Provident Financial Services, Inc. Announces Fourth Quarter and Full Year Earnings, Declaration of Quarterly Cash Dividend and Annual Meeting Date

Rhea-AI Summary

Provident Financial Services (NYSE:PFS) reported Q4 2024 net income of $48.5 million ($0.37 per share), up from $46.4 million ($0.36 per share) in Q3 2024. Full-year 2024 net income was $115.5 million ($1.05 per share), compared to $128.4 million ($1.72 per share) in 2023.

The company's performance was significantly impacted by its May 2024 merger with Lakeland Bancorp, which added $10.91 billion in total assets, $7.91 billion in loans, and $8.62 billion in deposits. Merger-related transaction costs totaled $20.2 million in Q4 and $56.9 million for the full year 2024.

Key Q4 metrics include a net interest margin decrease to 3.28%, total deposits increase of $247.6 million to $18.62 billion, and improved asset quality with non-performing loans decreasing to 0.39%. The Board declared a quarterly cash dividend of $0.24 per share, payable February 28, 2025.

Positive

• Net income increased to $48.5M in Q4 2024 from $46.4M in Q3 2024
• Total deposits grew by $247.6M to $18.62B in Q4
• Asset quality improved with non-performing loans decreasing to 0.39% from 0.47%
• Wealth management and insurance agency income increased 12% and 19% respectively YoY

Negative

• Full-year net income declined to $115.5M from $128.4M in 2023
• Net interest margin decreased 3 basis points to 3.28% in Q4
• Merger-related costs totaled $56.9M for 2024
• Average yield on total loans decreased 22 basis points to 5.99% in Q4

Insights

Financial Analyst

The Q4 2024 results reveal a complex financial picture dominated by the transformative $10.91 billion Lakeland merger. While headline earnings show improvement, with Q4 net income reaching $48.5 million ($0.37 per share), the underlying performance metrics deserve closer scrutiny.

The merger's integration costs significantly impacted profitability, with transaction costs of $56.9 million for the full year. However, several positive trends emerged: The bank's core deposit growth of $247.6 million in Q4 demonstrates strong funding capabilities, while asset quality metrics improved with non-performing loans ratio decreasing to 0.39% from 0.47%.

Particularly noteworthy is the bank's strategic decision to exit non-relationship equipment lease financing, reclassifying $151.3 million to held-for-sale status. This move, combined with improving credit metrics and strong fee income growth (wealth management up 12%, insurance agency up 19%), suggests management is effectively optimizing the combined entity's business mix.

The net interest margin of 3.28%, though down 3 basis points quarterly, remains healthy considering the challenging rate environment. The core margin actually improved 4 basis points to 2.85%, indicating underlying strength in the bank's fundamental earnings power.

ISELIN, N.J., Jan. 28, 2025 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $48.5 million, or $0.37 per basic and diluted share for the three months ended December 31, 2024, compared to $46.4 million, or $0.36 per basic and diluted share, for the three months ended September 30, 2024 and $27.3 million, or $0.36 per basic and diluted share, for the three months ended December 31, 2023. For the year ended December 31, 2024, net income totaled $115.5 million, or $1.05 per basic and diluted share, compared to $128.4 million, or $1.72 per basic and $1.71 per diluted share, for the year ended December 31, 2023.

The Company’s earnings for the three months and year ended December 31, 2024 reflect the impact of the May 16, 2024 merger with Lakeland Bancorp, Inc. (“Lakeland”), which added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments. The merger with Lakeland significantly impacted provisions for credit losses in 2024 due to the initial Current Expected Credit Loss ("CECL") provisions recorded on acquired loans in the second quarter. Transaction costs related to our merger with Lakeland totaled $20.2 million and $56.9 million, for the three months and year ended December 31, 2024, respectively, compared with transaction costs of $2.5 million and $7.8 million for the respective 2023 periods. Additionally, the Company realized a $2.8 million loss related to the sale of subordinated debt issued by Lakeland from the Provident investment portfolio, during the second quarter of 2024.

Anthony J. Labozzetta, President and Chief Executive Officer commented, “Provident had an eventful 2024 marked by solid financial performance and defined by the completion of our merger with Lakeland. We have maintained excellent asset quality, grown our deposits, and benefited from our expanding fee-based businesses. With core systems conversion and integration now completed, we look forward to further improving our performance across all business lines in 2025."

Performance Highlights for the Fourth Quarter of 2024

• Adjusted for transaction costs related to the merger with Lakeland, net of tax, the Company's annualized adjusted returns on average assets, average equity and average tangible equity⁽¹⁾ were 1.05%, 9.53% and 15.39% for the quarter ended December 31, 2024, compared to 0.95%, 8.62% and 14.53% for the quarter ended September 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios is shown on page 13 of the earnings release.
• The Company's annualized adjusted pre-tax, pre-provision returns on average assets, average equity and average tangible equity⁽²⁾ were 1.53%, 13.91% and 20.31% for the quarter ended December 31, 2024, compared to 1.48%, 13.48% and 19.77% for the quarter ended September 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios is shown on page 13 of the earnings release.
• Net interest margin decreased three basis points to 3.28% for the quarter ended December 31, 2024, from 3.31% for the trailing quarter, mainly due to a reduction in net accretion of purchase accounting adjustments related to the Lakeland merger. However, the core net interest margin, which excludes the impact of purchase accounting accretion and amortization, increased four basis points from the trailing quarter to 2.85%. The average yield on total loans decreased 22 basis points to 5.99% for the quarter ended December 31, 2024, compared to the trailing quarter, while the average cost of deposits, including non-interest-bearing deposits, decreased 11 basis points to 2.25% for the quarter ended December 31, 2024.
• Wealth management and insurance agency income increased 12% and 19%, respectively, versus the same period in 2023.
• Asset quality improved in the quarter, as non-performing loans to total loans as of December 31, 2024 decreased to 0.39% from 0.47% as of September 30, 2024, while non-performing assets to total assets as of December 31, 2024 decreased to 0.34% from 0.41% as of September 30, 2024.
• The Company recorded a $7.8 million provision for credit losses on loans for the quarter ended December 31, 2024, compared to a $9.6 million provision for the trailing quarter. The decrease in the provision for credit losses on loans for the quarter was primarily attributable to the reclassification of $151.3 million to the held for sale portfolio, partially offset by modest deterioration in the economic forecast within our CECL model.
• Total deposits increased $247.6 million to $18.62 billion as of December 31, 2024 compared to September 30, 2024.
• In December of 2024, $151.3 million of the Bank's commercial loan portfolio was reclassified from loans held for investment into the held for sale portfolio as a result of a decision to exit the non-relationship equipment lease financing business.
• As of December 31, 2024, the Company's loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.79 billion, with a weighted average interest rate of 6.91%.
• At December 31, 2024, CRE loans related to office properties totaled $884.1 million, compared to $921.1 million at September 30, 2024. CRE loans secured by office properties constitutes 4.6% of total loans and have an average loan size of $1.9 million, with seven relationships greater than $10.0 million. There were four loans totaling $9.1 million on non-accrual as of December 31, 2024.
• As of December 31, 2024, multi-family CRE loans secured by New York City properties totaled $244.5 million, compared to $226.6 million as of September 30, 2024. This portfolio constitutes only 1.3% of total loans and has an average loan size of $2.8 million. Loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.
  

