The First of Long Island Corporation (Nasdaq:FLIC), the parent
company of The First National Bank of Long Island, reported
increases in net income and earnings per share for the year ended
December 31, 2017. In the highlights that follow, all
comparisons are of the current year or three-month period to the
same period last year unless otherwise indicated.
FULL YEAR 2017 HIGHLIGHTS
- Net Income increased 13.7% to $35.1 million from $30.9
million
- EPS increased 6.7% to $1.43 from $1.34
- Cash Dividends Per Share increased 5.5% to $.58 from
$.55
- Book Value Per Share increased 11.4% to $14.37 at
12/31/17 from $12.90 at 12/31/16
- 16.7% growth in the average balance of
Loans
- 10.2% growth in the average balance of
Noninterest-Bearing Checking Deposits
- 8.6% growth in the average balance of Total
Deposits
FOURTH QUARTER HIGHLIGHTS
- Net Income and EPS were $7.6 million and $.30,
respectively
- Net Income includes a loss of $1.3 million, or $.05 per
share, on the sale of securities. The resulting proceeds were
reinvested in higher yielding securities.
- The Mortgage Loan Pipeline at quarter end was strong at
$190 million
- The Credit Quality of the Bank’s loan and securities
portfolios remains excellent
Analysis of 2017 Earnings
Net income for 2017 was $35.1 million, an
increase of $4.2 million, or 13.7%, over 2016. The increase
is primarily attributable to increases in net interest income of
$10.4 million, or 12.1%, and noninterest income, before securities
gains and losses, of $1.2 million, or 15.8%. The impact of
these items was partially offset by securities losses of $1.9
million and increases in the provision for loan losses of $1.4
million, noninterest expense, before debt extinguishment costs, of
$3.2 million, or 6.3%, and income tax expense of $840,000.
The increase in net interest income is mainly
attributable to growth in average interest-earning assets of $335.6
million, or 10.4%, which was driven by an increase in the average
balance of loans of $393.9 million, or 16.7%. Although most
of the loan growth occurred in residential and commercial mortgage
loans, commercial and industrial loans also grew with an increase
in average outstandings of $19.6 million, or 18.9%. The
growth in loans was funded mainly by growth in the average balances
of noninterest-bearing checking deposits of $81.0 million, or
10.2%, interest-bearing deposits of $140.8 million, or 7.8%,
short-term borrowings of $74.7 million and stockholders’ equity of
$43.3 million, or 14.9%. Also funding the growth in loans was
a decrease in the average balance of taxable investment securities
of $46.7 million, or 12.5%. Substantial contributors to the
growth in deposits were new branch openings, the Bank’s ongoing
municipal deposit initiative and deposit promotions.
Substantial contributors to the growth in stockholders’ equity were
net income, $35.3 million of capital raised in an underwritten
public offering in the first half of 2016 and the ongoing issuance
of shares under the Corporation’s Dividend Reinvestment and Stock
Purchase Plan. During 2017, shares issued under the Plan
added $22.6 million to capital. These sources of
capital were partially offset by the declaration of cash dividends
which amounted to $14.1 million.
Net interest income also benefitted from an
improvement in the Bank’s net interest margin. Net interest
margin was 2.91% for 2017 as compared to 2.89% for 2016. The
increase in net interest margin is attributable to higher portfolio
yields on loans and taxable securities partially offset by higher
rates on deposits and borrowings. The cost of deposits and
borrowings has been driven up, by among other things, increases in
the federal funds target rate. The current level of net
interest margin reflects the low interest rate environment that has
persisted for an extended period of time. Management
anticipates that net interest margin may be difficult to maintain
and could even decline and inhibit earnings growth.
The increase in noninterest income, before
securities gains and losses, of $1.2 million, or 15.8%, is
primarily attributable to increases in income from bank-owned life
insurance (“BOLI”) of $530,000, service charges on deposit accounts
of $126,000, checkbook income of $116,000 and Investment Management
Division income of $90,000. Also contributing to the increase
in noninterest income were refunds of sales taxes, real estate
taxes and telecommunications charges of $167,000. Cash value
accretion increased largely because of $25 million in BOLI
purchased during the first quarter of 2017. The increase in
service charges on deposit accounts is due to higher overdraft and
maintenance and activity charges resulting from, among other
things, growth in the number of deposit accounts. Growth in
the number of deposit accounts and a reduction in fee waivers
contributed to the increase in checkbook income. Investment
Management Division income increased largely because equity market
gains resulted in an increase in assets under management.
