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Flushing Financial (FFIC)

Participants
John Buran President and CEO
Susan Cullen SEVP, Treasurer and CFO
Mark Fitzgibbon Sandler O'Neill and Partners
Steven Comery Gabelli
Collyn Gilbert KBW
Brody Preston Piper Jaffray
Call transcript
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Operator

Good morning and welcome to Flushing Financial Corporation's Third Quarter 2018 Earnings Conference Call. Hosting the call today are John Buran, President and Chief Executive Officer; and Susan Cullen, Senior Executive Vice President, Treasurer and Chief Financial Officer. Today's call is being recorded and all participants are in a listen only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] A copy of the earnings release and slide presentation that the company will be referencing today are available on its Investor Relations website at flushingbank.com.

would contain remind the forward-looking provisions the company during that safe the of call this statements U.S. beginning, like you to discussions harbor Before made under of Act Reform Litigation Securities Private XXXX. results uncertainties are statements factors cause from statements. any subject contained risks, to Such and materially differ to that other may in such those actual factors in company's the Such filings with are included the U.S. Securities and Exchange Commission. required not undertake any except as update any forward-looking to does under obligation Corporation law. Financial Flushing applicable statements,

as intended measures measures be non-GAAP or made considered the to and presented prepared for this operating to in financial substitute During references assess and financial review in call, will financial non-GAAP measures to isolation supplemental performance. with These accordance GAAP. information a are as not be U.S.

about measures, overview non-GAAP strategy to Buran, release. these the earnings President reconciliation and who please an of Officer, now Executive to will information like introduce GAAP I'd measures provide and the For to John results. refer any and Chief

John Buran

to Good by address EPS a greater quarter thank impacted you. were to GAAP and to core are nearly Beginning driven higher create of million questions. XXXX everyone in Net approximately and earnings into prepared life Core modestly and third was for as provide review $X the was income between was executing the After $X.XX, detail. of through previously long-term begin additional quarter-over-quarter rates Today, positive third reversal The I the and your $X.XX. by in additional earnings strong the we $X power. competitive share performance XXXX. points quarter-over-quarter shareholder Federal three, value. earnings core The financial funding per quarter since and by for we to earnings of our overview will joining points Then quarter strategies Susan GAAP sector. Reserve $XX net our is this EPS raised will competition funds CFO, interest then recorded Susan third third from by insurance diluted margin pressure cost. difference walking consistent XXXX. our of you The through on the positively XXXX proceeds. margin our of XX insight Cullen basis in advantages an morning XXX diluted quarter XX our quarter us and remarks year-over-year was on points provide slide strategy, approximately due and deposits Overall, million. attributable competition hope increased basis our million highlights, I'll expect sustainable has municipal deposits the liability we tax compression net and call. Thank for business gains down interest interest an especially you continued year-over-year for of basis cost

with and on are equity pressure. generate and over We average XX% of pleased average on ability our of continued margin return to despite strong equity core earnings XX% growth return nearly

rate we rather than the as institution repay did at to approximately of below approximately has through meet prepay another is growth allowed quarter, criteria. participations focus liability the rates have prior from of of refinancing criteria. our offered reducing our X% net our Our million rate strategic and linked process to in not emphasizing with to financial $XXX sensitive Year-to-date, volume million refinance position resulted Similar participations the quarter. the over a $XX loan allowed we

million late Also, for a securities our entered time approximately new forward the XX% and rate first benefit net provided investment percent of us XXXX our future quarter. reduce During swaps on of approximately XX% loans quarter, this the to in products margin. adjustable the were allowing of compression $XXX new have interest

from rise. rates to swaps these maturity on sensitive as with the XX the yield swaps representing of increased increased from on the basis The execution The liabilities X successful portfolio interest yield long our margin liability reduced loan linked basis the linked objectives. of of quarter, points expect mortgage position. has quarter. We our coupled originations increasingly extension the points Also, our the benefit strategic net

