AUM hitting a record $4.2 billion, boosting fee income by 9% YoY.

Presentation

[Operator]

Thank you for standing by. I would like to welcome everyone to the Provident Financial Services, Inc. Third Quarter Earnings Conference Call. I would now like to turn the call over to Adriano Duarte, the Investor Relations Officer. Please go ahead, sir.

[Adriano Duarte, Head of Investor Relations at Provident Financial Services, Inc.]

Thank you, Dustin. Good morning, everyone, and thank you for joining us for our Third 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 the review of our financial results, we ask that you please take note of our standard question as to any forward-looking statements that may be made during the course of today's call. Our full disclaimers contain yesterday evening's earnings release, which has been posted to the Investor Relations page on our website, provident.bank. Now, it's my pleasure to introduce Tony Labozzetta, who will offer his perspective on the third quarter. Tony?

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Thank you, Adriano, and welcome everyone to the Provident Financial Services Earnings Call. Before we discuss our quarterly results, I am pleased to announce that as of September 3rd, the conversion of Lakeland Bank's core system was completed, and we are now operating as a fully united organization. Our cultures are combining well, and we have successfully retained virtually all legacy Lakeland customers. We are grateful to all the team members whose hard work and diligent preparation allowed us to have a smooth systems integration. We are already seeing the benefits of the merger through cost savings, expansion in our margin, and more revenue enhancement opportunities, and we are excited to carry this momentum into 2025.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Moving on to our quarterly results, the third quarter was characterized by stronger-than-expected economic growth, the first interest rate cut in more than four years, and an optimistic outlook for the banking sector despite weak loan demand and higher deposit costs. The Provident team achieved solid core profitability, highlighted by core margin expansion, growth in the loan pipeline, significant contributions from our fee-based businesses, and improved operating efficiency. During the quarter, we reported net earnings of $46.4 million, or $0.36 per share, on an annualized adjusted return on average assets of 0.95%, and a return on average tangible equity of 14.53%. Our adjusted pre-tax, pre-provision return on average assets was 1.48% for the third quarter. As we move forward, we expect to continue to leverage synergies and further enhance earnings going into 2025. At quarter end, our capital was healthy and exceeded levels deemed to be well capitalized.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Our tangible book value per share increased 4.5% to $13.66, and our tangible common equity ratio was 7.68%, compared to 7.34% for the trailing quarter. As such, our board of directors approved a quarterly cash dividend of $0.24 per share payable on November 29th. During the quarter, our average cost of total deposits increased nine basis points to 2.36%. Our deposits grew by $22 million this quarter, largely in short-term certificates of deposit. Our total cost of funds increased six basis points to 2.62% and remains favorable relative to our peer group. Overall, our net interest margin increased ten basis points to 3.31%, and we expect to see continued improvement over the next several quarters. During the third quarter, our commercial lending team closed approximately $489 million of new commercial loans. We experienced approximately $227 million in loan payoffs, resulting in a net growth of about $39 million.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

This quarter's production consisted of 35% commercial real estate, 43% in commercial and industrial lending, and 22% in specialty lending. Despite a slight deterioration in non-performing loans, primarily due to one commercial real estate credit, for which we anticipate a near-term resolution with no expected loss, our credit quality remained strong for the third quarter, as evidenced by our non-performing loan ratio of 47 basis points. We do not see any systemic weakness in our loan portfolio and remain confident in our underwriting and portfolio management standards. This is further supported by lower levels of net charge-offs relative to our peer group. We have seen an increase in our total loan pipeline, which grew during the third quarter to approximately $2 billion. The weighted average interest rate is 7.18% compared to 7.53% in the trailing quarter. The pull-through adjusted pipeline, including loans pending closing, is approximately $1.2 billion.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

We are optimistic regarding the strength and quality of our pipeline, and as such, we expect good growth over the next two quarters. This quarter, Provident's fee-based businesses performed very well. Provident Protection Plus had 13% organic growth in the third quarter as compared to the same quarter last year, which was the highest third quarter growth rate in its history. In addition, it had 16% organic growth year to date, and its retention rate was 99%, even as insurance rates continued to rise. Beacon Trust Assets Under Management grew by 4% for the quarter to a record high of $4.2 billion, which represents a 10% year-to-date growth. This growth was driven largely by good investment performance, and as a result, fee income improved 9% as compared to the third quarter of 2023.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

