Good morning, everyone, and thank you for joining us today to discuss Sterling Bancorp's financial results for the Q1 ended March 31st, 2023. Joining us today from Sterling management team are Tom O'Brien, Chairman, CEO, and President, and Karen Knott, Chief Financial Officer and Treasurer. Tom will discuss the Q1 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 future performance and financial conditions of Sterling Bancorp that involve risks 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 floor over to Tom O'Brien. Tom? Great. Thank you. Good morning, everyone. I am in San Francisco this week, so it's 8:00 A.M. here, and I'm in our office on the corner of Montgomery and California. I guess first I'll start off and say with the First Republic resolution, it's been another momentous weekend for bankers and investors and government agencies. I would say there's a meaningful cause for concern here, which I think we'd all like to see addressed more proactively by bankers, especially risk managers, regulatory supervisory teams, and I'd also say the fundamental construct of the FDIC. Just these three failures, basically in the last four weeks, have cost the Deposit Insurance Fund, you know, between $40 billion to $50 billion. The way we are going, you know, looks more like the early 1800s with the First and Second Bank of the United States. That concentrates our resources, basic economic control in very, very few hands. I'd argue it's just not good for... certainly not good for banking in general, and ultimately not good for consumers. Let's hope that some saner heads prevail here and control both the risk-taking in banks that may look like these three. Also, you know, the regulatory process becomes much more forward-looking instead of backward-looking. That's my soapbox comment. I do feel it's fundamentally impacting the future of what has always been the envy of the global banking system, and that is the system in the U.S. With that, more specifically at Sterling, kinda go through a few high points. I'm gonna ask Karen to give us a little better detail on CECL. Anyhow, basically kind of a break-even quarter again. A little bit of growth in tangible book value, mostly from some improvement in the mark-to-market on the held for sale securities. Margin had a little bit of compression. A fair part of the margin is occupied by the cost of our sub-debt. You know, I think at the beginning of the year, I set out basically three objectives to do in the order in which I could do them, and they were basically to settle with the DOJ, which we've done. Once that was done, I was allowed to address the longer-term delinquent, seriously delinquent Advantage loans, and we are doing that now. The next thing I have to tackle is the sub-debt. It's very expensive and probably, I don't know, Karen can correct me, but something like 12 basis points on our margin at current rates. Obviously, if rates go up another 25, one or two times, that'll, you know, continue to impact us. Expenses still, you know, relatively high, not unexpected as, you know, the settlement process in the legal space with the DOJ was time-consuming and expensive. Nonetheless, our, you know, our goal of protecting book value is, you know, remains in place. We haven't financed much of this through capital, which was always certainly my goal. Our leverage ratio, remains, you know, very strong by any calculation. Deposits just under $2 billion. As we note in the press release, there was at the time of the first two collapses, we had a little bit of repositioning accounts, mostly in and around the deposit insurance level. We also had some accounts come into the bank. As of just the other day, I think we're $25 million or so ahead of where we were, the day before the collapse of Silicon Valley. We keep all of our debt securities in available for sale. I've never used held to maturity. I don't like it. Kind of too much camouflage, I think, from a transparency perspective. Almost simultaneously with the conclusion of the DOJ settlement, we started looking at the sale process for the non-accrual and seriously delinquent residential loans. We, you know, hired an independent advisor and got several bids, and a very competitive process, which was nice to see. I think we should have that sale concluded, hopefully, you know, late May. As you all know, of course, we had the DOJ settlement, which has to go through the court system to get approved, and I think that'll probably be done in mid-July. The elements are all there, and the court has to approve it, which we expect shouldn't present any obstacles. You know, we've continued to do the job of fixing the bank, and I think we've virtually accomplished 95% of what was the original goal when I started with the bank, and we developed all the action plans and remedial plans for the fixing of what at that time was a big issue. I can also say one of the biggest concerns I had when I joined the bank was liquidity, given the loans that were sold previously to outside investors and the risk with that, the reliance on brokered deposits and home loan bank advances and things like that were, you know, in the $ hundreds of millions. I think addressing that the way we did turned out to be good and what turned out to be a, you know, liquidity important period right here and now. I can't say I or any of us basically anticipated that, but it does, you know, it does validate the concerns that, you know, we and management had at that time in mid-2020 about the illiquid nature and the high loan-to-deposit ratio in the institution. That's kind of my thought on where things are. I think we're going to see more regulation, obviously. As I said earlier, I just hope it's well thought out and that we don't keep coming up with solutions to address yesterday's problems. I mean, they just have to be more forward-looking and understand