Q2 2022 First of Long Island Corp Earnings Call
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Operator: Welcome to the First of Long Island Corporation's second quarter 2022 earnings conference call. On the call today are Chris Becker, President and Chief Executive Officer, Jay Makoni, Chief Financial Officer, and Will Aprigliano, Chief Accounting Officer.
Today's call is being recorded. A copy of the earnings release is available on the corporation's website at fnbli.com and on the earnings call webpage at www.cstproxy.com/fnbli/earnings.
C. S T proxy dotcom forward Slash F N B L I forward Slash earnings.
Before we begin, the company would like to remind everyone that this call may contain certain statements that constitute forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995.
Such statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contained in any such statements, including as set forth in the company's filings with the US Securities and Exchange Commission.
Investors should also refer to our 2021 10-K filed on March 11, 2022, for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements. I would now like to turn the call over to Chris Becker.
The call over to Chris Becker.
Chris Becker: Thank you. Good afternoon, and welcome to the first quarterly earnings call of the First of Long Island Corporation.
Good afternoon, and welcome to the first quarterly earnings call of the first of Long Island Corporation.
Our company works on a mission of continually doing the right thing to help our customers employees and shareholders succeed while being socially accountable to the communities we serve.
While being socially accountable to the communities we serve.
We are committed to making a meaningful impact on stakeholders through ethical intent and strong business practices and believe these efforts create long-term sustainable value for our constituents.
And believe these efforts create long term sustainable value for our constituents.
This week, we rolled out a new web page dedicated to showcasing corporate integrity at the First of Long Island Corporation.
Turning to our results, we believe the second quarter and first six months of 2022 positively reflect the strategic initiatives we have worked feverishly to implement during the past two years despite the pandemic. Some of these key initiatives include, supporting the growth of our balance sheet with profitable relationship banking business.
Positively reflect the strategic initiatives, we have worked feverishly to implement during the past two years despite the pandemic.
Some of these key initiatives include.
Supporting the growth of our balance sheet with profitable relationship banking business.
Loans have shown three quarters of strong growth and deposit growth continues as our relationship teams have been successfully onboarding new customers. Our recent loan growth has exhausted the bank's excess cash position. Management is focused on future asset and loan growth being driven from increases in core deposits.
Our recent loan growth has exhausted the bank's excess cash position management is focused on future asset and loan growth being driven from increases in core deposits.
Our second initiative has been recruiting seasoned banking professionals with longstanding relationships. Increasingly, as bankers have become frustrated with the lack of responsiveness at their bank, they are seeking us out. The word is getting out that we are the go-to bank in the market for both customers and bankers looking to make a change.
Increasingly as bankers have become frustrated with the lack of responsiveness that their bank they are seeking us out.
The word is getting out that we are the go to bank in the market for both customers and bankers looking to make a change.
Our third initiative over the past few years has been optimizing our branch network across a larger geography. We established a three-branch presence on Eastern Long Island in Riverhead, East Hampton, and South Hampton. June 30, 2022, these branches have deposits totaling nearly $60 million. We successfully consolidated 14 branches with minimal customer disruption. We are currently working on three branch relocations in much more visible and convenient buildings in Bohemia, Fort Jefferson, and Melville. We continue to look for appropriate de Novo branch locations to expand our geography.
We established a three branch presence on eastern long island in Riverhead, he stamped in South Hampton.
At June 32022.
These branches has deposits totaling nearly $60 million.
We successfully consolidated 14 branches with minimal customer disruption.
We are currently working on three branch relocations.
But much more visible and convenient buildings and Bohemia for Jefferson.
And Melville.
We continue to look for appropriate de Novo branch locations to expand our geography.
Our fourth initiative has been our new branding and a community-first focus to improve name recognition and enhancing our website and social media presence. We celebrate the bank's 95th anniversary on October 1st of this year. We have been using that milestone as the catalyst for our marketing in 2022.
We celebrate the bank's 95th anniversary on October <unk> of this year.
We have been using that milestone as the catalyst for our marketing in 2022.