C&I However, loan yield quarter certain originations on that recorded to during due decreased points adjustable all the X the new basis the on rate initial rate loans.

an Importantly of reset these loans rate average three months. have

loans. Over of five new which primarily adjustable the XX% C&I loans loan represent quarters past originations, are rate

points previously have of through billion quarter. average the of basis in we repricing loans XX disclosed, approximately during up which loans $X million As we $XXX an XXXX of third repriced have mortgage have

of Asian XX% remain program growth in pipeline loan with quarter $XXX the conversion add of by in Win the quarter, community reliance The to of third first million converted, the spend XXX% the we $XXX the strong the Win million our million branches to deposit from customers the been our on pace grow million captured seen in time $XXX deposit transactions program experienced ATM to to more addition, reducing branches XXX% In have deposits X.XX% in over staff Through an of through XXX% this million has at permitting Central increasing over at at on program customers. increasing to processed universal is over Queens. the Flushing due improved feature balances an model Flushing In linked tellers. and to to end $XXX XXXX. quarter the and ratio banking to of of $XXX in have with the the deposits Flushing increase in quarter. Flushing A we our share yield remains compared focuses in quarter. an growth deposits retail retail deposit average largely market prominent X.XX% have which on

of $XX Chinatown quality non-performing the the committed end end universal by points just remains of gross banker in the in in million improving basis and assets loans portfolio Manhattan quarter, remain branch points third a only third XXXX. of remaining At less loans quarter, to assets. overall quarter-over-quarter quarter totaled the XX X% expense Credit we were non-performing total fourth the our a discussed, XX% than Non-performing four, previously of XX of and basis were opening Referring maintaining branch efficiency, key decrease from earnings strong focused customer by slide on bank and remain and pristine. XXXX As commercial the areas. scalability year-over-year. balance conversions Exceeding loans the and the sheet strengthening enhancing management philosophy. power, of expectations, model to to our completing risk we our following our

sustainable include our attractive branches Our significant business area. deposits dynamics market a and very New developing market ongoing maintaining on staff diverse York in Asian savings, banking owners. a multilingual has including degree surrounding of customers of City small branch business focus the advantages a our to serve high our number competitive available The

on strong this than funds. our total cost have community where These a of have $XXX lower in over deposits. we million deposits have We focus funds of cost a

further and Our through deliver focused our on capitalizing this Win value long-term we shareholders. knowledge customer is very on of well-positioned market profitable campaign and to understanding Flushing Overall, to growth market remain needs.

risk by income five. As remain continue continue is well improving to funding stress on improve which opportunities, credit enhance capitalized earnings efficiency, we power under test core net slide execute core manage pricing to mix, to all our leveraging and scalability and Increased loan manage by interest objectives scenarios. summarized and deposits strategic on

and XXXX, $XX.XX XXX,XXX shares share per profitable no remained maximum us under growth objectives XXX,XXX strategic has XX, authorized to repurchased current limit. which nearly at our and we deliver stock enable repurchase During of capitalized Overall, the average of cost third treasury an September expiration and program, focus as shares approximately further well to the shareholders. our long-term on dollar remain we've on quarter, our value

the Now, I'll in call Susan over quarter's to results discuss turn financial detail. greater to the

Susan Cullen

real up X% third begin were quarter we quarter-over-quarter and loans $X.X XXXX. XX% of the full Thank quarter on Total and of estate business banking the These commercial XXXX, continue billion, origination on to you, loan of nearly originations total production third the X% six. John. multifamily, relationship. I'll of of totaled focus as for loans slide from commercial

