Operator: Welcome to the Dime Commercial Bancshares, Inc. third quarter earnings conference call. At this time, all participants are on a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again.
Operator: Please be advised that today's conference is being recorded. Before we begin, the company would like to remind you that discussions during this call contain forward-looking statements made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contained in any such statements, including as set forth in today's press release and the company's filings with the US Securities and Exchange Commission, to which we refer you.
Operator: During this call, references will be made to non-GAAP financial measures as supplemental measures to review and assess operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with GAAP. For information about these non-GAAP measures and for reconciliation to GAAP, please refer to today's earnings release. I would now like to hand the conference over to your speaker today, Stuart Lubow, President and CEO. Please go ahead.
Stuart Lubow: Good morning. Thank you, Shannon. Thank you all for joining us this morning for our third quarter earnings call. With me today are Avi Reddy, our Chief Operating Officer and CFO, and Tom Geisel, our Chief Commercial Officer. In my prepared remarks, I will touch upon the progress we made in the third quarter. I will provide a summary of our acquisition of Empire State Bank. Suffice to say, Dime's organic growth trajectory is very strong, and we have clearly differentiated our franchise from our local competitors as it relates to our ability to grow low cost, best-in-class deposits, diversify our loan portfolio away from its historical CRE focus, attract talented bankers, and at the same time improve NIM and grow net interest income and overall profitability.
Stuart Lubow: Revenues for the third quarter were $135 million, which once again was a record for Dime. EPS was up 53% versus prior year the NIM was up 7 basis points versus the linked quarter, as we were able to maintain our cost of deposits while improving our yield on loans. On the loan front, we are executing well and our growth plans are in place. Year over year growth in business loans was approximately $929 million, which represents 30% year over year increase.
Stuart Lubow: Our loan pipeline continues to be very strong and is approximately $1.4 billion with a weighted average rate of approximately 6.5%. We are pleased to report a return on assets of 1.10% for the third quarter and a core efficiency ratio of below 48%. As you know, we have been very active on the hiring front over the past few years, and it is gratifying to see these investments contributing to the improved profitability. We continue to believe that the hires we have made over the last few years have a long runway in front of them as we execute our clearly articulated growth plan.
Stuart Lubow: The disruption in our local marketplace remains very high, and the environment for our organic growth strategy as it relates to acquiring clients and bankers continues to be very attractive. In this regard, we are pleased to announce our entry into the affordable housing space with the launch of a dedicated group that will be led by Mike Camoia. Finally, as it relates to profitability, our significant loan repricing opportunity over the next five quarters will continue to serve as a catalyst for continued revenue growth in the quarters ahead.
Stuart Lubow: During the quarter, we reduced our CRE ratio to 338%, while repurchasing approximately 1% of our shares outstanding. We continue to see significant long-term value in our shares underpinned by continued NIM expansion and interest income growth. Avi will provide some color on capital in his prepared remarks. This morning, we announced that we signed a definitive agreement to acquire Empire State Bank.
Stuart Lubow: We are very pleased to welcome CEO Phil Guarnieri and his team to Dime. By way of background, Empire is a $600 million asset size commercial bank with a very granular low-cost deposit base that is headquartered in Staten Island. Dime has had her eye on having a greater ground-level branch presence in Staten Island for a long time, and we believe Empire is a very low-risk transaction for our shareholders, given their granular deposit base and low-risk LTV loan portfolio.
Stuart Lubow: The transaction expands Dime's presence to all five boroughs of New York City, and we believe Empire's granular deposit base will have real value in a higher rate environment. Empire represented a unique opportunity for Dime and a transaction economics and strategic rationale makes sense for both sets of shareholders. With that said, I will end by saying our focus remains on strong organic growth as seen by our $1.1 billion year-over-year growth in core deposits.
Stuart Lubow: Our significant cash position, which stood at over $2 billion at quarter end, positions us very favorably for organic growth, and we expect to benefit from meaningful loan repricing over the next five quarters. I want to end by thanking all our dedicated employees for their efforts and in positioning Dime as the best commercial bank in metro New York. With that, I will turn the call over to Avi.
