The First of Long Island

 
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
 
FORM 10-K
 
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended
 December 31, 2024
 
OR
 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ____ to ____
 
Commission file number 001-32964
 
THE FIRST OF LONG ISLAND CORPORATION
(Exact Name Of Registrant As Specified In Its Charter)
 
New York
11-2672906
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
 
 
 275 Broadhollow Road, Melville, NY
11747
(Address of Principal Executive Offices)
(Zip Code)
 
(516) 671-4900
(Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common stock, $0.10 par value per share
FLIC
Nasdaq
 
 
Securities registered pursuant to Section 12(g) of the Act:
 
None
(Title of class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐   No ☒
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐   No ☒
 
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
requirement for the past 90 days.     Yes ☒   No ☐
 
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).
    Yes ☒   No ☐
 

Table of Contents
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐  
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company ☐
 
Emerging growth 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.  ☒
 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐  
 
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes ☐   No ☒
 
The aggregate market value of the Corporation’s voting common stock held by nonaffiliates as of June 30, 2024, the last business day of the Corporation’s
most recently completed second fiscal quarter, was $213.4 million. This value was computed by reference to the price at which the stock was last sold on
June 30, 2024 and excludes $12.2 million representing the market value of common stock beneficially owned by directors and executive officers of the
registrant.
 
As of March 7, 2025, the registrant had 22,635,334 of shares of common stock, $0.10 par value per share, outstanding.
 
 

Table of Contents
 
TABLE OF CONTENTS
 
PART I
ITEM 1.
Business
1
ITEM 1A.
Risk Factors
9
ITEM 1B.
Unresolved Staff Comments
19
ITEM 1C.
Cybersecurity
19
ITEM 2.
Properties
19
ITEM 3.
Legal Proceedings
20
ITEM 4.
Mine Safety Disclosures
20
PART II
 
 
ITEM 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
20
ITEM 6.
Reserved
21
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
37
ITEM 8.
Financial Statements and Supplementary Data
40
ITEM 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
81
ITEM 9A.
Controls and Procedures
81
ITEM 9B.
Other Information
81
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspection
81
PART III
 
 
ITEM 10.
Directors, Executive Officers and Corporate Governance
82
ITEM 11.
Executive Compensation
86
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
104
ITEM 13.
Certain Relationships and Related Transactions and Director Independence
105
ITEM 14.
Principal Accountant Fees and Services
105
PART IV
 
 
ITEM 15.
Exhibits and Financial Statement Schedules
107
ITEM 16.
Form 10-K Summary
107
 
INDEX OF EXHIBITS
108
 
SIGNATURES
109
 
 

Table of Contents
 
 
PART I
 
ITEM 1. BUSINESS
 
General
 
The First of Long Island Corporation (“Registrant”), a one-bank holding company, was incorporated on February 7, 1984 for the purpose of providing
financial services through its wholly-owned subsidiary, The First National Bank of Long Island. The consolidated entity is referred to as the "Corporation,"
and the Bank and its subsidiaries are collectively referred to as the "Bank."
 
The Bank was organized in 1927 as a national banking association under the laws of the United States of America. 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.
 
All the financial operations of the Corporation are aggregated in one reportable operating segment. All revenues are attributed to and all long-lived assets
are located in the United States.
 
The Bank’s revenues are derived principally from interest on loans and investment securities, service charges and fees on deposit accounts and bank-owned
life insurance (“BOLI”).
 
The Bank did not commence, abandon or significantly change any of its lines of business during 2024.
 
Recent Developments
 
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 0.5175 shares of ConnectOne common stock for each share of the Corporation's common stock (the
“merger consideration”). The Corporation held a special meeting of shareholders on February 14, 2025  at which time the Corporation's shareholders
approved the Merger Agreement and the transactions contemplated thereunder. The merger remains subject to the receipt of certain regulatory approvals
and the satisfaction of other customary closing conditions. The Corporation expects the transaction to close in the second quarter of 2025. 
 
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, which is attached to this Annual Report on Form 10-K as Exhibit 2.1. 
 
Litigation. 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 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 $11.1 million, the net amount of funds involved in the suspicious wire transfer activity. The Corporation and Bank intend to
vigorously defend against the lawsuit.
 
Markets Served and Products Offered
 
The Bank serves the financial needs of small to  middle market  businesses, professional service firms, not-for-profits, municipalities and consumers
primarily in Nassau and Suffolk Counties of Long Island, and the boroughs of New York City (“NYC”). The Bank has 37 branch locations including
16 branches in Nassau, 16 in Suffolk, three in Queens, one in Brooklyn and one in Manhattan. During 2024, the Bank closed and consolidated four
branches within its footprint and opened one branch in eastern Suffolk County. The Bank continues to evaluate the strategic placement of its branch
network and invests in digital channels to best serve customer demand both within and beyond its physical locations.
 
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The Bank’s loan portfolio is primarily comprised of loans to borrowers on Long Island and in the boroughs of NYC, and its real estate loans are principally
secured by properties located in those areas. The Bank’s investment securities portfolio is comprised of direct obligations of the U.S. government and its
agencies, obligations of the Small Business Administration ("SBA"), corporate bonds of large U.S. financial institutions and highly rated obligations of
states and political subdivisions.
 
The Bank offers trust, estate, custody and investment services through a partnership with Financial Resources Group, an affiliate of LPL Financial ("LPL").
The Bank offers  credit cards through a partnership with TCM Bank, N.A., a subsidiary of ICBA Payments. The Bank currently does not originate
residential mortgage loans but does refer residential mortgage loans to Rocket Mortgage® through a co-marketing referral agreement.
 
In addition to its loan, investment and deposit products, the Bank offers a wide array of banking services to its customers through its branch network,
mobile applications and interactive website.
 
Competition
 
The Bank encounters substantial competition in its banking business from numerous other financial services organizations that have offices located in the
communities served by the Bank. Principal competitors are large money center, regional and community banks located within the Bank’s market area,
mortgage brokers, brokerage firms, credit unions and fintech or e-commerce companies. The Bank competes for loans and deposits by offering a high level
of customer service, flexible product structures, competitive pricing, convenient locations and maintaining a well-designed website. Cash management
tools and digital channels support our loan and deposit offerings.
 
Investment Activities
 
The Bank’s investment policy, as approved by the Asset Liability Committee of the Board (“ALCO”) and supervised by both the ALCO and the
Management Asset Liability Committee, is intended to promote investment practices which are both safe and sound and in full compliance with applicable
regulations. Investment authority is granted and amended as necessary by the Board of Directors or ALCO.
 
The Bank's investment decisions seek to optimize income while keeping both credit and interest rate risk at acceptable levels, provide for the Bank's
liquidity needs and provide securities that can be pledged, as needed, to secure deposits and borrowings.
 
The Bank’s investment policy generally limits individual maturities on municipal bonds to 20 years and estimated average lives on collateralized mortgage
obligations (“CMOs”) and other mortgage-backed securities to ten years. At the time of purchase, bonds of states and political subdivisions must generally
be rated AA or better, notes of states and political subdivisions must generally be rated MIG-1 (or equivalent), commercial paper must be rated A-1 or P-1,
and corporate bonds of large U.S. based financial institutions must have a rating of BBB+ or better. In addition, management periodically reviews the
creditworthiness of all securities in the Bank’s portfolio other than those issued by the U.S. government or its agencies. Any significant deterioration in the
creditworthiness of an issuer is analyzed and action is taken if deemed appropriate.
 
At year end 2024 and 2023, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater
than 10% of stockholders’ equity.
 
The Bank’s investment portfolio at December 31, 2024 was comprised of available-for-sale (“AFS”) securities totaling $624.8 million and was made up of
state and municipal securities of $135.5 million, pass-through mortgage securities of $129.4 million, CMOs of $145.1 million, SBA agency obligations
of $101.4 million and corporate bonds of $113.3 million. Substantially all the municipal securities are rated AA or better. The pass-through mortgage
securities and CMOs are issued by Government National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”) and
Federal Home Loan Mortgage Corporation (“FHLMC”). GNMA is a U.S. government agency and FNMA and FHLMC are U.S. government-sponsored
agencies. SBA agency obligations are floating rate, government guaranteed securities backed by $78.3 million of commercial mortgages and $23.1 million
of equipment finance loans at December 31, 2024. The corporate bonds are investment grade securities issued by large U.S. based financial institutions
with variable rates that reset quarterly based on the ten-year swap rate.
 
The Bank has not engaged in the purchase and sale of securities for the primary purpose of producing trading profits and its current investment policy does
not allow for such activity.
 
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Lending Activities
 
General. The Bank’s lending is subject to written underwriting standards and loan origination procedures, as approved by the Loan Committee of the
Board (“Loan Committee”) and contained in the Bank’s loan policy. The loan policy allows for exceptions and sets forth specific exception approval
requirements. Decisions on loan applications are based on the borrower’s credit history, the financial strength of the borrower, estimates of the borrower’s
ability to repay the loan and the value of the collateral and guarantees, if any. All real estate appraisals must meet the requirements of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank
Act”), banking agency guidance and, for those loans in excess of $250,000, be reviewed by the Bank’s independent appraisal review function.
 
The Bank’s loan portfolio is primarily comprised of loans to small and middle market businesses, professional service firms, real estate investors and
consumers on Long Island and in the boroughs of NYC. The Bank’s range of lending services includes commercial mortgage loans, commercial and
industrial loans, standby letters of credit, SBA loans, construction and land development loans and consumer loans. Commercial lending is emphasized and
supported by increases in credit and lending staff.
 
The Bank makes both fixed and variable rate loans. Variable rate loans reprice primarily with changes in the prime interest rate as published in The Wall
Street Journal, U.S. Treasury rates and the Secured Overnight Financing Rate (“SOFR”).
 
Commercial and Industrial Loans. Commercial and industrial loans include short-term business loans and lines of credit; revolving credit facilities,
term and installment loans; common interest realty association (“CIRA”) loans, asset-based loans, leveraged loans and small business loans. Commercial
and industrial loans may be secured by general business assets, specific equipment, cash and other liquid collateral, or real estate. The Bank makes
commercial and industrial loans on a demand basis, short-term basis, installment or revolving basis. Short-term business loans are generally due and
payable within one year and should be self-liquidating during the normal course of the borrower’s business cycle. Lines of credit are reaffirmed annually
and generally require an annual cleanup period. Revolving credit facilities, term and installment loans are usually due and payable within five years. The
Bank’s loan policy delineates the minimum required guarantee based on specific loan categories.
 
Commercial Mortgage Loans.  The Bank makes commercial mortgage loans secured by owner-occupied and investment properties, including
multifamily properties. Applicants will be considered for approval provided they, as well as any guarantors, have satisfactory credit history and can
demonstrate the ability to repay through documentation such as financial statements, leases and rent rolls. The Bank obtains independent appraisals in
accordance with regulatory requirements and an appropriate environmental assessment. All properties are inspected by Bank personnel and/or approved
third-party vendors before closing on the mortgage and annually thereafter for loans over $2.5 million. Properties may also be re-inspected if concerns arise
during the Bank’s annual review process described below. Commercial mortgage loans generally mature in 10 years with amortization schedules ranging
between 20 and 30 years. We strive to reprice commercial mortgage loans every five years although pricing may be fixed for longer terms. The Bank will
generally not lend more than 75% of appraised value for investment properties, including multifamily properties.
 
Construction Loans. The Bank makes loans to finance the construction of both residential and commercial properties. The maturity of such loans is
generally 24 months or less and advances are made as the construction progresses. The advances can require the submission of bills and lien waivers by the
contractor, verification by a Bank-approved inspector that the work has been performed, and title insurance updates to ensure that no intervening liens have
been placed. The Bank also will consider loans on unimproved land subject to a maximum loan-to-value of 50% and a maximum 10-year term and
amortization. Variable rate construction and land development loans are included in commercial mortgages on the consolidated balance sheets.
 
Consumer Loans and Lines. The Bank makes secured and unsecured consumer loans and establishes revolving overdraft lines of credit. Consumer
loans are generally made on an installment basis over terms not in excess of five years. In reviewing loans and lines for approval, the Bank generally
considers the borrower’s ability to repay, stability of employment and residence and past credit history.
 
Sources of Funds
 
The Bank’s primary sources of cash are deposits, maturities and amortization of loans and investment securities, operations and borrowings. The Bank uses
cash from these and other sources to fund loan growth, purchase investment securities, repay deposits and borrowings, expand and improve its physical
facilities and pay cash dividends to the Corporation. The Corporation uses dividends from the Bank to pay stockholder dividends, repurchase its common
stock and for general corporate purposes.
 
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The Bank offers checking and interest-bearing deposit products. The Bank has a variety of business and personal checking products that differ in minimum
balance requirements and fees, if any. Interest-bearing deposit products, which have a wide range of interest rates and terms, consist of negotiable order of
withdrawal (“NOW”) accounts, interest on lawyer accounts, escrow service accounts, rent security accounts, personal and nonpersonal money market and
savings accounts, time deposits and individual retirement accounts.
 
The Bank relies primarily on its branch network, customer service, calling programs, lending relationships, referral sources, competitive pricing  and
advertising to attract and retain local deposits. The flow of deposits is influenced by general economic conditions, changes in interest rates and competition.
 
Human Capital Resources
 
We aspire to provide all employees equal opportunity to realize their maximum potential with the Bank. We are a diverse workplace that encourages open
and honest employee comment without retaliation. We believe our workforce is reflective of the communities in which we live and work. Using employee
feedback, we implemented initiatives to improve communication and enhance employee development opportunities.
 
Employee Profile. At December 31, 2024, we had approximately 265  full time equivalent employees in locations across the New York ("NY")
metropolitan area. This represents a decrease of 23 employees, or 8.0%, from December 31, 2023 due to factors such as branch closures and employee
retirements. 
 
Total Rewards. As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for
our employees in order to attract and retain superior talent. In addition to base wages, additional programs include annual equity and/or cash incentive
opportunities, a Corporation matched 401(k) plan, a defined benefit pension plan, healthcare and insurance benefits, health savings accounts, transit
benefits, flexible spending accounts, paid time off, family leave and employee assistance programs.
 
Health and Safety. The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the
health, safety and wellness of our employees. We provide our employees and their families with access to a variety of flexible and convenient health and
welfare programs, including benefits that support their physical and mental health. We provide tools and resources to help them and their families
experience healthier living.
 
Training and Development. We are committed to the ongoing success and development of our employees at every level to promote and foster
individual and organizational effectiveness. Employees take part in recurring training that covers regulatory compliance, cybersecurity, sales and retail
strategies and other programs tailored to specific job functions. Additional professional development and leadership training is offered for growth
opportunities.
 
Talent. A core tenet of maintaining our highly skilled workforce is to foster career opportunities for existing staff while actively recruiting seasoned
bankers for certain roles. Hiring entry level staff is also important as we prepare for our future. These approaches create loyalty in our employee base while
also bringing in new perspectives and ideas to help us grow the business, expand our product lines and benefit our customers. We believe a favorable
reputation in the marketplace and our corporate headquarters centrally located in Melville on Long Island allows us to attract highly skilled workers. We
use internal and external resources to identify the best job candidates while encouraging employee referrals for open positions. We have an active intern
program. 
 
Our performance management framework includes annual reviews, a review of goals achieved and a discussion of future goals and employee development,
including training opportunities, and annual merit-based salary adjustments.
 
Employee retention helps us operate efficiently and achieve one of our business objectives, which is being a high-quality, efficient provider of financial
services. We believe our commitment to core values, prioritizing concern for our employees’ well-being, supporting our employees’ career goals, offering
competitive wages and providing valuable benefits aids in the retention of our employees.
 
Supervision and Regulation
 
General. The banking industry is highly regulated. Statutory and regulatory controls are designed primarily for the protection of depositors and the
banking system, and not for the purpose of protecting shareholders. The following discussion is not intended to be a complete list of all the activities
regulated by banking laws or of the impact of such laws and regulations on the Corporation and the Bank. Changes in applicable laws or regulations and
their interpretation and application by regulatory agencies cannot be predicted and may have a material effect on our business and results of operations.
 
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As a registered bank holding company, the Corporation is regulated under the Bank Holding Company Act of 1956, as amended (“BHC Act”), and subject
to inspection, examination and supervision by the Federal Reserve Bank (“FRB”). In general, the BHC Act limits the business of bank holding companies
to banking, managing or controlling banks, performing servicing activities for subsidiaries and engaging in activities that the FRB has determined, by order
or regulation, are so closely related to banking as to be a proper incident thereto under the BHC Act. The Corporation is also subject to the disclosure and
regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the Securities
and Exchange Commission (“SEC”). Our common stock is listed on the Capital Market tier of the NASDAQ Stock Market (“NASDAQ”) under the
symbol “FLIC” and is subject to NASDAQ rules for listed companies.
 
As a national bank, the Bank is subject to regulation and examination by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit
Insurance Corporation (“FDIC”). Insured banks, such as the Bank, are subject to extensive regulation of many aspects of their businesses. These
regulations generally relate to: (1) the nature and amount of loans that may be made by the Bank and the rates of interest that may be charged; (2) types and
amounts of other investments; (3) branching; (4) anti-money laundering and Office of Foreign Control ("OFAC"); (5) permissible activities; (6) information
security and technology; and (7) dealings with officers, directors and affiliates.
 
The Dodd-Frank Act made extensive changes in the regulation of depository institutions and their holding companies. For example, the Dodd-Frank Act
created a new Consumer Financial Protection Bureau (“CFPB”) as an independent bureau of the FRB. The CFPB has assumed responsibility for the
implementation of the federal financial consumer protection and fair lending laws and regulations, a function previously assigned to principal federal
banking regulators, and has authority to impose new requirements. However, institutions of less than $10 billion in assets, such as the Bank, continue to be
examined for compliance with consumer protection and fair lending laws and regulations by, and subject to the enforcement authority of, their primary
federal regulator, although the CFPB has limited back-up authority to examine such institutions.
 
Bank Holding Company Regulation. The BHC Act requires the prior approval of the FRB for the acquisition by a bank holding company of 5% or
more of the voting stock or substantially all of the assets of any bank or bank holding company. Also, under the BHC Act, bank holding companies are
prohibited, with certain exceptions, from engaging in, or from acquiring 5% or more of the voting stock of any company engaging in activities other than
(1) banking or managing or controlling banks, (2) furnishing services to or performing services for their subsidiaries, or (3) activities that the FRB has
determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Bank holding companies that meet
certain criteria specified by the FRB may elect to be regulated as a “financial holding company” and thereby engage in a broader array of financial
activities including insurance and investment banking.
 
Payment of Dividends. The source of the Corporation’s liquidity is dividends from the Bank. Prior approval of the OCC is required if the total of all
dividends declared by a national bank in any calendar year would exceed the sum of the bank’s net profits for that year and its retained net profits for the
preceding two calendar years, less any required transfers to surplus. Under the foregoing dividend restrictions, and while maintaining its “well capitalized”
status and absent affirmative governmental approvals, during 2025 the Bank could declare dividends to the Corporation of approximately $6.3 million plus
any 2025 net profits retained to the date of the dividend declaration.
 
In addition, the Corporation and the Bank are subject to other regulatory policies and requirements relating to the payment of dividends, including
requirements to maintain adequate capital above regulatory minimum capital levels. The FRB is authorized to determine under certain circumstances
relating to the financial condition of a bank holding company or a bank that the payment of dividends would be an unsafe or unsound practice and to
prohibit payment thereof. FRB guidance sets forth the supervisory expectation that bank holding companies will inform and consult with FRB staff in
advance of declaring a dividend that exceeds earnings for the quarter and should inform the FRB and should eliminate, defer or significantly reduce
dividends if (1) net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully
fund the dividends, (2) the prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current and
prospective financial condition, or (3) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy
ratios.
 
Stock Repurchases. Current FRB regulations provide that a bank holding company that is not well capitalized or well managed, as such terms are
defined in the regulations, or that is subject to any unresolved supervisory issues, is required to give the FRB prior written notice of any repurchase or
redemption of its outstanding equity securities if the gross consideration for repurchase or redemption, when combined with the net consideration paid for
all such repurchases or redemptions during the preceding 12 months, will be equal to 10% or more of the company’s consolidated net worth. The FRB may
disapprove such a repurchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice or violate a law or
regulation. FRB guidance generally provides for bank holding company consultation with FRB staff prior to engaging in a repurchase or redemption of a
bank holding company’s stock, even if a formal written notice is not required.
 
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Transactions with Affiliates. Federal laws strictly limit the ability of banks to engage in transactions with their affiliates, including their bank holding
companies. Regulations promulgated by the FRB limit the types and amounts of these transactions (including loans due and extensions of credit from their
U.S. bank subsidiaries) that may take place and generally require those transactions to be on an arm’s-length basis. In general, these regulations require that
any “covered transactions” between a subsidiary bank and its parent company or the nonbank subsidiaries of the bank holding company be limited to 10%
of the bank subsidiary’s capital and surplus and, with respect to such parent company and all such nonbank subsidiaries, to an aggregate of 20% of the bank
subsidiary’s capital and surplus. Further, loans and extensions of credit to affiliates generally are required to be secured by eligible collateral in specified
amounts.
 
Source of Strength Doctrine. FRB policy has historically required bank holding companies to act as a source of financial and managerial strength to
their subsidiary banks. The Dodd-Frank Act codified this policy as a statutory requirement. Under this requirement, the Corporation is expected to commit
resources to support the Bank, including at times when the Corporation may not be in a financial position to provide such resources. Any capital loans by a
bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary
banks. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.
 
Capital Requirements. As a bank holding company, the Corporation is subject to consolidated regulatory capital requirements administered by the
FRB. The Bank is subject to similar capital requirements administered by the OCC.
 
The Corporation and the Bank are subject to the Basel III regulatory capital standards (“Basel III”) issued by the FRB and the OCC. Under the Basel III
capital requirements, the Corporation and the Bank are required to maintain minimum ratios of Tier 1 capital to average assets of 4.00%, Common equity
tier 1 capital to risk weighted assets of 4.50%, Tier 1 capital to risk weighted assets of 6.00% and Total capital to risk weighted assets of 8.00%. Common
equity tier 1 capital, Tier 1 capital, Total capital, risk weighted assets and average assets are defined in the Basel III rules. Failure to meet the minimum
capital requirements can result in certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct
material effect on the financial statements of the Corporation and Bank. The Corporation and the Bank opted to exclude accumulated other comprehensive
income components from Tier 1 and Total regulatory capital.
 
Basel III also requires the Corporation and the Bank to maintain a capital conservation buffer of 2.50% in order to avoid being subject to limitations on
capital distributions, including dividend payments, and discretionary bonus payments to executive officers. The capital ratio requirements, including the
capital conservation buffer, for banks with $250 billion or less in total assets are 7.00% for Common equity tier 1 capital to risk weighted assets, 8.50% for
Tier 1 capital to risk weighted assets and 10.50% for Total capital to risk weighted assets.
 
In accordance with the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies adopted a final rule whereby
financial institutions and financial institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying
criteria, including a leverage ratio of greater than 9% (“qualifying community banking organizations”), are eligible to opt into a community bank leverage
ratio (“CBLR”) framework. Qualifying community banking organizations that elect to use the CBLR framework and that maintain a leverage ratio of
greater than 9% are considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies’ capital rules and will
be considered to have met the well capitalized ratio requirements under the prompt corrective action (“PCA”) statutes. The agencies reserved the authority
to disallow the use of the CBLR framework by a financial institution or holding company, based on the risk profile of the organization. On January 1, 2020,
the CBLR framework became effective, and management elected to adopt the alternative framework. As a qualifying community banking organization, the
Corporation and the Bank may opt out of the CBLR framework in any subsequent quarter by completing its regulatory agency reporting using the
traditional capital rules.
 
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 ratio of the Corporation and the Bank at December 31, 2024 was 10.12% and 10.11%, respectively. The Corporation and the Bank
elected the optional five-year transition period provided by the federal banking agencies for recognizing the regulatory capital impact of the implementation
of the current expected credit loss (“CECL”) methodology.
 
PCA Regulations. The Federal Deposit Insurance Act, as amended (“FDIA”), requires that the federal banking agencies take “prompt corrective
action”  with respect  to banks that do not meet minimum capital requirements. The FDIA sets forth the following five capital tiers for purposes of
implementing the PCA regulations: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically
undercapitalized.” As of December 31, 2024, the Bank was well capitalized.
 
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Deposit Insurance. The FDIC imposes an assessment on financial institutions for deposit insurance. The assessment is based on the FDIC’s statistical
model for estimating the institution’s probability of failure over a three-year period and the institution’s average total assets and average tangible equity.
The FDIC periodically adjusts the deposit insurance assessment rates, which may raise or lower the cost to an institution of maintaining FDIC insurance
coverage.
 
The FDIC may terminate an institution’s deposit insurance upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. Management is not
aware of any practice, condition or violation that might lead to termination of the Bank’s deposit insurance.
 
Safety and Soundness Standards. The FDIA requires the federal bank regulatory agencies to prescribe standards, through regulations or guidelines,
relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth,
asset quality, earnings, stock valuation and compensation, fees and benefits, and such other operational and managerial standards as the agencies deem
appropriate. Guidelines adopted by the federal bank regulatory agencies establish general standards relating to internal controls and information systems,
internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits. In general, the
guidelines require appropriate systems and practices to identify and manage the risk and exposures specified in the guidelines. The guidelines prohibit
excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee, director or principal stockholder. In addition, the agencies adopted
regulations that authorize, but do not require, an agency to order an institution that has been given notice by an agency that it is not satisfying one or more
of the safety and soundness standards to submit a compliance plan. If, after being so notified, an institution fails to submit an acceptable compliance plan or
fails in any material respect to implement an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may
issue an order directing other actions of the types to which an undercapitalized institution is subject under the PCA provisions of the FDIA. If an institution
fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties.
 
Community Reinvestment Act and Fair Lending Laws. The Community Reinvestment Act of 1977 (“CRA”) requires depository institutions to assist
in meeting the credit needs of their market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to
help meet the credit needs of its market areas by providing credit to low- and moderate-income individuals and communities. Depository institutions are
periodically examined for compliance with the CRA and are assigned ratings. Banking regulators take into account CRA ratings when considering approval
of proposed acquisition transactions. The Bank received a “Satisfactory” CRA rating on its most recent CRA examination. The Bank and the Corporation
are firmly committed to the practice of fair lending and maintaining strict adherence to all federal and state fair lending laws which prohibit discriminatory
lending practices.
 
On May 5, 2022, the federal banking agencies released a notice of proposed rulemaking to “strengthen and modernize” the CRA regulations and the related
regulatory framework. This final rule was codified on October 24, 2023 with an effective date of April 1, 2024. Under the final rule, banks with assets of at
least $2 billion as of December 31 in both of the prior two calendar years are considered a "large bank." The agencies will evaluate large banks under four
performance tests: the Retails Lending test, the Retail Services and Products Test, the Community Development Financing Test and the Community
Development Services Test. The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements
will be applicable on January 1, 2027. The Bank is committed to comply with the changes, much of which are programmatic changes that will address
technology changes in the banking industry and providing greater clarity, consistency and transparency in the application of the CRA.
 
Federal Home Loan Bank System. The Bank is a member of the Federal Home Loan Bank System (“FHLB System”), which consists of 11 regional
Federal Home Loan Banks (each a “FHLB”). The FHLB System provides a central credit facility primarily for member banks. As a member of the FHLB
of New York ("FHLBNY"), the Bank is required to acquire and hold shares of capital stock in the FHLB in an amount equal to 4.5% of its borrowings from
the FHLB (transaction-based stock) plus 0.125% of the total principal amount at the beginning of the year of the Bank’s unpaid residential real estate loans,
commercial real estate loans, home equity loans, CMOs and other similar obligations (membership stock). At December 31, 2024, the Bank was in
compliance with the FHLB’s capital stock ownership requirement.
 
Financial Privacy. Federal regulations require the Bank to disclose its privacy policy, including identifying with whom it shares “nonpublic personal
information,” to its customers at the time the customer establishes a relationship with the Bank and annually thereafter. In addition, we are required to
provide our customers with the ability to “opt-out” of having the Bank share their nonpublic personal information with nonaffiliated third parties before we
can disclose that information, subject to certain exceptions.
 
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The federal banking agencies adopted guidelines establishing standards for safeguarding our customer information. The guidelines describe the agencies’
expectation that regulated entities create, implement and maintain an information security program, which would include administrative, technical and
physical safeguards appropriate to the size and complexity and the nature and scope of our activities. The standards set forth in the guidelines are intended
to ensure the security and confidentiality of customer records and information, protect against any anticipated threats or hazards to the security or integrity
of customer records, and protect against unauthorized access to records or information that could result in substantial harm or inconvenience to customers.
Additionally, the guidance states that banks, such as the Bank, should develop and implement a response program to address security breaches involving
customer information, including customer notification procedures. The Bank has developed such a program.
 
Anti-Money Laundering and the USA PATRIOT Act. A major focus of governmental policy on financial institutions in recent years has been aimed at
combating money laundering and terrorist financing. The USA PATRIOT Act of 2001 (“Patriot Act”) substantially broadened the scope of U.S. anti-money
laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding
the extra-territorial jurisdiction of the United States. The U.S. Treasury Department has issued a number of regulations that apply various requirements of
the Patriot Act to financial institutions such as the Bank. These regulations impose obligations on financial institutions to maintain appropriate policies,
procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Certain of those
regulations impose specific due diligence requirements on financial institutions that maintain correspondent or private banking relationships with non-U.S.
financial institutions or persons. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist
financing, or to comply with all of the relevant laws or regulations, could have serious legal, financial and reputational consequences for the institution. The
Bank and the Corporation are firmly committed to maintaining strong policies, procedures and controls to ensure compliance with anti-money laundering
laws and regulations and to combat money laundering and terrorist financing. In recent months, the Financial Crimes Enforcement Network ("FinCEN"), a
division of the U.S. Treasury Department, has begun to promulgate regulations to establish a national beneficial owner registry for legal entities, as
mandated under the Anti-Money Laundering Act of 2020 (“AMLA”) and the Corporate Transparency Act (“CTA”). The AMLA and CTA are included in
the National Defense Authorization Act of 2020, passed in December of 2020. The AMLA and CTA establish a federal beneficial ownership registry, new-
and-enhanced Bank Secrecy Act penalties, expands the ability to subpoena foreign banks and creates an expanded whistleblower reward program. On
January 1, 2024, the U.S. Department of the Treasury's FinCEN began accepting beneficial ownership information reports as part of the promulgated
registry.
 
Office of Foreign Assets Control. The OFAC of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on
U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in
activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United
States. The Bank maintains a risk based OFAC program to screen applicable transactions against the required watchlists. Additionally, the Bank remains
aware of geo-political and high-risk jurisdiction guidance that is released by government agencies periodically.
 
Legislative Initiatives and Regulatory Reform. From time to time, various legislative and regulatory initiatives are introduced in Congress and state
legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and
depository institutions or proposals to change substantially the financial institution regulatory system. Such legislation could change banking statutes and
the operating environment in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or
expand permissible activities or affect the competitive balance among banks, savings associations, credit unions and other financial institutions. The
Corporation cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on
our financial condition or results of operations. A change in statutes, regulations or regulatory policies applicable to the Corporation could have a material
effect on our business.
 
Availability of Reports
 
The Bank maintains a website at www.fnbli.com. The Corporation’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, amendments to these reports and proxy materials filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 are available free of charge through the Bank’s website as soon as reasonably practicable after they are electronically filed with or
furnished to the SEC. To access these reports go to the homepage of the Bank’s website, hover over FLIC and click on “FLIC Investor Relations,” place the
cursor over “Financial Information” and click on “SEC Filings.” This will bring you to a listing of the Corporation’s reports. Information on our website
shall not be considered a part of this Annual Report on Form 10-K. Our SEC filings are also available on the SEC’s website at www.sec.gov.
 
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ITEM 1A. RISK FACTORS
 
The Corporation is exposed to a variety of risks, some of which are inherent in the banking business. The more significant of these are addressed by the
Corporation’s written policies and procedures. While management is responsible for identifying, assessing and managing risk, the Board of Directors is
responsible for risk oversight. The Board fulfills its risk oversight responsibilities largely through its committees. The following provides information
regarding material risk factors faced by the Corporation. Additional risks and uncertainties not currently known to the Corporation, or that the Corporation
currently deems to be immaterial, could also have a material impact on the Corporation’s business, financial condition or results of operations.
 
Merger Activity
 
There is no assurance when or even if the merger will be completed. 
 
Completion of the merger is subject to satisfaction or waiver of a number of conditions. The Corporation and ConnectOne currently anticipate the merger
will close in the second quarter of 2025, however there can be no assurance that the Corporation and ConnectOne will be able to satisfy the closing
conditions or that closing conditions beyond their control will be satisfied or waived. Additionally, the Corporation and/or ConnectOne can terminate the
Merger Agreement under specified circumstances.
 
Because the market price of ConnectOne common stock will fluctuate, the value of the merger consideration to be received by our shareholders may
change.
 
On September 4, 2024, the Corporation announced the signing of the Merger Agreement with ConnectOne, pursuant to which the Corporation will merge
with and into ConnectOne, with ConnectOne as the surviving entity. Under the terms of the Merger Agreement and upon completion of the merger, each
share of the Corporation’s common stock (other than certain shares held by the Corporation or ConnectOne), will be converted into the right to receive
0.5175 shares of common stock of ConnectOne. The closing price of ConnectOne’s common stock on the date that the merger is completed may vary from
the closing price of ConnectOne’s common stock on the date ConnectOne and the Corporation announced the signing of the Merger Agreement and the
date of the special meeting of the Corporation’s shareholders regarding the merger. Because the merger consideration is determined by a fixed exchange
ratio, the Corporation’s shareholders will not know or be able to calculate the value of the shares of ConnectOne’s common stock they will receive upon
completion of the merger. Any change in the market price of ConnectOne’s common stock prior to completion of the merger may affect the value of the
merger consideration. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in the
companies’ respective businesses, operations and prospects, and regulatory considerations, among other things. Many of these factors are beyond the
control of ConnectOne and the Corporation.
 
Regulatory approvals required to complete the merger may not be received, may take longer than expected or may impose conditions that are not
presently anticipated or cannot be met.
 
Before the merger may be completed, the Corporation and ConnectOne must obtain approvals from, or provide notice to, the FRB, the FDIC and the New
Jersey Department of Banking and Insurance. Other approvals, waivers or consents from regulators may also be required. In determining whether to grant
these approvals, the applicable regulatory authorities consider a variety of factors, including the competitive impact of the proposal in the relevant
geographic markets; financial, managerial and other supervisory considerations of each party; convenience and needs of the communities to be served and
the record of the insured depository institution subsidiaries under the Community Reinvestment Act of 1977 and the regulations promulgated thereunder;
effectiveness of the parties in combating money laundering activities; any significant outstanding supervisory matters; and the extent to which the proposal
would result in greater or more concentrated risks to the stability of the United States banking or financial system. These regulatory authorities may impose
conditions on the granting of such approvals. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of
delaying completion of the merger or of imposing additional costs or limitations on the combined company following the merger. The regulatory approvals
may not be received at all, may not be received in a timely fashion, or may contain conditions on the completion of the merger that are not anticipated or
cannot be met. If the consummation of the merger is delayed, including by a delay in receipt of necessary regulatory approvals, the business, financial
condition and results of operations of the Corporation may also be materially and adversely affected.
 
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Failure to complete the merger, the termination of the Merger Agreement or a significant delay in the consummation of the merger could negatively
impact the Corporation.
 
The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. These conditions for the
consummation of the merger may not be fulfilled and, accordingly, the merger may not be completed. In addition, if the merger is not completed by
September 4, 2025, either ConnectOne or the Corporation may choose to terminate the Merger Agreement at any time after that date, provided that the
failure to complete the merger on or before that date is not due to the failure of the party seeking to terminate the Merger Agreement to perform or observe
the covenants and agreements of such party under the Merger Agreement. If the merger is not consummated, the ongoing business, financial condition and
results of operations of the Corporation may be materially adversely affected and the market price of the Corporation’s common stock may decline
significantly, particularly to the extent that the current market price reflects a market assumption that the merger will be consummated.
 
