Financial Data and Key Metrics Changes - The company reported a net income of $6.8 million and earnings per share of $0.30, consistent with the prior quarter [9] - The net interest margin decreased by 4 basis points to 2.13%, a significant improvement compared to previous declines of 40 and 17 basis points in the first and second quarters of 2023 respectively [17] - The return on assets (ROA) and return on equity (ROE) were 63 basis points and 7.34% respectively for the quarter [18] - The efficiency ratio increased to 65.3% for the nine months ended September 30, 2023, up from 49.7% in the prior year period [19] Business Line Data and Key Metrics Changes - Noninterest income was $2.2 million, consistent with prior quarters, and is expected to continue at this run rate in Q4 [46] - Noninterest expense decreased to $16.1 million, a reduction of $353,000 compared to the linked quarter [46] - The bank's cumulative deposit beta on nonmaturity deposits was approximately 38% through September 30, 2023, close to historical averages [21] Market Data and Key Metrics Changes - Total deposits remained stable at approximately $3.4 billion, but the mix shifted from noninterest-bearing to interest-bearing deposits, increasing the average cost of funding by 153 basis points to 2.58% [48] - The bank's total wholesale funding was $559 million, representing 13% of total assets, with a weighted average cost of funds of 4.53% [49] Company Strategy and Development Direction - The company is focusing on expense management and has announced another branch consolidation as part of its optimization strategy [37] - A new co-marketing referral agreement with Rocket Mortgage was established, leading to the elimination of the residential mortgage department, saving nearly $1 million annually [38] - The bank aims to reduce noninterest expenses below 2023 actual levels as part of its 2024 budget process [5] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the net interest margin will bottom out over the next two quarters, assuming the Federal Reserve halts rate increases [2][66] - There is a cautious outlook regarding credit quality, with no significant concerns noted despite some market slowdowns [68] - The effective tax rate decreased to 11.5% in Q3 2023, with expectations to remain between 11.5% to 12% for the full year [47] Other Important Information - The bank's capital position remains strong with a leverage ratio of 10% [50] - The bank declared a quarterly cash dividend of $0.21 per share on September 28, 2023 [50] Q&A Session Summary Question: Comments on the transition of management and future plans - Management expressed gratitude for Jay McConie's contributions and welcomed Janet Verneuille as the new CFO, emphasizing continuity and confidence in leadership [39][41] Question: Insights on loan yields and pipeline - The bank has a pipeline of approximately $126 million, predominantly commercial, and will continue to purchase residential mortgages but not originate them [58] Question: Future asset growth and funding challenges - The company anticipates a flat growth trajectory for total assets in the near term, with potential for slight growth or contraction [73] Question: Credit quality outlook - Management reported no significant concerns regarding credit quality, despite some market apprehensions [68]
The First of Long Island (FLIC) - 2023 Q3 - Earnings Call Transcript