Good afternoon and welcome to Brookline Bancorp Inc fourth 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'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 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, everyone. Thank you for joining us for today's earnings call. Our core operating performance improved slightly over the third quarter, with net income of $20.7 million and operating earnings per share of $0.23. On a GAAP basis, which would include merger charges of $3.4 million, net income was $17.5 million with earnings per share of $0.20. Loans grew a modest $24 million, and customer deposits increased by $116 million, and our margin increased by five basis points. As market rates gradually return to normal, we would expect to see our net interest margin continue to improve through this year. In December, we announced the planned merger with Berkshire Hills Bancorp to create a $24 billion financial institution with highly complementary market footprints covering most of the key markets in New England with very little branch overlap. This partnership generates significant economies of scale, resulting in cost savings and the ability to leverage future investments, driving the profitability metrics of a combined company. Additionally, we have a very experienced management team who continue to collaborate on the planning and preparation to execute and drive performance in this deal. I will now turn you over to Carl, who will review the company's fourth quarter results. Carl? Thank you, Paul. Total assets grew $228 million from September, driven by growth in securities and cash equivalents of $176 million and loan growth of $24 million. Strong C&I growth of $84 million and $33 million in consumer loans were offset by reductions of $63 million in commercial real estate and $30 million in equipment finance. In the fourth quarter, we originated $492 million in loans at a weighted average coupon of 734 basis points. However, the weighted average coupon on the core loan portfolio declined 11 basis points during the quarter to 592 basis points, as approximately 23% of our loan portfolio repriced to lower rates as the Federal Reserve Bank continued to lower short-term rates. On a linked quarter basis, the yield on the loan portfolio decreased 10 basis points to 607 basis points. On the deposit side, customer deposits grew $117 million and broker deposits increased $53 million. Deposit growth continued to be focused in time deposits and money market. However, we also saw demand deposits grow $11 million. Total funding costs were 346 basis points, a decline of 21 basis points from Q3, as the overall net interest margin improved five basis points to 312 basis points for the quarter. Total average interest-earning assets grew $146 million on a linked quarter basis, resulting in net interest income of $85 million, an increase of $2 million from Q3. Non-interest income was $6.5 million, which was up slightly from the prior quarter of $6.3 million due to stronger loan-level derivative income offset by the mark-to-market on swaps. Operating expenses were $60.3 million for the quarter versus $57.9 million in Q3. The increase is largely driven by additional incentive and commission-related expenses in the quarter. The provision for credit losses was $4 million for the quarter, a decrease of $700,000 from the third quarter. Looking forward, the interest rate environment remains volatile, and client behavior and industry responses will continually adapt. As the yield curve continues to normalize, we will see net interest margin improvements. The modest improvements in the environment so far suggest our net interest margin will increase four to eight basis points in Q1 and continue to improve throughout 2025. We anticipate growth in the loan portfolio to be in the low single digits for 2025, as growth in commercial and consumer loans will be tempered by the runoff of specialty vehicle and continued lower commercial real estate activity. Cash and securities combined are expected to represent 9%-12% of total assets. On the deposit side, we anticipate growth of 4%-5%. Given prevailing interest rates, the migration of lower-cost deposits may continue, but are anticipated to slow. Our first quarter margin is projected to fall within a range of 316-320 basis points and will continue to improve throughout the year. However, this is dependent upon deposit flows and the timing and magnitude of future actions by the Federal Reserve. Non-interest income is projected to be in the range of $6-$7 million per quarter, although components may vary significantly. We are managing expenses to $247 million or less for the full year, excluding merger-related costs, and our effective tax rate is expected to be in the range of 24.25%. Yesterday, the board approved maintaining our quarterly dividend at $0.13 per share to be paid on February 28th to stockholders of record on February 14th. On an annualized basis, our dividend payout approximates a yield of 4.5%. This concludes my formal comments, and I'll turn it back to Paul. Thanks, Carl. Now we will 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 you feel like your question has already been answered, you can press star, followed by two to withdraw yourself from the queue. The first question today comes from Mark Fitzgibbon