Q1 2026 Provident Financial Services Inc Earnings Call

April 30, 2026

Operator: Good morning. My name is Carrie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Provident Financial Services Q1 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. I would now like to turn the call over to Michael A. Perito, Head of Investor Relations. Please go ahead.

Speaker #2: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press stars, then the number one on your telephone keypad.

Speaker #2: If you would like to withdraw your question, please press star one again. I would now like to turn the call over to Michael Prudo.

Speaker #2: Head of Investor Relations. Please go ahead. Thank you. Good morning, everyone, and thank you for joining us for our first quarter 2026 earnings call.

Michael A. Perito: Thank you. Good morning, everyone, and thank you for joining us for our Q1 2026 earnings call. Today's presenters are President and CEO, Tony Labozzetta, and Senior Executive Vice President and Chief Financial Officer, Tom Lyons. Before beginning their review of our financial results, we ask that you please take note of our standard caution as to any forward-looking statements that may be made during the course of today's call. Our full disclaimer is contained in last evening's earnings release, which has been posted to the investor relations page on our website, provident.bank. Now, I'd like to hand it off to Tony Labozzetta, who will offer his perspective on our Q1. Tony.

Speaker #2: Today's presenters are President and CEO Tony Labozzetta and Senior Executive Vice President and Chief Financial Officer Tom Lyons. Before beginning their review of our financial results, we ask that you please take note of our standard caution as to any forward-looking statements that may be made during the course of today's call.

Speaker #2: Our full disclaimer is contained in last evening's earnings release, which has been posted to the Investor Relations page on our website, provident.bank. Now I'd like to hand it off to Tony Labozzetta, who will offer his perspective on our first quarter.

Speaker #2: Tony? Thank you, Michael. And welcome, everyone. I appreciate you joining us today to discuss Provident's first quarter 2026 results. I am pleased to report that we delivered another strong quarter of financial performance.

Anthony Labozzetta: Thank you, Michael. Welcome everyone. I appreciate you joining us today to discuss Provident's Q1 2026 results. I am pleased to report that we delivered another strong quarter of financial performance, demonstrating the continued momentum of our business and the effectiveness of our strategic initiatives. For Q1, we reported net earnings of $79 million or $0.61 per share, representing solid profitability as we continue to execute our growth strategy. Our annualized return on average assets was 1.29%, while our adjusted return on average tangible common equity was 16.6%. Pre-provision net revenue of $108 million, which grew 13.5% year over year, benefited from higher net interest income and notable growth in contingency income from our insurance platform, Provident Protection Plus.

Anthony J. Labozzetta: Thank you, Michael. Welcome everyone. I appreciate you joining us today to discuss Provident's Q1 2026 results. I am pleased to report that we delivered another strong quarter of financial performance, demonstrating the continued momentum of our business and the effectiveness of our strategic initiatives. For Q1, we reported net earnings of $79 million or $0.61 per share, representing solid profitability as we continue to execute our growth strategy. Our annualized return on average assets was 1.29%, while our adjusted return on average tangible common equity was 16.6%. Pre-provision net revenue of $108 million, which grew 13.5% year over year, benefited from higher net interest income and notable growth in contingency income from our insurance platform, Provident Protection Plus.

Speaker #2: Demonstrating the continued momentum of our business and the

Speaker #1: The effectiveness of our strategic initiatives . For the first quarter . We reported net earnings of $79 million , or $0.61 per share .

Speaker #1: Representing solid profitability . As we continue to execute our growth strategy , our annualized return on average assets was 1.29% , while our adjusted return on average tangible common equity was 16.6% .

Speaker #1: Pre-provision net revenue of $108 million , which grew 13.5% year over year , benefited from higher net interest income and notable growth , in contingency income from our insurance platform Represents 1.75% of average assets on an annualized basis , compared to 1.61% for the same quarter last year .

Anthony Labozzetta: This represents 1.75% of average assets on an annualized basis compared to 1.61% for the same quarter last year. We continue to focus on our balanced approach to sustaining growth across our business lines, while also managing risk appropriately and generating sustainable positive operating leverage. Turning to our balance sheet. Our commercial loan team generated new loan production of $649 million in Q1, up 8% compared to the same quarter last year. This production contributed to our commercial loan portfolio growth of $161 million or 3.9% annualized. Commercial and industrial loan activity was particularly strong, growing at a 10% annualized rate. Commercial loan payoffs during the quarter were down significantly to $191 million. Overall, we remain positive about our loan growth guidance for 2026.

Anthony J. Labozzetta: This represents 1.75% of average assets on an annualized basis compared to 1.61% for the same quarter last year. We continue to focus on our balanced approach to sustaining growth across our business lines, while also managing risk appropriately and generating sustainable positive operating leverage. Turning to our balance sheet. Our commercial loan team generated new loan production of $649 million in Q1, up 8% compared to the same quarter last year. This production contributed to our commercial loan portfolio growth of $161 million or 3.9% annualized. Commercial and industrial loan activity was particularly strong, growing at a 10% annualized rate. Commercial loan payoffs during the quarter were down significantly to $191 million. Overall, we remain positive about our loan growth guidance for 2026.

Speaker #1: We continue to focus on our balanced approach to sustaining growth across our business lines . While also managing risk appropriately and generating sustainable , positive operating leverage Turning to our balance sheet , our commercial loan team generated new loan production of $649 million in the first quarter , up 8% compared to the same quarter last year .

Speaker #1: This production contributed to our commercial loan portfolio growth of $161 million , or 3.9% annualized . Commercial and industrial loan activity was particularly strong , growing at a 10% annualized rate commercial loan payoffs during the quarter were down significantly to $191 million , and overall , we remain positive about our loan growth guidance for 2026 .

Speaker #1: Our commercial loan pipeline reached a record $3.1 billion as of March 31st . This pipeline is well diversified and comprised of $1.3 billion in CRE , $1.1 billion in CNI , lending , and 200 million in middle market loans .

Anthony Labozzetta: Our commercial loan pipeline reached a record $3.1 billion as of 31 March. This pipeline is well diversified and comprised of $1.3 billion in CRE, $1.1 billion in C&I, $400 million in specialty lending, and $200 million in middle-market loans. This is the first time in our company's history that both the CRE and C&I pipelines have exceeded $1 billion, reflecting the investments we have made in our commercial banking group to generate sustainable, diversified loan growth. Switching to deposits. Our total non-maturity core business and consumer deposits increased $66.5 million during the quarter, or 2.2% annualized. Seasonal municipal deposit outflow and an intentional reduction in broker deposits during the quarter impacted our total deposit balances, which were down sequentially.

Anthony J. Labozzetta: Our commercial loan pipeline reached a record $3.1 billion as of 31 March. This pipeline is well diversified and comprised of $1.3 billion in CRE, $1.1 billion in C&I, $400 million in specialty lending, and $200 million in middle-market loans. This is the first time in our company's history that both the CRE and C&I pipelines have exceeded $1 billion, reflecting the investments we have made in our commercial banking group to generate sustainable, diversified loan growth. Switching to deposits. Our total non-maturity core business and consumer deposits increased $66.5 million during the quarter, or 2.2% annualized. Seasonal municipal deposit outflow and an intentional reduction in broker deposits during the quarter impacted our total deposit balances, which were down sequentially.

Speaker #1: This is the first time in our company's history that both the CRE and CNI pipelines have exceeded 1 billion , reflecting the investments we have made in our commercial banking group to generate sustainable , diversified loan growth .

Speaker #1: Switching to deposits . Our total non maturity core business and consumer deposits increased 66.5 million during the quarter , or 2.2% annualized . Seasonal municipal deposit outflow , and an intentional reduction in brokered deposits during the quarter impacted our total deposit balances , which were down sequentially .

Speaker #1: Our average noninterest bearing deposits were relatively stable , and we remain focused on deposit generation strategies to build core deposits in consumer small business and commercial verticals .

Anthony Labozzetta: Our average non-interest-bearing deposits were relatively stable. We remain focused on deposit generation strategies to build core deposits in consumer, small business, and commercial verticals. While the overall deposit environment remains very competitive, our focus on relationship banking, combined with our expanding digital capabilities and treasury management solutions, positions us well to continue attracting quality deposit relationships that support our loan growth objectives. Provident's commitment to managing credit risk and generating top quartile risk-adjusted returns remains unchanged. During Q1, we experienced net charge-off of $3.1 million, representing just 6 basis points of average loans. Non-performing loans increased to 73 basis points of total loans from 40 basis points in Q4, with the increase primarily attributable to a bankruptcy that impacted 4 related commercial loans totaling $82 million. I'd like to provide additional context on this relationship.

