Good morning and welcome to the Provident Financial Services first quarter 2010 earnings conference call. (Operator instructions) Please note that this event is being recorded. I would now like to turn the conference over to Mr Chris Martin. Sir, please go ahead.

Thank you, good morning everyone. Before we discuss our first quarter 2010 results, we ask that you please review our standard cautions or any forward-looking statements that may be made during the review of our financial performance of Provident Financial Services Incorporated. A full disclosure and disclaimer can be found on the text of our earnings release and you can obtain a copy of that and all of our SEC filings by accessing our Web site www.providentnj.com or by calling our Investor Relations area 201 915 5344. For today’s discussions, I am joined by Tom Lyons, our CFO. Our earnings of $11.2 million or $0.20 per share represent an improvement of 25% over the same quarter last year on an operating basis excluding the goodwill impairment taken in our first quarter of 2009. We are pleased with these results as our net interest income before the loan loss provision increased 15.6% from the same quarter last year. Provision for loan losses of $9 million was an increase of $3.2 million from the same period in 2009 and represent our view that the New Jersey economy and the market in general remain under some stress. Evidence of this strain can be found in the residential loan portfolio where we continue to experience delinquencies from prime borrowers, as we did not originate any sub-prime mortgages as these borrowers struggle with loss of employment and declining home values. We are however seeing some early signs of stabilization in the residential home valuation. The consumer though has been severely impacted by this historic recession hence normalcy will be dramatically different in the recovery. Competition is returning to the marketplace however we will not change our loan underwriting practices and credit discipline to win some business. There are many commercial lending opportunities that we have…

Thank you Chris and good morning everyone. Net income for the first quarter of 2010 was $11.2 million or $0.20 per share as compared to $6.8 million or $0.12 per share for the fourth quarter of 2009. Compared with the trailing quarter, first quarter results benefitted from a $3.2 million decrease in the provision for loan losses, a $2.4 million decrease in non-interest expense, a $2.2 million increase in net interest income, and a $976,000 increase in non-interest income. The March 31, 2010 tangible common equity to tangible assets increased 8.34%. The company’s regulatory capital ratios strengthened further and the company and the bank continued to be well capitalized by the current regulatory guidelines. Total investments decreased $74 million during the first quarter to $1.63 billion and represented 24% of total assets of March 31. The investment portfolio consists primarily of agency guaranteed mortgage-backed securities and bank qualified municipal bonds. The portfolio had a weighted average life of 3.2 years and a duration of 2.8 years at March 31, 2010. The decrease in investments during the quarter was attributable to pay downs on mortgage-backed securities, maturities of municipal and agency obligation, and sales of $18.1 million of mortgage-backed securities as part of the company’s interest rate risk management process, which resulted in net gains of $817,000 for the quarter. During the quarter, total loans decreased $57 million, commercial mortgage loans including multi-family loans increased $45 million, however commercial loans, consisting of middle market and business banking loans increased $52 million, which included a repayment of a low yielding $25 million LIBOR based line of credit and reductions in Shared National Credit. In addition, residential mortgage loans decreased $25 million during the first quarter due to amortization, sales and payoff. Construction loans also decreased $16 million during the first quarter and…

Thank you. (Operator instructions) our first question comes from Mark Fitzgibbon from Sandler O'Neill. Please go ahead. Mark Fitzgibbon – Sandler O'Neill: Hi guys, good morning.

Good morning.

Good morning. Mark Fitzgibbon – Sandler O'Neill: First question I had for you, you guys have done a nice job cutting cost, are we approaching the point where you think expenses will start to level off or stabilize?

Mark, as you know, we have been constantly looking at our capacity utilization and certainly our management and our structure to make sure that we are getting everything we can out of it that will continue to go forward. So we still think there is some opportunity. That being said we have opportunities to grow revenues and as an increment of the expense we will definitely do that. Mark Fitzgibbon – Sandler O'Neill: Okay, and then could you share with us your outlook for the margin over the next quarter or so?

Hi Mark, I think we will see some continued modest expansion over the next couple of quarters. We have about $893 million worth of liabilities we are pricing favorably over the next six months based on current rates. Mark Fitzgibbon – Sandler O'Neill: Great. And then lastly, you have done some deals in your market that seemed like they made a lot of sense, I guess I am curious, are you guys in the mix or are you on the sidelines right now for acquisitions?