with Piper Sandler. Please go ahead, Mark. Your line is now open. Hey, guys. Good afternoon. Hi, Mark. It's been a couple of months, Paul, since you announced the acquisition of Berkshire Hills, or merger with Berkshire Hills. I guess I was curious, have you been able to yet triangulate in with the regulators on what the timeline for getting approvals on that deal might look like? We've certainly had contact with them, but I can't tell you that we have a read yet on how that is going to happen. Part of the sort of front-end delay here, I think, has to do with the fact that we are advised, and I think Carl would have said this anyway, that the regulators are going to expect we use year-end numbers for the filings. So it sort of became a little bit awkward time. If we had tried to bend as fast as possible, we would have been forced to use third-quarter numbers with the expectation that when we got there, they would have told us, "Well, file again with the fourth-quarter numbers." So I don't have a read yet, but I am reading about some favorable speeding up of approvals in the past few weeks. I'm a bit hopeful that this could be a little bit faster than our anticipated Q3 approval. Okay. Great. And then secondly, I wonder if you could share any color on the equipment finance loan that resulted in the $5.1 million charge-off in the quarter. I guess I was curious, was that in the specialty vehicle sector, or was that something else? No, that was in the laundry. So we had a customer with some large. Industrial. Industrial laundro mats. We've been talking about this for a little while now. It was specifically reserved for. So that was the charge-off in the quarter. It's not a type of loan that we have many of, so you don't have to worry about that. Okay. And then on page 26 of your slide deck, where you break out the deposit betas, I was a little surprised that you haven't taken deposit rates down faster, given that many of your peers have. Is that simply a function of the fact that you're trying to hold that loan-to-deposit ratio kind of at or below the current level, or something else at work there? No, I can't think of anything at work. I mean, it's hard for me to evaluate just based on your review of that, but I think our deposit price setters have been reasonably aggressive, but we are careful that we want to hold the funding. Thank you. Thanks, Mark. Our next question comes from Steve Moss with Raymond James. Steve, please go ahead. Good afternoon. I'm following up on Mark's question there with regard to the margin. Just kind of curious, Paul or Carl, how you have 40 basis points of margin expansion in the upcoming quarter. Just kind of as you think about it, how much should you have over the course of the year? Yeah. I'm not giving guidance on the course of the year at this time. I know we talked a little bit about it last time. It's been just too volatile out there, depending on what the Fed's going to do and the timing of changes. So whenever the Fed does move, it takes a little time for our liabilities to reprice. So we saw moves in November and December, and we're still seeing that play out for the most part in our liability side of things. So I continue to see margin improvement going forward. We have the 22% of our loan book gets impacted immediately with those moves in prices. So we feel we may be even doing better on the margin side if the Fed is at a slower pace of reductions. But I don't know if there's going to be one reduction next year. I don't know if there's going to be three reductions next year or no reductions next year. So right now, I'm not giving guidance on that. I thought I'd try again, but I guess given that, maybe just as you think about deposit betas here, how are you guys thinking about the pace of downward cuts going forward here? I think it was a 33-ish type deposit beta for the quarter, if I recall correctly. Yeah. I think we'll continue to be on that pace. I think we're seeing that in the industry. Everybody's pretty responsive to changes in any rates in the market as they move down. I think we're all looking for a normal yield curve. I know we always talk about the inversion of the yield curve is over from the 2 to the 10, but when you look at the Fed effective rate at 433 and the five-year at 430 and the two-year at 420, where banks make money, where we make money, it's still. Backed up. Flat at best. So I think we'd love to see that come down a bit more, and we'll be pretty responsive to their rates on our deposit pricing. Okay. So I'd say it's north of what the loan model is. At least for a little while. Got it. Okay. Fair enough. And then in terms of on the loan growth front here, I'm assuming kind of the CRE runoff was maybe a bit planned given the merger. Just kind of curious how you're thinking about overall loan growth for 2025. Yeah. Again, I think it's going to be in the low single digits. We're going to continue to bring down commercial real estate loans in a thoughtful manner. We're certainly in the business taking care of our customers, but we're being more selective on what we're doing. And I think on a combined basis, we'll be searching to get that down to 300%. I think the market appreciates that, and so I think that's the goal of the organization. Okay. And one last one for me. In the deck, I noticed you