Provident Financial Services, Inc. Reports Third Quarter Earnings and Declares Quarterly Cash Dividend

Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $46.4 million, or $0.36 per basic and diluted share for the three months ended September 30, 2024, compared to a net loss of $11.5 million, or $0.11 per basic and diluted share, for the three months ended June 30, 2024 and net income of $28.5 million, or $0.38 per basic and diluted share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, net income totaled $67.0 million, or $0.65 per basic and diluted share, compared to $101.1 million, or $1.35 per basic and diluted share, for the nine months ended September 30, 2023.

The Company’s earnings for the three and nine months ended September 30, 2024 reflected 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 the trailing quarter due to the initial CECL provisions recorded on acquired loans.  The results of operations for the three and nine months ended September 30, 2024 also included other transaction costs related to the merger with Lakeland, totaling $15.6 million and $36.7 million, respectively, compared with transaction costs totaling $2.3 million and $5.3 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 nine months ended September 30, 2024.

Anthony J. Labozzetta, President and Chief Executive Officer commented, “We achieved solid performance this quarter, and we are optimistic that our results will continue to improve as we further realize the synergies of the merger.  Provident generated strong earnings and core metrics, aided by robust performance in our fee-based businesses. We continue to expand our operations prudently and believe we are well-positioned for even greater success as market conditions improve.”

Regarding the Company's merger with Lakeland, Mr. Labozzetta added, “We are proud to announce that, with the conversion of our core system in early September, our merger is complete and we are a unified organization. Our cultures are combining well and we are already experiencing the benefits of cost savings and enhanced revenue opportunities. We are grateful to the many team members whose hard work allowed for a smooth conversion and the retention of almost all legacy Lakeland customers.”

Performance Highlights for the Third Quarter of 2024

• Net interest income increased $42.2 million to $183.7 million for the three months ended September 30, 2024, from $141.5 million for the trailing quarter primarily due to the full quarter impact of net assets acquired from Lakeland, including the accretion of purchase accounting adjustments and four basis points of core margin expansion.  
• The net interest margin increased ten basis points to 3.31% for the quarter ended September 30, 2024, from 3.21% for the trailing quarter. The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 17 basis points to 5.84%, compared to the trailing quarter, while the weighted average cost of interest-bearing liabilities for the quarter ended September 30, 2024 increased ten basis points to 3.19%, compared to the trailing quarter. The increases in the yields and costs on interest-earning assets and interest-bearing liabilities were primarily due to a full quarter of accretion of purchase accounting adjustments related to the Lakeland merger, which contributed approximately 53 basis points to the net interest margin in the current quarter.
• Non-interest income increased $4.6 million to $26.9 million for the three months ended September 30, 2024, from $22.3 million for the trailing quarter, while non-interest expense increased $20.6 million to $136.0 million for the three months ended September 30, 2024, compared to $115.4 million for the trailing quarter.   The increases in both non-interest income and non-interest expense were reflective of a full quarter of combined operations with Lakeland.
• Wealth management and insurance agency income increased 9.0% and 12.6%, respectively, versus the same period in 2023. The increase in wealth management income was primarily due to an increase in the average market value of assets under management during the period, while the increase in insurance agency income was largely due to an increase in business activity.
• Adjusting 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 0.95%, 8.62% and 14.53% for the quarter ended September 30, 2024, compared to 0.06%, 0.53% and 2.01% for the quarter ended June 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios are 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 1.48%, 13.48% and 19.77% for the quarter ended September 30, 2024, compared to 1.47%, 13.26% and 19.21% for the quarter ended June 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios are shown on page 14 of the earnings release.
• As of September 30, 2024, the Company's loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.98 billion, with a weighted average interest rate of 7.18%, compared to $1.67 billion, with a weighted average interest rate of 7.53%, as of June 30, 2024.
• The Company recorded a $9.6 million provision for credit losses on loans for the quarter ended September 30, 2024, compared to a $66.1 million provision for the trailing quarter. The provision for credit losses on loans in the quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration. The allowance for credit losses as a percentage of loans increased to 1.02% as of September 30, 2024, from 1.00% as of June 30, 2024.
• As of September 30, 2024, CRE loans related to office properties totaled $921.1 million, compared to $953.5 million as of June 30, 2024. CRE loans secured by office properties constitutes only 4.9% of total loans and have an average loan size of $1.9 million, with just seven relationships greater than $10.0 million. There were four loans totaling $9.2 million on non-accrual as of September 30, 2024, however we do not expect to incur losses on any of these loans.
• As of September 30, 2024, multi-family CRE loans secured by New York City properties totaled $226.6 million, compared to $227.7 million as of June 30, 2024. This portfolio constitutes only 1.2% of total loans and has an average loan size of $2.6 million. Loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.
• Non-performing loans to total loans as of September 30, 2024 increased to 0.47%, compared to 0.36% as of June 30, 2024, while non-performing assets to total assets as of September 30, 2024 increased to 0.41%, compared to 0.33% as of June 30, 2024. The increase in non-performing loans, compared to the prior quarter was primarily attributable to one commercial real estate credit secured by an industrial property which has a loan-to-value ratio of approximately 39%. We anticipate a near-term resolution of this credit with no expected loss.   For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans. Of this total, $6.4 million was attributable to one previously identified commercial relationship that had a $4.4 million specific reserve as of June 30, 2024. This credit is expected to be fully resolved in the fourth quarter of 2024.

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on November 29, 2024 to stockholders of record as of the close of business on November 15, 2024.

Results of Operations

Three months ended September 30, 2024 compared to the three months ended June 30, 2024

For the three months ended September 30, 2024, the Company reported net income of $46.4 million, or $0.36 per basic and diluted share, compared to a net loss of $11.5 million, or $0.11 per basic and diluted share, for the three months ended June 30, 2024. The Company’s earnings for the prior quarter were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. The results of operations for the three months ended September 30, 2024 included transaction costs related to the merger with Lakeland totaling $15.6 million, compared with transaction costs totaling $18.9 million in the trailing quarter. Additionally, the Company realized a $2.8 million loss in the trailing quarter related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland.

Net Interest Income and Net Interest Margin

Net interest income increased $42.2 million to $183.7 million for the three months ended September 30, 2024, from $141.5 million for the trailing quarter. Net interest income for the three months ended September 30, 2024 was favorably impacted by a full quarter of combined operations with Lakeland and accretion of purchase accounting adjustments, compared to a 45 days impact in the prior quarter.

