Flagstar Bank, National Association Q1 FY2025 Earnings Call

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Flagstar Financial, Inc.'s First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. I would now like to turn the conference over to Sal DiMartino, Director of Investor Relations. Go ahead.

Thank you, Regina, and good morning, everyone. Welcome to Flagstar Financial, Inc.'s first quarter 2025 earnings call. This morning, our Chairman, President and CEO, Joseph Otting, along with the company's Senior Executive Vice President and Chief Financial Officer, Lee Smith, will discuss our first quarter results and outlook. During this call, we will be referring to our earnings presentation which provides additional detail on our quarterly results and operating performance. Both the earnings presentation and the press release can be found on the Investor Relations section of our company website at ir.flagstar.com. Also, before we begin, I'd like to remind everyone that certain comments made today by the management team of Flagstar Financial, Inc. may include forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements we may make are subject to the Safe Harbor rules. Please review the forward-looking disclaimer and Safe Harbor language in today's press release and presentation for more information about risks and uncertainties which may affect us. Also, when discussing our results, which excludes certain items from reported results, please refer to today's earnings release for reconciliations of these non-GAAP measures. And with that, now I would like to turn the call over to Mr. Otting. Joseph?

Thank you, Sal, and good morning, everyone, and welcome to our first quarter earnings call. We are very pleased with this quarter's operating performance and financial results as we continue to make significant progress on our journey to profitability, executing on our strategic plan, and transforming the company into a strong performing regional bank. We executed on critical cost takeouts, credit management, C&I growth, and risk governance during the quarter. Our first quarter adjusted net loss available to common shareholders was $0.23 per diluted share compared to a consensus of $0.27 per diluted share. This was also $0.17 better than what we reported in the fourth quarter. In addition to our improved financial results, I'm also excited about the progress that we are making in building out our commercial lending business. We continue to add talented bankers. These new hires are now generating strong origination volumes, which I will detail for you shortly. During the quarter, we announced the hiring of Mark Fitzgibbon to lead our private bank and wealth management business. Mark's extensive expertise at various large regional and international banks will help us drive our continued growth in these two core businesses, and we're really excited because Mark is going to be a great leader. He's already brought focus to those businesses, and we look to add additional talent as we move forward. In addition, we rounded out some key product offerings in the C&I, including an interest-only jumbo ARM mortgage with a low loan-to-value aimed at our high-net-worth clients and a subscription loan product. We feel now that we have the appropriate product set in place to grow market share in the high-net-worth space. Turning to slide three of our presentation, in 2024, we successfully built capital, improved liquidity, and enhanced the credit quality of our commercial real estate and multifamily portfolios. In 2025, our focus is on the following four areas: improving our earnings profile through margin expansion as our cost of funds decreases, moderating credit costs, and cost reductions. Lee will discuss these and outline these later on a couple of slides, and we'll continue to execute on our C&I and private bank growth initiatives. We will proactively manage the CRE portfolio, including reducing our CRE concentration, which you'll also see in a couple of slides. I will note that both net charge-offs and the loan loss provision in the first quarter each declined by almost 50% on a quarter-over-quarter basis. I'd like to spend the next few slides discussing the build-out and increasing momentum in our C&I business, which we've consistently communicated as one of our key targets is to diversify the balance sheet away from being a CRA-driven balance sheet to one where we focus on consumer, C&I, and commercial real estate going forward. We've continued to add talent in the C&I business. We hired another 15 bankers during the first quarter and intend to hire another 80 to 90 during the remainder of the year. These additional hires, already factored into our forecast, will not impact our cost savings initiatives. Early returns from the bankers we hired in 2024 are impressive, especially in our two main focus areas, which are corporate and regional commercial banking and our specialized industry verticals. Overall, we had over $1 billion of C&I loan commitments in the quarter with $769 million in originations, up over 40% versus the fourth quarter. Our C&I pipeline currently stands at $870 million, up over two times compared to the fourth quarter. Our expansion strategy in this is twofold. Our corporate and regional commercial banking business is focused on relationship lending in and around our branch footprint to ensure we can maximize our middle market corporate banking lending opportunities in our backyard, specifically where we have Flagstar brand recognition. The second is our specialized industry business, which is a national model and focuses on several industry verticals, including sports and entertainment, energy and energy renewables, franchise finance, health care, and lender finance. Slide five depicts the momentum we have in these two areas over the last several quarters. And if you recall, we really, with Rich Rufeto's hiring in June of 2024, began to organize ourselves and began to recruit talent into that space. As you can see on slide five, importantly, in our two areas of forecast, originations increased over 70% to $449 million on a linked quarter basis, while commitments rose 40% to $656 million. We're really excited about that, and it shows as we've talked to people about growing our C&I opportunities in the marketplace that those are really starting to come through as we forecast. On slide six, in addition to the sale of the mortgage warehouse business, we opted to strategically reduce our exposure to several non-core, non-relationship-based C&I borrowers. As a result, over the past several quarters, the runoff in these portfolios has masked the progress we are making in growing our new focus areas. As you can see in the upper left of this slide on page six, while overall C&I loans declined again this quarter, corporate regional commercial banking and the specialized industry loans increased to $147 million, up 4.4% compared to the fourth quarter. Runoff has now abated in these C&I portfolios, and combined with continued momentum in our focus area, we feel comfortable that the overall C&I portfolio will begin to net grow in the second quarter. With that, I will turn it over to Lee and allow Lee to walk you through some of our financial data.

