Good afternoon, and welcome to Brookline Bancorp, Inc's First Quarter 2024 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, Inc'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 our 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. Good afternoon, and thank you for joining us on today's earnings call. At the start of the year, prevailing market sentiment suggested inflation was well contained and the Federal Reserve would implement substantial rate cuts, potentially up to six to seven reductions throughout 2024. However, the economic landscape remains dynamic. Unemployment rates persist at historically low levels, consumer spending remains steady, and overall economic vitality endures as inflation remains a persistent concern. Within a matter of months, the market now anticipates only one rate cut for the year, with some even speculating no cuts at all. The five-year and 10-year Treasury rates have surged over 80 basis points since the end of last year. Unfortunately, the prolonged period of higher interest rates continues to hinder the anticipated improvement in net interest margins. We remain vigilant in our efforts to navigate this challenging environment. While the New England and New York economies continue to perform well, the impact of rising interest rates on loan demand is evident. Our deposit composition and funding costs further contribute to the strain on the net interest margins and overall revenues. Our goal is to provide boutique commercial banking services to our valued customers efficiently. Careful investments in our team of bankers, technology, and locations play a pivotal role in achieving this objective. This quarter, we celebrated the grand opening of our relocated PCSB branch in Mount Vernon, New York. Additionally, our newest Bank Rhode Island branches in Cranston and Newport, Rhode Island, are off to a very promising start. I will now turn you over to Carl, who will review the company's first quarter results. Thank you, Paul. Yesterday, we reported net income for the quarter of $14.7 million, equivalent to $0.16 per share. During the quarter, total assets grew approximately $161 million, driven by the growth in cash and equivalents of $169 million, with modest loan growth of $13 million distributed across C&I, equipment finance and consumer, as commercial real estate experienced a decline of $10 million. In the first quarter, we had loan originations and draws of $435 million at a weighted average coupon of 779 basis points. The weighted average coupon on the loan portfolio rose 4 basis points to 596 basis points, with the quarterly yield on the portfolio increasing 2 basis points for the quarter. On the funding side, customer deposits grew $81 million, broker deposits increased $90 million, and borrowings declined $15 million. Deposit growth centered around higher rate savings and time deposits, offset by decreases in demand deposits and money market products. Funding costs increased 19 basis points in the quarter. Consequently, our net interest margin compressed 9 basis points to 3.06%, resulting in net interest income of $81.6 million, a decline of $2 million from Q4. Non-interest income was $6.3 million, reflecting a decrease of $1.7 million compared to the prior quarter. Factors contributing to this change include lower loan level derivative activity, gains on participated loans, and a swing in the mark-to-market adjustment on derivatives, which is reflected in other non-interest income. Notably, due to the sharp increase in interest rates, the mark-to-market adjustment shifted from a positive adjustment of $447,000 in Q4 to a negative adjustment of $358,000 in Q1. Expenses were $61 million for the quarter, up $1.8 million from Q4 due to the seasonality of compensation and benefits and weather-related occupancy costs. The provision for credit losses was $7.4 million for the quarter, an increase of $3.6 million from the fourth quarter. The increase is driven by net charge-offs and reserve build. Net charge-offs were $8.8 million, driven by $4.7 million in C&I charge-offs previously specifically reserved for, $3.5 million associated with equipment finance, and $600,000 associated with exiting two office credits. Non-accrual loans experienced a modest decline in the quarter, and our reserve coverage ratio increased to 124 basis points. Over the past few weeks, the outlook for 2024 Federal Reserve rate cuts has significantly shifted. Longer-term rates have risen notably. Client behavior and industry responses continue to adapt to this evolving environment. We face renewed pressure on our deposit mix and funding costs. While the economy remains robust, loan demand has softened. Consequently, we now anticipate our margin and net interest income for the full year to be lower than initially projected. We expect overall loan growth of 1%-4%, primarily driven by C&I and equipment finance. Although there appears to be market opportunity in non-owner-occupied commercial real estate, our focus remains on serving relationship customers. Hence, we anticipate only slight growth in this