[Management View]
Provident Financial Services reported net income of $72 million, or $0.55 per share, reflecting improvement over Q2 2024 and Q1 2025. Key metrics included a return on average assets (ROA) of 1.19% and a return on average tangible equity of 16.79%. Management highlighted strategic loan mix diversification, significant growth in commercial and industrial segments, and reduced reliance on commercial real estate.

[Outlook]
Management affirmed confidence in sustaining current loan growth trends for the remainder of 2025, with a robust commercial loan pipeline and a neutral balance sheet position. Margin guidance for Q3 2025 and the full year factors in two 25-basis-point rate cuts.

[Financial Performance]
Revenue reached a record $214 million, driven by net interest income of $187 million and noninterest income of $27 million. Net interest margin (NIM) was 3.36%, up two basis points versus the prior quarter. Loans held for investment increased by $318 million, or 6.8% annualized, led by commercial, multifamily, and commercial real estate growth. Deposit growth was $260 million, or 5.6% annualized.

[Q&A Highlights]
Question 1: On the Beacon business, is there any change in strategy or is it just new hires to market and grow the business?
Answer: The focus is on growing AUM with a stronger sales force to work with business line partners. The new chief growth officer will enhance sales and service integration across business lines.

Question 2: Regarding provisioning, was the reserve release due to Moody's economic forecast changes?
Answer: Yes, Moody's baseline, particularly the commercial property price index, drove the reserve release. Improved credit quality and economic conditions support modest provisioning for the rest of the year.

Question 3: With the stock price up, does it give capacity to consider M&A?
Answer: While the focus remains on organic growth, M&A is not off the table if strategic opportunities arise. The stock price better reflects the company's value, providing more room for consideration.

Question 4: What's driving strong C&I growth, and are there additional hiring opportunities for C&I lenders?
Answer: Growth is driven by increased origination and line usage, with a diverse set of products contributing. The focus is on expanding capacity and geography as needed.

Question 5: Wealth management fees seemed light; was this due to lower average AUM from market volatility?
Answer: Yes, lower average AUM impacted revenue, but market recovery and stable client count have improved AUM per client.

Question 6: On expense guidance, can quarterly expenses come down in the back half of the year?
Answer: Yes, despite nonrecurring severance charges, expense guidance remains at $112 million to $115 million per quarter, with potential adjustments based on incentive accruals.

Question 7: Expectations for municipal deposit flow seasonality and brokered deposits?
Answer: Municipal deposit inflows are expected in Q3, replacing high-yielding CDs. The pipeline for new municipal business is strong.

Question 8: Target capital level and share repurchases?
Answer: The target CET1 capital level is around 11.25%, with share repurchases considered based on capital strength.

Question 9: NIM trajectory and impact of Fed rate cuts?
Answer: The balance sheet is neutral, with NIM projected in the 3.35%-3.45% range, factoring in two 25-basis-point rate cuts.

Question 10: Loan pipeline and borrower caution?
Answer: Despite a slight decrease in the pipeline, strong loan closings and replenishment indicate no immediate slowdown or borrower caution.

Question 11: Main driver for NIM in the back half of the year?
Answer: Asset repricing and accretive new loan production are key drivers, with cautious optimism on funding side dynamics.

Question 12: Competition for deposits?
Answer: Elevated competition is seen in consumer deposits, while business and municipal deposits remain stable and growing.

[Sentiment Analysis]
Analysts and management maintained a positive tone, with confidence in sustaining growth and managing competitive pressures. Management's focus on strategic objectives and prudent financial management was well-received.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | Q2 2024 |
|---------------------------------|---------------|---------------|---------------|
| Net Income | $72 million | $68 million | $65 million |
| ROA | 1.19% | 1.15% | 1.10% |
| Return on Tangible Equity | 16.79% | 16.50% | 16.20% |
| Revenue | $214 million | $210 million | $200 million |
| Net Interest Margin | 3.36% | 3.34% | 3.30% |
| Loans Held for Investment | $318 million | $300 million | $290 million |
| Deposit Growth | $260 million | $250 million | $240 million |
| Tangible Book Value per Share | $14.60 | $14.15 | $13.90 |

[Risks and Concerns]
- Elevated competition for consumer deposits.
- Potential market shifts or global events impacting credit quality.
- Dependence on economic forecasts for provisioning.

[Final Takeaway]
Provident Financial Services delivered strong financial performance in Q2 2025, with record revenue and strategic loan growth. Management's focus on diversifying the loan portfolio and maintaining robust asset quality positions the company well for sustained growth. While competition for deposits remains a challenge, the company's strategic initiatives and prudent financial management provide a solid foundation for future success.