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PF

PROVIDENT FINANCIAL SERVICES INC (PFS)·Q3 2025 Earnings Summary

Executive Summary

  • Record revenue and net interest income with EPS at $0.55; revenue of $221.7M and EPS both modestly beat S&P Global consensus (rev: $220.7M; EPS: $0.5425). Bold beat: revenue +$1.0M; EPS +$0.0075. Values retrieved from S&P Global. Actuals: Revenue $221.7M, EPS $0.55 .
  • Net interest margin expanded to 3.43% (+7 bps QoQ; +12 bps YoY), efficiency improved to 51.0% (from 53.5% QoQ, 57.2% YoY), reflecting lower funding costs and operating discipline .
  • Loan growth led by C&I (+$149M QoQ) and mortgage warehouse lines (+$52M QoQ); deposits rose $388M QoQ (core +$291M), supporting record pre-tax, pre-provision earnings .
  • Asset quality resilient: NPAs/Assets improved to 0.41%; net charge-offs annualized 0.11% with allowance/loans at 0.97% .
  • Forward catalysts: CFO guided Q4 NIM to 3.38%–3.45% and core OpEx ≈$113M; dividend declared at $0.24/share payable Nov 28 after a correction, supporting capital return narrative .

What Went Well and What Went Wrong

What Went Well

  • Record revenue ($221.7M) and record net interest income ($194.3M) on continued earning asset growth and margin expansion; CEO: “record revenues and pre-tax, pre-provision earnings… growing earning assets and deposits” .
  • Core deposit growth (+$290.8M QoQ) and total deposit growth (+$387.7M QoQ) improved funding mix; average total deposit cost held at a manageable 2.14% .
  • Pipeline strength (~$2.87–$2.89B at ~6.15% rate) and diversified C&I momentum; CEO emphasized specialty vertical contributions and improved CRE concentration ratio to ~402% (adjusted) .

What Went Wrong

  • Provision for credit losses swung to +$7.0M (vs a $2.9M benefit QoQ), reflecting loan growth and a modestly weakened CECL economic forecast; net charge-offs rose to $5.4M (11 bps annualized) .
  • Insurance agency revenues declined -$1.1M QoQ on normal seasonality despite YoY growth; management flagged likely Q4 seasonality headwind in non-interest income .
  • Competitive pressure notably in CRE (payoffs ~$348M) amid private and insurance capital; management sees stronger competition but maintains relationship lending discipline .

Financial Results

Core P&L and Profitability vs Prior Periods and Estimates

MetricQ3 2024Q2 2025Q3 2025Q3 2025 Consensus*
Revenue ($USD Millions)$210.6 $214.2 $221.7 $220.7
Diluted EPS ($USD)$0.36 $0.55 $0.55 $0.5425
Net Income ($USD Millions)$46.4 $72.0 $71.7 —
Net Interest Margin (%)3.31% 3.36% 3.43% —
Efficiency Ratio (%)57.20% 53.52% 51.01% —

*Consensus values retrieved from S&P Global.

Non-interest Income Breakdown (YoY and QoQ context)

Component ($USD Millions)Q3 2024Q2 2025Q3 2025
Fees$9.8 $10.7 $11.3
Wealth Management$7.6 $6.9 $7.3
Insurance Agency$3.6 $4.9 $3.9
BOLI$4.3 $2.6 $2.7
Other$1.5 $1.9 $2.2
Net Gains on Securities$0.0–$0.0 (2k) $0.0 $0.1

Balance Sheet & Credit KPIs

KPIDec 31, 2024Q2 2025Q3 2025
Loans HFI ($USD Billions)$18.659 $19.105 $19.286
Total Deposits ($USD Billions)$18.624 $18.709 $19.096
Core Deposits (Savings + Demand, Period-End $USD Billions)$15.454 (Q2) $15.440 (Q2 avg) $15.730
Loan Pipeline ($USD Billions)$1.98 (Q3 2024) $2.59 $2.87–$2.89
NPAs / Assets (%)0.34% (Dec) 0.44% 0.41%
Allowance / Loans (%)1.04% (Dec) 0.98% 0.97%
Net Charge-offs (Annualized, %)0.08% (9M 2024) 0.03% 0.11%
Tangible Book Value/Share ($)$13.66 $14.60 $15.13
Tangible Common Equity Ratio (%)7.67% 8.03% 8.22%
Avg Cost of Total Deposits (%)2.27% (9M 2024) 2.10% 2.14%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (reported)Q4 2025Not provided3.38%–3.45%New
Core Net Interest Margin trajectoryNext several quartersNot provided+3–5 bps per quarter (expected)New
Core Operating ExpensesQ4 2025Not provided≈$113MNew
Deposit Beta (modeled)Q4 2025 onwardNot provided~30–35%New
Non-interest IncomeQ4 2025Not provided~-$1M QoQ (seasonality, lower prepayment fees assumed)New
DividendQ4 2025$0.24/share; initially stated payable Nov 18$0.24/share payable Nov 28; correction issuedMaintained dividend; payable date corrected