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on February 28, 2025, to stockholders of record as of the close of business on February 14, 2025.

Annual Meeting Date Set

The Annual Meeting of Stockholders will be held on April 24, 2025 at 10:00 a.m. Eastern Time as a virtual meeting. February 28, 2025 has been established as the record date for the determination of stockholders entitled to vote at the Annual Meeting.

Results of Operations

Three months ended December 31, 2024 compared to the three months ended September 30, 2024

For the three months ended December 31, 2024, net income was $48.5 million, or $0.37 per basic and diluted share, compared to net income of $46.4 million, or $0.36 per basic and diluted share, for the three months ended September 30, 2024.

Net Interest Income and Net Interest Margin

Net interest income decreased $2.0 million to $181.7 million for the three months ended December 31, 2024, from $183.7 million for the trailing quarter. The decrease in net interest income was primarily due to a decrease in net accretion of purchase accounting adjustments in the loan portfolio related to the Lakeland merger.

The Company’s net interest margin decreased three basis points to 3.28% for the quarter ended December 31, 2024, from 3.31% for the trailing quarter. The average yield on interest-earning assets for the quarter ended December 31, 2024 decreased 18 basis points to 5.66%, compared to the trailing quarter. The average cost of interest-bearing liabilities for the quarter ended December 31, 2024 decreased 16 basis points to 3.03%, compared to the trailing quarter. The average cost of interest-bearing deposits for the quarter ended December 31, 2024 decreased 15 basis points to 2.81%, compared to 2.96% for the trailing quarter. The average cost of total deposits, including non-interest-bearing deposits, was 2.25% for the quarter ended December 31, 2024, compared to 2.36% for the trailing quarter. The average cost of borrowed funds for the quarter ended December 31, 2024 was 3.64%, compared to 3.73% for the quarter ended September 30, 2024. The net accretion of purchase accounting adjustments contributed 43 basis points to the net interest margin for the quarter ended December 31, 2024, compared with 50 basis points in the trailing quarter. The reduction in purchase accounting accretion was largely due to the prepayment of certain loans that resulted in accelerated amortization of acquisition premiums and a decrease in accelerated accretion related to prepayments of loans with acquisition discounts.

Provision for Credit Losses on Loans

For the quarter ended December 31, 2024, the Company recorded a $7.8 million provision for credit losses related to loans, compared with a provision for credit losses on loans of $9.6 million for the quarter ended September 30, 2024. The decrease in the provision for credit losses on loans for the quarter was primarily attributable to the reclassification of $151.3 million of commercial loans to the held for sale portfolio, partially offset by modest deterioration in the economic forecast within our CECL model for the current quarter as compared to the prior quarter. For the three months ended December 31, 2024, net charge-offs totaled $5.5 million, or an annualized 12 basis points of average loans, compared to net charge-offs of $6.8 million, or an annualized 14 basis points of average loans for the trailing quarter.

Non-Interest Income and Expense

For the three months ended December 31, 2024, non-interest income totaled $24.2 million, a decrease of $2.7 million, compared to the trailing quarter. Bank owned life insurance ("BOLI") income decreased $2.0 million compared to the trailing quarter, to $2.3 million for the three months ended December 31, 2024, primarily due to a reduction in benefit claims. Insurance agency income decreased $342,000 to $3.3 million for the three months ended December 31, 2024, compared to $3.6 million for the trailing quarter, largely due to a seasonal decrease in business activity. Additionally, other income decreased $181,000 to $1.3 million for the three months ended December 31, 2024, compared to the trailing quarter, while fees and commissions decreased $129,000 to $9.7 million for the three months ended December 31, 2024, compared to the trailing quarter.

Non-interest expense totaled $134.3 million for the three months ended December 31, 2024, a decrease of $1.7 million, compared to $136.0 million for the trailing quarter. Compensation and benefits expense decreased $3.5 million to $59.9 million for the three months ended December 31, 2024, compared to $63.5 million for the trailing quarter mainly due to decreases in salary expense and payroll tax expense. Amortization of intangibles decreased $2.7 million to $9.5 million for the three months ended December 31, 2024 primarily due to a current quarter adjustment to the rate of core deposit intangible amortization related to Lakeland, as a result of lower projected attrition on core deposits. FDIC insurance decreased $769,000 to $3.4 million for the three months ended December 31, 2024, compared to $4.2 million for the trailing quarter, primarily due to a decreases in the assessment rate and average assets. Additionally, data processing expense decreased $600,000 to $9.9 million for the three months ended December 31, 2024, compared to the trailing quarter, largely due to a decrease in core system expenses. Partially offsetting these decreases, merger-related expenses increased $4.6 million to $20.2 million for the three months ended December 31, 2024, compared to the trailing quarter, while other operating expenses increased $1.6 million to $17.4 million for the three months ended December 31, 2024, compared to the trailing quarter largely due to a $1.4 million charge for contingent litigation reserves.

The Company’s annualized adjusted non-interest expense as a percentage of average assets⁽⁴⁾ was 1.90% for the quarter ended December 31, 2024, compared to 1.98% for the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)⁽⁵⁾ was 55.43% for the three months ended December 31, 2024, compared to 57.20% for the trailing quarter.

Income Tax Expense

For the three months ended December 31, 2024, the Company's income tax expense was $14.2 million with an effective tax rate of 22.6%, compared with income tax expense of $18.9 million with an effective tax rate of 28.9% for the trailing quarter. The decrease in tax expense and the effective tax rate for the three months ended December 31, 2024, compared with the trailing quarter was largely due to a $4.2 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024.

Three months ended December 31, 2024 compared to the three months ended December 31, 2023

For the three months ended December 31, 2024, net income was $48.5 million, or $0.37 per basic and diluted share, compared to net income of $27.3 million, or $0.36 per basic and diluted share, for the three months ended December 31, 2023. The Company’s earnings for the quarter ended December 31, 2024 reflected the impact of the May 16, 2024 merger with Lakeland. The results of operations included transaction costs related to the merger with Lakeland totaling $20.2 million and $2.5 million for the three months ended December 31, 2024 and 2023, respectively.

Net Interest Income and Net Interest Margin

Net interest income increased $85.9 million to $181.7 million for the three months ended December 31, 2024, from $95.8 million for same period in 2023. Net interest income for the quarter ended December 31, 2024 compared to the same period in 2023 was favorably impacted by the net assets acquired from Lakeland, combined with favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by unfavorable repricing of deposits.

