DALLAS, TX -- January 29, 2026 -- Provident Financial Services Inc (NYSE: PFS): Provident Financial Services delivered another strong quarter of expanding profitability and continued operating momentum. Net income increased to $83.4M, for an EPS of $0.64, driving a 1.34% ROAA. Revenue reached a third consecutive quarterly record at $225.7M, supported by record net interest income of $197.4M and record noninterest income of $28.3M, reflecting the Company’s ability to grow earning assets while sustaining strong fee generation across its other business lines.
Net Interest Income and Margin: Net interest income increased to a record $197.4M, supported by strong loan growth and continued improvement in core spread dynamics. Reported net interest margin was 3.44% (up 1bp q/q), while core net interest margin expanded 7bps to 3.01% despite a 10bp decline in the average yield on assets to 5.66%, as funding costs improved meaningfully with the cost of interest-bearing liabilities down 13bps to 2.83%. Management reiterated a largely neutral interest-rate risk posture and expects continued core NIM expansion of 3–5bps over the next two quarters, with reported NIM projected in the 3.4%–3.5% range for 2026; management also noted December core margin trended higher at 3.05% and highlighted that each 25bp Fed cut could add ~2–3bps of core margin, with deposit betas expected to remain ~25%–30% through the down-cycle.
Loans and Deposits: Period-end loans held for investment increased $218.M (4.5% annualized), driven by growth in multifamily, commercial mortgage, and commercial loans, partially offset by planned reductions in construction and residential mortgage balances. Origination momentum remains healthy, with total commercial loans up 5.4% annualized and total commercial pipeline at $2.7B, carrying a weighted average rate of 6.22% (accretive versus the current portfolio yield). Deposits increased $182.0 million (3.8% annualized), with core deposits expanding $260.0 million (6.6% annualized); brokered deposits remained a modest 4% of total deposits, and the loan-to-deposit ratio improved modestly to 101%, supporting management’s view that liquidity remains robust.
Financial Ratios and Capital: Credit performance improved further, with non-performing assets declining $22.0M to 0.32% of total assets, net charge-offs of $4.2 million representing 0.09% of loans, and allowance coverage at 0.95% of total loans. Expense discipline remained intact, with the efficiency ratio holding at 51% even as incentive accruals increased alongside stronger performance, and tangible book value per share grew 4% q/q to $15.70 (+15% y/y), reflecting continued organic capital formation. Looking ahead, management guided to 2026 loan and deposit growth of 4%–6% (annualized) and expects quarterly core operating expenses of ~$118–$120 million, while also calling out an incremental ~$5 million of nonrecurring costs tied to a core systems conversion planned for 2H26.
Valuation: We use a comp analysis on P/E and P/TBV to frame our valuation of PFS Using a forward P/E range of 9.0x to 10.0x with a mid-point of 9.5x on FY26 estimates results in a valuation range of $23.81 to $26.46 with a mid-point of $25.13. Using a P/TBV range of 1.5x to 1.6x with a mid-point of 1.5x results in a valuation range of $22.77 to $24.34 with a mid-point of $23.55.
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