Q4 2023 OceanFirst Financial Corp Earnings Call

January 19, 2024

Hello everyone and welcome to the Ocean First Financial Corp Q423 earnings release and thank you for standing by. My name is Daisy and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. I would now like to hand over to your host, Alfred Goon from First Ocean to begin. Alfred, please go ahead.

Daisy (Operator): Hello everyone, and welcome to the Ocean First Financial Corp. Q423 earnings release. Thank you for standing by. My name is Daisy, and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. I would now like to hand over to your host, Alfred Goon from First Ocean. Alfred, please go ahead. Thank you, David. Good morning, and welcome to the Ocean First fourth quarter 2023 earnings call. I am Alfred Goon, SVP of Corporate Development and Investor Relations. Before we kick off the call, we'd like to remind everyone that our quarterly earnings release and related earnings supplement can be found on the company website, oceanfirst.com.

Hello, everyone and welcome to the <unk> Financial Corp, Q4, 'twenty three earnings release and thank you for standing by my name is David and I'll be coordinating your call today.

David: If you would like to register a question. Please press star followed by one on no telephone keypad now.

Speaker Change: Now I'd like to hand over to your host offered gain from Substations Frigging Alfred Please go ahead.

Thank you, David. Good morning and welcome to the Ocean First fourth quarter 2023 earnings call. I am Alfred Goon, SVP of Corporate Development and Investor Relations.

June: Thank you David Good morning, and welcome to the Ocean first fourth quarter of 2023 earnings call I am all for June SVP of corporate development and Investor Relations before we kick off the call wed like to remind everyone that our quarterly earnings release and related earnings supplement can be found on the company website Ocean first dot com.

Before we kick off the call, we'd like to remind everyone that our quarterly earnings release and related earnings supplement can be found on the company website, oceanfirst.com.

Alfred Goon: Our remarks today may contain forward-looking statements and may refer to non-GAAP financial measures. All participants should refer to our FCC filings, including those found in our forms 8-K, 10-Q, and 10-K, for a complete discussion of forward-looking statements and any factors that could cause actual results to differ from those statements.

Our remarks today may contain forward-looking statements and may refer to non-GAAP financial

June: Our remarks today may contain forward looking statements and may refer to non-GAAP financial measures all participants to refer to our SEC filings, including those found in our forms 8-K, 10-Q, and 10-K for a complete discussion of forward looking statements and any factors that could cause actual results to differ from those statements. Thank you and I will now turn the call over to Chris.

All participants should refer to our FCC filings, including those found in our forms 8-K, 10-Q, and 10-K, for a complete discussion of forward-looking statements and any factors that could cause actual results to differ from those statements.

Speaker Change: Thank you, and I will now turn the call over to Christopher Maher, Chairman and Chief Executive Officer.

Alfred Goon: Thank you, and I will now turn the call over to Christopher Maher, Chairman and Chief Executive Officer.

Chris: For Martin Chairman and Chief Executive Officer.

Christopher D. Maher: Thank you, Alfred. Good morning and thank you to all who have been able to join our fourth quarter 2023 earnings conference.

Christopher D. Maher: Thank you, Alfred. Good morning, and thank you to all who have been able to join our fourth quarter 2023 earnings conference.

Chris: Thank you Alfred good morning, and thank you to all been able to join our fourth quarter 2023 earnings Conference call.

Speaker Change: This morning I'm joined by our president, Joe LaBelle, and our chief financial officer, Pat Barrett.

Christopher D. Maher: This morning, I'm joined by our president, Joe LaBelle, and our chief financial officer, Pat Barrett.

Chris: This morning, I'm joined by our President, Joe Labelle, and our Chief Financial Officer, Pat Barrett. We appreciate your.

Speaker Change: We appreciate your interest in our performance and this opportunity to discuss our results we appreciate your interest in our results

Christopher D. Maher: We appreciate your interest in our performance and this opportunity to discuss our results. We appreciate your interest in our results. This morning, we'll provide brief remarks about the financial and operating performance for the quarter and some color regarding the outlook for our business. We may refer to the slides filed in connection with the earnings release throughout the call. After our discussion, we look forward to taking your questions. Our financial results for the fourth quarter include a gap diluted earnings per share of 46 cents. Our earnings reflect net interest income of $87.8 million, representing a modest decrease compared to the prior wind quarter of $91 million.

Pat Barrett: Your interest in our performance in this opportunity to discuss our results with you. This.

Speaker Change: This morning we'll provide brief remarks about the financial and operating performance for the quarter and some color regarding the outlook for our business.

This morning, we will provide brief remarks about the financial and operating performance for the quarter and some color regarding the outlook for our business we.

Speaker Change: We may refer to the slides filed in connection with the earnings release throughout the call.

We may refer to the slides filed in connection with the earnings release throughout the call.

Speaker Change: After our discussion, we look forward to taking your questions.

After our discussion we look forward to taking your questions.

Speaker Change: Our financial results for the fourth quarter include gap diluted earnings per share of 46 cents. Our earnings reflect net interest income of $87.8 million.

Pat Barrett: Our financial results for the fourth quarter, including GAAP diluted earnings per share of <unk> 46 cents.

Pat Barrett: Our earnings reflect net interest income of $87 8 million representing.

Speaker Change: representing a modest decrease compared to the prior wind quarter of $91 million.

Pat Barrett: Representing a modest decrease compared to the prior linked quarter of $91 million.

Christopher D. Maher: Operating expenses decreased to $60.2 million, excluding the FDIC special assessment of $1.7 million. Expenses decreased to $58.5 million. We're pleased to have executed many strategic initiatives that resulted in a meaningful improvement to the bank's efficiency. This work will continue in 2024 as we make every effort to hold expenses flat for the year. Fourth quarter results were impacted by modest margin pressure linked to our continued efforts to improve the quality of deposit funding. These efforts resulted in another quarter of a substantial decline in brokered CDs, stable deposit balances, and a loan-to-deposit ratio below 100%.

Speaker Change: Operating expenses decreased to $60.2 million.

Operating expenses decreased to $60 2 million.

Speaker Change: excluding the FDIC special assessment of $1.7 million.

Pat Barrett: Excluding the FDIC special assessment of $1 7 million operating expenses decreased to $58 5 million.

Speaker Change: Operating expenses decreased to $58.5 million.

Speaker Change: We're pleased to have executed many strategic initiatives that resulted in a meaningful improvement to the bank's efficiency.

We're pleased to have executed many strategic initiatives that resulted in a meaningful improvement to the bank's efficiency.

Hello everyone, and welcome to the Ocean First Financial Corp. Q423 earnings release. Thank you for standing by. My name is Daisy, and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. I would now like to hand over to your host, Alfred Goon from First Ocean.

Speaker Change: This work will continue in 2024 as we make every effort to hold expenses flat for the year.

Pat Barrett: This work will continue in 2024 as we make every effort to hold expenses flat for the year.

Speaker Change: Fourth quarter results were impacted by modest margin pressure linked to our continued efforts to improve the quality of deposit funding.

Pat Barrett: Fourth quarter results were impacted by modest margin pressure linked to our continued efforts to improve the quality of deposit funding.

Pat Barrett: These efforts resulted in another quarter of substantial decline in brokerage Cds stable deposit balances and our loan to deposit ratio below 100%.

Speaker Change: These efforts resulted in another quarter of substantial decline in brokered CDs, stable deposit balances, and a loan-to-deposit ratio below 100%.

Alfred Goon: Alfred, please go ahead. Thank you, David. Good morning, and welcome to the Ocean First fourth quarter 2023 earnings call. I am Alfred Goon, SVP of Corporate Development and Investor Relations. Before we kick off the call, we'd like to remind everyone that our quarterly earnings release and related earnings supplement can be found on the company website, oceanfirst.com. Our remarks today may contain forward-looking statements and may refer to non-GAAP financial measures. All participants should refer to our FCC filings, including those found in our forms 8-K, 10-Q, and 10-K, for a complete discussion of forward-looking statements and any factors that could cause Thank you, and I will now turn the call over to Christopher Maher, Chairman and Chief Executive Officer. Thank you, Alfred.

Speaker Change: The resulting mixed shift in deposits placed some pressure on net interest margins, but margin pressure continues to abate, allowing net interest income to stabilize.

Christopher D. Maher: The resulting mixed shift in deposits placed some pressure on net interest margins, but margin pressure continues to abate, allowing net interest income to stabilize. It is possible that margins may expand modestly throughout 2020. Deposit betas increased to 38% from 35% in the prior wind quarter, indicating a slowdown in the pace of deposit cost increases. However, our competitive pricing strategy through various channels has continued to protect the deposit base, which increased $265 million, or 3%, excluding brokered time deposits, resulting in our decision to reduce broker time deposits by $364 million, all while keeping our loan-to-deposit ratio below 98%. Capital levels continue to build, with our common equity Tier 1 capital ratio increasing to 10.88% and continued growth in tangible book value per share to $18.35.

Pat Barrett: The resulting mix shift in deposits placed some pressure on net interest margins. The margin pressure continues to abate, allowing net interest income to stabilize and it is possible that margins may expand modestly throughout 2024.

Speaker Change: It is possible that margins may expand modestly throughout 2020.

Speaker Change: Deposit betas increased to 38% from 35% in the prior wind quarter, indicating a slowdown in the pace of deposit cost increases.

Pat Barrett: Deposit betas increased to 38% from 35% in the prior linked quarter, indicating a slowdown in the pace of deposit cost increases.

Speaker Change: Our competitive pricing strategy through various channels has continued to protect the deposit base, which increased $265 million, or 3%, excluding brokered time deposits.

Pat Barrett: Our competitive pricing strategy through various channels has continued to protect the deposit base, which increased $265 million.

Pat Barrett: Or 3%, excluding brokered time deposits.

Speaker Change: resulting in our decision to reduce broker time deposits by $364 million.

Pat Barrett: Resulting in our decision to reduce brokered time deposits by $364 million.

Christopher D. Maher: Good morning, and thank you to all who have been able to join our fourth quarter 2023 earnings conference. This morning, I'm joined by our president, Joe LaBelle, and our chief financial officer, Pat Barrett. We appreciate your interest in our performance and this opportunity to discuss our results. We appreciate your interest in our results. This morning, we'll provide brief remarks about the financial and operating performance for the quarter and some color regarding the outlook for our business. We may refer to the slides filed in connection with the earnings release throughout the call. After our discussion, we look forward to taking your questions. Our financial results for the fourth quarter include a gap diluted earnings per share of 46 cents. Our earnings reflect net interest income of $87.8 million, representing a modest decrease compared to the prior wind quarter of $91 million. Operating expenses decreased to $60.2 million, excluding the FDIC special assessment of $1.7 million.

Speaker Change: all while keeping our loan-to-deposit ratio below 98%.

Pat Barrett: All while keeping our loan to deposit ratio below 98%.

Speaker Change: Capital levels continue to build, with our common equity Tier 1 capital ratio increasing to 10.88%, and continued growth in tangible book value per share to $18.35.

Pat Barrett: Capital levels continue to build with our common equity tier one capital ratio increasing to $10 eight 8% and continued growth in tangible book value per share to $18 35.

Christopher D. Maher: Turning to capital management, the board approved a quarterly cash dividend of 20 cents per common share. This is the company's 108th consecutive quarterly cash dividend and represents 44% of GAAP earnings. The company did not repurchase any shares in the fourth quarter. However, the company may reactivate the share repurchase program this quarter.

Speaker Change: Turning to capital management, the board approved the quarterly cash dividend of 20 cents per common share.

Pat Barrett: Turning to capital management, the board approved a quarterly cash dividend of <unk> 20 per common share. This is the company's 100 <unk> consecutive quarterly cash dividend and represents 44% of GAAP earnings.

Speaker Change: This is the company's 108th consecutive quarterly cash dividend and represents 44% of GAAP earnings.

Speaker Change: The company did not repurchase any shares in the fourth quarter. However, the company may reactivate the share repurchase program this quarter.

Pat Barrett: The company did not repurchase any shares in the fourth quarter. However, the company may reactivate the share repurchase program this quarter.

Despite the tumultuous time for the industry in 2023, the company executed on our strategic goals to improve operating expenses diversify and strengthen our deposit base and bolster our capital position.

Speaker Change: Despite a tumultuous time for the industry in 2023, the company executed on our strategic goals to improve operating expenses, diversify and strengthen our deposit base, and bolster our capital.

Christopher D. Maher: Despite a tumultuous time for the industry in 2023, the company executed on its strategic goals to improve operating expenses, diversify and strengthen our deposit base, and bolster our capital. Looking ahead to 2024, the company is well-positioned to continue to create shareholder value by remaining focused on responsible growth, expense discipline, and a prudent balance sheet.

Speaker Change: Looking ahead to 2024, the company is well-positioned to continue to create shareholder value by remaining focused on responsible growth

Looking ahead to 2024, the company is well positioned to continue to create shareholder value by remaining focused on responsible growth expense discipline and prudent balance sheet management at.

Christopher D. Maher: Operating expenses decreased to $58.5 million. We're pleased to have executed many strategic initiatives that resulted in a meaningful improvement to the bank's efficiency. This work will continue in 2024 as we make every effort to hold expenses flat for the year. Fourth quarter results were impacted by modest margin pressure linked to our continued efforts to improve the quality of deposit funding. These efforts resulted in another quarter of a substantial decline in brokered CDs, stable deposit balances, and a loan-to-deposit ratio below 100%. The resulting mixed shift in deposits placed some pressure on net interest margins, but margin pressure continues to abate, allowing net interest income to stabilize. It is possible that margins may expand modestly throughout 2020. Deposit betas increased to 38% from 35% in the prior wind quarter, indicating a slowdown in the pace of deposit cost increases.

Speaker Change: expense discipline and prudent balance sheet

Speaker Change: At this point, I'll turn the call over to Joe to provide some more details regarding our performance during the fall.

Joseph J. Lebel III: At this point, I'll turn the call over to Joe to provide some more details regarding our performance during the fall.

Speaker Change: At this point I will turn the call over to Joe to provide some more details regarding our performance during the fourth quarter.

Joseph J. Lebel III: Thanks, Chris. Non-maturity deposits continued to grow, increasing approximately 1% link quarter, while overall deposit balances declined by approximately 1%, reflecting our continued planned runoff of brokered CDs.

Joseph J. Lebel III: Thanks, Chris. Non-maturity deposits continued to grow, increasing approximately 1% each quarter, while overall deposit balances declined by approximately 1%, reflecting our continued planned runoff of brokered CDs. Our strategy to change the mix in the deposit composition has proven successful with the percentage of brokered CDs to total deposits dropping to 6%. We couldn't have accomplished this without growing our deposits organically, and our deposit growth for the year of $760 million demonstrates our ability to grow and deepen relationship deposits during what has been a very challenging and competitive higher cost environment for the industry. On the loan origination side, we continue to see tempered growth as a result of reduced demand from customers combined with our pricing discipline. We have seen a slight uptick in pipelines and anticipate a resurgence in customer demand with an outlook calling for loans and deposits to grow at mid-single-digit levels in 2024. Growth may be lower in the first half of the year but potentially accelerate as the year goes on.

Joseph J. Lebel III: Thanks, Chris non maturity deposits continued to grow increasing approximately 1% linked quarter, while overall deposit balances declined by approximately 1%, reflecting our continued planned run off of brokered Cds.

Joseph J. Lebel III: Our strategy to change the mix in the deposit composition has proven successful with the percentage of brokered CDs to total deposits dropping to 6%.

Joseph J. Lebel III: Our strategy to change the mix and the deposit composition has proven successful with the percentage of brokerage Cds to total deposits dropping to 6%.

Joseph J. Lebel III: We couldn't have accomplished this without growing our deposits organically and our deposit growth for the year of $760 million.

Joseph J. Lebel III: We couldnt have accomplished this without growing our deposits organically.

Joseph J. Lebel III: And our deposit growth for the year of 760 million.

Joseph J. Lebel III: demonstrates our ability to grow and deepen relationship deposits.