Finally, we've been working on moving to a new administrative space in Melville to support our growth. I am pleased to report that move was completed in the second quarter. Also, I'm happy to report we just entered a conditional contract to sell several buildings in [inaudible].
I am pleased to report that move was completed in the second quarter.
Also I'm happy to report, we just entered the conditional contract to sell several buildings in glad ahead.
While these initiatives have been successful and helped produce our best six-month performance in the company's history, we do see some headwinds in the second half of 2022. Deposit customers are starting to demand higher rates and in term borrowing rates are generally well north of 3%, putting pressure on our net interest margin. We anticipate the margin could decline over the second half of 2022. How much depends on, among other things, the number and level of Fed movements.
Deposit customers are starting to demand higher rates and.
In term borrowing rates are generally well north of 3% putting pressure on our net interest margin.
We anticipate the margin could decline over the second half of 2022. How much depends on, among other things, the number and level of Fed movements.
How much depends on among other things the number and level of fed moves.
The mortgage pipeline is at $125 million, which is down from an average of 164 million from the prior three quarters. We are starting to see customers rethink real estate deals in this high rate and inflationary environment. We currently anticipate new loan originations in the second half of 2022 will be lower than the first half of 2022.
We are starting to see customers rethink real estate deals in this high rate an inflationary environment.
We currently anticipate new loan originations in the second half of 2022.
Will be lower than the first half of 2022.
There could be pressure on fee income as the bank recently revamped its consumer overdraft charges by instituting a grace limit of $50 where there will be no charge. Reducing our overdraft charge from $38 to $15 for overdrafts over $50, charging for one item, not multiple items, eliminating the daily charge for remaining overdrawn, and eliminating the charge on return items. These changes will take effect August 1, 2022. Jay Makoni will now take you through some highlights of the second quarter and year-to-date.
Reducing our overdraft charge from $38 to $15 for overdrafts over $50.
Barging for one item not multiple items, eliminating the daily charge for remaining overdrawn.
And eliminating the charge on return items.
These changes will take effect August one 2022.
Jay Makoni will now take you through some highlights of the second quarter and year to date.
Jay Makoni: Thank you, Chris. Net income for the second quarter and six months ended June 30th, 2022 grew by 8.4% to 9.6% respectively to $12.5 million and $24.6 million when compared to the same period last year.
Net income for the second quarter and six months ended June 30th 2022 grew by 8.4% to 9.6%, respectively to $12 5 million and 24.6 million when compared to the same period last year.
The growth in net income was driven by another strong quarter of mortgage loan originations of $236 million, bringing total mortgage loan originations to $497 million for the year. Weighted average rate on new mortgage loans continues to improve and was 3.51% for the quarter and should increase significantly as our current loan pipeline of 125 million at a weighted average rate of 4.40%
<unk> 5 million at a weighted average rate of 4.40%.
Strong loan originations over the past few quarters increased our period-end total loan balance to $3.3 billion, an increase of $230 million or 7.4% when compared to December 31st, 2021.
Commercial industrial loans, which were $108 million at June 30, 2022, an increase of $17.7 million or 19.5% compared to December 31, 2021 is a key part of our strategic initiatives as we continue to grow our relationship business and further diversify our portfolio.
Our net interest margin for the quarter was 2.97%, an increase of 26 basis points when compared to the same quarter last year. Improving our margin was due to the [inaudible] factors first reinvestment rates on mortgage-backed securities have improved and we're in the 3.75% to 4.0% range depending on average [inaudible] duration.
Type in duration.
Second, the $119 million floating rate corporate bond portfolio, which we price this quarterly based on a 10-year swap rate continued to improve with the increase in long term rates.
Third, the cost of funds on interest-bearing liabilities improved by 16 basis points as the bank was able to maintain the cost of funds on its 1.7 billion savings now money market deposit portfolio at 18 basis points.
Fourth, the maturity and downward repricing on certain brokered time deposits and federal home bank advances over the past year. And finally, the average balance on non-interest-bearing checking accounts improved $120.9 million or 11% to $1.5 billion.
