Provident Financial Services (PFS) of Jersey City beat fourth-quarter earnings expectations as it lowered its loan-loss provision and profited from asset sales.

On Friday, the $7.3 billion-asset company reported a fourth-quarter profit of $16.7 million, up 12% from the final quarter of 2011. Per-share earnings of 29 cents were 2 cents higher than analysts polled by Bloomberg expected.

Provident's improving asset quality allowed it to lower its provision for loan losses, despite the impact of Hurricane Sandy. The bank's provision for loan losses was $4 million, a $2 million decrease, and charge-offs declined 26%, to $3.9 million. Provident's nonperforming loans declined 19%, to $99 million, in 2012.

The bank "conservatively" provided for Sandy's potential impact on its loan portfolio, Provident Chairman, President and Chief Executive Christopher Martin said in the news release. The bank also plans to donate $250,000 to affected communities.

The bank's net interest income was flat from the prior-year quarter, at $54.2 million, as lower interest income was offset by lower deposit expenses.

Provident's noninterest income rose 35%, to $11.8 million, despite a slight decline in fee income. The increase was due to the sale of mortgage-backed securities, loans and properties.

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