The increase in noninterest expense, before debt
extinguishment costs, of $3.2 million, or 6.3%, is primarily
attributable to increases in salaries of $2.0 million, or 9.2%,
employee benefits expense of $261,000, or 3.8%, occupancy and
equipment expense of $981,000, or 10.6%, and marketing expense of
$390,000. Also contributing to the increase was a valuation
allowance of $725,000 recorded in the fourth quarter of 2017 on
other real estate owned. The impact of these items was partially
offset by decreases in consulting fees of $635,000, computer and
telecommunications expense of $743,000 and FDIC insurance expense
of $201,000. The increase in salaries is primarily due to new
branch openings, additions to staff in the back office, higher
stock-based compensation expense and normal annual salary
adjustments. The increase in employee benefits expense
resulted primarily from increases in group health insurance expense
of $260,000, incentive compensation expense of $101,000 and payroll
tax expense of $88,000, partially offset by a decrease in
retirement plan expense of $257,000. The increase in group
health insurance expense resulted from increases in staff count and
the rates being charged by insurance carriers and the decrease in
retirement plan expense resulted from an increase in the discount
rate and the favorable performance of plan assets. The
increase in occupancy and equipment expense is primarily due to the
operating costs of new branches, a growth-related increase in
depreciation on the Bank’s facilities and equipment and the cost of
servicing equipment. The increase in marketing expense is
largely due to new branch and deposit account promotions. The
decrease in consulting fees is mainly due to a charge of $800,000
in the second quarter of 2016 for advisory services rendered in
connection with renegotiating the Bank’s data processing
contract. The decrease in computer and telecommunications
expense reflects the cost savings arising from this
renegotiation. The decrease in FDIC insurance expense is
attributable to a lower FDIC assessment rate effective July 1,
2016, partially offset by a growth-related increase in the
assessment base.
During the fourth quarter of 2017, the Bank sold
approximately $88.6 million of mortgage-backed securities with a
yield of 1.55% and an expected average life of 3.4 years and
reinvested substantially all of the proceeds in mortgage-backed
securities with a yield of 2.61% and an expected average life of
4.9 years. The sale resulted in a pretax loss of $1.9 million
and an after-tax loss of $1.3 million, or $.05 per share. Due
to changes in Federal tax law enacted in December 2017, most of the
future incremental income will be taxed at a Federal tax rate of
21% while the $1.9 million pre-tax loss in 2017 will receive a
Federal tax benefit at a rate of 35%. Considering both the
future incremental income on the replacement securities and the
change in the federal tax rate effective in 2018, the payback
period for the 2017 loss is approximately 1.7 years. The
securities loss negatively impacted 2017 ROA and ROE by 3 and 38
basis points, respectively.
During the first quarter of 2017, the Bank
executed a deleveraging transaction. This transaction
involved the sale of approximately $40 million of mortgage-backed
securities at a gain of $57,000 and use of the resulting proceeds
to pay down short-term borrowings. During the second quarter
of 2016, the Bank executed a deleveraging transaction. That
transaction involved the sale of $40.3 million of mortgage-backed
securities at a gain of $1,795,000 and the prepayment of $30
million of long-term debt at a cost of $1,756,000. These
deleveraging transactions were undertaken to eliminate inefficient
leverage and accrete Tier 1 leverage capital.
The $1.4 million increase in the provision for
loan losses in 2017 is mainly due to more loan growth, an increase
in net chargeoffs of $448,000 from $679,000 in 2016 to $1,127,000
in 2017 and a decline in historical loss rates in 2016. The
impact of these items was partially offset by improved economic
conditions in 2017 and a $510,000 decline in specific reserves on
loans individually deemed to be impaired. Net chargeoffs were
driven higher in 2017 by an $820,000 chargeoff recorded on one
commercial mortgage when the Bank took a deed-in-lieu of
foreclosure. Other real estate owned at year end 2017
consists solely of the property taken. The Bank is currently
in contract to sell this property for its carrying value of
$5,125,000. Specific reserves declined in 2017 almost
entirely as a result of the collection in full of one impaired
loan.