Avi Reddy: Thank you, Stu. Core EPS for Q3 was $0.91 per share. Core pre-tax, pre-provision net revenue of $70 million represented 186 basis points of average assets. By maintaining a strong focus on cost of funds management and the growth of our business loan portfolio, our NIM has now increased for 10 consecutive quarters. The reported Q3 NIM increased to 335. Excluding the benefits from purchase accounting and prepayment fees, the run rate NIM for Q3 would have been closer to 332 compared to a 322 run rate for the prior quarter.
Avi Reddy: Average earning assets for Q3 was approximately $14.36 billion. Core cash operating expenses of approximately $64.3 million was in line with our expectations. The loan loss provision was in line with the prior quarter at $13.8 million, and the allowance to loans increased to 99 basis points. The loan loss provision in the quarter was primarily to cover specific reserves on C&I loans, growth in the business loan portfolio, and charge-offs on multi-family loans.
Avi Reddy: While NPAs were up, substandard loans were down 7% on a linked-quarter basis, and in addition, 30 to 89 days past due loans also declined on a linked-quarter basis. As Stu mentioned, we reduced our CRE concentration ratio to 338%, while at the same time repurchasing approximately 1% of our shares outstanding. We believe that robust growth in our C&I businesses and operating with a CRE ratio that is lower than 350% will set us apart from the other local banks, which are operating between 375% to 450%, and Dime will be rewarded in the medium to longer term with a higher valuation.
Avi Reddy: Our strong capital position allowed us to structure the Empire transaction with a $30 million cash component, which represents a little more than 50% of the consideration mix for the transaction. The transaction's return metrics for Dime are very strong, with an internal rate of return well in excess of 20%, which is above our cost of capital. The transaction is expected to be approximately 3.5% accretive to earnings on a run rate basis once all synergies have been realized.
Avi Reddy: We expect the impact on our capital ratios from the Empire deal to be approximately 35 basis points, factoring in the full impact of one-time deal costs and the interest rate marks in an elevated rate scenario. Finally, our pro forma capital levels provide us room for both organic growth as well as continued buybacks. Turning next to forward guidance. As usual, while we will not provide any specific guidance on 2027 until our January earnings call, I will provide some thoughts on the remainder of 2026.
Avi Reddy: As I mentioned previously, excluding purchase accounting and prepayment fees, the run rate NIM for Q3 would have been closer to 332. We would use this 332 NIM as a starting point for modeling purposes going forward. We expect continued NIM expansion in Q4, driven primarily by loan repricing and secondarily from the recent Federal Reserve rate increase. With respect to rate hikes, we expect the September rate hike to benefit NIM by a couple of basis points, and any future rate hikes will likely be neutral to NIM as they will be a lagging effect on deposit costs.
Avi Reddy: We have repeatedly said our large cash position is a competitive advantage that will allow us to take advantage of lending opportunities as they arise, and it will help us create a sustainable NIM that is not subject to cyclical moves based on the trajectory of short-term rates. While it is hard to predict the NIM in individual quarters and the path may not be in a straight line on equal increments, we are focused on the ultimate destination by Q4 of 2027.
Avi Reddy: On our prior earnings call, we discussed a run rate quarterly NIM of over 350 by the end of 2027. Based on our strong performance this quarter and our current pipelines, we believe there is a clearer line of sight to a NIM on our existing balance sheet of over 360 by the end of 2027. Next, I will turn to expenses. We expect core cash operating expenses, excluding intangible amortization for the final quarter of the year to be around $66 million. Finally, we expect the tax rate for the final quarter of 2026 to be 28.5%. With that, I will turn the call back to Shannon, and we will be happy to take your questions.
Operator: Thank you. As a reminder, to ask a question, please 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 Steve Moss with Raymond James. Your line is now open.
Steve Moss: Good morning. A nice quarter.
Stuart Lubow: Hi, Steve. How are you?
