DCOM - NASDAQ

Good day. Thank you for standing by. Welcome to Dime Community Bancshares Inc. Fourth Quarter Earnings Conference Call. Before we begin, the company would like to remind you that discussions during this call contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contained in any such statements, including as set forth in today's press release and the company's filings with the US Securities and Exchange Commission, to which we refer you. During this call, references will be made to non-GAAP financial measures as supplemental measures to review and assess operating performance. These non-GAAP financial measures are not intended to be considered in isolation, or as a substitute for the financial information prepared and presented in accordance with the US GAAP. For information about these non-GAAP measures and for reconciliation to GAAP, please refer to today's earnings release. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be question-and-answer session. [Operator Instructions] Please note that today's conference may be recorded. I will now hand the conference over to your speaker, Mr. Stu Lubow, President and CEO. Please go ahead sir.

Thank you, Olivia, and thank you all for joining us this morning for our quarterly earnings call. With me today is Avi Reddy, our CFO. Today, I will touch upon the progress we made in 2024 as we execute our business plan. Avi will then provide some details on the fourth quarter and guidance for 2025. We began 2024 by hiring a number of deposit gathering teams from the former Signature Bank. These teams came to Dime, given the positive results achieved and the performance of the 2023 teams we hired earlier -- had hired previously. Collectively, the deposit groups have raised approximately $1.8 billion of core deposits, with approximately 40% in non-interest-bearing deposits. In fact, we've opened up over 11,000 accounts and 7,000 individual customer relationships, clearly a home run for Dime. The successful build-out of our private and commercial bank has been a company-wide initiative a true team effort. The growth and stabilization of the branch-based deposits, especially in consumer and DDA -- consumer DDA resulted in substantial year-over-year growth in core deposits. In fact, we ended the year with a loan-to-deposit ratio of less than 95%, and we have reduced our wholesale borrowings and brokered deposits by approximately $1.2 billion in the past year. On the loan front, we continue to execute our stated plan of growing business loans and managing our CRE ratio lower. Business loans were up over $70 million in the fourth quarter and $400 million for the full year. This was driven by strong growth in our C&I and our health care verticals. Our loan pipeline remains very strong with over $750 million of loans at a weighted average rate of 7.75%. These are weighted towards C&I and health care loans as well continuing to execute on our plan. We ended the year with CRE concentration of approximately 45 and we expect to continue to reduce this ratio over time to the low 400s. Despite all the deposit and loan teams we've brought on over the last two years, we've had -- we've been able to keep core operating expenses to assets well contained and in a 165 basis point range. We have achieved this by using technology to drive operational efficiencies and keeping a very close watch on discretionary expenses. As we guided to on the last call, fourth quarter expenses were relatively flat versus the third quarter. Post the election and given the improved investor sentiment towards bank stocks, we raised approximately $136 million of net proceeds from a significantly oversubscribed common equity offering. The transaction was accretive to tangible book value. We used a portion of the proceeds to reposition our securities and BOLI portfolios. As a result, capital -- the capital we raised, we ended the year with a common equity Tier 1 ratio in excess of 11% and a total capital ratio in excess of 15.5%. Having a best-in-class capital ratios versus our peer will allow us to take advantage of opportunities as they may arise and continue to support our organic growth. In addition, over the course of the year we increased our loan loss reserves from 67 basis points to 82 basis points. This is within striking distance of our medium-term target of 90 basis points to 100 basis points. During the fourth quarter, we received our second consecutive outstanding CRA rating. Apart from the overall rating of outstanding, we received outstanding on the three component CRA tests, including the lending test, the investment test and the service test. Receiving a perfect score on all three components sets us apart from our competitors and a testament to Dime's commitment to community and the hard work of our dedicated employees. In conclusion, we continue to execute on our growth plan and we have differentiated our franchise from competition as it relates to our growth and ability to attract talented bankers. We have a -- we have solid momentum and we continue to grow the business loans and core deposits. Our net interest margin continues to expand with the fourth quarter NIM increasing to 2.79%. Importantly, we have substantial opportunity to continue to increase our net interest margin in the years ahead given the significant back book repricing we have in our portfolio. Avi will provide more details in remarks, but suffice to say, we have a clear line of sight to returning to a 3% plus net interest margin. Our DDA levels are back to 30% and we believe the value of this DDA base will shine through in the current rate environment. Disruption in our marketplace remains very high and we are very active on the hiring front and our recruiting pipelines are very strong. More to come on this over the next 90 days as bonus season comes to an end. I am looking forward to a strong 2025 and I want to again thank all our dedicated employees for their efforts in positioning Dime as the best business bank in New York. With that I will turn the call over to Avi.