primarily product fixed is The which to the million, over of XX% loan was gross composition as was value C&I $XXX This estate same or the past yield portfolio growth, last commercial pipeline resulted originations strong last of adjustable XX, on XX% The continue advantages from the loan, our continue adjustable growing the of on The originations $XXX the slightly rate. diversify several loan rate to XX, XX% growth up XXX. real quarter. volume. loans September in our is mix. offers from continue pipeline the loan stress company of rate of and is quarters. current cap real quarter-end meet XXX%. to five to to C&I to growth quarter and multifamily The we while and rate mortgage portfolio of of over diversification quarter's seven We pipeline loan rate portfolio expected XX% to business the offer increased are of underwrite, and the quarter pipeline coverage September XXXX. to million test interest funding the total the during has XX% loan XX% rising the more the commercial our corporate and approximately rate originations of remains a primarily of portfolio range. excess mid-X% as the loan rate over We mixed-use on for highlights modest at in service Slide using to to individual loans protection XX% period the our debt the our loan composition balances total and for end and each of in estate these At ratio one loan as lower in emphasize and up pace Overall environment.

CDs tenth approximately total wholesale XX% growth funding and X% we XX, primarily XXXX On need a XXXX. grown to for accounts. compared markets, quarter-over-quarter percentage driven XX% they an all out has of quarter-over-quarter and increased to X CD to decreased. the deposits the four year-over-year of XX, rise percent liabilities September see the either access longer by years, borrowings just to terms December and slide is which X% you’ll and the at When year-over-year, advantage. deposit deposits money was non-interest-bearing over at increased has Core can As funding X% and market related

of focus on which XX% increased deposits year-over-year. continue on accounts X% deposits. growth non-interest-bearing $XXX represent emphasis of an deposits Non-interest-bearing deposit nearly of We with to the total core

competition increased increased deposits The to for see basis quarter. prior with We pressure quarterly rate the XX of cost points deposits. from continue

was markets. the municipal pricing As XX We disciplined terms and of money cost remaining and in XX for deposits John in deposit of basis competitive competition tough the our in as points. increased NOW market accounts this remained noted, the while basis quarter sector especially points

basis income net decreased points year-over-year. quarter-over-quarter and at modestly net down $XX interest Turning The X third to XX slide X.XX% quarter-over-quarter for basis year-over-year. points million, margin XXXX was nine, and quarter interest

interest have Excluding recovered prepayment been interest a net quarter-over-quarter and decline X.XX%, basis year-over-year. of penalty income margin and points would delinquent from points XX basis loans, XX

margin continued expect pressures We through XXXX.

loans points in through have from quarter which mortgage XX re-priced his during $X an John loans re-pricing about remarks, noted As billion to of third a up we XXXX, $XXX X.XX%. average an of average of have the of basis X.XX% rate

this to Our points of funds overall XX. the steps on was basis for quarter-over-quarter our quarter XX in In order increase cost basis following and are of have an slide taken increase of partially funds XX we the mitigate cost year-over-year. X.XX%, which summarized points

sensitive $XXX forward entered exceeded quarter’s the We which penalties in We quarter and adjustable strategies current earnings swaps on the portfolio and time non-originations XXXX. commercial funded we quarter totaled million, provided our these in of the yields and the mentioned, continue primarily to have quarter of project swaps points business which been previously $XXX rise. XXXX. of on from as yield approximately rate have September recovered swaps evaluate manage of to first basis loan will interest liability And benefit sheet. balance increased totaling approximately enhance The in are loans loans, now rates current the For XX% for the loan origination prepayment yield quarterly Loan net XX% margin of forward interest mitigate XX, to fifth of comprise continue delinquent from as XX actively as the third and portfolio. have net funding origination million consecutive cost loans. the

margin Our remain likely interest pressured. net will

XXXX on coupled leveraging will third portfolio noted On focus mix. We previously million pricing to non-interest of and executing of loan interest we driving reported income continue XX, by slide income steps net on with driven $X opportunities which for quarter on the sale net income of fair from core by decrease where loss on the net insurance in gains reduction $X adjustments was proceeds. non-interest primarily was value $X.X excludes quarter-over-quarter million and loans. The million, core life gain the