Joseph J. Lebel III: It demonstrates our ability to grow and deepen relationship deposits.

Joseph J. Lebel III: during what has been a very challenging and competitive higher cost environment for the industry.

Joseph J. Lebel III: During what has been a very challenging and competitive higher cost environment for the industry.

Christopher D. Maher: Our competitive pricing strategy through various channels has continued to protect the deposit base, which increased $265 million, or 3%, excluding brokered time deposits, resulting in our decision to reduce broker time deposits by $364 million, all while keeping our loan-to-deposit ratio below 98%. Capital levels continue to build, with our common equity Tier 1 capital ratio increasing to 10.88% and continued growth in tangible book value per share to $18.35. Turning to capital management, the board approved a quarterly cash dividend of 20 cents per common share. This is the company's 108th consecutive quarterly cash dividend and represents 44% of GAAP earnings. The company did not repurchase any shares in the fourth quarter.

Joseph J. Lebel III: On the loan origination side, we continue to see tempered growth as a result of reduced demand from customers combined with our pricing discipline.

Joseph J. Lebel III: On the loan origination side, we continue to see tempered growth as a result of reduced demand from customers.

Joseph J. Lebel III: With our pricing discipline.

Joseph J. Lebel III: We have seen a slight uptick in pipelines and anticipate a resurgence in customer demand with an outlook calling for loans and deposits to grow at mid-single-digit levels in 2024.

Joseph J. Lebel III: We have seen a slight uptick in pipelines and anticipated resurgence in customer demand with an outlook, calling for loans and deposits to grow at mid single digit levels in 2024.

Joseph J. Lebel III: Growth may be lower in the first half of the year, but potentially accelerate as the year goes on.

Joseph J. Lebel III: Asset quality metrics remain strong, with non-performing loans and criticized and classified assets representing only 0.29% and 1.44% of total loans, respectively. This quarter, we reported essentially zero net charge-offs, bringing our full-year annualized charge-off rate to a nominal level.

Joseph J. Lebel III: Asset quality metrics remain strong with non-performing loans and criticized and classified assets.

Joseph J. Lebel III: Asset quality metrics remained strong with nonperforming loans and criticized and classified assets, representing only <unk>, two 9% and 144% of total loans respectively.

Joseph J. Lebel III: representing only 0.29% and 1.44% of total loans respectively.

Joseph J. Lebel III: This quarter we reported essentially zero net charge-offs.

Joseph J. Lebel III: This quarter, we reported essentially zero net charge offs.

Joseph J. Lebel III: bringing our full-year annualized charge-off rate to a nominal

Joseph J. Lebel III: Bringing our full year annualized charge off rate to a nominal.

Joseph J. Lebel III: A basis

Christopher D. Maher: However, the company may reactivate the share repurchase program this quarter. Despite a tumultuous time for the industry in 2023, the company executed on its strategic goals to improve operating expenses, diversify and strengthen our deposit base, and bolster our capital. Looking ahead to 2024, the company is well-positioned to continue to create shareholder value by remaining focused on responsible growth, expense discipline, and a prudent balance sheet. At this point, I'll turn the call over to Joe to provide some more details regarding our performance during the fall. Thanks, Chris.

Joseph J. Lebel III: Eight basis points.

Joseph J. Lebel III: With that, I'll turn the call over to Pat to review margin and expense outlook.

Pat Barrett: With that, I'll turn the call over to Pat to review the margin and expense outlook.

Speaker Change: With that I'll turn the call over to Pat to review margin and expense outlook.

Pat Barrett: Thanks, Jeff net interest income and margin were $87 8 million and $2 eight 2% respectively.

Pat Barrett: Thanks, Joe. Net interest income and margin were $87.8 million and 2.82% respectively.

Pat Barrett: Thanks, Joe. Net interest income and margin were $87.8 million and 2.82%, respectively, reflecting higher funding costs associated with deposit growth. As Chris noted, funding costs reflect cycle-to-date deposit betas of 38%, with margin compression stabilizing through the quarter. Based on our expectations for modest asset growth and assuming a continuation of the stability we're seeing in liquidity and funding, we're hopeful that we'll see margins stabilize and potentially expand as we move through the first half of 2024. However, pinpointing the exact quarter that that may occur depends on so many variables that I hesitate to put a degree of confidence on the exact time said another way in terms of net interest income.

Pat Barrett: reflecting higher funding costs associated with deposit growth.

Pat Barrett: Reflecting higher funding costs associated with deposit Chris as.

Pat Barrett: As Chris noted, funding costs reflect cycle-to-date deposit betas of 38%.

Speaker Change: As Chris noted funding costs flex cycle to date deposit beta is a 38% with margin compression stabilizing through the quarter.

Pat Barrett: Margin compression stabilizing through the quarter.

Pat Barrett: Based on our expectations for modest asset growth and assuming a continuation of the stability we're seeing in liquidity and funding,

Speaker Change: Based on our expectations for modest asset growth and assuming a continuation of the stability, we're seeing in liquidity and funding.

Pat Barrett: We're hopeful that we'll see margins stabilize and potentially expand as we move through the first half of 2024.

Speaker Change: Hopeful that we'll see margins stabilize and potentially expand as we move through the first half of 2024.

Joseph J. Lebel III: Non-maturity deposits continued to grow, increasing approximately 1% each quarter, while overall deposit balances declined by approximately 1%, reflecting our continued planned runoff of brokered CDs. Our strategy to change the mix in the deposit composition has proven successful, with the percentage of brokered CDs to total deposits dropping to 6%. We couldn't have accomplished this without growing our deposits organically, and our deposit growth for the year of $760 million demonstrates our ability to grow and deepen relationship deposits during what has been a very challenging and competitive higher cost environment for the industry. On the loan origination side, we continue to see tempered growth as a result of reduced demand from customers combined with our pricing discipline. We have seen a slight uptick in pipelines and anticipate a resurgence in customer demand with an outlook calling for loans and deposits to grow at mid-single-digit levels in 2024. Growth may be lower in the first half of the year but potentially will accelerate as the year goes on. Asset quality metrics remain strong, with non-performing loans and criticized and classified assets representing only 0.29% and 1.44% of total loans, respectively.

Pat Barrett: pinpointing the exact quarter that that may occur depends on so many variables I hesitate to put a degree of confidence on the exact time

Speaker Change: But 10, pointing the exact quarter that that may occur depends on so many variables I hesitate to put a degree of confidence on the exact timing.

Pat Barrett: We've reported two consecutive quarters of approximately 90 million dollars in NII, and we're hopeful that we'll see that quarterly run rate continue and begin to grow as we move through the first half. We're very pleased to have driven core non-interest expenses down by nearly 10% linked quarter to $58.5 million.

Pat Barrett: said another way in terms of net interest income.

Speaker Change: Said another way in terms of net interest income.

Pat Barrett: We've reported two consecutive quarters of approximately 90 million dollars in NII and we're hopeful that we'll see that quarterly run rate continue and begin to grow as we move through the first half.

Speaker Change: We've reported two consecutive quarters of approximately $90 million in NII.

Speaker Change: And we're hopeful that we'll see that quarterly run rate continue and begin to grow as we move through the first half of this year.

Pat Barrett: We're very pleased to have driven core non-interest expenses down by nearly 10% linked quarter to $58.5 million.

We're very pleased to have driven core noninterest expenses down by nearly 10% linked quarter to $58 5 million.

Pat Barrett: The fourth quarter expense run rate is in line with our stated guidance and directly driven by the company-wide efforts and investments which we executed during 2023.

Our fourth quarter expense run rate is in line with our stated guidance and directly driven by the companywide efforts and investments, which we executed during 2023.

Pat Barrett: Note that corn on interest expense excludes $1.7 million related to the FDIC special program.

Speaker Change: Note that core noninterest expense excludes $1 $7 million related to the FDIC special assessment.

Pat Barrett: every effort to hold operating expenses flat in 2024 to our fourth quarter 2023 run rate.

Speaker Change: We will make every effort to hold operating expenses flat in 2024 to our fourth quarter 2023 run rate.

Speaker Change: Some quarterly volatility should be expected.

Pat Barrett: Some quarterly volatility should be expected.

Pat Barrett: Additionally, we continue to explore opportunities to further improve our operating

Pat Barrett: Additionally, we continue to explore opportunities to further improve our operating processes.

Speaker Change: Additionally, we continue to explore opportunities to further improve our operating leverage.

Pat Barrett: The effective tax rate for the quarter of 24% remains in line with prior periods and guidance and we expect to remain in this range.

Pat Barrett: The effective tax rate for the quarter of 24% remains in line with prior periods and guidance, and we expect to remain in this range. Finally, as Chris mentioned earlier, capital strengthened depreciably with growth in our CET1 ratio to an estimated 10.88%. With modest organic growth expectations in the near term,

Speaker Change: Our effective tax rate for the quarter of 24% remains in line with prior periods and guidance and we expect to remain in this range going forward.

Pat Barrett: Finally, as Chris mentioned earlier, capital strengthened depreciably with growth in our CET1 ratio to an estimated 10.88%.

Speaker Change: Finally, as Chris mentioned earlier capital strength, and depreciate relate with growth in our CET one ratio to an estimated 10 eight 8%.

Pat Barrett: With modest organic growth expectations in the near term,

Speaker Change: At these levels and with modest organic growth expectations in the near term.

Pat Barrett: This quarter we reported essentially zero net charge-offs, bringing our full-year annualized charge-off rate to a nominal A basis. With that, I'll turn the call over to Pat to review margin and expense outlook. Thanks, Joe.

Speaker Change: It shouldn't surprise you to see the company resuming share repurchase activity, as we remain very comfortable with the CET ratio above 10%.

Pat Barrett: It shouldn't surprise you to see the company resume share repurchase activity, as we remain very comfortable with the CET ratio above 10%.

Speaker Change: It shouldn't surprise you to see the company resuming share repurchase activity as we remain very comfortable with the CET ratio above 10%.

Speaker Change: At this point, we'll begin the question and answer portion of the call.

Pat Barrett: At this point, we'll begin the question and answer portion of the call.

Speaker Change: Thank you. If anyone would like to register a question, please press star followed by 1 on your telephone keypad and ensure you are unmuted locally. If you would like to withdraw your question, please press star followed by 2.

Daisy (Operator): Thank you. If anyone would like to register a question, please press star followed by 1 on your telephone keypad and ensure that you are unmuted locally. If you would like to withdraw your question, please press star followed by 2. That's star followed by one on your telephone keypad to register a question.

Speaker Change: Thank you.

Speaker Change: Anyone would like to register a question. Please press star followed by one on your telephone keypad and ensure you Amit had lately.

Pat Barrett: Thank you. As Chris noted, funding costs reflect cycle-to-date deposit betas of 38%, with margin compression stabilizing through the quarter. Based on our expectations for modest asset growth and assuming a continuation of the stability we're seeing in liquidity and funding, we're hopeful that we'll see margins stabilize and potentially expand as we move through the first half of 2024. Pinpointing the exact quarter that that may occur depends on so many variables, I hesitate to put a degree of confidence on the exact time. Said another way, in terms of net interest income, we've reported two consecutive quarter We're very pleased to have driven core non-interest expenses down by nearly 10% a linked quarter to $58.5 million.

Speaker Change: I would like to withdraw your question. Please press star followed by <unk>.

Speaker Change: That's star followed by one on your telephone keypad to register a question.

Speaker Change: That stock followed by one on your telephone keypad to register a question.

Speaker Change: Our first question today is from Daniel <unk> from Raymond James Daniel. Please go ahead. Your line is open.

Speaker Change: Our first question today is from Daniel Tamayo from Raymond James. Daniel, please go ahead, your line is open.

Daniel Tamayo: Our first question today is from Daniel Tamayo from Raymond James. Daniel, please go ahead; your line is open.

Daniel Tamayo: Thank you. Good morning, everybody. Good morning. Maybe first, just...

Daniel: Thank you good morning, everybody.

Daniel: Good morning, maybe first just.

Speaker Change: Yeah, maybe first just on the margin forecast for the stable and perhaps expansion this year. First, just what are your assumptions in terms of any rate cuts this year baked into that? And then just curious how that is baked into the assumption of the margin in terms of how much the margin you think is reacting will react to each 25 basis point rate cut.

Daniel Tamayo: Yeah, maybe first on the margin forecast for the stable and perhaps expansion this year. First, just what are your assumptions in terms of any rate cuts this year baked into that? And then I was curious how that is baked into the assumption of the margin in terms of how much the margin you think is reacting will react to each 25 basis point rate cut.

Daniel: Maybe first just on the on the margin.

Daniel: Cash for the stable and perhaps expansion.

Daniel: This year, yes.

Daniel: First just what are your assumptions in terms of any rate cuts this year baked into that and then.

Daniel: Just curious how how that is.

Daniel: Baked into the <unk>.

Daniel: The assumption in the margin in terms of like how much. The margin you think is reacting well react to each 25 basis point rate cut.

Speaker Change: Hey Dave, Pat, I'll take that. So we're assuming, we kind of go with what the Fed says, and so we're assuming three rate cuts mid-year, third quarter, year-end.

Pat Barrett: Hey Dave, Pat, I'll take that. So we're assuming, we kind of go with what the Fed says, and so we're assuming three rate cuts mid-year, third quarter, year-end, and obviously, the street has much more aggressive expectations than that, so to the extent that rate cuts occur faster or in larger magnitude, they could move the needle for us, but not by a meaningful amount. We're talking about something that might be in the million dollar range, so it moves slowly, and unless we get a 50 basis point rate cut tomorrow, you're probably not going to see anything meaningful in the first half of the year.

Speaker Change: Hey, Dave Pat I'll take that so we're assuming we kind of go with what the fed says and so we're assuming three rate cuts mid year third quarter year end.

Pat Barrett: The fourth quarter expense run rate is in line with our stated guidance and directly driven by the company-wide efforts and investments which we executed during 2023. Note that corn on interest expense excludes $1.7 million related to the FDIC special program, and every effort to hold operating expenses flat in 2024 to our fourth quarter 2023 run rate. Some quarterly volatility should be expected. Additionally, we continue to explore opportunities to further improve our operating performance. The effective tax rate for the quarter of 24% remains in line with prior periods and guidance, and we expect to remain in this range. Finally, as Chris mentioned earlier, capital strengthened depreciably with growth in our CET1 ratio to an estimated 10.88%. With modest organic growth expectations in the near term, it shouldn't surprise you to see the company resuming share repurchase activity, as we remain very comfortable with the CET ratio above 10%.

Speaker Change: and obviously the street has much more aggressive expectations than that, so to the extent that rate cuts occur faster or in larger magnitude,

Speaker Change: And obviously the street has a much more aggressive expectations.

Speaker Change: So to the extent that rate cuts occur faster or larger magnitude it could move the needle for us, but not by a meaningful amount, we're talking about something that might be in the $1 million range.

Speaker Change: could move the needle for us, but not by a meaningful amount. We're talking about something that might be in the million dollar range.

Speaker Change: So it moves slowly, and unless we get a 50 basis point rate cut tomorrow,

Speaker Change: It moves slowly unless unless we get a 50 basis point rate cut tomorrow.

Pat Barrett: We kind of moved our asset sensitivity to where we're in a fairly neutral position right now, whether we get up rates or down rates, we're probably not going to see unless it's just an order of magnitude larger than anyone's expecting. You're not going to see a lot of NII volunteers. Okay.

Speaker Change: You're probably not going to see anything meaningful in the first half of the year.

Speaker Change: You are probably not going to see anything meaningful in the first half of the year coming out of that.

Speaker Change: We kind of moved our asset sensitivity to where we're a fairly neutral position right now.

Speaker Change: We've kind of moved our asset sensitivity and to where we are a fairly neutral position right now.

Speaker Change: whether whether we get up rates or down rates we're probably not going to see unless it's just an order of magnitude larger than anyone's expecting

Speaker Change: Whether whether we get upright door down rates, we're probably not going to see unless it's just an order of magnitude larger than anyone's expecting youre not going to see a lot of NII volatility.

