Valley National Bancorp (VLY) 26 Jan 232022 Q4 Earnings call transcript

Company Profile

Participants

Travis Lan	Head, IR
Ira Robbins	CEO
Tom Iadanza	President
Mike Hagedorn	CFO
Michael Perito	KBW
Steve Moss	Raymond James
Jon Arfstrom	RBC Capital Markets
Steven Alexopoulos	JPMorgan
Manan Gosalia	Morgan Stanley
Matthew Breese	Stephens
Frank Schiraldi	Piper Sandler

Call transcript

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Travis Lan

Good morning, and welcome to Valley's Fourth Quarter 2022 Earnings Conference Call. Presenting on behalf of Valley today are CEO, Ira Robbins; President, Tom Iadanza; and Chief Financial Officer, Mike Hagedorn.

Before we begin, I would like to make everyone aware that our quarterly earnings release and supporting documents can be found on our company website at valley.com. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to today's earnings release for reconciliations of these non-GAAP measures.

relating to you X during that may forward-looking like presentation our this would Bancorp contain remind National and the statements I highlight banking of Slide earnings call and Additionally, the Valley industry. to comments made participants forward-looking all our to statements. on refer those for a SEC and X-K, XX-Q to XX-K including complete found encourages Valley filings, Forms discussion of

the I'll turn call that, Ira over With Robbins. to

Ira Robbins

and Travis, to those on you call. welcome of the Thank you,

morning, a and quarter's results we and then few to comments insight have deposit detail. will this provide make I Tom then to Mike in more financial have on loan discuss the the results.

of of per X.XX%, non-core charges, X.XX%. In quarter XXXX, the and earnings reported adjusted net $XXX share income, net fourth were and and income $X.XX EPS, $XXX $X.XX, million, million, ROA Exclusive of of ROA respectively. of Valley annualized an

throughout from $XXX of acquisition income In represents a Bank XXXX, tenure benefit adjusted of interest and of realized we net increase were Valley's that extremely of of financial as generated I the million net million. the majority consistent performance Leumi growth, rates the This $XXX organic for the CEO. loan proud higher of as year. USA, XXXX, a and am my of income significant strong result

and resulted backdrops. XXXX and tangible book the in negative on share profitability growth. a interest in company's the have competitive on history, per year-over-year economic in earnings our equity and Despite focus Our variety impact metrics increased largest value steadily of our across rates acquisition of completing

XX% the increase and Valley period XXXX. tangible XX% stated and a proxy peers XXXX book over increased our same since In our This between a compares to for has increase XXXX. XX% for fact, value

proxy dividends paid over our we Our book as totaled plus XXXX. since is by tangible has X.Xx median have This of peer XX% measured the value value creation, XX%.

relative absolute franchise on both basis. real generated have an value and We

five I success, of morning company our see the sustained key what context I our the want and ahead. financial as positions the on last this evolution to Within years of years the how focus for over us our accomplishments

the sheet XX% of done deposits in focusing perspective, our base. job were tremendous end approximately deposit in retail only and Today, from branches branch XXXX, At digital a of funding XX% and deposits. that just we network Jersey on our balance a to the total From York perspective, deposits XX% XX% geographic of of branches. both From held deposits were XXXX. in a number relationships down our diversifying channels commercial today. total niche of and New are have By New our is

a CDs comprise despite challenging few funding five just today ago. XX% versus borrowings and Finally, XX% quarters, of years

on side business geographic has well. and our diversity approach commercial Our of the to relationships a focus asset benefited holistic as

was loan asset and XXXX, our to loan In our these York New of higher-yielding in adjustable XX% helped Currently, of and states. of net interest the could transformation our and the volatility our experienced prior Ultimately, reduce which this in margin foundation occur. provides help stable excellence cycles. In aforementioned liability credit portfolio better in ongoing XX% addition New view, we balance our than The has should that align Jersey. a increased portfolio betas. loans increasingly less upon to have sustained is

and relationships holistic a our underwriting result criteria will of a premier on the focus with of wealthy sophisticated and clients. both hallmark stringent quality strength organization. be Our credit This asset to commercial continue is

exceptional on pandemic indicate borrower Heading indicates during portfolio. meaningful any we trends, of event, the underlying believe the stress which our the height XXXX, would have resilience any we base. not experience into that the loan In identified our of

M&A activity. transformation direct of evolution result a we've our and been sheet company's balance strategic that the has targeted aggregate, In undergone

and organic establishing service We have growth premier engine. focused on a business diversification, sustainable customer and geographic

face and to well-positioned environment have navigate that hiring the near-term Our we these efforts operating feel headwinds aligned with we and today. initiatives outcomes, tactical

will over our Over and success our we years to on last the will stakeholders. We growth. external made the progress benefit long-term, continued focus five and sustainable ultimately continue drive associates, the believe diversification customers and

With that, Mike discuss growth I to to financial the the will turn over quarter's Tom call and results. and

Tom Iadanza

Thank you, Ira.