Anthony J. Labozzetta: Our average non-interest-bearing deposits were relatively stable. We remain focused on deposit generation strategies to build core deposits in consumer, small business, and commercial verticals. While the overall deposit environment remains very competitive, our focus on relationship banking, combined with our expanding digital capabilities and treasury management solutions, positions us well to continue attracting quality deposit relationships that support our loan growth objectives. Provident's commitment to managing credit risk and generating top quartile risk-adjusted returns remains unchanged. During Q1, we experienced net charge-off of $3.1 million, representing just 6 basis points of average loans. Non-performing loans increased to 73 basis points of total loans from 40 basis points in Q4, with the increase primarily attributable to a bankruptcy that impacted 4 related commercial loans totaling $82 million. I'd like to provide additional context on this relationship.

Speaker #1: While the overall deposit environment remains very competitive , our focus on relationship banking , combined with our expanding digital capabilities and treasury management solutions , positions us well to continue attracting quality deposit relationships that support our loan growth objectives .

Speaker #1: Providence commitment to managing credit risk and generating top quartile risk adjusted returns remains unchanged during the first quarter , we experienced net charge offs of 3.1 million , representing just six basis points of average loans .

Speaker #1: Non-Performing loans increased to 73 basis points of total loans from 40 basis points in the fourth quarter , with the increase primarily attributable to a bankruptcy that impacted four related commercial loans totaling 82 million .

Speaker #1: I'd like to provide additional context on this relationship . These loans have no prior charge off history and require no specific reserve allocations due to strong collateral values .

Anthony Labozzetta: These loans have no prior charge-off history and require no specific reserve allocations due to strong collateral values. Appraisals received in 2026 reflect loan-to-value ratios for the collateral properties of 32.9%, 51.7%, 61.3%, and 81.9% respectively. We are expecting resolution of these credits by year-end. Based on the current cash flow and occupancy rates of the properties and our secure position, we don't foresee a material loss to the bank. Outside of this relationship, we would have seen improvements in all credit metrics during Q1, including the levels of loan delinquencies, non-accrual loans, and criticized and classified assets. Shifting to non-interest income, we are pleased with the performance during the quarter.

Anthony J. Labozzetta: These loans have no prior charge-off history and require no specific reserve allocations due to strong collateral values. Appraisals received in 2026 reflect loan-to-value ratios for the collateral properties of 32.9%, 51.7%, 61.3%, and 81.9% respectively. We are expecting resolution of these credits by year-end. Based on the current cash flow and occupancy rates of the properties and our secure position, we don't foresee a material loss to the bank. Outside of this relationship, we would have seen improvements in all credit metrics during Q1, including the levels of loan delinquencies, non-accrual loans, and criticized and classified assets. Shifting to non-interest income, we are pleased with the performance during the quarter.

Speaker #1: Appraisals received in 2026 reflect loan to value ratios for the collateral properties of 32.9% , 51.7% , 61.3% and 81.9% , respectively . We are expecting resolution of these credits by year end based on the current cash flow and occupancy rates of the properties , and our secure position .

Speaker #1: We don't foresee a material loss to the bank outside of this relationship . We would have seen improvements in all credit metrics during the first quarter , including the levels of loan delinquencies , non-accrual loans and criticized and classified assets shifting to non-interest income .

Speaker #1: We are pleased with the performance during the quarter , our private and protection plus insurance platform in particular , delivered exceptional results in the first quarter , with the customer retention rates continuing at approximately 95% and significant year over year growth in both new business and contingency income .

Anthony Labozzetta: Our Provident Protection Plus insurance platform, in particular, delivered exceptional results in Q1, with the customer retention rates continuing at approximately 95% and significant year-over-year growth in both new business and contingency income. The strong contingency income we received this quarter reflects the quality of the relationships with our clients and carriers and the effectiveness of our risk management approach. We're seeing increased collaboration among our insurance platform, bank, and Beacon Trust, which is creating meaningful cross-sell opportunities and deepening client relationships across our organization. The pipeline of our insurance business remains strong heading into the remainder of 2026, we continue to invest in talent and capabilities that will drive sustainable growth in this differentiated revenue stream.

Anthony J. Labozzetta: Our Provident Protection Plus insurance platform, in particular, delivered exceptional results in Q1, with the customer retention rates continuing at approximately 95% and significant year-over-year growth in both new business and contingency income. The strong contingency income we received this quarter reflects the quality of the relationships with our clients and carriers and the effectiveness of our risk management approach. We're seeing increased collaboration among our insurance platform, bank, and Beacon Trust, which is creating meaningful cross-sell opportunities and deepening client relationships across our organization. The pipeline of our insurance business remains strong heading into the remainder of 2026, we continue to invest in talent and capabilities that will drive sustainable growth in this differentiated revenue stream.

Speaker #1: The strong contingency income we received this quarter reflects the quality of the relationships with our clients and carriers , and the effectiveness of our risk management approach .

Speaker #1: We seeing increased collaboration among our insurance platform , bank and beacon Trust , which is creating meaningful cross-sell opportunities and deepening client relationships across our organization .

Speaker #1: Our pipeline of our insurance business remains strong heading into the remainder of 2026 , and we continue to invest in talent and capabilities that will drive sustainable growth in this differentiated revenue stream .

Speaker #1: Beacon trust remains focused on retaining and growing its customer base , and we are optimistic that the recent hires will help accelerate growth over the balance of 2026 .

Anthony Labozzetta: Beacon Trust remains focused on retaining and growing its customer base. We are optimistic that the recent hires will help accelerate growth over the balance of 2026. Additionally, we have a strong pipeline for further SBA gain on sale over the remainder of the year. Our strong financial performance continues to build our capital position well beyond regulatory requirements. We delivered another quarter with significant year-over-year growth in earnings per share, profitability, and tangible book value, with our tangible common equity ratio ending the Q1 at 8.6%. During the quarter, we opportunistically took advantage of market volatility and bought back $12.4 million of our shares. Having said that, our top capital priority remains unchanged, driving sustained organic growth across our franchise while achieving top quartile risk-adjusted profitability. I am incredibly proud of both the efforts and production of our employees.

Anthony J. Labozzetta: Beacon Trust remains focused on retaining and growing its customer base. We are optimistic that the recent hires will help accelerate growth over the balance of 2026. Additionally, we have a strong pipeline for further SBA gain on sale over the remainder of the year. Our strong financial performance continues to build our capital position well beyond regulatory requirements. We delivered another quarter with significant year-over-year growth in earnings per share, profitability, and tangible book value, with our tangible common equity ratio ending the Q1 at 8.6%. During the quarter, we opportunistically took advantage of market volatility and bought back $12.4 million of our shares. Having said that, our top capital priority remains unchanged, driving sustained organic growth across our franchise while achieving top quartile risk-adjusted profitability. I am incredibly proud of both the efforts and production of our employees.

Speaker #1: Additionally , we have a strong pipeline for further SBA gain on sale over the remainder of the year . Our strong financial performance continues to build our capital position well beyond regulatory requirements .

Speaker #1: We delivered another quarter with significant year over year growth in earnings per share , profitability , and tangible book value . With our tangible common equity ratio ending the first quarter at 8.6% during the quarter , we opportunistically took advantage of market volatility and bought back $12.4 million of our shares .

Speaker #1: Having said that , our top capital priority remains unchanged , driving sustained organic growth across our franchise . While achieving top quartile risk adjusted profitability .

Speaker #1: I'm incredibly proud of both the efforts and production of our employees , and would now like to turn the call over to Tom for his comments on our financial performance .

Anthony Labozzetta: I would now like to turn the call over to Tom for his comments on our financial performance. Tom?

Anthony J. Labozzetta: I would now like to turn the call over to Tom for his comments on our financial performance. Tom?

Speaker #1: Tom .

Speaker #2: Thank you , Tony , and good morning , everyone . As Tony noted , our net income increased 24% versus the first quarter of 2025 to $79 million , or $0.61 per share , with a return on average assets of 1.29% .

Thomas Lyons: Thank you, Tony. Good morning, everyone. As Tony noted, our net income increased 24% versus Q1 2025 to $79 million, or $0.61 per share, with a return on average assets of 1.29%. Adjusting for the amortization of intangibles, our core return on average tangible equity was 16.6%. Pre-tax, pre-provision earnings were $108 million, or an annualized 1.75% of average assets, a 13.5% increase from the $95 million, or 1.61% of average assets reported for Q1 2025. Despite a lower day count, revenue topped $225 million for the second consecutive quarter, driven by net interest income of $194 million and record non-interest income of $31.5 million.

Thomas M. Lyons: Thank you, Tony. Good morning, everyone. As Tony noted, our net income increased 24% versus Q1 2025 to $79 million, or $0.61 per share, with a return on average assets of 1.29%. Adjusting for the amortization of intangibles, our core return on average tangible equity was 16.6%. Pre-tax, pre-provision earnings were $108 million, or an annualized 1.75% of average assets, a 13.5% increase from the $95 million, or 1.61% of average assets reported for Q1 2025. Despite a lower day count, revenue topped $225 million for the second consecutive quarter, driven by net interest income of $194 million and record non-interest income of $31.5 million.

