FLIC First of Long Island Corporation

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 quarter and year ended December 31, 2024.

President and Chief Executive Officer Chris Becker commented on the Company's results: "Our team is focused on best positioning our company for the future and its pending merger with ConnectOne Bancorp, Inc.  In that regard, our net interest margin bottomed out during the first quarter of 2024 and began its recovery during the remainder of the year.  Excluding loss on securities in 2023, noninterest income increased nearly 23% largely related to new and recurring fee income categories.  Noninterest expense was well controlled with an increase of 1.6% when compared to the prior year after backing out $3.1 million of merger and branch consolidation expenses in 2024.  Finally, asset quality remains strong.  We look forward to the changes to come in 2025, which will offer new and exciting opportunities to our stockholders, customers, employees and communities."

Analysis of Earnings - 2024 Earnings

Net income and diluted earnings per share ("EPS") for the year ended December 31, 2024, were $17.1 million and $0.75, respectively, as compared to $26.2 million and $1.16, respectively, in 2023. The principal drivers of the change in net income were a decline in net interest income of $13.6 million, or 15.7%, and a provision for credit losses of $359,000 as compared to a provision reversal of $326,000 in 2023, partially offset by a loss on sales of securities of $3.5 million in the first quarter of 2023, an increase in remaining noninterest income of $2.2 million, an increase in noninterest expense of $4.1 million and a decrease in income tax expense of $3.5 million. The year ended December 31, 2024 produced a return on average assets ("ROA") of 0.40%, a return on average equity ("ROE") of 4.49%, an efficiency ratio of 79.00%, and a net interest margin of 1.83%.  

For the year ended December 31, 2024, net interest income declined due to an increase in interest expense of $25.5 million that was only partially offset by an $11.8 million increase in interest income. Year over year, the cost of interest-bearing liabilities increased 90 basis points while the yield on interest-earning assets increased 31 basis points. The Bank's balance sheet remains liability sensitive, however the pace of repricing of average interest-earning assets began outpacing the repricing of average interest-bearing liabilities in the second half of the year as the Fed's easing of interest rates allowed the Bank to reduce nonmatured deposit rates.

The Bank recorded a provision for credit losses of $359,000 during 2024, compared to a provision reversal of $326,000 in 2023. The allowance for credit losses declined when compared to year-end 2023 largely due to declines in historical loss rates and reserves on individually evaluated loans, 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 December 31, 2024 as compared to 0.89% at December 31, 2023. Past due loans and nonaccrual loans were at $270,000 and $3.2 million, respectively, on December 31, 2024. Overall credit quality of the loan and investment portfolios remains strong.

Noninterest income, excluding the loss on sales of securities of $3.5 million in the 2023 period, increased $2.2 million, or 22.8%, year over year. Recurring components of noninterest income including bank-owned life insurance (“BOLI”) and service charges on deposit accounts had increases of 8.1% and 11.3%, respectively. Other noninterest income increased 45.7% and included increases of $655,000 in merchant card services, $465,000 in back-to-back swap fees, $377,000 of BOLI benefit payments, and $242,000 in pension income, which were partially offset by a gain on disposition of premises and fixed assets of $240,000 in 2023.

Noninterest expense increased $4.1 million, or 6.4%, for the year ended December 31, 2024, as compared to the prior year.  The change in noninterest expense is mainly attributable to branch consolidation and merger expenses of $1.9 million and $1.2 million, respectively.  Noninterest expense excluding merger and branch consolidation expenses increased by $1.0 million or 1.6%.  The 6.3% year-over-year increase in salaries and employee benefits included a variety of compensation and benefit categories including the vesting of certain awards during the fourth quarter of 2024.  The decrease of $554,000 in occupancy and equipment expense was largely due to the ongoing branch optimization strategy.  Lower other expenses included a decrease in telecommunication expenses of $510,000 due to efficiencies with system upgrades and a smaller provision for off-balance sheet commitments of $310,000 due to a decrease in off-balance sheet credit exposure.

