Good morning, everyone, and thank you for joining us today to discuss Sterling Bancorp's financial results for the first quarter, March 31st, 2021. Joining us today from Sterling's management team are Tom O'Brien, Chairman, President and Chief Executive Officer, and Steve Huber, Chief Financial Officer and Treasurer. Tom will discuss the first quarter's results, then we'll open the call to discuss questions. Before we begin, I would like to remind everyone that this conference contains forward-looking statements with respect to the future performance and financial conditions of Sterling Bancorp that involve risks and uncertainties. Various factors could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These two factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during this call. Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute, for the most directly compared GAAP measures. The press release available on the website contains the financial and quantitative information to be discussed today, as well as a reconciliation of the GAAP to non-GAAP measures. At this time, I would like to turn the call over to Tom O'Brien. Tom, please go ahead. Great. Thank you, good morning, everyone. Sterling released its first quarter of 2021 financial results today. Just the highlights, we reported $0.05 per share of net income. Generally, the margin continues to be pressured. It was 2.45%, and predominantly due to the ultra-low interest rates we're all experiencing and then the additional liquidity we keep on the balance sheet. Almost half of our reported expenses in the quarter were related to the multiple reviews and investigations that have been going on at the bank since long before I joined, but certainly during my tenure. Credit remained essentially flat in the quarter. The numbers didn't change too much. We're still dealing with the factors that I outlined in the press release. On the capital levels, I'd note the bank-only capital levels continue to be pretty healthy. Just keep in mind at the holding company, we do have $65 million worth of debt, which is now callable and losing its capital treatment over the next five years until its maturity. At some point, we need to begin to consider additional liquidity at the holding company since we are precluded at this time from dividend up from the bank. Obviously, there are holding company costs that need to be considered. That's something that'll get our focused attention in the next quarter or so. Going back to credit, as I continue to note, the concern from my perspective remains centered in the commercial real estate and the construction portfolios. We continue to manage these portfolios very aggressively to try to get down to the proper risk rating and understanding what the exposures are, the quality of the guarantors, the quality of the property or the project. We've made an awful lot of progress in that. To some extent, the past due loans are inflated because we've had loans that come up for maturity. On the commercial and construction side, we basically have to re-underwrite each and every one of them and reappraise them, and that just takes a long time. There are several in that category that have gone past maturity by 90 days, and we list those as non-accrual in an abundance of caution and conservatism. Understanding that's, as I said earlier, that's where I think the risk is for the bank, too. On the positive side, we did announce, as I'm sure you saw, the securities class action settlement has been submitted to and, I think at this point, approved by the courts, and it should begin to wind down to absolute closure in the next two or so months. Other matters, including the look back required under our formal agreement with the OCC, are nearing completion, and that's been an expensive proposition for the bank and the company also. Notwithstanding that, there are still a lot of moving parts, but we are working diligently to get past as much and as expeditiously as possible. Keep in mind, though, that the OCC and DOJ investigations are basically out of our control. We have and continue to cooperate fully with all of those. As you probably noticed, the Justice Department has begun to take action against certain individuals, and we anticipate that effort will continue. As I said, both that and the OCC item are out of our control, and we hear about it pretty much at the same time that you do. With that, probably always best to take questions and see what's on everybody's mind. Operator, if you'd open the line up for any questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Ben Gerlinger with Hovde Group. Please go ahead. Hey, good morning, guys. Hey, Ben. I was wondering if you could just kind of give some rough guidance. I completely understand that the expense level for legal is pretty much out of your control, but based on the last call, I think you guys said 2021 expenses will be near 2/3 or so of 2020 levels, which would definitely imply a ramp down in the back half of the year. I was wondering if you had any updated thoughts on that. I think what we said last time was we expected in the second half of the year for expenses not to ratchet down dramatically, but start to step down as this look back is completed and as the securities class action is completed. Hopefully, some of the other matters start to wind down. It's still our expectation that the second half will start to see the gradual diminution of these extraordinary expenses. Nothing's really changed in that respect at this point. Got you. Okay. Well, that's helpful. Do you have any line of sight into opportunities to repurchase more Advantage loans? I get that they're somewhat out of your control, and the timing and windows of opportunity are pretty narrow. I'm just curious if you see any kind of in-concrete moments over the next six months where you could repurchase more. Yeah. We finished one repurchase during the quarter. You're right, they do take some time and documentation. It's kind of a