Speaker #2: Adjusting for the amortization of intangibles , return on average tangible equity was 16.6% pre-tax pre-provision earnings were $108 million , or an annualized 1.75% of average assets .

Speaker #2: A 13.5% increase from the $95 million , or 1.61% of average assets reported for the first quarter of 2025 . Despite a lower day count , revenue topped $225 million for the second consecutive quarter , driven by net interest income of $194 million and record non-interest income of 31.5 million .

Speaker #2: Average earning assets increased by 264 million , or an annualized 4.7% , versus the trailing quarter , with the average yield on assets decreasing 13 basis points to 5.53% .

Thomas Lyons: Average earning assets increased by $264 million or an annualized 4.7% versus the trailing quarter, with the average yield on assets decreasing 13 basis points to 5.53%. This reduction in asset yield was largely offset by a 12 basis point decrease in the cost of interest-bearing liabilities to 2.71%. Interest-bearing deposit costs fell 21 basis points versus the trailing quarter to 2.39%, while total deposit costs declined 16 basis points to 1.94%. While a reduction in net purchase accounting accretion attributable to lower loan payoffs resulted in a 4 basis point decrease in our reported net interest margin versus the trailing quarter to 3.40%, our core net interest margin increased by 3 basis points to 3.04%.

Thomas M. Lyons: Average earning assets increased by $264 million or an annualized 4.7% versus the trailing quarter, with the average yield on assets decreasing 13 basis points to 5.53%. This reduction in asset yield was largely offset by a 12 basis point decrease in the cost of interest-bearing liabilities to 2.71%. Interest-bearing deposit costs fell 21 basis points versus the trailing quarter to 2.39%, while total deposit costs declined 16 basis points to 1.94%. While a reduction in net purchase accounting accretion attributable to lower loan payoffs resulted in a 4 basis point decrease in our reported net interest margin versus the trailing quarter to 3.40%, our core net interest margin increased by 3 basis points to 3.04%.

Speaker #2: This reduction in asset yield was largely offset by a 12 basis point decrease in the cost of interest bearing liabilities to 2.71% . Interest bearing deposit costs fell 21 basis points versus the trailing 1:45 .39 percent , while total deposit costs declined 16 basis points to 1.94% , while a reduction in net purchase accounting accretion attributable to lower loan payoffs resulted in a four basis point decrease in our reported net interest margin versus the trailing quarter .

Speaker #2: The 3.40% , our core net interest margin increased by three basis points to 3.04% . Given the macro developments since the start of the year , we are now modeling no further Federal Reserve rate actions for the remainder of 2026 versus three cuts in fed funds in our initial modeling .

Thomas Lyons: Given the macro developments since the start of the year, we are now modeling no further Federal Reserve rate actions for the remainder of 2026 versus 3 cuts in Fed funds in our initial modeling. As a result, we are slightly tightening our NIM outlook to 3.4% to 3.45% inclusive of purchase accounting accretion. We also now expect approximately 3 basis points of core NIM expansion in Q2. Period end loans held for investment increased $144 million or an annualized 3% for the quarter, driven by growth in commercial, multifamily, and commercial mortgage loans, partially offset by reductions in mortgage warehouse, construction, and residential mortgage loans. Total commercial loans grew by an annualized 3.9% for the quarter. Our pull-through adjusted loan pipeline at quarter end was $1.9 billion.

Thomas M. Lyons: Given the macro developments since the start of the year, we are now modeling no further Federal Reserve rate actions for the remainder of 2026 versus 3 cuts in Fed funds in our initial modeling. As a result, we are slightly tightening our NIM outlook to 3.4% to 3.45% inclusive of purchase accounting accretion. We also now expect approximately 3 basis points of core NIM expansion in Q2. Period end loans held for investment increased $144 million or an annualized 3% for the quarter, driven by growth in commercial, multifamily, and commercial mortgage loans, partially offset by reductions in mortgage warehouse, construction, and residential mortgage loans. Total commercial loans grew by an annualized 3.9% for the quarter. Our pull-through adjusted loan pipeline at quarter end was $1.9 billion.

Speaker #2: As a result , we are slightly tightening our Nim outlook to 3.4 to 3.45% , inclusive of purchase accounting accretion . We also now expect approximately three basis points of core Nim expansion in the second quarter period .

Speaker #2: End loans held for investment increased $144 million , or an annualized 3% , for the quarter , driven by growth in commercial , multifamily and commercial mortgage loans , partially offset by reductions in mortgage , warehouse construction and residential mortgage loans .

Speaker #2: Total commercial loans grew by an annualized 3.9% for the quarter . Our pull through adjusted loan pipeline at quarter end was $1.9 billion .

Speaker #2: The pipeline rate of 6.24% is accretive relative to our current portfolio . Yield of 5.85% period end deposits decreased $178 million for the quarter , or an annualized 3.8% .

Thomas Lyons: The pipeline rate of 6.24% is accretive relative to our current portfolio yield of 5.85%. Period end deposits decreased $178 million for the quarter or an annualized 3.8%. The decrease was driven by seasonal outflows of municipal deposits expected to return in subsequent quarters and a tactical decision to reduce broker deposits in favor of lower-cost FHLB borrowings. More specifically, the pricing of broker deposits was notably elevated in March, we elected to utilize more borrowings at a cost savings of approximately 20 basis points, driving a more favorable impact to our net interest margin. Asset quality remains strong despite the increase in non-performing loans that Tony previously detailed, with non-performing assets representing 58 basis points of total assets.

Thomas M. Lyons: The pipeline rate of 6.24% is accretive relative to our current portfolio yield of 5.85%. Period end deposits decreased $178 million for the quarter or an annualized 3.8%. The decrease was driven by seasonal outflows of municipal deposits expected to return in subsequent quarters and a tactical decision to reduce broker deposits in favor of lower-cost FHLB borrowings. More specifically, the pricing of broker deposits was notably elevated in March, we elected to utilize more borrowings at a cost savings of approximately 20 basis points, driving a more favorable impact to our net interest margin. Asset quality remains strong despite the increase in non-performing loans that Tony previously detailed, with non-performing assets representing 58 basis points of total assets.

Speaker #2: The decrease was driven by seasonal outflows of municipal deposits expected to return in subsequent quarters, and a tactical decision to reduce brokered deposits in favor of lower-cost borrowings.

Speaker #2: More specifically , the pricing of brokered deposits was notably elevated in March , and we elected to utilize more borrowings at a cost savings of approximately 20 basis points , driving a more favorable impact to our net interest margin .

Speaker #2: Asset quality remains strong despite the increase in nonperforming loans that Tony previously detailed with nonperforming assets representing 58 basis points of total assets .

Speaker #2: Net charge offs were 3.1 million , or an annualized six basis points of average loans . We recorded a net negative provision for credit losses of $2.1 million for the quarter , as required .

Thomas Lyons: Net charge-offs were $3.1 million or an annualized 6 basis points of average loans. We recorded a net -$2.1 million provision for credit losses for the quarter as required specific reserves on individually evaluated impaired credits declined. There was modest improvement in our CECL economic forecast and changes in our portfolio mix warranted lower pooled reserves. This brought our allowance coverage ratio down 5 basis points from the trailing quarter to 90 basis points of loans at March 31. Non-interest income increased to $31.5 million this quarter, with solid performance from our insurance and wealth management divisions, as well as increased BOLI claims and year-over-year increases in core banking fees and gains on SBA loan sales. Non-interest expense increased to $117.1 million this quarter, reflecting increased compensation and benefits costs and occupancy expense.

Thomas M. Lyons: Net charge-offs were $3.1 million or an annualized 6 basis points of average loans. We recorded a net -$2.1 million provision for credit losses for the quarter as required specific reserves on individually evaluated impaired credits declined. There was modest improvement in our CECL economic forecast and changes in our portfolio mix warranted lower pooled reserves. This brought our allowance coverage ratio down 5 basis points from the trailing quarter to 90 basis points of loans at March 31. Non-interest income increased to $31.5 million this quarter, with solid performance from our insurance and wealth management divisions, as well as increased BOLI claims and year-over-year increases in core banking fees and gains on SBA loan sales. Non-interest expense increased to $117.1 million this quarter, reflecting increased compensation and benefits costs and occupancy expense.

Speaker #2: Specific reserves on individually evaluated impaired credits declined . There was modest improvement in our seasonal economic forecast and changes in our portfolio mix warranted lower pooled reserves .

Speaker #2: This brought our allowance coverage ratio down five basis points from the trailing quarter to 90 basis points of loans at March 31st . Non-interest income increased to $31.5 million this quarter , with solid performance from our insurance and wealth management divisions , as well as increased claims and year over year increases in core banking fees and gains on SBA loan sales .

Speaker #2: Noninterest expense increased to $117.1 million this quarter , reflecting increased compensation and benefits , costs and occupancy expense expenses to average assets in the efficiency ratio .

