Good afternoon, and welcome to Brookline Bancorp, Inc.'s fourth quarter 2023 earnings conference call. All participants will be in 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, Emily, 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 two 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. I'm pleased to introduce Brookline Bancorp's Chairman and CEO, Paul Perrault. Thanks, Laura, and good afternoon, all, and thank you for joining us for today's earnings call. 2023 was a challenging year for the banking industry, yet a very productive one for Brookline Bancorp. We started the year with the successful acquisition, management transition, and integration of PCSB Bank. In mid-February, the systems conversions were completed without incident, and the synergies identified were realized. Then in March and April, as several banks failed, we were able to assist impacted customers in our markets as they navigated the significant near-term uncertainty it created. In a volatile interest rate environment, we have added bankers to our teams while continuing to expand and enhance our technology infrastructure, as well as our product and service offerings across our three banks, with a sharp focus on boutique commercial banking. Geographically, we are excited about the opportunities PCSB Bank provides us in the Hudson Valley of New York. In Massachusetts, Brookline Bank expanded our Wakefield lending office and opened a new lending office in Needham. In Rhode Island, Bank Rhode Island has opened new branches in both Cranston and Newport. Eastern Funding, our national equipment finance unit, specializing in laundromats, tow trucks, and fitness equipment, continued to demonstrate solid growth with enviable industry credit performance, which we attribute to the team's narrow focus and very deep expertise. I will now turn you over to Carl, who will review the company's fourth quarter results. Thank you, Paul. Yesterday, we reported net income for the quarter of $22.9 million or $0.26 per share. Total assets finished the year at $11.4 billion, approximately $200 million higher than Q3, driven by loan growth of $261 million, offset by a decline in other assets. We experienced strong loan growth in all categories, with commercial growth of $118 million, commercial real estate of $95 million, equipment finance $41 million, and $7 million in consumer loans. In the fourth quarter, we originated $792 million in loans at a weighted average coupon of 727 basis points. The weighted average coupon on the core loan portfolio rose 10 basis points to 592 basis points at December 31. On a linked-quarter basis, the yield on the loan portfolio increased 17 basis points to 6.01%. On the funding side, customer deposits were basically flat, while broker deposits declined $13 million and borrowings increased $242 million. Deposit growth continued to be focused in higher rate savings and time deposits, offset by declines in DDA and money market products. Total funding costs increased 23 basis points in the quarter to 339 basis points. Total average interest earning assets grew $63 million on a linked-quarter basis, and the net interest margin declined 3 basis points to 3.15%, resulting in net interest income of $83.7 million, a decline of $500,000 from the third quarter. Non-interest income was $8 million, which was $2.5 million higher than the prior quarter, driven by loan level derivative income, gains on participated loans, and higher other non-interest income. Expenses were $59.2 million for the quarter, up $1.5 million from Q3, primarily driven by compensation and benefits. Provision for credit losses was $3.8 million for the quarter, up $800,000 from Q3. Yesterday, the board approved maintaining our quarterly dividend at $0.135 per share to be paid on February 23rd to stockholders of record on February 9th. On an annualized basis, our dividend payout approximates a yield of approximately 5%. This concludes my formal comments, and I'll turn it back to Paul. Thank you, Carl, and we will now open it up for questions. Thank you. If you would like to ask a question today, please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue, please press star and then two. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally. Our first question today comes from the line of Mark Fitzgibbon with Piper Sandler. Please go ahead, Mark. Hey, guys. Nice quarter. Thank you. First question I had for you, the first question I had was, loan growth continues to outpace deposit growth, and I know you're opening some new branches, and hopefully over time, that'll catch up. But I guess I was curious, with the loan-to-deposit ratio at 113%, where would you be willing to let that go to, as you work hard to bring in new deposits? Yeah, you know, back in the old days, when you started looking at us, we were quite a bit higher than this, and I don't think I'd wanna go back to that level, which was like 175. But, you know, we're working hard at generating core deposits. The issue really has been that loan generation has been quite strong. So we'll keep with that strategy, and we'll see how we can manage the loan-to-deposit ratio. But I would hate to put a hard number out there, Mark. We know