The $840,000 increase in income tax expense is
due to higher pre-tax earnings in 2017 and a decline in income from
tax-exempt securities. Another important contributor to
the increase in income tax expense is the fact that in 2017 the
Corporation is subject to New York State and New York City taxes
based on capital rather than business income and did not record
the potential NYS and NYC tax benefits of deductible temporary
differences. The impact of these items was partially offset
by a $909,000 credit to income tax expense in 2017 resulting from a
reduction in the Corporation’s net deferred tax liability to
reflect the recent changes in Federal tax law. In addition,
the Corporation realized higher tax benefits in 2017 from stock
awards and BOLI. The vesting and exercise of stock awards
resulted in tax benefits over and above those accrued during the
vesting period of $762,000 and $385,000 in 2017 and 2016,
respectively.
Analysis of Earnings – Fourth Quarter
2017 Versus Fourth Quarter 2016
Net income for the fourth quarter of 2017 was
$7.6 million, up slightly from $7.5 million in the same period last
year. The increase is primarily attributable to increases in
net interest income and income from BOLI of $1.9 million and
$188,000, respectively, and decreases in the provision for loan
losses and income tax expense of $319,000 and $968,000,
respectively. These items were substantially offset by
increases in salaries and occupancy and equipment expense of
$536,000 and $380,000, respectively, and the aforementioned
securities loss and valuation allowance of $1.9 million and
$725,000, respectively. The securities loss negatively
impacted fourth quarter 2017 ROA and ROE by 13 and 141 basis
points, respectively. The decrease in the provision for loan
losses was primarily driven by a decrease in specific reserves in
the fourth quarter of 2017 of $821,000 versus an increase of
$482,000 in the comparable 2016 period, as partially offset by
higher net chargeoffs in the 2017 quarter and adjustments to
qualitative factors used in determining the allowance for loan
losses. The decrease in income tax expense is attributable to
lower pretax earnings in the fourth quarter of 2017 and the reasons
for a decrease discussed above with respect to the full year
periods. Other fourth quarter variances occurred for
substantially the same reasons discussed above with respect to the
full year periods.
Analysis of Earnings – Fourth Quarter
Versus Third Quarter 2017
Net income for the fourth quarter of 2017 was
$1.8 million lower than the third quarter. The decrease is
primarily attributable to a decrease in net interest income of
$303,000, an increase in the provision for loan losses of $529,000,
higher marketing expenses in the fourth quarter of $102,000 and the
aforementioned securities loss and valuation allowance of $1.9
million and $725,000, respectively. The decrease in net
interest income was driven mainly by a decline in prepayment
penalties and late charges of $684,000. The
increase in the provision for loan losses was principally due to
more loan growth and an increase in net chargeoffs of
$820,000. Partially offsetting these items was a decrease in
income tax expense of $2.3 million mainly due to lower pretax
earnings in the fourth quarter and the aforementioned credit to
income tax expense of $909,000, as partially offset by the NYS and
NYC tax items mentioned above.
Asset Quality
The Bank’s allowance for loan losses to total
loans decreased three basis points from 1.18% at December 31, 2016
to 1.15% at December 31, 2017. The provision for loan losses
was $4.9 million and $3.5 million in 2017 and 2016,
respectively. The provision in each period was mainly driven
by loan growth. The provision in 2017 was also driven by net
chargeoffs as partially offset by an improvement in the local
housing market and overall economic conditions and the decline in
specific reserves. The provision in 2016 was also impacted by
net chargeoffs and a decline in historical loss rates.
The overall credit quality of the Bank’s loan
portfolio remains excellent. Nonaccrual loans amounted to
$1.0 million, or .03% of total loans outstanding, at December 31,
2017, compared to $2.6 million, or .10%, at December 31,
2016. The decrease is attributable to paydowns and loans
returned to an accrual status based on the demonstrated ability of
the borrowers to service their debt, as partially offset by three
new nonaccrual loans. Troubled debt restructurings amounted
to $1.0 million, or .04% of total loans outstanding, at December
31, 2017, representing a decrease of $498,000 from year-end
2016. The decrease was primarily attributable to payoffs of
two loans and paydowns on other loans. Troubled debt
restructurings at year-end include $785,000 that are performing in
accordance with their modified terms and $100,000 that are
nonaccrual and included in the aforementioned amount of nonaccrual
loans. Loans past due 30 through 89 days amounted to $2.8
million, or .09% of total loans outstanding, at December 31, 2017,
compared to $1.1 million, or .04%, at December 31, 2016.
