Financial Data and Key Metrics Changes - The company reported a net income of $4.8 million for the second quarter, an increase from $4.4 million in the linked quarter but a decrease from $6.9 million in the same quarter last year [9] - Earnings per share (EPS) were $0.21 for the quarter, equal to the declared dividend, compared to $0.20 in the linked quarter and $0.31 in the same quarter last year [9] - Return on assets increased from 0.42% to 0.45% and return on equity improved from 4.72% to 5.15% [24] - Net interest margin increased slightly from 1.79% to 1.8% [24][19] - Non-interest expense decreased to $15.8 million from $16.2 million in the linked quarter [26] Business Line Data and Key Metrics Changes - The commercial lending business grew by $582 million, with relationship-based C&I and owner-occupied commercial mortgages increasing by 80% [4] - The company experienced a decrease in residential mortgage lending, which amortized down by $514 million [21] - Non-interest income for the quarter was $2.9 million, up from $2.8 million in the linked quarter [45] Market Data and Key Metrics Changes - Average non-maturity interest-bearing deposits increased by $85 million, while certificates of deposit rose by $15 million [27] - The weighted average cost of interest-bearing non-maturity deposits was 2.84% and for CDs it was 4.24% [27] - The yield on total interest-earning assets was 4.16% for the second quarter, compared to 4.8% in the linked quarter [28] Company Strategy and Development Direction - The company is focused on geographic expansion and improving efficiencies within its existing branch network [7] - There is a strategic shift towards relationship-based commercial lending, with no significant increase in multifamily loans [5] - The management remains optimistic about future opportunities to build shareholder value despite recent challenges [7] Management Comments on Operating Environment and Future Outlook - Management noted that the net interest margin is expected to stabilize, with potential improvements if the Federal Reserve cuts rates [19][24] - The company is proactively reaching out to borrowers facing cash flow stress to discuss options [6] - The effective tax rate for the second quarter decreased to 1.6%, with an expected annualized rate of approximately 4% [29] Other Important Information - The allowance for credit losses was $28.5 million, with a provision of $570,000 booked during the quarter [13] - The capital position remains strong with a leverage ratio of approximately 9.9% [48] - The company opened a new branch on the North Fork of Long Island, expanding its presence in the region [23] Q&A Session Summary Question: What drove the uptick in non-performing loans? - The net charge-offs were a little over $400,000 for the quarter, primarily due to one multifamily loan going non-performing [31] Question: What is the expected effective tax rate for 2025? - The effective tax rate is expected to rise to around 7% as income increases and tax-exempt items become a smaller percentage of income [33] Question: How much of the multifamily and non-owner occupied loans repriced in the first half of 2024? - The repricing in the first half was similar to what is expected in the second half, though specific numbers were not provided [38] Question: What is the outlook for loan growth considering the residential strategy? - The company plans to continue focusing on relationship-based C&I and owner-occupied commercial mortgages, with no plans to resume residential mortgage originations [42] Question: How much more repricing is expected in the second half of the year? - Very little repricing is expected, as most CDs are already at market rates [40]
The First of Long Island (FLIC) - 2024 Q2 - Earnings Call Transcript