JERSEY CITY, N.J., Oct. 23 /PRNewswire-FirstCall/ -- Provident Financial Services, Inc. (the "Company") reported basic and diluted earnings per share of $0.23 for the quarter ended September 30, 2008, compared to basic and diluted earnings per share of $0.14 for the quarter ended September 30,

2007. Basic and diluted earnings per share were $0.61 for the nine months ended September 30, 2008, compared to basic and diluted earnings per share of $0.55 for the nine months ended September 30, 2007. Net income for the three months ended September 30, 2008 totaled $13.2 million, compared to $8.3 million reported for the same period in 2007. Net income was $34.2 million for the nine months ended September 30, 2008, compared to $32.7 million for the same period in 2007.

Earnings and per share data for the nine months ended September 30, 2008 reflect severance costs totaling $503,000, net of tax, recognized during the second quarter of 2008. In addition, the Company recorded other-than-temporary impairment charges on investments in a debt security issued by Lehman Brothers Holdings, Inc. and the common stock of two publicly-traded financial institutions totaling $869,000, net of tax, during the quarter ended September 30, 2008. Results for the nine months ended September 30, 2008, were also impacted by a $180,000 net after-tax gain recorded in connection with the ownership and mandatory redemption of a portion of the Company's Class B Visa, Inc. shares as part of Visa's initial public offering in the first quarter of 2008, and a $175,000 net after-tax gain resulting from the sale of a branch office in the first quarter of 2008.

Earnings and per share data for the three and nine months ended September 30, 2007 were impacted by severance charges totaling $1.9 million, net of tax. Earnings and per share data for the nine months ended September 30, 2007 were further impacted by the settlement of an insurance claim which resulted in a recovery of $3.5 million, net of tax, related to a fraud loss that occurred and was recognized in 2002, and one-time expenses of $246,000, net of tax, related to the April 1, 2007 acquisition of First Morris Bank & Trust ("First Morris").

Paul M. Pantozzi, Chairman and Chief Executive Officer, commented, "Our third quarter operating results reflect the basic strategies of our business: expanding net interest margin, managing overhead expenses, adhering to conservative lending standards and maintaining our well-capitalized status, as defined by our regulators. We neither originate nor hold any sub-prime mortgages, trust preferred securities, or common or preferred stock issued by Fannie Mae or Freddie Mac. In comparison to the trailing quarter, our results also reflect growth in total loans outstanding, growth in total core deposits and improvement in our efficiency ratio. We remain mindful of the unsettled economic environment, and, in response, have made prudent and appropriate additions to our loan loss allowance. At the same time, we have maintained our ability and willingness to lend to quality borrowers, as well as our commitment to enhancing core customer relationships. We believe these are the appropriate strategies for achieving earnings momentum and returning long-term stockholder value."

Declaration of Quarterly Dividend

The Company's Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on November 28, 2008, to stockholders of record as of the close of business on November 14, 2008.

Balance Sheet Summary

Total assets increased to $6.45 billion at September 30, 2008, compared to $6.36 billion at December 31, 2007, due primarily to increases in loans and securities available for sale.

Total investments increased $62.1 million, or 5.3%, during the nine months ended September 30, 2008. The increase included $55.2 million of residential mortgage loan pools that were securitized by the Company in the first quarter of 2008 and are held as securities available for sale.

The Company's net loans increased $79.3 million, or 1.9%, to $4.33 billion at September 30, 2008, from $4.26 billion at December 31, 2007, as year-to-date loan originations and purchases more than offset the securitization of $55.2 million of conforming one- to four-family 30-year fixed-rate residential mortgage loans during the first quarter of 2008. Loan originations totaled $952.6 million and loan purchases totaled $228.4 million for the nine months ended September 30, 2008. Compared with December 31, 2007, commercial mortgage and multi-family loans increased $136.9 million, and residential mortgage loans increased $81.9 million, while construction loans decreased $80.1 million, commercial loans decreased $40.4 million, and consumer loans decreased $17.5 million. Commercial real estate, construction and commercial loans represented 44.7% of the loan portfolio at September 30, 2008, compared to 45.2% at December 31, 2007.