Thank you, Joseph, and good morning, everyone. We're very pleased with the continued progress of that turnaround strategy to transform Flagstar Financial, Inc. into a top-performing, well-diversified, relationship-driven regional bank. From a fundamental point of view, our CET1 capital ratio remains right around 12%, one of the strongest in the industry for regional banks. We further improved our liquidity profile as we continue to reduce brokered deposits and FHLB advances, and the results of that cost optimization are on full display as our noninterest expenses, excluding one-time charges, merger expenses, and intangible amortization, declined $71 million quarter over quarter, putting us on track to achieve our full 2025 forecasted run rate. We continue to see significant par payout in our commercial real estate portfolio, and we closed on the two non-accrual loan sales that had been moved to available for sale during the fourth quarter, with a combined book value of $290 million, resulting in a small gain of $9 million on these loan sales. We will continue to explore all options relating to reducing our multifamily and commercial real estate portfolios and nonperforming loans, and we'll execute on what is in the best economic interest of the bank. Joseph already touched on the momentum in the C&I business, but let me add that our goal is to originate $1 billion of C&I loans per quarter and believe the first quarter trends prove we're on track to do this. Moreover, this growth is at market spreads, which together with the expected multifamily resets and maturities will drive margin expansion over the next three years. We paid off approximately $1.9 billion of broker deposits during the quarter, with a weighted average cost of 5%, and $250 million of FHLB advances with a weighted average cost of approximately 4.5%. The last $1.4 billion of our high-cost savings promos with a weighted average cost of 5.2% matured during the first quarter, and we had $5 billion of retail CD maturities at a weighted average cost of almost 5%. Overall, our weighted average cost of basis points in Q1 versus Q4. Looking ahead, an additional $4.9 billion of retail CDs will mature in the second quarter with a weighted average cost of 4.80%. We continue to actively manage our deposit costs and will further deleverage the balance sheet in 2025 by paying down more broker deposits and FHLB advances. Over the next three quarters, we expect to reduce our broker deposits by an additional $3 billion and our FHLB advances by another $1 billion. On the asset quality front, our criticized assets declined quarter over quarter, while our allowance for credit losses and reserve coverage remained stable due to lower held pre-investment loan balances and better appraisal values. The increase in 30 to 89-day delinquencies was driven by one borrower who pays subsequent to month's end and has done so again, meaning that $414 million of delinquent loans as of March 31st are current as of April 23rd. We also moved one significant borrower to non-accrual status during the quarter. Their portfolio is approximately $563 million and 90 properties. We are pursuing all legal and contractual remedies against this borrower. Turning to slide seven. As you read in our earnings release, our first quarter loss narrowed significantly compared to the previous quarter. And as Joseph mentioned, it was ahead of consensus estimates. On a GAAP basis, we reported a net loss available to common stockholders of $0.26 per diluted share. And on an adjusted basis, we reported a net loss available to common stockholders of $0.23 per diluted share, versus $0.40 in the fourth quarter after adjusting for the following items in Q1. We had $5 million in trailing costs from the sale of the mortgage servicing and third-party origination business, $6 million in accelerated lease costs related to branch closures, and $8 million of merger-related expenses. Moreover, our adjusted pre-provision pretax net revenue for the quarter was negative $23 million, also much improved compared to the previous quarter. As we aim to return the bank to profitability by the fourth quarter of 2025. On slide eight, you can see the tremendous strides we have made in strengthening our balance sheet over the past five quarters. We have increased capital by nearly 300 basis points, improved our reserve coverage by almost 60 basis points, significantly enhanced our liquidity position, and we enhanced our funding profile by reducing our reliance on higher-cost wholesale borrowings. This last item also helps us reduce our FDIC expenses. We now have a more balanced sheet that will better support our diversification strategy as we move forward. Slide nine provides our updated three-year forecast through 2027. We slightly lowered our 2025 net interest income forecast and increased our forecast for fee income. These largely offset, resulting in no change to our 2025 earnings per share. Fiscal years 2026 and 2027 remain unchanged. Slide ten shows our NIM trends. As you can see, the margin has stabilized over the past two quarters. The NIM is expected to increase as we move