Valley National Bank Q4 2025 Valley National Bancorp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Valley National Bancorp Earnings Call
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Speaker #1: I would like to hand the conference over to your first speaker today, Andrew Giannetti. Please go ahead.
Speaker #2: Good morning, and welcome to Valley's Q4 2025 earnings conference call. I am joined today by CEO Ira Robbins and CFO Travis Lan. Our quarterly earnings release and supporting documents are available at valley.com.
Andrew Giannetti: Good morning, and welcome to Valley's Q4 2025 Earnings Conference Call. I am joined today by CEO Ira Robbins, and CFO Travis Lan. Our quarterly earnings release and supporting documents are available at valley.com. Reconciliations of any non-GAAP measures mentioned on the call can be found in today's earnings release. Please also note slide 2 of our earnings presentation and remember that comments made today may include forward-looking statements about Valley National Bancorp and the banking industry. For more information on these forward-looking statements and associated risk factors, please refer to our SEC filings, including Forms 8-K, 10-Q, and 10-K. With that, I'll turn the call over to Ira Robbins.
Andrew Giannetti: Good morning, and welcome to Valley's Q4 2025 Earnings Conference Call. I am joined today by CEO Ira Robbins, and CFO Travis Lan. Our quarterly earnings release and supporting documents are available at valley.com. Reconciliations of any non-GAAP measures mentioned on the call can be found in today's earnings release. Please also note slide 2 of our earnings presentation and remember that comments made today may include forward-looking statements about Valley National Bancorp and the banking industry. For more information on these forward-looking statements and associated risk factors, please refer to our SEC filings, including Forms 8-K, 10-Q, and 10-K. With that, I'll turn the call over to Ira Robbins.
Speaker #2: Reconciliations of any non-GAAP measures mentioned on the call can be found in today's earnings release. Please also note Slide 2 of our earnings presentation, and remember that comments made today may include forward-looking statements about Valley National Bancorp and the banking industry.
Speaker #2: For more information on these forward-looking statements and associated risk factors, please refer to our SEC filings including Forms 8K, 10Q, and 10K. With that, I'll turn the call over to Ira Robbins.
Speaker #3: Thank you, Andrew. Valley delivered record earnings in the fourth quarter of 2025 with net income of approximately $195 million or 33 cents per diluted share.
Ira D. Robbins: Thank you, Andrew. Valley delivered record earnings in Q4 of 2025, with net income of approximately $195 million or $0.33 per diluted share. Excluding certain non-core items, adjusted net income was $180 million, or $0.31 per diluted share, an increase from $0.28 on both the reported and adjusted basis in Q3 of 2025. Our adjusted return on average assets of 1.14% represents the highest level since Q4 of 2022. For the full year of 2025, we produced $598 million of net income, or $585 million on an adjusted basis. This material improvement versus 2024 reflects disciplined balance sheet management, a stronger funding mix, and continued benefits from strategic investments in talent, technology, and our operating model.
Ira D. Robbins: Thank you, Andrew. Valley delivered record earnings in Q4 of 2025, with net income of approximately $195 million or $0.33 per diluted share. Excluding certain non-core items, adjusted net income was $180 million, or $0.31 per diluted share, an increase from $0.28 on both the reported and adjusted basis in Q3 of 2025. Our adjusted return on average assets of 1.14% represents the highest level since Q4 of 2022. For the full year of 2025, we produced $598 million of net income, or $585 million on an adjusted basis. This material improvement versus 2024 reflects disciplined balance sheet management, a stronger funding mix, and continued benefits from strategic investments in talent, technology, and our operating model.
Speaker #3: Excluding certain non-core items, adjusted net income was $180 million or 31 cents per diluted share. An increase from 28 cents on both the reported and adjusted basis in the third quarter of 2025.
Speaker #3: Our adjusted return on average assets of 1.14% represents the highest level since the fourth quarter of 2022. For the full year of 2025, we produced $598 million of net income or $585 million on an adjusted basis.
Speaker #3: This material improvement versus 2024 reflects disciplined balance sheet management, a stronger funding mix, and continued benefits from strategic investments in talent, technology, and our operating model.
Speaker #3: We entered 2025 with a fortified balance sheet and clear profitability targets tied to sustained funding improvement and credit cost normalization. By year-end, we had exceeded these expectations across all major metrics, while further strengthening our capital and liquidity positions.
Ira D. Robbins: We entered 2025 with a fortified balance sheet and clear profitability targets tied to sustained funding improvement and credit cost normalization. By year-end, we had exceeded these expectations across all major metrics while further strengthening our capital and liquidity positions. This performance underscores both the resilience of our franchise and the depth of our customer relationships. Our improved profitability has accelerated retained earnings growth and enabled us to return more capital to investors through share buybacks and regular cash dividends. Our substantial core deposit growth stands out as one of our major significant achievements of the past year and is the key underpinning of our profitability improvement in 2025. On a year-over-year basis, we grew core deposits by nearly $4 billion or 9%. Past strategic investments in talent and technology have deepened customer engagement, increased operating account wins, and driven momentum across our diverse delivery channels.
We entered 2025 with a fortified balance sheet and clear profitability targets tied to sustained funding improvement and credit cost normalization. By year-end, we had exceeded these expectations across all major metrics while further strengthening our capital and liquidity positions. This performance underscores both the resilience of our franchise and the depth of our customer relationships. Our improved profitability has accelerated retained earnings growth and enabled us to return more capital to investors through share buybacks and regular cash dividends. Our substantial core deposit growth stands out as one of our major significant achievements of the past year and is the key underpinning of our profitability improvement in 2025. On a year-over-year basis, we grew core deposits by nearly $4 billion or 9%. Past strategic investments in talent and technology have deepened customer engagement, increased operating account wins, and driven momentum across our diverse delivery channels.
Speaker #3: This performance underscores both the resilience of our franchise and the depth of our customer relationships. Our improved profitability has accelerated retained earnings growth and enabled us to return more capital to investors through share buybacks and regular cash dividends.
Speaker #3: Our substantial core deposit growth stands out as one of our most significant achievements of the past year and is the key underpinning of our profitability improvement in 2025.
Speaker #3: On a year-over-year basis, we grew core deposits by nearly $4 4 billion or 9%. Past strategic investments in talent and technology have deepened customer engagement, increased operating account wins, and driven momentum across our diverse delivery channels.
Speaker #3: We continue to recruit experienced commercial bankers who are focused on both loan and deposit opportunities in their geographies or areas of focus. While future growth is not likely to be linear, we have a high degree of confidence in our ability to further enhance our funding profile over the next 12 months.
Ira D. Robbins: We continue to recruit experienced commercial bankers who are focused on both loan and deposit opportunities in their geographies or areas of focus. While future growth is not likely to be linear, we have a high degree of confidence in our ability to further enhance our funding profile over the next 12 months. The quarter's loan growth was strong, diverse, and tightly aligned with our relationship-focused strategy. For the first time since Q2 of 2024, total commercial real estate loans grew on a sequential basis. This growth was primarily in the owner-occupied category and was partially funded by a strategic runoff of non-relationship commercial real estate. During the quarter, owner-occupied CRE and C&I growth was driven primarily by activity in our specialty healthcare vertical and Southeast franchise. Loan growth is well positioned to accelerate further in 2026.
We continue to recruit experienced commercial bankers who are focused on both loan and deposit opportunities in their geographies or areas of focus. While future growth is not likely to be linear, we have a high degree of confidence in our ability to further enhance our funding profile over the next 12 months. The quarter's loan growth was strong, diverse, and tightly aligned with our relationship-focused strategy. For the first time since Q2 of 2024, total commercial real estate loans grew on a sequential basis. This growth was primarily in the owner-occupied category and was partially funded by a strategic runoff of non-relationship commercial real estate. During the quarter, owner-occupied CRE and C&I growth was driven primarily by activity in our specialty healthcare vertical and Southeast franchise. Loan growth is well positioned to accelerate further in 2026.
Speaker #3: The course loan growth was strong, diverse, and tightly aligned with our relationship-focused strategy. For the first time since the second quarter of 2024, total commercial real estate loans grew on a sequential basis.
Speaker #3: This growth was primarily in the owner-occupied category and was partially funded by strategic runoff of non-relationship commercial real estate. During the quarter, owner-occupied CRE and C&I growth was driven primarily by activity in our specialty healthcare vertical and Southeast franchise.
Speaker #3: Loan growth is well-positioned to accelerate further in 2026. Our immediate and late-stage pipelines are exceptionally strong, up over $1.1 billion, or nearly 70%, from just a year ago.
Ira D. Robbins: Our immediate and late-stage pipelines are exceptionally strong, up over $1 billion or nearly 70% from just a year ago, driven by a $600 million increase in C&I and $700 million increase in commercial real estate. Past investments in data analytics, artificial intelligence, and sales effectiveness are making our bankers more productive across the franchise. These investments also ensure that newly onboarded relationship bankers have the tools necessary to hit the ground running and contribute more quickly to our consolidated results. To this end, recent additions to our teams, New Jersey, California, and Florida, have already generated loan and deposit activity and directly support the aforementioned expansion in our pipelines. Our recruiting efforts remain active, which we expect will continue to accelerate the growth in our relationship-focused business model.
Our immediate and late-stage pipelines are exceptionally strong, up over $1 billion or nearly 70% from just a year ago, driven by a $600 million increase in C&I and $700 million increase in commercial real estate. Past investments in data analytics, artificial intelligence, and sales effectiveness are making our bankers more productive across the franchise. These investments also ensure that newly onboarded relationship bankers have the tools necessary to hit the ground running and contribute more quickly to our consolidated results. To this end, recent additions to our teams, New Jersey, California, and Florida, have already generated loan and deposit activity and directly support the aforementioned expansion in our pipelines. Our recruiting efforts remain active, which we expect will continue to accelerate the growth in our relationship-focused business model.
Speaker #3: Driven by a $600 million increase in C&I and $700 million increase in commercial real estate. Past investments in data analytics, artificial intelligence, and sales effectiveness are making our bankers more productive across the franchise.
Speaker #3: These investments also ensure that newly onboarded relationship bankers have the tools necessary to hit the ground running and contribute more quickly to our consolidated results.
Speaker #3: To this end, recent additions to our team's New Jersey/California and Florida have already generated loan and deposit activity and directly support the aforementioned expansion in our pipelines.
Speaker #3: Our recruiting efforts remain active, which we expect will continue to accelerate the growth in our relationship-focused business model. Most importantly, increased activity from both legacy and new hires is the result of our strategic focus on attracting profitable, holistic banking relationships, which align with our risk appetite.
Ira D. Robbins: Most importantly, increased activity from both legacy and new hires is the result of our strategic focus on attracting profitable, holistic banking relationships, which align with our risk appetite. Our improved balance sheet position and profitability metrics reflect the cumulative benefits of a variety of multi-year initiatives. We have focused on geographic and business line diversification across the franchise and have invested in high-caliber commercial talent to achieve our goals. Our 2023 core systems conversion set the stage for our expanded treasury management offering, which improved our ability to win operating accounts and deepen commercial relationships. This has directly supported additional growth in both core deposits and fee income and has been further augmented by specialty funding niches that have produced above-average deposit growth. Our strategic priorities for 2026 remain generally consistent and focused on sustained value creation.
Most importantly, increased activity from both legacy and new hires is the result of our strategic focus on attracting profitable, holistic banking relationships, which align with our risk appetite. Our improved balance sheet position and profitability metrics reflect the cumulative benefits of a variety of multi-year initiatives. We have focused on geographic and business line diversification across the franchise and have invested in high-caliber commercial talent to achieve our goals. Our 2023 core systems conversion set the stage for our expanded treasury management offering, which improved our ability to win operating accounts and deepen commercial relationships. This has directly supported additional growth in both core deposits and fee income and has been further augmented by specialty funding niches that have produced above-average deposit growth. Our strategic priorities for 2026 remain generally consistent and focused on sustained value creation.
Speaker #3: Our improved balance sheet position and profitability metrics reflect the cumulative benefits of a variety of multi-year initiatives. We have focused on geographic and business line diversification across the franchise and have invested in high-caliber commercial talent to achieve our goals.
Speaker #3: Our 2023 core systems conversion set the stage for our expanded treasury management offering, which improved our ability to win operating accounts and deepen commercial relationships.
Speaker #3: This has directly supported additional growth in both core deposits and fee income, and has been further augmented by specially funding niches that have produced above-average deposit growth.
Speaker #3: Our strategic priorities for 2026 remain generally consistent and focused on sustained value creation. To support our deposit ambitions, we are igniting our small business sales efforts, improving branch productivity, and exploring new growth-oriented deposit niches.
Ira D. Robbins: To support our deposit ambitions, we are igniting our small business sales efforts, improving branch productivity, and exploring new growth-oriented deposit niches. Additionally, there is an opportunity to further expand the customer adoption of our treasury platform. Recent investments in branding, artificial intelligence solutions, and service model improvements have been designed to accelerate customer acquisition and elevate the client experience, which we believe will contribute to future revenue growth and increased franchise value. At the same time, we are always working to identify and execute on expense offsets to help fund these initiatives. Our strong momentum in 2025 directly supports our 2026 outlook, which Travis will detail shortly. From a high level, we expect continued benefits from repricing opportunities on both the funding side of the balance sheet and in the lower-yielding fixed-rate segment of our loan portfolio.
