Earnings call transcript Q2 2023

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Operator

Welcome to the First of Long Island Corporation Second 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 web call page https://www.cstproxy.com/fnbli/earnings/2023/Q2.

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 US Private Securities Litigation Reform Act of 1995. as to results and those US to any statements, subject may factors contained Securities are the such actual in cause differ including and statements Exchange risks, with other uncertainties that in company's Commission. Such filings forth the set materially from

on XX-Q should quarter for Investors filed ended refer as XXXX, March our to Xth, also XXXX. the supplemented XX-K XXst, XXXX March by our

indicated risk of differ factors that implied actual cause statements. to those list could materially results from a or such by For

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

Chris Becker

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

increased the total XXXX. end of when As of first the the that settled the second to assets, quarter down, volatility of in and I'm quarter to the loans first report all comparing pleased total end the quarter deposits total

avoid year-end and million Most has allowed franchise only important, our deposit to $XX more remained strong. were XXXX, which deposits. levels adding Deposit costly below has us broker borrowings

Regulators growth through have broker funding loan continually channels. found on generally

we has Our which that formula, strength speaks franchise. to to the avoid model allowed of us our business believe

While some such teams short-term that options, been to customers money banking replace relationship-based our funding have able to new deposits. higher-yielding have with treasuries, as moved

manage market We we we our three and to quarter, optimizing for our our deposit second long-term our in Center remain branches. improving With in our key a relocation mix, the as focused success. celebrated on balance of gathering branch enhancing Rockville sheet strategic of initiatives legacy technology network mind, added and the team that

branches of since in resulted has relocation closing XXXX others. the and plan XX of four optimization branch Our the

roll see efficiencies branches business our team the upgrades current systems. to will to business new also expansion, back branch we branches banking, number the rapid from In online mobile our significant locations with right of decade app. right the a and right the plan is office October, including management out in getting new people. a After of And

loan $XX was market. $XXX at the from reflects million increase the from reported end the million quarter disruption opportunities pipeline that of an in recent commercial Our last the second quarter, new

pipeline have of X%. not borrowings passed deals spread we an did over CRE new that offer higher, cost acceptable at could Our on the be but several over

is needs Our the lending our pursuing focus with relationships commercial meeting deposits current relationships and of new attached.

note earnings release average a million amount rate $XX during originating just the quarter-end. outstanding X% to of under Please loans weighted Our that refers at of the second with is quarter.

certain drawn number fact the million were is all-in Given that rate average at for quarter the fully originations gross higher. lines are Total with X.XX%. quarter-end, the originations of $XXX not that weighted a were

again First LI, Bank second of from quality zero excellent, at be end continues at expected, National with quarter. to As credit the nonaccruals the

the now quarter. for financial will McConie results our discuss Jay Jay?

Jay McConie

Thank Chris. Good you, everyone. afternoon,

the a completed rising for The residential the $XXX transaction of repositioning that overnight fixed quarter, of help last bank a two transactions rate. SOFR rate to sheet To the a rate pays years. loans receives fixed first March position bank reduce two balance purpose was to bank's discussed liability-sensitive transactions in the recap, a As of briefly rates. XXXX. swap rate and interest rate floating of period to million floating converted on based a three rate mortgage The X.XX% was

the securities, of of X.XX tax earning and projected equivalent municipal over rate in the $XXX million QX purchased our second of approximately by yield transaction, margin bank transaction increase $XXX sold bonds. fixed SBA a X.XX% with XXXX. This life rate income helped the additional basis provided $XXX,XXX In an of floating securities, approximately of a and in seven yield interest the points million

June the interest second $XXX,XXX the total, quarter million two first of approximately by transactions quarter income XXXX. improved in securities increased quarter to also XXXX. of and $XXX these when In assets two by to the or million loans transaction one on in within This second XXXX. XX% transactions year total of increased that the compared amount of XXth, reprice $X.X securities These income

approximately the annualized which will Quarterly million from market securities in anticipate next inflows new loan XX over at quarterly total portfolios, mortgage both We on cash of assets and into assets approximately represents rates the $XX be also inflows cash current months. reinvested an X% basis.

government the purchased securities yields some with higher approximately in of quarter. during to protection $XX yield add million several X.XX% will the over second The lock and with rate various average an agency continue Management next quarters. bank securities

interest basis the slow slowed decline to XXXX points through rates into continue quarter the second will net early margin margin proactive decline second pace in from the the short-term have points of taken of potentially These the basis and yield quarter. the by serve XX in in largely first steps unless reduces management begins half XX to steepen the XXXX and Federal again. curve pace, By

balance the deposits interest-bearing billion remained have very of $X.X demand $XXX total stable XXXX. to mix sheet, approximately at On with The has deposits as higher customers changed seek moving in the side noninterest-bearing from deposits of deposits approximately funding million rates.

