Q2 2024 Dime Community Bancshares Inc Earnings Call

Operator: Thank you for standing by, and welcome to Dime Community Bancshares Inc.'s second quarter earnings conference call. Before we begin, the company would like to remind you that discussions during this call contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Thank you for standing by and welcome to Dime Community Bancshares, Inc. Second quarter earnings Conference call.

Operator: Such statements are subject to risks, uncertainties, and factors that may cause actual results to differ materially from those contained in any such statements, including as set forth in today's press release and the company's filings with the U.S. Securities and Exchange Commission, to which we refer you. During this call, references will be made to non-GAAP financial measures as supplemental measures to review and assess operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. GAAP.

Speaker Change: Before we begin the company would like to remind you that discussions. During this call contains forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.

Speaker Change: Such statements are subject to risks uncertainties and factors that may cause actual results to differ materially from those can take any such statements, including as set forth in today's press release and the company's filings with the U S Security and exchange Commission to which we refer you.

During this call references will be made to non-GAAP financial measures as supplemental measures to review and assess operating performance. These.

non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the U S. Scott.

Speaker Change: More information about non-GAAP measures and full reconciliation to GAAP. Please refer to today's earnings release.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the Speakers' presentation there'll be a question answer session.

Speaker Change: To ask a question during the session you will need to press star one on your telephone.

Speaker Change: You will then hear an automated message advising your hand is raised to start drawing a question. Please press star one again please.

Speaker Change: Please be advised that today's conference is being recorded.

Operator: For information about non-GAAP measures and for reconciliation to GAAP, please refer to today's earnings release. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Stuart Lubow, President and CEO. Please go ahead.

Stuart H. Lubow: Now I'd like to turn the conference over to Stuart <unk>, President and CEO. Please go ahead.

Stuart H. Lubow: Good morning.

Stuart H. Lubow: Thank you, Lisa, and thank you all for joining us this morning for our quarterly earnings call. With me today is Avi Reddy, our CFO. In the second quarter, Dime continued to execute on our growth plan. The momentum in our business is strong, and we grew core deposits by over $300 million and business loans by over $200 million. Strong growth in core deposits has enabled us to reduce our wholesale funding positions substantially since year-end. As a result, our net interest margin increased by 20 basis points in the quarter.

Stuart: Thank you Lisa and thank you all for joining US this morning for our quarterly earnings call with me today is Avi Reddy, our CFO.

Stuart: In the second quarter dive continues to execute on our growth plan.

Speaker Change: Momentum in our business are strong and we grew core deposits by over $300 million and business size by over $200 million.

Speaker Change: The strong growth in core deposits has enabled us to reduce our wholesale funding position substantially since year end as a result, the net interest margin increased by 20 basis points in the corner. We were pleased with the increase in the margin and believe the first quarter of 2024 was the trough for this cycle in terms of both net interest.

Stuart H. Lubow: We were pleased with the increase in the margin and believe the first quarter of 2024 was a trough for this cycle in terms of both net interest income and NIM. Our cost of deposits declined on a linked quarter basis, and since the end of the second quarter, deposits have continued to remain stable to decline. Going forward, we expect a slow and steady build in NIM, absent any rate cuts. Rate cuts and the eventual repricing of our legacy lower coupon fixed and adjustable rate loan portfolios should accelerate NIM expansion as we get into the latter half of 2025 and 2026, and this will drive a structurally higher nymph.

Income and NIM.

Speaker Change: Our cost of deposits declined on a linked quarter basis and since the end of the second quarter deposits have continued to remain stable to down.

Speaker Change: Going forward, we expect a slow and steady build of NIM absent any rate cuts right.

Speaker Change: Rate cuts and the eventual re pricing of our legacy lower coupon fixed and adjustable rate loan portfolios should accelerate NIM expansion as we get into the latter half of 2025 and 2026 and then this will drive a structurally higher NIM.

Stuart H. Lubow: Over the past month, we successfully raised $75 million in subordinated debt. At the end of the second quarter, our total capital ratio was 14.5%, and we now rank at the absolute top end of our local peer group in terms of total capital. Capital is obviously important in executing our growth strategy. Asset quality continues to remain solid, with NPAs down 29% on a link order basis.

Speaker Change: Over the past month, we have successfully raised $75 million of subordinated debt at the end of the second quarter. Our total capital ratio was 14, 5% and we now rank at the absolute top end of our local peer group in terms of total capital.

Speaker Change: Capital is obviously important and exited in executing our growth strategy.

Speaker Change: Asset quality continues to remain solid with NPA is down 29% on a linked quarter basis, we plan to file our 10-Q next week and expect to report that classified assets will also be down approximately 14% on a linked quarter basis.

Stuart H. Lubow: We plan to file our 10-Q next week and expect to report that classified assets will also be down approximately 14% on a link order basis. Additionally, we recently received regulatory approval for a new branch location in West Chester County. In fact, I was in White Plains just last week for a business reception we hosted with many important new and prospective clients, and I'm proud of our ability to expand Dime Franchise into this new, attractive new market.

Speaker Change: Yeah.

Speaker Change: We recently received regulatory approval for new branch location in Westchester County.

Speaker Change: In fact I was in White Plains, just last week for a business that reception, we hosted with many important new and prospective clients and I'm proud of our ability to expand our franchisee into this new attracted new market.

Stuart H. Lubow: Subsequent to our first quarter earnings call, where we announced the onboarding of six deposit gathering teams, we've onboarded another two deposit gathering teams in May and June. One of these teams is based in Williamsburg, a market that is very familiar to Dime and where we were founded, and the second team is based in Manhattan.

Speaker Change: Subsequent to our first quarter earnings call, where we announced the Onboarding of six deposit gathering teams. We've on boarded another two deposit gathering teams in May and June one of these teams is basically the Williamsburg market that is very very familiar to time and where we felt we were founded the second team is based in Manhattan.

Stuart H. Lubow: Additionally, we hired an exceptional banker to build out our not-for-profit lending work. I am proud of the company-wide effort in terms of recruiting and integrating all these bankers into the Dime umbrella. Clearly, our recruiting efforts over the past year have been successful. Our deposit gathering groups are up over $1 billion in total deposits, and our middle market C&I group helped drive strong business loan growth this quarter. In the quarters ahead, we expect the healthcare vertical to begin to meaningfully contribute to the loan growth and the diversification of our balance sheet as it has built a substantial loan pipeline at an attractive yield.

Speaker Change: Additionally, we hired an exceptional banker to build out our not for profit Monday.

Speaker Change: I am proud of the company wide effort in terms of recruiting and integrating all these bankers into the diamond relevant clearly our recruiting efforts over the past year have been successful or deposit gathering groups are up over a $1 billion of total deposits and our middle market C&I group helped drive strong business loan.

Speaker Change: Growth this quarter in.

Speaker Change: In the quarters ahead, we expect health the health care vertical to begin.

Speaker Change: To meaningfully contribute to the loan growth and the diversification of our balance sheet as they have built a substantial loan pipeline at attractive yields.

Stuart H. Lubow: In summary, I am very optimistic about the trajectory that Dime is on. Our market continues to be significantly disrupted, and the strategic offense we've been playing is paying off in the numbers. With that, I will turn it over to...

Speaker Change: In summary, I am very optimistic about the trajectory of that time is on our market continues to be significantly disrupted and they are strategic to the office. So we've been playing is paying off in the in the numbers.

Speaker Change: With that I will turn it over to Avi.

Avinash Reddy: Thank you, Stu. Reported EPS was 43 cents per share, an increase of 5% over the linked quarter. In line with the mid-quarter update we provided in June, we saw meaningful NIM expansion to the tune of 20 bases. NIM expansion was driven by the strong year-to-date growth in core deposits and our business loan portfolio, as well as the proactive reduction in higher-cost wholesale funding. Non-interest income for the second quarter was $11.8

Avinash Reddy: Thank you Stu.

Avinash Reddy: Reported EPS was <unk> 43 per share an increase of 5% over the linked quarter.

Avinash Reddy: In line with the mid quarter update we provided in June we saw meaningful NIM expansion to the tune of 20 basis points.

Avinash Reddy: NIM expansion was driven by the strong year to date growth in core deposits and our business loan portfolio as well as the proactive reduction in higher cost wholesale funding.

Avinash Reddy: Noninterest income for the second quarter was $11 8 million. This included a gain on the sale of a branch that we executed a sale leaseback on.

