Do You Believe in Provident Financial Services’ (PFS) Upward Valuation Potential?

Riverwater Partners, an investment management company, released its “Small Cap Strategy” Q3 2025 investor letter. A copy of the letter can be downloaded here. The Small Cap Core Strategy reported solid results for the quarter but did not keep pace with the sharp rally, thus lagging the benchmark. The market’s preference for lower-quality companies persisted in the quarter and contributed significantly to the benchmark’s outperformance. On the other hand, the strategy remains focused on higher-quality companies with enduring fundamentals, consistent revenue, and a transparent path to profitability. The firm strongly believes that the strategy is well-positioned in the challenging quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Riverwater Partners Small Cap Strategy highlighted stocks such as Provident Financial Services, Inc. (NYSE:PFS). Provident Financial Services, Inc. (NYSE:PFS) is the bank holding company for Provident Bank. The one-month return for Provident Financial Services, INC. (NYSE:PFS) was 16.88%, and its shares gained 4.26% over the last 52 weeks. On December 15, 2025, Provident Financial Services, Inc. (NYSE:PFS) stock closed at $21.05 per share, with a market capitalization of $2.75 billion.

Riverwater Partners Small Cap Strategy stated the following regarding Provident Financial Services, Inc. (NYSE:PFS) in its third quarter 2025 investor letter:

“Provident Financial Services, Inc. (NYSE:PFS) is the holding company for Provident Bank, a full-service community-oriented bank headquartered in Jersey City, New Jersey. Through its network of over 140 branches across New Jersey, Pennsylvania, and New York, along with subsidiaries Beacon Trust and Provident Protection Plus, the company provides a wide range of services including traditional banking, wealth management, and insurance. Following its transformative acquisition of Lakeland Bancorp in 2024, PFS now manages roughly $25 billion in assets, giving it greater scale and market share.

The bank is well positioned to deliver sustainable growth, with strong pipelines supporting mid-single-digit loan expansion, stable deposit funding, and an expanding net interest margin. Returns are expected to remain above peers with ROA around 1.15% and ROTCE near 16%, while disciplined cost management drives efficiency gains. With clean credit, limited exposure to riskier CRE segments, and a nearly 5% dividend yield, PFS offers investors an attractive combination of income, earnings growth, and upside valuation potential.”

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Provident Financial Services, Inc. (NYSE:PFS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held Provident Financial Services, Inc. (NYSE:PFS) at the end of the third quarter, which was 18 in the previous quarter. While we acknowledge the risk and potential of Provident Financial Services, Inc. (NYSE:PFS) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Provident Financial Services, Inc. (NYSE:PFS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.