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Flushing Financial (FFIC)

Participants
John Buran President & Chief Executive Officer
Susan Cullen Senior Executive Vice President, Treasurer & Chief Financial Officer
Mark Fitzgibbon Sandler O'Neill + Partners
Brody Preston Piper Jaffray
Collyn Gilbert KBW
Steve Comery G. Research
Call transcript
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Operator

Good morning and welcome to Flushing Financial Corporation's Second Quarter 2019 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 after today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]

earnings be and on referencing Relations at the the presentation its of website will company today flushingbank.com. copy press slide release that Investor A are available

that would made statements the Litigation Safe the to company Reform contain of under the provisions Private begin, this call we remind Before you U.S. discussions Harbor Act during forward-looking XXXX. like Securities of

law. such actual uncertainties statements. results in filings subject Corporation are Commission. obligation factors except other any any statements contained included and in factors to Flushing undertake to those Such forward-looking risks, statements any differ required are the to with as applicable may Securities Such materially the Financial from cause and update not that company’s does U.S. Exchange under

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

information non-GAAP please measures GAAP, a to earnings reconciliation the to refer these more about and for For release.

the now and ahead. John like to of and Please President Executive results. who would will an overview Buran, Officer, go provide I Chief introduce strategy

John Buran

you Thank XXXX for earnings Good for call. everyone, you. and our morning, thank us joining second quarter

Cullen, second greater continue review earnings in Susan value. our As are expecting business with strategy we hope call, long-term additional competitive to our overview highlights to performance our positive I'll CFO, of financial we create shareholder our provide always, an begin consistent, power, strategies today's insight and on provide and to will you Then into detail. the with advantage. then sustainable quarter

GAAP period. remarks, XXXX, address XX% we're first earnings during same Beginning of and the quarter the diluted Susan slide as per while overall report your Following increased core X, questions. earnings rose share for will growth, prepared XX% our pleased to on I earnings

share yield of per business. on quarter down net were increased pressure inversion pressure with diluted XXXX as coupled GAAP margin both earnings interest the in same curve, from deposit by However, core and our competitive the driven returned,

includes GAAP of We loan quarter the second closings slide to quarter increased The of core experienced reconciliation from XX% as more the in XXXX. first presentation earnings. growth robust a

second In basis XX% during addition, yield had increased the same pipeline first of on pipeline X.XX%, XXXX. $XXX XXXX. the over the points The for million since the than loan largest an of the of higher core to is total quarter average quarter XX pipeline which mortgage yield period, the loans

diversify produce XX% the of at quarterly XX% loan XX% to during total XXXX. loan rate loans at of as representing with XX, the loans total and These XXXX continue represented quarter compared floating June we are XX, portfolio We closings loans $XXX record closings. June generally of C&I million,

of The improvement XXXX mortgage an second also saw in quarter our loan business.

increased the the from modest million growth of Mortgage is annualized. first quarter loan closings $XX a at first Loan half X% tracking XXXX. for

liability sensitive. growth second accelerate remain of Given expectations, the the pipeline expect closing size will XXXX. and in we the half loan We of

the components sheet balance we of have However, mitigate in some the that sensitivity.

an approximately noted, scheduled is are portfolio XXXX, points. $X billion have Through of XX% I've As re-price, floating of generally our C&I rate. loans, to which we up basis of loan loans XX average

we and NIM strategy the market in the swap our increase compression movements coupled rate. to should mitigating full contractual recognize rate receive see balance in to that be These not the the sensitivity a of reducing our may core liability we but important sheet. We premium continue rate, elements with

$XXX interest borrowings, take NIM. into rate which we in million, core neutral, points $XXX on an of swaps of four the advantage all is which being goal to towards long-term allows provided entered million of additional to June to benefit swaps move to Our Therefore, rate environments. basis interest us bringing XXXX, total

increased deposits of in total a resulting municipal deposits, deposits outflows reduction seasonal for in offset million $XX Retail by by the quarter.

continue of deposits which Queens. increasing second on from million in to we community deposit At exceeding market Asian of the share see Flushing Win the focused initial the the captured $XXX the our We Flushing positive program have over program momentum end quarter, goal. from of our

was staff component Win of key Flushing to which with Banker allows spend the branches to of more A program model Flushing the Universal the time conversion customers.

