The First of Long Island Corporation Reports Earnings for the Second Quarter of 2024

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The First of Long Island 's Q2 2024 earnings report reveals a mixed financial picture. While there are some positive indicators, the overall trend shows challenges in maintaining profitability levels compared to the previous year.

Key points to consider:

Net income for H1 2024 decreased to $9.2 million from $13.4 million in H1 2023, a significant 31.3% drop.
Earnings per share declined from $0.59 to $0.41, a 30.5% decrease.
Net interest income fell by $8.9 million or 19.5%, primarily due to higher interest expenses.
The net interest margin remained stable at 1.80% in Q2 2024, showing a slight improvement from Q1 2024.
Credit quality remains strong with a stable reserve coverage ratio of 0.88%.
Noninterest income increased by 8.8%, excluding a one-time loss on securities sales in 2023.
Noninterest expenses decreased by $1.0 million or 3.1%, reflecting cost-cutting efforts.

The bank's efforts to stabilize its net interest margin and reduce expenses are commendable, but the significant drop in net income is concerning. The slight increase in net interest margin from Q1 to Q2 2024 suggests that the bank's strategy to manage its interest rate sensitivity is starting to show results. However, the continued pressure on net interest income remains a challenge.

Investors should monitor the bank's ability to grow its loan portfolio and attract low-cost deposits to improve its net interest margin further. The strong credit quality and cost-cutting measures provide some stability, but the bank needs to find ways to boost its top-line growth to reverse the declining profitability trend.

The First of Long Island 's Q2 2024 results reflect broader industry trends and macroeconomic conditions affecting regional banks. Several key factors warrant attention:

Deposit trends: Total average deposits declined by 2.4% year-over-year, aligning with industry-wide challenges in deposit retention amid rising interest rates.
Liquidity position: The bank maintains a strong liquidity position with $1.4 billion in available liquidity, important in the current banking environment where liquidity concerns have been prevalent.
Interest rate sensitivity: The bank's balance sheet remains liability-sensitive, but the narrowing gap between asset yields and funding costs suggests improving interest rate risk management.
Capital strength: With a leverage ratio of 9.91%, the bank maintains a robust capital position, providing a buffer against potential economic headwinds.
Efficiency improvements: The reduction in noninterest expenses, particularly in areas like occupancy and equipment, reflects successful cost management strategies.

The bank's performance should be viewed in the context of the challenging environment for regional banks. Rising interest rates have pressured net interest margins across the industry, while concerns about commercial real estate exposure have affected investor sentiment towards regional banks.

The First of Long Island 's focus on maintaining strong credit quality, improving operational efficiency and managing its interest rate risk positions it relatively well among its peers. However, the bank's ability to grow its loan portfolio and attract core deposits in a competitive market will be important for future performance.

Investors should keep an eye on the bank's strategies for deposit growth, particularly in lower-cost categories, as well as its ability to capitalize on potential opportunities in a changing interest rate environment. The bank's dividend policy and capital management approach also merit attention, as they reflect management's confidence in future earnings potential.

07/25/2024 - 05:00 PM

MELVILLE, N.Y., July 25, 2024 (GLOBE NEWSWIRE) -- The First of Long Island Corporation (Nasdaq: FLIC, the “Company” or the “Corporation”), the parent of The First National Bank of Long Island (the “Bank”), reported earnings for the three and six months ended June 30, 2024.

President and Chief Executive Officer Chris Becker commented on the Company's results: "We are encouraged by a quarter of increase in many financial metrics, including both deposit and loan growth during the quarter. At the end of the first quarter of this year, I commented that we believe our margin should be at the bottom. A one basis point increase in the margin during the second quarter is reflective of that guidance. Our noninterest income and noninterest expense beat our guidance for the second straight quarter. Finally, our credit quality results remained strong."

