Good afternoon, and welcome to Brookline Bancorp, Inc's first quarter 2023 earnings conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Brookline Bancorp's attorney, Laura Vaughn. Please go ahead. Thank you, Forum, and good afternoon, everyone. Yesterday, we issued our earnings release and presentation, which is available on the Investor Relations page of our website, brooklinebancorp.com, and has been filed with the SEC. This afternoon's call will be hosted by Paul A. Perrault and Carl M. Carlson. This call may contain forward-looking statements with respect to the financial condition, results of operations, and business of Brookline Bancorp. Please refer to page 2 of our earnings presentation for our forward-looking statement disclaimer. Also, please refer to our other filings with the Securities and Exchange Commission, which contain risk factors that could cause actual results to differ materially from these forward-looking statements. Any references made during this presentation to non-GAAP measures are only made to assist you in understanding Brookline Bancorp's results and performance trends and should not be relied on as financial measures of actual results or future predictions. For a comparison and reconciliation to GAAP earnings, please see our earnings release. If you can join us on page three of the earnings presentation, I'm pleased to introduce Brookline Bancorp's Chairman and CEO, Paul Perrault. Thank you, Laura. Good afternoon, everyone. Thank you for joining us for today's earnings call. Our first quarter results include transaction costs associated with the acquisition of PCSB Financial, which closed on January 1st. I am pleased to report our core system conversion was completed very smoothly in mid-February. Special thanks to the commitment and hard work of both Brookline and PCSB teams, as well as the folks at technology provider Jack Henry, who helped make it happen. Including one-time acquisition-related items, we reported net income for the quarter of $7.6 million or $0.09 per share. If we exclude those items, we had operating earnings of $23.3 million and operating earnings per share of $0.27. During the quarter, our assets grew by $2.3 billion to $11.5 billion. Loans grew to $9.2 billion. Deposits grew to $8.5 billion, and equity grew to $1.2 billion. The quarter was also one of disruption, as we all know, particularly here in Boston. From the start, our excellent staff was ready to answer questions, address concerns, and offer solutions to existing as well as potential clients. We also increased our on-balance sheet liquidity, adding to our cash and securities position by $513 million while affirming our access to multiple sources of liquidity if the need should arise. Our non-performing loans continue to be at historic lows with net charge-offs of $451,000 in the quarter or just 2 basis points annualized. Our reserve for loan losses is solid at 131 basis points. We continue to be very well-capitalized. I will now turn you over to Carl, who will review the company's first quarter. Thank you, Paul. This quarter we have quite a few moving parts. Some are unique to Brookline, some are continuation of trends, and some are related to the failure of SVB and Signature Bank near the end of the quarter. I'll unpack these as much as possible, as well as the impact on Brookline. On slide 4, we've provided summary comparative income statements. Net income this quarter was $7.6 million, which was $22.1 million lower than last quarter. This was largely driven by factors unique to Brookline, particularly the acquisition of PCSB Financial on January 1st, which had one-time items totaling $21.4 million on a pre-tax basis, which I will talk more about on the next slide. The decline in net income is also due to lower net interest margin and higher provision for credit losses. While revenues increased $6 million from Q4, the cost of funding reduced our net interest margin, limiting the overall contribution of the growth in assets. Also, higher targeted levels of on-balance sheet liquidity were maintained, which also had the effect of compressing the net interest margin. Expenses increased $11.7 million, driven by the addition of PCSB, as well as the $1.8 million due to core deposit intangible amortization, which is a non-cash charge. The $25.5 million provision for credit losses included in day one CECL provision for acquired loans of $16.7 million, as well as provisions to cover organic growth and cover net charge-offs of just $451,000 in the quarter. As illustrated on page 5, excluding the impact of one-time items associated with the PCSB acquisition, operating income was $23.3 million. The nine core items being excluded are the $1.8 million in security gains, $6.4 million in merger charges, and $16.7 million in day one CECL provision for acquired loans. Upon acquisition, Brookline classified the entire held-to-maturity portfolio of PCSB as available-for-sale and sold approximately 75% of the portfolio, resulting in a $1.5 million book gain on sale, but realized losses for tax purposes. Brookline currently estimates a normalized effective tax rate of 22.7%, which is used for estimating operating earnings. Our operating pre-tax, pre-provision net