Thomas Lyons: Expenses to average assets and the efficiency ratio, however, both improved from the prior year quarter to 1.90% and 52%, respectively. We now project quarterly core operating expenses of approximately $117 to $119 million for the remainder of 2026, with the run rate in the H2 of the year being higher than the H1. As we noted last quarter, in addition to normal expenses, we will be upgrading our core systems in Q3 of 2026 and expect additional non-recurring charges of approximately $5 million in connection with this investment, largely to be recognized in the Q3 and Q4. Our continued sound financial performance supported earning asset growth and again drove strong capital formation.

Thomas M. Lyons: Expenses to average assets and the efficiency ratio, however, both improved from the prior year quarter to 1.90% and 52%, respectively. We now project quarterly core operating expenses of approximately $117 to $119 million for the remainder of 2026, with the run rate in the H2 of the year being higher than the H1. As we noted last quarter, in addition to normal expenses, we will be upgrading our core systems in Q3 of 2026 and expect additional non-recurring charges of approximately $5 million in connection with this investment, largely to be recognized in the Q3 and Q4. Our continued sound financial performance supported earning asset growth and again drove strong capital formation.

Speaker #2: However , both improved from the prior year 12:45 .90 percent and 52% , respectively . We now project quarterly core operating expenses of approximately 117 to $119 million for the remainder of 2026 , with the run rate in the second half of the year being higher than the first half .

Speaker #2: As we noted last quarter . In addition to normal expenses , we will be upgrading our core systems in Q3 of 2026 and expect additional non-recurring charges of approximately $5 million in connection with this investment , largely to be recognized in the third and fourth quarters .

Speaker #2: Our continued sound financial performance supported earning asset growth and again drove strong capital formation , tangible book value per share , increased $0.33 , or 2.1% , this quarter , to $16.03 per share , and our tangible common equity ratio increased to 8.55% from 8.48% last quarter .

Thomas Lyons: Tangible book value per share increased $0.33 or 2.1% this quarter to $16.03 per share, and our tangible common equity ratio increased to 8.55% from 8.48% last quarter. Common stock buybacks for the quarter totaled $12.4 million and 589,000 shares, we have 2.2 million shares remaining on our current authorization. We reaffirm our previous full-year 2026 guidance of 4% to 6% loan and deposit growth, non-interest income averaging $28.5 million per quarter, and core ROA targeted 1.2% to 1.3% with a mid-teens return on average tangible common equity. That concludes our prepared remarks. We'd be happy to respond to questions.

Thomas M. Lyons: Tangible book value per share increased $0.33 or 2.1% this quarter to $16.03 per share, and our tangible common equity ratio increased to 8.55% from 8.48% last quarter. Common stock buybacks for the quarter totaled $12.4 million and 589,000 shares, we have 2.2 million shares remaining on our current authorization. We reaffirm our previous full-year 2026 guidance of 4% to 6% loan and deposit growth, non-interest income averaging $28.5 million per quarter, and core ROA targeted 1.2% to 1.3% with a mid-teens return on average tangible common equity. That concludes our prepared remarks. We'd be happy to respond to questions.

Speaker #2: Common stock buybacks for the quarter totaled $12.4 million and 589,000 shares , and we have 2.2 million shares remaining on our current authorization .

Speaker #2: We reaffirm our previous full year 2026 guidance of 4 to 6% loan and deposit growth , noninterest income averaging $28.5 million per quarter and core ROA targeted 1.2 to 1.3% with a mid-teens return on average .

Speaker #2: Tangible common equity. That concludes our prepared remarks. We'd be happy to respond to questions.

Speaker #3: At this time , I would like to remind everyone , if you would like to ask a question , please press star . Then the number one on your telephone keypad .

Operator: At this time, I would like to remind everyone if you would like to ask a question, please press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Your first question will come from Feddie Strickland with Hovde Group.

Speaker #3: If you would like to withdraw your question , please press star one again . Your first question will come from Fred Strickland with Hobday Group

Speaker #4: Hey , good morning . Just wanted to start on credit and the senior housing facilities . You know , seems like you don't really expect material losses there , but can you speak any more to the collateral location kind of types of senior housing facilities ?

Feddie Strickland: Hey, good morning. You know, wanted to start on credit and the senior housing facilities. It seems like you don't really expect material losses there. Can you speak any more to the collateral location kind of types of senior housing facilities these were or are? They consist of independent assisted living and memory care, no skilled nursing, minimal exposure to Medicaid in there. Strong demand for the properties, which is one of the reasons why we expect to see minimal loss as the bankruptcy gets resolved in fairly short order, we think. As far as the location, East Coast, properties range from $15.1 million to our share, $31.8 million is the highest loan amount.

Speaker #4: These were or are

Speaker #5: Yeah . There's a consist of independent assisted living and memory care . No skilled nursing and minimal exposure to Medicaid in their strong demand for the properties , which is one of the reasons why we .

Speaker #2: Expect to see minimal loss as the bankruptcy gets resolved in fairly short order . We think it's as to location , East coast properties range from 15.1 million to our share , 31.8 million is the highest loan amount .

Speaker #2: Ltvs , as we disclosed in the release , go from 51.7 to 81.9% . Probably noteworthy is the highest LTV is actually on the lowest loan amount .

Thomas Lyons: LTVs, as we disclosed in the release, go from 51.7% to 81.9%. Probably noteworthy is the highest LTV is actually on the lowest loan amount. That's the $15.1 million credit. I think more specifically, the properties are in New Jersey, Connecticut, Maryland, and Florida.

Thomas M. Lyons: LTVs, as we disclosed in the release, go from 51.7% to 81.9%. Probably noteworthy is the highest LTV is actually on the lowest loan amount. That's the $15.1 million credit. I think more specifically, the properties are in New Jersey, Connecticut, Maryland, and Florida.

Speaker #2: That's the $15.1 million credit . It's more specifically , the properties are in new Jersey , Connecticut , Maryland , and Florida

Speaker #4: I think that's super helpful . Thank you . And just switching gears to fees , just wanted to touch on the guide . You came in pretty meaningfully above your quarterly run rate guide , but kept the full year outlook intact .

Feddie Strickland: Okay. Got it. That's super helpful. Thank you. Just switching gears to fees, just wanted to touch on the guide. You came in pretty meaningfully above your kind of quarterly run rate guide but kept the full year outlook intact. Should we expect fees to pretty meaningfully step down from the Q1 on maybe some non-recurring revenue or some seasonality, or is there maybe some upside there?

Speaker #4: Should we expect fees to pretty meaningfully step down from the first quarter on maybe some non-recurring revenue or some seasonality ? Or is there maybe some upside there ?

Speaker #2: Yeah , I think it's just an acknowledgement of some of the volatility and some of those line items . A piece of that was Bowley income .

Thomas Lyons: Yeah, I think it's just an acknowledgement of some of the volatility in some of those line items. A, a piece of that was BOLI income. We do expect to see some seasonality in the insurance business, but we are anticipating continued improvement in the wealth management revenues as well over the course of the year to offset some of that to a degree.

Thomas M. Lyons: Yeah, I think it's just an acknowledgement of some of the volatility in some of those line items. A, a piece of that was BOLI income. We do expect to see some seasonality in the insurance business, but we are anticipating continued improvement in the wealth management revenues as well over the course of the year to offset some of that to a degree.

Speaker #2: We do expect to see some seasonality in the insurance business , but we are anticipating continued improvement in the wealth management revenues as well .

Speaker #2: Over the course of the year to offset some of that to a degree

Feddie Strickland: Got it.

Speaker #6: So in SBA , that'll be continuing .

Anthony Labozzetta: And SBA too, that'll be continuing.

Anthony J. Labozzetta: And SBA too, that'll be continuing.

Speaker #2: Yeah , that's another one that's volatile to a degree , though the , you know , depending on the production and what the gain on sale margins are at any point in time .

Thomas Lyons: Yeah. That's another one that's volatile to a degree, though. You know, dependent on the production and what the gain of sale margins are at any point in time. There may be a little bit of conservatism in that $28.5 million average.

Thomas M. Lyons: Yeah. That's another one that's volatile to a degree, though. You know, dependent on the production and what the gain of sale margins are at any point in time. There may be a little bit of conservatism in that $28.5 million average.

Speaker #2: So there may be a little bit of conservatism in that $28.5 million average

Speaker #4: Got it . Just one more quick one . If I could , on loan discount accretion expectations . I think you had a decent step down there this quarter .

Feddie Strickland: Got it. Just 1 more quick one if I could on loan discount accretion expectations. I think you had a decent step down there this Q. You know, what's kind of the expectation for the next Q or 2 there?

Speaker #4: What's what's kind of the expectation for the next quarter or two ?

Speaker #2: There was a significant reduction in payoffs this quarter , which , you know , we kind of like actually to retain the asset .

