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 one on your telephone keypads. If you would like to withdraw your question, you may press Star two. 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 Labozzetta, 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, provident.bank. Sorry, provident.bank. Now it's my pleasure to introduce Tony Labozzetta, who will offer his perspective on our first quarter. Tony. Thank you, Adriano, and good morning, everyone. We are very pleased with Provident's strong financial performance for the first quarter, with earnings of $0.58 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 cash 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 well-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 loan 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 2 basis points to 19 basis points and is among 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 7 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. SB One Insurance had a strong quarter, with revenue increasing 26.4% compared to the same quarter last year. The 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 $376,000, or 4.8% for the quarter as compared to the trailing quarter. 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. Lastly, our strong 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. Thank you, Tony, and good morning, everyone. As Tony noted, our net income for the quarter was $44 million or $0.58 per diluted share, compared with $37.3 million or $0.49 per share for the trailing quarter and $49.8 million or $0.63 per share for the first quarter of 2021. Pre-tax, pre-provision earnings for the quarter were $50.4 million or an annualized 1.49% of average assets. We had record revenue that exceeded $114 million for the third consecutive quarter on the strength of record net interest income. Our net interest margin increased 7 basis points from the trailing quarter to 3.02% as interest-bearing cash was deployed to fund higher-yielding loans, invested in higher-yielding securities, and borrowings were replaced with lower-costing deposits. Income recognized from PPP loan forgiveness fell $700,000 versus the trailing quarter to $1.1 million, and remaining deferred PPP fees totaled $354,000 at March 31st. Meanwhile, we drove funding costs down again as average deposits increased and average borrowings declined. Average non-interest-bearing deposits increased $26 million versus the trailing quarter, and the total cost of deposits declined another 2 basis points to just 19 basis points. Excluding the impact of PPP loans and purchase accounting adjustments, the core net interest margin increased 11 basis points from the trailing quarter to 2.95%. The pull-through adjusted loan pipeline at March 31st increased $134 million from the trailing quarter to $810 million, while the pipeline rate increased 55 basis points since last quarter to 4.15%. Excluding PPP loans, period-end commercial loan totals increased $165 million or an annualized 8.3% versus December 31st. Loan growth occurred primarily in the CRE and C&I categories. Net of runoff in the residential and consumer loan portfolios, total loans excluding PPP loans grew $147 million or an annualized 6.2% for the quarter. The allowance for credit losses on loans decreased $4.5 million for the quarter as a result of the $6.4 million negative provision for credit losses on loans and $1.9 million of net recoveries. Asset quality metrics, including non-performing loan levels, total delinquencies, criticized and classified loans and related ratios again improved versus the trailing quarter. Non-performing assets decreased to 39 basis points of total assets from 42 basis points at December 31st. Excluding PPP loans, the allowance represented 79 basis points of loans, a reduction from 85 basis points at the trailing quarter- end as a result of a decrease in impaired credits and improvements in the economic forecast. Non-interest income decreased by $106,000 versus the trailing quarter as an increase in insurance agency income was more than offset by lower benefit claims on bank-owned life insurance, lower loan prepayment fees and other loan fees, and lower wealth management fees as a result of a decrease in the market value of assets under management. Excluding provisions for credit losses on commitments to extend credit for all periods, operating expenses were an annualized 1.9% of average assets for the current quarter, compared with 1.81% in the trailing quarter and 1.95% for the first quarter of 2021. The efficiency ratio was 56.05% for the first quarter of 2022, compared with 54.74% in the trailing quarter and 56.19% for the first quarter of 2021. Operating expenses are typically elevated in the first quarter as employer payroll tax limits reset and seasonal occupancy costs are incurred. In the most recent quarter, there were also increases in stock-based compensation, data processing, and advertising and promotions expense when compared with the first quarter of 2021. Our effective tax rate declined to 25.7% versus 28.4% for the trailing quarter. The trailing quarter included a discrete item for additional tax expense related to the apportionment of income subject to state income taxes. We are currently