Tony Labozzetta: So, if you look at this quarter, I think the — like I mentioned earlier, the — there wasn’t any account closure activity that was of no — most of the dynamics were normal activity in our non-Experian accounts, which is cash flowing out for whatever business purposes and some disintermediation going into other accounts. Where we’re seeing the growth moving forward, and we’re experiencing some of that, we’re observing it, is largely in the business banking side. So, we’re seeing a lot of compensating balances and things of that nature. We’re also — the municipal accounts should flow back in as we move forward. And we have all the targeted activities that we’re doing to deepen the share with our existing customers as well as paying new ones as well.
So, there’s — that’s what we expect it to be. However, I do think it will still represent a challenge for us moving forward because we expect the loan — the lending growth levels to go back to their normal course. And so, you’ll have that little bit of a gap as we move forward.
Manuel Navas: I appreciate that. And just on a separate topic, I just wanted to confirm the numbers that so far with the deal do not include revenue synergies at the moment?
Tom Lyons: That’s correct.
Tony Labozzetta: Correct.
Manuel Navas: And that would be helpful with the insurance business and with ABL and the things you highlighted at the beginning.
Tom Lyons: Yes, we’re excited about the opportunities there, but we have not included those in our modeling.
Operator: For the last question, we have Tim Switzer with KBW.
Tim Switzer: Hey, sorry about that, guys, my headset messed up. Good morning. Thank you for all the updated financials impact. Do you guys have a projection on where capital levels will end up at the end of Q2 once you guys close the deal, particularly TCE and the total regulatory capital ratio?
Tom Lyons: Yes, I don’t know if we can go into much more detail than we already disclosed, Tim. I can assure you that there will be a comfortable cushion over the required limits that we agreed to as part of the nonstandard conditions.
Tim Switzer: Okay. Are you able to provide any kind of framing around if rates continue to rise, how that would impact capital levels and then maybe some of the other the NIM purchase accounting you provided?
Tom Lyons: Yes, I guess all I can say is I don’t have a sensitivity analysis in front of me, but rates are up the five years, about 60 basis points higher than deal announcement, and you can kind of do a ratio and figure out what changed versus there. I think we’re about $400 million at deal announcement, we’re up to 540 now, so you can straight line at that one.
Tim Switzer: Okay, and that purchase accounting, the 65 basis points, was that the number with rates at the end of the quarter or as of, like, this week?
Tony Labozzetta: Current rates.
Tim Switzer: Okay, great, and have you guys gotten any indications yet on where pricing on the sub -debt rates could fall, a range or something?
Tom Lyons: We really can’t speak on anything on the offering until it’s there or as it happens, Tim.
Tim Switzer: Okay, that’s understood, and the last question I have is historically, you guys have done a really good job of keeping your efficiency ratio pretty low compared to the industry, 52% efficiency ratio in 2025, over the long term, as you combine these two companies, where do you think the efficiency ratio could land over the long term?
Tony Labozzetta: Well, that efficiency ratio just combines our current earning power, right? I think if you look at what happened to the efficiency ratio over the last 12 to 18 months, it’s been more the compression in NIM and the revenue drivers. So as those things get back to normal, we expect that the efficiency ratio will continue to improve downward from where it is on a pro forma basis.
Tom Lyons: Yes, I guess you’d have to figure what the margin, projected margin expansion is beyond the 3.25% and continue to maintain that roughly 1.75% expense ratio to average assets.
Operator: That concludes our Q&A session. I will now turn the conference back over to Tony Labozzetta for closing remarks.
Tony Labozzetta: Thank you everyone for your questions and for joining the call. I’d like to once again thank the Provident and Lakeland teams for the successful merger approval and I think I speak for everyone when I say that we can move forward into 2024 with optimism and vigor. We look forward to talking to you all throughout the quarter and speaking to you all again next time. Have a great weekend.
Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
