Thomas Iadanza: Yes. Hi Steve, it’s Tom. There was an uptick in that non-accrual, primarily in the CRE business, $20 million to $10 million and has since been repaid. When you look at our performing past dues you will see a decline on the commercial side and very little if any in that 90-day bucket. The increase in the accruing past dues on that residential side, yes the color on that. It’s our jumbo on-balance sheet portfolio average loan-to-value of 58%. We don’t expect any loss. Historically, looking over 15-year period. Our real estate portfolio ran about 35% of charge-offs against our peer banks. We expect that trend to continue. We are seeing really improvement across the board. Our metrics remained solid, especially on the commercial side.
Steve Moss: Okay. And just curious – I know it’s in the text. Do you guys did refer to an uptick in classified assets, just kind of curious where did criticize and classified assets in the quarter here?
Ira Robbins: Travis you have the number, but the uptick, we do that forward review of all of our loans, our total portfolio, especially looking early on in the year at the ones that are repricing and resetting. There was a migration of those loans in the third quarter, primarily into that special mentioned category, where they might have fallen below or right at a one-time set service coverage. I just want to remind everyone, the loans that we repriced during 2023, and I’ll review of 2024 reprice, resulted in no modifications of any of the contractual terms to the repayment. But Travis, there is a different number that I’m referring to.
Travis Lan: Yes. I don’t have the number in front of me, but I would say in the third quarter that stress-test process that Tom referenced, resulted in a more significant increase in criticize and classified loans. Again not an impression that we would see additional losses, but just the way the debt service coverage is to shake out. In the fourth quarter it was a much more normal increase. So it was not as significant.
Michael Hagedorn: And this is Mike. Net increase would have been obviously in special mention credits, not the more extreme ratings.
Steve Moss: Okay. Got it. And maybe just following-up to that point as you seeing some borrowers get close on debt service coverage ratios. Just curious to what color you can give around whether it’s a workout process, borrowers – how borrower’s ability to maybe paydown loan. Just kind of what you’re seeing and what potential – NPA formations you could see in 2024?
Ira Robbins: And again, we haven’t had a, modify any terms to those borrowers where we were repricing in the past, a year, year and a half. Typically, our underwriting standards, which start, we use a higher cap level, then probably our peers use. We underwrite to current cash flow, we don’t underwrite to future cash flow. Our leverage tends to be lower going in our average loan-to-value and our real estate portfolio is about 60%. Of course, all of our asset classes. So there is flexibility. We do a lot of business with existing customers. They have the wherewithal. If it’s tight, we’ll either get additional collateral, a paydown for reserve to support any funding below and at appropriate level. And the other piece I want to add, the refinance activity, especially multifamily, picked up in the fourth quarter. So it did allow us to exit those non-relationship, non-core loans.
Steve Moss: Okay. Great. Thank you very much for all the color.
Ira Robbins: Thank you.
Operator: Thank you. One moment please. Our next question comes from the line of Michael Perito of KBW. Your line is open.
Michael Perito: Hi, good morning. Thanks for taking my questions. I understand this isn’t – just sort of something you guys guide to. But I’m trying to understand some of the cadence of kind of profitability around NIM, and some of the expense targets and the rationalization. I think which we’ll start to have a bigger benefit in the middle part of the year. Just are you guys willing or able to just kind of qualitatively talk about how you’re thinking in the current budget about what the kind of return ROE profile will look like as you exit ’24. I mean, it feels like the first half of the year might continue to be a little bit depressed, but just wondering if you can kind of give any indications around that, cadence relative to the guide that you provided?
Ira Robbins: I think your perspective Mike is pretty accurate. So, I think in the first quarter of the year. I mean, whether it’s on the expense side, the headwind to payroll tax were on the NII side, bay count and other things and the lack of kind of change that’s projected in the industry environment. We anticipate and generally stable margin I’d say in the first quarter, improving somewhat in the second quarter. And then getting more expansion in third and fourth quarter. I’m just kind of the way the budget is built now based on the implied forward curve. In terms of expenses, we have people look back to last year, there was a $7 million pickup in the first quarter related to payroll taxes. So you’re looking at something similar there.
As we stand here in December. We’ve – on an annualized basis got $20 million of expense saves out related to the headcount reduction that was enacted in June. We think there is another $8 million or so, give or take on – from an annualized perspective from further actions here in the first quarter on the personnel side. And then as we get into the second quarter and beyond. There should be some saves related to the core conversion some of these elevated costs that we’ve talked about with customer support efforts and other things. So, I think the first quarter, there will be some seasonal expense headwind, but then you’re looking at general stability over the three quarters following. So, I do think the profitability improved throughout the year when you blend that altogether, again in the midpoint of our range, you get to $1.04, $1.05 that puts you at an ROA level that I’d say it’s similar to what we’ve achieved this year, but it does improve as year goes on.
Michael Perito: Yes. I mean, it should kind of put you maybe in the 90s on the ROA on the exit. I guess the question is, if revenue to expense grow dollar-for-dollar right. That’s not going to really improve much. That’s kind of what the outlook is for ’24, but I guess what gives you confidence that in ’25 and beyond, you guys can get back into more positive operating leverage territory and continued to see those improvements kind of carry-forward in ’25. I mean, is it just margin, is there other kind of unit economics in some of the specialty businesses that you’re growing that, will benefit from scale, would love some additional color there?
Ira Robbins: I think there’s a lot of opportunity for us. I think if you look at the net interest income side, right sitting in an inverted curve hopefully, isn’t one that we sit in for that much longer. But it definitely has an impact on us. I think the core conversion is really understated as we think about what the ability to scale looks like for us. We changed every single one of our clients into a new core platform across the entire organization. That said, we put in 261 different APIs sitting on-top of that core conversion to think about what their client experience looks like. You go into Valley you open up a checking account, in one of our branches. It’s the exact same platform that you do when you’re opening up a digital account sitting at Valley.
