BankUnited (BKU) 26 Jan 242023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the BankUnited Financial Fourth Quarter and Fiscal Year 2023 Earnings Call. [Operator Instructions]. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Greenfield, Corporate Secretary. ahead. go Please

Good today. Kevin. thank for you Thank morning, us joining you, and

On Singh, and are and morning the this call Raj Chief Officer. Lunak, Chief our CEO; our our Financial Cornish, Officer; Tom Operating Leslie President Chairman,

achieved. A Such call relating limitation, company's remind XXXX Before that may company's current without risks that estimates the contemplated of financial condition, reflects growth this within Litigation that, are or the to statements by of as of differ forward-looking assumptions, developments Securities views by those current information, everyone the over Form update factors we otherwise. inclusion regarded on the statements turn a like outside like Private SEC's at available from this plans, can forward-looking Reform subject call on statements business the XX, operations, review representation including services Information are events I'd publicly or control, impacting results, indicated future which website, Form call meaning start, the in to These by things, any any on liquidity, for industry. The company exotics. to forward-looking X-K, year contain on undertake statements the Form events or be number any found result forward-looking those could expectations whether the financial and report that December company external Act The made company's factors impacted or as uncertainties such plans, by other current to of forward-looking as Raj. actual information are of financial during should to of circumstances the among the not obligation prospects, be as should and forward-looking and I'd future XX-Q this be www.sec.gov. With and will quarterly various the performance its financial to, materially including, respect direct historical to with a ended and report on and to important subsidiaries the based future statements. subsequent XX-K company's annual company's estimates on as performance. the adverse the not XXXX, report cause and be the does these company results company Any construed the expectations. or strategy not new factors the

what thank our say, summarize earnings, ]. and P&L and the for by, are. imperatives for Thank strategic let's you, will ago, through sheet About were improve X we Susan. quarter And roughly March everyone, earnings after [ us we then to of improve them the the sheet short-term balance balance mains and first laid kind Madness you the Good call. joining morning, out they the months for right you --

On sheet, resi less CRE the left side growth. we on and rely more and and of C&I the balance bonds

expenses keep that On all course, -- the we and ] core would we balance and rely did DDA on on credit [ the center, funding, defend key front margin expand inject and sheet, side and were certain more given that right times. of if of

Deposits I'm the includes continuation out couple million, a of the those was laid that despite XXXX announce grew hundred of we fact against So million of of $XXX quarters, happy how quarter we the for you that nicely, fourth did brokered of over kind coming the deals. down. of last story. couple to

everything of was But DDA down quarter, came wholesale million. only it was days And left brokered, our $XXX period-end Seasonal as funding $XX And on down were the more. brokered, literally last were in excluding DDA our side down. down deposits happened on million. did adjustment of first. X Average the down last XXX, I seeing was down So grew X, as growth the the quarter. the quarter And came of the FHLB actually we be $XXX came -- quarter, The million. at -- in like last grew. it had CRE, I bonds but Resi was down a actually for beginning also sheet, CRE balance C&I it flat but well. and just the quarter, our also loans like might core it segments, was

CRE, margin by -- and million. On this expansion C&I to again. between credit total $XXX led way, all So we the grew

if ticked margin, NPAs, through on quarter ] from in and fourth basis the XX this year you tax So we'll then quarter expanding, [indiscernible] margin NPAs just it's we if XX little basis keep expanded [ go about rest And XX next of keep And to last basis the side, $X.XX we'll loans, a $X.XX. from exclude talk doing credit first. down points. the points. points to SBA bit

If where So NPA's to remember for harder X XX we year, to that were a be down, will drive charge-offs we I are that getting it if so year. basis points to place they're compare at basis think I points, low last but right. the them

build So calling little And been still have reserve reserve -- it charge-offs I we the bit sorry, full this keep a for I quarter again fantastic. mean year ACL. -- I'm

quarter, of is, are, AOCI CETX to losses credit, XX.X% points, in you being by this TA is robust. they where time million portfolio they But now well being improved are tax XX is securities Unrealized X%. at cycle. the over night. Capital improved where and with basis million. I'm it and being at TCE the our basis by very or So NPAs now is and also net in $XX sleeping $XXX charge-offs Criticized overall, where quarter. points assets XX would ACL, was did this in reserve last as it increase expect,

stayed So liquidity strong. position

at this So juncture. become [indiscernible] point almost a that's

highlighted the by which So all $X.X is million than a we if the significantly these sold This avoid, that the expenses in FDIC charge. actually about, million And the the knew which helps coming $X.X some and we less sold million. about a that there avoid of earnings quarter, way, the you we the railcars. sort was this couple not of in us -- assessment, items railcars we quarters, are had P&L that expenses also, in some $XX notable release, guys

reprofiting some expenses. So

So happy as that about well.