In addition, the Corporation has incurred and will further incur substantial expenses in connection with the completion of the merger. If the merger is not
completed, the Corporation would have to recognize these expenses without realizing the expected benefits of the merger. Any of the foregoing, or other
risks arising in connection with the failure of or delay in consummating the merger, including the diversion of management attention from pursuing other
opportunities and the constraints in the Merger Agreement on the ability to make significant changes to the Corporation’s ongoing business during the
pendency of the merger, could have a material adverse effect on the Corporation’s business, financial condition and results of operations. If the Merger
Agreement is terminated and the Corporation’s board of directors seeks another merger or business combination, the Corporation’s shareholders cannot be
certain that the Corporation will be able to find a party willing to engage in a transaction on more attractive terms than the merger with ConnectOne.
 
The Corporation will be subject to business uncertainties and contractual restrictions while the merger is pending.
 
Uncertainty about the effect of the merger on employees, customers and vendors may have an adverse effect on the business, financial condition and results
of operations of the Corporation. These uncertainties may impair the Corporation’s ability to attract, retain and motivate key personnel and customers
pending the consummation of the merger, as such key personnel and customers may experience uncertainty about their future roles and relationships
following the consummation of the merger. Additionally, these uncertainties could cause customers, vendors and others who deal with the Corporation to
seek to change existing business relationships with the Corporation or fail to extend an existing relationship with the Corporation. In addition, competitors
may target the Corporation’s existing customers by highlighting potential uncertainties and integration difficulties that may result from the merger.
 
The pursuit of the merger and the preparation for the integration may place a burden on the Corporation’s management and internal resources. Any
significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration
process could have a material adverse effect on the Corporation’s business, financial condition and results of operations. In addition, the Merger Agreement
restricts each party from taking certain actions without the other party’s consent while the merger is pending. These restrictions could have a material
adverse effect on the Corporation’s business, financial condition and results of operations.
 
The Merger Agreement limits the per share cash dividend that the Corporation may pay after June 30, 2025.
 
Pursuant to the Merger Agreement, the Corporation may continue to declare and pay a quarterly cash dividend on its capital stock not to exceed the current
rate of $0.21 per quarter per share. However, if the closing of the merger has not occurred by June 30, 2025, the Corporation may pay a quarterly cash
dividend in an amount not to exceed the equivalent per share quarterly cash dividend paid by ConnectOne on shares of its common stock (i.e., the quarterly
per share cash dividend on each share of ConnectOne common stock multiplied by the exchange ratio) for each quarter until the closing. Based on
ConnectOne’s current quarterly cash dividend of $0.18 per share and the 0.5175 exchange ratio, the permitted quarterly cash dividend on FLIC common
stock would be $0.09 per share. ConnectOne and the Corporation currently anticipate the merger will close in the second quarter of 2025, subject to
customary closing conditions, including regulatory approvals. There is no assurance that the merger will close by June 30, 2025, or at all, or that the
Corporation will continue to pay its quarterly cash dividend at the rate of $0.21 per share through June 30, 2025.
 
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The Merger Agreement contains provisions that may discourage other companies from pursuing, announcing or submitting a business combination
proposal to the Corporation that might result in greater value to the Corporation’
s shareholders.
 
The Merger Agreement contains provisions that may discourage a third party from pursuing, announcing or submitting a business combination proposal to
the Corporation that might result in greater value to the Corporation’s shareholders than the merger with ConnectOne. These provisions include a general
prohibition on the Corporation from soliciting, or, subject to certain exceptions, entering into discussions with any third party regarding any acquisition
proposal or offers for competing transactions. Furthermore, if the Merger Agreement is terminated, under certain circumstances, the Corporation may be
required to pay ConnectOne a termination fee of approximately $11.8 million. 
 
Litigation against the Corporation or ConnectOne, or the members of the Corporation’
s or ConnectOne’
s board of directors, could prevent or delay
the completion of the merger.
 
Purported shareholder plaintiffs may assert legal claims related to the merger. The results of any such potential legal proceeding would be difficult to
predict and such legal proceedings could delay or prevent the merger from being completed in a timely manner. Moreover, any litigation could be time
consuming and expensive, and could divert attention of the Corporation’s and ConnectOne's respective management teams away from their companies’
regular business. Any lawsuit adversely resolved against the Corporation, ConnectOne or members of their respective boards of directors, could have a
material adverse effect on each party’s business, financial condition and results of operations.
 
One of the conditions to the consummation of the merger is the absence of any law, order, decree or injunction (whether temporary, preliminary or
permanent) or other action taken by the governmental authority of competent jurisdiction that restricts, enjoins or prohibits or makes illegal the
consummation of the transaction contemplated by the Merger Agreement, including the merger. Consequently, if a settlement or other resolution is not
reached in any lawsuit that is filed or any regulatory proceeding and a claimant secures injunctive or other relief or a governmental authority issues an order
or other directive restricting, prohibiting or making illegal the completion of the transaction contemplated by the Merger Agreement, including the merger,
then such injunctive or other relief may prevent the merger from being completed in a timely manner or at all.
 
Economic and Market Area
 
A worsening of national or local economic conditions could adversely affect our financial condition and results of operations.
 
Deteriorating economic conditions could significantly affect the markets in which we do business, the value of our loans and investments, the value of real
estate collateral securing our mortgage loans, the financial strength of our borrowers and our on-going operations, costs and profitability. A recession or
slowed economic conditions could lead to decreased consumer spending and lower profits, while rising interest rates could increase borrower costs and
make it more difficult for companies to access capital. Declines in real estate values, sales volumes and employment levels together with increased vacancy
rates, particularly in the NY metropolitan area, may result in greater loan delinquencies, increases in our nonperforming, criticized and classified assets and
a decline in demand for our products and services. These events may cause us to increase our credit loss reserves, incur credit losses and may adversely
affect our financial condition and results of operations. The majority of our loan portfolio is secured by real estate in the NY metropolitan area.
 
A concentration of loans in our primary market area may increase the risk of higher nonperforming assets.
 
Our success depends primarily on the general economic conditions in Nassau and Suffolk Counties of Long Island, and the boroughs of NYC as nearly all
of our loans are to customers in these markets. Accordingly, the local economic conditions in these market areas have a significant impact on the ability of
our borrowers to repay loans as well as our ability to originate new loans. A decline in real estate values in these market areas would also lower the value of
the collateral securing loans on properties in these market areas.
 
Inflationary pressures and rising prices may affect our results of operations and financial condition.
 
After peaking in 2022, inflation moderated in 2023 and 2024 but remained above the Federal Reserve's 2% target throughout 2024. Inflation may present a
significant risk as it can lead to increased costs and reduced purchasing power for consumers. Small to medium-sized businesses may be impacted more
during periods of high inflation as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses. Consequently,
the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly. Furthermore, a prolonged
period of inflation could cause wages and other operating costs to increase. These factors could adversely affect our results of operations and financial
condition.
 
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Competition within our market area could limit our ability to increase interest-earning assets and noninterest income.
 
Competition in the banking and financial services industry is intense. In our market area, we compete with numerous commercial banks, savings
institutions, mortgage brokers, credit unions, finance companies, mutual funds, fintech or e-commerce companies, insurance companies and brokerage and
investment banking firms operating locally and elsewhere. Some of our competitors have substantially greater resources and lending limits than we have
and have greater name recognition and market presence that benefit them in attracting business. In addition, large competitors may be able to price loans
and deposits more aggressively than we do, and some have recently eliminated certain noninterest income charges such as overdraft fees. Furthermore,
fintech developments such as peer-to-peer platforms, blockchain and other distributed ledger technologies have the potential to disrupt the financial
services industry and change the way banks do business. Competitive forces may limit our ability to increase our interest-earning assets or maintain the
current level of noninterest income. Our profitability depends upon our continued ability to successfully compete in our market area. For additional
information see “Item 1 – Business – Competition.”
 
Severe weather, acts of terrorism and other external events could impact our ability to conduct business.
 
Weather-related events have adversely impacted our market area, especially areas located near coastal waters and flood prone areas. Such events that may
cause significant flooding and other storm-related damage may become more common events in the future. Financial institutions have been, and continue
to be, targets of terrorist threats aimed at compromising operating and communication systems and the NY metropolitan area remains central targets for
potential acts of terrorism. Such events could cause significant damage, impact the stability of our facilities and result in additional expenses, impair the
ability of our borrowers to repay their loans, reduce the value of collateral securing repayment of our loans, and result in the loss of revenue. While we have
established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business,
operations and financial condition.
 
Additionally, global markets may be adversely affected by natural disasters, the emergence of widespread health emergencies or pandemics, cyber attacks
or campaigns, military conflict such as the Russia-Ukraine war and conflicts in the Middle East, supply chain disruptions, terrorism or other geopolitical
events. Global market fluctuations may affect our business liquidity. Also, any sudden or prolonged market downturn in the U.S. or abroad, resulting from
the above factors or otherwise, could result in a decline in revenue and adversely affect our results of operations and financial condition, including capital
and liquidity levels.
 
Interruption of our customers’ supply chains and federal funding could negatively impact their business and operations and impact their ability to
repay their loans.
 
Any material interruption in our customers’ supply chains, such as a material interruption of the resources required to conduct their business, such as those
resulting from interruptions in service by third-party providers, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions,
reductions in federal subsidies or grants, social or labor unrest, natural disasters, epidemics or pandemics or political disputes and military conflicts, that
cause a material disruption in our customers’ supply chains, could have a negative impact on their business and ability to repay their borrowings with us. 
In the event of disruptions in our customers’ supply chains, the labor and materials they rely on in the ordinary course of business may not be available at
reasonable rates or at all. Additionally, changes in distribution of federal funds or freezing of federal funds, including reductions in federal workforce
causing unemployment, could have an adverse effect on the ability of consumers and businesses to pay debts and/or affect the demand for loans and
deposits.
 
Interest Rates and Asset Quality
 
Declines in the value of investment securities, loans and BOLI may result in impairment charges and may adversely affect our financial condition and
results of operations.
 
There is always the risk that the Bank will be unable to realize the full carrying value of our investment securities, loans and BOLI. Fluctuations in the
market value of investment securities may be caused by changes in market interest rates, lower market prices, rating downgrades and limited investor
demand. Management periodically reviews the creditworthiness of all securities in the Bank’s portfolio, other than those issued by the U.S. government or
its agencies, and all BOLI carriers. Any significant deterioration in the creditworthiness of an issuer or carrier will be analyzed and action taken if deemed
appropriate. If an investment is deemed to have a credit loss, the Bank must record an allowance. 
 
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The 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 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 NYC, and a large percentage of these loans are mortgage loans secured by properties located in those
areas. At December 31, 2024, residential mortgage loans, including home equity lines of credit, amounted to approximately $1.1 billion and comprised
approximately  35% of total loans. The primary source of repayment for residential mortgage loans is cash flows from individual borrowers and co-
borrowers. At December 31, 2024, multifamily loans amounted to approximately $848.6 million and comprised approximately 43% of the Bank’s total
commercial mortgage portfolio and approximately 26% of total loans. The primary source of repayment for multifamily loans is cash flows from the
underlying properties, which generally involves a greater risk than residential real estate loans because of legislation and government regulations involving
rent control, rent stabilization and eviction, which are outside the control of the borrower or the Bank and could impair the value of the collateral for the
loans. Cash flows for both residential mortgage and multifamily loans are dependent on the strength of the local economy.
 
Environmental impairment of properties securing mortgage loans is always a risk. However, the Bank is not aware of any existing loans in the portfolio
where there is environmental pollution originating on or near the mortgaged properties that would materially affect the value of the portfolio.
 
Changes in interest rates and the shape of the yield curve could negatively impact our earnings.
 
The Bank’s financial condition and results of operations are subject to risk resulting from interest rate fluctuations 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.
 
When interest rates decline, borrowers may refinance higher rate loans to lower rates causing prepayments on mortgage loans and mortgage-backed
securities to be elevated. Under those circumstances, the Bank may not be able to reinvest the resulting cash flows in new interest-earning assets with rates
as favorable as those that prepaid. In addition, subject to the floors contained in many of the Bank’s loan agreements, the Bank’s loans at variable interest
rates may adjust to lower rates at their reset dates. While lower rates may reduce the Bank’s cost of funds on non-maturity deposits, certificates of deposit
(“CDs”) and borrowings, the cost savings could be somewhat constrained because decreases in the Bank’s funding rates may occur more slowly than
decreases in yields earned on the Bank’s assets and a significant portion of the Bank’s funding is currently derived from noninterest-bearing checking
deposits and capital. In addition, in a prolonged low interest rate environment, the Bank’s deposit products could reach an effective floor rate close to zero
which would not allow for any further reduction in its cost of funds.
 
In a period of rising interest rates, the interest income earned on the Bank’s assets may not increase as rapidly as the interest paid on its liabilities such as
deposits and borrowings. The Bank’s cost of funds is expected to increase more rapidly than interest earned on its loan and investment portfolios as its
primary source of funds is deposits and borrowings  with generally shorter maturities or repricing characteristics than the maturities and repricing
characteristics of its loans and investments. At
December 31, 2024,
23.9%
of the Bank’s loans and securities reprice or mature within one year. This makes
the balance sheet more liability sensitive in the short-term. In addition, in a period of rising interest rates, noninterest-bearing deposits may convert to
interest-bearing deposits further increasing the Bank’s funding costs. The current economic environment, characterized by a high rate of inflation, a pause
after a period of rapidly rising interest rates and an inverted yield curve, presents significant financial challenges to the Corporation.
 
Changes in interest rates also affect the value of our interest-earning assets and in particular our securities and loan portfolios. Generally, the value of
securities fluctuates inversely with changes in interest rates. At
December 31, 2024, our AFS securities portfolio totaled 
$624.8 million. Unrealized gains
and losses on AFS securities are reported as a separate component of stockholders’ equity. Therefore, decreases in the fair value of AFS securities resulting
from increases in interest rates could have an adverse effect on stockholders’ equity.
 
In addition to the risks arising from changes in interest rates, the shape of the yield curve could create downward pressure on net interest income and net
interest margin. In the current flat or inverted yield curve environment, asset growth could negatively impact the Bank’s earnings and/or profitability
metrics. As a result, the Bank may be unable to increase earnings, or maintain the current level of earnings, until the yield curve steepens.
 
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The performance of our multifamily real estate loans could be adversely impacted by regulation.
 
Multifamily real estate loans generally involve a greater risk of non-payment and loss than one-to-four family residential real estate loans. Repayment of
the loans often depends on the successful operation of the properties and the sale of such properties securing the loans. Such loans typically involve larger
loan balances to single borrowers or groups of related borrowers compared to one-to-four family residential loans. If loans that are collateralized by real
estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of
principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for credit losses and adversely
affect our operating results and financial condition. 
 
Additionally, legislation and government regulations involving rent control and rent stabilization which are outside the control of the borrower or the Bank,
could impair the value of the collateral for the loan or the future cash flow of such properties.
 
Management’s estimate of the Allowance for Credit Losses (“ACL” or “allowance”) may not be sufficient and could result in increased provisions and
adversely impact our financial condition and results of operations.
 
The Bank maintains an ACL in an amount believed to be adequate to absorb current expected lifetime credit losses in its loan portfolio. The maintenance of
the ACL is governed by a board committee approved ACL policy. In arriving at the ACL, an individual evaluation is performed on each loan with disparate
risk characteristics or information suggesting that the Bank will be unable to collect all the principal and interest due according to contractual terms. In
addition, current expected lifetime credit losses for all other loans in the Bank’s portfolio are determined on a pooled basis and take into account historical
loss experience and numerous quantitative and qualitative factors (“Q-factors”), including current and forecasted economic conditions measured by such
things as gross domestic product (“GDP”), unemployment levels, vacancies, changes in the value of underlying collateral, average growth in loan pools,
concentrations of credit, changes in lending policies and procedures, experience, ability and depth of lending staff, changes in quality of the loan review
function, environmental risks and loan risk ratings. Because estimating the ACL is highly subjective in nature and involves a variety of estimates and
assumptions that are inherently uncertain, there is the risk that management’s estimate may not accurately capture probable lifetime losses in the loan
portfolio. The Bank’s allowance may need to be increased based on additional information that comes to light after the estimate is made, changes in
circumstances or a recommendation by bank regulators based on their review of the Bank’s loan portfolio. The impact of one or more of these factors on
the Bank’s allowance could result in the need for a significant increase in the Bank’s provision for credit losses and have a material adverse impact on the
Bank’s financial condition and results of operations.
 
Regulatory Matters
 
If our regulators impose limitations on our commercial real estate lending activities, earnings could be adversely affected, and we may face greater risk
in our loan portfolio.
 
In 2006, the federal bank regulatory agencies issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management
Practices” (the “CRE Guidance”). Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial
mortgage lending exposure may receive increased supervisory scrutiny where total non-owner occupied commercial mortgages, including loans secured by
apartment buildings, investor commercial mortgages and construction and land loans ("CRE loans"), represent 300% or more of an institution’s total risk-
based capital and the outstanding balance of the CRE loan portfolio has increased by 50% or more during the preceding 36 months ("CRE growth rate").
The Corporation’s CRE loans, equaled
371% of total risk-based capital at
December 31, 2024 and the Corporation's CRE growth rate during the 36-month
period ended
December 31, 2024 was
8.6%. The Corporation did not meet the combined thresholds for increased supervisory scrutiny. However, if our
regulators were to impose restrictions on the amount of CRE loans we can hold in our portfolio or require higher capital ratios as a result of the level of
CRE loans held, our earnings would be adversely affected.
 
If we are limited in our ability to originate loans secured by commercial real estate, we may incur greater risk in our loan portfolio. For example, we are
and may continue to seek to further increase our growth rate in commercial and industrial loans, including both secured and unsecured commercial and
industrial loans. Unsecured loans generally involve a higher degree of risk of loss than do secured loans because, without collateral, repayment is wholly
dependent upon the success of the borrowers’ businesses and personal guarantees. Secured commercial and industrial loans are generally collateralized by
accounts receivable, inventory, equipment or other assets owned by the borrower and typically include a personal guaranty of the business owner.
Compared to real estate, that type of collateral is more difficult to monitor, its value is harder to ascertain, it may depreciate more rapidly, and it may not be
as readily saleable if repossessed. Therefore, we may be exposed to greater risk of loss on these credits.
 
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The Bank is subject to the CRA and fair lending laws, and failure to comply with these laws could lead to material penalties.
 
The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose non-discriminatory lending
requirements on financial institutions. With respect to the Bank, the FRB, U.S. Department of Justice and other federal and state agencies are responsible
for enforcing these laws and regulations. A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and
regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition
of restrictions on mergers and acquisitions activity and restrictions on expansion. Private parties may also have the ability to challenge an institution’s
performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on the Bank’s business, financial
condition and results of operations.
 
Changes in laws, government regulation, supervisory guidance and the regulatory policies of the Federal government could have a significant negative
impact on our financial condition and results of operations.
 
The Corporation and the Bank are subject to regulation, supervision and examination by, among others, the FRB, OCC and FDIC. The FDIC also insures
the Bank’s deposits. Regulation and supervision govern the activities in which a bank and its holding company may engage and are intended primarily for
the protection of depositors. Regulatory requirements affect virtually all aspects of the Corporation’s and the Bank’s business, including investment and
lending practices, deposit offerings and capital levels. The regulators have extensive discretion in connection with their supervisory and enforcement
activities, including imposing restrictions on Bank operations and expansion plans, imposing deposit insurance premiums and other assessments, setting
required levels for the ACL, capital and liquidity, and imposing restrictions on the ability to pay cash dividends and other capital distributions to
stockholders. Changes in laws, regulations and supervisory guidance, or the Corporation’s and the Bank’s compliance with these laws and regulations as
judged by the regulators, could have a significant negative impact on the Corporation’s financial condition and results of operations.
 
Additionally, Congress and the administration through executive orders control fiscal policy through decisions on taxation and expenditures. Depending on
the industries and markets involved, changes to tax law and increased or reduced public expenditures could affect us directly or the business operations of
our customers. 
 
Business Issues
 
The Bank and Corporation may not have sufficient funds or funding sources to meet liquidity demands.
 
Liquidity risk is the risk that the Bank will not have sufficient funds to accommodate loan growth, meet deposit outflows or make contractual payments on
borrowing arrangements. The Bank encounters significant competition for deposits in its market area from larger banks, various community banks, credit
unions and other financial services organizations. This competition for deposits, particularly in the recent rapidly rising interest rate environment, could
result in significant outflows and further exert upward pressure on the Bank’s funding costs. In addition, the Bank’s concentration of deposits with certain
customers could limit our ability to favorably reprice deposits and grow net interest income, net interest margin and earnings.
 
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 overnight investments and maturities and monthly payments on its investment securities and loan portfolios.
 
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The Bank is a member of the FRB of NY (“FRBNY”) and the FHLBNY 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 FHLBNY and FRBNY. In addition, the Bank can purchase
overnight federal funds under its existing line. However, the Bank’s FRBNY membership, FHLBNY 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 and the collateral margins required by the lenders. The Bank’s borrowing capacity may be
adjusted by the FRBNY or the FHLBNY 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 FHLBNY could adversely impact the Bank’s liquidity.
 
The Corporation relies on dividends from the Bank to fund its operating expenses, dividends to shareholders and repurchases of common stock. The OCC
restricts the dividends the Bank may pay to the Corporation to its retained net profits for the preceding two calendar years plus current year retained net
profits. These restrictions may limit the Corporation’s ability to pay dividends or repurchase shares. 
 
Our funding sources may prove insufficient to replace deposits at maturity and support our future growth. A lack of liquidity could adversely affect our
financial condition and results of operations and result in regulatory limits being placed on the Corporation.
 
The Bank must maintain sufficient funds to respond to the needs of depositors and borrowers. Deposits have traditionally been our primary source of funds
for use in lending and investment activities. We also receive funds from loan repayments, investment maturities and income on other interest-earning
assets. While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market
area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff. Accordingly, as
part of our liquidity management, we must use a number of funding sources in addition to deposits and repayments and maturities of loans and investments,
includin
g borrowings, federal funds purchased and brokered CDs. Adverse operating results or changes in industry conditions could lead to difficulty or an
inability to access these additional funding sources.
 
Our financial flexibility will be severely constrained if we are unable to maintain access to funding or if adequate financing is not available to
accommodate future growth at acceptable interest rates. Further, if we are required to rely more heavily on more expensive funding sources to support
liquidity and future growth, our revenues may not increase proportionately to cover the increased costs. In this case, our operating margins and profitability
would be adversely affected. Alternatively, we may need to sell a portion of our securities and/or loan portfolio to raise funds which, depending upon
market conditions, could result in us realizing a loss on the sale of such assets. As of
December 31, 2024, we had a net unrealized loss of 
$73.2
 million on
our AFS securities portfolio resulting from the change in the interest rate environment. Investment securities totaled 
$624.8 million, or 
15% of total assets,
at
December 31, 2024.
 
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, pay our expenses, or fulfill obligations such as
repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial
condition and results of operations.
 
A lack of liquidity could also attract increased regulatory scrutiny and potential restraints imposed on us by regulators. Depending on the capitalization
status and regulatory treatment of depository institutions, including whether an institution is subject to a supervisory PCA directive, certain additional
regulatory restrictions and prohibitions may apply, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or
prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits.
 
There can be no assurance that we will continue to declare cash dividends. 
 
The declaration and payment of any dividend is subject to the approval of our Board of Directors and our dividend may be discontinued or reduced at any
time. Our ability to pay cash dividends is limited by restrictions or limitations on our ability to obtain sufficient funds through dividends from the Bank.
There can be no assurance that the current payout ratio is sustainable or that we will be able to declare cash dividends in the future in any particular
amounts, or at all. For additional information, see "Item 1 – Business – Payment of Dividends."
 
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In addition, our ability to pay cash dividends is limited by the terms of the Merger Agreement with ConnectOne. For additional information, see "Item 1A –
Risk Factors – The Merger Agreement limits the per share cash dividend that the Corporation may pay after June 30, 2025."
 
A decline in the Corporation’
s market capitalization could negatively impact the price, trading volume and liquidity of our common stock.
 
The Corporation’s common stock is included in the Russell 3000 and Russell 2000 Indexes, which are reconstituted annually. Upon reconstitution in May
2024, the median market capitalization of the Russell 2000 index wa
s $869.6 million, the capitalization of the largest company in the
index was $7.1
billion and the capitalization of the smallest comp
any in the index was $150.4 million. The Corporation’s market capitalization was approximately 
$264
 million on
December 31, 2024. If the Corporation’s market capitalization falls below the minimum necessary to be included in the indexes at any future
reconstitution date, the price, trading volume and liquidity of its common stock may be negatively impacted.
 
The Corporation’
s internal controls and those of its third-party service providers (“
TPSPs”
) may be ineffective or circumvented, resulting in
significant financial loss, adverse action by governmental bodies and damaged reputation.
 
The Corporation relies on its system of internal controls and the internal controls of its TPSPs to ensure that transactions are captured, recorded, processed
and reported properly; confidential customer information is safeguarded; and fraud by employees and persons outside the Corporation is detected and
prevented. The Corporation’s internal controls and/or those of its TPSPs may prove to be ineffective or employees of the Corporation and/or its TPSPs may
fail to comply with or override the controls, either of which could result in significant financial loss to the Corporation, adverse action by bank regulatory
authorities or the SEC and damage to the Corporation’s reputation.
 
The Bank’s inability to keep pace with technological advances could negatively impact our business, financial condition and results of operations.
 
The delivery of financial products and services has increasingly become technology driven. The Bank’s ability to competitively meet the needs of its
customers in a cost-efficient manner is dependent on its ability to keep pace with technological advances and to invest in new technology as it becomes
available. The ability to keep pace with technological change is important, and failure to do so could have a material adverse impact on the Corporation’s
business, financial condition and results of operations.
 
The inability to attract, motivate or retain qualified key personnel could negatively impact our performance.
 
The Corporation’s future success depends in part on the continued service of its executive officers and other key members of management and its staff, as
well as its ability to continue to attract, motivate and retain highly qualified employees. The loss of services of key personnel and our inability to timely
recruit or promote qualified replacements could have an adverse effect on the Bank’s business, operating results and financial condition. Their skills,
knowledge of the Bank’s market and years of industry experience may be difficult to replace.
 
The inability to control the risks associated with social media and other internet postings could adversely impact the Corporation's business and
reputation.
 
Customers, shareholders, employees and outsiders could potentially share sensitive or inaccurate information on social media platforms or engage in
behavior that may reflect poorly on the Corporation and lead to adverse impacts on the Corporation’s business. While social media activity may provide
benefits like increased brand awareness, even positive social media posts have the potential to create controversy and increase the Corporation's risk
profile.
 
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Security
 
System failures, interruptions and security breaches could negatively impact our customers, reputation and results of operations.
 
The Bank outsources most of its data processing to TPSPs. If TPSPs encounter difficulties, or if the Bank has difficulty communicating with them, the
Bank’s ability to adequately process and account for customer transactions could be affected, and the Bank’s business operations could be adversely
impacted. Threats to information security also exist in the processing of customer information through TPSPs. The Bank’s website and online banking
products have been the target of cyberattacks in the past. While the Bank and its TPSPs believe they have successfully blocked attempts to infiltrate the
Bank’s systems, there is always the possibility that successful attacks have not yet been identified and future attacks may not be blocked. A significant
cybersecurity incident may be determined to be material insider information and would prohibit corporate insiders from trading in the Corporation’s stock
until appropriate public disclosures are made.
 
Opportunistic cyberattacks and malicious financial crimes have been growing globally in number and complexity and increase the cost of technology,
compliance and labor. The Bank makes use of logon and user access controls, multifactor and out of band authentication, transaction limits, firewalls,
antivirus software, intrusion protection monitoring and vulnerability scans and conducts independent penetration testing and cybersecurity audits. Bank
communications encourage employee and executive awareness of cybersecurity trends.
 
These precautions may not protect our systems from all compromises or breaches of security and there can be no assurance that such events will not occur
or that they will be adequately addressed if they do. The Bank carries a cyber liability insurance policy to mitigate the risks of financial loss. However, the
occurrence of any systems failure, interruption or breach of security could damage the Bank’s reputation and result in a loss of customers and business,
could subject the Bank to additional regulatory scrutiny or could expose the Bank to civil litigation and possible financial liability beyond any insurance
coverage. Any of these occurrences could have a material adverse effect on the Corporation’s financial condition and results of operations.
 
Risks associated with cybersecurity could negatively affect our earnings.
 
The financial services industry has experienced an increase in both the number and severity of reported cyberattacks aimed at gaining unauthorized access
to bank systems as a way to misappropriate assets and sensitive information, corrupt and destroy data, or cause operational disruptions.
 
We have established policies and procedures to prevent or limit the impact of security breaches, but such events may still occur or may not be adequately
addressed if they do occur. Although we rely on security safeguards to secure our data, these safeguards may not fully protect our systems from
compromises or breaches.
 
We also rely on the integrity and security of a variety of third-party processors, payment, clearing and settlement systems, as well as the various
participants involved in these systems, many of which have no direct relationship with us. Failure by these participants or their systems to protect our
customers’ transaction data may put us at risk for possible losses due to fraud or operational disruption.
 
Our customers are also the target of cyberattacks and identity theft. Large scale identity theft could result in customers’ accounts being compromised and
fraudulent activities being performed in their name. We have implemented certain safeguards against these types of activities, but they may not fully protect
us from fraudulent financial losses.
 
The occurrence of a breach of security involving our customers’ information, regardless of its origin, could damage our reputation and result in a loss of
customers and business and subject us to additional regulatory scrutiny, and could expose us to litigation and possible financial liability. Any of these
events could have a material adverse effect on our financial condition and results of operations.
 
While our Board of Directors takes an oversight role in cybersecurity risk tolerance, we rely to a large degree on management and outside consultants
in overseeing cybersecurity risk management.
 
Our Board of Directors takes an oversight role in the cybersecurity risk tolerance of the Corporation and all members receive cybersecurity training
annually. The Board approves information technology policies, including those relative to cybersecurity. Furthermore, our Audit Committee is responsible
for reviewing all audit findings related to information technology general controls, internal and external vulnerability, and penetration testing. We also
engage outside consultants to support our cybersecurity efforts. However, our directors do not have significant experience in cybersecurity risk
management outside of the Corporation and therefore, its ability to fulfill its oversight function remains dependent on the input it receives from
management and outside consultants.
 
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ITEM 1B. UNRESOLVED STAFF COMMENTS
 
None.
 
ITEM 1C. CYBERSECURITY
 
Our risk management program is designed to identify, assess, and mitigate risks across various aspects of our company, including
but not limited to the following risks: operational, regulatory compliance, reputational, strategic, information technology, data
security and privacy, and market risks such as interest rate, credit, liquidity and price risks. Cybersecurity is a critical component
of this program, given the increasing reliance on technology and potential of cyber threats. Our Board of Directors is responsible
for risk oversight over all significant risks facing the Corporation and fulfills this responsibility mainly through its committees.
While our Board of Directors takes an oversight role in cybersecurity risk tolerance, we rely to a large degree on management
and outside consultants in overseeing cybersecurity risk management. Our Director of Technology Solutions, who reports directly
to our Chief Information Officer, is primarily responsible for this cybersecurity component and is a member of management's
Operational Risk and IT Steering Committees, and regularly attends and presents to the Risk Committee of our Board of
Directors ("Risk Committee").
 
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse
our systems or information. The structure of our information security program is designed around regulatory guidance, and other industry standards. In
addition, we leverage certain industry and government associations, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
 
We leverage people, processes, and technology as part of our efforts to manage and maintain cybersecurity controls. We also employ a variety of
preventative and detective tools designed to provide alerts and monitor and block suspicious activity, as well as to report on suspected advanced persistent
threats. We have established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees,
preparedness simulations and tabletop exercises, and recovery and resilience tests. We engage in regular assessments of our infrastructure, software
systems, and network architecture, using internal and third-party specialists. We also maintain a third-party risk management program designed to identify,
assess, and manage risks, including cybersecurity risks, associated with external service providers. We also actively monitor our email gateways for
malicious phishing email campaigns and monitor remote connections as a significant portion of our workforce has the ability to work remotely. We
leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect
to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management
program.
 
We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including
notification of and escalation to the appropriate team members as well as executive management and the Board of Directors. The Incident Response Plan is
coordinated through the Director of Technology Solutions and key members of management. The Incident Response Plan facilitates coordination across
multiple departments and is evaluated at least annually.
 
Notwithstanding our defensive measures and processes, the threat posed by cyberattacks is severe. Our internal systems, processes, and controls are
designed to mitigate loss from cyberattacks. To date, the Corporation has not, to its knowledge, experienced an incident materially affecting or reasonably
likely to materially affect the Corporation.
 
The Director of Technology Solutions provides information security updates to the IT Steering Committee and the Risk Committee. Cybersecurity metrics
are reported to the IT Steering Committee monthly and to the Risk Committee on a quarterly basis. Security training is provided to all staff through targeted
training overseen by the Director of Technology Solutions. All Board members receive cybersecurity training annually.
 
The Board of Directors recognizes the importance of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information and has
incorporated those elements in its ongoing oversight of the Information Security Program. At least annually, the Director of Technology Solutions and the
Chief Risk Officer report to the Risk Committee the overall status of the Information Security Program.  Any material findings related to the risk
assessment, risk management and control decisions, service provider arrangements, results of testing, security breaches or violations are discussed as are
management’s responses and any recommendations for program changes.
 
ITEM 2. PROPERTIES
 
The Corporation neither owns nor leases any real estate. Office facilities of the Corporation are located at 275 Broadhollow Road, Melville, NY and the
Bank’s main branch is located at 10 Glen Head Road, Glen Head, NY in office space leased by the Bank.
 
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As of December 31, 2024, the Bank owns 18 buildings and leases 27 other facilities, all of which are in Nassau and Suffolk Counties of Long Island and
the NYC boroughs of Queens, Brooklyn and Manhattan. Included in the leased facilities are four branch locations that closed in 2024 for which the leases
terminated in early-2025  and one branch location that closed in 2023  for which the Bank continues to be obligated to make lease payments. The
Corporation believes that the remaining physical facilities of the Bank are suitable and adequate at present and are being fully utilized.
 
ITEM 3. LEGAL PROCEEDINGS
 
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. 
 
ITEM 4. MINE SAFETY DISCLOSURES
 
Not applicable.
 
PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 
The Corporation’s common stock trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market under the symbol “FLIC.” At December 31,
2024, there were 758 stockholders of record of the Corporation’s common stock. The number of stockholders of record includes banks and brokers who act
as nominees, each of whom may represent more than one stockholder. Cash dividends declared by the Corporation were unchanged from 2023 at $0.84 per
share for the year ended December 31, 2024. The timing and amount of future dividends are at the discretion of the Board of Directors and will depend
upon a number of economic and company-specific factors.
 
Performance Graph
 
The following performance graph compares the Corporation's total stockholder return with the NASDAQ U.S. Benchmark, NASDAQ U.S. Benchmark
Banks and the ABA Community Bank NASDAQ Indexes over a five-year measurement period assuming $100 invested on January 1, 2020, and dividends
reinvested in the Corporation’s stock. 
 
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Issuer Purchase of Equity Securities
 
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 Corporation did not
repurchase any shares of its own common stock in the fourth quarter of 2024 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 Q – Business Combination”
to the Corporation’s consolidated financial statements of this Form 10-K for further details.
 
ITEM 6. RESERVED
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following selected financial data should be read in conjunction with the accompanying consolidated financial statements.
 