Avinash Reddy: This included a gain on the sale of a branch that we executed a sale lease back on. Core cash operating expenses for the second quarter, excluding intangible amortization, were $55.4 million. We have recruited approximately 65 revenue-generating bankers over the course of the past five quarters, including 15 deposit-gathering teams, a fully built-out healthcare vertical, and most recently, a not-for-profit vertical. We expect the revenue generation from these hires to far outweigh the start-up expenses associated with the organic build-out of all these groups in the years ahead.

Avinash Reddy: Core cash operating expenses for the second quarter, excluding intangible amortization was $55 4 million.

Speaker Change: We have recruited approximately 65 revenue generating bankers over the course of the past five quarters, including 15 deposit gathering teams a fully built out health care vertical and most recently a not for profit vertical.

Speaker Change: We expect the revenue generation from these hires to far outweigh the startup expenses associated with the organic build out of all of these groups in the years ahead.

Avinash Reddy: We had a $5.6 million loan loss provision this quarter. The allowance to loans increased to 72 basis points... Our CT1 ratio is above 10%, and our total capital ratio of 14.5% is now best in class amongst our local peer groups. Next, I'll provide some thoughts on NIM, expenses, and balance sheet growth. With respect to NIM, we called out in the earnings release that there was a four basis point benefit from the payoff of a loan that was previously on non-accrual status.

Speaker Change: We had a $5 $6 million loan loss provision this quarter the allowance to loans increased to 72 basis points.

Speaker Change: Our CET one ratio is above 10% and our total capital ratio of 14 into half percent is now best in class amongst our local peer group.

Avinash Reddy: In addition, the subnet offering, which closed on the last day of the quarter, is expected to have a three basis point downward impact on the NIM going forward. As such, the base NIMH to work from for modeling purposes for future quarters is closer to 234.

Speaker Change: Next I'll provide some thoughts on the NIM expenses and balance sheet growth.

Speaker Change: With respect to NIM, we called out in the earnings release that there was a four basis point benefit from the payoff of a loan that was previously on non accrual status.

In addition, the sub debt offering which closed on the last day of the quarter is expected to have a three basis point downward impact on the NIM going forward.

Speaker Change: As such the base NIM to walk from for modeling purposes for future quarters, it's closer to 34.

Avinash Reddy: As Stu said, we expect a slow and steady improvement in NIM until the impact of rate cuts kicks in. We also have a significant repricing opportunity in our adjustable and fixed rate loan portfolios that is expected to kick in in the second half of 2025 and 2026. To give you a sense of the repricing opportunity, in the second half of 2025 and in 2026, we have approximately $2 billion of adjustable and fixed rate loans across the loan portfolio at a weighted average rate of 3.9% that either reprice or mature in that timeframe.

Speaker Change: As <unk> said, we expect a slow and steady improvement in the NIM until the impact of rate cuts kick in.

Speaker Change: We also have a significant repricing opportunity in our adjustable and fixed rate loan portfolios that is expected to kick in in the second half of 'twenty five and 'twenty six.

Speaker Change: To give you a sense of the repricing opportunity in the second half of 2025 and in 2026th we have approximately $2 billion of adjustable and fixed rate loans across the loan portfolio at a weighted average rate of three 9% that either reprice or mature in that timeframe.

Avinash Reddy: Assuming a conservative 225 basis points spread for those loans over the forward five-year Treasury, we should see a substantial 35 basis point increase in the NIM as these loans reset to higher rates in 2025 and 2026. With respect to expenses, we expect core cash operating expenses for the third quarter to be approximately $57 million, and we expect to hold that quarterly run rate with very nominal growth in 2025. We are working on a few company-wide initiatives that should drop to the bottom line in 2025, and this should result in very nominal expense growth in 2025.

Speaker Change: Assuming a conservative 225 basis point spread for those loans over the forward five year Treasury, we should see a substantial 35 basis point increase in the NIM at these loans reset to higher rates and 25% and 26.

Speaker Change: With respect to expenses, we expect core cash operating expenses for the third quarter to be approximately $57 million and we expect to hold that quarterly run rate with very nominal growth in 2025.

Speaker Change: We are working on a few company wide initiatives that should drop to the bottom line in 'twenty five and this should result in very nominal expense growth for 2025.

Avinash Reddy: With respect to our positioning on lending, we anticipate continued growth in our business lending portfolio. Growth in the business lending portfolio will offset declines in multifamily and Cree, while we are still servicing existing relationships. On an aggregate basis, we expect the loan portfolio to be up low single digits for the second half of the year. With that, I'll turn the call back to Lisa, and we'll be happy to take all your questions. Thank you.

Speaker Change: Okay.

Speaker Change: With respect to our positioning on lending, we anticipate continued growth in our business lending portfolio.

Speaker Change: Growth in the business portfolio will offset declines in multifamily inquiry, while we are still servicing existing relationships.

Speaker Change: On an aggregate basis, we expect the loan portfolio to be up low single digits for the second half of the year.

Speaker Change: With that I'll turn the call back to Lisa and we'll be happy to take all your questions.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1-1 on your telephone. We also ask that you wait to hear your name and company announced before you proceed with your question. One moment for the first question. And our first question today is coming from Mark Fitzgibbon of Piper Sandler. Your line is open.

Lisa: Thank you.

Lisa: If you would like to ask a question. Please press star one on your telephone. We also ask that you wait to hear your name and company announced before you proceed with your question.

Speaker Change: One moment for the first question.

Lisa: Okay.

And our first question today is coming from Mark Fitzgibbon of Piper Sandler Your line is open.

Gregory Zingone: Hey, good morning guys. This is Gregory Zingone stepping in for Mark at the moment. How are you?

Lisa: Hey, Good morning, guys. This is Greg <unk> stepping in for Mark at the moment how are you.

Stuart H. Lubow: Hey Greg, how are you doing? Hey, how are you?

Gregory Zingone: Just curious, what was your spot name for June?

Speaker Change: Hey, Greg how are you doing.

I'm just curious what was your thought NIM for June.

Avinash Reddy: Yes, so what I tried to point out in the prepared remarks, Greg, was we had around four basis points from the payoff of a previous non-accrual loan. All that happened in the month of June, so the June NIM was a little inflated, but if you back that out, you know, the spot NIM was probably around $236, $237 for the month of June. We also mentioned that, you know, the sub-debt offering closed at the end of June, so that'll have an impact going forward, but probably around $236 to $237 extra sub-debt for June.

Speaker Change: Yes, so what I tried to point out in the in the prepared remarks, Greg was.

Speaker Change: We had around four basis points from the payoff of thought.

Speaker Change: Previous nonaccrual loan all of that happened in the month of June for the June NIM was a little.

Speaker Change: Inflated, but if you back that out.

Speaker Change: The Spartan and <unk>, probably been around $2 36 to <unk> 37 for the month of June.

Speaker Change: We also mentioned that the sub debt offering closed at the end of June so that'll have an impact going forward, but probably around 236% to 237 extra sub debt for June.

Gregory Zingone: Okay, and then on the 5.5 million provision, is that a good run rate for us to think about for the remaining...

Speaker Change: Okay, and then on the $5 5 million provision is that a good run rate for us to think about for the remainder of the year.

Avinash Reddy: Well, we evaluate the provision every quarter based on economic conditions, so it's really going to be a function of, you know, what the Moody's forecasts are on a going-forward basis. I think right now we feel pretty adequately provisioned.

Speaker Change: Well, we evaluate the provision every quarter based on economic conditions are clearly going to be a function of what the Moody's forecast are on a going forward basis, I think right now we feel.

Speaker Change: Pretty adequately.

Avinash Reddy: We built the Reserva basis point here, so it's really going to be a function of, you know, how the Moody's estimates come out, Greg. Yeah, and as we continue to book new loans, C&I, and business-related loans, obviously, those provisions are somewhat higher, so, you know, they'll be just in terms of the ongoing... If there is a shift in the loan portfolio, there will be some provisioning associated with that that will change relative to the model.

Speaker Change: Provisioned, we built the resolve of basis points here.

Speaker Change: It's only going to be a function of how the Moody's estimates come out come out right.

Speaker Change: We continue to book, new loans, C&I and business related loans, obviously those provisions are somewhat higher so there'll be just in terms of the ongoing.

Speaker Change: The shift in the loan portfolio there'll be some provisioning associated with that that will.

Speaker Change: That will change relative to the model.

Gregory Zingone: Okay. And then lastly, how big of a push do you plan to make in Westchester? Is adding more teams or more branches in Westchester a priority going forward?

Speaker Change: Okay.