At September 30, 2008, the Company's unfunded loan pipeline totaled $728.9 million, including $238.0 million in commercial loan commitments, $119.6 million in construction loan commitments and $93.2 million in commercial mortgage commitments. The unfunded loan pipeline at June 30, 2008 was $763.4 million.

Total deposits decreased $88.9 million, or 2.1%, during the nine months ended September 30, 2008, however core deposits increased $51.8 million, or 2.0%, to $2.64 billion at September 30, 2008. Total deposits were $4.14 billion at September 30, 2008, with core deposits, consisting of savings and demand deposit accounts, representing 63.8% of total deposits. Borrowed funds increased $169.7 million, or 15.8%, during the nine months ended September 30, 2008.

Common stock repurchases for the nine months ended September 30, 2008 totaled 101,000 shares at an average cost of $14.30 per share. At September 30, 2008, book value per share and tangible book value per share were $17.04 and $8.38, respectively, compared with $16.78 and $8.05, respectively, at December 31, 2007.

  Results of Operations

  Net Interest Margin

The net interest margin increased 17 basis points to 3.27% for the quarter ended September 30, 2008, from 3.10% for the quarter ended June 30, 2008. The net interest margin for the quarter ended September 30, 2008 increased 30 basis points compared with the net interest margin of 2.97% for the quarter ended September 30, 2007. The weighted average yield on interest-earning assets was 5.51% for the three months ended September 30, 2008, compared with 5.50% for the trailing quarter and 5.87% for the three months ended September 30, 2007. The weighted average cost of interest-bearing liabilities was 2.55% for the quarter ended September 30, 2008, compared with 2.74% for the trailing quarter and 3.34% for the third quarter of 2007.

For the nine months ended September 30, 2008, the net interest margin was 3.08%. This was an increase of 8 basis points compared with the net interest margin of 3.00% for the nine months ended September 30, 2007. The weighted average yield on interest-earning assets was 5.54% for the nine months ended September 30, 2008, compared with 5.80% for the nine months ended September 30, 2007. The weighted average cost of interest-bearing liabilities was 2.80% for the nine months ended September 30, 2008, compared with 3.25% for the same period in 2007.

The average cost of interest-bearing deposits for the three months ended September 30, 2008 was 2.19%, compared with 2.41% for the trailing quarter and 3.17% for the same period last year. The average cost of borrowings for the three months ended September 30, 2008 was 3.62%, compared with 3.84% for the trailing quarter and 4.16% for the same period last year.

The average cost of interest-bearing deposits for the nine months ended September 30, 2008 was 2.49%, compared with 3.06% for the same period last year. The average cost of borrowings for the nine months ended September 30, 2008 was 3.83%, compared with 4.17% for the same period last year.

Non-Interest Income

Non-interest income totaled $7.8 million for the quarter ended September 30, 2008, a decrease of $298,000 compared to the same period in 2007. Net losses on securities transactions totaled $966,000 for the quarter ended September 30, 2008, compared with net gains of $2,000 for the same period last year. The net securities losses for the current quarter included $1.4 million of other-than-temporary impairment charges recognized on investments in a debt security issued by Lehman Brothers Holdings, Inc. and the common stock of two publicly-traded financial institutions. Partially offsetting the net securities losses, fee income for the quarter ended September 30, 2008 increased $846,000, or 13.1%, compared to the same period in 2007, primarily as a result of increases in the value of equity fund holdings. In addition, other income declined $157,000 for the quarter ended September 30, 2008, compared with the same period in 2007, as a result of a non-recurring gain on the sale of real estate recognized in 2007.