As we move towards the end of the year, we are increasingly optimistic about the prospects for future performance, as we anticipate a more favorable operating environment, growth in our business lines, continued revenue enhancement opportunities, strong credit quality, and improving operating efficiency, which will help us deliver even more value to our customers, employees, and stockholders. Now, I will turn the call over to Tom for his comments on our financial performance. Tom?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Thank you, Tony, and good morning, everyone. As Tony noted, we reported net income of $46.4 million, or $0.36 per share for the quarter. Excluding charges related to our merger with Lakeland Bancorp, core earnings were $57.7 million in the current quarter, or $0.44 per share, with a core ROA of 95 basis points. Further adjusting to the amortization of intangibles, our core return on average tangible equity was 14.53% for the quarter. Excluding merger-related charges, pre-tax, pre-provision earnings for the current quarter were $90.1 million, or an annualized 1.48% of average assets. Revenue increased to $210.6 million for the quarter, reflecting our first full quarter combined with Lakeland, and our net interest margin increased ten basis points in the trailing quarter to 3.31%. For the quarter, our margin included 53 basis points of purchase accounting accretion.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Excluding purchase accounting from both periods, our core margin expanded four basis points versus the trailing quarter to 2.78%. We project a NIM in the 3.3%-3.35% range for the remainder of 2024, increasing to around 3.45% over the course of 2025. Our projections include two additional 25 basis point rate reductions in 2024 and another three rate cuts in 2025. Period-end total loans were essentially flat for the quarter. Within the portfolio, C&I loans increased by $94 million, and multifamily loans increased by $37 million, while construction loans decreased by $97 million. Our pull-through adjusted loan pipeline at quarter end has increased to $1.2 billion, with a weighted average rate of 7.24% versus our current portfolio yield of 6.21%. Deposits totaled $18.4 billion at September 30th, consistent with the trailing quarter. Our loans-to-deposits ratio remains stable at 102%.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

The average cost of total deposits increased to 2.36% this quarter, reflecting a full period combined with Lakeland. We expect that this represents the cyclical peak in deposit costs. While metrics worsened slightly during the quarter, overall asset quality remained strong, with non-performing loans representing just 47 basis points of total loans, NPAs to assets at 41 basis points, total delinquencies at 56 basis points of loans, and criticized and classified loans totaling 2.74% of loans. The increase in non-performing loans this quarter was largely driven by one $19.7 million credit secured by an industrial property that has a current loan-to-value ratio of approximately 39%. There is an active near-term resolution plan, and we expect to incur no loss on this credit. Net charge-offs were $6.8 million, or an annualized 14 basis points of average loans this quarter.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Charge-offs were primarily driven by one commercial credit, which carried a specific reserve of $4.4 million at June 30th. The remaining collateral securing this relationship is scheduled to be auctioned in November, with full resolution expected in the fourth quarter. The provision for loan loss has increased to $9.6 million this quarter, reflecting specific reserve requirements and some deterioration in the macroeconomic variables that drive our CECL estimate. This increased our coverage ratio to 1.02% of loans at September 30th. Non-interest income increased to $27 million this quarter, reflecting the Lakeland combination's strong performance from our wealth management and insurance agency subsidiaries and an increase in BOLI income. Non-interest expenses, excluding merger-related charges, were in line with our expectations at $120 million, with expenses to assets at 1.98% and the efficiency ratio at 57.2% for the quarter.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

We have currently realized the majority of our targeted merger cost saves, and we project non-interest expenses of approximately $110 million for the fourth quarter of 2024. We currently project our effective tax rate for the remainder of 2024 and 2025 to approximate 29.5%. Regarding projected 2025 financial performance, with fully phased-in cost saves, we currently estimate 2025 return on average assets of approximately 1.15% and return on tangible equity of approximately 16%, with an operating expense ratio of approximately 1.8% and an efficiency ratio of approximately 52%. That concludes our prepared remarks. We'd be happy to respond to questions.

[Operator]

Thank you. As a reminder, if you'd like to ask a question, please press star and the number one on your telephone keypad. We will pause for just a moment to compile a roster. Thank you. We will begin the question-and-answer session. And our first question comes from the line of Mark Fitzgibbon from Piper Sandler. The line is open.