Management does not believe that the increase in loans past due 30
through 89 days is indicative of a deterioration in the overall
credit quality of the Bank’s loan portfolio.
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 74% 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, common equity
Tier 1 risk-based, Tier 1 risk-based and total risk-based capital
ratios were approximately 9.3%, 15.3%, 15.3% and 16.5%,
respectively, at December 31, 2017. The strength of the
Corporation’s balance sheet positions the Corporation for continued
growth in a measured and disciplined fashion.
During the first quarter of 2017, the
Corporation’s Board of Directors increased the amount of stock that
an individual can purchase on a quarterly basis under the stock
purchase component of the Dividend Reinvestment and Stock Purchase
Plan (the “Plan”) from $50,000 to $75,000. This change is
providing additional capital that is being used to accommodate
balance sheet growth. Future levels of dividend reinvestment
and stock purchases cannot be predicted with any degree of
certainty.
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 on
Long Island and in the New York City boroughs of Queens and
Brooklyn. With respect to loan growth, the Bank will continue
to prudently manage concentration risk and further develop its
broker and correspondent relationships. Small business credit
scored loans, equipment finance loans and SBA loans, along with the
Bank’s traditional commercial and industrial loan products, will be
originated to diversify the Bank’s loan portfolio and help mitigate
the impact of the low rate environment on the Bank’s earnings.
The Bank achieved a significant milestone in
December 2017 by opening its 50th branch in Astoria, Queens. The
Bank’s growing branch distribution system consists of branches in
Nassau and Suffolk Counties, Long Island and the New York City
boroughs of Queens, Brooklyn and Manhattan. The Bank expects
to open three or four more branches in Queens and Brooklyn over the
next twelve months and continues to evaluate sites for further
branch expansion. In addition to loan and deposit growth,
management is also focused on growing noninterest income from
existing and potential new sources, which may include the
development or acquisition of fee-based businesses.
Tax Reform
On December 22, 2017, the Tax Cuts and Jobs Act was signed into
law. The most significant impact of the Act on the
Corporation is a reduction in the federal corporate tax rate from
35% to 21% commencing in 2018. Some of the other provisions
affecting the Corporation are:
- Advance refunding municipal bonds issued after December 31,
2017 will no longer be tax-exempt.
- The Corporation will no longer be able to deduct any
compensation in excess of $1 million paid to a named executive
officer.
- Certain entertainment expenses previously deductible at 50% are
now disallowed.
- Bonus depreciation is increased to 100% for qualified property
placed in service after September 27, 2017 and before January 1,
2023, with phase downs over the next four years.
- The immediate expensing of tangible property that qualifies as
Internal Revenue Code Section 179 property is increased to $1
million with an increase of the phase-out threshold to $2.5
million.
The Corporation’s effective tax rate for 2017 is
22.0%. Considering, among other things, the changes
included in the Tax Cuts and Jobs Act, the Corporation currently
expects that its effective tax rate for 2018 will be in the range
of 14% to 16%.
Challenges We Face
Beginning in December 2015, there have been five
twenty-five basis point increases in the federal funds target rate
to its current level of 1.25% to 1.50%. These increases have
exerted upward pressure on non-maturity deposit rates and have
caused these rates and overnight borrowing rates to move
upward. Further increases in the federal funds target rate
are expected in the foreseeable future. At the same time, the
Bank generally lends and invests at a spread to intermediate and
long-term interest rates which remain relatively low and without
what management believes to be near term prospects for meaningful
improvement. This together with significant price competition
for loans in the Bank’s marketplace have resulted in suboptimal
investing and lending rates. These factors are expected to
continue to exert downward pressure on net interest margin.