As Chris mentioned in his remarks, customers are starting to demand higher rates. The pressure to increase deposit rates could intensify with the Federal Reserve Bank just announcing another 75 basis point increase in the Fed funds rate at the July meeting and we remain on target to increase that rate to between 3.25% to 3.50% by the end of 2022.
and we remain on target to increase that rate to between 3.25% to 3.50% by the end of 2022.
With 2% to 3.50% by the end of 2022.
Current wholesale funding costs [inaudible] 3.5% on all terms between six months and five years as the yield curve continues to flatten. A flattening of the yield curve could result in downward pressure on both net interest income and margin as our ability to delay increasing deposit rates, our non- maturity deposits becomes more difficult the longer the duration of the rising rate cycle. Additionally, our ability to further increase yields on interest-earning assets could be limited to offset a rise in funding costs if the yield curve remains flat or inverted for an extended period.
A flattening of verdict curve yield curve could result in downward pressure on both net interest income and margin as our ability to delight, increasing deposit rates, our non maturity deposits.
Deposits becomes more difficult the longer the duration of the rising rate cycle. Additionally, our ability to further increase yields on interest, earning assets could be limited to offset a rising funding costs. If the yield curve remains flat or inverted for an extended period.
Moving on to asset quality, the bank's non-accrual loans were just 260,000 on June 30th, 2022, and we have had 125,000 in net charge-offs during the current year. We had a provision of 726,000 for the quarter, which was mostly attributable to loan growth, partially offset by lower historical loss rates. The bank's reserve coverage ratio was 93 basis points on June 30th, 2022, a decrease of three basis points from 96 basis points on December 31st, 2021.
We had a provision of 726000 for the quarter, which was mostly attributable to loan growth, partially offset by lower historical loss rates banks reserve coverage ratio was 93 basis points on June 32022, a decrease of three basis points from 96 basis points on December 31 2021.
While the banking industry releases reserves during 2021 and the first quarter of 2022 due to improving economic conditions, as the COVID-19 pandemic waned, current inflation rates and aggressive tightening by the Federal Reserve as well as a slowdown in GDP could see this industry trend reverse in coming quarters. We are cognizant of the economic headwinds and have not relaxed our lending standards during this period of loan growth.
The economic headwinds has not relaxed our lending standards during this period of Colombia.
Moving on, non-interest income increased 695,000, excluding 606,000 gains on sales of securities in 2021 for the six months ended June 30th, 2022. As noted in our earnings release, the increase was due to a final transition payment of 477,000 from LPL financial for the conversion of the bank's retail broker and advisory accounts.
<unk> months ended June 32022.
As noted in our earnings release, the increase was due to a final transition payment of 477,000 from LPL financial for the conversion of the bank's retail broker and advisory accounts.
The increase includes higher fees from a pickup in debit and credit card activity and additional income from bank-owned life insurance as we purchased an additional $20 million in December 2021. We currently anticipate a run rate of approximately $3 million per quarter for the second half of 2022.
Non-interest expense came in at $16.4 million for the second quarter, an increase of approximately 600,000 when compared to the same period last year and three months ended March 31st, 2022. As noted in our earnings release, the increase in non-interest expense was due to higher salary and benefit costs as open positions fulfilled during the quarter, higher incentive costs due to loan origination volumes and additional occupancy costs related to the relocation of our new corporate office locations. We currently anticipate a quarterly run rate of approximately $16.7 million per quarter for the second half of 2022.
higher incentive costs due to loan origination volumes and additional occupancy costs related to the relocation of our new corporate office locations. We currently anticipate a quarterly run rate of approximately $16.7 million per quarter for the second half of 2022.
Incentive costs due to loan origination volumes and additional occupancy costs related to the relocation of our new corporate office locations. We currently anticipate a quarterly run rate of approximately $16 7 million per quarter for the second half of 2022.
Our priorities on capital remain to grow the balance sheet profitably, pay dividends to our shareholders, and when appropriate repurchase shares. During the quarter, we bought back approximately 286,011 shares at a price of $18.49. We have approximately 23 million remaining in our current authorization and we anticipate this program could continue during the second half of 2022 given our strong leverage ratio of 9.8%.
