FLIC
$19.41
First of Long Isla
$.57
3.03%
Earnings Details
3rd Quarter September 2022
Thursday, October 27, 2022 8:30:00 AM
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Summary

First of Long Isla (FLIC) Recent Earnings

First of Long Isla (FLIC) reported 3rd Quarter September 2022 earnings of $0.55 per share on revenue of $37.9 million. The consensus earnings estimate was $0.50 per share on revenue of $31.4 million. Revenue grew 14.5% on a year-over-year basis.

First of Long Island Corp is a bank holding company. The Company through its wholly-owned subsidiary provides financial services.

Results
Reported Earnings
$0.55
Earnings Whisper
-
Consensus Estimate
$0.50
Reported Revenue
$37.9 Mil
Revenue Estimate
$31.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

The First of Long Island Corporation Reports Earnings for the Third Quarter of 2022

MELVILLE, N.Y., Oct. 27, 2022 (GLOBE NEWSWIRE) -- 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 three and nine months ended September 30, 2022. In the highlights that follow, all comparisons are of the current three or nine-month period to the same period last year unless otherwise indicated.

THIRD QUARTER HIGHLIGHTS

  • Net Income and EPS were $12.5 million and $.55, respectively, versus $11.4 million and $.48
  • ROA and ROE were 1.14% and 12.84%, respectively, compared to 1.08% and 10.71%
  • Net interest margin was 2.97% versus 2.71%
  • Repurchased 209,579 shares at a cost of $4.1 million

NINE MONTH HIGHLIGHTS

  • Net Income and EPS were $37.0 million and $1.61, respectively, versus $34.1 million and $1.43
  • ROA and ROE were 1.17% and 12.57%, respectively, compared to 1.09% and 10.96%
  • Net interest margin was 2.95% versus 2.70%

Analysis of Earnings – Nine Months Ended September 30, 2022

Net income for the first nine months of 2022 was $37.0 million, an increase of $3.0 million, or 8.7%, versus the same period last year. The increase is primarily due to growth in net interest income of $8.5 million, or 10.7%, and noninterest income of $887,000, or 10.3%, excluding 2021 securities gains. These items were partially offset by increases in the provision for credit losses of $5.3 million, noninterest expense of $193,000 and income tax expense of $353,000.

The increase in net interest income reflects growth in interest income on loans of $6.8 million due to an increase in average loans outstanding of $283.9 million to $3.3 billion at September 30, 2022 and a decline in interest expense of $2.0 million related to the maturity and termination of the Bank’s interest rate swap in April 2022. Also contributing to the increase was a favorable shift in the mix of funding as an increase in average checking deposits of $136.2 million, or 10.4%, and a decline in average interest-bearing liabilities of $59.2 million, or 2.4%, resulted in average checking deposits comprising a larger portion of total funding. While the average cost of interest-bearing liabilities declined 10 basis points (“bps”) to .61% when comparing the nine-month periods, current funding costs are increasing due to higher market interest rates and competition.

Interest income on PPP loans declined $4.0 million to $1.1 million when comparing the first nine months of 2022 to the same period last year. Excluding PPP income, interest income on loans would have increased $10.8 million and the loan portfolio yield would have increased by 1 bp.

During the third quarter of 2022, we originated $130 million of loans with a weighted average rate of approximately 4.51% which includes $79 million of commercial mortgages at a weighted average rate of 4.62%. The mortgage loan pipeline was $68 million with a weighted average rate of 5.51% at September 30, 2022. The amount of originations during the quarter and the pipeline at quarter-end reflect lower demand for loans in the marketplace due to higher interest rates. 

Net interest margin for the first nine months of 2022 was 2.95% versus 2.70% for the 2021 period which includes 9 bps and 14 bps, respectively, related to prepayment fees, late fees and PPP income. Significant increases in interest rates due to inflation are expected to adversely affect net interest income and margin which are largely dependent on changes in the yield curve and competitive and economic conditions.