Thank you, Stu. During the fourth quarter we completed a repositioning of our available-for-sale securities portfolio and our Bank Owned Life Insurance portfolio. The securities restructuring was completed towards the end of November. The BOLI transaction took place in two stages a surrender of legacy BOLI was completed in the month of December and an equivalent amount of replacement BOLI is being purchased in the month of January. Excluding the impact of these two transactions as well as severance and costs associated with pension termination and other onetime items adjusted EPS increased by 45% versus the prior quarter. We saw a meaningful expansion in the net interest margin this quarter. Reported NIM was up 29 basis points and the core NIM excluding purchase accounting accretion was up 26 basis points. NIM expansion was driven by a significant reduction in our cost of deposits. Given the timing of the Federal Reserve rate cut in December, we adjusted deposit rates towards the end of the month. The full impact of the rate cut will flow through into our Q1 net interest margin. Given that the securities repositioning was completed towards the end of November, the fourth quarter NIM reflects only 1 month of benefit from the repositioning. Core deposits were up approximately $500 million in the fourth quarter. This included approximately $150 million of seasonal tax receiver municipal deposits that typically arrive in the month of December and leave in mid-January and $200 million of title company-related deposits that were tied to a closing at year end and that left the bank in early January. Excluding the seasonal tax receiver deposits and the title company-related deposits period-end core deposit growth for the fourth quarter was approximately $150 million. Similarly, the overall balance sheet size and cash position was elevated at quarter end by approximately $350 million due to the seasonal municipal deposits and title company deposits. Core cash operating expenses for the fourth quarter excluding intangible amortization was $57.7 million. This was consistent with our previous core cash expense guidance of between $57.5 million and $58 million. Non-core items for the fourth quarter, included severance additional FDIC special assessment related to the failure of Signature and Silicon Valley, and $1.2 million related to the previously disclosed termination of a legacy pension plan. Please note, we're in the final stage of the termination of this pension plan and expect an additional $4.5 million pre-tax termination expense in the first quarter of 2025. This additional $4.5 million is already captured in the AOCI line item at year end and as such will have no material impact on tangible book value per share as it is simply a realization of the unrealized loss that is already in our equity account. We had a $13.7 million loan loss provision this quarter. Consistent with our commentary during the third quarter earnings call, our allowance to loans increased to 82 basis points. As Stu mentioned, we're within striking distance of the 90 basis points to 100 basis points medium-term target, which we expect to reach over the next six months to nine months. Next, I'll provide some thoughts on the NIM trajectory and guidance for 2025. As I mentioned previously, given the timing of the securities repositioning, there was only a partial quarter benefit from the repositioning in the fourth quarter's NIM. In addition, the timing of the rate cuts in the fourth quarter was such that the full quarter impact of the November rate cut was not fully realized in the fourth quarter margin. As such, we thought it would be helpful to provide the core NIM for the month of December, which includes the full benefit of the Federal Reserve rate cut in November as well as the full impact of the securities repositioning. The monthly December core NIM was approximately 2.84%. This is a good base NIM to use as you build out your models for 2025. The 25 basis point Federal Reserve rate cut in December should result in a 5 basis point to 6 basis point NIM improvement for the first quarter of 2025. So starting with the 2.84% core NIM for the month of December and adding the full impact of the December rate cut should get us close to 2.90% for the first quarter. Additional core deposit growth and loan repricing could add a few more basis points of upside to the first quarter NIM. As Stu mentioned, we have a line of sight towards a 3% net interest margin. Should the Federal Reserve cut rates again this year, we expect another 5 basis points to 6 basis points in quarterly NIM improvement per 25 basis point rate cut. This assumes the behavior in deposits and loans hold for each subsequent rate cut and competition remains rational. Should the Federal Reserve not cut rates in 2025, we still have a pathway to increase NIM over time given the significant amount of back book repricing. To give you a sense of the significant back book repricing opportunity in our adjustable and fixed rate loan portfolios, in the second half of 2025 and the full year 2026, we have $1.9 billion of adjustable and fixed rate loans across the loan portfolio at a weighted average rate of 3.95% that either reprice or mature in that time frame. Assuming a 225 basis point spread on those loans over the forward five-year treasury, we could see a 35 basis point to 40 basis point increase in NIM from the repricing of these loans. Finally, and while we've previously only provided information on the back half of 2025 and full year 2026, as we look into the back book for 2027, we have another $1.75 billion of loans that are at a weighted average rate of 4.25% that will lead to continued NIM expansion in 2027. In summary, we see a pathway to a 3% NIM in 2025 and a NIM greater than 3.25% in 2026 with continued expansion in 2027 and approaching the 3.50% area. The impact of this enhanced NIM will no doubt increase our earnings power as time progresses. With respect to non-interest income guidance for 2025, we expect between $40 million and $42 million. Individual quarters may be impacted by the level of customer-related loan swap income. With respect to balance sheet growth, we expect period-end loan balances to grow in the low single-digit area in 2025 with growth more weighted towards the back half of 2025. As we mentioned previously, we are focused on gradually reducing our CRE concentration to the low 400s. Attrition in CRE and multi-family may mask some of the growth in our business loan portfolio in 2025 as it did in 2024. However, we expect this trend to moderate by the end of 2025 and expect to return to a mid single-digit growth profile in 2026. With respect to core cash non-interest expenses, our full year 2025 guidance is between $234 million and $235 million. This guidance takes into account our existing employee base. To the extent, we add additional client facing bankers after year-end bonuses are paid out, we could see an increase in expenses starting in the second quarter. But as we've demonstrated previously, we expect these bankers to pay for themselves and contribute to pretax income growth in a relatively short period of time. Finally, we expect the tax rate for the full year between 27% and 28%. With that, I'll turn the call back to Olivia, and we'll be happy to take your questions.