The banking
industry continues to be faced with new and complex regulatory
requirements and enhanced supervisory oversight. The markets
expect that regulatory relief will be forthcoming, but the timing,
magnitude and positive impact of any such relief are yet to be
determined. In the current environment, banking regulators
are increasingly concerned about, among other things, growth,
commercial real estate concentrations, underwriting of commercial
real estate and commercial and industrial loans, capital levels,
cyber security and predatory sales practices. Regulatory
requirements and enhanced supervisory oversight are exerting
downward pressure on revenues and upward pressure on required
capital levels and the cost of doing business.
CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
|
|
|
|
|
|
12/31/17 |
|
12/31/16 |
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
Assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
69,672 |
|
|
$ |
36,929 |
|
|
|
|
|
|
|
|
Investment securities: |
|
|
|
|
|
|
Held-to-maturity, at amortized cost (fair value of $7,749 and
$11,637) |
|
|
7,636 |
|
|
|
11,387 |
|
Available-for-sale, at fair value |
|
|
720,128 |
|
|
|
815,299 |
|
|
|
|
727,764 |
|
|
|
826,686 |
|
Loans: |
|
|
|
|
|
|
Commercial and industrial |
|
|
109,623 |
|
|
|
126,038 |
|
Secured
by real estate: |
|
|
|
|
|
|
Commercial mortgages |
|
|
1,193,007 |
|
|
|
1,085,198 |
|
Residential mortgages |
|
|
1,558,564 |
|
|
|
1,238,431 |
|
Home
equity lines |
|
|
83,625 |
|
|
|
86,461 |
|
Consumer
and other |
|
|
5,533 |
|
|
|
9,293 |
|
|
|
|
2,950,352 |
|
|
|
2,545,421 |
|
Allowance
for loan losses |
|
|
(33,784 |
) |
|
|
(30,057 |
) |
|
|
|
2,916,568 |
|
|
|
2,515,364 |
|
|
|
|
|
|
|
|
Restricted stock, at cost |
|
|
37,314 |
|
|
|
31,763 |
|
Bank
premises and equipment, net |
|
|
39,648 |
|
|
|
34,361 |
|
Bank-owned life insurance |
|
|
59,665 |
|
|
|
33,097 |
|
Pension
plan assets, net |
|
|
19,152 |
|
|
|
17,316 |
|
Other
assets |
|
|
24,925 |
|
|
|
14,804 |
|
|
|
$ |
3,894,708 |
|
|
$ |
3,510,320 |
|
Liabilities: |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Checking |
|
$ |
896,129 |
|
|
$ |
808,311 |
|
Savings,
NOW and money market |
|
|
1,602,460 |
|
|
|
1,519,749 |
|
Time,
$100,000 and over |
|
|
203,890 |
|
|
|
178,918 |
|
Time,
other |
|
|
119,518 |
|
|
|
101,739 |
|
|
|
|
2,821,997 |
|
|
|
2,608,717 |
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
281,141 |
|
|
|
207,012 |
|
Long-term
debt |
|
|
423,797 |
|
|
|
379,212 |
|
Accrued
expenses and other liabilities |
|
|
10,942 |
|
|
|
9,481 |
|
Deferred
income taxes payable |
|
|
2,381 |
|
|
|
68 |
|
|
|
|
3,540,258 |
|
|
|
3,204,490 |
|
Stockholders'
Equity: |
|
|
|
|
|
|
Common
stock, par value $.10 per share: |
|
|
|
|
|
|
Authorized, 40,000,000 shares; |
|
|
|
|
|
|
Issued
and outstanding, 24,668,390 and 23,699,107 shares |
|
|
2,467 |
|
|
|
2,370 |
|
Surplus |
|
|
127,122 |
|
|
|
101,738 |
|
Retained
earnings |
|
|
224,315 |
|
|
|
203,326 |
|
|
|
|
353,904 |
|
|
|
307,434 |
|
Accumulated other comprehensive income (loss), net of tax |
|
|
546 |
|
|
|
(1,604 |
) |
|
|
|
354,450 |
|
|
|
305,830 |
|
|
|
$ |
3,894,708 |
|
|
$ |
3,510,320 |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