The provision for credit losses increased $5.3 million when comparing the nine-month periods from a credit of $3.1 million in the 2021 period to a charge of $2.2 million in the 2022 period. The provision for the current nine-month period was mainly due to an increase in outstanding mortgage loans and charge-offs, partially offset by lower historical loss rates and changes in current and forecasted conditions.

The increase in noninterest income of $887,000, excluding $606,000 of gains on sales of securities in 2021, is primarily attributable to a final transition payment of $477,000 for the conversion of the Bank’s retail broker and advisory accounts. The increase also includes higher fees from merchant card services of $387,000 and income from bank-owned life insurance (“BOLI”) of $484,000. These amounts were partially offset by a decrease in investment services income of $610,000 as the shift to an outside service provider resulted in a revenue sharing agreement and less assets under management.

Noninterest expense increased $193,000 when comparing the nine-month periods. Noninterest expense in the 2021 period included charges of $1.2 million related to the 2021 branch optimization strategy. Excluding the branch optimization charges, the increase in operating expenses totaled $1.4 million which was attributable to higher salaries and benefits expense of $724,000, occupancy and equipment expense of $322,000 and other expense of $376,000. The salary and benefits increase includes recruiting of seasoned banking professionals, mid-year salary increases in 2022 and higher incentive and stock-based compensation expenses. The occupancy and equipment increase includes the costs of new branch locations on the east-end of Long Island and new corporate office space in Melville, N.Y. The increase in other expense includes higher marketing expense, relocation costs and other costs of operating the business.

Income tax expense increased $353,000 and the effective tax rate decreased from 20.2% to 19.5% when comparing the nine-month periods. The decrease in the effective tax rate is mainly due to the purchase of $20 million of BOLI in December 2021 and being in a capital tax position for New York State (“NYS”) and New York City (“NYC”) purposes. The increase in income tax expense is due to higher pre-tax earnings in the current nine-month period as compared to the 2021 period partially offset by the lower effective tax rate.

Analysis of Earnings – Third Quarter 2022 Versus Third Quarter 2021

Net income for the third quarter of 2022 of $12.5 million increased $1.0 million, or 9.1%, from $11.4 million earned in the same quarter of last year. The increase is mainly due to growth in net interest income of $3.7 million, or 13.7%, partially offset by an increase in the provision for credit losses of $2.5 million. The increase also reflects the aforementioned charges of $1.2 million in the 2021 quarter.

The increase in net interest income was primarily due to growth in interest income on loans of $4.1 million driven by higher outstanding balances and yields, partially offset by higher interest expense due to increases in the average balance and cost of interest-bearing liabilities of $75.1 million and 14 bps, respectively, as depositors increasingly seek higher returns due to rising market interest rates and competition. The increase in the provision for credit losses was primarily due to charges for current and forecasted economic conditions and net chargeoffs of $607,000 on five loans sold during the 2022 quarter. Also offsetting the increase in net interest income was an increase in salaries and benefits expense of $780,000 due to the same reasons discussed above with respect to the nine-month periods.

Analysis of Earnings – Third Quarter Versus Second Quarter 2022

Net income for the third quarter of 2022 was essentially unchanged as compared to the second quarter. Net interest income increased $563,000 substantially driven by higher average outstanding loan balances and higher loan yields. This increase was partially offset by higher interest expense due to increases in the average balance and cost of interest-bearing liabilities of $77.4 million and 21 bps, respectively, reflecting an increasing cost of funding the Bank’s assets. The provision for credit losses increased $363,000 when comparing the quarterly periods mainly due to economic conditions and higher net chargeoffs, partially offset by a decrease in loan originations in the third quarter. Salaries and employee benefits increased $547,000 due to lower deferred compensation and the same reasons discussed above with respect to the nine-month periods. Income tax expense decreased $345,000 due to a decrease in the effective tax rate from 19.8% in the second quarter to 18.0% in the third quarter and a decline in pre-tax earnings. The effective tax rate decreased because of the aforementioned NYS and NYC tax benefits.

Asset Quality

The Bank’s allowance for credit losses to total loans (reserve coverage ratio) was .94% on September 30, 2022 as compared to .93% at June 30, 2022 and .96% at December 31, 2021. The increase in the reserve coverage ratio during the third quarter was mainly due to current and forecasted economic conditions. Nonaccrual and modified loans and loans past due 30 through 89 days are at very low levels.

