Q1 2024 First of Long Island Corp Earnings Call

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Operator: Welcome to the First of Long Island Corporation's first quarter 2024 earnings conference call. On the call today are Chris Becker, President and Chief Executive Officer, and Janet Verneuille, Senior Executive Vice President and Chief Financial Officer. This call is being recorded.

Speaker Change: Welcome to the first of long Island Corporation's first quarter 2024 earnings conference call on the call today are Chris Becker, President and Chief Executive Officer, and Jennifer Kneale, Senior Executive Vice President and Chief Financial Officer.

Speaker Change: Today's call is being recorded.

Operator: A copy of the earnings release is available on the corporation's website at fnbli.com and on the earnings call web page at https://www.cstproxy.com or at www.cstproxy.com. 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 U.S. 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 U.S. Securities and Exchange Commission.

Speaker Change: Copy of the earnings release is available on the Corporation's website at F. N B L. I dot com and on the earnings call Web page at H T. T. P. S. Colon forward Slash <unk> slash Www Dot C. S T proxy.

Speaker Change: Tom Ford Slash F N B L. I forward Slash earnings forward Slash 'twenty 'twenty four for its last Q1.

Speaker Change: 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 U S. Private Securities Litigation Reform Act of 1995.

Speaker Change: 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 are set forth in the company's filings with the U S Securities Exchange Commission.

Operator: Investors should also refer to our 2023 10-K filed on March 8, 2024, 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.

Speaker Change: Investors should also refer to our 2023 10-K filed on March eight 2024 for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements.

Speaker Change: I'd now like to turn the call over to Chris Becker.

Speaker Change: Yeah.

Christopher D. Becker: Good afternoon, and welcome to First of Long Island Corporation's earnings call for the first quarter of 2024. Just last week, we held our annual stockholders' meeting and covered a number of key topics of interest. Please visit the Investor Relations page of our FNBLI.com website to replay that presentation. It focuses on the key strengths of our organization. Causes of the Current Earnings Challenge, How an Improving Yield Curve Can Lift Performance, and the many benefits of our recent technology. Focusing on our strength.

Christopher D. Becker: Thank you.

Christopher D. Becker: Good afternoon, and welcome to the first of all an island Corporation's earnings call for the first quarter of 2024.

Just last week, we held our annual stockholders meeting and.

Christopher D. Becker: And covered a number of key topics of interest.

Christopher D. Becker: Please visit the Investor Relations page of our F N B L. I dotcom website to replay that presentation.

Christopher D. Becker: It focuses on the key strengths of our organization.

Christopher D. Becker: Causes of the current earnings challenges.

Christopher D. Becker: How in improving yield curve can lift performance.

Christopher D. Becker: And the many benefits of our recent technology upgrades.

Christopher D. Becker: Focusing on our strengths.

Christopher D. Becker: Capital remains strong at the end of the first quarter with a leverage ratio of 10% and a tangible common equity ratio of 8.9%. We had ample liquidity on March 31, 2024, of $1.5 billion, with a balance of collateral for potential borrowings at both the Federal Home Loan Bank of New York and the Federal Reserve Bank, as we believe both are an appropriate source for day-to-day liquidity needs. The Federal Reserve Bank is working to eliminate the stigma of being the lender of last resort.

Christopher D. Becker: Capital remains strong at the end of the first quarter with a leverage ratio of 10% and a tangible common equity ratio of eight 9%.

Christopher D. Becker: We had ample liquidity on March 31, 2024 of one $1 billion with a balance of collateral for potential borrowings at both the federal home loan Bank of New York and the Federal Reserve Bank as we believe both are inappropriate source for day to day liquidity needs.

Christopher D. Becker: The Federal Reserve Bank is working to eliminate the stigma of being the lender of last resort, especially.

Christopher D. Becker: Especially with recent reports and discussions regarding the Federal Home Loan Bank System's Charter of Supporting Low and Moderate Income Housing Initiatives versus its role as a primary source of liquidity for banks. Our C&I loans, including owner-occupied commercial mortgages, increased 6% since year end. And we are encouraged by recent activity that is not yet reflected in our March 31, 2024 loan pipeline of $113 million, up from $86 million at year-end 2020. Additionally, our credit quality remained rock solid through March 31, 2024.

Christopher D. Becker: Especially with recent reports and discussions regarding the federal home loan bank system's charter of supporting low and moderate income housing initiatives versus its role as a primary source of liquidity for banks.

Christopher D. Becker: Our C&I loans, including owner occupied commercial mortgages.

Christopher D. Becker: Increased 6% since year end.

Christopher D. Becker: And we are encouraged by recent activity that is not yet reflected in our March 31, 2024 loan pipeline of $113 million.

Christopher D. Becker: From 86 million at year end 2023.

Christopher D. Becker: Our credit quality remained rock solid through March 31, 'twenty 'twenty four.

Christopher D. Becker: Charge-offs, Non-Performing Loans, and past-due loans remain at single-digit basis points as a percentage of total loans. Non-Interest Income had a good first quarter and was slightly ahead of our guidance of $2.6 million per quarter in 2024. Non-interest expense was slightly below our guidance of $6.25 million per quarter in 2024. We have a new technology platform to support our future growth. We are opening our fourth branch on the east end of Long Island during the second quarter of this year, continuing our growing momentum in that area, and we are staying disciplined in a difficult environment. We do not bend on credit quality.

Christopher D. Becker: With charge offs nonperforming loans and past due loans remaining at single digit basis points as a percentage of total loans.

Christopher D. Becker: Noninterest income had a good first quarter and was slightly ahead of our guidance of $2 6 million per quarter in 2024.

Christopher D. Becker: Noninterest expense was slightly below our guidance of $6, two 5 million per quarter in 2024.

We have a new technology platform to support our future growth.

Christopher D. Becker: We are opening our fourth branch on the East end of long island during the second quarter of this year.

Christopher D. Becker: <unk>, our growing momentum in that area.

Christopher D. Becker: And we are staying disciplined in a difficult environment.

Christopher D. Becker: We do not bend on credit quality.

Christopher D. Becker: We focus on adding one relationship banker at a time and looking to build long-standing, deposit-based relationships through good and bad news in the banking world, and we want to keep them that way. As anticipated, our net interest margin was lower in the first quarter of 2024. The drop was largely related to our average funding mix, as approximately $100 million shifted from average deposits to average wholesale funds when comparing the first quarter of 2024 to the fourth quarter of 2022.