the market that exists today and the ability of all of us basically to move our money around at the, you know, click on our phone. You know, the lines of the 1930s can't be the model for solving bank issues today. I mean, you're always gonna have banks that get in trouble like any other business. Whether it's, you know, a local economy or bad management, you know, things will happen, but it shouldn't be so unsettled a period and, you know, really should pass without the kind of crises we've had since early March. I'm gonna ask Karen to spend a minute or two on CECL. Of course, during the Q&A, we can or she can answer any questions on that. Karen, if you don't mind. Sure. As required, we adopted CECL on January first. There was a half a million dollar increase to retained earnings as a result of that adoption, that was primarily driven by the short-term nature of our construction portfolio. You know, you reserve for that until maturity. All of our construction portfolio is slated to mature in 2023. We were, based on this logic, a little bit over-reserved in that area. Some of that was allocated to our residential and commercial real estate portfolios, which did increase with the adoption due to the longer-term nature of those portfolios. We also established a small reserve for unfunded commitments as required by the guidance. We moved that forward to the Q1 then, we did see our overall allowance decline primarily as a result of the transfer of the residential delinquent and non-accrual loans to held for sale. We took that charge off and Reduce the allowance for the residential portfolio. We did see an increase in commercial real estate, and that's primarily a result of economic forecasts around the commercial real estate book. You know, not not what you're not seeing in the industry in general, some concerns there. We did take more of a provision on that portfolio. Okay. Thank you. Operator, we can take some questions now. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. If you'd like to ask a question, please press Star and then one using a touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality. To withdraw your questions, you may press Star and two. Once again, that is Star and then 1 to join the question queue. Our first question today comes from Ben Gerlinger from Hovde Group. Please go ahead with your question. Good morning. Hi, Ben. I'm just kinda somewhat random. I'll just jump around a little bit. Sure. For the $41 million, it seems like it took a pretty decent haircut on price, in the assumption there. I was curious, what is the yield on those? I'd be guessing a little bit, but I would say mid-fives. Karen, does that sound fair? I would say that's fair. You know, a lot of those loans are in non-accrual. We're not booking anything on our income statement for, you know, the bulk of that. 5.5 is reasonable. Got you. Okay. just an assumption based on the likelihood and then also from there. Yeah. Long yield mark, I guess. The investor yield, if you do it at, you know, kind of a lower mid-eighties pricing, probably comes up to 11%. Gotcha. Okay. Fair enough. From there, had some noise and some backdated noise within the income statements expenses, with the resolution. I know, Tom, you said that they should see the court approval in approximately July. Right. Any thoughts on kind of the two Q, does it fall precipitously post, court? Can we see kind of a ramp down in two Q getting to three Q? I would assume three Q is probably the most normalized this one could be. Any thoughts on, like, what that could be the floor? Yeah, I think, I mean, just kinda subtracting these things that we've had to address one by one, you know, the settlement process in this quarter back and forth with DOJ was just time-consuming and expensive. That will drop off to some extent in this quarter because we had a court appearance a couple weeks ago, and then the next one, as I mentioned, is in mid-July. After that, there will be a process for us to distribute the funds to the non-insider victim investors. Anyhow, those costs should step down, I think, in the Q2. The current quarter, we got some insurance recovery on expenses that we had previously. Those are hard to predict. I mean, all of the negotiations with the insurance companies are... Well, I'll just say they're protracted. I mean, an awful lot of detail that has to go with it, a lot of negotiations. Obviously, they have lawyers, we have lawyers. There are still some claims we have pending, but it's very hard to predict, you know, when they're going to be realized. I would say you're right. On the Q3, we should start to see some, you know, significant benefit on that. You know, hopefully in the Q4, you know, we're down to minor fractions of what we've had to experience, at least in my tenure here. To say it's been expensive is probably the biggest understatement in the world these days. It was, you know, I think, I guess I'd argue, given the seriousness of the issues and, you know, the long-running nature of it and obviously the involvement of very senior people in the institution, I'd say money well spent and a solution that was quite appropriate for the circumstances. Gotcha. Then the last one. I'm sure you can hear my son in the background now. Hey. For the last one, can we just CECL relative to the balance sheet? Seems like you guys are cleaning up more and the balance sheet's getting smaller. Any kind of targeted reserve level, or should we expect more recapture? you know, with CECL, a little hard to say. As Karen said, it's, you know, it's really focused on the maturity date. Obviously, you know, most of what we do, you know, with the portfolio that remains on the books, you know, is getting shorter and shorter. We're basically around just under 2.5% now. you know, by any standard, I know that's. I mean, I can't talk about releases, but I would say that's