The Company’s net interest margin increased ten basis points to 3.31% for the quarter ended September 30, 2024, from 3.21% for the trailing quarter. Accretion of purchase accounting adjustments related to the Lakeland merger contributed 53 basis points to the net interest margin in the current quarter. The current net interest margin reflects a full quarter of the acquisition of Lakeland’s interest-bearing assets and liabilities, the prior quarter sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the prior quarter issuance of subordinated debt.

The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 17 basis points to 5.84%, compared to the trailing quarter. The weighted average cost of interest-bearing liabilities for the quarter ended September 30, 2024 increased ten basis points from the trailing quarter, to 3.19%. The average cost of interest-bearing deposits for the quarter ended September 30, 2024 increased 12 basis points to 2.96%, compared to 2.84% for the trailing quarter. The average cost of total deposits, including non-interest-bearing deposits, was 2.36% for the quarter ended September 30, 2024, compared to 2.27% for the trailing quarter. The average cost of borrowed funds for the quarter ended September 30, 2024 was 3.73%, compared to 3.83% for the quarter ended June 30, 2024. All yields and costs reflect a full quarter of combined operations with Lakeland.

Provision for Credit Losses on Loans

For the quarter ended September 30, 2024, the Company recorded a $9.6 million provision for credit losses on loans, compared with a provision for credit losses on loans of $66.1 million for the quarter ended June 30, 2024. The provision for credit losses on loans in the quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration, while the provision for credit losses on loans in the prior quarter was primarily attributable to an initial CECL provision for credit losses of $60.1 million, recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans.

Non-Interest Income and Expense

For the three months ended September 30, 2024, non-interest income totaled $26.9 million, an increase of $4.6 million, compared to the trailing quarter. Net gain on securities transactions increased $3.0 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to a $2.8 million loss realized on the sale from the Provident investment portfolio of subordinated debt issued by Lakeland in the prior quarter.   Fee income increased $1.1 million to $9.8 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to increases in deposit and debit card related fee income. The increases in fee income are primarily attributable to the addition of the Lakeland customer base. BOLI income increased $1.0 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to an increase in benefit claims recognized. Partially offsetting these increases in non-interest income, insurance agency income decreased $857,000 to $3.6 million for the three months ended September 30, 2024, compared to the trailing quarter, due to a seasonal decrease in business activity in the current quarter, while wealth management income decreased $149,000 to $7.6 million for the three months ended September 30, 2024, compared to the trailing quarter, mainly due to a seasonal decrease in tax preparation fees, partially offset by an increase in the average market value of assets under management during the period.

Non-interest expense totaled $136.0 million for the three months ended September 30, 2024, an increase of $20.6 million, compared to $115.4 million for the trailing quarter. Compensation and benefits expense increased $8.6 million to $63.5 million for the three months ended September 30, 2024, compared to $54.9 million for the trailing quarter. The increase in compensation and benefits expense was primarily attributable to a full quarter of combined operations with Lakeland, compared to 45 days in the prior quarter.   Amortization of intangibles increased $5.7 million to $12.2 million for the three months ended September 30, 2024, compared to $6.5 million for the trailing quarter, largely due to a full quarter of core deposit intangible amortization related to Lakeland.   Other operating expenses increased $4.5 million to $15.8 million for the three months ended September 30, 2024, compared to $11.3 million for the trailing quarter, primarily due to increases in professional service expenses. Data processing expense increased $2.0 million to $10.5 million for the three months ended September 30, 2024, compared to $8.4 million for the trailing quarter, primarily due a full quarter of combined operations with Lakeland, while net occupancy expense increased $1.6 million to $12.8 million for the three months ended September 30, 2024, compared to $11.1 million for the trailing quarter, primarily due to increases in maintenance and depreciation expenses from the addition of Lakeland.   Additionally, FDIC insurance increased $1.1 million to $4.2 million for the three months ended September 30, 2024, primarily resulting from the impact of the Lakeland merger. Partially offsetting these increases, merger-related expenses decreased $3.3 million to $15.6 million for the three months ended September 30, 2024, compared to the trailing quarter.

The Company’s annualized adjusted non-interest expense as a percentage of average assets(5) declined to 1.98% for the quarter ended September 30, 2024, compared to 2.02% for the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(6) improved to 57.20% for the three months ended September 30, 2024, compared to 57.86% for the trailing quarter.

Income Tax Expense/Benefit

For the three months ended September 30, 2024, the Company's income tax expense was $18.9 million, compared to an income tax benefit of $9.8 million for the trailing quarter. The increase in tax expense for the three months ended September 30, 2024 compared with the trailing quarter was largely due to an increase in taxable income in the current quarter as a result of the Lakeland merger and a $5.3 million tax benefit realized in the trailing quarter 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 September 30, 2024 compared to the three months ended September 30, 2023

For the three months ended September 30, 2024, the Company reported net income of $46.4 million, or $0.36 per basic and diluted share, compared to net income of $28.5 million, or $0.38 per basic and diluted share, for the three months ended September 30, 2023. The Company’s earnings for the quarter ended September 30, 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 $15.6 million and $2.3 million for the three months ended September 30, 2024 and 2023, respectively.

Net Interest Income and Net Interest Margin

Net interest income increased $87.5 million to $183.7 million for the three months ended September 30, 2024, from $96.2 million for same period in 2023. Net interest income for the three months ended September 30, 2024 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 both deposits and borrowings.

The Company’s net interest margin increased 35 basis points to 3.31% for the quarter ended September 30, 2024, from 2.96% for the same period last year. Accretion of purchase accounting adjustments related to the Lakeland merger contributed 53 basis points to the net interest margin in the current quarter.   The current quarter net interest margin reflects the acquisition of Lakeland’s interest bearing assets and liabilities, the prior quarter sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the prior quarter issuance of subordinated debt.

The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 95 basis points to 5.84%, compared to 4.89% for the quarter ended September 30, 2023. The weighted average cost of interest-bearing liabilities increased 69 basis points for the quarter ended September 30, 2024 to 3.19%, compared to 2.50% for the third quarter of 2023. The average cost of interest-bearing deposits for the quarter ended September 30, 2024 was 2.96%, compared to 2.22% for the same period last year. Average non-interest-bearing demand deposits increased $1.51 billion to $3.74 billion for the quarter ended September 30, 2024, compared to $2.23 billion for the quarter ended September 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.36% for the quarter ended September 30, 2024, compared with 1.74% for the quarter ended September 30, 2023. The average cost of borrowed funds for the quarter ended September 30, 2024 was 3.73%, compared to 3.74% for the same period last year.

