Provident Financial Services, Inc

Good morning. Thank you for attending today's Provident Financial Services Incorporated Third Quarter Earnings Conference Call. My name is Alexis, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to Adriano Duarte, Investor Relations Officer of Provident Financial Services. You may proceed.

Thank you, Alexis. Good morning, and thank you for joining us for our third quarter earnings call. Today's presenters are President and CEO Tony Lavazetta 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 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 Lozada, who will offer his perspective on our third quarter results. Tony.

Thank you, Adriano. And good morning, everyone. In the third quarter, Providence delivered a strong financial performance, once again, producing record revenues resulting in earnings of 58 cents per share. Our performance was driven in large part by the strength and stability of our funding base, growth in loans, and an expanding net interest margin. The expanding net interest margin drove a 10.1% increase in net interest income over the trailing quarter. This resulted in an annualized return on average assets of 1.26%, a return on average tangible equity of 14.96%. For solid earnings performance continues to positively impact our capital, which remains strong and comfortably exceeds well capitalized levels. Our board of directors approved a quarterly cash dividend of 24 cents per share. We remain committed to furthering our goal of delivering a best in class customer experience, which creates advocates for life and will help build our business, all of our business lines. Commercial lending continues to be our primary focus. And in the third quarter, we closed approximately $533 million of new loans. Our line of credit utilization percentage decreased 3% from the second quarter to 33%, which is trailing our historical average of about 40%. In addition, prepayments increased approximately 17% to $265 million as compared to the second quarter. Approximately 2 thirds of the payoffs were due to the sale of the underlying collateral. As a result of our production and the levels of prepayments, we grew our commercial loan portfolio, excluding PPP, at an annualized rate of 3.9% for the quarter and 10% for the first nine months of 2022. Pull-through in our commercial loan pipeline during the third quarter was as expected. We also replenished our gross pipeline, which remained strong at approximately $1.5 billion. Pull-through adjusted pipeline, including loans pending closing, is approximately $963 million. And our projected pipeline rate increased 112 basis points from the last quarter to 6.11%. Through the first nine months of 2022, we had record commercial loan production and growth. fight the competitive market and rising interest rates. We are also encouraged by the activity that replenished our pipeline, and we expect normal pull-through in the fourth quarter, which should result in good commercial . However, we remain watchful of rising interest rates and the potential impact this may have industry-wide on pipeline pull-through. Stability of our core deposits is a valuable component of our franchise. During the quarter, the average balance of our core deposits increased 89 million, or 3.6% annualized. Total cost of deposits for the quarter increased 15 basis points to 35 basis points. For the third quarter, our deposit beta was 10%, while the rising rate cycle-to-date deposit beta was about 5%. The stability of our core deposits and relatively low betas combined with the growth and improved yields on our earning assets, particularly commercial loans, help drive a 30 basis point improvement in our net interest margin. Given our moderately asset-sensitive balance sheet, our stable core deposits, and our prospective loan growth, we expect more improvement in the net interest margin in the near term. Our fee-based business lines are an essential component of our community banking model. Profit and Protection Plus, formerly SB1 Insurance, had a solid third quarter with a 19% increase in revenue and a 31% increase in operating profit as compared to the same quarter last year. The unfavorable conditions in the financial markets persisted in the third quarter, and as a result, Beacon Trust experienced a decline in market value of assets under management and related fee incomes. Deacon trust fee income decreased 239,000 or 3.4% as compared to the trailing quarter. As we move forward and organically build our business lines, we are conscious of the potential deteriorating market conditions. Provident remains committed to its strong risk management culture. In September, we announced the merger of Lakeland Bancorp with Provident. We are excited about this partnership. which will form a powerhouse super community banking organization in the tri-state region. We begin planning the next steps with our new colleagues. The collective enthusiasm about the combination of the two organizations continues to grow. I would like to express a special thank you to the Provident team this quarter, not only for their commitment and dedication, but for remaining focused on producing strong financial results while working diligently on the prospective merger transaction. I also want to thank Tom Schara and the Lakeland Bank team for their professionalism and camaraderie during the merger negotiations. We look forward to growing our business lines and creating value for our employees, customers, communities, and shareholders. With that, I'll turn the call over to Tom for his comments on our financial performance. Tom? Thank you, Tony, and good morning, everyone.