Provident Financial Services Q4 2025 Earnings Call - Record revenue and nascent margin momentum, with capital to deploy and a busy 2026 agenda

Jill, Conference Operator: Thank you for standing by. My name is Jill, and I will be your conference operator today. At this time, I would like to welcome everyone to the Provident Financial Services fourth quarter earnings 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to Adriano Duarte, Investor Relations.

Adriano Duarte, Investor Relations, Provident Financial Services: Good morning, everyone, and thank you for joining us for our fourth quarter earnings call. Today’s presenters are President and CEO, Tony Labozzetta, and Senior Executive Vice President and Chief Financial Officer, Tom Lyons. Before beginning the 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, it’s my pleasure to introduce Tony Labozzetta, who will offer his perspective on the fourth quarter. Tony?

Tony Labozzetta, President and CEO, Provident Financial Services: Thank you, Adriano, and welcome everyone to the Provident Financial Services fourth quarter earnings call. The Provident team delivered another strong quarter, driven by record revenues, favorable credit metrics, and expanding core profitability. Throughout 2025, we built organic growth momentum on both sides of the balance sheet, which, combined with positive operating leverage, resulted in notable improvement in our financial performance. Accordingly, in the fourth quarter, we reported net earnings of $83 million or $0.64 per share. Our annualized return on average assets was 1.34%, and our adjusted return on average tangible common equity was 17.6%. Pre-provision net revenue was a record $111 million, or an ROA of 1.78%. Since closing the Lakeland transaction, we have grown four pre-provision net revenue every quarter.

Turning to our balance sheet, our commercial loan team generated total new loan production of $3.2 billion in 2025. Elevated loan payoffs of $1.3 billion, which were primarily in our CRE portfolio, partially offset our strong production, resulting in net commercial loan growth of 5.5% for the year. We remain focused on generating high-quality, diversified loan growth. At year-end, our pipeline remained solid at $2.7 billion, with a weighted average rate of 6.22%. Our loan pipeline has consistently been north of $2.5 billion for the last four quarters, and more importantly, our originations have grown every quarter in 2025, peaking at over $1 billion in the fourth quarter. On the funding side, core deposits grew $260 million or 6.6% annualized compared to the linked quarter.

Favorable trends in our commercial and consumer segments contributed to growth in our average non-interest-bearing deposits of 2% annualized. The deposit market remains competitive, but we continue to invest in our capabilities to drive meaningful growth in our core funding. Provident’s commitment to managing credit risk and generating top-quartile risk-adjusted returns has remained unchanged. During the quarter, we successfully resolved $22 million of non-performing loans while experiencing just $1.3 million in associated net charge-offs. As a result, non-performing assets improved nine basis points to a favorable 0.32%. The business environment in our market continues to be healthy, and as a reminder, our exposure to rent-stabilized multifamily properties in New York City is less than 1% of total loans, all of which are performing. Growing our non-interest income remains a strategic priority.

We generated record fee revenue of $28.3 million in the quarter. I want to take a minute to highlight the momentum and diversity of our non-interest income. Provident Protection Plus continues to drive consistent growth in our insurance agency income. New business and over 90% customer retention helped grow pre-tax income 13% year-over-year. Provident Protection Plus has a strong pipeline at the start of 2026, and I’m encouraged by the increased collaboration with both the bank and Beacon Trust, which should strengthen further in 2026. Beacon Trust saw a revenue growth again in the fourth quarter, increasing to $7.6 million on approximately $4.2 billion of AUM. Beacon remains focused on both growth and retention, and we continue to make investments in talent to help achieve these goals.

We also continue to invest in our SBA capabilities, which have been a more significant contributor to non-interest income in 2025, generating $946,000 of gains on sale in the fourth quarter. For the full year, we have generated $2.8 million of SBA gains on sale, which is up from $905,000 in 2024. While total assets grew nearly $1 billion in 2025, our strong profitability helped further build Provident’s capital position, which comfortably exceeds well-capitalized levels. As such, earlier this week, we announced a new share repurchase authorization that will allow us to buy back an additional 2 million shares. I’d like to conclude my remarks by discussing our strategic priorities for 2026. We expect to continue investing in revenue-producing talent across our middle market banking, treasury management, SBA, wealth management, and insurance platforms....