The Company’s net interest margin increased 36 basis points to 3.28% for the quarter ended December 31, 2024, from 2.92% for the same period last year. The average yield on interest-earning assets for the quarter ended December 31, 2024 increased 62 basis points to 5.66%, compared to 5.04% for the quarter ended December 31, 2023. The average cost of interest-bearing liabilities increased 32 basis points for the quarter ended December 31, 2024 to 3.03%, compared to 2.71% for the fourth quarter of 2023. The average cost of interest-bearing deposits for the quarter ended December 31, 2024 was 2.81%, compared to 2.47% for the same period last year. The average cost of total deposits, including non-interest-bearing deposits, was 2.25% for the quarter ended December 31, 2024, compared with 1.95% for the quarter ended December 31, 2023. The average cost of borrowed funds for the quarter ended December 31, 2024 was 3.64%, compared to 3.71% for the same period last year.

Provision for Credit Losses on Loans

For the quarter ended December 31, 2024, the Company recorded a $7.8 million provision for credit losses related to loans, compared with a $500,000 provision for credit losses on loans for the quarter ended December 31, 2023. The increase in the provision for credit losses on loans was largely a function of the period-over-period deterioration in the economic forecast and an increase in loans from the Lakeland acquisition.

Non-Interest Income and Expense

Non-interest income totaled $24.2 million for the quarter ended December 31, 2024, an increase of $5.2 million, compared to the same period in 2023. Fee income increased $3.6 million to $9.7 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily resulting from the Lakeland merger. Wealth management income increased $812,000 to $7.7 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily due to an increase in the average market value of assets under management, while BOLI income increased $617,000 to $2.3 million for the three months ended December 31, 2024, compared to the same period in 2023 largely due to an increase in income related to the addition of Lakeland's BOLI. Insurance agency income increased $530,000 to $3.3 million, for the three months ended December 31, 2024, compared to the same period in 2023, largely due to strong retention revenue and new business activity. Partially offsetting these increases to non-interest income, other income decreased $330,000 to $1.3 million for the three months ended December 31, 2024, compared to the quarter ended December 31, 2023, primarily due to a decrease in net gains on the sale of SBA loans.

Non-interest expense totaled $134.3 million for the three months ended December 31, 2024, an increase of $58.5 million, compared to $75.9 million for the three months ended December 31, 2023. Compensation and benefits expense increased $21.2 million to $59.9 million for three months ended December 31, 2024, compared to $38.8 million for the same period in 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Additionally, merger-related expense increased $17.7 million to $20.2 million for the three months ended December 31, 2024, compared to the same period in 2023. Amortization of intangibles increased $8.8 million to $9.5 million for the three months ended December 31, 2024, compared to $721,000 for the same period in 2023, largely due to core deposit intangible amortization related to the addition of Lakeland. Net occupancy expenses increased $4.8 million to $12.6 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily due to an increase in depreciation and maintenance expenses related to the addition of Lakeland. Data processing expense increased $3.4 million to $9.9 million for the three months ended December 31, 2024, compared to the same period in 2023, largely due to additional software and hardware expenses related to the addition of Lakeland, while other operating expenses increased $1.7 million to $17.4 million for the three months ended December 31, 2024, compared to the same period in 2023, largely due to an increase in professional service expenses.

The Company’s annualized adjusted non-interest expense as a percentage of average assets⁽⁴⁾ was 1.90% for the quarter ended December 31, 2024, compared to 1.98% for the same period in 2023. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)⁽⁵⁾ was 55.43% for the three months ended December 31, 2024 compared to 61.32% for the same respective period in 2023.

Income Tax Expense

For the three months ended December 31, 2024, the Company's income tax expense was $14.2 million with an effective tax rate of 22.6%, compared with $12.5 million with an effective tax rate of 31.3% for the three months ended December 31, 2023. The increase in tax expense for the three months ended December 31, 2024, compared with the three months ended December 31, 2023, was primarily due to an increase in taxable income, which was partially offset by a $4.2 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024. The decrease in the effective tax rate for the three months ended December 31, 2024, compared with the three months ended December 31, 2023 was primarily due to the aforementioned $4.2 million tax benefit related to the revaluation of deferred tax assets.

Year ended December 31, 2024 compared to the year ended December 31, 2023

For the year ended December 31, 2024, net income totaled $115.5 million, or $1.05 per basic and diluted share, compared to net income of $128.4 million, or $1.71 per basic and diluted share, for the year ended December 31, 2023.

Net Interest Income and Net Interest Margin

Net interest income increased $201.2 million to $600.6 million for the year ended December 31, 2024, from $399.5 million for 2023. Net interest income for the year ended December 31, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans and higher market rates on new loan originations, partially offset by the unfavorable repricing of both deposits and borrowings.

For the year ended December 31, 2024, the net interest margin increased 10 basis points to 3.26%, compared to 3.16% for 2023. The weighted average yield on interest earning assets increased 81 basis points to 5.68% for the year ended December 31, 2024, compared to 4.87% for 2023, while the weighted average cost of interest-bearing liabilities increased 81 basis points to 3.05% for the year ended December 31, 2024, compared to 2.24% last year. The average cost of interest-bearing deposits increased 84 basis points to 2.83% for the year ended December 31, 2024, compared to 1.99% in the prior year. Average non-interest-bearing demand deposits increased $792.0 million to $3.12 billion for the year ended December 31, 2024, compared with $2.33 billion for 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.26% for the year ended December 31, 2024, compared with 1.54% for 2023. The average cost of borrowings for the year ended December 31, 2024 was 3.71%, compared to 3.41% in the prior year.

Provision for Credit Losses on Loans

For the year ended December 31, 2024, the Company recorded an $83.6 million provision for credit losses related to loans, compared with a provision for credit losses of $28.2 million for 2023. The increased provision for credit losses on loans for the year ended December 31, 2024 was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, partially offset by some economic forecast improvement over the current twelve-month period within our CECL model, compared to last year.

Non-Interest Income and Expense

For the year ended December 31, 2024, non-interest income totaled $94.1 million, an increase of $14.3 million, compared to 2023. Fee income increased $9.7 million to $34.1 million for the year ended December 31, 2024, compared to 2023, primarily due to the addition of Lakeland. BOLI income increased $5.2 million to $11.7 million for the year ended December 31, 2024, compared to 2023, primarily due to an increase in benefit claims, combined with an increase in income related to the addition of Lakeland's BOLI, while wealth management income increased $2.9 million to $30.5 million for the year ended December 31, 2024, compared to 2023, mainly due to an increase in the average market value of assets under management during the period. Additionally, insurance agency income increased $2.3 million to $16.2 million for the year ended December 31, 2024, compared to $13.9 million for 2023, largely due to increases in contingent commissions, retention revenue and new business activity. Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the year ended December 31, 2024, primarily due to a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland. Additionally, other income decreased $2.8 million to $4.5 million for the year ended December 31, 2024, compared to $7.3 million for 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property recorded in the prior year, combined with a decrease in gains on sales of SBA loans in the current year.