Steve Moss: Hey, Steve. Doing well. Maybe just starting here on the margin, Avi. With that 360 margin by the end of 2027, just curious. I mean, obviously rates are higher here. We have seen some spread compression across the industry. Just maybe just a little updated thoughts in terms of dynamics here around your assumptions to that 360 margin.
Avi Reddy: Yes. I just want to be clear, we are actually increasing the NIM guidance here. Well, across the industry, there have been some spread compression. We are not seeing that here. We have been able to maintain our cost of deposits very close to that 168 area. Three weeks into the quarter here, there has been a couple of basis points drift up in deposit costs, but it is actually lower than what we thought. On the loan side, in our press release, the weighted average rate on loans was around 550. We have seen that expand to 558 right now sitting here today.
Avi Reddy: I think we are even more confident sitting here today than we were three months back, which is why we increased the guidance both from a NIM perspective as well as from a NII perspective. I think that is just a testament to the quality of the deposit base that we have at the bank, the new deposits that are coming into the bank, as well as all of the new business lines that Tom has put in place over the last year and a half, which are now coming to fruition.
Stuart Lubow: Yeah, you have to remember, our core DDA now, non-interest-bearing DDA, is now up to over 32%, and it is continuing to grow. The private bankers continuing to bring in new customers, new clients, new relationships. We are very excited about where we are in terms of our core funding abilities. On the loan side, with all the teams in place now and the verticals in place, the pipeline is very strong, and they are also bringing a nice chunk of deposits in as well. We are very comfortable that we are going to continue seeing NIM expansion at these levels.
Steve Moss: Right. Just to tap the margin a little further, in terms of, if I recall correctly, it is about $2.5 billion of fixed rate loans at around 4.25% that will reprice next year. Are you guys kind of thinking that like up 200 basis points at this point?
Avi Reddy: Yeah, no. The $2.5 billion was the number last quarter, Steve, so you got to roll that forward. We have had one quarter of one of those six quarters has gone away. We are closer to $2 billion right now, and the rate on those remaining loans are around 4.40% at this point. Yeah, there is still around 200 basis points off of that, in terms of an improvement. As Stu said early on, our pipeline rate right now, it has actually gone up to 6.50%.
Avi Reddy: There should be probably a 210 to 225 basis point increase on that $2 billion. Now, all of that is not going to stay with us. Some of that is going to refi out of the bank, and some of it is going to stay with us. I think we showed this quarter that we are able to grow overall loans, keeping in mind the reduction in the multifamily portfolio as well. You should see the repricing benefit as well as continued growth in the overall loan portfolio at a low to mid-single digit growth rate that we talked about last time around.
Stuart Lubow: Yeah. In the previous quarters, you have been seeing about $150 million to $175 million of commercial real estate move out. You have to assume that that will continue most likely. It has been about $150 million a quarter of multifamily has been prepaying or paying off and refinancing out. We are still seeing those same metrics, although in a higher rate environment, it might slow down a little bit.
Steve Moss: Okay. That is helpful there. That was going to be my next question. Then maybe just on the core deposit growth here. It was really strong this quarter. Just kind of curious how you are thinking about the cadence here on growth and just any color you can give there.
Avi Reddy: Yep. Steve, typically the Q3 and Q4 of the year are our best quarters, just given seasonality, the East End, some of our private bankers in terms of the type of business mix that they have. So I would say there is nothing in the numbers in Q3 that we expect to go away in Q4, so it is a good starting point. Then we have started the quarter reasonably here. So I would say it is kind of hard to predict in individual quarters where we go. Q1, generally, we do see some outflows, but I think Q4 should steadily build off of Q3.
Steve Moss: Okay. I appreciate all the color here, and I will step back in the queue, guys. Thank you very much.
Steve Moss: Thanks, Stu.
Operator: Our next question comes from the line of Manuel Navas with Piper Sandler. Your line is now open.
Manuel Navas: Hey, good morning.
Stuart Lubow: Hey, Manuel.