forward based on a lower cost of funds as we continue to deleverage the balance sheet and manage our cost of deposits lower, using excess cash to purchase investment securities, low coupon multifamily loans resetting higher or paying off at par, growth in higher-yielding C&I loans, and a reduction in non-accrual loan balances. I touched on our cost optimization efforts a moment ago. And on slide eleven, you can see the significant progress we've made in reducing our expense base. Our cost reduction efforts are focused on the following five areas: compensation and benefits, real estate optimization, vendor costs, outsourcing/offshoring non-strategic back-office functions and processes, and FDIC expenses. We've reduced noninterest expenses by $71 million quarter over quarter on an adjusted basis, and are on track to reduce expenses by over $600 million year over year and achieve our noninterest expense forecast for 2025. It is important to note that our cost savings goal is net of growth in other areas, including our C&I businesses and investment in our risk compliance, and technology infrastructure. Turning now to slide twelve, which shows the growth and strength of our capital position. At just under 12%, our CET1 capital ratio is top quartile among the peer group. Our priority is to redeploy this capital into growing our C&I business as we diversify our balance sheet. The next slide is our deposit overview. Our deposits decreased approximately $2 billion driven by the payoff of $1.9 billion in broker deposits, consistent with management strategy to reduce our reliance on wholesale funding. Moving to slide fourteen, the first quarter was another strong quarter for par payoffs in the CRE portfolio, which totaled $840 million. $673 million, or 80% of these in the multifamily portfolio. Importantly, 59% of the payoffs were loans rated substandard. These payoffs are driving a significant reduction in our CRE balances and in the CRE concentration ratio. Since year-end 2023, CRE balances are down $5.7 billion or 12% to $42 billion, while the CRE concentration ratio is down 62 percentage points to 439% compared to 501% at year-end 2023. Slide fifteen provides an overview of the multifamily portfolio. This portfolio has declined $3.3 billion or 9%. In addition to the payoffs, this portfolio has been reduced through loan sales and charge-offs. We maintain a strong reserve coverage on this portfolio of 1.82%, the highest relative to other multifamily-focused banks in the northeast. Furthermore, the reserve coverage on multifamily loans, where more than 50 of the units are rent-regulated, is 2.82%. Earlier, I stated that one driver of our margin expansion is the resetting of our multifamily loans. We have about $18 billion of multifamily loans either resetting or maturing through the remainder of 2025 and end of 2027, with a weighted average coupon of less than 3.8%. If these loans pay off, we will reinvest the proceeds and capital into C&I growth or pay down wholesale borrowings. If they reset, the contractual reset is at least 7.5%, which gives us an immediate NIM benefit. Going back to January 1, 2024, approximately $3.4 billion of multifamily loans have reset. Over 90% of these loans have either paid off at par or reset and are current, excluding the one borrower we moved to nonaccrual. Slide sixteen provides an overview of the office portfolio. We have reduced our office exposure by approximately $800 million or 25% over the past five quarters, and we will continue to actively manage this portfolio lower throughout the course of the year. Our office allowance coverage at March 31 stood at 6.68%, remains among the highest compared to our regional bank peers. The next slide details our allowance for credit losses by loan category. Of note, our total ACL coverage, including unfunded commitments of 1.82%, was relatively unchanged compared to the previous quarter due to lower loan balances, charge-offs, and the receipt of additional appraisals. On Slide eighteen, we provide additional details around our credit quality trends. Criticized loans declined almost $900 million or 6% on a quarter-over-quarter basis to $14 billion. Additionally, net charge-offs declined 48% to $115 million compared to the previous quarter, reflecting further normalization of credit costs. As I mentioned earlier, one borrower relationship totaling $563 million became non-accrual during the quarter, which accounted for almost all of the increase in nonaccruals. Excluding this nonaccrual, loans including held for sale would have declined modestly compared to last quarter. Finally, slide nineteen depicts our liquidity position as of quarter-end. Overall, our liquidity remains strong, totaling $30 billion representing 231% of uninsured deposits. During the quarter, we used that cash position to pay down broker deposits, wholesale borrowings, and to purchase investment securities. In conclusion, we're executing on our turnaround and strategic plan to return Flagstar Financial, Inc. to profitability and make us one of the best-performing regional banks in the country. I will now turn the call back to Joseph.