we're slowdown in seeing we that not the be that. sort either seeing beyond a slowdown. actually what seeing We're day-to-day the soft seeing concerns or achieving to So there concern [ say marketplace? not where mainstream, seeing margins. might Fed sort of able The not of that ] the will we I'd in loan in a perfect a which the there demand all credit sense are landing in the never marketplace, we're be On worried we a always have. We're achieve, but thing, we're

this right X rate is more we've is So last environment, by quarters. than what the it same, doing to Florida, that improving and we're year, we like you even the the the side With a pretty to XXXX say the mind, couple months last the ago. the will over we're the decent would strong X economy of described, the economy, seeing like pretty improve been It's sheet. the stay guidance, strategy quarters, I we left a way. going balance to the and of we to I just balance say feels of also for sheet, side in especially see feel economy given need in in that what optimistic seeing and

year. probably we'd whole get take that on growth. for ago of to lending NIDDA may the else? gearing certainly year what answer single-digit expenses can into will first It's to over year. including planning I in and will to XX% is side, when will year growth. like this So the terms we Or to terms happen, NIDDA if comes to will this least take are time. miss should thing is might flattish, this couple will X company the up take after up capital, points. that in anything? it well expense brokers And and be over get or of shrink be but to deposits, that of or brokers, And into back continue to shoot I XX%, happen happen give the basis it. And is increase growth a probably. still X all Resi actually It steady years. down most of year quarter to over want in the out FHLB. we'll improve. next question, single-digits probably the very And our amount but and mean of be missing C&I, But to just CRE as the take not to not up to back high we so digits may continue question important come in on Am give a that continue weeks anything we the where It fill will finished in high focus in remain. mid-single the at similar you again, first front, be hard that, the a the say for will I would shrank is couple chasing. Margins margin I down, that or

up capital to in into -- me in being, we be board. cords Board back see little and it medium a again I change but our recovering dividend after the time repurchase. a going we'll is to need with over positively stand. coming talk February, the probably term, the tend I it get it my so before turn on sidelines For the I the do about that. With that a to the we share think way, at repurchases I'm stay the act time from a But vocal February the term, to meeting, is will while. cold, lose and Board discussion of short we In that's to that, let expect There by more

turn because I to if if to, speaking, may just love So disclosure to Tom I is stop. less But over speak Leslie, don't it I a I'll first. not but you. want have I

Raj. Thanks, Okay.

little So -- I'll side. off on a start deposit the bit first

million, million The continues mentioned, pipeline deposits non-broker still the $XXX So $XXX very for were as total Raj were and grown for by piece. up the robust. look quarter deposits we overall to excluding nonbrokered

first $X and near-term now. the of it as remained heavily business, quarters NIDDA into account And of to for I part in comments a XXXX. continuing strong very Our think business. pipeline pipeline has head That business which about we is good. billion, looks dominated operating emphasize line by couple Raj's about with is that

loans On the by quarter. million for $XXX grew overall side, the loan

consistent specialties Raj up with CRE We And quarter. $XXX the decline for up did was almost all $XXX lines Resi with segments, growth. that million happy by geographies, quarter. the the were across the $XX As million, for by million million. $XXX was growth outlined strategy, C&I

trended rates in quarter quarter. bit some a and to excellent saw up an was more in actually on also that was residential sector area. the that as see side. activity for warehouse the for us starting mortgage down, C&I So the And We're we bit a recovery

franchise As in and Raj core to of down indicated, equipment that finance the the about for those will optimistic were direction trend and growth modestly, year. and XXXX. We're for CRE C&I continue [indiscernible] probably

think, I to and blessed excellent individual are, in We excellent geographies. be markets

the the Southeast, good we're growth we've in company, got just In people talent, seeing in right office on opportunities of now. parts of great places the think Dallas I C&I very the Florida, our in groups the in many side. specialties very,

year. We robust and the pre-growth We good that part unit, C&I we think the latter just look we commercial the across business areas the of have corporate pipeline in the an did have franchise. of quality for year, towards we're extremely opportunities as banking do seeing all small

I loans think of XX.X% in into capital our construction the loan, we're -- and perspective overall well capital. fairly risk-based portfolio free the total a numbers total are head total as positioned given of at pretty year of risk-based XX% that I'm sorry, from CRE modest on we

of advantage opportunities market have exposure half issues, market that looking rates clients in got much the of compared talk of bit And plenty year we'll have good So we've latter towards second we banks larger as we The are, future. the in construction I think now is position be muted, and to good opportunities clients selectively other also the a the some I half but the to expected it's with take of performs capital way think perform. they quality if the where get year, as we CRE opportunities the a to to rate that at see do play. to at

CRE So with the that, on portfolio. minutes few me let a spend

disclosure. You slides through supplemental where in of additional we've the XX also detail have provided greater deck

portfolio total LTV portfolio guidance CRE CRE ratio total XX.X% coverage matures the is XX X.X%. of capital to about So Everybody's below does at weighted rate. average the service the X% the About months fixed risk-based modest in is portfolio office. threshold. and in months CRE favorite was the December remain XX, XXX%, was XX% well of XX average in the CRE XX% matures At the regulatory this next weighted debt of and the next topic loans,

