Provident Financial Services, Inc

Good day and welcome to the Providence Financial Services Incorporated fourth quarter and year-end earnings release. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Adriana Duarte of Investor Relations. Please go ahead, sir.

Thank you, Chuck. Good morning, everyone, and thank you for joining us for our fourth quarter earnings call. Today's presenters are President and CEO Tony Labazzetta and Senior Executive Vice President and Chief Financial Officer Tom Lyons. Before beginning the review of our financial results, we ask you 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 this morning's earnings release, which has been posted to the investor relations page on our website, providence.bank. Now, it's my pleasure to introduce Tony Labazzetta, who will offer his perspective on the fourth quarter. Tony.

Thank you, Adriano, and good morning, everyone. Providence had strong financial performance for the fourth quarter. with earnings of 49 cents per share. Our performance was driven by growth in all of our key business lines, resulting in the deployment of some of our excess liquidity and increased average earning assets. That growth, combined with improved credit metrics and a strong expansion in our fee-based businesses, drove the increase in quarterly revenue, which produced a solid annualized return on average assets of 1.08% and return on average tangible equity of 12.04%. Our board approved quarterly cash dividend of 24 cents a share. During the quarter, we also repurchased approximately 290,000 shares of our common stock at an average price of $23.43 per share. Our capital position remains strong and comfortably exceeds well-capitalized levels. Our focus continues to be on growing our business lines, especially commercial lending. Our commercial lending group continues to exhibit strong productivity. In the fourth quarter, we closed over $663 million of new loans, an increase of 18.6% from the prior quarter. Pre-payments adjusted for PPP remain elevated and partially offset our strong productions. Approximately 50% of our commercial loan prepayments were driven by the sale of the underlying asset or refinanced away at terms that were deemed unacceptable by us. In the fourth quarter, we saw a nominal increase in our line of credit utilization percentage to 28%, still below our historical average of approximately 40%. Our production continues to outpace the pressures of the current operating environment, As such, we grew our commercial loan portfolio, excluding PPP, at an annualized rate of 7.1%. We had substantial pull-through in our commercial loan pipeline during the fourth quarter. However, as we move into 2022, our pipeline remains solid at approximately 1.05 billion. The pull-through adjusted pipeline, including loans pending closing, is approximately 641 million. The market continues to be very competitive and our team faces pressure on rates and structure from banks and non-banks. Despite these challenges, we are seeing strong lending activity and with a focus on providing our clients the best-in-class customer experience, we are confident about our loan growth heading into 2022. Our expected pipeline rate increased 20 basis points from last quarter. We expect good pull-through, and if our prepayments are stable, we should have strong loan growth in the first quarter of 2022. We continue to observe stable to improving market conditions. Consequently, our asset quality continues to improve, and during the quarter, we actually experienced net recoveries to our allowance for credit losses. We had very good growth in our core deposits, particularly non-interest-bearing deposits, which grew at an annualized rate of 24.4%. and presently comprise 24.6% of our total deposits. Our total cost of deposits for the quarter declined two basis points to 21 basis points and remains amongst the best in our peer group. We anticipate that the Federal Reserve will commence hiking interest rates in 2022. Provident is moderately asset sensitive and we have a stable low cost deposit base. which positions us well for rising interest rates while protecting us in the event rates remain constant. We are enthusiastic about the momentum in our fee-based businesses, Beacon Trust and SB1 Insurance, as they continue to build synergy with the bank. SB1 Insurance grew revenue 23.5% for the quarter compared to the same quarter last year, driven largely by strong organic growth and a retention ratio of 99.8%. Beacon Trust also had notable organic growth and solid performance with assets under management increasing approximately 13.2% and revenue increasing 18.1% over the same quarter last year. During this past year, we strove to build for the future. We developed a strategic plan with a new vision and mission statement, and we adopted new core values, which we call our guiding principles. This initiative will help ensure that we preserve what has made Providence special, while at the same time investing in our bank and our people to continue to build the value of our franchise. As we move into 2022, our aim is to grow earning assets and enhance our asset mix, which should improve our margin and optimize our net interest income. To further diversify our revenue sources, we will focus on growing our fee-based businesses and strengthen the synergies with the bank. We also have a number of digital initiatives that will modernize certain business processes. Lastly, I would like to thank our talented colleagues for their effort and dedication. I'm excited about their commitment to achieving the objectives in our plan, which will enable us to deliver long-term shareholder value. With that, I'll turn the call over to Tom for his comments on our financial performance.