(dollars in thousands, except per share data)
 
2024
   
2023
   
2022
   
2021
   
2020
 
INCOME STATEMENT DATA:
     
       
       
       
       
 
Interest Income
  $
167,330    $
155,483    $
134,210    $
122,959    $
131,216 
Interest Expense
   
94,111     
68,618     
18,497     
16,152     
29,188 
Net Interest Income
   
73,219     
86,865     
115,713     
106,807     
102,028 
Provision (Credit) for Credit Losses
   
359     
(326)    
2,331     
(2,573)    
3,006 
Net Income
   
17,076     
26,239     
46,932     
43,089     
41,203 
PER SHARE DATA:
     
       
       
       
       
 
Basic Earnings
  $
0.76    $
1.16    $
2.05    $
1.82    $
1.73 
Diluted Earnings
   
0.75     
1.16     
2.04     
1.81     
1.72 
Cash Dividends Declared
   
0.84     
0.84     
0.82     
0.78     
0.74 
Book Value
   
16.77     
16.83     
16.24     
17.81     
17.11 
BALANCE SHEET DATA AT YEAR END:
     
       
       
       
       
 
Total Assets
  $
4,119,336    $
4,235,900    $
4,281,511    $
4,068,789    $
4,069,141 
Loans
   
3,221,607     
3,248,064     
3,311,733     
3,105,036     
3,033,454 
Allowance for Credit Losses
   
28,331     
28,992     
31,432     
29,831     
33,037 
Deposits
   
3,264,858     
3,270,986     
3,464,634     
3,315,245     
3,321,588 
Borrowed Funds
   
435,000     
542,500     
411,000     
311,322     
306,097 
Stockholders' Equity
   
378,866     
380,146     
364,536     
413,812     
407,118 
AVERAGE BALANCE SHEET DATA:
     
       
       
       
       
 
Total Assets
  $
4,221,637    $
4,235,989    $
4,247,052    $
4,151,577    $
4,140,867 
Loans
   
3,237,664     
3,260,903     
3,276,589     
2,976,061     
3,110,512 
Allowance for Credit Losses
   
28,613     
30,291     
30,604     
31,300     
33,180 
Deposits
   
3,349,128     
3,431,990     
3,536,709     
3,425,976     
3,257,317 
Borrowed Funds
   
453,993     
397,928     
289,584     
281,191     
457,939 
Stockholders' Equity
   
380,357     
367,496     
386,839     
416,885     
393,662 
FINANCIAL RATIOS:
     
       
       
       
       
 
Return on Average Assets (ROA)
   
0.40%   
0.62%   
1.11%   
1.04%   
1.00%
Return on Average Equity (ROE)
   
4.49%   
7.14%   
12.13%   
10.34%   
10.47%
Average Equity to Average Assets
   
9.01%   
8.68%   
9.11%   
10.04%   
9.51%
 
Overview– 2024 Versus 2023
 
Analysis of 2024 Earnings. Net income and diluted earnings per share (“EPS”) for 2024 were $17.1 million and $0.75, respectively. Dividends per
share remained flat at $0.84 for 2024. ROA and ROE for 2024 were 0.40% and 4.49%, respectively. Book value per share was $16.77 at December 31,
2024 versus $16.83 at December 31, 2023.
 
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Net income and diluted EPS for 2024 were $17.1 million and $0.75, respectively, compared to $26.2 million and $1.16, respectively, in 2023. The principal
drivers of the change in earnings were a decline in net interest income of $13.6 million, a provision for credit losses of $359,000 as compared to a provision
reversal of  $326,000  in 2023, and  an increase in noninterest expense of  $4.1  million, partially offset by a  loss of  $3.5  million on the sales of
securities in 2023, an increase in the remaining noninterest income of $2.2 million and a decrease in income tax expense of $3.5 million. The year ended
December 31, 2024 produced an ROA of 0.40%, ROE of 4.49%, net interest margin of 1.83%, and an efficiency ratio of 79.00%. 
 
For the year ended December 31, 2024, net interest income declined due to an increase in interest expense of $25.5 million that was only partially offset by
an $11.8 million increase in interest income. Year over year, the cost of interest-bearing liabilities increased 90 basis points ("bps") while the yield on
interest-earning assets increased 31 bps. The Bank's balance sheet remains liability sensitive, however the pace of repricing of average interest-earning
assets began outpacing the repricing of average interest-bearing liabilities in the second half of 2024 as the FRB's easing of interest rates allowed the Bank
to reduce nonmaturity deposit rates.
 
The Bank recorded a provision for credit losses of $359,000 during 2024, compared to a provision reversal of $326,000 in 2023. The decline in the ACL in
2024 was driven largely by declines in historical loss rates and allowances on individually evaluated loans, partially offset by a deterioration in current and
forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties. The  Bank’s ACL to total loans (reserve
coverage ratio) remained stable at 0.88% of total loans at December 31, 2024 as compared to 0.89% at December 31, 2023. Past due loans and nonaccrual
loans were $270,000 and $3.2 million, respectively, at December 31, 2024. Overall credit quality of the loan and investment portfolios remains strong.
 
Noninterest income, excluding the loss on the sales of securities of $3.5 million in  the 2023 period, increased  $2.2 million, or  22.8%, year over
year.  Recurring components of noninterest income including BOLI  and service charges on deposit accounts had increases of 8.1%  and 11.3%,
respectively. Other noninterest income increased 45.7%  and included increases of $655,000 in merchant card services, $465,000  in interest rate swap
agreements ("back-to-back swap") fee income, $377,000 of BOLI benefit payments, and $242,000 in pension income, which were partially offset by a gain
on the disposition of premises and fixed assets of $240,000 in 2023.
 
Noninterest expense increased $4.1 million, or 6.4%, for the year ended December 31, 2024 as compared to the prior year. The change in noninterest
expense is mainly attributable to branch consolidation and merger expenses of $1.9 million and $1.2 million, respectively. Noninterest expense excluding
merger and branch consolidation expenses increased by $1.0 million, or 1.6%. The 6.3% year-over-year increase in salaries and employee benefits included
a variety of compensation and benefit categories including the vesting of certain awards during the fourth quarter of 2024. The decrease of $554,000 in
occupancy and equipment expense was largely due to the ongoing branch optimization strategy.  Lower other expenses included a decrease in
telecommunication expenses of $510,000 due to efficiencies with system upgrades and a smaller provision for off-balance sheet commitments of $310,000
due to a decrease in off-balance sheet credit exposure.
 
Income tax expense decreased $3.5 million and the effective tax rate (income tax expense or benefit as a percentage of pre-tax book income) declined from
11.0% in 2023 to (1.9%) in 2024. The decline in the effective tax rate was mainly due to an increase in the percentage of pre-tax income derived from the
Bank’s REIT, reducing the state and local income tax due. The decrease in income tax expense reflects the lower effective tax rate and a decline in pre-tax
income.
 
Asset Quality. The Bank’s reserve coverage ratio was 0.88% at December 31, 2024, compared to 0.89% at December 31, 2023. The decrease in the
reserve coverage ratio was driven largely  by  declines in historical loss rates and allowances on individually evaluated loans, partially offset by a
deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties. Gross loan
chargeoffs and recoveries were $1.1 million and $119,000, respectively, for the year ended December 31, 2024.
 
Nonaccrual loans were $3.2 million, or 0.10% of total loans outstanding, at December 31, 2024, compared to $1.1 million, or 0.03%, at December 31,
2023. Loans modified for  borrowers experiencing financial difficulty  prior to 2024  amounted to $421,000, or 0.01%  of total loans outstanding, at
December 31, 2024, compared to $431,000, or 0.01%, at December 31, 2023. All such modifications were performing in accordance with their modified
terms at December 31, 2024. Loans past due 30 through 89 days amounted to $270,000, or 0.01% of total loans outstanding, at December 31, 2024,
compared to $3.1 million, or 0.10%, at December 31, 2023.
 
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The Bank’s mortgage securities are backed by mortgages underwritten on conventional terms, with 22.5% of these securities being full faith and credit
obligations of the U.S. government and the balance being obligations of U.S. government sponsored entities. The remainder of the Bank’s securities
portfolio principally consists of high quality, general obligation municipal securities rated AA or better by major rating agencies and investment grade
corporate bonds of large U.S. financial institutions. In selecting securities for purchase, the Bank uses credit agency ratings for screening purposes only and
then performs its own credit analysis. On an ongoing basis, the Bank periodically assesses the credit strength of the securities in its portfolio and makes
decisions to hold or sell based on such assessments.
 
Overview – 2023 Versus 2022
 
Analysis of 2023 Earnings. Net income and diluted EPS for 2023 were $26.2 million and $1.16, respectively. Dividends per share increased 2.4%
from $0.82 for 2022 to $0.84 for 2023. ROA and ROE for 2023 were 0.62% and 7.14%, respectively, compared to 1.11% and 12.13%, respectively, for
2022.
 
Net income and EPS for 2023 were $26.2 million and $1.16, respectively, compared to $46.9 million and $2.04, respectively, in 2022. The principal drivers
of the decreases were declines in net interest income of $28.8 million, or 24.9%, and a loss on sale of securities of $3.5 million. These items were partially
offset by a decrease in income tax expense of $8.1 million and a decrease in the provision for credit losses of $2.7 million. The decline in net interest
income primarily resulted from the current rate environment’s impact on the Bank’s liability sensitive balance sheet. Reductions in net income negatively
impacted key financial ratios for the year as compared to historical results. For the year ended December 31, 2023, the ROA was 0.62%, ROE was 7.14%,
the net interest margin was 2.16%, and the efficiency ratio was 65.52%.
 
Over the second half of 2023, the pace of the decline in the net interest margin slowed considerably. After a 57 basis point reduction in the margin during
the first two quarters of 2023, over the final two quarters of 2023 the margin decreased 17 bps. The slowing downward trend in the net interest margin
largely resulted from a large portion of the wholesale funding and time deposits being repriced to higher market rates by mid-2023 and two balance sheet
repositioning transactions in the first quarter of 2023 that helped reduce the Bank’s liability sensitive position. Additionally, as the federal funds rate held
steady in the second half of the year, the demand for higher rates from depositors slowed.
 
For the year ended December 31, 2023, net interest income declined due to an increase in interest expense of $50.1 million that was only partially offset by
a $21.3 million increase in interest income. Year over year, the cost of interest-bearing liabilities increased 186 bps while the yield on interest-earning
assets increased 48 bps. Also contributing to the decline in net interest income was a shift in the mix of funding as average noninterest-bearing deposits
decreased $217.9 million while average interest-bearing liabilities increased $221.6 million as depositors took advantage of interest rates not seen in over a
decade.  
 
Noninterest income declined $2.8 million year over year excluding the net gains and losses on sales of securities and the disposition of premises and fixed
assets. The primary factor reducing noninterest income for the current year was a $2.3 million decline in the net pension credit, excluding service costs. The
remaining difference was related to a payment received in 2022 for the conversion of the Bank’s retail broker and advisory accounts to LPL.
 
Noninterest expense declined $3.0 million, or 4.4%, for the year ended December 31, 2023, as compared to the prior year. Reductions in salaries and
employee benefits of $3.7 million primarily drove the decline as short-term incentive compensation and stock-based compensation costs were substantially
lower than 2022 based on the Corporation falling short of established performance metrics for 2023. The primary offset to the lower salaries and employee
benefits was a $782,000 increase in FDIC insurance expense due to higher assessment rates.
 
The Bank recorded a credit loan loss provision of $326,000 during 2023. Changes in the loan loss reserve were driven largely by adjustments for economic
conditions offset by net chargeoffs of $2.1 million, or 6 bps of average loans. The reserve coverage ratio at year end 2023 was 0.89% of total loans as
compared to 0.95% of total loans at December 31, 2022. Past due loans and nonaccrual loans were modest at $3.1 million and $1.1 million, respectively, at
December 31, 2023. During the fourth quarter of 2023, the Bank partially charged off a previously identified substandard commercial and industrial loan
relationship in the amount of $1.4 million. The remaining outstanding balance of $632,000 was fully reserved and represented the majority of outstanding
nonaccrual loans. Overall credit quality in the loan and investment portfolios remains strong.
 
Income tax expense decreased $8.1 million and the effective tax rate declined from 19.4% in 2022 to 11.0% in 2023. The decline in the effective tax rate
was mainly due to an increase in the percentage of pre-tax income derived from the Bank's REIT and BOLI. The decrease in income tax expense reflects
the lower effective tax rate and a decline in pre-tax income.
 
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Table of Contents
 
Asset Quality. The Bank’s reserve coverage ratio was 0.89% at December 31, 2023, compared to 0.95% at December 31, 2022. The decrease in the
reserve coverage ratio was mainly due to improvements in historical loss rates and other portfolio metrics, partially offset by specific reserves taken against
two commercial and industrial loans. Gross loan chargeoffs and recoveries were $2.2 million and $96,000, respectively, for the year ended December 31,
2023.
 
Nonaccrual loans were $1.1 million, or 0.03% of total loans outstanding, at December 31, 2023. The Bank had no nonaccrual loans at December 31, 2022.
Loans modified for borrowers experiencing financial difficulty prior to 2023 amounted to $431,000, or 0.01% of total loans outstanding, at December 31,
2023, compared to $480,000, or 0.01%, at December 31, 2022. All such modifications were  performing in accordance with their modified terms at
December 31, 2023. Loans past due 30 through 89 days amounted to $3.1 million, or 0.10% of total loans outstanding, at December 31, 2023, compared to
$750,000, or 0.02%, at December 31, 2022.
 
Significant Events
 
On September 4, 2024, the Corporation entered into a Merger Agreement with 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, and
the Bank will merge into ConnectOne Bank, with ConnectOne Bank as the surviving institution. Upon closing of the transaction, the Corporation's
shareholders will receive 0.5175 shares of ConnectOne common stock for each share of the Corporation's common stock. The Corporation held a special
meeting of shareholders on February 14, 2025  at which time the Corporation's shareholders approved the Merger Agreement and the transactions
contemplated thereunder. The merger remains subject to the receipt of certain regulatory approvals and the satisfaction of other customary closing
conditions. The Corporation expects the transaction to close in the second quarter of 2025.
 
Application of Critical Accounting Policies
 
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 judgments 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 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.
 
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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 (probability of default/loss given default) 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 December 31, 2024, the ACL was composed approximately 82% of Q-
factors, 17% 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.
 
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Table of Contents
 
Net Interest Income
 
Average Balance Sheet; Interest Rates and Interest Differential. The following table sets 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.
 
 
 
2024
   
2023
   
2022
 
 
 
Average
   
Interest/
   
Average    
Average    
Interest/    
Average    
Average    
Interest/    
Average  
(dollars in thousands)
 
Balance
   
Dividends    
Rate
   
Balance     Dividends    
Rate
   
Balance     Dividends    
Rate
 
Assets:
     
       
       
       
       
       
       
       
       
 
Interest-earning bank balances
  $
60,259    $
3,221     
5.35%  $
48,879    $
2,508     
5.13%  $
35,733    $
674     
1.89%
Investment securities:
     
       
       
       
       
       
       
       
       
 
Taxable
   
611,936     
23,191     
3.79     
584,450     
20,155     
3.45     
442,758     
9,121     
2.06 
Nontaxable (1)
   
152,575     
4,843     
3.17     
196,341     
6,271     
3.19     
318,836     
10,206     
3.20 
Loans (1)
    3,237,664     
137,092     
4.23      3,260,903     
127,868     
3.92      3,276,589     
116,357     
3.55 
Total interest-earning assets
    4,062,434     
168,347     
4.14      4,090,573     
156,802     
3.83      4,073,916     
136,358     
3.35 
Allowance for credit losses
   
(28,613)    
      
      
(30,291)    
      
      
(30,604)    
      
  
Net interest-earning assets
    4,033,821     
      
       4,060,282     
      
       4,043,312     
      
  
Cash and due from banks
   
32,207     
      
      
30,847     
      
      
33,471     
      
  
Premises and equipment, net
   
30,700     
      
      
32,027     
      
      
37,376     
      
  
Other assets
   
124,909     
      
      
112,833     
      
      
132,893     
      
  
 
  $ 4,221,637     
      
     $ 4,235,989     
      
     $ 4,247,052     
      
  
Liabilities and Stockholders'
Equity:
     
       
       
       
       
       
       
       
       
 
Savings, NOW & money market
deposits
  $ 1,591,320     
45,254     
2.84    $ 1,657,947     
32,164     
1.94    $ 1,728,897     
7,180     
0.42 
Time deposits
   
622,229     
27,509     
4.42     
553,096     
19,267     
3.48     
368,922     
5,296     
1.44 
Total interest-bearing deposits
    2,213,549     
72,763     
3.29      2,211,043     
51,431     
2.33      2,097,819     
12,476     
0.59 
Overnight advances
   
7,156     
401     
5.60     
17,529     
950     
5.42     
57,119     
1,207     
2.11 
Other borrowings
   
446,837     
20,947     
4.69     
380,399     
16,237     
4.27     
232,465     
4,814     
2.07 
Total interest-bearing liabilities     2,667,542     
94,111     
3.53      2,608,971     
68,618     
2.63      2,387,403     
18,497     
0.77 
Checking deposits
    1,135,579     
      
       1,220,947     
      
       1,438,890     
      
  
Other liabilities
   
38,159     
      
      
38,575     
      
      
33,920     
      
  
 
    3,841,280     
      
       3,868,493     
      
       3,860,213     
      
  
Stockholders' equity
   
380,357     
      
      
367,496     
      
      
386,839     
      
  
 
  $ 4,221,637     
      
     $ 4,235,989     
      
     $ 4,247,052     
      
  
 
     
       
       
       
       
       
       
       
       
 
Net interest income (1)
   
     $
74,236     
      
     $
88,184     
      
     $
117,861     
  
Net interest spread (1)
   
      
      
0.61%   
      
      
1.20%   
      
      
2.58%
Net interest margin (1)
   
      
      
1.83%   
      
      
2.16%   
      
      
2.89%
 
(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 loans and investment securities had been made in loans and investment securities subject to federal income
taxes yielding the same after-tax income. The tax-equivalent amount of $1.00 of nontaxable income was $1.27 for each period presented using the
statutory federal income tax rate of 21%.
 
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Table of Contents
 
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 a combined impact of volume and rate have been allocated to the changes due to volume and the changes
due to rate.
 
 
 
2024 Versus 2023
   
2023 Versus 2022
 
 
 
Increase (decrease) due to changes in:
   
Increase (decrease) due to changes in:
 
 
   
 
     
 
   
Net
     
 
     
 
   
Net
 
(in thousands)
 
Volume
   
Rate
   
Change
   
Volume
   
Rate
   
Change
 
Interest Income:
     
       
       
       
       
       
 
Interest-earning bank balances
  $
602    $
111    $
713    $
325    $
1,509    $
1,834 
Investment securities:
     
       
       
       
       
       
 
Taxable
   
984     
2,052     
3,036     
3,550     
7,484     
11,034 
Nontaxable
   
(1,382)    
(46)    
(1,428)    
(3,900)    
(35)    
(3,935)
Loans
   
(942)    
10,166     
9,224     
(594)    
12,105     
11,511 
Total interest income
   
(738)    
12,283     
11,545     
(619)    
21,063     
20,444 
Interest Expense:
     
       
       
       
       
       
 
Savings, NOW & money market deposits
   
(1,335)    
14,425     
13,090     
(226)    
25,210     
24,984 
Time deposits
   
2,600     
5,642     
8,242     
3,652     
10,319     
13,971 
Overnight advances
   
(580)    
31     
(549)    
(1,239)    
982     
(257)
Other borrowings
   
3,011     
1,699     
4,710     
4,277     
7,146     
11,423 
Total interest expense
   
3,696     
21,797     
25,493     
6,464     
43,657     
50,121 
Decrease in net interest income
  $
(4,434)   $
(9,514)   $
(13,948)   $
(7,083)   $
(22,594)   $
(29,677)
 
Net Interest Income– 2024 Versus 2023
 
Net interest income on a tax-equivalent basis was $74.2 million in 2024, a decrease of $13.9 million, or 15.8%, from $88.2 million in 2023. Net interest
income declined due to an increase in interest expense that was only partially offset by an increase in interest income. Year over year, the cost of interest-
bearing liabilities increased 90 bps while the yield on interest-earning assets increased 31 bps. The Bank's balance sheet remains liability sensitive, however
the pace of repricing of average interest-earning assets began outpacing the repricing of average interest-bearing liabilities in the second half of 2024 as the
FRB's easing of interest rates allowed the Bank to reduce nonmaturity deposit rates. Net interest margin for 2024 was 1.83% versus 2.16% in 2023.
 
Net Interest Income – 2023 Versus 2022
 
Net interest income on a tax-equivalent basis was $88.2 million in 2023, a decrease of $29.7 million, or 25.2%, from $117.9 million in 2022. Net interest
income declined due to an increase in interest expense that was only partially offset by an increase in interest income. Year over year, the cost of interest-
bearing liabilities increased 186 bps while the yield on interest-earning assets increased 48 bps. Also contributing to the decline in net interest income was a
shift in the mix of funding as average noninterest-bearing deposits decreased $217.9 million while average interest-bearing liabilities increased $221.6
million as depositors took advantage of interest rates not seen in over a decade.
 
Noninterest Income
 
Noninterest income includes service charges on deposit accounts, gains or losses on sales of securities and other assets, income on BOLI, back-to-back
swap fee income, and all other items of income, other than interest, resulting from the business activities of the Corporation.
 
Noninterest income, excluding the loss on the sales of securities of $3.5 million in  the 2023 period, increased  $2.2 million, or  22.8%, year over
year.  Recurring components of noninterest income including BOLI  and service charges on deposit accounts had increases of 8.1%  and 11.3%,
respectively. Other noninterest income increased 45.7% and included increases of $655,000 in merchant card services, $465,000 in back-to-back swap fee
income, $377,000 of BOLI benefit payments, and $242,000 in pension income, which were partially offset by a gain on the disposition of premises and
fixed assets of $240,000 in 2023.
 
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Noninterest income was $6.3 million in 2023 compared to $11.9 million in 2022. Excluding the net gains and losses on sales of securities and the
disposition of premises and fixed assets, noninterest income was $9.6 million in 2023 compared to $12.4 million in 2022. The primary factor reducing
noninterest income for the current year was a $2.3 million decline in the net pension credit, excluding service costs. The remaining difference was related
to a payment received in 2022 for the conversion of the Bank’s retail broker and advisory accounts to LPL.
 
Noninterest Expense
 
Noninterest expense is comprised of salaries and employee benefits and other personnel expense, occupancy and equipment expense, branch consolidation
and merger expenses and other operating expenses incurred in supporting the various business activities of the Corporation.
 
Noninterest expense increased $4.1 million, or 6.4%, for the year ended December 31, 2024 as compared to 2023. The change in noninterest expense is
mainly attributable to branch consolidation and merger expenses of $1.9 million and $1.2 million, respectively. Noninterest expense excluding merger and
branch consolidation expenses increased by $1.0 million, or 1.6%. The 6.3% year-over-year increase in salaries and employee benefits included a variety of
compensation and benefit categories including the vesting of certain awards during the fourth quarter of 2024. The decrease of $554,000 in occupancy and
equipment expense was largely due to the ongoing branch optimization strategy. Lower other expenses included a decrease in telecommunication expenses
of $510,000 due to efficiencies with system upgrades and a smaller provision for off-balance sheet commitments of $310,000 due to a decrease in off-
balance sheet credit exposure.
 
Noninterest expense declined $3.0 million, or 4.4%, for the year ended December 31, 2023, as compared to 2022. Reductions in salaries and employee
benefits of $3.7 million primarily drove the decline as short-term incentive compensation and stock-based compensation costs were substantially lower
than 2022 based on the Corporation falling short of established performance metrics for 2023. The primary offset to the lower salaries and employee
benefits was a $782,000 increase in FDIC insurance expense due to higher assessment rates.
 
Income Taxes
 
The Corporation’s effective tax rate was (1.9%) and 11.0% in 2024 and 2023, respectively. The effective tax rate reflects the tax benefits derived from the
Bank’s municipal securities portfolio, ownership of BOLI and maintenance of a captive REIT.
 
2024 Versus 2023. Income tax expense decreased $3.5 million due to lower pre-tax earnings in 2024 and a decrease in the effective tax rate. The
decrease in the effective tax rate is mainly due to an increase in the percentage of pre-tax income derived from the REIT, reducing the state and local
income tax due.
 
2023 Versus 2022. Income tax expense decreased $8.1 million due to lower pre-tax earnings in 2023 and a decrease in the effective tax rate. The
decrease in the effective tax rate is mainly due to an increase in the percentage of pre-tax income derived from the REIT and BOLI in 2023.
 
Financial Condition
 
Total assets were $4.1 billion at December 31, 2024, a decrease of $116.6 million, or 2.8%, from the previous year end. The decrease was primarily
attributable to a decrease in securities of $71.1 million, or 10.2%, along with a decrease in loans of $26.5 million, or 0.8%. Total deposits remained
relatively flat at  $3.3  billion at December 31, 2024. Overnight advances and other borrowings were down by  $70.0  million and  $37.5 million,
respectively. Stockholders’ equity decreased $1.2 million, or 0.3%, from December 31, 2023. The decrease was mainly due to cash dividends declared
of  $18.9  million and  common stock repurchases of  $2.0  million, partially offset by net income of $17.1  million, stock compensation expense
of $2.2 million, and an increase in other comprehensive income of $552,000 primarily due to a change in the funded status of the pension plan.
 
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Table of Contents
 
Investment Securities. The following table presents the estimated fair value of AFS securities at December 31, 2024 and 2023.
 
(in thousands)
 
2024
   
2023
 
State and municipals
  $
135,543    $
143,621 
Pass-through mortgage securities
   
129,440     
138,603 
Collateralized mortgage obligations
   
145,059     
182,262 
SBA agency obligations
   
101,427     
125,476 
Corporate bonds
   
113,310     
105,915 
 
  $
624,779    $
695,877 
 
The following table presents the maturities and weighted average tax equivalent yields of the Bank’s AFS investment securities at December 31, 2024.
Yields on AFS securities have been computed based on amortized cost.
 
 
 
Principal Maturing (1)
 
 
 
Within
   
After One But
   
After Five But
   
After
 
 
 
One Year
   
Within Five Years
   
Within Ten Years
   
Ten Years
 
(dollars in thousands)
 
Amount
   
Yield
   
Amount
   
Yield
   
Amount
   
Yield
   
Amount
   
Yield
 
State and municipals
  $
1,397     
4.15%  $
18,671     
2.93%  $
36,546     
3.14%  $
78,929     
3.22%
Pass-through mortgage
securities
   
13     
2.87     
—     
—     
—     
—     
129,427     
1.73 
Collateralized mortgage
obligations
   
—     
—     
—     
—     
—     
—     
145,059     
3.22 
SBA agency obligations
   
—     
—     
—     
—     
23,071     
6.46     
78,356     
5.03 
Corporate bonds
   
—     
—     
113,310     
4.46     
—     
—     
—     
— 
 
  $
1,410     
4.14%  $
131,981     
4.24%  $
59,617     
4.42%  $
431,771     
3.10%
 
(1) Maturities shown are stated maturities, except in the case of municipal securities, which are shown at the earlier of their stated maturity or pre-refunded
dates. Mortgage  and asset-backed securities, consisting of  pass-through mortgage securities,  collateralized mortgage obligations and SBA agency
obligations, are expected to have periodic repayments resulting in average lives shorter than the stated maturities shown in the table above.
 
During 2023, the Bank sold $148.9 million of fixed rate municipal securities at a loss of $3.5 million. No securities were sold in 2024 and 2022.
 
During 2024, the Bank received cash dividends of $2.6 million on its FRB and FHLB stock, representing an average yield of 9.09%.
 
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Table of Contents
 
Loans. The composition of the Bank’s loan portfolio is set forth below.
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
 
Commercial and industrial
  $
136,732    $
116,163 
Commercial mortgages:
     
       
 
Multifamily
   
848,558     
857,163 
Other
   
851,277     
829,090 
Owner-occupied
   
263,272     
233,461 
Residential mortgages:
     
       
 
Closed end
   
1,084,090     
1,166,887 
Revolving home equity
   
36,468     
44,070 
Consumer and other
   
1,210     
1,230 
 
   
3,221,607     
3,248,064 
Allowance for credit losses
   
(28,331)    
(28,992)
 
  $
3,193,276    $
3,219,072 
 
Maturity information for loans outstanding at December 31, 2024 is set forth below. Variable rate loans have varying repricing dates but are disclosed at
their contractual maturity.
 
 
 
Maturity
 
 
 
Within
   
After One But Within
   
After Five But Within
   
After
     
 
 
 
 
One Year    
Five Years
   
Fifteen Years
   
Fifteen Years
   
Total
 
(in thousands)
   
 
   
Fixed
   
Variable
   
Fixed
   
Variable
   
Fixed
   
Variable
     
 
 
Commercial and industrial
  $
36,871    $
34,215    $
40,882    $
17,668    $
7,096    $
—    $
—    $
136,732 
Commercial mortgages:
     
       
       
       
       
       
       
       
 
Multifamily
   
—     
38,056     
135,186     
149,755     
337,359     
18,200     
170,002     
848,558 
Other
   
31,357     
146,440     
56,038     
276,608     
228,676     
17,021     
95,137     
851,277 
Owner-occupied
   
2,180     
4,586     
4,862     
117,487     
72,579     
317     
61,261     
263,272 
Residential mortgages:
     
       
       
       
       
       
       
       
 
Closed end (1)
   
216     
9,223     
—     
62,237     
15,748     
536,766     
460,425      1,084,615 
Revolving home equity
   
—     
—     
144     
926     
5,802     
—     
29,596     
36,468 
Consumer and other
   
317     
37     
856     
—     
—     
—     
—     
1,210 
 
  $
70,941    $
232,557    $
237,968    $
624,681    $
667,260    $
572,304    $
816,421    $ 3,222,132 
 
(1)Certain fixed rate residential mortgage loans are included in a fair value hedging relationship. The amortized cost excludes an adjustment  of
$525,000 related to basis adjustments for loans in the closed portfolio under the portfolio layer method at December 31, 2024. These basis adjustments
would be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated. See "Note N - Derivatives" to the
Corporation’s consolidated financial statements of this Form 10-K for more information on the fair value hedge.
 
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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.
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
 
Loans including modifications to borrowers experiencing financial difficulty:
     
       
 
Modified and performing according to their modified terms
  $
421    $
431 
Past due 30 through 89 days
   
270     
3,086 
Past due 90 days or more and still accruing
   
—     
— 
Nonaccrual
   
3,229     
1,053 
 
   
3,920     
4,570 
Other real estate owned
   
—     
— 
 
  $
3,920    $
4,570 
 
The past due status of a loan is based on the contractual terms in the loan agreement. Unless a loan is well secured and in the process of collection, the
accrual of interest income is discontinued when a loan becomes 90 days past due as to principal or interest payments. The accrual of interest income on a
loan is also discontinued when it is determined that the borrower will not be able to make principal and interest payments according to the contractual terms
of the current loan agreement. When the accrual of interest income is discontinued on a loan, any accrued but unpaid interest is reversed against current
period income.
 
At December 31, 2024, commercial mortgages comprised $2.0 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 50.4% and a weighted
average of the most recent debt service coverage ratio (“DSCR”) of 2.10x. Multifamily loans made up 43%  of the commercial real estate portfolio,
amounting to $848.6 million at December 31, 2024. Multifamily loans had an average loan size of $2.4 million, a weighted average current LTV based on
the most recent appraisal which may not be reflective of current values of 50.2%, a weighted average of the most recent DSCR of 1.91x and 53.7% were
majority rent regulated.
 
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Table of Contents
 
Loan Risk Ratings. Risk ratings of the Corporation’s loans are set forth in the tables below. Risk ratings are defined in “Note C – Loans” to the
Corporation’s consolidated financial statements of this Form 10-K. Deposit account overdrafts are not assigned a risk rating and appear as “not rated” in the
following tables.
 
 
 
December 31, 2024
 
 
 
Internally Assigned Risk Rating
     
 
     
 
 
 
   
 
     
 
   
Special
     
 
     
 
     
 
     
 
 
(in thousands)
 
Pass
   
Watch
   
Mention     Substandard   
Doubtful     Not Rated    
Total
 
Commercial and industrial
  $
129,796    $
6,309    $
123    $
504    $
—    $
—    $
136,732 
Commercial mortgages:
     
       
       
       
       
       
       
 
Multifamily
   
843,287     
—     
4,081     
1,190     
—     
—     
848,558 
Other
   
831,255     
—     
—     
20,022     
—     
—     
851,277 
Owner-occupied
   
254,072     
8,339     
861     
—     
—     
—     
263,272 
Residential mortgages:
     
       
       
       
       
       
       
 
Closed end
   
1,081,469     
—     
—     
2,621     
—     
—      1,084,090 
Revolving home equity
   
36,468     
—     
—     
—     
—     
—     
36,468 
Consumer and other
   
1,161     
—     
—     
—     
—     
49     
1,210 
 
  $ 3,177,508    $
14,648    $
5,065    $
24,337    $
—    $
49    $ 3,221,607 
 
 
 
December 31, 2023
 
 
 
Internally Assigned Risk Rating
     
 
     
 
 
 
   
 
     
 
   
Special
     
 
     
 
     
 
     
 
 
(in thousands)
 
Pass
   
Watch
   
Mention     Substandard   
Doubtful     Not Rated    
Total
 
Commercial and industrial
  $
112,732    $
2,709    $
—    $
722    $
—    $
—    $
116,163 
Commercial mortgages:
     
       
       
       
       
       
       
 
Multifamily
   
857,163     
—     
—     
—     
—     
—     
857,163 
Other
   
807,630     
916     
—     
20,544     
—     
—     
829,090 
Owner-occupied
   
228,107     
5,354     
—     
—     
—     
—     
233,461 
Residential mortgages:
     
       
       
       
       
       
       
 
Closed end
   
1,166,556     
—     
—     
331     
—     
—      1,166,887 
Revolving home equity
   
44,070     
—     
—     
—     
—     
—     
44,070 
Consumer and other
   
1,123     
—     
—     
—     
—     
107     
1,230 
 
  $ 3,217,381    $
8,979    $
—    $
21,597    $
—    $
107    $ 3,248,064 
 
Allowance and Provision for Credit Losses.The ACL decreased by $661,000 during 2024 amounting to $28.3 million, or 0.88% of total loans, on
December 31, 2024, compared to $29.0 million, or 0.89% of total loans, at December 31, 2023. The decrease in the reserve coverage ratio was driven
largely by declines in historical loss rates and allowances on individually evaluated loans, partially offset by a deterioration in current and forecasted
economic conditions, including adjustments for rent stabilization status of multifamily properties. Nonaccrual loans, modifications to borrowers
experiencing financial difficulty and loans past due 30 through 89 days remain at low levels.
 
During 2024, the Bank had loan chargeoffs of $1.1 million, recoveries of $119,000 and recorded a provision for credit losses of $359,000. Chargeoffs and
deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties, were the main
drivers of the provision recorded in 2024, partially offset by declines in historical loss rates and allowances on individually evaluated loans.
 
During 2023, the Bank had loan chargeoffs of $2.2 million, recoveries of $96,000 and recorded a credit provision for credit losses of $326,000. The credit
provision was mainly due to improvements in historical loss rates, economic forecasts of  unemployment  and GDP  and other portfolio metrics and a
decrease in outstanding mortgage loans, partially offset by net chargeoffs and allowances for individually evaluated loans.
 
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 the “Application of Critical Accounting Policies” section of this document, 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 C – Loans” to the Corporation’s consolidated financial
statements of this Form 10-K.
 
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The following table sets forth balances and credit ratios of the Bank’s loan portfolio.
 
 
 
December 31,
 
(dollars in thousands)
 
2024
   
2023
 
Total loans outstanding
  $
3,221,607    $
3,248,064 
Average loans outstanding
   
3,237,664     
3,260,903 
Allowance for credit losses
   
28,331     
28,992 
Total nonaccrual loans
   
3,229     
1,053 
Net chargeoffs
   
1,020     
2,114 
 
     
       
 
Allowance for credit losses as a percentage of total loans
   
0.88%   
0.89%
Nonaccrual loans as a percentage of total loans
   
0.10%   
0.03%
Net chargeoffs as a percentage of average loans outstanding
   
0.03%   
0.06%
Allowance for credit losses as a multiple of nonaccrual loans
   
8.8x    
27.5x
 
The following table sets forth net chargeoffs by loan type, average loans during the period and the percentage of net chargeoffs over average loans.
 
 
 
December 31,
 
 
 
2024
   
2023
 
 
 
Net
   
Average
    % of Average    
Net
   
Average
    % of Average  
(dollars in thousands)
 
Chargeoffs
   
Loans
   
Loans
   
Chargeoffs
   
Loans
   
Loans
 
Commercial and industrial
  $
871    $
133,737     
.65%  $
1,945    $
108,453     
1.79%
Commercial mortgages:
     
       
       
       
       
       
 
Multifamily
   
168     
859,878     
.02     
—     
861,758     
— 
Other
   
—     
830,774     
—     
(15)    
801,772     
— 
Owner-occupied
   
—     
248,448     
—     
—     
242,917     
— 
Residential mortgages:
     
       
       
       
       
       
 
Closed end
   
(51)    
1,128,170     
—     
176     
1,199,594     
0.01 
Revolving home equity
   
—     
35,368     
—     
—     
45,321     
— 
Consumer and other
   
32     
1,289     
2.48     
8     
1,088     
0.74 
 
  $
1,020    $
3,237,664     
0.03%  $
2,114    $
3,260,903     
0.06%
 
The following table sets forth the allocation of the Bank’s total ACL by loan type.
 