Thank you very much, Lee. And before we go to questions, I'd just reference for everybody's benefit slide twenty. You know, as we started this journey with all of you when we arrived virtually a year ago and started to talk about the direction we wanted to take the company. There were some critical components that needed to be accomplished. We obviously needed to lower the cost, needed to get our arms around the credit risk within the company, we needed to build a C&I franchise that could originate loans and we could move the company forward on that journey. And I think where we sit today, we feel very confident about the turnaround of the company. And as Lee referenced, we do forecast and believe that our fourth quarter will be a profitable quarter for us, a turning point in the organization's history. On slide twenty, we give you a reference that compared to where the current stock price is trading and where we think it would be on a one-time small multiple that we do feel for our investors, there is a tremendous opportunity in owning the Flagstar Financial, Inc. stock going forward. So with that, operator, I will turn it back to you, and we can open it up for questions.

At this time, I would like to remind everyone that in order to ask any additional questions that you might have. Our first question comes from the line of Mark Fitzgibbon with Piper Sandler. Please go ahead.

Thank you, and happy Friday. I see your guidance, Joseph, on page ten of the slide deck, and as it relates to the NIM. I'm curious to get to a 1.95 to 2.05 NIM for the year. It looks like a pretty big lift from the 1.74 we had this quarter. So I guess I'm curious, does that incorporate any rate cuts? If so, how many? Secondly, are the four main drivers that you referenced? What are the biggest pieces of that that contribute the most to them? Benefit?

Yeah. Thanks for the question. So when we put this latest forecast together, we were using the forward rate curve as of March. So there are two rate cuts in 2025 assumed in this. And as you think of the NIM improvement going forward, it is driven by the items that are noted. You'll see our cash balances come down throughout the remainder of this year, and that's the result of us. We're gonna buy another $2 billion of securities between now and the end of the year. We're planning on reducing brokered CDs another $3 billion. We will pay off another $1 billion of FHLB advances. As we've mentioned previously, we've got another $4 billion of multifamily loans reset in 2025. They have a coupon that is less than 3.8%. So as they reset, they're gonna move into coupons that are at least 7.5%. Thus, we get an immediate NIM benefit there. If they pay off a part, we will reinvest those proceeds in growing the C&I portfolio, which is based off the SOFR spread. This improving NIM position is also complemented by managing the cost of our deposits lower like we have in the first quarter. We've managed interest-bearing deposits down 34 basis points versus Q4, and we're gonna continue to do that as we move throughout not just 2025, but beyond as well. We have $4.9 billion of retail CDs maturing in the second quarter. They've got a weighted average cost of 4.8%. As I mentioned, we are also planning on reducing our non-accrual loans, and that will be additive to NIM as well.

Okay. And then secondly, just was curious about that one large relationship that went on non-accrual this quarter. Can you give us a sense of what the LTVs on those loans look like and how much you have in specific reserves on that relationship?