So little about a office. let's talk bit

a of $XXX Specifically, have million office buildings. is $X.X The little that, exposure. Florida. Within we majority in that little just office under over is billion medical of a

a that of office we will sort class kind think than in It position -- much is So of that perform asset nationwide. differently. longer

is So our overall around traditional office billion. portfolio $X.X

During the largest the overall quarter, office in had to market million had the what been year. portfolio payoffs $XX portfolio end went of office we that at the our the CMBS loan the totaling in including

by of XX% of the $XXX all Substantially to pass performing which portfolio office to perform characterized down quarters the much XX. December and underlying of XX%, at in of we portfolio some down the was with was for the from who loss exposure, third Overall, geography was to exposure and in the service portfolio. the the $XX quarter last overall properties office total supporting is generally office a on Our rated XX. breakdown those the in was million with so are of expect continues was It the low X provided is debt sponsors not numbers office properties, the in quarter. down do well. average also Slide by percentage the of weighted million, Consistent of by We've portfolio $XX million was we're coverage X.X% prior December underlying significant way quarter, the XX. LTV content basis as strong ratio average weighted the

where the that further submarket. continue and Slide some charts There's to Florida XX% portfolio the of As suburban. Tri-State all geographic portfolio and you I York Florida, in favorable portfolio mentioned, of XX generally demographics substantially of some by the be demand office is is New gives the breakdown on is

I in was Just not space last go a to side visiting in a Beach, week, office story, and their into building as the pulled parking a building client leave could somewhere find find Beach had private equity the I building and West else. and public Westcon Palm parking in downtown

XX% indicator New So I to in of is we're thought Manhattan York Tri-State health that the good was approximately a $XXX in market the that in. pretty particular which that the of geography office respect With portfolio, totals million.

concessionary space, less, days a very The has space XX% $XX to interest generally, a million insurance of XX/XX/XX, million XX-month months Island you XX/XX/XX. it's XX Our rent some even of in lease unless next is rated have investment-grade Most rollover is increase buildings, the we is if and Manhattan in is that. phenomenon is surrounding most remainder This cost rate flow, and office X%. in re-lease there even office increase small signed period result that XX%. the flows time, short of tenants the part rollover a to you Long portfolio and is in the which on portfolio release cash pressure period increased and were Overall, portion in of time. at the below occupancy past boroughs have There XX cash office today, this -- to we the count the buildings of at a a an or compares tenant $XXX million. of putting up replace if temporarily of costs an of it. tristate $XX vacating in of area. CRE

through quarter. are we it and details in that, the I'll parts for seeing this. With to the turn more some turnover work of on Leslie this portfolio, over So of we'll

Tom. Thanks, Okay.

from share, income $X.XX special quarter per million obviously, by So million was assessment that net impacted was $XX.X $XX.X FDIC or pretax. the the

We agreements also at similar loss That sell of sold million million. or railcars compares to $X.X a into in a to for some last transactions some cases, gain quarter. of entered EFG $X.X on

in for increased fee over ]. from the to went although $XX it on sales. expect wobbly all were The X.XX%. pretty big anything to we this some yields could see So but gains railcar Net quarters, the few income to to swing the it be Earning up coupon compared in aggregate net in there. million next more material There those be from may and X.XX% a don't losses, asset pretty but X.XX% securities it's resets terms in quarter to X.XX% last quarter-over-quarter, out related of you [ yield X.XX% quarter. to There X.XX%. much was of some

Some of these or quarterly things only reset annually.

still of coupon X.XX% XX XX -- last through retrospective XX The fill XX a point from Cost points some point mention accounting was I'll quarter seeing through, loans on was this basis and to we're to compares up yield So that, increase the up X.XX%. portfolio to increase adjustments. resets basis basis deposits point that quarter. X.XX%.

several last quarters and XXXX bit actually what likely a the although which the good A The little, X about was of it guidance doing to cuts, modestly very the this a following not we left composition, the know balance transformation the what's forecasted cost million, balance all to NIM say, a balance margin. doing do maybe with -- of the and very, more sheet right is flattish a going isn't want I rate expect it's flat, we're down balance up pretty does. static NIM that's FHLB in expand at that little on the going but that and tap sign. Average side that increase what curiosity about It's the average pretty X much of sheet expand on XXXX, to up drive of will whether almost we're do overall for It's lot positively that's to advances the down of I cuts, much QX doesn't the the So slow now, on going was neutral. there's is there's little. a result sheet, contributed seen asset-sensitive, be do a NIM be sheet not said, Raj both side of X quarter-over-quarter, we've the Fed to also balance cuts, result but hopefully, picture. $XXX expansion static, to change what NIM, sheet. to is the balance the

X from quarter. loans loans, the the composition I NIM, the each percentage cuts say criticized chart the the of portfolio the the a expect portfolio even total provision residential end the this and see really getting the as in of increased reserves. Our deck We're and ACL interest increase main the some drove change increase of and remain towards quarter's XXX% a it, the higher things commercial that in And would classified and Xs all by drivers high increase build in $XX continue forecast the the shows along does remixing into of the the not The that's carry commercial XXXX. there's this the for ratio have sheet we generally versus commercial X assets basis do quarter the ACL a shifts quarter, with but reserves the from that waterfall XX NIM for we more relatively and of you net to to obviously in included production in million, XXXX, in we expect mid-single-digit driver. though loans nonperforming ACL-to-loan ratio increased balance to projecting XXX% points. XX was to to flat. Provision to income, the

expense. saying looking historical Xx is and railcar the cycle rate. bit in happy with value about quarter, we to than income particularly the world respect the We in PSU The cushion. Noninterest comp assessment a now it's very of that, other of The related historically, about a in increase our to on that special office, point our of award. to would little we're talked the compared and impact stock our a RSU price I of we're get sale. have loss increase make almost already different lifetime been the FDIC the lot because in prior is is but I pre-reserve thing

