- Earnings call transcript Q3 2022

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Operator

Welcome to the First of Long Island Corporation's Third Quarter 2022 Earnings Conference Call.

On the call today are Chris Becker, President and Chief Executive Officer; Jay McConie, Chief Financial Officer; and Bill Aprigliano, Chief Accounting Officer. Today's call is being recorded. A copy of the earnings release is available on the corporation's website at snbli.com and on the earnings call web x at https//www.cstproxy.com/snbi/earnings.

Before it begins, the company would like to remind everyone that this call may be - may contain certain statements that constitute forward-looking statements made under the safe harbor provisions of the U.S. Act Reform Litigation Securities of XXXX. Private set are that may statements those U.S. in including subject with company's differ to factors other contained as statements, such and uncertainties any in cause the from the filings risks, materially Such forth actual to results Exchange and Securities Commission. March from by that Investors actual could refer on results XXXX those list implied a to XX-K our also XXXX,for statements. of materially indicated cause such or should filed differ to XX, risk factors call the turn to to Chris like now would over Becker I

Chris Becker

Thank afternoon, Long welcome quarter since on the Island management direct the X to Corporation's We the XXXX. of third January are first third result XXXX. our you. team the months the and has Good and initiatives First of quarter and focused earnings of call of XXXX believe for strategic

digital our Long Melville, anniversary. month, the with of location the highlighted Island's held headquarters name enhancements, with a governance to completing include banking with the the have community. Hollow investment long-standing and recruiting practices. our corporate focus our Broad cybersecurity seasoned include We for larger to of initiatives a communications website initiatives relationship numerous first relationships community branding and across the improve and using Melville Melville, profitable the National Earlier banking third additional at network XXX of quarter balance combined XXth relocation the to focusing new environmental, shareholders growth enhancing broader and Specific branch improving Bank social these geography, First we York. media and supporting our quality social Road, a of ribbon-cutting sheet technology the professionals and new New this on presence, through celebration They continuing recognition, in strong branch optimizing our business, during results on of

our truly ago. be customers Port the notification Xst was are to Long that relocation to of century this of is a longest-standing December mailed A that year. that branch opened the for independent approximately on We Jefferson bank proud scheduled Island branch

are branch new enhancements. on our is Inc., today throughout primary our These the off of September amount contract conversion we quarter. to provide to middle signed be XXXX. the in provider, believe technology the to The technology a efforts with DNA open core to solution. best of branding, Long complement Regarding new XXXX service and anticipated kicked completed completing our and which includes on October customers better significant We logo. this establishing Island. team will We end progress reported East investment continue I available have presence for future X-year the conversion project our a the a fourth and in renovations our architecture their on will Fiserv branch market

the of new of proud relatively results these two are initiatives. We

As in new million $XXX of XX, September XXXX, in approximately deposits. they have brought

integrity at During Please we Investor out the in performance Corporation. for more site about employees Governance of visit the best Island the hard page Long Directors ESG our recognize in and our their [ph] of have work our These First third the to to Board and new corporate quarter XXXX, of section web history, produce helped dedication want company's I success. X-month and initiatives to the company's cast Corporate Relations rolled a the learn site. of

first for generally of The X was well XXXX XXXX putting we rate increases XX forward, north of near-term of over seen for by rates the higher on The our are wholesale months rates X.XX%. caused in quarter was are Deposit customers challenges Fed net being X%, and margin X.XX%. borrowing definite not Looking margin pressure see interest years. demanding third margin. the

