Provident Financial Services, Inc

Hello and welcome to the Provident Financial Services Inc. First Quarter Earnings Release Call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star 1 on your telephone keypads. If you'd like to withdraw your question, you may press star 2. I'll now hand over to your host, Adriano Duarte, Investor Relations Officer for Provident. Over to you, Adriano.

Thank you, Alex. Good morning, and thank you for joining us for our first quarter earnings call. Today's presenters are President and CEO Tony Labazetta and Senior Executive Vice President and Chief Financial Officer Tom Lyons. Before beginning the review of our financial results, we ask that you please take note of our standard question 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.com. Sorry, Providence.Bank. Now, it's my pleasure to introduce Tony Lapazada, who will offer his perspective on our first quarter. Tony.

Thank you, Adriano, and good morning, everyone. We are very pleased with Providence's strong financial performance for the first quarter, with earnings of 58 cents per share. Our performance was driven by growth in our key business lines, resulting in the deployment of some of our excess liquidity in more desirable asset classes. The growth and improved asset mix, combined with an expanding net interest margin, bolstered net interest income, which drove the increase in quarterly revenue. In addition, improvements in credit metrics and the economic forecast supported a negative provision for the quarter. This produced an annualized rate of return on average assets of 1.3% and a return on average tangible equity of 14.58%. Our board approved the quarterly tax dividend of $0.24 per share. During the quarter, we also repurchased approximately 1.3 million shares of common stock at an average price of $23.36 per share. Our capital position remains strong and comfortably exceeds bulk capitalized levels. Our focus is to continue to build our best-in-class customer experience and grow all of our business lines, especially commercial lending. Our commercial lending group continues to be very active, and in the first quarter, we closed approximately $502 million of new loans, a 61% increase from the same quarter last year. Prepayments for the quarter, adjusted for PPP, included certain anticipated payoffs, which offset some of our strong production. Our line of credit utilization percentage increased 3% for the first quarter to 31%, but remains below our historical average of about 40%. Our production continues to be robust. Consequently, we grew our commercial loan portfolio, excluding PPP, at an annualized rate of 8.3%. We had good pull-through in our commercial loan pipeline during the first quarter, yet our gross pipeline remains healthy at approximately $1.4 billion. The pull-through adjusted pipeline, including loans pending closing, is approximately $810 million. and our expected pipeline rate increased 55 basis points from the last quarter to 4.15%. Despite a competitive market and rising interest rates, we continue to see vibrant lending activity. We expect solid pull-through in our pipeline, and if prepayments are normal, we should have a strong long growth throughout 2022. Our core deposits remain stable, and we continue to see growth. Our non-interest-bearing deposits grew at an annualized rate of 8.7% this quarter and presently comprise about 25% of our total deposits. The total cost of deposits for the quarter declined two basis points to 19 basis points and is amongst the best in our peer group. We deployed excess liquidity into commercial loans and investments and continued to reduce our cost of funds, which helped drive a seven basis points improvement in our net interest margin. We anticipate the Federal Reserve will continue to hike interest rates in 2022. Provident is moderately asset-sensitive, and we have a stable, low-cost deposit base. Therefore, we believe we're well positioned for rising interest rates. Our fee-based businesses are important to us. SB1 Insurance had a strong quarter, with revenue increasing 26.4% compared to the same quarter last year. performance was driven largely by healthy organic growth, a 37.1% increase in contingent income, and a retention ratio of 99.8%. Given the unfavorable conditions in the financial markets, Beacon Trust experienced a decline in the market value of assets under management. And as a result, fee income decreased 376,004.8% for the quarter as compared to the trailing quarter. And as we look forward, our goal is to grow our business lines and further improve our asset mix. We also expect that rising interest rates will continue to improve our margin, which, when combined with our growth, will have a positive impact on our net interest income in the upcoming quarters. In addition, we have a number of digital initiatives being implemented that will modernize certain business processes, improving efficiency and the customer and employee experience. first quarter performance was due in large part to our talented colleagues' commitment to our guiding principles and their continued pursuit of a high performing and innovative culture. I want to thank them for their dedication. We look forward to growing our business and achieving more financial success built on our commitment to our employees, customers, communities, and shareholders. With that, I'll turn the call over to Tom for his comments on our financial performance.