Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First of Long Island Corp (FLIC, Financial) reported improvements in key financial ratios, including return on assets and return on equity.
- The company experienced growth in deposits and loans, contributing to higher net income and earnings per share.
- There was an increase in net interest margin from 1.79% to 1.8%, indicating potential stabilization.
- The bank's commercial lending business has grown significantly, with a focus on relationship-based C&I and owner-occupied commercial mortgages.
- Credit quality remains strong, with low levels of criticized, classified, past due, non-performing, and charge-off loans.
Negative Points
- Net interest income decreased by $3.4 million compared to the same quarter last year.
- The net interest margin, although slightly improved, remains lower than the previous year, reflecting ongoing challenges.
- There was a $570,000 provision for loan losses, impacting overall financial performance.
- Non-performing loans increased by $1.8 million, primarily due to one multifamily loan.
- The effective tax rate decreased significantly, which may indicate lower projected income and potential future tax implications.
Q & A Highlights
Q: If the Fed follows the forward curve and we see two more cuts this year, how much might the net interest margin improve by the end of the year?
A: Each 25 basis point cut could improve the margin by 4 to 5 basis points, and this estimate remains unchanged.
Q: What drove the $1.8 million uptick in non-performing loans, and what were the net charge-offs for the quarter?
A: Net charge-offs were a little over $400,000, primarily due to one multifamily loan that went non-performing. The charge-off for this loan was about $175,000.
Q: Have you analyzed whether the cash flow on buildings will be sufficient once the rate doubles for multifamily and non-owner occupied commercial real estate loans?
A: Yes, we've analyzed each loan repricing through 2025. For loans showing potential stress, we've reached out to borrowers to discuss strategies, such as refinancing early or combining loans to improve cash flow.
Q: What will the effective tax rate look like in 2025?
A: Assuming income increases, the effective tax rate will rise, potentially to around 7%, depending on income levels and management of tax-exempt items.
Q: With CDs close to market rates, how much more is left to reprice?
A: Very little is left to reprice to market rates, as most retail CDs are already at market levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