Analysis of Earnings - Six Months Ended June 30, 2024

Net income and earnings per share for the six months ended June 30, 2024, were $9.2 million and $0.41, respectively, compared to $13.4 million and $0.59, respectively, for the comparable period in 2023. The principal drivers of the change in earnings were a decline in net interest income of $8.9 million, or 19.5%, and an increase in the provision for credit losses of $1.6 million, partially offset by a loss on sales of securities of $3.5 million in the first quarter of 2023 and decreases in noninterest expense of $1.0 million and income tax expense of $1.4 million. The six months ended 2024 produced a return on average assets of 0.44%, return on average equity of 4.93%, net interest margin of 1.80%, and an efficiency ratio of 75.00%.

Net interest income declined when comparing the six months of 2024 and 2023 due to an increase in interest expense of $18.8 million that was only partially offset by a $9.9 million increase in interest income. The cost of interest-bearing liabilities increased 128 basis points while the yield on interest-earning assets increased 45 basis points when comparing the six-month periods. The Bank's balance sheet remains liability sensitive but the pace of repricing of average interest earning assets is beginning to match the pace of repricing of average interest-bearing liabilities, which stabilized the net interest margin over the first half of 2024.

The Bank recorded a provision for credit losses of $570,000 for the six months ended 2024, compared to a provision reversal of $1.1 million in the same period of 2023. The decline in the reserve was driven largely by declines in historical loss rates and specific reserves, partially offset by a deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties. The reserve coverage ratio remained stable at 0.88% of total loans at June 30, 2024 as compared to 0.88% at March 31, 2024 and 0.89% at December 31, 2023. Past due loans and nonaccrual loans were at $942,000 and $2.4 million, respectively, on June 30, 2024. Overall credit quality of the loan and investment portfolios remain strong.

Noninterest income, excluding the loss on sales of securities in the 2023 period, increased $454,000, or 8.8%, when comparing the first six months of 2024 and 2023. Recurring components of noninterest income including bank-owned life insurance (“BOLI”) and service charges on deposit accounts had increases of 7.8% and 10.5%, respectively. Other noninterest income increased 8.2% and included increases of $287,000 in merchant card services and $121,000 in pension income, which were partially offset by a gain on disposition of premises and fixed assets of $240,000 in 2023.

Noninterest expense declined $1.0 million, or 3.1%, for the six months of 2024, as compared to the same period in 2023. Reductions in occupancy and equipment expense of $397,000, telecommunication expense of $285,000, professional fees of $268,000 and salaries and employee benefits of $145,000 drove the decline. The decrease in occupancy and equipment expense was largely due to the ongoing branch optimization strategy, which resulted in the closing of various locations. Telecom expense decreased mainly due to efficiencies associated with system upgrades. Salaries and employee benefits declined largely due to a decrease in incentives compensation expense.

Income tax expense decreased $1.4 million, and the effective tax rate declined to 3.9% for the six months ended 2024 as compared to 11.6% for the same period in prior year. The decline in the effective tax rate is mainly due to an increase in the percentage of pre-tax income derived from the Bank’s real estate investment trust and BOLI. The decrease in income tax expense reflects the lower effective tax rate and a decline in pre-tax income.

Analysis of Earnings – Second Quarter 2024 Versus Second Quarter 2023

Net income for the second quarter of 2024 decreased $2.1 million as compared to the second quarter of last year. The decrease is mainly attributable to a $3.4 million decline in net interest income for substantially the same reasons discussed above with respect to the six-month periods along with a $570,000 increase in the provision for credit losses. Partially offsetting the decrease in net interest income was reductions in salaries and employee benefits and occupancy and equipment expense of $354,000 and $286,000, respectively, for substantially the same reasons previously discussed. The quarter produced a return on average assets of 0.45%, return on average equity of 5.15%, net interest margin of 1.80%, and an efficiency ratio of 73.55%.

Analysis of Earnings – Second Quarter 2024 Versus First Quarter 2024

Net income for the second quarter of 2024 increased $363,000 compared to the first quarter of 2024. The increase was partially due to an increase in net interest income of $270,000, primarily due to an increase in interest income on loans and taxable investment securities along with decreases in borrowings outweighing the increase in interest expense on savings, NOW and money market deposits. Also contributing to the favorable earnings over the linked quarter is a decrease in salaries and employee benefits of $474,000 partially offset by an increase in the provision for credit losses of $570,000. Salaries and employee benefit expenses were lower in the second quarter of 2024 due to a decline in incentive compensation and payroll related expenses.

