The First of Long Island Corporation (Nasdaq:FLIC), the parent
company of The First National Bank of Long Island, reported that
net income and earnings per share for the first quarter of 2013
were $5.6 million and $.62, respectively, representing increases
over the same quarter last year of 9.5% and 6.9%, respectively.
Dividends per share were $.25 for the first quarter of 2013, or
8.7% more than the $.23 per share declared in the same quarter last
year. Returns on average assets (ROA) and average equity (ROE) for
the first quarter of 2013 were 1.09% and 11.10%, respectively,
versus 1.01% and 10.67%, respectively, for the first quarter of
2012. A decrease in unrealized gains on available-for-sale
securities accounts for a significant portion of the increase in
ROE and is the reason the Corporation's book value per share
decreased from $22.81 at year-end 2012 to $22.71 at the end of the
current quarter. The credit quality of the Bank's loan portfolio
remains excellent and the loan pipeline is strong.
Analysis of First Quarter
Earnings
The increase in net income for the first quarter of 2013 is
primarily attributable to a decrease in the provision for loan
losses of $1.3 million, as partially offset by increases in
noninterest expense of $603,000 and income tax expense of $330,000.
Because of the low interest rate environment, net interest income
for the quarter only increased by $136,000, or .9%, and net
interest margin declined by 6 basis points despite significant
growth in the average balances of loans and noninterest-bearing
checking deposits. A low interest rate environment negatively
impacts net interest income and net interest margin primarily
because: (1) the benefit of no cost funding in the form of
noninterest-bearing checking deposits and capital is reduced; (2)
cash received from payments and prepayments of higher yielding
loans and securities is used to originate or purchase lower
yielding loans and securities; (3) the rates on some loans are
modified downward to dissuade borrowers from refinancing elsewhere,
while other loans prepay in full resulting in the immediate
writeoff of deferred costs; and (4) prepayment speeds on mortgage
securities are high, thereby necessitating the faster amortization
of purchase premiums.
Average interest-earning assets increased by $45.5 million, or
2.3%, when comparing the first quarter of 2013 to the same quarter
last year. The increase is primarily comprised of increases in the
average balance of loans outstanding of $144.0 million, or 14.4%,
and nontaxable securities of $9.1 million, or 2.5%, as partially
offset by a decrease in the average balance of taxable securities
of $111.2 million, or 18.3%. From a yield perspective, the shift
from lower yielding taxable securities to better yielding loans and
nontaxable securities resulted in an improvement in the mix of the
Bank's interest-earning assets. Growth in the average balances of
noninterest-bearing checking deposits of $80.9 million, or 18.7%,
and savings, NOW and money market deposits of $63.4 million, or
7.8%, were used to fund loan growth and pay down high cost
long-term debt. This contributed to a reduction in the overall cost
of the Bank's interest-bearing liabilities and served to mitigate
the decline in net interest margin caused by the low interest rate
environment.
The Bank's continued ability to grow loans is attributable to a
variety of factors including, among others, competitive pricing,
targeted solicitation efforts, advertising campaigns, and broker
relationships for both residential mortgages and multifamily
commercial mortgages. The Bank's ability to continue to grow
deposits is attributable to, among other things, expansion of the
Bank's branch distribution system, targeted solicitation of local
commercial businesses and municipalities, new and expanded lending
relationships, the Bank's positive reputation in its marketplace
and the acquisition of some local competitors by larger financial
institutions.
The $1.3 million decrease in the provision for loan losses for
the first quarter of 2013 versus the same quarter last year is due
to less loan growth in the current quarter, net recoveries in the
current quarter of $132,000 versus net chargeoffs of $446,000 in
the same quarter last year, and a reduction in historical loss
rates in the current quarter versus an increase in the same quarter
last year. The impact of these items in reducing the provision was
partially offset by the fact that the current quarter includes an
increase in specific reserves on loans individually deemed to be
impaired of $180,000 while the same quarter last year included a
decrease of $256,000 in such reserves.
The $603,000 increase in noninterest expense is comprised of an
increase in salaries of $153,000, or 3.8%, an increase in employee
benefits expense of $130,000, or 10.1%, an increase in occupancy
and equipment expense of $142,000, or 7.7% and an increase in other
operating expenses of $178,000, or 8.9%. The increase in salaries
is primarily due to normal annual salary adjustments and new branch
openings. The increase in employee benefits expense is largely due
to increases in incentive compensation and group health insurance
expense. These increases were partially driven by additions to
staff, an increase in the size of the Bank's executive team and a
change in the Bank's executive compensation plan. The increase in
occupancy and equipment expense is largely due to an increase in
maintenance and repairs and snow removal cost. The increase in
other operating expenses is largely due to the fact that consulting
expense was higher in the current quarter and the first quarter of
2012 included the partial reversal of a previously accrued charge
for pending litigation. Management continues to maintain a strong
focus on expense control measures and enhancements in operating
efficiency.