So of true-ups anything quarter low little ETR the don't talk The and number about this ETR mainly expense. is that they of don't signings because impact quarter wish state a to pretax we there's think and RTP away. the noninterest was have lower. where the I else note outsized in on the the income

for over discrete I any expect any items, would for have. that's year ETR you to next around XX.X%. And the to Raj I closing make. remarks all want it Excluding to be turn I'll

given the seeing business, place when made, the the for months, listen, good grateful bottom pretty control, is from very of couple and in impacts this where our few we're certainly progress which I'm So the last I health we we're over coming that the the that with and a it momentum line. we've don't but economy,

So when haven't look felt I optimistic to XXXX, quite some as in I time.

place start this good year. I'll open So the it's we're ready a to up Operator, Q&A. for Q&A. for

[Operator Instructions].

first Will with Jones Our comes KBW. from question

in process start color is of to is balance wanted just guess gave I in more you loan margin as of the terms changing. to what really But forward. margin on of was opposed I go composition sheet that do just the the question benefiting That moving around back rates really side the guidance. the great

side. the lot from done or of really more a other? really guys the is the Or have of combination ahead. deposit go [indiscernible]. heavy Yes, coming one the on lifting both. Is You lift

curve from what be we which what both sides. mean, needs mean was, other side I Fed haven't And X mathematically we I to can't done moves just about -- of the Yes, cuts. use that made comes the whatever the base of [indiscernible], tell part it was numbers, like in comment our we forward the Leslie you work on

[indiscernible]. put we When

month balance cuts, it now. cuts That's when or X X our the it X right budget. cuts put really or Right. cuts, a doesn't we [indiscernible] if But X how ago, is Exactly sheet was matter. structured

a in raise will like or or thing. rates more doesn't matter something, times But guidance or really something day, less go down of to silly out we've didn't more ability it's last extra different done could X X be quarters. XX that has to cut giving. our if It's something -- cuts it [indiscernible] the we with Now what or X doing they the we're do or keep

that to But will and been more I has you've going mix. to related core on we're seen over good couple funding well, the forward, really the say, growth. And quarters CRE the last expansion get some traction C&I of starting

So since I think It's the it's one forward. going more [indiscernible]. not both than other

those obviously guys just yields Yes, think of terms doing that on slides newer important. roll are adding in where some the are you But C&I kind add loans? and and I in of trade-off lower-yielding rolling the CRE the on stuff you of some do off loan remix you and Resi portfolio see on then as off

in that a C&I give Resi little yield the Resi an mean around stuff today, more. is the that's or coming mean well, on average mid-Xs. the take, has I And off maybe the portfolio -- X, increase rolling I

don't even how we're if also than on, I rolling So And the spreads still, production on are all now, at know commercial putting way, by pickup. off, this product. least on seeing, new will the commercial spreads loans that it's the that we're rate the floating for but long big even and are wider last,

little were doing at to and relationship-based slightly and We've on just which of more that some different bilateral is that doing tends that that we of a Some come doing we're is bit from wider moved kind some away business. a also market the of SNCs and spreads. conditions business, of things

spreads year in XXXX. If year each did finished if commercial, business we that the at measure you where example, for lending better CRE, core internal every look, finished you this out, spreads for small corporate, looked group they and group, entire at we with than the

So we incremental lending margin improvement each teams. of the see in

that So is of all happening.

And will see that's don't maybe At back later, looks we spreads yet. what that but come the like. pipeline point, some

Yes.

Okay. this could an And Raj, moment on bit the sense. a a of first go back is the the while to see That like feel this leverage by margin is important like because we half ask year bit guys where where XXXX? of year, really as optimism some I'll maybe I guys. end one little to there's for quite you the the Is in feels a that out, pulling back really of makes of in it of feels years the kind this It play you growth. are where like operating especially expense start

operating in side I expenses rather than and side. revenue of through Yes. the I'd the achieve leverage, that know from terms expense

We have left. done a just much I'll won't And takeout that Otherwise, have really fairly the do large you pandemic. years. tell cannot exercise of you before couple something every you expense

have really to you So invest.

sheet to to about of not as But growing because that XXXX next And I So markets over wild to new I say invest about we world we a sheet line because may the have you growing it's balance are Leslie But talk beyond, well. markets supposed continuing from the quarters XXXX. I'm come in talk is balance really back you rather core to sheet not than transforming think the should still X just to the in -- a total table be would operating balance if story. transforming It kicking the talked expanding couple come that was take to margins. into and we a the guess, markets leverage I the of go last years. X, top And we'll growth it. and as normal about

Yes.

that course operating great kind that the is guys? business Okay. lease selling Last you Or for guys of gains were The equipment, those That's ordinary really and losses you of for see me. quick color. onetime. one more

think classes are pare our core think to we down don't business. on future I the asset trying we're to of

that next call it of over probably onetime, it's something done more we've some forever see So several you'll quarters. wouldn't course the either. I but not the of

lumpy, will next see don't be So net-net material of of to that. although it be expect over it to you the the course should I more And some expect year.

