Matthew Breese: Considering what you just said, that the loans coming off a 7% range, what’s going on is north of eight. But then considering your average loan yield this quarter is kind of 580-ish, does that imply that the pace of payoffs is really slow right now? Or could you characterize that?
Frank Sorrentino: I would agree with each of the business. Yes, it is slow. And that number, relative to the size of the $9 billion interest earning assets, isn’t as big as you might think. And so the impact of it is not all that great, but it is a positive, five years ago, we were less than 5 billion in size. We were half the size we are today. So those loans that are renewing are small relative to this, right.
Matthew Breese: That’s right. Okay. And then considering what you just said, which is north of 8%, stuff is going on, and we’re starting to see stability in deposit costs. It feels like to me, as we enter the middle part of the year, the NIM expansion on Fed cuts should be greater than five basis points?
Frank Sorrentino: Well, it could be. Matt, I am being conservative. I’ll tell you why. The one worry I have is that the quantitative tightening is even more than we expect, and that’s going to suck deposits out of the system and make the competition for deposits greater. And it’s going to slow the decline in the rate of deposits, which means the beta 50 could be lower. So that’s the offset to the projection you just sort of just made. It’s not just a rate gain.
Matthew Breese: Right, understood. Okay. And then turning – I’m sorry, Bill interrupted you. Go ahead.
Bill Burns: No, go ahead. No, go ahead. I’m sorry.
Matthew Breese: You had mentioned kind of a normalization of charge-offs. That being said, the reserve was down 10 bps this quarter. I’m assuming some of that was taxi. But I was hoping you could just comment on the overall reserve level heading into a year where credit might normalize. Should we anticipate some growth throughout the year?
Frank Sorrentino: Yes, you were a little bit garbled there, but we had about I think it was 15 or 16 basis points of charge offs in 2023, there’s nothing that I see specifically that’s making me say the number should be larger. But I think everyone is sort of agreeing that in the 20s is not a bad way to project charge-offs. So that’s one part of your question. The other is the reserve ratio. It went down, but it’s more of an accounting geography, because those reserves were in a specific reserve, they were taken out and taken off the loan balance. So there was no real change to our allowance coverage per se. And being under one, listen, this is the way our CECL model works. We have a lot of additional qualitative amounts in there, and so we feel very comfortable with where our allowance is today.
Matthew Breese: Okay. And then along the credit lines. Could you provide us an update of what your, I know it’s small, but your rent regulated multifamily. What’s the exposure there? And have you seen any sort of credit deterioration?
Bill Burns: It was under $100 million, and for the most part, it’s doing well. There’s one or two situations that we’re working on, but we’re working through those. We have a lot of tools in our arsenal for it. So I don’t see anything material coming from that small portfolio.
Matthew Breese: Okay, and then last one for me. I’ve covered you guys for a long time. It’s a challenging rate, challenging macro environment. I think given that you’re generally under earning, particularly versus kind of historical levels. As you look out 2024, 2025, when do you think you can get profitability as measured by ROA back to an over 1% level, somewhere we’re all more accustomed to seeing you.
Bill Burns: Well, I am optimistic about the years beyond 2024. There’s a lot of business, hundreds of millions, if not billions of loans that are going to reprice either maturing or adjustable rate. So even though rates are coming down, our adjustable portfolio is going to reprice higher. So when you combine all those things where rates coming down potentially, Matt, we could be in a situation where our deposit costs are going down and our loan yields keep going up. And that would get us to spreads over 340. And if we’re in that level, we would certainly be at back to 15% ROE.
Matthew Breese: Got it. Okay. That’s all I had. I appreciate taking my question. Thank you.
Frank Sorrentino: Yes.
Operator: I’ll turn the call back to management for any closing remarks.
Frank Sorrentino: Well, thanks again for everyone’s time today and certainly, we look forward to speaking to you again during our first quarter conference call that will take place in April. So, everyone have a very nice day. Thank you.
Operator: That does conclude today’s conference call. We thank you all for joining. You may now disconnect.