Asset Quality
The Bank's allowance for loan losses to total loans (reserve
coverage ratio) was 1.59% at March 31, 2013 compared to 1.62% at
year-end 2012. The decrease in the reserve coverage ratio is
largely due to a reduction in historical loss rates. The
$192,000 credit provision for loan losses in the first quarter of
2013 is primarily attributable to the reduction in historical loss
rates and net recoveries on loans previously charged off, as
partially offset by the impact on the provision of growth in the
loan portfolio and an increase in reserves on loans individually
deemed to be impaired. The $1.1 million provision for loan losses
for the first quarter of 2012 was primarily attributable to the
impact of loan growth, net chargeoffs and an increase in historical
loss rates, as partially offset by a reduction in reserves on loans
individually deemed to be impaired.
The credit quality of the Bank's loan portfolio remains
excellent, with nonaccrual loans amounting to $3.5 million, or .30%
of total loans outstanding at March 31, 2013. Additionally,
loans past due 30 through 89 days amounted to only $1.4 million, or
.12% of total loans outstanding. Troubled debt restructurings
were relatively unchanged during the quarter amounting to $4.3
million at quarter end compared to $4.4 million at year-end
2012. Of the $4.3 million in troubled debt restructurings
outstanding at March 31, 2013, $1.7 million are performing in
accordance with their modified terms and $2.6 million are past due
or nonaccrual and included in the aforementioned amounts of past
due and nonaccrual loans. The credit quality of the Bank's
securities portfolio also remains excellent. The Bank's
mortgage securities are backed by mortgages underwritten on
conventional terms, with 89% of these securities being full faith
and credit obligations of the U.S. government and the balance being
obligations of U.S. government sponsored entities. The
remainder of the Bank's securities portfolio principally consists
of high quality, general obligation municipal securities rated AA
or better by major rating agencies. In selecting municipal
securities for purchase, the Bank uses credit agency ratings for
screening purposes only and then performs its own credit
analysis. On an ongoing basis, the Bank periodically assesses
the credit strength of the municipal securities in its portfolio
and makes decisions to hold or sell based on such assessments.
Capital
The Corporation's Tier 1 leverage, Tier 1 risk-based and total
risk-based capital ratios were 9.38%, 18.90% and 20.16%,
respectively, at March 31, 2013. The strength of the
Corporation's balance sheet from both a capital and asset quality
perspective positions the Corporation for continued growth in a
measured and disciplined fashion.
Key Strategic Initiatives
Key strategic initiatives will continue to include loan and
deposit growth through effective relationship management, targeted
solicitation efforts, new product offerings and continued expansion
of the Bank's branch distribution system. Additionally, with
respect to loan growth, the Bank will continue to develop its
broker relationships and may establish correspondent
relationships. In 2012, the Bank opened one full service
branch in Lindenhurst, Long Island. In the first quarter of
this year, the Bank opened a full service branch in Massapequa
Park, Long Island and is planning to open another full service
branch in Sayville, Long Island later this year.
Challenges We Face
Interest rates are currently very low and are expected to remain
low for an extended period of time. In addition, there is
significant price competition for loans in the Bank's marketplace
and there is little room for the Bank to further reduce its deposit
rates. The persistence of these factors could result in a
decline in net interest margin from its current level. If that
were to occur, and management is unable to offset the resulting
negative impact by increasing the volume of the Bank's
interest-earning assets, effecting a favorable change in the mix of
the Bank's interest-earning assets or interest-bearing liabilities,
reducing expenses or the employment of other measures, the Bank's
profitability could decline.
Commercial and residential real estate values have been
negatively impacted by persistently high levels of unemployment and
underemployment, a decline in household disposable income,
foreclosures and commercial vacancies. Although real estate
values have rebounded some in recent months, these factors still
present meaningful threats to the maintenance of loan quality.
The banking industry is currently faced with an ever-increasing
number of new and complex regulatory requirements which are putting
downward pressure on revenues and upward pressure on required
capital levels and the cost of doing business.
