Good morning, everyone. Thank you for joining us today to discuss Sterling Bancorp's financial results for the third quarter, September 30, 2021. Joining us today from Sterling's management team are Tom O'Brien, Chairman, CEO, and President, and Karen Knott, Chief Financial Officer and Treasurer. Tom will discuss the third quarter results, and then we'll open the call to your questions. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of Sterling Bancorp that involve risk and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These 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 the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures. At this time, I'd like to turn the call over to Tom O'Brien. Tom? Right. Thank you. Good morning, everyone, and welcome to our third quarter earnings call. I'm joined this morning by our newly appointed CFO, Karen Knott. Karen brings long experience with Sterling to us, and I look forward to working together. Today we reported earnings per share of $0.19, which was comprised largely of a $6.5 million credit that we received under the CARES Act for employee retention. Sterling's eligible for this credit because we've maintained our employee base without furloughs or layoffs and met the criteria for eligibility, which was, you know, revenues down year over year by 20% and fewer than 500 employees. We expect also to be eligible for a similar credit in the fourth quarter, which we think will amount to about $2.2 million. These are employee tax credits and not income tax credits or refunds. More importantly, we had some improvement in NIM in the quarter, reached 2.83%. We had a decline in operating expenses, excluding the employee retention credit, to about $17.6 million. We had been hoping to see some modest decline in OpEx as certain of our remedial projects neared conclusion. Notably, the look back required by the OCC under the formal agreement is now just about complete, and that represented about a $10 million effort over several quarters. We are also near finality on the securities litigation matters, and that also helps to bring some expenses down. While the risk of volatile expenses remains elevated, we are working tirelessly to move things along as best we can. The various investigations and supervisory issues confronting Sterling continue to be significant, and we continue to cooperate fully and address those issues under our control, as quickly and comprehensively as we can. I believe we have made substantial progress on the matters found in our formal agreement. The system conversion was a huge step in that direction since multiple remedial steps required that successful transition. On the DOJ side, we have less insight into criminal investigations of various individuals. Again, we continue to fully cooperate, and be as transparent as we can, whenever requested. I continue to believe we'll have some greater insight into these matters as year-end approaches, but resolution from the bank's perspective will not be forthcoming, at least in my opinion, until well into 2022. The credit story in the bank remains, I'd say pretty much unchanged. We continue to work the commercial criticized and classified list aggressively. NPAs are pretty much unchanged from prior quarter. But as you can see from the tables in our release, the split between the residential and commercial is roughly $40 million each. We have not experienced significant credit losses to date on the residential side, notwithstanding obviously the horrendous costs that we've incurred to remediate the origination fraud that occurred in the past. Also included in the residential NPAs are several loans that are paying but have yet to return to accrual status. As I've noted over the last several quarters, my concern from the credit loss perspective remains centered in the commercial portfolio. We have not seen much in the way of migration into classified territory, and I think we at this point now we've properly risk rated the vast majority of the commercial portfolio. Again, that's where I think we retain some element of risk in the credit loss side. You know, we're looking at various alternatives. We've had some success in moving loans out of the bank without incident. We would probably look at some, you know, individual or bulk loan sales in the quarter ahead, and beyond. You know, our goal is to get the number down as efficiently and as quickly as we can, with a minimal loss. As I've said, oh, my God, probably since I've been at the bank, the exposure to loss really, in my view, continues to be heavily centered in that commercial portfolio. That's kind of the story with the bank for the quarter. You know, we made a lot of progress, probably some of it below the waterline that you don't see or appreciate as much as those of us who are on the inside can see every day. You know, fixing the supervisory issues that are found in the formal agreement are really, you know, check one through infinity. We're focused really on nothing else other than clearing those things away as quickly as we can and trying to bring some finality to the supervisory efforts of the difficulties that the bank has. With that operator, I'm through with anything I wanted to say, and maybe, you know, Karen and I can take some questions from those on the phone. