EX-99.1 2 a063023earningsrelease.htm EX-99.1 Document

Provident Financial Services, Inc. Announces Second Quarter Earnings
and Declares Quarterly Cash Dividend

ISELIN, NJ, July 27, 2023 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $32.0 million, or $0.43 per basic and diluted share for the three months ended June 30, 2023, compared to $40.5 million, or $0.54 per basic and diluted share, for the three months ended March 31, 2023 and $39.2 million, or $0.53 per basic and diluted share, for the three months ended June 30, 2022. For the six months ended June 30, 2023, net income totaled $72.5 million, or $0.97 per basic and diluted share, compared to $83.2 million, or $1.11 per basic and diluted share, for the six months ended June 30, 2022. Net income for the three and six months ended June 30, 2023 was negatively impacted by an increase in funding costs and an increase in the provision for credit losses due to a worsened economic forecast. In addition, transaction costs related to our pending merger with Lakeland Bancorp, Inc. (“Lakeland”) totaled $2.0 million and $3.1 million for the three and six months ended June 30, 2023, respectively.
Performance Highlights for the Second Quarter of 2023
•The Company’s total loan portfolio increased $306.3 million, or 12.0% annualized, to $10.53 billion at June 30, 2023, from $10.22 billion at March 31, 2023.
•At June 30, 2023, the Company's loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.74 billion, with a weighted average interest rate of 7.23%, compared to $1.54 billion, with a weighted average interest rate of 6.74%.
•The average yield on total loans increased 12 basis points to 5.24% for the quarter ended June 30, 2023, compared to the trailing quarter, while the average cost of deposits, including non-interest bearing deposits, increased 37 basis points to 1.42% for the quarter ended June 30, 2023 from the trailing quarter.
•Net interest income decreased $9.2 million to $99.1 million for the three months ended June 30, 2023, from $108.3 million for the trailing quarter as a result of higher funding costs, which more than offset the benefits of favorable loan repricing and loan growth.
•The net interest margin decreased 37 basis points to 3.11% for the quarter ended June 30, 2023, from 3.48% for the trailing quarter. The weighted average yield on interest-earning assets for the quarter ended June 30, 2023 increased 10 basis points to 4.73%, compared to the trailing quarter, while the weighted average cost of interest-bearing liabilities for the quarter ended June 30, 2023 increased 59 basis points to 2.13%, compared to the trailing quarter. The increase in funding costs reflected a decrease in lower-costing deposits, an increase in borrowings and unfavorable repricing in both deposits and borrowings.
•During the three months ended June 30, 2023, additional balances from traditional non-interest and interest bearing demand deposits transitioned into our insured cash sweep ("ICS") product, as a method to increase the level of customers' deposit insurance in light of recent banking turmoil. As of June 30, 2023 our ICS deposits totaled $382.9 million, compared to $58.9 million at December 31, 2022. Our estimated uninsured and uncollateralized deposits at June 30, 2023 totaled $2.72 billion. At June 30, 2023, Provident Bank had on balance sheet liquidity and borrowing capacity totaling $3.82 billion, representing 140% of estimated uninsured and uncollateralized deposits. All borrowing capacity is immediately available.
•At June 30, 2023, CRE loans related to retail, industrial, office, and hotel properties totaled $1.70 billion, $1.12 billion, $487.9 million and $152.1 million, respectively. At March 31, 2023 CRE loans related to retail, industrial, office, and hotel properties totaled $1.65 billion, $1.13 billion, $502.3 million and $167.4 million, respectively. Construction loans, consisting primarily of multi-family projects, decreased $8.3 million to $707.2 million at June 30, 2023, from $715.5 million at December 31, 2022.
•The Company recorded a $10.4 million provision for credit losses for the quarter ended June 30, 2023, compared to a $6.0 million provision for the trailing quarter. The provision for credit losses in the quarter was primarily attributable to a weakening economic forecast within our CECL model. Asset quality metrics
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were stable, with annualized net charge-offs totaling 4 basis points for the quarter. The allowance for credit losses as a percentage of loans increased to 0.97% at June 30, 2023, from 0.91% at March 31, 2023.
•Tangible book value per share(1) increased $0.02 to $15.66 at June 30, 2023, compared to the trailing quarter.
•Annualized returns on average assets, average equity and average tangible equity were 0.93%, 7.76% and 10.75%, respectively for the three months ended June 30, 2023, compared with 1.20%, 10.11% and 14.10%, respectively for the trailing quarter.
•The Company's annualized adjusted pre-tax, pre-provision ("PTPP") return on average assets(1) was 1.60% for the quarter ended June 30, 2023, compared to 1.86% for the quarter ended March 31, 2023.
Anthony J. Labozzetta, President and Chief Executive Officer commented, “Provident produced good financial results this quarter, despite unfavorable market conditions. We were pleased by the growth in our loans and loan pipeline, solid performance from our fee businesses, and prudent expense management. While increased interest rates and a shift in the funding mix have adversely impacted our net interest margin, our interest rate risk management remains sound. An increased provision for loan losses largely driven by changes in our CECL forecast also impacted the quarter’s results, however asset quality remains strong and stable. Our results demonstrate the strength of our franchise and talented management team.”
Regarding the Company's pending merger with Lakeland, Mr. Labozzetta added, “We continue our interaction with the regulators and have been providing additional information in order to further support our applications for approval of the merger. The companies have made significant progress in various integration initiatives through outstanding teamwork from both banks. We look forward to receiving regulatory approval and combining our two great franchises into the best bank in New Jersey.”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on August 25, 2023 to stockholders of record as of the close of business on August 11, 2023.
Results of Operations
Three months ended June 30, 2023 compared to the three months ended March 31, 2023
For the three months ended June 30, 2023, net income was $32.0 million, or $0.43 per basic and diluted share, compared to net income of $40.5 million, or $0.54 per basic and diluted share, for the three months ended March 31, 2023.
Net Interest Income and Net Interest Margin
Net interest income decreased $9.2 million to $99.1 million for the three months ended June 30, 2023, from $108.3 million for the trailing quarter. The decrease in net interest income was primarily due to a decrease in lower-costing deposits and an increase in borrowings, combined with unfavorable repricing of both deposits and borrowings, partially offset by originations of new loans at current market rates and the favorable repricing of adjustable rate loans.
The Company’s net interest margin decreased 37 basis points to 3.11% for the quarter ended June 30, 2023, from 3.48% for the trailing quarter. The weighted average yield on interest-earning assets for the quarter ended June 30, 2023 increased 10 basis points to 4.73%, compared to the trailing quarter. The weighted average cost of interest-bearing liabilities for the quarter ended June 30, 2023 increased 59 basis points from the trailing quarter, to 2.13%. The average cost of interest-bearing deposits for the quarter ended June 30, 2023 increased 46 basis points to 1.85%, compared to 1.39% for the trailing quarter. The average cost of total deposits, including non-interest bearing deposits, was 1.42% for the quarter ended June 30, 2023, compared to 1.05% for the trailing quarter. The average cost of borrowed funds for the quarter ended June 30, 2023 was 3.41%, compared to 2.48% for the quarter ended March 31, 2023.
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Provision for Credit Losses
For the quarter ended June 30, 2023, the Company recorded a $10.4 million provision for credit losses, compared with a provision for credit losses of $6.0 million for the quarter ended March 31, 2023. The provision for credit losses in the quarter was primarily attributable to a worsened economic forecast and related deterioration in the projected commercial property price indices over the expected life of the loan portfolio within our CECL model. Loan growth of $306.3 million and an increase in specific reserves on impaired credits further contributed to the increased provision for credit losses for this quarter.
Non-Interest Income and Expense