XXXX was margin the the for September of reflecting comments. month However, X.XX%, my

will in during in it curve reactions shape rate likely how followed high, of asset of pressure moves especially the sensitive, reprice half widening catches high modeling margin by our shows rate the assets repricing competitors. at resulting rates including liabilities long least interest margins bank shock liability regarding Fed short-term on our margin, and improvements from Ultimate Based XXXX. faster the on the based how margin increases, of up. first rates, fall is than the Our downward are scenarios. of as indications the current Fed the future as changes net Rates yield is on stay

momentum our equipment continue will have teams our in in that I successful mortgage On release, that end. result and level half Jay anticipated McConie It's pipeline note, the anticipate third and we earnings of half lower the That year-to-date. of last will positive expenses than consolidate about occupancy million loan and some coming into As in will quarter first the the half lower and a last relationships reported continue be new highlights anticipation of branches in efforts now XXXX. of of banking the our fruition second will quarter through into likely XXXX. first to we stated $XX back been staff you new quarter XXXX very XXXX. bringing half XXXX. to in that loan office also is is believe Jay? originations at deposit and take the will

Jay McConie

XX, income rate X by interest-earning same in funded prior growth balances the the and for was September average excess to The to $X.X months significant XX, third year-to-date. offset checking quarter both when the quarter flat period June ended ended to weighted over growth average paydowns. loan in average weighted but of cash liquidations deposits. income new loans billion and of deposits loan to third originations by loan million the $XXX and million higher average balances, the X.XX% the was and should X.X% for $X.X for respectively, were when held compared Net continues on Mortgage decreases loan million million net up quarter XX, was The Chris. and months X.XX%. pipeline $XX year. our quarter $XXX and current bank driven as were year. mortgage September our and by has grew The balances increase by time XXXX, compared X.X%, X Period-end XXXX, $XX.X XXXX, in for on improve increases since million in you, rate last a Thank and loan of

decline, than June hikes in offering of home Our have and price will mortgage have has low XX, activity as just up loan sellers Fed purchase dried dramatically from are prices rates refinancing as demand. frequency X hopeful that levels doubled Reserve suppressed months by decreased loan pipeline while them are to pace want. they the completely to and has rate more get slowed Residential buyers allow XXXX, inventory new waiting activity for and the borrower the

currently to investment continue in is not securities the and higher what see to commercial than not significantly available We mortgage in activity management. but market, at attractive rates

important than published With review June core XXX XX, rate XXX not Federal deposits causing year, accounts between for Fed banks continued Home year. wholesale funds year. net bond basis The points rate rates, assets on corporate since we or interest was $X.X following in funding, their on focusing X.XX% Federal XXX swap Bank this points extended average of retain improve current the has to cases, noninterest-bearing short-term to the is and is compared end attract This improvement months yield to reinvestment based rates quarter fund an of in likely improve cost rate structure target XXXX to core when deposit Our increase The quarter and additional and in XXXX. in curve result always volume, pressure on to checking additional factors, strategic million to X% which $XX increased a floating part basis on a their portfolio, Reserve $XXX well. basis as loan size which interest-earning rate is all deposits, on interest same billion. persistent more X.XX%, of to our margin. X X% to was terms environment. increases of an margin margin income balance improved and An rates the basis XX-year some been downward securities to between priced rate to Loan utilized to even X.XX% last period current bank of on increase higher the inverted by during the key and, mortgage-backed our only throughout on XX the continued of is lower-yielding flat points funding has net rates initiatives is with X quarterly points due frequency the million long-term by The the the expected years, but increase March funds rising to to the on both the rate

as high to new offering take Our lower leverage high securities loan balance and funds is the rates the of in wholesale limited cost margins. core the and at could or be ability of sheet advantage market

had includes Moving for months bank-owned $XX income points December net was in the the nonaccrual ratio economic ended for bank of charge-offs XXXX. no year. The increased during XX, from bank income XX, XXXX. December purchased XXXX, X and to attributable Noninterest The $XXX,XXX million life in we of on as of mostly had decrease the conditions was charges asset debit additional bank's increase basis September provision and current loans million points card credit to higher reserve September insurance fees approximately which on for The and activity and forecasted from $X.X a a had basis quality. XXXX, XX XX, XX, XXXX. charge-offs. September X $XXX,XXX and current the and net additional We coverage quarter,

due our our and optimization in offices branches. and End including to related costs new salary excluding and incentive costs earnings corporate release, and increase charges new to was expense, of the prior relocation hires East year As noted noninterest branch occupancy costs, higher the benefit in

