The First of Long Island
Annual Report 2023

Plain-text annual report

Great Relationships Strong Fundamentals 2023 Annual Report Selected Financial Data(dollars in thousands, except per share data)Income Statement Data20232022202120202019Interest Income$155,483 $134,210 $122,959 $131,216 $143,850 Interest Expense 68,618 18,497 16,152 29,188 43,681 Net Interest Income 86,865 115,713 106,807 102,028 100,169 Provision (Credit) for Credit Losses (326) 2,331 (2,573)3,006 33 Net Income 26,239 46,932 43,089 41,203 41,555 Per Share DataBasic Earnings$1.16 $2.05 $1.82 $1.73 $1.68 Diluted Earnings 1.16 2.04 1.81 1.72 1.67 Cash Dividends Declared 0.84 0.82 0.78 0.74 0.70 Dividend Payout Ratio72.41%40.20%43.09%43.02%41.92%Book Value$16.83 $16.24 $17.81 $17.11 $16.26 Balance Sheet Data at Year EndTotal Assets$4,235,900 $4,281,511 $4,068,789 $4,069,141 $4,097,843 Loans 3,248,064 3,311,733 3,105,036 3,033,454 3,188,249 Allowance for Credit Losses 28,992 31,432 29,831 33,037 29,289 Deposits 3,270,986 3,464,634 3,315,245 3,321,588 3,144,016 Borrowed Funds 542,500 411,000 311,322 306,097 528,182 Stockholders’ Equity 380,146 364,536 413,812 407,118 389,108 Average Balance Sheet DataTotal Assets$4,235,989 $4,247,052 $4,151,577 $4,140,867 $4,194,355 Loans 3,260,903 3,276,589 2,976,061 3,110,512 3,217,530 Allowance for Credit Losses 30,291 30,604 31,300 33,180 30,080 Deposits 3,431,990 3,536,709 3,425,976 3,257,317 3,276,699 Borrowed Funds 397,928 289,584 281,191 457,939 494,785 Stockholders’ Equity 367,496 386,839 416,885 393,662 391,613 Financial RatiosReturn on Average Assets (ROA)0.62%1.11%1.04%1.00%0.99%Return on Average Equity (ROE)7.14%12.13%10.34%10.47%10.61%Average Equity to Average Assets8.68%9.11%10.04%9.51%9.34% vested dividualized dispensible First National Bank LI works on a mission of continually doing the right thing to help our customers, employees and shareholders succeed while being socially accountable to the communities we serve. A true financial partner, 1N is committed to making a meaningful impact on these stakeholders through our ethical intent and strong business practices. We believe these efforts create long-term, sustainable value for our shareholders, clients, employees and communities. About Us The First of Long Island Corporation (Nasdaq: FLIC) is the parent company of The First National Bank of Long Island, a local bank founded in 1927 in Glen Head, New York. Through our branch network branded as First National Bank LI, the Bank focuses on business and consumer bank needs on Long Island and in New York City. We offer a broad set of lending, deposit, investment and digital products. First National Bank LI is known for its culture of delivering extraordinary service and a “Customer First” banking experience to small and middle market businesses, professional service firms, not-for-profits, municipalities and consumers. The Bank’s tagline “Go First. Go Far.®“ communicates the benefits of relationship service and our employees’ commitment to helping customers reach their financial goals. For more information about the Bank and Corporation visit fnbli.com. 1 First of Long Island Corporation 2023 Annual Report 1 2023 Annual Report 32 First of Long Island CorporationThe events and conditions of 2023 necessitated a focus on liquidity, capital and asset quality industrywide, and I’m happy to report that our Company is well-positioned in these areas. An inverted yield curve, as the one experienced throughout 2023, resulting from the Fed moving short-term rates up to the mid 5’s is unusual and largely unkind to the banking industry’s net interest margins. The shape of the curve in 2023 combined with The First National Bank of Long Island’s liability-sensitive Balance Sheet resulted in a 74-basis point drop in our net interest margin to 2.16% in 2023 from 2.89% in 2022. Net income and fully diluted earnings per share for 2023 totaled $26.2 million and $1.16, respectively. The Company’s return on average assets (ROA) was 0.62% and its return on average equity (ROE) was 7.14%. Owing primarily to the aforementioned margin compression, the metrics for 2023 did not match up to the