X loan growth. the illustrates Slide quarter's XX% annualized

growth residential While from on quarterly payoffs and below levels, more continues consumer and remain peak originations side. sustained the loan benefit slower activity net to

classes asset Our commercial loan diversified remains well growth and across geographies.

significant We and from our sophisticated commercial business repeat experience longstanding continue borrowers. to

have from sheet resources. utilization the our balance product and customers benefited Leumi also Legacy set of more robust

the somewhat in will capture wane We competitive to the higher from perspective a customer anticipate interest we for high-single-digit are due growth of XXXX loan well-positioned largely that year. impact demand Still, rates. to

Our continued challenging top potentially excellence well retaining and positions a service and talent preserving despite backdrop. focus on us attracting more

through X, Slide point to passing XX remain the to further and yields yields customers origination new the also X.X% We origination expansion On in average you see hikes successful in the can our basis in near-term. in increase anticipate quarter. rate during

As a to buckets XX is that These period should will increasing portfolio hikes support of yields portfolio slow. our reminder, loan days. and over a XX% provide another XX% a beyond continue re-prices as approximately tailwind rate fixed re-pricing

the on participated of to $XX loan. Leumi Legacy a to quarter's Approximately I Before charge-offs moving deposit and provide million Both related on credit. in has color some net wanted the larger to quarter's the Valley C&I were side, single this additional charge-offs. syndicated

well. loan credit perform the for is Our a as Ira the is non-accrual, and very trends continues vast exposure This And majority been remaining credit fully remain event, underlying strong. our as as combined our classified discrete reserved and of previously exposure XX/XX/XXXX. to of extremely mentioned, has portfolio

X. Slide to Turning

approximately at quarter. that see can the annualized deposits XX% rate during You an of grew

base largely effectively While funded net this brokered growth with pleased challenging ability our by is the in alternatives, defend we deposit quarter's are our traditional to environment.

this by customers challenges, and the continue and which non-interest deposit lines, the environmental area. time. across in average business, to in saw growth been largest deposit the anticipate driver add volatility of exacerbated occurred accounts quarter's we business technology we single While pressure above reduction over has our Despite certain

As a of reminder, our approximately balances. total contribute technology deposits X% our

across we experiencing for competition the quarter, sources deposit we indicated are last As franchise.

on the wealthy performance actively has betas same been that customer our competitive deposit our supports credit rates. base incrementally strong requesting commercial pressured costs. has the This and Specifically, and and deposit side, consistent sophisticated

retail has been CD Our both solid digital and network responsive to during saw our quarter. deposits offerings, canvas the and growth

remain cost alternatives of deposit to we us, aware keenly our competition to to are will to support of face most of and growth. do our continued available defend take grow our We effective the A that we price balances. channels the variety best and advantage loan

insight Mike provide call quarter's more the financials. Hagedorn to on to the turn will I that, With over

Mike Hagedorn

Tom. you, Thank

quarter. reflects illustrates interest interest loan Valley's continued pressures. deposit growth expanding income X quarterly cost robust growth which and approximately or from partially margin loan This Slide interest-bearing $XX funding and recent income were offset more and net trends. X% increased yields, the linked by Net million

tax-equivalent fully interest margin quarter above X basis fourth of of points the our the our from basis While fourth PPP net remains declined quarter points adjusted to X.XX% quarter XX XXXX. margin XXXX, third

increase our asset than During yields the basis asset on floating the in quarter, increase our by significant both newly re-pricing and a of originated by costs. more XX the funding driven basis total point loans. point increase in rate loans offset was a yield The expansion yield XX a in was

quarter, primarily runoff deposits. time the with higher our cost funded During we deposit loan and non-interest-bearing growth

X, of deposit XX%. Slide calculate you saw year-to-date approximately we on a beta As cumulative

noted and competition had to last funds higher As significant growth. have to we has to we deposit rates our quarter, accelerated loan attract offer support rapidly,

higher likely by be costs funding While this re-pricing, more XXXX. than we offset is continue to to benefit from asset in

the annualized our to XXXX partially stronger fourth income. We as under fee quarter million Slide high using We insurance was for quarter. and in compared anticipate the The could the $XX swap wealth lower of pace trust, just income reduction point. result revenues $XX.X to Moving income X. of at our non-interest from a the was third number This primarily as businesses. generated single-digit starting mid by a offset grow quarter to that million

see an activities. were the million hedging the approximately quarter of On during the collateral expense well expenses $XXX and for approximately certain fees basis. million third Most lines was non-interest related higher that were counterparty increase you can quarter, from modest levels partially Slide adjusted controlled on quarter the to our the or $XXX result XX,

helped be opportunities will XX.X% anticipate in sub-XX% XX.X% from third efficiency a quarter. revenue believe the drive and our growth sustaining We from to there drive XXXX to efficiency our ratio efficiency Continued level. lower ratio in current