Non-interest expense totaled $457.5 million for the year ended December 31, 2024, an increase of $182.2 million, compared to $275.3 million for 2023. Compensation and benefits expense increased $69.8 million to $218.3 million for the year ended December 31, 2024, compared to $148.5 million for 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Merger-related expenses increased $49.0 million to $56.9 million for the year ended December 31, 2024, compared to $7.8 million for 2023. Amortization of intangibles increased $26.0 million to $28.9 million for the year ended December 31, 2024, compared to $3.0 million for 2023, largely due to core deposit intangible amortization related to the addition of Lakeland. Net occupancy expense increased $12.7 million to $45.0 million for the year ended December 31, 2024, compared to 2023, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland, while data processing expense increased $12.6 million to $35.6 million for the year ended December 31, 2024, compared to $23.0 million for 2023, primarily due to additional software and hardware expenses related to the addition of Lakeland. Other operating expenses increased $7.3 million to $54.7 million for the year ended December 31, 2024, compared to $47.4 million for 2023, primarily due to increases in consulting and other professional service expenses, while FDIC insurance increased $4.4 million to $13.0 million for the year ended December 31, 2024, primarily due to the addition of Lakeland.

Income Tax Expense

For the year ended December 31, 2024, the Company's income tax expense was $34.1 million with an effective tax rate of 22.8%, compared with $47.4 million with an effective tax rate of 27.0% for 2023. The decrease in tax expense for the year ended December 31, 2024, compared with last year was largely due to a $10.0 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of the initial CECL provision for credit losses on loans of $60.1 million recorded in accordance with GAAP requirements for accounting for business combinations and additional expenses from the Lakeland merger.

Asset Quality

The Company’s total non-performing loans at December 31, 2024 were $72.1 million, or 0.39% of total loans, compared to $89.9 million or 0.47% of total loans at September 30, 2024 and $49.6 million, or 0.46% of total loans at December 31, 2023. The $17.9 million decrease in non-performing loans at December 31, 2024, compared to the trailing quarter, consisted of a $24.3 million decrease in non-performing commercial loans and a $676,000 decrease in non-performing residential loans, partially offset by a $6.9 million increase in non-performing commercial mortgage loans and a $223,000 increase in non-performing consumer loans. As of December 31, 2024, impaired loans totaled $55.4 million with related specific reserves of $7.5 million, compared with impaired loans totaling $74.0 million with related specific reserves of $7.2 million as of September 30, 2024. As of December 31, 2023, impaired loans totaled $42.3 million with related specific reserves of $2.9 million.

At December 31, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.04% of total loans, compared to 1.02% and 0.99% at September 30, 2024 and December 31, 2023, respectively. The allowance for credit losses increased $88.0 million to $193.4 million at December 31, 2024, from $107.2 million at December 31, 2023. The increase in the allowance for credit losses on loans at December 31, 2024 compared to December 31, 2023 was due to an $83.6 million provision for credit losses on loans, which included an initial CECL provision of $60.1 million on loans acquired from Lakeland, and a $17.2 million allowance recorded through goodwill related to Purchased Credit Deteriorated loans acquired from Lakeland, partially offset by net charge-offs of $14.6 million.

The following table sets forth accruing past due loans and non-accrual loans on the dates indicated, as well as certain asset quality ratios.

		December 31, 2024						September 30, 2024						December 31, 2023
		Number of Loans		Principal Balance of Loans				Number of Loans		Principal Balance of Loans				Number of Loans		Principal Balance of Loans
		(Dollars in thousands)
Accruing past due loans:
30 to 59 days past due:
Commercial mortgage loans		7		$	8,538			2		$	430			1		$	825
Multi-family mortgage loans		—			—			—			—			1			3,815
Construction loans		—			—			—			—			—			—
Residential mortgage loans		22			6,388			23			5,020			13			3,429
Total mortgage loans		29			14,926			25			5,450			15			8,069
Commercial loans		23			4,248			14			1,952			6			998
Consumer loans		47			3,152			53			4,073			31			875
Total 30 to 59 days past due		99		$	22,326			92		$	11,475			52		$	9,942
60 to 89 days past due:
Commercial mortgage loans		4		$	3,954			1		$	641			—		$	—
Multi-family mortgage loans		—			—			—			—			1			1,635
Construction loans		—			—			—			—			—			—
Residential mortgage loans		17			5,049			11			1,991			8			1,208
Total mortgage loans		21			9,003			12			2,632			9			2,843
Commercial loans		9			2,377			9			1,240			3			198
Consumer loans		15			856			10			606			5			275
Total 60 to 89 days past due		45			12,236			31			4,478			17			3,316
Total accruing past due loans		144		$	34,562			123		$	15,953			69		$	13,258
Non-accrual:
Commercial mortgage loans		17		$	20,883			17		$	13,969			7		$	5,151
Multi-family mortgage loans		6			7,498			6			7,578			1			744
Construction loans		2			13,246			2			13,151			1			771
Residential mortgage loans		23			4,535			24			5,211			7			853
Total mortgage loans		48			46,162			49			39,909			16			7,519
Commercial loans		65			24,243			69			48,592			26			41,487
Consumer loans		23			1,656			32			1,433			10			633
Total non-accrual loans		136		$	72,061			150		$	89,934			52		$	49,639
Non-performing loans to total loans					0.39	%					0.47	%					0.46	%
Allowance for loan losses to total non-performing loans					268.43	%					217.09	%					215.96	%
Allowance for loan losses to total loans					1.04	%					1.02	%					0.99	%

At December 31, 2024 and December 31, 2023, the Company held foreclosed assets of $9.5 million and $11.7 million, respectively. During the year ended December 31, 2024, there were four properties sold with an aggregate carrying value of $861,000 and one write-down of a foreclosed commercial property of $1.3 million. Foreclosed assets at December 31, 2024 consisted primarily of commercial real estate. Total non-performing assets at December 31, 2024 increased $20.2 million to $81.5 million, or 0.34% of total assets, from $61.3 million, or 0.43% of total assets at December 31, 2023.

Balance Sheet Summary

Total assets at December 31, 2024 were $24.05 billion, a $13.78 billion increase from December 31, 2023. The increase in total assets was primarily due to the addition of Lakeland.

The Company’s loans held for investment portfolio totaled $18.66 billion at December 31, 2024 and $10.87 billion at December 31, 2023. The loan portfolio consists of the following:

		December 31, 2024				September 30, 2024				December 31, 2023
		(Dollars in thousands)
Mortgage loans:
Commercial		$	7,228,078			$	7,342,456			$	4,512,411
Multi-family			3,382,933				3,226,918				1,812,500
Construction			823,503				873,509				653,246
Residential			2,014,844				2,032,671				1,164,956
	Total mortgage loans		13,449,358				13,475,554				8,143,113
Commercial loans			4,604,367				4,710,601				2,440,621
Consumer loans			613,819				623,709				299,164
	Total gross loans		18,667,544				18,809,864				10,882,898
Premiums on purchased loans			1,338				1,362				1,474
Net deferred fees and unearned discounts			(9,512	)			(16,617	)			(12,456	)
	Total loans	$	18,659,370			$	18,794,609			$	10,871,916

As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments. For the year ended December 31, 2024, the Company experienced net increases of $1.57 billion in multi-family loans, $2.16 billion in commercial loans and $2.72 billion in commercial mortgage loans, partially offset by net decreases of $170.3 million in construction loans and net decreases in residential mortgage and consumer loans of $849.9 million and $314.7 million, respectively. Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio at December 31, 2024, compared to 86.5% at December 31, 2023.

