Brookline Bancorp, Inc.

be hosted by Paul A. Peralt 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 23 cents. On a gap basis, which would include merger charges of $3.4 million, net income was $17.5 million, with earnings per share of 20 cents. 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 CNI 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 late 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 2005. 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 to 12% of total assets. On the deposit side, we anticipate growth of 4 to 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 to 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 to 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 13.5 cents 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.