Banker our branches by expect and convert have Universal to to We the to converted the continue year. of model remaining branches end the this

under XX operating the out XX Universal of As our had of model. XXXX Banker branches June we

XXX% branches reducing that of transactions our an converted, experienced ATMs customers' at processed we In in have to the tellers. on all reliance branch approximately been transactions XX% increase of over

a Credit from As focusing first have sales XXXX. sales increased branch due unchanged quarter over as were per time staff remains sales employee opportunities. quality as approximately XX% branch on loans to non-accrual and increased result, non-performing essentially XX% more our strong,

primarily value only net loan of resulted commercial one million from equaling a $X collateral of the as the book quarter's charge-offs business remaining million XX, identified And has The in relationship $X.X relationship. June previously value.

City laws. During new the rent quarter, regulations New passed York

on believe will On New York have regulations our rent what mean recent have impact in minimal -- us. they on portfolio. performance slide four we provide some City changes we Importantly, loan to perspective to

rents on Board. above new Guidelines rates. to Rent increase owner's by including some higher cap highlight slide, rates and you this valuations know We declining the potential recommended rules As ability restrict an risks

coverage LTVs, loans characteristics right this which performance side excess of strong cash flow portfolio. our in believe that based upon have these approved on underwriting. of of loan impact any importantly, minimal mitigate will multifamily More the slide, rent regulations current our debt X.XX, and including negative impact we portfolio Overall, loan and on highlighted ratios we've the of on laws, low

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

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

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

Overall, new business core we net remain to lines; long-term continue risk; X; further and earnings summarized returns; we growth stress profitable strategic growth, improve on is our scenarios. remain test and and focus well-capitalized manage objectives which deliver channels risk-adjusted best power and under improving funding and efficiency; value very mix, expansion well-positioned scalability our distribution the Slide to continue loan and credit to as increase through yield deposits core on in shareholders and manage to enhance to by profitable and all growth execute

shareholders. steady consistent long enhanced our Our on focus strategic growth value over deliver these to term profitable enables the and objectives us to

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

Susan Cullen

you, XX% loan X. Slide with These $X.X X% production we John. approximately full year-over-year quarter for Thank loans up and of over on relationship. originations total quarter-over-quarter banking totaled loans on of as a X% Total begin I'll XX% commercial continue and billion, the past focus business year. were the the origination to

the of continues the to as of to approximately more XX% primarily diversification year-over-year C&I XXXX. the have advantages to And as loans interest margin. Commercial adjustable business offer these primarily loan grown stability loans gross of continue portfolio portfolio. XX% rate yield XXth, June to The balances our offers are in net growth

quarters. $XXX million the is million and adjustable product As at as totaled up composition significantly The million pipeline John pipeline rate from prior end the remainder $XXX fixed highlighted two loan was which with June the of of the XXth, rate. the our $XXX XX% of

service of conservative at which the the mortgage one-to-four an at real real ratio core loans for XX% approximately is of XX originations average loans The coverage pipeline debt multifamily is loan-to-value of for yield estate loans portfolio mixed-use on Interest the on and estate yield X.XX% XXX%. above commercial basis the the remains core and rate the current our quarter. quarter total has family end in points

each test using cap continue loan individual mid-Xs. rate a We in and of excess underwrite to the stress

the Slide of our X highlights funding evolution mix. continued

the access to to the As funding up advantageously we for markets, can we percentage terms. When borrowings ladder decreased. liabilities years, grown funding longer has over has wholesale need the and the related CDs

X% primarily deposits core due The decreased to have at X% discussed. June however just XXst outflows previously as deposits deposits the and Core XXXX. quarter-over-quarter, municipal totaled seasonal to XXth year-over-year XX% in all December increased deposits the at compared of XX%

due deposits increase and market just decreased driven that quarter-over-quarter municipal noninterest-bearing X% in the X% under deposits you'll will deposits. seasonal CDs Slide money by The year-over-year outflows to On nearly deposits. X, see