guys made a disclosure about the $10.8 million classified loan in the central business district. Just curious, you say it's in negotiations. Do you expect it to close this quarter? And maybe could you give us a sense how much of a haircut, if any, the seller is taking? So the first question, it may be late this quarter or early next quarter. I don't want to try to guess what that's going to be. It's coming up. It's coming up. The second part of the question. I have no idea. Okay. We'll get out of what's left, basically, with the existing reserves against it. But what the outcome is for the owner, I have no idea. It probably wasn't a great adventure for them either. Got it. Okay. So you guys do expect to realize a charge-off, it sounds like. Yes. Yeah. Yeah. We've got. But it's reserved. It's reserved for. Right. Okay. And could you just remind us how much that is? What? The loan? Yeah. What I'm going to tell you. The reserve, I'm sorry. I'm out. I don't have the specifics. I don't have it here. Particular loan. All right. Well, I appreciate all the color, and I'll step back. Thanks, guys. All right. Thank you. Our next question comes from Laurie Hunsicker with Seaport. Please go ahead. Your line is now open. Great. Hi. Thanks. Hi, Paul and Carl. Maybe you stick with where Steve was. And so I understand how you don't want to tell us the specific reserve with that office hasn't closed yet, but can you help us think what is the total reserve on your office book? Your overall office reserve, what is that? So the general reserve is 2.23%. 2.3%. Okay. Great. And then how much did you have in office non-performers this quarter? I didn't see that number in your deck. It's not very much. It's the loan we're talking about and one more, I think. Yeah. There's only two loans, I believe, that are non-performers at this time. The other one's fairly small. Okay. Good. And I appreciate the color that you put on your pass rate. It's a very strong number. Just switching over to your specialty vehicle. So I know the $5.1 million was laundry, but the $1.6 million that the equipment finance, is that a specialty vehicle charge-off? Sorry. Of your $7.3 million in charge-off, you flagged the 5.1 and the 1.6. 5.1, you already talked about. The 1.6, is that specialty vehicle? It's a bit of a mix. It's $1.1 is really specialty vehicle in that charge-off. And you brought up the laundry. I misspoke earlier. It wasn't the laundromat. It was a grocery loan, a significant grocery loan at Eastern Funding that we took the charge-off on. Eastern Funding. Okay. Great. Want to clarify that? And then, can you remind? Hopefully, Mark, you got that. Hopefully, Mark got that. Yeah. Okay. Good. Yeah. Thanks. Okay. And then so $1.1 million is your charge-off on your specialty vehicle. That book is sitting at $296 million now. Can you remind us what is the runoff on that again? And is that tracking with what you think it's going to be tracking, or how are you looking at that? It is tracking exactly how we've been tracking. I think the CFO of that unit says, I think it's $2.2 million a week that that thing's running off. And I think it's running off fairly consistent. Is that the right number? Right. Okay. And then can you just remind us, what's the reserve that you have on that book? On the specialty vehicle, it's 2.6%. 2.6%. Okay. Great. Okay. And then tax rate, do you have a number for what that's looking like for 2025? Yeah. I think our run rate's around 24.25%. But again, that's not going to include if there's any merger charges because sometimes those things are not tax-deductible. So in this quarter, about $2.5 million of the charges were not tax-deductible, which can play games with that. But on a regular run rate, we're in that 24.25%. Okay. Great. And then margin, do you have a spot margin for December? December was a little lower than the run rate for the whole quarter. So it was 3.10%, 3.10. Was there an interest reversal? There's a lot of different things that go through that. So there might have been. I don't know all the components of that, but there may have been some interesting reversals, timing of bringing deposit rates down, things like that. But we'll see those types of things. Okay. Okay. Great. And then, sorry, just one last question. Going back to that $10.8 million classified office that you said would likely resolve in the first or second quarter, what is the vacancy rate on that property? 50%. Okay. Okay. Great. Thanks. I'll leave it there. Sure. Thanks, Laurie. Our next question comes from Chris O'Connell with KBW. Chris, please go ahead. Hey. Good afternoon. Just wanted to circle back to the margin discussion. I think from the last quarter's call, the spot margin in September was a 313, I think. And so I just was wondering, for this quarter, maybe just what happened where you guys thought you'd get expansion, which you did off the full 3Q number, but why there wasn't more overall expansion over the course of the quarter? Was that deposit timing? Did you guys move rates a little later in the quarter than you had expected, or? It's probably all of those things. Modeling isn't perfect. So I think it is probably a little bit on the deposit timing of when those things get moved and implemented. I don't think it's an interest reversal that caused it, but I think it's, and it might