Christopher D. Maher: How much does the assumption for rate cuts impact the assumption for accelerating loan growth in the back half of the year, or is that just more about pipelines or other factors? Hey, Dan. It's Chris. I think the assumption on loan growth is that we spent the majority of 2023 kind of bolstering capital and making sure that we had a great understanding of the credit risk dynamics in our portfolio, and we feel very good about both of those things. So, we're going to start to slowly build back towards our historical growth rate. So, as Joe said, mid-single digits during the year, that's not a rate-dependent decision.

Speaker Change: You're not going to see a lot of NII volunteers.

Speaker Change: Okay.

Speaker Change: How much does the assumption for rate cuts impact the assumption for accelerating loan growth in the back half of the year, or is that just more around kind of pipelines or other factors?

Speaker Change: And how.

Speaker Change: How much does the the assumption for rate cuts impact the assumption for accelerating loan growth in the back half of the year or is that just more around kind of.

Speaker Change: Pipelines are or other factors.

Pat Barrett: At this point, we'll begin the question and answer portion of the call. Thank you. If anyone would like to register a question, please press star followed by 1 on your telephone keypad and ensure you are unmuted locally. If you would like to withdraw your question, please press star followed by 2. That's star followed by one on your telephone keypad to ask a question.

Speaker Change: Hey, Dan, it's Chris. I think the assumption on loan growth is that we spent the majority of 2023 kind of bolstering capital and making sure that we had a great understanding of the credit risk dynamics in our portfolio, and we feel very good about both of those things. So, we're going to start to slowly build back towards our historical growth rate. So, as Joe said, mid-single digits during the year, that's not a rate-dependent decision. It's a decision that we're now generating capital and want to deploy it with our customers. The only caveat I'll leave you with that is obviously it's situationally dependent. We have certain credit quality standards and return dynamics that we've got to get out of our loans. So, we're going to be out looking to grow. The loan portfolio, but we're going to do it prudently, and we're not going to grow to chase a number. We're going to grow to improve the dynamics.

Chris: Hey, Dan it's Chris.

Chris: I think the assumption on loan growth is that we spent the majority of 2023 kind of bolstering capital and making sure that we had a great understanding of the credit risk dynamics in our portfolio and we feel very good about both of those things so.

Christopher D. Maher: It's a decision that we're now generating capital and want to deploy it with our customers. The only caveat I'll leave you with is that it's obviously situationally dependent. We have certain credit quality standards and return dynamics that we've got to get out of our loans. So, we're going to be out looking to grow. The loan portfolio, but we're going to do it prudently, and we're not going to grow to chase a number. We're going to grow to improve the dynamics.

We're going to start to slowly build back towards our historical growth rate.

So as Joe said mid single digits during the year, that's not a rate dependent decision. It's a decision that we're now generating capital and want to deploy it with our customers.

Daniel Tamayo: Our first question today is from Daniel Tamayo from Raymond James. Daniel, please go ahead; your line is open. Thank you. Good morning, everybody.

The only caveat I'll leave you with that with that is obviously, it's situationally.

Pat Barrett: Maybe first, just... Yeah, maybe first just on the margin forecast for the stable and perhaps expansion this year. First, just what are your assumptions in terms of any rate cuts this year baked into that? And then just curious how that is baked into the assumption of the margin in terms of how much the margin you think is reacting will react to each 25 basis point rate cut. Hey Dave, Pat, I'll take that.

Chris: Situationally dependent we have certain credit quality standards and return dynamics that we've got to get out of our.

Chris: Out of our loans, so we're going to be out looking to grow the loan portfolio.

Chris: But we're going to do it prudently and we're not going to grow to chase a number.

Chris: To grow to improve the dynamics of the company.

Speaker Change: I appreciate that Chris.

Daniel Tamayo: I appreciate that, Chris. And I, you know, I guess you expect to be able to.

Joseph J. Lebel III: I appreciate that, Chris. And I, you know, I guess you expect to be able to. You put, I think, 100% of the loan-to-deposit ratio this year, but as loan growth accelerates, you think you'd still be able to fund that loan growth with core deposit growth and maybe even overfund it, I guess, reduce the loan-to-deposit ratio as we get into the out years. Yeah, Danny. It's Joe. That's exactly right. I think we'll see loan growth as we see deposit growth. We expect that we'll fully fund loan growth with

Speaker Change: I guess, you expect to be able to.

Daniel Tamayo: You put, I think, 100% loan-to-deposit ratio this year, but as loan growth accelerates, you think you'd still be able to fund that loan growth with core deposit growth and maybe even overfund it, I guess, reduce the loan-to-deposit ratio?

Speaker Change: You put I think a 100% loan to deposit ratio this year, but.

Pat Barrett: So we're assuming, we kind of go with what the Fed says, and so we're assuming three rate cuts mid-year, third quarter, year-end, and obviously, the street has much more aggressive expectations than that, so to the extent that rate cuts occur faster or in larger magnitude, they could move the needle for us, but not by a meaningful amount. We're talking about something that might be in the million-dollar range. So it moves slowly, and unless we get a 50 basis point rate cut tomorrow, you're probably not going to see anything meaningful in the first half of the year. We kind of moved our asset sensitivity to where we're in a fairly neutral position right now, whether we get up rates or down rates, we're probably not going to see unless it's just an order of magnitude larger than anyone's expecting. You're not going to see Okay. How much does the assumption for rate cuts impact the assumption for accelerating loan growth in the back half of the year, or is that just more around pipelines or other factors? Hey Dan, it's Chris.

Speaker Change: Loan growth accelerates, you think you'd still be able to fund that loan growth with core deposit growth and maybe even.

Speaker Change: Overfunded, I guess reduce the loan to deposit ratio.

Daniel Tamayo: as we get in the out years.

Speaker Change: As we get in the out years.

Speaker Change: Yeah, Dan its Joe Thats exactly right I think we we see loan growth as we see deposit growth. We expect that we will fully fund loan growth with continued core deposit growth as we deepen relationships. So we're pretty comfortable you saw that you saw the uptick in the pipeline in Q4, a little bit I mean, we have a ways to go.

Daniel Tamayo: Yeah, Danny, it's Joe. That's exactly right. I think we see loan growth as we see deposit growth. We expect that we'll fully fund loan growth with

Speaker Change: Thank you for joining us today, and we'll see you next time.

Joseph J. Lebel III: Thank you for joining us today, and we'll see you next time. sort of seeing their way through, navigating through, and that, I think, will bode well for us as well.

Dan: But we're starting to see some green shoots clients are.

Speaker Change: sort of seeing their way through, navigating through, and that I think will bode well for us as well.

Sort of seeing their way through navigating through that I think will bode well for us as well.

Speaker Change: Okay, thank you for all the color. I'll step back.

Daniel Tamayo: Okay, thank you for all the color. I'll step back.

Speaker Change: Okay. Thank you for all the color ill step back.

Speaker Change: Thank you.

Daniel Tamayo: Thank you. Thank you.

Speaker Change: Thank you.

Thank you.

Speaker Change: Our next question today is from Frank Schiraldi from Piper Sandler. Frank, please go ahead, your line is open.

Frank Joseph Schiraldi: Our next question today is from Frank Schiraldi on behalf of Piper Sandler. Frank, please go ahead; your line is open.

Speaker Change: Our next question today is from Frank Schiraldi from Piper Sandler.

Frank Joseph Schiraldi: Please go ahead your line is open.

Frank Joseph Schiraldi: Yeah.

Frank Joseph Schiraldi: Good morning.

Frank Joseph Schiraldi: Good morning. Good morning, Frank. Just given the

Speaker Change: Good morning, Frank just given.

Frank Joseph Schiraldi: Given that the cost of deposits and the spot rate being slightly below the average for the quarter,

Frank Joseph Schiraldi: Given that the cost of deposits and the spot rate were slightly below the average for the quarter,

Speaker Change: Given that the cost of deposits and then the spot rate being slightly below the average for the quarter.

Speaker Change: Is that an assumption, you know, can we...

Pat Barrett: Is that an assumption, you know, can we... Sounds like you're still thinking that there could be some deposit costs increased in the first half of the year before we see margins. Stabilize, or is it potentially that we're already at stabilization on the deposit cost side, and we could be closer to the NIM trough here?

Speaker Change: Is that is that can we.

Christopher D. Maher: I think the assumption on loan growth is that we spent the majority of 2023 kind of bolstering capital and making sure that we had a great understanding of the credit risk dynamics in our portfolio, and we feel very good about both of those things. So, we're going to start to slowly build back towards our historical growth rate. So, as Joe said, mid-single digits during the year. That's not a rate-dependent decision. It's a decision that we're now generating capital and want to deploy it with our customers. The only caveat I'll leave you with is that, obviously, it's situationally dependent.

Speaker Change: Sounds like you're still thinking that there could be some deposit costs increased in the first half of the year before we see margins.

It sounds like Youre still thinking that there could be some deposit costs increase in the first half of the year before we see margins stabilize or potentially we're already at stabilization on the deposit cost side, and we could be closer to NIM dropped here.

Speaker Change: Stabilize, or is it potentially we're already at stabilization on the deposit cost side and we could be closer to NIM trough here?

Speaker Change: Yes, we would be very cautious Frank predicting anything about the deposit cost because of the <unk> is really an unknown how consumers and businesses are going to respond to the perception of that lower rates.

Speaker Change: We would be very cautious, Frank, predicting anything about the deposit cost because it's really unknown how consumers and businesses are going to respond to the perception about lower rates.

Pat Barrett: We would be very cautious, Frank, predicting anything about the deposit cost because it's really unknown how consumers and businesses are going to respond to the perception of lower rates. So I think there's a lot of discussion about rates. Consumers and businesses may have different expectations about what they want for a rate. I think what you saw in the mechanism in the fourth quarter is that during the course of the quarter, we rolled off a substantial amount of brokered CDs. So that would cause the spot rate at the end of the quarter to not reflect all those brokered CDs. So that was kind of the impact. That impact will diminish a little bit over time.

Speaker Change: So I think there's a lot of discussion about rates. Consumers and businesses may have different expectations about what they want for rate. I think what you saw in the mechanism in the fourth quarter is during the course of the quarter, we rolled off a substantial amount of brokered CDs. So that would cause the spot rate at the end of the quarter to not reflect all those brokered CDs. So that was kind of the impact. That impact will diminish a little bit over time.

Speaker Change: So I think there's a lot of discussion about rates.

Christopher D. Maher: We have certain credit quality standards and return dynamics that we've got to get out of our loans. So, we're going to be out looking to grow the loan portfolio, but we're going to do it prudently, and we're not going to grow to chase a number. We're going to grow to improve the dynamics. I appreciate that, Chris.

Speaker Change: Consumers and businesses may have different expectations about what they wanted for rate.

Speaker Change: I think what you saw in the mechanism in the fourth quarter is during the course of the quarter, we rolled off a substantial amount of brokered Cds.

Speaker Change: So that would cause the spot rate at the end of the quarter do not reflect all of those brokered Cds.

Speaker Change: That was kind of the.

The impact that that impact will diminish a little bit over time.

Joseph J. Lebel III: And I, you know, I guess you expect to be able to. You put, I think, a 100% loan-to-deposit ratio this year, but as loan growth accelerates, you think you'd still be able to fund that loan growth with core deposit growth and maybe even overfund it, I guess, reduce the loan-to-deposit ratio as we get in the out years. Yeah, Danny, it's Joe.

Speaker Change: Okay, great.

Frank Joseph Schiraldi: Okay, great.

Speaker Change: Okay, Great and then.

Speaker Change: Yes.

Speaker Change: Pat, you mentioned getting to...

Frank Joseph Schiraldi: Pat, you mentioned getting to...

Speaker Change: Pat you mentioned getting to.

Speaker Change: We're getting close to neutral here on rate sensitivity. What does that assume, and what do you assume in your guide for deposit betas on the way down as we see these three rate cuts? Are you guys expecting a modeling and immediate reaction to the rate cuts in terms of a deposit beta, or is there some lag effect?

Pat Barrett: We're getting close to neutral here on rate sensitivity. What does that assume, and what do you assume in your guide for deposit betas on the way down as we see these three rate cuts? Are you guys expecting a modeling and immediate reaction to the rate cuts in terms of a deposit beta, or is there some lag effect? I think we would definitely expect a lag effect. I mean, we saw a one-year lag effect for the most part on the way up, and I can't imagine that it would be dramatically shorter than that. 2024 is going to be a baked-in kind of higher funding cost year from a core deposit perspective, and frankly, people are still expecting. I mean, we're still competing on rate with about all of our competitors.

Okay getting close to neutral here.

Speaker Change: Rate sensitivity.

Speaker Change: What does that assume and what do you assume.

Speaker Change: Forward.

Speaker Change: <unk> in your guide for deposit betas.

Speaker Change: Way down as we see these.

Joseph J. Lebel III: That's exactly right. I think we see loan growth as we see deposit growth. We expect that we'll fully fund loan growth with, Thank you for joining us today, and we'll see you next time, sort of seeing their way through, navigating through, and that I think will bode well for us as well. Okay, thank you for all the color.

These three rate cuts.

Speaker Change: Are you guys expecting.

Speaker Change: Modeling an immediate reaction.

Two the rate cuts in terms of.

Speaker Change: Deposit beta or there is some lag effect.

Speaker Change: I think we would definitely expect a lag effect. I mean, we saw a one-year lag effect for the most part on the way up.

Speaker Change: I think we would definitely expect a lag effect I mean, we saw we saw a one year lag effects for the most part on the way up.

Speaker Change: and I can't imagine that it would be dramatically shorter than that.

Speaker Change: And you can imagine that it would be dramatically shorter than that so I think 22020 for us.

Joseph J. Lebel III: I'll step back. Thank you. Our next question today is from Frank Schiraldi on Piper Sandler. Frank, please go ahead; your line is open, morning. Good morning, Frank.

Speaker Change: 2024 is going to be a baked in kind of higher funding cost year from a core deposit perspective.

Speaker Change: He is going to be a baked in kind of higher funding cost year from a core deposit perspective.

Speaker Change: and frankly people are still expecting, I mean we're still competing on rate for

And frankly people are still expecting.

Pat Barrett: Just given that the cost of deposits and the spot rate being slightly below the average for the quarter, Is that an assumption, you know, can we... Sounds like you're still thinking that there could be some deposit costs increased in the first half of the year before we see margins. Stabilize, or is it potentially that we're already at stabilization on the deposit cost side, and we could be closer to the NIM trough here? We would be very cautious, Frank, predicting anything about the deposit cost because it's really unknown how consumers and businesses are going to respond to the perception of lower rates. So I think there's a lot of discussion about rates. Consumers and businesses may have different expectations about what they want for a rate.

Speaker Change: We're still competing on rate for just about all of our deposits right now.

Speaker Change: about all of our competitors.

Speaker Change: I guess, Chris, I'd add that if you think about supply and demand and deposits for the industry, right, there are a lot of banks who would love to grow their deposit portfolio right now. So although the Fed may make rate cuts and you may see overall rates come down, we expect the competition among banks for deposits to remain brisk. So I think you're going to see, as Pat said, a fair way.

Christopher D. Maher: I guess, Chris, I'd add that if you think about supply and demand and deposits for the industry, right, there are a lot of banks who would love to grow their deposit portfolio right now. So although the Fed may make rate cuts and you may see overall rates come down, we expect the competition among banks for deposits to remain brisk. So I think you're going to see, as Pat said, in a fair way. Okay.

Greg It's Chris I would add that if you think about kind of supply and demand deposits for the industry right. There are a lot of banks, who would love to grow the deposit portfolio right now so.

Although the fed may make rate cuts and you may see overall rates come down we expect the competition among banks for deposits to remain brisk. So I think youre going to see as Pat said, a fair lag.

Speaker Change: Okay.

Speaker Change: And then, just lastly, on that front,

Frank Joseph Schiraldi: And then, just lastly, on that front,

Speaker Change: And then just lastly on that front.