Thank you. [Operator Instructions] And our first question coming from the line of Mark Fitzgibbon with Piper Sandler. Your line is now open.

Hey, guys. Good morning.

Hi, Mark.

Good morning.

First question I had Avi, just to follow-up on one of the guidance numbers that you gave for non-interest income. I think you had said $40 million to $42 million for the full year 2025. Is that correct?

Yes, yes Mark. So, we did the BOLI restructuring in the month of December. So what happened there was we took the tax charge in Q4. We're purchasing around $85 million to $90 million of BOLI in the month of January. So the additional income that comes in on the BOLI side will be around $5 million to $5.5 million plus or minus. And so that's why the non-interest income is higher. We also factored that into the tax rate of 27% to 28% given the BOLI income is tax-free. So we gave a range. The range was $40 million to $42 million. And obviously, the individual quarters may be impacted by the level of loan swap income in there.

Okay. Got you. So the big delta is the BOLI income number.

Yes, correct.

It goes from sort of $2.8 million to up to $5 million, got you. Okay. And then secondly, I think your guidance for loan growth was sort of low-single-digits. I mean you -- is that because the pipeline you expect a bunch of that to fall out? Or you just feel like there'll be a fair amount of refinancing activity? I guess I'm curious is that...

Yes. I think that what we're seeing and there's more volume -- transaction volume occurring in the marketplace. For example we -- in the month of -- in the fourth quarter we closed over $150 million to $175 million of new business-related loans. Yet we saw a higher level of payoffs and refinances, which resulted in not quite the growth we had expected. So we are seeing some more activity. And clearly, I think in the CRE world and the multifamily world where we are seeing some more transactions. And since we are not as active as we once were that's the offset to the growth.

Yes Mark, if you look at 2024, we grew the business loan portfolio $425 million for the year. So we're pretty happy with that looking to build on that. And then on the CRE side we were down around $350 million multifamily and CRE together. So -- and we're focused on getting the CRE ratio down to the low 400s, right? So some of that's going to -- the multifamily CRE is going to offset some of the business stuff in the first half of the year. But as we exit 2025 and into 2026, maintaining that level of CRE you should see the overall loan growth pick up at that point in 2026.