We have approximately 23 million remaining in our current authorization and we anticipate this program could continue during the second half of 2022 given our strong leverage ratio of 9.8%.
In addition, on July 1st, 2022, we announced the declaration of a second quarter dividend of 20 cents per share, which represents a 5.3 increase over the dividend paid the same quarter last year.
Finally, we anticipate our tax rate for the remainder of 2022 to be approximately 20%. With that, I turn it back to our operator for questions.
Operator: Thank you. Our first question for today comes from Alex Twerdahl from Piper Sandler.
First question for today comes from Alex Tour at all from Piper Sandler.
Alex Twerdahl: Hey, good afternoon guys.
Jay Makoni: Hey, Alex how are you?
Alex Twerdahl: I'm good, thanks. Basically, you're the first earnings call here. I wanted to ask a couple of questions or follow-ups on your prepared remarks. First off, Chris, I think you mentioned that the fairly strong loan growth that you've seen over the last couple of quarters is likely to abate a little bit in the second half of the year, but I noticed that the mix shift is a little bit different this quarter and you actually put out a bit more residential relative to the commercial real estate. I'm just curious if those comments apply to the overall portfolio or just to the commercial real estate portfolio and maybe you can make up some of the excess with a bit more on the resi side.
Basically here the first earnings call here.
I wanted to ask a couple of questions or follow ups in your prepared remarks first off.
Chris I think you mentioned that the fairly strong loan growth that you've seen over the last couple of quarters is likely to to abate a little bit in the second half of the year, but I noticed that the mix shift is a little bit different this quarter than you actually put out a bit more residential.
Relative to the commercial real estate I'm, just curious if those comments apply to the overall portfolio or just to the commercial real estate portfolio and maybe you can make up some of the access with a bit more on the resi side.
Chris Becker: No, it's actually both portfolios; the residential side because of the rate increases, obviously, you're seeing a refis dry up on that and also the very high housing prices I think is keeping some people on the sidelines combined with high interest rates. So you are seeing both pipelines, we gave you a total pipeline number but both pipelines are reducing.
Obviously, you're seeing a refis dry up on that end.
Also the very high housing prices.
<unk> is keeping some people on the sidelines combined with high interest rates. So you are seeing both.
Pipelines, we gave you a total pipeline number but both pipelines are reducing.
Alex Twerdahl: Okay, and then I know that you guys have brought out a number of new bankers over the last couple of years early across your market. I was wondering if you could kind of share with us sort of where you are in that process and I know you mentioned being the go-to bank for not just customers, but also for bankers, but sort of if there is a little bit of a pipeline that's built from some of these people coming on board and whether or not that can continue even in the higher rate environment.
Brought out a number of new bankers over the last couple of years.
Early across your market I was wondering if you could kind of share with us sort of where you are in that process of and I know you mentioned being the go to bank for not just customers, but also for bankers, but.
Sort of if there is a little bit of a pipeline. That's built from some of these people coming on board and whether or not that can continue even in the higher rate environment.
Chris Becker: It is, I mean, we've added as you know a middle market team of four. We rebuilt our residential team, we added recently a South [inaudible] team leader for the East end, the South forecast on the East end and we've added some people to both our Nassau and Suffolk teams. And that business has been good. As I indicated my comments, they're onboarding new customers, focused on relationships, bringing in commercial deposits, lines of credit, our line utilizations have been up a little bit. So that business has been good. As you know, that's a smaller percentage of our portfolio but it is growing. I think when you look at the slowdown it's related mainly to the mortgage business. So we'll say the decree business, multifamily, residential mortgages, our momentum is pretty good on the C&I side.
You know as you know our middle market team of four we rebuilt our residential team we added.
Recently a.
South Fork team leader for the East end.
South forecast on the East end and we've added some people to both our Nassau and Suffolk teams add that business.
Has been good as I indicated my comments, they're onboarding new customers.
Focus on relationships, bringing in.
Bringing in commercial deposits.
Lines of credit our line Utilizations have been up a little bit so that that business has been good as you know that's just that's a smaller percentage of our portfolio.
But it is growing I think when you look at the slowdown it's related mainly to the mortgage business. So we'll say.
