The First of Long Island Corporation, the parent company of The First National Bank of Long Island, has established itself as a reliable financial institution serving the communities of Long Island and New York City. With a history spanning nearly a century, the company has weathered various economic cycles, consistently delivering solid financial performance and shareholder returns.
Business Overview and History Incorporated in 1984, The First of Long Island Corporation operates as a one-bank holding company, with The First National Bank of Long Island as its wholly-owned subsidiary. The bank was originally organized in 1927 as a national banking association. Over the decades, the company has steadily expanded its footprint, currently operating 37 branch locations across Nassau, Suffolk, Queens, Brooklyn, and Manhattan.
The bank's loan portfolio is primarily comprised of commercial mortgages, residential mortgages, and commercial and industrial loans, catering to the needs of small to middle-market businesses, professional service firms, not-for-profits, municipalities, and consumers in its target markets. The investment securities portfolio consists of high-quality, investment-grade debt instruments, including direct obligations of the U.S. government and its agencies, as well as corporate bonds of large U.S. financial institutions.
To enhance its service offerings, the Bank has established partnerships to provide trust, estate, custody and investment services, as well as credit card services. This diversification of services allows the Bank to meet a broader range of customer needs and compete effectively in its market.
Throughout its history, the Bank has faced various challenges common to community banks, such as competition from larger regional and national banks, changes in interest rates, and local economic conditions in its primary markets on Long Island and in New York City. However, the Bank has successfully navigated these challenges by focusing on its core competencies, building strong customer relationships, and maintaining a conservative, community-oriented approach to banking.
Financials
Financial Performance and Ratios The First of Long Island Corporation has demonstrated consistent financial strength, with a solid balance sheet and prudent risk management practices. As of December 31, 2024, the company reported total assets of $4.12 billion, total loans of $3.22 billion, and total deposits of $3.26 billion.
The company's financial ratios paint a picture of a well-capitalized and efficiently run institution. Return on Average Assets and Equity The return on average assets (ROA) stood at 0.40% in 2024, while the return on average equity (ROE) was 4.49%. Efficiency Ratio The bank's efficiency ratio, a measure of operational efficiency, improved to 79.00% in 2024, down from 65.52% in the previous year. These ratios reflect the company's ability to generate consistent earnings and manage its costs effectively.
For the most recent quarter, the company reported revenue of $21.64 million and net income of $4.60 million. Year-over-year, revenue decreased by 4.7% and net income decreased by 30.4%, primarily due to a decrease in net interest income.
The company operates through two primary business segments: Banking and Investment Services. The Banking segment, which forms the core of FLIC's operations, saw its loan portfolio totaling $3.22 billion in 2024, comprised mainly of commercial mortgages (61% of total loans) and residential mortgages (34% of total loans). The commercial mortgage portfolio includes $848.6 million in multifamily loans, which made up 43% of the commercial real estate portfolio. Loan growth was relatively flat year-over-year, increasing just 0.8%.
Deposits remained stable at $3.26 billion, with noninterest-bearing checking deposits comprising 32.9% of the total. The bank utilizes brokered time deposits, which totaled $175 million or 5.4% of deposits at the end of 2024. The proportion of uninsured deposits greater than $250,000 was 29.7% of total deposits.
Net interest income, the primary driver of revenues, declined 15.8% to $73.2 million in 2024 due to higher funding costs as interest rates rose. The net interest margin compressed to 1.83% from 2.16% the prior year. Provision for loan losses was $359,000 compared to a credit of $326,000 in 2023, reflecting a slight deterioration in credit quality.
The Investment Services segment, which provides trust, estate, custody, and investment management services through a partnership with Financial Resources Group, an affiliate of LPL Financial, generated fee-based revenues of $5.2 million in 2024, an increase of 45.7% year-over-year. This segment contributes about 14% of non-interest income, complementing the core banking operations.
Liquidity
Liquidity and Solvency Liquidity Ratios The First of Long Island Corporation maintains a strong liquidity position, with a current ratio of 0.56 and a quick ratio of 0.56 as of December 31, 2024. The company's cash and cash equivalents totaled $38.33 million at the end of 2024, providing ample liquidity to meet its short-term obligations.
