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1. Company Snapshot

1.a. Company Description

Provident Financial Services, Inc.operates as the bank holding company for Provident Bank that provides various banking products and services to individuals, families, and businesses in the United States.The company's deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA products.


Its loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, and retail and industrial properties; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, marine loans, personal loans and unsecured lines of credit, and auto and recreational vehicle loans.The company also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards.In addition, it provides wealth management services comprising investment management, trust and estate administration, financial planning, tax compliance and planning, and private banking.


Further, the company sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure.As of December 31, 2021, it operated 96 full-service branch offices in northern and central New Jersey, as well as in Pennsylvania and New York counties.The company was founded in 1839 and is headquartered in Jersey City, New Jersey.

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1.b. Last Insights on PFS

Provident Financial Services' recent performance was driven by a strong Q1 2025 earnings beat, with net income of $64.0 million, or $0.49 per basic and diluted share, surpassing the Zacks Consensus Estimate of $0.47 per share. The company's revenue growth was fueled by a large loan pipeline, which is expected to remain decent despite tariffs. Additionally, the net interest margin is largely unaffected by interest rate changes, providing a stable foundation for the company's financial performance. The company's digital upgrades are also expected to improve efficiency, contributing to its growth prospects.

1.c. Company Highlights

2. Provident Financial Services Delivers Solid Q2 Earnings

Provident Financial Services reported net earnings of $72 million or $0.55 per share for the second quarter, beating analysts' estimates of $0.50 per share. The company's annualized return on average assets was 1.19%, and the adjusted return on average tangible equity was 16.79%. The tangible book value per share grew $0.45 to $14.60, and the tangible common equity ratio expanded to 8.03%. These results demonstrate the company's ability to generate profitability and grow its tangible book value.

Publication Date: Jul -25

📋 Highlights
  • Net Earnings: Reported $72 million or $0.55 per share for Q2, with a 1.19% annualized return on average assets.
  • Deposit Growth: Deposits rose $260 million, a 5.6% annualized increase, with deposit costs down to 2.1%.
  • Loan Production: Commercial loans closed at $764 million in Q2, with a record $1.4 billion in H1 and 8% annualized portfolio growth.
  • Credit Quality: Net charge-offs at $1.2 million or 3 basis points of average loans, reflecting strong credit performance.
  • Net Interest Margin Outlook: Expected to reach 3.40% in Q3 and 3.45-3.47% by year-end, supported by asset repricing and new loans.

Financial Performance

The company's net interest margin (NIM) is expected to be around 3.40% in Q3 and 3.45-3.47% by the end of the year, driven by asset repricing, with $6 billion of existing back book repricing over the next 12 months and new loan production at accretive levels. Two rate cuts of 25 basis points are built into this expectation. The company's deposits increased $260 million, with an annualized growth rate of 5.6%, while the average cost of total deposits decreased to 2.1%. The commercial lending team closed approximately $764 million in new loans, bringing production to a record $1.4 billion for the first half of the year.

Credit Quality and Risk

Net charge-offs decreased to $1.2 million or 3 basis points of average loans, demonstrating strong credit quality. According to President and CEO Tony Labozzetta, "We continue to focus on maintaining a solid foundation for growth and profitability." This focus on credit quality and risk management has allowed the company to maintain a strong financial position.

Valuation and Capital Management

The company's Price-to-Tangible Book Value (P/TBV) is 0.9, which suggests that the stock may be undervalued. The Dividend Yield is 5.23%, which is attractive compared to other companies in the financial sector. The company's CET1 capital level target is around 11.25%, and with less focus on M&A, the company is open to share repurchases. This capital management strategy should support the company's stock price.

Growth Outlook

Analysts estimate next year's revenue growth at 7.4%, which suggests that the company has a strong growth outlook. The company's loan pipeline decreased slightly due to strong loan closings in Q2, but the company feels good about the remaining pipeline and expects a nice pull-through in the third quarter. There are no signs of slowdown or uncertainty causing borrowers to be more cautious.