Manuel Navas: I hear you on the low single digits, mid-single digits growth pace. It was really strong this quarter. Can you talk a little bit about the mix this quarter, how it accelerated a bit, and I guess the pace should maybe slow a little bit in Q4. But can you just talk about the growth trajectory and what businesses drove it most?
Stuart Lubow: Yeah, sure. So, a couple of things. So if you go back and take a look at the year on the business loan side, Q1 net loan growth was about $125 million. Q2 was $275 million, and then Q3 was $350 million. So nice chronology of growth across the year and across the quarters. Q4, I think, is probably going to be flat to where we were in this quarter. Q1 tends to be lower, just by the nature of the business. Q2 and Q3 tends to be stronger, as you know, in banking. Q4 just depends on the overall economic environment and the momentum. So we feel pretty good about where we think we'll end the year. To Stu's point about the $925 million or so growth year-over-year, what we're really happy about is the diversification of that growth.
Stuart Lubow: Our C&I business, our traditional C&I business, led the way at about 25%. Then when you start to add in some of the new specialty finance businesses we put in place like lender finance, fund finance, sponsor finance, and healthcare, they all came in at about 20%. So we're really happy. We didn't have one business that pretty much outshined the others. When you look about the quarter, the quarter had about one-third growth from C&I, followed by fund finance, and then the balance of the other specialty groups fell behind. So real diverse business growth across the year and across the quarter.
Avi Reddy: Yeah. Manuel, I'd just add a couple of things. I think our guidance still, when you go back to last quarter, think about the balance sheet in three different pieces. So on the business loan front, really somewhere between $200 million and $250 million every quarter. This quarter we were at $350 million, so probably a little bit higher in terms of the run rate. The multifamily piece, we still expect around $500 million of runoff on that piece. Then what changed this quarter, which is why overall loans grew, is we're back in the commercial real estate market doing relationship CRE.
Avi Reddy: Pre-balances were down only $10 million or $15 million this quarter. We probably originated $100 million this quarter. Nice spreads, nice LTVs, nice debt service. So that should continue going forward. So where the variable's going to be going forward is business loans. Some quarters it may be closer to $200 million, some quarters it may be closer to $250 million, some it may be closer to $300 million over there. But when you put all of that together, you come back to that low to mid-single digits for the next probably six to nine months.
Manuel Navas: Great. That $500 million multifamily decline, that gets you towards that 25% longer-term target. No shift there, in essence, on the mix projected going forward?
Avi Reddy: Yeah. It is probably a little bit less than 25. Right now we are at 27%. So I would use $500 million off the current numbers, basically.
Manuel Navas: I appreciate that. Is there any other color you could add on kind of the deposit growth, which was so strong? What areas that came from most? I know you talked a little bit about the private banker business mix, and you talked a little bit about the trajectory over the course of the year. Just what businesses led it most and where there might be some competition.
Avi Reddy: Well, where we are really growing deposits is on the business deposits. If you look at our base, right now it is probably 70% to 75% of the base is business deposits, and consumer deposits are 25%. The consumer piece this time last year was 30%. This time 2 years back was probably 35%. So we are actually seeing small declines on the consumer side because we are not the highest rate payers out there for consumer deposits, which really means business deposits are growing at an even faster pace. We did hire 3 teams earlier this year in April. They are doing really well, in line with our projections.
Avi Reddy: So it takes a little bit of time for teams to get going, but they were a good contributor to Q3 growth. Our municipal business did really well in Q3. Our branches did well. I would say, look, we think we have got the best footprint in our area. We have got the best bankers, we have got the best branch network. We have hired the best private bankers. It is really the people that we have. Stu said we are able to do this with growing DDA, right? We are bringing in core operating accounts.
Avi Reddy: Over the course of this year, we have opened over 6,000 accounts basically. A lot of what is coming in now is the work that was done over the last three to six months. We continue to see that accounting opening process not stop. I think this quarter was especially strong in Q3. Q4, we will have to see where we end up at. I will say we have been able to manage the cost of funds really well, and we are not really seeing a creep up in that yet.