We expect recent balance sheet growth momentum to be sustained, and that loan payoff activity will normalize when compared to 2025. Finally, we are preparing for a core system conversion in the fall of 2026, an important investment that will enhance scalability and our digital capabilities. I’m confident in our team’s ability to successfully complete this conversion, particularly given how seamlessly we integrated Lakeland Bank in 2024. I’m incredibly proud of the efforts and production of our employees. We are pleased with our organic growth momentum and improved profitability, and we continue to target sustained top quartile performance. Now, I’d like to turn the call over to Tom for his comments on our financial performance and to discuss our 2026 guidance. Tom?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Thank you, Tony, and good morning, everyone. As Tony noted, we reported net income of $83 million or $0.64 per share for the quarter, with a return on average assets of 1.34%. Adjusting for the amortization of intangibles, our core return on average tangible equity was 17.58%. Pre-provision net revenue increased 2% over the trailing quarter to a record $111 million, or an annualized 1.78% of average assets. Revenue increased to a record for a third consecutive quarter at $226 million, driven by record net interest income of $197 million and record non-interest income of $28.3 million.

Average earning assets increased by $307 million or an annualized 5.4% versus the trailing quarter, with the average yield on assets decreasing 10 basis points to 5.66%. This reduction in asset yield was more than offset by a 13 basis point decrease in the cost of interest-bearing liabilities to 2.83%. While a reduction in net purchase accounting accretion limited our reported net interest margin expansion to 1 basis point versus the trailing quarter at 3.44%, our core net interest margin increased by seven basis points to 3.01%. The company continues to maintain a largely neutral interest rate risk position, but anticipates future benefit to the core margin from recent Fed rate cuts and expected steepening of the yield curve.

The core margin for the month of December continued to trend upward at 3.05%. We currently project continued core NIM expansion of 3-5 basis points for the next two quarters, with reported NIM estimated in the 3.4%-3.5% range for 2026. Period end loan sales for investment increased to $118 million, or an annualized 4.5% for the quarter, driven by growth in multifamily, commercial mortgage, and commercial loans, partially offset by reductions in construction and residential mortgage loans. Total commercial loans grew by an annualized 5.4% for the quarter. Our pull-through adjusted loan pipeline at quarter end was $1.5 billion. The pipeline rate of 6.22% is accretive relative to our current portfolio yield of 5.98%.

Period end deposits increased $182 million for the quarter, or an annualized 3.8%, while average deposits increased $786 million, or an annualized 16.5% versus the trailing quarter. The average cost of total deposits decreased four basis points to 2.1% this quarter, while the total cost of funds decreased ten basis points to 2.34%. Asset quality remains strong, with non-performing assets declining $22 million or 22% to 32 basis points of total assets. Net charge-offs were $4.2 million, or an annualized nine basis points of average loans this quarter, while full year 2025 net charge-offs were just seven basis points of average loans. Current quarter charge-offs reflected the disposition of several non-performing and underperforming loans and the write-off of related specific reserves.

We recorded a net negative provision for credit losses of $1.2 million for the quarter, as year-end loan closings drove a decrease in approved commitments pending closing, asset quality improved, and there was modest improvement in our CECL economic forecast. This brought our allowance coverage ratio down 2 basis points from the trailing quarter to 95 basis points of loans at December 31st. Non-interest income increased to $28.3 million this quarter, with gains realized on calls of corporate securities and solid performance from our wealth management and insurance divisions, as well as gains on SBA loan sales and increased core banking fees.

Non-interest expense increased to $114.7 million this quarter, as strong operating results drove increased performance-based incentive accruals, while expenses to average assets and the efficiency ratio were consistent with the trailing quarter at 1.84% and 51% respectively. Excluding the amortization of intangibles and the related average balance, these ratios were 1.76% and 48.15%, respectively. We project quarterly core operating expenses of approximately $118 million-$120 million for 2026, with the second half of the year run rate being slightly higher than the first half.

In addition to normal expenses, as Tony mentioned, 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 quarter. Our sound financial performance supported earning asset growth and drove strong capital formation. Tangible book value per share increased $0.57, or 3.8% this quarter, to $15.70, and our tangible common equity ratio increased to 8.48% from 8.22% last quarter. We realized a $3.4 million benefit to our income tax expense from the purchase of energy production tax credits for the 2025 tax year.... We are exploring opportunities to purchase additional similar tax credits for the 2026 year and open carryback years.

Excluding the discrete benefit of any tax credit carrybacks, we currently project an effective tax rate of approximately 29% for 2026. Regarding additional 2026 guidance, we are expecting loans and deposits to grow in the 4%-6% range, non-interest income to average $28.5 million per quarter, and are targeting a core return on average assets in the 1.20%-1.30% range, with a mid-teens return on average tangible common equity. That concludes our prepared remarks. We’d be happy to respond to questions.

