UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
| For the quarterly period ended | |
or
| For the transition period from | to |
Commission file number
THE FIRST OF LONG ISLAND CORPORATION
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
| | | |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | |
| Non‑Accelerated Filer ☐ | Emerging Growth Company |
| Smaller Reporting Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As of April 30, 2025, the registrant had
| PART I. |
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| ITEM 1. |
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| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| ITEM 3. |
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| ITEM 4. |
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| PART II. |
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| ITEM 1. |
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| ITEM 1A. |
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| ITEM 2. |
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| ITEM 3. |
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| ITEM 4. |
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| ITEM 5. |
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| ITEM 6. |
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| March 31, | December 31, | |||||||
| (dollars in thousands) | 2025 | 2024 | ||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investment securities available-for-sale, at fair value | ||||||||
| Loans: | ||||||||
| Commercial and industrial | ||||||||
| Secured by real estate: | ||||||||
| Commercial mortgages | ||||||||
| Residential mortgages | ||||||||
| Home equity lines | ||||||||
| Consumer and other | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Restricted stock, at cost | ||||||||
| Bank premises and equipment, net | ||||||||
| Right-of-use asset - operating leases | ||||||||
| Bank-owned life insurance | ||||||||
| Pension plan assets, net | ||||||||
| Deferred income tax benefit | ||||||||
| Other assets | ||||||||
| $ | $ | |||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Checking | $ | $ | ||||||
| Savings, NOW and money market | ||||||||
| Time | ||||||||
| Overnight advances | ||||||||
| Other borrowings | ||||||||
| Operating lease liability | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Stockholders' Equity: | ||||||||
| Common stock, par value $ per share: | ||||||||
| Authorized, shares; | ||||||||
| Issued and outstanding, and shares | ||||||||
| Surplus | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss, net of tax | ( | ) | ( | ) | ||||
| $ | $ | |||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Three Months Ended |
||||||||
| March 31, |
||||||||
| (in thousands, except per share data) |
2025 |
2024 |
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| Interest and dividend income: |
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| Loans |
$ | $ | ||||||
| Investment securities: |
||||||||
| Taxable |
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| Nontaxable |
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| Interest expense: |
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| Savings, NOW and money market deposits |
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| Time deposits |
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| Overnight advances |
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| Other borrowings |
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| Net interest income |
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| Provision for credit losses |
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| Net interest income after provision for credit losses |
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| Noninterest income: |
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| Bank-owned life insurance |
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| Service charges on deposit accounts |
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| Net loss on sales of securities |
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| Other |
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| Noninterest expense: |
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| Salaries and employee benefits |
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| Occupancy and equipment |
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| Merger expenses |
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| Other |
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| Income before income taxes |
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| Income tax expense |
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| Net income |
$ | $ | ||||||
| Weighted average: |
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| Common shares |
||||||||
| Dilutive restricted stock units |
||||||||
| Dilutive weighted average common shares |
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| Earnings per share: |
||||||||
| Basic |
$ | $ | ||||||
| Diluted |
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| Cash dividends declared per share |
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See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended |
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| March 31, |
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| (in thousands) |
2025 |
2024 |
||||||
| Net income |
$ | $ | ||||||
| Other comprehensive income (loss): |
||||||||
| Change in net unrealized holding gains (losses) on available-for-sale securities |
( |
) | ||||||
| Change in funded status of pension plan |
||||||||
| Other comprehensive income (loss) before income taxes |
( |
) | ||||||
| Income tax expense (benefit) |
( |
) | ||||||
| Other comprehensive income (loss) |
( |
) | ||||||
| Comprehensive income |
$ | $ | ||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
| Three Months Ended March 31, 2025 |
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| Accumulated |
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| Other |
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| Common Stock |
Retained |
Comprehensive |
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| (dollars in thousands) |
Shares |
Amount |
Surplus |
Earnings |
Loss |
Total |
||||||||||||||||||
| Balance, January 1, 2025 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
| Net income |
||||||||||||||||||||||||
| Other comprehensive income |
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| Shares withheld upon the vesting and conversion of RSUs |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Common stock issued under stock compensation plans |
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| Common stock issued under dividend reinvestment and stock purchase plan |
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| Stock-based compensation expense |
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| Cash dividends declared |
( |
) | ( |
) | ||||||||||||||||||||
| Balance, March 31, 2025 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
| Three Months Ended March 31, 2024 |
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| Accumulated |
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| Other |
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| Common Stock |
Retained |
Comprehensive |
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| (dollars in thousands) |
Shares |
Amount |
Surplus |
Earnings |
Loss |
Total |
||||||||||||||||||
| Balance, January 1, 2024 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
| Net income |
||||||||||||||||||||||||
| Other comprehensive loss |
( |
) | ( |
) | ||||||||||||||||||||
| Repurchase of common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Shares withheld upon the vesting and conversion of RSUs |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Common stock issued under stock compensation plans |
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| Common stock issued under dividend reinvestment and stock purchase plan |
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| Stock-based compensation expense |
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| Cash dividends declared |
( |
) | ( |
) | ||||||||||||||||||||
| Balance, March 31, 2024 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, |
||||||||
| (in thousands) |
2025 |
2024 |
||||||
| Cash Flows From Operating Activities: |
||||||||
| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Provision for credit losses |
||||||||
| (Credit) provision for deferred income taxes |
( |
) | ( |
) | ||||
| Depreciation and amortization of premises and equipment |
||||||||
| Amortization of right-of-use asset - operating leases |
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| Premium amortization on investment securities, net |
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| Stock-based compensation expense |
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| Accretion of cash surrender value on bank-owned life insurance |
( |
) | ( |
) | ||||
| Pension expense |
||||||||
| Decrease in other liabilities |
( |
) | ( |
) | ||||
| Other increases in assets |
( |
) | ( |
) | ||||
| Net cash provided by operating activities |
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| Cash Flows From Investing Activities: |
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| Available-for-sale securities: |
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| Proceeds from maturities and redemptions |
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| Purchases |
( |
) | ( |
) | ||||
| Net decrease in loans |
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| Net decrease in restricted stock |
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| Purchases of premises and equipment, net |
( |
) | ( |
) | ||||
| Proceeds from death benefit of bank-owned life insurance |
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| Net cash provided by investing activities |
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| Cash Flows From Financing Activities: |
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| Net increase in deposits |
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| Net decrease in overnight advances |
( |
) | ||||||
| Proceeds from other borrowings |
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| Repayment of other borrowings |
( |
) | ( |
) | ||||
| Proceeds from issuance of common stock, net of shares withheld |
( |
) | ||||||
| Repurchase of common stock |
( |
) | ||||||
| Cash dividends paid |
( |
) | ( |
) | ||||
| Net cash (used in) provided by financing activities |
( |
) | ||||||
| Net increase in cash and cash equivalents |
||||||||
| Cash and cash equivalents, beginning of year |
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| Cash and cash equivalents, end of period |
$ | $ | ||||||
| Supplemental Cash Flow Disclosures: |
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| Cash paid for: |
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| Interest |
$ | $ | ||||||
| Income taxes |
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| Operating cash flows from operating leases |
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| Noncash investing and financing activities: |
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| Cash dividends payable |
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See notes to unaudited consolidated financial statements
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1 - BASIS OF PRESENTATION
The accounting and reporting policies of The First of Long Island Corporation (“Corporation”) reflect banking industry practice and conform to generally accepted accounting principles (“GAAP”) in the United States.
The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiary, The First National Bank of Long Island (“Bank”). The Bank has one wholly owned subsidiary: FNY Service Corp., an investment company. The Bank and FNY Service Corp. jointly own another subsidiary, The First of Long Island REIT, Inc., a real estate investment trust. The consolidated entity is referred to as the “Corporation” and the Bank and its subsidiaries are collectively referred to as the “Bank.” All intercompany balances and amounts have been eliminated. For further information refer to the consolidated financial statements and notes thereto included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024.
The consolidated financial information included herein as of and for the periods ended March 31, 2025 and 2024 is unaudited. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The December 31, 2024 consolidated balance sheet was derived from the Corporation's December 31, 2024 audited consolidated financial statements. When appropriate, items in the prior year financial statements are reclassified to conform to the current period presentation.
Use of Estimates. In preparing the consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported asset and liability balances, revenue and expense amounts, and the disclosures provided, including disclosure of contingent assets and liabilities, based on available information. Actual results could differ significantly from those estimates. Information available which could affect these judgements includes, but is not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers.