The increase in the net interest margin to 1.80% in the second quarter of 2024 from 1.79% in the first quarter of 2024 was largely due to the stabilization of our wholesale funding cost that is essentially repriced to current market rates. Additionally, average interest-bearing deposits increased $73.1 million and average higher cost borrowings decreased $52 million.

Liquidity

Total average deposits declined by $81.0 million, or 2.4%, when comparing the first halves of 2024 to 2023, reflecting industry trends. On June 30, 2024, overnight advances and other borrowings were down by $70.0 million and $42.5 million, respectively, from year-end 2023. The Bank had $1.1 billion in collateralized borrowing lines with the Federal Home Loan Bank of New York and the Federal Reserve Bank, as well as a $20 million unsecured line of credit with a correspondent bank. We also had $282.5 million in unencumbered cash and securities. In total, we had approximately $1.4 billion of available liquidity on June 30, 2024.

Capital

The Corporation’s capital position remains strong with a leverage ratio of approximately 9.91% on June 30, 2024. Book value per share was $16.71 on June 30, 2024, versus $16.22 on June 30, 2023. The accumulated other comprehensive loss component of stockholders’ equity is mainly comprised of a net unrealized loss in the available-for-sale securities portfolio due to higher market interest rates. The Company declared its quarterly cash dividend of $0.21 per share during the quarter. There were no share repurchases during the quarter. The Board and management continue to evaluate both capital management tools to provide the best opportunity to maximize shareholder value.

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 (“SEC”). 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 quarterly report on Form 10-Q for the quarter ended June 30, 2024. The Form 10-Q will be available through the Bank’s website at www.fnbli.com on or about August 1, 2024, when it is anticipated to be electronically filed with the SEC. Our SEC filings are also available on the SEC’s website at www.sec.gov.


CONSOLIDATED BALANCE SHEETS (Unaudited)

	6/30/2024			12/31/2023
	(dollars in thousands)
Assets:
Cash and cash equivalents	$	67,289		$	60,887
Investment securities available-for-sale, at fair value		657,989			695,877

Loans:
Commercial and industrial		150,587			116,163
Secured by real estate:
Commercial mortgages		1,936,691			1,919,714
Residential mortgages		1,122,866			1,166,887
Home equity lines		39,665			44,070
Consumer and other		1,330			1,230
		3,251,139			3,248,064
Allowance for credit losses		(28,484	)		(28,992	)
		3,222,655			3,219,072

Restricted stock, at cost		27,530			32,659
Bank premises and equipment, net		30,687			31,414
Right-of-use asset - operating leases		21,270			22,588
Bank-owned life insurance		115,317			114,045
Pension plan assets, net		10,527			10,740
Deferred income tax benefit		31,628			28,996
Other assets		24,432			19,622
	$	4,209,324		$	4,235,900
Liabilities:
Deposits:
Checking	$	1,123,244		$	1,133,184
Savings, NOW and money market		1,628,078			1,546,369
Time		612,119			591,433
		3,363,441			3,270,986

Overnight advances		—			70,000
Other borrowings		430,000			472,500
Operating lease liability		23,553			24,940
Accrued expenses and other liabilities		16,134			17,328
		3,833,128			3,855,754
Stockholders' Equity:
Common stock, par value $0.10 per share:
Authorized, 80,000,000 shares;
Issued and outstanding, 22,517,881 and 22,590,942 shares		2,252			2,259
Surplus		78,537			79,728
Retained earnings		355,674			355,887
		436,463			437,874
Accumulated other comprehensive loss, net of tax		(60,267	)		(57,728	)
		376,196			380,146
	$	4,209,324		$	4,235,900


CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Six Months Ended						Three Months Ended
	6/30/2024			6/30/2023			6/30/2024			6/30/2023
	(dollars in thousands)
Interest and dividend income:
Loans	$	67,653		$	61,888		$	34,110		$	31,483
Investment securities:
Taxable		14,472			9,283			7,479			5,614
Nontaxable		1,917			2,972			957			1,027
		84,042			74,143			42,546			38,124
Interest expense:
Savings, NOW and money market deposits		21,520			13,386			11,437			7,611
Time deposits		14,036			7,301			7,059			4,232
Overnight advances		267			546			4			438
Other borrowings		11,627			7,435			5,615			4,002
		47,450			28,668			24,115			16,283
Net interest income		36,592			45,475			18,431			21,841
Provision (credit) for credit losses		570			(1,056	)		570			—
Net interest income after provision (credit) for credit losses		36,022			46,531			17,861			21,841