Jill, Conference Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from line of Mark Fitzgibbon of Piper Sandler. Your line is open.

Mark Fitzgibbon, Analyst, Piper Sandler: Hey, guys. Good morning. Nice quarter.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Morning, Mark.

Tony Labozzetta, President and CEO, Provident Financial Services: Morning, Mark.

Mark Fitzgibbon, Analyst, Piper Sandler: Tom, first question for you. I heard your comments on the effective tax rate being 29%, for 2026. I guess I’m curious, those tax credit investments that you announced you made, I think it was $54 million, how does that flow through to the effective rate or when does it flow through?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: So that’s was in the Q4. Those are 2025 tax year benefits. So that was reflected in the $3.4 million we saw in reduction in income tax expense. Next year’s purchases, the 2026 year, will be realized in 2026 as a reduction. That’s why we’re dropping from close to 30% down to about 29% in our estimate of what the effective rate will be.

It’s spread out throughout the year. So it’s not a one-time like we did in 2025?

That’s correct. We did them at the end of the year, so it should be spread through three quarters of the year, in 2026.

Mark Fitzgibbon, Analyst, Piper Sandler: Okay, great. And then secondly, I saw the buyback announcement. I guess, you know, you have a little bit of excess capital. Could you help us think about, you know, how you’d rank your priorities for deployment of excess capital today?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Yeah, I don’t think they’ve changed. I still profitable, balance sheet growth is our primary objective. We think that’s the longest term value creator, but we wanted to add additional flexibility to our capital deployment options, which is why we refreshed the stock buyback plan.

Tony Labozzetta, President and CEO, Provident Financial Services: Yeah, I think, I think that’s spot on. Organic growth is our primary focus. You know, the second half of the year, we might look at our dividend, if as our productivity continues. Obviously, there’s always the additional uses of capital. We want to invest deeper into our insurance and wealth platforms. And then, there’s always in the background the thoughts of mergers, but our primary number one focus is organic growth.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Yeah. Our capital levels, we’re comfortable with where they are now, and we’re confident in our capital formation projections for the rest of the year. So again, that was another trigger, as Tony said, to both give some consideration in the remainder of the year to the dividend rate, as well as to reintroduce some buyback options.

Mark Fitzgibbon, Analyst, Piper Sandler: Okay. And I hear what you’re saying, Tony, on M&A, you know, being sort of, you know, back in the list, so to speak. But if you were to look at bank deals, what kinds of things would you be looking for in a potential target?

Tony Labozzetta, President and CEO, Provident Financial Services: Well, I think as I mentioned in the past, I think the primary I would start by saying, this team is a pretty outstanding team, and we put together a pretty good engine. Everybody’s meshing well. We got a good dynamic group, from board on down, and number one thing is that the cultures have to be compatible so that we don’t create a tremendous amount of hiccups in what we’ve been building here already, that’s producing value. So that being said, we would also love to see some additional talent acquisition, and then also perhaps a new line of business or market that we’re not in.

Complementary things, adding to the wealth side or to deepening our insurance penetration is certainly something of value, but we do recognize that you can’t get all those boxes checked off in any situation. So you have to pick off how many boxes do you want checked off in order to get the deal done. But a lot of good still a lot of good franchises out there that we think we could be good partners with. However, you know, I did just cover what we thought was a value of Virgin.

Mark Fitzgibbon, Analyst, Piper Sandler: Thank you.

Jill, Conference Operator: Your next question comes from the line of Tim Switzer of KBW. Your line is open.

Tim Switzer, Analyst, KBW: Hey, good morning. Thanks for taking my questions. Also want to-

Tony Labozzetta, President and CEO, Provident Financial Services: Good morning.

Tim Switzer, Analyst, KBW: Congrats, congrats to Tom on his pending retirement.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Thank you, Tim. Appreciate it.

Tim Switzer, Analyst, KBW: The first question I have is that there’s been a good amount of talk on conference calls this quarter about rising deposit competition in some of your core markets, particularly on pricing and. But what have you guys seen in the market? Where is, you know, the highest level of competition right now in terms of, like, category or geography? And, you know, does that maybe impact your NIM outlook or, you know, liquidity management at all?