have been the timing of our sub-debt and making sure that got recorded in our model. I'm not sure if that was picked up by our model or not as well. Our sub-debt went from. Okay. Got it. Fixed to floating. So that might have been an impact as well. Got it. And then for the quarter, I think you mentioned that the core loan yield was 592, which is about 15 basis points below the total loan yield. Just wondering if that is, I guess, what's in that? Is that prepay? Is that accretion? Is that non-accrual reversal? What are the components there? And then has that been a typical differential from the core and the stated loan yield over the past couple of quarters, or is that either light or outsized? It's such a moving piece. That's why I give you both, so the yield is for the quarter, and so rates are moving throughout the quarter, right, depending on what the Fed's doing, the timing of originations, timing of payoffs, all of those things go into it, as well as any accretion income and things, fees that are getting amortized over the life of the loan. The accretion's typically very stable, so that's not something that's moving it much. We haven't seen a lot of prepayments these days, so that's really not driving it as well. So I would say it's just really the timing of when the Fed's been moving rates, how rates are, and when those rates reprice in the system itself. Some loans reprice the next day. Some reprice the first of the next month, and so all of those things go into it. So that's why I kind of give you, "Hey, what's the coupon on the book at the end of the quarter?" Because that kind of has everything in as of that moment. And then you can see what the loan yields are for the quarter as well. And I can see how you're trying to size those up. Yeah. I got it. And then I think the originations were about $491 million this quarter. Sorry if I missed it, but did you mention what the origination yields were there? Yeah. It was 734 basis points. Got it. And then with regards to the merger with Berkshire, you guys had mentioned upon the announcement the contemplation of maybe outside actions with regards to managing the CRE concentration ratio, pro forma. Have you guys made any progress there? Is there anything being more specific being discussed? Nothing in addition to what we've already discussed. I think when we talked about this, we had already had plans to reduce our CRE concentration over time. This accelerates that simply because the building capital is very, very helpful as well to the transaction. But it also gives us a lot of flexibility down the road if we want to do something more. But we're not providing any information around that. Got it. And then last one for me, just on the reserve from here, you guys have made a couple of adjustments in the weightings the past couple of quarters. I was wondering if you had what the impact was on the overall reserve level? And I think you have a target, kind of steady-state targets for those weightings, which indicate maybe a slight more shift in the coming quarters. Is that something that you think kind of occurs near-term or happens over time? I think that just happens over time. The Moody's scenarios have been changing. Our credit folks take a hard look at that and see what's going on with that and see what's appropriate. And so we adjust those weightings as we feel is appropriate. As you know, we've been moving more away, more from the recessionary environment and more towards a more balanced look at the market. I would expect that to continue, but I don't know if that's really going to happen or not. That's a quarter-by-quarter at all. That's a management decision at the end of the day. And we have a lot of smart folks in the room that decide that. But I think as far as we saw the reserve or the reserve for loan losses decline three basis points, I think, in the quarter to 128, still a very, very healthy reserve. And so I feel that the team's doing a great job. Got it. I mean, it might be too specific, but I'm just wondering how much that last if you guys were to shift to the neutral targets next quarter, do you know if that has a one or two or three basis point kind of impact? Yeah. I don't have insight into that because a lot of it's based on what the underlying scenarios are. For instance, the baseline scenario for the Moody's decreased the CRE price index quite a bit. And we actually said, "That's certainly more reasonable. That's a more reasonable outlook." And so we weighted that a little heavier, the baseline outlook on that. So those are things that go into it. So if you just moved it, if you had run this thing in Q4 using your baseline scenario, or I shouldn't say baseline scenario, but a more weighted towards the normal weightings, I would say it's probably between $6 million and $10 million on the reserve. If I had to guess, I'm guessing though, to be honest with you. So hopefully that's helpful. Yeah. Very. Thank you. Appreciate it. Sure. All right. Chris. This concludes our question and answer session. I'd like to turn the conference back over to Mr. Perrault for any closing remarks. Thanks, Emily. Thank you all for joining us this afternoon. We look forward to talking with you again next quarter. Good day. The conference has concluded. 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