very robust. I'm not, you know, not overly concerned about, you know, the coverage, you know, with this loan sale of. I should say in the quarter, once again, we had on the commercial side, we had 0 delinquencies, 0 past due, maturity. I mean, I would say that's the last, I think, five or six months it has been as good as any I've ever seen. The residential was always hung up by that group that we marked on this quarter, but I couldn't sell them until we resolved with the DOJ. That takes care of virtually everything we have at March 31. You know, there will certainly be you know, migration at some times in the future into delinquency and non-accrual. There's a certain inevitability to that, at that point, it becomes kind of one by one, not big bucket. Long way of saying I'm certainly comfortable with the level of the reserve. I think it validates the approach that we took back in, I guess November, December of 2020, looking at the risk profile at that time. I guess I can say I don't envision any more additions, you know, unless and until we got into significant originations, which hard to forecast that right now. Gotcha. Lastly, now that we're done with or maybe you have to wait till July, but now it seems like we're done with everything from a legal perspective. Is there any appetite for doing something on the capital base, whether it be share purchases or addressing the sub-debt or anything to that end? Well, as I mentioned, the next, you know, the next and last issue I have from a, you know, a financial statement perspective is the sub-debt. It's, you know, I mean, it sticks out obviously by cost, and there's little, if any, value to it. On a capital perspective, we have plenty of liquidity. You know, that is the third of three items that I wanted to address this year. I think, all of us in management and the board and all of our investors kind of understand the drag that that provides. That does lead you, Ben, to the, you know, the idea that if we can get that done, you know, the next coupon date is mid-July. We the calls are on coupon date, so it'll be July 15th, October 15th, et cetera. The sooner we can get that done, the, you know, the less expense we'll have to deal with. That's a holding company expense, obviously. The, again, the cleaner the balance sheet. Very expensive. Right. We don't have to thread the needle with, like, what happens with the courts. Like, we could theoretically do it on the next call date, right? We have the liquidity. you know, there's some regulatory process we have to go through and all of that. Yeah. In theory, sure. Gotcha. Okay. That sounds good. Appreciate all the color. Yeah. Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. We'll pause momentarily to assemble any additional questioners. We do have an additional question from Ross Haberman from RLH Investments. Please go ahead with your question. Morning, Tom. Tom, how are you today? Good, Ross. How are you? Good. You think we bottomed out with the margin here, or if they raise rates another this week and maybe 1 time over the summer, that'll continue to put pressure on the margin like I'm hearing from most banks? Thank you. Well, it's a little hard to predict because, I mean, you probably look at the same banks I do in the each quarter end. I mean, you saw margin compression almost everywhere. Some was relatively minor like ours, and then you had some that were 80 and 90 basis points. You know, like I said, hard to predict, but I think, you know, when if we take in the conversation we had on the sub-debt and we look at the asset repricing and the liquidity that we have, I think we have a reasonably good amount of protection on higher rates. There's, you know, always a little bit of margin between the rate that we pay our customers and the rate we're earning. You know, I'd be hard-pressed to pre-predict a bottom, but I think, you know, I think we're okay. Within, you know, a handful of basis points one way or the other. Okay. With that, with the sub-debt, I guess there's no, there's no active secondary market with that stuff. As you said, it's just on each coupon date you have the option of buying it back or how does that work exactly? Yes. It's callable. It's callable. Okay. you can call 100% of it or just a portion of it? My understanding is we can call some or all of it. At par? Yes. Okay. Okay. let's see how amenable the holders are, I guess. Well, if we call it, they don't have a choice, of course. the, You're right. You're right. It certainly does not trade much, but I'm aware of one trade several months ago that, if it wasn't par, it was like 99, 98. I mean. Okay. So. Okay. You're saying that clearly would be a help to the margin? Yeah. The current coupon is over 11%. Oh, wow. Okay. All right. Yeah. I didn't realize it was that high. Okay. It... That would be a great help. It'd be a significant help. Yes. Okay. Um. Call away. Call away, I should say. Thank you. Thank you. Sure. Ladies and gentlemen, with that, and showing no additional questions, I'd like to turn the floor back over to the management team for any closing comments. Okay. Thank you. Appreciate all of you being on the call today. It's always certainly good for us to have the opportunity to explain things to those who have an interest in our stock and, you know, watch the progress as we go along. As many times as I've done this in my career, it's always a challenge, you know, looking forward, but there does get to be a time in the process where you can look back and, you know, take a lot of comfort and satisfaction from the team you've assembled and the successes we've had as a group in dealing with what was a very nasty situation. I think successfully so. So, enjoy it. We enjoy the opportunity to talk about it, and we will all look forward to the Q2 call in July. Thanks very much. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.