projecting an effective tax rate of approximately 25.75% for the remainder of 2022. That concludes our prepared remarks. We'd be happy to respond to questions. Thank you. We will now begin the Q&A. If you'd like to ask a question, you can press Star one on your telephone keypad. If you'd like to withdraw your question, you may press Star two. Our first question for today comes from Mark Fitzgibbon from Piper Sandler. Mark, your line is now open. Gentlemen, good morning. Morning, Mark. Good morning, Mark. How are you? Terrific, thank you. I guess, first question I had, Tom, could you share with us what the impact of accretable yield was this quarter and last quarter, let's say? The last quarter was 7 basis points and 6 basis points in the current quarter, Mark. Okay, great. PPP was $5 last quarter and $2 in the third quarter. Okay, great. Secondly, what was assets under management at the end of the quarter, and what were the net flows? At the end of the quarter, $3.9 billion. On average, we're only down $59,000, so $4.034 billion for the average for the quarter. Really, market valuation driving that. We actually increased number of clients by seven over the course of the quarter. The fee rate remains about 77 basis points. Okay. Tom, it sounds like the margin probably goes down a little bit in the short term as PPP income burns off and, you know, accreditable yield declines. Should we assume the reported margin will kind of dip down a little bit in 2Q and then start to build in the back half of the year? No, Mark, I think we're actually going to see it continue to build into 2022. PPP, as I said, only contributed 2 basis points this quarter. There's about $28 million worth of principal left and just $354,000 left in deferred fees, so that noise will go away. But we have a, you know, a modestly asset-sensitive balance sheet as we've discussed. We're currently modeling 7 rate hikes over the course of the year, 50 basis points in May, and then 25 in June, July, August, September, November, and December. Our models are giving us a kind of a 3.12%-3.15% for next quarter on the NIM, getting up into the low 3.20s% by the end of the year. Okay, great. I guess I was curious. I didn't notice anything in the release about it. Are you taking advantage of the consolidation around you and hiring some lenders from other banks? You know, if so, how many and how many might you consider this year? Thank you. Yeah, Mark, the answer is yes on a number of fronts. If I recall correctly, I don't hold me to this number, but I think we've hired about almost 19 new RMs this year. Not all of them from the disintermediation that has taken place, but we certainly see some activity. We've taken, I guess, our share of it and perhaps some more in the New York area as well, in Westchester and Rockland too. On the loan side, I would say yes, probably we've grown our book. I don't have a number right off the top of my head, but I'm certain that there's certain advantages that we've taken in terms of of loan productivity as well. Thank you. You're welcome. Thank you. Our next question comes from Michael Perito from KBW. Michael, your line is now open. Thank you. Good morning, guys. Mike, good morning. I wanted to ask on the reserve, you know, as we kind of think of the mechanics of that moving forward here. I mean, it seems like the credit environment for you guys is pretty benign and strong. But I imagine, you know, on the CECL front, as we move through the year here, even if it doesn't prove to be true, there'll probably be some increased weightings for some more negative economic scenarios. Is it fair to think, especially with the low growth pipeline where it is and everything I just said, that the reserve here on a percentage basis will probably be close to the low point? Curious if you guys are willing to provide any context around that commentary as well. I would expect that we're close to the low point. As you said, I think provisioning going forward will be largely driven by growth with maybe a slight tinge to some more pessimistic forecasts if the recessionary fears become reality. Right now if you look at the most recent, you know, we look to Moody's for the economic forecast, and if you look at the April forecast, it actually saw some further improvement in the baseline versus March. There's the potential for some additional smaller release, I believe, in the second quarter. Okay. Helpful. Apologies if I missed this, kind of jumping around over here. But on the operating expense side, any thoughts near term on where the run rate might trend? You know, Anthony, you mentioned some digital investments you guys are making. Just curious if you guys could put that in context for us around the kind of the rate of those investments. Is it accelerating? You know, is it going to become a larger percentage of your OpEx moving forward? Just curious how you guys are thinking about that from a high level as well as to the kind of near term OpEx run rate. I'll go first and then Tony can amplify. I think in terms of an expense run rate for dollars, excluding the provisions on the off-balance sheet credit losses or credit exposures, I think we're probably in the $63 million-$64 million range for the next quarter. I think it's