Turning XX. to Slide

in quality charge-offs charge-offs are net our Tom You loan pleased spike the rate point can asset that isolated was quarters. X basis believe quarter. single and with five an the relationship trends to for our this for loan We the aggregate net drove average see incident for XXXX. the last detailed

forecast, XX. our percent loans for X.XX% XX continued credit of result at metrics stability losses and in economic to underlying as in of As our a X.XX% the from credit improvement total at September declined December a allowance

non-accrual increased percentage XX of As loans, allowance September from XXX% and one ago. year a XXX% at to the XXX%

can On the associated Slide in for XX, our was modest OCI value approximately with increased a quarter. result of book earnings portfolio. our tangible strong the available-for-sale the the see X.X% This improvement you and securities impact

result of same slightly factors. equity common to the assets as Tangible tangible improved a

declined in now. growth levels loan strong year modestly We from during higher as moderate resulting growth. capital Our capital ratios in regulatory quarter that regulatory our XXXX, result the of anticipate will a a

We Slide lay out additional on XXXX guidance items XX.

quarters our current of based XX.X% below XXXX imply pullback net our as level approximately we point. using from demand, less full-year This to or XXXX results, in forecast XXXX starting anticipate we to full-year this the and ratio three impact growth efficiency simplicity, a anticipate We result in Bank XX.X% growth Leumi. for only This growth to merger of X% XX% would pipeline X%. on interest included mid-XX% income would which at a expectations posted in of charges XX%. For reported a modest quarter. Based expenses on loan

you. turn I'll that, to to Q&A. the With begin operator Thank back the call

Operator

Instructions]. [Operator

And comes line of KBW. from our Michael question the Perito with first

Please open. is go line Your ahead.

Michael Perito

just the business by about point the there are in guys I factoring strong the taken year. stable more funding being well the wanted of a kind you as had process of coming much beta asset pressure But mix? structurally obviously yield outflow side? end your about start about guide on is on but assuming thought is the margin the bearing kind and the around first though, be of side improvements, and changed, of? you offset guys you Because XXXX environment non-interest how continued from out Ira, some are how also to guys normalization has we're I'm on I that still relatively curious, Or to mean, funding the improvements the drilling obviously, for thinking Appreciate in and NIM outlook, just imagine we the half I little a bit. are year. the to a some think down

Ira Robbins

as beta to have Yes. high as And just has today high change have I got the footprint. is. and to in in on performance think more New it's question, believe. the the going funding our we of basis base versus of do that But on historically, overall But Northeast some Mike, I before turn the and to re-highlight well some an over once want New been mechanics a Mike. the retail details, I know, deposits region to you've I'll XX% macro a Jersey good of out I just And especially dramatically again now that change York, what beta absolute basis. XX% is the

Mike Hagedorn

Yes.

million -- we non-interest $XXX and right quarter. look our thing into saw reason fairly the we of anticipation quarter increases "excess" continue. The really Fed first deposits third And we where sophisticated put a $XXX expectation XXXX. had into in keep range. And that of wealthy bank the in quotation million out XXs between now rotate think base. will to mind think half that to the that the two Fed's actions about hopefully, with that in marks I the line high fourth fourth in $XXX roughly going the put bearing. bottoms out Also obviously, into type that is we bearing they're of deposits in rotated, And additional in on as mind we that, million excess that is, XXXX of keep that we leave also pass we interest-bearing that is non-interest customer it

a those getting attached higher a we're little ahead And bit. that beta obviously, them. have out So to of

Ira Robbins

commercial book to And things we to is want add have that I of really just continue the the well. to done do grow one as

look seen year-over-year you lot have checking at business If of accounts them. XX%. accounts associated increase a obviously, basis, a operating And with we've those

some in there there deposits excess really as So much is of -- isn't those.

of unload some XXXX. changes strategic the there areas benefit do I to had in and the while to is focuses pressure, believe So throughout really we've the are that going

Michael Perito

Great.

say context, are taking that fair kind a you the assuming this continue stable-ish towards some that I occurred of that occur in to of kind mean to So NIM, quarter all guys at conservatively it's fourth of guiding of point, that you kind when into could XXXX. headwinds in the

Travis Lan

when growth kind we're the think our I see you rate guide NII XXXX, this about you out for Travis, figure kind you the you'll loan think Mike, to you and growth. And run when take guide closer -- about NII X% of on X% is fourth X% to when of is quarter and that think giving you where

of anticipating we're margin some amount So compression.

a well. couple additional day too, headwinds. basis forget Like issue the going there us to is points we'll don't obviously, quarter, as cost of count And the have first

to if pressure margin. talked necessarily all little there's bit here, in it baked about. that's stable guiding factor of together, we've we're the because factors a say think don't you would I and it's of that that I a So

Michael Perito

Perfect.