Speaker Change: Sorry if I missed it, but in terms of, you know, the guide for long growth and positive growth is pretty broad in the deck. And, you know, you guys talked about it a little bit on the call, but it's true. So, my understanding is the most likely scenario, as we sit here, like low single digits to start the year, and then the idea is that that could pick up through the year, given what the environment looks like. Is that sort of the guide here?

Frank Joseph Schiraldi: Sorry if I missed it, but in terms of, you know, the guide for long growth and positive growth is pretty broad in the deck. And, you know, you guys talked about it a little bit on the call, but it's true. So, my understanding is the most likely scenario, as we sit here, like low single digits to start the year, and then the idea is that that could pick up through the year, given what the environment looks like. Is that sort of the guide here? Frank, it's Joe. That's the most likely scenario. I tend to think that we could see a little underperformance.

Speaker Change: Sorry, if I missed it but in terms of.

Speaker Change: The guide for loan growth and deposit growth.

Speaker Change: It's pretty broad in the deck.

Speaker Change: You guys talked a little bit on the call, but so if I understand the most likely scenarios as we sit here like low single digits to start the year and then yes.

Pat Barrett: I think what you saw in the mechanism in the fourth quarter is that during the course of the quarter, we rolled off a substantial amount of brokered CDs. So that would cause the spot rate at the end of the quarter to not reflect all those brokered CDs. So that was kind of the impact.

That could pick up through the year given.

What the environment looks like.

Speaker Change: Sort of the guide here.

Speaker Change: Frank, it's Joe. That's the most likely scenario. I tend to think that we could see a little outperformance. Conversely, we could see a little slow performance. So it's sort of choppy out there a little bit. There's a lot of noise, a lot of conversations we're having. As I mentioned earlier, the pipeline is up, but it's still got to get to fruition. So I definitely think we're going to see positive growth. The question is how fast it ramps up to what we consider to be more normalized environments.

Joseph J. Lebel III: Yeah, Frank it's Joe.

Frank Joseph Schiraldi: Most likely scenario.

Joseph J. Lebel III: I tend to think that we could see we could see a little outperformance. Conversely, we could see a little slow performance.

Joseph J. Lebel III: Conversely, we could see a little slow performance. So it's sort of choppy out there a little bit. There's a lot of noise, a lot of conversations we're having. As I mentioned earlier, the pipeline is up, but it's still got to get to fruition. So I definitely think we're going to see positive growth. The question is how fast it ramps up to what we consider to be more normalized environments.

Pat Barrett: That impact will diminish a little bit over time. Okay, great. Pat, you mentioned getting to... We're getting close to neutral here on rate sensitivity. What does that assume, and what do you assume in your guide for deposit betas on the way down as we see these three rate cuts? Are you guys expecting a modeling and immediate reaction to the rate cuts in terms of a deposit beta, or is there some lag effect? I think we would definitely expect a lag effect.

Joseph J. Lebel III: Sort of choppy out there a little bit there is a lot of noise a lot of conversations we're having.

Joseph J. Lebel III: As I mentioned earlier the pipeline is up but it's still got to get to fruition. So I definitely think we're going to see a.

Joseph J. Lebel III: Positive growth, but the question is how fast it ramps up to what we consider to be more normalized environment.

Frank Joseph Schiraldi: Okay.

Speaker Change: Okay.

Joseph J. Lebel III: Okay.

Speaker Change: And then just lastly, you know, Chris, you mentioned the deposit environment, obviously.

Joseph J. Lebel III: And then, just lastly, you know, Chris, you mentioned the deposit environment. Obviously, it's quite competitive. And so just curious, any sort of strategies you can talk about that you use to bring in the incremental dollar? Geographically or in the size range of a given competitor, where is the opportunity here to bring in the incremental deposit policy?

Joseph J. Lebel III: And then just lastly.

Speaker Change: Chris you mentioned the deposit environment obviously.

Speaker Change: It's quite competitive. And so just curious, any sort of strategies you can talk about that you use to bring in the incremental dollar?

Chris: It's quite competitive and so.

Chris: Just curious on any sort of strategy you can talk about that you are using to bring in the incremental dollar.

Pat Barrett: I mean, we saw a one-year lag effect for the most part on the way up, and I can't imagine that it would be dramatically shorter than that. 2024 is going to be a baked-in kind of higher funding cost year from a core deposit perspective, and frankly, people are still expecting. I mean, we're still competing on rate with about all of our competitors. I guess, Chris, I'd add that if you think about supply and demand and deposits for the industry, right, there are a lot of banks who would love to grow their deposit portfolio right now. So although the Fed may make rate cuts and you may see overall rates come down, we expect the competition among banks for deposits to remain brisk.

Speaker Change: Geographically or size range of a given competitor, where is the opportunity here to bring in the incremental deposit policy?

Chris: Rapidly or size range of a given competitor.

Chris: Or is the.

Chris: Whereas the opportunity here to bring in.

Chris: The incremental deposit dollar.

Speaker Change: I'll make a few comments and I'll ask Joe to follow in as well. You know, one of the things we have not talked much about is that while we have reduced operating expenses, we've actually kind of apples to apples reduced them more than you would think. And we've then dedicated some of that save to reinvest in a couple of key platforms in both the hiring of bankers and treasury and all that. So, Joe, maybe talk a little bit about the bankers you've added this year, despite having kind of brought the expenses down.

Christopher D. Maher: I'll make a few comments, and I'll ask Joe to follow in as well. You know, one of the things we have not talked much about is that while we have reduced operating expenses, we've actually, kind of apples to apples, reduced them more than you would think. And we've then dedicated some of that savings to reinvesting in a couple of key platforms in both the hiring of bankers and treasury and all that. So, Joe, maybe talk a little bit about the bankers you've added this year, despite having kind of brought the expenses down.

Speaker Change: Yes, I'll make a few comments and I'll ask Joe to follow it as well.

The thing is we have not talked much about is that while we have reduced operating expenses.

Speaker Change: We've actually kind of apples to apples reduce them more than you would think and we've been dedicated some of that save to reinvest in a couple of key platforms.

Speaker Change: Both the hiring of bankers and treasury and all that so Joe maybe talk a little bit about the bankers you've added this year, so despite having kind of prostate cancer.

Pat Barrett: So I think you're going to see, as Pat said, in a fair way. Okay. And then, just lastly, on that front, Sorry if I missed it, but in terms of, you know, the guide for long growth and positive growth is pretty broad in the deck. And, you know, you guys talked about it a little bit on the call, but it's true. So, my understanding is the most likely scenario, as we sit here, like low single digits to start the year, and then the idea is that that could pick up through the year, given what the environment looks like. Is that sort of the guide here? Frank, it's Joe.

Joseph J. Lebel III: Yeah, so Frank, a little color here. We've added eight C&I bankers all throughout.

Joseph J. Lebel III: Yeah, so Frank, a little color here. We've added eight C&I bankers all throughout. 2023 in all the footprints so you know a couple in Boston, Philadelphia, New Jersey, New York and then I so they've been hitting the ground running and bringing in some deposits and I think the other point I'd mention you know for us historically being core deposit driven we didn't offer you know competitive rates for some of the excess cash that that many of our clients have had and in the last year we've dedicated ourselves going out and getting that cash back so we've deepened relationships with existing clients as well as adding adding some new operational accounts so I think it's been a testament to one of the reasons the deposit has done well both on the both on the retail and on the commercial banks

Joseph J. Lebel III: Yes, so Frank.

Joseph J. Lebel III: A little color here, we've added eight C&I bankers all throughout.

Joseph J. Lebel III: 2023 in all the footprints so you know a couple in Boston, Philadelphia, New Jersey, New York and then I so they've been hitting the ground running and bringing in some deposits and I think the other point I'd mention you know for us historically being core deposit driven we didn't offer you know competitive rates for some of the excess cash that that many of our clients have had and in the last year we've dedicated ourselves going out and getting that cash back so we've deepened relationships with existing clients as well as adding adding some new operational accounts so I think it's been a testament to one of the reasons the deposit has done well both on the both on the retail and on the commercial banks

Joseph J. Lebel III: 2023, and all of footprint so.

Joseph J. Lebel III: A couple of Boston, Philadelphia, New Jersey, and New York.

And then so they've been hitting the ground running and bringing some deposits and I think the other point I'd mentioned for us historically.

Joseph J. Lebel III: Being core deposit driven we didn't offer.

Joseph J. Lebel III: Competitive rates for some of the excess cash that that.

Joseph J. Lebel III: Many of our clients have had in the last year, we've dedicated ourselves to going out and getting that cash back. So we've deepen relationships with existing clients as well as adding.

Joseph J. Lebel III: That's the most likely scenario. I tend to think that we could see a little outperformance. Conversely, we could see a little slow performance. So it's sort of choppy out there a little bit.

Adding some new operational accounts. So I think it's been a testament to one of the reasons.

Joseph J. Lebel III: Clauses has done well both on the both on the retail and in the commercial bank.

Joseph J. Lebel III: There's a lot of noise, a lot of conversations we're having. As I mentioned earlier, the pipeline is up, but it's still got to get to fruition. So I definitely think we're going to see positive growth. The question is how fast it ramps up to what we consider to be more normalized environments.

Speaker Change: Okay, Great I appreciate the color. Thank you.

Speaker Change: Okay, great. I appreciate the call. Thank you.

Frank Joseph Schiraldi: Okay, great. I appreciate the call. Thank you.

Speaker Change: Thanks, Frank.

Frank Joseph Schiraldi: Thanks, Frank.

Speaker Change: Thanks, Greg.

Speaker Change: Thank you.

Michael J. Fitzpatrick: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question today is from Michael Perito from KBW. Michael, please go ahead, your line is open.

Michael J. Fitzpatrick: Our next question today is from Michael Perito from KBW. Michael, please go ahead; your line is open.

Speaker Change: Our next question today is from Michael Perito from K BW. Michael. Please go ahead. Your line is open.

Joseph J. Lebel III: Okay. And then, just lastly, you know, Chris, you mentioned the deposit environment. Obviously, it's quite competitive.

Michael J. Fitzpatrick: Hey, guys. Good morning. Good morning, Mike. Pat, I want to ask a similar question that I asked last quarter and just kind of get the updated thoughts, kind of where, you know, as we think about why NIM might stabilize, right, it sounds like it's too early to necessarily call bottom on deposit costs rising. But, you know, I think maybe it sounds like with loan growth reengaging more consistently at better incremental spread to like the 280 consolidated NIM you have today, that starts to become maybe a bigger impact, particularly as it compounds in the back half of 24. It was just a long-winded way of asking, can you give us kind of an updated view kind of of where, you know, the average, you know, kind of credit, commercial credit is being originated today relative to the 5.40 blended yield quarter? And, you know, are you still seeing that rise? Or is that also starting to stabilize that incremental kind of new yield on the commercial origination?

Michael J. Fitzpatrick: Hey guys, good morning. Good morning, Mike. Pat, I want to ask a similar question that I asked last quarter and just kind of get the updated thoughts, kind of where, you know, as we think about why NIM might stabilize, right, it sounds like it's too early to necessarily call the bottom on deposit costs rising. But, you know, I think maybe it sounds like with loan growth reengaging more consistently at a better incremental spread to like the 280 consolidated NIM you have today, that starts to become maybe a bigger impact, particularly as it compounds in the back half of 24.

Michael J. Fitzpatrick: Hey, guys good morning.

Michael J. Fitzpatrick: Pat I wanted to ask a similar question I asked last quarter, just kind of get the updated thoughts kind of where as.

Christopher D. Maher: And so just curious, any sort of strategies you can talk about that you use to bring in the incremental dollar? Geographically or in the size range of a given competitor, where is the opportunity here to bring in the incremental deposit dollars? I'll make a few comments, and I'll ask Joe to follow in as well.

Speaker Change: As we think about why NIM might stabilize right. It sounds like it's too early to necessarily call bottom on deposit costs rising but.

Maybe it sounds like with loan growth re engaging more consistently.

Speaker Change: At better incremental spreads to like the 280 consolidated NIM you have today that starts to become maybe a bigger impact, particularly as it compounds in the back half of 'twenty four.

Pat Barrett: It was just a long way of asking, can you give us kind of an updated view of where, you know, the average, you know, kind of credit, commercial credit, is being originated today relative to the 5.40 blended yield quarter? And, you know, are you still seeing that rise? Or is that also starting to stabilize that incremental kind of new yield on commercial origination?

Joseph J. Lebel III: You know, one of the things we have not talked much about is that while we have reduced operating expenses, we've actually kind of apples to apples reduced them more than you would think. And we've then dedicated some of that savings to reinvest in a couple of key platforms, in both the hiring of bankers and treasury and all that. So, Joe, maybe talk a little bit about the bankers you've added this year, despite having kind of brought the expenses down. Yeah, so Frank, just a little color here.

Speaker Change: Along with way of asking can you give us kind of an updated view of kind of where the average kind of credits commercial credits being originated today relative to the 540% blended yield in the fourth quarter and are you still seeing that rise or is that also starting to stabilize that incremental kind of new yield on commercial.

Speaker Change: <unk>.

Speaker Change: We're actually definitely seeing that rise on new money and on renewals. So I think.

Pat Barrett: We're actually definitely seeing that rise on new money and on renewals, so I think now I'll caution you that when numbers are small,

Pat Barrett: We're actually definitely seeing that rise on new money and on renewals, so I think now I'll caution you that when numbers are small, we shouldn't extrapolate them, but on the originations we had in the fourth quarter, we were originating at an average rate of about $7.70. Our pipeline, although it's grown, is still a lot smaller than it normally is and was a year, year and a half ago. But our pipeline yields are at around $8, so we're definitely getting the pricing that we're looking for on originations.

Speaker Change: Now I'll caution you that when numbers are small.

Joseph J. Lebel III: We've added eight C&I bankers all throughout. 2023 in all the footprints so you know a couple in Boston, Philadelphia, New Jersey, New York and then I so they've been hitting the ground running and bringing in some deposits and I think the other point I'd mention you know for us historically being core deposit driven we didn't offer you know competitive rates for some of the excess cash that that many of our clients have had and in the last year we've dedicated ourselves going out and getting that cash back so we've deepened relationships with existing clients as well as adding adding some new operational accounts so I think it's been a testament to one of the reasons the deposit has done well both on the both on the retail and on the commercial banks, Okay, great. I appreciate the call.

Pat Barrett: We shouldn't extrapolate them, but on the originations we had in the fourth quarter, we were originating at an average rate of about $7.70. Our pipeline, although it's grown, is still a lot smaller than it normally is and was a year, year and a half ago. But our pipeline yields are at around $8. So we're definitely getting the pricing that we're looking for on originations. And then, you know, we continue to have the portfolio roll. So we'll have, you know, somewhere in the neighborhood of.

Speaker Change: You shouldn't extrapolate them, but on the originations we had in the fourth quarter, we were originating at an average rate of about 770, our pipeline. Although its ground is still a lot smaller than it normally is and it was a year year and a half ago, but our pipeline yields are.

At around eight so we're.

Speaker Change: <unk> getting the pricing that we're looking for on originations and then we continue to have the portfolio role. So we will have.

Pat Barrett: And then, you know, we continue to have the portfolio roll. So we'll have, you know, somewhere in the neighborhood of, and a half a billion dollars per quarter of loans, and those are going to reprice into whatever terms they are as they mature. So, we definitely have all the pieces in place to see NIM expansion, notwithstanding changes in deposit customer behavior or the need to fund incremental growth in a very competitive environment.

Speaker Change: Somewhere in the neighborhood of <unk>.

Pat Barrett: and a half a billion dollars per quarter of loans

Speaker Change: $5 billion per quarter.

Speaker Change: Loans that are going to roll and those are going to reprice into whatever terms they are as they as they mature.

Pat Barrett: and those are going to reprice into whatever terms they are as they mature.

Speaker Change: Yes.

Pat Barrett: So we definitely have all the pieces in place to see NIM expansion, notwithstanding changes in deposit customer behavior or the need to fund incremental growth in a very competitive environment.

Speaker Change: So we definitely have all the <unk>.