INCOME(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Three Months Ended |
|
|
12/31/17 |
|
12/31/16 |
|
12/31/17 |
|
12/31/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
Interest and dividend
income: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
97,027 |
|
|
$ |
82,456 |
|
$ |
25,217 |
|
|
$ |
21,612 |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
7,754 |
|
|
|
7,981 |
|
|
1,871 |
|
|
|
2,061 |
Nontaxable |
|
|
13,484 |
|
|
|
13,686 |
|
|
3,372 |
|
|
|
3,430 |
|
|
|
118,265 |
|
|
|
104,123 |
|
|
30,460 |
|
|
|
27,103 |
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Savings,
NOW and money market deposits |
|
|
7,113 |
|
|
|
5,344 |
|
|
2,139 |
|
|
|
1,511 |
Time
deposits |
|
|
5,479 |
|
|
|
5,107 |
|
|
1,493 |
|
|
|
1,197 |
Short-term borrowings |
|
|
1,345 |
|
|
|
296 |
|
|
359 |
|
|
|
142 |
Long-term
debt |
|
|
7,772 |
|
|
|
7,255 |
|
|
2,069 |
|
|
|
1,797 |
|
|
|
21,709 |
|
|
|
18,002 |
|
|
6,060 |
|
|
|
4,647 |
Net
interest income |
|
|
96,556 |
|
|
|
86,121 |
|
|
24,400 |
|
|
|
22,456 |
Provision for loan
losses |
|
|
4,854 |
|
|
|
3,480 |
|
|
1,651 |
|
|
|
1,970 |
Net
interest income after provision for loan losses |
|
|
91,702 |
|
|
|
82,641 |
|
|
22,749 |
|
|
|
20,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income: |
|
|
|
|
|
|
|
|
|
|
|
|
Investment Management Division income |
|
|
2,090 |
|
|
|
2,000 |
|
|
525 |
|
|
|
502 |
Service
charges on deposit accounts |
|
|
2,792 |
|
|
|
2,666 |
|
|
673 |
|
|
|
687 |
Net gains
(losses) on sales of securities |
|
|
(1,866 |
) |
|
|
1,868 |
|
|
(1,940 |
) |
|
|
- |
Other |
|
|
3,813 |
|
|
|
2,845 |
|
|
935 |
|
|
|
691 |
|
|
|
6,829 |
|
|
|
9,379 |
|
|
193 |
|
|
|
1,880 |
Noninterest
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries |
|
|
24,159 |
|
|
|
22,116 |
|
|
6,215 |
|
|
|
5,679 |
Employee
benefits |
|
|
7,150 |
|
|
|
6,889 |
|
|
1,722 |
|
|
|
1,741 |
Occupancy
and equipment |
|
|
10,245 |
|
|
|
9,264 |
|
|
2,721 |
|
|
|
2,341 |
Debt
extinguishment |
|
|
- |
|
|
|
1,756 |
|
|
- |
|
|
|
- |
Other |
|
|
11,966 |
|
|
|
12,066 |
|
|
3,652 |
|
|
|
3,053 |
|
|
|
53,520 |
|
|
|
52,091 |
|
|
14,310 |
|
|
|
12,814 |
Income
before income taxes |
|
|
45,011 |
|
|
|
39,929 |
|
|
8,632 |
|
|
|
9,552 |
Income tax expense |
|
|
9,889 |
|
|
|
9,049 |
|
|
1,066 |
|
|
|
2,034 |
Net
income |
|
$ |
35,122 |
|
|
$ |
30,880 |
|
$ |
7,566 |
|
|
$ |
7,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Three Months Ended |
|
|
|
12/31/17 |
|
12/31/16 |
|
12/31/17 |
|
12/31/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
35,122 |
|
$ |
30,880 |
|
$ |
7,566 |
|
$ |
7,518 |
|
Income allocated to
participating securities |
|
|
128 |
|
|
127 |
|
|
27 |
|
|
28 |
|
Income
allocated to common stockholders |
|
$ |
34,994 |
|
$ |
30,753 |
|
$ |
7,539 |
|
$ |
7,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares |
|
|
24,219,813 |
|
|
22,745,967 |
|
|
24,586,980 |
|
|
23,663,336 |
|
Dilutive
stock options and restricted stock units |
|
|
255,333 |
|
|
271,929 |
|
|
260,135 |
|
|
289,910 |
|
|
|
|
24,475,146 |
|
|
23,017,896 |
|
|
24,847,115 |
|
|
23,953,246 |
|
Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS |
|
|
$1.44 |
|
|
$1.35 |
|
|
$.31 |
|
|
