Earnings call transcript Q1 2023

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Operator

Welcome to the First of Long Island Corporation's First Quarter 2023 Earnings Conference Call.

On the call today are Chris Becker, President and Chief Executive Officer and Jay McConie, Chief Financial Officer.

Today's call is being recorded. A copy of the earnings release is available on the corporation's website at fnbli.com and on the earnings call web page at https://www.cstproxy.com/fnbli/earnings/2023/q1.

Before we begin, the company would like to remind everyone that, this call 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. statements. March materially implied factors Investors cause that refer on actual XXXX from a or for results XX-K our also XXXX such list differ those could by indicated should filed to to XXth, of risk

would turn Chris I to Becker. to like floor over now the

Chris Becker

you. to Thank for the of Long XXXX. Good quarter first call earnings First afternoon. And welcome Island the of Corporation's

mentioned As XX treasury driven zero, short-term and respectively, over XX-year be remarks, to most has Annual recent challenging. X.XX% X% the the the past treasury After Fed X yields yields and and are Meeting X averaging while of our and near of in a X.XX% rates XXXX rates proving XX-year my mid-Xs. Stockholders, to year is decade months, in up at short-term

at small the community concerns point respond basis not to The big well interest-bearing margins of failures do generally XXX regional shock bank and curve recent banks inversions. a over and yield Add cost expectations. rate of and and XX, is margin liquidity liabilities to is escalating XXXX. rapidly backdrop, generally With beyond I that, customers March compression we have ample and have analyst our that report pleased am remained loyal

with betas deposits total reduction. cumulative Fed year Historically deposit still in plus are All betas, only billion that, were increase billion. interest quarter and XX%. million XX% in we Checking savings Throughout is in minimal the averaging money to rates, market on we to look the we When CDs. maintain in quarter, we to any increases at during change end able the at a deposits minus betas of that deposit non-maturity held funds. represent are the bearing in billion rising and and deposits steady deposit numbers our deposits with turmoil change been in the of total deposits, deposits internally, or from $XX compared line broker deposit $X.X and proud have XXXX have focused ranging $X.X without first levels cumulative, total now cumulative these $X.XX

Through these betas XX%. the the approximately be rate are One we of end are interpretation higher. the could first end the deposit quarter, in nearing repricing cycle deposits of current

point with does rate include our XX consecutive historical basis basis deposit betas four XXX near However, tracking moves. a XX over not of months point increase

be As in historical the deposits cycle. total confident a we current XXst, on could betas The and rate our of deposits easily uninsured Banks's, of exceed were XX%. result, cannot XX% deposit uncollateralized totally rate March XXXX. that betas this deposit hold pace increases, at Based will current

accounts to Our uninsured uninsured that levels working years. deposit our of consistent in Many trending operate of uncollateralized peers from have ratios the than and need couple their market operate $XXX,XXX meet with and greater have uncollateralized similar been past mainly amounts lower businesses that deposits, payroll. in and and over

a business, their distinction concentrations to dollars takes private in versus million a startups. like We that relationship-oriented customers a large ours funds a few business between clear equity being believe with operate for there's earmarked commercial bank needing bank of

monthly short March. Recent due January, in XXX be month. in February, XXX in to to continues margin interest XXX net impacted numbers margins are December, the XXX have monthly in been the by always Our current February's environment. lower and

about talking of still higher Fed rates short-term our rates the an the extended period. possibility and remaining for With high

assets average through on of outpace earning to increases the yield of any XXXX. cost Our continue remainder funds the should in

year. interest income specifics of decrease of Although, the in some the slow the could Jay through net that will take the pace remainder you throughout

related was pipeline this million commercial during year XXst, lending loan is skewed the our and Loan and towards March $XX relationship focus was demand first XXXX. deposits. at quarter, weaker Our