record Fellow Shareholders dispensible business partner “ Our leadership team is focused on business growth through efficiency...” net income and fully diluted earnings per share performance the Bank produced in 2022 of $46.9 letter. The good news is that inverted yield curves historically last approximately eighteen months. With interest rates beyond our control, we remain focused on our primary strategic initiatives as follows: • Recruit bankers that build relationship business. • Structure the Balance Sheet to optimize financial performance. • Optimize the current and prospective branch network. million and $2.04, respectively. In 2022, ROA was 1.11% • Improve the quality and utilization of technology. and ROE was 12.13%. Noninterest expenses were managed carefully and were 4.4% lower in 2023 totaling $64.1 million compared to $67.0 million in 2022. • Improve the Company’s name recognition and community standing. • Attract, retain and motivate employees that Interest rates and the slope of the yield curve will support our objectives. eventually change. A historically normal upward- shaped yield curve is expected to benefit the Bank and allow our performance metrics to return to historical norms. The yield curve inversion between the two-year and ten-year Treasuries started in July 2022 and remains so through the drafting of this 1N celebrated the ribbon cutting of three Branch relocations in Bohemia, Hauppauge and Port Jefferson. The new locations offer an improved customer experience through the upgrade or addition of 24-hour ATMs, drive-ups (where applicable) and expanded on-site parking. With that in mind, during 2023 we added deposit gathering bankers in several markets and celebrated the relocation of three legacy branches. Our branch optimization plan has resulted in the closing of 15 branches since 2020, which has reduced annual operating expenses by approximately $5 million. To expand our reach on Long Island, we successfully opened three branches on the East End over the same period with those branches attracting $119 million in new deposit relationships of which 41% is in noninterest-bearing checking accounts as of year- end 2023. We plan to open a branch on Long Island’s North Fork in Southold during the second quarter of 2024, which will complete our initial expansion plan on the East End. Our leadership team is focused on business growth through efficiency – providing the right number of branches, in the right locations, with the right people to best serve our clients, communities and shareholders. 2 First of Long Island Corporation 2023 Annual Report 3 Liquidity $425,133 $262,358 Cash & Unencumbered Securities ($ in thousands) 2022 2023 Capital 9.83% 10.05% 8.51% 8.97% 2022 2023 2022 2023 Leverage Capital Ratio Tangible Capital Ratio dividualized service “ Our loyal customers appreciate the stability of our Bank.” Large regional bank failures and short-term Treasury yields not seen since prior to the Great Recession caused some deposit market disruption in 2023. I am proud that average total deposits held steady at $3.4 billion during 2023. That compares to average total deposits in 2022 of $3.5 billion. Noninterest- bearing checking deposits still represent 35% of total deposits highlighting the relationship focus in our deposit mix. As markets settle and rates stabilize, we believe our banking teams will capitalize on the constantly shifting banking landscape in our market area. Our loyal customers appreciate the stability of our Bank, and we believe the same is desired by our target markets of small and middle market businesses, professional service firms, not-for-profits, municipalities and service-conscience consumers. Asset Quality 0.20% 0.15% 0.10% 0.05% 0.00% 2019 2020 2021 2022 2023 NPL / Total Loans 0.03% 0.04% 0.04% 0.00% 0.03% NCO / Average Loans 0.05% 0.07% 0.02% 0.02% 0.06% This device allows participating customers to walk into any of our branches and hover their hand over the scanning surface, verifying client identity within seconds. *Data as of December 31 4 First of Long Island Corporation 2023 Annual Report 5 Coming Soon Our Branches ●  