For the year ended December 31, 2024, loan funding, including advances on lines of credit, totaled $4.73 billion, compared with $3.34 billion for the same period in 2023.

At December 31, 2024, the Company’s unfunded loan commitments totaled $2.73 billion, including commitments of $1.62 billion in commercial loans, $608.1 million in construction loans and $85.1 million in commercial mortgage loans. Unfunded loan commitments at September 30, 2024 and December 31, 2023 totaled $2.97 billion and $2.09 billion, respectively.

The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.79 billion at December 31, 2024, compared to $1.98 billion at September 30, 2024 and $1.70 billion at December 31, 2023.

Total investment securities were $3.21 billion at December 31, 2024, a $2.26 billion increase from December 31, 2023. This increase was primarily due to the addition of Lakeland.

Total deposits increased $10.56 billion during the year ended December 31, 2024, to $18.62 billion. Total savings and demand deposit accounts increased $6.26 billion to $15.46 billion at December 31, 2024, while total time deposits increased $2.07 billion to $3.17 billion at December 31, 2024. The increase in savings and demand deposits was largely attributable to a $3.13 billion increase in interest-bearing demand deposits, a $1.59 billion increase in non-interest-bearing demand deposits, a $1.04 billion increase in money market deposits and a $504.0 million increase in savings deposits. The increase in time deposits consisted of a $1.98 billion increase in retail time deposits and a $91.1 million increase in brokered time deposits.

Borrowed funds increased $1.34 billion during the year ended December 31, 2024, to $2.02 billion. The increase in borrowings was largely due to the addition of Lakeland. Borrowed funds represented 8.4% of total assets at December 31, 2024, an decrease from 13.9% at December 31, 2023.

Stockholders’ equity increased $1.60 billion during the year ended December 31, 2024, to $2.60 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and a slight improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders. For the year ended December 31, 2024, common stock repurchases totaled 89,569 shares at an average cost of $14.90 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At December 31, 2024, approximately 3.1 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share⁽⁶⁾ at December 31, 2024 were $19.93 and $13.66, respectively, compared with $22.38 and $16.32, respectively, at December 31, 2023.

About the Company

Provident Financial Services, Inc. is the holding company for Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Orange, Queens and Nassau Counties in New York. The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company and insurance services through its wholly owned subsidiary, Provident Protection Plus, Inc.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors on Wednesday, January 29, 2025 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter and year ended December 31, 2024. The call may be accessed by dialing 1-888-412-4131 (United States Toll Free) and 1-646-960-0134 (United States Local). Speakers will need to enter conference ID code (3610756) before being met by a live operator. Internet access to the call is also available (listen only) at provident.bank by going to Investor Relations and clicking on "Webcast."

Forward Looking Statements

Certain statements contained herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” "project," "intend," “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q, and those related to the economic environment, particularly in the market areas in which the Company operates, inflation and unemployment, competitive products and pricing, real estate values, fiscal and monetary policies of the U.S. Government, the effects of the recent turmoil in the banking industry, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, the ability to complete, or any delays in completing, the pending merger between the Company and Lakeland; any failure to realize the anticipated benefits of the transaction when expected or at all; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected conditions, factors or events; potential adverse reactions or changes to business, employee, customer and/or counterparty relationships, including those resulting from the completion of the merger and integration of the companies; and the impact of a potential shutdown of the federal government.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not assume any duty, and does not undertake, to update any forward-looking statements to reflect events or circumstances after the date of this statement.

Footnotes

⁽¹⁾ Annualized adjusted pre-tax, pre-provision return on average assets, annualized return on average tangible equity, tangible book value per share, annualized adjusted non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes following the Consolidated Financial Highlights which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Financial Highlights
(Dollars in Thousands, except share data) (Unaudited)
	At or for the Three months ended												At or for the Year ended
	December 31,				September 30,				December 31,				December 31,				December 31,
		2024				2024				2023				2024				2023
Statement of Income
Net interest income	$	181,737			$	183,701			$	95,788			$	600,614			$	399,454
Provision for credit losses		8,880				9,299				(863	)			87,564				28,168
Non-interest income		24,175				26,855				18,968				94,113				79,829
Non-interest expense		134,323				136,002				75,851				457,548				275,336
Income before income tax expense		62,709				65,255				39,768				149,615				175,779
Net income		48,524				46,405				27,312				115,525				128,398
Diluted earnings per share	$	0.37			$	0.36			$	0.36			$	1.05			$	1.71
Interest rate spread		2.63	%			2.65	%			2.33	%			2.63	%			2.63	%
Net interest margin		3.28	%			3.31	%			2.92	%			3.26	%			3.16	%
Profitability
Annualized return on average assets		0.81	%			0.76	%			0.77	%			0.57	%			0.92	%
Annualized adjusted return on average assets (1)		1.05	%			0.95	%			0.83	%			0.78	%			0.97	%
Annualized return on average equity		7.36	%			6.94	%			6.60	%			5.07	%			7.81	%
Annualized adjusted return on average equity (1)		9.53	%			8.62	%			7.10	%			6.95	%			8.22	%
Annualized return on average tangible equity (3)		12.21	%			12.06	%			9.32	%			8.58	%			11.01	%
Annualized adjusted return on average tangible equity (1)		15.39	%			14.53	%			9.99	%			11.29	%			11.54	%
Annualized adjusted non-interest expense to average assets (4)		1.90	%			1.98	%			1.98	%			1.97	%			1.90	%
Efficiency ratio (4)		55.43	%			57.20	%			61.32	%			57.67	%			55.19	%
Asset Quality
Non-accrual loans					$	89,934							$	72,061			$	49,639
90+ and still accruing						—								—				—
Non-performing loans						88,061								72,061				49,639
Foreclosed assets						9,801								9,473				11,651
Non-performing assets						97,862								81,534				61,290
Non-performing loans to total loans						0.47	%							0.39	%			0.46	%
Non-performing assets to total assets						0.41	%							0.34	%			0.43	%
Allowance for loan losses					$	191,175							$	193,432			$	107,200
Allowance for loan losses to total non-performing loans						217.09	%							268.43	%			215.96	%
Allowance for loan losses to total loans						1.02	%							1.04	%			0.99	%
Net loan charge-offs	$	5,493				6,756			$	4,010			$	14,560			$	8,129
Annualized net loan charge offs to average total loans		0.12	%			0.14	%			0.16	%			0.09	%			0.08	%
Average Balance Sheet Data
Assets	$	23,908,514			$	24,248,038			$	14,114,626			$	20,382,148			$	13,915,467
Loans, net		18,487,443				18,531,939				10,660,201				15,600,431				10,367,620
Earning assets		21,760,458				21,809,226				12,823,541				18,403,149				12,637,224
Savings and demand deposits		15,581,608				15,394,715				9,210,315				13,103,803				9,358,290
Borrowings		1,711,806				2,125,149				1,873,822				1,983,674				1,636,572
Interest-bearing liabilities		17,093,382				17,304,569				10,020,726				14,596,325				9,671,794
Stockholders' equity		2,624,019				2,660,470				1,642,854				2,279,525				1,644,529
Average yield on interest-earning assets		5.66	%			5.84	%			5.04	%			5.68	%			4.87	%
Average cost of interest-bearing liabilities		3.03	%			3.19	%			2.71	%			3.05	%			2.24	%

Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
(Dollars in Thousands, except share data)

The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.