2 - COMPREHENSIVE INCOME
Comprehensive income includes net income and other comprehensive income (loss) (“OCI”). OCI includes revenues, expenses, gains and losses that under GAAP are included in comprehensive income but excluded from net income. OCI for the Corporation consists of net unrealized holding gains or losses on available-for-sale (“AFS”) securities and changes in the funded status of the Bank’s defined benefit pension plan, all net of related income taxes. Accumulated OCI is recognized as a separate component of stockholders’ equity.
The following table sets forth the components of accumulated OCI, net of tax.
| Current |
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| Balance |
Period |
Balance |
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| (in thousands) |
12/31/2024 |
Change |
3/31/2025 |
|||||||||
| Unrealized holding loss on available-for-sale securities |
$ | ( |
) | $ | $ | ( |
) | |||||
| Unrealized actuarial loss on pension plan |
( |
) | ( |
) | ||||||||
| Accumulated other comprehensive loss, net of tax |
$ | ( |
) | $ | $ | ( |
) | |||||
The components of OCI and the related tax effects are as follows:
| Three Months Ended |
||||||||
| March 31, |
||||||||
| (in thousands) |
2025 |
2024 |
||||||
| Change in net unrealized holding gains or losses on available-for-sale securities: |
||||||||
| Change arising during the period |
$ | $ | ( |
) | ||||
| Tax effect |
( |
) | ||||||
| ( |
) | |||||||
| Change in funded status of pension plan: |
||||||||
| Amortization of net actuarial loss included in pension expense (1) |
||||||||
| Tax effect |
||||||||
| Other comprehensive income (loss) |
$ | $ | ( |
) | ||||
| (1) |
Represents the amortization of net actuarial loss relating to the Corporation’s defined benefit pension plan. This item is a component of net periodic pension cost and is included in the consolidated statements of income in the line item “Other noninterest income.” |
3 - INVESTMENT SECURITIES
The following tables set forth the amortized cost and estimated fair values of the Bank’s AFS investment securities at the dates indicated.
| March 31, 2025 | ||||||||||||||||
| Gross | Gross | |||||||||||||||
| Amortized | Unrealized | Unrealized | Fair | |||||||||||||
| (in thousands) | Cost | Gains | Losses | Value | ||||||||||||
| State and municipals | $ | $ | $ | ( | ) | $ | ||||||||||
| Pass-through mortgage securities | ( | ) | ||||||||||||||
| Collateralized mortgage obligations | ( | ) | ||||||||||||||
| SBA agency obligations | ( | ) | ||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||
| $ | $ | $ | ( | ) | $ | |||||||||||
| December 31, 2024 | ||||||||||||||||
| State and municipals | $ | $ | $ | ( | ) | $ | ||||||||||
| Pass-through mortgage securities | ( | ) | ||||||||||||||
| Collateralized mortgage obligations | ( | ) | ||||||||||||||
| SBA agency obligations | ( | ) | ||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||
| $ | $ | $ | ( | ) | $ | |||||||||||
The Bank did have any securities classified as held-to-maturity at March 31, 2025 and December 31, 2024.
Small Business Administration (“SBA”) agency obligations are floating rate, government guaranteed securities backed by $
At March 31, 2025 and December 31, 2024, investment securities with a carrying value of $
There were
There was
Securities With Unrealized Losses. The following tables set forth securities with unrealized losses at the dates indicated presented by the length of time the securities have been in a continuous unrealized loss position.
| March 31, 2025 | ||||||||||||||||||||||||
| Less than | 12 Months | |||||||||||||||||||||||
| 12 Months | or More | Total | ||||||||||||||||||||||
| Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
| (in thousands) | Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
| State and municipals | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| Pass-through mortgage securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Collateralized mortgage obligations | ( | ) | ( | ) | ||||||||||||||||||||
| SBA agency obligations | ( | ) | ( | ) | ||||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Total temporarily impaired | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||
| State and municipals | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| Pass-through mortgage securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Collateralized mortgage obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| SBA agency obligations | ( | ) | ( | ) | ||||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Total temporarily impaired | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
Following is a discussion of unrealized losses by type of security, none of which are considered impaired at March 31, 2025.
State and Municipals
At March 31, 2025, approximately $
Pass-through Mortgage Securities
At March 31, 2025, pass-through mortgage securities of approximately $
Collateralized Mortgage Obligations
At March 31, 2025, collateralized mortgage obligations of approximately $
SBA Agency Obligations
At March 31, 2025, SBA agency obligations of approximately $
Corporate Bonds
At March 31, 2025, approximately $
Each of the financial institutions is considered upper medium investment grade and rated A3 or higher. The unrealized loss is attributable to changes in credit spreads and interest rates and the illiquid nature of the securities. The Bank does not have the intent to sell these securities, nor is it likely that it will be required to sell the securities before their anticipated recovery. Each of these financial institutions has diversified revenue streams, is well capitalized and continues to make timely interest payments. Management evaluates the quarterly financial statements of each company to determine if full payment of principal and interest is in doubt and does not believe there is any impairment at March 31, 2025.
Sales of AFS Securities. There were no sales of AFS securities during the three months ended March 31, 2025 and 2024.
Maturities. The following table sets forth by maturity the amortized cost and fair value of the Bank’s state and municipal securities and corporate bonds at March 31, 2025 based on the earlier of their stated maturity or, if applicable, their pre-refunded date. The remaining securities in the Bank’s investment securities portfolio are mortgage and asset-backed securities, consisting of pass-through mortgage securities, collateralized mortgage obligations and SBA agency obligations. Although these securities are expected to have substantial periodic repayments, they are reflected in the table below in aggregate amounts.
| (in thousands) | Amortized Cost | Fair Value | ||||||
| Within one year | $ | $ | ||||||
| After 1 through 5 years | ||||||||
| After 5 through 10 years | ||||||||
| After 10 years | ||||||||
| Mortgage and asset-backed securities | ||||||||
| $ | $ | |||||||
4 - LOANS
The following table sets forth the loans outstanding by class of loans at the dates indicated.
| (in thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Commercial and industrial | $ | $ | ||||||
| Commercial mortgages: | ||||||||
| Multifamily | ||||||||
| Other | ||||||||
| Owner-occupied | ||||||||
| Residential mortgages: | ||||||||
| Closed end | ||||||||
| Revolving home equity | ||||||||
| Consumer and other | ||||||||
| $ | $ | |||||||
Allowance for Credit Losses. Loans that do not share similar risk characteristics are evaluated on an individual basis. Such disparate risk characteristics may include internal or external credit ratings, risk ratings, collateral type, size of loan, effective interest rate, term, geographic location, industry or historical or expected loss pattern. For loans individually evaluated, an allowance for credit losses (“ACL” or “allowance”) is estimated based on either the fair value of collateral or the discounted value of expected future cash flows. In estimating the fair value of real estate collateral, management utilizes appraisals or evaluations adjusted for costs to dispose and a distressed sale adjustment, if needed. Estimating the fair value of collateral other than real estate is also subjective in nature and sometimes requires difficult and complex judgements. Determining expected future cash flows can be more subjective than determining fair values. Expected future cash flows could differ significantly, both in timing and amount, from the cash flows actually received over the loan’s remaining life. Individually evaluated loans are excluded from the estimation of credit losses for the pooled portfolio.
For loans collectively evaluated for credit loss, management segregates its loan portfolio into distinct pools, certain of which are combined in reporting loans outstanding by class of loans: (1) commercial and industrial; (2) small business; (3) multifamily; (4) owner-occupied; (5) other commercial real estate; (6) construction and land development; (7) residential mortgage; (8) revolving home equity; (9) consumer; and (10) municipal loans. Historical loss information from the Bank’s own loan portfolio from December 31, 2007 to present provides a basis for management’s assessment of expected credit losses. The choice of a historical look-back period that begins in 2007 covers an entire economic cycle and impacts the average historical loss rates used to calculate the final ACL. Due to the extensive loss data available, management selected the vintage approach to measure the historical loss component of credit losses for most of its loan pools. For the revolving home equity and small business pools, the lifetime PD/LGD (probability of default/loss given default) method is used to measure historical losses.
Modifications to borrowers experiencing financial difficulty are included in loans collectively evaluated for credit loss. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. A charge to the allowance for credit losses is generally not recorded upon modification.