revenue of $38.9 million or $0.45 per share compares to $32.8 million or $0.42 per share in the prior year. Please follow me to slide six in our net interest margin slide. While net interest margin income increased $6 million, our net interest margin declined 45 basis points to 3.36%. Interest earning assets grew a little more than $2 billion in the quarter as yields improved 15 basis points. Interest-bearing liabilities grew a little less than $2 billion, and the cost of funds increased 83 basis points. During the quarter, the federal funds rate increased another 50 basis points as rates on two years and longer declined, causing a steeper inversion of the yield curve. In the quarter, our cost of interest-bearing deposits increased 75 basis points compared to the 50 basis point change in the federal funds rate, resulting in a quarterly beta of 150%. Through the cycle beta on interest-bearing deposits has been 34%. The increase in funding cost is a continuation of the trend we have been experiencing, but we anticipate it will slow significantly as we approach the 40% through the cycle beta. Slide 7 reflects the linked quarter and year-over-year balance sheet reflecting growth primarily driven by the acquisition of PCSB Bank, which Paul highlighted earlier. We also provided the purchase price allocation of day one acquired assets and assumed liabilities in our press release and in the appendix of this presentation. I just want to highlight that due to the recent bank failures in March, we added significant on-balance sheet liquidity, which increased short-term investments and borrowings at the end of the quarter. If you follow me to slide 8, the activity and composition of our loan and deposit categories is provided. The loan portfolio overall increased $1.6 billion from the prior quarter, driven by day one growth of $1.3 billion from PCSB and strong net organic growth of $265 million. In the first quarter, we originated $775 million in loans at a weighted average coupon of 668 basis points. The weighted average coupon on the core loan portfolio rose 24 basis points during the quarter to 548 basis points at March thirty-first. Total deposits grew $1.9 billion. Excluding broker deposits increased $1.3 billion. Excluding the day one impact of PCSB, deposits declined $289 million. The decline in deposits is also a continue of trends we have been experiencing as depositors move money to money market funds and fixed income opportunities, frequently with the assistance of our investment professionals. With the failure of SVB and Signature Banks, there was heightened awareness around FDIC insurance. This has not had a meaningful net impact on our banks from a balance perspective. We have been very active communicating with and providing services to ensure current and new customers are comfortable with the insurance coverage of their deposits. As shown on slide 9, the company continues to be well-capitalized, exceeding all regulatory requirements as well as our own internal policies and operating targets. At the end of March, we had a capital buffer of $240 million over re-regulatory well-capitalized standards. The company designates all securities as available-for-sale, and as of March 31st, the negative mark to market on the investment portfolio was $52.7 million. While this mark is included in reported equity, it does not impact regulatory capital calculations. If it was, it would represent 59 basis points to regulatory capital, and the company would still have nearly $200 million in excess capital above well-capitalized requirements. Slide 10 provides a history of the growth in our regular common stock dividend. Yesterday, the board approved maintaining our quarterly dividend at $0.135 per share to be paid on May 26th to shareholders of record on May 12th. On an annualized basis, our dividend payout estimates a 5.5% yield. This concludes my formal comments, and I'll turn it back to Paul. Thanks, Carl. Now we will open it up for questions. Certainly. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question will come from the line of Mark Fitzgibbon with Piper Sandler. Mark, your line is now open. Mark? Carl, I'm sorry about that. I was muted accidentally. I apologize. Wondered if you. We understand. Okay. Wondered if you could, remind us of the timing of, you know, Durbin and sort of the impact from that? Sure. Since the acquisition happened on January 1st, the Durbin impact won't happen till next July. July 1st of next year, 2024. How much? Well, how much? That's a good question. I'd say it's about $1 million a year at this point. Okay, great. Secondly, what is the effective tax rate for the combined company gonna look like? Right now, it's estimated at 22.7%. Okay. Carl, can you help us. I heard your comments on the margin. Assuming, you know, sort of the Fed follows the forward curve, can you give us a sense for where you think the bottom of the margin might be and roughly when that happens? Oh, I'm not gonna go down that rabbit hole. We have a lot of models. I can't tell you how many models we have doing this, different scenarios, whether, you know, deposit runoff and repricing as well as whatever the Fed is gonna do. Right now, the pressure's gonna be negative