|
BALANCE SHEET
INFORMATION |
(Unaudited) |
|
|
|
|
3/31/13 |
12/31/12 |
|
(in thousands, except
share |
|
and per share data) |
|
|
|
Total Assets |
$ 2,140,671 |
$ 2,108,290 |
|
|
|
Loans: |
|
|
Commercial and industrial |
64,472 |
54,339 |
Secured by real estate: |
|
|
Commercial mortgages |
513,242 |
504,368 |
Residential mortgages |
502,471 |
502,367 |
Home equity lines |
79,395 |
81,975 |
Consumer |
5,234 |
4,335 |
|
1,164,814 |
1,147,384 |
Allowance for loan losses |
(18,564) |
(18,624) |
|
1,146,250 |
1,128,760 |
Investment Securities: |
|
|
State and municipals |
377,644 |
368,768 |
Pass-through mortgage securities |
148,613 |
88,738 |
Collateralized mortgage obligations |
366,450 |
404,095 |
|
892,707 |
861,601 |
Deposits: |
|
|
Checking |
513,381 |
528,940 |
Savings, NOW and money market |
901,644 |
844,583 |
Time, $100,000 and over |
163,644 |
168,437 |
Time, other |
86,835 |
91,116 |
|
1,665,504 |
1,633,076 |
Borrowed Funds |
250,480 |
248,634 |
Stockholders' Equity |
206,149 |
205,370 |
|
|
|
Share and Per Share Data: |
|
|
Common Shares Outstanding at Period
End |
9,075,553 |
9,001,686 |
Book Value Per Share |
$22.71 |
$22.81 |
Tangible Book Value Per Share |
$22.69 |
$22.79 |
|
|
CONSOLIDATED STATEMENTS
OF INCOME |
(Unaudited) |
|
|
Three Months Ended |
|
3/31/13 |
3/31/12 |
|
(in thousands, except
share |
|
and per share data) |
Interest and dividend income: |
|
|
Loans |
$ 12,332 |
$ 12,133 |
Investment securities: |
|
|
Taxable |
2,629 |
4,153 |
Nontaxable |
3,158 |
3,225 |
|
18,119 |
19,511 |
Interest expense: |
|
|
Savings, NOW and money market
deposits |
609 |
1,031 |
Time deposits |
1,282 |
1,476 |
Short-term borrowings |
67 |
93 |
Long-term debt |
991 |
1,877 |
|
2,949 |
4,477 |
Net interest income |
15,170 |
15,034 |
Provision for loan losses (credit) |
(192) |
1,123 |
Net interest income after provision for
loan losses (credit) |
15,362 |
13,911 |
|
|
|
Noninterest income: |
|
|
Investment Management Division
income |
411 |
400 |
Service charges on deposit accounts |
709 |
778 |
Net gains on sales of securities |
4 |
108 |
Other |
550 |
418 |
|
1,674 |
1,704 |
Noninterest expense: |
|
|
Salaries |
4,201 |
4,048 |
Employee benefits |
1,412 |
1,282 |
Occupancy and equipment
expense |
1,998 |
1,856 |
Other |
2,169 |
1,991 |
|
9,780 |
9,177 |
|
|
|
Income before income taxes |
7,256 |
6,438 |
Income tax expense |
1,617 |
1,287 |
Net Income |
$ 5,639 |
$ 5,151 |
|
|
|
Share and Per Share Data: |
|
|
Weighted Average Common & Common
Equivalent Shares |
9,108,336 |
8,921,316 |
Basic EPS |
$.62 |
$.58 |
Diluted EPS |
$.62 |
$.58 |
Cash Dividends Declared |
$.25 |
$.23 |
|
|
|
FINANCIAL
RATIOS |
|
|
|
ROA |
1.09% |
1.01% |
ROE |
11.10% |
10.67% |
Net Interest Margin |
3.31% |
3.37% |
Dividend Payout Ratio |
40.32% |
39.66% |
|
|
PROBLEM AND
POTENTIAL PROBLEM LOANS AND ASSETS |
(Unaudited) |
|
|
|
|
3/31/13 |
12/31/12 |
|
(dollars in thousands) |
|
|
|
Loans, excluding troubled debt
restructurings: |
|
|
Past due 30 through 89 days |
$ 1,160 |
$ 678 |
Past due 90 days or more and still
accruing |
-- |
-- |
Nonaccrual |
1,113 |
1,668 |
|
2,273 |
2,346 |
Troubled debt restructurings: |
|
|
Performing according to their modified
terms |
1,740 |
1,747 |
Past due 30 through 89 days |
206 |
206 |
Past due 90 days or more and still
accruing |
-- |
-- |
Nonaccrual |
2,357 |
2,430 |
|
4,303 |
4,383 |
Total past due, nonaccrual and restructured
loans: |
|
|
Performing according to their modified
terms |
1,740 |
1,747 |
Past due 30 through 89 days |
1,366 |
884 |
Past due 90 days or more and still
accruing |
-- |
-- |
Nonaccrual |
3,470 |
4,098 |
|
6,576 |
6,729 |
Other real estate owned |
425 |
-- |
|
$ 7,001 |
$ 6,729 |
|
|
|
Allowance for loan losses |
$ 18,564 |
$ 18,624 |
Allowance for loan losses as a percentage of
total loans |
1.59% |
1.62% |
Allowance for loan losses as a multiple of
nonaccrual loans |
5.3 |
4.5 |
|
|
AVERAGE BALANCE SHEET,
INTEREST RATES AND INTEREST DIFFERENTIAL |
(Unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended March
31, |
|
2013 |
2012 |
|
Average |
Interest/ |
Average |
Average |
Interest/ |
Average |
|
Balance |
Dividends |
Rate |
Balance |
Dividends |
Rate |
Assets |
(dollars in thousands) |
Interest-bearing bank balances |
$ 11,274 |
$ 6 |
.22% |
$ 7,644 |
$ 4 |
.21% |
Investment Securities: |
|
|
|
|
|
|
Taxable |
495,964 |
2,623 |
2.12 |
607,173 |
4,149 |
2.73 |
Nontaxable (1) |
374,766 |
4,785 |
5.11 |
365,704 |
4,886 |
5.34 |
Loans (1) (2) |
1,146,630 |
12,338 |
4.31 |
1,002,597 |
12,141 |
4.85 |
Total interest-earning assets |
2,028,634 |
19,752 |
3.90 |
1,983,118 |
21,180 |
4.27 |
Allowance for loan losses |
(18,982) |
|
|
(17,227) |
|
|
Net interest-earning assets |
2,009,652 |
|
|
1,965,891 |
|
|
Cash and due from banks |
28,284 |
|
|
27,157 |
|
|
Premises and equipment, net |
24,690 |
|
|
22,979 |
|
|
Other assets |
36,061 |
|
|
30,789 |
|
|
|
$ 2,098,687 |
|
|
$ 2,046,816 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
Savings, NOW & money market deposits |
$ 878,125 |
609 |
.28 |
$ 814,703 |
1,031 |
.51 |
Time deposits |
253,761 |
1,282 |
2.05 |
269,893 |
1,476 |
2.20 |
Total interest-bearing deposits |
1,131,886 |
1,891 |
.68 |
1,084,596 |
2,507 |
.93 |
Short-term borrowings |
80,420 |
67 |
.34 |
105,697 |
93 |
.35 |
Long-term debt |
145,000 |
991 |
2.77 |
207,500 |
1,877 |
3.64 |
Total interest-bearing liabilities |
1,357,306 |
2,949 |
.88 |
1,397,793 |
4,477 |
1.29 |
Checking deposits |
514,177 |
|
|
433,288 |
|
|
Other liabilities |
21,122 |
|
|
21,605 |
|
|
|
1,892,605 |
|
|
1,852,686 |
|
|
Stockholders' equity |
206,082 |
|
|
194,130 |
|
|
|
$ 2,098,687 |
|
|
$ 2,046,816 |
|
|
|
|
|
|
|
|
|
Net interest income (1) |
|
$16,803 |
|
|
$16,703 |
|
Net interest spread (1) |
|
|
3.02% |
|
|
2.98% |
Net interest margin (1) |
|
|
3.31% |
|
|
3.37% |
(1) Tax-equivalent basis. Interest
income on a tax-equivalent basis includes the additional amount of
interest income that would have been earned if the Corporation's
investment in tax-exempt loans and investment securities had been
made in loans and investment securities subject to Federal income
taxes yielding the same after-tax income. The tax-equivalent
amount of $1.00 of nontaxable income was $1.52 in each period
presented based on a Federal income tax rate of 34%. |
(2) For the purpose of these computations,
nonaccruing loans are included in the daily average loan amounts
outstanding. |
Forward Looking Information
This earnings release contains various "forward-looking
statements" within the meaning of that term as set forth in Rule
175 of the Securities Act of 1933 and Rule 3b-6 of the Securities
Exchange Act of 1934. Such statements are generally contained
in sentences including the words "may" or "expect" or "could" or
"should" or "would" or "believe". The Corporation cautions
that these forward-looking statements are subject to numerous
assumptions, risks and uncertainties, and therefore actual results
could differ materially from those contemplated by the
forward-looking statements. In addition, the Corporation
assumes no duty to update forward-looking statements.
For more detailed financial information please see the
Corporation's quarterly report on Form 10-Q for the quarter ended
March 31, 2013. The Form 10-Q will be available through the
Bank's website at www.fnbli.com on or about May 10, 2013, after it
is electronically filed with the Securities and Exchange Commission
("SEC"). Our SEC filings are also available on the SEC's
website at www.sec.gov. You may also read and copy any
document we file with the SEC at the SEC's public reference room at
100 F Street, N.E., Room 1580, Washington, DC 20549. You
should call 1-800-SEC-0330 for more information on the public
reference room.
CONTACT: Mark D. Curtis, EVP, CFO and Treasurer
(516) 671-4900, Ext. 556
First of Long Island (NASDAQ:FLIC)
Historical Stock Chart
From Sep 2024 to Oct 2024
First of Long Island (NASDAQ:FLIC)
Historical Stock Chart
From Oct 2023 to Oct 2024