a little bit less certain as we move further out, but that's probably a fair run rate to use. My perspective on the digital investments is that we're pretty stable in there. I think we're running, if you look at as a percentage of revenue, total DP expense runs in the 7.3%-8% kind of range. I don't see that changing materially. Yeah. I think they're embedded in the number that you've already. Yes gave guidance on. You know, nothing's draconian in there. I think a lot is really to make us more efficient and perhaps reduce the run rate as we go forward or handle more units of business with the same level of with better efficiency. I wouldn't characterize it as we should see a big boost in our expense spending as a byproduct of the things I mentioned. Great. Got it. Tony, are you willing to provide a little bit more detail about some of the things you're looking at on that front? Is it third-party vendors? Is it more like operational and organizational on your side and making things more efficient that way? Or I'd just love a little bit more color. Yeah, I mean, you know, we do, and I might have mentioned this in the last call. We're putting a new LOS system, loan origination system in place, which is going to make us much more efficient in terms of not only how loans flow through our bank, but the customer's journey, the employee's experience, on how we handle credits. Which in theory or in actuality, we should see an increase in productivity in the number of units that we handle. We should see better reporting within our organization as well. It really positions us better as we continue to get larger. We're also looking at a new small business lending platform which automates things a little bit better and gives us better analytics around those tools. We're doing a lot of internal development in terms of these bots that we use to reduce a lot of the mundane processes internally. All of these things are aimed at, obviously, improving the efficiency, the customer and employee experience, which we believe all of these will improve upon and more productivity. Did I miss anything there in terms of? No, not at all. Actually, I just wanted to correct an error that I made when I misspoke. I was thinking about occupancy expense in terms of the percentage of cost to revenue. It's more about 5% on the IT side. Okay. Great. Just one last one for me and I'll step back. Just Tony, on capital deployment, just, you know, pretty simple question. Just curious if you could provide us maybe some updated thoughts. Obviously, the valuations on the banking sector are pulled in here, but it sounds like, you know, near term, you guys have pretty good line of sight on some strong performance. Just curious how you guys are thinking about the overall capital deployment as we kind of move into the balance of the year here. I'll start first and then let Tom. Like, this is a conversation that we have almost periodically, the balancing, you know, seeing us undervalued and being a good buyback versus, you know, the growth plans that we have and deploying that. It's a continuing balancing act for us to make sure that we could execute both of those, right? So Yeah, I think that's why we target the 45%-55% range for the regular recurring cash dividend, because that gives us sufficient capital formation to support our current expectations of growth, and we assess that periodically. In terms of where we like to be, I think we talked before about trying to work the TC down to around 8.5%. We think that's a comfortable level. As Tony said, we've never been pro-programmatic in our approach to buybacks. It's really been opportunistic and as you noted, when we have a clear kind of view of our comfort level with earnings projections, we take advantage of market conditions. All right. Cool. Thank you guys very much. Appreciate you taking my questions. Thank you. Thank you. Thank you. Our next question comes from Billy Young of RBC. Billy, your line is now open. Hey, good morning, guys. How are you? Morning, Billy. Just first question on maybe the loan growth outlook for the year. It seems like loan growth is accelerating, and it's good to see your pipelines are up from year-end. On the core, it does seem like growth is tracking to your previously guided 5%-6%. It also sounded like prepayment activity was generally as expected. I know in the past you've spoken to maybe some moderation in that payoff activity in the back half of the year. Do you still see some room for that to happen? If so, you know, how do you think about you know, potential lift to growth, as we progress further in the year? Sure. Maybe I'll give a long-winded answer here because I think there's, if you look at our growth this quarter on a commercial loan side of about 8.3% annualized, when you factor about $100 million, roughly $98 million of loans that we plan to exit, which means these were things we wanted to happen, so we encouraged these loans out of the bank. If you adjust just for that, our growth rate for the quarter on an annualized basis would have exceeded 13%. The messaging points that we've been giving everyone over the last bunch of quarters is that, you know, we've ramped up things. We've hired new people. We got focus, and we're seeing a