Provision for Credit Losses on Loans

For the quarter ended September 30, 2024, the Company recorded a $9.6 million provision for credit losses on loans, compared with an $11.0 million provision for credit losses on loans for the quarter ended September 30, 2023.   The provision for credit losses on loans in the current quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration.   For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans.

Non-Interest Income and Expense

Non-interest income totaled $26.9 million for the quarter ended September 30, 2024, an increase of $7.5 million, compared to the same period in 2023. Fee income increased $3.7 million to $9.8 million for the three months ended September 30, 2024, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card related fee income and loan related fee income, resulting from the Lakeland merger.   BOLI income increased $2.5 million to $4.3 million for the three months ended September 30, 2024, compared to the prior year quarter, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI. Wealth management fees increased $628,000 to $7.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, mainly due to an increase in the average market value of assets under management during the period, while insurance agency income increased $407,000 to $3.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, largely due to an increase in business activity. Additionally, other income increased $339,000 to $1.5 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, primarily due to increases in gains on the sale of SBA and mortgage loans.

For the three months ended September 30, 2024, non-interest expense totaled $136.0 million, an increase of $70.4 million, compared to the three months ended September 30, 2023. Compensation and benefits expense increased $27.8 million to $63.5 million for the three months ended September 30, 2024, compared to $35.7 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 expenses increased $13.3 million to $15.6 million for the three months ended September 30, 2024, compared to the same period in 2023. Amortization of intangibles increased $11.5 million to $12.2 million for the three months ended September 30, 2024, compared to $720,000 for the same period in 2023, largely due to core deposit intangible amortization related to Lakeland in the current quarter. Data processing expenses increased $5.2 million to $10.5 million for three months ended September 30, 2024, compared to $5.3 million for the same period in 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland. Net occupancy expense increased $4.7 million to $12.8 million for three months ended September 30, 2024, compared to $8.1 million for the same period in 2023, primarily due to an increase in depreciation and maintenance expenses due to the addition of Lakeland.   Other operating expenses increased $5.0 million to $15.8 million for the three months ended September 30, 2024, compared to $10.7 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance increased $2.6 million to $4.2 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

The Company’s annualized adjusted non-interest expense as a percentage of average assets(5) was 1.98% for the quarter ended September 30, 2024, compared to 1.80% 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)(6) was 57.20% for the three months ended September 30, 2024 compared to 54.81% for the same respective period in 2023.

Income Tax Expense

For the three months ended September 30, 2024, the Company's income tax expense was $18.9 million with an effective tax rate of 28.9%, compared with an income tax expense of $8.8 million with an effective tax rate of 23.7% for the three months ended September 30, 2023. The increase in tax expense for the three months ended September 30, 2024, compared with the same period last year was largely due to an increase in taxable income in the quarter, as a result of the Lakeland merger and the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee in the prior quarter.

Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

For the nine months ended September 30, 2024, net income totaled $67.0 million, or $0.65 per basic and diluted share, compared to net income of $101.1 million, or $1.35 per basic and diluted share, for the nine months ended September 30, 2023. The Company’s earnings for the nine months ended September 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. Transaction costs related to our merger with Lakeland totaled $36.7 million and $5.3 million for the nine months ended September 30, 2024 and 2023, respectively. Additionally, the Company realized a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland, during the nine months ended September 30, 2024.

Net Interest Income and Net Interest Margin

Net interest income increased $115.2 million to $418.9 million for the nine months ended September 30, 2024, from $303.7 million for same period in 2023. Net interest income for the nine months ended September 30, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by the unfavorable repricing of both deposits and borrowings.

For the nine months ended September 30, 2024, our net interest margin decreased one basis point to 3.18%, compared to 3.19% for the nine months ended September 30, 2023. The weighted average yield on interest earning assets increased 85 basis points to 5.61% for the nine months ended September 30, 2024, compared to 4.76% for the nine months ended September 30, 2023, while the weighted average cost of interest-bearing liabilities increased 99 basis points to 3.06% for the nine months ended September 30, 2024, compared to 2.07% for the same period last year. The average cost of interest-bearing deposits increased 102 basis points to 2.84% for the nine months ended September 30, 2024, compared to 1.82% for the same period last year. Average non-interest-bearing demand deposits increased $514.3 million to $2.90 billion for the nine months ended September 30, 2024, compared with $2.38 billion for the nine months ended September 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.27% for the nine months ended September 30, 2024, compared with 1.40% for the nine months ended September 30, 2023. The average cost of borrowings for the nine months ended September 30, 2024 was 3.73%, compared to 3.29% for the same period last year.

Provision for Credit Losses on Loans

For the nine months ended September 30, 2024, the Company recorded a $75.9 million provision for credit losses on loans, compared with a provision for credit losses on loans of $27.4 million for the nine months ended September 30, 2023. The increased provision for credit losses on loans for the nine months ended September 30, 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 an improved economic forecast for the current nine-month period within our CECL model, compared to the same period last year. For the nine months ended September 30, 2024, net charge-offs totaled $9.1 million or an annualized eight basis points of average loans.

Non-Interest Income and Expense

For the nine months ended September 30, 2024, non-interest income totaled $69.9 million, an increase of $9.1 million compared to the same period in 2023. Fee income increased $6.1 million to $24.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in deposit fee income, debit and credit card related fee income and loan related fee income resulting from the Lakeland merger. BOLI income increased $4.6 million to $9.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI, while wealth management income increased $2.1 million to $22.9 million for the nine months ended September 30, 2024, compared to the same period in 2023, mainly due to an increase in the average market value of assets under management during the period. Additionally, insurance agency income increased $1.7 million to $12.9 million for the nine months ended September 30, 2024, compared to $11.2 million for the same period in 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 nine months ended September 30, 2024, primarily due to a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland. Other income decreased $2.4 million to $3.2 million for the nine months ended September 30, 2024, compared to $5.7 million for the same period in 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.

