Good morning -- I'm sorry, Good afternoon, and welcome to the First Bank First Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Patrick Ryan, President and CEO. Please go ahead.

Thank you. I'd like to welcome everyone today to First Bank's First Quarter 2018 Earnings Call. I'm joined by our Chief Financial Officer, Stephen Carman; and our Chief Lending Officer, Peter Cahill. Before we begin, however, Steve will read the safe harbor statement.

The following discussion may contain forward-looking statements concerning the financial condition, results of operations and business of First Bank. We caution that such statements are subject to a number of uncertainties, and actual results could differ materially. And therefore, you should not place undue reliance on any forward-looking statements we make. We may not update any forward-looking statements we make today for future events or developments. Information about risks and uncertainties are described under item 1A, Risk Factors, in our annual report on Form 10-K for the year ended December 31, 2017, filed with the FDIC. Pat, back to you.

Thanks, Steve. Well, I'd like to start off by saying, I think, the first quarter was a very good start to the year, building off the good momentum, I believe, we generated in 2017. Loan growth continued with an increase of $43 million. And that was net including some significant payoff and pay-down activity during the quarter, which Peter Cahill will discuss later. I'm proud to report, growth came from each of our regions, Northern New Jersey, Central New Jersey and Pennsylvania. We had good growth in our Southeastern PA market, which helped to offset some runoff in the greater Bucks County market. Joe Calabro, our Market Executive for the Southeastern PA region and his team are off to a great start. And we're in the process of hiring some new commercial lending RMs in the Bucks County market to transition from some turnover we've had in that area over the last couple of months. We also enjoyed a good mix of loan growth in the first quarter with more growth coming from our owner-occupied real estate compared to our investor real estate. Unfortunately, loan growth outpaced deposit growth to a significant measure in the first quarter, further increasing our loan-to-deposit ratio. That was driven, to some degree, by efforts to preserve our margin, which led to some CD runoff. And we also experienced some seasonal balance fluctuations in our Commercial Deposit segment. We're hopeful in our new office in Pennington, New Jersey and Mercer County, together with strong commercial deposit growth and more competitive rates will help us drive improved deposit growth for the remainder of this year. We think that the improved deposit growth and the addition of core deposits from Delanco should help alleviate some of the pressure on our loan-to-deposit ratio. Future deposit growth will come…

Thanks, Pat. As was the case in 2017, we started 2018 with solid net interest income growth led by loan growth, as Pat mentioned, of $43.1 million, and supported by a strong asset quality profile. Noninterest expenses were effectively managed in the first quarter, reflected in a lower efficiency ratio of 53.91%, down from 54.76% for the linked fourth quarter, and 60.34% for the first quarter of 2017. In addition, we've benefited from the federal statutory income tax rate decrease from 35% to 21%, which was effective January 1, 2018. Result of this core operating earnings continued to move higher as we recorded record profitability in the first quarter. We reported net income for the first quarter of 2018 of $4.0 million or $0.23 per diluted share, compared to $1.9 million or $0.17 per diluted share for the first quarter of 2017. Return on average assets, or ROAA, and average equity, or ROAE, for the first quarter of 2018 was 1.11% and 9.90%, respectively. That compares to a return on average assets of 73.73% and return on average equity of 8.73% for the first quarter of 2017. As Pat mentioned, if you don't include certain merger-related items, we would have earned an adjusted net income of $4.15 million for the first quarter of 2018, or return on average assets of 1.14%, and return on average equity of 10.18%, respectively. Net interest income for the first quarter of 2018 was $12.6 million, an increase of $4.5 million or 55.6%, compared to $8.1 million in the first quarter of 2017. Average loan balances, primarily commercial, grew $357.6 million, as a result of organic and acquired growth. Included in first quarter 2018 results was $302,000 in prepayment penalties on paid-off loans. Shortly, Peter will discuss the level of prepayments we experienced in the…

Thank you, Steve. As Steve and Pat both mentioned, loan growth in the first quarter was $43 million or 3.5%. I'm satisfied with this level of growth for a couple of reasons: First, while the integration of the Bucks County Bank loan portfolio went smoothly from an operational standpoint, we experienced a decent amount of turnover in the relationship management staff early in the quarter. This slowed us down from a production standpoint in that market, and that slowdown will roll into much of the second quarter. We did a good job, however, getting out meeting our important clients there and don't anticipate a major impact from the RM turnover. I'm also pleased to report that we've reached agreement with new hires that will get staffing back to normal over the next couple of weeks. The turnover in staff creates some short-term pain, but I think over the long term, it will be a gain for the bank once our new RMs get in and get acclimated. Secondly, we experienced extraordinary loan payments of approximately $37 million during the quarter. For comparisons, this exceeded the prepayments we had in the first quarter of 2017 by almost $16 million. As Steve pointed out, we did earn approximately $302,000 in prepayments penalties as a result of these payoffs. So to summary, after facing the challenges, I've just described, I think the quarter was a good one from a new business standpoint. Regarding the makeup of a loan portfolio, again, Pat alluded to this, as in previous quarters, there's been no significant change. From a growth perspective, we've been focused on increasing the percentage of C&I loans we do relative to investor real estate, and we continue to see progress in that area. As you probably know, we track and report our loan…

Thanks, Peter. While at this point, I'd like to turn it back to the operator to open it up for Q&A.

[Operator Instructions] The first question comes from Joe Gladue with Merion Capital Group.

I guess, just first of all, I just wanted to talk about -- I'll ask you to repeat a number. I didn't quite catch, you said what percentage of the Bucks County cost saves have been achieved so far?

About 75%. Let me clarify just 75% of the stated goal. So we targeted 40%, so 30% of the base, if you will.

Okay. And just wondering between that and Delanco, if you have a sort of a target efficiency ratio, you think you can get to by the end of the year?

Well, I don't know that we have a formal target. But I certainly think we can continue to see improvement there. I mean, some of it will be driven by what happens with the margin. But holding the margin constant, I think we can get down closer to 50% by the end of the year.

And I guess, I'll also ask the tax rate for the full year. And I think we -- gets a little lower first quarter, just wondering if you had any change or?

Well, we had, Joe, some discrete items in the first quarter related to the exercise of stock options which effective tax rate for the first quarter at 17.10%, and we expect if those discrete items aren't there next quarter that our annual effective tax -- run rate will be somewhere right around 20% for the rest of the year at this point.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Patrick Ryan for any closing remarks.

All right. Just like to thank, everybody, for taking the time to listen in, and we look forward to speaking with folks again next quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.