segment. Our cash and securities portfolio remains stable, representing 9%-12% of total assets. On the deposit side, we anticipate growth of 4%-5%. Given prevailing interest rates, the migration of demand deposit accounts and other lower-cost deposits may persist. Our Q2 margin is currently projected to fall within the range of 300-305 basis points and then improve throughout the year. However, this is dependent upon deposit flows. Non-interest income is projected to be in the range of $6 million-$7 million per quarter, although components may vary significantly. We continue to manage operating expenses at $240 million for the full year. However, we are actively reviewing investment plans and evaluating potential cost savings opportunities. Currently, our effective tax rate is expected to be around 24.7% for the balance of the year. Yesterday, the board approved maintaining our quarterly dividend at $0.135 per share, to be paid on May 24 to stockholders of record on May 10. On an annualized basis, our dividend payout approximates a yield of approximately 6.5%. This concludes my formal comments, and I will turn it back to Paul. Thanks, 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 or 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. The first question today comes from Mark Fitzgibbon with Piper Sandler. Please go ahead. Good afternoon, gentlemen. Hi, Mark. Hi, Mark. Carl, just to follow up on your tax guidance. Do you plan to replace those tax credits that expired this quarter, or it sounds like maybe not? We're always looking at those opportunities, but I don't have any visibility into. So I don't have a pipeline, let's say. If we came across them- If we came across them. ... We would do them. Yeah. Okay. And then it looked like cash balances were up quite a bit this quarter, which I assume is a function of, you know, some deposit flows. But that, I would assume, is probably weighing on the margin a little bit. How should we think about cash balances moving forward? I think it will be fairly stable in that range of 10%. Okay. Um, And then- Between 10%-with securities. Cash and securities, around 10% of the balance sheet. It's kind of where we target. Okay. And then in your press release, you kind of mentioned the fact that, yeah, there's been an uptick in expected losses in the equipment finance business. You know, I guess I'm curious, which segment of the equipment finance business is kind of driving that? Mark, the biggest single category would be related to transport things. You know, they finance trucks for contractors, for the big package companies like FedEx, UPS, and stuff like that. And what's been happening is that a lot of those guys were carrying stuff for Amazon, and Amazon has developed their own delivery systems. So, they lose some of that business, and these are small entrepreneurs that don't have a lot of places to turn to. That's been the single biggest element. You know, and the trucks are not in good repair. And then- And it's not a huge portfolio, so I expect there'll be some more dribbling in the next couple of quarters, but it's not a waterfall or anything like that. Okay. And then lastly, I know you guys didn't buy back any stock this quarter, and given the environment, maybe you don't want to. But given the pullback in your stock price today, do you feel like buybacks make some sense here, trading comfortably below tangible book? We'll continue to evaluate that, but we have no, no expectation to do anything near term. Thank you. Thanks, Mark. The next question comes from the line of Steve Moss with Raymond James. Steve, please go ahead. Good afternoon. Hey, Steve. Hi, Steve. Maybe, Carl, just starting off. Hey, Paul. Carl, just hopefully maybe just starting off on the office portfolio here. The two credits that were charged off, were those resolved, you know, sold, liquidated during the quarter, or was that just a charge off ahead of an expected sale? ... No, those were two note sales, which one was on our balance sheet at the end of the quarter as a loan held for sale and was subsequently closed. Okay. They were sold a little bit under par, which is what created that small loss, but we got rid of a couple of properties that were a bit troubled. Got it. And you guys mentioned in the deck, you know, only two loans maturing of about $23 million representing criticized classified within office. Those are separate of those loan sales, I take it? They were not part of those numbers. Okay. And just in terms of like, I realize it's small, but just curious, like what type of properties are they? You know, kind of geographically, where are they located? They're Boston-based. They're Boston-based, and one of them that I'm aware of was retail and commercial on the upper floors. Okay. Got it. And then just turning to the margin here, you know, with the 3%- 3.3% or 3.5% guide, just, you know, maybe bottoming out, just curious, like, you know, what do you think, gives you comfort here that the margin could bottom in the second quarter? And just, you know, what if we stay in the higher for