lower is better. And then, Carl, on the margin, it feels like almost every bank is predicting that their margin will decline a little bit more in the first half of this year and then start to rebound when the Fed begins to hopefully ease. Do you share that view for Brookline? Our current projections for the first quarter are probably flat to down a couple more basis points. A lot of our growth in the loan book came near the end of the quarter, so you didn't really see it in the average balances. You saw it at the ending balances. And of course, that's been funded, for the most part right now, with as wholesale borrowings. So the wholesale borrowings jump up $242 million. So that's definitely at a lower spread than our going margin. You know, as Paul mentioned, we're working hard to try to get those deposits up to you know, improve the margin. So while we might have net interest income up, the margin may be down a little bit. But as we look forward, you know, depending on what the Fed does with rates and what the market does, you know, we do expect the margin to improve going out, you know, through 2024. Okay. And then, Carl, can you help us think about expense growth, given, you know, the new branches and people that you're hiring, how that's likely to affect operating expenses in 2024? So if you use our fourth quarter run rate, it's a little over $59 million, I think, we'll only grow maybe 1% or 2% off that run rate. It'll pop a little bit in Q1 because of seasonality factors associated with payroll taxes and incentive accruals for the most part, unless we start getting snowstorms, but so far we've been all right there. And so that's kind of what we usually see in the first quarter. Yeah, and the number of branches that we're gonna open is very strategic and limited because there'll be some closures and some moving of things. See, I don't tell them about the closures, Paul. Not gonna start. It's not gonna change the expense mode very much. Yeah. Okay. To the full of it. In your slide deck on page 18, you have kind of a breakdown of the office portfolio, and the maturities. I guess I was curious if you could share with us any sort of high-level thoughts on what sort of the occupancy rates look like on those office buildings today? I don't, I don't have occupancy rates at my fingertips on these, on these loans. I know our guys are looking at that all the time. But, you know, we continue to work with, with our borrowers, anybody that's coming up for maturities, on, on refinancing their, their loans. Paul, you have anything to add? Thank you. No, I would think a lot of it is pretty good because it's mostly outside of the core business district. You know, it's all over the Hudson Valley, it's all over Rhode Island, and a lot of it is in suburban Boston, which hasn't really seen the occupancy issues that central business district has. Thank you. Thanks. Our next question comes from Nick Cucharale with Hovde Group. Please go ahead. Good afternoon, everyone. How are you? Hi, Nick. Very good. So I just wanted to follow up on the accelerating loan growth. Could you provide some color there? Was this simply capitalizing on some good opportunities this quarter, and that pace should revert back towards the mid-single digits we're used to seeing from you guys? I think, you know, we're focused on probably growth of 4%-5% for 2024. We closed certainly more loans in Q4 than I was expecting. And so some of that growth probably in Q1 has gotten pulled into Q4, so we're starting the year off very strong. And of course, that's my guys always sandbagging me on the budgeting side, but that's another story. But we're off to a good start for 2024, and I think some of the pipelines are going to have to rebuild, so Q1 may be a little slower side. But we're projecting, you know, 4%-5% growth for 2024 at this point. I appreciate that color. In a related vein, can you give us some color on the lending environment across your markets? Have you seen a pullback or any hesitance from your competition, given the funding and capital challenges? I don't think it's because of funding or any other particular challenges, but it feels like the largest banks which dominate our markets have really pulled back in a lot of areas and are not really participating as much as they had. Which is one of the reasons why we're seeing a fair amount of business. And the displacement, there were some of the failed banks were pretty active in all of our markets, and that created another level of opportunity. But I, I don't, I don't know that there is a liquidity or capital problem at the people who are playing, you know, the Boston market. You would have Eastern, and you would have Rockland Trust, people like that. You know, why, there's some people in Rhode Island, there's a few banks there, but it's our opportunity. And then lastly, can you just help us think about the effective tax rate for 2024? Oh, excellent. Yeah, tax rate's gonna jump back up to about 24%. We had some tax-efficient investments that we had that phase out at the end of this year, so that, or end of 2023. So it'll jump back up to about 24%. Thank you for taking my questions. Sure. Okay, Nick. Thanks, Nick. The next question comes from Steve Moss of Raymond James. Steve, please go ahead. Good afternoon, guys. Hi, Steve. Steve. Just maybe could you talk about a little bit on loan pricing here? Just on loan pricing, just curious, you know, where are new loans coming on, and just color right now. Sure. So, I kind of told you in my, in my notes, you know, over $700 million of loans originated in the quarter. 