Speaker Change: Okay, and then lastly, how big of a push do you plan to make in Westchester is adding more teams or more branches in westchester priority going forward.

Stuart H. Lubow: I think, you know, we've got two teams up there now. We've just gotten approval for a full service or limited service branch up there. We're not really looking to open up retail locations. It's really more second-story, you know, business-related growth, and so, you know, for now, I can see us bringing on more teams over time. I don't see us opening up a lot more bricks and mortar up there.

Speaker Change: I think we've got two teams up there now.

Speaker Change: Just gotten approval for our full service or limited service branch up there, we're not really looking to open up retail locations, it's really more second story.

Speaker Change: Business related.

Speaker Change: And so for now.

Speaker Change: I can see us bringing on more teams over time, I don't see us opening up.

Speaker Change: A lot more bricks and mortar up there in terms of branch locations.

Gregory Zingone: Awesome. Thank you guys. Thanks, Greg. Thank you.

Speaker Change: Awesome. Thank you guys.

Operator: Thank you and one moment for the next question. Our next question will be coming from Manuel Navas of D.A. Davidson. Your line is open.

Greg: Thanks, Greg.

Speaker Change: Thank you and one moment for the next questions.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Our next question will be coming from manual novice of D. A Davidson your line is open.

Manuel Antonio Navas: Hey, good morning, fellows. I appreciate it.

Manuel Antonio Navas: Hey, good morning Fellows.

Manuel Antonio Navas: I think I just missed the OPEX guide for next quarter. Could you just reiterate that? And then any color you can add on some of the things you're looking at for next year? You're saying you're going to have nominal expense growth. Could you highlight or discuss any of those initiatives in greater detail?

Speaker Change: I appreciate it.

Manuel Antonio Navas: I think I just missed the Opex guide for next quarter could you just reiterate that and then any any color you can add on so some of that.

Speaker Change: Things Youre looking at for next year, Youre, saying youre going to have nominal expense growth just could you highlight or discuss any of those initiatives in greater detail.

Manuel Antonio Navas: Or is it too early to say?

Avinash Reddy: Yeah, we're just going through our budgeting process now, Manuel, so I think as we get towards the end of the year and into, you know, our January call, we'll be able to outline all of those in detail. The guidance was, you know, we probably expect to be around $57 million in Q3, you know, kind of hold that for the rest of the year, but our goal is, you know, for next year to have very nominal growth, you know, absent any, you know, additional team hiring, you know, opportunity that could take place next year. So that's pretty much the guidance at this point. I think we'll have more details as we get, you know, into our December and January timeframe once we get through the budgeting season.

Speaker Change: Too early to say.

Speaker Change: Yes, we're just going through our budgeting process now Emmanuel So I think as we get towards the end of the R&D.

Speaker Change: And the daily our January call, we'll be able to outline all of those in detail.

Speaker Change: Detail of the guidance.

Speaker Change: We probably expect to be around $57 million.

Speaker Change: In Q3 kind of hold that for the rest of the hour, but our goal is for next year are very very nominal growth absent any additional team hiring opportunity that could take place next year.

Speaker Change: So that's pretty much the guidance at this point I think we'll have more details as we get.

Speaker Change: December and January timeframe once we once we get through the budgeting season.

Manuel Antonio Navas: I really appreciate that. That leads me to my next question.

Speaker Change: I really appreciate that that leads me to my next question, what's kind of the pipeline are higher or is it kind of calmed down are you still seeing talent out there that's interesting.

Speaker Change: Sure.

Speaker Change: Eight.

Speaker Change: On.

Speaker Change: On hiring the hiring process.

Manuel Antonio Navas: What's the pipeline for hires? Has it kind of calmed down? Are you still seeing talent out there that's interesting? What's the update on the hiring process?

Brian: We are still talking to folks who are still talent out there both on both sides of the balance sheet, both on the deposit side and on the lending side. We've obviously been busy on both sides of the balance sheet, we Brian.

Stuart H. Lubow: We're still talking to folks; there's still talent out there on both sides of the balance sheet, both on the deposit side and on the lending side. We've obviously been busy on both sides of the balance sheet; we've brought in a group of C&I lenders, and they've really begun contributing in a significant way. Our healthcare group pipeline is very significant, and I think there's going to be some meaningful loan volume this quarter in that business as well.

Brian: As a group of C&I lenders and we.

Brian: And.

Brian: Dave.

Dave: Have begun contributing in a significant way our healthcare group pipeline is very significant and I think theres going to.

Brian: These are meaningful.

Brian: Loan volume this quarter in that business as well.

Stuart H. Lubow: And we are exploring other opportunities in terms of the C&I business. So yeah, there's some opportunity. I think as we get later in the year, as folks get closer to year-end and bonuses and whatnot, that's going to slow down a little bit, but we are planting the seeds for next year. So I do think there's some opportunity. I think we've proved that we're the bank to be in terms of opportunity and bringing our customers over.

Brian: And we are exploring other other teams.

Brian: In terms of C&I business. So yes, there is some opportunity I think as we get later in the year.

Brian: As folks get closer to year end and bonuses and whatnot.

Brian: Is going to slow down a little bit, but we are planting the seeds into next year. So I.

Brian: I do think Theres some opportunity I think we proved that.

Brian: Where the bank to be in terms of opportunity and bringing their customers over we've opened.

Stuart H. Lubow: We've opened 3,000 to 4,000 new business accounts and relationship accounts with the new teams that are just starting to fund. We're almost at $1.1 billion in new deposits, nearly half of that DDA. So the model and the thesis that we have have proved out, and I think we're looked at as a place to go in terms of opportunity. So I really do think there's a lot to come in the future.

Brian: Three to 4000, new business accounts and relationship accounts with the new teams that are just starting to fund.

Brian: Almost at $1 $1 billion of new deposits.

Brian: Nearly half of that DDA. So.

Brian: The model and the thesis that we have as proved out.

Brian: And I think.

Brian: We're looked at as a place to go in terms of opportunity. So I really do think there is a lot a lot to come in the future.

Manuel Antonio Navas: Is healthcare going to be a big chunk of the low single-digit growth in the back half of this year? I think you've given pipelines in the past for that group. Is that something that's disclosable today?

Brian: Okay.

Speaker Change: Is health care are going to be a big chunk of that low single digit growth in the back half of this year I think you've given pipelines in the past for that for that group is is that something thats.

Stuart H. Lubow: Our pipeline in the healthcare business is $172 million at an average rate of $780 million. And, you know, but our C&I pipeline is $430 million at an average rate of 8 12.

Speaker Change: Those are all today.

Speaker Change: Sure I mean, our pipeline in the health care business is $172 million on an average rate of 780.

Speaker Change: <unk>.

Speaker Change: And but our C&I pipeline is $130 million at an average rate of eight and a half so.

Stuart H. Lubow: So, you know, it's across the board, and it's really, you know, again, following what we've been saying for the last year in terms of diversification. So, you know, we're quite encouraged by the buildout of both our middle market C&I business and our healthcare business. Even our residential group is up substantially in terms of pipeline. They have over $60 million in the pipeline at a 6 12% rate, all adjustable rate mortgages. So, you know, again, we're out there, and we're doing business, and so we're very

Speaker Change: It's.

Speaker Change: It's across the board and it's really.

Speaker Change: Following what we've been saying for the last year in terms of diversification.

Speaker Change: So.

Speaker Change: We're quite encouraged.

Speaker Change: Hi.

Speaker Change: The build out of both our middle market C&I business, our health care business.

Speaker Change: Even our residential group is up substantially in terms of pipeline of over $60 million and a pipeline of six 5% rate.

Speaker Change: Our adjustable rate mortgages so.

Speaker Change: Again, we're out there and we're doing business.

Speaker Change: And so we're very encouraged.

Manuel Antonio Navas: If I just shift to the NIMM for a moment. I really appreciate the repricing opportunity second half of next year into 2026. More near-term, if we do get a rate cut in September, could the slow and steady NIM increases accelerate a bit?

Speaker Change: If I just shift to the NIM for a moment.

Speaker Change: <unk>.

Speaker Change: I really appreciate the repricing opportunity second half of next year and into 2026.

Speaker Change: More near term, if we do get a rate cut in September could the slow and steady NIM increases accelerate a bit in the fourth quarter.

Speaker Change: Yes, yes.

Stuart H. Lubow: I think we're seeing, you know, just month over month with the new, new originations and, and repricing of what loans we do have that are repricing this year. We're seeing slow and steady growth, you know, in terms of loan yields, and deposit yields are flattened down. So just the natural progression is positive, but certainly with a rate cut in September and possibly one later in the year, we could see that accelerate quite a bit.