longer, how are you guys thinking about the margin beyond the second quarter? It's a great question, and comfort's tough, a tough word to come by. I think we model a lot of, you know, deposit migration. I think in the first quarter, we saw more deposit migration than we anticipated. I do anticipate that it's going to go down, or everything suggests that the deposit migration is not going to continue. Our models right now are coming in around the 3.03% range for a margin. Not that we're going to try to be precise, and that was before the rate, you know, just the recent rate increases. You know, we're using more like March 31st numbers, and so we get a little bit of bump with the repricing of loans throughout the quarter from, you know, where the five-year is now. It's over 80 basis points higher, almost 90 basis points higher than where it was at the end of the year. I'm not sure exactly how much higher it is from March thirty-first, but it's helpful to have 50 basis points just in the last couple of weeks. So that's helpful. Right. Okay, that's good color for me. Appreciate all that. I'll step back in the queue here. Thanks. Thanks, Steve. The next question comes from the line of Laurie Hunsicker with Seaport Research. Laurie, please go ahead. Yeah, hi. Thanks. Good afternoon. Hi, Laurie. For all the detail on the real estate that you guys added. That's super helpful. But I actually wanted to go back to the equipment finance section, and I'm looking at Page 14 of your deck. Can you just help us think about the $3.5 million in charge-off? So the specialty vehicle category looks like you have tow trucks. It wasn't that, it wasn't a heavy tow. Are you saying it came from sort of that FedEx category of $40 million or the other vehicle category? Or just how should we think about that? I guess that, that's sort of my first question around equipment finance. Like, what's the segment that's coming from? No, sure. So to get to—break that down a little bit. So we have about $3.5 million of net charge offs in the Eastern Funding segment overall. And as we said, you know, as Paul was mentioning, 1.6 of that was just basically in the FedEx- Transport. Yeah, transport. Well, in this category, when you look at Page 14, it's probably mostly in the FedEx and maybe in the other vehicle categories. We have about $800,000 in charge-offs on the tow, $600,000 in laundry, and about $600,000 in fitness. And then we've got some net, you know, some recoveries that are sprinkled throughout. For the entire equipment finance portfolio far and away, the vast majority of it, as you can probably see there, is laundromats. Which performs- Got it. exceptionally. Got it. it. Yeah. We'll do more, we're gonna do more laundromats. Yeah, it makes sense. Makes a lot of sense. Okay, and so just thinking about equipment finance, I mean, directionally, you know, the categories that you mentioned, very, very small. Directionally, there's nothing there that you're thinking, "Hey, we should pull back. We've seen a change." You're still- Oh, they are working on... Yeah, we're feeling good about it, but the guys who run Eastern Funding are sort of reevaluating their strategic direction in all of this, as we speak. Yeah, I think the difficulty of getting, when we talk about recoveries, I think they're very comfortable how they underwrite and things of that nature, but when things do go bad, you have to recover these vehicles. And I think it's becoming a little bit more difficult, taking a lot more time, and so they're rethinking about some of that- Some of those loans are pretty small, and they become very expensive, and the trucks are in bad repair, and it's not a wonderful picture, and it's not something that they've done forever either. The nice thing about the laundry equipment, it's not going anywhere. Right. Yes, I- And so, I mean- With that, a particular address. Right. Go ahead, Laurie. So I guess when you think about that, yeah, that specialty vehicle bucket, then, I mean, would you potentially look to sell those loans or get out of that? Or how do you think about that? Just not grow them further? Well, there are, there are meetings concurrent to now that are considering all of those things. Okay. Okay. And then one other question here on the equipment finance. You've got a, you've got a category, it's EF CRE, so Equipment Finance CRE. What is that? That's $166 million. That's- If you don't know, I can follow up with you. That's when the laundromat owner acquires the building that the laundromat is in, and in a lot of cases, it might be a little strip mall, for example, that the guy wants to own, but it's always attached to a laundry. There's always a laundromat involved. Got it. Okay, gotcha. Gotcha. Okay, and then, one more question, and Mark sort of already asked this, but I am just so curious. It would seem you guys have such a plethora of capital that buybacks here, you know, in the high 70s percentage of book, would just be absolutely top of mind. I mean, at what point do you say, "Oh, my gosh, you know, we have to pivot and get excited about this? Well, we