Christopher D. Becker: We focus on adding one relationship banker at a time and looking to build long standing relationships.

Our deposit base.

Christopher D. Becker: <unk> has a history of being loyal through good and bad news in the banking world and we want to keep it that way.

Christopher D. Becker: As anticipated.

Christopher D. Becker: Our net interest margin was lower in the first quarter of 2024.

Christopher D. Becker: The drop was largely related to our average funding mix as approximately $100 million shifted from average deposits to average wholesale funds when comparing the first quarter of 2024 to the fourth quarter of 2023.

Christopher D. Becker: We also had $62.5 million of wholesale funding repriced from a weighted average cost of 1.36% to 4.78%. Regarding the drop in deposits during the fourth quarter of 2023, $34.2 million in tax escrow deposits were used to pay real estate taxes, and Municipal Deposits were down 97.5%. Escrow deposits build back throughout the year as monthly loan payments are received.

Christopher D. Becker: We also had $62 5 million of wholesale funding, we price from a weighted average cost of 136% to 4.78%.

Christopher D. Becker: Regarding the drop in deposits during the fourth quarter of 2023.

Christopher D. Becker: $34 2 million in tax escrow deposits, we used to make real estate tax payments.

Christopher D. Becker: And municipal deposits were down $97 5 million.

Christopher D. Becker: Escrow deposits build back throughout the year as monthly loan payments are received.

Christopher D. Becker: Municipal Deposits were $46.6 million higher at March 31, 2024, when compared to the Linked Corp. The fluctuations in tax escrow and municipal deposits are common for our bank in the fourth quarter. Real estate tax payments are made every year in the fourth quarter, and municipal deposits have been down in the fourth quarter for four of the last five years by an average of 54.4 million. Our commercial and consumer deposits remained stable, and non-interest-bearing checking deposits were 33% of total deposits at the end of the first quarter.

Christopher D. Becker: Municipal deposits were $46 6 million higher at March 31, 2024, when compared to the linked quarter.

Christopher D. Becker: The fluctuations in tax escrow and municipal deposits are common for our bank in the fourth quarter.

Christopher D. Becker: Real estate tax payments are made every year in the fourth quarter and municipal deposits have been down in the fourth quarter four of the last five years by an average of $54 4 million.

Christopher D. Becker: Our commercial and consumer relationship deposits remained stable and noninterest bearing checking deposits were 33% of total deposits at the end of the first quarter.

Christopher D. Becker: Please note that while average deposits were lower during the quarter, quarter-end deposits were higher than year-end 2023 by over $55 million. As of the end of the first quarter, there are no significant tranches of wholesale funding, including any brokered CDs that are not at or close to market rates. Our retail CDs.

Christopher D. Becker: Please note that while average deposits were lower during the quarter quarter end deposits were higher than year end 2023 by over $55 million.

Christopher D. Becker: As of the end of the first quarter. There are no significant tranches of wholesale funding, including any brokerage Cds that are not at or close to market rates.

Christopher D. Becker: Jay McConie, Unknown Executive, Christopher Becker, Jay McConie, First of Long Island Corp., especially after approximately 87 million in maturities in April and May that are paying very close to 4% and are expected to reprice at an estimated 50 to 70 basis points higher, barring any significant changes in our funding mix. Short-Term Rates Moving Higher, We believe our margins should be at the box. We expect it to fluctuate within a narrow band for the remainder of 2024, although continued improvement in our funding mix or a more favorable yield curve may improve margin in the second half of the year. Janet Verneuille will now take you through other financial highlights of the first quarter.

Christopher D. Becker: Our retail Cds maturing over the next 12 months are largely at current market rates, especially after approximately $87 million in maturities in April and May that are paying very close to 4% and are expected to reprice at an estimated 50 to 70 basis points.

Christopher D. Becker: Higher.

Christopher D. Becker: Barring any significant changes in our funding mix.

Short term rates moving higher.

Christopher D. Becker: We believe our margin should be at the bottom.

Christopher D. Becker: We expect it will fluctuate within a narrow band for the remainder of 2024.

Although continued improvement in our funding mix or Fe or more favorable yield curve may improve margin in the second half of the year.

Christopher D. Becker: Janet for now will now take you through other financial highlights of the first quarter Janet.

Janet T. Verneuille: Thank you, Chris. Good afternoon, everyone. The company recognized net income of $4.4 million for the first quarter of 2024, down from $6.5 million in the first quarter of 2023. The decrease was largely attributed to lower net interest income of $5.5 million. A $1.1 million credit provision for loan losses in 2023, partially offset by a loss on sale of securities of $3.5 million in the first quarter of 2023. Net income was also down $6.1 million in the linked quarter.

Janet: Thank you Chris good afternoon, everyone.

Janet: The company recognized net income of $4 4 million for the first quarter of 'twenty 'twenty four down from $6 5 million in the first quarter of 2023.

Janet: The decrease was largely attributed to lower net interest income of $5 5 million or one.

Janet: 1.1 million credit provision for loan losses in 2023, partially offset by the loss on sale of securities of $3 5 million in the first quarter of 2023.

Janet: Net income was also down $6 1 million in the linked quarter that decrease was mainly the result of lower net interest income of 1.8 million and an increase in salaries and employee benefits of $1 9 million due to the reversal of incentive accruals taken in the linked quarter.

Janet T. Verneuille: That decrease was mainly the result of lower net interest income of $1.8 million and an increase in salaries and employee benefits of $1.9 million due to the reversal of incentive accruals taken in the linked quarter. After excluding the loss on the sale of securities in 2023, non-interest income of $2.8 million exceeded non-interest income recorded in the first quarter of 2023 of $2.5 million. The quarter's non-interest income also exceeded the linked quarter total of $2.4 million.

Janet: After excluding the loss on sale of Securities in 2023, noninterest income up $2 8 million exceeded non interest income recorded in the first quarter of 2023 of $2 5 million.

Janet: The quarter's noninterest income also exceeded the linked quarter total of $2 4 million that are service charge income on deposit accounts and bully income helped in both quarter comparisons.

Janet T. Verneuille: Better service charge income on deposit accounts and BOLI income helped in both quarter comparisons. Non-interest expense totaled $16.2 million, which is a decline of $365,000, or 2.2%, compared to the first quarter of 2023. However, the linked quarter had a lot of noise related to the reversal of incentive accruals, so the comparison is not as meaningful.

Janet: Noninterest expense totaled $16 2 million, which is a decline of 300 mm.