727 basis points was the weighted average coupon on that. Not sure how much more detail you want, but it's, our equipment finance unit does- Yeah P articularly well, close, close to 10%, for those loans. I accidentally dropped off. That's. I must have missed that right there. Okay, appreciate that. And just, you know, given the end-of-period balance sheet, it you know, you look more liability sensitive given the borrowings here. Just kind of curious, you know, if we get some rate cuts, how you guys are thinking about the margin, with rate cuts? Everybody's talking about rate cuts. You know, so our book's fairly short, but not that short. So if they start cutting rates, we will have assets repricing a little faster than our liabilities. So it may take a little bit for us to catch up with that, but our borrowings we have, you know. That's the benefit of having borrowings and things of that nature. They do reprice fairly quickly, and it depends on how fast we're able to adjust our market rates on our deposits. But I feel, you know, we feel in pretty good shape there. Okay, appreciate that. And then, you know, you guys are in a good capital position on from a TC standpoint. Just kind of curious, you know, probably going to build a little bit this year. What are your thoughts around deploying the capital with an M&A transaction? And maybe, you know, how are M&A discussions these days? M&A discussions these days. Right now, we have seen M&A pick up a little bit. There's a few more deals being announced. I'd say the holes are still very big on many of these banks that are in the worst shape with you know very low NIMs and huge marks in their loan books and their security books. So I think you know that deploying capital into something like that is not something that we're particularly anxious to do. I do think you know that there is an opportunity, so there will be opportunities to do strategic deals that really makes sense. But more to come on that. It's a very difficult environment. Yeah. That's all. Okay. Okay, great. Well, thank you very much for all that. Okay, Steve. Thanks. The next question comes from Laurie Hunsicker with Seaport Research. Laurie, please go ahead. Yeah. Hi, thanks. Good afternoon. Hello. Hi, Laurie. Maybe, margin, just back that margin for the month of December. Do you have that, Carl? I do. It was 3.10%. 3:10. Okay, and then what, what was the accretion income number in net interest income this month? For the month or for the quarter? I'm sorry, this quarter. Thank you. So the quarter was just. Sorry. It was just under, just under $2 million. $2 million. Okay. So less than last. Okay. And then a non-interest income, that other, other category of $3.26 million, that looked outsized by a couple million. What, what was that, and what's non-recurring in that number? Yeah, that's a number that has a lot of volatility in it because there's a category in there that are mark-to-market on our risk participation agreements, which are really associated with swaps. So as rates change in the market, that gets marked every quarter. And so this quarter, it was roughly, it was just under $500,000 this quarter, and it was a loss of about $1.4 million the prior quarter. So it was a big swing quarter to quarter in that number. And then we had some other non-interest income items that go through that as well. Okay. Okay, that's great. And then, same question on the non-interest expense line, the other category, that $5.5 million that looked outsized. Anything non-recurring in that? There was about $800,000 there that was non-recurring. That had to do with the write-off of, Okay S ome premises that we were- Projects. Projects we were working on. Okay, great. And then on office, can you update us that $14.8 million Class B office in downtown Boston that went non-accruing last quarter? Can you just give us an update on that? And then do you happen to have a debt service coverage ratio, LTV, occupancy, anything on that particular property? Well, we continue to work with the borrower on that. It's a participated loan, so we're also, I think it's mostly working with the participant on this as well, to get this to the finish line. But the debt service coverage is in the 50s, and the LTV is, I think, around 115%, something like that. Okay. And then just the rest of your office book- There's a very capable sponsor who- Oh. Go ahead, Laurie. I was just gonna say, the rest, the rest of your office book, can you just help us think a little bit about that $774 million in terms of what's Class A versus Class B and C? And do you have an average LTV or debt service on your whole book? Sure. So. And I guess also one more question. How. Go ahead. Okay. So of that, about, there's really not a lot of A in there at all. It's mostly Bs and Cs. I'd say mostly the Bs, B category there. The LTV on that is right in the fifties, but, that's, you know, basically at, you know- At origination A t origination. So I, I wouldn't want to try to guess what the recent appraisals are at this point, because I think that's just tough to get to. And the debt service coverage around 1.6. 