Piper Sandler Reiterates Overweight Rating on Provident Financial Services (PFS)

Piper Sandler analyst Mark Fitzgibbon reiterated an Overweight rating and $19.00 price target on Provident Financial Services (NYSE: PFS).

The analyst commented, "Earlier this week, we hosted a series of investor Zoom calls for the management team of Provident Financial Services (PFS) ... Management suggested that the recently completed merger with Lakeland Bancorp is progressing quite well. A side benefit of having had to wait 17 months to close the deal is that the two teams were able to map out the integration in great detail, helping to ensure a seamless transition. Based upon early indications, management thinks the cost saves initially projected (35% of Lakeland costs) may prove conservative. Likewise, the deal charges (initially projected at $95 million) may also come in below initial estimates. The company expects to complete the systems conversion over Labor Day weekend and plans to consolidate 22 branch locations in late August. Although management said that the deal-related interest rate marks have not yet been finalized, we do not expect them to change meaningfully from the $543 million that the company provided in conjunction with the recent sub debt offering. Management also suggested that about 50% of the accretion tied to the interest rate marks will come back into earnings over the first 3 years. Lastly, we were pleased to hear management has made cultural integration a top priority and the CEO is spending a tremendous amount of time on this important and often overlooked aspect of the deal."

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