Manhattan ●  Brooklyn ●  Queens ●  Nassau County ●  Suffolk County Management proactively completed two balance I cannot thank them enough for their outstanding sheet repositioning transactions during the year to work and dedication to this project. We believe our help reduce our sensitivity to rising interest rates. new best-in-class systems will enhance customer In March, the Bank entered into an interest rate experience and provide our bankers with the tools swap to convert $300 million of fixed rate residential needed to service our clients and generate new mortgage loans to floating rate for a period of 3 relationship-based business. years. During 2023, this transaction added $3.1 million to pre-tax earnings. Also in March, the Bank sold $149 million in fixed rate municipal securities and purchased a similar dollar amount of floating rate SBA securities. The Bank recognized a $3.5 million pre-tax loss and earned back approximately $2.7 million of the pre-tax loss through year end 2023. As we ended 2023, these two transactions were generating approximately $2.2 million in quarterly pre-tax earnings above what would have been earned without these moves. build g relationships “ We believe our new best-in-class systems will enhance customer experience...” The transition to a more commercially focused institution that began in 2020 continued to make progress in 2023 thanks to the hard work by our Our planned technology upgrades were completed commercial lending teams and their branch partners. over the first weekend of February 2024. New A key component of this objective is growing our technology includes Fiserv’s DNA core processing commercial and industrial loan and owner-occupied system, business online banking, business mobile mortgage business. This combined portfolio has app, branch platform and teller systems, biometrics increased from $223 million at the beginning of 2020 identification and numerous paper-eliminating to $350 million at the end of 2023. While the pace of efficiencies. Our team has been working on growth in this area slowed in 2023 to 6.3%, it has still implementing these new systems for 18 months. exceeded 12% per year on average since 2020. 4 First of Long Island Corporation 2023 Annual Report 5 Deposits $912 29.0% $1,133 34.6% 2021 2019 2022 2023 Checking Deposits ($ in millions) Ratios: Non-interest bearing checking deposits/ total deposits Loans $350 $223 C&I and Owner Occupied Commercial Mortgages ($ in millions) 2021 2019 2023 2022 $1,681 $1,211 Residential Mortgages ($ in millions) 2019 2023 *Data as of December 31 6 First of Long Island Corporation Mortgage customers now benefit from expanded purchase and refinance products, including low down payment options and closing cost incentives, all using Rocket Mortgage’s streamlined online application process. Visit fnbli.com/mortgage to learn more. Our total commercial loan portfolio has grown from $1.5 billion to $2.0 billion over the past four years. Offsetting the success of this management team’s commercial transition has been the legacy residential mortgage business. Since year end 2019, our management team has allowed the portfolio to paydown by $454 million, which has disguised our success in growing the commercial portfolio as outlined in the previous paragraph. In 2023, the Bank announced a new co-marketing referral agreement with Rocket Mortgage®, the nation’s leading mortgage lender. As a result of this new relationship, we eliminated the need for a residential mortgage department saving nearly $1 million in annual noninterest expense going forward, while expanding financing options and benefits for our customers. The support of a strong marketing team sets the tone for our key initiatives. We continue to get compliments on the fresh look of our branding at new and relocated branch locations. Many of our existing locations have also received facelifts to five- star reviews. Our new social media and refreshed 2023 Annual Report 7 lead g local lender “ Our total commercial loan portfolio has grown from $1.5 billion to $2.0 billion over the past four years.” traditional media advertising has