Noninterest income:
Bank-owned life insurance		1,697			1,574			857			794
Service charges on deposit accounts		1,701			1,540			821			753
Net loss on sales of securities		—			(3,489	)		—			—
Other		2,240			2,070			1,186			1,135
		5,638			1,695			2,864			2,682
Noninterest expense:
Salaries and employee benefits		19,474			19,619			9,500			9,854
Occupancy and equipment		6,324			6,721			3,110			3,396
Other		6,257			6,748			3,239			3,267
		32,055			33,088			15,849			16,517
Income before income taxes		9,605			15,138			4,876			8,006
Income tax expense		372			1,758			78			1,107
Net income	$	9,233		$	13,380		$	4,798		$	6,899

Share and Per Share Data:
Weighted Average Common Shares		22,515,464			22,522,663			22,510,359			22,551,568
Dilutive restricted stock units		62,161			59,910			50,494			33,309
		22,577,625			22,582,573			22,560,853			22,584,877

Basic EPS	$	0.41		$	0.59		$	0.21		$	0.31
Diluted EPS		0.41			0.59			0.21			0.31
Cash Dividends Declared per share		0.42			0.42			0.21			0.21

FINANCIAL RATIOS
(Unaudited)
ROA		0.44	%		0.64	%		0.45	%		0.66	%
ROE		4.93			7.27			5.15			7.44
Net Interest Margin		1.80			2.25			1.80			2.17
Dividend Payout Ratio		102.44			71.19			100.00			67.74
Efficiency Ratio		75.00			64.31			73.55			66.61


PROBLEM AND POTENTIAL PROBLEM LOANS AND ASSETS (Unaudited)

	6/30/2024			12/31/2023
	(dollars in thousands)
Loans including modifications to borrowers experiencing financial difficulty:
Modified and performing according to their modified terms	$	426		$	431
Past due 30 through 89 days		942			3,086
Past due 90 days or more and still accruing		—			—
Nonaccrual		2,370			1,053
		3,738			4,570
Other real estate owned		—			—
	$	3,738		$	4,570

Allowance for credit losses	$	28,484		$	28,992
Allowance for credit losses as a percentage of total loans		0.88	%		0.89	%
Allowance for credit losses as a multiple of nonaccrual loans		12.0	x		27.5	x


AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL (Unaudited)

	Six Months Ended June 30,
	2024								2023
	Average			Interest/		Average			Average			Interest/		Average
(dollars in thousands)	Balance			Dividends		Rate			Balance			Dividends		Rate
Assets:
Interest-earning bank balances	$	83,341		$	2,271		5.48	%	$	44,889		$	1,067		4.79	%
Investment securities:
Taxable (1)		629,958			12,201		3.87			533,866			8,216		3.08
Nontaxable (1) (2)		153,001			2,427		3.17			234,036			3,762		3.21
Loans (1) (2)		3,236,620			67,653		4.18			3,270,722			61,890		3.78
Total interest-earning assets		4,102,920			84,552		4.12			4,083,513			74,935		3.67
Allowance for credit losses		(28,639	)							(30,811	)
Net interest-earning assets		4,074,281								4,052,702
Cash and due from banks		32,751								30,388
Premises and equipment, net		31,093								32,024
Other assets		120,772								116,229
	$	4,258,897							$	4,231,343
Liabilities and Stockholders' Equity:
Savings, NOW & money market deposits	$	1,576,447			21,520		2.75		$	1,675,355			13,386		1.61
Time deposits		638,028			14,036		4.42			510,461			7,301		2.88
Total interest-bearing deposits		2,214,475			35,556		3.23			2,185,816			20,687		1.91
Overnight advances		9,560			267		5.62			20,845			546		5.28
Other borrowings		487,541			11,627		4.80			374,285			7,435		4.01
Total interest-bearing liabilities		2,711,576			47,450		3.52			2,580,946			28,668		2.24
Checking deposits		1,131,917								1,241,566
Other liabilities		39,137								37,541
		3,882,630								3,860,053
Stockholders' equity		376,267								371,290
	$	4,258,897							$	4,231,343