on a go-forward basis. We expect through the cycle, we'll be around 40% as far as betas are concerned. I still see accelerated betas for a quarter or so. We're also seeing good repricing on the loan side, et cetera. I see on the asset side some benefit. I'm not gonna try to guess what quarter it's gonna be, but right now I don't see a break in three, that's for sure. I mean, I see some pressure going into Q2, though. There's a lot of stuff going on that's gonna affect that we just don't know where it is. We've got a lot of excess liquidity on the balance sheet, which we're holding on to. We'll see how conditions are. At some point, if we can get rid of that's very beneficial. We also, by the nature of our loan book, we've got two big assets that reprice well, which is the big derivatives book that we have, where that's a floating rate, obviously. Then the cash flow off the equipment finance units comes in very hard and heavy, and that gets re-lent at better rates. I'm not, I'm not trying to get myself in trouble here with my CFO, I think we'll muddle through here for a little while. I see a little sunshine on the horizon margin-wise. Okay. Then your slides were really helpful on slide 18 and 19, where you give some detail on maturities in the office book. It looks like almost 20% of your office book is maturing in the next 2 years. And a decent chunk of that is in Boston. Should we expect some issues as these loans roll, Paul? When we say that's in Boston, we don't have very much in the central business district. I would not be surprised if there pops up a problem or two, but I would be very shocked if it was broad-based. Because a lot of our stuff in Metro Boston is really in the inner suburbs and out to 128, if you know the geography. Those markets have tended to behave pretty well. We don't have the really big buildings that are suffering in the sublet market. Real estate's gonna be tough to get marked there. There have been virtually no trades, and so there really isn't much evidence of how much valuation has been affected. We do a lot of stress testing. We do a lot of updating of tenant lists and things like that. We're doing the legwork to make sure that we understand. So far, it's feeling pretty good. Depending on how things go and how sponsors are feeling, it would not surprise me if there's a bump in the road here or there. I don't know when. Okay. Then my last question, I wondered if you could give us an update on Clarendon Private, how that's going. I guess it's been a year, a year and a half or so, and was curious, you know, any data points that you could share with us there. Thank you. Sure. I'd say they've been very, very busy. The challenge here right now is a lot of it's fixed income. As you probably know, you don't make a lot of revenue off fixed income. I think the relationships with the customers are building and the word is getting out about our capabilities. We're very pleased with the activities that's going on there. I think we're slightly over $300 million in assets under management at this time, and it's. Yeah. There's a lot coming that's on the way in, too. You know, for the first year market, it went very, very well because the bankers were thrilled to have that around, and the customers loved staying with us. That was pretty traditional business. Now they've been busy helping handle the uninsured deposits of our very large depositors. That has been very useful as Carl's pointed out. As well as new customers. Yes. Yep. People from across town who didn't wanna stay where they were. Thank you. Okay, Mark. Our next question comes from the line of Steve Moss with Raymond James. Steve, your line is now open. Good afternoon, guys. Hi, Steve. Maybe just starting, going back to the margin here. Appreciate the color. Just curious, maybe starting with the broker deposits you had at this quarter, kind of what was the term of those deposits and, you know, how quickly could that and the Federal Home Loan advances go away? To step back, we usually use these avenues to fund our equipment finance units. We're very comfortable going out 2.5 years and ladder them out both on the Federal Home Loan Bank side as well as the broker deposit side over the organization to really fund that, the equipment finance book. We did certainly get a great deal of benefit when the PPP money came in. We're kind of getting back to where we used to be as far as managing that book. We did add some more additional borrowings that are relatively short term just for on-balance sheet liquidity. They're still laddered out, so it's not something we would expect to just be turning on and off a switch. There is a lot of cash flow on a monthly basis that we can make decisions and move on. Okay. Maybe just, you know, another way of thinking about it here, Carl, do you happen to have a margin for the month of March or a spot margin at the end of the quarter just to kind of get a feel for, you know, where things shook out? Because definitely a lot of moves in the EOP numbers here. For the month of March? I don't have that at my fingertips. Yes. Okay. Then I guess in terms of just kind of, you know, I hear you on your expectation for the deposit beta. You know, I guess I just as I