First Of Long Island (FLIC) Q2 Earnings call transcript Jul 26, 2024
The First of Long Island Corporation recently held its second quarter 2024 earnings call, featuring President and CEO, Chris Becker, and Senior Executive Vice President and Chief Financial Officer, Janet Verneuille. The call provided valuable insights into the company's financial health and growth prospects, highlighting several key themes and trends.
Financial Highlights
Chris Becker reported an improvement in key financial ratios and financial statement line items for the second quarter, including an increase in return on assets, return on equity, and net interest margin. The company's net interest margin, which had declined for six consecutive quarters, showed a positive sign of stabilization, with a slight increase to 1.8%. The company also saw growth in deposits, loans, and non-interest income, while lowering non-interest expense and increasing net income.
Loan Portfolio and Originations
The call revealed that the company had a stronger loan origination quarter, closing $70 million with a weighted average rate of approximately 7%. This growth was driven by commercial and industrial (C&I) and owner-occupied commercial mortgages, emphasizing the company's focus on relationship-based business. This trend of remixing the loan portfolio from consumer to commercial began in 2020, resulting in a significant increase in commercial lending business. This growth has been masked by the amortization of residential lending, but the commercial relationship business has also improved the funding side, with non-interest-bearing deposits representing 30% of the funding mix.
Credit Quality and Multifamily Loans
Credit quality remains strong at The First of Long Island Corporation, with low levels of criticized, classified, past due, non-performing, and charge-off loans. However, the company did experience an increase in non-performing loans, specifically a multifamily loan that was restructured and partially charged off. The company is actively reaching out to borrowers to discuss options to relieve any potential stress, indicating a proactive approach to managing credit risk.
Future Outlook and Challenges
Looking forward, the company anticipates further improvements in net interest margin, particularly with the expectation of lower short-term rates and a more favorable yield curve. However, the company is also monitoring multifamily and non-owner occupied commercial mortgage repricings, which are expected to increase significantly in the second half of 2024 and into 2025. The company has begun reaching out to borrowers to discuss strategies for managing potential cash flow stress.
Conclusion
The First of Long Island Corporation's Q2 2024 earnings call provided a comprehensive overview of the company's financial performance and strategic initiatives. The company's focus on relationship-based business, loan origination growth, and proactive credit management indicate a strong commitment to growing shareholder value over the long-term. However, challenges remain, particularly in managing multifamily loan repricings and potential interest rate changes. By staying focused on fundamentals and maintaining a strong credit quality, The First of Long Island Corporation is well-positioned to navigate these challenges and continue its growth trajectory.