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Flushing Financial (FFIC)

Participants
John Buran President and CEO
Susan Cullen Sr. EVP, Treasurer and CFO
Mark Fitzgibbon Sandler O’Neill & Partners
Steve Comery G.Research
Collyn Gilbert KBW
Brody Preston with Piper Jaffray
Call transcript
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Operator

Welcome to the Flushing Financial Corporation’s Fourth 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. Today, there will also be an opportunity to ask questions. [Operator Instructions] A copy of the earnings press release and slide presentation that the Company will be referencing today are available on its Investor Relations website at flushingbank.com.

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

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

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

John Buran

thank us additional provide full-year insight Good today's earnings create we executing advantage. provide fourth performance to greater an our and will our Then, everyone. I’ll Cullen, we review shareholder earnings begin with detail. overview sustainable for hope and financial call, our our as for consistent, in strategies On strategy XXXX quarter XXXX And value. power, into positive call. morning, to highlights the quarter competitive long-term fourth and of to always, then our you are business continue CFO, Susan joining

core adjustments the core share reversal generate previously Net core on tax core a between from of continued on driven other diluted average nearly quarter-over-quarter EPS about $XX which over higher of to due fair positively of XX% recorded of net per outstripped gain funding over slide of and on to approximately and I diluted securities assets impacted modestly earnings of Following margin and ability attributable loss year-over-year is and We're was return liability earnings $X.XX. sale to income interest $X.XX and $X and were net strong our of by million down a margin return loss million. GAAP our net fourth $X.XX, and your pressure. three, earnings equity equity of remarks, quarter growth net re-pricing. of will GAAP sale X% on pleased by with questions. value address $X.XX $X.XX, GAAP ‘XX $X.XX was despite EPS mitigate loan on to and Susan our difference prepared was of interest pressure, cost, through ability average Beginning

funds However, X quarter-over-quarter, basis the the only basis cost fell core of points. NIM points increasing XX

interest The reminder, repricing on recovered new the As the impact during positive quarter. net of core yields XX% new year-over-year. NIM Variable discount delinquent and variable of on loans, of increasing NIM a accretion of and products investment and call XX% our on our of is loans securities. represented loans securities approximately loans new rate penalties, prepayment a rate had

basis net mortgage rates XXXX, in XXXX, margin quarter's our net Fed have margin. forward three scenario, of to interest points. In repricing as fourth over manage entered hike a million we compression do a to NIM swaps, point up billion we of on the the to through interest provided an compression loans of $XXX under continue margin. swaps These interest expected to approximately million benefit Although basis in net future rate repriced us average quarter, rise. of a XX $XXX increasingly XXXX, have into expect are Also, benefit $X late of allowing loans,

loan another report to are We of pleased closings. strong quarter

$XXX this year. During totaled quarterly highest our closings quarter million, fourth ‘XX, production loan

of execution from points portfolio a successful loan increased XX basis objectives. Our yield quarters our fourth strategic representing ‘XX,

linked in stated prior of institution of to of refinancing over not rate over the for a criteria. in from volume blow and we've our quarter to at allowed meet ‘XX. $XX criteria. liability position ‘XX million net the resulted those average yields $XXX increase reducing through Year-to-date, fourth resulted fourth process quarter, prepay loan our and rate we financial of in with refinance focus a million basis-point repay rather compared rates X% rate participations Similar loan loan over XX full another allowed to participations to on as has growth the year. over Our the in quarter in did booked our emphasizing approximately than closings volume sensitive quarter X% the offered Emphasizing

quarter While on to income loan new the and penalty ‘XX, linked in recovered loans interest. the of with increased combined in quarter. X The adjustable basis XX closings volume increase loans X.XX% basis-point loan rate the resulted prepayment in in repricing yield total X.XX% third points yield yields ‘XX a fourth excluding the from increase of quarter and from in

past the loans, which primarily Over have loan loans, XX% C&I represented year, new closings. adjustable are rate of

has at linked loan yield to yield adding quarter, million in $XXX compared of on improvement X.XX% sheet. X.XX% an of the asset balance to the million addition, totaling In the the pipeline average side $XXX million