Okay. And then lastly, given your outstanding CRA rating it strikes me that you're really well positioned to do acquisitions. Is that something that you think is in the cards for Dime in coming quarters? And if so, where and what might you be most focused on in potential partners?

Yes. I mean look, we're always interested in strategic opportunities that enhance franchise value certainly within Tri-State area in the metropolitan area. And we'll look at opportunities as they may arise. We also have significant -- and expect significant organic growth and with some of the new teams that have come on board and that we're talking to and that capital is going to support that as well. But suffice to say, if opportunities arise given valuations and given our positioning at this point, we're certainly interested if they make sense.

Thank you.

Thanks Mark.

Thank you. And our next question coming from the line of Steve Moss with Raymond James. Your line is now open.

Good morning.

Hi, Steve.

Starting with the -- just following-up on the margin guidance here. Avi, you mentioned the $1.9 billion fixed rate for the second half of 2025 and 2026. Just wondering could you break that out between what's going to mature in the second half of 2025 versus the total for 2026?

Yes sure. So the second half of 2025, it's around $600 million at a rate of 4.25% and the remaining piece is in 2026. So it looks like there's $1.3 billion plus or minus in 2026 and the rate on that is around 3.85%.

Okay. Great. Appreciate that color. And then in terms of just kind of -- you mentioned rational deposit competition here. Just kind of curious, you had a very healthy move on deposit pricing lower. Just kind of where are your marginal deposits coming on these days?

Yes. It's a mix, Steve. I mean we're starting with client needs to have DDA. If you have DDA we're willing to pay a competitive rate on the money market side. As Stu said, we're tracking account activity. The difference with us is versus a lot of banks in our footprint is there's a lot of new activity coming into the bank and new customers coming in, which helps us be more aggressive on existing customer rates and looking at them one by one. I think I mentioned on our third quarter earnings call, we had a large municipal customer that we were paying a very high rate to and we rationalized the size of that deposit over time, because it didn't make sense for the bank. Same with the broker deposits. So I would say, it's coming in between 2 and 2.5 plus or minus on a blended basis in terms of deposits coming in, because the new groups are bringing in DDA at a rate of around 40%. And if you're paying a money market rate of plus or minus 4% to be competitive you're looking at somewhere between 2 and 2.5 in terms of the marginal cost coming in.

Yes. And overall cost of deposits -- overall cost of deposits are in the 2% to -- 2% to 2.05% range at this point.

Right. Okay. Great. No I really appreciate that color there. And then just on credit here, just curious if you could give some color around the charge-offs that occurred this quarter that would be helpful.

Yes, sure. Just it's kind of across the board Steve, there's a mix across C&I, commercial real estate and multifamily, no large credits in there. I think a lot of other banks have said this. I mean it's important to look at charge-offs over an extended period of time. I think our charge-offs for 2024 was 17 basis points or 18 basis points. So all stuff that we've identified. Our classified assets when we report our 10-K will be down. 30 days to 90 days it's pretty flat basically. So not seeing any concerning trends at this point. And so I'll just leave it at that for now.

Okay. Great. Really appreciate the color and nice quarter. Thank you, guys.

Thanks, Steve.

Thanks.

Thank you. And our next question coming from the line of Chris O'Connell with KBW. Your line is now open.

Hi, Chris…

Hey. Good morning. So I was just wondering on the fact that the cash you guys mentioned was elevated at the end of the year here but there's not -- the low single-digit loan growth isn't putting too much out there especially it sounds like in the first half of the year. I guess what's the plan or the timing that you guys think on the deployment of that?

Yes. Look, I think what we said Chris and we communicated this when we did the equity offering, we've pretty much paid off most of our wholesale funding at this point. The FHLB position is around $500 million to $600 million plus or minus. Of that $500 million is medium to longer-term, which we don't expect to pay off at this point. The broker deposits are probably around $300 million to $400 million plus or minus. So there's not a lot of room to continue to pay off wholesale deposits and borrowings over the course of the year. Q4 was a bit of an anomaly. As I said, we had some municipal deposits come in every year at the end of the year. In addition, we had a couple of large title companies put in deposits then. So the normalized cash position is probably $350 million to $400 million lower than that. Look, I think we're being judicious on securities purchases. We did do a repositioning in the fourth quarter obviously on securities, where we restructured on $400 million. I think look having a little bit more cash is not a bad thing. It helps position the bank to the extent that the Fed doesn't cut rates or the Fed goes in another direction. So I think we're trying to manage our asset sensitivity with the cash position. And over time, we'll put it to work on the loan side. We're not rushing in to do anything all at once. So it does have a little bit of drag on the margin, obviously but, I think we're willing to live with that just given the additional flexibility it provides the bank overtime.