(1) Annualized Adjusted Return on Average Assets, Equity and Tangible Equity
		Three Months Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2024				2024				2023				2024				2023
Net Income		$	48,524			$	46,405			$	27,312			$	115,525			$	128,398
Merger-related transaction costs			20,184				15,567				2,477				56,867				7,826
Less: income tax expense			(5,819	)			(4,306	)			(465	)			(14,010	)			(1,480	)
Annualized adjusted net income		$	62,889			$	57,666			$	29,324			$	158,382			$	134,744
Less: Amortization of Intangibles (net of tax)		$	6,649			$	8,551			$	504			$	20,226			$	2,064
Annualized adjusted net income for annualized adjusted return on average tangible equity		$	69,538			$	66,216			$	29,828			$	178,607			$	136,808
Annualized Adjusted Return on Average Assets			1.05	%			0.95	%			0.83	%			0.78	%			0.97	%
Annualized Adjusted Return on Average Equity			9.53	%			8.62	%			7.10	%			6.95	%			8.22	%
Annualized Adjusted Return on Average Tangible Equity			15.39	%			14.53	%			9.99	%			11.29	%			11.54	%
(2) Annualized adjusted pre-tax, pre-provision ("PTPP") returns on average assets, average equity and average tangible equity
		Three Months Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
			2024				2024				2023				2024				2023
Net income		$	48,524			$	46,405			$	27,312			$	115,525			$	128,398
Adjustments to net income:
Provision charge (benefit) for credit losses			8,880				9,299				(863	)			87,564				28,168
Net loss on Lakeland bond sale			—				—				—				2,839				—
Merger-related transaction costs			20,184				15,567				2,477				56,867				7,826
Contingent litigation reserves			—				—				3,000				—				3,000
Income tax expense			14,185				18,850				12,456				34,090				47,381
Adjusted PTPP income		$	91,773			$	90,121			$	44,382			$	296,885			$	214,773
Annualized Adjusted PTPP income		$	365,097			$	358,525			$	176,081			$	296,885			$	214,773
Average assets		$	23,908,514			$	24,248,038			$	14,114,626			$	20,382,148			$	13,915,467
Average equity		$	2,624,019			$	2,660,470			$	1,642,854			$	2,279,525			$	1,644,529
Average tangible equity		$	1,797,994			$	1,813,327			$	1,184,444			$	1,581,339			$	1,185,026
Annualized Adjusted PTPP return on average assets			1.53	%			1.48	%			1.25	%			1.46	%			1.54	%
Annualized PTPP return on average equity			13.91	%			13.48	%			10.72	%			13.02	%			13.06	%
Annualized PTPP return on average tangible equity			20.31	%			19.77	%			14.87	%			18.77	%			18.12	%
(3) Annualized Return on Average Tangible Equity
		Three Months Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
			2024				2024				2023				2024				2023
Total average stockholders' equity		$	2,624,019			$	2,660,470			$	1,642,854			$	2,279,525			$	1,644,529
Less: total average intangible assets			826,025				847,143				458,410				698,186				459,503
Total average tangible stockholders' equity		$	1,797,994			$	1,813,327			$	1,184,444			$	1,581,339			$	1,185,026
Net income		$	48,524			$	46,405			$	27,312			$	115,525			$	128,398
Less: Amortization of Intangibles, net of tax			6,649				8,551				504				20,226				2,064
Total net income (loss)		$	55,173			$	54,956			$	27,816			$	135,751			$	130,462
Annualized return on average tangible equity (net income/total average tangible stockholders' equity)			12.21	%			12.06	%			9.32	%			8.58	%			11.01	%
(4) Annualized Adjusted Non-Interest Expense to Average Assets
		Three Months Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
			2024				2024				2023				2024				2023
Reported non-interest expense		$	134,323			$	136,002			$	75,851			$	457,548			$	275,336
Adjustments to non-interest expense:
Merger-related transaction costs			20,184				15,567				2,477				56,867				7,826
Contingent litigation reserves			—				—				3,000				—				3,000
Adjusted non-interest expense		$	114,139			$	120,435			$	70,374			$	400,681			$	264,510
Annualized adjusted non-interest expense		$	454,075			$	479,122			$	279,201			$	400,681			$	264,510
Average assets		$	23,908,514			$	24,248,038			$	14,114,626			$	20,382,148			$	13,915,467
Annualized adjusted non-interest expense/average assets			1.90	%			1.98	%			1.98	%			1.97	%			1.90	%
(5) Efficiency Ratio Calculation
		Three Months Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
			2024				2024				2023				2024				2023
Net interest income		$	181,737			$	183,701			$	95,788			$	600,614			$	399,454
Non-interest income			24,175				26,855				18,968				94,113				79,829
Adjustments to non-interest income:
Net loss (gain) on securities transactions			14				(2	)			7				2,986				(30	)
Adjusted non-interest income			24,189				26,853				18,975				97,099				79,799
Total income		$	205,912			$	210,554			$	114,756			$	694,727			$	479,283
Adjusted non-interest expense		$	114,139			$	120,435			$	70,374			$	400,681			$	264,510
Efficiency ratio (adjusted non-interest expense/income)			55.43	%			57.20	%			61.32	%			57.67	%			55.19	%
(6) Book and Tangible Book Value per Share
														December 31,				December 31,
															2024				2023
Total stockholders' equity														$	2,601,207			$	1,690,596
Less: total intangible assets															819,230				457,942
Total tangible stockholders' equity														$	1,781,977			$	1,232,654
Shares outstanding															130,489,493				75,537,186
Book value per share (total stockholders' equity/shares outstanding)														$	19.93			$	22.38
Tangible book value per share (total tangible stockholders' equity/shares outstanding)														$	13.66			$	16.32