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Ben Gerlinger with the Hovde Group. You may go ahead. Hey, good morning. Good morning, Ben. How is everyone doing? We're doing fine. You getting any sleep? Yeah. I haven't had any sleep at all. Two little ones and Halloween candy make for not much sleep for anybody. Appreciate it. If I could actually start with Karen, if you look at the deposit and the cost of deposits, there's a pretty good reduction linked quarter, both in time balances and the yield. I was curious if you had any insight over what could be coming up for renewal, and then what is the new rate that is coming on over the next quarter or two? Sure. In the next quarter, we have about $150 million CDs maturing. The rate on those is about 1%. Our highest offering rate, base rate now, is about 65 basis points. We do expect to see some more reduction in our cost of funds in the next quarter. Okay. Good to hear. Tom, just thinking big picture, I know that you can't answer it with a fine-tooth comb, but if you look at the professional and legal fees reduction linked quarter, and so there's a lot of heavy lifting being done behind the scenes, which I think we can all agree that is important. But there's not a lot of clarity in terms of total costs going forward. If you had any thoughts to what professional fees might be for the fourth quarter, even the first quarter, and then kind of juxtapose against that, like, what would theoretically or a core run rate be for that, for that line item? Well, let me, I guess, start at the back end of the question. I think Karen can fine-tune this if I'm off. I think our core run rate would be something around the $12 million range. Does that sound right, Karen? Yeah. I would say with the current level of services that we're using third parties for. The excess over that in this case for the quarter, so we kind of adjusted it to $17.6 million. That's down from $19 million, $20 million, $21 million in prior quarters over the last year or so. You know, the, I guess, what we call the extraordinary costs, which predominantly legal and professional or advisory type work, you know, would run anywhere from, you know, almost a double of our regular OpEx, $10-$11 million a quarter. You know, as I've said before, I think they'll drift down a little more as we get into the fourth quarter and as we get into the first quarter. The risk of volatility, though, remains high if, you know, something comes out of one of these investigations that requires us to do another deep dive into something. I'm not aware of it at the moment. That's been going on for a year predating my arrival, so, you know, two-plus years. I, you know, think the trend that we've talked about, which is slowly declining rates with the risk of some volatility, you know, is intact. It's really, really hard to put a number on it because month to month it, you know, it can vary at a level beyond what we might expect or something gets delayed, you know, an expense that we might have incurred gets pushed off to the next quarter. You know, the secret really is just to get these things past us and resolve all of the issues in a formal agreement quickly. Then, as best as we can, push for resolution of the bank's exposure with the regulatory and the Justice Department side and with the SEC. It's just like an alphabet soup sometimes of agencies. But I'd be uncomfortable trying to give you a hard and fast quarter to quarter estimate because a lot of it's out of our control. As we tick off things like the securities litigation, then, you know, they no longer contribute to, you know, the risk of higher expenses. That's. Got you. Yeah. That's the best I can give you. Okay. That's fair. I mean, just thinking from an optics perspective, there's no, like, looming lump sum that could cause it to increase outside of an unforeseen investigation, right? The trend is lower. It's just the pace is unknown. Yep. Yep. Okay. Fair enough. You know, Okay. The trend continues, you know, to be better, you know. Just as I said, we're not gonna have any more expenses probably as we get into 2022 with the securities litigation because it's over. We're not gonna have any more expenses with the look back because it's over. It's, you know, fewer kids eating at the table. Fair enough. Okay. Well, I appreciate it. It was good to see the tangible book value grow. I'll step back. Yeah. Yeah. That's a nice benefit. Thanks. Our next question comes from Mark Fitzgibbon with Piper Sandler. You may go ahead. Good morning, everyone. How are you? Hello, Mark. How are you? I'm doing very well, thank you. Thanks. I wanted to start on the loan balances. Yeah. While the residential portfolio continues to run off, you had strong commercial real estate growth this quarter. Do you anticipate this becoming a trend? Just some color there on the sequential increase would be great. We did actually originate a loan or two on the commercial side in the context of new credit to the bank. You know, some of the loan growth in the commercial side is we've had matured construction loans that moved into I guess a sales period, you'd call it. We put those down as bridge loans just to more properly identify what's really construction risk and what's now I guess you'd call marketing or sales time and sales risk. That's the bulk of it. Nothing, you know, dramatic next. I would say, you know, that would not be something I'd be uncomfortable with to the extent we can find some, you know, good commercial product in and around our various markets. You know, with people that we've known before that I'd have no problem with it. The residential side is, you know, it's in my view, as you probably know, it's for community banks, it gets tougher and tougher to be a