been recognized by customers and prospects with positive feedback. In particular, our new “Meet the Bankers” series on social media was a big hit in 2023. I am proud to say key aspects of our transformation strategy which began in 2020 are largely in the rearview. The Bank has a fresh look, top notch technology, innovative partnerships replace legacy stalemate business lines, a more efficient branch network, bankers focused on commercial relationship growth, a proven history of strong asset quality all of which is underpinned by a strong capital position with leverage and tangible capital ratios of 10.05% and 8.97%, respectively. Combined with optimism about short-term rates moving lower, especially for a Bank that remains generally liability-sensitive, we enter 2024 with a bright outlook for the future. Before closing, I would like to recognize a few people for their many contributions over the years. After five years as our Chief Investment Officer and four years as our Chief Financial Officer, Jay McConie has decided to step away from day-to-day management. He has been a key executive partner in many of the initiatives discussed in this letter and prior communications. I thank him for his tremendous efforts and dedication to the Company over these past 9 years. We have two director retirements in 2024. Alexander L. Cover will retire effective April 16, 2024, after 20-years of service on our Board of Directors. He was a long-time Chair of our Audit Committee. Alex joined the Board of Directors after a distinguished career in public accounting with Ernst & Young LLP. Stephen V. Murphy retired effective January 31, 2024, after 18-years of service on our Board of Directors. He was a long-time Chair of our Board Loan Committee prior to becoming a long-time Chair of our Board Asset Liability Committee. Steve was a career investment banker specializing in financial institutions. Both gentlemen worked tirelessly as committee chairs and board members to assure the proper oversight of our Company. Their combined experience made them a formidable duo and their contributions to the Board will be missed. On behalf of the Board of Directors, Management and staff, thank you both for your many years of dedicated service and valuable insight. Also, thank you to all directors for bringing their unique perspectives to the governance of our Company. Thank you to our customers and employees who are the reason we continue to succeed. Lastly, I want to reassure our loyal shareholders that the Board of Directors and Management Team are focused on returning to our historical performance metrics and making the right decisions to maximize future shareholder returns. Sincerely, Christopher Becker President and Chief Executive Officer 6 First of Long Island Corporation 2023 Annual Report 7 ➊ ➋ vested in our community Our Impact 1 1,425+ Hours of Volunteerism. Includes hands-on service and professional guidance For more than 95 years, 1N has remained committed to local service and goodwill. This has been achieved through a combination of monetary donations and hands-on volunteerism, which has fostered a meaningful connection and equity between our employees and the communities we serve with pride. ➊  New York Blood Center ➋  9-1-1 Veterans Turkeys for Vets Blood Drive The Bank is proud to support The Blue Crew hosted its first ever 9-1-1 Veterans, a small not-for-profit on-site Blood Drive in Melville, partnering with New York Blood organization assisting those who have served and are serving in the United Center for a day of donations. Team States Military through financial members from across the Bank assistance, food and clothing. Team network also donated at area blood members assisted with its 11th Annual centers during the month of June. Turkeys for Vets Thanksgiving event, Together, we donated over 58 pints of hosted at the VFW of Lindenhurst. blood for use in area hospitals. Five hundred frozen turkeys were provided with all the trimmings, benefitting local Veterans and local VFW’s across Long Island. 