Tony Labozzetta, President and CEO, Provident Financial Services: Well, I kind of want to say it’s, like, you know, competition is heightening a little bit, but I see the competition for deposits in our market as being universal. It’s always been there as long as I’ve been in this space. You know, it kind of moves here and there in different segments. I would argue that everybody’s in a fight for interest, non-interest-bearing demand and low-cost money, and then that’s part of your model. I think from our perspective, we’re doing a good job with our core model. If you look this quarter, we had 16.5% growth on average balances.

You’re seeing, we produced nearly $479 million of commercial deposits this year, that tend to be your lower costing deposits, funding about 24% of our loan production. So those are all good things. So the competition is there, but if you go to market with the right, with the right talent and with the right approach, I think you can win your share. I would say a safe answer would be that if everybody has designs to grow high single digits, there’s just not enough new money for everybody’s needs. So that’s what creates a competition. It’s like, Yeah, it’s just not enough to cover everybody’s growth needs.

Tim Switzer, Analyst, KBW: Got you. Yeah, it makes sense. And then can you remind us on—I think you have close to $5-$6 billion of fixed rate loans repricing in your back book over the next year. Can you refresh us on what that number is, and maybe the gap on, you know, new origination yields versus what’s rolling off?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Yeah, the total repricing over the next four quarters, this is on the adjustable side, is about $5.7 billion. Looking for... Okay, back book repricing, cash flows, both amortization and prepays, we’re looking at another $4.7 billion over the next 12 months as well. So the pickup in rate is about 30-40 basis points. I think it adds about 4 basis points to the NIM.

Tim Switzer, Analyst, KBW: Gotcha. Okay. And then the last question I have is just on CRE market trends. Seems like it’s becoming a little bit healthier. Volumes are improving, pricing, you know, holding up to rising. You know, like, are you guys seeing the same thing there? And then I believe there’s also, due to some M&A in your market, there’s a competitor looking to sell potentially some CRE portfolios in the New York market. Is that anything with your guys’ capital levels you’d be interested in or just focused on organic?

Tony Labozzetta, President and CEO, Provident Financial Services: Yeah, I mean, there’s a couple of questions in there. I’ll try to tackle them all. I’ll start with the last one first. There’s probably little to no desire for us to acquire anyone’s portfolio since our productivity is quite high, and being able to allocate that capital to our clients is more important, right? So the relationship banking that we do, we would view that book acquisition as a filler, and it’s just not necessary for us in the way we approach our business. When you look at the CRE market overall, I do see a healthier CRE market. Our CRE book has held up incredibly well throughout any of these perceived cycles. You’re starting to see other banks that may have stepped a little bit back on the CRE space, stepping back in.

And certainly the agencies, if you look at half of our prepayments that I mentioned in call, 50% of them were with the agencies that basically are offering terms that we just don’t do, which is high level of prepayments, high level of IOs rather, long-term IOs and high leverage and rates that are just not balanced with the risk reward. So, again, I think that the market is healthy, and you’re always gonna have spotty situations like right now, the big concern thought process is what’s happening on the rent-controlled, rent-stabilized in New York with the new administration. We’re attentive to it. We don’t see anything, even in our small portfolio, that is alarming to us at this point.

So knock on wood, everything appears to be healthy going into the 2026 year.

Tim Switzer, Analyst, KBW: Awesome. Appreciate all the color. Thank you.

Jill, Conference Operator: Your next question comes from line of Feddie Strickland of Hovde Group. Your line is open.

Feddie Strickland, Analyst, Hovde Group: Hey, good morning. Wanted to touch back on loan yields a little bit. Tom, I think you mentioned this a little in your opening comments, but is there the potential for yields to move up a bit as we move into early 2026, just given the increase in the pipeline yield to 12-31 versus 9-30, and what you just talked about with backflow repricing?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: I think so, and stable to slight improvement overall.

Yeah, that makes sense, especially, we had a little bit of a lift in the five-year from the prior quarter of about 20 basis points, and that’s where the yield improvement came from.

Yeah.

Or the rate improvement came from.

Feddie Strickland, Analyst, Hovde Group: Got it. And then just switching over to fees, I noticed the wealth AUM was down a little bit from last quarter, despite what I would imagine is positive market move impacts. But it still sounds like you’re, you’re pretty bullish on 2026. Can you talk a little bit about what drove AUM maybe a little lower in the fourth quarter?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: It was down a little bit on a spot basis, up on average, though, by about $80 million. We did have some net outflows for the quarter, but we did have some good, strong business production during the period as well. So overall, client count is pretty stable.