Income tax expense decreased $3.5 million, and the effective tax rate declined from 11.0% in 2023 to (1.9%) in 2024. 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, reducing the state and local income tax due. The decrease in income tax expense reflects the lower effective tax rate and a decline in pre-tax income.

Analysis of Earnings – Fourth Quarter 2024 Versus Fourth Quarter 2023

Net income for the fourth quarter of 2024 decreased $2.8 million as compared to the fourth quarter of 2023. The change in net income is mainly attributable to an increase in salaries and employee benefits expense of $2.4 million for substantially the same reasons discussed above with respect to the year-over-year changes, a $1.9 million decline in net interest income along with a $1.4 million increase in branch consolidation expenses.  This was partially offset by a provision reversal for credit losses of $381,000 as compared to a provision of $901,000 in the fourth quarter of 2023, back-to-back swap fees of $233,000 and a BOLI benefit payment of $225,000, both recorded in the current period and an increase in merchant card services income of $186,000. The quarter produced a ROA of 0.31%, a ROE of 3.35%, an efficiency ratio of 86.78%, and a net interest margin of 1.83%. 

Analysis of Earnings – Fourth Quarter 2024 Versus Third Quarter 2024

Net income for the fourth quarter of 2024 decreased $1.4 million compared to the third quarter of 2024. The decrease in net income was primarily due to an increase in salaries and employee benefits of $856,000, additional branch consolidation expenses of $840,000 and a decrease in net interest income of $573,000, partially offset by a provision reversal for credit losses of $381,000 in the fourth quarter as compared to a provision of $170,000 in the third quarter and a decrease in merger expenses of $571,000. The decline in net interest income was primarily due to a net interest margin decrease of 6 basis points when compared to the linked quarter, which was largely due to lower income on the fair value derivative.

Liquidity

On December 31, 2024, overnight advances and other borrowings were down by $70.0 million and $37.5 million, respectively, from prior year end. At year-end, the Bank had $583.0 million in collateralized borrowing lines with the Federal Home Loan Bank of New York and the Federal Reserve Bank, $20.0 million unsecured line of credit with a correspondent bank and $265.5 million in unencumbered cash and securities. In total, $868.5 million in liquidity was available on December 31, 2024.  Uninsured deposits were 45.8% of total deposits at December 31, 2024. 

Capital

The Corporation’s capital position remains strong with a leverage ratio of approximately 10.12% on December 31, 2024. Book value per share was $16.77 on December 31, 2024, versus $16.83 on December 31, 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. 

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 Annual Report on Form 10-K for the year ended December 31, 2024. The Form 10-K will be available through the Bank’s website at www.fnbli.com on or about March 12, 2025, 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)
		12/31/2024				12/31/2023
		(dollars in thousands)
Assets:
Cash and cash equivalents		$	38,330			$	60,887
Investment securities available-for-sale, at fair value			624,779				695,877
Loans:
Commercial and industrial			136,732				116,163
Secured by real estate:
Commercial mortgages			1,963,107				1,919,714
Residential mortgages			1,084,090				1,166,887
Home equity lines			36,468				44,070
Consumer and other			1,210				1,230
			3,221,607				3,248,064
Allowance for credit losses			(28,331	)			(28,992	)
			3,193,276				3,219,072
Restricted stock, at cost			27,712				32,659
Bank premises and equipment, net			29,135				31,414
Right-of-use asset - operating leases			18,951				22,588
Bank-owned life insurance			117,075				114,045
Pension plan assets, net			11,806				10,740
Deferred income tax benefit			36,192				28,996
Other assets			22,080				19,622
		$	4,119,336			$	4,235,900
Liabilities:
Deposits:
Checking		$	1,074,671			$	1,133,184
Savings, NOW and money market			1,574,160				1,546,369
Time			616,027				591,433
			3,264,858				3,270,986
Overnight advances			—				70,000
Other borrowings			435,000				472,500
Operating lease liability			21,964				24,940
Accrued expenses and other liabilities			18,648				17,328
			3,740,470				3,855,754
Stockholders' Equity:
Common stock, par value $0.10 per share:
Authorized, 80,000,000 shares;
Issued and outstanding, 22,595,349 and 22,590,942 shares			2,260				2,259
Surplus			79,731				79,728
Retained earnings			354,051				355,887
			436,042				437,874
Accumulated other comprehensive loss, net of tax			(57,176	)			(57,728	)
			378,866				380,146
		$	4,119,336			$	4,235,900