X% by we XX, slide the X% to compared the to XX% quarter to of growth of Overall, third Moving third expenses XXXX XX% ratio XXXX over efficiency and the in quarter approximately XXXX just from bank. second annual the the in was of project quarter of driven to increase in XXXX XXXX. XX%

is adjustments. XXs. efficiency low-to-mid our expense achieve to an opportunities due in officer’s efficiency increase and and for due improvement benefits of on remain gains. continuous acceleration We in As focused previously an long-term compensation The goal the for to operations was discussed, death the our normal accrual the ratio in quarter to the

quarter year. approximately effective full just rate a XX% of tax effective and increase previously accrued approximately the release under fourth for third We for tax to the rate in quarter, was taxes, the benefiting the Regarding XX% tax to anticipate the liability. XX% the from

credit on turning XX. Now quality to slide

quarter. remained credit excellent this Our metrics

As in delinquency process. seller and a historical of are charge-offs the we non-performing credits reminder, early report

As into do of from coverage value credit of not XX, for loans XXX% quality you as real collateral our a based non-performing The approximately and was underlying value upon origination ratio XXX% the and metrics XXXX. adjust December loan on we estate a to of improving XX% see, appraisal results our can a increased average increases.

to value low the not foresee expense. an loan related real Given loans, estate do non-performing with associated increase the we

loan in we reporting future that loan ratio. Looking growth, losses adequate to growth maintain forward proportionate expected provisions course with for anticipate with

the XX by Slide days due our strong process. quarter and core down were credit credit did to originated percentage diligence XX,XXX in as X% to $XX Debt loan not third Moving and of in of remains the XX for year. loans conservative losses delinquencies of our reflect XX% under We quality XX, one the non-performing provisions quality. million underwriting slide strengths. as recoveries loans third a year-over-year collection just quarter-over-quarter record quarter shows [ph] in

vintage underwriting to John see Overall than XX some quality XXXX. greater remains for can our that, credit results days comments. turn there years only are back the you I’ll Here as for strong delinquent loans it discipline three With pristine. for after closing

John Buran

On for Thank we I’d profitable growth. by slide like strategic believe we reviewing you, and continuous to Susan. are why XX, conclude well-positioned

with multi-cultural the community market exceeding strong a preeminent services relationships. by leveraging Asian Our and be New vision market is strong to area city our our customer financial banking company in The expectations York on continues focused us. our and Flushing to for significant that through customer quality a every opportunity superior experience personalized base in service for innovation, customers touchpoint remain represent consistent We attention. providing a and

an attractive We growth conclusion philosophy, innovation shareholders. to have record profitable our and grow in security markets ability company management deposits, investments risk leadership talent, a to position the value experience In levels, a customers and all strong well strong sheet, track to and deliver to strategy. long-term foundation our capital cyber balance very with team execute and proven our

it We I’ll will turn questions. over up to now open Operator it to you.

Operator

you. Thank

We begin answer question will session. now Instructions]. [Operator the and

O’Neill. go Fitzgibbon will Please today from ahead. question of Sandler Mark first Our come

Mark Fitzgibbon

Hey guys, good morning.

Susan Cullen

Good morning.

Mark Fitzgibbon

said through we your think margin to look in magnitude it do expect the on persist what today quarter XXXX will comments as you XXXX? that does you you clarify subsequent elevates do this to in of similar saw compression you you we NIM think it pressure just you each to get quarter the do into further or see think Susan based in what

Susan Cullen

that the data I pricing. driven going deposit think by we the be to it’s see on

corner, compression. we’ve driver on data our seeing pricing, to We’re loan be starts going really the and of the to more but the turn deposit so our pressure is NIM more seen the

Mark Fitzgibbon

at in term Okay. success new are what having CD the in of at sort And you rate? then and what bringing money most

Susan Cullen

nine XXX. about It’s months, the

Mark Fitzgibbon

XXX, okay. around In

Susan Cullen

Right.