Manuel Navas: Yeah, that does bode well. My last question is, you have added now Staten Island with the transaction today. You have grown in the affordable business vertical. What is remaining for where you would like to add density? Perhaps another team by next April. What is it you are looking at next as like to have in terms of a new lending vertical or a new geographic area you would like to invest in?
Stuart Lubow: Look, I think we have kind of accomplished what we were set out to do in terms of verticals and business lines. We have been opportunistic. When the opportunity arises and talented people become available, we have taken the opportunity to bring them on board, and we have been successful at it. The same thing with private banking teams. There are probably still a few out there that we would be interested in. I think overall, strategically, I think it is really now we need to operate on all cylinders and get things cranking. I think we are really about there.
Stuart Lubow: A lot of these teams have been on for quite a while, and their pipelines are growing. That is why you are seeing the results in terms of loan originations and closings. Strategically, I think we are really in a spot where we really got to execute and grow the business. I think we have the horses and the manpower to do that now. I do not see any significant moves away from that. We will be opportunistic if an opportunity arises in terms of teams or verticals.
Tom Geisel: Yeah, I think one thing to think about is when we bring a new team on, it takes them anywhere from a year to 18 months to really get their footing. You can tell by the loan growth results, many of those teams are just starting to get there now. So it is nice to see that the investment that we put into the business a year or so ago is starting to come to fruition, and we would just want to keep pushing that for now and focusing on the organic side.
Avi Reddy: Yeah, Manuel, I would just round it out by saying we are very focused on getting our profitability to a level by the back half of 2027, where you are talking about an ROA in excess of 130 at that point. So you saw this quarter with the efficiency ratios sub 48% at this point. We have updated our NIM guidance where we think NIM guidance is going to be over 360 at that point. So we have made all the investments. Anything going forward is probably marginal and pays for itself pretty quick. But as Stu said, right now it is about execution and driving the profitability to reflect the value in our deposit base, which is still not in there in terms of the overall profitability because there is so much repricing assets that we have over the next five quarters.
Manuel Navas: I really appreciate the commentary. Thank you.
Operator: Thank you. Our next question comes from the line of David Conrad with KBW. Your line is now open.
David Konrad: Great. Thanks. Good morning. Just want to talk about credit for a little bit. You mentioned criticized and special mention was down high single digits, but you also mentioned the NPA growth was pretty strong this quarter. It looks like partially in business loans and in multifamily. So maybe a little bit of color of the NPA moves and then maybe expectations in Q4 for provisions and maybe NPAs as well.
Avi Reddy: Yeah, sure. I will take that, David. So, on the C&I side, we had one relationship. This had been substandard for a couple of years with us. We took $6 million specific reserve on this. We have some collateral behind it as well. So we feel pretty well secured over there. Person who is involved in property management, kind of tied to the real estate space over there. On the multifamily side, one relationship, this had been in the 60 to 89-day bucket for the last two years.
Avi Reddy: Slow-paying relationship, and we kind of charged that down and got an updated appraisal on that. So I would say, look, it is part and parcel of the business that we have. Substandard loans were down 7%. The 30 to 89-day bucket was down substantially. You will see those disclosures in the 10-Q when we put that out. Look, I would just say overall, in terms of provisioning levels, we would probably expect something similar to the last couple of quarters for the next couple of quarters.
Avi Reddy: Our goal really is to get the earnings stream of this company to a 130-plus ROA by the back half of 2027. So I do not think we should be operating at a $13 to $15 million provision level for more than a couple of quarters. But I think for the next couple of quarters, that is not unreasonable, just given we would just like to work out some of these credits. And it really depends, right? Certain situations, you sell the loan and you move on. That is the best lowest cost option as a bank. In other situations, you take a specific reserve and you do a longer-term workout.
Avi Reddy: I'm not really going to comment on projections for different type of credit quality metrics. What I will say is we feel pretty well resolved with what we have right now. We've got a pre-tax, pre-provision earnings with 185 basis points. Could be some choppiness next couple of quarters. But I think by the time we get to the back half of 2027, we feel pretty good about earnings stream of the company including provisions.