Net interest income (2)				$	37,102							$	46,267
Net interest spread (2)							0.60	%							1.43	%
Net interest margin (2)							1.80	%							2.25	%

(1) The average balances of loans include nonaccrual loans. The average balances of investment securities exclude unrealized gains and losses on available-for-sale securities.

(2) 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 $1.27 for each period presented using the statutory federal income tax rate of 21%.


AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL (Unaudited)

	Three Months Ended June 30,
	2024								2023
	Average			Interest/		Average			Average			Interest/		Average
(dollars in thousands)	Balance			Dividends		Rate			Balance			Dividends		Rate
Assets:
Interest-earning bank balances	$	111,565		$	1,520		5.48	%	$	40,668		$	520		5.13	%
Investment securities:
Taxable (1)		621,059			5,959		3.84			599,558			5,094		3.40
Nontaxable (1) (2)		152,585			1,212		3.18			165,559			1,300		3.14
Loans (1)		3,229,796			34,110		4.22			3,253,952			31,483		3.87
Total interest-earning assets		4,115,005			42,801		4.16			4,059,737			38,397		3.78
Allowance for credit losses		(28,330	)							(30,204	)
Net interest-earning assets		4,086,675								4,029,533
Cash and due from banks		33,798								29,768
Premises and equipment, net		30,929								32,263
Other assets		120,660								117,288
	$	4,272,062							$	4,208,852
Liabilities and Stockholders' Equity:
Savings, NOW & money market deposits	$	1,618,812			11,437		2.84		$	1,673,101			7,611		1.82
Time deposits		632,201			7,059		4.49			513,414			4,232		3.31
Total interest-bearing deposits		2,251,013			18,496		3.30			2,186,515			11,843		2.17
Overnight advances		275			4		5.85			32,747			438		5.36
Other borrowings		470,824			5,615		4.80			378,654			4,002		4.24
Total interest-bearing liabilities		2,722,112			24,115		3.56			2,597,916			16,283		2.51
Checking deposits		1,137,244								1,201,585
Other liabilities		38,259								37,391
		3,897,615								3,836,892
Stockholders' equity		374,447								371,960
	$	4,272,062							$	4,208,852

Net interest income (2)				$	18,686							$	22,114
Net interest spread (2)							0.60	%							1.27	%
Net interest margin (2)							1.80	%							2.17	%

(1) The average balances of loans include nonaccrual loans. The average balances of investment securities exclude unrealized gains and losses on available-for-sale securities.

(2) 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 investment securities had been made in investment securities subject to federal income taxes yielding the same after-tax income. The tax-equivalent amount of $1.00 of nontaxable income was $1.27 for each period presented using the statutory federal income tax rate of 21%.

For More Information Contact:

Janet Verneuille, SEVP and CFO

(516) 671-4900, Ext. 7462

FAQ

What was FLIC's net income for Q2 2024?

The exact net income for Q2 2024 is not specified in the press release. However, for the six months ended June 30, 2024, FLIC reported net income of $9.2 million.

How did FLIC's net interest margin change in Q2 2024?

FLIC's net interest margin increased by 1 basis point to 1.80% in Q2 2024, up from 1.79% in Q1 2024.

What was FLIC's EPS for the first half of 2024?

FLIC reported earnings per share (EPS) of $0.41 for the six months ended June 30, 2024.

How much liquidity did FLIC have as of June 30, 2024?

FLIC had approximately $1.4 billion of available liquidity as of June 30, 2024.

What was FLIC's book value per share on June 30, 2024?

FLIC's book value per share was $16.71 on June 30, 2024.

The First of Long Island Corporation Reports Earnings for the Second Quarter of 2024

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The First of Long Island Corporation Reports Earnings for the Second Quarter of 2024

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