Janet: 365000, a two 2% compared to the first quarter of 'twenty to 'twenty three the linked quarter had a lot of noise related to the reversal of incentive accruals. So the comparison is not as meaningful.

Janet T. Verneuille: Gross loans declined $11.5 million from the prior quarter end, mainly related to $21.2 million of amortization and other paydowns on residential mortgages and home equity lines. This decline was offset by continued growth in our commercial portfolios, as Chris mentioned. The overall loan yield of 4.14% was up five basis points from the linked quarter. The loan yield for the first quarter of 2023 was 3.70%. Total deposits increased $55.5 million from year-end.

Janet: Gross loans declined $11 5 million from the prior quarter and mainly related to $21 2 million of amortization and other pay downs of residential mortgages and home equity lines.

Janet: This decline was offset by continued growth in our commercial portfolios as Chris mentioned the.

The overall loan yield a full 0.14% was up five basis points from the linked quarter loan yields for the first quarter of 2023 was $3 seven zero percent.

Janet: Total deposits increased $55 5 million from year end.

Janet T. Verneuille: The mix of deposits continues to change as customers move out of non-interest-bearing checking accounts and into interest-bearing alternatives. As Chris mentioned, average deposits were down approximately $100 million from the linked quarter. The average cost of deposits was 2.64% for the first quarter of 2024, 2.43% for the linked quarter, and 1.40% for the first quarter of 2023. Other borrowings averaged $523.1 million for the first quarter as the drop in deposits was supplemented partially by these advances.

Janet: Mix of deposits continues to change as customers move out of noninterest bearing checking accounts and into interest bearing alternatives.

Janet: As Chris mentioned average deposits were down approximately 100 million from the linked quarter.

The average cost of deposits was $2 six 4% for the first quarter of 'twenty 'twenty four 2.43% for the linked quarter and 1.40% for the first quarter of 2023.

Other borrowings averaged $523 1 million for the first quarter as the drop in deposits was supplemented partially by these advances the average cost of these borrowings was $4 eight 2% in the first quarter of 'twenty 'twenty four 4.59% in the linked quarter and <unk>.

Janet T. Verneuille: The average cost of these borrowings was 4.82% in the first quarter of 2024, 4.59% in the linked quarter, and 3.79% in the first quarter of 2023. Net interest income and the net interest margin for the first quarter reflect the challenges described above. The purchase of the fixed floating swap and the repositioning of a portion of the investment securities portfolio in the first quarter of 2023 continued to positively impact the income statement above the line. However, the pace of the repricing of the liability side of the balance sheet continued to outpace the repricing of the assets on the balance sheet.

Janet: 3.79% in the first quarter of 2023.

Net interest income and the net interest margin for the first quarter reflects the challenges described above the purchase of the fixed to floating swap and the repositioning of a portion of the investment securities portfolio in the first quarter of 2023 continued to positively impact the income statement above the line.

Janet: Get the pace of the repricing of the liability side of the balance sheet continued to outpace the repricing of the assets on the balance sheet.

Janet T. Verneuille: Net interest income for the first quarter of 2024 declined $1.8 million from the linked quarter and $5.5 million from the first quarter of 2023. The net interest margin calculated to 1.79% in the first quarter of 2024, 2.0% in the linked quarter, and 2.34% in the first quarter of 2023. The yield on total earning assets was 4.10 in the first quarter of 2024, 4.0% in the linked quarter, and 3.61% in the first quarter of 2023.

Janet: Net interest income for the first quarter of 'twenty 'twenty four declined $1.8 million from the linked quarter and $5 5 million from the first quarter of 2023.

Janet: The net interest margin calculated to 179% in first quarter of 2024, 2.0% linked quarter and 2.34% in the first quarter of 2023.

The yield on total earning assets was 4.10 in the first quarter of 'twenty 'twenty four 4.0% in the linked quarter and $3 six 1% in the first quarter of 2023.

Janet T. Verneuille: The cost of total interest-bearing liabilities was 3.47% in the first quarter of 2024, 3.15% in the linked quarter, and 1.96% in the first quarter of 2023. However, no provision was booked to the allowance for credit losses during the quarter.

Janet: Cost of total interest bearing liabilities is 3.47% in first quarter of 'twenty 'twenty four 3.15% in the linked quarter and 1.96% in the first quarter of 2023.

Janet: No provision was booked to the allowance for credit losses during the quarter.

Janet T. Verneuille: The commercial real estate market remains under heightened scrutiny, especially in the New York metropolitan area, in the wake of credit problems disclosed by New York Community Bank at year-end 2023. Although the New York State Housing Stability and Tenant Protection Act passed in 2019, the ripple impact of the legislation is negatively affecting the rent-regulated multi-family real estate market in the New York metropolitan area. Management has provided detailed disclosures on our CRE portfolio, including our multifamily portfolio, in an 8K furnished on March 1, 2024, and in our recent annual meeting presentation. We believe the credit quality of the loan portfolio remains strong.

Janet: The commercial real estate market remains under a heightened scrutiny, especially in the New York Metropolitan area in the wake of credit problems disclose by New York Community Bank at year end 2023.

Janet: The New York State housing stability and tenant Protection Act passed in 2019.

Janet: Most recently the impact of the legislation is negatively affecting the rent regulated multifamily real estate market in the New York Metropolitan area.

Janet: Management has provided detailed disclosures on our CRE portfolio, including our multifamily portfolio and an 8-K furnished on March 1st 2024 and in our recent annual meeting presentation. We believe the credit quality of the loan portfolio remained strong the reserve coverage.

Janet T. Verneuille: The reserve coverage ratio on March 31, 2024 was 88 basis points, compared to 89 basis points at year-end 2023. Book value per share was $16.78 on March 31, 2024 versus $16.43 on March 31, 2023. The accumulated or the comprehensive loss component of the stockholder's equity is mainly comprised of a net unrealized loss in the available-for-sale securities portfolio due to the higher market interest rates. The company repurchased shares during the first quarter of 2024 at a cost of $2 million, and the bank declared its quarterly cash dividend of $0.21 per share. The effective tax rate for the first quarter of 2024 was 6.2 as the tax-advantaged assets of loans in our REITs subsidiary, municipal bonds, and BOLI were a larger portion of taxable income during the quarter.

Janet: ACL on March 31, 'twenty 'twenty, four is 88 basis points compared to 89 basis points at year end 2023.

Book value per share was $16 17 on March 31, 'twenty 'twenty four versus 16043 cents on March 31, 2023, the accumulated other comprehensive loss component of the stockholders equity is mainly comprised of net unrealized loss in the available for sale.