Asian a X% to growth. ratio achieving have the due loan to deposit improved XXX% We retail with total increased share our our Flushing from linked Queens. Asian from roots in increasing our prominent XXX% $XXX with December XXX% in to non-annualized, growth deposits progressed community, XXXX, beginning feature or York. in which deposit to while a At goal quarter deposits $XXX deposits the deposit loan million the the same program, New the through closer XX, million A deposit is retail to Flushing, during of has longstanding of relationship ratio Flushing, Bank on Win in Flushing period. in the market community the focuses increasing

million the deposits program on quarter captured to permitting deposit in the XX over and program Chinese remain we with million of $XXX in end Flushing first achieve more Through Banker model, speak $XXX time through being to branches quarter, of Mandarin in new been the Universal over of the this serve. Central markets the employees Cantonese fourth pace by prevalent Our to customers. languages the we growth ‘XX. Flushing to the have Win with target spend conversion staff has and

XX% tellers. on reducing staff more our sales, over sales reliance in of XX sales under year-end, focusing in approximately importantly more of to thereby to we an our total opportunities. as XX% experienced Banker transactions, we the XXX% customer's In XX% ATMs branch increased have been on have of increase branches model. of an at Universal that operating due time over As employee branch almost branches per the branch all converted, have And transactions processed increase

As previously branches the the Universal converted discussed, Banker we expect to have by of the XXXX. model end remaining to

in new the Chinatown, December New York up opened on XXth. also We branch

model Chinatown Asian the relationship continues customer-centric community. longstanding new staff. This by this technology with of customer Our service combining expansion a planned highly location leverages full innovative with the and engagement Universal efficient model encourages Banker a

our We nearly year. These been flat from quarter X% and actively increased have decreased to full quarter In non-interest for were the expenses. expenses expenses from managing XXXX, comparison X% previous non-interest the fourth of XXXX. the

record up were year-over-year. XX% we total originations assets XX of Our were EPS quarter, basis credit basis GAAP EPS non-performing of points billion. XX% were In end up loans had total fourth loans, of only while quality the and Slide $X.XX, record the Net pristine. points XX up four of just year-over-year X% deposits year-over-year, core achieved loan we assets. while remains $X.XX, of gross were up XXXX, At was shows $X.X loans non-performing XX%.

our to referring customer five, power, and strengthening slide Now focused maintaining Exceeding we these on sheet, key remain bank risk our philosophy. strong commercial areas: balance enhancing management earnings expectations,

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

six, $XXX deposits summarized loan remain enhance risk funds mix, to cost very-well profitable core in pricing deposits. efficiency, cost increase have slide all we manage a long-term we earnings a with continue as deliver focus positioned shareholders leveraging income total of our remain over mix, on to funds. portfolio scalability manage further scenarios. where by to have test power credit this We to and and million strong our These strategic under by and we opportunities lower Overall, improve well-capitalized value funds interest have of funding objectives, continue and cost our on to on than improving of execute growth community, stress

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

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

Susan Cullen

origination Thank and as with year-over-year to Total of These X% we seven. on fourth continue on up production you, full X% commercial a slide than loan relationship. John. quarter. multifamily, totaled originations loans estate, banking $X.X and loans were begin XX% real of quarter-over-quarter I'll billion, the focus commercial more for the business

of C&I past quarter diversify as over We year. and XX% originations continue the to our XX% total for were portfolio loan origination the

Loan to portfolio. loans, for the family rate quarter from cap more exceeded the growth Commercial our a our closings using the loan mix. quarter-end offers $XXX excess the rate C&I of commercial quarter. We December fixed the the of eight and of adjustable real on mid-Xs. and and the balances yield And XX% rate for XX% The the primarily pipeline from to business products was ratio from modest on and primarily The XXst, grown to current the offers increased loan is and pipeline several approximately quarter XX%, these XXXX. last loans the composition underwrite mortgage which loan X.XX%. business evaluation multifamily, to Company, estate time, advantages at XX% down XX, one-to-four The test diversification totaled this first funding debt and on of million, is December our the individual Slide year, rate the originations as estate protection are loans the highlights the For loans a multifamily environment. stress loan adjustable of XX% interest of closings At portfolio use in remains last XXX%. service to portfolio gross of in have mixed each continued value rate. as real coverage quarter. pipeline year rising rate