For the three months ended June 30, 2023, non-interest income totaled $19.4 million, a decrease of $2.8 million, compared to the trailing quarter. Other income decreased $2.0 million to $1.3 million for the three months ended June 30, 2023, compared to the trailing quarter, primarily due to a $2.0 million gain recognized in the prior quarter, related to the resolution of certain post-closing conditions following the September 2022 sale of a foreclosed commercial property, along with a reduction in the gains on sale of SBA loans. Fee income decreased $612,000 to $5.8 million for the three months ended June 30, 2023, compared to the trailing quarter, primarily due to decreases in deposit fee income and commercial loan prepayment fees. Additionally, insurance agency income decreased $255,000 to $3.8 million for the three months ended June 30, 2023, compared to the trailing quarter, mainly due to the prior quarter receipt of contingent commissions, partially offset by new business activity in the current quarter.
Non-interest expense totaled $64.5 million for the three months ended June 30, 2023, a decrease of $5.0 million, compared to $69.5 million for the trailing quarter. Compensation and benefits expense decreased $3.5 million to $35.3 million for the three months ended June 30, 2023, compared to $38.7 million for the trailing quarter. The decrease in compensation and benefit expense was primarily attributable to decreases in the accrual for incentive compensation, payroll taxes and stock-based compensation. For the three months ended June 30, 2023, the Company recorded a $647,000 negative provision for credit losses for off-balance sheet credit exposures, compared to a $739,000 provision for the trailing quarter. The $1.4 million decrease in the provision for credit losses for the quarter was primarily due to an increase in line of credit utilization, partially offset by an increase in loans approved and awaiting closing. Additionally, other non-interest expense decreased $1.1 million to $9.9 million for the three months ended June 30, 2023, compared to the trailing quarter, mainly due to prior quarter charges related to the disposal of a former branch office, combined with prior quarter miscellaneous charges. Partially offsetting these decreases, merger expenses related to our pending combination with Lakeland increased $860,000 to $2.0 million for the three months ended June 30, 2023, compared to the trailing quarter.
The Company’s annualized adjusted non-interest expense as a percentage of average assets(1) was 1.83% for the quarter ended June 30, 2023, compared to 2.00% for the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(1) was 53.29% for the three months ended June 30, 2023, compared to 51.85% for the trailing quarter.
Income Tax Expense
For the three months ended June 30, 2023, the Company's income tax expense was $11.6 million with an effective tax rate of 26.7%, compared with income tax expense of $14.5 million with an effective tax rate of 26.3% for the trailing quarter. The decrease in tax expense for the three months ended June 30, 2023, compared with the trailing quarter was largely due to a decrease in taxable income, while the increase in the effective tax rate, compared with the trailing quarter was primarily due to an increase in non-deductible merger related transaction costs.
Three months ended June 30, 2023 compared to the three months ended June 30, 2022
For the three months ended June 30, 2023, net income was $32.0 million, or $0.43 per basic and diluted share, compared to net income of $39.2 million, or $0.53 per basic and diluted share, for the three months ended June 30, 2022.
Net Interest Income and Net Interest Margin
Net interest income decreased $369,000 to $99.1 million for the three months ended June 30, 2023, from $99.5 million for same period in 2022. The decrease in net interest income was primarily due to a decrease in lower-costing
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deposits and an increase in borrowings, combined with unfavorable repricing of both deposits and borrowings, partially offset by originations of new loans and the favorable repricing of adjustable rate loans.
The Company’s net interest margin decreased 10 basis points to 3.11% for the quarter ended June 30, 2023, from 3.21% for the same period last year. The weighted average yield on interest-earning assets for the quarter ended June 30, 2023 increased 130 basis points to 4.73%, compared to 3.43% for the quarter ended June 30, 2022. The weighted average cost of interest bearing liabilities increased 182 basis points for the quarter ended June 30, 2023 to 2.13%, compared to 0.31% for the second quarter of 2022. The average cost of interest bearing deposits for the quarter ended June 30, 2023 was 1.85%, compared to 0.27% for the same period last year. Average non-interest bearing demand deposits decreased $407.5 million to $2.37 billion for the quarter ended June 30, 2023, compared to $2.78 billion for the quarter ended June 30, 2022. The average cost of total deposits, including non-interest bearing deposits, was 1.42% for the quarter ended June 30, 2023, compared with 0.20% for the quarter ended June 30, 2022. The average cost of borrowed funds for the quarter ended June 30, 2023 was 3.41%, compared to 0.84% for the same period last year.
Provision for Credit Losses
For the quarter ended June 30, 2023, the Company recorded a $10.4 million provision for credit losses, compared with a $3.0 million provision for credit losses for the quarter ended June 30, 2022. The increase in the allowance for credit losses on loans was primarily attributable to a worsened economic forecast and related deterioration in the projected commercial property price indices over the expected life of the loan portfolio within our CECL model, combined with an increase in total loans outstanding.
Non-Interest Income and Expense
Non-interest income totaled $19.4 million for the quarter ended June 30, 2023, a decrease of $1.5 million, compared to the same period in 2022. Fee income decreased $1.6 million to $5.8 million for the three months ended June 30, 2023, compared to the trailing quarter, primarily due to decreases in commercial loan prepayment fees and deposit fee income. Other income decreased $647,000 to $1.3 million for the three months ended June 30, 2023, compared to the quarter ended June 30, 2022, primarily due to a decrease in net gains on sales of SBA loans. Partially offsetting these decreases in non-interest income, insurance agency income increased $997,000 to $3.8 million for the three months ended June 30, 2023, compared to the quarter ended June 30, 2022, largely due to strong retention revenue and new business activity.
For the three months ended June 30, 2023, non-interest expense totaled $64.5 million, an increase of $617,000, compared to the three months ended June 30, 2022. Merger-related expenses totaled $2.0 million for the three months ended June 30, 2023, as a result of transaction costs related to our pending combination with Lakeland. FDIC insurance expense increased $775,000 to $2.1 million for the three months ended June 30, 2023, compared to the same period in 2022, primarily due to an increase in the assessment rate. The Company recorded a $647,000 negative provision for credit losses for off-balance sheet credit exposures, compared to a $973,000 negative provision for the same period in 2022. The $326,000 reduction in the provision benefit was primarily the result of the period-over-period relative changes in line of credit utilization. Partially offsetting these increases in non-interest expense, compensation and benefits expense decreased $2.2 million to $35.3 million for three months ended June 30, 2023, compared to $37.4 million for the same period in 2022. The decrease was principally due to decreases in the accrual for incentive compensation and stock-based compensation, partially offset by an increase in salary expense. Net occupancy expenses decreased $530,000 to $7.9 million for the three months ended June 30, 2023, compared to the same period in 2022, largely due to decreases in depreciation and maintenance expenses.
The Company’s annualized adjusted non-interest expense as a percentage of average assets(1) was 1.83% for the quarter ended June 30, 2023, compared to 1.92% for the same period in 2022. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)(1) was 53.29% for the three months ended June 30, 2023 compared to 53.83% for the same respective period in 2022.
Income Tax Expense
For the three months ended June 30, 2023, the Company's income tax expense was $11.6 million with an effective tax rate of 26.7%, compared with $14.3 million with an effective tax rate of 26.8% for the three months ended June 30,
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2022. The decrease in tax expense for the three months ended June 30, 2023, compared with the same period last year was largely the result of a decrease in taxable income, while the decrease in the effective tax rate for the three months ended June 30, 2023, compared with the three months ended June 30, 2022, was largely due to a decrease in the proportion of income derived from taxable sources.