quarter XXXX, the rising This rate cumulative on our basis beta historical close non-maturity XX% approximately of by XXXX. funding cost interest-bearing on points deposits in to which deposits second The to of X.XX% to XX, Bank's to June the compared is XXX XXXX was average shift quarter of environment. average the deposit through fourth when increased a

Federal could could over of years, XXXX hikes has this in rate indicated screaming rate been However, the XX in cycle, well seen and given additional size XXXX. especially rate has increases that since rising that and the elevated deposit not both be bases into our pace be there higher in the Reserve fact

or and months. of average average of total The maturity deposits, $XXX of X.XX% assets June XX% funds brokered an weighted including wholesale nine funding, was million at Bank's a XXth cost of total at had

of $XXX over million. funds In cost months addition, time average has XX $X.XX mature in of an million the bank next that retail deposits the with

in could result matures, this additional cost As of categories. these pressure upward funding it some each in

uninsured bank ample have total The borrowing XX% Federal and were of liquidity. as $X.X with XXst, XXth, New We June Bank deposits maintained the to collateralized and percentage bank's same York Federal continues the lines deposits on billion XXXX. Home Reserve the in on March Bank. uncollateralized of The

cash securities. We in $XXX have million and unencumbered also

approximately points the or for $X.XX the per total, of on same In have XXXX in and per XXXX. which share income deposits. $X.X compared available of The net of and had share basis quarter X.XX% million liquidity, uninsured we uncollateralized billion our respectively. assets Bank's to earnings of $XX.X XX period $X.XX equity and is of and were $X.X million well for bank excess return second

the net inversion by continues has Reserve's between points bond basis Federal spread monetary the caused partially curve. the income The be expense in compared and by US cause is income. million interest to XXXX, further XXX was increased in increase aggressive quarter rates to decline the offset interest basis $X.X same to by three-month million $XX.X by yield and of Bank's The short-term points. increased last quarter currently when inverted only XXX the a interest second of which policy, approximately XX-year and year

quarter, noninterest the when income run was expense rate The was current second and flat both quarterly consistent prior Bank's continue compared during The expectations. the noninterest XXXX. throughout was should which to quarter with $XX.X linked million million, $X.X bank's year

the Management near expense remainder of it in is Bank's environment given effort keep current every is prior very the up June to to level remain We expect the of year. mindful control expense rate XXXX, run XXXX. and was current forward. the XXth, decreasing six the or we making noninterest ended as XX.X% XX.X% from the steady move efficiency for ratio for months

mostly X is attributable assets months for respectively. in net XXXX, flat ended and ratio income. expense of The fairly X.XX and at interest average noninterest June XX, total the increase a This Bank's decline to X.XX to XXXX, remain

basis XXXX, Our ratio with repurchase of capital the XXXX. strong on of points second on shares increase XX, not XX, March June position Bank a from quarter did XX.XX% X.XX% remains any during XXXX. an of XX leverage

approximately Board repurchase -- under recent approved authorized most $XX the still have have We stock million plan. we

-- quarterly on the of June to XX to its maximize management repurchases XXXX XXXX. and $X.XX opportunity declared dividends dividend Bank -- value. June best cash to The on and evaluate provide shareholders to continue of Board XX shareholder XX, the

of rate the tax the income anticipate second of our to from in XX% real trust increase effective and XXXX pre-tax to XX%. of decline percentage from between quarter bank's XXXX. investment in insurance. derived life an in to mainly The for quarter the second XX.XX% be XX.X% estate the tax effective XXXX the to Bank's We bank-owned The rate in due tax decreased rate is

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

Operator

Thank you.

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

Alexander Twerdahl

Good afternoon, guys.

Chris Becker

Hi, Alex.

Jay McConie

Alex. Hi,

Alexander Twerdahl

quarter. the us is, and give out month had the I quarter, figure this more if And sort NIM that trajectory were by quarter Hey, I And wondering of for not stabilization exit to think, is, last and you maybe, whether to I handy. Jay, or some really trying year. the there you guess, the the later to of NIM come I'm decline was able what this

Jay McConie

Yes.

basis, June bit was the a -- May and monthly little extra the XXX, a For XXX on XXX. was April maybe day. higher was of because

on margin a XX You bit little get days. higher

Alexander Twerdahl

about the I of I what -- or is to could for shake kind going quarters the And of out. NIM as think try couple guess Okay. to next figure be

what's paying, guys exit exit, I rates the terms Are of the that similar that in to for categories for much two Just from guess, guess sheet? in the average And the I average break rate out rates the you're higher? quarter balance the quarter? the they deposit mean, I are you

Jay McConie

XX at significantly increase the very in It of when the at way, pace and about slowed quarter. was monthly it On with bit nonmaturity basis say this funding I'd seven deposit And points. we're on July, mean down points I you basis it, sheet, to NIM nonmaturity look the for basis XX Alex. on XX little points on in of average this basis quarter. balance has happy was I pace a probably We're average, deposits higher. QX, about, contraction this look QX

it with. a to the cautious there's trying we So if guidance -- higher where They're to be because we're about near a a significant be be staying rate very today, end, that longer, be XX-XX of is but this obviously, nonmaturity really tackle -- hikes of in providing we've we're slowdown going work was cycle, in the for increase had don't just know it at seen yesterday. seems assuming a rate which there's the the just increase, end inflation. we definitely some deposits Fed done rate the to just happy seems and additional But to for markets push to just print it chance and to inflation good kind we're of still