[Gregory Zingone, Equity Research Analyst at Piper Sandler]

Hey, guys. It's Greg Zingone stepping in for Mark at the moment. How are you?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Hey, good. Good morning, Greg.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Very good. How are you?

[Gregory Zingone, Equity Research Analyst at Piper Sandler]

Good. First question. One of your competitors just announced it was selling a large pool of commercial real estate loans to drive their concentration down. Is this something that you guys would also consider doing?

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

No. It's not even in our discussions here. We don't have a lot of transactional accounts, a relationship-oriented institution. We like our book. There's no systemic deterioration in there. It's all within our concentration risk levels that meet our tolerances from a concentration risk perspective. So there's no business or strategic reason for us to entertain that at this time.

[Gregory Zingone, Equity Research Analyst at Piper Sandler]

Okay, and then lastly, what are your thoughts on a securities portfolio restructuring?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Again, none anticipated at this time. We're happy with the quality content and performance of the securities portfolio as well.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

We did a minor reshift there in.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

We did. When we bought Lakeland, as you know, it was about $550 million that we restructured out and paid down.

[Gregory Zingone, Equity Research Analyst at Piper Sandler]

And reinvested some of that. Yeah.

[Gregory Zingone, Equity Research Analyst at Piper Sandler]

Awesome. Thanks, guys. I'll sit back to the queue.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Billy Young from RBC Capital. The line is open.

[Billy Young, Former Analyst at RBC Capital]

Hey, good morning, guys. How are you?

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Good, Billy. How are you?

[Billy Young, Former Analyst at RBC Capital]

Doing well. Doing well. Thank you. Just kind of looking at next year's margin guide, the 335-340, can you just maybe comment on what type of Fed rate actions you would need to see to kind of get to the upper end of that range? I guess to follow on to that is, does that matter, or do you have enough natural repricing ability on the deposit book to kind of get there?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Yeah, but I think it's less about the Fed's actions. As we've discussed, we're pretty neutral in terms of interest rate risk and more about the repricing of the organic book. So I think we're looking at probably core margin expansion in the three to five basis points range per quarter over the course of the next several quarters. And that 54, 55 kind of purchase accounting that we saw this quarter is probably representative of the future, subject to some volatility depending on the cash flows that underlie that, so depending on the loan prepayments. So I think we're moving towards a 345 number, but closer to the end of the year, the year 2025.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Maybe you want to share the core margin movement, some of the betas that we had on our deposits that we worked a little bit better than what we thought.

[Billy Young, Former Analyst at RBC Capital]

In terms of.

[Billy Young, Former Analyst at RBC Capital]

Of repricing with the Fed's rate moves?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Yeah. So again, a lot of what goes into the quality of the margin expansion is how effectively and aggressively we can manage deposit funding costs. Our stated rates are typically pretty low relative to the peer group, so that's the concern. There's not a lot of room for movement there. But there's a fair amount of exception pricing in the book as well as there is with most institutions. We've been very successful in this first round, and you'll see it effective with the October 1st rate of repricing some of those down, about $2.3 billion worth of deposits at an average of about 37, 38 basis points reduction that we saw effective October 1st. So again, that's what's going to influence our ability to outperform going forward is how effectively we're able to manage those funding costs.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

While retaining the deposit balances.

[Billy Young, Former Analyst at RBC Capital]

Got it. Thank you for all that. Appreciate it. Just moving on to a different topic. Your updated expense guide is tracking a little higher than the 107 you previously guided to. So can you just maybe elaborate what areas you might be seeing incremental expense pressure? And I apologize if I missed this, but can you just kind of help clarify what you're kind of assuming in terms of the expense growth run rate target for next year?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Yeah. The 110, I think we talked about a 107 last quarter for Q4. Some of that's just a little bit of the timing on the realization of the remaining cost saves from the merger. So that's what's given us a little bit more of a delay in fully realizing those benefits. For next year, I'm thinking the first couple of quarters at least, it'll probably pick up a little bit from there. As you know, there's typically seasonal expenses, compensation increases, payroll taxes on the employer side, and whatever weather-related costs that come into play. So I'm thinking something like a 112-115 for the first quarter or two.