The decree business multifamily residential mortgages.
Our momentum is pretty good on the C&I side.
Alex Twerdahl: Okay, great. And then, just another question from me. I think you mentioned you're selling some buildings in [inaudible], is that going to have any impact on gains or book value or anything like that in the third quarter?
Okay, Great and then.
Just another question for me I think you mentioned, you're selling some buildings in glad and as that can have any impact on.
On gains or book value or anything like that in the third quarter.
Jay Makoni: Right now, we're not going to disclose the key financials of the contract, but those properties Alex back at 12.31, we did in our [inaudible] available for sale. And so any property would have been reduced to mark to market there, so they're carried at that cost.
The key financials.
Of the contract, but those properties Alex back at 12 31, we.
We did in our Q.
This doses available for sale.
And so any property would have been reduced to mark to market. There. So theyre carried at that cost.
Alex Twerdahl: Okay, great. Thanks for taking my questions.
Chris Becker: Thanks, Alex.
Thanks Alan.
Operator: Alright. Our next question for today comes from Chris O'Connell with KBW. Please proceed with your question.
Chris O'Connell: Hey, good afternoon.
Multiple speakers: [Jay Makoni] Hi, Chris. [Chris Becker] Good afternoon, Chris.
Chris O'Connell: So I want to just start on the deposit comments around the deposit rates kind of increasing going forward. Maybe quantifying where you guys are at on deposit rates now or where you think you're going to be moving rates during the third quarter, any beta assumptions that you might be using for this cycle?
Jordan just start on the on.
On the deposit comments.
The deposit rates kind of increasing going forward.
You know, maybe quantifying where you guys are at on deposit rates now or where you think youre going to be moving rates during the third quarter.
Any beta assumptions that you might be using for this cycle.
Jay Makoni: It's Jay, Chris how are you?
I ate side, Jay Chris how are you.
Chris O'Connell: Good. Hey, Jay.
Jay Makoni: We're not going to disclose data assumptions by looking at it, obviously the bank, the reason why we can kind of discuss some of those things in our open remarks, the bank is liability sensitive and it's traditionally been that way with them having a little bit more longer duration fixed assets and a little bit less C&I portfolios as other commercial banks. So right now looking at the increase of say 100 basis point shock, we're probably about liability sensitive about negative 3% or so, up 100 basis points, which we think is kind of the most likely scenario being where we are with the Fed and hopefully where we think they have to go from this point forward based on the science of where the Fed funds target rate would be.
We're not going to disclose that data assumptions by looking at it obviously the bank.
The reason why we can kind of discuss some of those things that are open remarks CCM. The bank is that liability sensitive dia traditionally been that way with them.
Adding a little bit more longer duration fixed assets and a little bit less C&I portfolios. It has other commercial banks.
So you know right now looking at.
The increase of say 100 basis point shock.
Probably about liability sensitive about negative 3% or so.
Up 100 basis points, which we think is kind of the most likely scenario being where we are with the fed and hopefully where we think you know.
Do they have to go from this point forward based on the science of the hub, where the fed funds target rate would be.
Chris Becker: And Chris, this is Chris. Specifically on rates, on CD rates, pretty much from what one year out through five years, we're at 2% and 2% plus on those rates. Our money market now and savings, like most banks those rates remain low. You're going to see some pressure on that both from business consumers and also municipal customers, and those rates are starting to move up quickly. And you can see some rates in those accounts now north of 1%.
Specifically on rates on our.
On C D rates pretty.
Pretty much from what one year out through five years, we're at 2% and 2% plus on those rates.
Our our money market now and savings.
Like most banks those rates remain low.
You see some pressure on that both from from.
Business and consumer and also municipal customers.
And those rates are starting to move up quickly and you can see some rates.
And those accounts now north of 1%.
Chris O'Connell: Got it. That's helpful. And for the securities book, what's the duration on the overall book, and then are there any plans to move the securities book into loans and mix shift a little bit going forward, or do you expect that to hold more or less kind of flat going forward?
Yeah.
Got it.
That's helpful.
Further for the security stock, what's the duration on the overall book and then.