Thomas Lyons: There's a significant reduction in payoffs this quarter, which, you know, we kind of like actually to retain the asset. If we're looking for 3 basis points of core margin expansion to roughly 3.07 and still anticipating a margin in the 3.40 to 3.45 range for the balance of the year, the difference being purchase accounting accretion.

Thomas M. Lyons: There's a significant reduction in payoffs this quarter, which, you know, we kind of like actually to retain the asset. If we're looking for 3 basis points of core margin expansion to roughly 3.07 and still anticipating a margin in the 3.40 to 3.45 range for the balance of the year, the difference being purchase accounting accretion.

Speaker #2: But if we're looking for three basis points of core margin expansion to roughly 3.07%, and still anticipating a margin in the 3.40% to 3.45% range for the balance of the year.

Speaker #2: The difference being purchase accounting accretion.

Speaker #4: Got it . Thanks for taking my questions

Feddie Strickland: Got it. Thanks for taking my questions.

Speaker #7: Thank you

Thomas Lyons: Thank you.

Thomas M. Lyons: Thank you.

Speaker #3: Your next question will come from Tim Schwartz with KBW .

Operator: Your next question will come from Tim Switzer with KBW.

Speaker #8: Hey , good morning . Thanks for taking my questions

Tim Switzer: Hey, good morning. Thanks for taking my questions.

Anthony Labozzetta: Good morning.

Anthony J. Labozzetta: Good morning.

Speaker #6: Good morning

Thomas Lyons: Good morning.

Thomas M. Lyons: Good morning.

Speaker #8: Really quick follow up on your comment there on the Nim . Can you talk about maybe how a fed rate cut would impact not necessarily 2026 numbers , but perhaps 2027 ?

Tim Switzer: Really quick follow-up on your comment there on the NIM. Can you talk about maybe how, you know, a Fed rate cut would impact, not necessarily 2026 numbers, but perhaps 2027? Is that accretive to earnings going forward if we get one or two cuts?

Speaker #8: Is that is that accretive to earnings going forward ? If we get 1 or 2 cuts .

Speaker #2: It is . Tim . I think consistent with last quarter when we talked , each cut's about 2 to 3 basis points of benefit to us on the current balance sheet .

Thomas Lyons: It is, Tim. I think consistent with last quarter when we talked, each cut's about 2 to 3 basis points of benefit to us on the current balance sheet.

Thomas M. Lyons: It is, Tim. I think consistent with last quarter when we talked, each cut's about 2 to 3 basis points of benefit to us on the current balance sheet.

Speaker #8: Okay , great . And then on your loan back book repricing , I know you guys have a good amount of loans over the next year or so .

Tim Switzer: Okay, great. On your loan backlog repricing, I know you guys have a good amount of loans over the next year or so. Can you update us on, you know, how much there is and what the gap is on new yields versus old?

Speaker #8: Can you update us on how much there is and what the gap is on new yields versus old

Thomas Lyons: Mike, do you by any chance?

Speaker #2: Mike , do you by any chance .

Thomas M. Lyons: Mike, do you by any chance?

Speaker #9: Yeah . So Tim , the gap , you know the loan pipelines at about just under a six and a quarter . You know we still have loans coming off in the mid fives generally .

Michael A. Perito: Yeah. Tim, the gap, the loan pipelines at about just under 6.25%. We still have loans coming off in the mid-fives generally. There's some pickup there. I think we've isolated that benefit to the NIM to be a couple, 2 to 3 basis points over the 12-month period. We can get you. Tom might have the exact dollar amount of the reprice or ID, but that's the general impact to margin.

Speaker #9: So there's there's some pickup there . I think we've isolated that benefit to the Nim to be a couple 2 to 3 basis points over the 12 month period .

Speaker #9: We can get you Tom might have the exact dollar amount of the reprice , but or Adi . But that's the general impact of margin .

Speaker #10: It's about 5 billion in the total loan portfolio . But you would say only 60% of that . We get a benefit from , because that's the Lakeland sorry .

Thomas Lyons: It's about $5 billion in the total loan portfolio, but you would say only 60% of that we get a benefit from because that's the 40% is the Lakeland related portfolio.

Thomas M. Lyons: It's about $5 billion in the total loan portfolio, but you would say only 60% of that we get a benefit from because that's the 40% is the Lakeland related portfolio.

Speaker #10: The other 40% is the Lakeland related portfolio . So

Speaker #8: Got you . Okay . So it's a slight benefit . And then last , last one for me , could you guys walk us through some of the benefits in new capabilities ?

Tim Switzer: Got it. Okay. So it's a slight benefit. Last one for me. Could you guys walk us through some of the benefits and new capabilities the core upgrade, I think it's from FIS, will bring you? You know, are there any, like, new products it'll enable or anything like that?

Speaker #8: The core upgrade, I think it's from FIS, will bring you— and you know, are there any, like, new products that will enable or anything like that?

Speaker #6: Yeah . I mean ,

Anthony Labozzetta: Yeah. I mean, just at a high level, we're going to be able to get more robustness around the lending area in terms of information data flows. The branch opening, account opening activity is going to be much faster, robust. These are some of the things we expect. Also creates the foundation for us to be able to attach other applications through the APIs that work more efficiently. The IBS core is much more functional for what I would call a more complicated commercial bank that has a lot of verticals that we can't get the full benefit on the current core as some of the benefits.

Anthony J. Labozzetta: Yeah. I mean, just at a high level, we're going to be able to get more robustness around the lending area in terms of information data flows. The branch opening, account opening activity is going to be much faster, robust. These are some of the things we expect. Also creates the foundation for us to be able to attach other applications through the APIs that work more efficiently. The IBS core is much more functional for what I would call a more complicated commercial bank that has a lot of verticals that we can't get the full benefit on the current core as some of the benefits.

Speaker #1: Just , just at a high level , we're going to be able to get more robustness around , around the lending area in terms of information , data flows , the branch opening account , opening activities going to be much faster , robust .

Speaker #1: So so these are some of the things that that we expect also creates the foundation for us to be able to attach other applications through the APIs that work more efficiently .

Speaker #1: The , the core is much more functional for , for a , what I would call more complicated commercial bank that has a lot of verticals that we can get the , the full benefit on the , on the current quarter , as some of the benefits

Speaker #8: Okay , great . Thank you

Tim Switzer: Okay, great. Thank you.

Anthony Labozzetta: You're welcome.

Anthony J. Labozzetta: You're welcome.

Speaker #3: Your next question will come from Steve Moss with Raymond James .

Operator: Your next question will come from Steve Moss with Raymond James.

Speaker #4: Hi . Good morning guys . Maybe just starting off here Morning on the loan pipeline here . Looking good . Just kind of curious .

Steve Moss: Good morning, guys.

Anthony Labozzetta: Morning, Steve.

Anthony J. Labozzetta: Morning, Steve.

Steve Moss: Maybe just starting off here. Morning. On the, you know, loan pipeline here looking good, just kind of curious, you know, how you guys are thinking about the pull-through, economic uncertainty? You know, I realize you didn't increase the loan growth guidance, but just how you're thinking about those things?

Speaker #4: You know how you guys are thinking about the pull through economic uncertainty . You know , I realize you didn't update increase the loan growth guidance , but just how you're thinking about those things

Speaker #1: Well , I'll start there . I mean , I , I look at , you know , our pipeline , our pull through , our commitments .

Anthony Labozzetta: Well, I'll start there. I mean, I look at, you know, our pipeline, our pull-through, our commitments. They're looking good. I think, you know, we're still thinking the guidance is good. We might overachieve the guidance depending on what happens with prepayments and market conditions. I don't see anything right at this time, given the geopolitical circumstances that would affect the guidance that we've provided to you. We're still feeling good about that. Depending on prepayments determines whether we can overachieve or come close.

Anthony J. Labozzetta: Well, I'll start there. I mean, I look at, you know, our pipeline, our pull-through, our commitments. They're looking good. I think, you know, we're still thinking the guidance is good. We might overachieve the guidance depending on what happens with prepayments and market conditions. I don't see anything right at this time, given the geopolitical circumstances that would affect the guidance that we've provided to you. We're still feeling good about that. Depending on prepayments determines whether we can overachieve or come close.

Speaker #1: They're looking good . I think , you know , we're still thinking the guidance is , is , is good . We might , we might overachieve the guidance depending on what happens with prepayments and , and market conditions .

Speaker #1: But I don't see anything right at this time , given the , the geopolitical circumstances that would affect the guidance that we've , we've provided to you .

Speaker #1: So we're still feeling good about that . And depending on prepayments determines whether we can overachieve or , or come close .

Speaker #2: Yes , Steve , I kind of indicated in my comments the pull through adjusted pipeline at about 1.9 billion to . So the expected if you do the math on that , it's about a 6,061% pull through rate in terms of mix of that pipeline , about 47% of it is commercial real estate .