Mark Fitzgibbon

a points, and is your touched to in continues of to think a ratio, this we’d certainly on basis loan little quality low. you looks but comments credit bit you optically skinny at your down And then outstanding loss I resumption reserve the know loan it When provisioning? see it XX

Susan Cullen

XX points those we little say. little unfortunately Well, messed of has been recoveries The on side some growth we’ve had and every couple here been loan for Mark you of quarter quarters that at skinny quarter basis this this now. We’ve bit. a as evaluated a a

commercial have normalizing expect said. commercial in quarters low portfolio, given we We couple portfolio, in estate next LTVs real the our soon loan growth we it as

Mark Fitzgibbon

Thank you.

Susan Cullen

Mark. you, Thank

Operator

Steve question G come our And Please Research. go will from next of Comery ahead.

Steven Comery

morning. Hey guys, good

Susan Cullen

morning Good Steve.

John Buran

Steve. Hi

Steven Comery

maybe significant I a of lower? of you initial give X.X% there and X.X% if and could the pretty quarter. rate was previous The wondering was on more little looks magnitude quarter sort versus C&I the rates on like kind why color the explain

John Buran

this a and say market a rates So less LIBOR result, some over some at protection a competitive little than initial versus over and our of a let's bit at are, estate initial LIBOR we they time to priced on the are rates real over prices to continue of spread LIBOR. say let's the fixing margin from is we expect them spread a most on commercial due spreads as were will see but that the the

on has addition, focused high In C&I that credit quality. we're business the

little more would C&I that rate obviously, that normally So makes bit than what in the a we see portfolio. competitive

Steven Comery

Okay.

enough. differently getting what's Okay. pretty Thanks. from those doing up you're Is And on guys business kind there any anything end there? C&I, coming are basis, more then deposits our are of Fair through non-interest-bearing period you nicely. there on

John Buran

a lot is accounts additional strong very are are deposits. the in associated the oriented towards of flushing businesses we're quite obviously that And non-interest-bearing coming There particularly. of in new the bringing with them fact CDs. the despite that we're bit So, got C&I, going excited some marketplace a the of Win say program we've to in $XXX results I've that but about on that over got Flushing and million in

Steven Comery

Okay.

with starting and different So, of kind strategy C&I. things this Win to Flushing a off are just pay is

John Buran

upon a point and and what in market nice of think we expect going concentrated up I method pick a results. we're market. into I more very we hit $XX this that X in finding to market achieving some share Yes, a of is a manner mean, billion

pretty we to also it's out other that significant and them areas. potential learnings take we move these So, feel and can ethnic

Steven Comery

C&I quarter I anything gears in attractive Very more or growth CRE you at to that of categories is it good. of on this can basis. switch If like, was point? Okay. periodic those mean looks to Is go the there mean, kind negative I changing less the I a portfolio. sort to still in

John Buran

remind I'll $XXX nine course that of, over the of chose obviously. a that competitive the months of part It's to because million participations the we you three over did we have the in again yields not area. are be

we're dry as day a do business focused leave loan for the we the rather there, we for on a and result, commercial we And powder new really we real brought like opportunities meeting portfolio. new help not a we've XX So, our diversify over been have continuing us yields course, think better still expectations, portfolio. we'd C&I the And years. on But grow people track do record got fortunately to in our there if are are estate, the real of in estate. to

to in for little yields back we'll So, happy an year. real the a the market more we've of will if was increase bit are attractive got liking again. And the ability in and originations which that, product comes on But concentrate to and the our XX% C&I until jump to frankly, about estate be attractive set.

Steven Comery

on. from may just then I Okay. me, more one And if

kind ask your sort some as is for whether to You years a like outdated expect use this active you updated you for $XX more of attractive of repurchasing quarter. the authorization stock. the certainly level to give your guys if there? are ago, and guidance repurchases sort extremely obviously not couple Maybe talked In about past, you you the repurchase appetite the about or being of just during

Susan Cullen

any anticipate the but over do can't to purchasing using board as the we I that market on timeframe do do of using to that. which it presents us. opportunistically allotment all. the We itself gave indication that, anticipate our what We give in full market will intend allow us use you up we the

Steven Comery

Thanks. Okay, good. very

Operator

Gilbert Collyn KBW. next go will come from question ahead. Please of Our

Collyn Gilbert

morning everyone. Good Thanks.