For the nine months ended September 30, 2008, non-interest income totaled $23.2 million, a decrease of $6.8 million, or 22.6%, compared to the same period in 2007. In 2007, the Company recorded a one-time gain on an insurance settlement of $5.9 million, before taxes, related to the resolution of previously disclosed litigation. In addition, net losses on securities transactions totaled $565,000 for the nine months ended September 30, 2008, compared with net losses of $61,000 for the same period in 2007.

Non-Interest Expense

For the three months ended September 30, 2008, non-interest expense decreased $3.7 million, or 10.5%, to $32.0 million, compared to $35.7 million for the three months ended September 30, 2007. For the three months ended September 30, 2008, compensation and benefits expense decreased $4.3 million, compared with the same period in 2007. Compensation and benefits expense decreased as a result of previous staff reductions and lower stock-based compensation costs. The Company recorded $3.2 million in severance charges during the quarter ended September 30, 2007. Amortization of intangibles decreased $304,000 for the three months ended September 30, 2008, compared with the same period in 2007, as a result of scheduled reductions in the amortization of core deposit intangibles. Partially offsetting these decreases, other operating expenses increased $427,000 for the quarter ended September 30, 2008, compared with the same period in 2007, due primarily to expenses related to foreclosed assets.

For the nine months ended September 30, 2008, non-interest expense decreased $2.0 million, or 2.0%, to $97.2 million, compared to $99.2 million for the nine months ended September 30, 2007. Compensation and benefits expense decreased $4.0 million, as a result of previous staff reductions and lower stock-based compensation costs. The Company incurred $773,000 in pre-tax severance costs during the second quarter of 2008, compared with $3.2 million in severance charges recognized during the quarter ended September 30, 2007. Advertising costs decreased $352,000 for the nine months ended September 30, 2008, compared with the same period in 2007, as prior year costs included charges related to the First Morris acquisition. Amortization of intangibles decreased $209,000 for the nine months ended September 30, 2008, compared with the same period in 2007, as a result of scheduled reductions in the amortization of core deposit intangibles. Partially offsetting these decreases, other operating expenses increased $1.4 million for the nine months ended September 30, 2008, compared with the same period in 2007, due to increases in several categories, including an expense of $356,000 associated with the Company's proportionate share of a litigation reserve established by Visa, as well as increases in attorney fees and costs associated with foreclosed assets. Net occupancy expense increased $1.2 million for the nine months ended September 30, 2008, compared with the same period in 2007, due primarily to the addition of nine branch locations in connection with the acquisition of First Morris.

The Company's annualized non-interest expense as a percentage of average assets improved to 1.98% for the quarter ended September 30, 2008, compared with 2.30% for the same period in 2007. For the nine months ended September 30, 2008, non-interest expense as a percentage of average assets was 2.04%, compared with 2.21% for the same period in 2007. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) improved to 60.16% for the quarter ended September 30, 2008, compared with 75.41% for the same period in 2007. For the nine months ended September 30, 2008, the efficiency ratio was 64.66%, compared with 67.65% for the same period in 2007.

Asset Quality

Total non-performing loans at September 30, 2008 were $35.3 million, or 0.81% of total loans, compared with $34.6 million, or 0.81% of total loans at December 31, 2007, and $11.0 million, or 0.26% of total loans at September 30, 2007. At September 30, 2008, the Company's allowance for loan losses was 0.99% of total loans, compared with 0.95% of total loans at December 31, 2007, and 0.89% of total loans at September 30, 2007. The Company recorded provisions for loan losses of $3.8 million and $6.6 million for the three and nine months ended September 30, 2008, respectively, compared with provisions of $1.3 million and $2.8 million for the three and nine months ended September 30, 2007, respectively. For the three and nine months ended September 30, 2008, the Company had net charge-offs of $1.6 million and $4.1 million, respectively, compared with net charge-offs of $473,000 and $468,000 for the same periods in 2007. The allowance for loan losses increased $2.5 million, to $43.3 million at September 30, 2008, from $40.8 million at December 31, 2007. The increase in the loan loss provision for the three and nine months ended September 30, 2008, compared with the same periods in 2007, was attributable to an increase in non-performing loans, growth in the loan portfolio, and an increase in commercial loans as a percentage of the loan portfolio to 44.7% at September 30, 2008, from 44.0% at September 30, 2007, as well as ongoing uncertainty with respect to general economic conditions. At September 30, 2008, the Company held $3.6 million of foreclosed assets, compared with $1.0 million at December 31, 2007, and $5.9 million at June 30, 2008. The increase in foreclosed assets at September 30, 2008, compared with December 31, 2007, was primarily attributable to one commercial real estate line of credit secured by a number of properties that was previously classified as impaired.