Six Months Ended June 30, 2023 compared to the six months ended June 30, 2022
For the six months ended June 30, 2023, net income totaled $72.5 million, or $0.97 per basic and diluted share, compared to net income of $83.2 million, or $1.11 per basic and diluted share, for the six months ended June 30, 2022.
Net Interest Income and Net Interest Margin
Net interest income increased $13.4 million to $207.4 million for the six months ended June 30, 2023, from $194.0 million for same period in 2022. The increase in net interest income for the six months ended June 30, 2023 was primarily driven by an increase in the net interest margin resulting from 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, a decrease in lower-costing deposits and an increase in borrowings. Additionally, fees related to the forgiveness of PPP loans, which are recognized in interest income, were approximately $4,000 for the six months ended June 30, 2023, compared to $1.3 million for the six months ended June 30, 2022.
For the six months ended June 30, 2023, the net interest margin increased 18 basis points to 3.29%, compared to 3.11% for the six months ended June 30, 2022. The weighted average yield on interest earning assets increased 135 basis points to 4.68% for the six months ended June 30, 2023, compared to 3.33% for the six months ended June 30, 2022, while the weighted average cost of interest bearing liabilities increased 154 basis points to 1.84% for the six months ended June 30, 2023, compared to 0.30% for the same period last year. The average cost of interest bearing deposits increased 136 basis points to 1.62% for the six months ended June 30, 2023, compared to 0.26% for the same period last year. Average non-interest bearing demand deposits decreased $321.9 million to $2.46 billion for the six months ended June 30, 2023, compared with $2.78 billion for the six months ended June 30, 2022. The average cost of total deposits, including non-interest bearing deposits, was 1.24% for the six months ended June 30, 2023, compared with 0.19% for the six months ended June 30, 2022. The average cost of borrowings for the six months ended June 30, 2023 was 3.01%, compared to 0.85% for the same period last year.
Provision for Credit Losses
For the six months ended June 30, 2023, the Company recorded a $16.4 million provision for credit losses related to loans, compared with a negative provision for credit losses of $3.4 million for the six months ended June 30, 2022. The increase in the allowance for credit losses on loans was attributable to a worsened economic forecast and related deterioration in the projected commercial property price indices over the expected life of the loan portfolio within our CECL model, combined with an increase in total loans outstanding.
Non-Interest Income and Expense
For the six months ended June 30, 2023, non-interest income totaled $41.5 million, an increase of $462,000, compared to the same period in 2022. Insurance agency income increased $1.7 million to $8.0 million for the six months ended June 30, 2023, compared to $6.3 million for the same period in 2022, largely due to increases in contingent commissions, retention revenue and new business activity. Other income increased $1.4 million to $4.6 million for the six months ended June 30, 2023, compared to $3.1 million for the same period in 2022, mainly due to a $2.0 million gain related to the resolution of certain post-closing conditions following the September 2022 sale of a foreclosed commercial property, combined with an increase in the gains on sales of SBA loans, partially offset by a decrease in net fees on loan-level interest rate swap transactions. Additionally, BOLI income increased $277,000 to $3.0 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to greater equity valuations, partially offset by a decrease in benefit claims recognized. Partially offsetting these increases to non-interest income, fee income decreased $2.2 million to $12.2 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to a decrease in commercial loan prepayment fees, while wealth
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management income decreased $655,000 to $13.8 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to a decrease in the market value of assets under management.
Non-interest expense totaled $134.0 million for the six months ended June 30, 2023, an increase of $8.2 million, compared to $125.7 million for the six months ended June 30, 2022. The Company recorded a $92,000 provision for credit losses for off-balance sheet credit exposures for the six months ended June 30, 2023, compared to a $3.4 million negative provision for the same period in 2022. The $3.5 million increase in the provision for credit losses for off-balance sheet credit exposures was primarily the result of the period-over-period relative change in line of credit utilization and an increase in projected loss factors as a result of a worsened economic forecast. Merger-related expenses totaled $3.1 million for the six months ended June 30, 2023, as a result of transaction costs related to our pending combination with Lakeland. Other operating expense increased $1.8 million to $21.0 million for the six months ended June 30, 2023, compared to $19.2 million for the six months ended June 30, 2022, primarily due to an increase in consulting fees and additional expenses related to foreclosed commercial real estate owned properties. FDIC insurance expense increased $1.5 million to $4.1 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to an increase in the assessment rate. Partially offsetting these increases, net occupancy expense decreased $1.5 million to $16.4 million for the six months ended June 30, 2023, compared to the same period in 2022, mainly due to decreases in maintenance and depreciation expenses. Additionally, compensation and benefits expense decreased $482,000 to $74.0 million for the six months ended June 30, 2023, compared to $74.5 million for the six months ended June 30, 2022, primarily due to decreases in the accrual for incentive compensation and stock-based compensation, partially offset by an increase in salary expense.
Income Tax Expense
For the six months ended June 30, 2023, the Company's income tax expense was $26.1 million with an effective tax rate of 26.4%, compared with $29.6 million with an effective tax rate of 26.2% for the six months ended June 30, 2022. The decrease in tax expense for the six months ended June 30, 2023, compared with the same period last year was largely the result of a decrease in taxable income, while the increase in the effective tax rate for the six months ended June 30, 2023, compared with the prior year period was largely due to non-deductible merger related transaction costs recognized in the current year, partially offset by a decrease in the proportion of income derived from taxable sources.
Asset Quality
The Company’s total non-performing loans at June 30, 2023 were $45.9 million, or 0.44% of total loans, compared to $35.5 million, or 0.35% of total loans at March 31, 2023 and $58.5 million, or 0.57% of total loans at December 31, 2022. The $10.5 million increase in non-performing loans at June 30, 2023, compared to the trailing quarter, consisted of an $8.8 million increase in non-performing commercial loans, a $766,000 increase in non-performing multi-family loans, a $532,000 increase in non-performing consumer loans and a $464,000 increase in non-performing commercial mortgage loans, partially offset by a $46,000 decrease in non-performing residential mortgage loans. At June 30, 2023, impaired loans totaled $37.1 million with related specific reserves of $4.5 million, compared with impaired loans totaling $27.5 million with related specific reserves of $1.4 million at March 31, 2023. At December 31, 2022, impaired loans totaled $42.8 million with related specific reserves of $2.4 million.
At June 30, 2023, the Company’s allowance for credit losses related to the loan portfolio was 0.97% of total loans, compared to 0.91% and 0.86% at March 31, 2023 and December 31, 2022, respectively. The allowance for credit losses increased $14.1 million to $102.1 million at June 30, 2023, from $88.0 million at December 31, 2022. The increase in the allowance for credit losses on loans at June 30, 2023 compared to December 31, 2022 was due to a $16.4 million provision for credit losses, partially offset by net charge-offs of $1.8 million and a gross reduction of the allowance for credit losses of $594,000 which was recorded against equity upon the January 1, 2023 adoption of ASU 2022-02, related to troubled debt restructurings. The increase in the allowance for credit losses on loans was primarily attributable to a worsened economic forecast and related deterioration in the projected commercial property price index over the expected life of the loan portfolio, combined with an increase in total loans outstanding.
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The following table sets forth accruing past due loans and non-accrual loans on the dates indicated, as well as certain asset quality ratios.
 June 30, 2023March 31, 2023December 31, 2022
 