think about that, you're kind of implying, o n deposit beta, do you mean total deposits or just interest-bearing deposits? Total interest-bearing deposits. Just as I think about the interest-bearing deposit kind of implies like a 230-ish type cost of funds, which is, you know, still, you know, a pretty big gap relative to where Fed funds is. Just curious, like, you know, if you think about the potential that the Fed holds for the next, you know, at 5%, like, you know, could you break 3% under that type of scenario for the margin? By like the fourth quarter? I don't expect to because we continue to see repricing of our loan book. You know, I don't think I saw a model yet that had us breaking 3%. That doesn't mean it can't happen. I'm not gonna say nothing can't happen. You don't expect. You know, when things are this volatile, it's hard to say anything with any conviction. I know you guys want something that you can hold on to. We, you know, we manage this on a day-to-day basis and we do the modeling that we can. You know, no one expected what happened in March. Nobody expected what was gonna happen in March. This is dynamic, you know. Yeah. We're still signing up customers at a pretty good clip. Our cash management treasury areas are as busy as they can be. That's all favorable stuff for the margin because we've insisted the operating expense a little. Yes. It's hard to move the needle, by almost $9 billion of deposits. Yeah. I think. Right. Okay. Another thing to highlight is the impact of ICS, and you don't hear about this much at all in the media. Quite frankly, you don't hear it from the analysts as well. I don't know how many people are up to speed on what IntraFi is. It's been around for a couple of decades now, and they do a fantastic job in helping banks service folks with deposits over $250,000, and providing insurance. You know, everybody's claiming the death of the community bank and the regional bank, and I think that's just ridiculous, quite frankly. We've been able to do very, very well. Maybe, maybe we're ahead of the game because we had set this up quite some time ago to be able to do this and our staff and our, and our folks are up to speed on it. It's something that, you know, we have customers with up to $50 million right now. I think we could go up to $150 million if we wanted to, in deposits to be insured by this network of banks, using that platform. Quite frankly, 50% of the banks in the country are part of this platform, and probably in a couple of quarters, the rest of the 50% will be there. I think it's something people have to start paying a little bit attention to. Okay. That's helpful. Maybe just in terms of on the loan side here, you know, where is loan pricing these days for, you know, new originations? Kind of curious as to what your thoughts are on the pace of loan growth. You had pretty good organic growth by my numbers here this quarter. I wanna cover some of the other questions you had because I didn't have it at my fingertips. I have somebody else's fingers running around here right now giving me some numbers. I'll give you the March. The March net interest margin was 3.22%. Okay. That's being driven, as you know, we added a lot of liquidity on the balance sheet right at the end of the quarter. You don't see as much of that impact in the quarterly numbers, but you see it in that number in particular. The other number I wanted to give you was between brokered deposits and Federal Home Loan Bank advances, it's about $330 million matures over the next 90 days. Just so you have a sense. That gives us a flexibility on the liability side, and of course, we have a lot of flexibility on the asset side. Yeah. Now your question on. You're pushing those numbers. What rates we've been putting them on. I think I already mentioned. For the quarter, it was 668 basis points. Was the average coupon of the, of the loans that we booked. We had originations of $775 million in the quarter, just to give you a sense of the size of the origination book. Of that, I'd love to highlight Eastern Funding because I love those guys, $118 million in originations at a coupon of 918 b asis points. Okay. Great. That's helpful. Then in terms of just, you know, loan growth here going forward, you know, kind of curious on with higher rates and the dislocation we saw, kind of what's, you know, your loan pipeline and kind of your thought process here going forward? Last two quarters, we've been running very hard. For us, the originations were big in Q4, and in Q1 they were big, as Carl pointed out. It has certainly markedly slowed down. We are seeing the displacement around town from the troubles in the industry, and we're an attractive alternative. We have been signing up some of their former customers. In some cases, we were sharing customers. We've taken over the entire relationships. It's definitely slowed down. Obviously in real estate, investors are hesitant, and we're very careful. You're not seeing all that much business. C&I is not terrible. Okay. Great. I appreciate all the color. Thank you very much. Yep. Thanks, Steve. Chris. Thank you for your question. Our next question comes from the line of Chris O'Connell with KBW. Chris, your line is now open. Hey, good