Management believes that the methods selected fairly reflect the historical loss component of expected losses inherent in the Bank’s loan portfolio. However, since future losses could vary significantly from those experienced in the past, on a quarterly basis management adjusts its historical loss experience to reflect current and forecasted conditions. In doing so, management considers a variety of general qualitative and quantitative factors (“Q-factors”) and then subjectively determines the weight to assign to each in estimating losses. Qualitative characteristics include differences in underwriting standards, policies, lending staff and environmental risks. Management also considers whether further adjustments to historical loss information are needed to reflect the extent to which current conditions and reasonable and supportable forecasts over a year to year forecasting horizon differ from the conditions that existed during the historical loss period. These quantitative adjustments reflect changes to relevant data such as changes in unemployment rates, gross domestic product (“GDP”), vacancies, average growth in pools of loans, rent regulation status, delinquencies or other factors associated with the financial assets. The immediate reversion method is applied for periods beyond the forecasting horizon. The Bank’s ACL allocable to pools of loans that are collectively evaluated for credit loss results primarily from these qualitative and quantitative adjustments to historical loss experience. Because of the nature of the Q-factors and the degree of judgement involved in assessing their impact, management’s resulting estimate of losses may not accurately reflect current and future losses in the portfolio.
Chargeoffs and deterioration in current and forecasted economic conditions, including adjustments for economic uncertainty, were the main drivers of the provision recorded in the first quarter of 2025, partially offset by declines in loan portfolio balances, historical loss rates and allowances on individually evaluated loans.
The following tables present the activity in the ACL for the periods indicated.
| Balance at | Provision (Credit) for | Balance at | ||||||||||||||||||
| (in thousands) | 1/1/2025 | Chargeoffs | Recoveries | Credit Losses | 3/31/2025 | |||||||||||||||
| Commercial and industrial | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Commercial mortgages: | ||||||||||||||||||||
| Multifamily | ( | ) | ||||||||||||||||||
| Other | ( | ) | ||||||||||||||||||
| Owner-occupied | ( | ) | ||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||
| Closed end | ( | ) | ||||||||||||||||||
| Revolving home equity | ( | ) | ||||||||||||||||||
| Consumer and other | ||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ |
| |||||||||||||
| Balance at | Provision (Credit) for | Balance at | ||||||||||||||||||
| (in thousands) | 1/1/2024 | Chargeoffs | Recoveries | Credit Losses | 3/31/2024 | |||||||||||||||
| Commercial and industrial | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Commercial mortgages: | ||||||||||||||||||||
| Multifamily | ||||||||||||||||||||
| Other | ( | ) | ||||||||||||||||||
| Owner-occupied | ( | ) | ||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||
| Closed end | ( | ) | ||||||||||||||||||
| Revolving home equity | ( | ) | ||||||||||||||||||
| Consumer and other | ||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
Aging of Loans. The following tables present the aging of loans past due and loans on nonaccrual status by class of loans.
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Past Due | Nonaccrual | |||||||||||||||||||||||||||||||
| (in thousands) | 30-59 Days | 60-89 Days | 90 Days or More and Still Accruing | With an Allowance for Credit Loss | With No Allowance for Credit Loss | Total Past Due Loans & Nonaccrual Loans | Current | Total Loans | ||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial mortgages: | ||||||||||||||||||||||||||||||||
| Multifamily | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Owner-occupied | ||||||||||||||||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||||||||||||||
| Closed end | ||||||||||||||||||||||||||||||||
| Revolving home equity | ||||||||||||||||||||||||||||||||
| Consumer and other | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial mortgages: | ||||||||||||||||||||||||||||||||
| Multifamily | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Owner-occupied | ||||||||||||||||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||||||||||||||
| Closed end | ||||||||||||||||||||||||||||||||
| Revolving home equity | ||||||||||||||||||||||||||||||||
| Consumer and other | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
At March 31, 2025, past due loans increased $
At March 31, 2025 and December 31, 2024, there was residential real estate loan for which formal foreclosure proceedings are in process with an amortized cost of $
Accrued interest receivable from loans totaled $
Loan Modifications. The Bank did modify the terms of any loans for borrowers experiencing financial difficulty in the form of principal forgiveness, an interest reduction, an other-than-insignificant payment delay or a term extension during the previous twelve months.
Risk Characteristics. Credit risk within the Bank’s loan portfolio primarily stems from factors such as changes in the borrower’s financial condition, credit concentrations, changes in collateral values, economic conditions, rent regulation and environmental contamination of properties securing mortgage loans. The Bank’s commercial loans, including those secured by real estate mortgages, are primarily made to small and medium-sized businesses. Such loans sometimes involve a higher degree of risk than those to larger companies because such businesses may have shorter operating histories, higher debt-to-equity ratios and may lack sophistication in internal record keeping and financial and operational controls. In addition, most of the Bank’s loans are made to businesses and consumers on Long Island and in the boroughs of New York City (“NYC”), and a large percentage of these loans are mortgage loans secured by properties located in those areas. The primary sources of repayment for residential and commercial mortgage loans include employment and other income of the borrowers, the businesses of the borrowers and cash flows from the underlying properties. In the case of multifamily mortgage loans, a substantial portion of the underlying properties are rent stabilized or rent controlled. These sources of repayment are dependent on the strength of the local economy.
Credit Quality Indicators. The Bank categorizes loans into risk categories based on relevant information about the borrower’s ability to service their debt including, but not limited to, current financial information for the borrower and any guarantors, payment experience, credit underwriting documentation, public records, due diligence checks and current economic trends. Management analyzes loans and classifies them using risk rating matrices consistent with regulatory guidance as follows.
Watch: The borrower’s cash flow has a high degree of variability and is subject to economic downturns. Liquidity is strained and the ability of the borrower to access traditional sources of credit is diminished.
Special Mention: The borrower has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to risk sufficient to warrant adverse classification.
Substandard: Loans are inadequately protected by the current sound worth and paying capacity of the borrower or the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Doubtful: Loans have all the inherent weaknesses of those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on existing facts, conditions and values, highly questionable and improbable.
Risk ratings on commercial and industrial loans and commercial mortgages are initially assigned during the underwriting process and affirmed as part of the approval process. The ratings are periodically reviewed and evaluated based on borrower contact, credit department review or independent loan review.
The Bank's loan risk rating and review policy establishes requirements for the annual review of commercial real estate and commercial and industrial loans. The requirements include details of the scope of coverage and selection process based on loan-type and risk rating. The Bank reviews at least
Residential mortgage loans, revolving home equity lines and other consumer loans are initially evaluated utilizing the borrower’s credit score. A credit score is a tool used in the Bank’s loan approval process, and a minimum score of
The following tables present the amortized cost basis of loans by class of loans, vintage and risk rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful. Also presented are gross chargeoffs recorded in the current year-to-date period by year of origination.
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Revolving | |||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Loans (1) | Total | ||||||||||||||||||||||||
| Commercial and industrial: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Commercial mortgages – multifamily: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial mortgages – other: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial mortgages – owner-occupied: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Revolving | |||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Loans (1) | Total | ||||||||||||||||||||||||
| Residential mortgages (2): | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||
| Consumer and other: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| Not Rated | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total Loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total gross chargeoffs | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| (1) | Includes revolving lines converted to term of $ |
| (2) | Certain fixed rate residential mortgage loans are included in a fair value hedging relationship. The amortized cost excludes an adjustment of $ |
5 - STOCK-BASED COMPENSATION
The following table presents a summary of restricted stock units (“RSUs”) outstanding at March 31, 2025 and changes during the three month period then ended.
| Weighted- |
||||||||||||||||
| Weighted- |
Average |
Aggregate |
||||||||||||||
| Average |
Remaining |
Intrinsic |
||||||||||||||
| Number of |
Grant-Date |
Contractual |
Value |
|||||||||||||
| RSUs |
Fair Value |
Term (yrs.) |
(in thousands) |
|||||||||||||
| Outstanding at January 1, 2025 |
$ | |||||||||||||||
| Converted |
( |
) | ||||||||||||||
| Outstanding at March 31, 2025 |
$ | $ | ||||||||||||||
As of March 31, 2025, there was $
6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Instruments Recorded at Fair Value. When measuring fair value, the Corporation uses a fair value hierarchy, which is designed to maximize the use of observable inputs and minimize the use of unobservable inputs. The hierarchy involves three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Corporation can access at the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect the Corporation’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The fair values of the Corporation’s financial assets and liabilities measured at fair value on a recurring basis are set forth in the table that follows. The fair values of AFS securities are determined on a recurring basis using matrix pricing (Level 2 inputs). Matrix pricing, which is a mathematical technique widely used in the industry to value debt securities, does not rely exclusively on quoted prices for the specific securities but rather on the relationship of such securities to other benchmark quoted securities. Where no significant other observable inputs were available, Level 3 inputs were used. The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.