Janet: Securities portfolio due to the higher market interest rates the company repurchase shares during the first quarter of 2024 at a cost of $2 million in the bank declared its quarterly cash dividend of 21 cents per share.

Janet: The effective tax rate for the first quarter of 'twenty 'twenty four with six point too as the tax advantaged assets of loans in our REIT subsidiary municipal bonds, and boldly, where a larger portion of taxable income during the quarter.

Operator: With that, I turn it back to our operator for questions. Thank you. Our first question for today.

Speaker Change: With that I turn it back to our operator for questions.

Speaker Change: Thank you our first question for today comes from Alex short haul.

Operator: Thank you. Our first question for today comes from Alex Twerdahl and Piper Sandler. Alex, please proceed with your question.

Speaker Change: Piper Sandler.

Speaker Change: Alex. Please proceed with your question.

Speaker Change: Yeah.

Christopher D. Becker: First on the loan outlook, Chris, you talk a little bit about the commercial loan growth you saw this quarter and the pipeline building. It's still, however, a pretty small percentage of the overall pie. So I was hoping maybe you could just help us frame sort of the opportunity and the outlook for that commercial portfolio overall and where you think it might eventually get to as a percentage of the overall loan book.

Alex: Hey, good afternoon.

Good afternoon.

First on the on the loan outlook, Chris can you talk a little bit about the commercial loan growth you saw this quarter and in that pipeline building. It is still however, a pretty small percentage of the overall pie shows I was hoping maybe you can just help us frame sort of the opportunity and the outlook for that the commercial portfolio overall and where are you.

Alex: Over time might eventually get to as a percentage of the overall loan book.

Christopher D. Becker: So the commercial, well, let's break it down, right? The C&I portfolio and owner-occupied portfolio were at 11% of the total portfolio, and then, obviously, we have the commercial real estate portfolio, which is over half the portfolio. So we certainly are happy with the size of the commercial real estate portfolio. We still, we still want that piece of the pie in the residential side, which is still over 35 percent of the portfolio, to come down, and The CNI and owner-occupied piece is the piece we want to grow. If I could, If I could look forward and look at that pie, I'd love to see four equal slices. I'd love to see about 25% in multifamily, about 25% in other CRE, about 25% in residential, and about 25% in C&I and owner-occupied.

Christopher D. Becker: So the commercial book well, let's break it down right the CNI portfolio in owner occupied portfolio.

Christopher D. Becker: It was up about 11% of the total portfolio and then obviously, we have the commercial real estate portfolio, which is over half the portfolio.

Christopher D. Becker: So we like we certainly we were happy with the size of where the commercial real estate portfolio as well.

We're still we still want that piece of the pie and the residential side, which is still over 35% of the portfolio to come down.

Christopher D. Becker: And the CNI and owner occupied piece of the piece, we want to grow if I could.

If I can look forward and look at that pie I'd love to see four equal slices I'd Love I'd love to see about 25% in our in multifamily about 25% and other creative about 25% in residential and about 20.

Christopher D. Becker: 25% in C&I and owner occupied but it it's going to take.

Christopher D. Becker: But it's going to take some time for the C&I and owner-occupied to get there. And when I say some time, you're talking years, not months, but uh... that's certainly their direction, and we've, you know, we've just hired another middle market lender. We've grown our middle market team over the past four years. And, you know, some activities are picking up there. You see, our pipeline is up a little bit, quarter over quarter.

Christopher D. Becker: It's going to take some time, but we see an owner owner C&I and owner occupied to get there and when I say some time that you were talking.

Christopher D. Becker: Years not months, but that's certainly the direction we're moving.

Christopher D. Becker: And we've you know we've just hired another middle market lenders you know we've grown our middle market team over the past four years and some activities picking up there you see our pipeline is up a little bit quarter over quarter, and you know we want to keep growing that but the you know the.

Christopher D. Becker: And, you know, we want to keep growing that. But the, you know, the activity has been quiet. You know, the rates are obviously impacting that. Some of the on the real estate side, commercial real estate side, we're seeing some opportunities from other banks, but quite often the loans have to be the right size because of the current interest rate environment, and not everybody's willing to do that, so it does remain, it does remain challenging out there, and that's why you see very low growth rates in the industry and some banks shrinking.

Christopher D. Becker: The activity is has been has been quiet.

Christopher D. Becker: The rates are obviously impacting that.

Christopher D. Becker: Some of the AR on the real estate side commercial real estate side.

Christopher D. Becker: We're seeing some opportunities from other banks, but quite.

Christopher D. Becker: Quite often the loans have to be rightsize because of the current interest rate environment and not everybody is willing to do that so.

Christopher D. Becker: It does remain it does remain challenging out there and that's why you see very lower growth rates in the industry and some banks shrinking a little bit.

Christopher D. Becker: Yeah, that makes sense. I mean, as you kind of think about those four equal slices over time and totally understand it's going to take a while to get there. Do you see it kind of being sort of a flattish overall loan book, or is the overall loan book growing as well? And I guess, when you think about loan growth for this year and the pipelines, the opportunities, are they sufficient to keep the loan book at a current level just running against that amortization and the payoff activity that you alluded to earlier in the call?

Christopher D. Becker: Yeah.

Speaker Change: Makes sense I mean, as you kind of thinking about those vehicles license over time and totally get it it's going to take a while to get there do you see in kind of being sort of a flattish overall loan book or is the overall loan book grow as well and I guess when you think about loan growth for this year and the pipeline that the opportunities are they sufficient to.

Speaker Change: Keep the loan book at a current level, just running against that amortization and the payoff activity that you alluded to earlier in the call.

Christopher D. Becker: I think so. We're still thinking, you know, low single-digit growth for the year, even though we were down a little bit in the first quarter, mainly related to payoffs in the residential portfolio, not on the commercial side. When you look at our pipeline numbers that we talk about in our earnings calls or state in our press releases, our earnings releases, depending on where we talk about them, and then you look at what we close in a quarter, the numbers are much more in line with each other.

Speaker Change: I think so.

Speaker Change: Still thinking you know low single digit growth for the year, even though we were down a little bit in the in the first quarter and mainly related to payoffs in the residential portfolio not on the commercial side.

Speaker Change: So.

When you look at our pipeline numbers that we talked about in our earnings calls in or state and our press release for our earnings releases, depending on where we where we talk about them.

Speaker Change: And then you look at what we close in a quarter. The numbers are much more in line with each other and I think every bank.