Speaker Change: Okay.

Speaker Change: I think that I think we're seeing you know.

Jess: Jess bumped over months.

Speaker Change: With the new new originations and.

Speaker Change: And repricing of what loans, we do have that are repricing.

Speaker Change: This year, we're still seeing a slow and steady growth.

Speaker Change: In terms of loan yields.

Speaker Change: And deposit yields are flat to down so just the natural progression is positive, but certainly with a.

Speaker Change: With a rate cut in September and input, possibly one later in the year, we could see that accelerate quite a bit.

Stuart H. Lubow: You know, just month to date, for example, our yields on loans are up over three basis points and, you know, and we expect that to accelerate with this quarter's new originations and repricing. So, you know, again, we're optimistic and, as I said, absent rate cuts, we're going to see a slow and steady grind upward, but certainly, rate cuts are going to help, you know, accelerate that grind.

Speaker Change: Just just month to date for example, our yields yields aren't alone are up.

Speaker Change: Over three basis points.

Speaker Change: And.

And we expect that to accelerate with.

Speaker Change: With this quarter's new originations and repricing so.

Again, we're optimistic.

Speaker Change: And as I said absent rate cuts, we're going to see it.

Speaker Change: A slow and steady grind up but certainly the rate cuts are going to help.

Speaker Change: Accelerate that that growth.

Manuel Antonio Navas: My last question is, is that repricing opportunity doesn't include any... It just includes the forward curve for the second half of 25 into 26. That's just the loan side.

Speaker Change: Okay.

Speaker Change: My last question is that repricing opportunity doesn't include any.

Speaker Change: Alright. It just includes the forward curve for the second half of 'twenty five 'twenty six it's just the loan side. It doesn't include.

Avinash Reddy: It doesn't include... expectations of rate cuts in there, correct? Is that the right way to think about that analysis?

Speaker Change: Expectations.

Speaker Change: On rate cuts in there correct is that the right way to think about that analysis correct, yes, just off the forward curve manual.

Avinash Reddy: Yep, just off the forward curve, Manuel. So the comment was, you know, we have, you know, $2 billion in the back half of 25 and 26 at a rate of 390. Just follow the forward curve, and that's, you know, which is around 4% for the five-year going forward. You should see a 35 basis point increase in NIM overall, just solely because of that. Now, on top of that, we are remixing the loan portfolio.

Speaker Change: Comment was.

Speaker Change: We have $2 billion in the <unk>.

Speaker Change: Back half of 'twenty five 'twenty six at a rate of $3 90, just follow the forward curve and Thats.

Speaker Change: Which is around 4% for the five year going forward, you should see a 35 basis points.

Speaker Change: The increase in the NIM overall, just solely because of that and on top of that we are remixing the loan portfolio. That's obviously, adding.

Avinash Reddy: That's obviously adding, as you said, around four to five basis points every quarter to the NIM, and then you layer on top of that the deposit growth that we have. We still have around $750 million of brokered deposits on the balance sheet. We've obviously paid down a lot of our short-term FHLB borrowings, so that was the first step in the balance sheet evolution. The brokerage is still at 750, so, you know, as the new teams bring in deposits, you know, as our lending teams bring in deposits, that's going to help offset the broker deposits on the balance sheet.

Speaker Change: Down four to five basis points every quarter to the NIM and then you layer on top of that the deposit growth that we have we still have around $750 million of brokered on the balance sheet. We've obviously paid down a lot of our shutdown <unk> borrowings. So that was the first step in the balance sheet evolution, the brokerage still at $7 50.

Speaker Change: So as we as the new teams bring in deposits.

Speaker Change: Our lending teams, bringing deposits that's going to help offset that.

Speaker Change: The broker deposits on the balance sheet. So I think the message here is we don't need rate cuts still to see.

Avinash Reddy: So I think the message here is we don't need rate cuts to see, you know, an upward bias in the NIM. With rate cuts, we're going to have an even greater increase in the NIM, and then once the repricing opportunity kicks in, you know, the NIM is really going to accelerate at that point in time back and probably higher than where we were in the last cycle based on our models.

Speaker Change: An upward bias in the NIM with rate cuts, we're going to have an even greater increase in the NIM and then once the repricing opportunity kicks in the NIM is really going to accelerate at that point in time back and probably higher than where we were in the last cycle based on what our models are showing.

Manuel Antonio Navas: That's great. I really appreciate the commentary. Thank you very much.

I really appreciate the commentary.

Speaker Change: That's great I really appreciate the commentary thank you very much.

Speaker Change: Thank you.

Stephen Moss: And our next question will be coming from Steve Moss of Raymond James.

Operator: And our next question will be coming from Steve Moss. Of Raymond James, your line is open.

Speaker Change: And our next question will be coming from Steve Moss.

Operator: Your line is open.

Speaker Change: Of Raymond James Your line is open.

Stephen M. Moss: Good morning.

Steve: Hey, Steve.

Stephen M. Moss: Just following up on deposits here. Stu, I think you said balances on deposits were stable to down at the beginning of the call. Just kind of curious here, you had a healthy step up in deposit growth with all the teams you've added here. Is it possible that we could see that pace continue this quarter? And then the second part to that. Go ahead.

Stephen Moss: Just following up on deposits here, Stuart. I think you said balances on deposits were stable to down to the beginning of the call.

Speaker Change: Just following up on deposits here Steve.

Speaker Change: Steve I think you said balances on deposits were stable to down to be in the call just kind of curious here, helping step up and the deposit growth.

Stephen Moss: Just kind of curious here. You know, you got to help me step up and be deposit growth with all the teams you've added here. Is it possible that we could see that pace continue this quarter? And then what I can part of that.

Speaker Change: With all the teams you've added here is it possible that we could see that pace continue this quarter.

Speaker Change: And then part of that great.

Stuart Lubow: What I said was yields on deposits were stable, stable to down, but you were seeing steady growth on the deposit side. So we expect continued growth on the deposit side.

Stuart H. Lubow: You know, what I said was yields on deposits were stable. We're seeing steady growth on the deposit side, so we expect continued growth on the deposit side.

Speaker Change: Yields on deposits were stable.

Speaker Change: Table to down, but we are seeing steady growth on the deposit side. So we expect continued growth on the positive side.

Stephen Moss: Okay. And so perhaps that a similar pace to what we saw with past quarter?

Stephen M. Moss: And so, perhaps at a similar pace to what we saw this past quarter.

Speaker Change: Okay.

Speaker Change: And so perhaps at a similar pace to what we saw this past quarter.

Stuart Lubow: Yeah, I don't think we don't think about it on a quarterly basis.

Stuart H. Lubow: Yeah, I don't think we don't think about it on a quarterly basis, Steve. Obviously, in the first and second quarters, there was, you know, significant disruption with one of our competitors, so sometimes it ebbs and flows. But I mean, the way we look at it is that the groups that have come on board, right, the average tenure of the groups on a weighted average basis is only seven to eight months at the bank. So they have a substantial runway in front of them to do that.

Speaker Change: Yes, I don't think we don't think about it on a quarterly basis, Steve obviously.

Stuart Lubow: Steve, obviously, you know, in the first and second quarters, there was significant disruption with one of our competitors. So sometimes it ebbs and flows. But I mean, the way we look at it is the groups that have come on, right? The average ten yard of the groups on a weighted average basis is only eight, seven to eight months at the bank. So they have a substantial runway in front of them to do that. So, you know, we're measuring it in terms of yields as opposed to quarters. So I think a year from now, we're going to be substantially higher than where we are right now.

Speaker Change: In the first and second quarters, there was significant disruption with one of our competitors, sometimes that it ebbs and flows but I mean, the way we look at it as the groups that have come on rate. The average tenure of the group.

Speaker Change: <unk> on a weighted average basis is only eight 7% to eight months at the bank.

Speaker Change: So they have a substantial runway in front of them to do that until we're measuring it in terms of yours as opposed to quarters. So I think a.

Stephen M. Moss: So, you know, we're measuring it in terms of years as opposed to quarters. So I think, you know, a year from now, we're going to be substantially higher than where we are right now. Every individual quarter, you have seasonal deposits coming in and deposits coming out. The other way we track this, too, Seth, is by accounts. So we're continuing to see accounts open, you know, every day, every week, and, you know, very bullish about, you know, them bringing in more and more deposits over time.