To support our deposit ambitions, we are igniting our small business sales efforts, improving branch productivity, and exploring new growth-oriented deposit niches. Additionally, there is an opportunity to further expand the customer adoption of our treasury platform. Recent investments in branding, artificial intelligence solutions, and service model improvements have been designed to accelerate customer acquisition and elevate the client experience, which we believe will contribute to future revenue growth and increased franchise value. At the same time, we are always working to identify and execute on expense offsets to help fund these initiatives. Our strong momentum in 2025 directly supports our 2026 outlook, which Travis will detail shortly. From a high level, we expect continued benefits from repricing opportunities on both the funding side of the balance sheet and in the lower-yielding fixed-rate segment of our loan portfolio.
Speaker #3: Additionally, there is an opportunity to further expand the customer adoption of our treasury platform. Recent investments in branding, artificial intelligence solutions, and service model improvements have been designed to accelerate customer acquisition and elevate the client experience, which we believe will contribute to future revenue growth and increased franchise value.
Speaker #3: At the same time, we are always working to identify and execute on expense offsets to help fund these initiatives. Our strong momentum in 2025 directly supports our 2026 outlook, with Travis will detail shortly.
Speaker #3: From a high level, we expect continued benefits from repricing opportunities on both the funding side of the balance sheet and in the lower-yielding fixed-rate segment of our loan portfolio.
Speaker #3: While Travis will describe some of the traditional seasonal headwinds that we faced in the first quarter of each year, we anticipate an additional 15 to 20 basis points of margin expansion from the fourth quarter of 2025 to the fourth quarter of 2026, all else equal.
Ira D. Robbins: While Travis will describe some of the traditional seasonal headwinds that we face in Q1 of each year, we anticipate an additional 15 to 20 basis points of margin expansion from Q4 of 2025 to Q4 of 2026, all else equal. This, combined with continued fee income growth, credit stability, and expense management, should result in further profitability improvement in 2026. I am extremely proud of what our team accomplished in 2025. We have built undeniable momentum with respect to customer growth, funding diversification, loan quality, talent acquisition, and ultimately, financial performance. Our strategy is paying off, our teams are executing, and we remain focused on delivering additional long-term value for our associates, shareholders, and clients. With that, I will now turn the call over to Travis to discuss our financial results.
While Travis will describe some of the traditional seasonal headwinds that we face in Q1 of each year, we anticipate an additional 15 to 20 basis points of margin expansion from Q4 of 2025 to Q4 of 2026, all else equal. This, combined with continued fee income growth, credit stability, and expense management, should result in further profitability improvement in 2026. I am extremely proud of what our team accomplished in 2025. We have built undeniable momentum with respect to customer growth, funding diversification, loan quality, talent acquisition, and ultimately, financial performance. Our strategy is paying off, our teams are executing, and we remain focused on delivering additional long-term value for our associates, shareholders, and clients. With that, I will now turn the call over to Travis to discuss our financial results. After his remarks, Gino Martocci, Patrick Smith, Mark Saeger, Travis, and I will be available for your comments.
Speaker #3: This combined with continued fee income growth, credit stability, and expense management should result in further profitability improvement in 2026. I am extremely proud of what our team accomplished in 2025.
Speaker #3: We have built undeniable momentum with respect to customer growth, funding diversification, loan quality, talent acquisition, and ultimately, financial performance. Our strategy is paying off.
Speaker #3: Our teams are executing, and we remain focused on delivering additional long-term value for our associates, shareholders, and clients. With that, I will now turn the call over to Travis to discuss our financial results.
Speaker #3: After his remarks, Gina Martocci, Patrick Smith, Mark Sager, Travis, and I will be available for your
Ira D. Robbins: After his remarks, Gino Martocci, Patrick Smith, Mark Saeger, Travis, and I will be available for your comments.
Speaker #3: comments. Thank you,
Travis P. Lan: Thank you, Ira. Continuing the discussion on 2026 expectations, we have provided our guidance for the year on slide 9. We expect mid-single-digit loan growth supported by roughly 10% C&I growth, low single-digit CRE growth, and mid-single-digit consumer and residential growth. While results may not be linear, we anticipate deposit growth will outpace loans throughout the year, allowing us to further reduce our loan-to-deposit ratio. We expect CET1 will remain in the previously guided 10.5 to 11% range as we continue to execute our capital deployment strategy. As a result of expected balance sheet growth and continued repricing tailwinds, we anticipate that net interest income will grow between 11 and 13% in 2026. Our forecast assumes 2 rate cuts in 2026, though we remain generally neutral to the front end of the yield curve.
Travis P. Lan: Thank you, Ira. Continuing the discussion on 2026 expectations, we have provided our guidance for the year on slide 9. We expect mid-single-digit loan growth supported by roughly 10% C&I growth, low single-digit CRE growth, and mid-single-digit consumer and residential growth. While results may not be linear, we anticipate deposit growth will outpace loans throughout the year, allowing us to further reduce our loan-to-deposit ratio. We expect CET1 will remain in the previously guided 10.5 to 11% range as we continue to execute our capital deployment strategy. As a result of expected balance sheet growth and continued repricing tailwinds, we anticipate that net interest income will grow between 11 and 13% in 2026. Our forecast assumes 2 rate cuts in 2026, though we remain generally neutral to the front end of the yield curve.
Speaker #2: Ira. Continuing the discussion on 2026 expectations, we have provided our guidance for the year on slide 9. We expect mid-single-digit loan growth supported by roughly 10% C&I growth, low single-digit Cree growth, and mid-single-digit consumer and residential growth.
Speaker #2: While results may not be linear, we anticipate deposit growth will outpace loans throughout the year, allowing us to further reduce our loan-to-deposit ratio. We expect CET1 will remain in the previously guided 10.5 to 11% range, as we continue to execute our capital deployment strategy.
Speaker #2: As a result of expected balance sheet growth and continued repricing tailwinds, we anticipate the net interest income will grow between 11 and 13% in 2026.
Speaker #2: Our forecast assumes two rate cuts in 2026, though we remain generally neutral to the front end of the yield curve. While fourth-quarter fee income benefited from abnormally high commercial loan swap activity, and to a lesser extent, valuation gains on fintech equity investments, which may not recur, we anticipate high single-digit growth in 2026.
Travis P. Lan: While Q4 fee income benefited from abnormally high commercial loan swap activity and, to a lesser extent, valuation gains on fintech equity investments, which may not recur, we anticipate high single-digit growth in 2026. Ira discussed the investments we have made and will continue to make in talent, branding, technology, and capability expansion. These are incorporated into our operating expense guidance, and any incremental investments would be expected to further enhance our growth potential. Finally, we expect further credit cost improvement in 2026. We anticipate general stability in our allowance coverage ratio and further normalization in net charge-offs. These factors would combine to imply a 2026 loan loss provision of around $100 million, give or take.
While Q4 fee income benefited from abnormally high commercial loan swap activity and, to a lesser extent, valuation gains on fintech equity investments, which may not recur, we anticipate high single-digit growth in 2026. Ira discussed the investments we have made and will continue to make in talent, branding, technology, and capability expansion. These are incorporated into our operating expense guidance, and any incremental investments would be expected to further enhance our growth potential. Finally, we expect further credit cost improvement in 2026. We anticipate general stability in our allowance coverage ratio and further normalization in net charge-offs. These factors would combine to imply a 2026 loan loss provision of around $100 million, give or take.
Speaker #2: Ira discussed the investments we have made and will continue to make in talent, branding, technology, and capability expansion. These are incorporated into our operating expense guidance, and any incremental investments would be expected to further enhance our growth potential.
Speaker #2: Finally, we expect further credit cost improvement in 2026. We anticipate general stability in our allowance coverage ratio and further normalization in net charge-offs. These factors would combine to imply a 2026 loan loss provision of around $100 million give or take.
Speaker #2: While quarterly trends naturally vary, I would remind you that our first quarter tends to be somewhat softer as a result of lower day count, elevated payroll taxes within operating expenses, and seasonal headwinds on both sides of the balance sheet.
Travis P. Lan: While quarterly trends naturally vary, I would remind you that our Q1 tends to be somewhat softer as a result of lower day count, elevated payroll taxes within operating expenses, and seasonal headwinds on both sides of the balance sheet. These dynamics may be more evident in the Q1 of 2026, as we saw a late-year spike in both fee income and non-interest deposits, which are likely to moderate early in the year. That said, our 2026 guidance reflects the strong momentum that we have and our expectation for further profitability improvement throughout the year... We added Slide 10 to provide a clearer view of our capital deployment strategy, which continues to balance organic growth with meaningful capital returns.
While quarterly trends naturally vary, I would remind you that our Q1 tends to be somewhat softer as a result of lower day count, elevated payroll taxes within operating expenses, and seasonal headwinds on both sides of the balance sheet. These dynamics may be more evident in the Q1 of 2026, as we saw a late-year spike in both fee income and non-interest deposits, which are likely to moderate early in the year. That said, our 2026 guidance reflects the strong momentum that we have and our expectation for further profitability improvement throughout the year... We added Slide 10 to provide a clearer view of our capital deployment strategy, which continues to balance organic growth with meaningful capital returns.
Speaker #2: These dynamics may be more evident in the first quarter of 2026, as we saw a late-year spike in both fee income and non-interest deposits, which are likely to moderate early in the year.
Speaker #2: That said, our 2026 guidance reflects the strong momentum that we have, and our expectation for further profitability improvement throughout the year. The added slide 10 to provide a clearer view of our capital deployment strategy which continues to balance organic growth with meaningful capital returns.
Speaker #2: In the fourth quarter, we generated $188 million of net income to common shareholders, of which we returned $109 million of that in the form of cash dividends and share repurchases.
Travis P. Lan: In the fourth quarter, we generated $188 million of net income to common shareholders, of which we returned $109 million of that in the form of cash dividends and share repurchases. Our earnings generated about 38 basis points of CET1 during the quarter, and we used about half of that to support organic loan growth while returning the other half to shareholders and preserving capital ratios well within our target range. At the upper end of that range, we believe we have significant flexibility and anticipate preserving this balanced approach to capital deployment going forward. Slide 11 illustrates the continued momentum in our deposit gathering efforts. During the quarter, we increased core deposits by about $1.5 billion, enabling us to pay off almost $500 million of maturing higher cost brokered deposits.
In the fourth quarter, we generated $188 million of net income to common shareholders, of which we returned $109 million of that in the form of cash dividends and share repurchases. Our earnings generated about 38 basis points of CET1 during the quarter, and we used about half of that to support organic loan growth while returning the other half to shareholders and preserving capital ratios well within our target range. At the upper end of that range, we believe we have significant flexibility and anticipate preserving this balanced approach to capital deployment going forward. Slide 11 illustrates the continued momentum in our deposit gathering efforts. During the quarter, we increased core deposits by about $1.5 billion, enabling us to pay off almost $500 million of maturing higher cost brokered deposits.
Speaker #2: Our earnings generated about 38 basis points of CET1 during the quarter, and we used about half of that to support organic loan growth while returning the other half to shareholders.
Speaker #2: And preserving capital ratios well within our target range. At the upper end of that range, we believe we have significant flexibility and anticipate preserving this balanced approach to capital deployment going forward.
Speaker #2: Slide 11 illustrates the continued momentum in our deposit-gathering efforts. During the quarter, we increased core deposits by about $1.5 billion, enabling us to pay off almost $500 million of maturing higher-cost broker deposits.
Speaker #2: Our core deposit growth was primarily concentrated in non-interest and transactional accounts. Non-interest deposits grew over 15% on an annualized basis, but benefited from late-quarter activity, which is likely to moderate.
Travis P. Lan: Our core deposit growth was primarily concentrated in non-interest and transactional accounts. Non-interest deposits grew over 15% on an annualized basis, but benefited from late quarter activity, which is likely to moderate. Still, total deposit costs came down by 24 basis points sequentially, implying a 55% quarterly deposit beta. Turning to Slide 14, total loans grew about $800 million or 7% on an annualized basis. This was the result of accelerating commercial real estate originations, continued C&I momentum, and complementary residential and consumer growth. We continue to fund relationship-based CRE growth with transactional CRE runoff. For the year, we anticipate 40% of our net loan growth will come from C&I, 40% from CRE, and the remainder from consumer and residential.
Our core deposit growth was primarily concentrated in non-interest and transactional accounts. Non-interest deposits grew over 15% on an annualized basis, but benefited from late quarter activity, which is likely to moderate. Still, total deposit costs came down by 24 basis points sequentially, implying a 55% quarterly deposit beta. Turning to Slide 14, total loans grew about $800 million or 7% on an annualized basis. This was the result of accelerating commercial real estate originations, continued C&I momentum, and complementary residential and consumer growth. We continue to fund relationship-based CRE growth with transactional CRE runoff. For the year, we anticipate 40% of our net loan growth will come from C&I, 40% from CRE, and the remainder from consumer and residential.
Speaker #2: Still, total deposit costs came down by 24 basis points sequentially, implying a 55% quarterly deposit beta. Turning to slide 14, total loans grew about $800 million or 7% on an annualized basis.
Speaker #2: This was the result of accelerating commercial real estate originations, continued C&I momentum, and complementary residential and consumer growth. We continue to fund relationship-based CRE growth with transactional CRE runoff.
Speaker #2: For the year, we anticipate 40% of our net loan growth will come from C&I, 40% from Cree, and the remainder from consumer and residential.
Speaker #2: Our loan yield beta continues to meaningfully lag our deposit beta, as the replacement of low-yielding fixed-rate loans with higher-yielding originations slows the rate-based compression.