complex operation. We have one more we're expecting in this quarter that is somewhat larger than the one we completed in the first quarter. I think that was about $88 million or $89 million. This one is probably, by the time we repurchase, it might be in the $150 million-$160 million category. Then we've got one more that is much smaller, in the $30 million or so, but just given the securitization that it's in and the call opportunities, the sponsor really can't free those up until, I think it's July next year. Steve can correct me if I'm wrong on that date. Yeah, that's correct. The remaining smaller piece in the $30 million range will be July 2022. Got you. Okay. Just kind of thinking bigger picture, the selling of the Bellevue Washington branch. I was kind of curious. I get that it's not really in your quote unquote footprint, and it was a little bit more of a one-off. I was curious how that process went or anything you're open to talking about in sort of like a bid-ask, or was it completely sold to one person or the one entity, WashingtonFirst Bank? Were they the target specifically, or did they approach you? Just any kind of color you might be able to provide on that as well? There's two parts of it. First is the motivation, really it is exactly as you said. The Bellevue, Washington branch had been fairly successful, it was a single branch in a very remote market for our core business. We had some good business there, some very good employees, that's why we looked to exit the way we did. In terms of the process, yeah, we spoke to a fair number of banks. There was some reasonable interest, First Federal was frankly the most interested and had the best chances of success on an application to do this transaction with their regulator and attractive for all of our stakeholders, our employees, our customers, and for Sterling itself. Got you. Okay. Well, that's helpful. I'll step back in the queue. Thanks. Sure. The next question will come from Nick Cucharale with Piper Sandler. Please go ahead. Hi, Tom and Steve. How are you? Morning, Nick. Good. Good morning. Good morning. On the liability side, can you remind us how much of the CD portfolio is expected to mature in the second quarter and your current offering rates there? Steve, why don't you handle that? Yeah, I can speak to that. Yeah, we have CDs maturing in the second quarter of $474 million approximately. Which is about a third of the CD portfolio. We're expecting those to reprice down pretty substantially, assuming that they choose to remain with the bank. A significant piece of that $474 million are 12-month CDs, which are currently at rates of around 135 basis points-145 basis points. We're expecting those to reprice down into the 25 basis point category if they, again, choose to stay with the bank. That's great color. On the origination front, pretty stable from quarter to quarter. Do you anticipate loan demand ramping up in the coming periods, or is it pretty likely to be consistent in the near term? I think in the near term, it's going to look like the recent past. We spend an awful lot of time on going through the portfolios that we have, and with the regulatory overhang, it's not exactly easy to ramp up. We'll continue to meet the credit demand in the communities that we're in, but I wouldn't look for anything too explosive. Great. Thank you for taking my questions. Sure. Again, if you have a question, please press star then one. Our next question will come from Jeremy Zhu with TCW. Please go ahead. Hi, Tom. It's TCW, obviously. Yeah, TCW. All right. A quick question on the cash balance. You still have pretty elevated cash balance. I know that you have some CDs coming due and the purchase of a Advantage Loan portfolio. Are there any other ways you're thinking about using the cash? No. We had to build cash, Jeremy, because there was no way to determine the level of Advantage loans that we ultimately would repurchase. We had to be prepared for all of that. Whatever deposit flows happen to be given some of the news that was coming out last year with the delayed quarterly and 10-K filings and things like that. We built up liquidity in an abundance of caution. Those who were taking us up on our offer to repurchase the Advantage loans have raised their hand, and we're in that process, and the others have declined. We pretty much know what our needs are in that context at this point. That's why you saw in the first quarter that we let deposits run off a little bit through both pricing and then, as we discussed a minute ago, the sale of the State of Washington branch will take up some of that liquidity also. We hope to get down to a more normal level of liquidity, which should help margin and stabilize things better now that we pretty much know who's going to give us back the Advantage Loan and who not. You're always worried in these situations with banks like I've been in with the risk of reputational damage, and we haven't seen that. That's really a credit to the people that we have working in our system and in our branches, and I think in the way we've tried to communicate to clients and investors alike. Yeah. In other words, you think you have a pretty good visibility of the cash needs at this point. Yeah, much better than we did. Other things. Yeah. Much better than we did when I joined the bank. Yeah. When you buy back the Advantage loans, are you buying them back at par? Are these performing loans or non-performing loans? Well, we buy back the portfolios with those who are interested in taking us up on it, and the mortgage loan purchase agreement that we entered into at the time sets forth a formula for the repurchase. It's basically such that we pay on the reduced principal balance, the premium that we were paid on the original sale. For instance, if we sold $100 million of loans at $102 million, and that $100 million is now $40 million, we would buy the $40 million back at $102 million. Got it. In the last year, if you recall, we set up what we called