Thomas Lyons: Steve, I kind of indicated in my comments the pull-through adjusted pipeline at about $1.9 billion too. We expect that if you do the math on that, it's about a 60% to 61% pull-through rate. In terms of mix of that pipeline, about 47% of it is commercial real estate and multifamily. Commercial lending C&I growth is about 49%, and the balance is in consumer, that's just 4%.

Thomas M. Lyons: Steve, I kind of indicated in my comments the pull-through adjusted pipeline at about $1.9 billion too. We expect that if you do the math on that, it's about a 60% to 61% pull-through rate. In terms of mix of that pipeline, about 47% of it is commercial real estate and multifamily. Commercial lending C&I growth is about 49%, and the balance is in consumer, that's just 4%.

Speaker #2: And multifamily commercial lending . CNI growth is about 49% , and the balance is in consumer . That's just 4% .

Speaker #1: Yeah , I and I would just , you know , Steve , I don't know the dimension . This is pretty , pretty good dynamic at Provident because what you're seeing is the way it's it's distributed .

Anthony Labozzetta: Yeah. I, and I would just, you know, Steve, add another dimension. This is pretty good dynamic at Provident because what you're seeing is the way it's distributed, it's very diverse. Just by the normal dynamics, without us doing anything and just achieving our CRE loan objectives, we can still see the CRE ratio coming down because of capital build and diversification into the other books like C&I, specialty lending, and middle market. That's a pretty good dynamic that we're accomplishing here, which is our strategic focus.

Anthony J. Labozzetta: Yeah. I, and I would just, you know, Steve, add another dimension. This is pretty good dynamic at Provident because what you're seeing is the way it's distributed, it's very diverse. Just by the normal dynamics, without us doing anything and just achieving our CRE loan objectives, we can still see the CRE ratio coming down because of capital build and diversification into the other books like C&I, specialty lending, and middle market. That's a pretty good dynamic that we're accomplishing here, which is our strategic focus.

Speaker #1: It's very diverse . So just by the normal dynamics , without us doing anything and just leaving our , our CRE loan objectives , we can still see the CRE ratio coming down because of capital build and , and diversification into the other books like CNI Specialty Lending and Middle market .

Speaker #1: So that's a pretty good dynamic that we're , we're accomplishing here , which is our strategic focus , right ?

Steve Moss: Right. Okay. I appreciate all that color there. Then just, you know, on the deposit side, just curious what you guys are seeing for competition these days and, you know, how you're feeling about funding cost trends?

Speaker #4: Okay . I appreciate all that color there . And then just , you know , on the deposit side , just curious what you guys are seeing for competition these days .

Speaker #4: And you know , how you're , how you're feeling about funding cost trends .

Speaker #1: I would say that the competition is probably heightened more than I've seen in the last bunch of quarters . I think it's getting a little tough , not only on on the deposit side , but also on the lending side .

Anthony Labozzetta: I would say that the competition is probably heightened more than I've seen in the last bunch of quarters. I think it's getting tough not only on the deposit side but also on the lending side. We're seeing spreads coming down. We're seeing, you know, creative structures on deposit programs. For people like waiving fees, waiving certain scenarios, pricing. We're seeing that. You know, again, we're responding to that. We have our pathways. We're seeing some good dynamics on our consumer side and our small business side. You know, the municipals, I think we're seeing good dynamics even though the flows went out because we have some good RFPs moving forward into Q2.

Anthony J. Labozzetta: I would say that the competition is probably heightened more than I've seen in the last bunch of quarters. I think it's getting tough not only on the deposit side but also on the lending side. We're seeing spreads coming down. We're seeing, you know, creative structures on deposit programs. For people like waiving fees, waiving certain scenarios, pricing. We're seeing that. You know, again, we're responding to that. We have our pathways. We're seeing some good dynamics on our consumer side and our small business side. You know, the municipals, I think we're seeing good dynamics even though the flows went out because we have some good RFPs moving forward into Q2.

Speaker #1: We're seeing spreads coming down . We're seeing , you know , creative structures on , on , on deposit Programs . So so for people like waiving fees , waiving certain scenarios , pricing , so we're seeing that and , you know , again , we're , you know , we're responding to that .

Speaker #1: We have our pathways . We're seeing some good dynamics in our consumer side and our small business side . You know , the municipals , I think we're we're seeing good dynamics , even though the flows went out because we have some good RFPs moving forward into the second quarter , our focus is to get our regional teams and our TM teams more expanded so that we can go get more scale in that space .

Anthony Labozzetta: Our focus is to get our regional teams and our TM teams more expanded so that we can go get more scale in that space. We're feeling good about the prospects. The competition to your question is stronger than I've seen it in a while.

Anthony J. Labozzetta: Our focus is to get our regional teams and our TM teams more expanded so that we can go get more scale in that space. We're feeling good about the prospects. The competition to your question is stronger than I've seen it in a while.

Speaker #1: We're feeling good about the prospects , but the competition to to your question is , is stronger than I've seen it in a while .

Speaker #4: Okay . And then , you know , on to maybe the reserve here , just with the , the Cecil move down . Do we just think of this as a one time adjustment , you know , or kind of how your thoughts on , on where this reserve goes ?

Steve Moss: Okay. You know, on to maybe the reserve here. Just with the CECL move down, do we just think of this as a one-time adjustment? You know, or kind of how are your thoughts on where this reserve goes?

Speaker #2: As you know , Steve , a lot of that's dependent on the , on the forecast going forward . I wouldn't expect material continued improvement in that forecast .

Thomas Lyons: Well, as you know, Steve, a lot of that's dependent on the forecast going forward. I wouldn't expect material continued improvement in that forecast, again, given the macro events in the world. A big piece of that was also the reduction in specific reserves. We had a really strong quarter for resolutions with very minimal losses. You saw the net charge-offs at $3.1 million. About $2.5 million of that was previously reserved for, so no need to replenish those reserves. There's limited specific reserves on the remaining impaired loans that have been identified. We're very positive on the resolution prospects for a number of those credits in the following quarter. We don't see a lot of loss content in the book overall.

Thomas M. Lyons: Well, as you know, Steve, a lot of that's dependent on the forecast going forward. I wouldn't expect material continued improvement in that forecast, again, given the macro events in the world. A big piece of that was also the reduction in specific reserves. We had a really strong quarter for resolutions with very minimal losses. You saw the net charge-offs at $3.1 million. About $2.5 million of that was previously reserved for, so no need to replenish those reserves. There's limited specific reserves on the remaining impaired loans that have been identified. We're very positive on the resolution prospects for a number of those credits in the following quarter. We don't see a lot of loss content in the book overall.

Speaker #2: Again , given the macro events in the world . But a big piece of that was also the reduction in specific reserves . We had a really strong quarter for resolutions with with very minimal losses .

Speaker #2: You saw the net charge offs at 3.1 million , about 2.5 million of that was previously reserved for . So no need to replenish those .

Speaker #2: Those reserves . There's limited specific reserves on the remaining impaired loans that have been identified . And we're very positive on on the resolution prospects for a number of those credits in the following quarter .

Speaker #2: So we don't see a lot of lost content in the book overall We did have some some improvement in the portfolio mix in terms of construction loans , reducing a bit so that required less pooled reserves as well .

Thomas Lyons: We did have some improvement in the portfolio mix in terms of construction loans reducing a bit, so that required less pooled reserves as well. Yeah, that's it. Overall, you know, again, 60 basis points of charge-offs. We feel pretty strongly about the quality of our underwriting and our asset quality going forward.

Thomas M. Lyons: We did have some improvement in the portfolio mix in terms of construction loans reducing a bit, so that required less pooled reserves as well. Yeah, that's it. Overall, you know, again, 60 basis points of charge-offs. We feel pretty strongly about the quality of our underwriting and our asset quality going forward.

Speaker #2: And yeah , that's , that's , that's it . So overall , again , six points of charge offs . We feel pretty strong strongly about the quality of our underwriting and our asset quality going forward

Speaker #4: Guy . Okay . Appreciate that . And just last one , following up on on the credits here with the senior housing , are those Non-performers cross collateralized and just do you by any chance have a weighted average LTV ?

Steve Moss: Got it. Okay. Appreciate that. Just last one following up on the credits here with the senior housing. Are those non-performers cross-collateralized? Just do you by any chance have a weighted average LTV?

Speaker #2: They are not cross collateralized . They're in Delaware . Statutory trusts , but the specific ltvs are outlined in the release . They go from 32.9% up to 81.9 on the smallest dollar credit .

Thomas Lyons: They are not cross-collateralized. They're in Delaware statutory trusts. The specific LTVs are outlined in the release. They go from 32.9% up to 81.9% on the smallest dollar credit.

Thomas M. Lyons: They are not cross-collateralized. They're in Delaware statutory trusts. The specific LTVs are outlined in the release. They go from 32.9% up to 81.9% on the smallest dollar credit.