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Margin & Funding CostsNIM up to 3.34% (Q1) on deposit repricing; 3.36% (Q2); avg deposit cost down to 2.10% (Q2) NIM 3.43%; avg deposit cost 2.14%; guided NIM 3.38%–3.45% in Q4 Improving
Loan Growth & PipelinePipeline $2.77B (Q1); $2.59B (Q2) Pipeline ~$2.87–$2.89B at ~6.15%; pull-through ~$1.7B Re-accelerating
CRE Concentration & MixFocus on diversification post-Lakeland Adjusted CRE concentration ~402% vs 408% prior; more C&I, specialty lending growth Improving risk mix
Competition & Private CreditNot emphasizedCRE competition elevated; private credit not a major factor given relationship focus Mixed (competitive pressure)
Non-interest Income DriversInsurance contingent commissions (Q1), mixed Q2 Insurance seasonal step-down; Beacon Trust revenue $7.3M; SBA gains $0.5M; Q4 seasonality guide Stabilizing with seasonality
Purchase Accounting AccretionLakeland accretion supporting NIM (Q1/Q2) ~40–45 bps of NIM expected to persist over next 4 quarters Sustained tailwind
Credit QualityNPAs rose in Q1 from two loans; improved to 0.44% in Q2 NPAs at 0.41%; net charge-offs at 11 bps annualized; allowance/loans 0.97% Improving
NYC Rent-Stabilized ExposureNot highlightedNYC multifamily $286.7M (1.5% of loans); rent-stabilized <1% of total loans and all performing Monitored; low exposure
Capital & DividendsDividend $0.24 declared (Q1) Dividend $0.24 payable Nov 28; aiming for ~40–45% payout over time Consistent return

Management Commentary

  • CEO: “We again achieved record revenues and pre-tax, pre-provision earnings by responsibly growing earning assets and deposits… while further improving operational efficiency and maintaining strong asset quality” .
  • CFO: “Pre-tax, pre-provision earnings… grew to a record $109M… Our reported NIM increased 7 bps to 3.43%; we currently project a NIM in the 3.38% to 3.45% range in the fourth quarter” .
  • Strategic focus: “Our commercial lending team closed ~$742M in new loans… specialty verticals (asset-based lending, healthcare) delivered double-digit growth… pipeline nearly $2.9B” .
  • Risk posture: “Exposure to rent-stabilized multifamily properties in New York City is modest… less than 1% of total loans, all of which are performing” .

Q&A Highlights

  • Margin dynamics and repricing: ~$5.9B total repricing over next 12 months; pipeline rate (~6.15%) accretive to portfolio yield; NIM guided 3.38%–3.45% for Q4 .
  • Competition: Heightened CRE competition from private/insurance capital drove ~$348M payoffs; C&I competition less acute; relationship lending mitigates private credit impact .
  • Non-interest income: Q4 modeled step-down (~$1M) from lower prepayment fees and insurance seasonality; Beacon Trust and SBA gains remain contributors .
  • Capital allocation: Target payout ratio ~40–45%; buybacks considered opportunistically given attractive valuation; preference for organic growth .
  • Operating investments: Continued hiring in insurance, wealth, middle market C&I; emphasis on revenue-driven operating leverage with disciplined expense management .

Estimates Context

  • Q3 2025 actual EPS $0.55 vs S&P Global consensus $0.5425; bold beat. Values retrieved from S&P Global. Actual EPS cited above .
  • Q3 2025 actual revenue $221.7M vs S&P Global consensus $220.7M; bold beat. Values retrieved from S&P Global. Actual revenue cited above .
  • Estimate depth: EPS (# of estimates) = 4; Revenue (# of estimates) = 3. Values retrieved from S&P Global.
Consensus Metric (Q3 2025)ConsensusActual
Primary EPS Consensus Mean0.54250.55
Revenue Consensus Mean ($USD)220,743,330221,684,000
Primary EPS - # of Estimates4—
Revenue - # of Estimates3—

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and EPS modest beats with NIM trending higher; margin and efficiency improvements support near-term estimate upward revisions in NII/NIM-sensitive models .
  • Funding mix improved (core deposits up) with manageable deposit costs; continued asset growth should sustain PTPP momentum into Q4 .
  • Asset quality stable with low NPAs and disciplined allowances; NYC rent-stabilized exposure is limited and performing, reducing headline risk .
  • Q4 guide: NIM 3.38%–3.45% and core OpEx ≈$113M provide visibility; expect seasonal non-interest income softness but core fee engines (wealth, SBA, insurance) intact .
  • Competitive CRE dynamics may pressure prepayments/production mix; focus on C&I and specialty lending should diversify yields and lower concentration risk .
  • Capital return steady (dividend $0.24/share); management targeting ~40–45% payout over time while prioritizing organic growth; buybacks remain optional .
  • Trading lens: Near-term catalysts include delivery against Q4 NIM guide, deposit cost capture post Fed cuts, and confirmation of fee seasonality impact; medium-term thesis hinges on sustained PTPP growth, diversified loan mix, and tight credit control .