our program million approximately at declaration a you. - XXX,XXX dividend X% we X.XX%. The XX, the XXXX, the to and - our approximately last for was strong quarter and fourth share, during the $XX.XX it quarter, quarter $XX quarter, we continue dividend of which Thank given we on shares year. third paid I addition, represents our the remaining on this we a During per $X.XX repurchased announced XX, leverage September same turn our in in operator October anticipate current authorization over The that, of out questions. paid back will With dividend ratio of have XXXX. in increase

today Alex, with question Samer. comes Alex first Piper for Twerdahl your Our questionX at from please proceed

Alex Twerdahl

Good Hi. afternoon.

Jay McConie

Good Alex. afternoon,

Alex Twerdahl

more bit could - just wondering, the was obviously, if in the looks. on expectations a just on maybe I interest sheet I'm color next you comments NIM environment, the expectations, quarters. a tough those for wondering give I could us your over little just and appreciate balance of how you overall rate couple how

you're see what basis? liquidity maybe So of And the in a about same little position from a securities bit shrinkage. a little kind bit on cash and flows we getting of then quarterly just the talk your portfolio context

Jay McConie

we to pay lending value might little wholesale in more flow market, I loan lines that to but continue DDA, our hired think, working use out probably bring build little environment. we're as in think have think a slightly even We're at prudent the the franchise teams down borrowings. cash core several and to relationships all we have with Alex, we as method flat to do. a and broker of growth sense probably because we for the not it the say, quarter, to than be higher, each coming still And to going Chris are in. going come this be Obviously, that pays over provide again, long credit I'd repricing But that those of and we've loan more really due cash more we're the a to allow during what quarters over teams. looking makes lower that be flows that next say, but might borrowings down, bit it's look that want to term a with to wholesale flow at to we that rates decreasing down some portfolio, cash bit

Alex Twerdahl

And then... it. Got

Jay McConie

a had flows? you on question then And cash

Alex Twerdahl

was I curious... Yes, just

Jay McConie

about Yes. The is portfolio, securities the bonds. XX% portfolio looking excluding of the probably corporate

reprices and probably of So out over between year because in securities then value, our value, again, in portfolio. if XX% matures look reinvested. to other that flows, coming our portfolio the we'll that flows use it's X% down to bonds our relationships until again, not the your key XX% XX-Q of either of coming security back in don't you book of XX% cash pay the meaning so and get mature flow in, then if at $XXX to that which value, probably fair XX%, they is to about or you for out next amount, flows million book probably XXXX. to with cash next about portfolio, then XX% be $XX our and the And our is cash back in - our mature million flows cash cash that And you're year. loan looking can And our bonds corporate grow And wholesale X% to that funding. - look reprice reprice

Alex Twerdahl

up Okay. as you've Or and And curious some you more just weeks. then everyone bring markets, are ramp that if you build certain pressure to market pockets seeing respect the of deposits, pressure over there's these couple last in if as obviously, costs. the pressure? relationships you're deposit - of even some deposit we're the that is you to more look seeing in core seen of I'm seeing with

Jay McConie

Yes.

a when I I X months. we're you like you But going scenario up an to going to basis to at year, most on first their by non-maturity where or get through forward, for we deposits, end XXX kind - on this is we're XX about And to up reacted think what have a of in they're at between think think right? will everything they it, giving of of back look kind XXX, points look XXX X up of in when at shock banks, type up it's that months. XXX basis, it guidance kind cumulative margin that level. probably be pressure the XXX looking increase is the Eventually, going

a bit And to see you're the starting into Fed we market think go in business to a they raise, have leaves you is municipal with deposits accounts treasury the don't and little level. much, gets and So bit that maybe pressure to little think continues of accelerate. to into duration to kind treasury ability as will And start to going X-year their seeing bit. that of customers more their market that, I the now XXX a with as so where more up lock X that kind money a months factor little funds your and see that

Alex Twerdahl

should seeing that head loan if comment real Okay. on And pressure credit. back down then maybe X credit. we us give Obviously, next expect you provision basically over pretty towards not on can some just But any couple to growth slows, the of quarters?