 
 
December 31,
 
 
 
2024
   
2023
 
 
   
 
   
% of Loans      
 
   
% of Loans  
 
   
 
   
to Total
     
 
   
to Total
 
(dollars in thousands)
 
Amount
   
Loans
   
Amount
   
Loans
 
Commercial and industrial
  $
1,365     
4.2%  $
2,030     
3.6%
Commercial mortgages:
     
       
       
       
 
Multifamily
   
8,734     
26.3     
6,817     
26.4 
Other
   
7,597     
26.4     
7,850     
25.5 
Owner-occupied
   
3,243     
8.2     
3,104     
7.2 
Residential mortgages:
     
       
       
       
 
Closed end
   
7,107     
33.8     
8,838     
35.9 
Revolving home equity
   
269     
1.1     
339     
1.4 
Consumer and other
   
16     
—     
14     
— 
 
  $
28,331     
100.0%  $
28,992     
100.0%
 
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Table of Contents
 
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 December 31, 2024. The majority of these loans are
collateralized by properties located on Long Island and in the boroughs of NYC. While business activity in the NY 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.
 
Deposits and Other Borrowings. Total deposits remained relatively flat at $3.3 billion during 2024, as compared to prior year. Growth in savings,
NOW and money market deposits of $27.8 million, or 1.8%, and time deposits of $24.6 million, or 4.2%, was offset by a decline in noninterest-bearing
checking deposits of  $58.5  million, or 5.2%.  Noninterest-bearing checking deposits of $1.1  billion represent 32.9%  of total deposits.  Brokered time
deposits remained relatively flat during 2024, totaling $175.0 million, or 5.4%, of total deposits. Brokered time deposits have a weighted average cost of
4.85% and an average maturity of approximately 7 months, of which $45.0 million, or 25.7%, will mature in the first quarter of 2025 with an average cost
of 4.85%. Reciprocal deposits under the Insured Cash Sweep (“ICS”) program were $10.4 million at December 31, 2024.
 
The aggregate amount of uninsured deposits (amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was
$1.5 billion at December 31, 2024 and $1.7 billion at December 31, 2023.
 
The following table sets forth the remaining maturity of uninsured time deposits, by account.
 
(in thousands)
 
December
31, 2024  
3 months or less
 $
39,882 
Over 3 through 6 months
  
20,807 
Over 6 through 12 months
  
9,609 
Over 12 months
  
3,078 
 
 $
73,376 
 
Borrowings include overnight advances and other borrowings. There were no overnight advances at December 31, 2024, compared to $70.0 million at
year-end 2023. Other borrowings decreased $37.5 million, or 7.9%, in 2024, to $435.0 million at December 31, 2024. Maturities of $387.5 million with a
weighted average rate of 4.79% were partially offset by new borrowings of $350.0 million with a weighted average rate of 4.43%. Other borrowings at
December 31, 2024 had a weighted average cost of 4.39% and an average maturity of 13 months. 
 
Capital. Stockholders’ equity totaled $378.9 million at December 31, 2024, a decrease of $1.2 million from $380.1 million at December 31, 2023. The
decrease was mainly due to cash dividends declared of $18.9 million and common stock repurchases of $2.0 million, partially offset by net income of
$17.1 million, stock compensation expense of $2.2 million, and an increase in other comprehensive income of $552,000 primarily due to a change in the
funded status of the pension plan.
 
The Corporation’s ROE was 4.49%,  7.14% and 12.13% for the years ended December 31, 2024,  2023 and 2022, respectively and its ROA was
0.40%, 0.62% and 1.11%, respectively. Book value per share decreased $0.06 during 2024 to $16.77 at December 31, 2024, from $16.83 at December 31,
2023. Based on the Corporation’s market value per share at December 31, 2024 of $11.68, the dividend yield is 7.19%.
 
The Corporation and the Bank elected to adopt the CBLR framework in 2020, which requires a leverage ratio of greater than 9.00%. As a qualifying
community banking organization, the Corporation and the Bank may opt out of the CBLR framework in any subsequent quarter by completing its
regulatory agency reporting using the traditional capital rules. In addition, the Corporation and the Bank exclude accumulated OCI components from Tier 1
and Total regulatory capital, in accordance with the federal banking agencies’ regulatory capital guidelines.
 
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 ratio of the Corporation and the Bank at December 31, 2024 was  10.12% and 10.11%, respectively, and  satisfies  the well
capitalized ratio requirements under the PCA statutes. The Corporation and the Bank elected the optional five-year transition period provided by the federal
banking agencies for recognizing the regulatory capital impact of the implementation of CECL.
 
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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. During the first quarter of 2024, the Corporation repurchased 167,526 shares of its common stock at a total cost of $2.0
million. No shares were repurchased in the subsequent quarters of 2024 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. 
 
Cash Flows and Liquidity
 
Cash Flows. During 2024, the Corporation’s cash and cash equivalent position decreased by $22.6 million, from $60.9 million at December 31, 2023
to $38.3 million at December 31, 2024. The decrease occurred primarily because cash used to repay borrowings exceeded cash provided by net paydowns
from loans and securities.
 
Securities decreased $71.1 million during 2024, from $695.9 million at year-end 2023 to $624.8 million at December 31, 2024. The decrease was primarily
attributable to $74.2 million in paydowns and maturities, amortization and accretion of $2.4 million, and a decrease in the unrealized loss of $1.4 million,
partially offset by purchases of $6.9 million. 
 
The Bank’s securities portfolio comprised
15% of total assets at
December 31, 2024 and had a
duration of approximately 3.8 years. Approximately
34% of
the portfolio was comprised of floating rate assets, including
$101.4 million of SBA a
gency obligations with a current yield of 5.35% that reprice quarterly
based on the prime rate and $113.3
 million of floating rate corporate bonds with a current yield of approximately 4.46% that reprice quarterly based on the
ten year constant maturity swap rate.
 
Government agency fixed rate mortgage-backed securities, including collateralized mortgage obligations, were
$274.5 million and comprised
43.9% of the
investment portfolio at
December 31, 2024.
This portfolio had a current yield of 2.49%. The Bank expects approximately
$57.3 million of cash inflows
from the investment securities portfolio over the next twelve months. The remaining
22% of the portfolio is invested in tax exempt municipal bonds th
at
currently yield 3.17% on a tax adjusted basis.
 
The $3.2  billion loan portfolio was comprised of $2.0  billion of commercial mortgages, $1.1  billion of residential mortgages and $136.7  million of
commercial and industrial loans. Approximately $704.9 million, or 21.9%, will reprice by December 31, 2025, of which $300.0 million is related to the
three-year interest rate swap transaction discussed in "Note N - Derivatives" to the Corporation’s consolidated financial statements of this Form 10-K. The
Bank expects an additional $243.0 million, or 7.5%, of the loan portfolio to reprice from approximately 3.51% to 7.03% from December 31, 2025 to
December 31, 2026 based on current rates. We expect approximately $349.5 million of cash inflows from the mortgage loan portfolio over the next twelve
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. 
 
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The  Bank had  $583.3  million available in collateralized borrowing lines with the FHLBNY and the FRBNY at December 31, 2024, as well as a
$20.0  million unsecured line of credit with a correspondent bank. We also had  $265.5  million in unencumbered cash and securities. In total, we
had  approximately  $868.8  million of available liquidity, compared to an aggregate of  uninsured and uncollateralized deposits of approximately
$968.1 million. Uninsured and uncollateralized deposits represented 29.7% of total deposits. 
 
Off-Balance Sheet Arrangements and Contractual Obligations. Commitments to extend credit and letters of credit arise in the normal course of the
Bank’s business of meeting the financing needs of its customers and involve, to varying degrees, elements of credit risk in excess of the amount recognized
in the consolidated balance sheets. Since some of the commitments to extend credit and letters of credit are expected to expire without being drawn upon
and, with respect to unused home equity, small business and certain other lines, can be frozen, reduced or terminated by the Bank based on the financial
condition of the borrower, the total commitment amounts do not necessarily represent future cash requirements.
 
The Bank's exposure to credit loss in the event of non-performance by the other party to financial instruments for commitments to extend credit and letters
of credit is represented by the contractual notional amount of these instruments. The Bank uses the same credit policies in making commitments to extend
credit, and generally uses the same credit policies for letters of credit, as it does for on-balance sheet instruments such as loans.
 
The Corporation believes that its current sources of liquidity are sufficient to fulfill the obligations it has at December 31, 2024 pursuant to off-balance
sheet arrangements and contractual obligations.
 
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ITEM 7A. 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
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.
 
In utilizing interest rate sensitivity modeling to project net interest income and calculate EVE, management makes a variety of estimates and assumptions
which include the following: (1) how much and when yields and costs on individual categories of interest-earning assets and interest-bearing liabilities will
change in response to projected changes in market interest rates; (2) future cash flows, including prepayments of mortgage assets and calls of municipal
securities; (3) cash flow reinvestment assumptions; (4) appropriate discount rates to be applied to loan, deposit and borrowing cash flows; and (5) decay or
runoff rates for nonmaturity deposits such as checking, savings, NOW and money market accounts. The repricing of loans and borrowings and the
reinvestment of loan and security cash flows are generally assumed to be impacted by the full amount of each assumed rate change, while the repricing of
nonmaturity deposits is not. For nonmaturity deposits, management makes estimates of how much and when it will need to change the rates paid on the
Bank’s various nonmaturity deposit products in response to changes in general market interest rates. These estimates are based on product type,
management’s experience with needed deposit rate adjustments in prior interest rate change cycles, the results of a nonmaturity deposit study conducted by
an independent consultant and updated on a periodic basis and management’s assessment of competitive conditions in its marketplace.
 
The information provided in the following table is based on a variety of estimates and assumptions that management believes to be reasonable, the more
significant of which are set forth hereinafter. The base case information in the table shows: (1) a calculation of the Corporation’s EVE at December 31,
2024 arrived at by discounting estimated future cash flows at rates that management believes are reflective of current market conditions; and (2) an
estimate of net interest income for the year ending December 31, 2025 assuming a static balance sheet, the adjustment of repricing balances to current rate
levels, and the reinvestment at current rate levels of cash flows from maturing assets and liabilities in a mix of assets and liabilities that is intended to
reflect a static balance sheet. In addition, in calculating EVE, cash flows for nonmaturity deposits are assumed to have an overall life of 5.7 years based on
the current mix of such deposits and the most recently updated nonmaturity deposit study.
 
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The rate change information in the following table shows estimates of net interest income for the year ending December 31, 2025 and calculations of EVE
at December 31, 2024 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 December 31, 2024
   
2025
 
 
   
 
   
Percent Change      
 
   
Percent Change  
 
   
 
   
From
     
 
   
From
 
Rate Change Scenario (dollars in thousands)
 
Amount
   
Base Case
   
Amount
   
Base Case
 
+ 300 basis point rate shock
  $
347,272   
-27.5%
    $
73,265   
-10.0%
 
+ 200 basis point rate shock
   
386,461   
-19.4%
     
75,897   
-6.8%
 
+ 100 basis point rate shock
   
435,890   
-9.1%
     
78,873   
-3.1%
 
Base case (no rate change)
   
479,301   
—
     
81,408   
—
 
- 100 basis point rate shock
   
520,451   
8.6%
     
83,527   
2.6%
 
- 200 basis point rate shock
   
543,621   
13.4%
     
84,686   
4.0%
 
- 300 basis point rate shock
   
549,411   
14.6%
     
85,002   
4.4%
 
 
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 December 31, 2025 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 December 31, 2024, approximately $919.7 million of the Bank's loans and securities, or 22.3% 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 non-maturity 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. The negative
impact of rising interest rates on net interest income in 2025 could be more significant than the amounts shown in the table.
 
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Forward-Looking Statements
 
This Annual Report on Form 10-K 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; 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 and/or shareholder 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 Item 1A, “Risk Factors” included in this report. 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 SEC from time to time.
 
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
CONSOLIDATED BALANCE SHEETS
 
 
     
       
 
December 31, (dollars in thousands)
 
2024
   
2023
 
Assets:
     
       
 
Cash and cash equivalents
  $
38,330    $
60,887 
Investment securities available-for-sale, at fair value
   
624,779     
695,877 
 
     
       
 
Loans:
     
       
 
Commercial and industrial
   
136,732     
116,163 
Secured by real estate:
     
       
 
Commercial mortgages
   
1,963,107     
1,919,714 
Residential mortgages
   
1,084,090     
1,166,887 
Home equity lines
   
36,468     
44,070 
Consumer and other
   
1,210     
1,230 
 
   
3,221,607     
3,248,064 
Allowance for credit losses
   
(28,331)    
(28,992)
 
   
3,193,276     
3,219,072 
Restricted stock, at cost
   
27,712     
32,659 
Bank premises and equipment, net
   
29,135     
31,414 
Right-of-use asset - operating leases
   
18,951     
22,588 
Bank-owned life insurance
   
117,075     
114,045 
Pension plan assets, net
   
11,806     
10,740 
Deferred income tax benefit
   
36,192     
28,996 
Other assets
   
22,080     
19,622 
 
  $
4,119,336    $
4,235,900 
Liabilities:
     
       
 
Deposits:
     
       
 
Checking
  $
1,074,671    $
1,133,184 
Savings, NOW and money market
   
1,574,160     
1,546,369 
Time
   
616,027     
591,433 
 
   
3,264,858     
3,270,986 
Overnight advances
   
—     
70,000 
Other borrowings
   
435,000     
472,500 
Operating lease liability
   
21,964     
24,940 
Accrued expenses and other liabilities
   
18,648     
17,328 
 
   
3,740,470     
3,855,754 
 
     
       
 
Commitments and Contingent Liabilities (Note L)
      
        
 
 
     
       
 
Stockholders' Equity:
     
       
 
Common stock, par value $0.10 per share: Authorized, 80,000,000 shares; Issued and outstanding,
22,595,349 and 22,590,942 shares
   
2,260     
2,259 
Surplus
   
79,731     
79,728 
Retained earnings
   
354,051     
355,887 
 
   
436,042     
437,874 
Accumulated other comprehensive loss, net of tax
   
(57,176)    
(57,728)
 
   
378,866     
380,146 
 
  $
4,119,336    $
4,235,900 
 
See notes to consolidated financial statements.
 
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Table of Contents
 
CONSOLIDATED STATEMENTS OF INCOME
 
Year Ended December 31, (dollars in thousands, except per share data)
 
2024
     
2023
   
2022
 
Interest and dividend income:
     
         
       
 
Loans
  $
137,092      $
127,866    $
116,352 
Investment securities:
     
         
       
 
Taxable
   
26,412       
22,663     
9,795 
Nontaxable
   
3,826       
4,954     
8,063 
 
   
167,330       
155,483     
134,210 
Interest expense:
     
         
       
 
Savings, NOW and money market deposits
   
45,254       
32,164     
7,180 
Time deposits
   
27,509       
19,267     
5,296 
Overnight advances
   
401       
950     
1,207 
Other borrowings
   
20,947       
16,237     
4,814 
 
   
94,111       
68,618     
18,497 
Net interest income
   
73,219       
86,865     
115,713 
Provision (credit) for credit losses
   
359       
(326)    
2,331 
Net interest income after provision (credit) for credit losses
   
72,860       
87,191     
113,382 
 
     
         
       
 
Noninterest income:
     
         
       
 
Bank-owned life insurance
   
3,456       
3,197     
3,017 
Service charges on deposit accounts
   
3,376       
3,034     
3,157 
Net loss on sales of securities
   
—       
(3,489)    
— 
Gain (loss) on disposition of premises and fixed assets
   
21       
240     
(553)
Other
   
5,215       
3,354     
6,242 
 
   
12,068       
6,336     
11,863 
Noninterest expense:
     
         
       
 
Salaries and employee benefits
   
39,720       
37,373     
41,096 
Occupancy and equipment
   
12,586       
13,140     
13,407 
Merger expenses
   
1,161       
—     
— 
Branch consolidation expenses
   
1,934       
—     
— 
Other
   
12,763       
13,546     
12,523 
 
   
68,164       
64,059     
67,026 
Income before income taxes
   
16,764       
29,468     
58,219 
Income tax (benefit) expense
   
(312)      
3,229     
11,287 
Net income
  $
17,076      $
26,239    $
46,932 
 
     
         
       
 
Weighted average:
     
         
       
 
Common shares
   
22,527,300       
22,550,562     
22,868,658 
Dilutive restricted stock units
   
121,393       
82,609     
99,895 
Dilutive weighted average common shares
   
22,648,693       
22,633,171     
22,968,553 
 
     
         
       
 
Earnings per share:
     
         
       
 
Basic
  $
0.76      $
1.16    $
2.05 
Diluted
  $
0.75      $
1.16    $
2.04 
 
     
         
       
 
Cash dividends declared per share
  $
0.84      $
0.84    $
0.82 
 
See notes to consolidated financial statements.
 
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Year Ended December 31, (in thousands)
 
2024
   
2023
   
2022
 
Net income
  $
17,076    $
26,239    $
46,932 
Other comprehensive income (loss):
     
       
       
 
Change in net unrealized holding (losses) gains on available-for-sale securities
   
(1,362)    
9,133     
(83,835)
Change in funded status of pension plan
   
2,292     
1,183     
(8,176)
Change in net unrealized loss on derivative instruments
   
—     
—     
1,750 
Other comprehensive income (loss) before income taxes
   
930     
10,316     
(90,261)
Income tax expense (benefit)
   
378     
3,277     
(27,807)
Other comprehensive income (loss)
   
552     
7,039     
(62,454)
Comprehensive income (loss)
  $
17,628    $
33,278    $
(15,522)
 
See notes to consolidated financial statements.
 
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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 
 
   
 
     
 
     
 
     
 
    Accumulated      
 
 
 
   
 
     
 
     
 
     
 
   
Other
     
 
 
 
 
Common Stock
     
 
   
Retained
    Comprehensive     
 
 
(dollars in thousands)
 
Shares
   
Amount
   
Surplus
   
Earnings
    (Loss)/Income    
Total
 
Balance, January 1, 2022
   
23,240,596    $
2,324    $
93,480    $
320,321    $
(2,313)   $
413,812 
Net income
   
      
     
     
46,932     
     
46,932 
Other comprehensive loss
   
      
     
     
     
(62,454)    
(62,454)
Repurchase of common stock
   
(915,868)    
(92)    
(17,797)    
     
     
(17,889)
Shares withheld upon the vesting and conversion
of RSUs
   
(27,287)    
(3)    
(573)    
     
     
(576)
Common stock issued under stock compensation
plans
   
100,973     
10     
52     
     
     
62 
Common stock issued under dividend
reinvestment and stock purchase plan
   
44,966     
5     
834     
     
     
839 
Stock-based compensation
   
      
     
2,466     
     
     
2,466 
Cash dividends declared
   
      
     
     
(18,656)    
     
(18,656)
Balance, December 31, 2022
   
22,443,380     
2,244     
78,462     
348,597     
(64,767)    
364,536 
Net income
   
      
     
     
26,239     
     
26,239 
Other comprehensive income
   
      
     
     
     
7,039     
7,039 
Shares withheld upon the vesting and conversion
of RSUs
   
(48,941)    
(5)    
(865)    
     
     
(870)
Common stock issued under stock compensation
plans
   
133,796     
14     
46     
     
     
60 
Common stock issued under dividend
reinvestment and stock purchase plan
   
62,707     
6     
836     
     
     
842 
Stock-based compensation
   
      
     
1,249     
     
     
1,249 
Cash dividends declared
   
      
     
     
(18,949)    
     
(18,949)
Balance, December 31, 2023
   
22,590,942     
2,259     
79,728     
355,887     
(57,728)    
380,146 
Net income
   
      
     
     
17,076     
     
17,076 
Other comprehensive income
   
      
     
     
     
552     
552 
Repurchase of common stock
   
(167,526)    
(17)    
(2,003)    
     
     
(2,020)
Shares withheld upon the vesting and conversion
of RSUs
   
(62,941)    
(6)    
(788)    
     
     
(794)
Common stock issued under stock compensation
plans
   
183,949     
19     
43     
     
     
62 
Common stock issued under dividend
reinvestment and stock purchase plan
   
50,925     
5     
591     
     
     
596 
Stock-based compensation
     
     
     
2,160     
     
     
2,160 
Cash dividends declared
     
     
     
     
(18,912)    
     
(18,912)
Balance, December 31, 2024
   
22,595,349    $
2,260    $
79,731    $
354,051    $
(57,176)   $
378,866 
 
See notes to consolidated financial statements.
 
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CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
Year Ended December 31, (in thousands)
 
2024
   
2023
   
2022
 
Cash Flows From Operating Activities:
     
       
       
 
Net income
  $
17,076    $
26,239    $
46,932 
Adjustments to reconcile net income to net cash provided by operating activities:
     
       
       
 
Provision (credit) for credit losses
   
359     
(326)    
2,331 
(Credit) provision for deferred income taxes
   
(7,574)    
(1,149)    
670 
Depreciation and amortization of premises and equipment
   
3,096     
3,108     
3,612 
Amortization of right-of-use asset - operating leases
   
3,637     
2,644     
2,699 
Gain on early termination of operating leases
   
(96)    
—     
— 
Premium amortization on investment securities, net
   
2,436     
2,227     
1,578 
Net loss on sales of securities
   
—     
3,489     
— 
(Gain) loss on disposition of premises and fixed assets
   
(21)    
(240)    
553 
Stock-based compensation expense
   
2,160     
1,249     
2,466 
Accretion of cash surrender value on bank-owned life insurance
   
(3,456)    
(3,197)    
(3,017)
Pension expense (credit)
   
1,226     
1,492     
(129)
Decrease in other liabilities
   
(1,550)    
(384)    
(3,770)
Other increases in assets
   
(2,343)    
(2,990)    
(2,501)
Net cash provided by operating activities
   
14,950     
32,162     
51,424 
Cash Flows From Investing Activities:
     
       
       
 
Available-for-sale securities:
     
       
       
 
Proceeds from sales
   
—     
145,451     
— 
Proceeds from maturities and redemptions
   
74,228     
56,413     
45,054 
Purchases
   
(6,928)    
(220,911)    
(69,562)
Proceeds from sales of loans held-for-sale
   
1,092     
—     
— 
Net decrease (increase) in loans
   
24,431     
61,555     
(207,427)
Net decrease (increase) in restricted stock
   
4,947     
(6,296)    
(4,839)
Purchases of premises and equipment, net
   
(1,468)    
(2,862)    
(3,598)
Proceeds from disposition of premises and facilities held-for-sale
   
383     
2,291     
6,601 
Proceeds from death benefit of bank-owned life insurance
   
576     
—     
— 
Net cash provided by (used in) investing activities
   
97,261     
35,641     
(233,771)
Cash Flows From Financing Activities:
     
       
       
 
Net (decrease) increase in deposits
   
(6,128)    
(193,648)    
149,389 
Net (decrease) increase in overnight advances
   
(70,000)    
70,000     
(125,000)
Proceeds from other borrowings
   
350,000     
275,000     
300,000 
Repayment of other borrowings
   
(387,500)    
(213,500)    
(75,322)
Proceeds from issuance of common stock, net of shares withheld
   
(198)    
(28)    
263 
Repurchase of common stock
   
(2,020)    
—     
(17,889)
Cash dividends paid
   
(18,922)    
(18,918)    
(18,591)
Net cash (used in) provided by financing activities
   
(134,768)    
(81,094)    
212,850 
Net (decrease) increase in cash and cash equivalents
   
(22,557)    
(13,291)    
30,503 
Cash and cash equivalents, beginning of year
   
60,887     
74,178     
43,675 
Cash and cash equivalents, end of period
  $
38,330    $
60,887    $
74,178 
Supplemental Cash Flow Disclosures:
     
       
       
 
Cash paid for:
     
       
       
 
Interest
  $
92,782    $
64,319    $
17,142 
Income taxes
   
7,798     
3,676     
11,610 
Operating cash flows from operating leases
   
3,605     
3,072     
4,148 
Noncash investing and financing activities:
     
       
       
 
Right-of-use assets obtained in exchange for operating lease liabilities
   
—     
1,280     
18,386 
Cash dividends payable
   
4,734     
4,744     
4,713 
Bank premises transferred to held-for-sale
   
—     
—     
2,407 
Loans transferred from portfolio to held-for-sale
   
1,006     
—     
— 
 
See notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
The consolidated financial statements include the accounts of The First of Long Island Corporation and 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.
(“REIT”). The Corporation’s financial condition and operating results principally reflect those of the Bank and its subsidiaries. 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 have been
eliminated.
 
The accounting and reporting policies of the Corporation reflect banking industry practice and conform to generally accepted accounting principles
(“GAAP”) in the United States. The following is a summary of the Corporation’s significant accounting policies.
 
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
include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers.
 
Cash and Cash Equivalents
 
Cash and cash equivalents include cash and deposits with other financial institutions that generally mature within 90 days. Net cash flows are reported for
customer loan and deposit transactions.
 
Investment Securities
 
Current accounting standards require that investment securities be classified as held-to-maturity (“HTM”), available-for-sale (“AFS”) or trading. The
trading category is not applicable to any securities in the Bank's portfolio because the Bank does not buy or hold debt or equity securities principally for the
purpose of selling in the near term. HTM securities, or debt securities which the Bank has the intent and ability to hold to maturity, are reported at
amortized cost, net of allowance for credit losses (“ACL” or “allowance”), if any. AFS securities, or debt securities which are neither HTM securities nor
trading securities, are reported at fair value, with unrealized gains and losses, net of the related income tax effect, included in other comprehensive income
(loss) (“OCI”). Equity securities, if any, are carried at fair value, with changes in fair value reported in net income. Equity securities without readily
determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions
for the identical or a similar investment.
 
Interest income includes amortization or accretion of purchase premium or discount. Premiums and discounts on securities are amortized or accreted using
the level-yield method. Prepayments are anticipated for mortgage-backed securities. Premiums on municipal securities are amortized to the earlier of the
stated maturity date or the first call date, while discounts on municipal securities are accreted to the stated maturity date. Realized gains and losses on the
sale of securities are determined using the specific identification method.
 
Management measures expected credit losses on HTM debt securities, if any, on a collective basis by major security type. Accrued interest receivable on
HTM debt securities is excluded from the estimate of credit losses.
 
For AFS securities in an unrealized loss position, management first evaluates whether it has the intent to sell or would otherwise be required to sell before
the recovery of amortized cost, and then whether the decline in fair value has resulted from an actual or estimated credit loss event. Management considers
the extent to which fair value is less than amortized cost, changes to the rating of the security, and adverse conditions specifically related to the security. If
this assessment indicates that a credit loss is likely, management then assesses whether it has the intent to sell the security or more likely than not will be
required to sell the security before recovery of its amortized cost and determines the present value of cash flows expected to be collected from the security
as compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis,
an allowance is recorded for the estimated credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that
has not been recorded through an allowance is recognized in OCI. Accrued interest receivable on AFS securities is excluded from the estimate of credit
losses.
 
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Loans Held-for-Sale
 
Loans held-for-sale are carried at the lower of cost or fair value. Any subsequent declines in fair value below the initial carrying value are recorded as a
valuation allowance established through a charge to noninterest income.
 
Loans and Allowance for Credit Losses
 
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost, net of the
ACL. Amortized cost is the principal balance outstanding plus or minus net deferred loan costs and fees. Accrued interest receivable is reported in “Other
assets” on the consolidated balance sheets and is excluded from the estimate of credit losses. Interest on loans is credited to income based on the principal
amount outstanding. Direct loan origination costs, net of loan origination fees, are deferred and recognized in interest income using the level-yield method
without anticipating prepayments.
 
The past due status of a loan is based on the contractual terms in the loan agreement. Unless a loan is well secured and in the process of collection, the
accrual of interest income is discontinued when a loan becomes 90 days past due as to principal or interest payments. The accrual of interest income on a
loan is also discontinued when it is determined that the borrower will not be able to make principal and interest payments according to the contractual terms
of the current loan agreement. When the accrual of interest income is discontinued on a loan, any accrued but unpaid interest is reversed against current
period income. Interest received on nonaccrual loans is applied to the outstanding principal balance until the loans qualify for return to an accrual status, if
ever. Return to an accrual status occurs when all the principal and interest amounts contractually past due are brought current and all future payments are
reasonably assured.
 
The ACL is a valuation account 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 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 against the ACL, and subsequent recoveries, if any, are credited to the ACL.
 
Management identifies loans in the Bank’s portfolio that must be individually evaluated for loss due to disparate risk characteristics. For loans individually
evaluated, an 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.
 
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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 one year to two 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, 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.
 
The ACL is an amount that management currently believes will be adequate to absorb current expected credit 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. Actual
results could differ significantly from those estimates.
 
Transfers of Financial Assets
 
Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be
surrendered when the assets have been isolated from the Corporation, the transferee obtains the right (free of conditions that constrain it from taking
advantage of that right) to pledge or exchange the transferred assets, and the Corporation does not maintain effective control over the transferred assets
through an agreement to repurchase them before their maturity.
 
Bank Premises and Equipment and Operating Leases
 
Land is carried at cost. Other bank premises and equipment are carried at cost less accumulated depreciation and amortization. Buildings are depreciated
using the straight-line method over their estimated useful lives, which range from 31 to 40 years. Building and leasehold improvements are depreciated
using the straight-line method over the remaining lives of the buildings or leases, as applicable, or their estimated useful lives, whichever is shorter. The
lives of the respective leases range from five years to fifteen years. Furniture, fixtures and equipment are depreciated using the straight-line method over
their estimated useful lives, which range from three years to ten years. Premises and equipment held-for-sale, if any, is included in “other assets” on the
Corporation’s consolidated balance sheets and carried at the lower of cost or fair value. Writedowns upon transfer to held-for-sale are included in “other
noninterest expense” on the consolidated income statements. Fair value is based on an appraisal, where available, adjusted for estimated costs to sell.
 
The Bank determines if an arrangement is a lease at inception and recognizes a right-of-use (“ROU”) asset and lease liability at the commencement date
based on the present value of lease payments over the lease term. As most of the Bank’s leases do not provide an implicit interest rate, the Bank uses its
incremental borrowing rate to determine the present value of the lease payments. Leases with an initial lease term of 12 months or less are not recorded on
the consolidated balance sheets. The Bank’s ROU asset and lease liability may include options to extend the lease when it is reasonably certain that the
Bank will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.
 
Bank-owned Life Insurance
 
The Bank is the owner and beneficiary of insurance policies on the lives of certain current and past employed officers. Bank-owned life insurance
(“BOLI”) is recorded at the amount that can be realized under the contract at the balance sheet date, which is the cash surrender value adjusted for other
charges or amounts due that are probable at settlement, if any.
 
Restricted Stock
 
The Bank is a member of and is required to own stock in the Federal Home Loan Bank of NY (“FHLBNY”) and the Federal Reserve Bank of NY
(“FRBNY”). The amount of FHLBNY stock held is based on membership and the level of FHLBNY advances. The amount of FRBNY stock held is based
on the Bank’s capital and surplus balances. These stocks do not have a readily determinable fair value, are carried at cost, classified as restricted stock and
periodically evaluated for impairment based on the prospects for the ultimate recovery of cost. Cash dividends, if any, are reported as interest income on
taxable investment securities.
 
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Other Real Estate Owned
 
Real estate acquired through foreclosure or by deed-in-lieu of foreclosure is initially recorded at the lower of cost or fair value, less estimated selling costs
and is included in “other assets” on the consolidated balance sheets. Chargeoffs recorded at the time of acquisition are charged to the ACL. Subsequently,
decreases in the property’s estimated fair value are charged to earnings and credited to a valuation allowance and recoveries in fair value are credited to
earnings and charged to the valuation allowance. Such adjustments to earnings are included in other noninterest expense along with any additional property
maintenance costs incurred in owning the property. Rental income received from tenants of other real estate owned is included in other noninterest income.
 
Long-term Assets
 
Premises and equipment, intangible assets, BOLI and other long-term assets, if any, are reviewed for impairment when events indicate that their carrying
amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.
 
Loan Commitments and Related Financial Instruments
 
Financial instruments include off-balance sheet credit instruments, such as commitments to make loans, commercial letters of credit and standby letters of
credit. The face amount of these items represents the exposure to loss, before considering collateral held or ability to repay. The Bank estimates credit
losses on off-balance sheet credit exposures by considering the likelihood of an outstanding commitment converting into an outstanding loan and applying
an estimate of expected lifetime credit losses used on similar portfolio segments, unless the obligation is unconditionally cancellable by the Bank. The ACL
on off-balance sheet credit exposures is recorded in the line item “Accrued expenses and other liabilities” in the consolidated balance sheets and
totaled $449,000 and $590,000, respectively, at December 31, 2024 and 2023. The ACL is adjusted through a provision for credit loss which is included in
the line item “other noninterest expense” in the consolidated statements of income and amounted to ($141,000), $169,000 and ($71,000) in 2024, 2023 and
2022, respectively. Off-balance sheet credit instruments are recorded on the balance sheet when they are funded or drawn down.
 
Derivatives
 
At the inception of a derivative contract, the Corporation designates the derivative as one of three types based on the Corporation's intentions and belief as
to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm
commitment ("fair value hedge"), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset
or liability ("cash flow hedge"), or (3) an instrument with no hedging designation ("non-designated derivative"). For a fair value hedge, the gain or loss on
the derivative, as well as the offsetting loss or gain on the hedged item is attributable to the hedged risk, are recognized in current earnings as fair values
change. For a cash flow hedge, the gain or loss on the derivative is recorded in OCI and is reclassified into earnings in the same period during which the
hedged transaction affects earnings. The changes in the fair value of a derivative that is not designated is recorded currently in earnings, as noninterest
income.
 
Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged.
Net cash settlements on derivatives that do not qualify for hedge accounting are reported in noninterest income or noninterest expense. Cash flows from
hedges are classified in the consolidated statements of cash flows in the same manner as the items being hedged.
 
The Corporation formally documents the relationship between derivatives and hedged items, as well as the risk management objective and the strategy for
undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking cash flow hedges to specific assets and
liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Corporation also formally assesses, both at the hedge’s
inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in cash flows of the hedged
item. The Corporation discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in cash flows of the
hedged item, the derivative is settled or terminated, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm or
treatment of the derivative as a hedge is no longer appropriate or intended.
 
When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as interest expense. When a cash flow hedge is
discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in OCI are amortized
into earnings over the same periods which the hedged transactions will affect earnings.
 
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Table of Contents
 
Income Taxes
 
A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current year. A deferred tax liability or asset
is recognized for the estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred tax assets is
reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized. The measurement of current and
deferred tax liabilities and assets is based on provisions of the enacted tax law. The effects of future changes in tax laws or rates are not considered. The
Corporation recognizes interest and/or penalties related to income tax matters in noninterest income or noninterest expense as appropriate.
 
Retirement Plans
 
Pension expense is the sum of service cost, interest cost, amortization of actuarial gains and losses and plan expenses, net of the expected return on plan
assets and participant contributions. The service cost component of pension expense is included in salaries and employee benefits on the consolidated
statements of income. All other components of pension expense are included in other noninterest income. Employee 401(k) plan expense is equal to the
amount of the Corporation’s matching contributions and is included in salaries and employee benefits in the consolidated statements of income.
 
Loss Contingencies
 
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is
probable and an amount or range of loss can be reasonably estimated.
 
Operating Segments
 
While the chief decision-makers  monitor  the revenue streams of the Bank’s various products and services,  operations are managed and financial
performance is evaluated on a company-wide basis. Accordingly, all of the financial operations of the Bank are aggregated in one reportable operating
segment.
 
Investment Services
 
Assets held in a fiduciary capacity are not assets of the Corporation and, accordingly, are not included in the accompanying consolidated financial
statements. The Bank records investment services fees on the accrual basis.
 
Reclassifications
 
When appropriate, items in the prior year financial statements are reclassified to conform to the current period presentation.
 