Speaker Change: A year from now we're going to be substantially higher than where we are right. Now every individual quarter, you have seasonality deposits coming in deposits coming out the other way we track. It is to set his account. So we're continuing to see accounts open every.

Stuart Lubow: Every individual quarter, you have seasonality deposits coming in, deposits coming out. The other way we track this two set as accounts.

Stuart Lubow: So we're continuing to see accounts open every day, every week, and you know, very bullish about them bringing over more and more deposits over time.

Speaker Change: Every day every week.

Speaker Change: We're very bullish about.

Speaker Change: Im, bringing bringing over more and more deposits overtime.

Stephen M. Moss: Okay, could you share with us how many accounts were opened this quarter?

Okay.

Stuart Lubow: Could you share with us how many accounts were opened this quarter? This quarter, we probably had, I'd say, close to around 700 to 800 accounts that were open.

Speaker Change: Okay could you share with us how many accounts were opened this quarter.

Avinash Reddy: This quarter we probably had, I would say, close to around 700 to 800 accounts that were open.

Speaker Change: This quarter, we probably had.

Speaker Change: I'd say close to around 700 to 800 accounts that were opened.

Stuart Lubow: And then in terms of the, just curious, what the blended costs of funds are you're seeing on the deposits coming over these days? Yeah, probably say on between 250 and 270 plus or minus. Look from the new groups, because, as two said, a substantial portion of it is in DDA, probably 40 to 45% DDA of the stuff that's coming in. So it's between 250 and 270.

Speaker Change: Okay.

Stephen M. Moss: And then in terms of the just curious what the blended cost of funds is you're seeing on the deposits coming in these days.

Speaker Change: And then in terms of.

Speaker Change: Just curious what the blended cost of funds are you seeing on the deposits come over these days.

Avinash Reddy: Yeah, probably say around between 250 and 270, plus or minus, from the new groups, because, as Stu said, a substantial portion of it is in DDA, probably 40 to 45% DDA of the stuff that's coming in, so it's between 250 and 275.

Speaker Change: Yes, probably say around between $2 50, and $2 70, plus or minus.

Speaker Change: But from the new groups because <unk> substantial portion of it is in DDA, probably 40% to 45% of the stuff that's coming in.

Speaker Change: So it's between $2 50, and $2 75.

Okay, appreciate that.

Stephen M. Moss: Appreciate that. And then in terms of the drivers here on the lower classified, down 14% quarter over quarter, just curious to get some incremental color around those drivers.

Speaker Change: Okay.

Stephen Moss: And then in terms of the drivers here on the lowered classified down 14% quarter of a quarter, just curious to get some incremental color around those drivers.

Speaker Change: Great and then in terms of the.

Speaker Change: The.

Speaker Change: Drivers here on the lower classified down 14% quarter over quarter, just curious to get some incremental color.

Speaker Change: Around those drivers.

Avinash Reddy: Yeah, we should have all the details in the 10-Q. We just provided an expectation right now.

Stuart Lubow: Yeah, we should have all the detail in the 10-Q. We just provide an expectation right now. I think multi-families down around 15, 20 million bucks. I think C&I and owner occupied are down; you know, the rest basically, investor crease, basically flat.

Speaker Change: Yes, we should have all the detail in the 10-Q, we just provided an expectation right now I think multifamily is down around 15 to 20 million Bucks.

Avinash Reddy: I think multifamily is down around 15-20 million bucks. I think C&I and Owner Occupied are down, you know, the rest basically, Investor Cree is basically flat. But all the details will be in our Q next week.

Speaker Change: C&I and owner occupied are down.

Speaker Change: The rest basically investor Cree is basically flat.

Stuart Lubow: But all the detail being our Q next week, please. Appreciate that.

Speaker Change: But all of the detailed being our Q next week.

Speaker Change: Okay.

Speaker Change: I appreciate that.

Stephen Moss: Okay, so I guess just the last one for me here, in terms of, you know, it sounds like you guys remain active on the hiring front, or at least interested. You know, do you expect like a steady pace of ads in the second half of the year for traditional teams, or is it more maybe a 2025? Yeah, I think it's more 2025, as we're getting towards the end of the year. Folks tend to have, you know, the view of, I'm going to stay where I am for now, like a bonus is coming up.

Stephen M. Moss: I appreciate that. Okay, so. I guess just the last one for me here in terms of, You know, it sounds like you guys remain active on the hiring front, or at least interested. Do you expect a steady pace of ads in the second half of the year for additional teams, or is it more maybe 2025?

Speaker Change: Okay. So.

Speaker Change: I guess just.

Speaker Change: Last one for me here in terms of.

Speaker Change: It sounds like you guys remain active on the hiring front or at least interested.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Do you expect like a steady pace of adds in the second half of the year for for additional teams or is it more maybe a 2025.

Stuart H. Lubow: Yeah, I think it's more 2025. As we're getting toward the end of the year, folks tend to have the view of, well, I'm going to stay where I am for now. I got bonuses coming up.

Speaker Change: Yes, I think it's more 2025 as we're getting towards the end of the year folks tend to have the view of Walnut Im going to stay where and for now I got bonuses coming up so it's probably more towards.

Stephen M. Moss: And so it's probably more towards, you know, the end of the first quarter of 2025. Although there probably might be some opportunity on the lending side with some teams that I think, you know, may be available. And, you know, we are talking too seriously. So, but I think on the deposit side, it's probably more, you know, geared toward early 2025. Okay.

Stuart Lubow: So it's probably more towards, you know, the end of the first quarter, 2025, although there probably might be some opportunity on the lending side with some teams that I think, you know, may be available, and you know, we are talking to seriously. So, but I think on a deposit side, it's probably more, you know, geared toward early 2025.

Speaker Change: We ended the first quarter of 2025, although they are probably might be some opportunity on the.

Speaker Change: On the lending side with some teams.

Speaker Change: I think may be available.

Speaker Change: And we are talking too seriously so.

Speaker Change: But I think on a deposit side is probably more.

Speaker Change: Geared toward.

Speaker Change: Early 2025.

Stephen Moss: Okay, great, really appreciate all the color. Nice quarter, thank you.

Stephen M. Moss: Okay, great. I really appreciate all the color. Nice quarter.

Speaker Change: Okay, Great really appreciate all the color nice quarter.

Speaker Change: Thank you.

Operator: Thank you. If you would like to ask a question, please press star 1 1 on your telephone. Our next question will be coming from Christopher O'Connell of KBW. Your line is open.

If you would like to ask a question, please press star 11 on your telephone.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone.

Christopher O'Connell: Our next question will be coming from Christopher O'Connell of KBW; your line is open.

Speaker Change: Yeah.

Speaker Change: Our next question will be coming.

Christopher O'connell.

Speaker Change: K B W. Your line is open.

Christopher O'Connell: Hey, good morning.

Christopher O'Connell: Hey, good morning.

Stuart Lubow: Hey, Chris, good morning.

Christopher O'Connell: Hey Chris, good morning. Hey Chris.

Christopher O'Connell: Hey, Chris Good morning, Chris.

Christopher O'Connell: So yeah, just want to start off on the name and, you know, apologize if I miss anything. But, from what I understand, you know, slow and steady progress until there's rate cuts from here in the back half of the year, and that's inclusive of the sub-dead offering, correct, and kind of minus the non-accrual recovery. Are you guys thinking the, the name will progress and be up from the 237 June name range X, X, the non-accrual recovery?

Christopher O'Connell: So yeah, I just want to start off on the NIM and apologize if I missed anything. But, from what I understand, you know, slow and steady progress until there's rate cuts from here in the back half of the year, and that's inclusive of the sub-debt offering, correct, and kind of minus the non-accrual recovery. Are you guys thinking the NIM will progress and be up from the 237 June NIM range, excluding the non-accrual recovery? Yes.

Christopher O'Connell: So yeah, just wanted to start off on the NIM and I apologize if I missed anything but.

Speaker Change: From what I understand slow and steady progress until there's rate cuts from here in the back half of the year.

Speaker Change: And that's inclusive of the sub debt offering correct in kind of minus the nonaccrual recovery.

Speaker Change: Are you guys thinking the NIM will progress and be up from the $2 37 June.

Speaker Change: NIM range X X the non accrual recovery.

Christopher O'Connell: So Chris, in my prepared remarks, what I said was the base NMDA uses 234. So the 234 excludes the four basis points from the nonaccrual interest recovery and then the three basis points from the subdebt. So I'd start with the 234 and use the slow and steady and upward bias off of that base.