3. NewsRoom

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For the Second Consecutive Year, Provident Bank Announces $50,000 in Grants to 6 Non-Profit Organizations

Nov -06

Source: globenewswire.com

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Stonegate Capital Partners Updates Coverage on Provident Financial Services Inc (PFS) 2025 Q3

Nov -05

Source: newsfilecorp.com

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IDEAYA Biosciences Reports Third Quarter 2025 Financial Results and Provides Business Update

Nov -04

Source: prnewswire.com

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Provident Financial Services, Inc. (PFS) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

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CORRECTION -- Provident Financial Services, Inc. Declares Quarterly Cash Dividend

Oct -30

Source: globenewswire.com

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Provident Financial Services, Inc. Declares Quarterly Cash Dividend

Oct -30

Source: globenewswire.com

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Provident Financial (PFS) Reports Q3 Earnings: What Key Metrics Have to Say

Oct -30

Source: zacks.com

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Provident Financial (PFS) Matches Q3 Earnings Estimates

Oct -29

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.77%)

6. Segments

Banking and Related Activities

Expected Growth: 4.77%

Strong loan growth, driven by commercial and industrial lending, and a robust mortgage banking business, contributed to Provident Financial Services, Inc.'s 4.77% growth in Banking and Related Activities. Additionally, the company's focus on digital transformation, cost savings initiatives, and strategic acquisitions also supported this growth.

7. Detailed Products

Commercial Loans

Provident Financial Services, Inc. offers commercial loans to businesses, providing financing for various purposes such as expansion, equipment purchases, and working capital.

Commercial Real Estate Loans

The company offers commercial real estate loans for property acquisition, construction, and refinancing, helping businesses to own or invest in commercial properties.

Residential Mortgage Loans

Provident Financial Services, Inc. offers residential mortgage loans to individuals and families, helping them to purchase or refinance their homes.

Consumer Loans

The company offers consumer loans for various personal financing needs, such as debt consolidation, home improvements, and unexpected expenses.

Deposit Services

Provident Financial Services, Inc. offers a range of deposit services, including checking and savings accounts, certificates of deposit, and individual retirement accounts.

Treasury Management Services

The company offers treasury management services to help businesses manage their cash flow, optimize liquidity, and reduce financial risk.

8. Provident Financial Services, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Provident Financial Services, Inc. operates in a highly competitive industry, but the threat of substitutes is mitigated by the company's strong brand recognition and customer loyalty.

Bargaining Power Of Customers

Customers have a high bargaining power due to the availability of alternative financial services providers, which puts pressure on Provident Financial Services, Inc. to maintain competitive pricing and services.

Bargaining Power Of Suppliers

Provident Financial Services, Inc. has a diversified supplier base, which reduces the bargaining power of individual suppliers, giving the company more negotiating power.

Threat Of New Entrants

The threat of new entrants is moderate due to the regulatory barriers and capital requirements in the financial services industry, but Provident Financial Services, Inc. still needs to innovate and adapt to changing market conditions.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players, which leads to a high intensity of rivalry, and Provident Financial Services, Inc. needs to differentiate itself through its products and services.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 64.90%
Debt Cost 3.95%
Equity Weight 35.10%
Equity Cost 9.11%
WACC 5.76%
Leverage 184.90%

11. Quality Control: Provident Financial Services, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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TriCo

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Value: 6.1

Growth: 4.8

Quality: 8.2

Yield: 6.0

Momentum: 5.0

Volatility: 7.7

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Provident Financial Services

A-Score: 6.3/10

Value: 6.8

Growth: 5.7

Quality: 4.4

Yield: 9.0

Momentum: 5.0

Volatility: 6.7

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Quality: 4.6

Yield: 8.0

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Quality: 4.2

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A-Score: 5.0/10

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Quality: 4.3

Yield: 6.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

18.86$

Current Price

18.86$

Potential

-0.00%

Expected Cash-Flows