You are speaking of FDIC deals? Mark Fitzgibbon – Sandler O'Neill: I am speaking of non-FDIC deals.

Okay, we always get involved in almost everything we look at. We go through the analysis if a bill does not make sense and some of the deals had been very accretive to some organizations for us though we did not see that and so we would move on but we do try to keep our fingers on the pulse on what is going on out there and look for opportunities even with the backdrop of where capital areas are and what is going on in Washington in the regulatory front. Mark Fitzgibbon – Sandler O'Neill: Okay great, thank you.

Thank you. Mark Fitzgibbon – Sandler O'Neill: Thanks Martin.

Thank you. Our next question comes from Rick Weiss from Janney Montgomery Scott. Please go ahead. Rick Weiss – Janney Montgomery Scott: Good morning. Actually two broader questions, one, if you could talk a little bit about the economy, and second, we hear a lot about Governor Christie’s new business initiatives. Do you think that that will upturn things around in New Jersey?

Let’s take the second part of that first Rick, the governor and the legislature are trying to fix their major problem which is probably endemic in the United States as we tend to spend too much and we do not know how to pay for it, and being the most taxes state in the nation, we have got to stop that. So I think he is trying and trying to work through these processes and we support him wholeheartedly to try to get this back on square. But there is still a lot of challenges ahead and you cannot just move this on its own. So we hope for some progress. From the global, I think we still are very cautious on the market, I think we have said that several times. Still people are struggling out there job losses are not coming back in full form and that is a problem, but if we see some stabilization in the asset valuations, I think that will help at least to get us really to jump off at that point. Rick Weiss – Janney Montgomery Scott: Okay and Chris what is your best guess when you were saying loan demand will pick up?

Well, we are still seeing some volume the problem is we would not be seeing a heck of a lot of stuff that makes sense to us. Some of our competitors are jumping in with both feet and some of their hands, so we are not going to do that. But we are looking at where the market would get better probably in the third quarter. Rick Weiss – Janney Montgomery Scott: Okay, thank you very much.

Thank you. Our next question comes from Jason O'Donnell from Boenning & Scattergood. Please go ahead. Jason O'Donnell – Boenning & Scattergood: Good morning gentlemen.

Good morning. Jason O'Donnell – Boenning & Scattergood: Can you just give us some more detail around why we are seeing resurgence and stress and whether there is mortgage loans in your market, is it due to folks rolling off of unemployment comp or is that more to do with home priced trends and your market continuing to weaken?

There are several fronts with that. I think the job losses on prime borrowers people probably that were prime were out of work and then they used some of their savings and everything else to stay current, and then that runs out if you do not get the job or spouse may have lost a job. The debt burdens that people have had in the past, I think it is getting to the rationalization that they cannot afford to do what they did three, four years ago. That being said, it takes a while for people to hit that and all of a sudden it takes a long time to get the properties through the cycle in the course, especially in New Jersey it takes a long time. So I think with the glut of all the things coming down the road, the sub-prime maybe has been washed out to a degree. We did not do any of that but I think the prime borrowers until we get the asset valuations to get a little bit better, it is going to still be a strain.

The other item I would add is that when we look internally at the rate the cost residential mortgage attract versus unemployment rate, they appear to lag six to eight months, even though we saw a little bit of improvement in the unemployment data in the last quarter, we expect that there is going to be a period of time when we do not see that reflected in the residential delinquencies. Jason O'Donnell – Boenning & Scattergood: Right that makes a lot of sense. And Chris, we have talked in the past about the likelihood of seeing FDICs (inaudible) and you were cautious giving the level of competition in your market and I think the distractions that those deals could potentially create, have your views changed at all here?

I think as we said, we will look, the distraction has to make sense to our company, to our franchise, and so for some of these deals that have been going on across the United States, it does make sense to some people, we do not think that. We are a New Jersey based company. If it were closer contiguous that made sense to our company, we would look at it. It will be well competed for, we have a lot of people in the area that would do that, just like it is tough to keep our margin comparative to three states the way where they can have a 4.5% margin. It is very competitive in here and I think it will happen with FDIC opportunities that will show up but we would still plan on at least giving it a review. Jason O'Donnell – Boenning & Scattergood: Okay, great, thanks a lot.