So mean, business, for it's it's foreseeable. much don't maybe I there odds equal, We the growth not. maybe see lease that financing

No, it should shrink.

from come which ]. It core equipment to we last the C&I, of run we those for our X what BMT, bridge the, business, finance is shrinking have years. plans the Not been finance down. call [ CRE, shrink. Most business, will businesses, franchise business. small which and will continue growth ] be It's to The from footprint [ is

Yes.

If our years been Today, ago, about went billion. $XXX have it's would million. you X UPB back $X

next Braziler Our Fargo. from comes question with Wells Timur

what assumptions. of are there as deposit in wondering at assuming just the your the think is Looking might deposit immediate going betas expectations down over on then market curious And competitive XQ, near couple you elsewhere. kind on I'm to much XQ? just that And to how of no see deposits is the similar are expectation I'm down. way the betas what your beta additional or lag the deposit the next term, reprice rate creep might way Florida if quarters, on to what over for on cuts you betas increase here effect Florida if

mean XXs dive time a details I'll So staff. a lot We're to into it. not of about level. thus beta the there's I modeling at the the to pricing address all far up The granular XX. in that the cycle goes high I'm been and aggregate high still there, by modeling going of very on through that try has

the the at cost bringing marginal you down, coming that higher to be of the on deposit as way far we'll rates cost on down, way of as back is down to up, cost the I than rates down, market be think in the when marginal going business -- the proactive remember quite while book. total As come new are the cost have

being business back book down, have costs. new cost but marginal back than the equal of so of So book way higher the you maybe cost not on much. are a the The marginal cost on because to of the way still the going little back doesn't of bit the book the the

So in the look to together, aggregate, little appear that of when it will at a be phenomenon, it all you because slower.

which of the we're more one have is do in We now. right quarter [indiscernible] quarter pricing,

into and really at off our quarter of maturity, after we that, quarter the quarter, quarter rest pretty significantly CE big. look drops second small is big after fourth So Last And year. when then the pretty March. was this is also very just it

coming but the obviously that's back today, second -- So should the pretty I cuts, still of the book one be should over Fed money phenomenon But average in coming X the to the where is is book repricing in money maybe is that is more of high compared element element start existing until basically new it. in book about that weeks. think

one the Yes, reasons the is then we expansion repricing phenomenon guide of first agreed. to And margin in quarter. didn't [indiscernible]

you to additional with migration the And more makes it. XQ and excess that was kind so wondering, of nature. encouraging do that flight That done seasonal I'm throughout then case, along move And us noninterest-bearing risk are talk course here? is Got sense. if in year the it's you of the the should balances of think seasonal liquidity factors the just those the can that. through and what hear non-interest-bearing and that's maybe how

of basically is deposits. it. our more They're close month, has down We're they title -- very business one is to is with quarter. of end the stronger the Year-end very that grown middle I do the which in pretty of December always with and little cycle. mortgage and a shut XX there's And closing origination, with in most very activity. always They're coming It's a year-end. month mean That's banking-related that nicely. from. where quarter Yes. weaker seasonality kind follow on routine they business Nobody middle of mortgage happy end exception, it. or

data last we've more we bigger. the little before. years same December and pronounced trend gotten over a just the last this So has as see back and as the business X closely the December looked very It's

and But within see So time. will a within a Summer when also quarter, will over a around the pretty month things level start we it. now that business these and building have handle hottest and that is is the up. good we cyclicality

most happened There that from a So of some accounts, like bit business. I that hoc that stuff outflow happens. in little but call was of that of sort would ad

quarter. significant But outflows. of in mortgage pretty Sometimes see cost period in why was imbalances XX% outflow change, really it but and they flow, an say you [indiscernible]. average hardly late a related, that Which a was I'd in sometimes this any is are happened

December It's phenomenon. XX a regular

through CRE-related you're us and York, up sales little a looks bit questions. LTEs Maybe It what some picked Manhattan And it. office Got like there. as just reappraisals a New just that talk the seeing then in as York. in migration quarter-over-quarter primarily had New couple far on recent you've

things I couple that. about of can say a

that reappraisal. of Some

adjust is that of LTV. Some modeled commercial submarket appraisal, submarket take we the because don't when property the at detailed new have models a we level -- our forecasts and actually

is you Tom, modeled anything that some So add? have actually reappraisal. some that to and do of of is

-- a maturities loans say of City, the it's paid I York Manhattan specifically only small you fairly the Yes. total. our is means say we've in office in everybody, when off. -- loans would seen that number. actually have number It's The XX only obviously, about we Manhattan, fairly New

of by whole fairly the lack the building base those building. not we hearing to are So just were specific off. appraisals. the a and not upon And depending internally and don't have did don't general, go not would would in in to debt it's because something issue There's occupancy estate, down changes maybe building all we say towards of very things coverage hear valuations it's and and not to of we're sample maturities, also the that But kinds service information our XX%, in But enough majorities kind have yields I to valuation at say related I enough a we portfolio real that. looking limited given have anecdotally, it's that large much point portfolio going and of like building a largely say building. we But kind in debt being new market. of our by range. information

lot remain LTVs cushion the there. say very still will I strong, And a of

portion, regulated just York and vintage. Great. rent And any, then multifamily, is New City earlier is lastly, if what or XXXX portion worth