Great. thinking customers Ira, on you terms stakes? a like I -- then Okay. guess kind standpoint moving -- kind Curious should guess, your there. are? sub-XX And your of I'll mean, of philosophical try stuff? of incremental business I base -- irregardless just this to Travis. table the of the I is, think just from business is as the question, new kind case ROI and investment guess manage do Thanks, but guys on question business in margins is ratio an mean, new is rates of mean, you of of thoughts an this standpoint it kind the are. where leave I forward secondly, I your efficiency way be kind of we just and Yes, I about what and

Ira Robbins

in basis. should believe continue really initiates to franchise we went our not value if even drive to XX% I for continues invest on strategic candidly, above consistent this that mean year are disappointed forecast I we be a to us. for going

focus areas. think I certain in probably expenses on much we too

back go took to have of you X,XXX CEO, quarter $XX I and first If billion employees assets we when the over as thereafter.

$XX with employees. X,XXX sitting assets, billion we're of Today,

every There's the years and and XXX billion. we're spend here the the single dollar So employees efficiencies, five the of we we've on added sure over grown out making that expense process bank focus that tremendous on getting $XX most side.

your build but value. -- I to to think point, we have franchise

in investing outsized think we future going really in are our continue that are to certain and businesses to We grow so performance.

the So within important I it something really is a balance for us. number, But macro everyone here the managing think, to that's organization. is

Michael Perito

just Helpful. back. then one, Perfect. and And I'll then drop sneak one last

make expect depending next be more what there year. like idea once just quarter. look and I -- fee Just Or an they in there so was curious we us the we fees have I least trust just they if of what were for, you would are stronger looking investment maybe to any structures assumptions could some color the the are great And like market-dependent? than fixed? and So at for remind was just

Ira Robbins

Yes. Mike, partially quarter seasonally was related the Dudley, which some back-loaded think pickup revenues. has I to fourth

their trust So line insurance that flows that advisory fees. through investment for

I XXXX, market-based think look improvement do the total markets improvement our there's and some that for our think normalize, assume that debt revenues. line we would I in because in forecast continued some should for we equity in

a we're side. on anticipate to growth significant don't to we guiding high single-digit mid but reasonable, that's fee think I So -- obviously, the

it's So astronomical. not

Michael Perito

that the the annual the on -- you revenue an year? end Okay. that occur basis towards would seasonal And to kind expect is of Dudley, something would of

Ira Robbins

That's correct.

Michael Perito

guys. Great, Okay. Thanks.

Ira Robbins

Thank you, Mike.

Operator

question moment line comes with our one our of the from And James. Moss next And next Raymond you. Steve Thank for question.

ahead. Please go open. is line Your

Steve Moss

Maybe going up morning. weeds. here, just on a further question pricing Mike's where Curious, little is just loan the Good these into following days?

Tom Iadanza

month the I think for at basis, fourth that of Tom, the X.X%. X.X% a increased -- in XXX it's we look When points under when basis you were December. Steve. we you to just quarter, our yield On monthly

earlier, our to And continue asset of adjustable. more deposits. XX% cost really It we're our will so push by Ira counter else. to than mentioned spreads the We as differ anything up classes,

by tied LIBOR. of continue we'll prime So rates that SOFR to short-term in and benefit to XX% portfolio our rise on the

Steve Moss

mentioned That's the cannabis I here. you deposit Okay. side, just think, helpful. on growth and And then tech in,

there, it if color give bearing? Just non-interest can size curious little kind up. of And you on more much a interest maybe is maybe the versus trends how bearing

Tom Iadanza

grow do Yes. It's in us, We operators. XX focusing a We now on of deposit-driven business and on them. business for quarter-to-quarter a multistate we the double-digits are accounts with basis.

-- don't but on accounts. it bearing our I exactly, non-interest are We we're primarily deposit have

Steve Moss

Okay. Great.

Travis Lan

in is with Travis, other -- lumped couple deposit we niche this one a businesses. cannabis thing And of

us, national of four and deposits of in in the million aggregate digital. HOA, offset traditional to commercial other some the there'll deposits during deposit quarter, cannabis, And for be helped businesses $XXX So kind those which added runoff.

back And so different Absent which new relatively picture. businesses, transformation the at be to a about are of goes deposit to Valley, looking that the the we'd those conversation bank. Ira's

Steve Moss

helpful. for And then That's last here. question Okay. me

color Just things that status was curious, type nature? of that give moved construction the non-performing can to you loan geography, any on

Tom Iadanza

Yes. Steve. six contracted construction in to Sure. paid It's single Upon close those TCO be three to sales. based Tom in a full. will be City. again, for-sale York sold. of loan It's sales, are a project the awaiting We're three New units, a It's we

Steve Moss

Appreciate color. the Thank very Okay. you much.