Thank you.

Our next question comes from Collyn Gilbert from Stifel Nicolaus. Please go ahead. Collyn Gilbert – Stifel Nicolaus: Great thanks, good morning guys.

Good morning.

Good morning. Collyn Gilbert – Stifel Nicolaus: Chris, can you just elaborate a little bit on when you were talking about some of the dynamics of certain deals that you are seeing that is keeping you out of them in terms of competing and something you were talking on the commercial side?

We are talking about loans or we are talking about acquisitions? Collyn Gilbert – Stifel Nicolaus: Sorry, loans, loans.

We are seeing a lot of opportunities. What it is though, the number just do not pane out and the cash flows are not necessarily there, and so for our standpoint, even though maybe if people have made it through this market, they will survive long term but until we see more stabilization in the economy, we are a little bit cautious. The demand is not there where it used to be. I think that is something that we hope that the economy finds its bottom and people get a little bit more confident that we will see a little bit more volume and then what we are seeing is a lot of pricing, and a lot of the change to underwriting standards that we do not want to do at this stage. We can play in pricing but we do not play in credit. Collyn Gilbert – Stifel Nicolaus: Okay. Is there any specific area within the commercial segment you are seeing more intense competition versus another?

Multi-family, that is an area specially competitive and maybe a little bit at the C&I world, as people are trying to figure out how they are going to put their money to work and if the one is not generating the business, they are going to probably lean towards another business line. Collyn Gilbert – Stifel Nicolaus: Okay that is helpful and then Tom, just a question, I mean you guys have done the capital loan yield up pretty well. What are some of the dynamics going on there and do you anticipate that to keep moving higher just in terms of the natural flow of the portfolio taking interest rate off the table for right now.

I am not sure if I understood what you meant by keeping the interest rate off the table. Collyn Gilbert – Stifel Nicolaus: Meaning that obviously if the interest rates are going higher then there is a chance for the portfolio to see loan yields increase. And I am just saying, you know, essentially the components are kind of what is re-pricing what is rolling off, what is maturing in the book and keeping that loan yield up, is that –

Got you, yes, in a flat rate environment the earnings asset yield stays fairly stable at around the 470, 480 mark. We do have – and then we have been putting floors on loans for a number of years now. I think there is about 120 basis points between the floors on the loans and the current rates versus lean backs on the loans we do (inaudible) I want to say for over $400 million of the loans were floors [ph]. Collyn Gilbert – Stifel Nicolaus: Okay that is helpful. And then just one final question, the fact that the provision did not cover net charge-offs this quarter, is that a beginning of a trend or is that more just a function as you guys have indicated there were specific reserves against those loans?

It is really a function of the specific reserves. If you were to gross up those loans, you would actually be at a 148 coverage of total loans meaning if you were to treat it as we had not recorded net charge-offs in this period. So we have actually increased the coverage on the remaining portfolio exclusively the credits that were 100% reserve. Collyn Gilbert – Stifel Nicolaus: Okay and is the expectation to continue to increase the coverage until you see improvement?

A balance sheet driven analysis but I would say it is safe to say that until we see improvement overall in delinquency data, get a little more comfort on some of the trends that we maintain our ratios relative to the balance sheet levels at about this point. Collyn Gilbert – Stifel Nicolaus: Okay that is helpful, thanks very much.

Sure.

Thank you. Our next question comes from Damon DelMonte from Keefe Bruyette & Woods. Please go ahead. Damon DelMonte – Keefe Bruyette & Woods: Hi, good morning guys, how are you?

Good, how are you doing Damon? Damon DelMonte – Keefe Bruyette & Woods: Great thanks. Could you give us a little perspective on your at-risk fees for the regulation [ph] that is getting implemented in July?

Yes we have about 79,000 accounts that are subject to the outstanding and we are taking steps to reach out to those customers ongoing our best guess is that the potential exposure there could be up to about $2.7 million on the high end. Damon DelMonte – Keefe Bruyette & Woods: Would that be per quarter or for the year the back half of this year?