New We regulated have this It's insignificant City exposure. worth York at rent $XXX point. million of

So.

in when base back And property is I'd in the base. also extremely important. is client important, the issue investor come And are to values Yes, Loan traditional also New were of and debt extremely they but that coverage basis York. buildings, on a generational client tax owned loan-to-value you a at in when service lot valuations. have matters acquired a and how lot The terms swings low things support occupancy of any ratios basis if there's of issue in buildings short-term nature. these our

comes question Our with David from next Point. Compass Rochester

on right? it a Or the it, Just of guide. point expense That's clarification the is that? FDIC including off of special? expenses ex Excluding

Yes. you that for Thank point. making

Okay. great Xs. you high high want sounded a And hoping range. some around pretty of the on Sure. decent was maybe sure. guide, could parameters margin because be that can I put in I finer the to Xs range, just big terms make that a pretty

one basis that little move bit and do are a few that to that I'm because so just in or could other. the hesitant I know, factors many points there a direction

little So give you point you estimate wrong. because to point I is a give I'm hesitant a going to estimate whatever be

gets Got you you. NII? Whatever mid-singles on to

Yes.

Yes.

do first And you comment What's for what that. sales, railcar those may good that that this of going more a If point? Okay. at underwater you some And Is going on rate that the on of it a into all just sales income quarter? make then forward? book sounded on the like the have mean coming. run stream just the bulk

to other positive. will associated that line, well. come business going stream see down well a know that's P&L down. come come The of I down, the going the and they're are going that to broken but to don't net-net, lease bottom not are equipment that is as to and depreciation you income going come be to expenses as expenses because in you are And running operating out don't down of the there --

line net-net, be this So boost fee down, bottom income the will will while that line. a come to

with I that. Yes, agree

you. Got

that mean, the I trend you thinking half how are Or magnitude in about cut guys of the you In the over year? terms get next are expecting should down? there,

The probably million a million ] fee $X $X [indiscernible] quarter. will line, and income it [

Okay. buybacks. And is CRE you I seems know positively It C&I outlook about loan the addressed already one growth. maybe last on one. like and speaking this you're positive.

landing, Why have about soft the trends a discount you talking take are not to it? You're advantage credit here still tangible of why contained.

still still past. speak more just too of There's a conservative. I I a or feel in of the time Maybe possibility kind to needed a that's recession there's slowdown.

deploy stop capital, which growth that point into I next But been honestly, that's year we into Even much. are we're just the I know year, we've talking shaking. bond example, thinking think that. not at shrinking growth. as year, about will this portfolio, about as I'd this total rather it some loan an

gearing looking in also years the sheet we're overall, also still at and system. balance So uncertainty out in for growth the

don't but the I of think I the So stay point the the have But term, put all that discussion we in starting for board want together decision meeting a very do mention on in short speak February. we'll every to to Board's sideline. Board

it agenda it the again discuss. change. board they year. My is can discuss actively We into meeting. guess have half that probably on the every second of will defer the we to We probably do but

to that is we point it want so we're back to will keep and be related one these railcar line in, them that come much require a to long kind that assets marketable it's continue on not from to question wanted this underwater. perspective, investment not It's run. future analysis to on the business in about of comment the your as I residual underwater a to

the have opportunities company. sometimes small sometimes we these can move to out when the continue strategy So of small that games, of relatively losses. long-term fits we relatively It

Our next from Arfstrom comes RBC. John question with

do much my it I right alluded up, to few might I think similar. it I mean, all Raj, you to in lined Dave had just a the do be it, more How questions is residential more. but have runoff?

guess, this down go? long billion? -- one question do continue I $X to under how a does assume another little we is, And So

sort year, I despite I -- you think guidance resi And on we're just asset. million, for have being kind way $XXX next the is to of more still continue spread. doesn't yield over not expect will -- this safe year. it the giving I very this think trend we're $XXX that a that year, because should million think It allocated but of

terms of So a in about -- similar a number but Yes, I think production. the number be we similar 'XX number I in year, this exact will between forget will 'XXit something did be it

Have shared resi? optimal you for an ever percentage

of I'd what it to pandemic. be before say used kind the

go before I there's of So go way we a think couple [indiscernible]. to to a years

Okay.

Okay. Good.

to You you do go. the that? noninterest-bearing term get you back like is to used think to What do there. gearing XX% do where I you'd How was is the strategy referenced the up And that?