1.6. Okay, great. And then, okay, that's great. And then, then one more thing. How much of that $774 million is medical, that lower risk medical category? $100 million. $100 million. Okay, great. Thanks. I'll leave it there. Sure. Very good. Our next question comes from Chris O'Connell with KBW. Please go ahead. Hey, good afternoon. Hi, Chris. So just following up on the office line of questions, it looks like in the deck on that slide that the 1Q 2024 office maturities, you know, from last quarter's deck to this quarter's deck, went from, like, $1 million up to $24 million. I know you had a larger credit set to mature in the fourth quarter here. Just wondering if that was the reason. Did that get shifted back a little bit, or, you know, what was the driver of that kind of change in the maturity schedule? I don't know the specifics around what the specific question you're asking here, but, you know, we did have a maturity that came up that we've done some extensions. I want to say it might have been two loans that we did some extensions on to continue to resolve it. So it may just be pushed out 3-6 months as we continue to work with the borrower on things. That might be answering your question. Okay, great. Great, that's helpful. And then, you know, as far as, you know, the deposits go, you know, it slowed a bit on a quarterly basis in terms of the pace, but, you know, any read into, you know, how much of the non-interest-bearing, you know, mix shift, you know, has remaining? I mean, did it slow between, you know, the October and December, and, you know, what's kind of your, you know, baseline outlook for the next couple of quarters here? It's a great question. I wish I had a great answer for you. You know, on the deposit side, we do expect to start seeing some growth in deposits. It may come a little bit later this year than earlier this year. But you know, the deposit outflows we've seen have largely been driven by the higher balance accounts that have been moving their excess balances to treasury funds and, you know, seeking higher yields. But that has largely played itself out. I think that's kind of all done with. The last Fed hike we had was in July, and while deposit pricing remains very, very competitive, it's fairly stabilized at this point. So we do, we do feel like we're gonna start seeing some deposit growth. Albeit, we'll also probably, given the level of interest rates, DDA, we may still continue to see a little bit of DDA in the low, low-cost deposits, you know, migrate into the higher, higher cost of funds. But even that is, that's going at a much slower pace at this point. But to give you a precise number, I really couldn't do that. Okay. Understood. And for next year, mid-year, I believe Durbin, you know, starts, you know, to hit your fees. Maybe just an update on what that number is? Well, so, it's so we, we've been guiding that up it to be about $200,000-$250,000 a quarter for the interchange. That's our expectation, and that would start happening in July. And so that'll be a negative to the fee income side. But we continue to work very hard on other sources of fee income throughout the organization. Great. And just circling back to the margin dynamics, you know, can you, can you remind us how much, you know, of the portfolio on the loan side it immediately, you know, reprices with short-term rates? And what, you know, how much of, you know, the deposit book, I guess, you know, is indexed to short-term rates? We've got a nice little slide. Slide 22 kind of lays out where we are on that. So about 20% of our loan portfolio is floating. So that basically reprices within 2 months. And- None of the deposits are indexed. Yeah, nothing's indexed on the deposit side. You know, we can move rates on, you know, the non-maturity deposits at will, but that's also very market driven, as you can imagine. Our CD portfolios, so CDs, we have about $335 million of CDs that are repricing in Q1. And it's around 3.40, 3.45, something like that, in yield or cost. And those are repricing up into the 4s, the mid-4s. Mid-4s, still. Great. That's helpful. And, you know, as far as, you know, capital levels go, I mean, you guys have, you know, pretty good, you know, TC here, should be, you know, building going forward. You know, it sounds like M&A is probably set on pause for now. You know, any appetite for utilizing a buyback or kind of holding out for loan growth right now? I think, well, from our perspective, letting capital build at this point and support growth in all of our markets is the right thing to do. Great. Appreciate the time. Thank you. We're good. Okay, good. This concludes our question and answer session. I'd like to turn the conference back over to Mr. Perrault for any closing remarks. Thank you, Emily, and thank you all for joining us this afternoon. We look forward to talking with you again next quarter. Have a good day. The conference has concluded.