Alexander Twerdahl

demand loan growth. maybe, bit can looks pipeline more of Understood. at of I And the the in for sort amount I a decent that's the question. how seeing player the -- out least like sort you to for the there, then guess, It impacted that's you're a the little would first increase pipeline the a Chris, complexion, into And just what sort relative sort changed away, us what of be just outlook there's market, of did guess, obviously, you? end the anything's then on the the quarter third of actually end sort March. of the of gone give big if of of part

like there. a that that's overall but yield, mix surprised in the of came just little, I pipeline little down a function shift if a look of to wondering see guess, I'm Just it

Chris Becker

Yes.

is from from the the as the opportunities said, a that's have market. come that little in So pipeline the additional disruption -- bit, I some up and

to we're that. So see pleased

I you at little know unfunded rate how a higher higher lines what closer And funded, generally our the closings but what some quarter, $XX look that is funded. release of upcoming credit were if historically. was for the in we unfunded. a that when million than that to we And that and that's look are -- as the pipeline, I gave than carry are it's said, lines much actual of we have last $XXX pipeline, month million. mortgages that's were those again, Now and at kind quarter's when our pipeline, of the you tracks closed a

So that's a bit why that raise little higher.

but outstanding. as far might that's fully is that drawn plus X% as prime at are your around not So outstanding, -- outstands because that fully fully aren't or are all be lines mortgages prime

north whole So is our little But the average It's -- like, about discrepancy rate originations, year it's there on weighted a growth at is there. those looking X.X%. our more of X.XX%.

rate with the not coming higher as where our numbers are drawn, items. those certainly are those are So we're help will in. yield the because disappointed And lines improve that

not business, doing It's So overall, much looks mainly as the CRE as good. now, said. pipeline we relationship-based right

that at good the we come quarter And the closings And second would so can pipeline closed kind things the of out, quarter bit quarter-end. closings that at where think than would would in good weren't a quarter. a be we look in other third that get as think fall in proxy the Obviously, third I little quarter obviously, where a quarter. higher be would the things but proxy pretty that during would of there -- during I the pretty be

Alexander Twerdahl

Okay.

I So guess all-in-all?

Jay McConie

the half this of the funding Jay. starting to definitely keeping little lower bit second though with you're to that starting is as year seeing loans loans the change and for for are kind cost. up. Alex, CRE The definitely rates we that into We're go a of that's competition and inversion getting loans was and rates go spreads

realizing think paid risk I for and need to go to spreads getting. higher in that is that the the have itself be just you you're industry

Alexander Twerdahl

it. Got

guess So kind chug higher say, would that in at activities, portfolio second back payoff mid-single-digit half and of a the similar based to you in of on can pipeline the I year? fair the quarter it that sort pace be annualized overall amortization the today -- saw assuming the of

Chris Becker

the high some probably We would bit the think but growth we half quarter. top know be don't if the growth would can some year. little in see optimistic as in as the see I half think that second we the as continued to of would be growth the second it, I of a of that certainly it we're digits. mid-single saw of second in year

Jay McConie

And a too. Alex, bit that's little

outstanding off, couple bit larger then kind of million, some $XX at kind up million, have footings obviously a a they're of than And footing customers. if million. suffer of yield out, they We loan a then demand fluctuate and those lines up, little up our paid can if depending And come $XX higher of where and is $XX they're lower.

drives kind to little of that So That's hard too. our for customers. bit a predict

Chris Becker

Yes.

obviously, a down lower usage, So back it's we reflection as quarters, previous been. in it our bit. line was usage line believe little But in rates. a of is came than that's And we've said the historically pandemic, way the

much maybe of companies use certain levels avoiding things, certain keeping inventory lower some not to little current of interest the And the a trying line maybe doing making bit purchases, as just and because level rates.

Alexander Twerdahl

All right. my Got questions. it. you That's helpful. taking Appreciate

Chris Becker

Alex. Thanks,

Operator

question-and-answer All right. session. our Thank you. This concludes

I'll closing turn the floor to So over Chris for Becker back some final comments.

Chris Becker

call your environment rest you success. the strong deposit forward a long-term strong and team liquidity proactive good management talking to halfway for challenging bank for our organization, continues franchise, our due quality, you We're Thank a today. from attention believe and have participation the on asset interest rate highlighted to We strength bank failures. events and transition to that these quarter. We Have the through system the day. of recent ample look the of XXXX shocks to a banking to the next

The First of Long Island Corporation (FLIC) 28 Jul 232023 Q2 Earnings call transcript