8 First of Long Island Corporation 2023 Annual Report 9 Our Impact 1 1,425+ Hours of Volunteerism. Includes hands-on service and professional guidance ➌ ➍ ➎ 146 Organizations touched by 1N through volunteerism and monetary support 117 Community Development & Reinvestment Loans Issued $23.6 Million Extended in Community Development & Reinvestment Lending ➌  Oceanside Senior Center ➍  Harry Chapin Community Garden ➎  COVE Animal Shelter With this annual event at Oceanside Members of our Commercial Lending Our #1NTeam spent time at Senior Center, members of our branch team spent the afternoon with COVE Animal Shelter in Glen network and Branch Administration Long Island Cares at Harry Chapin Cove, walking many of the dogs staff enjoy an afternoon of food, bingo Community Garden, cleaning up available for adoption, playing with and good company. Our team starts the garden beds and harvesting cats, cleaning the facilities and out the morning greeting seniors as vegetables. 1N helped build the raised assisting with laundry. Our team they arrive, play several rounds of beds of the community garden in was lucky to witness another bingo, and participate in a stretch 2022, creating a space that allows adoption while volunteering. before helping to serve lunch to all of local communities to have access to the senior center’s guests. fresh produce for years to come. 8 First of Long Island Corporation 2023 Annual Report 9 12023 Data based on lending data, volunteerism efforts and philanthropic contributions Consolidated Balance Sheets December 31 (dollars in thousands) 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 Short-term borrowings Long-term debt Operating lease liability Accrued expenses and other liabilities Stockholders' Equity: Common stock, par value $.10 per share: Authorized, 80,000,000 shares; Issued and outstanding, 22,590,942 and 22,443,380 shares Surplus Retained earnings Accumulated other comprehensive loss, net of tax 2023 2022 $ 60,887 695,877 $ 74,178 673,413 116,163 108,493 1,919,714 1,166,887 44,070 1,230 3,248,064 (28,992) 1,916,493 1,240,144 45,213 1,390 3,311,733 (31,432) 3,219,072 3,280,301 32,659 31,414 22,588 114,045 10,740 28,996 19,622 26,363 31,660 23,952 110,848 11,049 31,124 18,623 $ 4,235,900 $ 4,281,511 $ 1,133,184 1,546,369 591,433 $ 1,324,141 1,661,512 478,981 3,270,986 70,000 472,500 24,940 17,328 3,464,634 – 411,000 25,896 15,445 3,855,754 3,916,975 2,259 79,728 355,887 437,874 (57,728) 2,244 78,462 348,597 429,303 (64,767) 380,146 364,536 $ 4,235,900 $ 4,281,511 10 First of Long Island Corporation 2023 Annual Report 11 Consolidated Statements of Income Year Ended December 31 (dollars in thousands, except per share data) Interest and dividend income: Loans Investment securities: Taxable Nontaxable Interest expense: Savings, NOW and money market deposits Time deposits Short-term borrowings Long-term debt Net interest income Provision (credit) for credit losses 2023 2022 2021 $ 127,866 $ 116,352 $ 106,266 22,663 4,954 9,795 8,063 8,162 8,531 155,483 134,210 122,959 32,164 19,267 950 16,237 7,180 5,296 1,207 4,814 4,414 5,712 1,427 4,599 68,618 18,497 16,152 86,865 (326) 115,713 2,331 106,807 (2,573) Net interest income after provision (credit) for credit losses 87,191 113,382 109,380 Noninterest income: Bank-owned life insurance Service charges on deposit accounts Net gain (loss) on sales of securities Gain (loss) on disposition of premises and fixed assets Other Noninterest expense: Salaries and employee benefits Occupancy and equipment Debt extinguishment Other Income before income taxes Income tax expense Net income Earnings per share: Basic Diluted Cash dividends declared per share 3,197 3,034 (3,489) 240 3,354 3,017 3,157 – (553 ) 6,242 2,399 2,925 1,104 – 6,146 6,336 11,863 12,574 37,373 13,140 – 13,546 41,096 13,407 – 12,523 39,753 15,338 1,021 12,535 64,059 67,026 68,647 $ $ 29,468 3,229 26,239 1.16 1.16 0.84 58,219 11,287 53,307 10,218 $ $ $ $ 46,932 2.05 2.04 0.82 43,089 1.82 1.81 0.78 10 First of Long Island Corporation 2023 Annual Report 11 The First of Long Island Corporation and The First National Bank of Long Island Board of Directors Christopher Becker President & Chief Executive Officer of The First National Bank of