Speaker #1: You know , just just to give a little bit more color , I think it's something that might get lost in , in the in the write up these , these loans that we mentioned went into NPA , not because of cash flow , not because of anything except the bankruptcy of the holding entity that dragged that into payment , stopping .

Anthony Labozzetta: You know, just to give a little bit more color, I think it's something that might get lost in the write-up. These loans that we mentioned went into NPA not because of cash flow, not because of anything except the bankruptcy of the holding entity that dragged that into payments stopping. That's why we feel strong about the ultimate resolution of these because the cash flows are intact, the LTVs are strong, and we just needed to go through the bankruptcy process and get us pushed through. We feel the resolution can happen in this calendar year with minimal to no loss to us. You know, it's hard for us to say absolutely no, but we think it's going to be a positive resolution.

Anthony J. Labozzetta: You know, just to give a little bit more color, I think it's something that might get lost in the write-up. These loans that we mentioned went into NPA not because of cash flow, not because of anything except the bankruptcy of the holding entity that dragged that into payments stopping. That's why we feel strong about the ultimate resolution of these because the cash flows are intact, the LTVs are strong, and we just needed to go through the bankruptcy process and get us pushed through. We feel the resolution can happen in this calendar year with minimal to no loss to us. You know, it's hard for us to say absolutely no, but we think it's going to be a positive resolution.

Speaker #1: So that's why we feel strong about the ultimate resolution of these, because the cash flows are intact. The leaves are strong, and we just needed to go through the bankruptcy process and get us pushed through.

Speaker #1: And we feel the resolution can happen in this calendar year with a minimal to no loss to us . You know , it's hard for us to say absolutely no , but we think it's going to be a positive resolution .

Speaker #4: Okay , great . I appreciate all that color . Thank you very much , guys .

Steve Moss: Okay, great. I appreciate all that color. Thanks very much, guys.

Speaker #7: Thank you . Thank you .

Thomas Lyons: Thank you.

Thomas M. Lyons: Thank you.

Anthony Labozzetta: Thank you.

Anthony J. Labozzetta: Thank you.

Speaker #3: Your next question will come from David Storms with Stonegate.

Operator: Your next question will come from David Storms with Stonegate.

Speaker #11: Morning . And thank you for taking my questions . I just wanted to start just wanted to start with the noninterest income . It was mentioned in fair remarks that there's been some cooperation between insurance and the rest of the business , and that's been helping to drive the insurance growth .

David Storms: Morning, thank you for taking my questions.

Dave Storms: Morning, thank you for taking my questions.

Anthony Labozzetta: Morning.

Anthony J. Labozzetta: Morning.

David Storms: Morning. Just want to start with a non-interest income. It was mentioned in prepared remarks that there's been some cooperation between insurance and the rest of the business, and that's been helping to drive the insurance growth. Maybe how much more integration or cooperation could there be here, and how applicable could that be to the wealth segment?

Dave Storms: Morning. Just want to start with a non-interest income. It was mentioned in prepared remarks that there's been some cooperation between insurance and the rest of the business, and that's been helping to drive the insurance growth. Maybe how much more integration or cooperation could there be here, and how applicable could that be to the wealth segment?

Speaker #11: Maybe how much more integration or cooperation could there be here and how applicable could that be to the wealth segment

Anthony Labozzetta: It was a little faint, but maybe.

Speaker #1: It was a little faint, but maybe.

Anthony J. Labozzetta: It was a little faint, but maybe.

Speaker #2: Collaboration among the insurance wealth divisions and the remainder of the banks . And what the upside is .

Thomas Lyons: Collaboration among the insurance wealth divisions and the major bank and what the upside is there.

Thomas M. Lyons: Collaboration among the insurance wealth divisions and the major bank and what the upside is there.

Speaker #7: There .

Anthony Labozzetta: You know, what I'm seeing is huge momentum. I think part of why the insurance company is growing, I think they did 21% revenue growth year over year. It's the constant dynamic of working with the commercial bank and the Beacon and retail side of the organization that we're collaboratively very integrated. We're seeing a lot more. They track the referrals. Now it's become sort of, you know, natural to the bank. You don't have to force it through incentives. People are doing it because they see the value that it creates for our customer base. So it's fun to watch from my perspective because there's no end to how far the insurance can grow.

Speaker #1: I you know .

Speaker #7: I .

Anthony J. Labozzetta: You know, what I'm seeing is huge momentum. I think part of why the insurance company is growing, I think they did 21% revenue growth year over year. It's the constant dynamic of working with the commercial bank and the Beacon and retail side of the organization that we're collaboratively very integrated. We're seeing a lot more. They track the referrals. Now it's become sort of, you know, natural to the bank. You don't have to force it through incentives. People are doing it because they see the value that it creates for our customer base. So it's fun to watch from my perspective because there's no end to how far the insurance can grow.

Speaker #1: What I'm seeing is , is huge momentum . I think part of why the insurance company is , is growing . I think they did 21% revenue growth year over year .

Speaker #1: It's the constant dynamic of working with the commercial bank and the beacon and the retail side of the organization that we're collaboratively very integrated .

Speaker #1: We're seeing a lot more . They track the referrals . But now it's become sort of , you know , natural to the bank .

Speaker #1: You don't have to force it through incentives. People are doing it because they see the value that it creates for our customer base.

Speaker #1: And so it's fun to watch . From my perspective , because there's , there's no end to how far the insurance can grow .

Speaker #1: In fact , the conversations we have is about making sure that we , we continue to staff up and find that workforce in order to be able to handle that business .

Anthony Labozzetta: In fact, the conversations we have is about making sure that we continue to staff up and find that workforce in order to be able to handle that business. There's still a lot of business within the bank that we can refer across. The same thing is happening on the Beacon side. You know, we've seen in this quarter, we've seen positive flows, and we've also seen a good dynamic of referrals from the bank and insurance back into Beacon. As these things, I think that momentum will only pick up. You know, what we have to do on the Beacon side is continue to build up that sales force to be able to handle these cross referrals as they come in.

Anthony J. Labozzetta: In fact, the conversations we have is about making sure that we continue to staff up and find that workforce in order to be able to handle that business. There's still a lot of business within the bank that we can refer across. The same thing is happening on the Beacon side. You know, we've seen in this quarter, we've seen positive flows, and we've also seen a good dynamic of referrals from the bank and insurance back into Beacon. As these things, I think that momentum will only pick up. You know, what we have to do on the Beacon side is continue to build up that sales force to be able to handle these cross referrals as they come in.

Speaker #1: There's still a lot of business within the bank that we can refer across . And the same thing is happening on the beacon side .

Speaker #1: You know , we've seen in this quarter , we've seen positive flows , and we also have seen a good dynamic of referrals from the bank and insurance back into beacon .

Speaker #1: So as these things , I think that momentum will only pick up , you know , what we have to do on a beacon side is continue to build up that sales force to be able to handle these cross referrals as they come in .

Speaker #1: So I think that is , I think the way we we described it in the write up , it's a very differentiated revenue stream .

Anthony Labozzetta: I think the way we described it in the write-up, it's a very differentiated revenue stream, and I think it's one that we can continue to build. The team's doing a great job on that.

Anthony J. Labozzetta: I think the way we described it in the write-up, it's a very differentiated revenue stream, and I think it's one that we can continue to build. The team's doing a great job on that.

Speaker #1: And I think it's one that we can continue to build . So team's doing a great job on that .

Speaker #11: Understood . That's very helpful . Thank you . One more for me . And I know your primary goal is , you know , strong , organic growth , but just thinking about your efficiency ratio hovering in the low 50s for a little bit now , what appetite or ability is there to keep dialing that lower ?

David Storms: Understood. That's very helpful. Thank you. One more for me. I know your primary goal is, you know, strong organic growth. Just thinking about your efficiency ratio, hovering in the low fifties for a little bit now. What appetite or ability is there to keep dialing that lower? Do any of these core updates have a significant impact on that? Just any thoughts around your efficiency ratio.

Dave Storms: Understood. That's very helpful. Thank you. One more for me. I know your primary goal is, you know, strong organic growth. Just thinking about your efficiency ratio, hovering in the low fifties for a little bit now. What appetite or ability is there to keep dialing that lower? Do any of these core updates have a significant impact on that? Just any thoughts around your efficiency ratio.

Speaker #11: Do any of these core updates have a significant impact on that? Just any thoughts around your efficiency ratio.

Speaker #7: All right .

Speaker #1: I'll start . I mean , you know , we're constantly looking for operational efficiencies . Some of the , you know , if you look at our efficiency ratio today .

Anthony Labozzetta: I'll start. I mean, you know, we're constantly looking for operational efficiency. If you look at our efficiency ratio today, I think the part that needs to be really described is how much investment we've made in our technology over the last bunch of quarters in our infrastructure. That's in the run rate. We're seeing the revenue streams coming in from some of the investments we've made. We can lower the efficiency ratio in that regard. We'll continue to do branch optimization strategies. We'll continue to look at some tools on the technology side for efficiency. I would look at us more from the standpoint of doing more with less in the future than continuing to have to invest in more talent in order to execute.