residential lender of any substance. It's a high risk from the compliance side, you know. It's very, very costly. You know, the risk of doing something wrong on the compliance side is always high. When I say that, I don't mean the things that Sterling went through, but I'm just you know, good faith mistakes. You know, the market multiples aren't so great for revenues from gain on sale and residential loan business in general. It's not one of my favorites. Mm-hmm. In your prepared remarks, you referred to some bulk loan sales. Is that solely on the commercial side? At this point, it's on the commercial side. The residential, I'm honestly all for that. You know, we did move that group of loans that I referenced in the press release to held for sale. We can't do much until the Justice Department investigation is over. We're kind of stymied on that. Once, you know, as it, you know, pertains to the bank once that's over, then I'd be more inclined to sell those, you know, as quickly as I could. We had some good interest in those, but there's just this issue with, you know, the DOJ part of it that we've got to retain those until they finish with the bank. Another reason for you to encourage them to move along. Yeah, completely understandable. We've discussed this on past calls, but can you update us on your scheduled loan repurchases over the course of future periods? Yeah. We're pretty much through everything. So when I joined the bank, there was about $800 million worth of loans at risk of repurchase, $750 maybe. That's now down to about $160. They do continue to pay off pretty quickly, as you saw. The scheduled committed repurchases, I think we have, and Karen can correct me again, but I think we have one in March 2022 and one in July 2022, and that is it. That amounts to about, I think, $75-$80 million, $90 maybe in the aggregate. Then we'll have what is today almost half of that $160. Then the rest of, you know, the investors who bought those didn't take on our offer, so I assume they remain outstanding. We've had no interest from them in putting them back. Okay. The other part of that is just the excess liquidity that you're holding apart for the potential repurchases. When do you anticipate more normalized levels of liquidity? I think we're, you know, we got down some in the quarter. I would say I'd go back and say I'd feel a little better when we reach some finality with the governmental investigations. You know, 'cause you just always have to be cautious with issues that could surround that and, you know, potential publicity or something like that causes a problem. We're more cautious on the various needs for liquidity. You know, the big need at the point in time when I joined the bank for loan repurchases is pretty well extinguished. Okay. Lastly, as you pointed in the press release, a lower tax rate relative to the prior quarter. Just what's your expectation for the go-forward tax rate? That's why we have a new CFO on the call. Yes. Yeah. I mean, I think typically we're around the 30% range, maybe slightly less, and I anticipate that's where we'll be for the whole year at the end of the year. Thank you for taking my questions. I'll say also, Mark, the tax rate, you know, from a guy who spent his life working in New Jersey and New York banks, the you know, the tax rate in the state of Michigan consolidated is substantially more attractive than it is in New York or New Jersey or most of the Northeast states that I've worked in. I can confirm that as well. Go Michigan. Thanks again. Go Michigan State, I should say. That was it. Again, if you have a question, please press star then one to be joined into the queue. Our next question comes from Ross Haberman with RLH Investments. You may go ahead. Good morning, Tom. Tom, how are you? Yeah, I'm fine. How are you, Ross? Good. I just wanted to focus in a little bit on the non-performers, both the residential and the commercial. I guess the commercial was down a little bit, residential was up. Could you give us a sense of what's in there and how comfortable you are with your carrying values and what you're doing to readily get rid of them, work them down, and could we see any significant drop off in the fourth quarter? Thanks. Sure. Let me start with the residential side. That's actually why we broke them out in the tables for this quarter. The residential, I think I said in my remarks, there's a number of those that are, you know, I guess you'd call them, you know, either erratically performing, you know, where they make catch-up payments with some regularity. There's also some that were, you know, substantially delinquent and then brought current. Karen may know the exact breakdown or rough breakdown of those two differentials on the residential side. We've not experienced losses either in, you know, short sales or liquidations or anything like that on the residential side. Notwithstanding the, you know, the compliance remedial costs we've incurred. You know, the credit side of it has been, you know, fairly benign. No reason I have to think that won't continue. That group of about $22 million or so that we marked as held for sale at year-end, you know, has paid down to around $11 million at this point. That's just from loan satisfactions and, you know, repayments, prepayments, things like that, without any credit loss in them. That's, you know, whether or not that continues is hard to see, but it's, you know, it's certainly not indicative of, you know, residential loans with big losses embedded in them. I'm not at