XX% December at see almost grown has of December ladder by advantageously can Core deposits need up related to all slide barrowing access has market funding terms. over the that decreased. and deposits to liabilities On markets, the of the deposits CDs the XXXX. quarter-over-quarter XX, compared nine, and XX% arises When longer we you funding the the and increased X% As primarily years, Growth driven quarter-over-quarter and percentage to wholesale XX% totaling year-over-year. year-over-year, CDs noninterest-bearing XX% accounts. XX, increased money was X% for

an on with total which bearing of noninterest-bearing deposits. nearly X% We deposits growth continue represent of million emphasis core to on deposits the X% the Noninterest focus of year-over-year. deposit, $XXX increased

deposits. continue in competitive for deposit points quarterly while We to competition We markets. within disciplined quarter. XX terms see remain basis increased of the remaining increased cost from funds rate our with prior pressure of pricing The

X.XX% interest income quarter-over-quarter at million decreased modestly basis year-over-year. down points XXXX points about quarter-over-quarter quarter slide fourth XX and $XX XX. the was Net and of basis XX year-over-year. interest to Net Turning margin for

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

continued We pressure expect through margin XXXX.

we mortgage of over remarks, during repricing loans points. of billion million As basis his loans fourth John have up have noted XX an And the in through repriced $X $XXX XXXX. in quarter average

Loan approximately swaps The XX, totaling benefit has from which yield Focused interest swaps the X.XX%, on $XXX funds approximately have of loan recovered forward XX quarter slide basis funded sixth was of yield million, on of as increase million in net interest the quarter-over-quarter an We've delinquent portfolio forward December points rates current volume, points originations swaps on of partially of XX project for we loans. net entered overall a following the to enhance the to of provided quarter the we rise. earnings XXXX. pressure, quarter's mitigate on into margin points basis basis cost versus penalties and and for X in have loan Our these steps quarterly prepayment third order margin been the consecutive increased as $XXX XX exceeded point yields to year-over-year. In XX. the taken quarter summarized and are yield of which have continue origination XXXX. basis

mid-to-high of originations which handle billion $X XX% loan current Originations totaled of now to from X comprise X and a primarily low-to-mid the the of have XX% loans, a handle. loans adjustable, of repricing are business commercial We quarter's portfolio.

$XXX sold in even million manage yielding million transaction X.X%. securities continue and balance years. $XXX two break We our to mitigate interest yielding our share in aid strategies securities to and net actively sensitive we per of evaluate We X.X% approximately to Additionally, to funding sheet. and anticipate purchased margin and costs this liability earnings

interest and of continue net focus our coupled fund increases, mix. portfolio interest against to pricing executing net leveraging likely mitigation driving While margin income we on pressured, cost will remain loan opportunities with strategies by

XXXX, from Moving driven the to approximately XX, of increased by Bank. growth anticipated as XXXX annual slide the expenses X%

quarter, X% expense. the non-interest BOLI dollar life the to fourth due lower $XX.X was decrease expense million, quarter-over-quarter a insurance of For split the

the reduction the third expense, of the $XX.X an fourth of XXXX. quarter but million, split still the of dollar XX% to in year-over-year. XXXX XX% of quarter was XX% and decrease insurance in XXXX, the X% quarter increase efficiency X% in fourth was ratio below expense compared nearly of of non-interest Excluding quarter-over-quarter, a The

ratio in Our long-term goal efficiency remains achieving to an low mid-XXs.

focused improvement on in new are gains. operations our and for We opportunities efficiency continuous

was the tax effective release XXXX, tax just rate X% liability. of fourth previously taxes, in the benefiting Regarding the from under quarter accrued

fourth XX% the release rate liability, the tax in of Excluding the was tax the effective approximately quarter.

rate we approximate XX%. between and tax effective XXXX, an XX For

slide on quality XX. credit to turning Now

excellent remained metrics this credit Our quarter.

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

the quarter, Our improving XX, $XXX,XXX. provision result ratio recorded December coverage to credit we increasing of to our the metrics quality collateral as fourth approximately a average from estate The In XXX% in loans underlying loan of of values value upon of we XX%, XXX% and value the adjust XXXX. for the do origination, our increases. appraised based non-performing was at real not

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

recording prior net Looking XX, reserve. for anticipate are million, to provision in about proportion due quarters loan forward, future with under On up expected adequate $XX our loan of non-accrual quarter four banking underwriting losses XX% slide we conservative non-performing of from in one $XX that the loans. still and We strengths. collection process. year-over-year delinquent non-performing our for reflecting as Positively, $XXX,XXX million the growth remains core quarter, growth, loans maintain declined loans of fourth business reported diligence with credit to quality in recoveries the XXXX,

recorded Slide as net annual originated loans year. by we the shows delinquency $XX,XXX. For recoveries of XX-day of XX percentage period, approximately a

see credit for as loans results the years. greater can for six nine it are of underwriting last discipline, pristine. closing you days remains strong our delinquent John Here Overall, comments. only our to there quality than XX I'll vintage back turn some the