Earnings Per Share
 
The Corporation calculates basic and diluted earnings per share (“EPS”) using the treasury stock method. Basic EPS excludes the dilutive effect of
outstanding restricted stock units (“RSUs”) and is computed by dividing net income by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if outstanding RSUs were converted into shares of common stock that then shared in the
earnings of the Corporation. Diluted EPS is computed by dividing net income by the weighted average number of common shares and dilutive RSUs. There
were 21,329, 101,480 and 33,017 RSUs excluded from the calculation of EPS at  December 31, 2024, 2023 and 2022, because their inclusion would be
anti-dilutive. Other than the RSUs described in “Note I – Stock-Based Compensation,” the Corporation has no securities that could be converted into
common stock nor does the Corporation have any contracts that could result in the issuance of common stock.
 
Stock-based Compensation 
 
The Corporation’s stock-based compensation plans are described in “Note I – Stock-Based Compensation.” Compensation cost is determined for RSUs
issued to employees and non-employee directors based on the grant date fair value of the award.
 
Compensation expense for RSUs is recognized over the applicable performance or service period, which is usually the vesting period. Compensation
expense is adjusted at the end of the performance period, if applicable, to reflect the actual number of shares of the Corporation’s common stock into which
the RSUs will be converted. The Corporation accounts for forfeitures as they occur.
 
49

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Comprehensive Income
 
Comprehensive income (loss) includes net income and 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 AFS securities and
derivative instruments 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 sets forth the components of accumulated OCI, net of tax:
 
 
   
 
   
Current
     
 
 
 
 
Balance
   
Period
   
Balance
 
(in thousands)
 
12/31/2023
   
Change
   
12/31/2024
 
Unrealized holding loss on available-for-sale securities
  $
(49,809)   $
(1,033)   $
(50,842)
Unrealized actuarial loss on pension plan
   
(7,919)    
1,585     
(6,334)
Accumulated other comprehensive loss, net of tax
  $
(57,728)   $
552    $
(57,176)
 
The components of OCI and the related tax effects are as follows:
 
(in thousands)
 
2024
   
2023
   
2022
 
Change in net unrealized holding gains (losses) on available-for-sale securities:
     
       
       
 
Change arising during the period
  $
(1,362)   $
5,644    $
(83,835)
Reclassification adjustment for losses included in net income (1)
   
—     
3,489     
— 
 
   
(1,362)    
9,133     
(83,835)
Tax effect
   
(329)    
2,887     
(25,825)
 
   
(1,033)    
6,246     
(58,010)
Change in funded status of pension plan:
     
       
       
 
Unrecognized net gain (loss) arising during the period
   
1,492     
165     
(8,176)
Amortization of net actuarial loss included in pension expense (2)
   
800     
1,018     
— 
 
   
2,292     
1,183     
(8,176)
Tax effect
   
707     
390     
(2,520)
 
   
1,585     
793     
(5,656)
Change in unrealized loss on derivative instrument:
     
       
       
 
Amount of gain during the period
   
—     
—     
1,324 
Reclassification adjustment for net interest expense included in net income (3)
   
—     
—     
426 
 
   
—     
—     
1,750 
Tax effect
   
—     
—     
538 
 
   
—     
—     
1,212 
Other comprehensive income (loss)
  $
552    $
7,039    $
(62,454)
 
(1) Represents net realized losses arising from the sale of AFS securities, included in the consolidated statements of income in the line item “Net loss on
sales of securities.” See “Note B – Investment Securities” for the income tax benefit related to these net realized losses, included in the consolidated
statements of income in the line item “Income tax (benefit) expense.”
(2) 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 (see "Note J – Retirement Plans") and included in the consolidated statements of income in the line item "Other noninterest income."
(3) Represents the net interest expense recorded from derivative transactions and included in the consolidated statements of income under “Interest
expense.”
 
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Adoption of New Accounting Standards
 
In
November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2023-
07 "Segment Reporting
(Topic
280): Improvements to Reportable Segment Disclosures." The ASU requires incremental segment information disclosures, including disclosures of
significant segment expenses that are regularly provided to the chief operating decision maker, a description of other segment items by reportable segment,
and any additional measures of a segment's profit or loss used by the chief operating decision maker when deciding how to allocate resources. ASU
2023-
07 is effective for fiscal years beginning after
December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024. Early
adoption is permitted, and retrospective adoption is required for all prior periods presented. The adoption of the ASU for the year ended
December 31,
2024 modified the Corporation’s disclosures but did
not impact its financial position or results of operations. See “Note R – Segment Information” for
disclosures required by ASU
2023-
07.
 
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 FASB issued 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.
 
NOTE B – INVESTMENT SECURITIES
 
The following tables set forth the amortized cost and estimated fair values of the Bank’s AFS investment securities at December 31, 2024 and 2023.
 
 
 
2024
 
 
   
 
   
Gross
   
Gross
     
 
 
 
 
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
(in thousands)
 
Cost
   
Gains
   
Losses
   
Value
 
State and municipals
  $
151,909    $
8    $
(16,374)   $
135,543 
Pass-through mortgage securities
   
158,789     
8     
(29,357)    
129,440 
Collateralized mortgage obligations
   
166,014     
595     
(21,550)    
145,059 
SBA agency obligations
   
102,308     
262     
(1,143)    
101,427 
Corporate bonds
   
119,000     
—     
(5,690)    
113,310 
 
  $
698,020    $
873    $
(74,114)   $
624,779 
 
 
 
2023
 
State and municipals
  $
155,294    $
317    $
(11,990)   $
143,621 
Pass-through mortgage securities
   
165,734     
—     
(27,131)    
138,603 
Collateralized mortgage obligations
   
201,500     
1,836     
(21,074)    
182,262 
SBA agency obligations
   
126,228     
331     
(1,083)    
125,476 
Corporate bonds
   
119,000     
—     
(13,085)    
105,915 
 
  $
767,756    $
2,484    $
(74,363)   $
695,877 
 
Small Business Administration ("SBA") agency obligations are floating rate, government guaranteed securities backed by $78.3 million of commercial
mortgages and $23.1 million of equipment finance loans at December 31, 2024.
 
At December 31, 2024 and 2023, investment securities with a carrying value of $259.8 million and $203.9 million, respectively, were pledged as collateral
to secure public deposits.
 
There were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’
equity at December 31, 2024 and 2023.
 
There was no allowance for credit losses associated with the investment securities portfolio at December 31, 2024 or 2023.
 
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Securities With Unrealized Losses. The following tables set forth securities with unrealized losses at  December 31, 2024 and 2023 presented by
length of time the securities had been in a continuous unrealized loss position.
 
 
 
2024
 
 
 
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
  $
14,719    $
(318)   $
117,168    $
(16,056)   $
131,887    $
(16,374)
Pass-through mortgage securities
   
9,364     
(179)    
119,191     
(29,178)    
128,555     
(29,357)
Collateralized mortgage obligations
   
3,726     
(33)    
92,366     
(21,517)    
96,092     
(21,550)
SBA agency obligations
   
—     
—     
83,439     
(1,143)    
83,439     
(1,143)
Corporate bonds
   
—     
—     
113,310     
(5,690)    
113,310     
(5,690)
Total temporarily impaired
  $
27,809    $
(530)   $
525,474    $
(73,584)   $
553,283    $
(74,114)
 
 
 
2023
 
 
   
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
  $
29,522    $
(719)   $
95,725    $
(11,271)   $
125,247    $
(11,990)
Pass-through mortgage securities
   
2,361     
(1)    
134,558     
(27,130)    
136,919     
(27,131)
Collateralized mortgage obligations
   
—     
—     
102,528     
(21,074)    
102,528     
(21,074)
SBA agency obligations
   
98,879     
(1,083)    
—     
—     
98,879     
(1,083)
Corporate bonds
   
—     
—     
105,915     
(13,085)    
105,915     
(13,085)
Total temporarily impaired
  $
130,762    $
(1,803)   $
438,726    $
(72,560)   $
569,488    $
(74,363)
 
Following is a discussion of unrealized losses by type of security, none of which are considered impaired at December 31, 2024.
 
State and Municipals
 
At December 31, 2024, approximately $131.9 million of state and municipal bonds had an unrealized loss of $16.4 million. Substantially all the state and
municipal bonds are considered high investment grade and rated Aa2/AA- or higher. The unrealized loss is primarily attributable to changes in interest rates
and illiquidity and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. 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. The fair value is expected to recover as
the bonds approach maturity.
 
Pass-through Mortgage Securities
 
At December 31, 2024, pass-through mortgage securities of approximately $128.6 million had an unrealized loss of $29.4 million. These securities were
issued by U.S. government and government-sponsored agencies and are considered high investment grade. The unrealized loss is attributable to changes in
interest rates and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. 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. The fair value is expected to recover as the
bonds approach maturity.
 
Collateralized Mortgage Obligations
 
At December 31, 2024, collateralized mortgage obligations of approximately $96.1 million had an unrealized loss of $21.6 million. These securities were
issued by U.S. government and government-sponsored agencies and are considered high investment grade. The unrealized loss is attributable to changes in
interest rates and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. 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. The fair value is expected to recover as the
bonds approach maturity.
 
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SBA Agency Obligations
 
At December 31, 2024, SBA agency obligations of approximately $83.4 million had an unrealized loss of $1.1 million. These securities were issued by the
SBA, a U.S. government agency and are considered high investment grade. The unrealized loss is attributable to changes in interest rates and not credit
quality. The issuer continues to make timely principal and interest payments on the bonds. 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. The fair value is expected to recover as the bonds approach maturity.
 
Corporate Bonds
 
At December 31, 2024, approximately $113.3 million of corporate bonds had an unrealized loss of $5.7 million. The corporate bonds represent senior
unsecured debt obligations of six of the largest U.S. based financial institutions, including JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs,
Morgan Stanley and Wells Fargo. Each of the corporate bonds has a stated maturity of ten years and matures in 2028. The bonds reprice quarterly based on
the ten year constant maturity swap rate.
 
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 December 31, 2024.
 
Sales of AFS Securities. Sales of AFS securities were as follows:
 
(in thousands)
 
2024
   
2023
   
2022
 
Proceeds
  $
—    $
145,451    $
— 
 
     
       
       
 
Gains
  $
—    $
—    $
— 
Losses
   
—     
(3,489)    
— 
Net gain (loss)
  $
—    $
(3,489)   $
— 
 
Income tax benefit related to the net realized losses was $1.1 million in 2023 and is included in the consolidated statements of income in the line item
“Income tax (benefit) expense.”
 
Sales of HTM Securities. The Bank did not have any securities classified as HTM in 2024, 2023 or 2022.
 
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Table of Contents
 
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 December 31, 2024 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
  $
1,403    $
1,397 
After 1 through 5 years
   
138,656     
131,981 
After 5 through 10 years
   
40,201     
36,546 
After 10 years
   
90,649     
78,929 
Mortgage and asset-backed securities
   
427,111     
375,926 
 
  $
698,020    $
624,779 
 
NOTE C – LOANS
 
The following table sets forth the loans outstanding by class of loans for the periods indicated.
 
 
   
At December 31,
 
(in thousands)
   
2024
     
2023
 
Commercial and industrial
  $
136,732    $
116,163 
Commercial mortgages:
     
       
 
Multifamily
   
848,558     
857,163 
Other
   
851,277     
829,090 
Owner-occupied
   
263,272     
233,461 
Residential mortgages:
     
       
 
Closed end
   
1,084,090     
1,166,887 
Revolving home equity
   
36,468     
44,070 
Consumer and other
   
1,210     
1,230 
 
  $
3,221,607    $
3,248,064 
 
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Table of Contents
 
The following tables present the activity in the ACL for the years ended December 31, 2024, 2023 and 2022.
 
 
 
Balance at
     
 
     
 
   
Provision
(Credit) for    
Balance at
 
(in thousands)
 
1/1/2024
   
Chargeoffs
   
Recoveries
    Credit Losses    
12/31/2024  
Commercial and industrial
  $
2,030    $
(938)   $
67    $
206    $
1,365 
Commercial mortgages:
     
       
       
       
       
 
Multifamily
   
6,817     
(168)    
—     
2,085     
8,734 
Other
   
7,850     
—     
—     
(253)    
7,597 
Owner-occupied
   
3,104     
—     
—     
139     
3,243 
Residential mortgages:
     
       
       
       
       
 
Closed end
   
8,838     
(1)    
52     
(1,782)    
7,107 
Revolving home equity
   
339     
—     
—     
(70)    
269 
Consumer and other
   
14     
(32)    
—     
34     
16 
 
  $
28,992    $
(1,139)   $
119    $
359    $
28,331 
 
 
 
Balance at
     
 
     
 
   
Provision
(Credit) for    
Balance at
 
(in thousands)
 
1/1/2023
   
Chargeoffs
   
Recoveries
    Credit Losses    
12/31/2023  
Commercial and industrial
  $
1,543    $
(2,026)   $
81    $
2,432    $
2,030 
Commercial mortgages:
     
       
       
       
       
 
Multifamily
   
8,430     
—     
—     
(1,613)    
6,817 
Other
   
7,425     
—     
15     
410     
7,850 
Owner-occupied
   
3,024     
—     
—     
80     
3,104 
Residential mortgages:
     
       
       
       
       
 
Closed end
   
10,633     
(176)    
—     
(1,619)    
8,838 
Revolving home equity
   
362     
—     
—     
(23)    
339 
Consumer and other
   
15     
(8)    
—     
7     
14 
 
  $
31,432    $
(2,210)   $
96    $
(326)   $
28,992 
 
 
 
Balance at
     
 
     
 
   
Provision
(Credit) for    
Balance at
 
(in thousands)
 
1/1/2022
   
Chargeoffs
   
Recoveries
    Credit Losses    
12/31/2022  
Commercial and industrial
  $
888    $
(511)   $
154    $
1,012    $
1,543 
SBA PPP
   
46     
—     
—     
(46)    
— 
Commercial mortgages:
     
       
       
       
       
 
Multifamily
   
8,154     
—     
—     
276     
8,430 
Other
   
6,478     
—     
—     
947     
7,425 
Owner-occupied
   
2,515     
—     
—     
509     
3,024 
Residential mortgages:
     
       
       
       
       
 
Closed end
   
11,298     
(372)    
—     
(293)    
10,633 
Revolving home equity
   
449     
—     
—     
(87)    
362 
Consumer and other
   
3     
(1)    
—     
13     
15 
 
  $
29,831    $
(884)   $
154    $
2,331    $
31,432 
 
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Table of Contents
 
The provision recorded in 2024 was mainly due to chargeoffs and deterioration in current and forecasted economic conditions, including adjustments for
rent stabilization status of multifamily properties, partially offset by declines in historical loss rates, allowances on individually evaluated loans, and loan
balances. The credit provision recorded in 2023 was mainly due to improvements in historical loss rates, the economic forecasts of unemployment and
GDP and other portfolio metrics and a decrease in outstanding mortgage loans, partially offset by net chargeoffs and allowances for individually evaluated
loans. The provision recorded in 2022 was mainly due to an increase in outstanding mortgage loans, chargeoffs and deteriorating economic conditions,
partially offset by lower historical loss rates.
 
Aging of Loans. The following tables present the aging of loans past due and loans in nonaccrual status by class of loans.
 
 
 
December 31, 2024
 
 
 
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
  $
174    $
96    $
—    $
—    $
—    $
270    $
136,462    $
136,732 
Commercial mortgages:
     
       
       
       
       
       
       
       
 
Multifamily
   
—     
—     
—     
1,190     
—     
1,190     
847,368     
848,558 
Other
   
—     
—     
—     
—     
—     
—     
851,277     
851,277 
Owner-occupied
   
—     
—     
—     
—     
—     
—     
263,272     
263,272 
Residential mortgages:
     
       
       
       
       
       
       
       
 
Closed end
   
—     
—     
—     
—     
2,039     
2,039      1,082,051      1,084,090 
Revolving home equity
   
—     
—     
—     
—     
—     
—     
36,468     
36,468 
Consumer and other
   
—     
—     
—     
—     
—     
—     
1,210     
1,210 
 
  $
174    $
96    $
—    $
1,190    $
2,039    $
3,499    $ 3,218,108    $ 3,221,607 
 
 
 
December 31, 2023
 
Commercial and industrial
  $
73    $
—    $
—    $
722    $
—    $
795    $
115,368    $
116,163 
Commercial mortgages:
     
       
       
       
       
       
       
       
 
Multifamily
   
—     
—     
—     
—     
—     
—     
857,163     
857,163 
Other
   
1,624     
—     
—     
—     
—     
1,624     
827,466     
829,090 
Owner-occupied
   
—     
—     
—     
—     
—     
—     
233,461     
233,461 
Residential mortgages:
     
       
       
       
       
       
       
       
 
Closed end
   
1,389     
—     
—     
—     
331     
1,720      1,165,167      1,166,887 
Revolving home equity
   
—     
—     
—     
—     
—     
—     
44,070     
44,070 
Consumer and other
   
—     
—     
—     
—     
—     
—     
1,230     
1,230 
 
  $
3,086    $
—    $
—    $
722    $
331    $
4,139    $ 3,243,925    $ 3,248,064 
 
At December 31, 2024, there was one residential real estate loan for which formal foreclosure proceedings are in process  with an amortized cost of
$844,000. This loan is included in the column "Nonaccrual - With No Allowance for Credit Loss" in the December 31, 2024 table above. The Bank did not
hold any foreclosed residential real estate property at  December 31, 2024. There were no loans in the process of foreclosure nor did the Bank hold any
foreclosed residential real estate property at  December 31, 2023 or 2022.
 
Accrued interest receivable from loans totaled $10.7 million and $10.4 million at December 31, 2024 and 2023, respectively, and is included in the line
item “Other assets” on the consolidated balance sheets.
 
Loans to Directors and Executive Officers. At  December 31, 2024 and 2023, loans outstanding to executive officers and directors, including their
immediate families and companies in which they are principal owners, totaled $1.6 million. 
 
Loan Modifications. From time to time, the Bank may modify the terms of loans to borrowers experiencing financial difficulty in the form of principal
forgiveness, an interest reduction, an other-than-insignificant payment delay or a term extension. In order to determine whether a borrower is experiencing
financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future
without the modification. The Bank performs the evaluation under its internal underwriting policy.
 
56

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The Bank did not modify the terms of any loans to borrowers experiencing financial difficulty during 2024, 2023 or 2022. 
 
There were no modifications for which there was a payment default during 2024, 2023 and 2022 that were modified during the 12 month period prior to
default. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.
 
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 80% of its
commercial real estate loan portfolio on an annual basis and uses a third-party review firm as part of its credit quality monitoring program. Lines of credit
are also reviewed annually at each proposed reaffirmation. The frequency of the review of other loans is determined by minimum principal balance
thresholds and the Bank’s ongoing assessments of the borrower’s condition.
 
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 680 is generally required for new loans. Credit scores for each borrower
are updated at least annually. However, regardless of credit score, loans may be classified, criticized or placed on management’s watch list if relevant
information comes to light.
 
57

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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 2024 by year of origination.
 
 
 
December 31, 2024
 
 
 
Term Loans by Origination Year
    Revolving     
 
 
(in thousands)
 
2024
   
2023
   
2022
   
2021
   
2020
   
Prior
    Loans (1)    
Total
 
Commercial and industrial:
     
       
       
       
       
       
       
       
 
Risk rating:
     
       
       
       
       
       
       
       
 
Pass
  $
56,696    $
19,121    $
15,949    $
10,648    $
16,300    $
3,455    $
7,627    $ 129,796 
Watch
   
3,080     
409     
92     
2,728     
—     
—     
—     
6,309 
Special Mention
   
—     
—     
123     
—     
—     
—     
—     
123 
Substandard
   
—     
504     
—     
—     
—     
—     
—     
504 
Doubtful
   
—     
—     
—     
—     
—     
—     
—     
— 
 
  $
59,776    $
20,034    $
16,164    $
13,376    $
16,300    $
3,455    $
7,627    $ 136,732 
 
     
       
       
       
       
       
       
       
 
Current-period gross chargeoffs
  $
—    $
—    $
—    $
—    $
—    $
—    $
(938)   $
(938)
 
     
       
       
       
       
       
       
       
 
Commercial mortgages – multifamily:
       
       
       
       
       
       
       
 
Risk rating:
     
       
       
       
       
       
       
       
 
Pass
  $
30,166    $
41,537    $ 187,624    $ 166,205    $
33,783    $ 383,847    $
125    $ 843,287 
Watch
   
—     
—     
—     
—     
—     
—     
—     
— 
Special Mention
   
4,081     
—     
—     
—     
—     
—     
—     
4,081 
Substandard
   
—     
—     
—     
—     
—     
1,190     
—     
1,190 
Doubtful
   
—     
—     
—     
—     
—     
—     
—     
— 
 
  $
34,247    $
41,537    $ 187,624    $ 166,205    $
33,783    $ 385,037    $
125    $ 848,558 
 
     
       
       
       
       
       
       
       
 
Current-period gross chargeoffs
  $
—    $
—    $
—    $
—    $
—    $
(168)   $
—    $
(168)
 
     
       
       
       
       
       
       
       
 
Commercial mortgages – other:
       
       
       
       
       
       
       
 
Risk rating:
     
       
       
       
       
       
       
       
 
Pass
  $
70,093    $
71,739    $ 192,125    $ 213,387    $
97,405    $ 186,484    $
22    $ 831,255 
Watch
   
—     
—     
—     
—     
—     
—     
—     
— 
Special Mention
   
—     
—     
—     
—     
—     
—     
—     
— 
Substandard
   
—     
—     
—     
—     
—     
20,022     
—     
20,022 
Doubtful
   
—     
—     
—     
—     
—     
—     
—     
— 
 
  $
70,093    $
71,739    $ 192,125    $ 213,387    $
97,405    $ 206,506    $
22    $ 851,277 
 
     
       
       
       
       
       
       
       
 
Current-period gross chargeoffs
  $
—    $
—    $
—    $
—    $
—    $
—    $
—    $
— 
 
     
       
       
       
       
       
       
       
 
Commercial mortgages – owner-occupied:
       
       
       
       
       
       
       
 
Risk rating:
     
       
       
       
       
       
       
       
 
Pass
  $
41,024    $
21,903    $
48,339    $
50,201    $
23,042    $
68,067    $
1,496    $ 254,072 
Watch
   
—     
246     
3,222     
4,871     
—     
—     
—     
8,339 
Special Mention
   
—     
—     
—     
861     
—     
—     
—     
861 
Substandard
   
—     
—     
—     
—     
—     
—     
—     
— 
Doubtful
   
—     
—     
—     
—     
—     
—     
—     
— 
 
  $
41,024    $
22,149    $
51,561    $
55,933    $
23,042    $
68,067    $
1,496    $ 263,272 
 
     
       
       
       
       
       
       
       
 
Current-period gross chargeoffs
  $
—    $
—    $
—    $
—    $
—    $
—    $
—    $
— 
 
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Table of Contents
 
 
 
December 31, 2024
 
 
 
Term Loans by Origination Year
    Revolving     
 
 
(in thousands)
 
2024
   
2023
   
2022
   
2021
   
2020
   
Prior
    Loans (1)    
Total
 
Residential mortgages (2):
     
       
       
       
       
       
       
       
 
Risk rating:
     
       
       
       
       
       
       
       
 
Pass
  $
6,183    $
26,528    $ 186,504    $ 155,595    $
32,133    $
675,051    $
36,468    $ 1,118,462 
Watch
   
—     
—     
—     
—     
—     
—     
—     
— 
Special Mention
   
—     
—     
—     
—     
—     
—     
—     
— 
Substandard
   
—     
—     
—     
—     
582     
2,039     
—     
2,621 
Doubtful
   
—     
—     
—     
—     
—     
—     
—     
— 
 
  $
6,183    $
26,528    $ 186,504    $ 155,595    $
32,715    $
677,090    $
36,468    $ 1,121,083 
 
     
       
       
       
       
       
       
       
 
Current-period gross chargeoffs
  $
—    $
—    $
—    $
—    $
—    $
(1)   $
—    $
(1)
 
     
       
       
       
       
       
       
       
 
Consumer and other:
     
       
       
       
       
       
       
       
 
Risk rating:
     
       
       
       
       
       
       
       
 
Pass
  $
—    $
37    $
151    $
—    $
—    $
100    $
873    $
1,161 
Watch
   
—     
—     
—     
—     
—     
—     
—     
— 
Special Mention
   
—     
—     
—     
—     
—     
—     
—     
— 
Substandard
   
—     
—     
—     
—     
—     
—     
—     
— 
Doubtful
   
—     
—     
—     
—     
—     
—     
—     
— 
Not Rated
   
—     
—     
—     
—     
—     
—     
49     
49 
 
  $
—    $
37    $
151    $
—    $
—    $
100    $
922    $
1,210 
 
     
       
       
       
       
       
       
       
 
Current-period gross chargeoffs
  $
—    $
—    $
—    $
—    $
—    $
—    $
(32)   $
(32)
 
     
       
       
       
       
       
       
       
 
Total Loans
  $ 211,323    $ 182,024    $ 634,129    $ 604,496    $ 203,245    $ 1,340,255    $
46,660    $ 3,222,132 
Total gross chargeoffs
  $
—    $
—    $
—    $
—    $
—    $
(169)   $
(970)   $
(1,139)
 
(1) Includes revolving lines converted to term of $3.8 million of commercial and industrial, $1.0 million of owner-occupied commercial mortgage and
$6.9 million of residential home equity.
(2) Certain fixed rate residential mortgage loans are included in a fair value hedging relationship. The amortized cost excludes an adjustment of
$525,000 related to basis adjustments for loans in the closed portfolio under the portfolio layer method at December 31, 2024. These basis adjustments
would be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated. See "Note N - Derivatives" for more
information on the fair value hedge.
 
NOTE D – PREMISES AND EQUIPMENT AND OPERATING LEASES
 
Premises and equipment. Bank premises and equipment consist of the following:
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
 
Land
  $
9,002    $
9,002 
Buildings and improvements
   
22,410     
22,250 
Leasehold improvements
   
13,030     
12,412 
Furniture and equipment
   
37,763     
37,010 
Construction in process
   
44     
642 
 
   
82,249     
81,316 
Accumulated depreciation and amortization
   
(53,114)    
(49,902)
 
  $
29,135    $
31,414 
 
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Table of Contents
 
Land and buildings held-for-sale of $383,000 were sold for their carrying value in the second quarter of 2024. These assets were measured at the lower of
cost or fair value on a nonrecurring basis and reported in the line item “Other assets” in the consolidated balance sheets at  December 31, 2023.
 
Operating Leases. The Bank leases certain branch and back-office locations under long-term, non-cancelable operating lease agreements. The leases
expire at various dates through 2038 and had a weighted average remaining term of 10.61 and 11.15 years at December 31, 2024 and 2023, respectively.
Many of the Bank’s leases include renewal options of up to 10 years with the longest option extending to 25 years. The exercise of lease renewal options is
at the Bank’s sole discretion.
 
The weighted average discount rate for leases in place at  December 31, 2024 and 2023 was 3.31% and 3.29%, respectively. Leases with an initial term of
12 months or less are not recorded on the balance sheet. The Bank had one such lease in 2024, 2023 and 2022 and recognized rent expense for these leases
on a straight-line basis over the lease term. 
 
The Bank’s branch optimization strategy resulted in charges of $1.9 million in 2024 and $905,000 in 2022 related to the closing or relocation of leased
branch office space. The charges include rent and depreciation expenses, lease acceleration costs and asset disposal charges. These charges are included in
the consolidated statements of income in “branch consolidation expenses” in 2024 and partially included in “gain (loss) on disposition of premises and
fixed assets” in 2022.
 
Rental payments required by the Bank’s lease agreements may increase over time based on certain variable components such as real estate taxes and
common area maintenance charges.
 
The components of rent expense were as follows:
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
   
2022
 
Operating lease cost
  $
3,262    $
3,480    $
3,271 
Variable lease cost
   
430     
463     
490 
Short-term lease cost
   
7     
78     
10 
 
  $
3,699    $
4,021    $
3,771 
 
The following is a maturity analysis of the operating lease liability at December 31, 2024.
 
Year (dollars in thousands)
 
Total
 
2025
 $
3,949 
2026
  
2,642 
2027
  
2,430 
2028
  
1,844 
2029
  
1,689 
Thereafter
  
13,699 
Total lease payments
  
26,253 
Less: interest
  
4,289 
 
 $
21,964 
 
NOTE E – DEPOSITS
 
The following table sets forth the remaining maturities of the Bank’s time deposits at December 31, 2024.
 
Year (dollars in thousands)
 
Total
 
2025
 $ 518,169 
2026
  
60,690 
2027
  
18,160 
2028
  
16,037 
2029
  
2,275 
Thereafter
  
696 
 
 $ 616,027 
 
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Time deposits that meet or exceed the FDIC  insurance limit of $250,000 totaled $73.4 million and $70.3  million at December 31, 2024 and 2023,
respectively. Deposits from executive officers, directors and their affiliates were approximately $8.3 million and $8.4 million at  December 31, 2024 and
2023, respectively. Time deposits maturing in 2025 and 2026 include $130.0 million and $45.0 million, respectively, of brokered deposits.
 
NOTE F – BORROWED FUNDS
 
Borrowings at  December 31, 2024 and 2023 consisted of overnight advances and fixed rate Federal Home Loan Bank (“FHLB”) advances as follows.
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
 
Overnight advances:
     
       
 
FHLB overnight advances
  $
—    $
70,000 
 
   
      
  
Other borrowings:
     
       
 
FHLB advances
   
435,000     
472,500 
 
  $
435,000    $
542,500 
 
Accrued interest payable on borrowed funds is included in “accrued expenses and other liabilities” in the consolidated balance sheets and amounted
to $1.3 million and $1.4 million at December 31, 2024 and 2023, respectively.
 
FHLB advances are collateralized by a blanket lien on residential and commercial mortgage loans with a lendable value of $1.2 billion and $1.9 billion at
December 31, 2024 and 2023, respectively. Based on this collateral and the Corporation’s holdings of FHLB stock, the Corporation was able to borrow up
to a total of $493.7 million at December 31, 2024. Each advance is non-amortizing and, for those advances with a term greater than one day, generally are
subject to a prepayment penalty. 
 
Advances through the Federal Reserve Bank Discount Window generally include overnight advances which are fully collateralized by certain pledged
loans under the Federal Reserve Bank's Borrower-in-Custody ("BIC") program. At  December 31, 2024, the Corporation had loans pledged under the BIC
program of $113.3 million. There were no overnight advances outstanding under the BIC program at  December 31, 2024 and 2023. At  December 31,
2024, the Corporation had borrowing capacity available under the BIC program of $89.6 million.
 
The following table sets forth as of December 31, 2024 the contractual maturities and weighted average interest rates of FHLB advances for each of the
next five years. There are no FHLB advances with contractual maturities beyond three years at December 31, 2024.
 
Contractual Maturity (dollars in thousands)
 
Amount
   
Weighted Average
Rate
 
Overnight
  $
—     
—%
2025
   
230,000     
4.50 
2026
   
150,000     
4.27 
2027
   
55,000     
4.22 
2028
   
—     
— 
2029
   
—     
— 
After 2029
   
—     
— 
 
   
435,000     
4.39 
 
  $
435,000     
4.39%
 
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NOTE G – INCOME TAXES
 
The Corporation, the Bank and its subsidiaries, except for the REIT, file a consolidated federal income tax return. Income taxes charged to earnings in
2024, 2023 and 2022 had effective tax rates of (1.9%), 11.0% and 19.4%, respectively. The following table sets forth a reconciliation of the statutory
federal income tax rate to the Corporation’s effective tax rate.
 
 
 
Year Ended December 31,
 
 
 
2024
 
 
2023
   
2022
 
Statutory federal income tax rate
   
21.0%    
21.0%   
21.0%
State and local income taxes, net of federal income tax benefit
   
(16.2)
   
(4.8)    
1.7 
Tax-exempt income, net of disallowed cost of funding
   
(4.5)
   
(3.3)    
(2.8)
BOLI income
   
(4.8)
   
(2.3)    
(1.1)
Excess tax benefit of stock-based compensation
   
1.1 
   
0.4     
— 
Non-deductible officer compensation
   
0.9 
   
—     
0.1 
Other
   
0.6 
   
—     
0.5 
 
   
(1.9%)   
11.0%   
19.4%
 
Provision for Income Taxes. The following table sets forth the components of the provision for income taxes.
 
 
 
Year Ended December 31,
 
(in thousands)
 
2024
   
2023
   
2022
 
Current:
     
       
       
 
Federal
  $
6,677    $
3,469    $
9,287 
State and local
   
585     
909     
1,330 
 
   
7,262     
4,378     
10,617 
Deferred:
     
       
       
 
Federal
   
(4,548)    
1,771     
358 
State and local
   
(3,026)    
(2,920)    
312 
 
   
(7,574)    
(1,149)    
670 
 
  $
(312)   $
3,229    $
11,287 
 
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Net Deferred Tax Asset. The following table sets forth the components of the Corporation’s net deferred tax asset.
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
 
Deferred tax assets:
     
       
 
Unrealized loss on AFS securities
  $
22,399    $
22,070 
Allowance for credit losses and off-balance sheet credit exposure
   
8,775     
9,036 
Operating lease liability
   
6,703     
7,627 
Net operating loss carryforwards
   
5,822     
2,869 
Interest expense limitation
   
4,436     
— 
Transaction costs - capitalized
   
350     
— 
Stock-based compensation
   
255     
519 
Contract incentive
   
50     
— 
Asset writedown
   
46     
51 
Retirement expense
   
34     
35 
Interest on nonperforming loans
   
2     
14 
 
   
48,872     
42,221 
Valuation allowance
   
—     
— 
 
   
48,872     
42,221 
Deferred tax liabilities:
     
       
 
Right-of-use asset
   
5,783     
6,908 
Prepaid pension
   
3,603     
3,274 
Depreciation
   
1,685     
1,509 
Deferred loan costs
   
1,357     
1,365 
Prepaid expenses
   
144     
146 
Interest rate swap fair market value adjustment
   
108     
23 
 
   
12,680     
13,225 
Net deferred tax asset
  $
36,192    $
28,996 
 
At year-end
2024, the Corporation did
not have any federal net operating loss carryforwards. At year-end
2024, the Corporation had state and local gross
operating loss carryforwards of
$85.8 million, which begin to expire in
2043. Deferred tax assets are recognized for net operating losses because the benefit
is more likely than
not to be realized. 
 
In evaluating our ability to recover deferred tax assets in the jurisdiction from which they arise, all available positive and negative evidence is considered,
including projected future taxable income, tax-planning strategies, and results of recent operations. Assumptions about future taxable income use internal
budgets and plans prepared to manage our business and therefore require the use of significant judgment. Based on projections for future taxable income
over the periods in which the deferred tax assets are deductible, the Corporation believes the net deferred tax assets are more likely than not to be realized.
 
The Corporation had
no material unrecognized tax benefits at
December 
31,
2024, 
2023 or
2022. The Corporation has
not taken any tax positions for
which it is reasonably possible that unrecognized tax benefits will significantly increase within the next
12 months.
 
The Corporation is subject to Federal, New York State ("NYS"), NYC, New Jersey and Connecticut income taxes. The Corporation did not incur any
amounts for interest and penalties due to taxing authorities for calendar years 
2024
, 
2023
or 2022
. The tax years 2022 through 2024 remain open to
examination by the Internal Revenue Service, NYS, NYC, New Jersey and Connecticut.
 
NOTE H – REGULATORY MATTERS
 
Minimum Regulatory Capital Requirements. The Corporation and the Bank are subject to the Basel III regulatory capital requirements administered
by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action (“PCA”) regulations, involve quantitative
measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Failure to meet the minimum capital
requirements can result in certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material
effect on the financial statements of the Corporation and Bank. The most recent regulatory notifications categorized the Bank as well capitalized under the
PCA provisions and there are no conditions or events since that notification that management believes have changed that category.
 
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In accordance with the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies adopted, effective January 1,
2020, a final rule whereby financial institutions and financial institution holding companies that have less than $10 billion in total consolidated assets and
meet other qualifying criteria, including a leverage ratio of greater than 9% (“qualifying community banking organizations”), are eligible to opt into a
community bank leverage ratio (“CBLR”) framework. Qualifying community banking organizations that elect to use the CBLR framework and that
maintain a leverage ratio of greater than 9% are considered to have satisfied the generally applicable risk-based and leverage capital requirements in the
agencies’ capital rules and will be considered to have met the well capitalized ratio requirements under the PCA statutes. The agencies reserved the
authority to disallow the use of the CBLR framework by a financial institution or holding company, based on the risk profile of the organization.
 