That is the full year and commencing in the back half of the year. Damon DelMonte – Keefe Bruyette & Woods: Okay, great. And then you had mentioned Tom that there is going to be roughly $800 million or so of liability that would be re-pricing. What is the average cost on those liabilities right now?

The pickup would be about 55 basis points at the current rate. Damon DelMonte – Keefe Bruyette & Woods: Okay, great. I guess lastly just kind of a follow up on the last question about reserve levels and provision, so you felt comfortable with the elevated provision level that we saw this quarter until you guys have more comfort with the overall trend in the market, is that accurate?

I think a better way to express it would be that we are comfortable with the coverage ratios to total loans and to non-performing loans so depending on how the balance sheet looks, the provision would react accordingly. Damon DelMonte – Keefe Bruyette & Woods: Okay, great, thank you very much guys.

Thank you.

Thank you.

Our next question comes from Matthew Kelley from Sterne Agee. Please go ahead. Matthew Kelley – Sterne Agee: Yes, hi guys.

Hi Mat. Matthew Kelley – Sterne Agee: Chris, you have given a little bit of an overview there of the dynamics in commercial loan pricing, you said that multi-family is competitive, C&I was getting competitive but what about commercial real estate and am wondering if you can give an update on your thoughts on the maturities default risk that still lies in front of us and how that is going to play out for community banks like yourself?

I think everybody has been pontificating and predicting that for the last like two years, commercial real estate portfolio has probably been our best performing portfolio. In that respect to the credit that we do, the work and the people our customers that we do deal with absent the fact that we think there might be a little problem if this economy continues to struggle, but we have not seen it yet. We are not getting a heck of a lot of growth in the commercial real estate side but it is a scenario that we do not feel uncomfortable with so we always look at exposures and making sure we are not over-obligating to any one sector and the old piece of the business. So we have yet to see that to be a problem. We are not seeing a heck of a lot of deals that are out there more the multi-family that we are having an opportunity as some of the larger banks are still distracted, we are getting an opportunity to reach the people because we have true relationships. We do talk to them, they get quick answers. They can talk to the head of the organization. So I think the high cuts is winning that business. Matthew Kelley – Sterne Agee: Okay, all right. Actually a question for Tom, any impact from the Freddie buyouts in 2Q in the MBS side?

Nothing material based on the securities that we held. Matthew Kelley – Sterne Agee: Okay, thank you.

Thank you.

Our next question comes from Ross Haberman from Haberman Fund. Please go ahead. Ross Haberman – Haberman Fund: Good morning gentlemen, how are you?

Good morning, how are you doing Ross? Ross Haberman – Haberman Fund: Hi Chris. Could you talk about competition on the deposits as well as on the loan side and are beginning to raise and if your longer term deposits (inaudible) yet?

We have not been very competitive on the rate and I am sure my retail group would be very happy if we start to get more competitive, but we are letting a lot of the single relationships run away. We are not being that competitive in the CD front. We have been very successful in growing the core and the relationship especially through the commercial lending that we have been doing, we are getting a lot of non-interest bearing and a lot of checking accounts, which are certainly a good core base for us to continue to build, and that is where we are spending a lot of our attention. We could certainly raise our rates and generate deposits but at this point, why do that when it is tough to generate loans on the other side. So we are just trying to really get more relationships definitely core type and we are not really chasing CDs now. There are competitive rates out there, I know that there is one of the companies that has a 2% rate for CD for six months that is very aggressive. We do not know why but we really cannot concern ourselves with that. On the loan side we price our one to four our consumer business kind of where the market runs and we hope that we can get that business by being in touch with everybody. We do sell all of our 30 year and we have been, and we will continue to do that in the near term, but it has been obviously slow with the market and the consumers retrenched and there is not a lot of people going out there in the market buying homes. But hopefully the spring and all the smell that will get people to get out and maybe look at the opportunities and that will help the market. Ross Haberman – Haberman Fund: Thank you.

Thank you.

Gentlemen, we have no further questions. This concludes the question-and-answer session for today’s conference. I will now turn the floor back over to our presenters for any closing remarks.

We thank you for your attention. We hope to speak to you next quarter and have a positive result that we did this quarter. Thank you very much.