Jay McConie

Yes.

potentially kind I to declining trying Fed increase we drive inflation loan GDP obviously, rates see the and unemployment, of think Chris mentioned increasing future had is kind of adjustments down any to potential reserves unemployment conditions, with offsetting slow additional demand. and for economic growth down trying obviously for

modest, fairly if front. but provisioning again, forecast in results yes, that portfolio trends to the fairly loan forecasting in there's if -- But go be our really changes we stays economic think So we on that the there. something think flat, would unforeseen, portfolio the something unless unless

Alex Twerdahl

for final -- me. just remarks during missed just prepared question Could I third in on salaries the you then maybe with going quarter? your And what's Okay.

Jay McConie

Yes.

had of at we lot banks when the stems so branches their with and back QX from, year, and most of where really look of of end that more to of had going our QX, that, there up I'd minimum kind kind in of really the adjustments say, rates branches wage in from half a competition first into was throughout structure or forth. salary So

try in get our onetime a kind prevent that kind So competition was of line with adjustment wages to of turnover. to just to

Chris Becker

competitors to for of - purposes. we and for lot made on branch rates proactively certain pressure a retention adjustments positions from was There

Alex Twerdahl

Perfect.

point fourth the XX.X, seeing that only that's into heading starting the But for pressure. not one You're for right the quarter salaries?

Jay McConie

overall, Yeah. finalize efforts Chris updating of think our we're alluded some Alex, five for you look about as with and think I expense the would with when to, I it, branches. bit, our to quarter, fourth rebranding at would a being mean maybe little I trying really noninterest XX.X with

that right them. $XX haven't maintenance like a end flat we're And a to update now, our for had think inverted out bottom guidance quarter difficult through, XXXX little years, you we're doing I some million more we more even more kind fourth salaries expenses, maintain And branches bit curve, guidance. budgets of and of normal that's right a the But little onetime but and give on really our XXXX obviously, become we in with the of just expense. just We repairs of which in also that's preliminary critical bank inflation. updates the And going top just then going really does every think expense updating overall, updated when be bit for yield there other realize at to approach. we revisit to and would we'll of noninterest watch now, give and on a

Alex Twerdahl

Thanks, Alex.

Chris Becker

Alex. Thank,

Operator

Okay.

Chris of proceed Our question question. next please from KBW. with your comes Chris, O'Connell

Chris O'Connell

expenses. it Do of expect but over bit the course a Not I year? you to a year you see different first pretty to the this the would of average little in down follow past summer? up with quarter in have year just expense comments kind the there. that this uptick seasonality on on years, year, next of be usually wanted the Or good and

Jay McConie

and quarter-over-quarter be fairly so is we based true and like been get then hiring with to year the don't units, have in next going have - just know could I'm and trying it also if with incentive and you flat. been that cash accruals metrics sometimes both forth. come to coincidence stick taxes think with on was headcount payroll just performance the adjustments stock really of it timing up. teams I it might seasonality. think it to those I And some was are might sometimes restricted maybe But

So part, salary be the we kind should those think a that other year. fairly items for from it consistent most next of quarter-to-quarter than

Chris O'Connell

book back cash then book flows to securities use off Or those growth in that minimal use outlook. of forward Are off the flows Got in? be? with back Or do try on and expect guess Okay. of you to you go reinvest you the it. I expecting to those to pay that And fundings? kind of circling cash coming as what's some wholesale loan the going

Jay McConie

Yeah.