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

to from the encounter The competition points quarterly for prior cost strong basis of quarter. deposits. increased continue We XX funds

remain will in We while our remaining pricing, competitive of disciplined deposit markets. within terms

Turning of quarter-over-quarter to by Core margin to detailed. quarter-over-quarter of quarter X.XX%. points interest competition margin XX net points and the interest second $XX quarter-over-quarter X% funds XX down net as the higher XX, decreasing net John million XXXX at to basis cost driven was due income for down pricing Slide interest X.XX% low basis previously also

loan Slide yield highlight NIM. the our the using One improving support is we are to On strategies to XX, we the related on portfolio.

XXXX $X repricings at over reprice contractual These highlighted, average but are the scheduled billion loans will we not through an the refinance. loans John these rate, of XX to upwardly price market and may contract points. reprice as to reprice As the full basis of between

strategy. relates A to stabilization our of yield swap second component the

highlighted, benefited interest supported was As totaling rate net core by which NIM the John points. the $XXX basis the quarter swaps second four interest margin by in million,

balance strategies we our funding further in which sheet rate us strengthen over costs the all and interest to sheet we'll to opportunities to environments. continue more long-term, evaluate be neutral, seize allows balance as our Importantly, rate to actively position interest manage

year-over-year. to second from quarter X% expenses decreased the XX, million the decreased approximately previous quarter. Non-interest Moving slide expenses $X.X

in the is and XXXX. to decreased of non-interest totaling in second X.XX% expense expected million, non-interest of X.XX% the compared first $X.X in quarter quarter seasonal the second second The during quarter. in expenses of the average recorded the onetime Excluding ratio quarter and XXXX assets first X.XX% to expenses quarter X% the

second to the The us The has XX% an quarter NIM the the in maintained was relatively The in low mid-XXs. XX% stable second of will assets. historically XXXX. our and compared company XX% assist expense of quarter the non-interest of ratio for first to a in achieving in efficiency ratio to goal in improvement quarter long-term average efficiency ratio annual

As operations and look on are focused we always, for continuous opportunities efficiency gains. for on improvement

approximately effective XXXX. the The taxes. in tax XX% was Regarding rate of quarter second

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

quality credit to turning Now XX. on slide

quarter. Our remained this metrics strong credit

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

credit quality strong ratio December our Our coverage from XXXX. to XXX% XXX% of as XX, increasing metrics results

Looking forward, provisions XXXX expected adequate growth the that as we for be reserve losses proportionate maintain John range, growth for loan to recording loan with noted, an future with to in level. quarters mid-single-digit anticipate in

remains were origination quality did relatively The core On real slide flat quarter-over-quarter, our $XX increases. one the loans appraised loans adjust loan-to-value of credit XX, XX% of and as of upon values non-performing our non-performing for based collateral not estate was the and million, we under approximately value average underlying strengths.

from net partial the increase quarter, Given relationship and of expenses. charge-offs of provision in non-performing charge-off net the do commercial charge-offs a the first had primarily nearly estate foresee a real with The million we the an also second recorded In that resulted associated low not quarter. business loans, loan $X.X in $X loan-to-value we one million. related

became recorded. information available to Additional charge-off on led which loan, the this

pristine. $XXX,XXX, of of relationship which XX, of Importantly, as year. the Slide our value a percentage by as vintage collateral. originated equals our Overall, value XX quality the June credit remains of remaining shows has the delinquencies mentioned, John loans underlying book XX-day

strong As delinquent our underwriting with XX days loans XX vintage than years. you can see just the discipline results last greater XX for the of

it turn to comments. for John I'll now back some closing

John Buran

would remain conclude for profitable Thank growth. well consistent reviewing why like to by we positioned On continued you, I slide Susan. XX, and

the in a business, our closings. portfolio significantly closings more We rate continue C&I as improving XX% balance to and non-brokered we loan growth move quarter loan toward floating C&I pipeline see positive to trends improved of including sheet second

be to balance important of in liability the core NIM compression continues and mitigating strategy the swap sensitivity Our component sheet. an reducing

being of risk rate to advantage take is move neutral, allows interest goal towards us environments. which rate to all interest long-term Our

non-interest has the quarter We this increase $XXX our expense very have have program been and first the home compared in our of expenses gathered of ratio XXXX. The of new average market exceeding second improved $XXX to environment. second to original market deposits, target contained of X.XX% assets rate established million. quarter share to in Flushing in our low non-interest The to-date the in X.XX% X.XX% to in successful, Win quarter as we million