The Corporation and the Bank elected to adopt the CBLR framework. As a qualifying community banking organization, the Corporation and the Bank may
opt out of the CBLR framework in any subsequent quarter by completing its regulatory agency reporting using the traditional capital rules.
 
The Corporation and the Bank exclude accumulated OCI components from Tier 1 and Total regulatory capital.
 
During 2020, the Corporation and the Bank elected the optional five-year transition period provided by the federal banking agencies for recognizing the
regulatory capital impact of the implementation of CECL.
 
The Corporation’s and the Bank’s actual and required capital amounts and ratios under the CBLR rules at  December 31, 2024 and 2023 are presented in
the tables below.
 
 
 
2024
 
 
 
Actual Capital
   
To Be Well Capitalized Under
CBLR Framework
 
(dollars in thousands)
 
Amount
   
Ratio
   
Amount
   
Ratio
 
Tier 1 capital to average assets:
     
       
       
       
 
Consolidated
  $
430,428     
10.12%  $
382,731     
9.00%
Bank
   
429,693     
10.11     
382,683     
9.00 
 
 
 
2023
 
 
 
Actual Capital
   
To Be Well Capitalized Under
CBLR Framework
 
(dollars in thousands)
 
Amount
   
Ratio
   
Amount
   
Ratio
 
Tier 1 capital to average assets:
     
       
       
       
 
Consolidated
  $
435,643     
10.05%  $
389,969     
9.00%
Bank
   
438,648     
10.13     
389,874     
9.00 
 
Other Matters. The source of funds for the Corporation’s dividend payments to shareholders is dividends received from the Bank. Banking regulations
limit the amount of dividends that may be paid by the Bank without prior approval of regulatory agencies. Under these regulations, the amount of dividends
that the Bank may pay in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years,
subject to the minimum capital requirements described above. During 2025, the Bank could, without prior approval, declare dividends of
approximately $6.3 million plus any 2025 net profits retained to the date of the dividend declaration.
 
Regulation D of the Board of Governors of The Federal Reserve System may require banks to maintain reserves against certain deposit balances. There was
no reserve requirement in 2024 or 2023.
 
NOTE I – STOCK-BASED COMPENSATION
 
On April 20, 2021, the stockholders of the Corporation approved the 2021 Equity Incentive Plan (“2021 Plan”). Upon approval of the 2021 Plan, no further
awards could be made under the 2014 Equity Incentive Plan (“2014 Plan”).
 
2021 Plan. Under the 2021 Plan, awards may be granted to employees and non-employee directors as stock options, restricted stock awards or RSUs,
with a one year minimum vesting period for at least 95% of the awards granted. All awards granted under the 2021 Plan will immediately vest upon an
involuntary termination following a change in control, total and permanent disability, as defined, or death.
 
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The Corporation has 750,000 shares of common stock reserved for awards under the 2021 Plan, plus 23,167 shares that remained available for grant as full
value RSUs or restricted stock awards under the 2014 Plan. RSUs granted under the 2014 Plan that expire or are forfeited after April 20, 2021 are added to
the number of shares of common stock reserved for issuance of awards under the 2021 Plan. At December 31, 2024, 358,333  equity awards remain
available to be granted under the 2021 Plan.
 
2014 Plan. Under the 2014 Plan, awards were granted to employees and non-employee directors as non-qualified stock options, restricted stock awards
and RSUs. Substantially all of the awards granted under the 2014 Plan were RSUs. All awards granted under the 2014 Plan will immediately vest upon an
involuntary termination following a change in control, total and permanent disability, as defined, or death, and with certain exceptions, will immediately
vest in the event of retirement, as defined.
 
Details of RSUs. The following table summarizes the vesting schedule of RSUs outstanding at December 31, 2024.
 
 
 
Total
Number of RSUs:
   
Vested and convertible at December 31, 2024
  
28,021
Scheduled to vest during:
   
2025
  
95,773
2026
  
26,210
2027
  
38,635
2028
  
5,340
2029
  
2,191
 
   196,170
 
The RSUs in the table above include performance-based RSUs with vesting based on the financial performance of the Corporation in 2024 and 2025 and
service-based RSUs with various service-based vesting periods. The grant date fair value of RSUs is equal to the market price of the shares underlying the
awards on the grant date, discounted for dividends that are not paid on these RSUs.
 
The fair values of awards made in 2024, 2023 and 2022, and the assumptions utilized in determining such values, are presented below.
 
 
 
2024
 
 
Performance-Based
 
Service-Based
 
 
Vesting
 
Vesting
Grant date fair value
 
$10.89
 
$7.63
to
$10.89
Market price on grant date
 
$12.46
 
$9.90
to
$12.46
Expected annual dividend
 
$0.84
 
$0.84
Expected term (in years)
 
2.0
 
1.0
to
5.0
Risk-free interest rate
 
4.43%
 
4.27%
to
5.16%
 
 
2023
Grant date fair value
 
$16.57
 
$11.77
to
$16.57
Market price on grant date
 
$18.14
 
$12.57
to
$18.14
Expected annual dividend
 
$0.84
 
$0.84
Expected term (in years)
 
2.0
 
1.0
to
5.0
Risk-free interest rate
 
4.24%
 
4.01%
to
4.80%
 
 
2022
Grant date fair value
 
$20.07
 
$17.70
to
$20.07
Market price on grant date
 
$21.64
 
$18.12
to
$21.64
Expected annual dividend
 
$0.80
 
$0.42
to
$0.80
Expected term (in years)
 
2.0
 
1.0
to
5.0
Risk-free interest rate
 
1.12%
 
1.12%
to
4.56%
 
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The following table presents a summary of RSUs outstanding at December 31, 2024 and changes during the year 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, 2024
   
213,879    $
16.04     
      
  
Granted
   
231,467     
10.54     
      
  
Converted
   
(178,693)    
13.85     
      
  
Forfeited
   
(70,483)    
13.32     
      
  
Outstanding at December 31, 2024
   
196,170    $
12.53     
0.93    $
2,291 
Vested and convertible at December 31, 2024
   
28,021    $
12.22     
—    $
327 
 
RSUs outstanding at December 31, 2024 include 58,394 performance-based RSUs, of which  28,021  are vested and convertible at year-end,
and 137,776 service-based RSUs. The performance-based RSUs have a maximum payout potential of 1.50 shares of the Corporation’s common stock for
each RSU awarded. Based on the Corporation’s performance in 2024, 67,339 shares were forfeited on the performance-based RSUs and reflected in the
table above. Service-based RSUs have a maximum payout potential of one share of the Corporation’s common stock for each RSU awarded.
 
The total intrinsic value of RSUs converted in 2024, 2023 and 2022 was $2.5 million, $2.2 million and $2.0 million, respectively.
 
Stock Option Activity. There were no stock options outstanding at December 31, 2024, 2023 and 2022. No stock options were exercised in 2024, 2023
and 2022. 
 
Compensation Expense. The Corporation recorded expense for share-based payments of $2.2 million, $1.2 million and $2.5 million in 2024, 2023 and
2022, respectively, and related income tax benefits of $661,000, $383,000 and $760,000, respectively.
 
Unrecognized Compensation Cost. As of December 31, 2024, there was $1.1 million of total unrecognized compensation cost related to non-vested
RSUs. The total cost is expected to be recognized over a weighted-average period of 1.7 years.
 
Other. The Corporation uses newly issued shares for the conversion of RSUs. During 2024,  2023 and 2022,  5,256, 4,573  and 3,315 shares,
respectively, of the Corporation’s common stock were issued to members of the Board of Directors in payment of director fees. 
 
NOTE J – RETIREMENT PLANS
 
The Bank has a 401(k) plan and a defined benefit pension plan (“Pension Plan” or “Plan”). Employees are immediately eligible to participate in the 401(k)
plan provided they are at least 18 years of age. Participants may elect to contribute up to 100% of gross compensation, as defined, subject to the limitations
of Section 401(k) of the Internal Revenue Code. The Bank may, at its sole discretion, make matching contributions to each participant's account based on
the amount of the participant's contributions. Participants are fully vested in their elective contributions and, after five years of participation in the 401(k)
plan, are fully vested (20% vesting per year) in the matching contributions, if any, made by the Bank. The Bank’s expense for matching contributions
was $577,000, $571,000 and $530,000 for 2024, 2023 and 2022, respectively.
 
An internal management committee (the “Committee”) oversees the affairs of the Pension Plan and acts as named fiduciary. The Committee utilizes a
formal Investment Policy Statement which includes the investment guidelines and policies contained in the Investment Management Agreement. The
Investment Policy Statement is periodically revised by the Committee as deemed appropriate.
 
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Employees are eligible to participate in the Pension Plan after attaining 21 years of age and completing 12 full months of service. Pension benefits are
generally based on a percentage of average annual compensation during the period of creditable service. The Bank makes contributions to the Pension Plan
which, when taken together with participant contributions equal to 2% of their compensation, will be sufficient to fund these benefits. The Bank’s funding
method, the unit credit actuarial cost method, is consistent with the funding requirements of applicable federal laws and regulations which set forth both
minimum required and maximum tax deductible contributions. Employees become fully vested after four years of participation in the Pension Plan (no
vesting occurs during the four year period).
 
Significant Actuarial Assumptions. The following table sets forth the significant actuarial assumptions used to determine the benefit obligation at
December 31, 2024, 2023 and 2022 and the benefit cost for each of the Plan years then ended.
 
 
 
2024
 
2023
 
2022
Weighted average assumptions used to determine the
   
   
   
benefit obligation at year end:
   
   
   
Discount rate
 
5.68%
 
5.16%
 
5.44%
Rate of increase in compensation levels
 
4.00%
 
4.00%
 
3.50%
 
   
   
   
Weighted average assumptions used to determine net pension cost:
   
   
   
Discount rate
 
5.16%
 
5.44%
 
2.97%
Rate of increase in compensation levels
 
4.00%
 
3.50%
 
3.50%
Expected long-term rate of return on plan assets
 
6.00%
 
6.00%
 
5.25%
 
The increase in the discount rate from 5.16% in 2023 to 5.68% in 2024 decreased the projected benefit obligation at December 31, 2024 by approximately
$2.8 million. Changes due to experience, including changes in participant demographics, resulted in a net actuarial gain of approximately $247,000 during
2024.
 
The decrease in the discount rate from 5.44% in 2022 to 5.16% in 2023 increased the projected benefit obligation at December 31, 2023 by approximately
$1.5 million. The increase in the salary scale from 3.50% in 2022 to 4.00% in 2023 increased the projected benefit obligation at December 31, 2023 by
approximately $296,000. Changes due to experience, including changes in participant demographics, resulted in a net actuarial loss of approximately
$1.0 million during 2023.
 
Net Pension Cost. The following table sets forth the components of net periodic pension cost.
 
(in thousands)
 
2024
   
2023
   
2022
 
Service cost plus expected expenses and net of expected plan
     
       
       
 
participant contributions
  $
1,467    $
1,378    $
2,133 
Interest cost
   
2,439     
2,341     
1,641 
Expected return on plan assets
   
(3,480)    
(3,245)    
(3,903)
Amortization of net actuarial loss
   
800     
1,018     
— 
Net pension cost (credit)
  $
1,226    $
1,492    $
(129)
 
The components of net pension cost (credit) other than the service cost component were included in the line item “Other noninterest income” in the
consolidated statements of income. The service cost component was included in the line item “Salaries and employee benefits” in the consolidated
statements of income.
 
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Funded Status of the Plan. The following table sets forth the change in the projected benefit obligation and Plan assets for each year and, as of the end
of each year, the funded status of the Plan and accumulated benefit obligation.
 
(in thousands)
 
2024
   
2023
   
2022
 
Change in projected benefit obligation:
     
       
       
 
Projected benefit obligation at beginning of year
  $
48,798    $
44,460    $
56,587 
Service cost
   
1,738     
1,630     
2,357 
Interest cost
   
2,439     
2,341     
1,641 
Benefits paid
   
(2,550)    
(2,430)    
(2,361)
Assumption changes
   
(2,766)    
1,778     
(15,343)
Experience loss and other
   
(247)    
1,019     
1,579 
Projected benefit obligation at end of year
   
47,412     
48,798     
44,460 
 
     
       
       
 
Change in fair value of plan assets:
     
       
       
 
Fair value of plan assets at beginning of year
   
59,538     
55,509     
75,684 
Actual return on plan assets
   
1,946     
6,127     
(18,113)
Plan participant contributions
   
392     
455     
425 
Benefits paid
   
(2,550)    
(2,430)    
(2,361)
Expenses
   
(108)    
(123)    
(126)
Fair value of plan assets at end of year
   
59,218     
59,538     
55,509 
Funded status at end of year
  $
11,806    $
10,740    $
11,049 
Accumulated benefit obligation
  $
44,092    $
45,185    $
41,551 
 
During 2024, the Bank did not make a contribution to the Plan and the Bank has no minimum required pension contribution for the Plan year ending
September 30, 2025. The Bank does not expect to make a contribution in 2025.
 
Plan Assets. The objective for the Plan’s assets is to generate long-term investment returns from both income and capital appreciation which outpaces
the rate of inflation, while maintaining sufficient liquidity to ensure the Plan’s ability to pay all anticipated benefit and expense obligations when due. The
Plan may maintain a de minimis amount of cash equivalents, with the remaining assets allocated across two broadly-defined financial asset categories: (1)
equity, both domestic and international; and (2) fixed income of various durations and issuer type. The goal of the equity allocation is to supplement the
Bank’s contributions to the Plan when the Plan is underfunded and increase surplus when the Plan is overfunded. The fixed income component will include
longer-duration bonds designed to match and hedge the characteristics of the Plan’s liabilities. Cash equivalents, under normal circumstances, will be
temporary holdings for the purpose of paying expenses and monthly benefits.
 
For fixed income investments: (1) the minimum average credit quality shall be investment grade (Standard & Poor’s BBB or Moody’s Baa) or higher; and
(2) no more than 5% of the portfolio may be invested in securities with ratings below investment grade, and none may be rated below investment grade at
the time of purchase.
 
Reasonable precautions are taken to avoid excessive concentrations to protect the portfolio against unfavorable outcomes within an asset class. Specifically,
the following guidelines are in place:
 
 
●
With the exception of fixed income investments explicitly guaranteed by the U.S. government, no single investment security shall represent more
than 5% of total Plan assets; and
 
 
●
With the exception of passively managed investment vehicles seeking to match the returns of broadly diversified market indices or diversified
investment vehicles chosen specifically to hedge the interest rate risk embedded in Plan liabilities, no single investment pool or investment
company (mutual fund) shall comprise more than 10% of total plan assets.
 
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The portfolio will be rebalanced to the target asset allocation, if needed, no less often than quarterly. Unless expressly authorized in writing by the
Committee, the following investing activities are prohibited:
 
 
●
Purchasing securities on margin;
 
 
●
Pledging or hypothecating securities, except for loans of securities that are fully collateralized;
 
 
●
Purchasing or selling derivative securities for speculation or leverage; and
 
 
●
Engaging in investment strategies that have the potential to amplify or distort the risk of loss beyond a level that is reasonably expected given the
objectives of the portfolio.
 
The Plan’s actual asset allocations, target allocations and expected long-term rates of return by asset category are set forth in the following tables.
 
 
 
December 31, 2024
 
 
  Target Allocation    
Percentage of Plan
Assets
   
Weighted Average
Expected Long-
term Rates of
Return
 
Cash equivalents
 
0% - 1%
   
0.0%
   
N/A
 
Equity mutual funds
 
20% - 30%
   
25.0%
   
5.5% to 12.2%
 
Fixed income mutual funds
 
70% - 80%
   
75.0%
   
3.2% to 7.0%
 
 
 
 
   
100.0%
   
3.7% to 8.3%
 
 
 
 
December 31, 2023
 
Cash equivalents
 
0% - 1%
   
0.3%
   
<1.00%
 
Equity mutual funds
 
20% - 30%
   
25.0%
   
6.1% to 8.5%
 
Fixed income mutual funds
 
70% - 80%
   
74.7%
   
4.9% to 6.1%
 
 
 
 
   
100.0%
   
5.2% to 6.7%
 
 
The ranges for the weighted average expected long-term rates of return for equity funds, bond funds and total plan assets set forth in the preceding table
represent an average of all expected allocation percentile returns. For these purposes the trustee utilizes a third party capital markets model (the “model”),
which forecasts distributions of future returns for a wide array of broad asset classes. The theoretical and empirical foundation of the model is that the
returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk. At the core of the model are
estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available historical
monthly financial and economic data.
 
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Fair Value of Plan Assets. The fair value of Plan assets at  December 31, 2024 and 2023 is summarized below.
 
 
   
 
   
Fair Value Measurements Using:
 
(in thousands)
 
Total
   
Quoted Prices
in Active
Markets for
Identical
Assets (Level
1)
   
Significant
Other
Observable
Inputs (Level
2)
   
Significant
Unobservable
Inputs (Level
3)
 
December 31, 2024:
     
       
       
       
 
Equity mutual funds:
     
       
       
       
 
US Equity
  $
9,434    $
9,434    $
—    $
— 
Non-US Equity
   
5,356     
5,356     
—     
— 
Total equity mutual funds
   
14,790     
14,790     
—     
— 
Fixed income mutual funds
   
44,428     
—     
44,428     
— 
Total Plan Assets
  $
59,218    $
14,790    $
44,428    $
— 
 
     
       
       
       
 
December 31, 2023:
     
       
       
       
 
Cash equivalents
  $
196    $
—    $
196    $
— 
Equity mutual funds:
     
       
       
       
 
US Equity
   
8,940     
8,940     
—     
— 
Non-US Equity
   
5,928     
5,928     
—     
— 
Total equity mutual funds
   
14,868     
14,868     
—     
— 
Fixed income mutual funds
   
44,474     
44,474     
—     
— 
Total Plan Assets
  $
59,538    $
59,342    $
196    $
— 
 
An explanation of matrix pricing and the definitions of Level 1, 2 and 3 fair value measurements are included in “Note M – Fair Value of Financial
Instruments” to these consolidated financial statements.
 
Estimated Future Benefit Payments. The following benefit payments, which reflect expected future service as appropriate, are expected to be made by
the Plan.
 
Year (in thousands)
   
Amount
 
2025
    $
3,067 
2026
     
3,105 
2027
     
3,242 
2028
     
3,389 
2029
     
3,485 
2030 - 2034
     
18,842 
 
 
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NOTE K – OTHER OPERATING EXPENSES
 
Expenses included in other operating expenses that exceed one percent of the aggregate of total interest income and noninterest income in one or more of
the years shown are as follows.
 
(in thousands)
 
2024
   
2023
   
2022
 
Computer services
  $
2,173    $
1,436    $
1,501 
FDIC Insurance
   
1,927     
1,944     
1,162 
Telecommunications
   
844     
1,354     
1,669 
 
NOTE L – COMMITMENTS AND CONTINGENT LIABILITIES
 
Financial Instruments With Off-Balance-Sheet Risk. In the normal course of business, the Bank enters into various types of off-balance-sheet
arrangements to meet the financing needs of its customers. These off-balance-sheet financial instruments include commitments to extend credit, standby
letters of credit and commercial letters of credit. These instruments involve varying degrees of credit risk in excess of the amount recognized in the
consolidated balance sheets and expose the Bank to credit loss in the event of nonperformance by the Bank’s customers. The Bank's exposure to credit loss
is represented by the contractual notional amount of these instruments. The Bank uses the same credit policies in making commitments to extend credit,
and generally uses the same credit policies for letters of credit, as it does for on-balance sheet instruments such as loans.
 
Financial instruments whose contract amounts represent credit risk are as follows:
 
 
 
2024
   
2023
 
(in thousands)
 
Fixed Rate
   
Variable Rate    
Fixed Rate
    Variable Rate  
Commitments to extend credit
  $
1,811    $
181,527    $
1,877    $
237,083 
Standby letters of credit
   
7,082     
—     
6,852     
— 
 
A commitment to extend credit is a legally binding agreement to lend to a customer as long as there is no violation of any condition established in the
contract. Unused home equity, small business and commercial lines of credit are a large component of the Bank’s variable rate loan commitments. Since
some of the commitments to extend credit and letters of credit are expected to expire without being drawn upon and, with respect to unused lines of credit,
can be frozen, reduced or terminated by the Bank based on the financial condition of the borrower, the total commitment amounts do not necessarily
represent future cash requirements. Home equity lines generally expire ten years from their date of origination and small business lines generally have a
three year term. Other real estate loan commitments generally expire within 60 to 90 days and commercial line commitments generally expire within one
year. The amount of collateral obtained, if any, by the Bank upon extension of credit is based on management’s credit evaluation of the borrower. Collateral
held varies but may include mortgages on commercial and residential real estate, securities, deposit accounts with the Bank or other financial institutions
and security interests in business assets and equipment. At  December 31, 2024, the Bank’s fixed rate loan commitments are primarily overdraft lines of
credit on deposit accounts.
 
Standby letters of credit are conditional commitments issued by the Bank to assure the performance or financial obligations of a customer to a third party.
The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The Bank generally
holds collateral and/or obtains personal guarantees supporting these commitments. Standby letters of credit are considered financial guarantees and are
recorded at fair value.
 
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Employment Agreements. At December 31, 2024, the Corporation’s Chief Executive Officer and executive vice presidents, collectively referred to as
the senior executives, have employment agreements with the Corporation under which they are entitled to severance compensation in the event that their
employment is terminated without cause or they terminate their employment following an event constituting Good Reason, as defined, whether or not such
termination occurs in connection with a change in control. The Chief Executive Officer’s amended and restated employment agreement has a term of three
years beginning January 1, 2022. Each of the other senior executives has an employment agreement with a term of two years and various effective dates.
These two year and three year employment agreements automatically renew for an additional period of one year on January 1 of each year unless the
Corporation gives written notice of non-renewal at least 30 days prior to such date. Notwithstanding the foregoing, each of these employment agreements
expire on December 31 of the calendar year in which the executive attains normal retirement age (“Retirement Age Termination Date”), which for these
purposes is age 65. At the appropriate time and at its option, the Corporation can extend the employment agreements for two years beyond their retirement
age termination dates. The current aggregate annual salaries provided for in these employment agreements is $2.7 million.
 
Litigation. 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 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 $11.1 million, the net amount of funds involved in the suspicious wire transfer activity. The Corporation and Bank intend to
vigorously defend against the lawsuit and no accrual for potential losses have been made.
 
NOTE M – 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 Corporation deems transfers between levels of the fair value hierarchy to have occurred on the date of the event or change in circumstance that caused
the transfer. There were no transfers between levels of the fair value hierarchy in either 2024 or 2023.
 
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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)
 
December 31, 2024:
     
       
       
       
 
Financial Assets:
     
       
       
       
 
Available-for-Sale Securities:
     
       
       
       
 
State and municipals
  $
135,543    $
—    $
135,407    $
136 
Pass-through mortgage securities
   
129,440     
—     
129,440     
— 
Collateralized mortgage obligations
   
145,059     
—     
145,059     
— 
SBA agency obligations
   
101,427     
—     
101,427     
— 
Corporate bonds
   
113,310     
—     
113,310     
— 
 
   
624,779     
—     
624,643     
136 
Derivative - interest rate swaps
   
1,274     
—     
1,274     
— 
 
  $
626,053    $
—    $
625,917    $
136 
 
   
      
      
      
  
Financial Liabilities:
     
       
       
       
 
Derivative - interest rate swaps
  $
395    $
—    $
395    $
— 
 
   
      
      
      
  
December 31, 2023:
     
       
       
       
 
Financial Assets:
     
       
       
       
 
Available-for-Sale Securities:
     
       
       
       
 
State and municipals
  $
143,621    $
—    $
143,429    $
192 
Pass-through mortgage securities
   
138,603     
—     
138,603     
— 
Collateralized mortgage obligations
   
182,262     
—     
182,262     
— 
SBA agency obligations
   
125,476     
—     
125,476     
— 
Corporate bonds
   
105,915     
—     
105,915     
— 
 
   
695,877     
—     
695,685     
192 
Derivative - interest rate swaps
   
582     
—     
582     
— 
 
  $
696,459    $
—    $
696,267    $
192 
 
State and municipal AFS securities measured using Level 3 inputs. The Bank held three non-rated bond anticipation notes with a book value of
$136,000 at December 31, 2024. These bonds have a one year maturity and are issued by local municipalities that are customers of the Bank. Due to the
short duration of the bonds, book value approximates fair value at December 31, 2024.
 
Land and Buildings. Premises and facilities held-for-sale of $383,000 were sold for their carrying value in the second quarter of 2024. These assets
were measured at the lower of cost or fair value on a nonrecurring basis and reported in the line item “Other assets” in the consolidated balance sheets at 
December 31, 2023.
 
Financial Instruments Not Recorded at Fair Value. Fair value estimates are made at a specific point in time. Such estimates are generally subjective
in nature and dependent upon a number of significant assumptions associated with each financial instrument or group of similar financial instruments,
including estimates of discount rates, liquidity, risks associated with specific financial instruments, estimates of future cash flows, and relevant available
market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated
future business, premiums or discounts that could result from offering for sale at one time the Corporation’s entire holdings of a particular financial
instrument, or the income tax consequences of realizing gains or losses on the sale of financial instruments.
 
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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.
 
 
 
Level of
   
December 31, 2024
   
December 31, 2023
 
 
 
Fair Value    
Carrying
     
 
   
Carrying
     
 
 
(in thousands)
 
Hierarchy
   
Amount
   
Fair Value
   
Amount
   
Fair Value
 
Financial Assets:
   
       
       
       
       
 
Cash and cash equivalents
 
Level 1
    $
38,330    $
38,330    $
60,887    $
60,887 
Loans, net
 
Level 3
     
3,193,276     
2,947,587     
3,219,072     
2,945,864 
Restricted stock
 
n/a
     
27,712     
n/a     
32,659     
n/a 
Accrued interest receivable
 
Level 2
     
2,701     
2,701     
3,057     
3,057 
Accrued interest receivable
 
Level 3
     
10,706     
10,706     
10,438     
10,438 
 
   
       
       
       
       
 
Financial Liabilities:
   
       
       
       
       
 
Checking deposits
 
Level 1
     
1,074,671     
1,074,671     
1,133,184     
1,133,184 
Savings, NOW and money market deposits
 
Level 1
     
1,574,160     
1,574,160     
1,546,369     
1,546,369 
Time deposits
 
Level 2
     
616,027     
614,245     
591,433     
586,856 
Short-term borrowings
 
Level 1
     
—     
—     
70,000     
70,000 
Long-term debt
 
Level 2
     
435,000     
434,492     
472,500     
471,276 
Accrued interest payable
 
Level 2
     
7,672     
7,672     
6,344     
6,344 
 
NOTE N – 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 three year interest rate swap with a notional amount totaling $300 million which was
designated as a fair value hedge of certain fixed rate residential mortgages. The Bank pays a fixed rate of 3.82% and receives a floating rate based on the
secured overnight financing rate (“SOFR”) for the life of the agreement without an exchange of the underlying notional amount. The hedge was determined
to be effective during the year ended  December 31, 2024 and the Corporation expects the hedge to remain effective during the remaining term of the swap.
The gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk is recognized in interest income.
 
The following table summarizes information about the interest rate swap designated as a fair value hedge.
 
 
 
December 31, 2024  
Notional amount (in millions)
  $
300 
Fixed pay rate
   
3.82%
Overnight SOFR receive rate
   
4.49%
Maturity (in years)
   
1.21 
 
The following table presents the amount recorded on the balance sheet related to cumulative basis adjustments for the fair value hedge as of the years
indicated.
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
 
Loans - Residential Mortgages:
     
       
 
Carrying amount of the hedged asset (1)
  $
440,755    $
465,495 
Fair value hedging adjustment included in the carrying amount of the hedged asset
   
(525)    
(506)
 
(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 December 31, 2024, the amortized cost
basis of the closed portfolio used in this hedging relationship was  $441.3  million. The cumulative basis adjustment associated with this hedging
relationship was $525,000 and the amount of the designated hedged item was $878,000.
 
During 2024, the Bank recorded a $4.1 million credit from the swap transaction as a component of interest income in the consolidated statements of
income.
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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.
 
 
 
December 31, 2024
 
 
   
 
   
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    $
36,523    $
395    $
— 
Interest rate swap with offsetting counterparty
   
3    $
36,523    $
—    $
395 
 
During 2024, the Bank recorded $465,000 in back-to-back swap fee income, included in the consolidated statements of income in the line item “Other
noninterest income.”
 
NOTE O – REVENUE FROM CONTRACTS WITH CUSTOMERS
 
The noninterest income section of the consolidated statements of income includes the following types of revenues earned from the Bank's contracts with
customers.
 
Deposit Account Revenues. Fees are earned and collected on a monthly basis for account maintenance and activity-based service charges on deposit
accounts. The services are performed for customers over time, requiring a time-based measure of progress. Customers
 may be required to maintain
minimum balances and average balances. Additional fees
may also be earned for overdrafts, replacement of debit cards, bill payment, lockbox services and
ACH services and are earned and collected as transactions take place. All deposit account fees are accrued to income as earned, either monthly or at the
point of sale, and are included in the consolidated statements of income in the line item "Service charges on deposit accounts."
 
Transaction and Branch Service Fees. The following revenue streams are components of “Other noninterest income” on the consolidated statements
of income. These components totale
d $4.2 million, $3.3 million and
$2.9 million for the years ended
December 31, 2024, 
2023 and
2022, respectively.
Other items included in “Other noninterest income,” such as non-service components of net pension cost, real estate tax refunds, back-to-back swap fee
income and gains on sales of fixed assets are outside of the scope of Accounting Standards Codification
606.
 
Debit Card Revenues. The Bank earns a fee when its customers use their debit cards in point-of-sale transactions. These fees are generally known as
interchange fees. Interchange fees from cardholder transaction represent a percentage of the underlying transaction value and are recorded daily,
concurrently with the transaction processing services provided to the cardholder. 
 
Merchant Card Services. Together with a
third-party vendor, the Bank offers its small business customers debit/credit card readers for them to accept
and process card payments. The vendor aggregates the charges, collects the fees and remits the Bank’s portion on a monthly basis. Fees are accrued to
income as earned and collected.
 
Branch Services Revenues. The Bank charges fees for safe deposit box rentals, wire transfers, money orders, checkbook printing, official checks and
ATM usage. Fees are earned, collected and generally recorded as revenue when the service is provided.
 
Investment Services Revenues. Customer assets are held in a fiduciary capacity and the Bank provides trust services to those customers as it transitions
its remaining accounts to the LPL Financial platform. The services are performed for customers over time, requiring a time-based measure of progress.
Fees are assessed based on market values of customer assets held as of a certain point in time, and income cannot be estimated prior to the end of the
measurement period. Volatility in equity and other market values impacts the amount of revenue earned. Fees are generally earned and collected on a
monthly or quarterly basis and accrued to income as earned.
 
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Investment Management Services. The Bank provides investment management, trust, estate and custody services and offers retail investment services
through a partnership with an outside service provider, LPL Financial. Fees are variable and based on various factors including the market value of
financial assets under management. Fees are accrued to income as earned and collected.
 
NOTE P – PARENT COMPANY FINANCIAL INFORMATION
 
Condensed financial information for the Corporation (parent company only) is as follows:
 
CONDENSED BALANCE SHEETS
 
 
 
December 31,
 
(in thousands)
 
2024
   
2023
 
Assets:
     
       
 
Cash and due from banks
  $
4,585    $
695 
Investment in subsidiary bank, at equity
   
377,412     
383,151 
Prepaid income taxes
   
603     
42 
Deferred income tax benefits
   
973     
1,010 
Other assets
   
62     
9 
 
  $
383,635    $
384,907 
Liabilities:
     
       
 
Other liabilities
  $
35    $
17 
Cash dividends payable
   
4,734     
4,744 
 
   
4,769     
4,761 
Stockholders' equity:
     
       
 
Common stock
   
2,260     
2,259 
Surplus
   
79,731     
79,728 
Retained earnings
   
354,051     
355,887 
 
   
436,042     
437,874 
Accumulated other comprehensive loss, net of tax
   
(57,176)    
(57,728)
 
   
378,866     
380,146 
 
  $
383,635    $
384,907 
 
CONDENSED STATEMENTS OF INCOME
 
 
 
Year Ended December 31,
 
(in thousands)
 
2024
   
2023
   
2022
 
Income:
     
       
       
 
Dividends from subsidiary bank
  $
25,500    $
15,000    $
36,450 
Interest on deposits with subsidiary bank
   
13     
6     
5 
Other
   
—     
13     
— 
 
   
25,513     
15,019     
36,455 
 
     
       
       
 
Expenses:
     
       
       
 
Salaries
   
1,770     
779     
2,065 
Other operating expenses
   
902     
1,070     
795 
 
   
2,672     
1,849     
2,860 
 
     
       
       
 
Income before income taxes
   
22,841     
13,170     
33,595 
Income tax benefit
   
(526)    
(504)    
(791)
Income before undistributed earnings of subsidiary bank
   
23,367     
13,674     
34,386 
Equity in undistributed earnings
   
(6,291)    
12,565     
12,546 
Net income
  $
17,076    $
26,239    $
46,932 
 
     
       
       
 
Comprehensive income (loss)
  $
17,628    $
33,278    $
(15,522)
 
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CONDENSED STATEMENTS OF CASH FLOWS
 
 
 
Year Ended December 31,
 
(in thousands)
 
2024
   
2023
   
2022
 
Cash Flows From Operating Activities:
     
       
       
 
Net income
  $
17,076    $
26,239    $
46,932 
Adjustments to reconcile net income to net cash provided by operating activities:
     
       
       
 
Undistributed earnings of subsidiary bank
   
6,291     
(12,565)    
(12,546)
Deferred income tax provision (credit)
   
37     
78     
(199)
Stock-based compensation expense
   
2,160     
1,249     
2,466 
(Increase) decrease in other assets
   
(53)    
16     
(1)
Increase (decrease) in other liabilities
   
18     
(3)    
5 
Other (increases) decreases
   
(499)    
3,730     
(530)
Net cash provided by operating activities
   
25,030     
18,744     
36,127 
 
     
       
       
 
Cash Flows From Investing Activities:
     
       
       
 
Capital contributions to Bank subsidiary
   
—     
—     
— 
 
     
       
       
 
Cash Flows From Financing Activities:
     
       
       
 
Repurchase of common stock
   
(2,020)    
—     
(17,889)
Proceeds from issuance of common stock, net of shares withheld
   
(198)    
(28)    
263 
Cash dividends paid
   
(18,922)    
(18,918)    
(18,591)
Net cash used in financing activities
   
(21,140)    
(18,946)    
(36,217)
Net increase (decrease) in cash and cash equivalents*
   
3,890     
(202)    
(90)
Cash and cash equivalents, beginning of year
   
695     
897     
987 
Cash and cash equivalents, end of year
  $
4,585    $
695    $
897 
 
     
       
       
 
Supplemental Schedule of Noncash Financing Activities:
     
       
       
 
Cash dividends payable
  $
4,734    $
4,744    $
4,713 
 
*
Cash and cash equivalents is defined as cash and due from banks and includes the checking and money market accounts with the Corporation’s wholly-
owned bank subsidiary.
 
NOTE Q – 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 0.5175 shares of ConnectOne common stock for
each share of the Corporation's common stock (the “merger consideration”). The Corporation held a special meeting of shareholders on February 14,
2025 at which time the Corporation's shareholders approved the Merger Agreement and the transactions contemplated thereunder. The merger remains
subject to the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions. The Corporation expects the transaction to
close in the second quarter of 2025. 
 
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, which is attached to this Annual Report on Form 10-K as Exhibit 2.1. 
 
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NOTE R – 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 one
reportable operating segment. Accounting policies for the segment are the same as those described in "Note A - Summary of Significant Accounting
Policies." 
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Shareholders and the Board of Directors of
The First of Long Island Corporation
Melville, New York
 
Opinions on the Financial Statements and Internal Control over Financial Reporting
 
We have audited the accompanying consolidated balance sheets of The First of Long Island Corporation (the "Company") as of December 31, 2024 and
2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the
three-year period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). We also have audited the
Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31,
2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024 in conformity
with accounting principles generally accepted in the United States of America.  Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:
(2013) issued by COSO.
 
Basis for Opinions
 
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over
Financial Reporting.  Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control
over financial reporting based on our audits.  We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control
over financial reporting was maintained in all material respects.
 
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances.  We believe that our audits provide a reasonable basis for our opinions.
 
Definition and Limitations of Internal Control Over Financial Reporting
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.   A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate. 
 