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
December 31, 2024 (Unaudited) and December 31, 2023
(Dollars in Thousands)
Assets	December 31, 2024				December 31, 2023
Cash and due from banks	$	166,914			$	180,241
Short-term investments		25				14
Total cash and cash equivalents		166,939				180,255
Available for sale debt securities, at fair value		2,768,915				1,690,112
Held to maturity debt securities, (net of $14,000 allowance as of December 31, 2024 (unaudited) and $31,000 allowance as of December 31, 2023)		327,623				363,080
Equity securities, at fair value		19,762				1,270
Federal Home Loan Bank stock		112,115				79,217
Loans held for sale		162,453				1,785
Loans held for investment		18,659,370				10,871,916
Less allowance for credit losses		193,432				107,200
Net loans		18,628,391				10,766,501
Foreclosed assets, net		9,473				11,651
Banking premises and equipment, net		119,622				70,998
Accrued interest receivable		91,160				58,966
Intangible assets		819,230				457,942
Bank-owned life insurance		405,893				243,050
Other assets		582,702				287,768
Total assets	$	24,051,825			$	14,210,810
Liabilities and Stockholders' Equity
Deposits:
Demand deposits	$	13,775,991			$	8,020,889
Savings deposits		1,679,667				1,175,683
Certificates of deposit of $250,000 or more		789,342				218,549
Other time deposits		2,378,813				877,393
Total deposits		18,623,813				10,292,514
Mortgage escrow deposits		42,247				36,838
Borrowed funds		2,020,435				1,970,033
Subordinated debentures		401,608				10,695
Other liabilities		362,515				210,134
Total liabilities		21,450,618				12,520,214
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued		—				—
Common stock, $0.01 par value, 200,000,000 shares authorized, 137,565,966 shares issued and 130,489,493 shares outstanding as of December 31, 2024 and 75,537,186 outstanding as of December 31, 2023.		1,376				832
Additional paid-in capital		1,834,495				989,058
Retained earnings		989,111				974,542
Accumulated other comprehensive loss		(135,355	)			(141,115	)
Treasury stock		(88,420	)			(127,825	)
Unallocated common stock held by the Employee Stock Ownership Plan		—				(4,896	)
Common Stock acquired by the Directors' Deferred Fee Plan		—				(2,694	)
Deferred Compensation - Directors' Deferred Fee Plan		—				2,694
Total stockholders' equity		2,601,207				1,690,596
Total liabilities and stockholders' equity	$	24,051,825			$	14,210,810

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three months ended December 31, 2024, September 30, 2024 (Unaudited) and December 31, 2023, and year ended December 31, 2024 (Unaudited) and 2023
(Dollars in Thousands, except per share data)
	Three Months Ended											Year Ended
	December 31,				September 30,			December 31,				December 31,				December 31,
		2024				2024			2023				2024				2023
Interest and dividend income:
Real estate secured loans	$	194,236			$	197,857		$	109,112			$	655,868			$	408,942
Commercial loans		75,978				81,183			34,939				251,793				128,854
Consumer loans		10,815				12,947			5,020				36,635				18,439
Available for sale debt securities, equity securities and Federal Home Loan Bank stock		27,197				25,974			12,042				85,895				46,790
Held to maturity debt securities		2,125				2,136			2,303				8,885				9,362
Deposits, federal funds sold and other short-term investments		1,596				2,425			755				7,062				3,433
Total interest income		311,947				322,522			164,171				1,046,138				615,820
Interest expense:
Deposits		105,922				110,009			50,579				349,523				159,459
Borrowed funds		15,652				19,923			17,527				73,523				55,856
Subordinated debt		8,636				8,889			277				22,478				1,051
Total interest expense		130,210				138,821			68,383				445,524				216,366
Net interest income		181,737				183,701			95,788				600,614				399,454
Provision charge (benefit) for credit losses		8,880				9,299			(863	)			87,564				28,168
Net interest income after provision for credit losses		172,857				174,402			96,651				513,050				371,286
Non-interest income:
Fees		9,687				9,816			6,102				34,114				24,396
Wealth management income		7,655				7,620			6,843				30,533				27,669
Insurance agency income		3,289				3,631			2,759				16,201				13,934
Bank-owned life insurance		2,261				4,308			1,644				11,709				6,482
Net (loss) gain on securities transactions		(14	)			2			(7	)			(2,986	)			30
Other income		1,297				1,478			1,627				4,542				7,318
Total non-interest income		24,175				26,855			18,968				94,113				79,829
Non-interest expense:
Compensation and employee benefits		59,937				63,468			38,773				218,341				148,497
Net occupancy expense		12,562				12,790			7,797				45,014				32,271
Data processing expense		9,881				10,481			6,457				35,579				22,993
FDIC Insurance		3,411				4,180			2,890				12,964				8,578
Amortization of intangibles		9,511				12,231			721				28,931				2,952
Advertising and promotion expense		1,485				1,524			1,100				5,146				4,822
Merger-related expenses		20,184				15,567			2,477				56,867				7,826
Other operating expenses		17,352				15,761			15,636				54,706				47,397
Total non-interest expense		134,323				136,002			75,851				457,548				275,336
Income before income tax expense		62,709				65,255			39,768				149,615				175,779
Income tax expense		14,185				18,850			12,456				34,090				47,381
Net income	$	48,524			$	46,405		$	27,312			$	115,525			$	128,398
Basic earnings per share	$	0.37			$	0.36		$	0.36			$	1.05			$	1.72
Average basic shares outstanding		130,067,244				129,941,845			74,995,705				109,668,911				74,844,489
Diluted earnings per share	$	0.37			$	0.36		$	0.36			$	1.05			$	1.71
Average diluted shares outstanding		130,163,872				130,004,870			75,041,545				109,712,732				74,873,256

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Dollars in Thousands) (Unaudited)
	December 31, 2024									September 30, 2024									December 31, 2023
	Average Balance			Interest			Average Yield/Cost			Average Balance			Interest			Average Yield/Cost			Average Balance			Interest			Average Yield/Cost
Interest-Earning Assets:
Deposits	$	117,998		$	1,596		5.38	%		$	179,313		$	2,425		5.38	%		$	54,998		$	745		5.37	%
Federal funds sold and other short-term investments		—			—		—	%			—			—		—	%			838			10		4.39	%
Available for sale debt securities		2,720,065			25,063		3.69	%			2,644,262			24,884		3.72	%			1,647,906			9,858		2.39	%
Held to maturity debt securities, net (1)		328,147			2,125		2.59	%			342,217			2,136		2.50	%			364,433			2,303		2.53	%
Equity securities, at fair value		19,920			—		—	%			19,654			—		—	%			1,016			—		—	%
Federal Home Loan Bank stock		86,885			2,134		9.82	%			91,841			1,090		4.75	%			94,149			2,184		9.28	%
Net loans: (2)
Total mortgage loans		13,287,942			194,236		5.75	%			13,363,265			197,857		5.83	%			8,028,300			109,112		5.34	%
Total commercial loans		4,587,048			75,978		6.54	%			4,546,088			81,183		7.05	%			2,329,430			34,939		5.90	%
Total consumer loans		612,453			10,815		7.02	%			622,586			12,947		8.27	%			302,471			5,020		6.58	%
Total net loans		18,487,443			281,029		5.99	%			18,531,939			291,987		6.21	%			10,660,201			149,071		5.50	%
Total interest-earning assets	$	21,760,458		$	311,947		5.66	%		$	21,809,226		$	322,522		5.84	%		$	12,823,541		$	164,171		5.04	%
Non-Interest Earning Assets:
Cash and due from banks		159,151									341,505									111,610
Other assets		1,988,905									2,097,307									1,179,475
Total assets	$	23,908,514								$	24,248,038								$	14,114,626
Interest-Bearing Liabilities:
Demand deposits	$	10,115,827		$	71,265		2.80	%		$	9,942,053		$	74,864		3.00	%		$	5,856,916		$	39,648		2.69	%
Savings deposits		1,677,725			968		0.23	%			1,711,502			1006		0.23	%			1,183,857			602		0.20	%
Time deposits		3,187,172			33,689		4.21	%			3,112,598			34,139		4.36	%			1,095,468			10,329		3.74	%
Total Deposits		14,980,724			105,922		2.81	%			14,766,153			110,009		2.96	%			8,136,241			50,579		2.47	%
Borrowed funds		1,711,806			15,652		3.64	%			2,125,149			19,923		3.73	%			1,873,822			17,527		3.71	%
Subordinated debentures		400,852			8,636		8.57	%			413,267			8,889		8.56	%			10,663			277		10.27	%
Total interest-bearing liabilities		17,093,382			130,210		3.03	%			17,304,569			138,821		3.19	%			10,020,726			68,383		2.71	%
Non-Interest Bearing Liabilities:
Non-interest bearing deposits		3,788,056									3,741,160									2,169,542
Other non-interest bearing liabilities		403,057									541,839									281,504
Total non-interest bearing liabilities		4,191,113									4,282,999									2,451,046
Total liabilities		21,284,495									21,587,568									12,471,772
Stockholders' equity		2,624,019									2,660,470									1,642,854
Total liabilities and stockholders' equity	$	23,908,514								$	24,248,038								$	14,114,626
Net interest income				$	181,737								$	183,701								$	95,788
Net interest rate spread							2.63	%								2.65	%								2.33	%
Net interest-earning assets	$	4,667,076								$	4,504,657								$	2,802,815
Net interest margin (3)							3.28	%								3.31	%								2.92	%
Ratio of interest-earning assets to total interest-bearing liabilities	1.27x									1.26x									1.28x

