Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Summary of Significant Accounting Policies

A. Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include the accounts of Provident Financial Services, Inc. and its wholly owned subsidiary, Provident Bank (the “Bank,” together with Provident Financial Services, Inc., the “Company”).

In preparing the interim unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and the consolidated statements of income for the periods presented. Actual results could differ from these estimates. The allowance for credit losses and the valuation of deferred tax assets are material estimates that are particularly susceptible to near-term change.

The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. These interim financial statements include the assets and liabilities acquired from SB One on July 31, 2020, and include two months of results of operations related to the acquisition of SB One for the three and nine months ended September 30, 2020. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results of operations that may be expected for all of 2020.

Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

These unaudited consolidated financial statements should be read in conjunction with the December 31, 2019 Annual Report to Stockholders on Form 10-K.

B. Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands, except per share amounts):


	Three months ended September 30,
	2020					2019
	Net Income		Weighted Average Common Shares Outstanding	Per Share Amount		Net Income		Weighted Average Common Shares Outstanding	Per Share Amount
Net income	$	27,143				$	31,399
Basic earnings per share:
Income available to common stockholders	$	27,143	72,519,123	$	0.37	$	31,399	64,511,956	$	0.49
Dilutive shares			85,175					120,329
Diluted earnings per share:
Income available to common stockholders	$	27,143	72,604,298	$	0.37	$	31,399	64,632,285	$	0.49


	Nine months ended September 30,
	2020					2019
	Net Income		Weighted Average Common Shares Outstanding	Per Share Amount		Net Income		Weighted Average Common Shares Outstanding	Per Share Amount
Net income	$	56,384				$	86,682
Basic earnings per share:
Income available to common stockholders	$	56,384	67,093,442	$	0.84	$	86,682	64,720,642	$	1.34
Dilutive shares			80,434					132,341
Diluted earnings per share:
Income available to common stockholders	$	56,384	67,173,876	$	0.84	$	86,682	64,852,983	$	1.34

Anti-dilutive stock options and awards at September 30, 2020 and 2019, totaling 1.1 million shares and 678,583 shares, respectively, were excluded from the earnings per share calculations.

C. Loans Receivable and Allowance for Credit Losses

On January 1, 2020, the Company adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments,” which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The Company used the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be reported with previously applicable GAAP. Further information regarding the impact of CECL can be found in