Christopher D. Becker: And I think every bank, you know, decides how to disclose its pipeline numbers a little bit differently. I hear pipeline numbers for some banks that are very large, but then when I see closings for the quarter, they're not very large. And this seems to me, to me, a little bit of a disconnect.

Speaker Change: Decides how to disclose their pipeline numbers, a little bit differently I hear pipeline numbers that some banks that are very large, but then when I see closings for the quarter. They are they're not very large and this seems to be to me a little bit of disconnect, but I. Just think that's the way everybody looks at it when we look at our pipeline. We look at are obviously lower.

Christopher D. Becker: But I just think that's the way everybody looks at it. When we look at our pipeline, we look at, obviously, loans that are approved and ready to close. And we look at, you know, LOIs that are signed and agreed upon, and we've already vetted those credits closely, and they have a very high probability of getting to closing. So I think, you know, looking at our number, which is probably a little bit more on the conservative side, the way we report it, is probably why it looks maybe a little bit lower than some others.

Speaker Change: That are approved and ready to close and we look at.

Speaker Change: L O I's that are <unk>.

Signed and agreed upon and we've already vetted those credits closely and they have a very high probability of getting to closing so I.

Speaker Change: I think you know looking at our number which was probably a little bit more concerned on the conservative side.

And the way we report it is probably why it looks maybe a little bit lower than some others.

Christopher D. Becker: Okay, understood. Thanks for that color.

Speaker Change: Okay understood thanks for that color.

Janet T. Verneuille: You know, as you I think, Janet, as you're going through some of the repricing on the borrowing and sort of what new stuff's going on today, and you kind of look at it again, the Securities portfolio. I mean, it's clear that there is some, you know, less efficient leverage on the balance sheet today that is not necessarily going to be super cheap to get out of, but you have a pretty healthy capital position.

Speaker Change: Yeah.

Speaker Change: I think Jen as youre going through some of the repricing on the on the borrowing and sort of what new stuff's coming on today and you kind of look at it against.

The securities portfolio I mean, it's clear that there is some less efficient leverage on the balance sheet today that I know is not necessarily going to be super cheap to get out or but you have a pretty healthy capital position. So as you think about you.

Janet T. Verneuille: So as you think about using capital today, you know, how do you weigh, you know, some restructuring similar to, or similar to, what you did last year or something else, you know, to kind of get rid of some of that leverage that maybe is upside down right now?

Speaker Change: Using capital today, how do you weigh.

Speaker Change: Our size and restructuring schindler to either similar to what you did last year or something else.

Speaker Change: To kind of get rid of some of that.

Speaker Change: That leverage that Navy is upside down right now.

Lee.

Lee: Well, we have modeled various scenarios out we usually look at the payback period to see if it makes sense.

Janet T. Verneuille: We have modeled various scenarios out. We will consider, you know, as we go forward, and we have some room with liquidity, maybe putting some investment securities on, but for the first quarter, it just didn't make sense.

We will consider you know as we go forward and we have some room with liquidity, maybe putting some investment securities on but for the first quarter. It just it makes sense.

Janet T. Verneuille: On some of the things we looked at, if you start getting out to five or six years, we think that makes a lot of sense. So we, but we continue to monitor that. We look at that on both the securities and loans.

Lee: You're the earn back periods on some of the things we looked at.

Lee: If you start getting out to five or six years, we don't think that.

Speaker Change: That makes a lot of sense.

Speaker Change: So we but we continue to monitor that we look at that on both the securities and loan side.

Janet T. Verneuille: Yeah, I totally get it. Are there pieces of the securities portfolio that have a shorter, shorter weighted average life or sort of cash flows that you could see over the next year or two that you could accelerate and do something today just to give us a near-term boost to the NIM?

Speaker Change: Yeah, I mean, I totally get it or are there.

The securities portfolio that are.

Speaker Change: Have a shorter shorter wait or weighted average life or sort of cash flows that you could see over the next year or two that you could accelerate and do something today just to.

Speaker Change: Give us some near term boost to the NIM.

Janet T. Verneuille: Not at the moment. I would say we'll continue to look at that, but there's nothing when we look at the investment portfolio. I mean, the immunities are paying down, but some of the mortgage backs, they're longer in the CMOs, the you know the mortgage-backed war

Speaker Change: Not at the moment I would say.

Speaker Change: We'll continue to look at that but there's nothing when we look at the investment portfolio I mean, the muni is a paying down but some of the mortgage backs that theyre longer Cmos.

Speaker Change: The mortgage backed portfolio is similar to our residential portfolio.

Janet T. Verneuille: The mortgage-backed portfolio is similar to our residential portfolio. There are a lot of underlying loans in the mortgage-backed portfolio, and not a lot of prepayments are coming in if the underlying mortgage is at 3% or 3.5%.

Speaker Change: A lot of the underlying loans in the mortgage backed portfolio.

Speaker Change: Not a lot of prepayments coming in if the underlying mortgages at 3% or three 5%.

Yes, okay.

Christopher D. Becker: I wanted to, I wanted to, you know, I really liked all the disclosure you guys put in your slide deck with respect to the multifamily and was looking at the weighted average debt service coverage ratio after reset for the sum of the stuff that's resetting in 24 and 25, which is pretty helpful. And I haven't seen a lot of that.

Speaker Change: Wanted to I wanted to you know I really liked all the disclosure you guys put in the in your slide deck with respect to multifamily and was.

Speaker Change: Looking at the weighted average debt service coverage ratio up to reset for the some of the stuff is resetting in 'twenty four 'twenty, five which is pretty helpful and haven't seen a lot of that so thanks for giving us that information.

Speaker Change: I was wondering if you had at your fingertips, maybe you don't just weak.

Christopher D. Becker: So thanks for giving us that information. I was wondering if you had it at your fingertips, and maybe you don't just, you know, we kind of all can guess what the rates are going to do and sort of the interest on the debt service. But you know, in terms of the net operating income of some of these properties, you know, for both the regulated and the free market. Do you have a sense for whether or not those NOIs are starting to come down in the next year or two? How do you think about that piece of the equation for the debt service coverage ratio? I don't have specific numbers for this.

Speaker Change: Alton gas and what the rates are going to do and sort of the interest and the debt survey service, but you know in terms of the net operating income of some of these properties for both the regulated and the free market.

Speaker Change: Do you have a sense for whether or not those NOI is starting to come down in the next in the next year or two or how do you think about that piece of the equation for the debt service coverage ratio.