Tony Labozzetta, President and CEO, Provident Financial Services: Yeah, I would add, it’s a little bit more exciting of what we expect for 2026, right? So we’ve added some more talent to Beacon to augment the growth and retention strategies that are there. We’ve brought in some teams along with that to help. Pretty exciting early indications. Obviously, it’s way too early for any real huge material numbers change, but we’re seeing the engagement, we’re seeing new-to-bank clients coming in. We’re seeing a group that can deeply penetrate both Provident and work with Provident Protection Plus and the bank to deepen those client relationships. So I’m pretty excited about the prospects for 2026 when it comes to Beacon. I’m expecting some pretty good things there.

Feddie Strickland, Analyst, Hovde Group: Got it. Just one last one for me. Just is there any desire or opportunity to expand, the footprint a little bit more in adjacent geographies? More, more organically is what I’m talking about. I mean, maybe areas like Long Island, given some of the disruption there, maybe a little further south into the Philly suburbs, or are you pretty happy with where you are today?

Tony Labozzetta, President and CEO, Provident Financial Services: Well, people that know me, I’m never really happy. So, I would say that yes to all of the above. I mean, we’re already out on Long Island in Manhasset, and we have an office in Astoria. So continuing to penetrate there is obviously intelligent. We like the Westchester Rockland markets. We do like the Main Line around Philly. All of those areas are where we already have teams down there. We don’t have physical locations around that Philly market, but we already have lending teams down there, same as in Westchester, in New York. You know, so seeing us expand geographically in those areas is not something that should surprise anyone on this call.

Feddie Strickland, Analyst, Hovde Group: All right, great. Thanks for taking my questions, and congrats, Tom, on the retirement.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Thank you very much.

Tony Labozzetta, President and CEO, Provident Financial Services: Thank you.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Really appreciate it.

Jill, Conference Operator: Your next question comes from the line of Steve Moss of Raymond James. Your line is open.

Tony Labozzetta, President and CEO, Provident Financial Services: Hey, Steve.

Steve Moss, Analyst, Raymond James: Hi, good morning.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Morning.

Steve Moss, Analyst, Raymond James: Hey, Tony.

Hey, Tom. Congrats on your retirement.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Thank you, sir.

Steve Moss, Analyst, Raymond James: You’re welcome. Maybe just starting back on the accretion numbers here. Just kind of curious, Tom, what you’re thinking for total purchase and accretion for 2026.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: On the loan book, it’s about $60 million for the full year.

Steve Moss, Analyst, Raymond James: Okay, got it.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: The volatility in there, you know, depending on prepayments, but that’s our kind of base case model.

Steve Moss, Analyst, Raymond James: Right. Okay. So then a lot of the adjustable rate loans you’re referring to that are repricing, carry rate marks at the current time, you’re just looking to convert those to kinda like a core margin? Kinda how to think about that, that benefit.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Not all. Some, not all, Steve, just because there’s a blend, a healthy blend of legacy Provident-

Steve Moss, Analyst, Raymond James: Right

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: loans and labels.

Steve Moss, Analyst, Raymond James: Okay.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Yeah.

Steve Moss, Analyst, Raymond James: Got ya. But it is about 3-4 basis points or 4 basis points to the margin, just from the backbook repricing, if I heard that correctly?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: That’s correct. Yep.

Steve Moss, Analyst, Raymond James: Okay. Perfect. And then my other question here is just kind of, you know, Tony, in your prepared remarks, you mentioned, you know, hirings planned for 2026. You kind of alluded to it a little bit in some of your earlier commentary. Just kind of looking for any specific niches maybe you’re looking to add, how many people you’re looking to hire in the upcoming year?

Tony Labozzetta, President and CEO, Provident Financial Services: Yeah. As I mentioned, the area—I think one of the areas, the biggest areas of focus, when we look at hiring the people, it’s augmenting some of the things we’re doing already, like in the insurance space and in our wealth space. You could, you should expect to see a lot more in the production side and the retention side. I think one of the greatest areas of investments for us this year is going to be in the middle market space. You know, that range of $75-$500 million in client size. We think that is an area that we haven’t really penetrated deeply yet. Comes with all the attributes that we like: strong deposits, strong relationships.

We’re able to use our wealth group in those segments as well as our insurance. It meets. Not that our other clients don’t, but this is an area that we think is very suitable for us in the scale that we’re at. So there’s going to be some good. I wouldn’t be surprised if you add another, you know, three to five additional complements in this year. Obviously, all of that is timed in the expense guidance we’ve given, and, you know, we are very attentive to positive operating leverage, so we’re not gonna race ahead of ourselves. Also, the other area that you could expect to see some growth is in our treasury management capabilities, particularly on the outbound deposit-only categories, like the gathering functions.