| Fair Value Measurements Using: | ||||||||||||||||
| Quoted Prices | Significant | |||||||||||||||
| in Active | Other | Significant | ||||||||||||||
| Markets for | Observable | Unobservable | ||||||||||||||
| Identical Assets | Inputs | Inputs | ||||||||||||||
| (in thousands) | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| March 31, 2025: | ||||||||||||||||
| Financial Assets: | ||||||||||||||||
| Available-for-Sale Securities: | ||||||||||||||||
| State and municipals | $ | $ | $ | $ | ||||||||||||
| Pass-through mortgage securities | ||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||
| SBA agency obligations | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| - interest rate swaps | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Financial Liabilities: | ||||||||||||||||
| Derivative - interest rate swaps | $ | $ | $ | $ | ||||||||||||
| December 31, 2024: | ||||||||||||||||
| Financial Assets: | ||||||||||||||||
| Available-for-Sale Securities: | ||||||||||||||||
| State and municipals | $ | $ | $ | $ | ||||||||||||
| Pass-through mortgage securities | ||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||
| SBA agency obligations | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| - interest rate swaps | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Financial Liabilities: | ||||||||||||||||
| Derivative - interest rate swaps | $ | $ | $ | $ | ||||||||||||
State and municipal AFS securities measured using Level 3 inputs. The Bank held non-rated bond anticipation notes with a book value of $
There were
The following table sets forth the carrying amounts and estimated fair values of financial instruments that are not recorded at fair value in the Corporation’s financial statements.
| Fair Value Measurements Using: | ||||||||||||||||||||
| Quoted Prices | Significant | |||||||||||||||||||
| in Active | Other | Significant | ||||||||||||||||||
| Markets for | Observable | Unobservable | ||||||||||||||||||
| Carrying | Fair | Identical Assets | Inputs | Inputs | ||||||||||||||||
| (in thousands) | Amount | Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||
| March 31, 2025: | ||||||||||||||||||||
| Financial Assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
| Loans, net | ||||||||||||||||||||
| Restricted stock | n/a | n/a | n/a | n/a | ||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||
| Checking deposits | ||||||||||||||||||||
| Savings, NOW and money market deposits | ||||||||||||||||||||
| Time deposits | ||||||||||||||||||||
| Overnight advances | ||||||||||||||||||||
| Other borrowings | ||||||||||||||||||||
| Accrued interest payable | ||||||||||||||||||||
| December 31, 2024: | ||||||||||||||||||||
| Financial Assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
| Loans, net | ||||||||||||||||||||
| Restricted stock | n/a | n/a | n/a | n/a | ||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||
| Checking deposits | ||||||||||||||||||||
| Savings, NOW and money market deposits | ||||||||||||||||||||
| Time deposits | ||||||||||||||||||||
| Overnight advances | ||||||||||||||||||||
| Other borrowings | ||||||||||||||||||||
| Accrued interest payable | ||||||||||||||||||||
7 – DERIVATIVES
As part of its asset liability management activities, the Corporation may utilize interest rate swaps to help manage its interest rate risk position. The notional amount of an interest rate swap does not represent the amount exchanged by the parties. The exchange of cash flows is determined by reference to the notional amount and the other terms of the interest rate swap agreements.
Fair Value Hedge. On March 16, 2023, the Bank entered into a year interest rate swap with a notional amount totaling million which was designated as a fair value hedge of certain fixed rate residential mortgages. The Bank pays a fixed rate of
The following table summarizes information about the interest rate swap designated as a fair value hedge.
| March 31, | |||
| 2025 | |||
| Notional amount |
| ||
| Fixed pay rate | | ||
| Overnight receive rate | | ||
| Maturity |
The following table presents the amount recorded on the balance sheet related to cumulative basis adjustments for the fair value hedge as of the periods indicated.
| March 31, | December 31, | |||||||
| (in thousands) | 2025 | 2024 | ||||||
| Loans - Residential Mortgages: | ||||||||
| Carrying amount of the hedged asset (1) | $ | $ | ||||||
| Fair value hedging adjustment included in the carrying amount of the hedged asset | ( | ) | ||||||
| (1) | This amount represents the amortized cost basis of the closed loan portfolio used to designate the hedging relationship in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedge period. At March 31, 2025, the amortized cost basis of the closed portfolio used in this hedging relationship was $ |
During the first quarter of 2025, the Bank recorded a $
Derivatives Not Designated as Hedges. The Bank enters into interest rate swap agreements (“back-to-back swap”) that are not designated as hedging instruments. A back-to-back swap allows a borrower to effectively convert a variable rate loan to a fixed rate. The Bank originates a variable rate loan with a borrower and simultaneously enters into offsetting back-to-back swaps with the borrower and an unaffiliated dealer counterparty to minimize interest rate risk. In connection with each swap transaction, the Bank agrees to pay interest to the borrower on a notional amount at a variable interest rate and receives interest from the borrower on a similar notional amount at a fixed interest rate. Concurrently, the Bank agrees to pay the dealer counterparty the same fixed interest rate on the same notional amount and receives the same variable interest rate on the same notional amount. Because the Bank acts as an intermediary for its borrower, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Bank’s results of operations.
| March 31, 2025 | ||||||||||||||||
| Notional | Fair Value | Fair Value | ||||||||||||||
| (in thousands) | Positions | Amount | Asset | Liabilities | ||||||||||||
| Derivatives not designated as hedging instruments included in other assets / other liabilities: | ||||||||||||||||
| Interest rate swap with borrower | 3 | $ | $ | $ | ||||||||||||
| Interest rate swap with offsetting counterparty | 3 | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Derivatives not designated as hedging instruments included in other assets / other liabilities: | ||||||||||||||||
| Interest rate swap with borrower | 3 | $ | $ | $ | ||||||||||||
| Interest rate swap with offsetting counterparty | 3 | $ | $ | $ | ||||||||||||
The Bank did record any back-to-back swap fee income during the first quarter of 2025.
8 – BUSINESS COMBINATIONS
Proposed Merger with ConnectOne Bancorp, Inc. On September 4, 2024, the Corporation entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ConnectOne Bancorp, Inc., a New Jersey corporation (“ConnectOne”), pursuant to which the companies will combine in an all-stock transaction. Under the terms of the Merger Agreement, the Corporation will merge into ConnectOne, with ConnectOne as the surviving corporation (the "merger"), and the Bank will merge into ConnectOne Bank, with ConnectOne Bank as the surviving institution (the “bank merger” and, together with the merger, the “transaction”). Upon closing of the transaction, the Corporation's shareholders will receive
The foregoing description of the proposed merger and the Merger Agreement is not complete and is qualified in its entirety by reference to the full text of the Merger Agreement.
9 – CommitmentS and ContingenT LIABILITIES
From time to time, the Corporation and its subsidiaries may be a named defendant in legal actions incidental to the business. For some of these actions, there is always a possibility that the Corporation and/or its subsidiaries will sustain a financial loss.
As previously disclosed in the Corporation’s Current Report on Form 8-K dated August 28, 2024, the Bank was notified by a customer of suspicious wire transfer activity in July 2024 involving the customer's bank accounts. The wire transfer activity arose as the result of unauthorized access to banking information within the customer's control, and upon completion of an internal procedural investigation, the Bank determined that it followed its reasonable procedures regarding online wire transfers. On January 22, 2025, the customer filed a lawsuit against the Corporation and the Bank claiming monetary damages of approximately $
10 – SEGMENT INFORMATION
The Corporation has determined that the chief operating decision makers ("CODM") are the Chief Executive Officer and Chief Financial Officer, as well as from time to time the Board of Directors. Members of the Board of Directors, with the exception of the Chief Executive Officer, are not in day-to-day management of the Corporation but there are times when board approval of operating decisions is required, such as for strategic plans, budgets, establishing executive compensation practices, declaring shareholder dividends and for execution of material transactions, such as mergers and acquisitions.