Speaker Change: I don't have specific numbers for you, but I do see NOI is coming down and the N O wise are coming down because of inflation I mean, we're seeing when we're looking at new opportunities or when youre looking at a.

Christopher D. Becker: I don't have specific numbers for you, but I do see NOIs coming down, and NOIs are coming down because of inflation. I mean, when we're looking at new opportunities, or when you're looking at loans that are up, you know, for a rate reset. We're just doing annual reviews.

Speaker Change: Loans that are up for a rate reset we.

We're just doing annual reviews.

Speaker Change: Certain areas utility expenses insurance, we've seen insurance rates.

Speaker Change: Rates on some loans triple.

Since the loan was originally booked so the expense side is is really.

Christopher D. Becker: You know, certain areas, utility expenses, insurance, we've seen insurance rates on some loans triple, you know, since the loan was originally booked. So the expense side is really also a challenge, right? When you think about multifamily, you do have a lot of rent-regulated properties in that space. So it's not necessarily related to the regulations and to the 2019 legislation.

Also a challenge right. When you think about the multifamily you do have a lot of rent regulated properties in that.

Speaker Change: In that space.

Speaker Change: But if you see properties that look like they may have some stress on cash flow, it's more related to the higher interest rates that reset and the expenses.

Speaker Change: It's not so it's not necessarily related to the to the.

Christopher D. Becker: I mean, I guess when you guys think about underwriting these things and resetting them, then you know, like, what's sort of the magic number on the debt surge coverage ratio that you feel comfortable with?

Speaker Change: <unk> and to the.

Speaker Change: The 2019.

Speaker Change: Legislation that was passed.

Speaker Change: Right.

Speaker Change: Okay.

I mean, I guess when you guys think about underwriting these things and resetting them then what's sort of the magic number on debt service coverage ratio that you feel comfortable with it.

Christopher D. Becker: Well, listen, if it's new stuff, I mean, we, you know, if you look at policy, and you know, you'll go down to maybe 125. But if you look at reality, where we book things, and we've, we talked about it, and obviously provide a lot of guidance on it, we generally book things that have the weighted average rate average debt service coverage ratio of about 1.8 times and, you And that's consistent with the information that we put out there in both our annual meeting and the 8k. So, you know, that leaves you a lot of room.

Well.

Listen if it's new stuff I mean.

Speaker Change: If you look at policy and.

Speaker Change: You'll go down to maybe 125, but if you look at reality, where we were.

Speaker Change: We book things and we've talked about it and obviously provide a lot of guidance on it we generally.

Speaker Change: Book things add to weight average weighted average debt service coverage ratio by 1.8 times and 50% Ltvs and that's that's consistent with the information that we put out there.

In both our annual meeting in the in the 8-K.

Speaker Change: So that leaves you a lot of room and when we also put the additional information in our annual meeting when we talked about what the.

Christopher D. Becker: And when we also, you know, put the additional information in our annual meeting when we talked about what the, you know, looking at what was resetting in 24 and 25. And we assumed a risk that they all reset at March 31 of this year; the debt service coverage ratios basically went from the 180s to the 140s, still a strong debt service coverage ratio, and certainly loans, if it was a new loan coming in, that we would look at seriously, assuming all the other metrics were in good shape.

Speaker Change: Looking at what was resetting in 'twenty, four and 'twenty five.

Speaker Change: We assumed a risk that they will reset at March 31 of this year.

Speaker Change: The debt service coverage ratios.

Speaker Change: Basically went from the one <unk> to the one <unk> still.

Speaker Change: Still a strong debt service coverage ratio and and certainly loans. If it was a new loan coming in that that we would look at seriously.

Speaker Change: Assuming all the other metrics were in good shape, but looking at those changes right that that's basically about a 20% drop in the debt service coverage ratio. Okay. So if you. If you were to write loans at a minute minimum debt service coverage ratio and banks have different some of them you know minimum.

Christopher D. Becker: But looking at those changes, right, that's basically about a 20% drop in the debt service coverage. Okay, so if you were to write loans at a minimum debt service coverage ratio, banks have different minimums, some have a minimum of 115, some 120, 125, but if you had a 125, And if you did book a full loan and it was at a 125 debt service coverage ratio at the time you booked it, and that 20% decrease kind of held on across the board that you're seeing on average from what we showed you for 24 and 25, that loan would go down to about 1 to 1.

Speaker Change: 115 someone 'twenty, one 'twenty five but if you had a $1 25 and if you. If you did book a full loan and it was out of 125 debt service coverage ratio at the time you booked it.

Speaker Change: And that 20%.

Speaker Change: Decreased kind of kind of held on across the board that youre seeing on average from from what we showed you for 'twenty four 'twenty five does that alone would go down to about one to one. So you know it would obviously be in a more of a stretch distressed situation, but it would be covering covering itself. There just would be no.

Christopher D. Becker: So it would obviously be in more of a stressed situation, but it would be covering itself. There just would be no excess cash flow for the borrower, but they would be able to cover their expenses. You know, this it's that 20% threshold for us from what we're seeing kind of seems to be the number where things are falling, and I would guess that's probably pretty consistent throughout the industry because everybody's kind of looking at the same rates, and everybody's kind of looking at the same types of properties.

Speaker Change: Excess.

Speaker Change: Cash flow for the borrower, but they would be able to cover their expenses.

Speaker Change: So.

Speaker Change: It's that 20% threshold for us from what we're seeing kind of seems to be.

Seems to be the number where things are falling and I would guess, that's probably pretty consistent.

Speaker Change: Throughout the industry, because everybody's kind of looking at the same rates and everybody's kind of looking at the same type properties.

Christopher D. Becker: That's a really helpful call, Chris. I appreciate all the comments. Thanks for taking my questions.

Speaker Change: That's really helpful color, Chris I appreciate all the comments thanks for taking my questions.

Christopher D. Becker: Thanks, Alex. I appreciate it.

Christopher D. Becker: Thanks, Alex appreciate it.

Christopher D. Becker: Thank you Alex our next question comes from Chris O'connell K BW, Chris you can proceed with your question.

Operator: Thank you, Alex. Our next question comes from Chris O'Connell at KBW. Chris, you can proceed with your question.

Christopher D. Becker: Thanks.

Christopher D. Becker: Hi.

Christopher D. Becker: Following up on the multifamily discussion, you know, the, you know, the slide with the service coverage ratios, it shows the 2025 free market at like two, almost 2.2 times. Is there anything unusual about that? It just seems like, you know, really, really strong, you know, for it to be that high before the rate resets kick in.