[indiscernible]

with growing behind and business of that company over was company we're that's XX% going of rally different with what of slow a saying year, point when and the behind at environment to do. couple up We come the years to that the is sort putting a of of back. we're of we sort very today. idea up that But the were monetary the beginning often a Obviously, in

that magic [ we XX%, even and So not if for were XX%. a X than we are certainly higher just It's to that. handle. this ] know XX%, the should is at commercial length I strive

years. that robust. attainable of me [indiscernible] certainly we there I but decent spend the think this we it isn't say a may in on of quarters, track the logic will why the confidence X the something but with gives of focusing closely every the is by to treasury pipeline, that goal. -- than that It now in the company is What account that So X, out which sort next week hours to anything And there. account, happen thought you couple pipeline well will [indiscernible] say can is we we not pretty next which get achieve

middle that and we ex-bank to you at bank. client comes places, the of that I I'm people one, driving the right would things. make to down talent generally level since our to the have the it to of the change day in X add battle every from right Number have value can are in kind

some are segments are to on There be industries others. market than that more drive focused predominantly have deposits. that You significant deposit-rich

that don't. some And

the have, we to just you over altered on to to do So focus the it. where focused industries to alluded intense significant And deposit of tend is is the types strategy back few Raj drive years, third be on last our something very levels.

look because don't just that not where that based And combinational years. talk banks at where sometimes to industry where now those of [ But take business in on even are hard and A is early actually out, are about this the about have it's that's to then pain pick it's ] And those focused spots the working process. to pipeline been they a doesn't to you when even points That's and do the market openly they share. solving multiple in entire takes there you technology the for and these those then lot do you about too things happen that banks solve on and people work say. how points. things we effort as built. year. talk them. You replicate. And goes in been industries has bigger or on formula those were able money go in spots to pain those on, points success. for pain gather generally we are the the we're size multiyear are It to the And next But and it do. hit and

every a the you're dots football X day. in of fan, If it's cloud yards

Yes.

was it you thought I give I'll yards, Tom. Okay. X, X but

[indiscernible].

Yes.

don't throw, they you're -- that. The they is what they than say. should Okay, run I run better Yes. dolphins

true little forecast. impact a it's had more. specific do then but X I'm that that at the forward the that actually X, what's interesting circling on a Or 'XX you going obviously, slides this how But better year, for a migration you mix of because migration? migration behind as build huge those risk and Slide one the Or economic reserves -- Just mix? On looking of is have forecast changes? kind and material economic reserves. expect 'XX, risk for build? the risk Is that And

that -- Yes. future, to not to classified be material the criticized where to enough you. specific saw this and that that What It's about. with the quarter goes a you it's in corresponds increase put go to we into in see hard that the there you say details really more honest reserve on to outlook one

of see you low. we'll there's credit. charge-off for over across NPL think not think And credit. are industry, credit, Net continue I some but we're continue sleep think and seeing nothing very losing normalization see as low, I normalization is credit normalizing, levels that to of the rates I some will we're to are us very

a So be bit little that. there'll of probably

shift Rev But from [indiscernible]. it also the includes

[indiscernible].

In general.

build, basis should CNI build and the Rev CRE [indiscernible],you expect [indiscernible] the points XX As

still will go up. It

Because we just -- against C&I, we have higher.

see C&I reserve that, [indiscernible] and go else compositional if reserve I stays if we've rating economy the because happens, X.XX% the in now expected. you will of on of got be still risk reserve up X.XX% to mean else a and specific shift all right terms Yes, constant, and and nothing can reserves everything has the on of residential.

So.

moment, place a will we kick not and company, based today, the the cash rate loses in have rating we created around X from you an a think are tenant, not in. from have we flow months risk and months, building now. And we loans, and start you X have flow say but flow disciplined I for a new upon investment-grade well process not lease they a if the months thought X cash cash now. to what exact does what from they at risk this be that very

think, change. of conservative that see very I we inappropriately. rate, So We'll risk happen, will that but some

next with Our comes from Ben question Gerlinger Citi.

guidance wanted I ranges. just of wanted correct. I confirm to circle had Just to everything lot a out thrown back. know we've I and

'XX. of on off core $XXX NII just growth of or kind full the call numbers, it, the around So digits million, mid-single-digit mid-single let's expenses, give on take year

should said quarter finance think you I around As be $X roughly. million a lease

[indiscernible]

Okay.

call basis? it on to XX%, is rough a So it normalized XX-ish around fair

sorry? I'm what, XX, XX,

I'm total sorry, Million for noninterest -- income.

I don't know.

see have and lease trend you'll a will income. my of don't growth, Probably the in I up that you bit, that for other NIDDA the right they back too. head charges deposit little in I a think total. service number slight gave up fees number trend on the

Sure.

Okay, sounds the got good. guidance I right. felt of most like I

guys the of and kind So lending philosophical when perspective. just from you think

in, of the like lenders annoying with yield? little probably they you And is but You if embedded raise, some it a perspective, the odd are better Are rate, out competitive backing better that Or said than is from will on back potentially you you guys down in come credit floating if especially that is a start is better -- a bit are getting introducing of gives even kind risk? your come rate. will just economy which probably expected? that other guidance you rates

with I in think fact shrinking it system. that is everything the the has money do Fed the of amount to the

the on are So money cost way, By of the they're the deposit has there is up, too. gone reason. that for spreads wider -- wider side

something conduit we're XX So this just that for same kind [indiscernible] ago. rating, is pass same same up risk spread that of months credit, to the in borrowers. names that's market on to The coming the

is place That's is it about ago. we're market But in was than side. said, there's or spectrum, deposits in ago, a like than we're the the So for side competitively lending on I down X.X way that paying also like case. wider why it was borrowing in it credit my going the happy is that years deposit be the wider year up the that spreads a on That's is getting we're wider. what not spreads. driving will not place different That's only

dynamics. It's selection. So it's it's There's about about not competition. the all less now price market

you. Got

just back to high the you you should then when cadence more I with point think Okay. just be the some of might That's pronounced kind a holistic -- curious fair. just the some where half about kind about there's was you like than know can a quarter-to-quarter, think I approach And are of others. of expenses of seasonality if the there's year?