Pat Barrett: Thank you. Thanks, Frank. Thank you. Our next question today is from Michael Perito from KBW. Michael, please go ahead; your line is open. Hey, guys. Good morning.

Speaker Change: <unk> is in place to see NIM expansion notwithstanding changes in.

Speaker Change: Deposit customer behavior or the need to fund incremental growth in a very competitive environment.

Pat Barrett: Good morning, Mike. Pat, I want to ask a similar question that I asked last quarter and just kind of get the updated thoughts, kind of where, you know, as we think about why NIM might stabilize, right, it sounds like it's too early to necessarily call the bottom on deposit costs rising. But, you know, I think maybe it sounds like with loan growth reengaging more consistently at a better incremental spread to like the 280 consolidated NIM you have today, that starts to become maybe a bigger impact, particularly as it compounds in the back half of 24. It was just a long way of asking, can you give us kind of an updated view of where, you know, the average, you know, kind of credit, commercial credit, is being originated today relative to the 5.40 blended yield quarter?

Speaker Change: That's helpful. And then just in terms of the 2024 outlook, any kind of initial thoughts around non-interest income, which I didn't see necessarily anywhere in the guide, just is there, you know, obviously probably a couple key pieces, you know, maybe swaps, mortgages, just any thoughts about what might transpire over the year in your budget as we think about what the contribution looks like?

Michael J. Fitzpatrick: That's helpful. And then just in terms of the 2024 outlook, any kind of initial thoughts around non-interest income, which I didn't see necessarily anywhere in the guide, just is there, you know, obviously probably a couple key pieces, you know, maybe swaps, mortgages, just any thoughts about what might transpire over the year in your budget as we think about what the contribution looks like?

Speaker Change: Okay. That's helpful. And then just in terms of the 2024 outlook any kind of initial thoughts around noninterest income, which I didn't see necessarily anywhere in the guide is there.

Speaker Change: Obviously, probably a couple of key pieces, maybe swaps mortgages, just any thoughts about what might transpire.

Speaker Change: Transpire over the year on your budget as we think about what the contribution looks like.

Speaker Change: So we have.

Speaker Change: Look, there's an opportunity. We wouldn't provide guidance and it would be very difficult to quantify for you, but the three main areas that could be impacted by 2024 volume.

Christopher D. Maher: Look, there's an opportunity. We wouldn't provide guidance, and it would be very difficult to quantify for you, but the three main areas that could be impacted by 2024 volume are, as you mentioned, swaps, but also gain-on-sale income in residential and the title insurance business that we own as well.

Speaker Change: Look there is an opportunity we wouldn't provide guidance and be very difficult to quantify for you but.

Speaker Change: Three main areas that could be impacted by 2020 for volumes.

Speaker Change: are, as you mentioned, swaps, but also gain-on-sale income in residential and the title insurance business that we own as well. So it's really far too early to tell how much the unit volumes will increase, but you could imagine over the course of 2024, we certainly expect units to be higher in 2024 than they were in 2023, which should bode well for swap income, gain-on-sale, and title insurance revenue.

Speaker Change: As you mentioned swaps, but also gain on sale income and residential.

Speaker Change: In the title insurance business that we own as well so.

Christopher D. Maher: So it's really far too early to tell how much the unit volumes will increase, but you can imagine that over the course of 2024, we certainly expect units to be higher in 2024 than they were in 2023, which should bode well for swap income, gain-on-sale, and title insurance revenue.

Speaker Change: It's really far too early to tell how much the unit volumes will increase but you could imagine over the course of 2024, we certainly expect units to be higher in 'twenty four than they were in 2003, which should bode well for swap income gain on sale in title insurance revenues.

Pat Barrett: And, you know, are you still seeing that rise? Or is that also starting to stabilize that incremental kind of new yield on commercial origination? We're actually definitely seeing that rise on new money and on renewals, so I think now I'll caution you that when numbers are small, we shouldn't extrapolate them, but on the originations we had in the fourth quarter, we were originating at an average rate of about $7.70. Our pipeline, although it's grown, is still a lot smaller than it normally is and was a year, year and a half ago.

Speaker Change: Thanks, Chris that's helpful. And then just lastly, and I'll step back just on I know you commented a little bit on our already just to maybe go a layer deeper just around buybacks I think you were pretty clear in terms of why.

Speaker Change: Thanks, Chris. It's helpful. And then just lastly, and I'll step back, just on, I know you commented a little bit on it already, just to maybe go a layer deeper, just around buybacks. You know, I think you were pretty clear in terms of why you didn't elect to use them in 23. You know, it was kind of a build liquidity, build capital year. It feels like the footing underneath you guys is much more certain now. You know, as we think about the 2.9 million authorization remaining, are you willing to provide any more color about how kind of attractive the opportunity is to deploy capital that route today, particularly if, you know, loan growth might be a little bit more back half heavy in 24? I mean, it's kind of now the time to maybe buy back some shares or just any expanded thoughts there would be great.

Michael J. Fitzpatrick: Thanks, Chris. It's helpful. And then, just lastly, and I'll step back, just on, I know you commented a little bit on it already, just to maybe go a layer deeper, just around buybacks. You know, I think you were pretty clear in terms of why you didn't elect to use them in 23. You know, it was kind of a build liquidity, build capital year. It feels like the footing underneath you guys is much more certain now. You know, as we think about the 2.9 million authorization remaining, are you willing to provide any more color about how kind of attractive the opportunity is to deploy capital that way today, particularly if, you know, loan growth might be a little bit more back half heavy in 24? I mean, it's kind of now the time to maybe buy back some shares or just any expanded thoughts there would be great.

Speaker Change: Didn't elect to use them in 'twenty three.

Speaker Change: A build liquidity build capital year, it feels like the footing underneath you guys as much more certain now as we think about the $2 9 million authorization remaining.

Pat Barrett: But our pipeline yields are at around $8, so we're definitely getting the pricing that we're looking for on originations. And then, you know, we continue to have the portfolio roll. So we'll have, you know, somewhere in the neighborhood of, and a half a billion dollars per quarter of loans, and those are going to reprice into whatever terms they are as they mature. So we definitely have all the pieces in place to see NIM expansion, notwithstanding changes in deposit customer behavior or the need to fund incremental growth in a very competitive environment. That's helpful. And then just in terms of the 2024 outlook, any kind of initial thoughts around non-interest income, which I didn't see necessarily anywhere in the guide, just is there, you know, obviously probably a couple key pieces, you know, maybe swaps, mortgages, just any thoughts about what might transpire over the year in your budget as we think about what the contribution looks like? Look, there's an opportunity.

Speaker Change: Are you willing to provide any more color about how kind of attractive opportunities to deploy capital of that route today, particularly if you will.

Speaker Change: It might be a little bit more back half heavy in 'twenty four I mean, it's kind of now the time to maybe buy back some shares or just any expanded thoughts there would be great.

And Mike.

Speaker Change: Thanks for bringing that up. And you're exactly spot on. When you get into a period like we did in 23,

Christopher D. Maher: Thanks for bringing that up. And you're exactly spot on. When you get into a period like we did in 23, you want to be, you know, extra careful to make sure that you understand your risk positions, you understand your liquidity position, and you don't have anything that would be a lien against capital. So we build up capital over the course of the year. We're really happy with where capital is now, and we expect to maintain it. So the math around this, I think, will be pretty straightforward. To the extent we can grow customer relationships, that's always the best thing we can do with capital. But if that growth is a little more back-ended or takes a little more time, then at these valuations, we would expect to deploy capital through repurchases to maintain our capital ratio.

Speaker Change: Thanks for bringing it up.

Speaker Change: You're exactly spot on.

Speaker Change: When you get into a period like we did in 'twenty three.

Speaker Change: You want to be, you know, extra careful to make sure that you understand your risk positions, you understand your liquidity position, and you don't have anything that would be a lien against capital. So we build capital up over the course of the year. We're really happy with where capital is now, and we expect to maintain it. So the math around this, I think, will be pretty straightforward. To the extent we can grow customer relationships, that's always the best thing we can do with capital. But if that growth is a little more back-ended or takes a little more time, then these valuations, we would expect to deploy capital through repurchases to maintain our capital ratio. And kind of interestingly, as we do the math, that's about a neutral proposition. So whether we're doing an incremental repurchase or bringing on new clients has about a neutral impact to earnings per share, and that's fine. We'd always rather have a customer, so that's our priority. But if we can't have the customer, we can get the same benefit by doing the buyback.

Speaker Change: You want to be extra careful to make sure that you understand your risk positions you understand your liquidity position and you don't have anything that would be a lean against capital. So we built capital up over the course of the year, we're really happy with where capital is now and we expect to maintain it so that.

Speaker Change: The math around this I think it would be pretty straightforward.

Speaker Change: To the extent, we can grow customer relationships. That's always the best thing, we can do with capital.

Speaker Change: But if that growth is it more back ended or it takes a little more time than these valuations, we would expect to deploy capital through repurchases.

Speaker Change: To maintain our capital ratio and interestingly as we do the math.

Christopher D. Maher: And kind of interestingly, as we do the math, that's about a neutral proposition. So whether we're doing an incremental repurchase or bringing on new clients has about a neutral impact on earnings per share, and that's fine. We'd always rather have a customer, so that's our priority. But if we can't have the customer, we can get the same benefit by doing the buyback, and certainly trading below book value is a great opportunity to take advantage of.

Speaker Change: That's about a neutral proposition, so whether we're doing an incremental repurchase or bringing on new clients.

Pat Barrett: We wouldn't provide guidance, and it would be very difficult to quantify for you, but the three main areas that could be impacted by 2024 volume are, as you mentioned, swaps, but also gain-on-sale income in residential and the title insurance business that we own as well. So it's really far too early to tell how much the unit volumes will increase, but you can imagine that over the course of 2024, we certainly expect units to be higher in 2024 than they were in 2023, which should bode well for swap income, gain-on-sale, and title insurance revenue. Thanks, Chris. It's very helpful. And then just lastly, and I'll step back, just on, I know you commented a little bit on it already, just to maybe go a layer deeper, just around buybacks. You know, I think you were pretty clear in terms of why you didn't elect to use them in 23.

As about a neutral impact to earnings per share.

Speaker Change: And Thats fine, we would always rather have a customer.

Speaker Change: So that's our priority, but but if we can have the customer we can get the same benefit by doing the buybacks.

Speaker Change: and certainly trading below book value is a great opportunity to make

And certainly trading below book value as a great opportunity to make.

Speaker Change: to take advantage

Speaker Change: To take advantage of them.

Speaker Change: Got it. Helpful, guys. Thanks. Stay safe with the storm, and I appreciate you taking the time.

Michael J. Fitzpatrick: Got it. Very helpful, guys. Thanks. Stay safe with the storm, and I appreciate you taking the time.

Speaker Change: Got it helpful guys. Thanks stay safe with the storm and I appreciate you taking my questions.

Speaker Change: Thanks. Take care.

Michael J. Fitzpatrick: Thanks. Take care.

Speaker Change: Thanks, Ken.

Speaker Change: Thank you.

Michael J. Fitzpatrick: Thank you.

Speaker Change: Our next question is from David Bishop from Hovde Group. David, please go ahead, your line is open.

David Jason Bishop: Our next question is from David Bishop from Hovde Group. David, please go ahead; your line is open. Great

Speaker Change: Our next question is from David Bishop from hub to Great. David. Please go ahead. Your line is open.

Speaker Change: Great.

Speaker Change: Sure.

David Jason Bishop: Alright, good morning, gentlemen.

David Jason Bishop: Muy bien.

Christopher D. Maher: Muy bien. Chris, quick question in terms of, you noted that another quarter may be challenging in terms of non-interest-bearing deposits. Has there been any change in terms of, I don't know if you track where they go, does it continue to run off to some of the bigger J.P. Morgans of the world, or are you retaining them in other OCS products, Ocean First products? And remind us if there's any seasonality in that end-of-year runoff. We're certainly keeping deposits here at the bank for the most part. As Joe mentioned, we've taken the opportunity to deepen relationships.

David Jason Bishop: We did.

David Jason Bishop: Chris, quick question in terms of, you noted another quarter may be challenging in terms of the non-interest-bearing deposits. Has there been any change in terms of, I don't know if you track where they go, does it continue to run off to some of the bigger, the J.P. Morgans of the world, or are you retaining them in other OCS products, Ocean First products? And remind us if there's any seasonality in that end of year runoff.

David Jason Bishop: First quick question in terms of noted another quarter, maybe challenging in terms of the non interest bearing deposits has there been any change in terms of I don't know if you track where they go as they continue to run off.

David Jason Bishop: Some of the bigger the J P morgans or the world or are you retaining them. Another ocs products <unk> products and remind us if theres any seasonality in that that interview runoff.

David Jason Bishop: We're certainly keeping the deposits here at the bank for the most part. As Joe mentioned, we've taken the opportunity to deepen relationships. The good news about that is you get customers to bring money in from other banks. The bad news is sometimes they want to move some of their non-interest bearing accounts into other accounts. We're not seeing any competitive losses of magnitude to anyone, whether it's a big bank or a small bank. That's really what's driving it. As we look forward, I would also mention that we have a lot of transaction accounts that are not captured in the non-interest bearing designation. We have a lot of interest bearing checking that are truly transactional accounts. While the non-interest number is important to us,

David Jason Bishop: Yes.

Certainly keeping the deposits here at the bank for the most part.

Christopher D. Maher: You know, it was kind of a build liquidity, build capital year. It feels like the footing underneath you guys is much more certain now. You know, as we think about the 2.9 million authorization remaining, are you willing to provide any more color about how kind of attractive the opportunity is to deploy capital that way today, particularly if, you know, loan growth might be a little bit more back half heavy in 24? I mean, it's kind of now the time to maybe buy back some shares or just any expanded thoughts there would be great. Thanks for bringing that up. And you're exactly spot on.

Speaker Change: As Joe mentioned we.

Christopher D. Maher: The good news about that is you get customers to bring money in from other banks. The bad news is that sometimes they want to move some of their non-interest-bearing accounts into other accounts. We're not seeing any competitive losses of magnitude for anyone, whether it's a big bank or a small bank. That's really what's driving it. As we look forward, I would also mention that we have a lot of transaction accounts that are not captured in the non-interest bearing designation. We have a lot of interest-bearing checking accounts that are truly transactional accounts. While the non-interest number is important to us, the transaction account number is more important to us, and that's been pretty stable.

Speaker Change: We've taken the opportunity to deepen relationships.

Speaker Change: Good news about that is you get customers to bring money in from other banks.

Speaker Change: The bad news is sometimes they want to move some of their noninterest bearing accounts into other accounts. So we're not seeing any competitive losses of magnitude to anyone whether its a big bank or a small bank.

Speaker Change: Essentially what's driving it.

As we look forward I would also mention that we have a lot of transaction accounts.

Speaker Change: Not captured in the noninterest bearing designation so.

Speaker Change: We have a lot of interest bearing checking that are truly transactional accounts. So.

Speaker Change: While the noninterest number is important to us.

David Jason Bishop: transaction account number is more important to us and that's been pretty stable.

Transaction account number is more important to us and thats been pretty stable.

Christopher D. Maher: When you get into a period like we did in 23, you want to be, you know, extra careful to make sure that you understand your risk positions, you understand your liquidity position, and you don't have anything that would be a lien against capital. So we build up capital over the course of the year. We're really happy with where capital is now, and we expect to maintain it. So the math around this, I think, will be pretty straightforward.

Speaker Change: I'd just, hey Dave, it's Pat. I'd just throw in too, we do have seasonality, but it tends to be in truck order.

Pat Barrett: I'd just, hey Dave, it's Pat. I'd just throw in, too, that we do have seasonality, but it tends to be in truck order.

Speaker Change: Hey, David I'd, just throw into we do have seasonality, but it tends to be intra quarter.

Dave: So if we changed our year end to October 15th,

Pat Barrett: So if we changed our year end to October 15th, you would probably see kind of peak non-interest bearing levels every quarter instead of troughs, which is what you see today, but it's a very, it's the government business, so that does drive inflows throughout the quarter, and they come back out again just in time for us to report.