You know, we wanna deepen that investment as we move into and deeper into 2026. So, great—I mean, it’s a great thing ’cause we keep investing in our future, and that it’s exciting because we’re having these, the growth, and we just wanna make sure that we can continue to deliver growth in 2026 and 2027. So, hiring these productive individuals is gonna be critical for us.

Steve Moss, Analyst, Raymond James: Okay. Got it. That’s, that’s helpful. And then one, one last one for me on credit here, just with the reserve has come down a fair amount over the course of the year. Curious, what the potential is for maybe incremental reserve lead here or, you know, is there just- is there less give on that, on that number here going forward?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: You know, it’s largely a model-driven exercise at this point. The macroeconomic variables drive the provision requirements. That said, it feels like we’re at a base here. But, you know, we’ve been very consistent in our approach and our methodology throughout the year, and it really has been warranted, as you can see, with 7 basis points in net charge-offs over the year. Good, strong credit metrics, 32 basis points in NPAs. I think it’s 40 basis points, NPLs to loans. So, the credit quality and the strong underwriting and the low-leverage lending we do have all supported the lower allowance coverage ratio.

Steve Moss, Analyst, Raymond James: Okay, great. Appreciate all the color there. Thank you very much.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: Thank you.

Tony Labozzetta, President and CEO, Provident Financial Services: Thank you.

Jill, Conference Operator: Your last question comes from line of Dave Storms of Stonegate Capital Partners. Your line is open.

Dave Storms, Analyst, Stonegate Capital Partners: Morning, and thank you for taking my questions.

Tony Labozzetta, President and CEO, Provident Financial Services: Morning. Thank you. Morning.

Dave Storms, Analyst, Stonegate Capital Partners: Just wanted to start with, you know, you mentioned in parameters, decrease in deposit costs. Just curious as to how you see the room to run here, and if there’s any specific initiatives that we should keep in mind as you continue to try to bring those costs down?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: I’m sorry, Dave, I had trouble hearing that. Could you just try to speak a little louder, please?

Dave Storms, Analyst, Stonegate Capital Partners: Apologies. Yeah, just around decrease in deposit costs, how much more room do you think there is to run here? And if there’s any specific initiatives that we should keep an eye on, as you’re working through these costs?

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: So we are still repricing downward. We didn’t get the full benefit of the last cut reflected, which is one of the reasons we wanted to bring to everybody’s attention, that the margin for the last month of the quarter, December, was 3.05% on a core basis. So we’ll see the full benefit of that. I think every 25 basis point cut that we may get gives us another 2-3 basis points in the core margin in terms of improvement. Overall, I’d say our betas are going to continue to run in the 25%-30% range relative to the Fed rate cuts.

Dave Storms, Analyst, Stonegate Capital Partners: That’s great. Thank you. And then just one more for me. You mentioned the core systems conversion. Is there anything more you can tell us about maybe the timeline for that and maybe any other, tech investments or initiatives that you have on the horizon?

Tony Labozzetta, President and CEO, Provident Financial Services: I think that’s the major, the major initiative on the near-term horizon. The conversion is scheduled for Labor Day weekend of 2026. It’s the IBS platform of FIS. It’s a very commercial-oriented very proven system, commercial-oriented, will meet the needs of our needs as we move into the future, from a digital perspective or product perspective, everything that we need. It’s comparable to a lot of banks between 25 and 100 and 150 billion are on it, and we talk to them, and the system works very well for them. So I think it’s something that we need to do to position our bank for the growth that we’re experiencing in our futures.

Tom Lyons, Senior Executive Vice President and Chief Financial Officer, Provident Financial Services: We expect to realize additional efficiencies in our processes as a result, and enhancements that will help our product set and delivery to our customers.

Dave Storms, Analyst, Stonegate Capital Partners: That’s great color. Thank you for taking my questions.

Tony Labozzetta, President and CEO, Provident Financial Services: You’re welcome.

Jill, Conference Operator: This concludes our Q&A session. We’ll now turn the conference back over to Anthony Labozzetta for closing remarks.

Tony Labozzetta, President and CEO, Provident Financial Services: Well, thank you everyone for your questions and for joining the call. We hope everyone had a good start to the new year, and we look forward to speaking with you very soon. Thank you very much.

Jill, Conference Operator: This concludes today’s conference call. You may now disconnect.