Travis P. Lan: Our loan yield beta continues to meaningfully lag our deposit beta as the replacement of low-yielding fixed-rate loans with higher-yielding originations slows the rate-based compression. Slide 17 tells our net interest income and margin expansion story as we benefit from loan growth and repricing dynamics on both sides of the balance sheet. Net interest income increased 4% quarter-over-quarter or 10% year-over-year. We also saw our margin expand to 3.17%, well beyond our Q4 target of above 3.1%. We continue to see the repricing dynamic playing out, supporting our expectations for an additional 15 to 20 basis points of margin expansion from the Q4 of 2025 to the Q4 of 2026. We saw exceptional 18% growth in non-interest income during the quarter.
Our loan yield beta continues to meaningfully lag our deposit beta as the replacement of low-yielding fixed-rate loans with higher-yielding originations slows the rate-based compression. Slide 17 tells our net interest income and margin expansion story as we benefit from loan growth and repricing dynamics on both sides of the balance sheet. Net interest income increased 4% quarter-over-quarter or 10% year-over-year. We also saw our margin expand to 3.17%, well beyond our Q4 target of above 3.1%. We continue to see the repricing dynamic playing out, supporting our expectations for an additional 15 to 20 basis points of margin expansion from the Q4 of 2025 to the Q4 of 2026. We saw exceptional 18% growth in non-interest income during the quarter.
Speaker #2: Slide 17 tells our net interest income and margin expansion story, as we benefit from loan growth and repricing dynamics on both sides of the balance sheet.
Speaker #2: Net interest income increased 4% quarter over quarter, or 10% year over year. We also saw our margin expand to 3.17%, well beyond our fourth-quarter target of above repricing dynamic playing out, supporting 3.1%.
Speaker #2: our expectations for an additional We continue to see the 15 to 20 basis points of margin expansion, from the fourth quarter of 2025 to the fourth quarter of 2026.
Speaker #2: We saw exceptional 18% growth in non-interest income during the quarter. Roughly two-thirds of the sequential growth was from swap fees and unrealized gains on certain fintech investments.
Travis P. Lan: Roughly two-thirds of the sequential growth was from swap fees and unrealized gains on certain fintech investments. Some of this activity was episodic and is not likely to recur. That said, we continue to have strong momentum from a deposit service charge and wealth management perspective. Quarterly fee income in the mid- to high-$60 million range is likely a reasonable starting point for 2026, with anticipated growth throughout the year. Similar to fee income, fourth quarter adjusted expenses were elevated by a few discrete and infrequent items. Roughly half of the quarterly expense growth was due to our new branding campaign and performance-based accruals tied to the execution of certain operational initiatives and milestones in 2025. Even with these items, expenses for the full year increased just 2.6%, well below our 9% revenue growth.
Roughly two-thirds of the sequential growth was from swap fees and unrealized gains on certain fintech investments. Some of this activity was episodic and is not likely to recur. That said, we continue to have strong momentum from a deposit service charge and wealth management perspective. Quarterly fee income in the mid- to high-$60 million range is likely a reasonable starting point for 2026, with anticipated growth throughout the year. Similar to fee income, fourth quarter adjusted expenses were elevated by a few discrete and infrequent items. Roughly half of the quarterly expense growth was due to our new branding campaign and performance-based accruals tied to the execution of certain operational initiatives and milestones in 2025. Even with these items, expenses for the full year increased just 2.6%, well below our 9% revenue growth.
Speaker #2: Some of this activity was episodic and is not likely to recur. That said, we continued to have strong momentum from a deposit service charge and wealth management perspective.
Speaker #2: Quarterly fee income in the mid- to high-$60 million range is likely a reasonable starting point for 2026, with anticipated growth throughout the year.
Speaker #2: Similar to fee income, fourth-quarter adjusted expenses were elevated by a few discreet and infrequent items. Roughly half of the quarterly expense growth was due to our new branding campaign and performance-based accruals tied to the execution of certain operational initiatives and milestones in 2025.
Speaker #2: Even with these items, expenses for the full year increased just 2.6%, well below our 9% revenue growth. We continued to project low single-digit expense growth in 2026, as ongoing investments in talent, technology, branding, and capabilities are partially funded by efficiencies from other parts of the organization.
Travis P. Lan: We continue to project low single-digit expense growth in 2026 as ongoing investments in talent, technology, branding, and capabilities are partially funded by efficiencies from other parts of the organization. As a result of these efforts, we anticipate that our efficiency ratio will continue to decline towards 50% throughout the year. Slides 21 and 22 illustrate our asset quality and reserve trends. Criticized and Classified Loans declined by over $350 million, or 8%, during the quarter, and total non-accrual loans to total loans were effectively unchanged. Quarterly net charge-offs were 18 basis points of average loans, bringing 2025 net charge-offs down to 24 basis points of average loans versus 40 basis points in 2024. Our allowance coverage ratio declined by 2 basis points during the quarter, as lower quantitative reserves more than offset higher specific and qualitative factors.
We continue to project low single-digit expense growth in 2026 as ongoing investments in talent, technology, branding, and capabilities are partially funded by efficiencies from other parts of the organization. As a result of these efforts, we anticipate that our efficiency ratio will continue to decline towards 50% throughout the year. Slides 21 and 22 illustrate our asset quality and reserve trends. Criticized and Classified Loans declined by over $350 million, or 8%, during the quarter, and total non-accrual loans to total loans were effectively unchanged. Quarterly net charge-offs were 18 basis points of average loans, bringing 2025 net charge-offs down to 24 basis points of average loans versus 40 basis points in 2024. Our allowance coverage ratio declined by 2 basis points during the quarter, as lower quantitative reserves more than offset higher specific and qualitative factors.
Speaker #2: We anticipate that our efficiency ratio will continue to decline towards 50% throughout the year as a result of these efforts. Slides 21 and 22 illustrate our asset quality and reserve trends.
Speaker #2: Criticizing classified loans declined by over $350 million or 8% during the quarter, and total non-accrual loans to total loans were effectively unchanged. Quarterly net charge-offs were 18 basis points of average loans, bringing 2025 net charge-offs down to 24 basis points of average loans versus 40 basis points in 2024.
Speaker #2: Our allowance coverage ratio declined by two basis points during the quarter, as lower quantitative reserves more than offset higher specific and qualitative factors. We remain confident in the performance of our loan portfolio and expect further normalization of credit costs in 2026.
Travis P. Lan: We remain confident in the performance of our loan portfolio and expect further normalization of credit costs in 2026. Turning to Slide 24, tangible book value increased by nearly 3% during the quarter as a result of retained earnings and a favorable OCI impact associated with our available-for-sale portfolio. Regulatory capital ratios remain generally stable as we support our loan growth and utilize excess capital to repurchase stock. We utilized over $60 million of organically generated capital to repurchase over 6 million shares in 2025. 4 million of these shares were bought back in the fourth quarter of 2025 alone, and we anticipate continued repurchase activity going forward. With that, I will turn the call back to the operator to begin Q&A. Thank you.
We remain confident in the performance of our loan portfolio and expect further normalization of credit costs in 2026. Turning to Slide 24, tangible book value increased by nearly 3% during the quarter as a result of retained earnings and a favorable OCI impact associated with our available-for-sale portfolio. Regulatory capital ratios remain generally stable as we support our loan growth and utilize excess capital to repurchase stock. We utilized over $60 million of organically generated capital to repurchase over 6 million shares in 2025. 4 million of these shares were bought back in the fourth quarter of 2025 alone, and we anticipate continued repurchase activity going forward. With that, I will turn the call back to the operator to begin Q&A. Thank you.
Speaker #2: Turning to slide 24, tangible book value increased by nearly 3% during the quarter, as a result of retained earnings and a favorable OCI impact associated with our available-for-sale portfolio.
Speaker #2: Regulatory capital ratios remain generally stable, as we support our loan growth and utilize excess capital to repurchase stock. We utilized over $60 million of organically generated capital to repurchase over 6 million shares in 2025.
Speaker #2: $4 million of these shares were bought back in the fourth quarter of 2025 alone, and we anticipate continued repurchase activity going forward. With that, I will turn the call back to the operator to begin Q&A.
Speaker #2: Thank you.
Speaker #1: Thank you. At this time, we'll conduct a question-and-answer session. As a reminder to ask the question, you'll need to press star 11 on your telephone and wait for your name to be announced.
Operator: Thank you. At this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of David Chiaverini of Jefferies. Your line is now open.
Operator: Thank you. At this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of David Chiaverini of Jefferies. Your line is now open.
Speaker #1: question, please press star 11 To withdraw your again. Please stand by while we compile the Q&A roster. And our first question comes from a line of David Chiaverini of Jefferies.
Speaker #1: Your line is now
Speaker #1: open. Hi, thanks for taking the
[Analyst] (Jefferies): Hi, thanks for taking the question. So wanted to start on net interest margin. You mentioned about 15 to 20 basis points for Q25 versus for Q26. Can you talk about some of the drivers, behind that on both sides, the loan side as well as the deposit side in terms of betas?
David Chiaverini: Hi, thanks for taking the question. So wanted to start on net interest margin. You mentioned about 15 to 20 basis points for Q25 versus for Q26. Can you talk about some of the drivers, behind that on both sides, the loan side as well as the deposit side in terms of betas?
Speaker #2: question. So I wanted to start on net interest margin. You mentioned about 15 to 20 basis points for Q25 versus for Q26. Can you talk about some of the drivers behind that on both sides?
Speaker #2: The loan side as well as the deposit side in terms of betas.
Speaker #3: Yeah, this is Travis David, and thanks for the question. The benefits between now and the end of 2026 will be fairly balanced between the loan and deposit sides of the balance sheet.
Travis P. Lan: ... Yeah, this is Travis, David, and thanks for the question. The benefits between now and the end of 2026 will be fairly balanced between the loan and deposit sides of the balance sheet. So from a deposit perspective, you know, we continue to work customer deposit rates lower, and then we have the additional benefit of replacing higher cost brokered with lower cost core. In 2026, we also have $600 million of FHLB advances at about 4.7% that will come due and will be replaced lower as well. So that's another benefit that we anticipate to play out on the margin. We have $1.8 billion of fixed rate loans that are gonna mature in 2026 at a rate of around 4.7%.
Travis P. Lan: ... Yeah, this is Travis, David, and thanks for the question. The benefits between now and the end of 2026 will be fairly balanced between the loan and deposit sides of the balance sheet. So from a deposit perspective, you know, we continue to work customer deposit rates lower, and then we have the additional benefit of replacing higher cost brokered with lower cost core. In 2026, we also have $600 million of FHLB advances at about 4.7% that will come due and will be replaced lower as well. So that's another benefit that we anticipate to play out on the margin. We have $1.8 billion of fixed rate loans that are gonna mature in 2026 at a rate of around 4.7%.
Speaker #3: So from a deposit perspective, we continue to work customer deposit rates lower, and then we have the additional benefit of replacing higher-cost brokered with lower-cost core in 2026.
Speaker #3: We also have one—excuse me—$600 million of FHLB advances at about 4.7% that will come due, and will be replaced lower as well. So that's another benefit that we anticipate to play out on the margin.
Speaker #3: We have $1.8 billion of fixed-rate loans that are going to mature in 2026 at a rate of around 4.7%. Those are coming back on $150 to $200 basis points higher.
Travis P. Lan: Those are coming back on 150 to 200 basis points higher. And so while, you know, as rates fall, asset yields may fall, you know, we slowed the rate of compression because of that fixed rate repricing dynamic.
Those are coming back on 150 to 200 basis points higher. And so while, you know, as rates fall, asset yields may fall, you know, we slowed the rate of compression because of that fixed rate repricing dynamic.
Speaker #3: And so while as rates fall, asset yields may fall, we slowed the rate of compression because of that fixed-rate repricing dynamic.
Speaker #2: And in terms of kind of the cadence, you mentioned a couple of times about results not being linear through the year. How should we think about the net interest margin as we kind of progress through the year?
[Analyst] (TD Cowen): In terms of kind of the cadence, you mentioned a couple of times about, you know, results not being linear through the year. How should we think about the net interest margin as we kind of progress through the year?
David Chiaverini: In terms of kind of the cadence, you mentioned a couple of times about, you know, results not being linear through the year. How should we think about the net interest margin as we kind of progress through the year?
Speaker #3: Yeah, so in the first quarter, I would anticipate the margin comes down a little bit from the 3.17% that we put up this quarter.
Travis P. Lan: Yeah. So in the first quarter, I would anticipate the margin comes down a little bit from the 3.17 that we put up this quarter, and then grows from that level, back to that kind of mid-3.30s that we talked about by the fourth quarter. The drivers of that, again, I mentioned that, you know, we had some late December spikes in non-interest bearing balances. I would expect that that's closer to, you know, the average non-interest deposit balance for the fourth quarter, at $331 million. And then we also get the headwind from day count. So, each day, we accrue about $5 million of NII, so 2 fewer days in the first quarter is a slight headwind.
Travis P. Lan: Yeah. So in the first quarter, I would anticipate the margin comes down a little bit from the 3.17 that we put up this quarter, and then grows from that level, back to that kind of mid-3.30s that we talked about by the fourth quarter. The drivers of that, again, I mentioned that, you know, we had some late December spikes in non-interest bearing balances. I would expect that that's closer to, you know, the average non-interest deposit balance for the fourth quarter, at $331 million. And then we also get the headwind from day count. So, each day, we accrue about $5 million of NII, so 2 fewer days in the first quarter is a slight headwind. You know, we'll offset some of that with growth and the rate dynamics, but that's the way that we think about it.