Number
of
Loans
Principal
Balance
of Loans
Number
of
Loans
Principal
Balance
of Loans
Number
of
Loans
Principal
Balance
of Loans
(Dollars in thousands)
Accruing past due loans:
30 to 59 days past due:
Commercial mortgage loans2 $1,445 1 $3,000 2 $2,300 
Multi-family mortgage loans1 3,853 1 3,875 1 790 
Construction loans— — — — 1 905 
Residential mortgage loans11 1,427 9 2,064 10 1,411 
Total mortgage loans14 6,725 11 8,939 14 5,406 
Commercial loans10 3,021 4 1,070 5 964 
Consumer loans15 957 22 2,106 18 885 
Total 30 to 59 days past due39 $10,703 37 $12,115 37 $7,255 
60 to 89 days past due:
Commercial mortgage loans2 $1,137 4 $1,528 2 $412 
Multi-family mortgage loans— — 1 785 — — 
Construction loans— — — — 1 1,097 
Residential mortgage loans6 1,171 6 639 9 1,114 
Total mortgage loans8 2,308 11 2,952 12 2,623 
Commercial loans2 90 2 3,028 5 1,014 
Consumer loans3 147 1 150 4 147 
Total 60 to 89 days past due13 2,545 14 6,130 21 3,784 
Total accruing past due loans52 $13,248 51 $18,245 58 $11,039 
Non-accrual:
Commercial mortgage loans7 $7,279 5 $6,815 10 $28,212 
Multi-family mortgage loans2 2,314 1 1,548 1 1,565 
Construction loans2 1,874 2 1,874 2 1,878 
Residential mortgage loans12 1,698 12 1,744 14 1,928 
Total mortgage loans23 13,165 20 11,981 27 33,583 
Commercial loans30 31,885 30 23,129 34 24,188 
Consumer loans8 878 10 346 10 738 
Total non-accrual loans61 $45,928 60 $35,456 71 $58,509 
Non-performing loans to total loans0.44 %0.35 %0.57 %
Allowance for loan losses to total non-performing loans222.25 %261.61 %150.44 %
Allowance for loan losses to total loans0.97 %0.91 %0.86 %
At June 30, 2023 and December 31, 2022, the Company held foreclosed assets of $13.7 million and $2.1 million, respectively. During the six months ended June 30, 2023, there were three additions to foreclosed assets with an aggregate carrying value of $12.3 million, and three properties sold with an aggregate carrying value of $768,000. Foreclosed assets at June 30, 2023 consisted primarily of commercial real estate. Total non-performing assets at June 30, 2023 decreased $1.0 million to $59.6 million, or 0.42% of total assets, from $60.6 million, or 0.44% of total assets at December 31, 2022.
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Balance Sheet Summary
Total assets at June 30, 2023 were $14.03 billion, a $246.2 million increase from December 31, 2022. The increase in total assets was primarily due to a $281.6 million increase in total loans, partially offset by a $37.8 million decrease in total investments.
The Company’s loan portfolio totaled $10.53 billion at June 30, 2023 and $10.25 billion at December 31, 2022. The loan portfolio consisted of the following:
June 30, 2023March 31, 2023December 31, 2022
(Dollars in thousands)
Mortgage loans:
Commercial$4,373,436 $4,292,853 $4,316,185 
Multi-family1,645,770 1,580,297 1,513,818 
Construction707,234 658,902 715,494 
Residential1,166,159 1,174,035 1,177,698 
Total mortgage loans7,892,599 7,706,087 7,723,195 
Commercial loans2,348,447 2,228,207 2,233,670 
Consumer loans301,306 301,672 304,780 
Total gross loans10,542,352 10,235,966 10,261,645 
Premiums on purchased loans1,374 1,364 1,380 
Net deferred fees and unearned discounts(13,195)(13,116)(14,142)
Total loans$10,530,531 $10,224,214 $10,248,883 
During the six months ended June 30, 2023, the loan portfolio had net increases of $57.3 million in commercial mortgage loans, $132.0 million in multi-family loans and $114.8 million in commercial loans, partially offset by net decreases in residential mortgage, construction and consumer loans of $11.5 million $8.3 million and $3.5 million, respectively. Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 86.1% of the loan portfolio at June 30, 2023, compared to 85.6% at December 31, 2022.
For the six months ended June 30, 2023, loan funding, including advances on lines of credit, totaled $1.79 billion, compared with $2.15 billion for the same period in 2022.
At June 30, 2023, the Company’s unfunded loan commitments totaled $2.02 billion, including commitments of $1.13 billion in commercial loans, $491.1 million in construction loans and $75.1 million in commercial mortgage loans. Unfunded loan commitments at December 31, 2022 and June 30, 2022 were $2.06 billion.
The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.74 billion at June 30, 2023, compared to $1.29 billion and $1.43 billion at December 31, 2022 and June 30, 2022, respectively.
Total investment securities were $2.22 billion at June 30, 2023, a $37.8 million decrease from December 31, 2022. This decrease was primarily due to repayments of mortgage-backed securities and maturities and calls of certain municipal and agency bonds, partially offset by purchases of mortgage-backed and municipal securities and an improvement in unrealized losses on available for sale debt securities.
Total deposits decreased $301.9 million during the six months ended June 30, 2023, to $10.26 billion. Total savings and demand deposit accounts decreased $570.8 million to $9.24 billion at June 30, 2023, while total time deposits increased $268.9 million to $1.02 billion at June 30, 2023. The decrease in savings and demand deposits was largely attributable to a $285.5 million decrease in non-interest bearing demand deposits, a $269.5 million decrease in money market deposits and a $163.3 million decrease in savings deposits, partially offset by a $147.6 million increase in interest bearing demand deposits. During the six months ended June 30, 2023, deposit balances from traditional non-interest and interest bearing demand deposits transitioned into our ICS product, as a method to increase the level of customers' deposit insurance in light of recent bank deposit turmoil. The Bank's ICS deposits increased $324.0 million to $382.9 million at March 31, 2023, from $58.9 million at December 31, 2022. The increase in time deposits consisted of a $258.3 million increase in retail time deposits and a $10.6 million increase in brokered time deposits.
8