Operator

moment Thank our you. for next question. And one

from with of Markets. Our the Capital RBC Arfstrom next Jon comes question line

Your line go is ahead. open. Please

Jon Arfstrom

in you see five be, growth that Do or next the to it on the more CD Should quarter. guys you ago. XX% to two? I same CD growth? you we for during limits mentioned question of Ira, any years used A the the think quarter expect

Mike Hagedorn

growth And are the what then I loan-to-deposit liquid we'll and us, slightly is to market we use in that's manage very our that a the our sheet levels, brokered think in excess will ratio. assuming tool as guidance. balance fund higher CD of loan up see it have you and for expectations

But in seeing commented the fourth what's with sectors, as in did earlier, the promotion along billion quarter Travis CD do is as we just that fact growth we're really the that $X well. other these important niche raised about another

as cheaper, link rate of are to deposits first trying XXXX. earlier said it expected the Fed's become we those earlier, in expect And will the back those occur comment, to higher-cost while assuming increases that deposits, my half I

Ira Robbins

the I talk income, CD had. enough we we It the where market. mean, always come today to out I of different When used never of brokered of came three the that about generate we have choices branches. we out reiterate can't Jon, the that And just we to historically were have you levers fund Those or had. the came FHLB out

to growth, flexibility have think retail we that's that it of levers we to support additional today. market could from. wanted And Today, portion then a where if we that's of XX% the we go loan attractive, litany a to the to even the because come CD have

on We have the ability we've before. never to extend things certain that had duration

flexibility want it one we've balance side to the the dictate be a you the to better on necessarily entire us isolation. compared cost of in on, we're to over across I which put the organization. at today a the been in just is of to We degree to rate of to. help our that we funding what balance a they the funding we assets really helps at that than basis looked that time have sheet before. do floating much period of types we in at where relative astronomical able side look sheet, look don't should able conjunction asset were So historically And when believe do And manage that's the that going

Jon Arfstrom

right? -- right understand of Yes. a Ira, Yes, It's it's makes a pressure that. mean pricing sense. unique we're maximum I now and period, in deposit that period I

Ira Robbins

-- keep think, of early, mind, in point as to, alluding a And because sensitivity. the basis I we right, XX-plus we was Mike had XX asset had runoff

there's see to loan funds But that that. able along in that build the increase right Jon, that. with an expectation But going value you interesting here the was really find it's XX% we're unique, funding now. franchise to by said, some massive growth there cost like to support adding be able it's we're and to So come to

Jon Arfstrom

Yes.

Okay.

deposits have in rate? one. of And that tech and topic, one one a on But that decision there. something was there? the the a Just making quick other Was surprise? simply I what was you vertical, decline in then magnitude on one mentioned Was else And drove Or the what this that that? that?

Mike Hagedorn

magnitude a deposits what previously the bank is time as in space result tell had. overall, of one I And I IPO IPO. of balances of that What was that seen that our no as that basically customer happens are it. the their tech won't business. what the caused everybody to That come give it in surprise. went that, will caused portfolio when that the And we but that we you it, of flat took But the should received from started have you've else lifecycle most tech now inside the you declines.

Ira Robbins

if you burn This Which deposits industry of perspective, a good I an the down I tech portfolio a individual cash thing. mean, about companies. overall seen think you've at event. what because seen great you've and was from think needs come is

with even I of perspective. in some maybe about industry demonstrates really others investor you perspective, And IPO it what market think tech from like sizable the client still an that what generate base. a this of business do from If think you returns there looks the versus it our and from differentiation an some

Jon Arfstrom

Yes.

drove factor that maybe Good. a just sure. you there's be us And the lower that quantitative Was Mike, the on the the that talking Thanks. provision could if Okay. comment And I'm well, Or curious helpful. that. And what would I'm some thoughts reserves. then then as give was else that to buried about for reserves, behind in in about was you, But is this not just release, that? related charge-off? something a

Mike Hagedorn

Yes.

based quantitative an one. because kept the adjustment we that -- adjustment economic those But the most was the really weeds same. upon part, in the the on quantitative assumptions You're not for

around what overlays in you function more about of to the is think probably nuances kind pools that It's we a really that's get it. management loan want various use; at. to So way

current good, that's all important all we'll be the on that if else believe note we basis that to else maintain equal, did able now, the we to our we're able to provision being coverage then from being also And definitely equal, question, will that -- ratio time allowance to we we're of But XX CECL it's points. up X.XX%. where at actually be

at started at we points. today. And by XX XXX basis down We're math, roughly So our CECL basis XX the peer is group points.

So could or while if exact it's allowance and done we prudent reductions, best can. you've in the this and we've to releases seen And to been chose going not our our opposite. we provision massive try as because economic to quarter, environment that to I we preserve have the into think clearly, we chose fourth

Ira Robbins

And of just following did. reserve to the mean just many terms; up that, put peers maybe on our I simplest didn't it believe when in we

recession to as not provide we're have that the the much economy peers compared go to to into unlikely if not where going does it's So were.

Jon Arfstrom

just you doesn't -- that we're later? is seeing like you're But but cautious, necessarily the erosion maybe not guys coming are you're all feel fearing being it

Ira Robbins

it put find our to people basis weighting that drain everybody out recession down It no last I did. to for reserve XX we sense their points their below me. five P&L. six of the pandemic towards unfathomable to makes significant conditions what economic CECL and cautious quarters, I being -- it last the much a would a coming had think still else for when were more where a than

I everybody we've never dropped to more where think individual it's my They we're have absolutely below that the should more down now else been from have is. So perspective. conservative, CECL, going to to not level that build that likely

Jon Arfstrom

the right. guys. Thanks All help for Okay.