Non-interest expense totaled $323.2 million for the nine months ended September 30, 2024, an increase of $123.7 million, compared to $199.5 million for the nine months ended September 30, 2023. Compensation and benefits expense increased $48.7 million to $158.4 million for the nine months ended September 30, 2024, compared to $109.7 million for the nine months ended September 30, 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland.   Merger-related expenses increased $31.3 million to $36.7 million for the nine months ended September 30, 2024, compared to $5.3 million for the nine months ended September 30, 2023. Amortization of intangibles increased $17.2 million to $19.4 million for the nine months ended September 30, 2024, compared to $2.2 million for the nine months ended September 30, 2023, largely due to core deposit intangible amortization related to Lakeland. Data processing expense increased $9.2 million to $25.7 million for the nine months ended September 30, 2024, compared to $16.5 million for the nine months ended September 30, 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland, while net occupancy expense increased $8.0 million to $32.5 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland. Other operating expenses increased $5.6 million to $37.4 million for the three months ended September 30, 2024, compared to $31.8 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance increased $3.9 million to $9.6 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

Income Tax ExpenseFor the nine months ended September 30, 2024, the Company's income tax expense was $19.9 million with an effective tax rate of 22.9%, compared with $34.9 million with an effective tax rate of 25.7% for the nine months ended September 30, 2023. The decrease in tax expense for the nine months ended September 30, 2024 compared with the same period last year was largely due to a $5.8 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 as of September 30, 2024 were $89.9 million, or 0.47% of total loans, compared to $67.9 million, or 0.36% of total loans as of June 30, 2024 and $49.6 million, or 0.46% of total loans as of December 31, 2023. The $22.1 million increase in non-performing loans as of September 30, 2024, compared to the trailing quarter, consisted of a $10.4 million increase in non-performing commercial mortgage loans, an $8.9 million increase in non-performing commercial loans, a $1.5 million increase in non-performing construction loans, a $764,000 increase in non-performing residential mortgage loans, a $302,000 increase in non-performing multi-family loans and a $289,000 increase in non-performing consumer loans. As of September 30, 2024, impaired loans totaled $74.0 million with related specific reserves of $7.2 million, compared with impaired loans totaling $54.6 million with related specific reserves of $7.7 million as of June 30, 2024. As of December 31, 2023, impaired loans totaled $42.8 million with related specific reserves of $2.4 million.

As of September 30, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.02% of total loans, compared to 1.00% and 0.99% as of June 30, 2024 and December 31, 2023, respectively. The allowance for credit losses increased $84.0 million to $191.2 million as of September 30, 2024, from $107.2 million as of December 31, 2023. The increase in the allowance for credit losses on loans as of September 30, 2024 compared to December 31, 2023 was due to a $75.9 million provision for credit losses, 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 $9.1 million.

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

		September 30, 2024						June 30, 2024						December 31, 2023
		Number of Loans		PrincipalBalanceof Loans				Number of Loans		PrincipalBalanceof Loans				Number of Loans		PrincipalBalanceof Loans
		(Dollars in thousands)
Accruing past due loans:
30 to 59 days past due:
Commercial mortgage loans		2		$	430			3		$	1,707			1		$	825
Multi-family mortgage loans		—			—			—			—			1			3,815
Construction loans		—			—			—			—			—			—
Residential mortgage loans		23			5,020			9			1,714			13			3,429
Total mortgage loans		25			5,450			12			3,421			15			8,069
Commercial loans		14			1,952			20			3,444			6			998
Consumer loans		53			4,073			38			2,891			31			875
Total 30 to 59 days past due		92		$	11,475			70		$	9,756			52		$	9,942
60 to 89 days past due:
Commercial mortgage loans		1		$	641			3		$	1,231			—		$	—
Multi-family mortgage loans		—			—			—			—			1			1,635
Construction loans		—			—			—			—			—			—
Residential mortgage loans		11			1,991			10			2,193			8			1,208
Total mortgage loans		12			2,632			13			3,424			9			2,843
Commercial loans		9			1,240			6			1,146			3			198
Consumer loans		10			606			9			648			5			275
Total 60 to 89 days past due		31			4,478			28			5,218			17			3,316
Total accruing past due loans		123		$	15,953			98		$	14,974			69		$	13,258
Non-accrual:
Commercial mortgage loans		17		$	13,969			10		$	3,588			7		$	5,151
Multi-family mortgage loans		6			7,578			5			7,276			1			744
Construction loans		2			13,151			1			11,698			1			771
Residential mortgage loans		24			5,211			20			4,447			7			853
Total mortgage loans		49			39,909			36			27,009			16			7,519
Commercial loans		69			48,592			58			39,715			26			41,487
Consumer loans		32			1,433			24			1,144			10			633
Total non-accrual loans		150		$	89,934			118		$	67,868			52		$	49,639
Non-performing loans to total loans					0.47	%					0.36	%					0.46	%
Allowance for loan losses to total non-performing loans					217.09	%					277.50	%					215.96	%
Allowance for loan losses to total loans					1.02	%					1.00	%					0.99	%

As of September 30, 2024 and December 31, 2023, the Company held foreclosed assets of $9.8 million and $11.7 million, respectively. During the nine months ended September 30, 2024, there were three properties sold with an aggregate carrying value of $532,000 and one write-down of a foreclosed commercial property of $1.3 million. Foreclosed assets as of September 30, 2024 consisted primarily of commercial real estate. Total non-performing assets as of September 30, 2024 increased $36.6 million to $97.9 million, or 0.41% of total assets, from $61.3 million, or 0.43% of total assets as of December 31, 2023.

Balance Sheet Summary

Total assets as of September 30, 2024 were $24.04 billion, a $9.83 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 $18.79 billion as of September 30, 2024 and $10.87 billion as of December 31, 2023. The loan portfolio consisted of the following:

	September 30, 2024				June 30, 2024				December 31, 2023
	(Dollars in thousands)
Mortgage loans:
Commercial	$	7,342,456			$	7,337,742			$	4,512,411
Multi-family		3,226,918				3,189,808				1,812,500
Construction		873,509				970,244				653,246
Residential		2,032,671				2,024,027				1,164,956
Total mortgage loans		13,475,554				13,521,821				8,143,113
Commercial loans		4,710,601				4,617,232				2,440,621
Consumer loans		623,709				626,016				299,164
Total gross loans		18,809,864				18,765,069				10,882,898
Premiums on purchased loans		1,362				1,410				1,474
Net deferred fees and unearned discounts		(16,617	)			(7,149	)			(12,456	)
Total loans	$	18,794,609			$	18,759,330			$	10,871,916

As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments.   Compared to the prior quarter, during the three months ended September 30, 2024, the loan portfolio had net increases of $93.4 million of commercial loans, $37.1 million of multi-family loans, $8.6 million of residential mortgage loans, and $4.7 million of commercial mortgage loans, partially offset by net decreases of $96.7 million of construction loans and $2.3 million of consumer loans.   Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio as of September 30, 2024, compared to 86.5% as of December 31, 2023.

For the nine months ended September 30, 2024, loan funding, including advances on lines of credit, totaled $2.78 billion, compared with $2.53 billion for the same period in 2023.