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Critical Audit Matter
 
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments.  The communication of the critical audit matter does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
 
Qualitative and Quantitative Loss Factors in the Allowance for Credit Losses
 
The methodology for determining the allowance for credit losses requires substantial judgment by management. As of December 31, 2024, the balance of
the allowance for credit losses was $28.3 million. As described in Note A to the consolidated financial statements, management estimates the allowance for
credit losses balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and
supportable forecasts.
 
Management adjusts its historical loss experience to reflect current and forecasted conditions. In doing so, management considers a variety of general
qualitative and quantitative loss factors (“Q-factors”). We consider management’s application of Q-factors in the allowance for credit losses to be a critical
audit matter due to the extent of audit effort and degree of auditor judgment required to evaluate the Q-factors given the volume and nature on inputs and
the significant management judgment required.
 
To address this matter, we tested the design and operating effectiveness of the Company’s controls related to the Q-factors, including the following:
 
 
●
Management’s application of qualitative and quantitative judgments related to the Q-factors and the resulting allocation to the allowance for credit
losses;
 
●
Management's review over the completeness and accuracy of the data used as the basis for the Q-factors;
 
●
Management's testing over the mathematical accuracy of the allowance for credit losses calculation; and
 
●
Management's Allowance for Credit Losses Committee review of the allowance for credit losses and provision for credit losses.
 
Our substantive procedures related to the Q-factors included the following:
 
 
●
Evaluating the reasonableness of management’s application of Q-factors and the resulting allocation to the allowance for credit losses;
 
●
Testing the completeness and accuracy of certain data used in the qualitative factor calculations; and
 
●
Testing the mathematical accuracy of the allowance for credit loss calculation.
 
 
 
 
 
/s/ CROWE LLP
 
 
 
 
Crowe LLP
 
 
We have served as the Company’s auditor since 2003.
 
New York, New York
March 12, 2025
 
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
ITEM 9A. CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
The Corporation’s Principal Executive Officer, Christopher Becker, and Principal Financial Officer, Janet T. Verneuille, 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.
 
Management's Report on Internal Control Over Financial Reporting
 
The management of The First of Long Island Corporation is responsible for establishing and maintaining adequate internal control over financial reporting,
based on the criteria established in Internal Control - Integrated Framework:(2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). The First of Long Island Corporation’s system of internal control over financial reporting was designed by or under the
supervision of the Corporation’s Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of the
preparation of the Corporation’s financial statements for external and regulatory reporting purposes, in accordance with U.S. GAAP. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
 
The First of Long Island Corporation’s management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December
31, 2024, based on the criteria established in Internal Control - Integrated Framework:(2013) issued by COSO. Based on the assessment, management
determined that, as of December 31, 2024, the Corporation’s internal control over financial reporting is effective.
 
Report of Independent Registered Public Accounting Firm
 
Crowe LLP, an independent registered public accounting firm, has expressed an opinion on the effectiveness of the Corporation’s internal control over
financial reporting as of December 31, 2024 in their report which appears on page 79.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in internal control over financial reporting that occurred during the fourth quarter of 2024 that have materially affected, or are
reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
 
ITEM 9B. OTHER INFORMATION
 
During the fourth quarter of 2024, none 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 Securities and Exchange Commission (“SEC”) regulations.
 
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
 
None.
 
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PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
DIRECTORS
 
The Board of Directors (“Board”) of the Corporation currently consists of eleven members, and is divided into two classes, Class I and Class II. The
biographies of each of the board members are set forth below and contain information regarding specific experience, qualifications, attributes or skills that
led to the conclusion that the person should serve as a director considering the Corporation’s business and structure and the general qualifications and core
competencies identified and deemed desirable by the Governance and Nominating Committee. Each director of the Corporation is also a director of the
Bank. The ages presented are as of 
December 31, 2024.
 
Class I Directors Expiring in 2025
 
Christopher Becker (Age 59) – Mr. Becker joined the Board in January 2020 upon being named President and Chief Executive Officer of the
Corporation and the Bank. Mr. Becker is a member of the Loan, Asset Liability and Risk Committees of the Bank. Mr. Becker has been employed by the
Bank since 2011 and served as Executive Vice President and Chief Risk Officer of the Corporation and the Bank and Corporate Secretary of the
Corporation through the end of 2019.  In these positions, Mr. Becker was responsible for the Bank’s enterprise risk management program including
oversight of strategic planning, technology, loan and deposit operations, compliance, administration of internal audit, facilities, and certain credit
administration functions. Prior to joining the Bank, Mr. Becker served as Executive Vice President and Chief Financial Officer at the Bank of Smithtown
and previously as Director, President and Chief Executive Officer of a national bank in organization.  Mr. Becker began his career at Bridgehampton
National Bank and served ultimately as Executive Vice President and Chief Operating Officer. Mr. Becker’s experience has provided him with the core
competencies identified by the Governance and Nominating Committee, which include corporate governance, banking, strategic planning, business
leadership, corporate responsibility, accounting and reporting, finance and/or investments, technology and/or cybersecurity, mergers and acquisitions, legal
and/or regulatory, real estate, and marketing and/or public relations.
 
J. Abbott R. Cooper (Age 57) – Mr. Cooper joined the Board in 2023 and is a member of the Governance and Nominating, Audit and Asset Liability
Committees. Mr. Cooper is an attorney at Abbott Cooper, PLLC and the founder and managing member of Driver Management Company LLC (“Driver
LLC”). Prior to founding Driver LLC, Mr. Cooper was the senior portfolio manager of the Financial Opportunity Strategy at Hilton Capital Management.
Prior to that, Mr. Cooper was a senior investment banker covering depository institutions at Jefferies and Bank of America Merrill Lynch. Mr. Cooper
began his career as a corporate lawyer, focusing on public and private company mergers and acquisitions, corporate governance, and contests for corporate
control and capital markets. Mr. Cooper earned his J.D. from the University of Montana School of Law and his B.A. from the University of Virginia. Mr.
Cooper’s experience has provided him with the core competencies identified by the Governance and Nominating Committee, which include corporate
governance, banking, strategic planning, business leadership, accounting and reporting, finance and/or investments, mergers and acquisitions, and legal
and/or regulatory.   
 
John J. Desmond (Age 74) – Mr. Desmond joined the Board in 2016 and is Chair of the Audit Committee and a member of the Compensation and
Risk Committees. Previously, he was Partner-In-Charge of the Long Island office of Grant Thornton LLP from 1988 through his retirement from the firm in
2015, having served over 40 years in the public accounting industry. Mr. Desmond’s experience included serving as lead audit partner for many public and
privately-held companies. Mr. Desmond was elected by the U.S. Partners of Grant Thornton LLP to be a Partnership Board Member from 2001 through
2013. The Board was responsible for oversight of many of the firm’s activities including strategic planning, the performance of the senior leadership team
and financial performance.  Mr. Desmond also serves or has served as a director for various publicly held and not-for-profit entities.  Mr. Desmond’s
experience has provided him with the core competencies identified by the Governance and Nominating Committee, which include corporate governance,
banking, strategic planning, business leadership, accounting and reporting, finance and/or investments, mergers and acquisitions, and legal and/or
regulatory.
 
Edward J. Haye (Age 65) – Mr. Haye joined the Board in November 2022 and is Chair of the Risk Committee and a member of the Governance and
Nominating and Loan Committees. Mr. Haye has substantial experience working for regulated companies and for law firms serving various regulated
industries and government agencies. He is a former  partner at Cullen and Dykman LLP and also formerly served as Chief Regulatory Counsel for
American Water Works Company, Inc., the largest publicly traded water and wastewater utility company in the United States.  Mr. Haye’s leadership
responsibilities have included corporate governance, contract administration, affiliate transactions, intellectual property and labor and employment law. He
currently serves or has served on the boards of various not-for-profit and community organizations. Mr. Haye’s experience has provided him with the core
competencies identified by the Governance and Nominating Committee, which include corporate governance, strategic planning, business leadership,
corporate responsibility, mergers and acquisitions, legal and/or regulatory, real estate, and marketing and/or public relations. 
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Louisa M. Ives (age 58) – Ms. Ives joined the Board in 2019 and is Chair of the Asset Liability Committee and a member of the Compensation and
Risk Committees. Ms. Ives has substantial experience in the financial services industry currently serving as Managing Director at Chilton Trust Company
where she is responsible for external manager selection and due diligence for Chilton clients. Prior to her current role, Ms. Ives was a Managing Director
and research analyst at Chilton Investment Company and served on the company’s board of directors. She currently serves on the boards of various not-for-
profit and community organizations. Ms. Ives’ experience has provided her with the core competencies identified by the Governance and Nominating
Committee, which include corporate governance, banking, strategic planning, business leadership, corporate responsibility, finance and/or investments, and
mergers and acquisitions. 
 
Milbrey Rennie Taylor (Age 78) – Ms. Taylor joined the Board in 2008 and is a member of the Governance and Nominating, Loan and Risk
Committees. Ms. Taylor’s experience includes over 30 years in the television news business. She served as Executive Producer of CBS News Sunday
Morning and CBS Weekend News. Ms. Taylor also served as Vice President of ThirdAge Media, an Internet company partly owned by CBS, Inc. Ms.
Taylor currently serves and has served as a director on several not-for-profit entities. Ms. Taylor’s experience has provided her with the core competencies
identified by the Governance and Nominating Committee, which include corporate governance, strategic planning, business leadership, corporate
responsibility, and marketing and/or public relations.
 
Walter C. Teagle III (Age 75) – Mr. Teagle joined the Board in 1996, became Chair of the Board in 2005 and is an ex officio member for all purposes
of all Board committees of the Corporation and the Bank. Mr. Teagle is currently President and owner of Teagle Management, Inc., a private investment
firm and Chairman Emeritus and Director of The Teagle Foundation, Inc., a private foundation. Mr. Teagle’s past experience includes a variety of executive
and board positions including Managing Director, Groton Partners LLC, a merchant banking firm; Officer and Managing Director, Groton Asset
Management LLC, an investment management company; Executive Vice President and Director, Lexent, Inc., a publicly-held infrastructure service
provider; and President, Chief Executive Officer, and Director, Metro Design Systems, Inc., an engineering design services firm. Mr. Teagle has also been a
director of not-for-profit entities. Mr. Teagle’s experience has provided him with the core competencies identified by the Governance and Nominating
Committee, which include corporate governance, banking, strategic planning, business leadership, corporate responsibility, finance and/or investments, and
mergers and acquisitions.
 
Class II Directors Expiring in 2026
 
Paul T. Canarick (Age 68) – Mr. Canarick joined the Board in 1992 and is a member of the Governance and Nominating, Compensation and Risk
Committees. Mr. Canarick is President and Principal of Paul Todd, Inc., a privately held construction company. Mr. Canarick’s experience has provided
him with the core competencies identified by the Governance and Nominating Committee, which include banking, business leadership, corporate
responsibility, and real estate.
 
Peter Quick (Age 69) – Mr. Quick joined the Board in 2015 and is Chair of the Loan Committee and a member of the Compensation and Asset
Liability Committees.  Mr. Quick has over 30 years of experience in the securities and financial services industries.  He is a recognized leader in the
securities industry with experience in the domestic and international equity markets, equities market making, market structure reform, trading technology
and clearing operations. Mr. Quick is a retired Partner of Burke and Quick Partners Holdings LLP, the parent company of Burke & Quick Partners LLC, a
broker dealer. Mr. Quick was President of the American Stock Exchange from 2000 to 2005. Prior to joining the American Stock Exchange, he served as
President of Quick & Reilly Inc., a Quick & Reilly subsidiary and a national discount brokerage firm. Mr. Quick also serves or has served as a director for
several publicly held companies and not-for-profit entities.  Mr. Quick’s experience has provided him with the core competencies identified by the
Governance and Nominating Committee, which include corporate governance, banking, strategic planning, business leadership, corporate responsibility,
accounting and reporting, finance and/or investments, technology and/or cybersecurity, mergers and acquisitions, legal and/or regulatory, and real estate.
 
Denise Strain (Age 71) – Ms. Strain joined the Board in 2017 and is Chair of the Governance and Nominating Committee and a member of the Audit
and Risk Committees. Ms. Strain has 35 years of experience in the banking industry including most recently as the Managing Director and Senior Tax
Counsel of Citigroup Inc. Ms. Strain has served as a member on the Board of Trustees of a not-for-profit educational institution. Ms. Strain’s experience
has provided her with the core competencies identified by the Governance and Nominating Committee, which include corporate governance, banking,
strategic planning, business leadership, corporate responsibility, accounting and reporting, finance and/or investments, mergers and acquisitions, and legal
and/or regulatory.
 
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Eric J. Tveter (Age 66) – Mr. Tveter joined the Board in 2013 and is Chair of the Compensation Committee and a member of the Audit and Loan
Committees.  He is currently Managing Member of ETC Ventures LLC; Managing Member of ETC Investment Fund I LLC; Senior Advisor of
Communications Equity Associates; and Senior Advisor of Arthur D. Little.  Mr. Tveter has extensive knowledge and experience in the US, UK and
European technology, media and telecommunications industries. Mr. Tveter’s experience has provided him with the core competencies identified by the
Governance and Nominating Committee, which include corporate governance, banking, strategic planning, business leadership, corporate responsibility,
accounting and reporting, finance and/or investments, technology and/or cybersecurity, mergers and acquisitions, legal and/or regulatory, real estate, and
marketing and/or public relations.
 
EXECUTIVE OFFICERS
 
The biographies of each of the executive officers who are not also directors are set forth below. The ages presented are as of December 31, 2024.
 
Janet T. Verneuille (Age 64) – Ms. Verneuille joined the Bank in 2019 as Executive Vice President and Chief Risk Officer of the Corporation and the
Bank. On December 1, 2023, Ms. Verneuille was promoted to Senior Executive Vice President and Chief Financial Officer of the Corporation and the
Bank. Prior to joining the Bank, Ms. Verneuille served as Executive Vice President and Chief Financial Officer of Empire National Bank. Ms. Verneuille
previously served as Director, Executive Vice President and Chief Financial Officer of a national banking  organization after serving fifteen years at
Bridgehampton National Bank, ultimately as Executive Vice President and Chief Financial Officer.  Ms. Verneuille obtained her public accounting
experience at KPMG LLP and is a Certified Public Accountant.
 
Christopher J. Hilton (Age 47) – Mr. Hilton joined the Bank in June 2017 as Senior Vice President and Commercial Banking Division Executive. On
January 1, 2018, Mr. Hilton was promoted to Executive Vice President of the Corporation and the Bank. On January 1, 2020, Mr. Hilton was named Chief
Lending Officer of the Bank. On December 1, 2023, Mr. Hilton was promoted to Senior Executive Vice President of the Corporation and the Bank. Prior to
joining the Bank, Mr. Hilton served as Executive Vice President and Chief Credit Officer of Suffolk County National Bank until its acquisition by People’s
United Bank in April 2017. Mr. Hilton joined People’s United Bank and served as Senior Credit Officer until May 2017. Prior to his employment at Suffolk
County National Bank, Mr. Hilton served as Executive Vice President & Chief Credit Officer of Empire National Bank.
 
Tanweer S. Ansari (Age 50) – Mr. Ansari joined the Bank in 2014 as Senior Vice President and Chief Compliance Officer. Effective January 1, 2022,
Mr. Ansari was promoted to Executive Vice President and was named Internal Counsel. On December 1, 2023, Mr. Ansari was promoted to Chief Risk
Officer of the Corporation and General Counsel of the Bank. Prior to joining the Bank, Mr. Ansari served as Associate General Counsel and Compliance
Officer of Bethpage Federal Credit Union from 2007 to 2014 and in various management capacities at two Long Island/New York City banks from 1999 to
2007. Mr. Ansari is a licensed attorney admitted to the New York State Bar (2009) and United States Supreme Court Bar (2015).
 
Richard P. Perro (Age 59) – Mr. Perro joined the Bank in 2002 as Vice President, Branch Manager. Effective January 1, 2009, Mr. Perro was promoted
to Senior Vice President of Branch Administration. Effective January 1, 2013, Mr. Perro was promoted to Executive Vice President of Branch
Administration and in 2020 was named Chief Retail Officer of the Bank. Prior to joining the bank Mr. Perro served as Vice President, Branch Manager at
North Fork Bank.
 
Susanne Pheffer (Age 62) – Ms. Pheffer joined the Bank in 2020 as Executive Vice President and Chief Information Officer. Prior to joining the Bank,
Ms. Pheffer served six years as Executive Vice President and Chief Technology Officer of Empire National Bank. Ms. Pheffer previously served as a
Senior Consultant and Director of Operations for a bank consulting firm headquartered on Long Island from 2007 to 2014. Prior to that, Ms. Pheffer served
twenty-five years at another Long Island-based community bank where she was promoted to Senior Vice President and Chief Information Officer.
 
Michael J. Spolarich (Age 56) – Mr. Spolarich joined the Bank in 2020 as Senior Vice President and Senior Credit Officer. Effective December 1,
2020, Mr. Spolarich was promoted to Executive Vice President and Chief Credit Officer. Prior to joining the Bank in 2020, Mr. Spolarich served as Senior
Credit Officer for the New York City and Long Island districts of People’s United Bank and Chief Credit Officer for Empire National Bank. Mr. Spolarich
was previously employed with the First National Bank of Long Island.
 
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DELINQUENT SECTION 16(A) REPORTS
 
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation’s executive officers, directors and beneficial owners who own greater than
10% of the Corporation's Common Stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. These
individuals are required by regulation to furnish the Corporation with copies of all Section 16(a) reports they file. Based solely on our review of ownership
reports required to be filed for the year ended December 31, 2024, all filing requirements were satisfied on a timely basis except for the following Form 4s
inadvertently filed late on transactions related to (A) the annual vesting of restricted stock units for Messrs. Canarick, Cooper, Desmond, Haye, Quick,
Teagle and Tveter and Mss. Ives, Strain Taylor; (B) the vesting of restricted stock units for two executive officers, Mr. Spolarich and Ms. Verneuille; (C)
one transaction regarding the termination of an indirect position held by Mr. Cooper and (D) one transaction regarding the monthly receipt of stock in lieu
of director fees granted to Mr. Haye.
 
CORPORATE GOVERNANCE
 
Code of Ethics
 
The Corporation has adopted a Code of Ethics (the “Code”) which apply to all of the Corporation’s directors, executive officers and employees. The Code
includes guidelines relating to compliance with laws, the ethical handling of actual or potential conflicts of interest, the use of corporate opportunities,
protection and use of the Corporations’ confidential information, accepting gifts and business courtesies, accurate financial and regulatory reporting, and
procedures for promoting compliance with, and reporting violations of, the Code. The Code is available on the Corporation’s website at www.FNBLI.com
through the “Investor Relations” page using the “Corporate Governance” documents link.
 
Audit Committee
 
The Corporation has a separately-designated standing Audit Committee which is responsible for providing oversight relating to our consolidated financial
statements and financial reporting process, systems of internal accounting and financial controls, internal audit function, annual independent audit and the
compliance and ethics programs established by management and the Board. The Audit Committee is also responsible for engaging the Corporation’s
independent registered public accounting firm and monitoring its conduct and independence. The members of the Audit Committee are Messrs. Cooper,
Desmond, Teagle and Tveter and Ms. Strain. The Board has determined that all members of the Audit Committee are independent. Independence is defined
in SEC Rule 10A-3 and the Nasdaq Rules. The Board has also determined that Messrs. Desmond and Tveter each qualifies as an “audit committee financial
expert” as that term is defined in Item 407 of Regulation S-K of the SEC. The Board determined that all members of the Audit Committee have banking or
related financial management expertise. The Audit Committee operates under a written charter, which is approved by the Board and governs its
composition, responsibilities and operation. The Audit Committee reviews and reassesses the adequacy of its charter at least annually. The Audit
Committee charter is available is available on the Corporation’s website at www.FNBLI.com through the “Investor Relations” page using the “Corporate
Governance” documents link.
 
Insider Trading Arrangements and Policies
 
The Corporation is committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules and regulations. As part
of this commitment, the Corporation has  adopted an Insider Trading Policy  governing the purchase, sale, and/or other dispositions of the
Corporation's  securities by all  directors, officers, and employees of the Corporation and the Bank that we believe is reasonably designed to promote
compliance with insider trading laws, rules and regulations, and the exchange listing standards applicable to the Corporation. A copy of the Corporation's
Insider Trading Policy, including any amendments thereto, and an Addendum to the Insider Trading Policy are filed as Exhibit 19.1 and Exhibit 19.2 to this
Annual Report on Form 10-K, respectively.
 
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ITEM 11. EXECUTIVE COMPENSATION
 
COMPENSATION DISCUSSION AND ANALYSIS
 
The Corporation’s named executive officers ("NEOs") for 2024 were as follows:
 
Executive Officers
    Present Capacity
Christopher Becker
    Director, President and Chief Executive Officer of the Corporation and the Bank
Janet T. Verneuille
    Senior Executive Vice President and Chief Financial Officer of the Corporation and the Bank; Treasurer of the
Corporation and Cashier of the Bank
Christopher J. Hilton
    Senior Executive Vice President of the Corporation and the Bank; Chief Lending Officer of the Bank
Susanne Pheffer
    Executive Vice President of the Corporation and the Bank; Chief Information Officer of the Bank
Michael J. Spolarich
    Executive Vice President of the Corporation and the Bank; Chief Credit Officer of the Bank
 
Key financial results and performance metrics for 2024 and 2023, including those used in determining incentive compensation, are as follows:
 
Results and Performance Metrics
2024 (1)
2023
Net Income
$19,912,000
$26,239,000
Diluted Earnings per Share
$0.88
$1.16
Return on Average Assets (“ROA”)
0.47%
0.62%
Return on Average Equity (“ROE”)
5.24%
7.14%
Total Shareholder Return
94.9%
78.6%
 
(1) Adjusted for nonrecurring expenses incurred due to the merger, net of taxes.
 
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The following is a discussion of the compensation awarded to, earned by or paid to the NEOs. The discussion explains all the material elements of the
Corporation’s compensation of the NEOs. It should be read in conjunction with the other executive compensation disclosure that appear elsewhere in this
Annual Report on Form 10-K.
 
Guiding Principles
 
In designing and maintaining a compensation program for the Corporation’s NEOs, other executive officers and employees, the Compensation Committee
adheres to the following guiding principles:
 
(1)
The compensation program should be principles-based, employ best practices in executive compensation and consider all relevant regulatory guidance
regarding sound incentive compensation policies.
(2)
The  compensation program should be designed and supervised by the Compensation Committee with, as needed, the assistance of independent
compensation consultants, legal counsel and other advisors who have significant experience in risk management, compensation practices and legal
matters in the financial services industry.
(3)
The Compensation Committee should consist entirely of independent directors and operate under a charter adopted by the Board that clearly defines
its duties and responsibilities.  Significant approvals by the Compensation Committee regarding the provisions of the executive compensation
program and awards thereunder should be ratified by the full Board.
(4)
A significant portion of executive compensation awarded under the program should be directly tied to corporate and peer group performance and thereby
closely aligned with the interests of stockholders. The corporate performance levels necessary to earn threshold, target and maximum cash incentive and
equity awards should be determined by the Compensation Committee and should not encourage inappropriate risks that could lead to material financial
loss to the Bank.
(5)
The compensation program should enable the Corporation to attract and retain highly skilled professionals in each necessary discipline (i.e., executive,
financial, lending, operations, risk management).
(6)
Compensation paid should be appropriately balanced between short and long-term components. The short-term components should primarily consist of
base salary and cash incentive compensation and the long-term components should be equity awards that vest over time as well as retirement benefits.
(7)
The competitiveness of total direct compensation, which consists of base salary, cash incentive and equity awards, should be tested regularly by a
comparison to: (1) a group of peer banks selected by the Compensation Committee that are similar in size and scope to the Corporation; and (2) amounts
published in compensation surveys for the banking industry conducted by nationally recognized independent compensation consulting firms.
(8)
The compensation program should achieve internal equity among the Corporation’s executive officers.
(9)
Retirement benefits should be market competitive and evaluated based on the percentage of the executive’s income replaced in retirement.
(10) Payments upon a change in control or termination should be market competitive, reasonable in amount and designed to ensure that the executive officers
of the Bank are not significantly harmed nor unduly enriched and are reasonable with respect to the consummation of a transaction, such as a sale or
merger of the Bank, that may be in the best interests of the Corporation’s stockholders.
(11) The Compensation Committee should identify those employees, whether they are executive officers or otherwise, who could potentially expose the
Corporation to material amounts of risk. The compensation of such employees should be designed to discourage imprudent risk taking and contain
maximum incentive amounts that do not represent windfalls.
(12) Clawbacks should be utilized within the compensation program in accordance with our clawback policy and applicable laws and regulations.
(13) Retention of vested or exercised equity awards should be required until stock ownership guidelines are met.
(14) Employees, whether they are executive officers or otherwise, should be prohibited from hedging the value of equity compensation that vests over time.
(15) Performance goals should be established by the Compensation Committee and ratified by the full Board.
(16) Achievement of performance goals should be determined by the Compensation Committee prior to the payment of awards.
 
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Objectives of the Executive Compensation Program
         
The Corporation’s executive compensation program is designed to enable the Corporation to attract and retain talented executive officers necessary to
safely and successfully operate and grow the Bank. The executive compensation program promotes sound risk management and long-term value creation
for our stockholders.
 
What the Executive Compensation Program is Designed to Reward
 
Certain elements of the executive compensation program are intended to reward current performance. By offering long-term equity compensation, the
executive compensation program is also designed to reward executive officers who help maximize long-term financial performance and earnings growth of
the Corporation. The short-term and long-term incentives and the metrics used to determine the amount of incentive earned are intended to align the
interests of management with the interests of stockholders.
 
Role of Independent Compensation Consultant
 
In determining an appropriate level of compensation for the CEO, other executive officers and the Board, the Compensation Committee periodically
engages an independent compensation consulting firm to gather and help analyze the information necessary to make such determinations. In 2023, the
Compensation Committee engaged Pearl Meyer & Partners LLC (“Pearl Meyer”), an independent national compensation consulting firm, to conduct a
review of the compensation of the Corporation’s CEO and other executive officers. The objective of the reviews was to provide an assessment of the
competitiveness and effectiveness of the Corporation’s compensation programs relative to peer banks.
 
In performing their 2023 review, Pearl Meyer worked with the Compensation Committee to develop a custom peer group. The peer banks were similar in
size and scope to the Bank, with total assets averaging approximately $5.2 billion. This average compared to total assets for the Bank of approximately
$4.3 billion at year-end 2023. The peer group consists of twenty publicly-held bank holding companies located in the Bank’s general geographic area
primarily within the Northeast and included: ACNB Corporation, Arrow Financial Corporation, BCB Bancorp, Inc., C&F Financial Corporation, Chemung
Financial Corporation, CNB Financial Corporation,  Enterprise Bancorp, Inc., Financial Institutions, Inc., Flushing Financial Corporation, HarborOne
Bancorp, Inc., Kearny Financial Corp., Northfield Bancorp, Inc., Orrstown Financial Services, Inc., Peapack-Gladstone Financial Corporation, Primis
Financial Corp., Tompkins Financial Corporation, TrustCo Bank Corp NY, Univest Financial Corporation, Washington Trust Bancorp, Inc. and Western
New England Bancorp, Inc.
 
In performing their 2023 review of executive compensation, Pearl Meyer compiled compensation data from the proxy statements of the Corporation’s
custom peer group and from published industry surveys and, based on this data, calculated percentile amounts against which total compensation for the
Corporation’s NEOs could be compared. The Compensation Committee found the results of the Pearl Meyer study to be directionally consistent with their
stated philosophy and took the results of the study into account to make compensation decisions.
 
In addition to gathering and analyzing compensation data for the peer group, Pearl Meyer also gathered and analyzed peer compensation data from
published industry surveys and other proprietary data sources. In performing their reviews, Pearl Meyer assessed total remuneration and the individual
elements of total remuneration including base salary, long-term incentives, annual cash incentive compensation, annual equity awards, retirement benefits
and perquisites. Based on their reviews, Pearl Meyer provided the Compensation Committee with a comparison of the compensation of the CEO and other
executive officers to the market 25th, 50th, and 75th percentiles.
 
The Compensation Committee received a letter from Pearl Meyer regarding its independence under the six factors to be considered for such purposes under
Nasdaq Rules, assessed the independence of Pearl Meyer pursuant to such rules and determined that Pearl Meyer is an independent and conflict-free
advisor to the Corporation. 
 
Elements of Executive Compensation
 
The executive compensation program consists of four basic components: (1) base salary; (2) annual cash incentive compensation; (3) equity awards; and
(4) other noncash compensation, consisting primarily of retirement benefits and reasonable perquisites.
 
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Why We Choose To Pay Each Element of Executive Compensation
 
Base Salary. The Compensation Committee believes that base salary for an NEO should compensate the officer for the skills and effort required to
perform the officer’s day-to-day responsibilities, taking into account the size and complexity of the Corporation.
 
Annual Cash Incentive Compensation. The Compensation Committee has included annual cash incentive compensation in the executive
compensation program as a means to incent executive officers to optimize corporate performance through the achievement of annual corporate goals set
forth in the Corporation’s strategic plan. Our Compensation Committee recommended, the Board adopted and the stockholders approved the 2016 Cash
Incentive Plan, which provides the opportunity for a cash incentive payment based upon the achievement of corporate and individual goals.
 
Equity Awards. The Compensation Committee uses equity awards granted under the Corporation’s equity incentive plan as a means to incentivize
executive officers to optimize corporate performance over an extended time-period. Equity awards, together with retirement benefits, are the longer-term
components of our executive compensation program.
 
Other Noncash Compensation. Other noncash compensation consists of: (1) retirement benefits paid under the Bank’s defined benefit pension plan
(“Pension Plan”) and 401(k) Plan; and (2) noncash fringe benefits not available to the general employee population of the Bank. Noncash fringe benefits,
other than those available to the general employee population at the Bank, include both the personal use of a business automobile and a country club
membership for the CEO.
 
Retirement benefits provided by the Corporation’s Pension and 401(k) Plans are intended to encourage the NEOs to maintain employment with the
Corporation and maximize long-term corporate performance. A country club membership is provided to the CEO to aid him in developing and retaining
business. Business automobiles or an auto allowance are provided to the Bank’s executive officers, including the NEOs, as a competitive perquisite and as
an alternative to reimbursing such officers for mileage driven on account of business conducted on behalf of the Corporation.         
 
How We Determine The Amount To Pay For Each Element of Executive Compensation
 
The total compensation paid by the Corporation to each of the NEOs is based on a variety of factors including: (1) the Corporation’s recent and expected
future overall financial performance; (2) current economic conditions and the effect on the Corporation’s performance and that of its peers; (3) the
executive officer’s experience and tenure, years of service to the Bank, scope of responsibilities, leadership ability, compensation relative to the
Corporation’s other executive officers, recent and expected future performance, and contributions to corporate performance; (4) a comparison of total
compensation and each element of compensation paid to the executive to compensation amounts paid by peer banks to executives with similar roles and
compensation amounts set forth in published industry surveys for executives with similar roles; and (5) the most recent stockholder advisory vote on
executive compensation. As previously discussed, comparative compensation studies are performed and updated on a periodic basis, most recently in 2023,
by an independent compensation consulting firm engaged by and working under the direction of the Compensation Committee.
 
Base salary for the CEO is reviewed by the Compensation Committee on an annual basis. The Compensation Committee also performs an annual review of
the base salary recommendations made by the CEO for the Corporation’s other NEOs. Each executive officer does not necessarily receive an increase in
base salary each year. In reviewing each NEO’s base salary, the Compensation Committee considers the amounts paid by peer banks, the amounts set forth
in compensation surveys performed by nationally recognized independent compensation consulting firms and the Corporation’s overall budget for base
salary increases.   
 
The Compensation Committee believes that total target remuneration for executive officers should be market competitive, benchmarked to the 50th
percentile of the Bank’s peer group and take into consideration individual and corporate performance and tenure. 
 
Cash Incentive Compensation. Annual cash incentive compensation for 2024 for the Corporation’s CEO and other NEOs was based on corporate
performance as measured by actual net income compared to target, ROA relative to peer median and achievement of monetary and nonmonetary personal
goals.
 
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The following table sets forth the metrics and weights established by the Compensation Committee for use in determining cash incentives paid in February
2025 for 2024 along with the actual 2024 results for each corporate performance metric.
 
 
Weight (1)
 
 
 
 
Metric
NEOs
Threshold
Target
Maximum
Actual Results (3)
Net Income
37.5%
$17,898,000
$22,372,000
$25,728,000
$19,912,000
ROA
37.5%
0.56%
0.70%
0.81%
0.47%
Personal Goals (2)
25.0%
N/A
N/A
N/A
N/A
 
(1) In the future the Compensation Committee may use different metrics to measure corporate performance or may change the weights applied to each metric.
(2) Measured by the achievement of monetary and nonmonetary goals assigned to each NEO.
(3) Adjusted for nonrecurring expenses incurred due to the merger, net of taxes.
 
The following table sets forth the range of annual cash incentive compensation for 2024 under the 2016 Cash Incentive Plan assuming that the Corporation
achieved threshold, target and maximum levels of performance and the NEO achieved threshold, target and maximum levels of performance with respect to
personal goals. Each NEO’s cash incentive target for 2024 was a percentage of base salary as determined by the Compensation Committee. Achievement of
corporate and personal performance levels greater than the threshold level but less than the maximum level results in a cash incentive payment that is
proportionately greater than the threshold level of incentive but less than the maximum level of incentive. NEO’s can earn an annual cash incentive below
threshold if some goals meet their threshold level or higher and other goals do not meet their threshold level.
 
NEO
Threshold ($)
Target ($)
Maximum ($)
Christopher Becker
155,000
310,000
465,000
Janet T. Verneuille
76,000
152,000
228,000
Christopher J. Hilton
74,000
148,000
222,000
Susanne Pheffer
66,000
132,000
198,000
Michael J. Spolarich
66,000
132,000
198,000
 
Equity Incentive Compensation. Equity incentive compensation for the NEOs consists of a combination of performance-based and time-based
restricted stock units ("RSU") that are awarded based on a fixed percentage of salary as determined by the Compensation Committee.
 
RSUs awarded in 2024 included two-thirds (⅔) that were performance-based and one-third (⅓) that were time-based. One-third (⅓) vests and converts into
shares of common stock, $.10 par value ("Common Stock") based on the Corporation’s ROE compared to the peer group median with a weighting of 50%
and total shareholder return compared to the peer group median with a weighting of 50% for the year awarded, one-third (⅓) vests and converts into shares
of Common Stock based on the Corporation’s ROE compared to the peer group median with a weighting of 50% and total shareholder return compared to
the peer group median with a weighting of 50% for the year subsequent to the year awarded, and the final one-third (⅓) vests on January 31, 2027.
 
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The performance-based RSUs granted in 2024 have upside conversion potential in that a maximum level of performance will result in the distribution of
more than one share of Common Stock for one RSU. A maximum level of performance will result in a conversion ratio of one RSU for one-and-one-half
(1½) shares of Common Stock.  Performance greater than the threshold level but less than the maximum level will result in a conversion ratio
proportionately greater than one RSU for one-half (½) share of Common Stock but less than one RSU for one-and-one-half (1½) shares of Common
Stock. For the ROE and total shareholder return performance metrics, the maximum level of performance is 115% of the target level, whereas the threshold
level of performance is 80% of the target level. The Compensation Committee utilizes executive compensation reviews performed by Pearl Meyer of the
structural elements of the Corporation’s incentive compensation plan and performance and payout levels for the Corporation’s peer banks.
 
Over the last three years, cash incentive compensation for the NEOs as a group has averaged approximately one-third (⅓) of total incentive compensation,
while equity incentive compensation has averaged approximately two-thirds (⅔) of total incentive compensation. 
 
Under the 2021 Equity Incentive Plan ("2021 Plan"), performance-based and time-based RSUs immediately vest in the event of an involuntary termination
following a change in control, total and permanent disability, as defined, or death. The 2021 Plan generally does not provide for automatic accelerated
vesting of either performance-based or time-based awards in the event of retirement.  For a further discussion of the tax-deductibility of executive
compensation, see the Tax Deductibility of Executive Compensation section of this Annual Report on Form 10-K.
 
The value of a RSU realized at vesting can be more or less than its grant date fair value if the Common Stock price at the date of vesting is more or less
than its fair market value on the date of grant or the aggregate conversion ratio described above is more or less than one RSU for one share of Common
Stock.  
 
