There’s not like all real estate, it’s building by building. But in general, those are the kinds of valuation changes we’re hearing in the market. But given our fairly limited portfolio and lack of maturities, we don’t have a whole base of information internally to go off.
Leslie Lunak: And I will say, the LTVs remain very strong, a lot of cushion still there.
Timur Braziler: Great. And then just lastly, New York City multifamily, what portion, if any, is rent regulated and what portion is 2019 or earlier vintage?
Leslie Lunak: We have $121 million worth of New York City rent regulated exposure. It’s insignificant at this point. So…
Thomas Cornish: Yes, I’d also come back on the loan-to-value issue in New York. Loan-to-values are important, but also investor basis in the property is extremely important. And when you have — our client base is a traditional generational owned client base. And when a lot of these buildings were acquired at extremely low valuations, the tax basis issue matters a lot in terms of how they support buildings, if there’s any short-term swings in occupancy and debt service coverage ratios and things of that nature.
Operator: Our next question comes from David Rochester with Compass Point.
David Rochester: Just a point of clarification on the expense guide. That’s off of expenses ex the FDIC special? Or is it including that? Excluding it, right?
Leslie Lunak: Yes. Thank you for making that point.
David Rochester: Okay. Sure. I just want to make sure. And on the margin guide, that sounded great in terms of the high 2s. I was hoping you could maybe put some finer parameters around that because high 2s can be a pretty decent range, a pretty big range.
Leslie Lunak: I know, and I’m a little bit hesitant to do that because there are just so many factors that could move that a few basis points in one direction or the other. So I’m a little hesitant to give you a point estimate because whatever point estimate I give you is going to be wrong.
David Rochester : Got you. Whatever gets you to mid-singles on NII?
Leslie Lunak : Yes.
David Rochester : Yes. Okay. And just on the railcar sales, it sounded like you may have some more of those coming. Is the bulk of that book underwater at this point? If you just make a comment on that. And then what do all the sales mean for that income stream going forward? What’s a good run rate on that going into the first quarter?
Leslie Lunak: The income stream is going to come down, but the associated expenses are going to come down as well. And net-net, to bottom line, that’s going to be a positive. I know you don’t — and the depreciation of operating lease equipment will come down as well and there are other expenses that you don’t see because they’re not broken out in the P&L of running that business that are going to come down. So while that fee income line will come down, net-net, this will be a boost to the bottom line.
Raj Singh: Yes, I agree with that.
David Rochester : Got you. In terms of the magnitude you guys are expecting there, I mean, should that get cut in half over the next year? Or how are you thinking about the trend down?
Leslie Lunak: The fee income line, it will probably reach to $0.8 million and $0.9 million a quarter.
David Rochester : Okay. And maybe one last one. I know you already addressed this on the buybacks. It seems like you’re speaking positively about loan growth. C&I and CRE outlook is positive. You’re talking about a soft landing, credit trends are contained. Why not take advantage of the discount to tangible here why you still have it?
Raj Singh: Maybe I just speak too conservative. I kind of still feel there’s more time that’s needed to in the past. There’s still a possibility of a recession or a slowdown. I think that’s just — I’d rather deploy that capital, honestly, into loan growth. I know we’re not talking about total growth this year as much. But into next year, we are thinking about that. Even the bond portfolio, as an example, which we’ve been shrinking at some point this year, it will stop shrinking. So overall, we’re also gearing for balance sheet growth in the out years and also looking at still uncertainty in the system. So put that all together in the very short term, I think we’ll stay on the sideline. But I don’t want to speak for the Board to mention the Board’s decision but we do have this as a discussion point of every board meeting starting in February.
We have that on the agenda again to discuss. My guess is they will probably defer it into probably the second half of the year. but we can change. We do actively discuss it every board meeting.
Thomas Cornish: I wanted to come back on one point on your railcar question as it related to the comment about underwater. It’s not so much that we’re underwater from a residual to NLV kind of analysis perspective, it’s that these assets will require future investment to continue to keep them marketable and this is not a business line that we want to be in, in the long run. So when we have opportunities that we can continue to move out of these sometimes relatively small games, sometimes relatively small losses, it fits the long-term strategy of the company.
Operator: Our next question comes from John Arfstrom with RBC.
John Arfstrom: I think Dave had all my questions just lined right up, but I do have a few more. How much more is it to do in the residential runoff? I mean, Raj, you alluded to it, it might be similar. So question one is, do we assume down another — I guess, a little under $1 billion? And how long does this continue to go?