As of September 30, 2024, the Company’s unfunded loan commitments totaled $2.97 billion, including commitments of $1.84 billion in commercial loans, $231.0 million in construction loans and $225.7 million in commercial mortgage loans. Unfunded loan commitments as of December 31, 2023 and September 30, 2023 were $2.09 billion and $2.18 billion, respectively.

The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.98 billion as of September 30, 2024, compared to $1.09 billion and $1.70 billion as of December 31, 2023 and September 30, 2023, respectively.

Total investment securities were $3.17 billion as of September 30, 2024, a $1.04 billion increase from December 31, 2023. This increase was primarily due to the addition of Lakeland.

Total deposits increased $8.08 billion during the nine months ended September 30, 2024, to $18.38 billion, due primarily to the addition of Lakeland. Total savings and demand deposit accounts increased $6.02 billion to $15.22 billion as of September 30, 2024, while total time deposits increased $2.06 billion to $3.16 billion as of September 30, 2024. The increase in savings and demand deposits was largely attributable to a $2.92 billion increase in interest bearing demand deposits, a $1.58 billion increase in non-interest bearing demand deposits, a $1.03 billion increase in money market deposits and a $495.5 million increase in savings deposits. The increase in time deposits consisted of a $2.01 billion increase in retail time deposits and a $46.5 million increase in brokered time deposits.

Borrowed funds increased $244.5 million during the nine months ended September 30, 2024, to $2.21 billion. The increase in deposits and borrowings was largely due to the addition of Lakeland. Borrowed funds represented 9.2% of total assets as of September 30, 2024, a decrease from 13.9% as of December 31, 2023.

Stockholders’ equity increased $930.5 million during the nine months ended September 30, 2024, to $2.62 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and an improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders. For the three and nine months ended September 30, 2024, common stock repurchases totaled 1,969 shares at an average cost of $16.36 per share and 88,821 shares at an average cost of $14.87 per share, respectively, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. As of September 30, 2024, approximately 1.0 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share(1) as of September 30, 2024 were $20.09 and $13.66, respectively, compared with $22.38 and $16.32, respectively, as of 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. Provident 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, October 30, 2024 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended September 30, 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 Current Reports on Form 8-K, 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 any turmoil or negative news 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, any failure to realize the anticipated benefits of the merger 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 return on average assets, average equity and average tangible equity, annualized adjusted pre-tax pre-provision return on average assets, average equity and 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 Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
		2024				2024				2023				2024				2023
Statement of Income
Net interest income	$	183,701			$	141,506			$	96,236			$	418,877			$	303,666
Provision for credit losses		9,299				69,705				12,541				78,684				29,031
Non-interest income		26,855				22,275				19,320				69,937				60,861
Non-interest expense		136,002				115,394				65,625				323,224				199,485
Income (loss) before income tax expense		65,255				(21,318	)			37,390				86,906				136,011
Net income (loss)		46,405				(11,485	)			28,547				67,001				101,086
Diluted earnings per share	$	0.36			$	(0.11	)		$	0.38			$	0.65			$	1.35
Interest rate spread		2.65	%			2.58	%			2.39	%			2.55	%			2.69	%
Net interest margin		3.31	%			3.21	%			2.96	%			3.18	%			3.19	%
Profitability
Annualized return on average assets		0.76	%		(0.24		)%			0.81	%			0.47	%			0.98	%
Annualized adjusted return on average assets (1)		0.95	%		0.06		%			0.86	%			0.66	%			1.02	%
Annualized return on average equity		6.94	%		(2.17		)%			6.84	%			4.14	%			8.22	%
Annualized adjusted return on average equity (1)		8.62	%		0.53		%			7.30	%			5.83	%			8.59	%
Annualized return on average tangible equity (4)		12.06	%		(3.15		)%			9.47	%			7.13	%			11.40	%
Annualized adjusted return on average tangible equity (1)		14.53	%			2.01	%			10.24	%			9.56	%			12.07	%
Annualized adjusted non-interest expense to average assets (4)		1.98	%			2.02	%			1.80	%			1.99	%			1.87	%
Efficiency ratio (6)		57.20	%			57.86	%			54.81	%			58.27	%			53.26	%
Asset Quality
Non-accrual loans					$	67,868							$	89,934			$	39,529
90+ and still accruing						—								—				—
Non-performing loans						67,868								88,061				39,529
Foreclosed assets						11,119								9,801				16,487
Non-performing assets						78,987								97,862				56,016
Non-performing loans to total loans						0.36	%							0.47	%			0.37	%
Non-performing assets to total assets						0.33	%							0.41	%			0.40	%
Allowance for loan losses					$	188,331							$	191,175			$	107,563
Allowance for loan losses to total non-performing loans						277.50	%							217.09	%			272.11	%
Allowance for loan losses to total loans						1.00	%							1.02	%			1.01	%
Net loan charge-offs	$	6,756			$	1,340			$	5,510			$	9,067			$	7,266
Annualized net loan charge-offs to average total loans		0.14	%			0.04	%			0.21	%			0.08	%			0.09	%
Average Balance Sheet Data
Assets	$	24,248,038			$	19,197,041			$	13,976,610			$	19,198,113			$	13,848,351
Loans, net		18,531,939				14,649,413				10,470,843				14,631,071				10,269,022
Earning assets		21,809,226				17,385,819				12,735,938				17,305,446				12,574,437
Core deposits		15,394,715				12,257,244				9,212,202				12,271,839				9,408,156
Borrowings		2,125,149				2,158,193				1,780,655				2,074,958				1,556,619
Interest-bearing liabilities		17,304,569				13,856,039				9,826,064				13,757,895				9,554,204
Stockholders' equity		2,660,470				2,127,469				1,654,920				2,163,856				1,645,093
Average yield on interest-earning assets		5.84	%			5.67	%			4.89	%			5.61	%			4.76	%
Average cost of interest-bearing liabilities		3.19	%			3.09	%			2.50	%			3.06	%			2.07	%