Is there any is there any plans to move the securities book into loans and mix shift a little bit going forward or do you expect that to hold more or less kind of flat going forward.
Jay Makoni: Chris, it's Jay. The average life on our portfolio is probably right around five years and as far when you look at our liquidity levels, when security rates were like 1% or so, we really kind of looked at it and said we want to lower the security portfolio and put more money into loans now with rates where they are and in the MBS sector, we can kind of get a little bit above a four handle, we're actively looking to put a little bit more money into the security portfolio. Really just replacement as securities roll off we're going to replace and keep it around flat, whereas maybe a year ago we would let those securities portfolios, security cash flows go into loans. So it should be fairly flat for the rest of the year.
Chris This is Jay.
The average life on our portfolio is probably right around that five.
Five years.
And as far when you look at our liquidity levels.
When.
When security rates were like 1% or so yeah, we really kind of looked at it and said we want to.
Laurie the security portfolio and put more money into allowance now with rates.
Where they are and in the MBS sector, we can kind of get a little bit above a four handle we're actively looking to put a little bit more money into the security portfolio.
You know really just replacement.
Securities Roll off we're going to replace and go into it and keep it around flat, whereas maybe a year ago will let know securities portfolios security cash flows go into loans. So it should be fairly flat for the rest of the year.
Chris O'Connell: Got it. That makes sense. And on the opening commentary, I think you said with the new origination yield was on the pipeline under 3Q, I believe it had a fore handle on it but I missed it. Do you mind just repeating that?
That makes sense.
Sure.
The opening commentary I think you said with the new origination yield was on the pipeline into three under <unk>.
I believe it had a four handle on it but I missed it can you just remind repeating that yes.
Jay Makoni: Yes, it's right around 440, the weighted average yield. Up from [inaudible] book in the first quarter, it was about 350.
Around 440.
The average weighted average yield.
Up from Olympus book in the first quarter it was about 350.
Chris O'Connell: Yes, really nice pick up there. Great. And on the fee income, I appreciate the guidance there. Just trying to figure out the parts. For the NSF fees, what do you think that that impact is in and of itself is going into the third quarter?
Great.
And on the <unk>.
The income I appreciate the guidance there just trying to figure out the parts.
For the NSF.
She is.
What do you think that that impact is an area of itself is going into the third quarter.
This is Chris. The change in the program on the consumer side, and we didn't change anything on the business side, but on the consumer side, on an annualized basis, that could be approximately $200,000 annually. Now, we've been picking up some momentum on the debit card interchange fees and some service charges, things like that that were down during the pandemic. So that's why we're still kind of guiding the quarterly non-interest income number to be fairly consistent but those are the impacts of the pieces.
In the program on the consumer side.
And we didn't change anything on the business side, but on the consumer side on an annualized basis.
That could be approximately $200000.
Annually.
Now we've been kicking up.
Some momentum on the on the debit card interchange fees.
And some service charges things like that that were down during the pandemic.
So that's why we're still we're still kind of guiding the quarterly noninterest income number to be it would be fairly consistent.
But those are the impacts of the pieces.
Jay Makoni: Hey, Chris, it's Jay. Also, I put in my remarks here, we purchased an additional $20 million of Bo Lee so that incremental income will help to offset somewhat if there is a loss in overdraft fees. And again the bully portfolio, while it increases as the cash surrender value goes up each quarter, so you get a little bit more income just through the cash surrender value increasing. And then, as interest rates go up it's part of the insurance companies portfolio, you should see the yield on that will also contribute. So we do think there is some tailwind to allow the bully income to also increase and complement the credit card activity as well.
That incremental income will help to offset somewhat.
The loss in overdraft fees and again.
The bully portfolio CEO wild.
It increases as the cash surrender value goes up each quarter. So you can a little bit more income just through the cash surrender value increasing and then.
As interest rates go up it's part of the insurance companies portfolio you should see the yield on that will also contribute. So we do think there is some tailwind to allow the bully income to also increase and complement the credit card activity as well.