C&I to plus side is they after rates as to loans immediately Borrowing on to enticing X% X% during quarter have the fall. utilization, to the especially the The interest at related customers operate commercial put at line refinance us, their when rates on business. X.X% will in or reduction lower just in was residential reacted residential they overly higher way not mortgages to

have with in the increased opportunities disruption New market. the recent

be Island, with XX, credit March again Long non-accruals expected zero from As quality XXXX. to on at excellent First of continues

McConie Jay you take quarter Jay? results. will now first through the

Jay McConie

Chris. you, Thank

XXXX, help a proactively bank us rates. the period reposition fixed million entered balance three mortgage rate remains first rate interest March our reduce during of to bank an to sensitive floating at management While sheet sensitivity the completed In March, $XXX transactions convert of for into two liability swap to interest residential loans rate XX, to the quarter years. rising

rate based purchased floating sold on earning immediately securities the was projected SBA income transaction bank rate if rate annual rate. a overnight equivalent million in receive yield remain a The and a will $X.X yield to $XXX tax municipal accretive pay time The SOFR rate unchanged. at of purchase. of fixed interest by floating approximately This million of fixed also million bank X.XX% to of X.XX% rates $XXX securities the X.XX% and

transaction annual earned recognized back expects the bank years. be million by immediately $X.X also income a million. interest $X.X noted, This loss approximately X.X agreed As and was the to pre-tax to

income were pace results reflect benefit net the of in slow to of a and interest increase transactions since first these decline presently full will they margin end quarter's the do quarter. These transactions of The income. not executed the close interest quarter and help

March security XX, at repositioned XXXX. net term loans margin repricing repricing million to assets or security the Bank nearly or income catch in the and reduces time transactions one total the to for will securities and to up liability within quarter in and during and Reserve interest rates. decline rate results swaps take interest of doubling Reversing year, loans Federal The until repricing and $XXX short XX%

portfolio of of that million current Approximately month quarterly years. the of securities end of and the SBA Bank has the XX% the the comprised rate as invest XX% quarterly of rate. that That and of million at X.XX% the of the of bank the swap the yield XX-year of $XXX of off comprised X.X of portfolio. the was bonds end approximately a bank $XXX investment XX% in quarter. rates floating approximately floating corporate assets million portfolio assets. reprice current the rate also primary has securities portfolio is X.XX% re-priced The has with in yield float total represent with The $XXX duration

portfolio, in approximately securities rate portfolio has $XXX of portfolio. the mortgage that was remaining comprised eventually a from and exempt and rates yielding CMOs million XX% cash when portfolio flows agency X.XX%. including of of the fixed X.XX%. XXXX mortgage yield bonds will yield million The that government investment investment securities the of expects tax XX% some agency $XX to current Banks currently approximately bank municipal security This lockout decline. in protection is look them in provide reinvest higher The invested portfolio

such loans. billion $XXX billion of million million portfolios which monthly estate loans. in and as Approximately or that loans of related $X.X by reprice XXXX home industrial in million $XXX basis $X.X equity interest reprice $XXX loans, Our real the XX, $XXX transaction swap on loan will rate and residential and to million previously a and C&I XX% in commercial $X.X is March discussed, mortgages comprised commercial billion

We cash expect approximately of quarter. portfolio million $XX per the loan from flows

rates. X.XX% of loan to reprised of from March at Federal Loan quarter. remaining The of X.X to bank The is from bank approximately average The advance XXXX million X% bank expects Home weighted with X.XX% has XX, current XXXX, $XXX in with the the maturity a an market for end additional XXXX. in current on $XX of portfolio average Bank $XXX June and cost advances the cost March the had XX, and million X.XX% X.XX% of mature on or mature an will XX, million outstanding XXXX of years funds based one