lot of activity. Obviously, market conditions, which I'll mention in a moment. That being said, we still had some prepayments this quarter that offset. We had $510 million of closings this quarter. And probably, I think close to $300 million was paid off. $100, as I mentioned, was planned on our part and $200, close to $200 was not. I would say nearly $150 million was refinanced elsewhere, and then the rest of it was from sale of properties. But if you look at our pipeline, if you look at our organizational capacity, if you look at the activity that we're seeing today, it really bodes well for us, particularly as we look out into the second quarter. Third quarter always gets a little bit soft because it's the summer months. You know, everybody's keeping an eye on what happens in the fourth quarter relative to the economic conditions. Do we see early onset of a downturn? We're being very careful about how we look at the fourth quarter, but everything right now points to us having some pretty solid loan growth in the upcoming quarters. If you look at us relative to last year, most of our growth happened in the second half versus this year, it's a better dynamic. We're having most of our growth in the first half, and if it continues on, it'll really bode well for our net interest income. Hopefully I gave some color there. I know there's some thoughts about what's happening in the marketplace. I'm talking to my teams, and we're still seeing some strong activity. Also on the C&I side. Today at this quarter, we probably had 70% in CRE space, about 30% in the C&I space. Which is a better ratio than we've had here at Provident for a while. Hopefully I gave you a good color. If I didn't answer all of it, please give me a follow-up. No, that was great. There was a lot to unpack there. And then separately, my follow-up is just on expenses. It seems, you know, your margin performance this quarter was very strong, and it seems like the outlook is even stronger than what we were thinking, you know, three months ago. As your margin accelerates higher, do you see, you know, some opportunities there to maybe accelerate investment, you know, in your business and some of your initiatives? I don't think in a material fashion, just because of internal resource constraints. There is some flexibility there. Usually the flexibility is more on the discretion side to withhold some spending. As you said, the favorable margin performance gives us the ability to continue full speed ahead. I don't know that there's that much opportunity to pull additional expenses forward. You also have, you know, organizational capacity. You know, we have, you know, a number of projects on the way to build for the future, and it's a matter of what we can handle. I don't think anything is constraining our thinking in terms of, you know, just continuing to execute on our plan. Great. Thank you very much. I'll step back. Thanks, Bill. Thank you. As a reminder, if you'd like to ask a question, you can press Star one on your telephone keypads. Our next question is from Erik Zwick of Boenning & Scattergood. Erik, your line is now open. Thanks. Good morning, guys. How are you? Morning. Morning, Erik. First, wondering just a bit of a follow-up on the net interest margin. Tom, I appreciate the commentary you gave there. Kind of looking forward to 2Q. Wondering what that incorporates in terms of, you know, excess liquidity. Kind of curious how you would quantify your excess liquidity position and how you would expect that to be kind of deployed over the next few quarters, and if that was factored into the guidance you provided earlier. Yeah, it's much less an excess liquidity story than an asset repricing story at this point. We've deployed the bulk, if not all of the excess liquidity last quarter. We do have good cash flows just off the investment portfolio returns about $30 million a month that we'll continue to reinvest into the rising rate environment. As you know, we have a significant floating rate loan portfolio that'll be adjusting with the increases in LIBOR over the course of the next quarter as well. Great. Thanks for the clarification there. Just thinking about kind of the non-interest income and the fees. You know, a number of banks have you know recently kind of reconsidered how they assess non-sufficient fees, overdraft charges, things of that nature. Just curious how you guys feel about your assessment strategy today and whether you'd anticipate any changes. We're comfortable right now. It's something we continue to evaluate, and we keep our eye on the marketplace. We think our processes are appropriate and fair to our customers. We don't see any immediate action there. Agreed. I think we'll continue to keep an eye on what's happening in the marketplace and reassess if we deem necessary. Understood. Tom, maybe just sticking on the noninterest income for one quick follow-up. Any thoughts on kind of the run rate going forward? If 1Q is a good kind of starting point or if there's other things to consider as we think about 2Q and beyond? I think it's a pretty good starting point. You know, there's volatile items in there around gains on loan sales, particularly in the SBA. Depends on the origination and what the current