Stuart Lubow: Yeah, no, so Chris and my prepared remarks, what I said was the base name to use is 234. So the 234 excludes the four basis fines from the non-accrual interest recovery, and then the three basis fines from the sub-dead. So I'd start with the 234 and use the slow and steady and upward bias off of that base. As we said, the loan yields are going up probably, you know, four to five basis points of every quarter on an average basis, so that's going to help. And obviously, if you see stabilization in the cost of deposits, you know, you're going to see the natural, you know, upward progression in the name.

Speaker Change: Yes, so Chris in my prepared remarks, what I said was the base NIM to use is $2 34, so the $2 34 excludes the four basis points from the.

Speaker Change: Non accrual interest recovery and then the three basis points from the sub debt. So I'd start with the $2 34, and use the slow and steady and upward bias off of that base as we've said the.

Avinash Reddy: As we said, the loan yields are going up probably four to five basis points every quarter on an average basis, so that's going to help. And obviously, if you see stabilization in the cost of deposits, you're going to see the natural upward progression in the NIMS. I think that's the case.

Speaker Change: The loan yields are going up probably four to five basis points every quarter on an average basis, so thats going to help and obviously if you see stabilization in the cost of deposits.

Speaker Change: Youre going to see in a natural upward progression in the NIM. So I think thats the case filled as rate cuts once those rate cuts. So we obviously have more.

So I think that's the case; still, there's rate cuts. Once there's rate cuts, we obviously have more, you know, deposits than assets that we can reprise, so that's going to help, you know, help us, I'd say, starting in Q4 and the Q1 and Q2 of next year. And then, you know, layer on top of that, the substantial repressing opportunity that really starts, you know, in the second half of 25. So it's going to be a layered, you know, approach in terms of the name. And then you, I think you also have to factor into all of that the due deposit teams that are coming, that are bringing in deposits.

Avinash Reddy: Still, there are rate cuts. Once there are rate cuts, we obviously have more deposits than assets that we can reprice. So that's going to help us, I'd say, starting in Q4 and going into Q1 and Q2 of next year. And then layer on top of that the substantial repricing opportunity that really starts in the second half of 2025. So it's going to be a layered approach in terms of the NIMS. And then I think you also have to factor into all of that the new deposit teams that are coming, that are bringing in deposits at a rate of between 250 and 275 versus the brokered cost right now, which is 535.

Speaker Change: <unk> then assets that we can reprice, so thats going to help.

Speaker Change: Help us I'd say starting in Q4 into Q1.

Speaker Change: Q2 of next year, and then layer on top of that the substantial repricing opportunity that really starts in the second half of 'twenty five so it's going to be a layered approach in terms of the NIM and then I think you also have to factor into all of that the human deposit teams that are coming that are bringing in deposits as I said in our radar.

And I said, you know, a rate of between 250 and 275 versus the broker cost right now, which is 535. So I think all of you put all of that together, you know, a pretty confident that, you know, as we get into, you know, back half of 25 and 26, the name structurally will be a lot higher than where it is straight.

Speaker Change: Between $2 50, and $2 75 versus the brokerage cost right now, which is 535. So I think all of you put all of that together, we're pretty confident that as we get into the back half of 'twenty five 'twenty. Six then the NIM structurally will be a lot higher than where it is right now.

Avinash Reddy: So I think if you put all of that together, we're pretty confident that as we get into the back half of 2025 and 2026, then NIMS will be structurally a lot higher than where it is right now.

Health. Great, it's helpful.

Christopher O'Connell: Great, it's helpful. And then, as you guys are, it sounds like a very good quarter multifamily on the, you know, criticized classifieds, no MPLs. Can you just remind us of, you know, how much you guys have maturing in the rent regulated portfolio in the second half of the year? And just anything that you've been seeing from your customers in terms of just, you know, any qualitative data as to, you know, what you've been seeing in terms of either debt service coverage ratios or just conversations with the

Speaker Change: Great that's helpful.

Christopher O'Connell: And then, as you guys are, you know, it sounds like a very good quarter multi-family on the, you know, criticized, classifieds, no MPLs.

Speaker Change: And then as you guys are it sounds like very good quarter multifamily on the criticized classifieds no npls.

Stuart Lubow: And you just remind us of, you know, how much you guys have maturing in the run regulated portfolio in the second half of the year. And just anything that you've been seeing from your customers in terms of, you know, any qualitative data, as to, you know, what you've been seeing in terms of either debt service coverage ratios, or just conversations with the customers, you know, for what's matured year to date. Yes, well, I'll start off with the, what's coming to you and then still add some qualitative comments. I mean, in Q3, we probably have our own $10 million on the rent regulated site, and in Q4, we have, I think, 15 to 20.

Speaker Change: Can you just remind us of how much you guys have maturing in the rent regulated portfolio in the second half of the year and just anything that you've been seeing from your customers in terms of just.

Speaker Change: Any.

Speaker Change: Any qualitative data as to.

Speaker Change: What <unk> been seeing in terms of either debt service coverage ratios are just conversations with the customers for whats matured year to date.

Avinash Reddy: Yes, well, I'll start off with what's coming to you and then still add some qualitative comments. I mean, in Q3 we probably have around 10 million dollars on the rent regulated side, and in Q4 we have, I think, 15 to 20, so it's very modest this year in terms of what's remaining. In the second quarter, for example, we probably had around $45 million of rent-regulated loans that we're supposed to reprice, around $20 million of that satisfied, and around $25 million of that repriced, and we've had no issues associated with them. So, probably a one-third, two-thirds split as of the last quarter in terms of satisfactions and repricings. There's probably going to be some color qualitatively on that. Yeah.

Speaker Change: Yes, so I'll start off with the what's coming to you and then still add some qualitative comments.

Speaker Change: In Q3, we probably have around $10 million on the rent regulated side in Q4, we have I think 15% to 20, so very modest.

Stuart Lubow: So it's very modest this year in terms of what's remaining. In the second quarter, for example, we probably had our own $45 million of rent regulated loans that were supposed to repress around 20 million of that satisfied around 25 million of that reprised. And we've had no issues associated with them. So probably like a one-third, two-thirds split as of the last quarter in terms of satisfaction and repricings, probably give you some color qualitatively on it. I mean, we haven't had a lot of conversations with customers. We haven't had, you know, the phones are not ringing off the hook in terms of issues or problems. Obviously, our MPOs and the link with these are stable to down.

In terms of whats remaining.

Speaker Change: In the second quarter for example, we probably had around.

Speaker Change: $45 million of rent regulated loans that was supposed to reprice around $20 million of that satisfied around $25 million of that re priced and we've had no issues associated with them. So probably like a one third two third split as of the last quarter in terms of satisfaction and repricing.

Speaker Change: Probably can give you some color quantitatively on.

Stuart H. Lubow: I mean, we haven't had a lot of conversations with customers. We haven't had a, you know, the phones aren't ringing off the hook in terms of issues or problems. Obviously, our MPOs and delinquencies are stable to down, so, you know, it's... We're monitoring everything. We haven't seen a significant change in debt service coverage, actually, overall, probably. A lot of it, you know, has actually gone to the positive in terms of growth in debt service coverage.

Speaker Change: We haven't had a lot of conversations with.

Speaker Change: With customers, we haven't had the phones are not ringing off the hook in terms of issues or problems, obviously R. R.

Speaker Change: Our npls and delinquencies are stable to down so.

Stuart Lubow: So, you know, it's, you know, we're monitoring everything. We haven't seen a significant change in, and debt service coverage is actually, you know, overall probably, you know, a lot of it has actually gone to the positive in terms of growth in debt service coverage. I'd say 75 to 80% of the portfolio year over year has a debt service coverage. So, you know, at this point, you know, we continue to monitor and, you know, certainly stay in contact with customers.

Speaker Change: It's.

Speaker Change: We're monitoring everything we haven't seen a significant change in and debt service coverage is actually overall probably.

A lot of it has actually gone to the positive in terms of growth and debt service coverage, I'd say, 75% to 80% of the portfolio year over year after debt service coverage.

Stuart H. Lubow: I'd say 75 to 80 percent of the portfolio year-over-year has debt service coverage. So, you know, at this point, we continue to monitor and, you know, and certainly stay in contact with customers where necessary, but we're not seeing any significant issues at this point.

Speaker Change: So.

Speaker Change: At this point, we continue to monitor and.

Speaker Change: Certainly.

Speaker Change: <unk>.

Speaker Change: Stay in contact with customers, where necessary, but we're not seeing any significant issues at this point.