[Billy Young, Former Analyst at RBC Capital]

Got it. Thanks. Thanks. And just my last question, I guess, is just to touch on your positive commentary on kind of loan pipelines. They do seem to be kind of gaining momentum here. So I guess can you just a broader comment? Are you starting to see that inflection point in terms of underlying demand and client activity? We've talked about some of the macro headwinds that have kind of plagued the industry for the last couple of quarters. Are you starting to see that inflect now that we're kind of getting some of that behind us? I know we have the election next week, but are you starting to see any change in sentiment here?

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Yes, that's a good question. There's a couple of things. I think we had a dynamic that affected Provident that is just outside of normal rates and market conditions. We had a merger integration happening. And as hard as you try, there's always going to be a little bit of a disruptive factor there. So it's hard to gauge what percentage that was. But suffice to say that as we got through, the merger got approved, then we got through our conversion, the momentum picked up on both sides of the legacy organizations. And we are seeing a great deal of activity. The sentiment from the clients today is great that rates went down, and it's starting to trigger more activity. I think we're in a space now where people are being active with projects because the specter of rising rates isn't there.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

So they can say, "Okay, we don't have to worry about variable rates continuing to move, and I can do this project over the short term. In three years from now, I can refinance it at a lower cost." So there's that sentiment. There's also the discussions out there in certain industrial sectors that people are waiting for what happens with this election depending on policy changes and how it might affect their business. For Provident, we're also seeing a little bit of a pull down from the bigger banks. There's been a little disruption in the market, and we're getting a lot more activity coming in from the top banks on down. So suffice to say that I think there's some guarded optimism out there. We see the pipeline building and a lot of activity.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

And as we're more focused now that the conversion is behind us, despite what the market is, I think we'll fare better. But if market conditions improve, I think we'll be able to exceed our normal projected loan growth. And I think the fourth quarter is looking nice right now for us, and we want to keep that momentum going into 2025.

[Billy Young, Former Analyst at RBC Capital]

Great. Thank you, guys, for taking my questions.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Thank you.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Very good.

[Operator]

Thank you. Our next question comes from the line of Tim Switzer, is that sir, from KBW. The line is open.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Hey, good morning, guys.

[Tim Switzer, Director in Equity Research at KBW]

Morning, sir.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Hope you're doing well.

[Tim Switzer, Director in Equity Research at KBW]

We are. Thanks. You too. I have a follow-up on the margin outlook here. The purchase accounting accretion didn't move up much versus the previous quarter. And I'm kind of curious on what the dynamics were there. And I know there's a lot that kind of goes into the estimates and calculations for that. But could you kind of walk us through why I guess it wasn't higher given the Q2 number? And then do you expect it to be stable over the near term instead of kind of slowly moving down? How should we model that out?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Yeah. So I think the primary driver was just the assumptions we were using around cash flows on the loans. So the prepayments on the loans came in lower than expected. And I think that is a reasonable run rate to use going forward. I would keep it stable. I mean, ultimately, there'll be some decrease in that over time, but I don't see a dramatic decrease in the first year or so.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

I think it's important to point out that the core margin also improved. And that's without consideration for this rate cut and the benefits that we'll see in October. So the core operating margin, Tim, has improved. And it's nothing further to look at in that margin change than prepayment speeds that we anticipated. So in essence, if those speeds pick up as rates continue to come down, we could actually see it go higher than what Tom and AD are guiding to. But I think Tom's guidance is to just keep it stable because it's the right thing to.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

It's an appropriate baseline.

[Tim Switzer, Director in Equity Research at KBW]

Correct. Yeah. No, that makes total sense. And then another quick one on the run rate for amortization expenses around $12 million this quarter. Is that a good run rate going forward? And also, is that included in your ROTCE projection?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

It is added back to the ROTCE, and it is a good run rate.

[Tim Switzer, Director in Equity Research at KBW]

Okay. Okay. That's helpful. And then could you maybe provide just a quick review of what's the impact of more aggressive Fed cuts or less aggressive Fed cuts to your margin in II outlook?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

I think it picked up a little bit on the margin because I think we will be able to be effective in the funding costs, and there's a fair amount of, let me see what the number is. We have $4.5 billion worth of maturing funding over the next 12 months at a rate of about 426. So to the extent we get to reprice that down, that'll certainly help us quite a bit. Slope of the yield curve will help as well in terms of reinvesting those funds, so there's greater opportunities with more dramatic decreases. That said, we are fairly neutral from an interest rate risk perspective, so regardless, we should be just fine.