Yeah. We're not gonna get into the specifics around the relationship. But what I would tell you is when we looked at this, this loan had the ability to pay. The LTVs and all the other metrics were adequate. This was a borrower who decided that he wasn't going to pay. That was a human behavioral choice, but he certainly had the ability to pay. A couple of other things that I would mention is you look at the specific impact of this on the quarter. Between additional reserves and charge-offs, it cost us about $28 million. In terms of NIM reversal, it was about $5 million. This particular borrower cost us about $33 million or $0.07 in the quarter. The other thing that I would add is we've scrubbed the remaining portfolio. We have done a lot of screens and we believe that this was a very unique situation. This borrower looked to gain additional leverage by pledging his equity interest. We've done various other screens and we don't see anything like this in the rest of the portfolio, so we see it as idiosyncratic and unique.

And the thing I would add, Mark, is, you know, I think we've communicated the journey through 2024 through the whole portfolio. We continue to, in an instance like this, do an assessment of our current reserves. When we move it to non-accrual, we do specific reserves against the loan. What Lee was referencing is that we've placed additional reserves against that loan. We feel subject to getting appraisals back in that we're adequately reserved on that loan for any action that we would take.

If you look at page seventeen of the deck, you will see the reserve or the coverage against the C&I loans increased quarter over quarter as a result of some of those new originations, but also the economic forecast that Joseph referenced that was coming out of Moody's. But as we think about the overall provision, it's looking at the entire book. It's back, what we're doing on the C&I side from a growth point of view. It's also taking into account what we expect to happen from a CRE and multi-family point of view as well.

So just to remind you, Jared, we actually went through the entire portfolio in 2024 and virtually re-underwrote all the commercial real estate, including the multifamily, that was marked to market from the standpoint of where we thought the underlying cash flow supported and the loan-to-value on the underlying assets.

Okay. Thanks. If I could just ask a follow-up on capital, you know, with the capital CET1 being sort of above that target range and then all the positive steps that you've outlined with tailwinds on margin and tailwinds on credit. Are your updated thoughts on maybe deploying some of that capital into a buyback, you know, maybe around here with the valuation being so far below tangible book?

We think that as we start to stabilize and pay down the real estate, the offset will be deploying that capital into the C&I and private bank. So I think our forecast at this point in time is to use that capital to expand the balance sheet. One thing we did do, Jared, is we stroked the balance sheet between $15 and $16 billion over the last twelve months. We actually think we can turn it around and go back the other way now with the balance sheet and use that excess capital for growing the franchise.

Hey. Good morning. You guys referenced around a billion or so aspirational run rate on C&I. I was curious if you could dig into that a little bit. I know you made seventy-five plus. You're looking to do a doubling down in terms of hiring. Just kind of a loan size or segments, you said at market rate, but a billion is quite a bit more than I was expecting.

So the billion is consistent from an origination point of view. That's what we accomplished in the first quarter. We originated a billion of commitments from a C&I point of view, and we outlined that on page five. This is coming from the sixty bankers that we recruited in the second half of 2024. We've recruited another fifteen to twenty just in the first quarter of this year, and still intend to recruit another sixty to seventy throughout the remainder of this year. These bankers are very experienced; they come with a track record. They're coming from other big financial institutions. They're typically originating their first loan within the first ninety days of arriving at Flagstar. That's how we’re seeing these numbers. From a strategic point of view, we're sort of focused on two areas. On a national basis, we're starting these specialty lending verticals. You heard Joseph mention sports and entertainment but also oil and gas, renewables, energy, and health care are just some of the other national lending verticals we've set up. Geographically, as it relates to our footprint, we're also hiring experienced bankers to penetrate the middle market C&I areas within our footprint. It's a twofold approach: there's the national approach and there's a geographical approach leveraging our brand name in the geographies that we operate.

That's helpful. And then, not to take away from the successes you guys have seen on the expense front because it seems like you've moved mountains, but when you think about the back half of this year, the remaining three quarters, I know you still have initiatives and plans. Is there anything to think about in terms of timing on additional cuts and or accruals for kind of the TNI success that we work against that? Or should we think about it linear to get to the range that you guys provided?

Here's what I would say on the cost reduction efforts. It’s been a tremendous effort by the entire organization. We are mostly there and then some. What I mean by that is I actually think right now that there's probably $25 to $30 million good guy from the bottom end of our range. We did not want to move our range this quarter, obviously wanted to get another quarter under our belt. But the way things are trending on the expense side, I think we'll be what we're guiding to. In terms of things that are still in process, as we mentioned last quarter, there are some additional branch closures that will happen at the end of June, about twenty-three. There are some private client locations that we are merging and exiting in early July. There will be additional branch consolidation at the end of September. That is all factored into our numbers, but the vast majority of what we were looking to accomplish has been accomplished or is on the agenda to be accomplished.