right now, in this environment, you know, I would say still in this environment, we still think capital is very precious, and it certainly is attractive to buy the stock at this level. There's no question. But I also think it's very important to keep the capital that you have, and continue to use that capital to support the balance sheet and opportunities that present themselves. So that's kind of where we are on it. Okay, great. I'll leave it there. Thanks. Sure. Thanks, Laurie. Our next question comes from the line of Chris O'Connell with KBW. Please go ahead, Chris. Hey, good afternoon. Hi, Chris. Staying on the credit front, can you just remind us about the non-equipment finance portion, you know, the $4.7 million, you know, that was, you know, had, had some partial reserves for it, previously? Sure, Chris. So those were fully reserved. They had specific reserves on those, one had to... And we talked about this in the past. One was the, it was construction firm, that we took the charge off on, as well as a, medical- Group -group. These are loans that have been dogging us. We've pretty well wrapped them up now, but for the past couple of quarters, you've heard us cite those two loans that were being worked out. Got it. And on the CRE front, I mean, outside of the office, you know, as you're looking at, you know, the rest of the maturities, you know, throughout 2024, I mean, how do you feel about kind of, you know, the core CRE or, or the, you know, ex office and the credit quality there, as these maturities come through over the course of the year? Yeah, so far, we feel very good about it, not only the maturities, but the repricings. As you can imagine, we have a lot of our commercial real estate, particularly multifamily space, and other things that reprice. They may not mature, but they'll reprice after five years. They may have a 10-year final balloon. And so they may be repricing up 200 basis, 280 basis points compared to five years ago. And so right now, those are, you know, debt service coverage things of that nature are just fine. Rents have gone up significantly more than that, so we're in good shape there. I don't think there's any issues on that. I think the office, even office is doing well. I think it's just the inside of, you know, certain properties in certain places that we have to, you know, work with our customers on. Got it. And has the recent increase in rates, has that, you know, tempered demand or even just the timing of potential pipeline closings in the CRE book? Probably. It certainly has tempered demand. I don't know if it's stopped closings at all. If it did, they're probably regretting it. Yeah. There's just not a lot of trades going on in our markets in real estate. Yeah. There's not a lot of buyers, not a lot of sellers. Got it. It's probably- The, the- Probably due to rates, but it's also probably due to the views on occupancy as an investor, particularly. Right. Yeah. Yep. And the demand that you're seeing, you know, for loan growth, you know, you mentioned, you know, C&I and equipment finance, you know, kind of leading that. In the C&I segment, you know, what's the type of loans that you're seeing, you know, the most attractive demand for? Oh, well, industrial has been strong. Import-export stuff has been strong. Law firms. A little of everything. Got it. There's not, there's not a particular expertise. Some, particularly in our New York operation, things like private schools and nonprofits have been doing quite well. And Brookline's gotten involved in some of that as well. So they tend to be very, very well established, low leverage organizations that have great, great cash flow and are doing something. Might be building a gym or something. Got it. And I know, you know, last quarter, you know, pretty, you know, light on the, M&A discussions. I mean, has there been any pickup at all in, you know, kind of the your general market or discussions, since then? Yeah, maybe a little bit, but, I mean, it's not too strong because it's so difficult, and everybody pushes the stuff around, and you get these capital holes. The holes are just way too big to fill from a capital perspective at the moment. Part of the problem is that the investment bankers have nothing to do, so they come up with all these great ideas. Yeah. Got it. And, you know, just in general, I guess, going forward, I mean, where are you guys thinking about in terms of, you know, normalized, you know, charge-off rate, in this type of environment? Certainly less than we saw in Q1 is where I plan to be headed. It's a little bit difficult early in the cycle here to try to pick a number, but if you look at our charge-off behavior in our past, that was a lot more comfortable. So that's where we're gonna try to get to. Great. That's all I had. Thanks for taking my questions. Thanks, Chris. 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, and we will look forward to talking with you again in the next quarter. Have a good day. The conference has concluded. Thank you for attending today's presentation. You may now disconnect.