We're necessary, but we're not seeing any significant issues at this point.

Speaker Change: <unk>.

Christopher O'Connell: Great. And then just on the expense discussion, so, you know, jumps up to 57 million next quarter, I'm assuming a lot of that's in compensation from the new hires and then Uh, it sounds like you think, you know, that level can hold, you know, relatively flat, uh, you know, into 2025, um, just, you know, where, what are some of the puts and takes, you know, I'm assuming there's merit increase, et cetera, in 25, uh, where you guys think that you have opportunities to kind of save and, and kind of limit the overall expense growth, uh, you know, from, from here, uh, into 25. Yeah, yeah.

Christopher O'Connell: Great. And then just on the expense discussions, you know, jumps up to 57 million next quarter. I'm assuming a lot of that's in compensation from the new hires. And then it sounds like you think, you know, that level can hold, you know, relatively flat, you know, into 2025. Just, you know, where, what are some of the puts and takes? You know, I'm assuming there's a merit increase, et cetera, in 25. Where you guys think that you have opportunities to kind of save and kind of limit the overall expense growth, you know, from here into 25.

Speaker Change: Great.

Speaker Change: And then just on the <unk>.

Speaker Change: Expense discussions.

Speaker Change #100: Up to 57 million next quarter I'm, assuming a lot of that is in compensation from the new hires and then.

Speaker Change #101: It sounds like you think that level can hold.

Speaker Change #102: Relatively flat.

Speaker Change #102: Into 2025.

Speaker Change #102: Just.

Speaker Change #107: What are some of the puts and takes that im assuming theres merit increase et cetera in 'twenty five.

Speaker Change #103: Where do you guys think that you have opportunities to kind of save and kind of limit the overall expense growth.

Speaker Change #103: From from here.

Avinash Reddy: Yeah, yeah, so I think all of that's fair, Chris. So I think, you know, for the second half of this year, around $57 million, plus or minus. It's probably a good range.

Stuart Lubow: Yeah. So, I think all of that's fair. Because, so I think, you know, for the second half of the CRown, $57 million plus or minus, it's probably a good range. Obviously, the mad increase is going to impact really on April's first. So, you know, the first quarter of next year is going to be pretty consistent with where the second half of this year is going to be. I mean, look, we've always managed expenses efficiently. Like you said, you know, we're going to see an uptick in salary and compact expenses. Especially as the new groups, you know, are performing very well.

Speaker Change #102: 25.

Yes, yes, so I think all of that said, Chris So I think for the second half of the CRM and $57 million plus on plus or minus.

Avinash Reddy: Obviously, the merit increases go into effect really on April 1st, so, you know, the first quarter of next year is going to be pretty consistent with where the second half of this year is going to be. I mean, look, we've always managed expenses efficiently. Like you said, we're going to see an uptick in salary and comp expenses, especially as the new groups are performing very well.

Speaker Change #106: Probably a good range obviously, the merit increase is going to impact really on April 1st. So the first quarter of next year, there's going to be pretty consistent with where the second half of this year is going to be I mean look we've always managed expenses efficiently.

Speaker Change #104: Like you said.

Speaker Change #102: We're going to see an uptick in salary and comp expense, especially as the new groups are performing very well so accrued.

Avinash Reddy: So you know, there's, you know, accruals and such to think about on a going forward basis. But we're working, like I said when I answered Manuel's question, on a few company-wide initiatives. We'll probably have more to disclose when we get into early next year. I think the guidance for next year is very nominal growth.

So, you know, there's a cruise and the such to think about on a going forward basis.

Speaker Change #102: Accruals and such.

Speaker Change #102: About <unk>.

But we're working, like I said, when I answered Manual's question, we're working on a few, you know, company way initiatives. We'll probably have more to disclose when we get into early next year. I think the guidance for next year is very nominal growth. I wouldn't say flat because, you know, obviously investing in our businesses, you know, throughout the year. But we're going to be very judicious, as we always are. And as you, you know, see the nim, you know, trajectory, you know, improve over time. I think that's going to give us a little bit of room to invest in the business as well.

Speaker Change #105: On a going forward basis, but we are working like I said when I answered <unk> question. We're working on a few company wide initiatives will probably have more to disclose when we get into early next dealer I think the guidance for next year is very nominal growth I wouldn't say flat because.

Avinash Reddy: I wouldn't say flat because, you know, obviously investing in our businesses throughout the year, but we're going to be very judicious, as we always are. And as you see the NIM trajectory improve over time, I think that's going to give us a little bit of room to invest in the business as well. Look, we're very happy with the early performance of the groups.

Speaker Change #102: We're obviously investing in our businesses.

Speaker Change #102: Throughout the year, but we're going to be very judicious.

Speaker Change #102: As we always are and as you see the NIM.

Speaker Change #102: Trajectory improve overtime, I think thats going to give us a little bit of room to invest in the business as well.

Look, we're very happy with the early performance of the groups. The groups are basically, you know, better than break even at this point in time. And there's no additional, you know, fixed costs that are coming in, you know, beyond what, you know, the 57 million on rates that we have right now. So, look, we'll have more to say, you know, then, and I think just down the road, you know, there will come up, you know, a time when we're able to grow the balance sheet a little bit more. And at that point in time, you know, I think we, you know, our expense-to-ask ratio will also naturally start coming down.

Speaker Change #108: Look we're very happy with the early performance of the group the groups are basically better than breakeven at this point in time.

Avinash Reddy: The groups are basically, you know, better than break-even at this point in time, and there's no additional, you know, fixed costs that are coming in beyond what, you know, the $57 million run rate that we have right now. So, look, we'll have more to say then.

Speaker Change #102: And there is no additional fixed costs that are coming in beyond what the $57 million run rate that we have.

Speaker Change #102: Right now.

Speaker Change #102: Look we'll have more to say.

Christopher O'Connell: And I think just down the road, there will come a time when we're able to grow the balance sheet a little bit more. And at that point in time, I think we'd, you know, our expense-to-asset ratio will also naturally start coming down. You know, we've historically managed the company, you know, between $150 and $155. We're probably closer to $160 to $165 right now. But, you know, we do see that coming down in the years ahead as if and when balance sheets will pick up.

Then I think just down the road.

Speaker Change #102: There will come a time, when we're able to grow the balance sheet, a little bit more and at that point in time I think.

Speaker Change #102: Our expense to asset ratio will also naturally stock start coming down.

You know, we've historically managed the company, you know, between 150 and 150. We're probably closer to 160 to 165 right now. But, you know, we do see that coming down in the years ahead, as it's in one balance sheet. So.

Speaker Change #102: We have historically managed the company between $1 50, and 155, we'll probably closer to 160 to 165 right now, but we do see that coming down.

Speaker Change #102: In the years ahead.

Speaker Change #102: If in one balance sheet pixel.

Christopher O'Connell: Great. And then any, you know, small, but any color on the drop in customer service fees, this quarter was last quarter kind of an unusually strong quarter, or if we take it as like a blend of the two. Yeah, yeah.

Speaker Change #102: Great.

Christopher O'Connell: Great. And then any, you know, small but any color on the drop in customer service fees. This quarter was, it was last quarter kind of an unusually strong quarter, or we take it as like a blend of the two. Yeah, yeah, we just had some.

Speaker Change #102: And then any.

Speaker Change #102: <unk>.

Speaker Change #102: Small, but any color on the drop in customer service fees.

Speaker Change #109: This quarter as it was last quarter kind of an unusually strong quarter or should we take it as like a blend of the two yes.

Avinash Reddy: Yeah, yeah, we just had some rollover fees last quarter on some loans basically that were repricing. So as I said earlier, we had more multi-family loans this quarter that actually closed versus repriced. And so that's where that fits in. Last quarter we had more loans, the first quarter more loans that took the rollover option, and that's where that goes. So I would say, look, there's a couple of seasonal items here and there that come in.

Stuart Lubow: We just had some roll over fees last quarter on some loans, basically, that we're repricing. So, as I said earlier, we had more multi-family loans this quarter that actually satisfied versus reprised. And so that's where that fits in. Last quarter, we had more loans; the first quarter, more loans that took the roll over option, and that's where that goes in there. So I would say look, there's a couple of seasonal items here on there, you know, that come in and out, but you know, nothing material.

Speaker Change #109: Yes, we just had some rollover fees last quarter on.

Speaker Change #109: On some loans basically that we're repricing.