Borrowed funds increased $512.3 million during the six months ended June 30, 2023, to $1.85 billion. The increase in borrowings was largely due to asset funding requirements, partially to replace the outflow of deposits. Borrowed funds represented 13.2% of total assets at June 30, 2023, an increase from 9.7% at December 31, 2022.
Stockholders’ equity increased $44.8 million during the six months ended June 30, 2023, to $1.64 billion, primarily due to 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 six months ended June 30, 2023, common stock repurchases totaled 71,357 shares at an average cost of $23.32 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At June 30, 2023, approximately 1.1 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share(1) at June 30, 2023 were $21.75 and $15.66, respectively, compared with $21.25 and $15.12, respectively, at December 31, 2022.
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 northern and central New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Queens and Nassau Counties in New York. The 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 Friday, July 28, 2023 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended June 30, 2023. 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 those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, the effects of the recent turmoil in the banking industry (including the closing of three financial institutions), 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, 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, the ability to complete, or any delays in completing, the pending merger between the Company and Lakeland; any failure to realize the anticipated benefits of the transaction when expected or at all; certain restrictions during the pendency of the transaction that may impact the Company’s ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management’s attention from ongoing business operations and opportunities; and potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger and integration of the companies.
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
9

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 pre-tax, pre-provision return on average assets, annualized return on 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.












