5/30/2023 0 Comments Flic meaning![]() ![]() ![]() In light of SIVB's sudden collapse from a deposit run, deposit quality, an aspect of bank financial analysis that has traditionally taken a backseat, is now front and center in everyone's analysis.įor example, prior to SIVB's collapse, we can see that the bank was under severe liquidity stress as it had lost $16 billion in deposits in 2022 (Figure 7).įigure 7 - SIVB's deposits declined by $16 billion in 2022 (SIVB 2022 10K report) In my opinion, the only clear attractive attribute of FLIC was its dividend, which had been steadily growing at a 7.1% CAGR in the past 5 years and is currently yielding 6.2% (Figure 6).įigure 6 - FLIC pays a 6.2% dividend yield (Seeking Alpha) Is Deposit Flight A Concern? The Bank's financial performance is generally ahead of the average peer, although the outperformance was not great enough to warrant special attention on the lender (Figure 4).įigure 4 - FLIC generally outperformed peers (FLIC investor presentation)įLIC's small size, with a market cap of only ~$300 million, meant it flew under the radar, and the stock has underperformed regional banking peers as measured by the SPDR S&P Regional Banking ETF ( KRE) in the past decade.įigure 5 - FLIC has underperformed the KRE ETF (Seeking Alpha) Historically, The First of Long Island has been a steady performer, with double digit loan growth and decent profitability with low digit returns on equity (Figure 2 and 3).įigure 2 - FLIC has had steady loan growth (FLIC investor presentation)įigure 3 - FLIC ROA and ROE (FLIC investor presentation) banking, with total assets of only $4.3 billion as of Decemand primarily serves customers on Long Island and the Metropolitan New York area through its 42 local branches (Figure 1).įigure 1 - FLIC is a relative small regional lender (FLIC 2022 annual report) Steady Financial Performer But Under-appreciated Stock The Bank is considered a minnow in the land of U.S. The Bank was organized in 1927 as a national banking association and primarily derive revenues from interest on loans and investment securities, service charges and fees on bank accounts, and income from investment management services. The First of Long Island Corporation is a bank holding company providing financial services through its wholly-owned subsidiary, The First National Bank of Long Island ("The Bank"). Furthermore, its sub-scale size means the government is unlikely to 'bail out' FLIC in the event of a crisis. Overall, I do not see a compelling reason to buy FLIC, as profitability is likely to decline in the coming quarters on NIM compression. I believe the main worry for FLIC and other regional banks is NIM compression, as the recent regional banking crisis sheds a light on the difference between bank deposit rates and money market yields. ![]() However, like SIVB, FLIC has been borrowing from the FHLB. Uninsured deposits only account for 57% of FLIC's deposits and unrealized securities losses amount to only 19% of tier 1 capital. While FLIC shares some of the same problems with the failed lender SIVB, its issues are nowhere near as severe. In this article, I will use a small regional lender, The First of Long Island Corporation ( NASDAQ: FLIC), as a template for analyzing these aspects of regional banks. In light of recent failures of regional banks like SVB Financial Group ( OTC:SIVBQ) and Signature Bank ( OTC:SBNY), investors may need to look beyond traditional profitability and growth analysis and adopt new tools to analyze and understand regional banks with respect to deposit quality and investment securities exposures. ![]()
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