Capital

The Corporation’s capital position remains strong with a Leverage Ratio of approximately 9.75% on September 30, 2022. We repurchased 698,476 shares of common stock during the first nine months of 2022 at a cost of $13.9 million. We expect to continue common stock repurchases during the fourth quarter.

The Corporation’s ROE was 12.84% and 12.57% for the three-month and nine-month periods ended September 30, 2022, respectively, an increase when compared to 10.71% and 10.96%, respectively, for the same periods in 2021. The increases in ROE were due to higher net income for both periods as well as an increase in accumulated other comprehensive losses due to a significant increase in the net unrealized loss in the available-for-sale securities portfolio from higher interest rates. The losses in the available-for-sale securities portfolio, which reduced the average balance of stockholders’ equity, accounted for 1.42% and 1.00%, respectively, of the improvement in the ROE ratio when compared to the prior year periods. The unrealized loss also accounted for a $2.86 reduction in the Corporation’s book value per share of $15.87 at September 30, 2022. Based on the Corporation’s market value per share at September 30, 2022 of $17.24, the dividend yield is 4.9%.

Key Initiatives and Milestones

We continue focusing on strategic initiatives supporting the growth of our balance sheet with a profitable relationship banking business. Such initiatives include improving the quality of technology through continuing digital enhancements and IT system upgrades, optimizing our branch network across a larger geography, using new branding and “CommunityFirst” focus to improve name recognition, enhancing our website and social media presence including the promotion of FirstInvestments, and recruitment of experienced banking professionals to support our growth and technology initiatives. We also continue to focus on the areas of cybersecurity, environmental, social and governance practices.

October 1, 2022 marked the Bank’s 95th anniversary. Since 1927, we have been helping our clients succeed. After 95 years, we continue to be an important part of the communities we operate in and were recently recognized in the annual Piper Sandler Small-All Star Class of 2022 as one of the top 35 performing small-cap banks and thrifts in the country.

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”). In addition, the current economic environment, characterized by a high rate of inflation and rising interest rates, presents significant financial and operational challenges for the Corporation, its customers and the communities it serves. These challenges are expected to adversely affect the Corporation’s results of operations and financial condition. 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 September 30, 2022. The Form 10-Q will be available through the Bank’s website at www.fnbli.com on or about November 3, 2022, when it is electronically filed with the SEC. Our SEC filings are also available on the SEC’s website at www.sec.gov.


CONSOLIDATED BALANCE SHEETS

(Unaudited)
  

     
  9/30/22 12/31/21
  (dollars in thousands)
Assets:      
Cash and cash equivalents $62,210  $43,675 
Investment securities available-for-sale, at fair value  664,221   734,318 
       
Loans:      
Commercial and industrial  113,066   120,920 
Secured by real estate:      
Commercial mortgages  1,942,214   1,736,612 
Residential mortgages  1,233,005   1,202,374 
Home equity lines  43,276   44,139 
Consumer and other  1,642   991 
   3,333,203   3,105,036 
Allowance for credit losses  (31,347)  (29,831)
   3,301,856   3,075,205 
       
Restricted stock, at cost  21,601   21,524 
Bank premises and equipment, net  37,614   37,523 
Right of use asset - operating leases  23,334   8,438 
Bank-owned life insurance  110,083   107,831 
Pension plan assets, net  19,193   19,097 
Deferred income tax benefit  32,675   3,987 
Other assets  18,443   17,191 
  $4,291,230  $4,068,789 
Liabilities:      
Deposits:      
Checking $1,397,166  $1,400,998 
Savings, NOW and money market  1,784,964   1,685,410 
Time  404,627   228,837 
   3,586,757   3,315,245 
       