Solvency Ratios In terms of solvency, the company's debt-to-equity ratio was 1.20 as of December 31, 2024, indicating a moderate level of leverage. The long-term debt-to-capitalization ratio stood at 53.38%, reflecting the company's prudent approach to managing its capital structure.
The company's total cash and available credit lines amount to $868.8 million, comprised of $583.3 million available in collateralized borrowing lines with the FHLBNY and FRBNY, and $285.5 million in unencumbered cash and securities. This substantial liquidity buffer provides the company with financial flexibility and the ability to weather potential economic uncertainties.
Recent Developments and Outlook In September 2024, The First of Long Island Corporation announced that it had entered into a definitive agreement to merge with ConnectOne Bancorp, Inc., a New Jersey-based bank holding company. The all-stock transaction, valued at $284 million, is expected to create a combined entity with approximately $14 billion in total assets, $11 billion in total deposits, and $11 billion in total loans. The merger, which is subject to regulatory approvals and other customary closing conditions, is anticipated to close in the second quarter of 2025.
The proposed merger with ConnectOne Bancorp is seen as a strategic move to expand the company's presence in the greater New York metropolitan area and create a premier middle-market bank in the region. The combined entity is expected to benefit from increased scale, diversification, and enhanced capabilities to serve its customer base.
On January 22, 2025, the company disclosed that a customer filed a lawsuit against the Corporation and the Bank claiming monetary damages of approximately $11.1 million. This lawsuit is related to suspicious wire transfer activity that occurred in July 2024, involving unauthorized access to banking information within the customer's control. The Corporation and Bank intend to vigorously defend against the lawsuit, maintaining that they followed reasonable procedures regarding online wire transfers.
Looking ahead, The First of Long Island Corporation remains focused on delivering exceptional customer service, maintaining prudent risk management practices, and driving sustainable growth. The company's experienced management team and dedicated workforce have navigated the bank through various challenges, positioning it well for the future.
Risks and Considerations While The First of Long Island Corporation has demonstrated resilience, the company is not without its risks. The bank's loan portfolio, concentrated in the Long Island and New York City markets, exposes it to regional economic conditions and real estate market dynamics. Increased competition from larger banks, fintech companies, and other financial institutions in the company's core markets could also pose a challenge.
Additionally, the pending merger with ConnectOne Bancorp introduces integration risks and potential cultural differences that the combined entity will need to navigate effectively. The successful execution of the merger and the realization of anticipated synergies will be critical to the combined company's long-term success.
Human Capital Resources As of December 31, 2024, the Bank had approximately 265 full time equivalent employees, a decrease of 23 employees or 8% from 288 employees at the end of the prior year. This decrease was primarily driven by branch closures and employee retirements.
To attract and retain talented employees, the Bank provides competitive total rewards programs, including base wages, annual incentives, a 401(k) plan, a defined benefit pension plan, healthcare benefits, and other offerings. The Bank also invests in the ongoing professional development of its employees through recurring training and leadership programs.
The Bank believes its focus on core values, employee well-being, career growth opportunities, and competitive compensation and benefits helps maintain a skilled and loyal workforce. This is a critical aspect of the Bank's operations, as its employees are fundamental to delivering high-quality service and executing the Bank's strategy.
Key aspects of the Bank's Human Capital Resources include: - 265 full time equivalent employees as of December 31, 2024, down 8% from 288 employees as of December 31, 2023 - Competitive compensation and benefits, including base wages, incentives, retirement plans, healthcare - Commitment to employee training, development, and leadership programs - Emphasis on retaining employees through values, support, and competitive rewards
The decrease in headcount was primarily due to branch closures and retirements, while the Bank continues to invest in its employees through comprehensive programs to support their success and development.
Conclusion The First of Long Island Corporation has established itself as a reliable and well-managed financial institution, serving the needs of its local communities. With a solid balance sheet, consistent financial performance, and a strategic merger on the horizon, the company appears poised for continued growth and value creation for its shareholders. As the company navigates the evolving financial landscape, its experienced leadership, prudent risk management, and customer-centric approach will be crucial factors in its ongoing success. The company's focus on human capital resources and employee development further strengthens its position as it faces future challenges and opportunities in the banking sector.