Anthony J. Labozzetta: I'll start. I mean, you know, we're constantly looking for operational efficiency. If you look at our efficiency ratio today, I think the part that needs to be really described is how much investment we've made in our technology over the last bunch of quarters in our infrastructure. That's in the run rate. We're seeing the revenue streams coming in from some of the investments we've made. We can lower the efficiency ratio in that regard. We'll continue to do branch optimization strategies. We'll continue to look at some tools on the technology side for efficiency. I would look at us more from the standpoint of doing more with less in the future than continuing to have to invest in more talent in order to execute.

Speaker #1: I think the part that needs to be really described is how much investment we've made in our technology over the last bunch of quarters in our infrastructure .

Speaker #1: So that's in the run rate. And we're seeing the revenue streams coming in from some of the investments we've made. So we can lower the efficiency ratio in that regard.

Speaker #1: We'll continue to do branch optimization strategies . We'll continue to look at tools on the technology side for efficiency . I would look at at us more from the standpoint of doing more with less in the future than continuing to have to invest in , in , in more talent in order to execute .

Speaker #1: So I , and I would expect the efficiency ratio to continue to come down , but it'll be sawtooth . The way we look at it here , is it will come down because of the positive operating leverage .

Anthony Labozzetta: I would expect the efficiency ratio to continue to come down. It'll be sawtooth. The way we look at it here is it will come down because of the positive operating leverage, and then we'll invest and bump up, and then it'll come back down by getting the positive operating again. Certainly, the new system will play in the efficiency side, on flows, how we get things into automated boarding, closing. We'll see a lot of that stuff in future state.

Anthony J. Labozzetta: I would expect the efficiency ratio to continue to come down. It'll be sawtooth. The way we look at it here is it will come down because of the positive operating leverage, and then we'll invest and bump up, and then it'll come back down by getting the positive operating again. Certainly, the new system will play in the efficiency side, on flows, how we get things into automated boarding, closing. We'll see a lot of that stuff in future state.

Speaker #1: And then we'll invest in pump up , and then it'll come back down by getting the positive operating again . But but the the certainly the new system will play in the efficiency side on flows .

Speaker #1: How we get things into automated boarding, closing—so we'll see a lot of that stuff in the future. State.

Speaker #11: Understood . Thank you for taking my questions , Kerry .

David Storms: Understood. Thank you for taking my questions.

Dave Storms: Understood. Thank you for taking my questions.

Anthony Labozzetta: Gary, before we move to the next question, I just wanted to the response to the last question to Steve. The weighted average LTV on the four properties is 53%. Thanks.

Anthony J. Labozzetta: Gary, before we move to the next question, I just wanted to the response to the last question to Steve. The weighted average LTV on the four properties is 53%. Thanks.

Speaker #9: Before we move to the next question , I just wanted to . The response to the last question to Steve , the weighted average LTV on the four properties is 53% .

Speaker #9: Thanks .

Speaker #2: But they're not cross-collateral.

Thomas Lyons: They're not cross-collateral.

Thomas M. Lyons: They're not cross-collateral.

Speaker #7: No , but just they want to know about the size of the property

Anthony Labozzetta: No, but just they wouldn't know about the size of the property.

Anthony J. Labozzetta: No, but just they wouldn't know about the size of the property.

Speaker #3: And your final question will come from Manuel Navas with Piper Sandler

Operator: Your final question will come from Manuel Navas with Piper Sandler.

Speaker #4: Hey , can you revisit the . Good morning . Can you revisit the buyback pace going forward ? And how it's impacted with kind of greater loan growth in the second quarter and you're talking about opportunistic , like , what's the pricing that would get you involved

Manuel Navas: Good morning. Can you revisit the buyback pace going forward and how it's impacted with kind of greater loan growth in Q2? You're talking about opportunistic, like, what's the pricing that would get you involved?

Speaker #2: Yeah , I think the pace is going to depend on market conditions and what our expectations are for growth . You saw significant bump in the pipeline rate , but we do believe we have adequate capital and adequate capital formation to continue to take advantage of market conditions when it warrants .

Thomas Lyons: Yeah, I think the pace is going to depend on market conditions and what our expectations are for growth. You saw a significant bump in the pipeline rate, we do believe we have adequate capital and adequate capital formation to continue to take advantage of market conditions, when it warrants. I don't want to define a specific price. We try to keep the earn back on that in the low 3 kind of range at a maximum level. Again, I don't want to define it too narrowly because it really does depend on our current view about asset generation and capital formation at any point in time.

Thomas M. Lyons: Yeah, I think the pace is going to depend on market conditions and what our expectations are for growth. You saw a significant bump in the pipeline rate, we do believe we have adequate capital and adequate capital formation to continue to take advantage of market conditions, when it warrants. I don't want to define a specific price. We try to keep the earn back on that in the low 3 kind of range at a maximum level. Again, I don't want to define it too narrowly because it really does depend on our current view about asset generation and capital formation at any point in time.

Speaker #2: I don't want to define a specific price . I try to keep the earn back on on that in the low three kind of range .

Speaker #2: At the maximum level . But again , I don't I don't want to define it too , too narrowly because it really does depend on our current view about asset generation and capital formation at any point in time

Speaker #4: Could you update on Place on the periphery of your of your geography where you've added talent or added offices and their growth ramps so far

Manuel Navas: Could you update on places on the periphery of your, of your geography where you've added talent or added offices and their growth ramps so far?

Anthony Labozzetta: Yes. I mean, we've added some talent in the Westchester market. We've added talent down in the Main Line of Pennsylvania around the Philadelphia area. We're adding some talent into the Cherry Hill area as part of our growth strategy, not only on lending, but on deposit gathering. Also moving some of our business partners down there, like insurance and wealth, to be able to penetrate some of those markets. Those are just, you know, two of the areas that I mentioned. Obviously, our strategic plan is to continue some more thoughts on expansion.

Speaker #1: Yes . I mean , we've added some talent in the Westchester market . We've added talent down in the main line of the Pennsylvania around the Philadelphia area .

Anthony J. Labozzetta: Yes. I mean, we've added some talent in the Westchester market. We've added talent down in the Main Line of Pennsylvania around the Philadelphia area. We're adding some talent into the Cherry Hill area as part of our growth strategy, not only on lending, but on deposit gathering. Also moving some of our business partners down there, like insurance and wealth, to be able to penetrate some of those markets. Those are just, you know, two of the areas that I mentioned. Obviously, our strategic plan is to continue some more thoughts on expansion.

Speaker #1: We're moving . We're adding some talent into the Cherry Hill area as part of our growth strategy , not only on on lending , but on deposit gathering , also moving some of our our business partners down there , like insurance and wealth to be able to penetrate some of those markets .

Speaker #1: So those are just , you know , two of the areas that I mentioned and obviously our strategic plan is to continue some some more thoughts on expansion .

Speaker #4: Okay . That's great . Thank you

Manuel Navas: That's great. Thank you.

Speaker #3: There are no further questions at this time . I would like to turn the call back over to Tony Lopez for any closing remarks .

Operator: There are no further questions at this time. I would like to turn the call back over to Anthony Labozzetta for any closing remarks.

Speaker #1: Thank you , everyone , for joining the call and your questions . Before we end , I would like to take a moment to congratulate Tom Lyons .

Anthony Labozzetta: Thank everyone for joining, the call and your questions. Before we end, I would like to take a moment to congratulate Thomas Lyons. This is his last official earnings call. Thomas obviously has been a great figure here and has done so much for Provident. He's been a great partner, and certainly, he will be missed by me and I'm sure all of his colleagues at the bank. Thank you, Thomas.

Anthony J. Labozzetta: Thank everyone for joining, the call and your questions. Before we end, I would like to take a moment to congratulate Thomas Lyons. This is his last official earnings call. Thomas obviously has been a great figure here and has done so much for Provident. He's been a great partner, and certainly, he will be missed by me and I'm sure all of his colleagues at the bank. Thank you, Thomas.

Speaker #1: This is his last official earnings call . Tom . Tom obviously has been a great figure here and and has done so much for Provident .

Speaker #1: He's been a great partner, and certainly he will be missed by me, and I'm sure all of his colleagues at the bank.

Speaker #1: So thank you Tom .

Speaker #7: Thank you .

Thomas Lyons: Thank you, Tom.

Thomas M. Lyons: Thank you, Tom.

Speaker #1: Tom and we look forward to speaking to you soon . And thank you very much

Anthony Labozzetta: We look forward to speaking to you soon. Thank you very much.

Anthony J. Labozzetta: We look forward to speaking to you soon. Thank you very much.

Operator: Thank you for your participation. This does conclude today's conference. You may now disconnect.

Q1 2026 Provident Financial Services Inc Earnings Call

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