The other thing I would add, which is really important, is, you know, these costs are in our net of, you know, we're investing $40 million in our risk governance infrastructure effectively adding 120 people over a twelve-month period. We have some significant IT and operational initiatives to drive costs down. But at the same time, we're investing in our systems to finalize the combination of the entire bank onto one platform. Those are things that are all laying the work and foundation for that to get completed in 2025. You can't, you know, our total expenses, as Lee indicated, probably are somewhere around $700 to $750 million takeout. We are making investments in the company in addition to taking those costs out. I would say we did get a lot of questions about whether we were gonna be able to meet those numbers. As Lee referenced, we feel really confident that not only are we gonna meet those numbers, but we can exceed those in 2025.

Hi. Good morning. Lee, I just wanted to follow up on your comments on C&I. How are you thinking about the utilization of those $1 billion in new commitments each quarter? How quickly do you expect to see balance sheet growth in C&I coming from those commitments?

If you look at the again, if you look at page five of the deck, $760 million has been funded from the billion dollars originated. This indicates a pretty high utilization rate. Will it remain at that level? Hopefully. But I think we're looking at a more traditional basis where people will sort of leg into it a little more, and it will ramp over time. Using Q1 as an example, we've sort of seen about 75, 76% of what was originated utilized.

Our pricing model is pretty punitive to put commitments out that aren't being utilized. That steers the team to look at transactions that meet high credit quality standards for that same time have high utilization rates. We feel really good about these growth numbers, but we have less than 1% market share in C&I. We may go from 1% to 3% by the end of 2026. It's not like we're gathering huge market share, but there's a lot of market available for us to participate in.

Hi, everyone. Can you hear me okay?

We can hear you fine.

Joseph, I know you said you're starting to receive updated financials from borrowers for 2024, but can you share with us any early reads? Specifically, for the $19 billion in loans you have in rent-regulated New York. Are you seeing improvements or deterioration of NOI?

It's a little early to tell on that question because we haven't received the 2024 financials yet. 2023 was a rough period in the rent-regulated space because increases were restricted and occupancy is very high in those buildings, generally in the 98, 99%. It's not like you're gonna fill up extra space to generate cash flow. Really, where they got impacted was on the expense side. Insurance went up 30 to 40%, HVAC and maintenance costs were up 40% and labor was up 30%. I'm hopeful that stabilization on the expense side over the last twelve months will be positive for NOIs in that particular space. Investors are re-entering, leading to demand for buying loans from us. It's an indication that investors are starting to feel more positive about rent-regulated properties. There's been some large projects that have gotten tax abatements.

Yep. On slide seventeen that walks through the allowance by loan portfolio, the increase in the reserves tied to C&I office owner-occupied was driven by two things: the economic forecast as we mentioned and also some individual credits and specific credit increases around specific credits.

Good morning.

Thanks, Steve.

Maybe just on the C&I side, Joseph, just curious. What kind of spreads are you getting on the new C&I loans you're originating here? Is there any deposits coming over with those relationships?

The spreads are ranging from 225 to 275 over SOFR. The spreads have held up pretty well in the C&I space even in light of a lot of competition. We are getting deposits, but what you generally see in those relationships is most of that transitions over a period of time. The significant opportunistic results we've seen are mainly on the fee side. We are starting to get senior leadership roles in some of these credits because the people who join us hold those roles at their prior institutions. Very few opportunities where we are willing to do a credit-only relationship. Most of those, we are offering 401k or treasury management services or interest rate derivative products.

The balance sheet will end the year at around $96 billion. At the end of 2026, we expect it to be around $102 billion, and at the end of 2027, we expect it to be around $111 billion. So that's how I would model it. But we end 2025 at $96 billion.

Thanks. Very much appreciate your interest in the company. We couldn't be more pleased with the journey we're on. Progress over the last twelve months has been incredible. There will be a significant amount of progress in 2025. We're going to look like a completely different company by the end of the year. All indications in our forecast and analysis is that we will return to profitability in the fourth quarter. Feel confident that our risk elements are under control. We're excited about what we can grow and develop over the next several years. Thank you very much.