$XXX has maturity XX% mature will a in average total XXXX. or current market second Home months. advances XXst. on for rate deposits cost reinvestment decreased is average Federal quarter. six is during of million Bank Federal average and deposit or X.XX% of quarter Bank X.XX%. deposits of have of an Bank with X% $XX broker cost million both approximately advances X.XX%. That The and X% time year-end deposits as same Loan that time currently Loan $XX broker to The the XXXX weighted totaled The Home million the the the number March funds time between broker of

a the by that borrowings, advances significant our to will end the reprice and meaning broker deposits markets time wholesale Home Bank by current rates Federal QX expect of of XXXX. current We Loan portion

collateralized available in billion $X.X Federal Bank over maintains Bank Federal the liquidity, Bank. to Reserve Loan regard With Home borrowing, and

in $X.X billion be bank available that cash the million unencumbered XXst. and in and March uncollateralized at pledged. had In deposits Bank addition, held uninsured the over securities exceeds This the $XXX liquidity to

income The caused $X.X the in million Bank were securities income for $X.XX had Bank quarter per a respectively. income same $X.X earnings to share assets key net of $X.XX of of XXXX. per $X.XX the XXXX, compared and million to million $XX.X $X.X return of for of of first share net or on drivers were on that decline and million. loss equity decrease The net and in and $X.XX interest sale period the

basis a a to points decline decrease tax years. interest currently over a was three expense the in of the The Reserve between ten provision XXX losses were rates $X.X increase million points, curve. for $X.X by $X.X items by bonds These the income spread of in XX decline the basis the U.S. two over over in in Federal million. Bank inversion month of million seen inverted yield of not short-term level partially credit income in net The offset XXX and and due is year

assets. prior cost income. was to The the increases increase interest a $X and compared funding on our earning $X.X magnitude deposits pace year faster and a increased than increase expense in of quarter pace to rate partially only these at million caused our the million Bank of yields interest the offset when interest has wholesale of by

cost increased yield the in Our liabilities an while basis our bearing on points. current increase earning X.XX% quarter, basis to XXX points, interest increased assets of XX interest of

consistent an of rate expense attributable expense with The excluding Also rent This first corporate with the quarter, due an first million. from last was was $X.X primarily higher income during expense increase of increase was expectations continue facility loss non-interest throughout Bank's higher insurance $XXX,XXX to million the and to securities quarterly rates. assessment Bank's sales Bank's on run was year. result expectations, The related FDIC the to non-interest in and increase the quarter headquarters $XX.X XXXX. this should consistent

be expense the non-interest to $XX per million million of expect the $XX.X for remainder to We XXXX. quarter

we'll and every keep the lower environment, Management is this of end effort current make mindful expenses in very towards of the XXXX. during the range run rate to

Our future at of capital position or laws an comprehensive remains did based approved strong end under X.XX XX.XX stock with not any authorized of X.X% the still and $X.X shares Cumulated December March XXst, XXXX, XXXX. most the shareholder repurchase maximizing at purchase increase we of other XX ratio We million approximately XXXX. first quarter the year tax plan. during value. XXst, The by Board improved since million be on of and will bank leverage decided and XXXX, have repurchases recent

of percentage XX.X% municipal due the XX%. bank's life to decline derived X.X% quarter estate in rate effective mainly between of quarter compared XX% pre-tax in to rate owned our be securities to to first investment the for the ‘XX The in from to We tax increase declined and trust, anticipate bank effective is insurance. portfolio, The the from tax XXXX income rate XXXX. bank's real an the first of tax when

our With turn back operator it that, questions. I’ll to for

Operator

comes first from please your question question. with of for Sandler. Twerdahl Piper Our today proceed Alex, Alex

Alex Twerdahl

Good guys. afternoon,

some prepared be little remarks, about opportunities I that could might bit First off, presenting more? themselves. that just you in your comment was Chris, commented hoping expand a on you

Chris Becker

tracking have brought they're mean, in Republic of I opportunities them, from new approximately loans and lines been $XX credit specifically, don't such the Signature have credits, we've loan Bank million side deposits I for First we side. new bank. on in looking a quantifiable and and the numbers on term we've that

that. So, but total I on numbers don't have

Alex Twerdahl

would And looking say you're talking a above? customers, for all officers the Okay. bank, new of you loan