Great. It sounds like that might stick around for a little bit. And then, on the loans, just curious, it seems like there's a bigger headwind for the multifamily and CRE repricing and maturities in the second half of 2025, but you guys are indicating that their growth might be more impacted in the first half, just curious on, kind of the dynamics there.

Yeah. Chris, this is more management of our balance sheet, right? So we want to get the CRE ratio into the low-400s. So right now we're not at a market rate to retain some of these credits. But as the year progresses and we get closer to the 400s, we have the option to keep some of these credits and they're very solid credits in the low-to-mid-sixes on the balance sheet. So I think, once we get to the level of CRE that we're comfortable with, we'll have more flexibility at that point in terms of retaining some stuff. The volume is higher. But at the same time it's -- the option is with us in terms of keeping some of these credits with us. So I think, again, the headwind is going to be in the first half of this year to later in this year. And after that, we'll be able to retain items and manage the balance sheet as appropriate.

Okay. Got it. And then just as you guys are moving into the March, April I guess, bonus season for competitor bankers. I know that things are still in flux, but is there any way to quantify perhaps on either a percentage of what you guys have either already added from the prior teams or the size just how big that opportunity is?

Yeah. I think it's still a bit early Chris. We've got a number of teams, multiple teams that were very close. Some have committed to coming on. Some are in very late stages. So it's a little early at this point. I think as we get into March and April it will be easier. Some -- for some banks bonus season ends in January, so you could see some announcements in February. So it's going to be a mix, but I think this will all shake out. And I think the one difference this year is that, the opportunities on both sides of the balance sheet, not just on the deposit side. And so I think the last couple of years we probably spent 80% to 90% of our energy on the deposit side. I think this time around it's probably going to be more balanced in terms of how we look at the opportunity.

I would expect that in the next 30 days to 45 days you'll see a couple of announcements. And then as we get into the end of March, there'll be additional.

Great. I appreciate it. Thank you.

Thank you. And our next question coming from the line of Manuel Navas with D.A. Davidson. Your line is now open.

I just wanted…

Hi Manuel.

Hey Good morning. I just wanted to build on some of the commentary on kind of the customer reaction to recent Fed rate cuts. Has there been really -- just more like an industry-wide question too, has there been any difference in reaction to deposit costs pushing out for the December cut versus the November cuts? Like has there -- have you seen any real difference yet or is most kind of expected at this point?

No. I mean pretty similar, Manuel. I mean obviously customers -- speaking from personal experience and because we're involved in the day on the deposit rate movements, customers have some optical thresholds that they care about. If you were at 5%, you wanted 5% as a customer. And then if you're at 4%, you want 4%. I mean if you're at 4.35%, you may be okay with 4.15%, right? So it's more I think customer psychology depending on where each one is. But the way we manage our base is its very segmented based on balances that they have and the weighted average rate. I will say, the best environment for banks is their gradual 25 basis point cuts over every 90 days, right? We had 100 basis point swings pretty quickly. So customers were impacted fairly significantly but they also got it on the way up, right? So I think the best environment for all of us would be the Fed takes a pause and then comes back at some point in May or June and cuts 25 basis points at that point and then you'll be able to cut the rates again. If you continuously have a significant amount of cuts, you'll probably see more sticker price reaction from some. But I think us individually it's a relationship bank and we did pay on the way up and we've been able to reduce costs on the way down.

Yeah. We've been very diligent on the way down in looking at individual customers and making the rate changes including on the municipal side where we told everyone that you want a 100% beta on the way up and we told them early on that on the way down expect 100% beta as well. So look there are -- most banks are -- have been fairly rational through this most recent cycle. And I think we've been able to take advantage of that and hold to our guns. As Avi said earlier, the fact that we are every month opening hundreds of new accounts and bringing on new customers gives us a lot more flexibility, right? So we don't have to fight and pay up for every last dollar where a customer says, look, I can get X from this place or that place and we basically can hold to our guns and they can make a decision. And for the most part they stay. And so we really haven't seen that much in the way of disintermediation as far as deposits on the rate side.