John Buran

portfolio, and articulated yield profitable our strategic I XX, consistent continued, than to are On on we for would quarter we fourth XXXX basis our If from XXXX. rather Susan. fourth like growth. focus increased loan volume loan slide by the points the the objective XXXX you, conclude basis believe and points XX quarter Thank new of yield reviewing well-positioned quarter the XX on why from to of we for third in of originations the

ratio us. X% loan of with in high-single-digits year. for growth record We were actual sector retail deposit in of is targeted the in X% from growth growth ratio previously XXX%. through fourth at in of of the to an a long deposit reducing the the company. loan balances Loan XXX% resulted have the especially We improvement an over important goal growth. the projected Disciplined quarter The loan-to-deposit XXXX increase to in closings deposit for the

about We mitigating investment have quarter portfolio further We've X points margin in controlling compression third core the margin The net net mitigate interest interest compression. core to recorded interest the margin pressure. decreased in repositioned the talked net of quarter the steps and to taken aid basis from NIM this future XXXX. in

expenses is fourth low as increase XXXX as Win approximately mere market the and increasing the Universal to and $XXX over XXXX in in compared deposits contained share branch time spending per market has our this quarter in million to established year-end more resulted only the Bankers ‘XX. in XXXX. to program noninterest of been our new XX% sales Universal employee. of third to-date rate by XXXX additional quarter very-successful, home are end our paying as we've million time The the X% first by Expenses over have model in in targets only fourth in full-year increasing quarter from quarter Banker while has investment the environment. XX% compared a total customers. gathered The $XXX with -- of The We of dividends. decreased Flushing The

In sheet, our and community banking capital exceeding and Our conclusion, in York growth strong preeminent levels, relationships. deliver the to by profitable financial customer market and all vision our represent leveraging grow services to multicultural strong innovation consistent the base its ability security, a talent, company us. long-term opportunity be to is strong cyber management in shareholders. City position Company expectations market very investments continues customer Asian with significant The balance well our New for our philosophy, risk value deposits, to to

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

Operator

you. Thank

Fitzgibbon question & will We O’Neill question-and-answer [Operator session. Partners. Instructions] Sandler today the comes Please now begin Our Mark ahead. from with first go

Mark Fitzgibbon

morning. first Good question. Susan, Hey, guys.

first those items help us in. numbers and quarter? what is about unusual expenses -- dollars quarter might Board always you for the fees look first the dollar for think with The like come compensation Could little a that in might such

Susan Cullen

the $X.X in to ballpark. to expect million million up that million, the $X $X.X would somewhere between I quarter first be dollars in

Mark Fitzgibbon

XX%, pretty that would rate, a sure on be is said XX%, what And range. the still of not are then, sort to secondly, heard big to XX% about? versus I things which what cause it tax the you you're main What XX%

Susan Cullen

It XXXX the when may change would and little allocation tweak that be bit. our a wait that return for we tax allocations the finalize they

Mark Fitzgibbon

how guys managing And then, next, What regulatory targeted kind you you I’m or ratio -- are are capital ratios? equity about to? curious are you of where thinking common your tangible

John Buran

these free regular we we of level manage And basis. order test we plan. so our stress we complete feel So, that on have adequate strategic an to in it capital a

Mark Fitzgibbon

today? plenty have you like feel you do And,

John Buran

Yes. We today. good feel shape we're in

Mark Fitzgibbon

was I growth, the maybe the some sheet that some challenges what and John inexpensive guess, repurchases, balance to divert I you of given of sense NIM curious given make would the is, it slow stock about capital that is how stock today? price towards have