CONSOLIDATED STATEMENTS OF INCOME(Unaudited)
		Year Ended								Three Months Ended
		12/31/2024				12/31/2023				12/31/2024				12/31/2023
		(dollars in thousands)
Interest and dividend income:
Loans		$	137,092			$	127,866			$	34,413			$	33,160
Investment securities:
Taxable			26,412				22,663				5,711				6,786
Nontaxable			3,826				4,954				954				978
			167,330				155,483				41,078				40,924
Interest expense:
Savings, NOW and money market deposits			45,254				32,164				11,617				9,976
Time deposits			27,509				19,267				6,761				6,181
Overnight advances			401				950				9				354
Other borrowings			20,947				16,237				4,664				4,455
			94,111				68,618				23,051				20,966
Net interest income			73,219				86,865				18,027				19,958
Provision (credit) for credit losses			359				(326	)			(381	)			901
Net interest income after provision (credit) for credit losses			72,860				87,191				18,408				19,057
Noninterest income:
Bank-owned life insurance			3,456				3,197				883				814
Service charges on deposit accounts			3,376				3,034				833				791
Net loss on sales of securities			—				(3,489	)			—				—
Gain on disposition of premises and fixed assets			21				240				—				—
Other			5,215				3,354				1,504				792
			12,068				6,336				3,220				2,397
Noninterest expense:
Salaries and employee benefits			39,720				37,373				10,551				8,105
Occupancy and equipment			12,586				13,140				3,297				3,166
Merger expenses			1,161				—				295				—
Branch consolidation expenses			1,934				—				1,387				—
Other			12,763				13,546				3,128				3,536
			68,164				64,059				18,658				14,807
Income before income taxes			16,764				29,468				2,970				6,647
Income tax (credit) expense			(312	)			3,229				(274	)			588
Net income		$	17,076			$	26,239			$	3,244			$	6,059
Share and Per Share Data:
Weighted Average Common Shares			22,527,300				22,550,562				22,548,966				22,586,296
Dilutive restricted stock units			121,393				82,609				221,692				122,961
Dilutive weighted average common shares			22,648,693				22,633,171				22,770,658				22,709,257
Basic EPS		$	0.76			$	1.16			$	0.14			$	0.27
Diluted EPS			0.75				1.16				0.14				0.27
Cash Dividends Declared per share			0.84				0.84				0.21				0.21
FINANCIAL RATIOS
(Unaudited)
ROA			0.40	%			0.62	%			0.31	%			0.57	%
ROE			4.49				7.14				3.35				6.68
Net Interest Margin			1.83				2.16				1.83				2.00
Efficiency Ratio			79.00				65.52				86.78				65.47

PROBLEM AND POTENTIAL PROBLEM LOANS AND ASSETS(Unaudited)
		12/31/2024				12/31/2023
		(dollars in thousands)
Loans including modifications to borrowers experiencing financial difficulty:
Modified and performing according to their modified terms		$	421			$	431
Past due 30 through 89 days			270				3,086
Past due 90 days or more and still accruing			—				—
Nonaccrual			3,229				1,053
			3,920				4,570
Other real estate owned			—				—
		$	3,920			$	4,570
Allowance for credit losses		$	28,331			$	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			8.8	x			27.5	x

AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL(Unaudited)
		Year Ended December 31,
		2024												2023
		Average				Interest/				Average				Average				Interest/				Average
(dollars in thousands)		Balance				Dividends				Rate				Balance				Dividends				Rate
Assets:
Interest-earning bank balances		$	60,259			$	3,221				5.35	%		$	48,879			$	2,508				5.13	%
Investment securities:
Taxable (1)			611,936				23,191				3.79				584,450				20,155				3.45
Nontaxable (1) (2)			152,575				4,843				3.17				196,341				6,271				3.19
Loans (1) (2)			3,237,664				137,092				4.23				3,260,903				127,868				3.92
Total interest-earning assets			4,062,434				168,347				4.14				4,090,573				156,802				3.83
Allowance for credit losses			(28,613	)											(30,291	)
Net interest-earning assets			4,033,821												4,060,282
Cash and due from banks			32,207												30,847
Premises and equipment, net			30,700												32,027
Other assets			124,909												112,833
		$	4,221,637											$	4,235,989
Liabilities and Stockholders' Equity:
Savings, NOW & money market deposits		$	1,591,320				45,254				2.84			$	1,657,947				32,164				1.94
Time deposits			622,229				27,509				4.42				553,096				19,267				3.48
Total interest-bearing deposits			2,213,549				72,763				3.29				2,211,043				51,431				2.33
Overnight advances			7,156				401				5.60				17,529				950				5.42
Other borrowings			446,837				20,947				4.69				380,399				16,237				4.27
Total interest-bearing liabilities			2,667,542				94,111				3.53				2,608,971				68,618				2.63
Checking deposits			1,135,579												1,220,947
Other liabilities			38,159												38,575
			3,841,280												3,868,493
Stockholders' equity			380,357												367,496
		$	4,221,637											$	4,235,989
Net interest income (2)						$	74,236											$	88,184
Net interest spread (2)											0.61	%											1.20	%
Net interest margin (2)											1.83	%											2.16	%

(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 December 31,
		2024												2023
		Average				Interest/				Average				Average				Interest/				Average
(dollars in thousands)		Balance				Dividends				Rate				Balance				Dividends				Rate
Assets:
Interest-earning bank balances		$	41,393			$	497				4.78	%		$	39,134			$	539				5.46	%
Investment securities:
Taxable (1)			585,774				5,214				3.56				642,590				6,247				3.89
Nontaxable (1) (2)			152,028				1,207				3.18				157,098				1,238				3.15
Loans (1)			3,240,254				34,413				4.25				3,245,232				33,160				4.09
Total interest-earning assets			4,019,449				41,331				4.11				4,084,054				41,184				4.03
Allowance for credit losses			(28,679	)											(29,577	)
Net interest-earning assets			3,990,770												4,054,477
Cash and due from banks			30,311												29,175
Premises and equipment, net			29,868												31,792
Other assets			131,573												105,902
		$	4,182,522											$	4,221,346
Liabilities and Stockholders' Equity:
Savings, NOW & money market deposits		$	1,597,769				11,617				2.89				1,626,615				9,976				2.43
Time deposits			612,334				6,761				4.39				602,256				6,181				4.07
Total interest-bearing deposits			2,210,103				18,378				3.31				2,228,871				16,157				2.88
Overnight advances			761				9				4.70				25,055				354				5.61
Other borrowings			416,413				4,664				4.46				390,326				4,455				4.53
Total interest-bearing liabilities			2,627,277				23,051				3.49				2,644,252				20,966				3.15
Checking deposits			1,132,122												1,176,276
Other liabilities			37,578												41,063
			3,796,977												3,861,591
Stockholders' equity			385,545												359,755
		$	4,182,522											$	4,221,346
Net interest income (2)						$	18,280											$	20,218
Net interest spread (2)											0.62	%											0.88	%
Net interest margin (2)											1.83	%											2.00	%

(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