Long Island and The First of Long Island Corporation Walter C. Teagle III Chairman of the Board, The First of Long Island Corporation and The First National Bank of Long Island; President and Owner, Teagle Management, Inc. (Private Investment Firm) Eric J. Tveter Former CEO of Central Europe Liberty Global plc. Officers Paul T. Canarick President & Principal of Paul Todd, Inc. (Construction Company) Christopher Becker President & Chief Executive Officer of the Corporation and the Bank J. Abbott R. Cooper Attorney, Abbott Cooper PLLC; Founder and managing member of Driver Management Company LLC Alexander L. Cover Business & Management Consultant Retired Partner of Ernst & Young LLP John J. Desmond Retired Partner of Grant Thornton LLP Edward J. Haye Partner at Cullen and Dykman LLP; Former Chief Regulatory Counsel for American Water Works Company, Inc. Louisa M. Ives Managing Director of Chilton Trust Peter Quick Retired Denise Strain Retired Managing Director, Senior Tax Counsel, Citigroup Inc. Milbrey Rennie Taylor Retired Executive Producer of CBS News Senior Executive Vice Presidents Christopher Hilton Chief Lending Officer Janet T. Verneuille, CPA Chief Financial Officer, Treasurer of the Corporation and Cashier of the Bank Executive Vice Presidents Tanweer S. Ansari, Esq Chief Risk Officer & General Counsel Richard P. Perro Chief Retail Officer Susanne Pheffer Chief Information Officer Michael J. Spolarich Chief Credit Officer Senior Vice Presidents Diane Beck Director of Program Management Jacqueline Brown Branch District Manager Robert Colosa Chief Auditor Richard Corrado Director of Commercial Lending Operations Margaret M. Curran-Rusch Middle Market Team Leader Maria Doyle, CPA Controller of the Corporation and the Bank Seamus Doyle South Fork Team Leader – Commercial Lending Brian Emigholz SVP - Business Banking Team Leader John Fitzpatrick CRE Relationship Manager Rose Florio-Campanaro Loan Operations Manager Robert Grady Director of Middle Market Lending Lou Iacucci Middle Market Relationship Manager Kelly McCormack Credit Department Manager Richard O’Rourke CRE Team Leader Jane F. Reed Senior Commercial Lending Officer Angela Reese Branch District Manager Kenneth B. Ruland II Middle Market Team Leader Matthew Ruppert Senior Credit Officer Shannon Shakespeare Chief Human Resources Officer Thomas Sullivan Middle Market Banking Leonardo Tavera Corporate Planning Officer Antoinette Valente Branch District Manager 12 First of Long Island Corporation Business Advisory Board Vincent A. Albanese Partner Albanese & Albanese LLP Barry Berg, CPA Consultant Bernard Esquenet CEO The Ruhof Corporation Kevin J. Harding Partner Harding and Burke, PLLC James D. Kiley Partner Kiley, Kiley & Kiley, PLLC Our Branches Manhattan 232 Madison Avenue Brooklyn Bay Ridge Cobble Hill Queens Astoria Bay Terrace College Point Howard Beach Whitestone Sal J. Turano President Abstracts Incorporated Candy Udell President London Jewelers Mark Udell CEO London Jewelers Mark Wurzel President Calico Cottage Inc. John Martinelli Principal Owen Petersen & Co., LLP Susan Hirschfeld Mohr President J.W. Hirschfeld Agency, Inc. John G. Passarelli, M.D. Managing Partner Sight Medical Doctors, PLLC Arthur C. Schupbach Partner Schupbach, Williams & Pavone LLP Frank Shahery Director of Marketing Convermat Corporation H. Craig Treiber CEO Treiber Family Enterprises Nassau County Suffolk County Bayville East Meadow Garden City Glen Head Great Neck Greenvale Hewlett Hicksville Lake Success Locust Valley Massapequa Merrick Rockville Centre Roslyn Heights Valley Stream Woodbury Babylon Bohemia East Hampton East Islip East Setauket Hauppauge Huntington Lindenhurst Melville Northport Patchogue Port Jefferson Riverhead Sayville Smithtown Southampton Southold (Coming Soon) Corporate Office The First of Long Island Corporation 275 Broad Hollow Road Suite 200 Melville, NY 11747 (516) 671-4900 www.fnbli.com Transfer Agent and Registrar Continental Stock Transfer & Trust Company 1 State Street, 30th Floor New York, New York 10004 (212) 509-4000 www.continentalstock.com 

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