Speaker #3: And then grows from that level back to that kind of mid-330s that we talked about by the fourth quarter. The drivers of that, again, I mentioned that we had some late December spikes in non-interest bearing balances.
Speaker #3: I would expect that that's closer to the average non-interest deposit balance for the fourth quarter, at $3.31 billion, and then we also get the headwind from day counts.
Speaker #3: So each day we accrue about $5 million of NII, so two fewer days in the first quarter of the slight headwind. We'll offset some of that with growth and the rate dynamics, but that's the way that we think about
Speaker #3: So each day we accrue about $5 million of NII, so two fewer days in the first quarter of the slight headwind. We'll offset some of that with growth and the rate dynamics, but that's the way that we think about it.
Travis P. Lan: You know, we'll offset some of that with growth and the rate dynamics, but that's the way that we think about it.
Speaker #2: Thanks very
[Analyst] (TD Cowen): Thanks very much.
David Chiaverini: Thanks very much.
Speaker #2: much. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Freddie Circle of OD Group. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Freddie Circle of OD Group. Your line is now open.
Speaker #1: One moment for our next question. And our next question comes from the line of Freddie Strickland of Hoodley Ley Group. Your line is now open.
[Analyst] (OD Group): Hey, thanks for taking my question. Good morning, guys. Just great to see the trend down in classifieds again this quarter. And as you look at workouts in progress, and you mentioned declining credit costs, is the implication that we could see adversely classified assets continue to fall over the course of 2026?
[Analyst] (OD Group): Hey, thanks for taking my question. Good morning, guys. Just great to see the trend down in classifieds again this quarter. And as you look at workouts in progress, and you mentioned declining credit costs, is the implication that we could see adversely classified assets continue to fall over the course of 2026?
Speaker #4: Hey, thanks for taking my question. Good morning, guys. Just great to see the trim down classifieds again this quarter. And as you look at workouts in progress, and you mentioned declining credit costs, is the implication that we could see adversely classified assets continue to fall over the course of '26?
Speaker #5: Hey, Freddie, this is Mark Sager. We absolutely, if the economy stays in the situation that it is today, which we expect, we expect this trend to continue in '26 and into '27.
Mark Saeger: Hey, Freddie, this is Mark Saeger. We absolutely, if the economy stays in the situation that it is today, which we expect, we expect this trend to continue in 2026 and into 2027. We've seen it for the past three quarters now, improvement, and this was a substantive decrease.
Mark Saeger: Hey, Freddie, this is Mark Saeger. We absolutely, if the economy stays in the situation that it is today, which we expect, we expect this trend to continue in 2026 and into 2027. We've seen it for the past three quarters now, improvement, and this was a substantive decrease.
Speaker #5: We've seen it for the past three quarters now improvement, and this was a substantive
Speaker #5: decrease. I would just add, Freddie,
Travis P. Lan: I would just add, Freddie, that the reduction quarter-over-quarter is a combination of payoffs, and net upgrades. So it's both factors that drove that improvement. We would anticipate that to continue.
Travis P. Lan: I would just add, Freddie, that the reduction quarter-over-quarter is a combination of payoffs, and net upgrades. So it's both factors that drove that improvement. We would anticipate that to continue.
Speaker #3: that the reduction quarter over quarter is a combination of payoffs and net upgrades. So it's both factors that drove that improvement. We would anticipate that to
Speaker #3: continue. Got it.
[Analyst] (OD Group): Got it. And then just on the loan growth outlook, it seems like you're gonna have CRE concentration continue to decline in 2026 if you have higher growth rates of C&I, consumer, and resi. Is that the case, or is it maybe relatively slide as you look to deploy some capital?
[Analyst] (OD Group): Got it. And then just on the loan growth outlook, it seems like you're gonna have CRE concentration continue to decline in 2026 if you have higher growth rates of C&I, consumer, and resi. Is that the case, or is it maybe relatively slide as you look to deploy some capital?
Speaker #4: And then just on the loan growth outlook, it seems like you're going to have CRE concentration continue to climb in '26 if you have higher growth rates of CNI, consumer and resi.
Speaker #4: Is that the case, or is it maybe relatively slight as you look to deploy some
Speaker #4: Capital? I think it's a modest
Travis P. Lan: I think it's a modest improvement or further decline in the CRE concentration ratio. So, you know, if you untangle kind of the loan growth guidance, it's about $1 billion of C&I, $1 billion of net CRE, and $0.5 billion of resi and consumer. Now, that $1 billion of CRE will be split between owner-occupied and regulatory CRE. And the way that we factor it with the capital growth that we anticipate, you'd still see CRE concentration improve throughout the year.
Travis P. Lan: I think it's a modest improvement or further decline in the CRE concentration ratio. So, you know, if you untangle kind of the loan growth guidance, it's about $1 billion of C&I, $1 billion of net CRE, and $0.5 billion of resi and consumer. Now, that $1 billion of CRE will be split between owner-occupied and regulatory CRE. And the way that we factor it with the capital growth that we anticipate, you'd still see CRE concentration improve throughout the year.
Speaker #3: improvement or further decline in the CRE concentration ratios. So if you untangle kind of the loan growth guidance, it's about a billion dollars of CNI, a billion dollars of net CRE, and a half billion of resi and consumer.
Speaker #3: Now, that billion dollars of CRE will be split between owner-occupied and regulatory CRE. And the way that we factor it with the capital growth that we anticipate, you'd still see CRE concentration improve throughout the year.
Speaker #4: All right, great. Thanks, that's it for me.
[Analyst] (OD Group): All right, great. Thanks. That's it for me.
[Analyst] (OD Group): All right, great. Thanks. That's it for me.
Speaker #1: Thank you. One moment for our next question. Our next question comes from a line of Anthony Allion of JP Morgan. Your line is now
Operator: Thank you. One moment for our next question. Our next question comes from the line of Anthony Allen of J.P. Morgan. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Anthony Allen of J.P. Morgan. Your line is now open.
Speaker #1: open. Hi,
[Analyst] (J.P. Morgan): Hi. Your adjusted ROE was over 13% in Q4, which is above your guide of 11% for 2025. Ira, I know last quarter you pointed to achieving the 15% goal by late 2027 or early 2028, but any update to that timeline, just given the tailwinds you have and you outline on slide nine for NIM, operating leverage, and provision?
Anthony Elian: Hi. Your adjusted ROE was over 13% in Q4, which is above your guide of 11% for 2025. Ira, I know last quarter you pointed to achieving the 15% goal by late 2027 or early 2028, but any update to that timeline, just given the tailwinds you have and you outline on slide nine for NIM, operating leverage, and provision?
Speaker #6: your adjusted ROE was over 13% in 4Q, which is above your guide of 11% for '25. Ira, I know last quarter you pointed to achieving the 15% goal by late '27 or early '28, but any updates to that timeline, just given the tailwinds you have and you outline on slide 9 for NIM, operating leverage, and provision?
Speaker #3: No, I don't think we're going to update what that guide looks like. We feel really, really strong about sort of where the liftoff is for us in the beginning of 2026.
Travis P. Lan: I don't think we're gonna update what that guide looks like. You know, we feel really, really strong about sort of where the liftoff is for us in the beginning of 2026, and a lot of tailwind for us. We think we're well on our way to achieve that 15% target.
Travis P. Lan: I don't think we're gonna update what that guide looks like. You know, we feel really, really strong about sort of where the liftoff is for us in the beginning of 2026, and a lot of tailwind for us. We think we're well on our way to achieve that 15% target.
Speaker #3: And a lot of tailwind for us, and we think we're well on our way to achieve that 15%
Speaker #3: target. Thank you.
[Analyst] (J.P. Morgan): Thank you. Then on expense, so I get the low single digit guide for the full year, but Travis, how are you thinking about expense specifically for Q1, just given some of the elevated items you mentioned around payroll taxes? Thank you.
Anthony Elian: Thank you. Then on expense, so I get the low single digit guide for the full year, but Travis, how are you thinking about expense specifically for Q1, just given some of the elevated items you mentioned around payroll taxes? Thank you.
Speaker #6: And then on expense, so I get the low single-digit guide for the full year, but Travis, how are you thinking about expense specifically for Q1, just given some of the elevated items you mentioned around payroll taxes?
Speaker #6: Thank
Speaker #3: Yeah, I appreciate it. I mean, I think, as I mentioned, the fourth quarter also included some elevated items. So as those normalize and then you typically have about a 7 or 8 million dollar headwind in the first quarter from payroll taxes.
Travis P. Lan: Yeah, I, I appreciate it. I mean, I think, as I mentioned, Q4 also included some elevated items. So as those normalize, and then you typically have about a $7 or 8 million dollar headwind in Q1 from payroll taxes, those things probably roughly balance out. And so you'd see, I'd say, general stability in, in operating expenses in Q1 due to that, whereas normally it would be kind of a straight uptick. Again, you have some offsets with some of these more one-time items that occurred in Q4.
Travis P. Lan: Yeah, I, I appreciate it. I mean, I think, as I mentioned, Q4 also included some elevated items. So as those normalize, and then you typically have about a $7 or 8 million dollar headwind in Q1 from payroll taxes, those things probably roughly balance out. And so you'd see, I'd say, general stability in, in operating expenses in Q1 due to that, whereas normally it would be kind of a straight uptick. Again, you have some offsets with some of these more one-time items that occurred in Q4.
Speaker #3: Those things probably roughly balance out. And so you'd see, I'd say, general stability in operating expenses in the first quarter due to that. Whereas normally it would be kind of a straight uptick.
Speaker #3: Again, you have some offsets with some of these more one-time items that occurred in the fourth quarter.
Speaker #6: Thank
Speaker #6: you. Thank you.
[Analyst] (J.P. Morgan): Thank you.
Anthony Elian: Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Janet Lee of TD Cowen. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Janet Lee of TD Cowen. Your line is now open.
Speaker #1: One moment for our next question. Our next question comes from the line of Janet Lee of TD Conway. Your line is now open.
Speaker #7: Good morning. So you guys said you're neutral to the front end of the curve. And I know there's a lot of fixed-rate asset repricing benefits that are flowing through for Valley.
[Analyst] (TD Cowen): Good morning.
Janet Lee: Good morning.
Travis P. Lan: Thanks.
Travis P. Lan: Thanks.
[Analyst] (TD Cowen): So you guys said you're neutral to the front end of the curve, and I know there's a lot of fixed rate asset repricing benefits that are flowing through for, for Valley. How does your prediction around 15 to 20 basis point NIM expansion change if we assume no rate cuts?
Janet Lee: So you guys said you're neutral to the front end of the curve, and I know there's a lot of fixed rate asset repricing benefits that are flowing through for, for Valley. How does your prediction around 15 to 20 basis point NIM expansion change if we assume no rate cuts?
Speaker #7: How does your prediction around 15 to 20 basis point NIM expansion change if we assume no rate cuts?
Speaker #3: Yeah, Janet, this is Travis. If you assume no, as I said, we are generally neutral. If you assume no rate cuts, you would actually look at kind of a half percent to a percent of headwind from NII.
Travis P. Lan: ... Yeah, Janet, this is Travis. If you assume, as I said, we are generally neutral. If you assume no rate cuts, you would actually, you know, you'd look at kind of 0.5% to 1% of headwind from NII. The reality, though, is the implied forward curve assumes some modest increase in the two, five, and ten-year points, which are more impactful to our margins. So, in a vacuum, no Fed cuts would be a slight, very slight headwind. But, you know, as the rest of the curve plays out, I think we offset that. The other component to think about is we're structurally neutral to the front end of the curve, but we've outperformed our beta assumptions in the wake of Fed cuts. So that's, you know, something that's improved at the beta.
Travis P. Lan: ... Yeah, Janet, this is Travis. If you assume, as I said, we are generally neutral. If you assume no rate cuts, you would actually, you know, you'd look at kind of 0.5% to 1% of headwind from NII. The reality, though, is the implied forward curve assumes some modest increase in the two, five, and ten-year points, which are more impactful to our margins. So, in a vacuum, no Fed cuts would be a slight, very slight headwind. But, you know, as the rest of the curve plays out, I think we offset that. The other component to think about is we're structurally neutral to the front end of the curve, but we've outperformed our beta assumptions in the wake of Fed cuts. So that's, you know, something that's improved at the beta.
Speaker #3: The reality, though, is the implied forward curve assumes some modest increase in the 2-, 5-, and 10-year points, which are more impactful to our margins.
Speaker #3: So, in a vacuum, no Fed cuts would be a slight, very slight headwind. But as the rest of the curve plays out, I think we offset that.
Speaker #3: The other component to think about is we're structurally neutral to the front end of the curve, but we've outperformed our beta assumptions in the wake of Fed cuts.
Speaker #3: So that's something that's improved at the beta level.
Speaker #7: Got it. Thank you. And just to follow up on buyback, looks like 19 million that's remaining in authorization that expires in April. And with their current capital generation, looks like you could maintain the 4Q pace of buyback while still pretty comfortably staying in that CT1 target range.
[Analyst] (TD Cowen): Got it. Thank you. And just a follow-up on buyback. Looks like $19 million that's remaining in authorization that expires in April. And with their current capital generation, looks like you could maintain the Q4 pace of buyback while still pretty comfortably staying in that CET1 target range, perhaps even at the higher end. Could you comment around the pace of buyback? I know you're going to be opportunistic, but just would love to hear your response. Thanks.