John Buran

volume, the to preference of new the Company focus do we we're there. that portfolio, trying obviously, what loan create of loan the obviously spite been our customers. fact to we've the yield have always has in versus that's been emphasis. impact some positive And had and growth What always So, had -- on is nice with

a customers, coming non-broker in channels. not say I us customers be That our through priority upon increasing, to to of doing. is only direct particularly new first continues real the business the that business, estate and So, C&I business, traditional is customers would creating are group proportion creating new basically we're but some based direct-to-customer business, which of our also coming a is greater estate business real greater

the and before. an they I while more is in we've the building I repurchase, customers deposit and -- more think loan on opportunity on franchise side gather believe results. of on think there I results, we we're seeing had both some have are side do So, terms value value And there's ever than clearly to stock

like in keep we'd place. to that So, preference

Operator

Comery comes Please question with Steve ahead. G.Research. from next go Our

Steve Comery

categories, too. loan guys improvement I good bunch your really you across real the non-multifamily estate, there just seeing of sales in just in growth, about wins different wanted competitively commercial there team? you’re especially are Is different strong yields to or getting anything and ask first

John Buran

to Competition, the be space, obviously, on in the in continued for real pressure estate has multifamily driving sure. area strong,

relationships we we've of business, number -- for the And focused commercial capabilities have had building doing be into place a we continue more we've on time. that that. in over years given been move to to So,

and our to own direct opportunities business our from grow more and see the transactional business. clearly capabilities remains relationship-based our that our particular holding the some estate let’s intense Competition Again, upon into been and also we're driven to So, in pivot continue based C&I in But, our competitive. customer to business real has multifamily say we to highly across business. more board. fairly away has

Steve Comery

and kind Okay, of typically very to seasonal the accounts. move good. QX And I ask the deposit want then, we about see NOW in

be goal kind deposit that for of something fits the that XXX%? is the First, ratio move seasonal how of to we anticipating And into sort loan QX of also I'm wondering XXXX? closer to should

John Buran

the So, half I of your guess, latter question. let me take

to continue like would we loan-to-deposit to driven forward. as be just that to depository relationships build relationships a think closer our going XXX% really goal I and While to is ratio by desire

I relationships, Steve, say force you part first could And number. would the building much driving particular that is not so of deposit So, the a long-term repeat question? just

Steve Comery

see just seasonal uptick we in in a Usually deposits, that anticipate wondering we Yes. if XXXX. should

John Buran

Yes.

those we -- kind of a jump in usually it the trail a of the think, see in end bit off to little starts government deposits quarter. by in January; our I

somewhat trend Win and the program. I mitigated branch, our of number success Flushing one, think, new be to some by our is going Chinatown in also that

trend but same the intense. generally see may maybe as not we So,

Steve Comery

what Flushing will and growth mitigate… the from say mean you Win when mitigated, And you'll you Chinatown is have that that branch

John Buran

well. quarter We're the exactly. going possibly least of that first branch, we're we actually feel then, $XXX to branch that from expecting in And Chinatown some of very, program place million more, Win the given that Yes, the and end to number the get hit as results of that good the very by now. clearly, at out do we're Flushing

some run-off two of those the government in run-off, the some that we seasonal the place takes So, factors of see mitigating portfolio.

Steve Comery

may. for one And if then, I me, more just

time-line efficiency and there? mid-XXs. sort you You to us to to could on the a goal ratio give get low mentioned expectations the trying of like Maybe indication any

John Buran

revenue-dependent. So, for us, I that realistically is somewhat think,

on margin, that big continuing by our both improve cake will is the the expect, which branch turn the system, the other Meanwhile, that the think kind the productivity we're what so icing that we way corner we're on the in reducing -- I the we to for to start as or So, be of do us we expenses relative XXXX, move. increase. reducing out don't of to revenues

Steve Comery

in goal not improvement in reaching expect necessarily but XXXX? that XXXX, So,

John Buran

Correct.

Operator

comes question Gilbert next from Our Collyn ahead. Please KBW. with go

Collyn Gilbert

I just to expense wanted circle the back on discussion.

indicated of lower I know kind had you you keep well, of where outlook and ‘XX going But, one expenses initiatives expense lower run that's a you to than some What given running ‘XX? what the Susan, you up. So, the quarter thought Do rate in at put is you lower them where obviously, growth, were maybe go. you guys put for year-over-year that have? can than you think expenses in have

Susan Cullen

low-single-digits, from in expense ‘XX the the to very increasing growth similar anticipate expenses to we We ‘XX. had total the