Following up on the on the multifamily discussion.

Christopher D. Becker: Yeah.

Unknown Executive: And decided that debt service coverage ratios, which shows the 2025 three market.

Unknown Executive: At like two almost two two times.

Speaker Change: Is there anything unusual in that it just seems like really really strong.

Speaker Change: For it to be that high before the rate resets kick in.

Christopher D. Becker: No, there is nothing unusual in that. I mean, we're, you know, we're pretty consistent in the way we underwrite and, you know, there's nothing unusual in that number. I mean, when you look at our overall portfolio, and it's, you know, it's 190, the entire Cree portfolio, it's certainly not going to be unusual to have some segments above two and some below.

Speaker Change: There is.

Speaker Change: No. There is there is nothing unusual in that I mean, we're you know we're pretty consistent in the way, we underwrite and.

Speaker Change: It's there's nothing unusual in that number I mean, when you look at our overall portfolio and it's you know it's.

Speaker Change: 190.

Speaker Change: The entire <unk> portfolio, it's certainly not going to be unusual to have some segments above two and some below.

Speaker Change: Got it.

Christopher D. Becker: [inaudible] Circling back to just the overall loan growth discussion, can you give us what the yield on that $118 million pipeline is?

Speaker Change: And then.

Speaker Change: Circling back to just the overall loan growth discussion.

Speaker Change: Can you give us what the yield on that $180 million by <unk>.

Speaker Change:

Speaker Change: The yield on the pipeline is always tough because it because a lot of Walmart.

Christopher D. Becker: The yield on the pipeline is always tough because a lot of them are floating off of an index until they close, but I can tell you in the first quarter, the closings for the first quarter were just about 7% within a few basis points. So, based on the fact that rates haven't changed that much, I know we've seen some ups and downs in the treasury curve, but I'm going to say it's probably pretty close to that, but I don't have an exact number. It shouldn't be too different from the seven.

Speaker Change: Floating offered off of.

Speaker Change: And index until they close but I can tell you in the first quarter of the closings for the first quarter.

Speaker Change: Just about 7% within a few basis points to 7% so.

Speaker Change: Based on the fact that rates haven't changed that much I know, we've seen some ups and downs in the treasury curve.

Speaker Change: But I'm going to say, it's probably pretty close to that but I don't have an exact number on that but.

Speaker Change: Shouldn't be too different from the 7% number.

Christopher D. Becker: Got it. And And for the remainder of the year or next 12 months, you know, I know you gave us on the combined basis, I think last quarter, but do you have just, you know, what the dollar amount of, you know, loans, either repricing or maturing, and then securities, but, but, you know, the separate balances of each.

Speaker Change: Got it and.

Speaker Change: And for the remainder of the year or next 12 months.

Speaker Change: I know you gave us on the combined basis, I think last quarter, but do you have just what the dollar amount of loans.

Speaker Change: Either repricing or maturing are.

Speaker Change: And then securities, but the separate balances of each.

Speaker Change: So.

Christopher D. Becker: What we put out there is we generally have about 80 to 90 million dollars in quarterly cash flow coming in. I know that's not necessarily loans repricing, but that's quarterly cash flow coming in repricing. I don't have, other than what we've put out on Cree and what's repricing on the multifamily portfolio, I don't have the total amount because, again, when you look at the C&I side, you have lines of credit paying up, paying down, and moving around.

Speaker Change: What we what we put out there is we generally have about $80 million to $90 million in quarterly cash flow coming in.

Speaker Change: I know, that's not that's not necessarily loans repricing, but that quarterly cash flow coming in repricing.

Speaker Change: I don't have other than what we've put out on Cree.

And whats re pricing on the multifamily portfolio I.

I don't have.

Speaker Change: The total amount because again when you look at the C&I side right you have <unk>.

Speaker Change: Lines of credit.

Speaker Change: Paying up paying down and moving around so you can't always can't always tell when the usage. When the line usage is going to be up a bit to be down a little bit from quarter to quarter and that does fluctuate. So I don't I don't have specific numbers on that but that's something that we can try to put together a better.

Christopher D. Becker: So you can't always tell when the line usage is going to be up or down a little bit from quarter to quarter, and that does fluctuate. So I don't have specific numbers on that, but that's something that we can try to put together better for the next quarter.

Speaker Change: For the next quarter for you.

Speaker Change: Yes, no problem.

Christopher D. Becker: I guess what I'm getting at is, you know, after we get past the second quarter with some of these, you know, May and April, you know, kind of final CD repricings, you know, you seem to be, you know, a little bit more tepid on the back end of the year, you know, NIM rebounding, you know, this quarter and, you know, It seems like the CDs will pretty much fully And you're going to be getting, you know, improvement, although slow with, you know, the asset side. You know, what are you thinking about, you know, that they're just being conservative? Or do you think that they're going to be going up in the second half of the year?

Speaker Change: I guess, what I'm getting at is.

Speaker Change: After we get past the second quarter with some of these may and April.

Speaker Change: Final CD re pricings.

Speaker Change: You seem to be a little bit more tepid on the on the back ended the year NIM rebounding.

Speaker Change: This quarter end.

Speaker Change: Yes.

Speaker Change: It seems like the Cds will pretty much fully reprice, the borrowings are more or less fully repriced.

Speaker Change: And youre going to be getting improvement.

Speaker Change: Although slow.

Speaker Change: The asset side.

Just are you thinking about that.

Just being conservative or do you think the NIM can be going up in the second half of the year.

Speaker Change: I think we're being conservative.

Speaker Change: Where we are.

Speaker Change: Never you know conservative theme.

Christopher D. Becker: I think we're being conservative because whenever you're not conservative, it seems to come back, just like everybody thought going into this year, or the market certainly thought there were going to be seven, you know, rate decreases. And, you know, now we don't know if there's going to be any, right? So that, you know, Unknown Executive, Christopher Becker, Jay McConie, Janet Verneuille, First of Long Island Corp. When you, when you look at our overall liability side, as we've said, The higher-cost stuff, the wholesale funding, any brokered CDs, the retail CDs, I mean, that is really largely repriced, right? There are a few little things here and there, but, you know, nothing really significant.

Speaker Change: <unk>.

Speaker Change: Come back just like everybody thought going into this year, where the market would certainly thinking there was going to be seven you know.

Speaker Change: The rate decreases in.

Speaker Change: Now, we don't know if there's going to be any right. So that.