afternoon. Hey, Chris. Just hoping to start off, with, you know, how much accretion income was in the quarter and then, you know, maybe an outlook going forward, for that. On the loan side, very little at all on the accretion income. The reason behind that was when it comes to the purchase accounting on the loans, we had some floating rate loans that were actually priced at a premium. That negated any of the discount that you were accreting into income during the first quarter. Basically it was a wash. On a go-forward basis, it's approximately $3 million on the loan side, in accretion income, that will be recognized. For what period? Per quarter. Per quarter. On the deposits and borrowings, it's not meaningful. In the securities portfolio, since we sold most of the securities, they were just at book yields for the most part. Great. Just hoping to get, you know, an update as to how expenses might trend, you know, into the second quarter and maybe beyond that. You know, if all of the cost saves have been achieved from the deal. It's too early to say exactly where we are on the cost savings. We did the acquisition January 1st. We did the conversion, which went very smooth, in the middle of February. Most of the people we retained through that process left early March. The cost savings are you start seeing some of the cost savings in March. You know, I'd say we got the head count. We nailed it on the head count. We're still looking at the salaries and things of that nature because I think some of those things are coming a little higher than we had originally anticipated. I think that was more because of inflation and things of that nature. I think we're going to be very close to those cost savings that we projected, which we're estimating about $2.8 million a quarter, I think was the number. That's the goal, and that's what we're working towards. I'm not claiming we're there yet. Got it. Let's put it. Yes. If I'm understanding it right, does that imply that, you know, maybe 2.8 or maybe a little bit shy of that number still comes out of the quarterly run rate going forward? I would love to say yes, but we also have some headwinds, particularly around FDIC insurance and other areas of the bank that we're continuing to see a little bit outsized growth in expenses. I don't want to relate it to PCSB and the acquisition, but it's other areas of the bank that we're seeing some cost pressures. Okay. hoping, you could touch on the C&I, NPL that came on in the quarter. You know, maybe the size and just any details around it. Well, let's say for us it's a medium-sized loan, if you will. It's not real estate. It is an operating enterprise, which happens to be facing some very serious issues. It's one of those things that you see from time to time where we've set up specific reserves because this thing can go either way. The whole thing can just be perfect and they can fix their issues or, it could fail. We're ready for it either way, but it's pretty well reserved now. Got it. Do you have the size of it? I'm guessing I don't have it in front of me. I'll give you the magnitude. I think it might be $8 million or something of that magnitude. Got it. Do you guys have what the reserve held against it is? You know, I don't know if it's useful to get into that level of detail, but I'm told by our credit guys that we're comfortably reserved for a bad outcome. Which we're still hoping. All right. It will not happen. Got it. Then, you know, on the fee side, you know, really strong quarter. I know that, you know, you guys have a number of kind of line items that, you know, fluctuate quite a bit with business activity. Just any color or updates on kind of the outlook on where things could shake out going forward? It's a volatile number. That's the best I can say. Right now I don't think we have a lot in the pipeline. Yeah. Look, a lot of our fee income comes from either the swaps book or from being the lead on an origination of a loan that gets sold down to friends and family in the neighborhood. With activity down the way that it is, it's not likely to be as impressive as it's been the past few quarters. Okay. Got it. Then lastly, for me, I mean, how are you guys, you know, thinking about, you know, target capital levels going forward? Is there, you know, any consideration, you know, to do a buyback at any point? Well, our operating targets. We lay out our operating targets in the deck. You know, we'd be very comfortable 11.5%. Naturally, whenever there's a lot of volatility in the market, you have to be very thoughtful about buybacks, even as attractive as they are. We'll talk, you know, we talk with the board frequently about this subject, whether it's dividends or buybacks. We'll keep doing that. We'll keep doing that. We'll act when we think the time's appropriate. Yeah. Okay. great. That's all I had. Thanks for taking my questions. Thanks, Chris. Okay. This concludes our Q&A session for today's call. I will now pass back for any final remarks. Thank you. Thank you, Forum, and thank you all for joining us today, and we look forward to talking with you again next quarter. Good day. This concludes today's call. Thank you for your participation. You may now disconnect your line.