Janet Lee: Got it. Thank you. And just a follow-up on buyback. Looks like $19 million that's remaining in authorization that expires in April. And with their current capital generation, looks like you could maintain the Q4 pace of buyback while still pretty comfortably staying in that CET1 target range, perhaps even at the higher end. Could you comment around the pace of buyback? I know you're going to be opportunistic, but just would love to hear your response. Thanks.
Speaker #7: Perhaps even at the higher end. Could you comment around the pace of buyback? I know you're going to be opportunistic, but just would love to hear your response.
Speaker #7: Thanks.
Speaker #3: Yeah, absolutely. So if you kind of play out our guidance, CET1 on a growth basis would increase 130 to 140 basis points next year.
Travis P. Lan: Yeah, absolutely. So if you kind of play out our guidance, CET1 on a gross basis would increase 130 to 140 basis points next year. About 50 basis points of that would be used to support loan growth, 50 basis points would be paid out in the dividend, and it would leave you with 30 or 40 basis points of excess CET1 for the buyback. That would kind of back into $150 to 200 million worth of stock, which, if you think about the pace of Q4, when we used about $48 million of equity in the buyback, it's pretty consistent. So, that's the way that we're thinking about it. To your point, our authorization expires in April.
Travis P. Lan: Yeah, absolutely. So if you kind of play out our guidance, CET1 on a gross basis would increase 130 to 140 basis points next year. About 50 basis points of that would be used to support loan growth, 50 basis points would be paid out in the dividend, and it would leave you with 30 or 40 basis points of excess CET1 for the buyback. That would kind of back into $150 to 200 million worth of stock, which, if you think about the pace of Q4, when we used about $48 million of equity in the buyback, it's pretty consistent. So, that's the way that we're thinking about it. To your point, our authorization expires in April. I mean, obviously, we would, you know, plan on re-upping that, as we would traditionally.
Speaker #3: About 50 basis points of that would be used to support loan growth, 50 basis points would be paid out in the dividend, and it would leave you with 30 or 40 basis points of excess CET1 for the buyback.
Speaker #3: That would kind of back into 150 to 200 million dollars worth of stock, which if you think about the pace of the fourth quarter when we used about 48 million, of equity in the buyback, it's pretty consistent.
Speaker #3: So that's the way that we're thinking about it, to your point. Our authorization expires in April. I mean, obviously, we would plan on re-upping that as we would.
Travis P. Lan: I mean, obviously, we would, you know, plan on re-upping that, as we would traditionally.
Speaker #3: traditionally. Thank
Speaker #7: you. Thank you.
[Analyst] (TD Cowen): Thank you.
Janet Lee: Thank you.
Operator: Thank you. One moment for our next question. Our next question comes to the line of Manan Gosalia of Morgan Stanley. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes to the line of Manan Gosalia of Morgan Stanley. Your line is now open.
Speaker #1: One moment for our next question. Our next question comes from a line of Manning-Grosalio of Morgan Stanley. Your line is now
Speaker #1: open. Hey,
Operator: Hey, good morning. On the strategic growth slide, you have a bullet in there that talks about contemplating geographic expansion. Any specific markets you'd highlight? And I guess, how should we think about the scale of that build-out?
Manan Gosalia: Hey, good morning. On the strategic growth slide, you have a bullet in there that talks about contemplating geographic expansion. Any specific markets you'd highlight? And I guess, how should we think about the scale of that build-out?
Speaker #8: good morning. On the strategic growth slide, you have a bullet in there that talks about contemplating geographic expansion. Any specific markets you'd highlight? And I guess how should we think about the scale of that buildout?
Speaker #3: I think, just from a broad perspective, we've had real success as we think about growing into different geographies, whether it be through acquisition or just from an organic perspective.
Ira D. Robbins: I think just from a broad perspective, we've had real success as we think about growing into different geographies, whether it be through acquisition or just from an organic perspective. On the back end of our Leumi deal, we were able to enter into the Chicago and Los Angeles markets and have seen strong growth come out of those areas. We recently expanded our team in the Philadelphia area and have seen real positive momentum and traction out of that. So I think we feel very comfortable, whether it be something that's contiguous to where we sit today or where there's other opportunities in strong markets. And Gino, maybe you can comment about-
Ira D. Robbins: I think just from a broad perspective, we've had real success as we think about growing into different geographies, whether it be through acquisition or just from an organic perspective. On the back end of our Leumi deal, we were able to enter into the Chicago and Los Angeles markets and have seen strong growth come out of those areas. We recently expanded our team in the Philadelphia area and have seen real positive momentum and traction out of that. So I think we feel very comfortable, whether it be something that's contiguous to where we sit today or where there's other opportunities in strong markets. And Gino, maybe you can comment about-
Speaker #3: On the back end of our Laumi deal, we were able to enter into the Chicago and Los Angeles markets and have seen strong growth come out of those areas.
Speaker #3: We recently expanded our team in the Philadelphia area and have seen real positive momentum and traction out of that. So I think we feel very comfortable whether it be something that's contiguous to where we sit today.
Speaker #3: Or where there's other opportunities and strong markets. And Gina, maybe you can comment on that.
Speaker #2: Well, I think you phrased that well. We have had some success with our senior leaders that we've hired in bringing in additional producers. And we are really focused on adjacent markets, but also on opportunistically on teams that we can bring in and quickly start producing.
Travis P. Lan: I think you phrased that well. We have had some success with our senior leaders that we've hired in bringing in additional producers. And we are really focused on adjacent markets, but also opportunistically on teams that we can bring in and quickly start producing.
Gino Martocci: I think you phrased that well. We have had some success with our senior leaders that we've hired in bringing in additional producers. And we are really focused on adjacent markets, but also opportunistically on teams that we can bring in and quickly start producing.
Speaker #8: Got it. Okay, great. And then as we think about the 3:30 plus NIM guide for 4Q26, how important are loan spreads there? We've heard from some banks that they're seeing more competition on both spread and structure.
Operator: Got it. Okay, great. And then, as we think about 3.30+ NIM guide for 2024 for 2026, how important are loan spreads there? You know, we've heard from some banks that they're seeing more competition on both spread and structure. I guess the question is: What are you seeing in your markets, and what are you baking into that guide?
Manan Gosalia: Got it. Okay, great. And then, as we think about 3.30+ NIM guide for 2024 for 2026, how important are loan spreads there? You know, we've heard from some banks that they're seeing more competition on both spread and structure. I guess the question is: What are you seeing in your markets, and what are you baking into that guide?
Speaker #8: I guess the question is, what are you seeing in your markets and what are you baking into that
Speaker #8: guide? Thanks, Manon.
Travis P. Lan: Thanks, Manan. This is Travis. The reality is we hear the same from our bankers on the street, but when you look at the data, the spreads have been fairly consistent. Now, based on the feedback, we are conservatively assuming modest spread compression in the NII forecast that we gave you. So I think we, you know, we hear it, you know, on the ground as well, and we're trying to factor that in appropriately.
Travis P. Lan: Thanks, Manan. This is Travis. The reality is we hear the same from our bankers on the street, but when you look at the data, the spreads have been fairly consistent. Now, based on the feedback, we are conservatively assuming modest spread compression in the NII forecast that we gave you. So I think we, you know, we hear it, you know, on the ground as well, and we're trying to factor that in appropriately.
Speaker #2: This is Travis. The reality is we hear the same from our bankers on the street when you look at the data, the spreads have been fairly consistent.
Speaker #2: Now, based on the feedback, we are conservatively assuming modest spread compression in the NII forecast that we gave you. So I think we hear it on the ground as well and we're trying to factor that in appropriately.
Speaker #8: Got it. So that's already baked in. Thanks.
Operator: Got it. So that's already baked in. Thanks.
Manan Gosalia: Got it. So that's already baked in. Thanks.
Travis P. Lan: Yes.
Travis P. Lan: Yes.
Speaker #1: Thank you. One moment for our next Yes. question. Our next question comes from a line of Jared Shaw of Barclays. Your line is now
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jared Shaw of Barclays. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jared Shaw of Barclays. Your line is now open.
Speaker #1: open.
Speaker #6: Hey, good
[Analyst] (Barclays Bank): Hey, good morning.
Jared Shaw: Hey, good morning.
Speaker #2: Good morning.
Ira D. Robbins: Good morning.
Ira D. Robbins: Good morning.
[Analyst] (Barclays Bank): Maybe just on the DDA, the non-interest bearing deposit discussion, you know, great growth this quarter. Were you saying we should expect average DDA to stay flat, but EOP potentially to go down? Or how should we think about the seasonality that you saw this quarter or the growth you saw this quarter and the seasonality in the first quarter?
Speaker #6: Maybe just on morning. the DDA, the non-interest-bearing deposit, discussion, great growth this quarter. Were you saying we should expect average DDA to stay flat, but EOP potentially to go down, or how should we think about the seasonality that you saw this or the growth you saw this quarter and the seasonality in the first quarter?
Jared Shaw: Maybe just on the DDA, the non-interest bearing deposit discussion, you know, great growth this quarter. Were you saying we should expect average DDA to stay flat, but EOP potentially to go down? Or how should we think about the seasonality that you saw this quarter or the growth you saw this quarter and the seasonality in the first quarter?
Speaker #3: Yeah. I mean, first, I think it's reflective of a lot of wonderful activity in terms of our bankers' ability to generate operating accounts, and utilize our treasury management platform to generate business.
Travis P. Lan: Yeah. I mean, first, I think it's reflective of a lot of wonderful activity, in terms of our bankers' ability to generate operating accounts, and utilize our treasury management platform to generate business. My commentary, though, was that, you know, we were at $11.9 billion of average NIB for the quarter, and the end of period was $12.2 billion. I would anticipate that the end of Q1, we're kind of at that $11.9 billion level on an end of period basis.
Travis P. Lan: Yeah. I mean, first, I think it's reflective of a lot of wonderful activity, in terms of our bankers' ability to generate operating accounts, and utilize our treasury management platform to generate business. My commentary, though, was that, you know, we were at $11.9 billion of average NIB for the quarter, and the end of period was $12.2 billion. I would anticipate that the end of Q1, we're kind of at that $11.9 billion level on an end of period basis.
Speaker #3: The thought was that we were at my commentary quarter, and the end-of-period was $11.9 billion of average NIB for the $12.2 billion. I would anticipate that at the end of the first quarter, we're kind of at that $11.9 billion level on an end-of-period basis.
Speaker #3: And generally flat from an average
[Analyst] (Barclays Bank): Okay.
Jared Shaw: Okay.
Travis P. Lan: Generally flat from an average perspective.
Travis P. Lan: Generally flat from an average perspective.
Speaker #3: perspective.
Speaker #6: Okay. All right. Thanks.
[Analyst] (Barclays Bank): Okay. All right. Thanks. And then, you know, maybe just, you know, credit overall, like you said, is stable and looks good. Any more color you can give on the growth in the C&I NPLs?
Jared Shaw: Okay. All right. Thanks. And then, you know, maybe just, you know, credit overall, like you said, is stable and looks good. Any more color you can give on the growth in the C&I NPLs?
Speaker #6: And then maybe just credit overall, like you said, is stable and looks good. Any more color you can give on the growth in the C&I NPLs?
Speaker #6: And then maybe just credit overall, like you said, is stable and looks good. Any more color you can give on the growth in the C&I NPLs?
Ira D. Robbins: Sure, Jared, this is Mark again. C&I growth was really driven by one credit in the portfolio, a larger credit that we've had within the portfolio for over 10 years, in-market syndicated credit.
Mark Saeger: Sure, Jared, this is Mark again. C&I growth was really driven by one credit in the portfolio, a larger credit that we've had within the portfolio for over 10 years, in-market syndicated credit. Unique business segment, that's supported by structural payments, but over a 10-year period. Because of the length of that payback, combined with the recent modification of the loan, we did move that to non-accrual and established what we feel is a adequate specific on that loan.
Speaker #4: Sure, Jared. This is Mark again. CNI growth was really driven by one credit in the portfolio, a larger credit that we've had within the portfolio for over 10 years—in-market, syndicated credit, unique business segment—that's supported by structural payments. But over a 10-year period, because of the length of that payback combined with a recent modification of the loan.
Gino Martocci: ... unique business segment, that's supported by structural payments, but over a 10-year period. Because of the length of that payback, combined with the recent modification of the loan, we did move that to non-accrual and established what we feel is a adequate specific on that loan.
Speaker #4: We did move that to non-accrual, and established what we feel is a adequate specific on that loan.
Speaker #6: Okay. Thank you.
Travis P. Lan: Okay, thank you.
Jared Shaw: Okay, thank you.
Speaker #1: Thank you. One moment for our next question. Our next question comes from a line of Steve Moss of Raymond James. Your line is now
Operator: Thank you. One moment for our next question. Our next question comes from the line of Steve Moss of Raymond James. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Steve Moss of Raymond James. Your line is now open.
Speaker #1: open.
Speaker #5: Good
[Analyst] (Raymond James): Good morning.
Stephen Moss: Good morning.
Gino Martocci: Morning.
Gino Martocci: Morning.
[Analyst] (Raymond James): Maybe just going back to the loan pipeline here, you highlighted, Ira. Just kind of curious, you know, good to hear the strong pipeline. And I guess also with the kind of decline in the runoff on CRE, just curious, you know, if you guys are thinking potential upside to your loan growth guidance here, or maybe what are some of the offsets you see?
Stephen Moss: Maybe just going back to the loan pipeline here, you highlighted, Ira. Just kind of curious, you know, good to hear the strong pipeline. And I guess also with the kind of decline in the runoff on CRE, just curious, you know, if you guys are thinking potential upside to your loan growth guidance here, or maybe what are some of the offsets you see?