Income Tax Expense

For the three months ended September 30, 2008, the Company's income tax expense was $4.2 million, compared with $2.1 million for the same period in 2007. For the nine months ended September 30, 2008, the Company's income tax expense was $12.3 million, compared with $11.9 million for the same period in 2007. The increase in income tax expense was primarily attributable to increased income before income taxes. For the three and nine months ended September 30, 2008, the Company's effective tax rates were 24.2% and 26.5%, respectively, compared with 20.2% and 26.7% for the three and nine months ended September 30, 2007, respectively. The effective tax rates for the three and nine months ended September 30, 2008 were favorably impacted by the utilization of capital losses on securities transactions. The effective tax rates for the three and nine months ended September 30, 2007 reflected a larger proportion of the Company's income being derived from tax-exempt sources, primarily as a result of lower pre-tax income in 2007 due to $3.2 million in severance charges recorded during the quarter ended September 30, 2007.

About the Company

Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering a full range of retail and commercial loan and deposit products. The Bank currently operates 83 full service branches throughout northern and central New Jersey.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors at 10:00 a.m. Eastern Time on October 23, 2008 regarding highlights of the Company's third quarter 2008 financial results. The call may be accessed by dialing 1-800-860-2442 (Domestic) or 1-412-858-4600 (International). Internet access to the call is also available (listen only) at http://www.providentnj.com/ by going to Investor Relations and clicking on Webcast.

Forward Looking Statements

Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

              PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
                     Consolidated Statements of Condition
             September 30, 2008 (Unaudited) and December 31, 2007
                            (Dollars in Thousands)

                    Assets                      September 30,  December 31,
                                                    2008           2007

  Cash and due from banks                          $84,970        $83,737
  Federal funds sold                                     -         18,000
  Short-term investments                             3,664         38,892
      Total cash and cash equivalents               88,634        140,629

  Investment securities held to
   maturity (market value of
   $347,193 at September 30, 2008
   (unaudited) and
   $359,666 at December 31, 2007)                  354,112        358,491
  Securities available for sale, at fair value     832,659        769,615
  Federal Home Loan Bank stock                      43,149         39,764

  Loans                                          4,378,148      4,296,291
      Less allowance for loan losses                43,329         40,782
          Net loans                              4,334,819      4,255,509

  Foreclosed assets, net                             3,556          1,041
  Banking premises and equipment, net               77,078         79,138
  Accrued interest receivable                       23,587         24,665
  Intangible assets                                516,031        520,722
  Bank-owned life insurance                        125,654        121,674
  Other assets                                      51,826         48,143
          Total assets                          $6,451,105     $6,359,391

       Liabilities and Stockholders' Equity
  Deposits:
        Demand deposits                         $1,732,534     $1,553,625
        Savings deposits                           904,596      1,031,725
        Certificates of deposit
         of $100,000 or more                       431,744        480,362
        Other time deposits                      1,067,003      1,159,108
          Total deposits                         4,135,877      4,224,820

  Mortgage escrow deposits                          19,648         18,075
  Borrowed funds                                 1,244,794      1,075,104
  Other liabilities                                 35,218         40,598
          Total liabilities                      5,435,537      5,358,597