Banker The time The The and has dividends. is spending investment employee. customers. approximately resulted paying additional with XX% are sales model in the total branch brand time per XX% in Universal in Universal more increasing Bankers over

ongoing maintaining Asian City is multilingual diverse a Our New to a continues market, on focus with base, customer City developing our its The New customers us. represent significant a York York staff branch for and strong key advantage. to opportunity serve

that Our banking our multicultural preeminent to Overall, customer exceeding relationships. community company be market credit financial area remains quality the by services pristine. leveraging in expectations is strong our remains consistent and vision our and

position grow deposits, shareholders. deliver all in the very our consistent profitable strong risk summary, and innovation further long-term to balance cybersecurity, value capital management to growth company to In philosophy, well ability our in investments talent, strong levels, sheet,

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

Operator

[Operator end. now the Mark with comes perhaps question-and-answer We your line Sandler Please Partners. Mr. + Our Fitzgibbon, on will Fitzgibbon from begin question your session. first ahead. go muted is O'Neill Instructions]

Mark Fitzgibbon

morning, you. guys. Thank is. it Good Yes,

Susan Cullen

Good morning.

John Buran

Good morning.

Mark Fitzgibbon

quarter. I maybe involved it's well? more bit by it this And wonder other little give a banks Maybe start with there color on if C&I big industry you us were could What that in? what -- as happened? if charge-off

John Buran

charge And pharmaceutical No took vast pharmaceutical of we for loan -- last position, banks same was other It's it in quarter. It's in charge decided reassessing majority we to this the the the on early involved. the all retail quarter. a that industry.

Mark Fitzgibbon

quarter event with been you had I'm it not last employee an Had something mistaken a said though, since If was one-time that rectified. then? changed

John Buran

we assessment and collateral independently collateral our to We than came of had is, anticipated. more position changed. negative up that somebody the in assess happened position What come the

upon company, collateral So it the further for down. was same it but cause, position the inspection it felt what was write of we the to prudent

Mark Fitzgibbon

volume. said you then, to NIM that more the secondly, kind focusing And over you sort I that that that Okay. mean Does of of position impact likely see release excluding modified your of think, swaps? compression, in we're rate the core on on

John Buran

price to the leader. I never would we're say, going So, be

consistent yield volumes loan So slightly. the reduced will with that we've years, -- to degree which the the the changed both operating was is inversion way that of that What the over company remain that the curve, the very been our same. very,

We're clearly had terms of it on the flat yields. impact but pretty loan in well loan an originations,

go So of to we had market competitive to didn't respond we that deposit way course, pressure. simultaneously, cost And us. which see any in down surprised then

Mark Fitzgibbon

maybe we So from today to see say rate compression the than if impact July factoring look and in margin back what year the of half we in swap slower cut you of at a September, you would in XQ this from albeit anticipate what saw the XQ?

John Buran

and between to in do on been interest interest think able -- we've net income income what past is between of differential cost the more I the focus funds.

side year stabilization. compression as did continue the And some inversion we the seen that on in see mentioned had earlier some the market loan curve The a more not pressure we'll the thought then still both some end way. compression result, I as New we of and react on and saw yield side. we throughout the caused York think of deposit to deposit I

continue the NIM. fair on liabilities portfolio we'll be government -- think particularly short-term Fed us, in dynamic do in I of on the that to for area. will a amount unless the down any a Obviously, rates have we move short-term So, because the positive of changes, see brings pressure that the

Mark Fitzgibbon

goal you take then said levers that? that guess, -- get I'm of was had are to think kind low pull what I And efficiency the to will the long ratio mid-XXs. it likely main Susan achieve you how curious And think to do you're that you Okay. I there? the to

Susan Cullen

growing until The see efficiency we get see there mid-XXs. there, main in NIM. won't And the the the is being we that we not ratio lever need inverted curve the the NIM to increase growth to

John Buran

to close don't on -- as interest ourselves scalability. with some some to in rate the dealing the in But clearly year. keep degree company that just of the end see until moving possible order focusing we're as compression is we delivering the So companies ratio asset-to-expense margin of

Mark Fitzgibbon

you. Thank Right.