Speaker #2: Maybe just morning. going back to the loan pipeline here you highlighted, Ira, just kind of curious good to hear the strong pipeline. And I guess also with the kind of decline in the runoff on CRE, just curious if you guys are thinking potential upside to your loan growth guidance here, or maybe what are some of the offsets you
Speaker #2: Maybe just morning. going back to the loan pipeline here you highlighted, Ira, just kind of curious good to hear the strong pipeline. And I guess also with the kind of decline in the runoff on CRE, just curious if you guys are thinking potential upside to your loan growth guidance here, or maybe what are some of the offsets you see?
Speaker #8: Maybe I'll start, Steve. This is Travis. So our 5%, or if you took the midpoint of our loan growth guide, it would be 5%.
Travis P. Lan: Maybe I'll start, Steve. This is Travis. So our 5%, where if you took the midpoint of our loan growth guide, it would be 5%. The reality is that also includes $500 million of runoff in our tier three transactional pre-portfolio. So absent that, you know, you'd be at certainly above the higher end of the range that we gave. So I think there's a lot of good dynamics in the pipeline that Gino can talk about, but wanted to throw that out as well.
Travis P. Lan: Maybe I'll start, Steve. This is Travis. So our 5%, where if you took the midpoint of our loan growth guide, it would be 5%. The reality is that also includes $500 million of runoff in our tier three transactional pre-portfolio. So absent that, you know, you'd be at certainly above the higher end of the range that we gave. So I think there's a lot of good dynamics in the pipeline that Gino can talk about, but wanted to throw that out as well.
Speaker #8: The reality is that also includes 500 million dollars of runoff in our tier three transactional pre-portfolio. So absent that, you'd be at certainly above the higher end of the range that we gave.
Speaker #8: So I think there's a lot of good dynamics in the pipeline that Gina can talk about, but wanted to throw that out as well.
Speaker #8: So I think there's a lot of good dynamics in the pipeline that Gina can talk about, but wanted to throw that out as well.
Speaker #2: Yeah, we've got a really very strong pipeline. I mean, we finished Q4 2025 at $1.2 billion, actually higher than Q4 2024. And also, since Q4 2025, we've grown the pipeline by another $300 million.
Gino Martocci: Yeah, we've got a really very strong pipeline. I mean, we've finished Q1 2025 and $1.2 billion, actually, higher than Q1 2024. Also, since Q1 2025, we've grown the pipeline by another $300 million, and despite closing about half a billion dollars worth of loans so far. So we feel very good, and it's geographically distributed. It's both CRE and C&I with a slight concentration in C&I. So, our clients continue to be very confident, and we're backing the loans.
Gino Martocci: Yeah, we've got a really very strong pipeline. I mean, we've finished Q1 2025 and $1.2 billion, actually, higher than Q1 2024. Also, since Q1 2025, we've grown the pipeline by another $300 million, and despite closing about half a billion dollars worth of loans so far. So we feel very good, and it's geographically distributed. It's both CRE and C&I with a slight concentration in C&I. So, our clients continue to be very confident, and we're backing the loans.
Speaker #2: And despite closing about half a billion dollars’ worth of loans so far, we feel very good. And it's geographically distributed. It's both CRE and C&I with a slight concentration in C&I.
Speaker #2: So our clients continue to be very confident, and we're backing them with loans.
Speaker #5: Okay. Appreciate that color there. And then just on credit here with the decline in criticizing classifieds, just kind of curious as to how you're thinking about the reserve kind of settling out over time.
[Analyst] (Raymond James): Okay, appreciate that, that color there. And then just on credit here, with the decline in criticized classifieds, you know, just kind of curious as to, you know, how you're thinking about the reserve kind of settling out over time. You know, if we see that come down towards, like, a more normal level, like 4% or 5%, could we see a pretty meaningful reserve decline over time?
Stephen Moss: Okay, appreciate that, that color there. And then just on credit here, with the decline in criticized classifieds, you know, just kind of curious as to, you know, how you're thinking about the reserve kind of settling out over time. You know, if we see that come down towards, like, a more normal level, like 4% or 5%, could we see a pretty meaningful reserve decline over time?
Speaker #5: If we see that come down towards a more normal level, like 4, 5%, could we see a pretty meaningful reserve decline over time?
Travis P. Lan: This is Travis. I think that directionally makes sense. The offset, though, is C&I will be an increasing portion of the portfolio, so I think that helps balance out the benefit, hypothetically, that you'd get from lower criticized and classified. So I think that's why we kind of guided to general stability in the Allowance Coverage Ratio.
Speaker #3: This is Travis. I think that directionally makes sense. The offset though is CNI will be an increasing portion of the portfolio. So I think that helps balance out the benefit hypothetically that you'd get from lower criticizing classifieds.
Travis P. Lan: This is Travis. I think that directionally makes sense. The offset, though, is C&I will be an increasing portion of the portfolio, so I think that helps balance out the benefit, hypothetically, that you'd get from lower criticized and classified. So I think that's why we kind of guided to general stability in the Allowance Coverage Ratio.
Speaker #3: So I think that's why we kind of guided to general stability in the allowance coverage ratio.
Speaker #5: Okay. Great. Appreciate all the color. Thank you very much, guys.
[Analyst] (Raymond James): Okay, great. Appreciate all the color. Thank you very much, guys.
Stephen Moss: Okay, great. Appreciate all the color. Thank you very much, guys.
Speaker #3: Thank you.
Gino Martocci: Thank you.
Gino Martocci: Thank you.
Speaker #1: Thank you. One moment for our next question. Our next question comes from a line of Matthew Breeze of Stevens. Your line is now
Operator: Thank you. One moment for our next question. Our next question comes from the line of Matthew Breese of Stephens. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Matthew Breese of Stephens. Your line is now open.
Speaker #1: open. Hey, good
Matthew M. Breese: Hey, good morning.
Matthew M. Breese: Hey, good morning.
Speaker #5: morning. I was hoping to get a little bit more color on loan growth this quarter and then the pipeline from a geography perspective. So how much of the CNI and CRE activity is coming from Florida?
Gino Martocci: Yeah.
Gino Martocci: Yeah.
Matthew M. Breese: I was hoping to get a little bit more color on, you know, loan growth this quarter and then the pipeline from a geography perspective. You know, so how much of the C&I and CRE activity is coming from Florida, you know, up here in the mid-Atlantic, Northeast, and then from the national lines? And I'm curious if you're seeing any, you know, major notable differences in origination trends, activity, or spreads across these kind of categories and geographies.
Matthew M. Breese: I was hoping to get a little bit more color on, you know, loan growth this quarter and then the pipeline from a geography perspective. You know, so how much of the C&I and CRE activity is coming from Florida, you know, up here in the mid-Atlantic, Northeast, and then from the national lines? And I'm curious if you're seeing any, you know, major notable differences in origination trends, activity, or spreads across these kind of categories and geographies.
Speaker #5: Up here, in the Mid-Atlantic, Northeast, and then from the national lines. And I'm curious if you're seeing any major notable differences in origination trends, activity, or spreads across these kind of categories
Speaker #5: and geographies. Hi,
Gino Martocci: Hi, it's Gino. I'll take that. As I just mentioned, it's really well balanced across the spectrum. There is a pretty good pipeline or a strong pipeline, I should say, in healthcare. And we saw that last year, and we're seeing it again this quarter. But New York, New Jersey, Florida, all are contributing. And then even as Ira mentioned, our affiliate market has already built a very strong pipeline. And as far as spread trends, it's pretty consistent across the markets as well. There is a minor bit of compression, some competition, but all in all, it's fairly well balanced.
Gino Martocci: Hi, it's Gino. I'll take that. As I just mentioned, it's really well balanced across the spectrum. There is a pretty good pipeline or a strong pipeline, I should say, in healthcare. And we saw that last year, and we're seeing it again this quarter. But New York, New Jersey, Florida, all are contributing. And then even as Ira mentioned, our affiliate market has already built a very strong pipeline. And as far as spread trends, it's pretty consistent across the markets as well. There is a minor bit of compression, some competition, but all in all, it's fairly well balanced.
Speaker #2: it's Gina. I'll take that. As I just mentioned, it's really well-balanced. Across the spectrum, there is a pretty good pipeline or a strong pipeline, I should say, in healthcare that we saw that last year, and we're seeing it again this quarter.
Speaker #2: But New York, New Jersey, Florida, all are contributing. And then even as Ira mentioned, our affiliate market has already built a very strong pipeline.
Speaker #2: And as far as spread trends, it's pretty consistent across the markets as well. There is a minor bit of compression and competition, but all in all, it's fairly well-balanced.
Speaker #6: Got it. Okay. And then Travis, time deposit costs, CDs are still a bit elevated, north of 4%. As stuff matures and rolls and maybe you can include some of the promotional activity, what is kind of the new blended rate of CDs?
Matthew M. Breese: Got it. Okay. And then, Travis, you know, time deposit costs, CDs are, are still a bit elevated, north of 4%. As stuff matures and rolls, and, and maybe you can include some of the promotional activity, what is kind of the new blended rate of CDs? And is that a decent proxy for where CD costs could go over the next, you know, call it 6, 9, 12 months?
Matthew M. Breese: Got it. Okay. And then, Travis, you know, time deposit costs, CDs are, are still a bit elevated, north of 4%. As stuff matures and rolls, and, and maybe you can include some of the promotional activity, what is kind of the new blended rate of CDs? And is that a decent proxy for where CD costs could go over the next, you know, call it 6, 9, 12 months?
Speaker #6: And is that a decent proxy for where CD costs could go over the next, call it, six, nine, twelve months?
Speaker #3: Yeah. I think our new rates or our rates that are available from a rollover perspective are in the kind of 350 range. Which would imply some opportunity to reprice lower in the CD portfolio more broadly.
Travis P. Lan: Yeah. I think where our new rates or our rates that are available from a rollover perspective are in the kind of 3.50 range, which would imply some opportunity to reprice lower in the CD portfolio more broadly. The elements that really keep that average cost elevated continue to be the brokered deposits. And so in the coming year, you know, we have $1.2 billion of brokered coming off close to 4.50. So that, you know, there's an upside there.
Travis P. Lan: Yeah. I think where our new rates or our rates that are available from a rollover perspective are in the kind of 3.50 range, which would imply some opportunity to reprice lower in the CD portfolio more broadly. The elements that really keep that average cost elevated continue to be the brokered deposits. And so in the coming year, you know, we have $1.2 billion of brokered coming off close to 4.50. So that, you know, there's an upside there.
Speaker #3: The elements that really keep that average cost elevated continue to be the broker deposits. And so, in the coming year, we have $1.2 billion of brokered coming off, close to $450 million.
Speaker #3: So that there's an upside there.
Speaker #6: Got it. And do you have the cost of deposits at period end or more recently? So we get a sense of
Matthew M. Breese: Got it. And do you have the cost of deposits at period end or more recently, so we get a sense of trend?
Matthew M. Breese: Got it. And do you have the cost of deposits at period end or more recently, so we get a sense of trend?
Speaker #6: trend. Yeah, for sure.
Travis P. Lan: Yeah, for sure. So the total portfolio spot deposit rate was 2.32, so below the 2.45 average for the quarter. You know, our core rate is about 2.10, and then brokered is 4.20 or so, give or take. So, gives you a little bit more insight into the dynamics there and the opportunity to replace brokered with core. I'd say in Q4, we originated $1.5 billion of new deposit relationships at a blended rate of 2.17. That was, from a balance perspective, pretty consistent with Q3, but the Q3 origination rate was 2.91. So we're seeing some very good tailwinds in terms of the new deposits that we're bringing to the bank, at a much lower blended cost.
Travis P. Lan: Yeah, for sure. So the total portfolio spot deposit rate was 2.32, so below the 2.45 average for the quarter. You know, our core rate is about 2.10, and then brokered is 4.20 or so, give or take. So, gives you a little bit more insight into the dynamics there and the opportunity to replace brokered with core. I'd say in Q4, we originated $1.5 billion of new deposit relationships at a blended rate of 2.17. That was, from a balance perspective, pretty consistent with Q3, but the Q3 origination rate was 2.91. So we're seeing some very good tailwinds in terms of the new deposits that we're bringing to the bank, at a much lower blended cost.
Speaker #3: So the total portfolio spot deposit rate was 232. So below the 245 average for the quarter. Our core rate is about 210. And then brokered is 420 or so, give or take.
Speaker #3: So it gives you a little bit more insight into the dynamics there and the opportunity to replace brokered with core. I'd say in the fourth quarter, we originated a billion and a half of new deposit relationships at a blended rate of 217.
Speaker #3: That was from a balance perspective pretty consistent with the third quarter, but the third quarter origination rate was 291. So we're seeing some very good tailwinds in terms of the new deposits that we're bringing into the bank.
Speaker #3: At a much lower blended cost.
Speaker #6: Understood. And then just last one. Loans past due 30 to 59 days picked up, I think by about 56 million. Was there anything administrative about that timing related?
Matthew M. Breese: Understood. And then just last one. Loans past due 30 to 59 days picked up, I think, by about $56 million. Was there anything administrative about that timing related? I know end of year can get a little bit hairy. Or, or is there a sense that that might migrate into NPLs? And that's all I had. Thank you.
Matthew M. Breese: Understood. And then just last one. Loans past due 30 to 59 days picked up, I think, by about $56 million. Was there anything administrative about that timing related? I know end of year can get a little bit hairy. Or, or is there a sense that that might migrate into NPLs? And that's all I had. Thank you.