Operator

you. comes And one our JPMorgan. moment for line next with next question Alexopoulos question. of And Thank our the from Steven

is open. go Please line ahead. Your

Steven Alexopoulos

XXXX. first, to the XXXX? of guide, beta XX% end guidance, in to NII that up the assumption what is so following on start wanted Within deposit I up -- the by XX% the

Mike Hagedorn

the cumulative XX%. is way all a through-the-cycle end the deposit XXXX through of of beta our So

Steven Alexopoulos

XX%. you do Perfect. the in rate And does -- there, assume cuts that way? by

Mike Hagedorn

second. Hold on a

Ira Robbins

absolutely like like, Mike so investor in when metric deck. we to terms it simplistic wanted just comparable to deposit said the that look simplistic I because present terms, would the the clarify, beta Sorry, be a we way you just for want the to you right, in give our

on deposit if forward and look that cumulative fourth to rate beta assumptions, based of the XX%. at our you would that be So that XXXX that quarter roll you

Steven Alexopoulos

Yes. rate Got cuts in the there? assume to there? you do scenario it. that underlying get But What's assumption

Mike Hagedorn

There rate in but it's very cuts, it impactful. think late don't so very is I one be will quarter, fourth

Steven Alexopoulos

Okay. Got it.

Mike Hagedorn

based of -- ahead. that's And go off

Steven Alexopoulos

ahead. no, go no, No,

Mike Hagedorn

Fed just expectation based off It's current Yes. of the for action.

So it's a not It's ours. market-based assumption.

Steven Alexopoulos

Got it.

have then the and mix other to these brokered And get costs? helped loan evolving of Okay. the Or mix, going growth lower-cost You messages, And growth in is skew lower-cost you in more the mixed materially about funding through the these think you you could towards the do But same How you it CDs higher terms I'm the see somewhat XXXX? CDs. of of verticals? niches, but because on do keep terms right? out strategy, funding XXXX, of in quarter. hearing which relying this you're

Mike Hagedorn

comments, as non-interest number a comment made possibly of our in percent rotation down around bearing So we reduce a the that to that total could high something XXs. deposits in

the question is So to I yes. think answer your

a further non-interest of expect out We bearing. rotation

shortfalls doing those the that. those and we've throughout don't But the the help enough loan have that I with growth. funding, the and expect based expect are And continued different fuel we brokered go. is growth loan extent that that think fund I interest first probably that think to been place we'll that will a aspects niches we in that rates year upon growth that we happen

demonstrating think I So it's been we've a just of what doing. continuation

Steven Alexopoulos

Okay.

put the year? fairly point NIM, down half? the Is second think of you and together level in pronounced to this of at it under this consistently pressure, NIM sort stability half from through XQ So if in the the being quarter-over-quarter about get more it's think do we the you some first then

Mike Hagedorn

Yes.

to hard nobody to crystal pressure So out. right try now this I -- think ball. has really a is the This figure

there pressure timing curve you'll pronounced fact, plateauing, you'll I later I quarter, later be is that think said and half actually be in hopefully, in be think year. lag, of realized. -- some a because of fourth the get pronounced, will future as And but see meaningful if we see more won't the it will a you in cut. the And earlier, maybe plateauing then first then more the be slight may the the reduction then that rate a of

Steven Alexopoulos

questions. how so uncertain recognize that's We it is many we're why asking

Ira Robbins

Yes.

keep but you in going to going right, -- XQ on a just the think into think, we looking really mind, at day is impact where if Steve it As from basis, XQ. I are count relative you're

that we're going So first just the quarter. our think think acknowledging when the about to I in see comments are you pressure

So day from that not is base funding piece a but pressure just the count really as all really well.

Steven Alexopoulos

or just to you a are broad? share the question detail commercial curious, Awesome. you rise a Slide then at credit. that There's estate concern obviously looking XX given just could market separate real I'm hear And commercial the the one provide And lot on if on love of And commentary on markets you maybe Thank Got it. cap the rates. over it Is real could on particular of geography concerned? deck, you. that. do concern one, drill your product? you I'd down estate more in

Tom Iadanza

moving in down is especially market of growth We see people to down growth estate share to into real in Steven, real our Tom. Yes. of southern people continue of the concern of coming We certainly the estate. the lot migration there. Florida Florida. support that still segments of it's A robust that markets markets,

we have book in sizable know, business. are concentration diverse don't segment. a granular As of We any you well a very

portfolio, average our XX%. our -- at is weighted real loan-to-value estate average Looking

service debt is coverage X.XX. Our

So at this we very closely. do look

always we've rates, than at our higher rates cap cap stressed Our competitors.

cap underwrite leverage keeps and what value. That weighted lower were X.XX%, through range, growth categories rate allows cash service and And the obtain don't in and collateral we consider debt us LTV to underwrite down to will coverage. average -- X% to Our We example, at flow. markets average our being And you'll we but is as around were stressing the go in different were classes. an X.X%. multifamily cap rates X%, when asset