10

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
Six Months Ended
June 30,March 31,June 30,June 30,June 30,
20232023202220232022
Statement of Income
Net interest income$99,106 $108,324 $99,475 $207,430 $194,001 
Provision for credit losses10,397 6,001 2,996 16,398 (3,409)
Non-interest income19,387 22,152 20,932 41,540 41,078 
Non-interest expense64,463 69,485 63,846 133,950 125,730 
Income before income tax expense43,633 54,990 53,565 98,622 112,758 
Net income32,003 40,536 39,228 72,539 83,191 
Diluted earnings per share$0.43 $0.54 $0.53 $0.97 $1.11 
Interest rate spread2.60 %3.09 %3.12 %2.84 %3.03 %
Net interest margin3.11 %3.48 %3.21 %3.29 %3.11 %
Profitability
Annualized return on average assets0.93 %1.20 %1.16 %1.06 %1.23 %
Annualized return on average equity7.76 %10.11 %9.83 %8.92 %10.21 %
Annualized return on average tangible equity (1)
10.75 %14.10 %13.82 %12.40 %14.22 %
Annualized adjusted non-interest expense to average assets (3)
1.83 %2.00 %1.92 %1.91 %1.91 %
Efficiency ratio (4)
53.29 %51.85 %53.83 %52.54 %54.91 %
Asset Quality
Non-accrual loans$35,456 $45,928 $40,448 
90+ and still accruing— — — 
Non-performing loans35,456 45,928 40,448 
Foreclosed assets13,743 13,697 9,076 
Non-performing assets49,199 59,625 49,524 
Non-performing loans to total loans0.35 %0.44 %0.40 %
Non-performing assets to total assets0.36 %0.42 %0.36 %
Allowance for loan losses$92,758 $102,073 $79,016 
Allowance for loan losses to total non-performing loans261.61 %222.25 %195.35 %
Allowance for loan losses to total loans0.91 %0.97 %0.79 %
Net loan charge-offs (recoveries)$1,085 $671 $259 $1,756 $(1,676)
Annualized net loan charge-offs (recoveries) to average total loans 0.04 %0.03 %0.01 %0.03 %(0.02)%
Average Balance Sheet Data
Assets$13,833,055 $13,732,708 $13,541,209 $13,783,159 $13,616,899 
Loans, net10,238,224 10,093,856 9,683,027 10,166,439 9,582,986 
Earning assets12,575,967 12,418,530 12,328,742 12,497,684 12,427,528 
Core deposits9,297,058 9,720,797 10,462,293 9,507,756 10,506,515 
Borrowings1,658,809 1,224,279 527,630 1,442,744 538,593 
Interest-bearing liabilities9,565,814 9,264,564 8,918,786 9,416,020 8,962,144 
Stockholders' equity1,653,677 1,626,370 1,601,245 1,640,099 1,643,549 
Average yield on interest-earning assets4.73 %4.63 %3.43 %4.68 %3.33 %
Average cost of interest-bearing liabilities2.13 %1.54 %0.31 %1.84 %0.30 %


11

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) Book and Tangible Book Value per Share
At June 30,At December 31,
20232022
Total stockholders' equity$1,642,471 $1,597,703 
Less: total intangible assets459,383 460,892 
Total tangible stockholders' equity$1,183,088 $1,136,811 
Shares outstanding75,530,425 75,169,196 
Book value per share (total stockholders' equity/shares outstanding)$21.75 $21.25 
Tangible book value per share (total tangible stockholders' equity/shares outstanding)$15.66 $15.12 
(2) Annualized Return on Average Tangible Equity
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20232023202220232022
Total average stockholders' equity$1,653,677 $1,626,370 $1,601,245 $1,640,099 $1,643,549 
Less: total average intangible assets459,865 460,631 463,039 460,246 463,462 
Total average tangible stockholders' equity$1,193,812 $1,165,739 $1,138,206 $1,179,853 $1,180,087 
Net income$32,003 $40,536 $39,228 $72,539 $83,191 
Annualized return on average tangible equity (net income/total average tangible stockholders' equity)10.75 %14.10 %13.82 %12.40 %14.22 %
(3) Annualized Pre-Tax, Pre-Provision ("PTPP") Return on Average Assets
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20232023202220232022
Net income$32,003 $40,536 $39,228 $72,539 $83,191 
Adjustments to net income:
Provision for credit losses10,397 6,001 2,996 16,398 (3,409)
Credit loss (benefit) expense for off-balance sheet credit exposure(647)739 (973)92 (3,363)
Merger-related transaction costs1,961 1,100 — 3,060 — 
Income tax expense11,630 14,454 14,337 26,083 29,567 
PTPP income$55,344 $62,830 $55,588 $118,172 $105,986 
Annualized PTPP income$221,984 $254,811 $222,963 $238,303 $213,729 
Average assets$13,833,055 $13,732,708 $13,541,209 $13,783,160 $13,616,899 
Annualized PTPP return on average assets 1.60 %1.86 %1.65 %1.73 %1.57 %
12

(4) Annualized Adjusted Non-Interest Expense to Average Assets
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20232023202220232022
Reported non-interest expense$64,463 $69,485 $63,846 $133,950 $125,730 
Adjustments to non-interest expense:
Credit loss (benefit) expense for off-balance sheet credit exposures(647)739 (973)92 (3,363)
Merger-related transaction costs1,961 1,100 — 3,060 — 
Adjusted non-interest expense$63,149 $67,646 $64,819 $130,798 $129,093 
Annualized adjusted non-interest expense$253,290 $274,342 $259,988 $263,764 $260,326 
Average assets$13,833,055 $13,732,708 $13,541,209 $13,783,160 13,616,899 
Annualized adjusted non-interest expense/average assets1.83 %2.00 %1.92 %1.91 %1.91 %
(5) Efficiency Ratio Calculation
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20232023202220232022
Net interest income$99,106 $108,324 $99,475 $207,430 $194,001 
Non-interest income19,387 22,152 20,932 41,540 41,078 
Total income$118,493 $130,476 $120,407 $248,970 $235,079 
Adjusted non-interest expense $63,149 $67,646 $64,819 $130,798 $129,093 
Efficiency ratio (adjusted non-interest expense/income)53.29 %51.85 %53.83 %52.54 %54.91 %
13

