PFS

• Overall Financial Performance

  • Q2 2026 net earnings reached $78 million ($0.60 per diluted share), and core net earnings reached $80 million ($0.61 per diluted share), representing 11% core net income growth year-over-year.
  • Adjusted pre-provision net revenue hit a record $118 million, with an annualized 1.87% return on average assets, an 18% increase from Q2 2025.
  • Annualized adjusted return on average assets was 1.27%, and adjusted return on average tangible common equity was 16.2%, meeting management's medium-term target range.

• Loan Growth Pipeline

  • Q2 2026 funded $700 million in new commercial loans, bringing year-to-date total commercial loan fundings to over $1.1 billion. Net total commercial loans grew 10% annualized, led by 20% annualized growth in the C&I segment.
  • Ended the quarter with a record $3.2 billion total loan pipeline, marking the second consecutive quarter that both C&I and CRE pipelines exceeded $1 billion. The pull-through adjusted pipeline yield of 6.33% is accretive to the current portfolio yield of 5.9%.

• Deposit Growth Strategy

  • Seasonally adjusted core deposits grew $67 million in Q2 (2% annualized), driven by commercial deposit growth including the treasury management segment. Period-end total deposits increased $445 million (9% annualized), driven by higher broker deposit balances.
  • As of June 30, newly hired senior deposit-focused bankers have built a nearly $150 million deposit pipeline, with ongoing strategic investments in digital, small business, and municipal deposit initiatives.

• Asset Quality

  • Non-performing assets represent 54 basis points of total assets; net charge-offs were $1.9 million (4 annualized basis points of average loans), remaining at historically low levels.
  • The $82 million senior housing non-accrual relationship is progressing through bankruptcy as expected, with all four credits expected to settle by year-end with no material loss to the firm. Excluding this relationship, non-performing loans equal just 27 basis points of total loans.
  • The allowance for credit losses coverage ratio increased 2 basis points to 92 basis points of total loans as of quarter-end.

• Strategic & Technology Initiatives

  • The planned core banking system conversion remains on track to meet the Labor Day 2026 target.
  • New technology initiatives are in development, including an internal AI agent for employees to speed up responses to customer inquiries, to support differentiated customer service.

• Full-year 2026 loan and deposit growth is now expected to land at the high end of the initial guidance range, updated to 5% to 6% full-year growth.
• Non-interest income guidance for Q3 and Q4 2026 has been raised to $29 million per quarter, up from the prior guidance of $28.5 million per quarter.
• Management projects core net interest margin will expand 1 to 2 basis points in Q3 and Q4 2026, with reported net interest margin (including purchase accounting accretion) expected to hold in a range of 3.45% to 3.50% for the remainder of 2026.
• Quarterly core operating expenses are projected to remain between $117 million and $119 million, with an additional $4.5 million in non-recurring conversion-related charges expected for the remainder of 2026.
• The full-year 2026 effective tax rate is expected to be approximately 28% to 28.25%.
• Management maintains its target range of 1.2% to 1.3% for core return on average assets, and mid-teens for return on average tangible common equity.
• 2027 purchase accounting accretion from the loan book is expected to be approximately $36 million, down from the 2026 estimate of ~$48 million.

Provident Financial Services reported total record revenue of $235 million for Q2 2026, broken into two core revenue segments: 1) Net interest income: Record $203 million, accounting for 86.4% of total revenue. Net interest margin expanded 8 basis points quarter-over-quarter to 3.48%, while core net interest margin expanded 5 basis points to 3.09%. Average yield on earning assets increased 8 basis points to 5.61%, and interest-bearing deposit costs fell 2 basis points to 2.37%. 2) Non-interest income: Record $32 million for the quarter, accounting for 13.6% of total revenue. Year-to-date non-interest income reached $64 million, representing 14% of total revenue (up from 12.5% in H1 2025). Key sub-segment performance: Provident Protection Plus (insurance) achieved 18% revenue growth in H1 2026 year-over-year; Beacon Trust (wealth management) posted 5% H1 2026 revenue growth, with assets under management growing to $4.5 billion; the SBA lending group saw 16% year-over-year growth in gain on sale revenues in H1 2026.

• Intense competition for incremental core deposits, particularly in the consumer and municipal segments, creates upward pressure on deposit costs.
• Prepayment levels on existing loans are unpredictable, which can create deviation from forecasted loan growth and net interest margin expansion.
• The ongoing $82 million senior housing non-accrual relationship carries unresolved credit risk, though management currently expects no material loss from the resolution.

Q: Analyst asks if there is more room for deposit cost declines from time deposit maturity repricing, or if costs will start to tick up, and what drives net interest margin expansion going forward. / A: Management expects deposit costs to rise 1 to 2 basis points over the next two quarters, driven by competitive pressure on certificates of deposit in the current market. NIM expansion will be primarily driven by repricing of the back book loan portfolio and cash flow impacts from the investment securities portfolio, not from lower deposit costs.

Q: Analyst asks about current competitive dynamics in commercial lending, specifically if management has seen irrational pricing or loosened underwriting from larger bank competitors in the region. / A: Management confirms there is general competition for loans, but has not observed irrational pricing or structural breakdowns in underwriting standards that would meaningfully change the firm's competitive positioning or risk appetite. Management maintains its disciplined underwriting approach.

Q: Analyst asks about M&A strategy, whether the firm will be more active in the current market, and what priorities guide potential transactions. / A: Management confirms M&A remains part of the firm's broader strategy, but organic growth across all business lines and building a stable low-cost funding base remain the top organizational priorities. Management will only pursue highly selective transactions that meet requirements for cultural alignment, strategic fit, and pro forma value creation, and will not pursue transactions haphazardly.

Q: Analyst asks how the firm is approaching new deposit generation amid intensifying competition, what promotional rates are currently offered, and whether the firm is chasing higher-cost hot money to grow deposits. / A: Management notes current promotional CD rates are around 4% in a highly competitive market, but the firm is not chasing hot money to grow the balance sheet. Most expected deposit growth for the second half will come from lower-cost inflows: seasonal municipal deposits (typically yielding 3.5% to 3.75%) and growth from treasury management, business banking, and small business segments, which offset incremental higher costs from promotional CDs.