Collyn Gilbert

‘XX. the And in reported you NIM. and But, mean, continue try growth? then, indicated NII through compress, to NII little Hearing compression, to little just can to going throughout thoughts to that the and Are -- a I to you're talking back that on is increase bit you the you indicate just your when John, And you your are or to about talking about terms framing core about maybe too you're drop? that there NIM bit? try does to hold quantify a going expecting to comments just of more? talking continue it NIM,

John Buran

increase The but next because were in NII. on We terms prepayment or we is obviously, down. growth. through core of a you puts core -- focused was can So, to NIM in the penalties, next we're NIM just get trying in quarter period that the hole NII more

you're looks we for strategy. deal the So, real forward. going growth nice of to as view quarter, lack but a that quarters with It don't one in going

the a look the for that digits quarter had So, clearly the probably lowest had in we the at best the last the example, you it's being it's in year. net X had basis the in -- is basis interest been margin. with if interest us, couple outline points been the -- all for single Last a year. core And being -- big X we've drop margin X But, points in quarters. lowest interest net core net we

think our the some So, But, the and yield spread-based we we're are major control changes of the to the between to day, any bit make still deposits. ability we business, there. a getting growth at end not better loan going little a of

the the is shape going and forward. ultimately curve loan the us, factor relates to deciding particularly pricing for as of be a it going So, curve to

Operator

next with comes Piper Jaffray. Brody from question ahead. go Our Preston Please

Brody Preston

I rate I guess, I I you on that expecting guide. guess guide. get understand, maybe to the little a just clarity wanted to wanted NIM within this regard dynamics the hikes maybe rate year are with to

John Buran

as remarks, there's a X. So, might -- I mentioned thinking If thinking prepared the about X, less in we're than we we're better. be doing little bit

last not of opportunity we an it's do couple on do is also since you but on curve we variable idea combination shaped curve, again, that's we of because -- the important loans. -- loan rate -- a reasonably think hikes, over then So, a course of side the of But, only have it's us, gives the rate we vis-à-vis put that that shape significant more kind that there. more we years, of have a the the to

a loans the portfolio, which is those market of first So, if of three-month $X growth is on presentation, variable in is result I’ll loan a of you our growth in the the is you XX% a weighted And exact, to with repricing a look that on our really have -- up course, toward very the rate continued move it the generally for be sheets the on on with that of in at portion of number But, second. it the of -- is the of page billion presentation, continued page of one -- very, year. get basis. XX variable our much we our rate the

So, basis. month or sometimes even on a

So, we side. see a lot of leverage on that

of the critical is shape So, to curve us. the

Brody Preston

Right.

doesn't look guys those that in like look XXXX, rate out laid for I for a rates. much of Is your -- it that have at the fair loans expansion statement? loan yield those when repricing way you assuming the at So, you're through

John Buran

I there we're points -- XX XXXX and Well, XXXX… XX think -- talking in was basis

Brody Preston

No, I'm hikes it repricing or a favorable assumed like a X.XX, doesn't it X.XX, doesn't you've like basis, like role-off you've the in look I delta. like look the mean the role-on just on -- a rate rates deepening? the to X.XX, year-by-year curves for actual I way understand is of assumed But, the from benefit much -- speaking pretty

John Buran

those increases in and projecting year X we're the years. rate this again, really Well, out three not increases rate projecting those much and we're change

Susan Cullen

this with had Brody, at interest put we table together is dynamics the XX/XX.

cetera, there et if rate these numbers year, obviously, change. So, during will the are increases

Brody Preston

costs moving stabilization lower amount by CRE to that start a multifamily Susan, is year-end? no I to rate the occurs, that mean, on you drive I is with the to higher. moving hikes we deposit this ultimately, to with I’m funding get in guess, see, some of if I a the continue the that lag decent have start going beta see book pause could given deposit at you get happens Fed probably and is beta given we But, on trying what forward, year, if that fact higher, the do still NIM just could

Susan Cullen

few slow Yes. laid given than higher that out written. beta is a years, believe environment were five right. have when loans had will The rate on still the increases. if loan years there rate the are a deposit repricing ago we increases, We scenario you these contractual no down, The

stabilization see or expect no rate would we with expansion So, to either increases.

