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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 Posts Solid Q3 Earnings

Provident Financial Services reported net earnings of $72 million or $0.55 per share for the third quarter, with a return on average assets of 1.16% and an adjusted return on average tangible equity of 16.01%. Pretax pre-provision earnings grew 9% to a record $109 million, driven by record net interest income of $194 million and noninterest income of $27.4 million. The company's EPS met analysts' estimates, indicating a stable performance. The net interest income growth was a significant contributor to the overall earnings, and the company's ability to maintain a stable NIM is crucial for future performance.

Publication Date: Nov -18

📋 Highlights
  • Strong Earnings Growth: Net earnings reached $72M ($0.55/share), with pretax pre-provision earnings up 9% to $109M, driven by record net interest income of $194M.
  • Loan Portfolio Expansion: Loan growth accelerated at 5% annualized, supported by a $2.9B commercial loan pipeline at a 6.15% weighted average interest rate.
  • Deposit Growth Outpaces Lending: Deposits rose $388M (8% annualized), fueled by core deposits, while deposit costs increased slightly to 2.44%.
  • Noninterest Income Momentum: Revenue growth was driven by Provident Protection Plus and Beacon Trust, alongside $512K in SBA gains, though Q4 seasonal declines are expected.
  • Capital Strength & Efficiency: Tangible book value per share climbed to $15.13, and the efficiency ratio stabilized at ~50%, with plans to reduce costs via revenue growth, not aggressive cuts.

Loan Portfolio Growth

The company's loan portfolio grew at an annualized rate of 5%, driven primarily by C&I production, with a commercial loan pipeline of nearly $2.9 billion and a weighted average interest rate of 6.15%. Deposits increased $388 million or an annualized 8%, primarily driven by core deposits. This growth in deposits is a positive sign, as it indicates the company's ability to attract and retain low-cost funding sources. As Thomas M. Lyons mentioned, the company's deposit costs were up 1 basis point to 2.44% this quarter, and they model a 30% to 35% beta on deposits, which will benefit from the recent Fed rate cuts.

Asset Quality and Credit Exposure

Nonperforming assets improved to 0.41%, with net charge-offs of $5.4 million. The company's exposure to rent-stabilized multifamily properties in New York City is modest at $174 million, and credit exposure to non-depository financial institutions is limited to $292 million of mortgage warehouse loans. This prudent credit management has helped maintain asset quality, and the company's credit metrics are likely to remain stable.

Valuation and Dividend Yield

With a P/TBV ratio of approximately 0.84, the stock appears to be reasonably valued. The dividend yield stands at 5.4%, making it an attractive income-generating investment. Analysts estimate revenue growth at 7.6% for next year, which could lead to further appreciation in the stock price. The company's commitment to maintaining a payout ratio of 40-45% and its history of returning capital to shareholders make it an appealing choice for income-focused investors.

Outlook and Growth Prospects

The company is strategically focused on scaling up specialty verticals like ABL and healthcare, which are driving double-digit growth. Management expects continued benefits from recent Fed rate cuts and a steepening yield curve. While there are challenges in the lending market, particularly on the CRE side, the company's strong C&I pipeline and diversified revenue streams position it for continued success. The company's guidance on core margin expansion and its plans to invest in growth initiatives are positive indicators for future performance.

3. NewsRoom

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Namibia Critical Metals unveils strong PFS for Lofdal rare earths project

Dec -04

Source: proactiveinvestors.com

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Emerita Awards Pre-Feasibility Study Contract for the Iberian Belt West Project to SLR Consulting

Dec -03

Source: globenewswire.com

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Provident Financial Services Passes Through 5% Yield Mark

Nov -28

Source: forbes.com

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Provident Bank and The Provident Bank Foundation Launch Crisis Response Fund to Address Food Insecurity

Nov -25

Source: globenewswire.com

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Provident Financial Services: I'm Not Ready To Stop Banking On Upside

Nov -21

Source: seekingalpha.com

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Campbell & CO Investment Adviser LLC Takes Position in Provident Financial Services, Inc $PFS

Nov -18

Source: defenseworld.net

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Provident Financial Services, Inc $PFS Shares Acquired by Bank of New York Mellon Corp

Nov -16

Source: defenseworld.net

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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

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

A-Score: 6.3/10

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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Growth: 5.2

Quality: 5.0

Yield: 6.0

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Value: 4.8

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Quality: 4.6

Yield: 8.0

Momentum: 4.0

Volatility: 6.3

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A-Score: 5.4/10

Value: 9.1

Growth: 4.2

Quality: 4.2

Yield: 8.0

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ConnectOne

A-Score: 5.0/10

Value: 4.2

Growth: 5.0

Quality: 4.3

Yield: 6.0

Momentum: 4.0

Volatility: 6.7

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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

20.02$

Current Price

20.02$

Potential

-0.00%

Expected Cash-Flows