Management attributed strong Q1 performance to the successful integration of the First of Long Island merger, which scaled the balance sheet to nearly $15 billion and diversified the client base.
Net interest margin expansion was driven by contractual loan repricings and improved deposit costs, exceeding initial internal projections.
The bank is transitioning to a ‘tech-forward’ model, integrating AI across the organization to optimize systems and enhance scalability while maintaining a relationship-focused approach.
Loan growth of 10% annualized was supported by a reduction in cash and investment securities as the bank prioritized funding higher-yielding originations.
Credit quality remains a primary focus; while delinquencies rose due to a single isolated relationship, management emphasized that criticized and classified assets remain at historically low levels.
The geographic strategy now spans the entire New York City metro region with a measured expansion into the South Florida market, which management views as a natural extension of its core footprint.
Management maintained a year-end spot net interest margin target of 3.50%, assuming a conservative scenario of fewer rate cuts and a competitive deposit environment.
Loan portfolio growth is anticipated to settle into the mid-single digits for the remainder of 2026 as payoff activity potentially stabilizes.
Operating expenses are targeted to grow at a disciplined rate of 1.5% per quarter as the bank continues to realize merger synergies.
The bank expects to continue opportunistic share repurchases, with over 500,000 shares remaining in the current authorization, balanced against asset growth requirements.
Margin widening is expected to be primarily supported by the repricing of approximately $100 million in fixed-rate loans per month.
A 12% total value cushion, consisting of $80 million in reserves and purchase accounting marks, has been established to offset exposure to the New York City rent-stabilized portfolio.
Delinquencies increased to 0.81% due to one specific client relationship collateralized by 19 rent-stabilized properties, which is currently undergoing a workout process.
The rent-stabilized portfolio was reduced to $675 million from $750 million at merger close through proactive paydowns and loan sales.
Purchase accounting interest accretion contributed $9.3 million to the quarter, with a projected decline to $8 million for the full year 2027.