David Jason Bishop: So if we changed our year end to October 15th.

Dave: and you would probably see kind of peak non-interest bearing levels every quarter instead of trough which is what you see today but it's a very it's the government business so that does drive inflows throughout the quarter they come back out again just in time for us to report.

David Jason Bishop: Then you would probably see kind of peak noninterest bearing levels every quarter instead of trough, which is what you see today, but it's a very it's the government business. So that does drive inflows throughout the quarter. They come back out again, just in time for us to report.

Christopher D. Maher: To the extent we can grow customer relationships, that's always the best thing we can do with capital. But if that growth is a little more back-ended or takes a little more time, then these valuations, we would expect to deploy capital through repurchases to maintain our capital ratio. And kind of interestingly, as we do the math, that's about a neutral proposition.

Speaker Change: Got it.

David Jason Bishop: Got it, and then noticed a a modest uptick in substandard loans uh didn't know if any common was there any commonality in segments just curious some color behind that that

Speaker Change: Got it.

Speaker Change: and then noticed a a modest uptick in substandard loans uh didn't know if any common was there any commonality in segments just curious some color behind that that

And then noticed a modest uptick in substandard loans.

Speaker Change: Don't know if any comment was there any commonality in segments, just curious some color behind that that increase.

Speaker Change: There's no theme and there was nothing of note in terms of a trend that would cause any concern.

Christopher D. Maher: There's no theme, and there was nothing of note in terms of a trend that would cause any concern. I would note that the level of substandard remains well below our long-term average of around 2%, and many more. Kind of a reversion to normalcy, right? The credits go through cycles and all that, but there's no segment of the portfolio that gives us any concern and shows no commonality.

Speaker Change: Yes, there is no theme and there was nothing of note in terms of a trend that would cause any concern.

Speaker Change: I would note that the level of substandard remains well below our long-term average of around 2%.

I would note that the level of substandard remains well below our long term average of around 2%.

Speaker Change: and many more.

Speaker Change: Below the level of pre pandemic. So this is really just.

Speaker Change: kind of a reversion to normalcy, right?

Speaker Change: Kind of a reversion to the normalcy right.

Speaker Change: The credits go through cycles and all that, but there's no segment of the portfolio that gives us any concern and no commonality.

Speaker Change: The credits go through cycles, and all that but Theres no segment of the portfolio that gives us any concern and no commonality among them.

Christopher D. Maher: So whether we're doing an incremental repurchase or bringing on new clients has about a neutral impact on earnings per share, and that's fine. We'd always rather have a customer, so that's our priority. But if we can't have the customer, we can get the same benefit by doing the buyback, and certainly trading below book value is a great opportunity to take advantage of. Got it. Helpful, guys. Thanks. Stay safe with the storm, and I appreciate you taking the time. Thanks. Take care.

Speaker Change: Got it. Appreciate the color.

David Jason Bishop: Got it. Appreciate the color and David Bishop.

Got it appreciate the color.

Speaker Change: and David Bishop.

Thanks, Dave.

Speaker Change: Thank you.

David Jason Bishop: Thank you.

Thank you.

Speaker Change: Our next question is from Matthew Breeze from Stevens Inc. Matthew, please go ahead, your line is open.

Matthew M. Breese: Our next question is from Matthew Breeze from Stevens Inc. Matthew, please go ahead; your line is open.

Speaker Change: Our next question is from Matthew Breese from Stephens, Inc. Matthew. Please go ahead. Your line is open.

Matthew M. Breese: Yeah, thank you. Good morning, everybody.

Yes. Thank you good morning, everybody.

Matthew M. Breese: The first one for me is maybe for Pat, you know, taking the lower end of the NIM guide, which is calling for stabilities.

Matthew M. Breese: The first one for me is, maybe for Pat, you know, taking the lower end of the NIM guide, which is calling for stabilities.

Matthew M. Breese: The first one for me is maybe for Pat.

Matthew M. Breese: Taking the lower end of the NIM guide, which is calling for stability.

Pat Barrett: What is the expectation for deposit costs by year end and is there any sort of

Pat Barrett: What is the expectation for deposit costs by year end, and is there any sort of and many more? I think we're assuming that we're peaking on deposit costs right now with a little bit of adjustment for some of the more institutional deposits that we have and allowing for runoff with those. But we're assuming that we're going to be rolling out our Ocean First CD program at generally kind of similar rates to where we are today. We've been pretty successful at rolling out those. We're not aggressively growing, as usual, in sweep deposits right now, but we always have that to turn on, have been across the core deposit. Base, we're assuming, a fairly stable mix in pricing, and as we touched on earlier, if we do begin to see improvement, i.e., lowering of costs, that's certainly going to be in the back half, so we look forward to that.

Matthew M. Breese: What are your expectations for deposit costs by year end and is there any sort of.

Pat Barrett: Thank you. Our next question is from David Bishop from Hovde Group. David, please go ahead, your line is open. Great. Muy bien.

Pat Barrett: and many more.

Matthew M. Breese: Peak and reduction in deposit cost within that assumption throughout the year.

David Jason Bishop: Hey, Chris, quick question in terms of another quarter may be challenging in terms of a non-interest-bearing deposit. Has there been any change in terms of, I don't know if you track where they go, as they continue to run off to some of the bigger J.P. Morgans of the world? Are you retaining them in other OCS products, such as Ocean First products?

Pat Barrett: I think we're assuming that we're peaking on deposit costs right now with a little bit of adjustment for some of the more institutional deposits that we have and allowing for runoff with those. But we're assuming that we're going to be rolling our Ocean First CD program at generally kind of similar rates to where we are today. We've been pretty successful at rolling at those. We're not aggressively growing.

Matthew M. Breese: I think we're assuming that we're peaking on deposit cost right now.

Matthew M. Breese: With some a little bit of adjustment for some of the more institutional deposits that we have and allowing for run off with us we're assuming that we're going to be rolling our ocean first CD program.

Matthew M. Breese: Generally kind of similar rates to where we are today, we've been pretty successful at Roche.

Matthew M. Breese: <unk>.

Christopher D. Maher: And remind us if there's any seasonality in that end-of-year runoff. We're certainly keeping deposits here at the bank for the most part. As Joe mentioned, we've taken the opportunity to deepen relationships. The good news about that is you get customers to bring money in from other banks. The bad news is that sometimes they want to move some of their non-interest-bearing accounts into other accounts. But we're not seeing any competitive losses of magnitude for anyone, whether it's a big bank or a small bank. That's really what's driving me.

Matthew M. Breese: We're not aggressively growing institutional and sweep deposits right now, but we always have that to turn on.

Pat Barrett: as usual in sweep deposits right now, but we always have that to turn on.

Pat Barrett: have been across the core deposit.

Matthew M. Breese: Then across the core deposit.

Pat Barrett: Base, we're assuming.

Matthew M. Breese: Base.

Assuming a fairly stable mix in pricing.

Pat Barrett: fairly stable mix in pricing.

Pat Barrett: and as we touched on earlier,

Matthew M. Breese: And as we touched on earlier.

Pat Barrett: if we do begin to see improvement

Matthew M. Breese: If we do begin to see improvement.

Pat Barrett: IE lowering of costs that's certainly going to be on the back half so we look forward to

E lowering of costs, that's certainly going to be on the back half. So we look forward to.

Pat Barrett: We've been able to put a couple of months together and start talking about a trend like that, but we just aren't seeing it

Pat Barrett: We've been able to put together a couple of months and start talking about a trend like that, but we just aren't seeing it.

Matthew M. Breese: Being able to put a couple of months together and start talking about a trend like that would you start seeing it quite yet.

Pat Barrett: Okay.

Matthew M. Breese: Okay. So the NIMS stability guide basically assumes deposit costs are flat, and expansion assumes maybe there's some reduction. Is that a fair statement? Okay. And then flip into the loan pipeline. I mean, the rates are considerably higher than what's on the balance sheet today. I mean, I think it's the widest I've seen in five to ten years, so I'm curious on the loan side if we should see an acceleration in terms of loan yield expansion from here, and any sort of frame of reference for the extent we might see that would be helpful.

Matthew M. Breese: Okay.

Pat Barrett: So the NIMS stability guide basically assumes deposit costs are flat and expansion assumes maybe there's some reduction. Is that a fair statement?

Matthew M. Breese: So the NIM stability guide basically assumes deposit costs are flat and expansion of things. Maybe there is some reduction is that a fair statement.

Christopher D. Maher: As we look forward, I would also mention that we have a lot of transaction accounts that are not captured in the non-interest bearing designation. We have a lot of interest-bearing checking that are truly transactional accounts. While the non-interest number is important to us, the transaction account number is more important to us, and that's been pretty stable. I'd just say, hey Dave, it's Pat.

Yes.

Pat Barrett: Okay.

Matthew M. Breese: Okay.

Pat Barrett: And then flip into the loan pipeline. I mean, the rates are considerably higher than what's on the balance sheet today.

Matthew M. Breese: And then flipping to the loan pipeline.

Matthew M. Breese: The rates are considerably higher than whats on the balance sheet today.

Pat Barrett: I mean I think it's the widest I've seen in five to ten years that

Matthew M. Breese: I think it's the widest I've seen in five to 10 years that difference. So im curious on the loan side, we should see an acceleration in terms of loan yield expansion from here and any sort of frame of reference for you extent, we might see that would be helpful.

Pat Barrett: so I'm curious on the loan side if we should see an acceleration acceleration

Pat Barrett: In terms of loan yield expansion from here and any sort of frame of reference for the extent we might see that would be helpful.

Joseph J. Lebel III: Matt, it's Joe. I'll start by saying this. We've seen a mixed shift in the pipelines, which is good, especially in the commercial pipe, more towards C&I credit and a little bit less in CRE credit. So those C&I credits, as you know, tend to be floating rates based off prime or a multiple of SOFR. So that's why you're seeing increased yields, which, by the way, is a good thing. We're very happy about that because those relationships come with deposits and a variety of other things. So we'll have some rate sensitivity if the Fed starts to move, but that will benefit deposit costs in the endgame.

Matt It's Joe I'll start by saying this.

Pat Barrett: Matt, it's Joe. I'll start by saying this. We've seen a mixed shift in the pipelines, which is good, especially in the commercial pipe, more towards C&I credit and a little bit less in CRE credit. So those C&I credits, as you know, tend to be floating rate based off prime or multiple of SOFR. So that's why you're seeing the increased yields, which, by the way, is a good thing. We're very happy about that because those relationships come with deposits and a variety of other things. So we'll have some rate sensitivity if the Fed starts to move, but that will benefit, hopefully, in the deposit costs in the endgame.

Seen a mix shift in the pipelines, which is good especially in the commercial pipe more towards C&I credit in a little bit less in CRE credit. So those C&I credits as you know tend to be floating rate.

Pat Barrett: I'd just throw in, too, that we do have seasonality, but it tends to be in truck order. So if we changed our year end to October 15, you would probably see kind of peak non-interest-bearing levels every quarter instead of troughs, which is what you see today, but it's a very, it's the government business, so that does drive inflows throughout the quarter, and they come back out again just in time for us to report. Got it, and then noticed a modest uptick in substandard loans. Uh, didn't know if there was any commonality in segments, just curious for some color behind that. There's no theme, and there was nothing of note in terms of a trend that would cause any concern. I would note that the level of substandard remains well below our long-term average of around 2%, and many more. Kind of a reversion to normalcy, right? The credits go through cycles and all that, but there's no segment of the portfolio that gives us any concern and shows no commonality. I got it. I appreciate the color and David Bishop.

Based off prime or multiple of sulfur so thats why youre seeing the increased yields which by the way. It's a good thing we're very happy about that because those relationships come with deposits and a variety of other things. So we.

Matthew M. Breese: We will have some rate sensitivity as the fed starts to move but.

Matthew M. Breese: <unk> will benefit hopefully in the deposit cost in the end game.

Joseph J. Lebel III: I do think you're going to see higher yields. Probably a little too premature to declare victory and think that we can expand margin just on loan yields, but we're pretty happy with what we're seeing so far.

Joseph J. Lebel III: I do think you're going to see higher yields. It's probably a little too premature to declare victory and think that we can expand margin just on loan yields, but we're pretty happy with what we're seeing so far.

Matthew M. Breese: As well, so I do think youre going to see higher yields.

Matthew M. Breese: A little too premature to declare victory and think that we can expand margin just on loan yields, but but we're pretty pretty happy with what we're seeing so far.

Speaker Change: Mike you might add to that too that if you look at the.

Speaker Change: You might add to that, too, that if you look at the rolling, just the CRE loans that are rolling that are in our supplemental presentation, they're carrying yields in the six

Pat Barrett: You might add to that, too, that if you look at the rolling loans, just the CRE loans that are rolling that are in our supplemental presentation, they're carrying yields in the six-so we're not rolling loans from 3 to 8. We're rolling loans from 6 to 7 and change because the rolling loans are probably a little bit lower than that newly originated CNI pipeline stuff that Joe refers to. This is something that will play out over time. And if you kind of freeze rates where they are now, we have a backlog of loans that have to roll. So that'll be a little bit of a tailwind. We just don't know if it's enough to overcome any deposit.

Speaker Change: The rolling just to CRE loans that are rolling that are in our supplemental presentation theyre carrying yields in the six months. So we're not rolling loans from three to eight.

Speaker Change: So we're not rolling loans from 3 to 8. We're rolling loans from 6 to 7 and change because the rolling loans are probably a little bit lower than that newly originated CNI pipeline stuff that Joe refers to.

Speaker Change: Rowling loans from six to seven and change because the.

Speaker Change: The rolling loans are probably a little bit lower than that newly originated C&I pipeline stuff reversed and so this is something that will play out over time.

Speaker Change: This is something that will play out over time.

Speaker Change: And if you kind of freeze rates where they are now, we have a backlog of loans that have to roll. So that'll be a little bit of a tailwind. We just don't know if it's enough to overcome any deposit

Speaker Change: If you kind of kind of the freeze rates, where they are now we have a backlog of loans that have to roll.

Speaker Change: So that'll be a little bit of tailwind. We just don't know if that's enough to overcome any deposit headwind.

Speaker Change: Headwind.

Matthew M. Breese: Thank you. Our next question is from Matthew Breeze from Stevens Inc. Matthew, please go ahead; your line is open. Yeah, thank you. Good morning, everybody.

Speaker Change: Got it and can you just remind us.

Speaker Change: And could you just remind us of what percentage of the overall loan book?

Matthew M. Breese: And could you just remind us of what percentage of the overall loan book it is?

Speaker Change: What percentage of the overall loan book.

Speaker Change: Floats immediately or then call it 50, 90 days.

Pat Barrett: Floats immediately, or then call it 50, 90 days. Call it a third, a third, and a third, so we've got a third that's at least quarterly, if not more frequently. We've got a third that's hard fixed, and then we've got a third that's adjustable, and those are spread out over a series of maturities and dates, and they roll when they do

Speaker Change: Floats immediately or within call. It 60 to 90 days.

Yes.

Speaker Change: Call it a third, a third, and a third, so we've got a third that

Pat Barrett: The first one for me is maybe for Pat, you know, taking the lower end of the NIM guide, which is calling for stability. What is the expectation for deposit costs by year end, and is there any sort of, and many more. I think we're peaking on deposit costs right now with a little bit of adjustment for some of the more institutional deposits that we have and allowing for runoff with those. But we're assuming that we're going to be rolling our Ocean First CD program at generally kind of similar rates to where we are today. We've been pretty successful at rolling at those.

Speaker Change: Call. It a third a third and a third so we've got a third that.

Speaker Change: at least quarterly if not more frequently,

Resets at least quarterly if not more frequently.

Speaker Change: We've got a third that's hard fixed and then we've got a third that are adjustable and those are spread out over a series of maturities and dates and they roll when they

Speaker Change: Got it Thats hard fixed and then we've got a third that are adjustable windows are spread out over.