all uncomfortable with where we are on the residential side. Karen, do you know the breakdown between the kind of rough, awkwardly performing- Yeah. Non-performing. I would say just slightly less than half of the non-performing residential loans are not even 90 days delinquent. They're either current or maybe 30 days. Like you said, they just really haven't established a regular repayment pattern since they went on to non-accrual. You know, if they achieve those goals, then according to our policy, we can flip them back. We're just monitoring them. That's the residential, Ross. The commercial is, you know, I think I've said every call I've been on. It's the one that troubles me the most from the credit risk perspective. You know, it's a combination of, you know, what gets banks into trouble all the time is, you know, too aggressive on, you know, commercial originations. Lack of expertise or talent in certain areas that, you know, creates credit exposures that get difficult to manage. We've got these, you know, these SRO loans, single room occupancy loans, predominantly in the city of San Francisco. You know, I think we're over-lent on several of those. You know, we've had some success at encouraging the owners to refinance elsewhere, as the loans came due. We've had somewhere we could improve the credit by restructuring it, improving the amortization schedule, getting additional collateral, things like that. We've got a couple others that are just stinkers that you know, we're gonna lose money on. In the construction side, again, you know, my experience at a lot of different banks has always been, you know, banks get into construction lending because they get seduced by the, you know, the terms and the rates and things like that. You know, that's a, it's a whole different game and, you know, the expertise to manage a sophisticated construction portfolio is hard to come by, and we did not have it. You know, again, we've had some success with those loans that are completed. You know, we're looking at marketing periods. We've had one or two of those paid down significantly or pay off as the property got sold. There's a couple others that, you know, are ill-conceived and problematic. I think, you know, we'll end up, you know, experiencing some losses on those. You know, we meet to talk about them every day, almost, or at least, you know, those that are on the agenda for that day. You know, we look to reduce the risk to the bank in the most efficient way we can. Efficiency is, you know, measured in both dollars, but also in time on the books. That's why I said earlier, I wouldn't, you know, wouldn't hesitate to look at a handful of bulk sales in the period ahead. I'm just, you know, in all candor, I've got to manage carefully here the things that I put into the bank for us to do. The project management is important, and I just can't. You know, we've got a lot of priorities. I can't overload the system here. We had a lot to do with this IT conversion. We had a regulatory exam during August and September, you know. You know, I kind of have to look out on the calendar and do these things in a way that is best for the institution, but also for the institution and the staff's ability to handle all of the moving parts. I know. I was just curious. I was looking at the allowance. You put in about $400,000 for the quarter. I've got to assume, at least from what you know today, after you've gone through all your summaries, that I guess you're fairly comfortable, I guess, with what you're carrying all that, the commercial. Let's just talk about the commercial. What you're carrying it at now. Otherwise, I guess we would've seen a much bigger provision in the September quarter. Would that be a good summary? I think you know me well enough by now. If I weren't comfortable, it would reflect the number that, you know, I think it should be. Okay. That's why it went up in you know, 2020. I mean, you know. Last question. I know you sold the Washington office. Any other offices you see as... I shouldn't say superfluous, but extraneous or, sort of, you know, not fitting in well, which, if you got a bid, you would sell it. Thank you. That's my last question. Thanks a lot. Sure. Well, I could probably say yes to that on any particular location, if somebody were, you know, that interested in it. You know, as a general rule, I think we have to look at the markets that are, let's call them non-core. Right. Evaluate those. We are doing that. I mean, we look at every location. In the core markets, we're looking at individual branches to see if, you know, it makes more sense to either consolidate or if we've been there for a while and the branch hasn't really achieved what we thought it should, you know, is there a reason to stay? I've got to be careful with what I load into the system here because we're all working a lot. You know, branch locations are high on the priority list. Okay. All right. The best of luck. Thanks a lot, and I'll stay in touch. Sure. Bye-bye. Good. I hope you do. Thanks. This concludes our question- and- answer session. I would like to turn the conference back over to Tom O'Brien for any closing remarks. Okay. Well, thank you again. I appreciate the questions and your interest in the bank. While it's hard to believe, the next call will be into 2022. Time's moving along quickly here. I hope you all enjoy a delightful fall, and we'll look forward to talking to you in January with our year-end commentary. Thanks so much. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.