  Stockholders' Equity:
  Preferred stock, $0.01 par value,
   50,000,000 shares authorized, none issued             -              -
  Common stock, $0.01 par value,
   200,000,000 shares authorized,
   83,209,293 shares issued and 59,609,837
   shares outstanding at
   September 30, 2008, and 59,646,936
   shares outstanding at
   December 31, 2007                                   832            832
  Additional paid-in capital                     1,013,080      1,009,120
  Retained earnings                                451,856        437,503
  Accumulated other comprehensive income               186          4,335
  Treasury stock at cost                          (384,852)      (383,407)
  Unallocated common stock
   held by Employee Stock
   Ownership Plan                                  (65,534)       (67,589)
  Common Stock acquired by the
   Directors' Deferred Fee Plan                     (7,690)        (7,759)
  Deferred compensation - Directors'
   Deferred Fee Plan                                 7,690          7,759
          Total stockholders' equity             1,015,568      1,000,794
          Total liabilities and
           stockholders' equity                 $6,451,105     $6,359,391



              PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
                      Consolidated Statements of Income
     Three and Nine Months Ended September 30, 2008 and 2007 (Unaudited)
                (Dollars in Thousands, Except Per Share Data)

                           Three Months Ended         Nine Months Ended
                              September 30,              September 30,
                            2008         2007         2008         2007
                               (Unaudited)               (Unaudited)
  Interest income:
    Real estate
     secured loans       $42,465      $42,791     $124,406     $125,315
    Commercial loans      10,665       11,547       32,568       29,880
    Consumer loans         9,106       10,227       27,932       29,061
    Investment
     securities            3,606        3,802       10,860       11,664
    Securities
     available
     for sale             10,770        9,418       32,372       28,614
    Other short-term
     investments              26           37          329          115
    Federal funds              -            5          164          110
          Total interest
           income         76,638       77,827      228,631      224,759

  Interest expense:
    Deposits              20,133       30,307       68,945       83,663
    Borrowed funds        11,154        8,237       32,577       24,501
          Total interest
           expense        31,287       38,544      101,522      108,164
          Net interest
           income         45,351       39,283      127,109      116,595

  Provision for
   loan losses             3,800        1,300        6,600        2,800

          Net interest
           income after
           provision for
           loan losses    41,551       37,983      120,509      113,795

  Non-interest income:
    Fees                   7,281        6,435       18,287       18,599
    Gain on insurance
     settlement                -            -            -        5,947
    Bank-owned life
     insurance             1,320        1,339        3,980        4,026
    Net (loss) gain on
     securities
     transactions          (966)            2        (565)         (61)
    Other income             140          297        1,525        1,490
          Total
           non-interest
           income          7,775        8,073       23,227       30,001

  Non-interest expense:
    Compensation and
     employee benefits    16,591       20,842       50,768       54,784
    Net occupancy expense  5,195        4,938       15,626       14,451
    Data processing
     expense               2,296        2,249        6,903        6,913
    Amortization of
     intangibles           1,373        1,677        4,706        4,915
    Advertising and
     promotion             1,160        1,089        2,989        3,341
    Other operating
     expenses              5,343        4,916       16,210       14,775
          Total
           non-interest
           expense        31,958       35,711       97,202       99,179
          Income
           before
           income tax
           expense        17,368       10,345       46,534       44,617
  Income tax expense       4,205        2,085       12,325       11,932
          Net income     $13,163       $8,260      $34,209      $32,685

  Basic earnings
   per share               $0.23        $0.14        $0.61        $0.55
  Average basic
   shares outstanding 56,078,691   58,968,076   56,006,174   59,787,076

  Diluted earnings
   per share               $0.23        $0.14        $0.61        $0.55
  Average diluted
   shares outstanding 56,078,870   58,968,076   56,006,234   59,787,076