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
June 30, 2023 (Unaudited) and December 31, 2022
(Dollars in Thousands)
AssetsJune 30, 2023December 31, 2022
Cash and due from banks$208,842 $186,490 
Short-term investments30 18 
Total cash and cash equivalents208,872 186,508 
Available for sale debt securities, at fair value1,749,889 1,803,548 
Held to maturity debt securities, net (fair value of $365,029 at June 30, 2023 (unaudited) and $373,468 at December 31, 2022) 378,894 387,923 
Equity securities, at fair value1,238 1,147 
Federal Home Loan Bank stock93,330 68,554 
Loans10,530,531 10,248,883 
Less allowance for credit losses102,073 88,023 
Net loans10,428,458 10,160,860 
Foreclosed assets, net13,697 2,124 
Banking premises and equipment, net70,602 79,794 
Accrued interest receivable53,845 51,903 
Intangible assets459,383 460,892 
Bank-owned life insurance241,107 239,040 
Other assets330,288 341,143 
Total assets$14,029,603 $13,783,436 
Liabilities and Stockholders' Equity
Deposits:
Demand deposits$7,965,529 $8,373,005 
Savings deposits1,275,262 1,438,583 
Certificates of deposit of $100,000 or more666,276 504,627 
Other time deposits354,053 246,809 
Total deposits10,261,120 10,563,024 
Mortgage escrow deposits44,280 35,705 
Borrowed funds1,849,714 1,337,370 
Subordinated debentures10,596 10,493 
Other liabilities221,422 239,141 
Total liabilities12,387,132 12,185,733 
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, 83,209,012 shares issued and 75,530,425 shares outstanding at June 30, 2023 and 76,169,196 outstanding at December 31, 2022.832 832 
Additional paid-in capital986,150 981,138 
Retained earnings954,403 918,158 
Accumulated other comprehensive (loss) income (162,493)(165,045)
Treasury stock(127,818)(127,154)
Unallocated common stock held by the Employee Stock Ownership Plan(8,603)(10,226)
Common Stock acquired by the Directors' Deferred Fee Plan(3,150)(3,427)
Deferred Compensation - Directors' Deferred Fee Plan3,150 3,427 
Total stockholders' equity1,642,471 1,597,703 
Total liabilities and stockholders' equity$14,029,603 $13,783,436 
14

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three months ended June 30, 2023, March 31, 2023 and June 30, 2022, and six months ended June 30, 2023 and 2022 (Unaudited)
(Dollars in Thousands, except per share data)
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20232023202220232022
Interest income:
Real estate secured loans$99,302 $95,988 $69,073 $195,290 $132,908 
Commercial loans31,426 28,683 22,363 60,109 45,184 
Consumer loans4,431 4,242 3,344 8,673 6,483 
Available for sale debt securities, equity securities and Federal Home Loan Bank stock11,432 11,430 8,454 22,862 16,406 
Held to maturity debt securities2,357 2,368 2,489 4,725 5,085 
Deposits, federal funds sold and other short-term investments948 845 562 1,793 1,209 
Total interest income149,896 143,556 106,285 293,452 207,275 
Interest expense:
Deposits36,447 27,510 5,576 63,957 10,763 
Borrowed funds14,088 7,476 1,104 21,564 2,272 
Subordinated debt255 246 130 501 239 
Total interest expense50,790 35,232 6,810 86,022 13,274 
Net interest income99,106 108,324 99,475 207,430 194,001 
Provision charge (benefit) for credit losses10,397 6,001 2,996 16,398 (3,409)
Net interest income after provision for credit losses88,709 102,323 96,479 191,032 197,410 
Non-interest income:
Fees5,775 6,387 7,424 12,162 14,313 
Wealth management income6,919 6,915 7,024 13,834 14,489 
Insurance agency income3,847 4,102 2,850 7,950 6,270 
Bank-owned life insurance1,534 1,484 1,563 3,018 2,741 
Net gain on securities transactions29 (5)141 24 157 
Other income1,283 3,269 1,930 4,552 3,108 
Total non-interest income19,387 22,152 20,932 41,540 41,078 
Non-interest expense:
Compensation and employee benefits35,283 38,737 37,437 74,021 74,503 
Net occupancy expense7,949 8,410 8,479 16,360 17,810 
Data processing expense5,716 5,508 5,632 11,224 10,976 
FDIC Insurance2,125 1,937 1,350 4,061 2,555 
Amortization of intangibles749 762 873 1,511 1,732 
Advertising and promotion expense1,379 1,232 1,222 2,589 2,326 
Credit loss (benefit) expense for off-balance sheet exposures(647)739 (973)92 (3,363)
Merger-related expenses1,960 1,100 — 3,060 — 
Other operating expenses9,949 11,060 9,826 21,032 19,191 
Total non-interest expense64,463 69,485 63,846 133,950 125,730 
Income before income tax expense43,633 54,990 53,565 98,622 112,758 
Income tax expense11,630 14,454 14,337 26,083 29,567 
Net income$32,003 $40,536 $39,228 $72,539 $83,191 
Basic earnings per share$0.43 $0.54 $0.53 $0.97 $1.11 
Average basic shares outstanding74,823,27274,645,33674,328,63274,734,79575,068,154
Diluted earnings per share$0.43 $0.54 $0.53 $0.97 $1.11 
Average diluted shares outstanding74,830,18774,702,52774,400,78874,766,84875,152,286
15

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
 (Dollars in Thousands) (Unaudited)
June 30, 2023March 31, 2023June 30, 2022
Average BalanceInterestAverage
Yield/Cost		Average BalanceInterestAverage
Yield/Cost		Average BalanceInterestAverage
Yield/Cost
Interest-Earning Assets:
Deposits$73,470 $947 5.17 %$72,022 $845 4.76 %$77,761 $191 0.98 %
Federal funds sold and other short-term investments881 6.75 %29— 3.70 %99,825371 1.49 %
Available for sale debt securities1,801,05010,2902.29 %1,808,61910,402 2.30 %2,023,1998,0931.60 %
Held to maturity debt securities, net (1)
379,9582,3572.48 %383,9072,368 2.47 %412,2292,4892.41 %
Equity securities, at fair value1,006 — — %991 — — %1,019 — — %
Federal Home Loan Bank stock82,1711,1425.56 %59,1061,0286.96 %31,6823614.55 %
Net loans: (2)
Total mortgage loans7,701,07299,3025.11 %7,643,14095,9885.02 %7,252,66569,0733.78 %
Total commercial loans2,234,04331,4265.59 %2,146,65828,6835.37 %2,107,68122,3634.22 %
Total consumer loans303,1094,4315.86 %304,0584,2425.66 %322,6813,3444.16 %
Total net loans10,238,224135,1595.24 %10,093,856128,9135.12 %9,683,02794,7803.89 %
Total interest-earning assets$12,575,967 $149,896 4.73 %$12,418,530 $143,556 4.63 %$12,328,742 $106,285 3.43 %
Non-Interest Earning Assets:
Cash and due from banks129,979142,953129,953
Other assets1,127,109 1,171,225 1,082,514
Total assets$13,833,055 $13,732,708 $13,541,209 
Interest-Bearing Liabilities:
Demand deposits$5,620,268 $28,613 2.04 %$5,771,582 $21,920 1.54 %$6,189,722 $4,458 0.29 %
Savings deposits1,307,8305370.16 %1,398,4194530.13 %1,496,0642850.08 %
Time deposits968,3447,2973.02 %859,7735,1372.42 %695,0158330.48 %
Total Deposits7,896,44236,4471.85 %8,029,77427,5101.39 %8,380,8015,5760.27 %
Borrowed funds1,658,80914,0883.41 %1,224,2797,4762.48 %527,6301,1040.84 %
Subordinated debentures10,563 255 9.66 %10,511 246 9.51 %10,355 130 5.05 %
Total interest-bearing liabilities9,565,81450,7902.13 %9,264,56435,2321.54 %8,918,7866,8100.31 %
Non-Interest Bearing Liabilities:
Non-interest bearing deposits2,368,9602,550,7962,776,507
Other non-interest bearing liabilities244,604290,978244,671
Total non-interest bearing liabilities2,613,5642,841,7743,021,178
Total liabilities12,179,37812,106,33811,939,964
Stockholders' equity1,653,6771,626,3701,601,245
Total liabilities and stockholders' equity$13,833,055 $13,732,708 $13,541,209 
Net interest income$99,106 $108,324 $99,475 
Net interest rate spread2.60 %3.09 %3.12 %
Net interest-earning assets$3,010,153 $3,153,966 $3,409,956 
Net interest margin (3)
3.11 %3.48 %3.21 %
Ratio of interest-earning assets to total interest-bearing liabilities1.31x1.34x1.38x
(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.
16