Speaker Change: The fed still saying, they're going to do something maybe two or three or what have you, but theres others, saying that maybe it doesn't happen till next year. So you do get a little Conservative and then you have.

Speaker Change: Some unexpected changes in the mix a little bit then you would still do have money moving out of DDA. So conservatively, we say hey, if this if the mix is good and we get some relief on the rate side.

We see.

See margin being able to move up.

Speaker Change: But.

Speaker Change: When you when you look at our overall liability side as we've said.

Speaker Change: The higher cost stuff the wholesale funding any brokerage Cds retail Cds.

Speaker Change: That is really largely repriced right, there's a few little things here and there.

Christopher D. Becker: So that's largely repriced. When we look at our non-maturity deposits, Savings Now Money Marketing. They've been continuing to go up, but at a decreasing pace, and you can see those numbers in our NIN tables for the past several quarters. And those numbers have moved down from an average of about 17 basis points a month when you go back to the first quarter of last year, down to about seven basis points a month when you look at the first quarter of this year. So when you look at that, and if you take that on, say, about $1.6 billion, and you borrow, well, how much extra interest cost is that going to be?

Speaker Change: Nothing real significant so that's largely repriced when we look at our non maturity deposits savings now money market accounts, they've been continuing to go up but at a decreasing pace and you can see those numbers in our NIM tables for the past several quarters and those those numbers have moved down.

Speaker Change: From.

An average of about 17 basis points a month when you go back to the first quarter last year down to about seven basis points a month. When you look at the first quarter of this year.

Speaker Change: So when you look at that and if you look at that on say about one one point.

Speaker Change: Six $1 billion.

Speaker Change: And you apply much.

Speaker Change: Much extra interest cost is that going to be and then if we look at our cash flow that we talked about coming in the 80 to 90.

Christopher D. Becker: And then if we look at our cash flow that we talk about coming in, the $80 to $90 million a quarter coming in on loans and securities, and if we look at a number of, say, two or three percent, two and a half percent on that repricing up, and just simply take a 3.5% loan and saying it's going to reprice to 6% for argument's sake, and use that number. You know, that repricing on that asset side, that small group of assets coming in because it's going to be a much larger repricing than where we currently are on the non-material deposits, there's upside potential there.

Speaker Change: Quarter coming in on loans and securities and if we.

Speaker Change: Look at a number of.

Speaker Change: Two 2% to 3% to 5% on that re pricing up and just just simply taking a three 5% loan and saying, it's going to reprice to six for argument's sake and use that number that.

Speaker Change: That repricing on that asset side that small group of assets coming in because it's going to be a much larger repricing than where we currently are on the non maturity deposits there is upside potential there right.

Christopher D. Becker: And we believe that the trend in the non-material deposits coming down from that seventeen basis points a month to seven. It's been coming down fairly consistently over that period of time, so that could very well continue. But if something happens, you know, it could go back up a little bit. So I think we're being on the conservative side a little when you, when you boil it down to what's really repricing now and where the pressures may be, I would say it leans towards the upside.

Speaker Change: And we believe that.

Speaker Change: That trend in the non maturity deposits coming down from that 17 basis points a month to seven.

Speaker Change: It's been coming down fairly consistently over that period of time, so that could very well continue.

Speaker Change: But if something happens you know it could go back up a little bit. So I think we're being on the conservative side, a little when you when you boil it down to what's what's really re pricing now and where the pressures may be I would say it leans towards the upside.

Speaker Change: But.

Christopher D. Becker: There are always the unknowns every quarter. We went down 21 basis points in margin this quarter, which was higher than I would have expected it to go down, but we just had an unfortunate change in mix from quarter to quarter that seems to be correcting now as we see the end of the first quarter numbers. But there is always the unexpected.

There's always there's always the unknowns every quarter right. We had it we went down 21 basis points in margin this quarter.

Speaker Change: Which was higher than I would have expected it to go down, but we had we just had an unfortunate change in mix from quarter to quarter that seems to be correcting now.

Speaker Change: As we see the end of the first quarter numbers, but you do you know that there is always the unexpected in there.

Speaker Change: Understood.

Christopher D. Becker: and just, you know, on the capital position, you guys bought back a little bit of shares this quarter. You were a little cautious on the buyback last quarter. Is that something that you think you will continue from here?

Speaker Change: Yeah.

Speaker Change: And just.

Speaker Change: The capital position.

Speaker Change: Guys.

Speaker Change: Bought back a little bit of shares this quarter.

Speaker Change: You were a little cautious on the buyback last quarter. That's something that you think you will continue from here.

Speaker Change: We take a look at it every quarter and depending on.

Christopher D. Becker: And depending on, you know, the capital position, we would consider buying back shares for sure in the upcoming months.

Speaker Change: The capital position, we would consider buying back shares for sure.

Speaker Change: And in the upcoming months.

Great.

Janet T. Verneuille: Great. And then the last one for me is just what's a good go forward tax rate?

Speaker Change: And then.

Speaker Change: Last one for me is just.

What's a good go forward tax rate.

Janet T. Verneuille: Well, I know we got it to 12 at the beginning of the year, but we came in at six and a quarter, starting to max out on the tax benefit of the REIT. So I do think the tax rate is going to be going up. I would say somewhere in the middle of the six and a quarter and the 12 that we got at the beginning of the year. Okay, great.

Well I know we are guided to 12 at the beginning of the year, we came in at six and a quarter starting to Max out on the.

Speaker Change: Tax benefited the REIT. So I think I do think the tax rate's going to be coming up I would say somewhere in the middle of the sixth quarter in the 12 that we guided at the beginning of the year.

Okay great.

Christopher D. Becker: Next time.

Speaker Change: Thanks, Don.

Operator: Thank you. That concludes our question and answer session. I will turn the floor back over to Chris Becker for closing comments.

You're welcome Thanks, Chris.

Speaker Change: Thank you. This concludes our question and answer session I will turn the floor back over to Chris Becker for closing comments.

Christopher D. Becker: Thank you for your attention and participation on the call today. And we look forward to talking to everybody at the end of the second quarter. Have a good rest of the day.

Christopher D. Becker: Yeah. Thank you for your attention and participation on the call today.

Christopher D. Becker: And we look forward to talking to everybody at the end of the second quarter have a good rest of the day.

Operator: Transcript by Rev.com. Page of

Operator: The meeting will go on air at the scheduled time on the meeting web page.

Christopher D. Becker: The meeting will go on air and as scheduled time on the meeting web page.

Yeah.

Christopher D. Becker: Yes.

Christopher D. Becker: Yes.