Operator

you. moment Thank one our for question. And next

with Our Manan of from Stanley. the next question Morgan Gosalia comes line

ahead. line Your open. go Please is

Manan Gosalia

good Had Hi, question a morning. CDs. on

have you what terms customers you Can know past. in your you're I that on? offerings. to were responsive putting them the on noted selling CD You been expand out

we're if in mix the re-price quarters? CD the any next holding is in -- couple help So steady the potentially closer will of Fed given the change or has cutting? portfolio And also that how likely duration much with there of rate to to likely us could been you

Mike Hagedorn

Yes. Mike. This is

fourth basically the all middle around quarter of or duration. So promotions our been have into and XXXX continued in XX retail started the XX-month CD that part

to one into spill We're flat have and of XXXX. you have any schedule XXXX where due. lot maturity we end do very so to curve So for we're because going down we out the gave long rates earlier we over coming the build not also related that around is obviously rates questions expect obviously, our expectation on answers quarter fairly trying in a to a the don't that to come

on offerings look are been you Fed So XXX generally fairly the we in now those us, bit some very side now increases, for that the as good cases. XX being XX back fairly those been when you look high of points actually high little and funding where rates -- months we've with cheap basis at have after to the they fortuitous time at the while on beta might a side, so months

Now obviously side the in fourth that. quarter that's one was expensive public. we did on the And the of more

at That was at. can it that So $X raised I and definitely billion. where under you X.X%, just tell was

Manan Gosalia

this, if about were helpful. talk -- about you like what how tightening Got And Very Can lending how this I little but apologies quarter? it. you doing it quarter, you're a sounded standards missed I you feel in? [indiscernible] think you last And bit. then going

Tom Iadanza

Yes. the I'm again Yes. standards look to downs and of ups to been in lending at base remind sorry. customer on early those pandemic. consistently business through And we the in the cycles. standards our And We everyone, and our that criteria. XX% economic is existing our have tighten our

our So before, typically talked We higher evaluate we loan-to-values. our we -- rates standards. the to grow. And we as about manage standards never our maintain to we cap compromise use

Operator

from Matthew Breese moment line for next comes the And Thank with our one our question. of you. question And Stephens. next

ahead. Please open. go is line Your

Matthew Breese

A couple of quick ones.

outlook what's what accretable for the the for First, was XXXX? in quarter? yield the And yield accretable

Travis Lan

Yes.

ticked $X the that So Matt, quarter. $XX we and up million we million kind loan this That we said said guidance. good $X.X on remains million the of our $X think I about million side. rate third quarter quarterly And to anticipate run was on that -- is basis, a a

Matthew Breese

and give you portfolio stay the securities Or kind us balance Okay. should in of overall outlook composition same? see And it much then sheet XXXX or growth. match any the some is not what for whether of just --

Mike Hagedorn

Yes.

earning So represents XX% our little a assets. of than it as a reminder, less

quality. held -- So a for held And remember, majority material high is Nevertheless, held income. it's maturity. of the of is in not very or that driver portfolio that

So of out probably any to the the XX%-ish I you've is there, AFS a payouts really change I changes. this lot been has biggest expect is change don't halt. that held an is in seen of industry only portfolio. ground a kind guess XX% have

we coming And probably What we'll pace, due so risk-weighted And add the and in will little the you obviously. that lowest way. ranges. is have ranges highest-quality in asset keep very

We in for have banking as a fund government have as well, an important of is reminder, niche money lot as public -- niche. and bank a a us this we

collateral for we business. do So to have that have

at So we will minimum a to what we maintain have. continue

Matthew Breese

it. Got

read just message stuff have be not. probably around front. would ton And do do it, we but was to that opportunity in like Okay. got Felt the on Ira M&A. There's of look, then, my to would of to a spectacular Previously, your plenty love for organically. M&A incredibly you XXXX was, thoughts

thoughts updated there. some wanted Just

Ira Robbins

copy well. comments say into you quarter I could this probably paste and would for as the back

of are we a successes I and focusing and on value that is really the one always and continues. book talked day experience something about is that that of tangible which many there had. CEO, fortunate very became for are likely partner that today, we're think think, that an when choice I people I've on we've out acquirer choice, wonderful, from based I Maximizing

look should such resources. continue Bank I and to need an do still with And doing. Outside as difficult really focus an on convert to comfortable well, value to that Leumi believe it's today, I opportunities strain, something at associated the not basis that's necessarily transaction think We isn't to there's we that. of the environment, deal, tremendous and the but a get you with that that, book opportunities continue synergies tangible do drain I'm with on when just tremendous resource have very and economic that M&A some those we organic that of the

and So paste, like copy probably I Matt. said,

Matthew Breese

Understood.

Lastly, appreciate for expense to thank guide I addition you. had. Thank adding just I you the guidance. XXXX. for that all That's

Ira Robbins

Anything for you.