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												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
			2024				2024				2023				2024				2023
Net Income		$	46,405			$	(11,485	)		$	28,547			$	67,001			$	101,086
Merger-related transaction costs			15,567				18,915				2,289				36,684				5,349
Less: income tax expense			(4,306	)			(4,625	)			(486	)			(9,274	)			(1,015	)
Annualized adjusted net income		$	57,666			$	2,805			$	30,350			$	94,411			$	105,420
Less: Amortization of Intangibles (net of tax)		$	8,551			$	4,532			$	503			$	13,577			$	1,560
Annualized adjusted net income for annualized adjusted return on average tangible equity		$	66,217			$	7,337			$	30,853			$	107,988			$	106,980
Annualized Adjusted Return on Average Assets			0.95	%			0.06	%			0.86	%			0.66	%			1.02	%
Annualized Adjusted Return on Average Equity			8.62	%			0.53	%			7.30	%			5.83	%			8.59	%
Annualized Adjusted Return on Average Tangible Equity			14.53	%			2.01	%			10.24	%			9.56	%			12.07	%
(2) Annualized adjusted pre-tax, pre-provision ("PTPP") returns on average assets, average equity and average tangible equity
		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
			2024				2024				2023				2024				2023
Net income (loss)		$	46,405			$	(11,485	)		$	28,547			$	67,001			$	101,086
Adjustments to net income (loss):
Provision for credit losses			9,299				69,705				12,541				78,684				29,031
Net loss on Lakeland bond sale			—				2,839				—				—				—
Merger-related transaction costs			15,567				18,915				2,289				36,684				5,349
Income tax expense (benefit)			18,850				(9,833	)			8,843				19,905				34,925
PTPP income		$	90,121			$	70,141			$	52,220			$	202,274			$	170,391
Annualized PTPP income		$	358,525			$	282,106			$	207,177			$	270,191			$	227,812
Average assets		$	24,248,038			$	19,197,041			$	13,976,610			$	19,198,113			$	13,848,351
Average equity		$	2,660,470			$	2,127,469			$	1,654,920			$	2,163,856			$	1,645,093
Average tangible equity		$	1,813,327			$	1,468,630			$	1,195,787			$	1,508,594			$	1,185,222
Annualized PTPP return on average assets			1.48	%			1.47	%			1.48	%			1.41	%			1.65	%
Annualized PTPP return on average equity			13.48	%			13.26	%			12.52	%			12.49	%			13.85	%
Annualized PTPP return on average tangible equity			19.77	%			19.21	%			17.33	%			17.91	%			19.22	%
(3) Book and Tangible Book Value per Share
										September 30,				June 30,				December 31,
											2024				2024				2023
Total stockholders' equity										$	2,621,058			$	2,555,646			$	1,690,596
Less: total intangible assets											839,223				851,507				457,942
Total tangible stockholders' equity										$	1,781,835			$	1,704,139			$	1,232,654
Shares outstanding											130,448,599				130,380,393				75,537,186
Book value per share (total stockholders' equity/shares outstanding)										$	20.09			$	19.60			$	22.38
Tangible book value per share (total tangible stockholders' equity/shares outstanding)										$	13.66			$	13.07			$	16.32
(4) Annualized Return on Average Tangible Equity
		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
			2024				2024				2023				2024				2023
Total average stockholders' equity		$	2,660,470			$	2,127,469			$	1,654,920			$	2,163,856			$	1,645,093
Less: total average intangible assets			847,143				658,839				459,133				655,262				459,871
Total average tangible stockholders' equity		$	1,813,327			$	1,468,630			$	1,195,787			$	1,508,594			$	1,185,222
Net income (loss)		$	46,405			$	(11,485	)		$	28,547			$	67,001			$	101,086
Less: Amortization of Intangibles, net of tax			8,551				4,532				503				13,577				1,560
Total net income (loss)		$	54,956			$	(6,953	)		$	29,050			$	80,578			$	102,646
Annualized return on average tangible equity (net income/total average tangible stockholders' equity)			12.06	%		(1.90)        %					9.64	%			7.13	%			11.58	%
(5) Annualized Adjusted Non-Interest Expense to Average Assets
		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
			2024				2024				2023				2024				2023
Reported non-interest expense		$	136,002			$	115,394			$	65,625			$	323,224			$	199,485
Adjustments to non-interest expense:
Merger-related transaction costs			15,567				18,915				2,289				36,684				5,349
Adjusted non-interest expense		$	120,435			$	96,479			$	63,336			$	286,540			$	194,136
Annualized adjusted non-interest expense		$	479,122			$	388,036			$	251,279			$	382,751			$	259,559
Average assets		$	24,248,038			$	19,197,041			$	13,976,610			$	19,198,113			$	13,848,351
Annualized adjusted non-interest expense/average assets			1.98	%			2.02	%			1.80	%			1.99	%			1.87	%
(6) Efficiency Ratio Calculation
		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
			2024				2024				2023				2024				2023
Net interest income		$	183,701			$	141,506			$	96,236			$	418,877			$	303,666
Reported non-interest income			26,855				22,275				19,320				69,937				60,861
Adjustments to non-interest income:
Net (gain) loss on securities transactions			(2	)			2,973				13				2,972				(37	)
Adjusted non-interest income			26,853				25,248				19,333				72,909				60,824
Total income		$	210,554			$	166,754			$	115,569			$	491,786			$	364,490
Adjusted non-interest expense		$	120,435			$	96,479			$	63,336			$	286,540			$	194,136
Efficiency ratio (adjusted non-interest expense/income)			57.20	%			57.86	%			54.80	%			58.27	%			53.26	%

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
September 30, 2024 (Unaudited) and December 31, 2023
(Dollars in Thousands)
Assets	September 30, 2024				December 31, 2023
Cash and due from banks	$	244,064			$	180,241
Short-term investments		25				14
Total cash and cash equivalents		244,089				180,255
Available for sale debt securities, at fair value		2,725,110				1,690,112
Held to maturity debt securities, net of allowance (fair value of $322,427 as of September 30, 2024 (unaudited) and $352,601 as of December 31, 2023)		332,021				363,080
Equity securities, at fair value		20,044				1,270
Federal Home Loan Bank stock		96,219				79,217
Loans held for sale		5,757				1,785
Loans held for investment		18,794,609				10,871,916
Less allowance for credit losses		191,175				107,200
Net loans		18,609,191				10,766,501
Foreclosed assets, net		9,801				11,651
Banking premises and equipment, net		124,955				70,998
Accrued interest receivable		89,866				58,966
Intangible assets		839,223				457,942
Bank-owned life insurance		403,648				243,050
Other assets		548,348				287,768
Total assets	$	24,042,515			$	14,210,810
Liabilities and Stockholders' Equity
Deposits:
Demand deposits	$	13,548,480			$	8,020,889
Savings deposits		1,671,209				1,175,683
Certificates of deposit of $250,000 or more		800,005				218,549
Other time deposits		2,356,491				877,393
Total deposits		18,376,185				10,292,514
Mortgage escrow deposits		48,007				36,838
Borrowed funds		2,214,512				1,970,033
Subordinated debentures		414,184				10,695
Other liabilities		368,569				210,134
Total liabilities		21,421,457				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 130,448,599 shares outstanding as of September 30, 2024 and 75,537,186 outstanding as of December 31, 2023.		1,376				832
Additional paid-in capital		1,871,343				989,058
Retained earnings		972,997				974,542
Accumulated other comprehensive loss		(93,049	)			(141,115	)
Treasury stock		(129,148	)			(127,825	)
Unallocated common stock held by the Employee Stock Ownership Plan		(2,461	)			(4,896	)
Common Stock acquired by the Directors' Deferred Fee Plan		(2,247	)			(2,694	)
Deferred Compensation - Directors' Deferred Fee Plan		2,247				2,694
Total stockholders' equity		2,621,058				1,690,596
Total liabilities and stockholders' equity	$	24,042,515			$	14,210,810