the repurchase reserve to account for that cost. In this case, we'd hit 2% of $40 million comes out of that reserve. Then we have a process for fair valuing the loans that we repurchase at the time of purchase. That has been as much as a 2-point discount to closer to par, and it really depends on the market interest rates at the time of the repurchase. That we flow through the income statement. And are these. It does include Oh, I'm sorry. I was going to say, it does include, in this case, if we buy back $40 million of a portfolio from a seller to us, that would be the entire portfolio. There might be some non-accruals in there. There might be some slow pays and there might be, obviously, just regular performing loans. For the most part, the non-accrual percentages have been no worse than what we've seen at the bank for our own portfolio, and that's been relatively modest. I'd say, 2%-3%. Oh, I guess that just answers my second part of the question. You were also looking at unload a small portion of the resi portfolio. Yeah. Has there been a lot of interest on that? Do you think you'll unload that at par, or I mean at your mark rather than any impairment discount Yeah. We marked them down. We marked about $22 million or $23 million of non-performing Advantage loans to held for sale at year-end. At the time, what I was saying is that we intend to sell them. We just had so many things going on in the first quarter that I just didn't want to overload the system. We had them marked, and I think we marked them down to $0.85 on the dollar. We're now going to begin the process of actively marketing it as soon as we get the 10Q filed. Hopefully they'll be done this quarter. My expectation is that the sale price will be no worse than where the mark is. Great. Thank you. Sure. Again, if you have a question, please press star, then one. This concludes our question and answer session. Excuse me, it seems that we just had a question to come in. Okay. That next question will come from Anthony Polino with American Capital Partners. Please go ahead, sir. Hey, Tom. Hey, Steve. How are you doing, Anthony? Anthony. Good. Great Mets game last night. More fit. Guys, how hard did you try to find charge-offs this quarter? We always try to make sure we're careful with that, this was a little bit more of a benign quarter than one might expect. That's why I said in the press release, Anthony, we're going to have some. It's undoubtable. What other institutions may or may not face, who knows? I think, just given especially the focus we have on construction, I think we'll see some charge-offs. From the reserve perspective, I think we're okay because as I mentioned, among the non-performing loans, the level is elevated, but you kind of have to break it down between the content of the different loan portfolios. In that, there's, I don't know, I'd say $60 million-$70 million of commercial and construction that, I would say I worry about, and the balance of the non-accrual, not so worried about. That $72 odd million in allowance that you have, I assume a high percentage of that is allocated toward that worrisome portfolio? If we had an increase in charge-offs, we wouldn't necessarily have a like increase in provision in the quarter? Yeah, no, as I mentioned, the credit quality's been pretty stable, and we had some recoveries in the allowance during the quarter, that's why that really didn't move so much. I think that's a fair assessment, Anthony, that if we have deterioration or actually realize losses on some of the commercial and construction, it's pretty well accounted for in the allowance. Some of the product like, we have these loans in San Francisco that are what kind of generically referred to as SROs, but single room occupancy. That's, in my view, kind of akin to a hotel type loan. Those are slower to recover in terms of occupancy and valuation and cash flows. It remains to be seen, yeah, it's an elevated concern for us as we look at that portfolio. Do you have a good handle now? Oh, I'm sorry. Yeah. No, I was going to say, the construction stuff, my general feel with construction is I feel okay if the project has never started or if it's completed. In the middle, that's where I worry. We've got some that are completed, and they're in a marketing period, and I think we feel pretty good about the chances of success for marketing those. Those in the middle, you have to monitor them closely, but you're not really in control of the process until they get near completion, and they can start marketing it as originally intended. There's some elevated concern there with the valuations at the original underwriting and the structure. Okay. How big was the Bellevue branch? $70 million, Steve? Yes. It says $78 million in deposits. Do you have a pretty good handle now, a good idea of what size this company will be by the end of the year, or is that still a pretty moving target? By the end of the year, that's probably a little harder to guess. Ideally, if you look at the structure of the retail distribution in California, the number of branches, the product mix and all that, and the capital levels, you'd say ideally, this is a low $3 billion balance sheet. In my opinion. Okay. Well, I think you're doing a great job, and I know it's tough, but I congratulate you guys. Thank you. Thanks, Anthony. I appreciate it. Thank you. This concludes the question and answer session. I would like to turn the conference back over to Tom O'Brien for any closing remarks. Please go ahead, sir. Okay, thank you. I'm just always happy to have these calls and a chance to catch up with our investors, and we certainly appreciate your interest in our efforts and in the process we're going through here. At times it's challenging, but we wouldn't have this opportunity were it not for the public investors we have in Sterling Bancorp, and we're all appreciative for that and for your interest. I look forward to the next quarter. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.