The following table summarizes the quarterly net interest margin for the previous five quarters.
6/30/233/31/2312/31/229/30/226/30/22
2nd Qtr.1st Qtr.4th Qtr.3rd Qtr.2nd Qtr.
Interest-Earning Assets:
Securities2.53 %2.52 %2.32 %2.36 %1.74 %
Net loans5.24 %5.12 %4.82 %4.38 %3.89 %
Total interest-earning assets4.73 %4.63 %4.36 %3.90 %3.43 %
Interest-Bearing Liabilities:
Total deposits1.85 %1.39 %0.90 %0.47 %0.27 %
Total borrowings3.41 %2.48 %1.74 %1.11 %0.84 %
Total interest-bearing liabilities2.13 %1.54 %1.00 %0.54 %0.31 %
Interest rate spread2.60 %3.09 %3.36 %3.36 %3.12 %
Net interest margin3.11 %3.48 %3.62 %3.51 %3.21 %
Ratio of interest-earning assets to interest-bearing liabilities1.31x1.34x1.35x1.37x1.38x


















17

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Dollars in Thousands) (Unaudited)
June 30, 2023June 30, 2022
AverageAverageAverageAverage
BalanceInterestYield/CostBalanceInterestYield/Cost
Interest-Earning Assets:
Deposits$72,750 $1,791 4.97 %$175,341 $298 0.34 %
Federal funds sold and other short term investments59 2 6.00 %147,447 911 1.25 %
Available for sale debt securities1,804,814 20,692 2.29 %2,069,270 15,671 1.51 %
Held to maturity debt securities, net (1)
381,921 4,725 2.47 %420,133 5,085 2.42 %
Equity securities, at fair value999 — — %1,055 — — %
Federal Home Loan Bank stock70,702 2,170 6.14 %31,296 735 4.70 %
Net loans: (2)
Total mortgage loans7,671,493 195,290 5.07 %7,156,189 132,908 3.70 %
Total commercial loans2,191,222 60,109 5.49 %2,105,001 45,184 4.30 %
Total consumer loans303,724 8,673 5.76 %321,796 6,483 4.06 %
Total net loans10,166,439 264,072 5.18 %9,582,986 184,575 3.84 %
Total interest-earning assets$12,497,684 $293,452 4.68 %$12,427,528 $207,275 3.33 %
Non-Interest Earning Assets:
Cash and due from banks136,431 126,423 
Other assets1,149,044 1,062,948 
Total assets$13,783,159 $13,616,899 
Interest-Bearing Liabilities:
Demand deposits$5,695,507 $50,533 1.79 %$6,238,860 $8,653 0.28 %
Savings deposits1,352,874 990 0.15 %1,486,407 576 0.08 %
Time deposits914,358 12,434 2.74 %687,956 1,534 0.45 %
Total deposits7,962,739 63,957 1.62 %8,413,223 10,763 0.26 %
Borrowed funds1,442,744 21,564 3.01 %538,593 2,272 0.85 %
Subordinated debentures10,537 501 9.58 %10,328 239 4.66 %
Total interest-bearing liabilities$9,416,020 $86,022 1.84 %$8,962,144 $13,274 0.30 %
Non-Interest Bearing Liabilities:
Non-interest bearing deposits2,459,375 2,781,248 
Other non-interest bearing liabilities267,666 229,958 
Total non-interest bearing liabilities2,727,041 3,011,206 
Total liabilities12,143,061 11,973,350 
Stockholders' equity1,640,099 1,643,549 
Total liabilities and stockholders' equity$13,783,160 $13,616,899 
Net interest income$207,430 $194,001 
Net interest rate spread2.84 %3.03 %
Net interest-earning assets$3,081,664 $3,465,384 
Net interest margin (3)
3.29 %3.11 %
Ratio of interest-earning assets to total interest-bearing liabilities1.33x1.39x
(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.
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The following table summarizes the year-to-date net interest margin for the previous three years.
Six Months Ended
June 30, 2023June 30, 2022June 30, 2021
Interest-Earning Assets:
Securities2.52 %1.59 %1.57 %
Net loans5.18 %3.84 %3.79 %
Total interest-earning assets4.68 %3.33 %3.36 %
Interest-Bearing Liabilities:
Total deposits1.62 %0.26 %0.36 %
Total borrowings3.01 %0.85 %1.15 %
Total interest-bearing liabilities1.84 %0.30 %0.46 %
Interest rate spread2.84 %3.03 %2.90 %
Net interest margin3.29 %3.11 %3.02 %
Ratio of interest-earning assets to interest-bearing liabilities1.33x1.39x1.35x




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