Susan Cullen

Mark. Thanks,

Operator

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

Brody Preston

morning How you? are Good everyone.

Susan Cullen

Good.

John Buran

morning. Good

Brody Preston

for you borrowers to guess exposed of type the properties wanted the understand have a borrower. I just had type guess, like holders to type I New book. are York the maybe you they multi-family family highlighted I ownership. City? get I little follow-up comments on that sense exposure you I to rent-regulated you're multi-family just in for, maybe I regarding of just to institutional get of sense wanted long-term the that But want are to -- office a better

John Buran

multi-property borrower a see owner Yes. with by the business and many leverage, in typically is for The as has typical been low can and years yeah. our portfolio you

Brody Preston

Yeah.

And I have been within to has the occurred the there in been these has you been transactions passed guess what -- within the that guidelines this any valuation And updated have cases? since portfolio so impact have portfolio?

John Buran

haven't change We much seen this of a at point.

think to see it's changes. too any just I early

Brody Preston

Okay.

slowdown you have But impacts have -- volumes? like regulations from pickup updated the been a Okay. or a in slowdown a the --

John Buran

of loans any pipeline, are it's haven't the that in quo. fallout pretty We so any much seen status

much could in more going the be pretty leave factor important think growth loan accelerate I terms way where which of the or is is. it to rates that wind either blows it

attention CRE C&I the also not your again that fact we're doing and But we're we're doing I'll well. multifamily, to as -- call only doing

classes. up make for happens we'll the multifamily it able we the in space, -- multifamily whatever in on asset other to be So that feel

Brody Preston

I to surrounding maybe allowance to impacts you and coverage. multifamily, in Understood. a some to is that Have some pretty for the potential the just guess excellent I the at negative on. move maybe your class on debt I asset your all? more understanding qualitative regard adjusted just Understood. your With the book I question with methodologies service one given regard factors as before guess multifamily whole, allowance And of guess LTV methodology of

Susan Cullen

have we No not.

ratios, Given results, it the qualitative to or LTV, the necessary felt stress the prudent adjust not debt our we have factors. test coverage

Brody Preston

you over to you C&I And these interaction guys just guess Okay. quarters. guess between wanted have understand the I growth had swaps the Thank I great for Great. several then I that that. better and the last loan

swaps rate borrowings floating, fixed that's understand swapped you've and -- fixed that or for of right? I off are those correct? They're based are the out floating LIBOR

Susan Cullen

It's swap based liability based Federal Home and -- they're the Bank it's off advance rate. the Loan

Let -- a the then me rate. but LIBOR, LIBOR is Federal other -- they a Loan of side is Home portion XX-day are them Bank

Brody Preston

Okay.

I LIBOR correct? the -- should benefit lower as that continue to so, lower moves guess And move to margin, as continues

Susan Cullen

should. else it have Yes, being that equal, Everything caveat. give always we to

Brody Preston

think I understood. benefit between is guess would C&I, Right swaps Right. the as portion larger and from like on pegged funding the a also And LIBOR? the interaction of the C&I about that I I side to the -- the book there assume obviously

Susan Cullen

a to pretty amount yes. LIBOR, pegged that is substantial is That

Brody Preston

Okay.

really driven And so an I of guess reaching is maybe two you deposit on interaction lower X in those things the as incrementally margin terms maybe I fair? inflection going cost. think to about point that Is be factor by between the the guys

Susan Cullen

lower costs deposit our Incrementally improve NIMs.