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three months ended September 30, 2024, June 30, 2024 and September 30, 2023, and nine months ended September 30, 2024 and 2023 (Unaudited)
(Dollars in Thousands, except per share data)
	Three Months Ended										Nine Months Ended
	September 30,			June 30,				September 30,			September 30,				September 30,
		2024			2024				2023			2024				2023
Interest and dividend income:
Real estate secured loans	$	197,857		$	156,318			$	104,540		$	461,632			$	299,830
Commercial loans		81,183			58,532				33,806			175,815				93,915
Consumer loans		12,947			8,351				4,746			25,820				13,419
Available for sale debt securities, equity securities and Federal Home Loan Bank stock		25,974			20,394				11,886			58,698				34,748
Held to maturity debt securities		2,136			2,357				2,334			6,761				7,059
Deposits, federal funds sold and other short-term investments		2,425			1,859				885			5,466				2,678
Total interest income		322,522			247,811				158,197			734,192				451,649
Interest expense:
Deposits		110,009			81,058				44,923			243,602				108,880
Borrowed funds		19,923			20,566				16,765			57,871				38,329
Subordinated debt		8,889			4,681				273			13,842				774
Total interest expense		138,821			106,305				61,961			315,315				147,983
Net interest income		183,701			141,506				96,236			418,877				303,666
Provision charge for credit losses		9,299			69,705				12,541			78,684				29,031
Net interest income after provision for credit losses		174,402			71,801				83,695			340,193				274,635
Non-interest income:
Fees		9,816			8,699				6,132			24,426				18,294
Wealth management income		7,620			7,769				6,992			22,878				20,826
Insurance agency income		3,631			4,488				3,224			12,912				11,175
Bank-owned life insurance		4,308			3,323				1,820			9,448				4,838
Net gain (loss) on securities transactions		2			(2,973	)			13			(2,972	)			37
Other income		1,478			969				1,139			3,245				5,691
Total non-interest income		26,855			22,275				19,320			69,937				60,861
Non-interest expense:
Compensation and employee benefits		63,468			54,888				35,702			158,404				109,724
Net occupancy expense		12,790			11,142				8,113			32,452				24,474
Data processing expense		10,481			8,433				5,312			25,698				16,536
FDIC Insurance		4,180			3,100				1,628			9,553				5,688
Amortization of intangibles		12,231			6,483				720			19,420				2,231
Advertising and promotion expense		1,524			1,171				1,133			3,661				3,722
Merger-related expenses		15,567			18,915				2,289			36,684				5,349
Other operating expenses		15,761			11,262				10,728			37,352				31,761
Total non-interest expense		136,002			115,394				65,625			323,224				199,485
Income (loss) before income tax expense		65,255			(21,318	)			37,390			86,906				136,011
Income tax expense (benefit)		18,850			(9,833	)			8,843			19,905				34,925
Net income (loss)	$	46,405		$	(11,485	)		$	28,547		$	67,001			$	101,086
Basic earnings per share	$	0.36		$	(0.11	)		$	0.38		$	0.65			$	1.35
Average basic shares outstanding		129,941,845			102,957,521				74,909,083			102,819,042				74,793,530
Diluted earnings per share	$	0.36		$	(0.11	)		$	0.38		$	0.65			$	1.35
Average diluted shares outstanding		130,004,870			102,957,521				74,914,205			102,845,261				74,816,606

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Dollars in Thousands) (Unaudited)
	September 30, 2024									June 30, 2024									September 30, 2023
	Average Balance			Interest			Average Yield/Cost			Average Balance			Interest			Average Yield/Cost			Average Balance			Interest			Average Yield/Cost
Interest-Earning Assets:
Deposits	$	179,313		$	2,425		5.38	%		$	40,228		$	1,859		5.38	%		$	74,183		$	884		4.73	%
Federal funds sold and other short-term investments		—			—		—	%			0			—		—	%			57			1		4.00	%
Available for sale debt securities		2,644,262			24,884		3.72	%			2,244,725			17,647		3.14	%			1,724,833			10,127		2.35	%
Held to maturity debt securities, net (1)		342,217			2,136		2.50	%			352,216			2,357		2.68	%			373,681			2,334		2.50	%
Equity securities, at fair value		19,654			—		—	%			10,373			—		—	%			1,068			—		—	%
Federal Home Loan Bank stock		91,841			1,090		4.75	%			88,864			2,747		12.36	%			91,273			1,759		7.71	%
Net loans: (2)
Total mortgage loans		13,363,265			197,857		5.83	%			10,674,109			156,318		5.81	%			7,881,193			104,540		5.21	%
Total commercial loans		4,546,088			81,183		7.05	%			3,514,602			58,532		6.62	%			2,289,267			33,806		5.81	%
Total consumer loans		622,586			12,947		8.27	%			460,702			8,351		7.29	%			300,383			4,746		6.27	%
Total net loans		18,531,939			291,987		6.21	%			14,649,413			223,201		6.05	%			10,470,843			143,092		5.37	%
Total interest-earning assets	$	21,809,226		$	322,522		5.84	%		$	17,385,819		$	247,811		5.67	%		$	12,735,938		$	158,197		4.89	%
Non-Interest Earning Assets:
Cash and due from banks		341,505									37,621									82,522
Other assets		2,097,307									1,773,601									1,158,150
Total assets	$	24,248,038								$	19,197,041								$	13,976,610
Interest-Bearing Liabilities:
Demand deposits	$	9,942,053		$	74,864		3.00	%		$	7,935,543		$	58,179		2.95	%		$	5,741,052		$	35,290		2.44	%
Savings deposits		1,711,502			1,006		0.23	%			1,454,784			832		0.23	%			1,240,951			592		0.19	%
Time deposits		3,112,598			34,139		4.36	%			2,086,433			22,047		4.25	%			1,052,793			9,041		3.41	%
Total deposits		14,766,153			110,009		2.96	%			11,476,760			81,058		2.84	%			8,034,796			44,923		2.22	%
Borrowed funds		2,125,149			19,923		3.73	%			2,158,193			20,566		3.83	%			1,780,655			16,765		3.74	%
Subordinated debentures		413,267			8,889		8.56	%			221,086			4,681		8.52	%			10,613			273		10.24	%
Total interest-bearing liabilities		17,304,569			138,821		3.19	%			13,856,039			106,305		3.09	%			9,826,064			61,961		2.50	%
Non-Interest Bearing Liabilities:
Non-interest bearing deposits		3,741,160									2,866,917									2,230,199
Other non-interest bearing liabilities		541,839									346,616									265,427
Total non-interest bearing liabilities		4,282,999									3,213,533									2,495,626
Total liabilities		21,587,568									17,069,572									12,321,690
Stockholders' equity		2,660,470									2,127,469									1,654,920
Total liabilities and stockholders' equity	$	24,248,038								$	19,197,041								$	13,976,610
Net interest income				$	183,701								$	141,506								$	96,236
Net interest rate spread							2.65	%								2.58	%								2.39	%
Net interest-earning assets	$	4,504,657								$	3,529,780								$	2,909,874
Net interest margin (3)							3.31	%								3.21	%								2.96	%
Ratio of interest-earning assets to total interest-bearing liabilities	1.26x									1.25x									1.30x