                      PROVIDENT FINANCIAL SERVICES, INC.
                      CONSOLIDATED FINANCIAL HIGHLIGHTS
            (Dollars in thousands, except share data) (Unaudited)

                         At or for the Three        At or for the Nine
                             Months Ended              Months Ended
                             September 30,             September 30,
                           2008         2007         2008         2007
  INCOME STATEMENT:
  Net interest income    $45,351      $39,283     $127,109     $116,595
  Provision for
   loan losses             3,800        1,300        6,600        2,800
  Non-interest income      7,775        8,073       23,227       30,001
  Non-interest expense    31,958       35,711       97,202       99,179
  Income before
   income tax expense     17,368       10,345       46,534       44,617
  Net income              13,163        8,260       34,209       32,685
  Basic earnings
   per share               $0.23        $0.14        $0.61        $0.55
  Diluted earnings
   per share               $0.23        $0.14        $0.61        $0.55
  Interest rate spread     2.96%        2.53%        2.74%        2.55%
  Net interest margin      3.27%        2.97%        3.08%        3.00%

  PROFITABILITY:
  Annualized return
   on average assets       0.82%        0.53%        0.72%        0.73%
  Annualized return
   on average equity       5.17%        3.18%        4.53%        4.22%
  Annualized non-interest
   expense to
   average assets          1.98%        2.30%        2.04%        2.21%
  Efficiency ratio (1)    60.16%       75.41%       64.66%       67.65%

  ASSET QUALITY:
  Non-accrual loans                                $35,281      $11,023
  Non-performing loans                              35,281       11,023
  Foreclosed assets                                  3,556          600
  Non-performing
   loans to
   total loans                                       0.81%        0.26%
  Non-performing
   assets to
   total assets                                      0.60%        0.19%
  Allowance for
   loan losses                                     $43,329      $37,591
  Allowance for
   loan losses to
   non-performing loans                            122.81%      341.02%
  Allowance for
   loan losses to
   total loans                                       0.99%        0.89%

  AVERAGE BALANCE
   SHEET DATA:
  Assets              $6,419,753   $6,159,799   $6,365,479   $6,008,416
  Loans, net           4,293,132    4,117,244    4,244,900    3,975,486
  Earning assets       5,548,275    5,283,844    5,501,514    5,174,565
  Core deposits        2,636,521    2,580,743    2,611,346    2,469,072
  Borrowings           1,227,084      785,760    1,136,553      785,636
  Interest-bearing
   liabilities         4,889,180    4,580,544    4,837,484    4,443,964
  Stockholders'
   equity              1,012,422    1,029,610    1,009,190    1,036,157
  Average yield on
   interest-earning
   assets                  5.51%        5.87%        5.54%        5.80%
  Average cost of
   interest-bearing
   liabilities             2.55%        3.34%        2.80%        3.25%



  Notes
  (1) Efficiency Ratio Calculation
                          Three Months Ended        Nine Months Ended
                             September 30,             September 30,
                           2008         2007         2008         2007
  Net interest income    $45,351      $39,283     $127,109     $116,595
  Non-interest income      7,775        8,073       23,227       30,001
  Total income           $53,126      $47,356     $150,336     $146,596

  Non-interest expense   $31,958      $35,711      $97,202      $99,179

    Expense/Income:       60.16%       75.41%       64.66%       67.65%



  Average Quarterly Balance
  NET INTEREST MARGIN ANALYSIS
  (Unaudited) (Dollars in thousands)