The Bank provides banking products and services as well as access to third-party financial products and services to business and retail clients through its network of physical locations and various digital channels. The CODM uses comparisons to Board of Director approved strategic plans and budgets and comparisons to peer metrics to assess performance and determine compensation. Comparisons include tracking actual performance to budgets, prior periods and peer performance. Metrics include, among others, net income, return on average equity, return on average assets, and total shareholder return. Interest on loans and investments, service charges, BOLI earnings and interchange fees provide most of the revenues in the banking operation. Interest expense on borrowings and deposits, provisions for credit losses, salaries and benefits, operating facilities and expenses related to technology are the significant expenses in the banking operation. All operations are domestic.
Because these operations are closely linked and largely dependent upon each other, they are managed, and the financial performance is evaluated on a consolidated basis. Accordingly, and consistent with prior years, all of the Corporation's operations are considered by management to be aggregated in reportable operating segment.
11 – IMPACT OF ISSUED BUT NOT YET EFFECTIVE ACCOUNTING STANDARDS
The pronouncements discussed in this section are not intended to be an all-inclusive list, but rather only those pronouncements that could potentially have an impact on the Corporation’s financial position, results of operations or disclosures.
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which includes amendments that further enhance income tax disclosures, primarily through disaggregation of specific rate reconciliation categories and income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied prospectively or retrospectively. Other than the new disclosure requirements, ASU 2023-09 will not have an impact on the Corporation's consolidated financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of The First of Long Island Corporation’s financial condition and operating results during the periods included in the accompanying consolidated financial statements and should be read in conjunction with such financial statements. The Corporation’s financial condition and operating results principally reflect those of its wholly owned subsidiary, The First National Bank of Long Island, and subsidiaries wholly owned by the Bank, either directly or indirectly, FNY Service Corp. and The First of Long Island REIT, Inc. The consolidated entity is referred to as the Corporation and the Bank and its subsidiaries are collectively referred to as the Bank. The Bank’s primary service area is Nassau and Suffolk Counties on Long Island and the NYC boroughs of Queens, Brooklyn and Manhattan.
Noninterest income decreased $57,000 when comparing the first quarters of 2025 and 2024 mainly due to 2024 nonrecurring items of $114,000 in real estate tax refunds, $60,000 in bank-owned life insurance (“BOLI”) benefit payments, $50,000 in joint marketing fees and an additional one-time service charge cycle related to the Bank's core system conversion, which were partially offset by increases of $96,000 in merchant card service fees and $72,000 in BOLI accretion.
Noninterest expense increased $922,000 for the first quarter of 2025, as compared to the first quarter of 2024. The change in noninterest expense is mainly attributable to the current year's expenses related to the pending merger. Noninterest expense increased due to merger expenses of $230,000, merger related system conversion expenses of $468,000, debit card chargeoffs of $243,000 and higher legal fees, partially offset by a 2.6% year-over-year decrease in salaries and employee benefits. The decrease in salaries and employee benefits was due to a decrease in full time equivalent employees, primarily the result of branch closings in 2024.
Income tax expense increased $193,000 due to an increase in the effective tax rate (income tax expense as a percentage of pre-tax book income) from 6.2% in the first quarter of 2024 to 11.5% in the first quarter of 2025. The increase in the effective tax rate was mainly due to a decrease in the percentage of pre-tax income derived from the Bank’s REIT, increasing the state and local income tax due.
Liquidity. Total average deposits declined by $51.9 million when comparing the first quarters of 2025 and 2024. At March 31, 2025, other borrowings were down $75.0 million from year-end 2024. At March 31, 2025, the Bank had $653.3 million in collateralized borrowing lines with the Federal Home Loan Bank ("FHLB") of New York and the Federal Reserve Bank ("FRB"), a $20.0 million unsecured line of credit with a correspondent bank and $204.8 million in unencumbered securities. There were no overnight advances at March 31, 2025 or December 31, 2024. In total, $878.1 million in liquidity was available at March 31, 2025. Uninsured deposits were 49.5% of total deposits at March 31, 2025.
Capital. The Corporation’s capital position remains strong with a leverage ratio of approximately 10.29% at March 31, 2025. Book value per share was $16.91 at March 31, 2025, versus $16.77 at December 31, 2024. The Bank declared its quarterly cash dividend of $0.21 per share during the quarter. There were no share repurchases during the quarter.
Net Interest Income
Average Balance Sheet; Interest Rates and Interest Differential. The following tables set forth the average daily balances for each major category of assets, liabilities and stockholders’ equity as well as the amounts and average rates earned or paid on each major category of interest-earning assets and interest-bearing liabilities. The average balances of loans include nonaccrual loans. The average balances of investment securities exclude unrealized gains and losses on AFS securities.
| Three Months Ended March 31, |
||||||||||||||||||||||||
| 2025 |
2024 |
|||||||||||||||||||||||
| Average |
Interest/ |
Average |
Average |
Interest/ |
Average |
|||||||||||||||||||
| (dollars in thousands) |
Balance |
Dividends |
Rate |
Balance |
Dividends |
Rate |
||||||||||||||||||
| Assets: |
||||||||||||||||||||||||
| Interest-earning bank balances |
$ | 28,537 | $ | 313 | 4.45 | % | $ | 55,117 | $ | 751 | 5.48 | % | ||||||||||||
| Investment securities: |
||||||||||||||||||||||||
| Taxable |
568,162 | 5,061 | 3.56 | 638,857 | 6,242 | 3.91 | ||||||||||||||||||
| Nontaxable (1) |
151,745 | 1,210 | 3.19 | 153,417 | 1,215 | 3.17 | ||||||||||||||||||
| Loans |
3,185,771 | 33,785 | 4.24 | 3,243,445 | 33,543 | 4.14 | ||||||||||||||||||
| Total interest-earning assets |
3,934,215 | 40,369 | 4.10 | 4,090,836 | 41,751 | 4.08 | ||||||||||||||||||
| Allowance for credit losses |
(28,399 | ) | (28,947 | ) | ||||||||||||||||||||
| Net interest-earning assets |
3,905,816 | 4,061,889 | ||||||||||||||||||||||
| Cash and due from banks |
28,197 | 31,703 | ||||||||||||||||||||||
| Premises and equipment, net |
28,912 | 31,257 | ||||||||||||||||||||||
| Other assets |
130,528 | 120,884 | ||||||||||||||||||||||
| $ | 4,093,453 | $ | 4,245,733 | |||||||||||||||||||||
| Liabilities and Stockholders' Equity: |
||||||||||||||||||||||||
| Savings, NOW & money market deposits |
$ | 1,572,109 | 10,318 | 2.66 | $ | 1,534,081 | 10,083 | 2.64 | ||||||||||||||||
| Time deposits |
612,730 | 6,403 | 4.24 | 643,854 | 6,977 | 4.36 | ||||||||||||||||||
| Total interest-bearing deposits |
2,184,839 | 16,721 | 3.10 | 2,177,935 | 17,060 | 3.15 | ||||||||||||||||||
| Overnight advances |
6,322 | 71 | 4.55 | 18,846 | 263 | 5.61 | ||||||||||||||||||
| Other borrowings |
416,944 | 4,501 | 4.38 | 504,258 | 6,012 | 4.80 | ||||||||||||||||||
| Total interest-bearing liabilities |
2,608,105 | 21,293 | 3.31 | 2,701,039 | 23,335 | 3.47 | ||||||||||||||||||
| Checking deposits |
1,067,804 | 1,126,593 | ||||||||||||||||||||||
| Other liabilities |
35,260 | 40,014 | ||||||||||||||||||||||
| 3,711,169 | 3,867,646 | |||||||||||||||||||||||
| Stockholders' equity |
382,284 | 378,087 | ||||||||||||||||||||||
| $ | 4,093,453 | $ | 4,245,733 | |||||||||||||||||||||
| Net interest income (1) |
$ | 19,076 | $ | 18,416 | ||||||||||||||||||||
| Net interest spread (1) |
0.79 | % | 0.61 | % | ||||||||||||||||||||
| Net interest margin (1) |
1.91 | % | 1.79 | % | ||||||||||||||||||||
| (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 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 in each period presented, using the statutory federal income tax rate of 21%. |
Rate/Volume Analysis. The following table sets forth the effect of changes in volumes and rates on tax-equivalent interest income, interest expense and net interest income. The changes attributable to the combined impact of volume and rate have been allocated to the changes due to volume and the changes due to rate.