guidance. I the to provide going when certain hit P&L. We to don't really know quarter-by-quarter don't try things are

quarter, are expenses because to things. those taxes a beyond have front-loading we little typically and hit of of HSA higher everybody don't trying P&L. time first and the which all going and payroll to XXX(k) the seating spend contributions You figure that, does of out of in lot bit But the payroll quarter a

next comes JPMorgan. Steven [indiscernible] question with Our from

the can the how fourth This what CD what new quarter? the impact And CDs with were the Also, of on quarter is off was for in rates the for expect running much Lau that coming we the on to old Steve. and NIM of the first off repricing at? CDs Alex rates the margin, were Starting

that's those first quarter. points. I billion reprice little average all coming don't I fourth up of quarter shy about probably know of there's me front the due to basis details $X for XX by the in bit of going have a in on

pricing In I money but on I both that is terms of on off right know in backed exactly pricing where right we the CD new coming around don't positive Thanksgiving. pricing, now, recall do

December. done it right have then actually may after in thanksgiving we So again and once

So did promotional which were -- lower we are. those remember late But for sort internally. do where our exact we the don't have what XX-month rates of product. making is But meaningfully is we I decisions I [indiscernible], did think, get , I our numbers

Got it.

in the is on of new Moving or the in the how you industry segments much did new rate deposits? non-brokered quarter? growth business on of this And deposits paying which level of you these are million to what deposits. see DDA. $XXX And

much deposit line. at would look every it growth, if the was say you pretty business Yes. I across

breakdown based units. what's it, business, front lines is from of segments It of we're you we look pipeline in but was, segments. all all in have of of across seeing across it's mean, hundreds opportunities give was the the me pretty across which at all what industry business it's a it I would our it I like to So be kind of of what wouldn't code-by-code when detail broadly

pipelines a ] convert balances were with close your you to now? Manas now and can quarter? willing deposit comment to the has Great. [ to in those ability this move And ago also convert fourth And ability improving customers year March on that treasury to

pretty generally, would high our stages the we our we we from range. XX% pipeline to pull-through is the when say, pipeline, track I historic various rate make of when say in mean, viewpoint. we Yes. my through rates a once once look the get pull-through rate at kind are I proposal I probably normally, proposal, would

stage, the proposal, it's get rate obviously, less. realization in when our But we before high. once dialogue, So then something pretty proposal is is

just is promo the at the XX-month our [indiscernible] a texted few team, rate and X.X%, That's have our on way, we last weeks. By price somebody the X%. X-month me for CD

And one the low when ratio What do to just range? then your XXXX? last call efficiency back are ratio that this think for the can it, get And in expectations you historical, trend question. to XX%

To not efficiency on We're the we're of focused assets expenses things. that those focused types probably ratio. and to on be honest, more

lot is and ratio. the time we thinking components. to increase efficiency ratio Yes, efficiency of going is balance The we'd There in to components with affect guidance rather a spend be to on don't and that. that. honest our affect certain about a the rate think expenses I mid-single-digit transformation you. The is sheet going just is environment focus the to that, not

Our with UBS. [ next ] comes Westerlind question from Zach

Most quick for my answered, on I ones related just to the Brody. questions of yield. margin. of Zack so have been a the It's had couple securities

quarters? guys the looking I like what's trajectory had in the just some driving X that that? of You next have the quarters. was couple nice over increases the curious And next over -- over what's past

coupon is probably That's think driving increases most about it rate I part. the been done. what's for

probably is than if get trajectory the down So likely particularly we us, more [indiscernible].

how it. of half first Got year? XXX the And to over rate, that spot the the deposit you expect on do trend cost, then the

at quarter had I think down as it repricing, rate over quarter or fruition, the the second cuts as will of back soon maybe the up on comes what half is [indiscernible]. start any got year going next least trending to curve still haven't CD depending be we to we're because we've -- still the if and the forward

at Raj any remarks. for I'd this further back the call to questions time. turn not showing I'm like over closing any to

very momentum so we're in the we that hard economy things us, a are -- year saying The got we're in in. that at all the starting right a the positive worked typical by XXXX, after favoring also especially on places close that it's note. and the XXXX business we control and I'll markets is fairly don't the

So energized do work hope XXXX. hit buildings the you is be the all a me -- joining XXXX that and through us. lot of for gives still all keep for a road will team lot and but Thank what of to us to is for

Bye. any months. If reach you. you talk get can in have me, questions, you course, We'll otherwise directly. ask Thank of you we'll X you to

presentation. gentlemen, this conclude does and Ladies today's

disconnect, now have a may and You wonderful day.