                           September 30,                 June 30,
                               2008                        2008
                    Average          Average    Average           Average
                   Balance Interest Yield/Cost Balance Interest Yield/Cost
  Interest-Earning
   Assets:
    Federal Funds
     Sold and
     Other
     Short-Term
     Investments     $4,651      $26   2.28%    $12,227      $93    3.05%
    Investment
     Securities (1) 354,603    3,606    4.07    354,012    3,601     4.07
    Securities
     Available
     for Sale       854,981   10,212    4.78    887,401   10,557     4.76
    Federal Home
     Loan Bank
     Stock           40,908      558    5.43     34,537      758     8.83
    Net Loans (2)
  Total
   Mortgage
   Loans          3,001,010   42,465    5.65  2,901,165   40,554     5.60
  Total
   Commercial
   Loans            670,535   10,665    6.33    679,636   10,621     6.29
  Total
   Consumer
   Loans            621,587    9,106    5.83    623,037    9,147     5.90
  Total
   Interest-
  Earning
   Assets         5,548,275   76,638    5.51  5,492,015   75,331     5.50

  Non-Interest
   Earning Assets:
    Cash and Due
     from Banks      84,333                      74,823
    Other Assets    787,145                     784,470
  Total Assets   $6,419,753                  $6,351,308

  Interest-Bearing
   Liabilities:
    Demand
     Deposits    $1,249,566    5,725   1.82% $1,178,700    5,110    1.74%
    Savings
     Deposits       920,365    2,273    0.98    965,877    2,446     1.02
    Time
     Deposits     1,492,165   12,135    3.24  1,570,383   14,666     3.76
  Total
   Deposits       3,662,096   20,133    2.19  3,714,960   22,222     2.41

  Total
   Borrowings     1,227,084   11,154    3.62  1,102,742   10,540     3.84
  Total
   Interest-
   Bearing
   Liabilities    4,889,180   31,287    2.55  4,817,702   32,762     2.74

  Non-Interest
   Bearing
   Liabilities      518,151                     524,333
  Total
   Liabilities    5,407,330                   5,342,035
  Stockholders'
   Equity         1,012,422                   1,009,273
  Total
   Liabilities
   & Stockholders'
  Equity         $6,419,753                  $6,351,308

  Net interest
   income                    $45,351                     $42,569

  Net interest
   rate spread                         2.96%                        2.76%
  Net interest-
   earning
   assets          $659,095                    $674,313

  Net interest
   margin (3)                          3.27%                        3.10%
  Ratio of interest-
  earning assets to
  interest-bearing
   liabilities        1.13x                       1.14x


  (1) Average outstanding balance amounts shown are amortized cost.
  (2) Average outstanding balances are net of the allowance for loan
      losses, deferred loan fees and expenses, loan premiums and
      discounts and include non-accrual loans.
  (3) Annualized net interest income divided by average interest-earning
      assets.



  The following table summarizes the net interest margin for the previous
  year, inclusive.

                    9/30/08   6/30/08   3/31/08   12/31/07   9/30/07
                    3rd Qtr.  2nd Qtr.  1st Qtr.   4th Qtr.  3rd Qtr.
  Interest-Earning
   Assets:
  Securities          4.59%     4.66%     4.67%     4.55%     4.55%
  Net Loans           5.78%     5.76%     5.90%     6.09%     6.24%
    Total Interest-
     Earning Assets   5.51%     5.50%     5.63%     5.76%     5.87%

  Interest-Bearing
   Liabilities
  Total Deposits      2.19%     2.41%     2.87%     3.11%     3.17%
  Total Borrowings    3.62%     3.84%     4.06%     4.19%     4.16%
    Total Interest-
     Bearing
     Liabilities      2.55%     2.74%     3.14%     3.33%     3.34%

  Interest Rate
   Spread             2.96%     2.76%     2.49%     2.43%     2.53%
  Net Interest
   Margin             3.27%     3.10%     2.87%     2.84%     2.97%
  Ratio of Interest-
   Earning Assets to
   Interest-Bearing
   Liabilities        1.13x     1.14x     1.14x     1.14x     1.15x



  Average YTD Balance
  NET INTEREST MARGIN ANALYSIS
  (Unaudited) (Dollars in thousands)