| Three Months Ended March 31, |
||||||||||||
| 2025 Versus 2024 |
||||||||||||
| Increase (decrease) due to changes in: |
||||||||||||
| Net |
||||||||||||
| (in thousands) |
Volume |
Rate |
Change |
|||||||||
| Interest Income: |
||||||||||||
| Interest-earning bank balances |
$ | (313 | ) | $ | (125 | ) | $ | (438 | ) | |||
| Investment securities: |
||||||||||||
| Taxable |
(653 | ) | (528 | ) | (1,181 | ) | ||||||
| Nontaxable |
(13 | ) | 8 | (5 | ) | |||||||
| Loans |
(581 | ) | 823 | 242 | ||||||||
| Total interest income |
(1,560 | ) | 178 | (1,382 | ) | |||||||
| Interest Expense: |
||||||||||||
| Savings, NOW & money market deposits |
235 | — | 235 | |||||||||
| Time deposits |
(352 | ) | (222 | ) | (574 | ) | ||||||
| Overnight advances |
(148 | ) | (44 | ) | (192 | ) | ||||||
| Other borrowings |
(991 | ) | (520 | ) | (1,511 | ) | ||||||
| Total interest expense |
(1,256 | ) | (786 | ) | (2,042 | ) | ||||||
| Decrease in net interest income |
$ | (304 | ) | $ | 964 | $ | 660 | |||||
Net Interest Income
Net interest income on a tax-equivalent basis for the three months ended March 31, 2025 was $19.1 million, an increase of $660,000, or 3.6%, from the same period of 2024. Net interest income increased when comparing the first quarters of 2025 and 2024 primarily due to a decrease in interest expense of $2.0 million which was partially offset by a $1.4 million decrease in interest income. The decrease in interest expense resulted from a combination of a 16 bps decrease in the cost of interest-bearing liabilities and a decrease in average interest-bearing liabilities of $92.9 million. The decrease in interest income resulted from interest-earning assets decreasing by $156.6 million offset by the yield on interest-earning assets increasing two bps. Net interest margin for the first quarter of 2025 was 1.91% compared to 1.79% for the same period of 2024.
Noninterest Income
Noninterest income includes BOLI, service charges on deposit accounts, gain or losses on sales of securities and all other items of income, other than interest, resulting from the business activities of the Corporation.
Noninterest income decreased $57,000, or 2.1%, when comparing the first quarters of 2025 and 2024 mainly due to 2024 nonrecurring items of $114,000 in real estate tax refunds, $60,000 in BOLI benefit payments, $50,000 in joint marketing fees and an additional one-time service charge cycle related to the Bank's core system conversion, which were partially offset by increases of $96,000 in merchant card service fees and $72,000 in BOLI accretion.
Income Taxes
Income tax expense increased $193,000 due to an increase in the effective tax rate from 6.2% in the first quarter of 2024 to 11.5% in the first quarter of 2025. The increase in the effective tax rate is mainly due to a decrease in the percentage of pre-tax income derived from the Bank’s REIT, increasing the state and local income tax due.
Critical Accounting Policies and Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported asset and liability balances and revenue and expense amounts. Our determination of the ACL on loans is a critical accounting estimate because it is based on our subjective evaluation of a variety of factors at a specific point in time and involves difficult and complex judgements about matters that are inherently uncertain. In the event that management’s estimate needs to be adjusted based on additional information that comes to light after the estimate is made or changes in circumstances, such adjustment could result in the need for a significantly different ACL and thereby materially impact, either positively or negatively, the Bank’s results of operations.
The Bank’s Allowance for Credit Losses Committee (“ACL Committee”), which is a management committee chaired by the Chief Credit Officer, meets on a quarterly basis and is responsible for determining the ACL after considering the results of credit reviews performed by the Bank’s independent loan review consultants and the Bank’s credit department. In addition, and in consultation with the Bank’s Chief Financial Officer, the ACL Committee is responsible for implementing and maintaining accounting policies and procedures surrounding the calculation of the required allowance. The Loan Committee of the Board reviews and approves the Bank’s loan policy at least once each calendar year. The Bank’s ACL is reviewed and ratified by the Loan Committee on a quarterly basis and is subject to periodic examination by the Office of the Comptroller of the Currency (“OCC”) whose safety and soundness examination includes a determination as to the adequacy of the allowance to absorb current expected credit losses.
The ACL is a valuation amount that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the Bank’s loan portfolio. The allowance is established through provisions for credit losses charged against income. When available information confirms that specific loans, or portions thereof, are uncollectible, these amounts are charged against the ACL, and subsequent recoveries, if any, are credited to the ACL.
Management estimates the ACL balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical loss information from the Bank’s own loan portfolio has been compiled since December 31, 2007 and generally provides a starting point for management’s assessment of expected credit losses. A historical look-back period that begins in 2007 covers an entire economic cycle and impacts the average historical loss rates used to calculate the final ACL. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as for current and potential future changes in economic conditions over a one year to two year forecasting horizon, such as unemployment rates, GDP, vacancy rates or other relevant factors. The immediate reversion method is applied for periods beyond the forecasting horizon. The ACL is an amount that management currently believes will be adequate to absorb expected lifetime losses in the Bank’s loan portfolio. The process for estimating credit losses and determining the ACL as of any balance sheet date is subjective in nature and requires material estimates and judgements. Actual results could differ significantly from those estimates.
The ACL is measured on a collective (pool) basis when similar risk characteristics exist. Management segregates its loan portfolio into distinct pools: (1) commercial and industrial; (2) small business; (3) multifamily; (4) owner-occupied; (5) other commercial real estate; (6) construction and land development; (7) residential mortgage; (8) revolving home equity; (9) consumer; and (10) municipal loans. The vintage method is applied to measure the historical loss component of lifetime credit losses inherent in most of its loan pools. For the revolving home equity and small business pools, the lifetime PD/LGD method is used to measure historical losses.
Management believes that the methods selected fairly reflect the historical loss component of expected losses inherent in the Bank’s loan portfolio. However, since future losses could vary significantly from those experienced in the past, on a quarterly basis management adjusts its historical loss experience to reflect current conditions and reasonable and supportable forecasts. In doing so, management considers a variety of Q-factors and then subjectively determines the weight to assign to each in estimating losses. The factors include: (1) changes in lending policies and procedures; (2) experience, ability and depth of lending staff; (3) trends in average loan growth and concentrations; (4) changes in the quality of the loan review function; (5) delinquencies; (6) environmental risks; (7) current and forecasted economic conditions as judged by things such as unemployment levels and GDP; (8) changes in the value of underlying collateral as judged by things such as median home prices and forecasted vacancy rates in the Bank’s service area; (9) rent regulation status of multifamily properties; and (10) direction and magnitude of risks in the portfolio. The Bank’s ACL allocable to its loan pools results primarily from these Q-factor adjustments to historical loss experience with the largest sensitivity of the ACL arising from loan growth, loan concentrations and economic forecasts of unemployment, GDP and vacancies. At March 31, 2025, the ACL was composed approximately 84% of Q-factors, 15% of historical losses and 1% reserves on individually evaluated loans. Because of the nature of the Q-factors and the difficulty in assessing their impact, management’s resulting estimate of losses may not accurately reflect lifetime losses in the portfolio.
Loans that do not share similar risk characteristics are evaluated on an individual basis. Such disparate risk characteristics may include internal or external credit ratings, risk ratings, collateral type, size of loan, effective interest rate, term, geographic location, industry or historical or expected loss pattern. Estimated losses for loans individually evaluated are based on either the fair value of collateral or the discounted value of expected future cash flows. For all collateral dependent loans evaluated on an individual basis, credit losses are measured based on the fair value of the collateral. In estimating the fair value of real estate collateral, management utilizes appraisals or evaluations adjusted for costs to dispose and a distressed sale adjustment, if needed. Estimating the fair value of collateral other than real estate is also subjective in nature and sometimes requires difficult and complex judgements. Determining expected future cash flows can be more subjective than determining fair values. Expected future cash flows could differ significantly, both in timing and amount, from the cash flows received over the loan’s remaining life. Individually evaluated loans are not included in the estimation of credit losses from the pooled portfolio.