Operator

comes Thank next of question you. And Schiraldi the one And line moment for with Piper our question. our from Sandler. next Frank

ahead. Your open. line Please go is

Frank Schiraldi

good. Thanks. Good,

sort the think, then, Tom, lump on way the rate talked Just And that, of national about mentioned the you in you businesses, a I the the in you you approach deposits. niche growth the cannabis, quarter. HOA,

within largely we to Just about could just ramping businesses no we that that And going cost forward. as is greater assume maybe deposits wondering, that up, think contribution then also quarterly a low those I'd basis see on curious, umbrella?

Tom Iadanza

broaden in primarily about have other bearing, be will individual large today. on we'll talked When the reliance operators, will we're HOA, bearing deposits that's have go Israeli the with that business. cannabis the will components, primarily and largely to a tech multi-state and There doing national process also. of an look you business bearing in are And certainly, there. addition We the the VCs interest a ramping Yes. users again -- interest been at program non-interest but the tech mix non-interest non-interest there plan up is bearing along VCs bearing The That's and program. have really with deposits. domestic portion to we've

the or plan focusing the of to businesses, So niche is on specialty side yes, deposit ramp up it. our

Frank Schiraldi

some overall, I technology on been balances, business sounds where deposits, it's flattish it the guess terms But there. there's you in the of acquired you volatility then sort mentioned And of like. with

-- you in do right you you the how gotten I so over continuing parameters deposits volatile short-term? -- quarters? to do think and now volatile give be And just where it to see you can X% that's last any been? has here the around And couple any put of it said

Mike Hagedorn

very the ours than Other it's question. and has been talking incredibly other volatile that great IPO in not actually it from but event, listening portfolios, discrete volatile, We us. be the not that to been. industry talked that a That's can folks we event for about, know

of experience a Now of it. granted, year we've with only had three-fourths

for worth. So to you got that take it's what

Frank Schiraldi

deposits? private a been umbrella? that rate Leumi the that mean, that is Okay. how And do you has those in banking Or you guys? like you lump acquisition Bank growth I got that do technology you from in lump with there for --

Mike Hagedorn

private not is in The No. banking technology. both domestic and included international

Frank Schiraldi

have business in that you contraction And you size -- have relative business? the Okay. of Or -- this do seen a any point? that at size the

Mike Hagedorn

Yes.

one on synergies of of we the that grow our business banking to business So This part think private acquisition. that business, should I I said is We'll is as Leumi we've international from is larger side perspective, identified the say. than And the domestic this have of the the business. going we deposit before, because side, of the a grow. the business is domestic the legacy

part, in notes. most has structured has banking The some And the market that's business. the been The remember, had and their business to an And is, both reduction deposits. a add not been deposit AUM international that. news private for good has obviously, conducive value

clients been a able to of in expect back different those treasury moving majority securities. would interest environment, So retain then them And vast mature into I they rate those as on sheet. balance we've to a by of come some

Tom Iadanza

manage. thing constant out bank assets from loan Valley Legacy business months, it's And had referrals private bank one a just six consumer customers the that we've into of over for last flow of In Valley. that the of And the million to into portfolio $XXX to comes add. domestic private

Frank Schiraldi

it. Got

color it, you I just lastly, if missed I just lead, to to as I the the weren't but well. partial Okay. that on And right with then participation? I any you heard Leumi mention thought mentioned give more heard make sure But think I in wanted sorry and you charge-off. there could you

Tom Iadanza

Yes, certainly.

as from XX%. that customer and or we million years. and customer performed us years. XX% for on put a ability to entities. this reserved on of pay Their million XXXX. has XXXX, XX% on, XX our began reviews that credit since $X.X So during constant took exposures, that from inception. began Isolated, them. facility a those. our loans, received the to loans. all very of put XXX% early The but facility had banking The increased produce. our the to early receivable-backed strain XX% million charge-off customers' your earlier, about share action. XX%. total Ira We grew do with a of XXXX with $XX credit customers' Company so always this a We sells of on a is mentioned We over stretching $XXX payments our strong. remain concentration to almost And in the well to reduced metrics boxes company loan our manage exposure we And This overall any non-accrual The XXXX. our X.X% Russian of saw we outstanding represents We embargo big in shipping cardboard early a as credit

Mike Hagedorn

It's well. probably this Leumi important of as piece that note had to a

different combined because had little number is they a a the So piece.

Frank Schiraldi

Okay.

the And Leumi, it's piece? total you're had sorry, so American your saying --? larger Bank, a So I'm

Mike Hagedorn

Correct.

Frank Schiraldi

Okay.

Tom Iadanza

group. Yes. XX the The the also bank bank referring Valley over the management a When total and I they to reserve the years. XX, both of shares. represents we in acquired those Leumi, was were charge-offs participant

Operator

I for no the I'm And questions. back like showing over to conference turn CEO, Robbins, to you. further any would Thank remarks. Ira And further

Ira Robbins

Well, the showing our we thank to time want taking forward the to I in you and today, performance for everyone XXXX. interest and for Valley look

Operator

participating. for This you today's conference. concludes Thank

may You now disconnect.

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