Short-term borrowings  40,000   125,000 
Long-term debt  264,835   186,322 
Operating lease liability  25,206   11,259 
Accrued expenses and other liabilities  14,985   17,151 
   3,931,783   3,654,977 
Stockholders' Equity:      
Common stock, par value $.10 per share:      
Authorized, 80,000,000 shares;      
Issued and outstanding, 22,644,626 and 23,240,596 shares  2,264   2,324 
Surplus  81,470   93,480 
Retained earnings  343,406   320,321 
   427,140   416,125 
Accumulated other comprehensive loss, net of tax  (67,693)  (2,313)
   359,447   413,812 
  $4,291,230  $4,068,789 


CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

              
  Nine Months Ended Three Months Ended 
  9/30/22 9/30/21 9/30/22 9/30/21 
  (dollars in thousands) 
Interest and dividend income:             
Loans $ 86,181 $ 79,431  $30,032 $25,975  
Investment securities:             
Taxable   6,556   6,269   2,751  2,191  
Nontaxable   6,013   6,535   2,051  2,073  
    98,750   92,235   34,834  30,239  
Interest expense:             
Savings, NOW and money market deposits   3,263   3,451   1,699  1,191  
Time deposits   3,474   4,818   1,374  921  
Short-term borrowings   775   1,062   91  362  
Long-term debt   3,280   3,468   1,412  1,157  
    10,792   12,799   4,576  3,631  
Net interest income   87,958   79,436   30,258  26,608  
Provision (credit) for credit losses   2,248   (3,058)  1,089  (1,449) 
Net interest income after provision (credit) for credit losses   85,710   82,494   29,169  28,057  
              
Noninterest income:             
Bank-owned life insurance   2,253   1,769   763  599  
Service charges on deposit accounts   2,346   2,170   840  752  
Net gains on sales of securities      606       
Other   4,896   4,669   1,444  1,504  
    9,495   9,214   3,047  2,855  
Noninterest expense:             
Salaries and employee benefits   30,264   29,663   10,528  9,748  
Occupancy and equipment   9,702   10,446   3,395  4,102  
Other   9,246   8,910   3,091  2,891  
    49,212   49,019   17,014  16,741  
Income before income taxes   45,993   42,689   15,202  14,171  
Income tax expense   8,965   8,612   2,738  2,749  
Net income $ 37,028 $ 34,077  $12,464 $11,422  
              
Share and Per Share Data:             
Weighted Average Common Shares   22,973,209   23,720,578   22,746,302  23,646,172  
Dilutive restricted stock units   89,817   97,291   99,208  112,074  
    23,063,026   23,817,869   22,845,510  23,758,246  
              
Basic EPS  $1.61  $1.44   $.55  $.48 
Diluted EPS  $1.61  $1.43   $.55  $.48 
Cash Dividends Declared per share  $.61   $.58   $.21  $.20 
              
FINANCIAL RATIOS
(Unaudited)
ROA   1.17%  1.09 % 1.14% 1.08 %
ROE   12.57%  10.96 % 12.84% 10.71 %
Net Interest Margin   2.95%  2.70 % 2.97% 2.71 %
Dividend Payout Ratio   37.89%  40.56 % 38.18% 41.67 %
 


PROBLEM AND POTENTIAL PROBLEM LOANS AND ASSETS

(Unaudited)

         
  09/30/22  12/31/21 
  (dollars in thousands) 
         
Loans including modifications to borrowers experiencing financial difficulty:        
Modified and performing according to their modified terms $485  $554 
Past due 30 through 89 days  526   460 
Past due 90 days or more and still accruing      
Nonaccrual     1,235 
   1,011   2,249 
Other real estate owned      
  $1,011  $2,249 
         
Allowance for credit losses $31,347  $29,831 
Allowance for credit losses as a percentage of total loans  .94%  .96%
Allowance for credit losses as a multiple of nonaccrual loans     24.2x
         


AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL

(Unaudited)