$.32 |
|
Diluted
EPS |
|
|
1.43 |
|
|
1.34 |
|
|
.30 |
|
|
.31 |
|
Cash
Dividends Declared |
|
|
.58 |
|
|
.55 |
|
|
.15 |
|
|
.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL RATIOS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROA |
|
|
.95 |
% |
|
.93 |
% |
|
.79 |
% |
|
.86 |
% |
ROE |
|
|
10.51 |
% |
|
10.62 |
% |
|
8.52 |
% |
|
9.64 |
% |
Net Interest
Margin |
|
|
2.91 |
% |
|
2.89 |
% |
|
2.87 |
% |
|
2.89 |
% |
Dividend Payout
Ratio |
|
|
40.56 |
% |
|
41.04 |
% |
|
50.00 |
% |
|
45.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROBLEM AND POTENTIAL PROBLEM LOANS AND
ASSETS(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
12/31/17 |
|
|
12/31/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
Loans, excluding
troubled debt restructurings: |
|
|
|
|
|
|
|
|
Past due
30 through 89 days |
|
$ |
2,594 |
|
|
$ |
1,106 |
|
Past due
90 days or more and still accruing |
|
|
- |
|
|
|
621 |
|
Nonaccrual |
|
|
900 |
|
|
|
1,770 |
|
|
|
|
3,494 |
|
|
|
3,497 |
|
Troubled debt
restructurings: |
|
|
|
|
|
|
|
|
Performing according to their modified terms |
|
|
785 |
|
|
|
757 |
|
Past due
30 through 89 days |
|
|
162 |
|
|
|
- |
|
Past due
90 days or more and still accruing |
|
|
- |
|
|
|
- |
|
Nonaccrual |
|
|
100 |
|
|
|
788 |
|
|
|
|
1,047 |
|
|
|
1,545 |
|
Total past due,
nonaccrual and restructured loans: |
|
|
|
|
|
|
|
|
Restructured and performing according to their modified terms |
|
|
785 |
|
|
|
757 |
|
Past due
30 through 89 days |
|
|
2,756 |
|
|
|
1,106 |
|
Past due
90 days or more and still accruing |
|
|
- |
|
|
|
621 |
|
Nonaccrual |
|
|
1,000 |
|
|
|
2,558 |
|
|
|
|
4,541 |
|
|
|
5,042 |
|
Other real estate
owned, net of valuation allowance of $725 |
|
|
5,125 |
|
|
|
- |
|
|
|
$ |
9,666 |
|
|
$ |
5,042 |
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses |
|
$ |
33,784 |
|
|
$ |
30,057 |
|
Allowance for loan
losses as a percentage of total loans |
|
|
1.15 |
% |
|
|
1.18 |
% |
Allowance for loan
losses as a multiple of nonaccrual loans |
|
|
33.8 |
x |
|
|
11.8 |
x |
|
|
|
|
|
|
|
|
|
AVERAGE BALANCE SHEET, INTEREST RATES AND
INTEREST DIFFERENTIAL(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, |
|
|
2017 |
|
2016 |
|
|
Average |
|
Interest/ |
|
Average |
|
Average |
|
Interest/ |
|
Average |
(dollars in thousands) |
|
Balance |
|
Dividends |
|
Rate |
|
Balance |
|
Dividends |
|
Rate |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning bank
balances |
|
$ |
25,356 |
|
|
$ |
281 |
|
1.11 |
% |
|
$ |
32,711 |
|
|
$ |
168 |
|
.51 |
% |
Investment
securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
327,491 |
|
|
|
7,473 |
|
2.28 |
|
|
|
374,199 |
|
|
|
7,813 |
|
2.09 |
|
Nontaxable (1) |
|
|
461,149 |
|
|
|
20,744 |
|
4.50 |
|
|
|
465,457 |
|
|
|
21,056 |
|
4.52 |
|
Loans (1) |
|
|
2,758,116 |
|
|
|
97,040 |
|
3.52 |
|
|
|
2,364,187 |
|
|
|
82,469 |
|
3.49 |
|
Total interest-earning
assets |
|
|
3,572,112 |
|
|
|
125,538 |
|
3.51 |
|
|
|
3,236,554 |
|
|
|
111,506 |
|
3.45 |
|
Allowance for loan
losses |
|
|
(32,022 |
) |
|
|
|
|
|
|
|
|
(28,238 |
) |
|
|
|
|
|
|
Net interest-earning
assets |
|
|
3,540,090 |
|
|
|
|
|
|
|
|
|
3,208,316 |
|
|
|
|
|
|
|
Cash and due from
banks |
|
|
31,555 |
|
|
|
