Provident Financial Services Reports $208 Million in Net Interest Income in Third Quarter
Key Facts
Provident Financial Services, listed on the New York Stock Exchange under the ticker PFS, reported net income of $69.2 million, or $0.53 per share, for the three months ended September 30, 2026. The company reported $71.7 million, or $0.55 per share, in the same period a year earlier, meaning reported profit declined year over year. Core net income, by contrast, was $84.3 million, or $0.65 per share, excluding certain expenses. The difference between reported and core net income reflects the impact of exceptional items and quarter-related costs. Nasdaq reported the results in a disclosure dated October 28.
Excluded items included a one-time $17.5 million loss from debt extinguishment, along with $3.7 million in core system conversion costs and $465,000 for branch restructuring. The company said these expenses are included in the reconciliation of reported net income to core net income. On this basis, third-quarter core income exceeded reported net income, while the reported figure fell from a year earlier. For the nine months ended September 30, net income was $226.7 million, or $1.74 per share, compared with $207.7 million and $1.59 per share in the same period of 2025. The comparison shows that results for the nine-month period improved despite the decline in net income for the quarter alone.
The annualized core return on average tangible equity was 16.57% in the third quarter, compared with 16.01% in the same quarter of 2025, and the company said this was the sixth consecutive quarter in which the measure exceeded 16%. This is a return on tangible equity measure, not a profit margin. Reported net interest margin rose to 3.50%, from 3.43% a year earlier. Core net interest margin was 3.16%, up 7 basis points from the previous quarter and 22 basis points from the year-earlier period. Thus, core and reported margins improved even as quarterly accounting net income declined year over year.
Net interest income reached a record $208.0 million, up $13.7 million from the third quarter of the previous year. The company attributed the increase mainly to growth in interest-earning assets and a wider net interest margin. Total deposits also rose by $261.7 million during the quarter, equivalent to an annualized growth rate of 5.31%, to $19.81 billion as of September 30. Core deposits totaled $15.42 billion. These figures provide context for the expansion in interest income, with deposits rising alongside the improvement in net interest margin.
Loans held for investment totaled $20.17 billion at the end of September, up from $19.50 billion on December 31, 2025. Commercial loans, including mortgage warehouse lines, commercial real estate, multifamily and construction loans, grew at an annualized rate of 3.4% during the quarter. Meanwhile, nonperforming loans rose to $140.1 million, or 0.69% of loans held for investment, compared with $78.4 million and 0.40% at the end of 2025. These figures present a mixed picture of lending growth and rising nonperforming loans during the period. The chief executive said a strong loan pipeline and asset quality underpin his optimism about continued profitable organic growth.
Total undrawn loan commitments were $3.03 billion as of September 30, with a weighted average interest rate of about 6.50%. Both commercial real estate and commercial and industrial loan commitments exceeded $1 billion for the third consecutive quarter. On the earnings call, management forecast core net interest margin expansion of 1 to 2 basis points in the fourth quarter. The forecast was based on the assumption of one Federal Reserve interest rate increase in December 2026. The company had announced that its investor call to discuss third-quarter results would be held on October 29, 2026, at 10:00 a.m. Eastern time.