John Buran

because the some of out less depression flat an curve we could mean on quarter. the inverted loan have which Right. likely is the in I other curve the think yields factor last a the only moving be position I or

Brody Preston

Okay.

your be moved as that guess some offerings of think BankPurely? have at from pricing online, track I you or about lower I iGObanking just it looking can at those think we of any So deposit the we

John Buran

we've moved think our retail... I

Susan Cullen

We've moved retail. the

John Buran

our retail We've lower. moved

Brody Preston

the based still sort hanging of Okay. just there But you're commercial in competitive the pressures? on

John Buran

Yes.

not in terms clearly top think, in I Internet. on the the of we're out -- what we the of the on list put

Internet move or there. to it's So for down happens we be see whether move space prudent down to thought retail alert not to in was we'll the place what and the best somewhat

Brody Preston

then... Okay. And

John Buran

the by short-term better funding way current which place. of wholesale All the in are than that's

Brody Preston

to like I guess If an one so, a then what on for we try all-in XX for the we or you NIM cut rate one basis here that do expect maybe all-in? last could would to I and basis impact XX me. guess if and Okay be a from the points NIM. point impact get week get

John Buran

-- But the bit of to I that little price we business look be of the that's have depend let's competitors. with pressures market. government is we a have amount rate give think say seen -- on going fair going of a down. up to in are dependent That could of competitive upon some upon what that

market move. to the quickly. So most business there, upon and think of the And to the be move I key dependent be that government rest the is one how going that's then, going can competitors is

Brody Preston

Thank Great. right. both All for taking you questions. my

John Buran

Sure.

Susan Cullen

Brody. Thanks, welcome. You’re

Operator

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

Collyn Gilbert

Good morning. Thanks.

Susan Cullen

morning. Good

Collyn Gilbert

loan And you about of even much Just quarter's your see you a us pipeline on do the rate for question in past. this the anticipate to guys What you have all that pull-through that? on kind or what growth, do been robust to as be even speaking be you is rates pipeline? on sort you are out pointed anticipating I – Susan – pull-through you stronger. pipelines the of know what – do

John Buran

the decent – quarters as given XX% number. all and is in mix quarter it of low I I point almost last a depends upon really mean, one the pretty any as at In the But pulled pipeline through we've We've varied. probably of had XX% it's guess. time.

Susan Cullen

we we had that I accelerate so loan release of for – a press a there less mid-single digits. year in saw the year. half than And the there. expect to and was that the the is growth second we're note in out said we've it for already little But somebody year-to-date, in the is X% mentioned comments full as that anticipate the the the

Collyn Gilbert

Okay.

of lot the haven't that like should core But it because a the this we're right? sort that comments and suggest sheet year quarter. guys thinking we rate of We of inherent rationale is balance not guess get behind would just question materializing. that, benefit. in benefit before disclosures obviously, – seems positioned in that's your back swaps sort you hikes understanding offered it have and you on now way the opening the and guys last a was you have Okay. I added seen And yet my the – then more them, seeing you the NIM be through necessarily there then indicated not

curious adding Just swaps this was high? did cost that of even quarter the the – pretty

John Buran

let not points So me one see points four benefit lot, it's of basis a did We – mention quarter. just from thing. in but basis this it's four swaps those

have seeing rate in been those – environment. the from this we So in benefits rising swaps

Collyn Gilbert

Okay.

Okay.

have curious would what or if Just be be swaps you of would potential capital the calculated all the book these you cost tangible to altogether? hit unwound value

Susan Cullen

we – really No

Collyn Gilbert

Because balance number, relative sheet. seems guess the like to it's I it a large

So what I'm impact did ever understand just be yeah, the if to trying unwind what you could – them.

Susan Cullen

need We them. that benefit no to There them unwind would now. getting right have be not calculations of done the as we're

Collyn Gilbert

the environment it, I going where mean, I And get quarter. – going tricky just rate is predict looking I'm Okay. been it's the understand. Fed so just to this try to situation a and has yeah, at I to be volatile

Susan Cullen

that understand We fully.

