Sterling Bancorp, Inc.

Good morning, everyone. Thank you for joining us today to discuss Sterling Bancorp's financial results for the first quarter ended March 31st, 2024. 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 first 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 and the banking industry generally that involves risks and uncertainties. For a complete discussion of forward-looking statements and factors that could cause actual results to differ from those statements, the company encourages to refer to its SEC filings especially those on Forms 8-K, 10-Q, and 10-K, and the press release issued in conjunction with this conference call, which applies to any forward-looking statements made on this call. 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 comparable gap measures. The press release available on our website contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the gap to non-gap measures. At this time, I'd like to turn the call over to Tom O'Brien. Tom?

Great. Thank you, and good morning. those on the call welcome to the first quarter 24 earnings call so I thought first what I do is kind of update you on some internal changes here at the bank we have promoted Christine Meredith to be our chief operating officer and she had been our chief risk officer additionally Christine was appointed to the boards of the bank and the holding company, replacing Lyle Wohlberg, who stepped down, and replacing Christine as the Chief Risk Officer. Eleni Willis has been promoted to that role. And I would tell you both of these individuals are quite qualified to take on these more demanding roles. As far as the first quarter goes, there's really not a lot to add to the press release. You know, for all intents and purposes, it was a break-even quarter driven in large part by the, what I'll go through in a minute, but some legal expenses towards the tail end of these OCC investigations. The bullet points in the press release really, you know, at least in my perspective, provide insight into all the meaningful highlights. Last week the OCC completed its investigation, which has been focused in the past year or so on the conduct of former Sterling executives. Consent orders were issued to a former CEO and to our controlling shareholder. Prior to this announcement, the OCC had issued consent orders to three former senior executives of Sterling. In each case, there was a civil money penalty assessed and lifetime industry bans from participating in the affairs of any federally insured depository along with other prohibitions. For anybody that needed the reminder, banking is a business of trust and integrity and character, and there should be no room in our industry for self-dealing or failing to do even the basics of our jobs. The Department of Justice has yet to speak, and as I've said many times, On these calls, we have very little visibility into their timing. We do believe that the legal costs for selected eligible former employees who cooperated in the investigations are essentially over. There may be some future costs related to any action by the Department of Justice requiring interviews or witnesses from these individuals, but we believe those will likely be immaterial. Strategically, we continue to operate deliberately to protect book value, liquidity, and credit. There's enormous uncertainty in the capital markets today. Commercial real estate remains under a cloud in many parts of the U.S., especially in major cities. Additionally, regulated multifamily in the metro New York area has been extremely weak, and that is likely to continue. I feel the actions that we took here at Sterling early on in my tenure to build the allowance and exit very high risk commercial real estate and non-performers has served us very well. In both cases, we exited those credits at very attractive prices and today our metrics are quite strong and our risk profile quite modest. The overall economy has remained impressively resilient But I do expect within banking there will be a few more shoes to drop. And I'd suggest at this point prudence dictates strong reserves and clear-eyed risk evaluations. We work day-to-day on the strategies that we have outlined in our prior 10Qs and 10Ks and that we've talked about in prior earnings calls. It is a very, as I mentioned earlier, a very uncertain market. I believe we operate at least at that level from a position of relative strength and transparency. There's not a lot of complexity in the bank anymore. Very easy to understand, you know, who we are, what we are, and as I mentioned a few minutes ago, the risk profile, in my opinion, anyhow, is really quite modest. Margins remain under, you know, some pressure. We think that's likely to continue. We do have a, I think, a $50 million home loan bank advance that will mature, I think, in late May or early June.

Middle of May.