I appreciate that commentary and it's obviously a relationship business. I don't think I heard and it's probably harder to pin down is how much more deposit growth can you get from the current teams you've had? Is there a thought process on what we should expect on the deposit side across this year? Just, kind of, thoughts on where that deposit growth could go.

Yes. So I think what we've said previously on this is it probably will take every team three to four years to get to some type of steady state and they're continuously opening accounts. Look every quarter we've grown accounts and we've grown deposits. And when we look at the forward pipeline, we think there's additional room. I think it's hard to predict Manuel exactly where they're going to end up. But what we're trying to do is look at accounts and account opening activity and they continue to make progress. Obviously they've built a substantial book. It's $1.8 billion right now. I think over time as our name gets out and our technology platform and some of the things we do for customers gets out they may bring in additional new customers as well not part of their existing book. So I think we're in a good spot. As Stu said our branch based deposits have stabilized. Our consumer deposits have stabilized and we're looking at other teams as well. So I think we have a long runway on the deposit side in terms of growing that over time.

Well, just to give you an idea if I look at our reports even today we've opened up over 300 accounts and 200 relationships just since December 31st. So that gives you an idea. They're still very active in moving relationships over and developing new relationships. So I still think there's a fairly long runway. But again that's going to happen over time. There are a lot of accounts get open. It takes them several months to fully fund. So there's still upside in terms of the pipeline.

I love the sense of activity there. If deposit growth comes in better than expected, could that drive stronger loan growth? Like how should we think of those together? And I know that you have a build in the back half of the year and you have a lot of repricing. But just how do those work together in your thought process?

I think credit is credit and we're always looking for good solid loans, but I don't think deposits are going to drive the credit side. I think we want to put on profitable relationships with good credits, focusing on business loans obviously. And so I think to some degree there -- one won't drive the other. But as we continue and as we've said earlier as we continue to build out the C&I, the health care and with some of the impending announcements we think on the -- on new teams focused on the loan side that will certainly take up the excess liquidity.

That makes a lot of sense. I appreciate that. One last question on the asset side is with the repricing that you're having over the next 3 years, are you still kind of thinking that the loan portfolio ends with multifamily in the 30% range or could there be a wider range of outcomes there? You spoke a little bit about flexibility that you might keep some of those more than you maybe thought if the pricing is right. Just kind of talk through that a bit and where it ends.

Yes. I think our range was 25% to 30%. So we don't want to be pinned down to one number. I think that's really trying to get us down to that -- the low 400s over there. On the investor CRE side, we have a lot of very solid relationships with good deposits as well in that business. So, I think 25% to 30% is probably a good medium to longer-term number there that gets us into the 400s.

Yes, you have to remember I mean the multifamily book has been a very solid book from a credit perspective, but it's the lowest yielding loan asset that we have on the books. It's even at 4.49% which is the average yield on our multifamily book, it's even lower than our adjustable rate mortgage portfolio 1 to 4 family portfolio. So, I mean, so there's a good risk-adjusted asset there, but we also are looking at maximizing returns. So, we think that 25% to 30% is the right place to be. Although in this marketplace obviously, rates have gone up quite a bit on the multifamily side and it's a much more profitable asset than it was several years ago when it was commoditized pricing.

Thank you, both. Thank you for the commentary.

Thanks, Manuel.

[Operator Instructions] Our next question coming from the line of Matthew Breese with Stephens Inc. Your line is now open.

Good morning. Just a few follow-ups for me. I was hoping first you could discuss new loan yields and spreads across C&I and kind of your focus relationship commercial real estate. And then secondly, just discuss payoff activity on the back book and whether or not the slowest pace of payoff activity if anything has changed there?

Sure. So on the pipeline, right now, the average rate on the pipeline is 7.75%. The C&I portfolio is at a weighted average rate of about 7.60% and the owner-occupied CRE is about 7.20% and the health care is right around 7.50% as well. We only have -- in the entire pipeline, we only have $9 million in multifamily and about $60 million in investor CRE. So, the 7.50% pipeline is really weighted towards the C&I owner-occupied CRE and health care.