(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.
	9/30/24			6/30/24			3/31/24			12/31/23			9/30/23
	3rd Qtr.			2nd Qtr.			1st Qtr.			4th Qtr.			3rd Qtr.
Interest-Earning Assets:
Securities	3.69	%		3.40	%		2.87	%		2.79	%		2.67	%
Net loans	6.21	%		6.05	%		5.51	%		5.50	%		5.37	%
Total interest-earning assets	5.84	%		5.67	%		5.06	%		5.04	%		4.89	%
Interest-Bearing Liabilities:
Total deposits	2.96	%		2.84	%		2.60	%		2.47	%		2.22	%
Total borrowings	3.73	%		3.83	%		3.60	%		3.71	%		3.74	%
Total interest-bearing liabilities	3.19	%		3.09	%		2.80	%		2.71	%		2.50	%
Interest rate spread	2.65	%		2.58	%		2.26	%		2.33	%		2.39	%
Net interest margin	3.31	%		3.21	%		2.87	%		2.92	%		2.96	%
Ratio of interest-earning assets to interest-bearing liabilities	1.26x			1.25x			1.28x			1.28x			1.30x

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Dollars in Thousands) (Unaudited)
	September 30, 2024									September 30, 2023
	Average						Average			Average						Average
	Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-Earning Assets:
Deposits	$	39,280		$	5,466		5.38	%		$	69,696		$	2,676		5.13	%
Federal funds sold and other short term investments		—			—		—	%			58			2		5.34	%
Available for sale debt securities		2,189,671			52,553		3.19	%			1,777,861			30,819		2.31	%
Held to maturity debt securities, net (1)		350,529			6,761		2.57	%			379,144			7,059		2.48	%
Equity securities, at fair value		10,050			—		—	%			1,022			—		—	%
Federal Home Loan Bank stock		84,845			6,145		9.66	%			77,634			3,929		6.75	%
Net loans: (2)
Total mortgage loans		10,682,974			461,632		5.70	%			7,740,591			299,830		5.12	%
Total commercial loans		3,487,600			175,815		6.69	%			2,225,725			93,915		5.60	%
Total consumer loans		460,497			25,820		7.49	%			302,706			13,419		5.93	%
Total net loans		14,631,071			663,267		5.99	%			10,269,022			407,164		5.25	%
Total interest-earning assets	$	17,305,446		$	734,192		5.61	%		$	12,574,437		$	451,649		4.76	%
Non-Interest Earning Assets:
Cash and due from banks		229,336									121,801
Other assets		1,663,331									1,152,113
Total assets	$	19,198,113								$	13,848,351
Interest-Bearing Liabilities:
Demand deposits	$	7,931,251		$	174,609		2.94	%		$	5,710,855		$	85,822		2.01	%
Savings deposits		1,444,135			2,476		0.23	%			1,315,157			1,582		0.16	%
Time deposits		2,091,806			66,517		4.25	%			961,010			21,476		2.99	%
Total deposits		11,467,192			243,602		2.84	%			7,987,022			108,880		1.82	%
Borrowed funds		2,074,958			57,871		3.73	%			1,556,619			38,329		3.29	%
Subordinated debentures		215,745			13,842		8.57	%			10,563			774		9.80	%
Total interest-bearing liabilities	$	13,757,895		$	315,315		3.06	%		$	9,554,204		$	147,983		2.07	%
Non-Interest Bearing Liabilities:
Non-interest bearing deposits		2,896,453									2,382,144
Other non-interest bearing liabilities		379,909									266,910
Total non-interest bearing liabilities		3,276,362									2,649,054
Total liabilities		17,034,257									12,203,258
Stockholders' equity		2,163,856									1,645,093
Total liabilities and stockholders' equity	$	19,198,113								$	13,848,351
Net interest income				$	418,877								$	303,666
Net interest rate spread							2.55	%								2.69	%
Net interest-earning assets	$	3,547,551								$	3,020,233
Net interest margin (3)							3.18	%								3.19	%
Ratio of interest-earning assets to total interest-bearing liabilities	1.26x									1.32x
(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.
	Nine Months Ended
	September 30, 2024			September 30, 2023			September 23, 2022
Interest-Earning Assets:
Securities	3.33	%		2.57	%		1.72	%
Net loans	5.99	%		5.25	%		4.01	%
Total interest-earning assets	5.61	%		4.76	%		3.51	%
Interest-Bearing Liabilities:
Total deposits	2.84	%		1.82	%		0.33	%
Total borrowings	3.73	%		3.29	%		0.97	%
Total interest-bearing liabilities	3.06	%		2.07	%		0.38	%
Interest rate spread	2.55	%		2.69	%		3.13	%
Net interest margin	3.18	%		3.19	%		3.24	%
Ratio of interest-earning assets to interest-bearing liabilities	1.26x			1.32x			1.38x

SOURCE: Provident Financial Services, Inc. CONTACT: Investor Relations, 1-732-590-9300 Web Site: http://www.Provident.Bank