Chris Becker

customers. both to and talking are We people

Alex Twerdahl

went through of lot and repricing very next the statistics months. the of assets Okay. And over you XX liabilities on helpful Jay, a

that I look liabilities, it the NIM. but to continue really from fast the a details, went boil So, to then to of certainly and help think what the as wholesale kind for all bit You when XXX transaction safe from boiling XXX, during transcript NIM basis to it near-term assume here, little about, down especially outlook and reprice was going really the pressure just the swap think de-leveraging in you I'm XX plus back the March Is you going can down second to starting it is points stuff it from of and sort it quarter? the quarter? to the point the is at those the continues the like re sounded the close about for us expectation to was

Jay McConie

the little SBA I with Yes, that, quarter bit like you look $X.X probably when we second then wholesale wholesale, go interest I brokerages, run repriced a million, your rates to I for the that the we in right, two floating Loan obviously I the the $X.X Federal up, QX. talked what provide market rates right so read more the stay most think pretty transactions. like full the Bank when flat, you're mean, Home when it'd mean, those much rate it's at And there. and by reflected kind said, about end to the will the about tried on quarter it's the of a and transcript, feel repriced, part for income million of you I swap you be be the with if because

got X.X little Obviously, the behind could and big trend X occurred rates the go if higher, has to up, stop kind kind us. of of they that but repricing from continue of a to increase bulk bit

your point, treasuries on that market deposits relationship. non-maturity are you points it's per to where that it money of the basis leaves in to XX X%, we're and a doing in when the funds. And customer deposits with by So customers then customer kind mutual just demands coming have are

but and currently kind on providing just guidance We on steady time. our of that. each see and project out, it we're of take basis we not cost can comfortable a increase funds You track daily it further

Fed we just that it's for they're little PCE came one, going is done maybe out feel while higher rates, May pause June. talking the with potentially so does So already take to a or the just when

of Not the one do the And curve. have do of is help the things have So talking other of one could two? to we but or one And inversion, we alleviate. about the lot we a people plenty yield capital.

curve, do sheet. is rate with that Margin compression But is leveraging or up actually it you're borrowing makes the very, balance that because to very yield at an anything difficult inverted it same against either lower. the

to to at can see did closer kind kind closer So, do, and bunch a singles, of to we continue going of our look we repositionings there's investment quarter each we're of at those if look things anything so and of kind of quarter, portfolio market get quarter rates to forth. small each this

go think inning if that that rates down to ability or the start that but have of eighth kind we of the help in to assets, ninth still floating We we're hurt. do so more rate kind that'll

little bit a and than sensitive So more get liability to a less neutral. closer we're be trying little

agree So, kind a have forecast do additive XXX, but put you wholesale very then of to with just we're to where seeing little hard on with going out kind and those non-maturity end. where then said you I of the back it's you and to again the bit it's what

Chris Becker

cost remarks, my to earning in I compression. funds on Alex, further to which I in going do that And stated outpace feel some of would as mean, increase to the our continue lead the assets, yield we is

Jay McConie

literally the the range forward the XXX, we to because XX but and steepen to books. take slightly like on need yield because with come you. of more we and is are And eventually to end about be penalties residential And the need it's yielding of six on the MBS that Chris always prepayment also that commercial here have we will pipeline assets up. the and said, the take that CMOs loans end and the just realize investments business like focus do short kind bit, have lockout a come get to we have understand we're pipeline also right from cash on We that whether trying do residential lockout down curve X.X%, see X% realize once also we no, from versus would we portfolio, advantage the months want know or to -- that know million $XX months I getting in type flow refinance that are down, going we that more year, some hopefully of talked assets higher we the X% end that does that flat Alex, it rates away that yielding think down to because and little our

we're on business. So, commercial the focused

Alex Twerdahl

Yes.