And then Matt, just on the payoff speeds, look, we track this every single quarter. The multifamily payoff speeds in Q4 were a little higher actually. It was around 10%. The prior quarters we're probably averaging closer to 6% to 7% plus or minus. On the investor CRE, it's probably around 6% to 7%, so the payoff speeds at this point pretty consistent with what the prior quarters were. We did see some elevated payoffs in our business loans at year-end just customers selling businesses just normal activity. That was actually 20% in Q4. That's a bit higher than what we traditionally see, because in that business portfolio, it's probably closer to 8% to 10% because those are just customers that we're retaining over time. So, if we didn't have that 20% payoff in that portfolio in Q4, loans would have ended up closer to $11 billion at the end.

Yes. We had a couple of large customers who sold their companies to private equity firms or whatnot and we did have some payoffs there which were unanticipated.

One thing from a industry perspective is, a lot of banks are pulling out of commercial real estate similar to you trying to lower CRE concentrations. I was hoping you could talk about what you're seeing on the nonbank side and whether or not they are taking market share and keeping spreads lower than you would normally see.

Yes. I think, we are seeing a little bit more activity on the nonbank side in terms of financing CRE and other multifamily opportunities. I do think that over time and today -- with today's yield curve and where rates are, that I think banks will eventually get back into the CRE business as they get to the levels that they'd like in terms of their CRE ratios because, again, given the yield curve and where rates are, there is money to be made in that business, and it's a good risk-adjusted asset.

All right. And then two more for me. The first one is just I was hoping for some -- the rent-regulated multifamily book and the office book are still kind of the two areas for everybody, areas of most concern. Just talk about the health of those portfolios. Any changes in underlying characteristics? And then maybe some thoughts around charge-off activity for next year, if you have some insights there?

Sure. Yeah, nothing significant, Matt, on both. Look, we track our classifieds very closely. Like I said in the prepared remarks, classifieds are down. We don't have a lot of maturities in the first half of this year. I think maturities pick up in a stairstep approach starting in the second half of the year. But really not seeing anything. Nobody is really coming in and asking for new deferrals or modifications at this point. Those levels are pretty steady at this point. I think we know what we have. I would just say for the charge-off item, look, it's hard to predict charge-offs over time. I think we've done a good job identifying what loans are substandard. So we know where we have issues over time. In an individual quarter, it may be up or down. It could also be, look, you may reach a decision point on certain credits saying, look, it's better for us to exit these credits at this point, especially as you have third-party investors and non-banks stepping up in those markets. So I'd say we're probably entering the point in the cycle that charge-offs are not going to be 0 basically. I mean, for the full year, our charge-offs were, I think, 17 basis points last year. So a range between 20 and 30 basis points is a reasonable range for a commercial bank, and that's probably where we expect to be for next year. So hopefully, that helps in terms of color, but not really seeing anything out of the ordinary at this point.

Yeah. And on our rent-regulated, we're really getting down to we separate between pre-2019 and after. And the pre-2019 portfolio continues to wind down. They've all repriced at this point. We have no non-performers. So we're -- we continue to monitor it. We're still doing our annual reviews. So we got a pretty good handle on what we're seeing in terms of debt service coverage, and we are seeing a good percentage of improvement in debt service coverage ratios as we go through our annual reviews. So I think the inflation issue has moderated somewhat. Rents are slowly increasing and landlords -- most of our loans are relatively small. So most of our average size on our rent regulated is about $2.8 million -- so they're managing their properties very tightly and maintaining their profitability.

Great. And then last one for me. Avi, I was hoping you could discuss deposit growth for 2025 a little bit. Sorry if I missed that. The composition is also important. And so I was hoping you could just touch on how you think non-interest-bearing deposit growth will look next year?

Thanks, Matt.

Thank you. And I see, we have a follow-up question from Manuel Navas. Your line is open.

That's current.

Yes.

Thank you. And there are no further questions in the queue at this time. I will now turn the call back over to Mr. Stu Lubow for any closing remarks.

Thank you, Olivia, and thank you all for joining us today and thank you to our dedicated employees and our shareholders for their continued support. We look forward to speaking with you all after the first quarter.