(1	)	Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2	)	Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
(3	)	Annualized net interest income divided by average interest-earning assets.

The following table summarizes the quarterly net interest margin for the previous five quarters.
	12/31/24			9/30/24			6/30/24			3/31/24			12/31/23
	4th Qtr.			3rd Qtr.			2nd Qtr.			1st Qtr.			4th Qtr.
Interest-Earning Assets:
Securities	3.78	%		3.69	%		3.40	%		2.87	%		2.79	%
Net loans	5.99	%		6.21	%		6.05	%		5.51	%		5.50	%
Total interest-earning assets	5.66	%		5.84	%		5.67	%		5.06	%		5.04	%
Interest-Bearing Liabilities:
Total deposits	2.81	%		2.96	%		2.84	%		2.60	%		2.47	%
Total borrowings	3.64	%		3.73	%		3.83	%		3.60	%		3.71	%
Total interest-bearing liabilities	3.03	%		3.19	%		3.09	%		2.80	%		2.71	%
Interest rate spread	2.63	%		2.65	%		2.58	%		2.26	%		2.33	%
Net interest margin	3.28	%		3.31	%		3.21	%		2.87	%		2.92	%
Ratio of interest-earning assets to interest-bearing liabilities	1.27x			1.26x			1.25x			1.28x			1.28x

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Dollars in Thousands) (Unaudited)
	December 31, 2024									December 31, 2023
	Average						Average			Average						Average
	Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-Earning Assets:
Deposits	$	36,932		$	7,062		5.23	%		$	65,991		$	3,421		5.18	%
Federal funds sold and other short-term investments		—			—		—	%			255			12		4.55	%
Available for sale debt securities		2,323,158			77,617		3.32	%			1,745,105			40,678		2.33	%
Held to maturity debt securities, net (1)		344,903			8,885		2.58	%			375,436			9,362		2.49	%
Equity securities, at fair value		12,367			—		—	%			1,020			—		—	%
Federal Home Loan Bank stock		85,358			8,278		9.70	%			81,797			6,112		7.47	%
Net loans: (2)
Total mortgage loans		11,333,540			655,868		5.79	%			7,813,764			408,942		5.23	%
Total commercial loans		3,768,388			251,793		6.68	%			2,251,175			128,854		5.72	%
Total consumer loans		498,503			36,635		7.35	%			302,681			18,439		6.09	%
Total net loans		15,600,431			944,296		6.05	%			10,367,620			556,235		5.37	%
Total interest-earning assets	$	18,403,149		$	1,046,138		5.68	%		$	12,637,224		$	615,820		4.87	%
Non-Interest Earning Assets:
Cash and due from banks		233,829									119,232
Other assets		1,745,170									1,159,011
Total assets	$	20,382,148								$	13,915,467
Interest-Bearing Liabilities:
Demand deposits	$	8,480,380		$	245,874		2.90	%		$	5,747,671		$	125,471		2.18	%
Savings deposits		1,502,852			3,443		0.23	%			1,282,062			2,184		0.17	%
Time deposits		2,367,144			100,206		4.23	%			994,901			31,804		3.20	%
Total deposits		12,350,376			349,523		2.83	%			8,024,634			159,459		1.99	%
Borrowed funds		1,983,674			73,523		3.71	%			1,636,572			55,856		3.41	%
Subordinated debentures		262,275			22,478		8.57	%			10,588			1,051		9.92	%
Total interest-bearing liabilities	$	14,596,325		$	445,524		3.05	%		$	9,671,794		$	216,366		2.24	%
Non-Interest Bearing Liabilities:
Non-interest bearing deposits		3,120,571									2,328,557
Other non-interest bearing liabilities		385,727									270,587
Total non-interest bearing liabilities		3,506,298									2,599,144
Total liabilities		18,102,623									12,270,938
Stockholders' equity		2,279,525									1,644,529
Total liabilities and stockholders' equity	$	20,382,148								$	13,915,467
Net interest income				$	600,614								$	399,454
Net interest rate spread							2.63	%								2.63	%
Net interest-earning assets	$	3,806,824								$	2,965,430
Net interest margin (3)							3.26	%								3.16	%
Ratio of interest-earning assets to total interest-bearing liabilities	1.26x									1.31x
(1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans.
(3) Annualized net interest income divided by average interest-earning assets.

The following table summarizes the year-to-date net interest margin for the previous three years.
	Year Ended
	December 31, 2024			December 31, 2023			December 31, 2022
Interest-Earning Assets:
Securities	3.43	%		2.62	%		1.86	%
Net loans	6.05	%		5.37	%		4.26	%
Total interest-earning assets	5.68	%		4.87	%		3.76	%
Interest-Bearing Liabilities:
Total deposits	2.83	%		1.99	%		0.47	%
Total borrowings	3.71	%		3.41	%		1.23	%
Total interest-bearing liabilities	3.05	%		2.24	%		0.54	%
Interest rate spread	2.63	%		2.63	%		3.22	%
Net interest margin	3.26	%		3.16	%		3.37	%
Ratio of interest-earning assets to interest-bearing liabilities	1.26x			1.31x			1.38x

FAQ

What was PFS's Q4 2024 earnings per share?

Provident Financial Services reported earnings of $0.37 per basic and diluted share for Q4 2024.

How much did the Lakeland merger add to PFS's assets in 2024?

The Lakeland merger added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits.

What is PFS's quarterly dividend payment for Q1 2025?

PFS declared a quarterly cash dividend of $0.24 per share, payable on February 28, 2025.

How did PFS's net interest margin change in Q4 2024?

The net interest margin decreased three basis points to 3.28% from 3.31% in the previous quarter.