Chris O'Connell: Okay, great. That's helpful. On the expense side, again, I appreciate the guidance there, very helpful. How are you thinking about--there's a lot of moving parts you guys mentioned between the decline in head sales, the new adjuvant space, potential de Novo ads, and some other relocations going on. How are you thinking about the growth as you go into 2023? I mean do all of these kinds of moves in terms of the building and space management wash out on a net basis or does it put you at a little bit of a higher growth rate or a lower growth rate going into the next year?
Great.
It's helpful.
On the expense side.
Again I appreciate the guidance there very helpful. How are you thinking about there's a lot of moving parts you guys mentioned between decline head sales, the new adjuvant space potential de Novo ads and some other.
Relocations.
Going on.
How are you thinking about.
The growth as you go into 2023, I mean do these all of these kind of moves in terms of.
The building and space management.
Wash out on a net basis or does it put you at a little bit about <unk>.
Higher growth rate or a lower growth rate going into the next year.
Yes, Chris, it's Jay, I mean, I agree we have done a lot. We kind of break it down to two pieces. If you remember last year, the branch location closures and that saved us probably about $1 million in annual non-interest expense. And if you look at it from that standpoint, we've also added the East end locations to three locations there and we also, as Chris alluded to, put on some of the lending staff. So we kind of look at those two kind of offsetting each other. And then when you look at the move to Melvo with our new location here and the cost of that we look and while we announced that we have a contract to sell some of those buildings. Once those buildings are liquidated and we're out of those [inaudible] to here, that should be fairly court cost neutral. So all in all a lot of moving parts. With the guidance, we're at 16.5 this quarter, we have it up a little bit around 16.7 which is just really kind of a full head count run and also as everybody sees, we have vendors too, high inflationary rates we negotiate with all vendors. But we're very cognizant that with deposit pricing pressure that we have to maintain expense levels barely flat, so that's why we gave that guidance, but our goal with all those moving parts is they are pretty much neutral.
Two pieces, if you remember last year, we closed about a week.
The branch location closures and that saved us probably about $1 million in in.
Annual non interest expense.
And if you look at it from that standpoint, we've also added T. He stand locations to three locations there and we also as Chris alluded to put on some of the lending staff. So we kind of look at those two kind of offsetting each other and then when you look at the move to Malvo with her new location here in the cost of that.
we look and while we announced that we have a contract to sell some of those buildings. Once those buildings are liquidated and we're out of those [inaudible] to here, that should be fairly court cost neutral. So all in all a lot of moving parts. With the guidance, we're at 16.5 this quarter, we have it up a little bit around 16.7
which is just really kind of a full head count run and also as everybody sees, we have vendors too, high inflationary rates we negotiate with all vendors. But we're very cognizant that with deposit pricing pressure that we have to maintain expense levels barely flat, so that's why we gave that guidance, but our goal with all those moving parts is they are pretty much neutral.
And also as everybody sees.
Have vendors too high inflationary rates, we negotiate with all vendors.
In fact, the very cognizant that with deposit pricing pressure that we have to maintain expense levels barely flat.
So that's why we gave that guidance, but we are our colleagues with all those moving parts is there pretty much neutral.
And it's part of our planning. As we do something we're always saying, okay, we want improve here, how do we cut costs here to try to keep that and maintain expense discipline?
As we do something we're always saying, okay. We want improve here had it was how do we cut costs here is to try to keep that and maintained expense discipline.
Chris O'Connell: Yeah, absolutely, makes sense. Alright, great. That's all I had. Thanks for taking my questions.
Alright, great Thats, all I had thanks for taking my questions.
Chris Becker: Thanks, Chris.
Operator: Thank you. This concludes our question-and-answer session. I will turn the floor back to Chris Becker for some final closing comments.
Chris Becker: Thank you. I want to thank everyone for their attention and participation on the call today. Once again, we're very pleased with the quarter and look forward to providing additional updates in the coming quarters. Enjoy the rest of your day.
Enjoy the rest of your day.
Okay. The meeting will go on air and as scheduled time on the meeting web page. [music]. Thank you. Okay. [music]. Okay. Okay. [music].
The meeting will go on air and as scheduled time on the meeting web page.
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