                   
  Nine Months Ended September 30,
  2022 2021
  Average Interest/ Average Average Interest/ Average
(dollars in thousands) Balance Dividends Rate Balance Dividends Rate
Assets:                  
Interest-earning bank balances $35,373  $314 1.19% $217,501  $204 .13%
Investment securities:                  
Taxable (1)  438,475   6,242 1.90   456,244   6,065 1.77 
Nontaxable (1) (2)  317,802   7,611 3.19   351,254   8,272 3.14 
Loans (1) (2)  3,261,521   86,185 3.52   2,977,583   79,435 3.56 
Total interest-earning assets  4,053,171   100,352 3.30   4,002,582   93,976 3.13 
Allowance for credit losses  (30,332)        (31,905)      
Net interest-earning assets  4,022,839         3,970,677       
Cash and due from banks  34,041         34,026       
Premises and equipment, net  37,967         38,362       
Other assets  140,114         132,527       
  $4,234,961        $4,175,592       
Liabilities and Stockholders' Equity:                  
Savings, NOW & money market deposits $1,726,886   3,263 .25  $1,808,349   3,451 .26 
Time deposits  345,623   3,474 1.34   324,419   4,818 1.99 
Total interest-bearing deposits  2,072,509   6,737 .43   2,132,768   8,269 .52 
Short-term borrowings  62,837   775 1.65   55,238   1,062 2.57 
Long-term debt  221,889   3,280 1.98   228,383   3,468 2.03 
Total interest-bearing liabilities  2,357,235   10,792 .61   2,416,389   12,799 .71 
Checking deposits  1,451,964         1,315,768       
Other liabilities  31,826         27,856       
   3,841,025         3,760,013       
Stockholders' equity  393,936         415,579       
  $4,234,961        $4,175,592       
                   
Net interest income (2)    $89,560       $81,177   
Net interest spread (2)       2.69%       2.42%
Net interest margin (2)       2.95%       2.70%
                   

(1) The average balances of loans include nonaccrual loans. The average balances of investment securities include unrealized gains and losses on AFS securities in the 2021 period and exclude such amounts in the 2022 period. Unrealized gains and losses were immaterial in 2021.

(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 September 30, 
  2022 2021 
(dollars in thousands) Average
Balance
 Interest/
Dividends
 Average
Rate
 Average
Balance
 Interest/
Dividends
 Average
Rate
 
Assets:                   
Interest-earning bank balances $38,714  $217 2.22% $282,148  $108 .15% 
Investment securities:                   
Taxable (1)  450,617   2,534 2.25   476,963   2,083 1.75  
Nontaxable (1) (2)  322,492   2,596 3.22   338,130   2,624 3.10  
Loans (1) (2)  3,341,335   30,034 3.60   2,916,572   25,976 3.56  
Total interest-earning assets  4,153,158   35,381 3.41   4,013,813   30,791 3.07  
Allowance for credit losses  (30,869)        (31,213)       
Net interest-earning assets  4,122,289         3,982,600        
Cash and due from banks  35,881         33,632        
Premises and equipment, net  38,017         38,287        
Other assets  131,823         130,235        
  $4,328,010        $4,184,754        
                    
Liabilities and Stockholders' Equity:                   
Savings, NOW & money market deposits $1,752,468   1,699 .38  $1,851,281   1,191 .26  
Time deposits  397,595   1,374 1.37   230,967   921 1.58  
Total interest-bearing deposits  2,150,063   3,073 .57   2,082,248   2,112 .40  
Short-term borrowings  13,152   91 2.75   52,138   362 2.75  
Long-term debt  272,294   1,412 2.06   226,002   1,157 2.03  
Total interest-bearing liabilities  2,435,509   4,576 .75   2,360,388   3,631 .61  
Checking deposits  1,470,783         1,374,803        
Other liabilities  36,718         26,618        
   3,943,010         3,761,809        
Stockholders' equity  385,000         422,945        
  $4,328,010        $4,184,754        
Net interest income (2)    $30,805       $27,160    
Net interest spread (2)       2.66%       2.46% 
Net interest margin (2)       2.97%       2.71% 
                    

(1) The average balances of loans include nonaccrual loans. The average balances of investment securities include unrealized gains and losses on AFS securities in the 2021 period and exclude such amounts in the 2022 period. Unrealized gains and losses were immaterial in 2021.

(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%.

For More Information Contact:
Jay McConie, EVP and CFO
(516) 671-4900, Ext. 7404


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Source: The First of Long Island Corporation