Asset Quality
Information about the Corporation’s risk elements is set forth below. Risk elements include nonaccrual loans, other real estate owned, loans that are contractually past due 30 days or more and modifications made to borrowers experiencing financial difficulty. These risk elements present more than the normal risk that the Corporation will be unable to eventually collect or realize their full carrying value.
| March 31, |
December 31, |
|||||||
| (in thousands) |
2025 |
2024 |
||||||
| Loans including modifications to borrowers experiencing financial difficulty: |
||||||||
| Modified and performing according to their modified terms |
$ | 419 | $ | 421 | ||||
| Past due 30 through 89 days |
7,452 | 270 | ||||||
| Past due 90 days or more and still accruing |
— | — | ||||||
| Nonaccrual |
3,510 | 3,229 | ||||||
| 11,381 | 3,920 | |||||||
| Other real estate owned |
— | — | ||||||
| $ | 11,381 | $ | 3,920 | |||||
The disclosure of other potential problem loans can be found in “Note 4 – Loans” to the Corporation’s consolidated financial statements included in this Quarterly Report on Form 10-Q.
At March 31, 2025, commercial mortgages comprised $1.9 billion, or 61%, of total loans outstanding, with an average loan size of $2.4 million, a weighted average current loan-to-value (“LTV”) based on the most recent appraisal which may not be reflective of current values of 50.1% and a weighted average of the most recent debt service coverage ratio (“DSCR”) of 2.16x. Multifamily loans made up 44% of the commercial real estate portfolio, amounting to $840.7 million at March 31, 2025. Multifamily loans had an average loan size of $2.3 million, a weighted average current LTV based on the most recent appraisal which may not be reflective of current values of 50.0%, a weighted average of the most recent DSCR of 1.93x and 53.9% were majority rent regulated.
Allowance and Provision for Credit Losses
The ACL is established through provisions for credit losses charged against income. When available information confirms that specific loans, or portions thereof, are uncollectible, these amounts are charged off against the ACL, and subsequent recoveries, if any, are credited to the ACL.
The ACL remained stable at $28.3 million, or 0.89% of total loans, at March 31, 2025, compared to 0.88% of total loans at December 31, 2024. During the first quarter of 2025, the Bank had loan chargeoffs of $370,000, recoveries of $179,000 and recorded a provision for credit loss of $168,000. The ACL remained relatively flat when compared to year-end 2024 largely due to declines in historical loss rates and loan balances which were offset by an increase due to deterioration in current and forecasted economic conditions, including adjustments for economic uncertainty. During the first quarter of 2024, the Bank had loan chargeoffs of $664,000 and recoveries of $7,000. The Bank did not record a provision in the first quarter of 2024 as increases in Q-factors assessed to multifamily loans were offset by reductions in loan balances, reserves on individually evaluated loans and other Q-factors pertaining to home prices and concentrations of credit.
The ACL is an amount that management currently believes will be adequate to absorb expected lifetime losses in the Bank’s loan portfolio. As more fully discussed in “Critical Accounting Policies and Estimates,” the process for estimating credit losses and determining the ACL as of any balance sheet date is subjective in nature and requires material estimates and judgements. Actual results could differ significantly from those estimates. Other detailed information on the Bank’s loan portfolio and ACL can be found in “Note 4 – Loans” to the Corporation’s consolidated financial statements included in this Quarterly Report on Form 10-Q.
The amount of future chargeoffs and provisions for credit losses will be affected by economic conditions on Long Island and in the boroughs of NYC. Such conditions could affect the financial strength of the Bank’s borrowers and will affect the value of real estate collateral securing the Bank’s mortgage loans. Loans secured by real estate represent approximately 96% of the Bank’s total loans outstanding at March 31, 2025. The majority of these loans are collateralized by properties located on Long Island and in the boroughs of NYC. While business activity in the New York metropolitan area has improved, inflation, increasing interest rates and government regulation pose economic challenges and may result in higher chargeoffs and provisions.
Future provisions and chargeoffs could also be affected by environmental impairment of properties securing the Bank’s mortgage loans. At the present time, management is not aware of any environmental pollution originating on or near properties securing the Bank’s loans that would materially affect the carrying value of such loans.
Cash Flows and Liquidity
The $3.2 billion loan portfolio was comprised of $1.9 billion of commercial mortgages, $1.1 billion of residential mortgages and $134.1 million of commercial and industrial loans. Approximately $725.2 million, or 22.9%, will reprice by March 31, 2026, of which $300.0 million is related to the three-year interest rate swap transaction previously discussed. The Bank expects an additional $284.9 million, or 9.0%, of the loan portfolio to reprice from approximately 3.57% to 6.73% from March 31, 2026 to March 31, 2027 based on current rates. We expect approximately $353.8 million of cash inflows from the mortgage loan portfolio over the next twelve months.
Total deposits remained relatively flat at $3.3 billion during the first quarter of 2025, as compared to year-end 2024. Savings, NOW and money market deposits increased $12.9 million, or 0.8%, and time deposits increased $19.8 million, or 3.2% Noninterest-bearing checking deposits remained flat at $1.1 billion, or 32.6% of total deposits. Brokered time deposits increased $25.0 million during the first quarter of 2025, totaling $200.0 million, or 6.1%, of total deposits. Brokered time deposits had a weighted average cost of 4.65% and an average maturity of approximately 6 months, of which $68.5 million, or 34%, will mature in the second quarter of 2025 with an average cost of 4.79%. Reciprocal deposits under the Insured Cash Sweep program were $10.2 million at March 31, 2025.
There were no overnight advances at March 31, 2025 and December 31, 2024. Other borrowings decreased $75.0 million, or 17.2%, due to maturities during the first quarter of 2025, to $360.0 million at March 31, 2025. These maturities had a weighted average rate of 4.51%. Other borrowings at March 31, 2025 had a weighted average cost of 4.36% and an average maturity of 12 months.
Liquidity. The Bank has a board committee approved liquidity policy and liquidity contingency plan, which are intended to ensure that the Bank has sufficient liquidity to meet the ongoing needs of its customers in terms of credit and deposit outflows, take advantage of earnings enhancement opportunities and respond to liquidity stress conditions should they arise.
The Bank has both internal and external sources of liquidity that can be used to fund loan growth and accommodate deposit outflows. The Bank’s primary internal sources of liquidity are maturities and monthly payments from its investment securities and loan portfolios, operations and sales of investment securities designated as AFS.
The Bank is a member of the FRB of New York and the FHLB of New York and has a federal funds line with a commercial bank. In addition to customer deposits, the Bank’s primary external sources of liquidity are secured borrowings from the FRB of New York and FHLB of New York. In addition, the Bank can purchase overnight federal funds under its existing line. However, the Bank’s FRB of New York membership, FHLB of New York membership and federal funds line do not represent legal commitments to extend credit to the Bank. The amount that the Bank can potentially borrow is currently dependent on the amount of unencumbered eligible securities and loans that the Bank can use as collateral, the collateral margins required by the lenders, and percentage caps on borrowing capacity based on total assets. The Bank’s borrowing capacity may be adjusted by the FRB of New York or the FHLB of New York and may take into account factors such as the Bank’s tangible common equity ratio, collateral margins required by the lender or other factors. A possible future downgrade of securities and loans pledged as collateral could also impact the amount of available funding. Regulatory or strategic changes affecting the access to and availability of funding from the FHLB and FRB could adversely impact the Bank's liquidity.
The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards and appropriately provide for growth. The leverage ratios of the Corporation and the Bank at March 31, 2025 were 10.29% and 10.28%, respectively, and satisfies the well capitalized ratio requirements under the Prompt Corrective Action statutes.
The Corporation has a stock repurchase program under which it is authorized to purchase shares of its common stock from time to time through open market purchases, privately negotiated transactions, or in any other manner that is compliant with applicable securities laws. The stock repurchase program does not obligate the Corporation to purchase shares and there is no guarantee as to the exact number of shares that may be repurchased pursuant to this program, which is subject to market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity and other factors deemed appropriate. No shares were repurchased in the first quarter of 2025 and we do not expect to utilize the remainder of this authorization as the Merger Agreement prohibits us from engaging in additional share repurchases without the consent of ConnectOne.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Bank invests in interest-earning assets, which are funded by interest-bearing deposits and borrowings, noninterest-bearing deposits and capital. The Bank’s results of operations are subject to risk resulting from interest rate fluctuations generally and having assets and liabilities that have different maturity, repricing and prepayment/withdrawal characteristics. The Bank defines interest rate risk as the risk that the Bank's net interest income and/or economic value of equity (“EVE”) will change when interest rates change. The principal objective of the Bank’s asset liability management activities is to optimize current and future net interest income while at the same time maintain acceptable levels of interest rate and liquidity risk and facilitate the funding needs of the Bank.