[Tim Switzer, Director in Equity Research at KBW]

Okay. Perfect. Thank you, guys.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Thank you.

[Operator]

Thank you. And our last question comes from the line of Manuel Navas from D.A. Davidson. The line is open.

[Manuel Navas, Managing Director and Senior Research Analyst at D.A. Davidson]

Good morning.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Hey, good morning.

[Manuel Navas, Managing Director and Senior Research Analyst at D.A. Davidson]

Good morning.

[Manuel Navas, Managing Director and Senior Research Analyst at D.A. Davidson]

That's great about the deposit cost declines in October. Is that similar deposit beta expected across 2025? You're extending that out. Has there been any pushback at the moment to those cuts?

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

I think our team did an outstanding job prepping the customers. We didn't just do it and let the customers find out. There was a lot of outreach, a lot of communication, and they were able to successfully get about 38 basis points of the 50-basis-point cut. We've conditioned our customers on expectation as we move forward. There's always those relationships that produce a lot of value that you make accommodations for. I think the team, along with the Treasury Group, is doing a fine job of preparing in advance of rate cuts in terms of customer communication.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

So I really expect that we should get similar betas, but it's really hard to predict how far. But I would say I'm pretty comfortable that it should be relatively close.

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Yeah. And I could share what we're modeling, recognizing the timing of the maturing funding. So in our modeling for next year, we have a weighted average interest sorry, weighted average beta on the interest-bearing deposits of a little over 31%, and on total deposits, about 24%, so including the non-interest-bearing. So that also includes the CDs, again, repricing as they come to maturity.

[Manuel Navas, Managing Director and Senior Research Analyst at D.A. Davidson]

That's by year-end next year, the top process?

[Thomas Lyons, CFO at Provident Financial Services, Inc.]

Yeah. That's over the course of the year next year. Yes.

[Manuel Navas, Managing Director and Senior Research Analyst at D.A. Davidson]

Okay. I appreciate that clarity. And can you just speak to potential fee revenue synergies? You've talked about it a bit already, but just kind of now that the deal is closed, where could insurance, wealth management, all kind of be stronger together than where it was before?

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

That's a great question. I did mention that in my written notes, and if we had a great deal of time, I would give you a lot of the factual or anecdotal information that we're seeing. Suffice to say that there's been a great reception across the two legacy organizations in terms of the businesses that we've contributed. For instance, we're seeing a lot of commercial activity going into our insurance from the legacy Lakeland side. We've actually had even our wealth business refer a commercial client over to our bank. We're seeing insurance referrals. The activity has picked up tremendously. And I think part of that is the excitement as we go in. I think we're just touching the beginning stages of what we do as a culture, working on an integrated basis. But the storylines are there.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

In addition to how we're referring business across the channels, you also have what we mentioned earlier on a few calls ago that as a larger organization, we're able to accommodate certain transactions that we were not, so I mean, just this quarter alone, I can point to about two or three transactions that the legacy Provident couldn't have done unless we had the combined scale, and it gave us the capacity to do more Treasury management business and other activity in insurance as a byproduct of that, so all of those are the revenue enhancement things that we refer to, and just watching that customer experience that goes back and forth between the teams, it's pretty exciting for me. We just have to keep that momentum going.

[Manuel Navas, Managing Director and Senior Research Analyst at D.A. Davidson]

I appreciate that. Thanks for the color. Thanks for the commentary.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Perfect.

[Operator]

Thank you. That now concludes our question and answer session. I will now turn the call over back to our CEO, Anthony Labozzetta, for closing remarks.

[Anthony J. Labozzetta, CEO at Provident Financial Services, Inc.]

Thank you, everyone, for your questions and for joining the call. It has been a very productive and eventful quarter for us, and we hope that you all have a great rest of the year and holiday season. We look forward to speaking to all of you in the new year. Thank you very much.

Participants

Executives

• Thomas Lyons, CFO
• Adriano Duarte, Head of Investor Relations
• Anthony J. Labozzetta, CEO

Analysts

• Manuel Navas, Managing Director and Senior Research Analyst at D.A. Davidson
• Billy Young, Former Analyst at RBC Capital
• Gregory Zingone, Equity Research Analyst at Piper Sandler
• Tim Switzer, Director in Equity Research at KBW