Speaker #6: I know end of year can get a little bit hairy. Or is there a sense that that might migrate into MPLs? And that's all I had.
Speaker #6: Thank Yeah, Matt.
Speaker #6: you.
Ira D. Robbins: Yeah, Matt, it was really driven. There's three loans in there, unique situations. We don't view this as a trend at all, but related to three specific loans. One, we have a contract of sale, and we expect that to be completed in this quarter, and be done. We've recently signed a modification for another loan and anticipate interest being current. And the third, where we believe it's gonna linger in delinquency 30- to 60-day bucket, but gradually catch up and potentially be current in Q2. So not seeing a trend really in the portfolio in any means, really just a couple of specific transactions.
Mark Saeger: Yeah, Matt, it was really driven. There's three loans in there, unique situations. We don't view this as a trend at all, but related to three specific loans. One, we have a contract of sale, and we expect that to be completed in this quarter, and be done. We've recently signed a modification for another loan and anticipate interest being current. And the third, where we believe it's gonna linger in delinquency 30- to 60-day bucket, but gradually catch up and potentially be current in Q2. So not seeing a trend really in the portfolio in any means, really just a couple of specific transactions.
Speaker #4: It was really driven there's three loans in there, unique situations. We don't view this as a trend at all, but related to three specific loans.
Speaker #4: One we have a contract of sale and we expect that to be completed in this quarter and be done. We've recently signed a modification for another loan and anticipate interest being current.
Speaker #4: And the third, we believe it's going to linger in delinquency 30 to 60-day bucket, but gradually catch up and potentially be current in the second quarter.
Speaker #4: So not seeing a trend really in the portfolio in any means really just a couple of specific transactions.
Speaker #6: That's all I had. Thanks for taking my questions.
Matthew M. Breese: That's all I had. Thanks for taking my questions.
Matthew M. Breese: That's all I had. Thanks for taking my questions.
Speaker #2: Thanks,
Ira D. Robbins: Thanks, Matt.
Ira D. Robbins: Thanks, Matt.
Speaker #2: Matt. Thank you.
Speaker #3: Matt.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jon Arfstrom of RBC. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jon Arfstrom of RBC. Your line is now open.
Speaker #1: One moment for our next question. Our next question comes from a line of Armstrong of RBC. Your line is now open.
Speaker #4: Hey, thanks. Good
[Analyst] (RBC): Hey, thanks. Good morning.
Jon Arfstrom: Hey, thanks. Good morning.
Speaker #4: morning. Yeah, just a couple of Good morning, Travis. follow-ups, but maybe obvious, but you mentioned CRE growth for the first time in a long time.
Ira D. Robbins: Morning, John.
Ira D. Robbins: Morning, John.
[Analyst] (RBC): Yeah, just a couple of follow-ups, but maybe obvious, but you mentioned, you know, CRE growth for the first time in a long time. What, what changed there? Is it just less runoff on your balance sheet, or are you actually seeing stronger growth and stronger pipelines there?
Jon Arfstrom: Yeah, just a couple of follow-ups, but maybe obvious, but you mentioned, you know, CRE growth for the first time in a long time. What, what changed there? Is it just less runoff on your balance sheet, or are you actually seeing stronger growth and stronger pipelines there?
Speaker #4: What changed there? Is it just less runoff in your balance sheet, or are you actually seeing stronger growth and stronger pipelines there?
Travis P. Lan: It's stronger originations, John. I mean, as we talked about entering 2025, you know, we were turning the CRE origination engine back on, obviously from a very, very disciplined perspective, both in terms of, you know, requiring deposits to come with those loans, and obviously, the consistent conservatism on the credit side. But it took a couple of quarters, I think, for the origination engine to fully pick back up, and we saw it in the Q4. Origination trends were very strong. Again, as we look forward to 2026, you know, we're contemplating about $1.5 billion of new Tier 1 and Tier 2 CRE. That'll be offset by about $0.5 billion of runoff in our transactional fee portfolio. So you net to about $1 billion.
Travis P. Lan: It's stronger originations, John. I mean, as we talked about entering 2025, you know, we were turning the CRE origination engine back on, obviously from a very, very disciplined perspective, both in terms of, you know, requiring deposits to come with those loans, and obviously, the consistent conservatism on the credit side. But it took a couple of quarters, I think, for the origination engine to fully pick back up, and we saw it in the Q4. Origination trends were very strong. Again, as we look forward to 2026, you know, we're contemplating about $1.5 billion of new Tier 1 and Tier 2 CRE. That'll be offset by about $0.5 billion of runoff in our transactional fee portfolio. So you net to about $1 billion.
Speaker #3: It's stronger originations, John. I mean, as we talked about entering 2025, we were turning the CRE origination engine back on. Obviously, from a very disciplined perspective, both in terms of requiring deposits to come with those loans.
Speaker #3: And obviously, the consistent conservatism on the credit side. But it took a couple of quarters, I think, for the origination engine to fully pick back up.
Speaker #3: And we saw it in the fourth quarter. Origination trends were very strong. Again, as we look forward to 2026, we're contemplating about a billion and a half of new tier one and tier two CRE that'll be offset by about a half billion dollars of runoff in our transactional CRE portfolio.
Speaker #3: So you'll net to about a billion dollars. And that's, I think, just consistent with the general strong activity we're seeing across our geographies.
Travis P. Lan: And that's, you know, I think, just consistent with the general strong activity we're seeing across our geographies.
And that's, you know, I think, just consistent with the general strong activity we're seeing across our geographies.
Speaker #4: Yep. Okay. And then just some subtleties on expenses. I'm just curious, Ira, how aggressive you want to be on the commercial banker recruiting efforts.
[Analyst] (RBC): Yep. Okay. And then just some subtleties on expenses. I'm, I'm just curious, Ira, how aggressive you want to be on the commercial banker recruiting efforts, and then also, if you can maybe comment on the branding investments and how much you want to allocate there.
Jon Arfstrom: Yep. Okay. And then just some subtleties on expenses. I'm, I'm just curious, Ira, how aggressive you want to be on the commercial banker recruiting efforts, and then also, if you can maybe comment on the branding investments and how much you want to allocate there.
Speaker #4: And then also, if you can maybe comment on the branding investments, and how much you want to allocate there.
Speaker #2: Yeah, look, I honestly believe there's a lot of opportunity within our geographies. And as we think about different verticals for us to enter into as well.
Ira D. Robbins: Yeah, look, I honestly believe there's a lot of opportunity within our geographies and as we think about different verticals for us to enter into as well. So from a hiring perspective, you know, it's a really good market for us. I think, you know, Valley has a very unique value proposition based on the size organization we are, our focus on relationship banking. And then when you look across the product set and the capabilities that we have, very few organizations our size have the breadth of capital markets, FX, and everything else that we do across the entire organization. The treasury platform here, the data and analytics, I mean, it's phenomenal, really on a relative basis. So we have bankers that are really attracted to us, which is a phenomenal place for us to be in.
Ira D. Robbins: Yeah, look, I honestly believe there's a lot of opportunity within our geographies and as we think about different verticals for us to enter into as well. So from a hiring perspective, you know, it's a really good market for us. I think, you know, Valley has a very unique value proposition based on the size organization we are, our focus on relationship banking. And then when you look across the product set and the capabilities that we have, very few organizations our size have the breadth of capital markets, FX, and everything else that we do across the entire organization. The treasury platform here, the data and analytics, I mean, it's phenomenal, really on a relative basis. So we have bankers that are really attracted to us, which is a phenomenal place for us to be in.
Speaker #2: So from a hiring perspective, it's a really good market for us. I think Valley has a very unique value proposition based on the size of the organization we are, our focus on relationship banking, and then when you look across the product set and the capabilities that we have, very few organizations our size have the breadth of capital markets FX and everything else that we do across the entire organization.
Speaker #2: The treasury platform here, the data and analytics—I mean, it's phenomenal, really, on a relative basis. So we have bankers that are really attracted to us, which is a phenomenal place for us to be in.
Ira D. Robbins: That said, you know, the P&L is very important, and managing the new hires that we bring into the organization, to not just blow up the expense base of some of that, we're, we're very focused on. Obviously, making sure that we provide internal opportunities, to really think about where we can reshift expenses across the organization, so it's not just growth and expenses. We think about some of the opportunities. You know, we talked in the prepared comments about some of the AI initiatives that we have in place, with regard to machine learning and other things to really focus on the expenses. And we continue to really look at the cost to serve across the entire organization.
Speaker #2: That said, the P&L is very important. And managing the new hires that we bring into the organization. To not just blow up the expense basis, some of that we're very focused on.
That said, you know, the P&L is very important, and managing the new hires that we bring into the organization, to not just blow up the expense base of some of that, we're, we're very focused on. Obviously, making sure that we provide internal opportunities, to really think about where we can reshift expenses across the organization, so it's not just growth and expenses. We think about some of the opportunities. You know, we talked in the prepared comments about some of the AI initiatives that we have in place, with regard to machine learning and other things to really focus on the expenses. And we continue to really look at the cost to serve across the entire organization.
Speaker #2: Obviously, making sure that we provide internal opportunities to really think about where we can reshift expenses across the organization so it's not just growth in expenses.
Speaker #2: We think about some of the opportunities. We talked in the prepared comments about some of the AI initiatives that we have in place with regard to machine learning and other things to really focus on the expenses.
Speaker #2: And we continue to really look at the cost of serve across the entire organization. When I took over CEO, we were 3,351 employees. And about 20 billion dollars in size.
Ira D. Robbins: When I took over CEO, we were 3,351 employees and about $20 billion in size. Today, we're 3,634 and, and, sixty billion in size. So 280 ± employees and triple the size of the organization. So we've done a really nice job, I think, leveraging in technology and thinking about how we can support growth within the organization without bloating on the expense side. And, and I really do believe we have a great team in place, and we'll be able to continue that.
When I took over CEO, we were 3,351 employees and about $20 billion in size. Today, we're 3,634 and, and, sixty billion in size. So 280 ± employees and triple the size of the organization. So we've done a really nice job, I think, leveraging in technology and thinking about how we can support growth within the organization without bloating on the expense side. And, and I really do believe we have a great team in place, and we'll be able to continue that.
Speaker #2: Today, we're 3,634. And 60 billion in size. So 280 plus or minus employees and triple the size of the organization. So we've done a really nice job, I think, leveraging in technology and thinking about how we can support growth within the organization without bloating on the expense side.
Speaker #2: And I really do believe we have a great team in place, and we'll be able to continue that.
[Analyst] (RBC): Mm-hmm. Okay. And just to comment on branding, how, you know, kind of what are you doing, and-
Jon Arfstrom: Mm-hmm. Okay. And just to comment on branding, how, you know, kind of what are you doing, and-
Speaker #4: Okay, just to comment on branding—what are you doing, and how extensive is that?
Ira D. Robbins: Yeah.
Ira D. Robbins: Yeah.
[Analyst] (RBC): How extensive is that?
Jon Arfstrom: How extensive is that?
Ira D. Robbins: It's been a real long-term effort for us, I think, in thinking about who our target client was, especially after what happened with SVB and making sure that we were focused on building a whole relationship, internal branding within our bankers to make sure that we understood what a relationship banker should do across the organization. And we're now very, very comfortable that we have the right ability to execute with the branding campaign that we put out there. So we have a That's How branding campaign that we're really focusing on. We think it'll really enhance the ability to grow some of the consumer and small business within our geography right now. We hired Patrick Smith to come into the organization during this past year.
Speaker #2: It's been a real long-term effort for us, I think, in thinking about who our target client was—especially after what happened with SVB—and making sure that we were focused on building a whole relationship, internal branding within our bankers, to make sure that we understood what a relationship banker should do across the organization.
Ira D. Robbins: It's been a real long-term effort for us, I think, in thinking about who our target client was, especially after what happened with SVB and making sure that we were focused on building a whole relationship, internal branding within our bankers to make sure that we understood what a relationship banker should do across the organization. And we're now very, very comfortable that we have the right ability to execute with the branding campaign that we put out there. So we have a That's How branding campaign that we're really focusing on. We think it'll really enhance the ability to grow some of the consumer and small business within our geography right now. We hired Patrick Smith to come into the organization during this past year.
Speaker #2: And we're now very, very comfortable that we have the right ability to execute with the branding campaign that we put out there. So we have a that's how branding campaign that we're really focusing on.
Speaker #2: We think it will really enhance the ability to grow some of the consumer and small business within our geography right now. We hired Patrick Smith to come into the organization during this past year.
Ira D. Robbins: Really strong, proven leader within that space, and we want to make sure that we have a branding campaign to complement a lot of what Patrick is able to really bring to the organization. So, for me, it's a holistic approach. You can't have branding without the people. And I think what we're doing on the branding side will really, really complement what Patrick's able to bring to Valley.
Speaker #2: Really strong proven leader within that space. And we want to make sure that we have a branding campaign to complement a lot of what Patrick is able to really bring to the organization.
Really strong, proven leader within that space, and we want to make sure that we have a branding campaign to complement a lot of what Patrick is able to really bring to the organization. So, for me, it's a holistic approach. You can't have branding without the people. And I think what we're doing on the branding side will really, really complement what Patrick's able to bring to Valley.
Speaker #2: So for me, it's a holistic approach. You can't have branding without the people. And I think what we're doing on the branding side will really, really complement what Patrick's able to bring to Valley.
Speaker #2: So for me, it's a holistic approach. You can't have branding without the people. And I think what we're doing on the branding side will really, really complement what Patrick's able to bring to Valley.