I think a combination. it's

customers rates rates are and asset reinvest years think - purchase what rates relationships side. we seen our our Our to the say higher XX we rates starting first prudent that thought of it's some and levels. request will also make rates. portion in these to we then wholesale, come the these thing is to of And don't right higher prudent we've quickly, of maintain when down, comes we is on some opportunity so the sure down, and best protect to build cash, going take maintain that but as to pay with now don't up down liquidity want up do those we missed and not liquidity we -- inflation the a think is want XX, we and anything in And it's to

everything away. yield down, goes to So cash MBS come also then those bucket. a those cash we're of portion we MBSs eventually in is. little because treasuries a lock the flows CMOs maybe when to and to CMOs X- be and come and We're streaming some on in deploying like rates in X-year that hesitant will looking take flows And

funds, people cost to like and and monitoring so cash having available. yield. in also bit lock a little we're mindful we higher being of our wholesale that liquidity of So paying at higher our that demanding of But

Chris Becker

and increasing. going this rates know really to environment the is driven. think high And Fed I'd we are long it's going be tremendously. be We how obviously, going wholesale like to And deposit how to the that don't in add, up

right while driven. said, we yields important Jay deposit think really of take now, core to advantage like as to So would higher these we be it's security

Chris O'Connell

pressure to - to being forward, going does then NIM decline be some that kind that flat does I Yes. mean, allow you on going you guess, But pressure given the -- of that's sheet certain terms for limit, fairly of allow XXXX you with what that balance there's to have I I in And here. NII hear you're of like you over or NIM NII declining as how do the a to going much get half outlook shooting the to into extent, and be the first any year? as

Jay McConie

give we X/XX Chris, would rates to, especially NII, the where mean with guidance rate of the if and net in don't I on you I quickly June analysis. XX-Q, tables you point are XX-Q XX in our years. our XX the interest at environment shock moving look last what various is obviously, so our But kind

XXX kind from, up the and at You they'll you'll Again, XXX of a plus the you we've where come of there up. for look kind and can in forth. plus XXX, see We've kind decline look knowing give of already so percentages shock those, in a and and right. NII at a that's

other April As into Chris the long think remains again, steepness is that, the this the be curve. dramatically, hearing going the pause of and could they're little in they've said by place we of higher. that the cut. of as to things towards said, have end the end bit may We're is how it yield seeing to factor We're some - a acute drop saying or of going go the up economists of cycle economists say year, rate QX. Fed lot inversion And a little to more a

NII. So could dipping we're But lease. change factors of magnitude the those

we're So that's why cautious. being

Chris Becker

But we the downside. it will think that do minimize

spread loan where wholesale put If and very because increases it and now, loans really even is can to not have investment you fully really yet. money think securities the the The reacted in you yields about rate put borrowing X%, or of would and margin. further or to would at on XXX to pressure minimal or margin. the If on on and pressure X.XX were the we X% funds and put investment borrow that further those X.XX% costs

by best flow, due And to those excess help to of at react may cash be preserve that course, down. if goes things if opportunity think better will change. is those wholesale we the We do the every time. So borrowings pay that that the it come quarter we we margin every option think by month goes as have as what

Chris O'Connell

That's color going And one forward? rate helpful. me is good and what's - good tax for Yes. a just last for then

Jay McConie

the would of a - I year. for be year XX.X rate the about for full remainder say would a good

Chris O'Connell

All right. what And Got it. going into just about XXXX? forward

Jay McConie

I be XXXX, And to around goes rate. don't over XX is $X would tax say coming expect with really right in billion. REIT from exclusion would obviously, been probably a Congress out that's any good changes XX.X -- nothing we there's away. because rates. applicable our federal still That tax

So it would keep we XX%. right around

Chris O'Connell

Thanks for questions. Great. my taking

Chris Becker

Thanks, Chris.

Operator

final Thank comments question-and-answer to you. the turn session. This floor Becker some concludes back I'll for Chris our closing

Chris Becker

Thank good next you you Have the participation and results on quarter talking results We're about year-end solid to some initiatives, to attention present to another day. with on a of very our today's of pleased quarter. you call. - we key the of rest update our look and for the your forward and

The First of Long Island Corporation (FLIC) 28 Oct 222022 Q3 Earnings call transcript