Provident Financial Services, Inc.
|Company Name||Provident Financial Services, Inc.|
On April 27, 2018, Provident disclosed “deterioration in selected commercial credits, including a $15.4 million credit to a commercial borrower” that had filed for bankruptcy in March 2018. The Company established a $2.5 million specific reserve for this impaired loan.
On July 5, 2018, Provident revealed that it expected an additional reserve for the remainder of the $15.4 million credit and that its net income for the quarter ended June 30, 2018 would be reduced by up to $9.3 million.
Then, on July 27, 2018, pre-market, Provident reported a net charge-off of $4 million for two additional loans from another commercial borrower that became impaired during second quarter 2018. The Company’s Chief Executive Officer Christopher Martin stated that the losses “were primarily driven by two commercial relationships which we believe involved borrower fraud in each instance.”
On this news, Provident’s stock price fell $1.46 per share, or over 5%, to close at $26.23 per share on July 27, 2018, thereby injuring investors.
Later, in December 2019, certain Provident emails, which became public during the course of certain litigation, indicated that the Company was aware of the fraudulent nature of and/or risks posed by at least one of its failed loans. Specifically, Provident executives and top-level management, including CEO Martin, seemingly ignored multiple red flags and extended a $17 million loan to Lotus Exim International.
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