John Buran

Good morning Collyn.

Collyn Gilbert

comment your book the John, just it of not chose on to be reprice to elsewhere. that fact you of to that to a guys part the - you the slug back allowed

in financing range. those mentioned X% had lenders those, you bank curious, was non-bank traditional Who the or Just lenders? were

John Buran

Traditional bank lenders.

Collyn Gilbert

those at But loan had you are along now questions. for guess growth and loan targeted lower I to range curious is, Susan was. if lines, I just of then end be your And of apologize you indicated in XXXX? Okay. what in the you're expecting all two of terms growth One said, what the your thinking that kind that

Susan Cullen

range. the We're probably around looking X%

Collyn Gilbert

the where lower those refinance that of won't think And you kind loans? slide happening these you is you could and that powerful, a where participate elsewhere can similar rate where your is dynamic Okay. portfolio Do see you at go. yield show in next when current in levels much repricing credits and retaining maybe year risk just

John Buran

there a remember this So, is cost not associated general doing with role.

where So, customers out legal to would have have those new is today appraisals, fees. they'd are and go we get new that

host whole is of a that. costs associated there with So,

may we penny XXXX, think we're for that. make X% significant on the and not at utilize looking we we and we've leverage a expect that of but amount every to got XXXX do Now,

other necessary. the As we've grow gotten I portfolio said if to opportunities

who be make our we may ultimately other lenders position to In believe have will undercutting better. which now increase pricing firmly that would addition, rates

Collyn Gilbert

the And rates growth Okay, what just then side, on deposit year? that's are kind for overall anticipating helpful. next of you deposit

John Buran

We're thinking around the area. XX%

Collyn Gilbert

new have this sense of deposits have the year Okay. that customers out come How came customers of And just of markets you is do versus new date. shifting what that that to current the of into of in CDs? those quarter much money the savings a in

John Buran

we're Flushing the We people market in the in. did something in business market, doing has market. name I happening we There recognition taken Flushing more in I’ll in more getting that few We recognition new recently that the a a a coming small although, that did perfect - of blitz and much -- and we're And still think clearly given hold. is example. knew we're special you so that customers that a the us what's think a been bank give relatively

way So, we it I for think mean that sure. we're getting appears more new customers,

Collyn Gilbert

And think on the of you that can deposit the XX% continue and increase year Okay. segment then total. just do Where year indicated it's over go? X% non-interest-bearing had side, to you

John Buran

some again there. been this of We brings one successful of DDA business market. in more which more opportunity we've have with we clearly segment We're the course doing think I it. C&I

area. So, factors some I those think a non-interest-bearing in to in contribute that growth positive

had So, clearly it's confident. lot course of gotten made the that an XX% over not last the months area a we of more successes us XX%, the in but XX the past, that we've has XX%

Collyn Gilbert

Okay. And broadly. just looking all this so of at kind of

into kind at that think way? what sense to offsets income sort trying just interest will to universal where to if levers banker. and and the Susan compression you in may it not see the continued I that see you're I seeing you'd down the earnings I or I just haven't I'm But branch to won't be obviously but be, started growth, numbers, assume coming to offset come some you maybe run of from and some But presume there. see seems how kind through rate. where of the net perhaps likely tax of the don't pull slower indicated savings it down about we're curious NIM the flat loan from like to get I if mean just to is going we that. if growth, of get so going be not XXXX. know maybe or running I thinking an flat perhaps a again normalize provisions maybe know you're XXXX

John Buran

at loan held this that growth did that that in participations. one million do the things year not think was we estate Well, we of back particular real $XXX

occurring there don't that additional some the can that we pick And is I year sure. So, the expense foresee again up of for well. as opportunities as course over we think

additional business positively have in that X have role with the quarter XXXX. time handle C&I in moves a discussed association X roughly in on that were our that just handle that now the the floats to the we The this contributed from LIBOR. a to So, first And we yields swaps which over NIM.