really all that’s Okay, helpful.

create has Would on don't say Signature in Now, thrived button back, investors. mentioned, Republic. additional stuff First when you word, subjects become you're side the right hot been see I of Long you City on other opportunities and city opportunities more guys? Chris say First a guys. little you a Any but or very, because Island, banks to created it's necessarily Are in for than have are New clean very banks pull to bit starting the from side historically real in credit multifamily and opportunities specific other it's for want the not any other commercial categories the certain to York you pullback estate that

Chris Becker

because sometimes the unfortunately, work numbers the of sometimes rates the and they But us don't for opportunities. for seeing borrowers. aren’t We don't work

institution. up coming on So us have outstanding a they pay to reset, balance their might to current down because another with are if they with refinance

underwriting very are, are to careful. So a sticking and criteria But who of we we staying looking opportunities. being lot true our at to are we

things even at us. the Because is affecting So making not and are -- pipeline are pipeline. we are obviously though them, that different the at they looking looking two them for

Alex Twerdahl

taking for you my questions. Thank Understood.

Operator

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

Chris O'Connell

afternoon. factors the A the the of follow-up driving Good that discussion. bit are margin understand a I pressure. on

late XQ quarter greater Given repricing, the on the of in will in and the wholesale of the basis? timing you margin the a that third quarter-over-quarter of transaction quarter in timing do be compression expect some the or the

Jay McConie

kind I our have guidance and stuff think let's of And give market. market, to we actual think, Chris at X.XX%. logically, the we I saying it, not there repriced that’s going like but it on some to be wholesale repriced we stuff said, call do I'm on when I'm have then as that might X.XX%

So I'm kind saying to X.XX% of the it of that by QX, X% repriced has call the range. end everything to

So higher that full cost. of rate at will you QX, in run have kind a wholesale of

should And you you the you focus think that, on have or then would start things slow you non-maturity Two that think of down DDA, to the thing and your any because at have is current is my that now it to X.XX% really six kind start only deposits and X% to happen is weeks market, X% X.XX%. that, run in from rate. in to would

point think kind go bad thought reports we and and pause beginning when this June see Fed a XXth. couple going to XXX going they've of I inflation continue starting of we increase we're by all is to a maybe started got to year, be year basis this at was and the to of that we

the X.XX%, and comes going in curve. XX to of that a it X-year end yield X.X% the X% and short up year steady again, locked by The And at range. steepness keeps

we trying the X.X% through loans So out at can with the guidance the are securities that state. And X% there are of go X.X% the should so I Fed I prudent to cautious And in. hopes a it Fed. that banks growth while and to back strategy a that that to any rates very where get or some of kind kind so been first at quarters, would point. that borrowings to two of start grow agree something why kind this, locked taking has they hopefully a it of kind steepen high And on the done that's we we lot kind balance putting that's of wholesale with provide slowly in or of to mean, have level hard gets in. it's and but just you with as think there then dissipate guidance, have

Chris O'Connell

your you of planning kind the cash of cash XXXX. for And there's the do prepared or that, flows keep and you of $XX million it. funding’s the those said Did the of cost remarks, Got balance sheet you were in let I plan think securities those-kind remainder say you off roll higher reinvest flows help lower? to about to

Jay McConie

Yes.

we into I those to try going invest think we're I manage both. to ads. try mean, to

hopefully kind more definitely it's the decline on and maybe Banks has then or And rates. I inevitable rates, could Federal raise trying our pay it's down quarter That first gives especially out, can, anywhere stuff down key for lines. keeping that think half the us to we and things focus. was but interest protection. calm clearly to of I really to Hopefully at first cash try that that lockout think the Home three-year was again, have put increase we after the get liquidity, we the two, in second QX that assets Loan half as bouncing on higher

costs higher assets put also can that fact the not cut, kind be funding on getting just So, locked margin. it's that that's It's of increasing in. yielding we

of bouncing kind that. So

growth. more So I start you'd little think would a slight flat bit asset to or see