                           September 30,             September 30,
                               2008                      2007
                    Average           Average Average            Average
                    Balance  Interest   Yield Balance  Interest    Yield
  Interest-
   Earning
   Assets:
    Federal Funds
     Sold and
     Other Short-Term
     Investments    $20,182      $493    3.27%   $5,561      $225     5.40%
    Investment
     Securities (1) 354,656    10,860    4.08   377,502    11,664     4.12
    Securities
     Available
     for Sale       843,576    30,300    4.79   785,987    26,876     4.56
    Federal Home
     Loan Bank
     Stock           38,200     2,072    7.25    30,029     1,738     7.74
    Net Loans (2)
  Total Mortgage
   Loans          2,933,316   124,406    5.66 2,795,469   125,315     5.98
  Total
   Commercial
   Loans            683,942    32,568    6.36   554,718    29,880     7.20
  Total Consumer
   Loans            627,642    27,932    5.93   625,299    29,061     6.21
  Total Interest-
   Earning
   Assets         5,501,514   228,631    5.54 5,174,565   224,759     5.80

  Non-Interest
   Earning Assets:
    Cash and Due
     from Banks      80,175                      89,151
    Other Assets    783,790                     774,700
  Total Assets   $6,365,479                  $6,008,416

  Interest-Bearing
   Liabilities:
    Demand
     Deposits    $1,181,644    17,315   1.96%  $787,590    14,152    2.40%
    Savings
     Deposits       961,161     7,830    1.09 1,207,087    14,757     1.63
    Time Deposits 1,558,126    43,800    3.75 1,663,651    54,754     4.40
  Total Deposits  3,700,931    68,945    2.49 3,658,328    83,663     3.06

  Total
   Borrowings     1,136,553    32,577    3.83   785,636    24,501     4.17
  Total Interest-
   Bearing
   Liabilities    4,837,484   101,522    2.80 4,443,964   108,164     3.25

  Non-Interest
   Bearing
   Liabilities      518,805                     528,295
  Total
   Liabilities    5,356,289                   4,972,259
  Stockholders'
   Equity         1,009,190                   1,036,157
  Total
   Liabilities
   & Stockholders'
   Equity        $6,365,479                  $6,008,416

  Net interest
   income                    $127,109                    $116,595

  Net interest
   rate spread                          2.74%                        2.55%
  Net interest-
   earning assets  $664,030                    $730,601

  Net interest
   margin (3)                           3.08%                        3.00%
  Ratio of
   interest-earning
   assets to
  interest-bearing
   liabilities        1.14X                       1.16x


  (1) Average outstanding balance amounts shown are amortized cost.
  (2) Average outstanding balances are net of the allowance for loan
      losses, deferred loan fees and expenses, loan premiums and
      discounts and include non-accrual loans.
  (3) Annualized net interest income divided by average
      interest-earning assets.



  The following table summarizes the YTD net interest margin for the
  previous three years, inclusive.

                                 Nine Months Ended
                         9/30/08      9/30/07      9/30/06
  Interest-Earning Assets:
    Securities             4.64%        4.50%        4.26%
    Net Loans              5.81%        6.19%        5.98%
      Total Interest-
       Earning Assets      5.54%        5.80%        5.51%

  Interest-Bearing
   Liabilities:
    Total Deposits         2.49%        3.06%        2.34%
    Total Borrowings       3.83%        4.17%        3.78%
      Total Interest
       -Bearing
       Liabilities         2.80%        3.25%        2.64%

  Interest Rate Spread     2.74%        2.55%        2.87%
  Net Interest Margin      3.08%        3.00%        3.28%
  Ratio of Interest-
   Earning Assets to
   Total Interest-
   Bearing Liabilities     1.14x        1.16x        1.19x

CONTACT: Kenneth J. Wagner, SVP Investor Relations, Provident Financial Services, Inc., +1-201-915-5344

Web Site: http://www.providentnj.com/