David Konrad: Great. Thank you. Then one more. The operating leverage story here has been pretty remarkable, and you're at a ratio roughly around 48%, a little bit better than 48%. I know expenses are going up a little bit for Q4, but is that sustainable? It feels like it is when you're talking about more 30 basis points better NIM expansion next year or so. How much can you drive that operating leverage?
Avi Reddy: Yes, I'd use that $66 million as a reasonable run rate for next year. Then if you assume, I don't know, 3%, 4%-ish regular merit increase type stuff. Look, it depends, right? I think we've done the heavy lifting on the expense side in terms of building out the infrastructure to support the private bank. We've opened 2 new branches. We've gone into New Jersey. We've added a lot of teams underneath Tom. I think all of that's done. Going forward, our goal is to get that 48% down to 45%, and then lower than 45% down the road. I think, expenses are what they are.
Avi Reddy: I think with additional scale with the Empire deal, which we've not talked about, that should help the efficiency ratio as well, given the fact that a lot of the back office, we're able to support with what we have right here. We should see that continuing to trend down over time, mainly driven by revenue growth.
David Konrad: Great. Thank you. Appreciate it.
Operator: Thank you. As a reminder, to ask a question at this time, please press *11 on your touchtone telephone. Our next question comes from the line of Matthew Breese with Stephens. Your line is now open.
Matthew Breese: Hey, good morning.
Avi Reddy: Hey, Matt.
Matthew Breese: A few questions from me. Just starting on the NPA pickup. Within multifamily, how much of that was tied to the rent-regulated space? Avi, maybe you could give us just an update on the health of that portfolio from a NPL and delinquency standpoint. Secondly, I was just curious, I heard you on substandard. What did classified loans do this quarter, and any kind of directional change there?
Avi Reddy: Yeah, sure. The relationship this quarter, Matt, that was rent-regulated. The NPAs that we have in the book are all rent-regulated on the multifamily side. Anything that is free market, we do not have anything there that is NPA at this point. I would say, look, overall, we are monitoring the portfolio very closely. What we really spend a lot of time on is there is $1 billion-ish overall of rent-regulated, which is over 50%, basically is how we characterize it, right? That portfolio, this past quarter, there was probably around $40 million of a decline in that.
Avi Reddy: So we are seeing a steady decline in that portfolio, specifically in the multifamily portfolio. Classified actually is substandard. That is the definition, right? In that particular portfolio on the multifamily side, overall, we have around $135 million of substandard. Last quarter, it is down to probably $125 million this quarter. So we are not seeing any pickup there. I think we know our portfolio. We know what we got. Could there be some hits over time? Sure. But by and large, it is very manageable. Our average loan size is around $3.5 million in the overall multifamily portfolio.
Avi Reddy: On the rent-regulated side, it is less than that. Our pre-2019 portfolio that we keep our eyes on is down $275 million. So we feel good about that. It is winding down. It is not a growth part of our business. We are not doing any new rent-regulated loans at this point. I think we have reached the point where our earnings power is so strong that we will work through anything that comes up over time.
Matthew Breese: Great. I appreciate all that. Then just on deposit cost, Avi, I heard you say it is coming in better than expected. I am just curious, as you think about that 360 or North NIM by year-end 2027, what kind of deposit beta are you anticipating?
Avi Reddy: Yes. I think on the first rate hike that happened, Matt, we've not seen much over there. There's obviously clients we've moved. I think as we see a pickup in rate increases, you're going to see the beta be a bit higher on the deposit side. I don't think it's going to be any different than on the way down. The one difference I think is that the DDA that we have, right now it's real DDA, it's real operating accounts. It's real stuff that's been coming into the bank. I think the last time around rates went to 5%, the issue that a lot of banks had was there was a lot of migration out of DDA into interest-bearing. We just don't see that happening this time around, right?