The Bank monitors and manages interest rate risk through a variety of techniques including traditional gap analysis and the use of interest rate sensitivity models. Both gap analysis and interest rate sensitivity modeling involve a variety of significant estimates and assumptions and are done at a specific point in time. Changes in the estimates and assumptions made in gap analysis and interest rate sensitivity modeling could have a significant impact on projected results and conclusions. Therefore, these techniques may not accurately reflect the actual impact of changes in the interest rate environment on the Bank’s net interest income or EVE.
Through the use of interest rate sensitivity modeling, the Bank projects net interest income over a five-year period assuming a static balance sheet and no changes in interest rates from current levels. Utilization of a static balance sheet ensures that interest rate risk embedded in the Bank’s current balance sheet is not masked by assumed balance sheet growth or contraction. Net interest income is projected over a five-year time period utilizing various interest rate change scenarios, including both ramped and shocked changes as well as changes in the shape of the yield curve. The interest rate scenarios modeled are based on the shape of the current yield curve and the relative level of rates and management’s expectations as to potential future yield curve shapes and rate levels.
The Bank also uses interest rate sensitivity modeling to calculate EVE in the current rate environment assuming shock increases and decreases in interest rates. EVE is the difference between the present value of expected future cash flows from the Bank’s assets and the present value of the expected future cash flows from the Bank’s liabilities. Present values are determined using discount rates that management believes are reflective of current market conditions. EVE can capture long-term interest rate risk that would not be captured in a five-year projection of net interest income.
The rate change information in the following table shows estimates of net interest income for the year ending March 31, 2026 and calculations of EVE at March 31, 2025 assuming rate changes of plus and minus 100, 200 and 300 bps. The rate change scenarios were selected based on the relative level of current interest rates and: (1) are assumed to be shock or immediate changes for both EVE and net interest income; (2) occur uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities; and (3) impact the repricing and reinvestment of all assets and liabilities, except nonmaturity deposits, by the full amount of the rate change. In projecting future net interest income under the indicated rate change scenarios, activity is simulated by assuming that cash flows from maturing assets and liabilities are reinvested in a mix of assets and liabilities that is intended to reflect a static balance sheet. The changes in EVE from the base case have not been tax affected.
| Economic Value of Equity |
Net Interest Income for |
|||||||||||||||
| at March 31, 2025 |
Year Ending March 31, 2026 |
|||||||||||||||
| Percent Change |
Percent Change |
|||||||||||||||
| From |
From |
|||||||||||||||
| Rate Change Scenario (dollars in thousands) |
Amount |
Base Case |
Amount |
Base Case |
||||||||||||
| + 300 basis point rate shock |
$ | 385,050 | -23.8 | % | $ | 75,994 | -10.0 | % | ||||||||
| + 200 basis point rate shock |
421,972 | -16.5 | % | 78,723 | -6.8 | % | ||||||||||
| + 100 basis point rate shock |
466,292 | -7.8 | % | 81,825 | -3.1 | % | ||||||||||
| Base case (no rate change) |
505,507 | — | 84,440 | — | ||||||||||||
| - 100 basis point rate shock |
540,612 | 6.9 | % | 86,720 | 2.7 | % | ||||||||||
| - 200 basis point rate shock |
558,040 | 10.4 | % | 87,872 | 4.1 | % | ||||||||||
| - 300 basis point rate shock |
563,110 | 11.4 | % | 88,226 | 4.5 | % | ||||||||||
As shown in the preceding table, assuming a static balance sheet, an immediate increase in interest rates of 100, 200 or 300 bps could negatively impact the Bank’s net interest income for the year ended March 31, 2026 because the Bank might need to increase the rates paid on its nonmaturity deposits to remain competitive and any time deposits or borrowings that mature would reprice at a higher interest rate. In addition, the Bank’s securities portfolio, excluding corporate bonds and SBA agency obligations, and a large portion of its loan portfolio do not immediately reprice with changes in market rates. At March 31, 2025, approximately $934.5 million of the Bank's loans and securities, or 24.7% of total assets, reprice or mature within one year. An immediate decrease in interest rates of 100, 200 or 300 bps could positively impact the Bank’s net interest income for the same time period because the Bank would pay less for time deposits or borrowings that mature and reprice at a lower interest rate and would be able to reduce nonmaturity deposit rates while the downward repricing of its assets would lag. The positive impact on net interest income of an immediate decrease in interest rates is somewhat constrained because the decrease is assumed to occur uniformly across the inverted yield curve. Changes in management’s estimates as to the rates that will need to be paid on nonmaturity deposits could have a material impact on the net interest income amounts shown for each scenario in the table.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated into it by reference contain or may contain various forward-looking statements. These forward-looking statements include statements of goals; intentions and expectations; estimates of risks and of future costs and benefits; assessments of expected future credit losses; assessments of market risk; and statements of the ability to achieve financial and other goals. Forward-looking statements are typically identified by words such as “would,” “should,” “could,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties which may change over time. Forward-looking statements speak only as of the date they are made. We do not assume any duty and do not undertake to update our forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that we anticipated in our forward-looking statements and future results could differ materially from historical performance.
Our forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; fluctuations in the trading price of our common stock; changes in interest rates and the rate of inflation; changes in the shape of the yield curve; changes in deposit flows, and in the demand for deposit and loan products and other financial services; our ability to maintain liquidity, including the percentage of uninsured deposits in our portfolio; changes in real estate values; changes in the quality or composition of our loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; our ability to retain key members of management; changes in legislation, regulation, and policies; changes in domestic or international governmental policies, including the imposition of tariffs; and a variety of other matters which, by their nature, are subject to significant uncertainties. As the result of the proposed merger with ConnectOne, forward-looking statements are also subject to the following additional risks: expenses related to our proposed merger with ConnectOne, unexpected delays related to the merger, required regulatory approvals not being obtained or a failure to satisfy other customary closing conditions required to complete the merger. We provide greater detail regarding some of these factors in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024, in Part I under “Item 1A. Risk Factors.” Our forward-looking statements may also be subject to other risks and uncertainties, including those that we may discuss elsewhere in other documents we file with the Securities and Exchange Commission ("SEC") from time to time.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Corporation’s Principal Executive Officer and Principal Financial Officer have evaluated the Corporation’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report. Based upon that evaluation, they have concluded that the Corporation’s disclosure controls and procedures are effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting that occurred during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
From time to time, the Corporation and its subsidiaries are involved in various legal actions and claims arising in the normal course of its business. In the opinion of management, these legal actions and claims are not expected to have a material adverse impact on the Corporation's financial condition and results of operations.
There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors, in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Stock Repurchases. The Corporation's Board of Directors approved a $30 million common stock repurchase program that was announced on January 31, 2022, pursuant to which the Corporation is authorized to purchase shares of its common stock from time to time through open market purchases, privately negotiated transactions, or in any other manner that is compliant with applicable securities laws. The Corporation did not repurchase any shares in the first quarter of 2025 and we do not expect to utilize the remainder of this authorization as the Merger Agreement prohibits us from engaging in additional share repurchases without the consent of ConnectOne. See “Note 8 – Business Combination” to the Corporation’s consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
(c) Securities Trading Plan of Directors and Executive Officers
During the three months ended March 31, 2025, of the directors or executive officers of the Corporation adopted or terminated any contract, instruction or written plan for the purchase or sale of the Corporation's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement," as that term is used in SEC regulations.
See Index of Exhibits that follows.
INDEX OF EXHIBITS
| Exhibit No. |
Description of Exhibit |
| 31.1 |
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) |
| 31.2 |
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) |
| 32 |
|
| 101 |
The following materials from the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements. |
| 104 |
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) |
Pursuant to the requirements of Section l3 or l5(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| THE FIRST OF LONG ISLAND CORPORATION |
||
| (Registrant) |
||
| Dated: May 1, 2025 |
By /s/ CHRISTOPHER BECKER |
|
| Christopher Becker, President & Chief Executive Officer |
||
| (principal executive officer) |
||
| By /s/ JANET T. VERNEUILLE |
||
| Janet T. Verneuille, Senior Executive Vice President, |
||
| Chief Financial Officer & Treasurer |
||
| (principal financial officer) |