market, gain on sale margins are. Prepayment fees are volatile. BOLI income obviously jumps around. The 20-21 kind of range seems like a safe number to work off of as a core. There are concerns about what the market performance does on the wealth management side of things, but I don't think that's a material detriment. The insurance business continues to look strong for us. All in, I'd say that's a safe number, $20 million-$21 million, with hopefully some upside potential. Just one last one, I guess maybe a bigger picture question. You know, Tony, since you've joined, you've had a hand in kind of re-emphasizing the importance of corporate culture with both regard to the employee and the customer experience. You know, curious just on your thoughts today on your current positioning and initiatives from kind of that ESG perspective across the franchise and in light of kind of proposals for enhanced disclosure in some of your filings. You know, there was a couple of questions in there. I mean, the first one was, I think about the employee and customer experience culture. I would say, you know, I would look to my colleagues in the room to maybe confirm. I think there's a lot of positives in that. I see a lot of energy. I see a lot of collegiality. It doesn't mean it didn't exist before. We just enhanced it. I think the storyline is starting to expand beyond Provident, where a number of people there are calling in. That's the testament by the resumes we're getting when we have openings, the flow of activity in terms of talent that wants to join our bank. A lot of those things are initial proof points that what we're doing is paying some dividends. On the ESG side, our council and our group is looking at the disclosures. I think, you know, we're studying what other institutions are doing. As we learn more about what needs to happen there. We'll do the appropriate disclosures. Meanwhile, from our bank as a whole, I will say we're pretty proud of what we look like in terms of organizational diversity and the things, you know, we do have our information, our ratios that we work with our head of HR. Today it feels good. That doesn't mean there's never more work to be done, but we feel pretty good about where we are as an organization. Great. Thanks for taking my question today. Thank you. Thank you. Our final question for today comes from Russell Gunther from D.A. Davidson. Russell, your line is now open. Hey, good morning, guys. Morning, Russell. I just wanted to. Morning Follow- up on the margin discussion and Tom, the glide path that you laid out. Could you give us a sense for what you are assuming from a deposit beta perspective? Maybe just characterize any migration from the first 100 basis points to the second 100 basis points, how you guys would expect to perform. Yeah. The all-in deposit beta is about 23%. Interest-bearing, I think, is closer to 31%. If you back the CDs out, because they kind of come in pieces, it's more like an 18.5%-19% kinda range. So that's what's built into the margin expectations currently. Okay. In terms of lag. Uh- That's the potential for some upside there because we don't really build a lag in. Okay. Yeah, you took kind of the words out of my mouth on that, but it sounds like you might be able to outperform that in the earlier innings of rate hikes. I appreciate the color there, Tom. Then, you know, just last one for me, would be back to the fee vertical. Appreciate your thoughts on the organic growth outlook there. Any commentary in terms of your acquisitive appetite within wealth management or insurance and, you know, likelihood something could come to fruition? Sure. You know, I think, as we mentioned in the past, you know, we are always looking to pursue situations that, you know, are both cultural and strategic fits for us, in all of those areas. You know, so wealth, I mean, we continue to look at opportunities there. The market is a little hot in terms of, you know, competing against these private equity enterprises. The same thing on the insurance side. We're actively looking to augment both of those businesses, as well as we are on the bank side. I mean, obviously, there's things we can and cannot say on these calls. Suffice to say that both myself and our Chairman, Chris, we're actively talking to our colleagues and seeing where opportunities exist for us to do some strategic partnerships. I mean, I don't think that's a shocking surprise. I think that's something that's part of our normal course of business. I know I didn't give you a lot of pointed color, but you know, suffice to say, we look at opportunities. Yeah. No, it's very helpful. Tony and Tom, thank you guys for the help. That's it for me. Thanks, Russell. Thank you. Thank you. We have no further questions for today, so I'll hand back to Tony Labozzetta for any closing remarks. Thank you. We thank everybody for being on the call and asking some good questions. Once again, we look forward. If there's any comments that people would like to talk offline at further clarification, Tom and I are always available. If not, we look forward to talking to all of you throughout the second quarter. My best to all of you, and have a great day. Thank you for joining today's call. You may now disconnect.