Chris O'Connell

utilizing as flattish to here. And mean, pretty is going far it. kind go be like It Got buyback purchases as basis, about you robust of I from sounds fairly levels to sheet up. here? are forward balance guys the Yes. guys How share thinking slightly are have you capital growth

Chris Becker

Yes.

think decision know, value. to made the and we're really in the and any what if be that quite going been or share the repurchases based is we frankly, given anything really shareholder in maximize hasn't as share quarter company do we're as you to first yet. not it's going to second didn't do far for opportunity not on repurchases quarter to best going as guidance, have we We're So and

Chris O'Connell

as far Okay. Got normalize rate that as it. -- the being off expense then growth things does guidance. been are and does Or efficiencies that XXXX? that expense goes growth some run guys put yet low go haven't opportunities the we Does increase you explored delayed go or we into into of or year? keep And kind as think that's drive still fairly helpful and do there's as to next

Chris Becker

as maintained levels Well, you our generally low branch branch and efficiency staffing, control. always cut optimization, of ratio expense fairly staffing a have we've with know as had of We high fact, don't have matter levels. we've a

can wherever it we're off do but looking some expenses, but a the long normal we're at a for But operating putting there do being this of possibly term, So we're certain I mindful are things we're we could I the that at for level out mindful bank one managing to to just the you lower level say mean, squeeze being you expenses efficiency. won't off, go following year wouldn't level and year. year. obviously back the we're I say putting

stay So, particular the think do than Jay towards quarter. that XX.X that number. run could end, little guidance. a in And a gave possibly lower better we We

good past. loan the business. in opportunities that people, come as those looking that by people Alex -- There opportunities. as staffing, We'll at we questions us take or they in to to there's deposits for have are there's if on going are about it opportunities depends bring we that of So was some if for generate earlier

moving it's of be to going be here, those are things going always you some say So -- can't pieces. there's exactly, there because it's to

Chris O'Connell

of lower year. the do to back one And does we on that go you of factors as year? bit? those Great. that that kind think hold XX%, last of factors some and driving that pull of for next considerably to Can start range are the a me tick some this rate, will up XX% the tax and Or into

Chris Becker

kind margin just slowly Yes, and we through to steepens you revert of of rate hopefully and no, curve start this pickup, Alex. and the it XX%, feel see to it's will it back increase yield pauses up as get that temporary, kind

We all the REIT. have our the obviously a deposit have the on on most loans are loans books. costs books of in do bank's We the and REIT, bank's

what tax interest up, State. REIT, basically on the income the to REIT bank, deductible goes there's the as from So happens the for less on more New and is dividend the expense income bank York

don't really benefit you that's recognize why smaller, only, so bank the consolidated much. there's is a it's a is percentage that bigger because So and declined

now. work tax we XX% with we to out, XX% with do as So, banks kind full stay of and goes always a or the be projections we up, projection going we'll tax consultant, where reprice as And that based at, we're them and our funds the gradual on I kind right adjust adjust mark see of would for we adjusted, just you'll But cost year. would up. a assets I it tick do think our on down pick guidance you. as that a But keep and

Chris O'Connell

Okay, great…

Jay McConie

I say, would where goes. fed the

Chris Becker

obviously, the fed goes. where Yes,

Chris O'Connell

my got Thanks for thanks questions. and all Yes, it. taking detail for the

Operator

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

Chris Becker

on call. the your and participation Yes. attention Thank you today for

performance remain XXXX averages, historical measure not up to our loyal. will While deposit based our metrics

next company ample, this of bank long-term We We good is team the forward hallmark always a you to have current for quarter. remains day. our and strong asset decisions management of the a proactively talking to success. Have to quality, look the making position rest

The First of Long Island Corporation (FLIC) 28 Apr 232023 Q1 Earnings call transcript