|
|
|
|
|
|
30,450 |
|
|
|
|
|
|
|
Premises and equipment,
net |
|
|
36,279 |
|
|
|
|
|
|
|
|
|
31,597 |
|
|
|
|
|
|
|
Other assets |
|
|
87,926 |
|
|
|
|
|
|
|
|
|
58,945 |
|
|
|
|
|
|
|
|
|
$ |
3,695,850 |
|
|
|
|
|
|
|
|
$ |
3,329,308 |
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW &
money market deposits |
|
$ |
1,635,044 |
|
|
|
7,113 |
|
.44 |
|
|
$ |
1,501,096 |
|
|
|
5,344 |
|
.36 |
|
Time deposits |
|
|
305,029 |
|
|
|
5,479 |
|
1.80 |
|
|
|
298,194 |
|
|
|
5,107 |
|
1.71 |
|
Total interest-bearing
deposits |
|
|
1,940,073 |
|
|
|
12,592 |
|
.65 |
|
|
|
1,799,290 |
|
|
|
10,451 |
|
.58 |
|
Short-term
borrowings |
|
|
132,137 |
|
|
|
1,345 |
|
1.02 |
|
|
|
57,395 |
|
|
|
296 |
|
.52 |
|
Long-term debt |
|
|
408,170 |
|
|
|
7,772 |
|
1.90 |
|
|
|
375,159 |
|
|
|
7,255 |
|
1.93 |
|
Total interest-bearing
liabilities |
|
|
2,480,380 |
|
|
|
21,709 |
|
.88 |
|
|
|
2,231,844 |
|
|
|
18,002 |
|
.81 |
|
Checking deposits |
|
|
872,660 |
|
|
|
|
|
|
|
|
|
791,698 |
|
|
|
|
|
|
|
Other liabilities |
|
|
8,722 |
|
|
|
|
|
|
|
|
|
14,960 |
|
|
|
|
|
|
|
|
|
|
3,361,762 |
|
|
|
|
|
|
|
|
|
3,038,502 |
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
334,088 |
|
|
|
|
|
|
|
|
|
290,806 |
|
|
|
|
|
|
|
|
|
$ |
3,695,850 |
|
|
|
|
|
|
|
|
$ |
3,329,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(1) |
|
|
|
|
$ |
103,829 |
|
|
|
|
|
|
|
$ |
93,504 |
|
|
|
Net interest spread
(1) |
|
|
|
|
|
|
|
2.63 |
% |
|
|
|
|
|
|
|
2.64 |
% |
Net interest margin
(1) |
|
|
|
|
|
|
|
2.91 |
% |
|
|
|
|
|
|
|
2.89 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $1.54 for each period presented
using the statutory Federal income tax rate of 35%.
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” or
“anticipate”. The Corporation cautions that these
forward-looking statements are subject to numerous assumptions,
risks and uncertainties that could cause actual results to differ
materially from those contemplated by the forward-looking
statements. Factors that could cause future results to vary
from current management expectations include, but are not limited
to, changing economic conditions; legislative and regulatory
changes; monetary and fiscal policies of the federal government;
changes in interest rates; deposit flows and the cost of funds;
demand for loan products; competition; changes in management’s
business strategies; changes in accounting principles, policies or
guidelines; changes in real estate values; and other factors
discussed in the “risk factors” section of the Corporation’s
filings with the Securities and Exchange Commission. The
forward-looking statements are made as of the date of this press
release, and the Corporation assumes no obligation to update the
forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking
statements.
For more detailed financial information please
see the Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2017. The Form 10-K will be available through
the Bank’s website at www.fnbli.com on or about March 16, 2018,
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.
For More Information Contact:Mark D. Curtis,
SEVP, CFO and Treasurer(516) 671-4900, Ext. 7413
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