to the kind So kind the a pressures those margin the the as of balance of generic the have result of a margin sheet. pressure that are offsets as result we of

Susan Cullen

And Collyn the additional again environment. as look transactions would rising past, in rate in type at or protection we'll a opportunistically protection that give we derivative said other us

we to So, that pull that able have lever be well. we that may as

Collyn Gilbert

Okay, great. leave That's All right, great. it I'll thank you. there.

Susan Cullen

you. Thank

Operator

[Operator Our Brody Preston come of next question ahead. Please will Jaffray. go Instructions] from Piper

Brody Preston

morning Good you? How everyone. are

Susan Cullen

Good morning.

Brody Preston

guess to are asset multi-family loans participations go those to quick. real the Are I want just what I back class or those?

John Buran

get Sorry. We didn't the question?

Susan Cullen

You are Brody. on mute,

Brody Preston

Yes, sorry about that.

On the class. know want participations, I to what just asset

John Buran

Multifamily.

Brody Preston

in is that And market?

John Buran

Yes.

Brody Preston

rates. those Doing

John Buran

an It's It's product. and in-market an in-market product bank. in-market

Brody Preston

well But you of doing guess growth I credit touch outlook right, for guess, a I maybe of C&I get want provision quality. segment a that to how to guess on growing I great. really that sense part the pristine quick. appreciate have just credit the given how for the I slower. All portfolio. you I guys ortfolio. is been little wanted the Okay. real I fact the have And you guys

Susan Cullen

that any for and look we provisioned other analysis to segment at the collateral use we or be discounted the impairment we if recognized. have determine flow segments to cash Well, and like there a loss was

Brody Preston

that do provision that apply there portfolio? Is of an of you like and Okay. sort to sort have you average

Susan Cullen

competition’s our take adjust we the look flows don't for we in do what and sake. our and collateral out impaired But compare balances them we numbers the in from to are that I apply our are qualitative want agency loans. have discount and yes, for factors those we historical charge-offs cash three-year Well, give statement. out outlined our it in and percentages that and to our

Brody Preston

expect then the the XXXX, that forward? know moving sort I for guide XX%. run Is And rate is great. the you rate XQ tax for Okay, of

Susan Cullen

as all finalized that really of process. haven’t you’re we wanted finding the budgeting we No, XXXX; our

I’m right now sitting here be a As that to but subject would that’s change. good estimate,

Brody Preston

without had put given And that great. have did still them in from you of guess specifics mentioned just various performing a get still you sort had covenants. were loans? wanted sense some classified the those then better in release trip going for are to classified of C&I and Okay, within the but that I the maybe you assets you accruing, I typical your CRE what covenants the have some into but bonds, and

John Buran

respect a Obviously, violated So, reporting. can given of let’s variety capital that that say. owners point leverage a any in with we’ve amount covenant We liquidity of the covenants, time. it leveraged the got of typically company was might also take have covenants and out at income to

things These kind that typically put as are we are of So, the covenants. the delays. into in we generally kind that reporting these of things put

Brody Preston

then I [Indiscernible] if and larger wanted for the type covenants -- sort they maybe of of than to guess to clients, have that that of some a for read with I And great. loans bunch your they of any your loans, of get you a of Okay, clients, fewer articles type in are seen you’ve the coming past? you maybe sense expecting proliferation

John Buran

than earlier sure. taking has lose kind the So, credit made competitive the more market tight and pricing you pricing tight on bring comment much versus credit pricing And I quality. been I’ll of about of lose back covenants. comfortable to is for criteria The we’re

better-quality credit, the take little that terms credit. away stay companies get a -- that and of a bit a on of less or the try we arrangements loans, companies light sooner from rate on yield floating in We’d are on So, covenants. or but little -- overleveraged bit

Brody Preston

Okay.