Avi Reddy: I think for the second rate hike, if there's one in October or December, you'll see a bigger pickup than the first hike. But on the first hike here, we ended the quarter with the cost of deposits 168. We're sitting here today at 172 plus or minus. There'll be a little bit more creep off the 172, but not substantial. I do think on the second and third, it'll probably pick up a little bit off of that. Which is why if you go back to my guidance on the NIM, we said the first rate hike was probably a couple basis points accretive to NIM, and then once you get to the second one, we're probably more neutral on NIM at that point.
Matthew Breese: Yeah. No, that makes sense.
Avi Reddy: Yeah.
Matthew Breese: The other, also tying to the NIM outlook, you guys are sitting on a lot of cash. I think it's up to 14% of total assets. Can you help me out with kind of the deployment strategy there and timeframe for deployment? Within that ROA target you have and the 360 NIM guide, what does the cash as a percentage of assets look like?
Avi Reddy: Yeah. I think we like the cash position because it keeps us neutral to short-term rates at this point. In Q3, we did not buy any securities. I think we would like to have a little bit more visibility into where rates end up before jumping in and buying securities. I think that 360 NIM really does not assume much deployment of the cash position. It is just off the $2 billion of maturing and repricing loans, if you assume, let us call it $1.7 billion, $1.8 billion of that. You can reprice up 200, 225 basis points. That itself should get us 20 to 25 basis points of NIM off of that. I think that the cash deployment, that is something over and above that.
Avi Reddy: But if you come back to our loan growth assumptions, we have said low- to mid-single-digit growth on the loan side, and we are growing deposits faster than a low- to mid-single-digit growth. That would really mean there is more cash on the balance sheet, right? Long story short, it does not really capture that. I think that is upside in the NIM. Another way to look at it is if we did deploy it, the 360 is more like 380%, 394% if we ran with the loan-to-deposit ratio closer to 90% to 95%.
Matthew Breese: Okay. Do you think cash could build from here? I did not really anticipate that, but it sounds like you might be leading me there.
Avi Reddy: No. Look, if you look at it this quarter, the loan-to-deposit ratio went down even though we grew loans because we grew deposits faster, right? It is a possibility, but we will deal with it as it comes.
Stuart Lubow: Yeah. Once we get to a point, Matt, where we are comfortable with our CRE ratio, and we are back in the CRE business today on a selected basis, you will see larger loan growth and then the deployment of the cash. At this point, you are still seeing net runoff on the commercial real estate side, both on the multifamily and obviously on the straight commercial real estate. Once that kind of levels out, at that point, and we expect that toward mid to late 2027, you will start to see more significant loan growth and deployment of more cash.
Matthew Breese: Okay. Last one for me. Avi, just on the deal, there are a few numbers I was hoping you could help me out with. Maybe forecasted cost saves, what percentage you are using for CDI, and then the credit interest rate marks. And one thing.
Avi Reddy: Yeah.
Matthew Breese: Sorry.
Avi Reddy: Yeah, sure. The deal size is pretty small, right. 4% of our asset base. I think overall, we expect to run this at an ROA well in excess of 2% at the bank, fully factor in cost savings over there. The rate mark and credit mark, you probably end up somewhere close to somewhere between 4% and 5% plus or minus, including the rate and credit mark. Obviously, rates are elevated, so it depends on what point in time you do it. We kind of assumed the worst case, where the five-year was at 5%. I think if you include that, it is probably somewhere between 4.5% and 5% rate and credit put together on it. In terms of the CDI assumption, I will just use 3% on the core deposits on that.
Avi Reddy: And then deal costs, they probably should be in the $12 to $13 million area, plus or minus, on a pre-tax basis.
Matthew Breese: Great. I will leave it there. Thank you for taking all my questions. Appreciate it.
Avi Reddy: Okay. Thanks, Matt.
Operator: Thank you. I am currently showing no further questions at this time. I would now like to turn the call back over to Stuart Lubow for closing remarks.
Stuart Lubow: Thank you, Shannon, and thank you all, and our dedicated employees and our shareholders for their continued support. We look forward to speaking with you after our Q4.
Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.
