Provident Financial Services Inc . (NYSE:PFS) has agreed to a $1.85 million settlement over a class action lawsuit alleging the wrongful assessment of overdraft fees, as per a recent SEC filing. The lawsuit, filed against Provident Bank in the Superior Court of New Jersey, claimed the bank charged overdraft fees on debit card transactions that were authorized into a positive balance. The complaint cited breach of contract and the New Jersey Consumer Fraud Act.
The parties reached an agreement in principle on Monday, following mediation on May 28, 2024. The preliminary approval for the settlement was filed on September 23, 2024, and the court granted approval on October 11, 2024. Provident Financial, while contributing to the settlement fund, has denied any liability or wrongdoing in connection with the claims.
This settlement comes amid increased scrutiny of banking fees and consumer rights. Overdraft fees, in particular, have been a point of contention between banks and their customers, often leading to legal challenges. The settlement will provide relief to the class members who were allegedly charged these fees inappropriately.
Provident Financial Services Inc., headquartered in Jersey City, New Jersey, is a federally chartered savings institution. The company, through Provident Bank, offers a range of banking services to individuals and businesses.
In other recent news, Provident Bank has appointed Vivin Varghese as its new Senior Vice President and Chief Information Security Officer. This leadership change is part of the bank's commitment to robust information security and customer data safeguarding. In financial developments, Provident Financial Services reported a Q2 net loss of $11.5 million due to merger-related expenses from its integration with Lakeland Bancorp (NASDAQ:LBAI). Despite this, adjusted earnings per diluted share were at $0.44.
The company also projects a return on average assets of approximately 1.1% and a return on tangible equity of around 15% by 2025. In analyst updates, RBC Capital Markets raised the price target on Provident Financial Services shares to $21 from $18, maintaining an Outperform rating.
In other recent developments, several Wall Street firms agreed to pay a collective sum exceeding $470 million in settlements with U.S. regulators due to violations of recordkeeping rules.
InvestingPro Insights
Provident Financial Services Inc. (NYSE:PFS) has demonstrated resilience in the face of legal challenges, as evidenced by its recent settlement and current financial metrics. According to InvestingPro data, the company boasts a market capitalization of $2.55 billion and a price-to-earnings ratio of 21.01, indicating investor confidence despite the recent lawsuit.
An InvestingPro Tip highlights that PFS has maintained dividend payments for 22 consecutive years, showcasing its commitment to shareholder returns even in challenging times. This long-standing dividend history may provide some reassurance to investors concerned about the recent legal settlement's impact on the company's financial stability.
Another relevant InvestingPro Tip notes that PFS is trading near its 52-week high, with a significant price uptick of 49.1% over the last six months. This positive price momentum suggests that the market has not been overly concerned about the lawsuit's potential impact on the company's long-term prospects.
The company's dividend yield stands at an attractive 4.82%, which could be appealing to income-focused investors looking for steady returns. However, it's worth noting that PFS suffers from weak gross profit margins, according to another InvestingPro Tip, which investors should consider in light of the recent legal expenses.
For those seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for PFS, providing a deeper understanding of the company's financial health and market position.
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