Okay on think XX% sense. loan-to-value your estate And type it’s ratio I I in low, the of pretty real is loans like that of range. makes lot a the guess

for borrowers some And out idea sort they to their your financing that? do or pocket getting so, are that wanted of as to an I all borrowers’ are equity or it bringing Is down -- of like how of XX%. or own I get to are that XX% debt guess maybe

John Buran

portfolio. These in anybody a leverage maybe REIT, investors and estate these long business a cases. long and maybe doesn’t owners track business lot to refis the time for in many have on has had put the then also we And in a for in And of bank the who typically real estate tend been time real their been that record.

Brody Preston

great. that’s Okay,

Susan Cullen

remind to that’s we’ve loan-to-value adjust we updates. that where like at loan-to-value had Brody those, just those denominator would the calculations, the are you origination don’t I on

the rates taking We’re indexes in loan not we and appraisals when for market area. a this originate it old increasing

Brody Preston

Okay.

the off appraisal value? based that’s So, previous

Susan Cullen

appraisal. Original

John Buran

we appraisal, the Manhattan new get appraisal. because we it prices I are refi adjust Yes, original them. year-over-year in adjust going Brooklyn. up in and don’t a mean But it we’ll if or

Brody Preston

Okay. All right.

So, that loan-to-value ratio [ph] be more risk then? could even

Susan Cullen

be. It Correct. could

Brody Preston

to that’s I last sense then just and relative little go up those pipeline you for picked your loans pipeline that just want get and has are the the too a a here bit on? the pipeline to held good has back have yield All to define term how quarter want to I right sheets you

John Buran

it there cash matter is the risk particular the there Usually our down money processing. usually cash a line, these our line in is to on estate of always businesses fact some so so of some start portfolio on is these some real put

Brody Preston

Okay, relatively so rate portfolio than on the pull should higher through right? be that

John Buran

is. it is, it yes -- that’s Yes,

Brody Preston

a clients guys years markets seasonality that you want and is something you your inflow larger into greater now of big on some much a or saw typically bit that money else I but understand is your was a typical from much the than municipal so really And deposit quarter to going mix really, I shift year this driven there by then, there? the of have and past in appreciate some seasonality Okay. and municipalities categories third within

John Buran

I a December where or bit No, down the back and but terms then bit typical get very-very in pattern will weeks sometimes I they’ll weeks strong money the the little -- the you be on a it’s think in pattern, fairly fairly or it’s will now think few little accounts now few typical seasonal a of down we’re in January. rather be so come in a it area markets off

we strong the first we third quarter So, slight then we the comes what fourth little back the very a quarter in typically get see. quarter had a reduces a that’s and bit slight in build, build in so

Brody Preston

guys. had much. I Okay. very All That’s you Thank great. all right,

Susan Cullen

Thank you.

John Buran

you. Thank Great.

Operator

the Ladies this for conference and I’d question to session. and turn gentlemen at John like Buran closing to conclude back this any remarks. over will answer our time,

John Buran

Yes, thank you very much.

the sensitive but the have. been we while increase people all yield our for in have us It on sheet, a loans, something the to to taking company for like balance is possibly it’s in that and think have balance is company keep a additional thing sheet I I basis. we’re that control that liability can measures the mind invest we trying we are long-term opportunities we run a funding our that We with I’d think time. long to to about So, Obviously, cost.

to recognize are we right that you things and similar at and a sheets, that’ll and hedging most place turn we’ve you’ll the terms look direction banks balance put situations least think in if a in better. we some good on the to with at in few corner I diversification position I that put due opportunities So, that possibly going have as us us as think moving of in got strategies

all feel you give your Thank free if any So, attention. I questions, you call. to a for And have you. us thank other

Susan Cullen

Thank you.

Operator

you is attending Ladies now Thank and gentlemen, conference for the concluded. today’s presentation.

You your may disconnect lines. now