Series of maturity dates and enrollment.

Speaker Change: Okay, last one for me, which is on your prior point on stuff that's rolling.

Matthew M. Breese: Okay, last one for me, which is on your prior point on stuff that's rolling, particularly commercial real estate. How well do these properties do?

Speaker Change: Okay.

Speaker Change: Last one for me, which is.

Speaker Change: Kristina prior point on stuff that's rolling.

Speaker Change: particularly commercial real estate how well do these properties

Speaker Change: Particularly commercial real estate, how well do these properties handle higher rates could you provide some colors on before and after debt service coverage ratios and then if there was a reappraisal on any of this stuff.

Speaker Change: Could you provide some colors on before and after debt service coverage ratios and then if there was a reappraisal on any of this stuff?

Matthew M. Breese: Could you provide some color on before and after debt service coverage ratios and then if there was a reappraisal on any of this stuff? How did the valuations and loan-to-value ratios respond?

Pat Barrett: We're not aggressively growing, as usual, in sweep deposits right now, but we always have that to turn on, and we have been across the core deposit. Base, we're assuming, a fairly stable mix in pricing, and as we touched on earlier, if we do begin to see improvement, i.e., lowering of costs, that's certainly going to be in the back half, so we look forward to that. We've been able to put a couple of months together and start talking about a trend like that, but we just aren't seeing it. Okay. So the NIMS stability guide basically assumes deposit costs are flat, and expansion assumes maybe there's some reduction. Is that a fair statement?

Speaker Change: How did the valuations and loan-to-value ratios respond?

Speaker Change: The valuations and loan to value ratios response.

Speaker Change: So there's more detail in our supplemental, but I will kind of give you kind of the headlines. We've done a lot of stress testing of the loan book over the course of the year. We've looked at, you know, rolling maturities, all office loans, kind of every facet we could look at. We have updated, as we have financial statements from clients about, you know, cash flows and rent rolls. And if you were to stress particularly the rolling CRE, the stuff that rolls over the next two years, and stressed it at an interest rate of 7%, what you find is it still debt serves pretty easily. So it's in the 124 range, I think, of debt service.

Christopher D. Maher: So there's more detail in our supplemental, but I will kind of give you kind of the headlines. We've done a lot of stress testing on the loan book over the course of the year. We've looked at, you know, rolling maturities, all office loans, kind of every facet we could look at. We have updated, as we have financial statements from clients about, you know, cash flows and rent rolls. And if you were to stress, particularly the rolling CRE, the stuff that rolls over the next two years, and stressed it at an interest rate of 7%, what you find is that it still debt service is pretty easily.

Speaker Change: So there is more detail in our supplemental but I will.

If you kind of the headlines we put a lot of stress testing of the loan book over the course of the year. We've looked at rolling maturities all office loans kind of every facet. We could look at we have updated as we have financial statements from clients about cash flows and rent rolls.

Speaker Change: And if you were to stress, particularly the rolling CRE the stuff that rolls over the next two years and stressed.

Pat Barrett: Okay. And then we flip into the loan pipeline. I mean, the rates are considerably higher than what's on the balance sheet today. I think it's the widest I've seen in five to ten years. So I'm curious on the loan side if we should see an acceleration acceleration in terms of loan yield expansion from here, and any sort of frame of reference for the extent we might see that would be helpful. Matt, it's Joe.

Speaker Change: Interest rate of 7%, which you find is it still that serves pretty easily. So it's in the 124 range I think that service so.

Christopher D. Maher: So it's in the 124 range, I think, of debt service. So we're comfortable that at that rate, the portfolio doesn't really have much stress that would be interest rate-related. And then I would point out another phenomenon. Some of these loans are eligible for either CMBS or some of the GSE programs. And what we're finding is that their pricing is even more affordable than that. So although we did all that stress at seven, that's not the market rate for those loans. So we don't expect a whole lot of concerns around that. In fact, it might be that some of that may wind up coming off the balance sheet because we're not willing to renew it at rates that are available in the market today.

Speaker Change: So we're comfortable that at that rate, the portfolio doesn't really have much stress that would be interest rate related.

Speaker Change: So we're comfortable that at that rate the portfolio doesn't really have much stress that would be interest rate related.

Speaker Change: And then I would point out another phenomenon. Some of these loans are eligible for either CMBS or some of the GSE programs. And what we're finding is that their pricing is even more affordable than that. So although we did all that stress at seven, that's not a market rate for those loans. So we don't expect a whole lot of concerns around that. In fact, it might be that some of that may wind up coming off the balance sheet because we're not willing to renew it at rates that are available in the market today.

And then I would point out another phenomenon. Some of these loans are eligible for either <unk> or some of the GSE programs and what we're finding is that their pricing is even more affordable than that so although we did all that stress at seven thats not a market rate for those loans.

Joseph J. Lebel III: I'll start by saying this. We've seen a mixed shift in the pipelines, which is good, especially in the commercial pipeline, more towards C&I credit and a little bit less in CRE credit. So those C&I credits, as you know, tend to be floating rate based off prime or a multiple of SOFR. So that's why you're seeing the increased yields, which, by the way, is a good thing. We're very happy about that because those relationships come with deposits and a variety of other things. So we'll have some rate sensitivity if the Fed starts to move, but that will benefit deposit costs in the endgame. I do think you're going to see higher yields.

Speaker Change: So we don't expect a whole lot of concerns around that in fact, it might be that some of that may wind up coming off the balance sheet, because we're not willing to renew it at rates that are available in the market today.

Speaker Change: Got it. Okay. I appreciate you taking my questions. Thank you. It's all I had.

Matthew M. Breese: Got it. Okay. I appreciate you taking the time to answer my questions. Thank you. It's all I had.

Got it okay.

I appreciate you taking my questions. Thank you that's all I had.

Speaker Change: Thanks, Matt.

Matthew M. Breese: Thanks, Matt.

Speaker Change: Thanks, Matt.

Speaker Change: Thank you.

Matthew M. Breese: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question today comes from Manuel Navas from DA Davidson. Manuel, please go ahead, your line is open.

Manuel Navas: Our next question today comes from Manuel Navas of DA Davidson. Manuel, please go ahead; your line is open.

Speaker Change: Our next question today comes from Manuel <unk> from D. A Davidson Manuel. Please go ahead. Your line is open.

Speaker Change: Okay.

Manuel Navas: Hey, thank you. Just to, I guess, dive into the pipeline a little better. So most of the pipeline right now on the commercial side is CNI. And it's indicative that CRE is still muted and CRE can kind of grow as we start to get the cuts that you foresee in your forecast.

Joseph J. Lebel III: Hey, thank you. Just to, I guess, dive into the pipeline a little better. So most of the pipeline right now on the commercial side is CNI, and it's indicative that CRE is still muted, and CRE can kind of grow as we start to get the cuts that you foresee in your forecast.

Manuel: Hey, Thank you just two.

I guess dive into the pipeline a little bit better. So most of the pipeline right now on the commercial side of C&I.

Manuel: The indicative that CRE is still muted and CRE can kind of grow as as we start to get the cuts that you foresee in your forecast.

Joseph J. Lebel III: It's probably a little too premature to declare victory and think that we can expand margin just on loan yields, but we're pretty happy with what we're seeing so far. You might add to that, too, that if you look at the rolling, just the CRE loans that are rolling that are in our supplemental presentation, they're carrying yields in the six, so we're not rolling loans from 3 to 8. We're rolling loans from 6 to 7 and changing because the rolling loans are probably a little bit lower than that newly originated CNI pipeline stuff that Joe refers to. This is something that will play out over time. And if you kind of freeze rates where they are now, we have a backlog of loans that have to roll, so that'll be a little bit of a tailwind. We just don't know if it's enough to overcome any deposit. And could you just remind us of what percentage of the overall loan book floats immediately, or then call it 50, 90 days?

I think we've been fortunate as I mentioned earlier, Matt and good morning.

Speaker Change: I think we've been fortunate, as I mentioned earlier, Maddie, good morning.

Joseph J. Lebel III: I think we've been fortunate, as I mentioned earlier, Maddie, good morning. 8 more C&I bankers during 2023. Those folks have now gotten fully immersed in the ocean-first culture, so to speak, and are starting to see green shoots in their opportunities. Look, we still love CRE. We're good at that. But I think, as it's been well-documented, CRE has had some more recent concerns around valuations, and there's not a lot of activity. So the activity that's in the market is absolutely something that we're interested in, and as Chris mentioned earlier, we're happy to compete. We've done a decent amount of construction in the last couple years, so we're pretty happy with that. And that continues to, as the projects complete, lease up according to terms or better than expected terms. So we'd like to do more. We're just not seeing a lot of it yet.

Speaker Change: 8 more C&I bankers during 2023. Those folks have now gotten fully immersed in the ocean-first culture, so to speak, and are starting to see green shoots in their opportunities. Look, we still love CRE. We're good at that. But I think, as it's been well-documented, CRE has had some more recent concerns around valuations, and there's not a lot of activity. So the activity that's in the market, we're absolutely interested in. And as Chris mentioned earlier, we're happy to compete. We've done a decent amount of construction in the last couple years, so we're pretty happy with that. That continues to, as the projects complete, lease up according to terms or better than expected terms. So we'd like to do more. We're just not seeing a lot of it yet.

Manuel: The higher more C&I bankers during 2023 of those folks have now.

Manuel: <unk> gotten fully immersed in the ocean first culture, so to speak and are starting to see green.

Manuel: Green shoots and there are opportunities look we still love CRE, we're good at that but I think.

Manuel: It's been well documented.

Manuel: <unk> had some.

Manuel: Some more recent concerns around valuations and theres not a lot of activity. So the activity. That's in the market. We're absolutely interested in and as Chris mentioned earlier, we're we're happy to compete we've done a decent amount of construction in the last couple of years. So we're pretty happy with that that continues to as the projects.

Pat Barrett: Call it a third, a third, and a third, so we've got a third that, at least quarterly if not more frequently, We've got a third that's hard fixed and then we've got a third that are adjustable and those are spread out over a series of maturities and dates and they roll when they, Okay, last one for me, which is on your prior point on stuff that's rolling, particularly commercial real estate how well do these properties, Could you provide some colors on before and after debt service coverage ratios and then if there was a reappraisal on any of this stuff? How did the valuations and loan-to-value ratios respond? So there's more detail in our supplemental, but I will kind of give you kind of the headlines.

Manuel: <unk>.

Manuel: Lease up according to terms are better than expected terms, so we'd like to do more we're just not seeing a lot of it yet.

Speaker Change: on

Manuel: On.

Speaker Change: On those C&I hires, you know, you talked a little bit about deepening relationships. Is that kind of the commercial lending channel?

Joseph J. Lebel III: On those C&I hires, you know, you talked a little bit about deepening relationships. Is that kind of the commercial lending channel? How much of the deposits are being driven from that commercial lending channel in the fourth quarter?

Manuel: On those C&I hires are you talked a little bit about deepening relationships is that.

Manuel: The commercial lending channel.

How much of the deposits are being driven from that commercial lending channel in the fourth quarter.

Speaker Change: How much of the deposits are being driven from that commercial lending channel in the fourth quarter?

Speaker Change: Well I don't have that answer in front of me, but I will tell you that.

Speaker Change: Well, I don't have that answer in front of me, but I will tell you that we've been very fortunate to not only defend but attract new deposits in the market in the commercial bank.

Joseph J. Lebel III: Well, I don't have that answer in front of me, but I will tell you that we've been very fortunate to not only defend but attract new deposits in the market for the commercial bank.

We've been very fortunate to not only defend but attract new deposits in the market and the commercial bank.

Pat Barrett: We've done a lot of stress testing on the loan book over the course of the year. We've looked at, you know, rolling maturities, all office loans, kind of every facet we could look at. We have updated, as we have financial statements from clients about, you know, cash flows and rent rolls. And if you were to stress, particularly the rolling CRE, the stuff that rolls over the next two years, and stressed it at an interest rate of 7%, what you find is that it still debt service is pretty easily. So it's in the 124 range, I think, of debt service. So we're comfortable that at that rate, the portfolio doesn't really have much stress that would be interest rate-related. And then I would point out another phenomenon. Some of these loans are eligible for either CMBS or some of the GSE programs.

Speaker Change: I'm sure we can get you some color after the call if that makes sense.

Joseph J. Lebel III: I'm sure we can get you some color after the call, if that makes sense.

Speaker Change: I'm sure we can get you some color.

Speaker Change: After the call if that makes sense.

Speaker Change: Okay, that's great.

Manuel Navas: Okay, that's great.

Speaker Change: Okay, that's great.

Speaker Change: Thank you.

Manuel Navas: Thank you.

Speaker Change: As.

Speaker Change: Thinking about it as a capital builds and you talked a little bit about the buyback, especially when growth is a little bit slower.

Speaker Change: Thinking about it as capital builds, and you talked a little bit about the buyback, especially when growth is a little bit slower, what are your kind of thoughts on M&A thawing, just kind of what's the opportunity out there?

Christopher D. Maher: Thinking about it as capital builds, and you talked a little bit about the buyback, especially when growth is a little bit slower, what are your kind of thoughts on M&A thawing, just kind of what's the opportunity out there?

Speaker Change: What are your kind of.

Speaker Change: Hasan M&A fine just kind of whats the opportunity out there.

Speaker Change: You find the right partner and capital stays elevated.

Christopher D. Maher: You find the right partner, and your capital stays elevated.

Speaker Change: You find the right partner and capital stays elevated.

Speaker Change: Well, I'd start with, you know, our best investment is in ourselves, especially as we, you know, we're currently trading below tangible books.

Christopher D. Maher: Well, I'd start with, you know, our best investment is in ourselves, especially as we, you know, we're currently trading below tangible book. So that would be our priority. We want to continue the organic growth and build out the franchise. There are kind of two, I think, precursors to M&A returning for the industry, a little better understanding of rates and rate marks and financial conditions, and then a little more transparency from the regulators regarding what they're looking for in responsible M&A transactions. So that said, I don't think it's a short term issue, but in the long term, I think there's obviously going to be more industry consolidation. I think we've done that well in the past, and we'd like to play a role going forward. But right now, most of our focus is on organically performing and improving our franchisees.

Speaker Change: I'd start with our best investment is in ourselves, especially as we.

Speaker Change: Trading below tangible book.

Speaker Change: So that would be our priority. We want to continue the organic growth and build out the franchise.

Speaker Change: So that would be our priority will continue the organic growth and build out the franchise.

Speaker Change: There are kind of two, I think, precursors to M&A returning for the industry, a little better understanding of rates and rate marks and financial conditions, and then a little more transparency from the regulators regarding what they're looking for in responsible M&A transactions. So that said, I don't think it's a short term, but in the long term, I think there's obviously going to be more industry consolidation. I think we've done that well in the past, and we'd like to play a role going forward. But right now, most of our focus is on organically performing and improving our franchisees.

Speaker Change: They're kind of two I think precursors to M&A returning for the industry with a better understanding of our rates and rate marks and financial conditions, and then a little more transparency from the regulators regarding what they're looking for and responsible M&A transactions.

Speaker Change: So that said I don't think its a short term.

Christopher D. Maher: And what we're finding is that their pricing is even more affordable than that. So although we did all that stress at seven, that's not the market rate for those loans. So we don't expect a whole lot of concerns around that. In fact, it might be that some of that may wind up coming off the balance sheet because we're not willing to renew it at rates that are available in the market today. I got it.

Speaker Change: But in the long term I think there is obviously going to be more industry consolidation I think we've done that well in the past and we'd like to play a role going forward.

But right now most of our focus is on.

Speaker Change: Organically performing and improving our franchise.

Speaker Change: I appreciate that thank you.

Speaker Change: I appreciate that. Thank you.

Manuel Navas: I appreciate that. Thank you.

Matthew M. Breese: Okay. I appreciate you taking my questions. Thank you. It's all I had.

Speaker Change: Thank you. Before we take our next question, I'd just like to remind everyone, if you would like to register a question, please press star followed by one on your telephone keypad.

