Provident Financial Services (NYSE:PFS) outlined record revenue, improving profitability, and continued balance sheet momentum during its fourth-quarter earnings call, while also providing initial guidance for 2026 and discussing capital deployment priorities and a planned core systems conversion.
Fourth-quarter results highlighted by record revenue and profitability
President and CEO Tony Labozzetta said the company delivered “another strong quarter,” citing record revenues, favorable credit metrics, and expanding core profitability. Provident reported fourth-quarter net earnings of $83 million, or $0.64 per share. The company posted an annualized return on average assets (ROA) of 1.34% and an adjusted return on average tangible common equity of 17.6%.
Net interest margin trends and 2026 outlook
Lyons said average earning assets rose by $307 million (annualized 5.4%) versus the prior quarter, while the average yield on assets declined 10 basis points to 5.66%. However, he said that decline was more than offset by a 13 basis point decrease in the cost of interest-bearing liabilities to 2.83%.
Provident’s reported net interest margin expanded 1 basis point to 3.44%, which Lyons said was limited by lower purchase accounting accretion. On a core basis, the net interest margin rose seven basis points to 3.01%, and the core margin for December trended higher at 3.05%. Management said the bank maintains a “largely neutral” interest-rate-risk position but expects its core margin to benefit from recent Federal Reserve rate cuts and a potentially steeper yield curve.
Looking ahead, Lyons said the company is projecting core NIM expansion of 3–5 basis points for the next two quarters and estimated reported NIM of 3.4%–3.5% for 2026. He also said loan purchase accounting accretion on the loan book is expected to be about $60 million for full-year 2026, with variability depending on prepayments.
Loan growth, deposit competition, and pipeline positioning
Labozzetta said Provident’s commercial loan team generated $3.2 billion of total new loan production in 2025, while elevated loan payoffs of $1.3 billion—primarily in commercial real estate—partially offset originations. The result was net commercial loan growth of 5.5% for the year.
At year-end, Labozzetta said the loan pipeline was $2.7 billion with a weighted average rate of 6.22% and noted the pipeline has been above $2.5 billion for four straight quarters. Lyons, referencing a pull-through adjusted measure, cited a quarter-end pipeline of $1.5 billion with the same 6.22% rate, which he said was accretive to the current portfolio yield of 5.98%.
Deposits also grew in the quarter. Labozzetta said core deposits increased $260 million, or 6.6% annualized, compared with the linked quarter, and average non-interest-bearing deposits increased 2% annualized. Lyons added that period-end deposits rose $182 million (annualized 3.8%), while average deposits increased $786 million (annualized 16.5%) versus the prior quarter. The average cost of total deposits decreased 4 basis points to 2.1%, and the total cost of funds fell 10 basis points to 2.34%.
During Q&A, Labozzetta said deposit competition in Provident’s markets remains “universal,” emphasizing that banks continue to compete for non-interest-bearing demand and low-cost funding. He pointed to growth in commercial deposits and said the company believes it can “win your share” with the right talent and approach.
Credit performance, fee income gains, and capital actions
Management said credit metrics improved. Labozzetta said the company resolved $22 million of non-performing loans with $1.3 million of associated net charge-offs, and non-performing assets improved to 0.32%. Lyons similarly reported non-performing assets declined by $22 million, or 22%, to 32 basis points of total assets. Net charge-offs were $4.2 million (annualized 9 basis points of average loans) in the quarter, while full-year 2025 net charge-offs were seven basis points. Provident recorded a net negative provision for credit losses of $1.2 million, which Lyons attributed to year-end loan closings reducing commitments pending closing, improved asset quality, and a modestly improved CECL forecast. The allowance coverage ratio ended the year at 95 basis points of loans.
Non-interest income reached a record $28.3 million in the quarter. Labozzetta highlighted growth across multiple lines, including Provident Protection Plus, Beacon Trust, and SBA loan sales. Beacon Trust revenue increased to $7.6 million on approximately $4.2 billion of assets under management. Lyons said non-interest income reflected gains on calls of corporate securities, wealth and insurance performance, SBA gains, and higher core banking fees. Management said SBA gains on sale were $946,000 in the quarter and $2.8 million for full-year 2025, up from $905,000 in 2024.
Provident announced a new share repurchase authorization to buy back an additional 2 million shares, which management tied to capital strength and continued capital formation. Tangible book value per share increased $0.57, or 3.8%, to $15.70, and the tangible common equity ratio rose to 8.48% from 8.22%.
2026 guidance, hiring priorities, and core system conversion
For 2026, Lyons guided to:
- Loan and deposit growth of 4%–6%
- Non-interest income averaging $28.5 million per quarter
- Core ROA of 1.20%–1.30%
- Mid-teens return on average tangible common equity
Lyons said Provident expects quarterly core operating expenses of approximately $118 million to $120 million in 2026, with a slightly higher run rate in the second half. He also said the company expects about $5 million of additional non-recurring charges tied to the core systems upgrade, largely in the third and fourth quarters.
Labozzetta said Provident plans to continue investing in revenue-producing talent across middle market banking, treasury management, SBA, wealth management, and insurance. He said hiring emphasis in 2026 includes expanding middle market coverage (roughly $75 million to $500 million client size), and he suggested the bank could add “three to five” additional complements over the year while remaining focused on positive operating leverage.
On technology, management said the company is preparing for a core system conversion scheduled for Labor Day weekend of 2026, moving to the FIS IBS platform. Labozzetta described the system as commercial-oriented and said the conversion is intended to enhance scalability, digital capabilities, and process efficiency.
About Provident Financial Services (NYSE:PFS)
Provident Financial Services, Inc is the bank holding company for Provident Bank, a regional commercial bank headquartered in Jersey City, New Jersey. The company operates a network of full-service branches across New Jersey, the New York metropolitan area and eastern Pennsylvania, offering a range of personal and business banking solutions.
Its core products and services include checking and savings accounts, consumer and residential mortgage loans, commercial real estate financing and small-business lending.
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