Speaker Change #110: So as I said earlier, we had more multifamily loans this quarter that actually satisfied versus repriced and so that's why that that fits in last quarter. We had more loans in the first quarter more loans that took the rollover option and Thats, where that goes in that so I would say look there's a couple of seasonal items here on that that come in and out.

Speaker Change #109: But.

Speaker Change #109: Nothing material.

Christopher O'Connell: Got it. I know you guys are usually cautious on this, but, you know, any sense of just, you know, outside of the, you know, amount of, you know, fixed maturities and everything happening in the second half to 25 and 26, but, you know, what the impact of each, you know, 25 basis point cut would be on the margin. Yeah, I think I think it's going to be, you know, obviously the first, you know, rate cut and the second rate cut, you know, it's going to, part of it's going to depend on the competition, you know, in terms of what they're doing.

Speaker Change #111: Got it.

Christopher O'Connell: I know you guys are usually cautious on this, but, you know, any sense of just, you know..., outside of the amount of, you know, fixed maturities and everything happening in the second half of 25 and 26, but you know, what the impact of each 25 basis point cut would be.

And I know you guys are usually cautious on this but.

Speaker Change #112: Any sense of just.

Speaker Change #112: Outside of the amount of fixed maturities and everything happening in the second half of 'twenty five 'twenty six but.

Speaker Change #113: What the impact is of each.

Speaker Change #114: 25 basis point cut would be on the margin.

Avinash Reddy: Yeah, I think it's going to be, you know, obviously the first rate cut and the second rate cut, you know, part of it's going to depend on the competition, you know, in terms of what they're doing. That said, I will say our deposit base is more skewed towards commercial customers, and we have more money markets than time deposits in our base, so that should lend itself to more, you know, in terms of, you know, having more benefit from rate cuts than a lot of our peers, right?

Speaker Change #115: Yes, I think I think it's going to be.

Speaker Change #115: Obviously, the first rate cut in the second rate cut.

Speaker Change #116: Part of it is going to depend on the competition in terms of what they are doing that said I will say, our our deposit base is more skewed towards commercial customers and we have more money market and time deposits in our base, which should should lend itself to more.

Stuart Lubow: That said, I will say our deposit base is most skewed towards commercial customers, and we have more money markets than time deposits in our base. So which should lend itself to more, you know, in terms of, you know, being having more benefit from rate cuts than a lot of a lot of our POs, right? You know, if you look at the balance sheet right now, around 31 to 32% is variable rate in terms of the loan portfolio. Obviously, 30% of the balance sheet is DDA, you know, on the deposit side of the balance sheet. And we probably have, you know, some deposits that are, you know, cost less than 1%, and so it's going to be harder to change the rates on those. But I would say, you know, by and large, you know, our goal is really to get the margin back, you know, to that 3% plus area, which is going to drive higher, you know, returns overall.

Speaker Change #115: Sure.

Speaker Change #115: In terms of being having more benefit from rate cuts than a lot of a lot of our pellets right.

Avinash Reddy: You know, if you look at the balance sheet right now, around 31 to 32% is a variable rate in terms of the loan portfolio. Obviously, 30% of the balance sheet is DDA, you know, on the deposit side of the balance sheet. And we probably have, you know, some deposits that cost less than 1%. And so it's going to be harder to change the rates on those. But I would say, by and large, our goal is really to get the margin back to that 3% plus area, which is going to drive higher returns overall for the company.

Speaker Change #115: If you look at the balance sheet right now around 31% to 32% is variable rate in terms of.

Speaker Change #115: The loan portfolio.

Speaker Change #117: Obviously, 30% of the balance sheet as DDA.

Speaker Change #117: On the deposit side of the balance sheet and.

Speaker Change #117: And we probably have some deposits that cost less than 1% and so it's going to be harder to change the rates on those but I would say by and large our goal is really to get the margin back to that 3% plus area, which is going to drive higher.

Avinash Reddy: And our internal models show us getting there, you know, the latter part of 25, you know, into 26. And so how it happens between here and there could be choppy up and down in an individual quarter, but there's definitely going to be, you know, a level of benefit from rate cuts. Yeah, and we do have, you know, as Avi said before, we do have $700 million of a broker that, you know, will, will be able to move those down very quickly in terms of, you know, rate cuts. Plus, we have about $1.8 billion of municipals that are also, you know, easily moved in terms of Avinash Reddy, Gregory Zingone, Dime Community Bancshares Inc.

Stuart Lubow: So the company and our internal model show us getting there, you know, you know, ladder part of 25, you know, into 26. And so how it happens between here and there, it could be choppy up and down in an individual quarter, but there's definitely going to be, you know, a level of benefit from rate cuts. Yeah, and we do have, you know, as Avi said before, we do have $700 million of broker that, you know, we'll be able to move those down very quickly in terms of, you know, rate cut. Plus, we have about $1.8 billion of the municipal that are also, you know, easily moved in terms of a rate cut.

Speaker Change #117: <unk> overall for the company in our internal models show is getting there.

Speaker Change #117: Latter part of 'twenty five 'twenty six.

Speaker Change #117: And so how it happens between Q on that could be choppy up and down in an individual quarter, but theres definitely going to be a level of benefit from rate cut we do have as Avi said before we do have $700 million of our broker debt.

Avinash Reddy: We will be able to move those down very quickly in terms of.

Speaker Change #117: Sure.

Speaker Change #118: Plus we have about $1 $8 billion of municipals that are also.

Speaker Change #118: Easily move moved in terms of.

Speaker Change #118: A rate cut so look we're looking to.

So, you know, look, we're looking to, you know, we're prepared; we've already segregated the portfolio in terms of when a rate cut happens, you know, which, which buckets are going to move at how much. So, I mean, we're pretty optimistic that, you know, we're a little cautious to this, at this point because obviously, you know, competition is going to play a bit of a role there as well.

Speaker Change #118: We're prepared we've already segregated the portfolio in terms of when a rate cut happens.

Speaker Change #119: Which which buckets are going to move at.

Speaker Change #119: And how much so we're pretty optimistic.

Speaker Change #120: We're a little cautious at this point, because obviously competition is going to play a bit of a role there as well.

Speaker Change #119: Sure.

Speaker Change #121: Got it.

Stuart Lubow: And last one for me, just, what's the tax rate going forward? Yeah, I think around 27, Chris. We had a couple of discrete items this quarter, so I'd use 27 going forward.

Speaker Change #121: And.

Speaker Change #122: Last one from me just.

Speaker Change #123: What's a good tax rate going forward.

Avinash Reddy: Yeah, I think around 27, Chris. We had a couple of discrete items this quarter, so I'd use 27 going forward.

Christopher O'Connell: Got it. And last one for me, just what's a good tax rate going forward? Yeah, I think around 27, Chris. We had

Speaker Change #123: Yes, I think around 27, Chris we had a couple of discrete items. This quarters I'd use 27 going forward.

Christopher O'Connell: Great. Thank you.

Chris: Great. Thank you.

Speaker Change #125: Thank you.

Christopher O'Connell: Thank you. There are no more questions in the queue. This does conclude today's Q&A session, and I would now like to turn the call back over to Stuart Lubow for closing remarks. Please go ahead. Thank you, Lisa.

There are no more questions in the queue.

Speaker Change #125: Yes.

Speaker Change #125: Thank you there are no more questions in the queue. This does conclude today's Q&A session and I would now like to turn the call back over to Stuart Labelle for closing remarks. Please go ahead.

Operator: This does conclude today's Q&A session.

Stuart Lubow: And I would now like to turn the call back over to Stuart Lubow for closing remarks. Please go ahead. Thank you, Lisa. Thank you all for joining us today. I'd like to thank our dedicated employees and our shareholders for their continued support.

Stuart H. Lubow: Thank you, Alicia. Thank you all for joining us today. I'd like to thank our dedicated employees and our shareholders for their continued support, and I look forward to speaking with you after the third quarter.

Stuart H. Lubow: Thank you Alicia Thank you all for.

Stuart H. Lubow: For joining us today I'd like to thank our dedicated employees and our shareholders for their continued support and I look forward to speaking with you after the third quarter.

And I look forward to speaking with you after the third quarter.

Stuart H. Lubow: Yes.

Operator: Thank you for joining today's conference call.

Operator: Thank you for joining today's conference call. You may all disconnect.

Speaker Change #126: Thank you for joining today's conference call you may all disconnect.

You may all disconnect. Thank you.

Speaker Change #126: Okay.

Speaker Change #126: [music].

Speaker Change #126: Okay.

Speaker Change #126: Okay.

Speaker Change #126: [music].