Christopher William Marinac: Thank you. Before we take our next question, I'd just like to remind everyone, if you would like to register a question, please press the star followed by one on your telephone keypad. Our next question is from Christopher Marinac of Janie Montgomery Scott. Christopher, please go ahead.

Speaker Change: Thank you before we take our next question I'd, just like to remind everyone. If you would like to register a question. Please press star followed by one on your telephone keypad.

Matthew M. Breese: Thanks, Matt. Thank you. Our next question today comes from Manuel Navas from DA Davidson. Manuel, please go ahead; your line is open.

Speaker Change: Our next question is from Christopher Marinac from Janie Montgomery Scott. Christopher, please go ahead.

Speaker Change: Our next question is from Christopher Merrimack from Janney Montgomery Scott Christopher Please go ahead.

Manuel Navas: Hey, thank you. Just to, I guess, dive into the pipeline a little better. So most of the pipeline right now on the commercial side is CNI, and that's indicative that CRE is still muted, and CRE can kind of grow as we start to get the cuts that you foresee in your forecast. I think we've been fortunate, as I mentioned earlier, Maddie. Good morning.

Christopher William Marinac: Thanks very much and thanks for hosting us all today. Chris, I wanted to ask you or Joe about the pace of new customers and I know you talked a couple times this morning about bringing in new deposits and having that success last year. Should that pace accelerate under the right circumstances and can you just kind of walk us through kind of what would kind of drive that? Is it more external economic factors that would drive the pace of new customers to you?

Christopher D. Maher: Thanks very much and thanks for hosting us all today. Chris, I wanted to ask you or Joe about the pace of new customers, and I know you talked a couple times this morning about bringing in new deposits and having that success last year. Should that pace accelerate under the right circumstances, and can you just kind of walk us through kind of what would kind of drive that? Is it more external economic factors that would drive the pace of new customers to you?

Christopher D. Maher: Thanks, very much and thanks for hosting US all today, Chris I wanted to ask you where Joe about the pace of new customers and I know you talked a couple of times. This morning about bringing in new deposits and having that success last year should that pace.

Christopher D. Maher: Accelerate under the right circumstances and can you just kind of walk us through kind of what would kind of drive that is it more external economic factors that would drive the pace of new customers to you.

Chris: We'd certainly like to see more growth going forward, and I think the way I would sum things up is that

Christopher D. Maher: We'd certainly like to see more growth going forward, and I think the way I would sum things up is that for a decent chunk of the year, if you think about events in March, April, and even into May, there was such unrest that customers were not willing to move from any bank to any other bank, right? If they were happy where they were, they were just kind of staying put. The same went for staff. We've been, you know, pleased to be able to add a few new bankers that Joe mentioned.

Joseph J. Lebel III: 8 more C&I bankers during 2023. Those folks have now gotten fully immersed in the ocean-first culture, so to speak, and are starting to see green shoots in their opportunities. Look, we still love CRE.

Speaker Change: We'd certainly like to see more growth going forward and I think the way I would sum things up is that.

Chris: For a decent chunk of the year, if you think about events in March, April, and even into May, there was such unrest that customers were not willing to move from any bank to any other bank, right? If they were happy where they were, they were just kind of staying put. The same went for staff. We've been, you know, pleased to be able to add a few new bankers that Joe referenced. Historically, we have grown organically over a long period of time at like the 10% per year rate. We'd love to get ourselves back to that. It's not going to happen, I don't think, in 2024, but that's...

Speaker Change: A decent chunk of the year. If you think about events in March April and even into May there was such unrest that customers were not willing to move from any bank to any other bank right. If they were happy where they were it was just kind of staying put the same one for staff.

Joseph J. Lebel III: We're good at that. But I think, as it's been well-documented, CRE has had some more recent concerns around valuations, and there's not a lot of activity. So the activity that's in the market is absolutely something that we're interested in, and as Chris mentioned earlier, we're happy to compete. We've done a decent amount of construction in the last couple years, so we're pretty happy with that. And that continues to, as the projects complete, lease up according to terms or better than expected terms.

Speaker Change: We've been pleased to be able to add a few new bankers that Joe referenced.

Christopher D. Maher: Historically, we have grown organically over a long period of time at about a 10% per year rate. We'd love to get ourselves back to that. It's not going to happen, I don't think, in 2024, but that's a really good number for our franchise. Our markets support it. We can find the talent to do that. So this is the year where growth rates pick up, but our long-term outlook would be to position the franchise to grow at about 10% a year. And I think we have the markets and the people to do that. It's just going to take a little while to return to that level. So we're bullish, but it's going to take a little time to work through that.

Speaker Change: Historically, we have grown organically over a long period of time like the 10% per.

Speaker Change: <unk> per year rate.

Speaker Change: We'd love to get ourselves back to that.

Speaker Change: Can happen I don't think in 2024, but thats it.

Chris: a really good number for our franchise. Our markets support it. We can find a talent to do that. So this is the year where we growth rates pick up but our long term outlook would be to position the franchise to grow at about 10% a year. And I think we have the markets and the people to do that it's just take a little while to return back to that level. So we're bullish but it's going to take a little time to

Speaker Change: A really good number for our franchise our market supported we can find the talent to do that.

Speaker Change: So this is the year, where we growth rates pick up but our long term outlook would be to position the franchise to grow at about 10% a year.

Joseph J. Lebel III: So we'd like to do more. We're just not seeing a lot of it yet on those C&I hires. You know, you talked a little bit about deepening relationships. Is that kind of the commercial lending channel?

And I think we have the markets and the people to do that it's just.

Joseph J. Lebel III: How much of the deposits are being driven from that commercial lending channel in the fourth quarter? Well, I don't have that answer in front of me, but I will tell you that we've been very fortunate to not only defend but attract new deposits in the market in the commercial bank. I'm sure we can get you some color after the call if that makes sense.

Speaker Change: Take a little while to return back to that level. So.

Speaker Change: So we're bullish.

But which could take a little time to.

Chris: to work through that.

Speaker Change: To work through them.

Speaker Change: Got it. That's helpful. And just to follow up for Pat or whomever, the loan marks from Fair Value that we've seen in past quarters, did those improve this quarter? And is there opportunity for that to change further with rates this year?

Pat Barrett: Got it. That's helpful. And just to follow up for Pat or whomever, the loan marks from Fair Value that we've seen in past quarters, did those improve this quarter? And is there opportunity for that to change further with rates this year?

Speaker Change: Got it that's helpful and just a follow up for Pat or whomever.

Joseph J. Lebel III: Okay, that's great. Thank you. Thinking about it as capital builds, and you talked a little bit about the buyback, especially when growth is a little bit slower, what are your thoughts on M&A thawing, just kind of what's the opportunity out there? You find the right partner, and capital stays elevated.

Speaker Change: The loan marks from fair value that we've seen in past quarters did those improve this quarter and is there opportunity for that to change further at which rates this year.

Speaker Change: I really want to thank you for closing the call down with that question. I was hoping we wouldn't get that, but yeah, you're going to see loan marks improve this quarter. You're going to see that across the industry with the change in curves and rate expectations. We spent a fair amount of time looking at that and taking a look at how our mix

Pat Barrett: I really want to thank you for closing the call down with that question. I was hoping we wouldn't get that, but yeah, you're going to see loan marks improve this quarter. You're going to see that across the industry with the change in curves and rate expectations. We spent a fair amount of time looking at that and taking a look at how our mix changes.

Speaker Change: I really want to thank you for closing the call down with that question I was hoping we wouldn't get that right, yes, youre going to see loan marks improved this quarter youre going to see that across the industry with the change in curve and rate expectations.

Speaker Change: We spent a fair amount of time looking at that and taken a look at how our mix is the same or differs from others.

Speaker Change: and others. Thank you.

Pat Barrett: and others. Thank you.

Speaker Change: Because we've noticed that we tend to have very conservative marks that are out there from a fair value disclosure perspective.

Speaker Change: We've noticed that we tend to have very conservative loan marks that are out there from a fair value disclosure perspective.

Pat Barrett: We've noticed that we tend to have very conservative loan marks that are out there from a fair value disclosure perspective, feel good about those fair value marks, and we think we've probably got a little bit of room for improvement. I think we'll be a little more in line with what some of the assumptions are. But, you know, we've got probably a bit heavier concentration of longer-term residential, and many others do, and that'll tend to drive a bigger fair value market. I think you'll see the gap between kind of average, and high and low, narrow pretty meaningfully as people report.

Speaker Change: feel good about those fair value marks, we think we've probably got a little bit of room for improvement.

Speaker Change: We feel good about those fair value marks we think we've probably got a little bit of room for improvement.

Christopher D. Maher: So that said, I don't think it's a short term issue, but in the long term, I think there's obviously going to be more industry consolidation. I think we've done that well in the past, and we'd like to play a role going forward. But right now, most of our focus is on organically performing and improving our franchisees. I appreciate that. Thank you. Thank you. Before we take our next question, I'd just like to remind everyone, if you would like to register a question, please press star followed by one on your telephone keypad. Our next question is from Christopher Marinac on behalf of Janie Montgomery Scott. Christopher, please go ahead.

Speaker Change: I think we'll be a little more in line with what some of the assumptions are.

Speaker Change: Be a little more in line with some of the assumptions in our discount rates.

Speaker Change: But, you know, we've got probably a bit heavier concentration of longer term residential.

Speaker Change: Got it.

Speaker Change: Probably a bit heavier concentration of longer term residential.

Speaker Change: and many others do, and that'll tend to drive a bigger fair value market.

Speaker Change: Many others do and that will tend to drive bigger fair value marks.

Speaker Change: I think you'll see the gap between kind of average.

Speaker Change: But I think youll see the gap between kind of average.

Speaker Change: and high and low, narrow pretty meaningfully as people report.

Speaker Change: And high and low narrowed pretty meaningfully as people report this quarter.

Christopher William Marinac: Thanks very much, and thanks for hosting us all today. Chris, I wanted to ask you or Joe about the pace of new customers, and I know you talked a couple times this morning about bringing in new deposits and having that success last year. Should that pace accelerate under the right circumstances, and can you just kind of walk us through kind of what would kind of drive that?

Speaker Change: That's great, Pat. Thank you for that, and sorry to bring up a sore topic, but we appreciate the background a lot. It's not sore. It's just a pretty deep topic.

Christopher William Marinac: That's great, Pat. Thank you for that, and sorry to bring up a sore topic, but we appreciate the background a lot. It's not sore. It's just a pretty deep topic.

That's great. Thank you for that and sorry to bring up a sore topic, but I appreciate the background a lot is not stored it's just.

Speaker Change: Okay.

Speaker Change: The Italian.

Speaker Change: Let's take Benjy offline on that sometime.

Christopher William Marinac: Let's take Benjy offline on that sometime.

Speaker Change: Let me take the engineering or offline on that some time Chris.

Speaker Change: It's Chris. I'll add to Pat's comments. These are like notoriously sensitive calculations.

Christopher D. Maher: It's Chris. I'll add to Pat's comments. These are like notoriously sensitive calculations.

Speaker Change: Chris It's Chris I'll add to Pat's comments these are notoriously sensitive calculations.

Christopher D. Maher: Is it more external economic factors that would drive the pace of new customers to you? We'd certainly like to see more growth going forward, and I think the way I would sum things up is that, for a decent chunk of the year, if you think about events in March, April, and even into May, there was such unrest that customers were not willing to move from any bank to any other bank, right? If they were happy where they were, they were just kind of staying put.

Chris: We're kind of looking at them, and they're very circular in some cases, where as your prepayment speed assumptions change, then your rates change, and kind of one thing feeds into another. The good news is they're getting better, and we're going to continue to put a finer point.

Chris: We're kind of looking at them.

Chris: Theyre very circular and some in some cases, where the euro is your prepayment speed assumptions changed in your rates change in kind of one thing feeds into another that the good news is that getting better.

Chris: And.

And we're going to continue to put a finer point on that.

Speaker Change: Nope, understood and I appreciate it. Thanks again for taking all of our questions.

Christopher William Marinac: Nope, understood, and I appreciate it. Thanks again for taking all of our questions.

Speaker Change: No understood and I appreciate it thanks again for taking all of our questions.

Speaker Change: Thanks, Chris.

Christopher William Marinac: Thanks, Chris.

Speaker Change: Thanks, Chris.

Christopher D. Maher: The same went for staff. We've been, you know, pleased to be able to add a few new bankers that Joe referenced. Historically, we have grown organically over a long period of time at about the 10% per year rate. We'd love to get ourselves back to that. It's not going to happen, I don't think, in 2024, but that's... a really good number for our franchise.

Chris: Thank you.

Speaker Change: Thank you.

Christopher William Marinac: Thank you.

Speaker Change: This is our final question today, so I'd like to hand back to management for any closing remarks.

Alfred Goon: This is our final question today, so I'd like to hand it back to management for any closing remarks.

Speaker Change: This is all final question today, so I'd like to hand back to management for any closing remarks.

Speaker Change: Alright, thank you.

Management: Thank you. We appreciate your time today and your continued support of Ocean First Financial Corp. We look forward to speaking with you after our first quarter results are published in April. Thanks very much and have a safe weekend.

Alfred Goon: Thank you. We appreciate your time today and your continued support of Ocean First Financial Corp. We look forward to speaking with you after our first quarter results are published in April. Thanks very much, and have a safe weekend.

We appreciate your time today and your continued support of Ocean first financial Corp. We look forward to speaking with you. After our first quarter results are published in April thanks, very much and have a say.

Speaker Change: If we can.

Christopher D. Maher: Our markets support it. We can find the talent to do that. So this is the year where growth rates pick up, but our long-term outlook would be to position the franchise to grow at about 10% a year. And I think we have the markets and the people to do that; it just takes a little while to return to that level. So we're bullish, but it's going to take a little time to work through that. Got it.

Speaker Change: Thank you everyone for joining today's call. You may now disconnect your lines and have a lovely day.

Daisy (Operator): Thank you everyone for joining today's call. You may now disconnect your lines and have a lovely day.

Speaker Change: Thank you everyone for joining today's call you may now disconnect your lines and have a lovely day.

Emily Beynon (Transcriber): transcript Emily Beynon

Speaker Change: [music].

Speaker Change: Yes.

Pat Barrett: That's helpful. And just to follow up for Pat or whomever, the loan marks from Fair Value that we've seen in past quarters, did those improve this quarter? And is there opportunity for that to change further with rates this year?

Speaker Change: [music].

Speaker Change: Okay.

Pat Barrett: We spent a fair amount of time looking at that and taking a look at how our mix and others compare. Thank you. We've noticed that we tend to have very conservative loan marks that are out there from a fair value disclosure perspective, feel good about those fair value marks, and we think we've probably got a little bit of room for improvement. I think we'll be a little more in line with what some of the assumptions are. But, you know, we've probably got a bit heavier concentration of longer-term residential, and many others do, and that'll tend to drive a bigger fair value market.

Pat Barrett: I think you'll see the gap between kind of average and high and low narrow pretty meaningfully as people report. That's great, Pat. Thank you for that, and sorry to bring up a sore topic, but we appreciate the background a lot. It's not sore.

Christopher D. Maher: It's just a pretty deep topic. Let's take Benjy offline on that sometime. It's Chris. I'll add to Pat's comments. These are notoriously sensitive calculations.

Christopher D. Maher: We're kind of looking at them, and they're very circular in some cases, where as your prepayment speed assumptions change, then your rates change, and kind of one thing feeds into another. The good news is they're getting better, and we're going to continue to make a finer point. Nope, understood, and I appreciate it. Thanks again for taking all of our questions. Thanks, Chris. Thank you. This is our final question today, so I'd like to hand it back to management for any closing remarks. Thank you. We appreciate your time today and your continued support of Ocean First Financial Corp. We look forward to speaking with you after our first quarter results are published in April. Thanks very much, and have a safe weekend. Thank you everyone for joining today's call. You may now disconnect your lines and have a lovely day. transcript Emily Beynon

Q4 2023 OceanFirst Financial Corp Earnings Call

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