Collyn Gilbert

Or guys to purely that's multifamily? City rent-regulated space okay. okay, the just multifamily? on exposure that cited billion $X.X York the then confirm that terms New in just all X slide Okay, in the to And of you rent-regulated is

Susan Cullen

rent-regulated the multifamily. That's

Collyn Gilbert

Okay. Great. I'll Thanks everybody. leave it there.

Susan Cullen

Thank you.

Operator

with go Comery Research. [Operator G. Please Instructions] The ahead. comes Steve question from next

Steve Comery

morning. Good guys. Hey,

Susan Cullen

morning, Steve. Good

Steve Comery

second. surprise rates kind you've pricing Just guys. in Do to of for that downward? the want you to mentioned case any why back the deposit a more pricing got – go sort moving that In have you this was be seem idea while of intense to competition the deposit and why activity

John Buran

in the CD and competitors just space aggressive. getting space saw We more the in particular government

Steve Comery

no this of Okay. that, to happen reason right But just it's other? surprising just guess, as it quarter it why particular any there's I opposed in would – kind

Susan Cullen

than funds is mind the higher that a we first the this that quarter in at The to of had government other government the quarter. outflows seasonal cost thing keep were in Steve we the on have in books replaced funds

the the So, should back third those flowing reverse of funds should we itself. in see quarter, fourth at so start kind of that end to

Steve Comery

Okay.

That Okay. makes sense.

I mortgage a down And the shift looks the piece rates looking it category? rates there. mix just at mortgage it loans loans loan the at Or that decent up down pushing a then, is non-mortgage think yield. closed table like a inside and then there's of the were pipeline amount, missing there, much was there mentioned lot. that kind also while and the our was were closed kind Maybe competition all? lower yield within you Is than categories of the

going sign of So, that? a kind how of read Or that I is competition increased forward? should into

John Buran

I think it's the of associated with yield curve expectations. and the movement

you price was where at the generally if So, at five look tenor we the inverted, it at year. that the curve right

of movement. regard a result provided So you type and think -- if you that in look at the curve and that I the changed customer expectations as

Steve Comery

Okay.

yes sense. that makes So,

the about then you -- the appreciate separating you by And repricing, that get but XXXX assumptions rate I built mentioned rate, and kind environment in it XXXX was your kind might year. into are in these like then just get the full And to I contractual just for of of of XX just, wondering, Susan, slide loan comments tables? prepared I Okay. think overall what kind not trying basically.

Susan Cullen

assumptions right where right that to now. we built that's flat The compared now are into are these

Steve Comery

Okay.

now? environment So essentially, the same as

Susan Cullen

Right.

down, will flat. modeling, if would it's -- go increase our of come a Fed it, So just up left rate obviously it's just cut it but or because there's we this it the -- if they by

Steve Comery

degradation this longer mostly you that kind about this margin I on in release, the -- margin I'm rate right? of I what neutral the desire because there. neutral. that relatively rate press sort just to fine. just a of to Okay. kind pricing thinking me in basis kind in -- quarter the term, Or of have kind know I about of helped am And mean would move Yes mentioned was even that's incorrectly? would increases then guys thinking and wanted in the being was the wondering of toward of being kind finally from for deposit just

John Buran

the Well, have and think, funding implies of in we the some deposits in rate have we changes type general. of neutral I type

a So, going I that that's strategy think key of forward. our component

Steve Comery

Okay.

rate you order, your would that changes? mix So, shift the vulnerable to being in deposit you pricing sense neutral so be that as wouldn't

John Buran

Yes.

bit have mix in a of... volatile possibly just less So a terms to little less deposit

Susan Cullen

Continue the noninterest-bearing deposit. grow to

John Buran

Right.

Steve Comery

good. me. it That’s guys. Very Okay. Thanks for

Susan Cullen

Thanks Steve.

John Buran

you. Thank

Operator

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

John Buran

of any Well, analysts or there much questions. are attention if we of and you are the thank your always, investors. as very for available, your always the from any questions any for And follow-up

thank again. you once So,

Susan Cullen

you. Thank

Operator

The for now today's conference has Thank you concluded. presentation. attending

disconnect. may You now