Provident Financial Services, Inc

Thank you for standing by. My name is Alex. I will be your conference operator today. At this time, I would like to welcome everyone to the Provident Financial Services Incorporated First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remark, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. I would now like to turn the call over to Adriano Duarte, Investor Relations Officer. Please go ahead.

Thank you, Alex. Good morning, everyone, and thank you for joining us for our first 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 their 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 yesterday evening's earnings release, which has been posted to the investor relations page on our website, provident.bank. Now, it's my pleasure to introduce Tony LaBazzetta, who will offer his perspective on the first quarter. Tony.

Thank you, Adriano. Good morning, everyone, and welcome to the Provident Financial Services earnings call. Before I go on to discuss the results for the quarter, I am delighted to say that as of the 11th of April, we have received all regulatory approvals to complete our merger with Lakeland Bancorp. We are grateful for the efforts of the members of our team and the Lakeland team who worked tirelessly to achieve this milestone. and who continue to work diligently to plan for the merger and integration of our two exceptional banks. We expect to complete the merger this quarter promptly following the subordinated debt raise that is a condition to close. This merger will bring together two high-performing institutions with like-minded cultures, an unwavering commitment to the employee and customer experience, and a dedication to excellence. The scale and strong financial performance of our combined organizations will allow us to better invest in our future, compete for market share in the highly attractive and densely populated New Jersey, New York, and Pennsylvania markets, and serve our customers and communities while creating value for our shareholders. It will further aid us in attracting and retaining top talent and providing even better technological solutions for our customers and employees. We expect that Providence' two fee-based business lines, insurance and wealth management, will augment the broad product and service offerings available to the Lakeland Bank customers. Providence will also bring its strength in treasury management, while Lakeland brings its capabilities in healthcare and asset-based lending to our combined institutions. Both institutions have talented management teams and boards and important past experience navigating mergers, and whose joint skill sets will bring even greater strength to our combined talent pool. Moving on to our quarterly results, the first quarter was characterized by continued economic growth, stubbornly high interest rates, and persistently difficult environment for the banking sector. Thanks to the efforts of the Provident team, our customer-centric culture, and robust risk management, we have performed very well. Providence produced strong financial results this quarter, which once again demonstrates the strength and discipline of our management team. We reported earnings of 43 cents per share, an annualized return on average assets of 0.92%, and a return on average tangible equity of 10.4%. Excluding merger-related charges, our pre-tax, pre-provision return on average assets was 1.28% for the first quarter. At quarter end, our capital is strong and exceeded levels deemed to be well capitalized. Tangible book value per share remains steady at $16.30, and our tangible common equity ratio improved to 9.05%. As such, our board of directors approved a quarterly cash dividend of 24 cents per share, payable on May 31st. During the quarter, our average deposits, excluding broker deposits, increased approximately 3% annualized as compared to the trailing quarter. And our total cost of deposits was impressive at 2.07%. The total cost of funds grew nine basis points to 2.32%, which compressed our net interest margin five basis points. Our commercial lending team closed approximately 275 million of commercial loans during the first quarter. As expected, commercial loan payoffs increased $77 million to $173 million when compared to the trailing quarter. Our credit metrics continued to improve in the first quarter, and the economic forecast in our CECL model modestly improved, resulting in a reduced provision for credit losses. We continue to maintain prudent underwriting and portfolio management standards, particularly in our CRE lending portfolio. Furthermore, Our Crete portfolio is comprised of well-diversified exposure levels concentrated within favorable asset classes. Overall, our total commercial loan portfolio remained relatively flat. However, we had good productivity in our C&I lending, which grew approximately $72.1 million, or 11.5% annualized for the quarter. In addition, our construction loans grew approximately $58.2 million, or 8.9% annualized, due to funding of existing commitments. The pull-through in our commercial loan pipeline during the first quarter was in line with our expectations, and the gross pipeline remained steady at approximately $1.1 billion. The pull-through adjusted pipeline, including loans pending closing, is approximately $561 million, and our projected pipeline rate is 7.46%. We remain optimistic regarding the strength and quality of our pipeline. Our fee-based business businesses performed exceedingly well. Despite the continuation of the hard insurance market, Profit and Protection Plus had a strong first quarter, which resulted in a 17.4% increase in operating profit as compared to the same quarter last year. Better market conditions helped increase Beacon Trust assets under management to about $4 billion at quarter end, which helped grow fee income 9.4% as compared to the trailing quarter. As we move further into 2024, our attention will, of course, be on completing all aspects of the merger and becoming the preeminent community bank in our market. We will also focus on growing our business lines with an emphasis on deposit growth, achieving operational synergies and other revenue enhancement opportunities resulting from our merger. Now, I will turn the call over to Tom for his comments on our financial performance. Tom? Thank you, Tony. Good morning, everyone.