Speaker #4: Yep. Okay. All right. Thank you.
[Analyst] (RBC): Yep. Okay. All right. Thank you.
Jon Arfstrom: Yep. Okay. All right. Thank you.
Ira D. Robbins: Thanks.
Ira D. Robbins: Thanks.
Speaker #1: Thank you. One moment Thanks. for our next question. Our next question comes from a line with Chris McGroudy of KVW. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line with Chris McGratty of KBW. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line with Chris McGratty of KBW. Your line is now open.
Speaker #5: Oh, great. Good morning.
Matthew M. Breese: Oh, great. Morning.
Matthew M. Breese: Oh, great. Morning.
Speaker #2: Good morning, Chris.
Ira D. Robbins: Morning, Chris.
Ira D. Robbins: Morning, Chris.
Christopher Edward McGratty: ... Travis, just going back to the deposit growth beyond—I hear you on the first quarter on the average EOP NIB, but on the full year, how do, how do you break out the 5% to 7% growth by mix? Like, how much contribution from NIB versus, yeah.
Christopher McGratty: ... Travis, just going back to the deposit growth beyond—I hear you on the first quarter on the average EOP NIB, but on the full year, how do, how do you break out the 5% to 7% growth by mix? Like, how much contribution from NIB versus, yeah.
Speaker #5: Travis, let's go back to the deposit growth. Beyond, I hear you on the first quarter and the average GOP and IBs. But on the full year, how do you break out the 5 to 7% growth by mix?
Speaker #5: contribution from an IB How much
Speaker #5: versus yeah. Yeah.
Ira D. Robbins: Yeah. Yep, so if you take the midpoint, you're at 6% total deposit growth. We conservatively model NIB growth to 5%. So all of the margin guide that we've talked about in the deposit growth that we're talking about, it's not over-indexed on some assumption that NIB, you know, significantly outgrows total deposits. It's pretty consistent. So 5% NIB growth, about 7% savings now in money market growth, and then pretty modest CD growth.
Travis P. Lan: Yeah. Yep, so if you take the midpoint, you're at 6% total deposit growth. We conservatively model NIB growth to 5%. So all of the margin guide that we've talked about in the deposit growth that we're talking about, it's not over-indexed on some assumption that NIB, you know, significantly outgrows total deposits. It's pretty consistent. So 5% NIB growth, about 7% savings now in money market growth, and then pretty modest CD growth.
Speaker #2: Yep. So, if you take the midpoint, you're at 6% total deposit growth. We conservatively model NIB growth at 5%. So all of the margin guide that we've talked about, and the deposit growth that we're talking about, it's not over-indexed on some assumption that NIB significantly outgrows total deposits.
Speaker #2: It's pretty consistent. So 5% NIB growth, about 7% savings now in money market growth, and then pretty modest CD growth.
Speaker #5: Okay. And then what's the beta you're assuming on I think you talked about I don't have the number in front of me, but the 55% in the fourth quarter.
Christopher Edward McGratty: Okay. And then what's the beta you're assuming on, I think you talked about. I don't have the number in front of me, but the 55% in the Q4, what are you assuming for 2026 on the betas?
Christopher McGratty: Okay. And then what's the beta you're assuming on, I think you talked about. I don't have the number in front of me, but the 55% in the Q4, what are you assuming for 2026 on the betas?
Speaker #5: What are you assuming for 26 on the betas?
Speaker #2: Yeah. We've been consistently assuming a 50% total deposit beta for the full year of '25. It was actually 60% in terms of the actual result, but we continue to model a 50% total deposit cost.
Ira D. Robbins: Yeah, we've been consistently assuming 50% total deposit beta. For the full year of 2025, it was actually 60%, in terms of the actual result, but we continue to model a 50%, total deposit cost beta.
Travis P. Lan: Yeah, we've been consistently assuming 50% total deposit beta. For the full year of 2025, it was actually 60%, in terms of the actual result, but we continue to model a 50%, total deposit cost beta.
Speaker #2: beta.
Speaker #5: Okay.
Christopher Edward McGratty: Okay, great. And then Ira, last quarter, you were asked this kind about strategic options and, and long-term planning. You know, you've got a good organic story going, operating leverage, good balance sheet growth. Is there a scenario where you might entertain buying a bank this year? Is there, is there a possibility?
Christopher McGratty: Okay, great. And then Ira, last quarter, you were asked this kind about strategic options and, and long-term planning. You know, you've got a good organic story going, operating leverage, good balance sheet growth. Is there a scenario where you might entertain buying a bank this year? Is there, is there a possibility?
Speaker #5: Great. And then, Ira, last quarter, you were asked this at kind of a strategic options and long-term planning. You've got a good organic story going, operating leverage, good balance sheet growth.
Speaker #5: Is there a scenario where you might entertain buying a bank this year? Is there a
Speaker #5: possibility? Look, I think M&A is an
Ira D. Robbins: Look, I think M&A is, you know, an interesting dynamic as to how you think about sort of where the market looks today. For me, really, there's sort of three levers that you really need to think about. One, it just starts with shareholders. Like, what are you doing for your shareholders, and are you really prioritizing your shareholders? I think the second, as you think about M&A, really sticks to what are the financial constraints. We spend a lot of time and a lot of focus across the organization as we've done M&A historically and not diluting the current shareholders. I think M&A largely is focused on the target shareholders, which I think is crazy.
Ira D. Robbins: Look, I think M&A is, you know, an interesting dynamic as to how you think about sort of where the market looks today. For me, really, there's sort of three levers that you really need to think about. One, it just starts with shareholders. Like, what are you doing for your shareholders, and are you really prioritizing your shareholders? I think the second, as you think about M&A, really sticks to what are the financial constraints. We spend a lot of time and a lot of focus across the organization as we've done M&A historically and not diluting the current shareholders. I think M&A largely is focused on the target shareholders, which I think is crazy.
Speaker #2: Interesting dynamic as to how you think about sort of where the market looks to today. For me, really, there’s sort of three levers that you really need to think about.
Speaker #2: One, it just starts with shareholders. What are you doing for your shareholders, and are you really prioritizing your shareholders? I think the second, as you think about M&A, really sticks to one of the financial constraints.
Speaker #2: We spent a lot of time and a lot of focus across the organization, as we've done M&A historically, and not diluting the current shareholders.
Speaker #2: I think M&A largely is focused on the target shareholders, which I think is crazy. You have a strong shareholder base and to sit there and solely my mind.
Ira D. Robbins: You have a strong shareholder base, and to sit there and solely focus on the target doesn't make any kind of sense in my mind. I think that M&A really then has to be aligned with what the strategic objectives of the organization look like. Travis and his team did a wonderful job on slide 8, laying out sort of what the focus is for us in 2026. So if we see an opportunity to accelerate some of those things, based on an M&A deal, that's something we may consider. But to your point, you know, there's an unbelievable organic story that's really unraveling here at Valley. We brought in tremendous leaders across the organization, starting with Gino, Patrick, and a real complement of individuals to help support them.
You have a strong shareholder base, and to sit there and solely focus on the target doesn't make any kind of sense in my mind. I think that M&A really then has to be aligned with what the strategic objectives of the organization look like. Travis and his team did a wonderful job on slide 8, laying out sort of what the focus is for us in 2026. So if we see an opportunity to accelerate some of those things, based on an M&A deal, that's something we may consider. But to your point, you know, there's an unbelievable organic story that's really unraveling here at Valley. We brought in tremendous leaders across the organization, starting with Gino, Patrick, and a real complement of individuals to help support them.
Speaker #2: I think that focus on the target doesn't make any kind of sense in M&A really then has to be aligned with what the strategic objectives of the organization look like.
Speaker #2: Travis and his team did a wonderful job on slide 8 laying out sort of what the focus is for us in 2026. So if we see an opportunity to accelerate some of those things, based on an M&A deal, that's something we may consider.
Speaker #2: But to your point, there's an unbelievable organic story that's really unraveling here at Valley. We brought in tremendous leaders across the organization, starting with Gino, Patrick, and a real complement of individuals to help support them.
Speaker #2: And then they've really been able to continue to bring in people below them. So we feel really excited about the organic. And there have to be some things that would make a lot of sense for us to really divert any kind of attention away from
Ira D. Robbins: And then we've really been able to continue to bring in people below them. So we feel really excited about the organic, and there have to be something that would make a lot of sense for us to really divert any kind of attention away from that.
And then we've really been able to continue to bring in people below them. So we feel really excited about the organic, and there have to be something that would make a lot of sense for us to really divert any kind of attention away from that.
Speaker #2: that. Okay.
Christopher Edward McGratty: Okay, great. Thank you very much.
Christopher McGratty: Okay, great. Thank you very much.
Speaker #5: Great. Thank you very
Speaker #2: Thanks.
Ira D. Robbins: Thanks.
Ira D. Robbins: Thanks.
Speaker #1: Thank you. much. One moment for our next question. Our next question comes from a line of David Smith of True Securities. Your line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of David Smith of Truist Securities. The line is now open.
Operator: Thank you. One moment for our next question. Our next question comes from the line of David Smith of Truist Securities. The line is now open.
David Charles Smith: Hey, good morning.
David Smith: Hey, good morning.
Speaker #6: Hey, good
Speaker #6: morning. Morning,
Ira D. Robbins: Morning, David.
Ira D. Robbins: Morning, David.
Speaker #6: On the funding cost David. side, you've obviously been able to pay down a lot of broker this year. You mentioned being able to take some FHLB funding lower next year.
David Charles Smith: On the funding cost side, you know, you've obviously been able to pay down a lot of brokered this year. You mentioned being able to take some FHLB funding lower next year. Is there a minimum level of brokered and borrowings that you would still want to maintain, you know, through the long term? Or as, you know, core organic deposit growth keeps outperforming, do those go more or less to zero over time?
David Smith: On the funding cost side, you know, you've obviously been able to pay down a lot of brokered this year. You mentioned being able to take some FHLB funding lower next year. Is there a minimum level of brokered and borrowings that you would still want to maintain, you know, through the long term? Or as, you know, core organic deposit growth keeps outperforming, do those go more or less to zero over time?
Speaker #6: Is there a minimum level of broker than borrowings that you would still want to maintain through the long term, or as core organic deposit growth keeps outperforming to those go more or less to zero over
Speaker #6: time? Yeah.
Ira D. Robbins: Yeah, David, this is Travis. Look, I think the reality is both brokered CDs and FHLB advances play a very important role in terms of interest rate risk management, and the certainty that you can get with some of those instruments. And so I don't anticipate that it would go to zero. You know, but there is a level certainly lower than where we are today that probably makes more sense.
Travis P. Lan: Yeah, David, this is Travis. Look, I think the reality is both brokered CDs and FHLB advances play a very important role in terms of interest rate risk management, and the certainty that you can get with some of those instruments. And so I don't anticipate that it would go to zero. You know, but there is a level certainly lower than where we are today that probably makes more sense.
Speaker #2: David, this is Travis. I think the reality is both brokered CDs and FHLB advances play a very important role in terms of interest rate risk management.
Speaker #2: And the certainty that you can get with some of those instruments. And so I don't anticipate that it would go to zero. But there is a level certainly lower than where we are today that probably makes more sense.
Speaker #5: Thank you. And then the regulatory backdrop is changing a lot. So the banking industry right now, but you can also say that about pretty much any industry.
David Charles Smith: Thank you. And then, you know, the regulatory backdrop is changing a lot for the banking industry right now, but you can also say that about pretty much any industry. I'm wondering, given that you have, you know, some pretty niche industries and commercial clients that you bank, are there any, regulatory changes to your client base that you're watching with particular interest, either from the risk or opportunity side? Thank you.
David Smith: Thank you. And then, you know, the regulatory backdrop is changing a lot for the banking industry right now, but you can also say that about pretty much any industry. I'm wondering, given that you have, you know, some pretty niche industries and commercial clients that you bank, are there any, regulatory changes to your client base that you're watching with particular interest, either from the risk or opportunity side? Thank you.
Speaker #5: I'm wondering, given that you have some pretty niche industries and commercial clients that you bank, are there any regulatory changes to your client base that you're watching—of particular interest, either from the risk or opportunity side?
Speaker #5: Thank
Speaker #5: you. Hi, it's Gino.
Gino Martocci: Hi, it's Gino. I think, generally speaking, the reduced regulation is driving confidence in our entrepreneurial borrowers. And I think it's increasing their level of confidence and their willingness to invest. But no specific industry, I would say that, at least we're pretty well generalists here.
Gino Martocci: Hi, it's Gino. I think, generally speaking, the reduced regulation is driving confidence in our entrepreneurial borrowers. And I think it's increasing their level of confidence and their willingness to invest. But no specific industry, I would say that, at least we're pretty well generalists here.
Speaker #6: I think generally speaking, the reduced regulation is driving confidence in our entrepreneurial borrowers. And I think it's increasing their level of confidence and their willingness to invest.
Speaker #6: But no specific industry, I would say, that at least we're pretty well generalist here.
Speaker #5: All right. Thank
David Charles Smith: All right. Thank you.
David Smith: All right. Thank you.
Speaker #5: you. Thank you.
Operator: Thank you. I'm showing no further questions at this time. Thank you for your participation in today's conference. This is to conclude the program. You may now disconnect.
Operator: Thank you. I'm showing no further questions at this time. Thank you for your participation in today's conference. This is to conclude the program. You may now disconnect.
Speaker #1: I'm showing no further questions at this time. Thank you for your participation in today's conference. This has concluded the program. You may now disconnect.