Brody Preston

rate or become, impact rate on maybe I start you is Is it swaps to to guess the then, that what those scenario reach that to I layered on, just to NIM? And you guess, I guess, threshold need the harmful what -- those there see a decreases in interest NIM? to have the do negatively

Susan Cullen

It would in decreasing those a be -X- become environment, to company. harmful would the rate

Brody Preston

And the NIM then, on more for maybe question. sticking just one

old in wanted was? that and more between in for of, yielding was the them $XXX securities I spread the yields sense securities On into moved out what then you you higher to the get new the $XXX securities versus it million those sold securities. the a

Susan Cullen

and went release, funds. XXX. as with new recall. press rate we there to remarks I about from And mostly -- bought about I is I was securities XXX believe It prepared about the floating XXX basis in points, the

Brody Preston

well back does help then, it And like retail I customers it's customers strategy, with branch Universal to as is working on commercial out model, Universal to transactions Bankers just just that increased to the guess, really you well? And the do for wanted the with go seems driving I better I -- understand guys. Banker or wanted the that

John Buran

have we short the yes. is So, -- answer

to say, place, we is volumes. against So, much have substantive more, have engagement there let's taking staff customer transaction don't because

sales So, the the it's are on opportunities, interactions of focused commercial business. to the the customers leading whether quality or And better more with we're commercial. clearly, consumer

helpful. So, very, very that is

relationships deepen estate in years associated is had network to a branch place have number that focused we we that to addition, put a works real And with a portfolio of that commercial also team the our team is a traditional In ago development then, commercial there. business continuing develop on -- relationships.

where discussions more clearly, seen So, operating, branch one and significant where substantive and network we've three the much got sales. we most improvement different recent have more areas clearly is the a we've

Susan Cullen

an securities Brody, We we I'd the an yield like for go with a sold investments with second. securities in of to that release X.XX% and of your reinvested disclose back press X.XX%. average to yield average do

reinvesting rate it's those again, were floating securities. XXX So, And to basis points.

Brody Preston

skimmed must Okay, that. have over great. I

Okay.

just growth. I And so, I the on wanted C&I to touch guess more

wanted account seems You noninterest-bearing to actual like C&I ratio on deposit self relationship? growth decent an portion I at as there. guys a like I to guess have what And -- I is seems a that in well, look the least sense like terms job it done the for percentage a incremental get it loan really when good of at funding it. it’s of

John Buran

We don't -- have that really information have we available. don't

We publicly. haven't out it really just we really haven't put --

Brody Preston

Okay.

John Buran

cash portfolio, requirement. I additional in on management order And of usually, those a or mean, just cash a me deposits balance services like then, management, for basis. discussed the cover example, usually compensating loan give you other to add companies the of services publicly. for type services, we guidance balance remote available; a pay Every in noninterest-bearing minimum C&I let XX% in the to information cost it some capture it. order haven't we compensating have But, C&I on has

Brody Preston

bucket, then, And good there color. guess, loans? industries within having C&I That's All success growing Okay. I that any particular right. are you're where

John Buran

particular Obviously, is in loan opportunity. the grow where more. it -- that we Professionals And portfolio loan less deposit requirement kind industrial way. other companies, the to the look than the more works of the

Brody Preston

Right.

are that accountants? and about lawyers mean would So, you talking like

John Buran

another profession Right. accountants, medical is Lawyers, one. service -- other the

Brody Preston

for the Are touch then, wanted remains concentrated bit me, within I good, or industry loans? right. to guess give banking could any a Okay. I that asset more just those understanding business quality four those one on you All very overall color specific more on And loans. little

John Buran

concentrated aren't any specific No, they industry.

of $X.X look X Let’s you exposure. this if are all at -- million paying a agreed and the million with $XX exception as loans loans of individual substandard see, of

dealing are defaults. So, predominantly here with what covenant we're

Susan Cullen

past piece on clear as of payments that as that paying is saying loan is agreed still paying million, receiving the a But don't agreed. on $X.X be its To we since is not we're that largest the have that’s it's really agreement, it. not a that maturity. renegotiated We're

Brody Preston

Okay.

Susan Cullen

is it But, paying.

Operator

concludes now conference any session. back to Buran, would closing I to This over for like the turn remarks. the question-and-answer Mr.

John Buran

the Thank conference. for Well, all you you. joining thank

on quickly, think strategic wrap we've I continue very these focus to outlined just we're presentation. initiatives -- the up that within we to

some have individual we has I you And questions, us. hope think, if to we're can where any conferences. seeing success find anybody continue And to here. know that these we

thank So, again. you

Susan Cullen

you. Thank

Operator

teleconference. today's This concludes

thank for may disconnect participation. your You And you your lines. now we