Termination and Change in Control Payments
 
Each of the NEOs had an employment agreement with the Corporation during 2024, which provides for severance compensation in the event that the
executive is terminated by the Board without cause or the NEO terminates employment for Good Reason, as defined, whether or not such termination
occurs in connection with a change in control (see Employment Agreements section of this Annual Report on Form 10-K). These provisions are designed
to ensure, among other things, that the NEOs are not significantly harmed or unduly enriched and are reasonable with respect to the consummation of a
transaction, such as a sale or merger of the Bank that may be in the best interests of the Corporation’s stockholders.  In determining the severance
arrangement for the CEO and each of the other NEOs, the Compensation Committee considered the severance arrangements offered by peer banks to their
named executive officers.
 
Impact of Accounting and Tax Treatment of Certain Elements of Compensation
 
The Compensation Committee has granted RSUs as equity compensation.  RSUs are advantageous from the Corporation’s standpoint because the
Corporation records a book tax benefit for the compensation cost recognized for financial statement reporting purposes under FASB ASC Topic 718. Upon
vesting of RSUs the Corporation records an income tax benefit or expense in earnings.
 
Tax Deductibility of Executive Compensation
 
Internal Revenue Code Section 162(m) limits the tax deductibility of compensation paid to any covered employee to $1 million per year. The Tax Cuts and
Jobs Act (the “Act”) amended Section 162(m) to treat all NEOs as covered employees and eliminated the exclusion of qualified performance-based
compensation in determining compensation subject to the $1 million limitation.    
 
While the Compensation Committee does not have a formal policy with respect to the payment of compensation in excess of the deduction limit under
Code Section 162(m), the Compensation Committee’s practice is to structure compensation programs offered to the NEOs with a view towards maximizing
tax deductibility of amounts paid. However, in structuring compensation programs, the Compensation Committee considers a variety of factors, including
the Corporation’s tax position, the materiality of the payments and tax deductions involved and the need for flexibility to address unforeseen
circumstances. After considering these factors, the Compensation Committee may decide to authorize payments, all or part of which may be nondeductible
for federal income tax purposes.
 
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Role of Executive Officers In Determining Executive Compensation
 
The Compensation Committee approves the proposed compensation of executive officers after considering executive compensation studies periodically
performed by independent compensation consulting firms. The CEO has served as a resource to the Compensation Committee in gathering the information
necessary to make such compensation determinations. The CEO does not have a policy-making role with respect to determining the amount or form of
executive compensation and does not participate in Compensation Committee deliberations regarding his own compensation.
 
Compensation Policies and Practices As They Relate To Risk Management
 
The Corporation has a written incentive-based compensation policy that sets forth governance roles for the Compensation Committee, senior management
and the Corporation’s internal auditors.  The policy is reviewed annually by the Compensation Committee, modified if deemed appropriate and
approved.  The purpose of the policy is to ensure that the Corporation’s incentive-based compensation arrangements, or any feature of any such
arrangement, do not encourage executive officers or employees to: (1) expose the Corporation to inappropriate risks by providing such persons with
excessive compensation, fees or benefits; or (2) take inappropriate risks that could lead to material financial loss to the Corporation. Pursuant to this policy,
the Corporation’s incentive-based compensation arrangements are required to: (1) balance risk and financial rewards, through such things as risk
adjustments of awards, deferral of payments, longer performance periods and/or reduced sensitivity to short-term performance; (2) be compatible with
effective internal controls and risk management; and (3) be supported by strong corporate governance, including active and effective oversight by the
Compensation Committee. The Compensation Committee has determined that the Corporation’s compensation policies and practices for its employees,
including non-executive officers, are not likely to have a material adverse effect on the Corporation.
 
Stock Ownership Guidelines and Equity Award Retention Policy
 
As a condition to receiving equity awarded under the Corporation’s equity incentive plan each director and executive officer shall enter into an agreement
with the Corporation providing that any stock acquired from the exercise of stock options or the vesting of equity awards, net of the disposition of shares
for tax withholding requirements, must be held until stock ownership requirements are met.
 
Each director of the Corporation is required to have common stock ownership of the Corporation equal to the prior three (3) years of retainers, which
includes Committee retainers and per meeting fees. The CEO of the Corporation is required to have common stock ownership of the Corporation equal to
the prior three (3) years of his base salaries. Each other executive officer of the Corporation is required to have common stock ownership of the
Corporation equal to one (1) times his or her current base salary. All ownership requirements need to be met within five years of becoming a director, CEO
or other executive officer. Directors, the CEO and other executive officers may satisfy stock ownership requirements with the following forms of stock
ownership: direct ownership, joint ownership, beneficial ownership, and unvested shares of time-based restricted stock or RSUs. RSUs subject to
performance-based vesting and stock options, whether vested or unvested, are not counted in determining whether stock ownership requirements are
satisfied. Directors, the CEO and other executive officers satisfy the applicable stock ownership requirements if either (i) the aggregate price paid for such
shares of common stock equals or exceeds the ownership requirements or (ii) the fair market value of such shares of common stock equals or exceeds the
ownership requirements, as calculated at the closing price on the last trading day of each calendar year after the fifth anniversary of becoming a director,
CEO or other executive officer.
 
Clawback Policy
 
In connection with the SEC’s and Nasdaq’s rules requiring adoption of a clawback policy applicable to incentive-based compensation for Section 16
officers of listed companies, the Corporation has adopted The First of Long Island Corporation Clawback Policy. Under such policy, and in general, if the
Corporation is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, the
Corporation will recoup any erroneously awarded incentive-based compensation paid during the three completed fiscal years immediately preceding such
restatement from the Corporation’s current and former Section 16 officers, provided that such individuals served as Section 16 officers at any time during
the applicable performance period.
 
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Policies Prohibiting Hedging, Margining and Pledging of the Corporation’s Securities
 
Directors, NEOs, other executive officers and employees are prohibited from hedging the Corporation’s securities with the use of financial instruments
(including prepaid variable forward contracts, equity swaps, calls, puts, collars, and exchange funds) that offset a decrease in the market value of the
Corporation’s equity securities and any other transaction with comparable economic consequences. Directors, NEOs and other executive officers are also
prohibited from holding the Corporation’s securities in a margin account and are prohibited from pledging such securities as collateral for any loan. The
Board, in its sole discretion and in limited circumstances, may grant an exception to the prohibitions against margining and pledging after giving
consideration to the number of shares involved. These prohibitions are documented in the Corporation’s Insider Trading Policy.
 
The information provided under this section shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 (“1933 Act”) or
the Securities Exchange Act of 1934 (“1934 Act”), except to the extent that the Corporation specifically incorporates this information by reference.
 
Stockholder Advisory Vote on Compensation and Policy Prohibiting Tax Gross-Up Arrangements
 
The Compensation Committee considers the results of the most recent annual stockholder say-on-pay advisory vote on the compensation paid to NEOs. To
the extent there is a significant vote against the compensation paid to our NEOs, the Compensation Committee will consider our stockholders’ concerns
and evaluate whether any actions are necessary to address those concerns. At the 2024 Annual Meeting of Stockholders, 83% of the shares voting on this
issue supported the compensation outlined in last year’s proxy statement, while 17% voted against or abstained. 
 
The Board has a longstanding prohibition against tax gross-up arrangements which is published in the Corporation’s Corporate Governance Guidelines.
 
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COMPENSATION OF EXECUTIVE OFFICERS
 
Summary Compensation Table 
 
The following table sets forth information with respect to the aggregate compensation of the CEO, CFO and each of the additional three most highly
compensated executive officers of the Corporation and the Bank. All compensation information is provided pursuant to the SEC executive compensation
disclosure rules. All of the listed officers are also officers of the Corporation but received salaries only from the Bank. These individuals are referred to in
this Annual Report on Form 10-K as NEOs.
 
 
 
Base
Salary
Bonus
Stock Awards
(1)
Non-Equity
Incentive Plan
Compensation
(2)
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings (3)
All Other
Compensation
(4)
Total
Name and Principal Position
Year
($)
($)
($)
($)
($)
($)
($)
Christopher Becker
2024
620,000
—
620,000
170,500
45,189
27,785
1,483,474
Director, President and CEO
2023
620,000
—
620,000
155,000
80,873
21,192
1,497,065
 
2022
620,000
20,000
620,000
332,630
—
26,255
1,618,885
Janet T. Verneuille
2024
380,000
—
190,000
84,056
55,478
22,350
731,884
Senior Executive Vice President;
2023
334,247
—
165,000
61,908
61,533
47,305
669,993
Chief Financial Officer and Treasurer
2022
330,000
13,250
165,000
140,052
25,031
14,928
688,261
Christopher J. Hilton
2024
370,000
—
185,000
81,400
13,802
12,000
662,202
Senior Executive Vice
2023
328,822
—
162,500
56,160
30,665
41,965
620,112
President; Chief Lending Officer
2022
325,000
13,250
162,500
141,180
—
18,335
660,265
Susanne Pheffer
2024
330,000
—
165,000
72,996
47,736
47,426
663,158
Executive Vice President;
2023
300,000
—
150,000
54,000
49,962
21,128
575,090
Chief Information Officer
2022
280,000
13,250
140,000
118,608
—
20,811
572,669
Michael J. Spolarich
2024
330,000
—
165,000
72,996
94,169
41,109
703,274
Executive Vice President;
2023
300,000
—
150,000
56,280
222,131
18,372
746,783
Chief Credit Officer
2022
300,000
13,250
150,000
128,760
—
18,376
610,386
 
(1) The amounts shown reflect the aggregate grant date fair value of time-vesting and performance-vesting awards computed in accordance with FASB
ASC Topic 718. The grant date fair values of the performance-vesting portion of the awards are computed at Target performance achievement. The
grant date fair values reflecting the performance-vesting portion of the awards at maximum performance achievement would be: $826,667, $246,667,
$220,000, $253,333 and $220,000 for 2024 for Messrs. Becker, Hilton, Spolarich, Mses. Verneuille and Pheffer, respectively; and $826,667, $216,667,
$200,000, $220,000 and $200,000 for 2023 for Messrs. Becker, Hilton, Spolarich, Mses. Verneuille and Pheffer, respectively.
(2) The amounts shown for each year represent cash incentive compensation earned based on performance for the applicable year but paid subsequent to
the close of the year.
(3) The amounts reported are computed in accordance with FASB ASC Topic 715 and reflect the actuarial increase in the present value at year end
compared to the prior year end of the NEO’s benefits under all defined benefit pension plans. (See “Note J – Retirement Plans" to the Corporation's
consolidated financial statements of this Form 10-K.) The Corporation applies the “no negative number” position for reporting the change in pension
value and consequently no amount is shown for certain years for certain NEOs. The fluctuations are primarily attributable to movement in the actuarial
discount rate. In 2022 through 2024, the discount rates were 5.44%, 5.16% and 5.68%, respectively.
(4) The  components of the 2024 amounts shown in the “All Other Compensation” column are set forth in the table that follows.  The “All Other
Compensation” column does not include the incremental cost to the Corporation of providing the NEOs with group term life and health insurance
benefits, because such benefits do not discriminate in scope, terms or operation in favor of the NEOs and are available generally to all employees.
 
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All Other Compensation Table 
 
 
Perquisites and Other Personal Benefits  
 
 
 
 
401(k) Matching  
 
Automobile (1)
Country Club
Contributions
Total
Name
($)
($)
($)
($)
Christopher Becker
12,882
4,553
10,350
27,785
Janet T. Verneuille
12,000
—
10,350
22,350
Christopher J. Hilton
12,000
—
—
12,000
Susanne Pheffer
37,526
—
9,900
47,426
Michael J. Spolarich
31,209
—
9,900
41,109
 
(1) Includes the value of an automobile transferred from the Bank's name to the name of Ms. Pheffer and Mr. Spolarich in the amount of $25,992 and
$20,134, respectively, in March of 2024. Subsequently, Ms. Pheffer and Mr. Spolarich received a monthly stipend of $1,000 in lieu of the personal use
of a bank-owned automobile.
 
The Compensation Committee believes that each NEO’s total compensation is appropriately balanced between currently paid out and deferred
compensation, with deferred compensation consisting of equity awards that vest over time and retirement benefits provided under the Corporation’s 401(k)
and Pension Plans.
 
Pay Ratio
 
Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act, presented below is the ratio of annual total compensation of the
Corporation’s CEO to the annual total compensation of the Corporation’s median paid employee, excluding the CEO. 
 
The ratio presented below is a reasonable estimate calculated in a manner consistent with Item 402(u).
 
The Corporation identified a new median paid employee for 2024 in a manner consistent with previous years. There have not been significant changes in
the employee population or compensation arrangements. The Corporation considered all full-time and part-time permanent employees when identifying the
median paid employee.
 
In determining the compensation of the median paid employee, the Corporation utilized year-to-date compensation from the twenty-sixth bi-weekly payroll
paid in December 2024. Compensation included, as applicable, regular earnings plus overtime, Saturday pay, commissions, cash incentives and stock-based
compensation. Earnings of employees included on the twenty-sixth bi-weekly payroll of 2024 that were employed for less than a full year were converted
to a twenty-six bi-weekly payroll equivalent. Full-time equivalent adjustments were not made. There were no seasonal or temporary employees on the final
payroll of 2024.
 
The 2024 annual total compensation of the CEO and median paid employee was determined under Item 402 of Regulation S-K and was $1,717,984 and
$75,335, respectively. The CEO’s annual total compensation for 2024 was 23 times that of the annual total compensation for 2024 of the median paid
employee.
 
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COMPENSATION PURSUANT TO PLANS
 
Equity Incentive Plans
 
The shareholders of the Corporation approved the 2021 Plan at the annual meeting held on April 20, 2021. The 2021 Plan gives us the flexibility to attract
and retain highly qualified officers and directors by offering a competitive compensation program that is linked to the performance of our common
stock. Equity awards granted under the 2021 Plan align the interests of our officers and directors with those of our stockholders by potentially increasing
the ownership interests of officers and directors in our Common Stock.
 
Awards under the 2021 Plan may be granted as incentive and non-qualified stock options, restricted stock awards or restricted stock units or any
combination thereof, any of which may vest based either on the passage of time or achievement of performance, as specified in the 2021 Plan. 
 
The following table presents the number of shares of Common Stock to be issued upon the exercise of outstanding stock options and vesting of RSUs, and
the number of shares of Common Stock remaining available for future issuance under the 2021 Plan, as of December 31, 2024. The table also presents the
weighted average exercise price of outstanding stock options as of December 31, 2024.
 
EQUITY COMPENSATION PLAN INFORMATION
 
Plan Category
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights (1)
Weighted-average exercise price
of outstanding options, warrants
and rights
Number of securities remaining
available for future issuance
under the 2021 Plan (2)
Equity compensation plans approved by security holders
196,170
—
358,333
 
(1) Represents RSUs which have no exercise price. 
(2) All of these shares are available to be granted as restricted stock or RSUs.
 
The Corporation does not have any equity compensation plans that have not been approved by stockholders.
 
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Grants Of Plan Based Awards
 
The following table sets forth information regarding the grants of plan-based awards during 2024, both cash and equity, to the NEOs.
 
 
 
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (1)
Estimated Future Payouts
Under Equity Incentive
Plan Awards (2)
All Other
Stock Awards:
Number of
Shares or
Units (3) (#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
Exercise or
Base Price of
Options
Awards
($/Sh)
Grant Date
Fair Value of
Stock and
Option
Awards (4) ($)
Name
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
 
 
 
 
Christopher Becker
1/31/24 155,000 310,000 465,000
18,978 37,955
56,933
18,978
—
—
620,000
Janet T. Verneuille
1/31/24 76,000 152,000 228,000
5,816
11,631
17,447
5,816
—
—
190,000
Christopher J. Hilton
1/31/24 74,000 148,000 222,000
5,663
11,325
16,988
5,663
—
—
185,000
Susanne Pheffer
1/31/24 66,000 132,000 198,000
5,051
10,101
15,152
5,051
—
—
165,000
Michael J. Spolarich
1/31/24 66,000 132,000 198,000
5,051
10,101
15,152
5,051
—
—
165,000
 
(1) The amounts shown represent cash incentive compensation that could have been earned by the NEO in 2024  under the Corporation’s incentive
compensation plan. The actual amount paid to each NEO in February 2025 based on 2024 performance is included in the “Non-Equity Incentive Plan
Compensation” column of the “Summary Compensation Table” in this Annual Report on Form 10-K.
(2) The amounts shown represent the range of possible awards for performance-based RSUs granted to the NEOs in 2024. The awards will vest based on the
achievement of two performance metrics: ROE, weighted 50% and Total Shareholder Return weighted 50%, both relative to the custom peer group
described under the heading "Role of Independent Compensation Consultant" in this Annual Report on Form 10-K.  The vesting and conversion
provisions of the RSUs are described under the heading “How We Determine The Amount To Pay For Each Element of Executive Compensation” in this
Annual Report on Form 10-K.
(3) The amounts shown represent the time-based RSUs granted to the NEOs in 2024. The awards will vest on January 31, 2027, based on the NEO being
employed by the Corporation through December 31, 2026.
(4) The amounts reflect the full grant date fair value of the RSUs calculated in accordance with FASB ASC No. 718, based on attaining the performance
metrics at target. The amounts are disclosed in the "Stock Awards" column for 2024 of the "Summary Compensation Table" in this Annual Report on
Form 10-K.
 
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Outstanding Equity Awards at Fiscal Year End
 
The following table sets forth information regarding outstanding equity awards for the NEOs at December 31, 2024.
 
 
 
Option Awards
Stock Awards
Name
Grant Date
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock That
Have Not
Vested (1)
Market Value
of Shares or
Units of
Stock That
Have Not
Vested (2) ($)
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (1) ($)
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (2) ($)
Christopher Becker (3)
 
—
—
—
—
—
—
—
—
Janet T. Verneuille
1/31/24
—
—
—
—
5,816
67,931
8,723
101,885
 
1/31/23
—
—
—
—
3,320
38,778
—
—
 
1/31/22
—
—
—
—
2,741
32,015
—
—
Christopher J. Hilton
1/31/24
—
—
—
—
5,663
66,144
8,493
99,198
 
1/31/23
—
—
—
—
3,269
38,182
—
—
 
1/31/22
—
—
—
—
2,699
31,524
—
—
Susanne Pheffer (3)
 
—
—
—
—
—
—
—
—
Michael J. Spolarich
1/31/24
—
—
—
—
5,051
58,996
7,575
88,476
 
1/31/23
—
—
—
—
3,018
35,250
—
—
 
1/31/22
—
—
—
—
2,492
29,107
—
—
 
4/13/20
—
—
—
—
500
5,840
—
—
 
(1) Represents the maximum number of shares into which outstanding RSUs can potentially be converted. At December 31, 2025, 16,527 performance-based
RSUs with a grant date of January 31, 2024 will vest based on the achievement of two performance metrics: ROE weighted 50% and total shareholder
return weighted 50%, both relative to the custom peer group described under the heading "Role of Independent Compensation Consultant" in this Annual
Report on Form 10-K. In 2025, 7,932 and 500 time-based RSUs with grant dates of January 31, 2022 and April 13, 2020, respectively, will vest. In 2026,
9,607 time-based RSUs with a grant date of January 31, 2023 will vest. In 2027, 16,530 time-based RSUs with a grant date of January 31, 2024 will vest.
(2) Amounts based on the closing price of the Common Stock on December 31, 2024 of $11.68, as reported on the NASDAQ ®.
(3) Mr. Becker and Ms. Pheffer received accelerated vesting of restricted stock units in December 2024 in order to mitigate the impact of any contractual
280G cutback provision contained in his/her applicable agreements with the Corporation and or the Bank.
 
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Stock Vested
 
The following table sets forth information for the NEOs for 2024 regarding stock awards acquired on vesting during the year.
 
 
Stock Awards
Name
Shares Acquired on Vesting
(#)
Value Realized on
Vesting (1) ($)
Christopher Becker (2)
80,757
1,005,321
Janet T. Verneuille
7,032
84,572
Christopher J. Hilton
5,968
73,824
Susanne Pheffer (2)
22,764
285,475
Michael J. Spolarich
5,144
62,136
 
(1) The value realized on vesting represents the market value on the vesting date.
(2) Mr. Becker and Ms. Pheffer received accelerated vesting of restricted stock units in December 2024 in order to mitigate the impact of any contractual
280G cutback provision contained in his/her applicable agreements with the Corporation and or the Bank.
 
PENSION BENEFITS
 
The Bank has a tax-qualified defined benefit pension plan. The following table sets forth the present value of accumulated benefits under the Pension Plan
and the number of years of credited service for each NEO through December 31, 2024. No pension benefits were distributed to the NEOs during 2024.
 
Pension Benefits
 
Name
Plan Name
Number of Years of Credited
Service (#)
Present Value of Accumulated
Benefit (1) ($)
Christopher Becker
Tax-qualified defined benefit pension plan
12.83
451,668
Janet T. Verneuille
Tax-qualified defined benefit pension plan
4.50
224,983
Christopher J. Hilton
Tax-qualified defined benefit pension plan
6.50
114,657
Susanne Pheffer
Tax-qualified defined benefit pension plan
3.08
139,578
Michael J. Spolarich
Tax-qualified defined benefit pension plan
10.75
377,647
 
(1) The actuarial assumptions used in determining the present value of the accumulated benefit for each NEO under the Pension Plan are set forth in “Note J
– Retirement Plans” to the Corporation’s consolidated financial statements of this Form 10K.
 
Pension Plan
 
Employees, including the NEOs, who are over 21 years of age and have been employed by the Bank for more than one year, are eligible to participate in
the Pension Plan. Compensation used to determine benefits includes base salary, commissions, cash incentive compensation and taxable fringe benefits, but
excludes employer contributions to the 401(k) Plan, amounts realized from the exercise of nonqualified stock options, amounts realized from the
conversion of restricted stock units into shares of stock and amounts realized from the sale, exchange or other disposition of stock. Employees that elect to
participate in the Pension Plan make contributions of 2% of their compensation used to determine benefits. Employees become fully vested in the Pension
Plan after 5 years of service with the Bank and 4 years of participation in the Pension Plan (no vesting occurs during that 5-year period). The normal
retirement age is 65. Early retirement with a reduced benefit is available beginning at age 55. 
 
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Upon retirement, each participant with a spouse is paid a benefit in the form of a joint and survivor annuity. Participants without a spouse are paid a benefit
in the form of a single life annuity guaranteed for sixty (60) months. All participants, whether with or without a spouse, may elect optional forms of benefit
payments. For all participants, the current annuity benefit is an amount equal to the sum of: (1) the participant’s Average Annual Compensation multiplied
by the product of 1.50 percent and the participant’s credited years of service limited to a maximum of 35 years; plus (2) 1.25 percent of Average Annual
Compensation multiplied by the participant’s credited years of service in excess of 35 years (up to five such years); and less (3) the product of .49% of the
participant’s Final Average Annual Compensation, limited to Covered Compensation, and the participant’s Benefit Service up to 35 years.  The
.49% represents the minimum Social Security offset to the pension benefit. Average Annual Compensation, Final Average Annual Compensation, Covered
Compensation and Benefit Service are all as defined in the Pension Plan document.  
 
401(k) Plan
 
The Bank has a tax-qualified 401(k) Plan. Employees, including the NEOs, are eligible to participate provided they are at least 18 years of age. The Bank
may, at its sole discretion, make matching contributions to each participant's account based on the amount of the participant's tax deferred
contributions. Eligibility for employer matching contributions, if any, occurs after completing twelve (12) consecutive months of Eligibility Service, as
defined, in which the participant worked a minimum of 1,000 hours. The sum of employee elective contributions and employer matching contributions plus
any other additions to a participant’s account is subject to certain limitations. Participants are fully vested in their elective contributions and fully vest in
any employer matching contributions after five years of participation. Employer matching contributions made during the first five years of participation
vest ratably over the remainder of the five-year period.
 
Participants in the 401(k) Plan will receive benefits generally upon attainment of age 65. However, the 401(k) Plan contains provisions allowing pre-
termination withdrawals and loans under certain circumstances. The amount of a participant’s Normal Retirement Benefit, as defined, will depend upon the
accumulation of contributions and forfeitures and the investment performance of the 401(k) Plan. The 401(k) Plan matching contributions for 2024 made to
the account of each NEO are set forth in the “All Other Compensation Table” appearing elsewhere in this Annual Report on Form 10-K
 
EMPLOYMENT AGREEMENTS
 
Each of the NEOs is a party to an employment agreement with the Corporation and the Bank. The employment agreement with CEO Christopher Becker
has a three-year term, while the employment agreements with the other NEOs have a two-year term.  Commencing on the first anniversary of the
employment agreements and continuing on each anniversary thereafter, the agreements renew for an additional one year such that the remaining term shall
be three years in the case of Mr. Becker, and two years with respect to the other NEOs, unless written notice of non-renewal is provided at least thirty (30)
days prior to any such anniversary date. Each employment agreement expires on December 31 of the calendar year in which the NEO attains age 65
(“Retirement Age Termination Date”). Nothing in the employment agreement mandates or prohibits the continued employment of the NEO beyond the
Retirement Age Termination Dates. However, an NEO shall not be entitled to any benefits or payments under the employment agreement following the
Retirement Age Termination Date unless the Corporation has elected to extend such agreement pursuant to its terms for an additional period of two years.
The employment agreements stipulate a base salary to be paid each NEO, which can be increased, but not decreased without the NEO’s consent (any
increase becoming the base salary for purposes of the agreement).
 
Pursuant to each NEO’s employment agreement, if the NEO is terminated by the Board without cause or the NEO terminates employment following an
event constituting Good Reason, the NEO will receive a cash lump sum severance payment equal to a multiple of the NEO’s base salary (three times base
salary for the CEO and two times base salary for the other NEOs) plus an amount equal to the product of the reasonably estimated monthly cost of the
medical, dental and vision insurance coverage maintained by the Bank for the NEO immediately prior to the date of termination, multiplied by thirty-six
(36) for the CEO and twenty-four (24) for the other NEOs. If the termination of employment of the CEO occurs after the CEO has attained age 60 but
before retirement age, and other than in connection with a change in control, he will receive a lump sum cash severance payment equal to base salary and
twelve times the monthly cost of the medical, dental and vision insurance coverage. In the event of a qualifying termination of employment following a
change in control the NEO will receive a lump sum cash severance benefit payable as a multiple of both base salary and target annual cash incentive (three
times for the CEO and two times for the other NEOs) in addition to insurance costs. The payment of severance is conditioned on the NEO executing a
release of the NEO’s claims against the Corporation and any affiliate, and their officers, directors, successors and assigns. Good Reason exists if, without
the NEO’s express written consent, any of the following occurs: (i) the failure to appoint the NEO during the term of the NEO’s employment agreement to
the executive position occupied by the NEO at the date of commencement of the employment agreement; (ii) a reduction in the NEO’s base salary; (iii) the
failure of the Bank to maintain the NEO’s participation under the Bank’s employee benefit, retirement, or material fringe benefit plans, policies, practices,
or arrangements in which the NEO participates; or (iv) a relocation of the NEO’s principal place of employment by more than 50 miles from the NEO’s
principal place of employment at the date of commencement of the employment agreement.
 
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Potential Payments Upon Termination or Change in Control
 
Notwithstanding the foregoing, in the event that a termination of employment is in connection with a change in control, the severance payments under the
employment agreements will be reduced to avoid an excess parachute payment under Section 280G of the Internal Revenue Code if doing so results in a
greater after-tax benefit to the NEO. Each NEO’s employment agreement subjects the NEO to non-compete and non-solicitation provisions for a period of
two years for the CEO or one year for the other NEOs following their date of termination, provided, however, that such restrictions would not apply in the
event of a termination for cause or a termination of employment following a change in control. 
 
The following table sets forth potential payments to the NEOs upon termination of their employment by the Corporation without cause or by the NEOs for
Good Reason, absent a change in control. The table also sets forth for the NEOs the accelerated vesting, if any, of unvested equity awards.
 
 
Payment Resulting from Termination Without Cause or For Good Reason
 
Absent a Change in Control
 
Lump Sum Cash Payment Based on:
 
 
 
Name
Multiple of Base Salary
($)
Multiple of Cost of
Medical, Dental and
Vision Insurance ($)
Total Lump Sum Cash
Payment ($)
Accelerated Vesting of
Equity Awards ($)
Total Termination
Payment ($)
Christopher Becker
1,860,000
95,629
1,955,629
—
1,955,629
Janet T. Verneuille
760,000
71,420
831,420
—
831,420
Christopher J. Hilton
740,000
35,227
775,227
—
775,227
Susanne Pheffer
660,000
64,908
724,908
—
724,908
Michael J. Spolarich
660,000
—
660,000
—
660,000
 
The following table sets forth potential payments to the NEOs upon termination of their employment by the Corporation without cause or by the NEOs for
Good Reason, in each case in connection with a change in control. All outstanding and unvested equity awards for the NEOs by their terms will
immediately vest upon a termination of employment following change in control. The amounts shown in the table below do not take into account any
reduction in payments required to comply with Section 280G of the Internal Revenue Code.
 
 
Payment Resulting from Termination Without Cause or For Good Reason
 
Following a Change in Control
 
Lump Sum Cash Payment Based on:
 
 
 
Name
Multiple of Base
Salary and Target
Short-Term Incentive
($)
Multiple of Cost of
Medical, Dental and
Vision Insurance ($)
Total Lump Sum
Cash Payment ($)
Accelerated Vesting of
Equity Awards ($)
Total Termination Payment ($)
Christopher Becker (1)
2,790,000
95,629
2,885,629
—
2,885,629
Janet T. Verneuille
1,064,000
71,420
1,135,420
206,643
1,342,063
Christopher J. Hilton
1,036,000
35,227
1,071,227
201,982
1,273,209
Susanne Pheffer (1)
924,000
64,908
988,908
—
988,908
Michael J. Spolarich
924,000
—
924,000
188,176
1,112,176
 
(1) Mr. Becker and Ms. Pheffer received accelerated vesting of restricted stock units in December 2024 in order to mitigate the impact of any contractual
280G cutback provision contained in his/her applicable agreements with the Corporation and or the Bank.
 
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COMPENSATION OF DIRECTORS
 
Cash Compensation
 
The Chairman of the Board of the Corporation and the Bank receives an annual retainer for service on both boards.  Non-employee directors of the
Corporation receive an annual retainer for service on both boards for attending regularly scheduled board meetings and a per meeting fee for special Board
meetings. Annual retainers and per meeting fees for service on both boards in 2024 are shown in the following table.
 
Board Member
Annual Retainer
Special Meeting Fees
Chairman
$113,500
None
Non-employee Directors
$37,000
$1,250
Non-employee Directors
—
$500 for loan approval meetings
 
Non-employee directors of the Corporation and the Bank receive annual retainers for Board committee service as shown in the following table.
 
Committee
Committee Chair
Committee Member
Audit Committee
$17,500
$7,500
Compensation Committee
$11,000
$5,000
Governance and Nominating Committee
$11,000
$5,000
Asset Liability Committee
$11,000
$5,000
Loan Committee
$11,000
$4,000
Risk Committee
$11,000
$5,000
 
There are no per meeting fees for committee meetings except Loan Committee members are paid $500 for each Management Loan Committee meeting
attended.
 
The Chairman does not receive per meeting fees or committee retainers. The CEO does not receive retainers or per meeting fees for Board or Board
committee service.
 
Stock-based Compensation
 
Non-employee directors of the Corporation receive compensation in the form of equity grants. Equity compensation for directors consists of RSUs or stock
awards. Directors are expected to continue to receive compensation in the form of equity awards.
 
Stock awards granted to non-employee directors in 2024 were granted under the 2021 Plan and vest on April 15, 2025. Stock awards granted to non-
employee directors in 2023 were granted under the 2021 Plan and vested on April 16, 2024. Stock awards granted to non-employee directors in 2022 were
granted under the 2021 Plan and vested on April 18, 2023. Awards granted to directors under the 2021 Plan immediately vest upon an involuntary
termination following a change in control, total and permanent disability or death. 
 
Frozen Retirement Plan
 
On June 18, 1991, the Board of the Bank adopted The First National Bank of Long Island Retirement Plan for Directors ("Frozen Retirement
Plan"). Effective December 31, 2000, benefits earned to date under the Frozen Retirement Plan were frozen and the ability of directors to earn additional
benefits was discontinued. Upon retirement after attaining the age of sixty (60), each of the current directors who was a director prior to 2001 will receive a
credit ("Credit Percentage") of ten percent (10%) multiplied by the number of years of service on the Board through December 31, 2000, not to exceed one
hundred percent (100%). The annual benefit ("Annual Benefit") payable under the Frozen Retirement Plan is equal to the monthly Board of Directors’
attendance fee in effect as of December 31, 2000, which was $1,000, multiplied by twelve (12) and then multiplied by the Credit Percentage. The Annual
Benefit is payable in quarterly installments for a period of seven (7) years from the date of retirement ("Payment Period"). In the event of the death of a
director or a retired director, the surviving spouse of such director is entitled to receive an annual payment equal to seventy-five percent (75%) of the
Annual Benefit, calculated as set forth above, and payable over the remainder of the applicable Payment Period.
 
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Director Compensation
 
The following table sets forth information concerning the compensation of directors for 2024.
 
Name
Fees Earned or Paid
in Cash ($)
Stock Awards (1)
($)
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings (2) ($)
Total ($)
Aggregate Option
Awards
Outstanding At
Year End (#)
Aggregate Stock
Awards
Outstanding (#)
Paul T. Canarick
57,000
37,000
2,104
96,104
—
3,953
J. Abbott R. Cooper
59,500
37,000
—
96,500
—
3,953
Alexander L. Cover (3)
18,167
—
—
18,167
—
—
John J. Desmond
69,500
37,000
—
106,500
—
3,953
Edward J. Haye
61,593
37,000
—
98,593
—
3,953
Louisa M. Ives
63,000
37,000
—
100,000
—
3,953
Stephen V. Murphy (4)
36,776
—
—
36,776
—
—
Peter Quick
64,000
37,000
—
101,000
—
3,953
Denise Strain
65,500
37,000
—
102,500
—
3,953
Milbrey Rennie Taylor
56,000
37,000
—
93,000
—
3,953
Walter C. Teagle III
113,500
70,000
1,454
184,954
—
7,479
Eric J. Tveter
66,000
37,000
—
103,000
—
3,953
 
(1) Stock awards were granted in 2024 and vest on April 15, 2025.
(2) The change in pension value represents accretion of the benefit obligation under the Frozen Retirement Plan.
(3) Mr. Cover retired from the Board effective April 16, 2024.
(4) Mr. Murphy retired from the Board effective January 31, 2024.
 
COMPENSATION COMMITTEE REPORT
 
We have reviewed and discussed with management the Compensation Discussion and Analysis included herein and provided pursuant to Item 402(b) of
Regulation S-K.
 
Based on this review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Annual Report on
Form 10-K. The Compensation Committee:
 
●Eric J. Tveter, Chairman
●Paul T. Canarick
●John J. Desmond
●Louisa M. Ives
●Peter Quick
●Walter C. Teagle III
 
The preceding report shall not be deemed incorporated by reference by any general statement incorporating by reference in this Annual Report on Form 10-
K into any filing under the 1933 Act or the 1934 Act, except to the extent the Corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under the 1933 Act or the 1934 Act.
 
Compensation Committee Interlocks and Insider Participation 
 
No member of the Compensation Committee: (1) was an officer or employee of the Corporation or the Bank; (2) was formerly an officer of the Corporation
or the Bank; or (3) had any relationship requiring disclosure by the Corporation under the SEC’s rules governing disclosure of related party
transactions.  No executive officer of the Corporation served as a director or member of a compensation committee of another entity, one of whose
executive officers served as a member of the Corporation’s Board or Compensation Committee.
 
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 
Beneficial Ownership of Corporation Common Stock
 
As of March 7, 2025, the Corporation had 22,635,334 of shares of Common Stock outstanding. Based on information available, the only persons owning
beneficially more than 5% of the Corporation's Common Stock as of March 7, 2025 are identified below. A person may be considered to beneficially own
any shares over which the person has, directly or indirectly, sole or shared voting or investment power.
 
Name and Address
 
Amount and Nature of
 
Percent
of Beneficial Owner
 
Beneficial Ownership
 
of Class
BlackRock, Inc.
 
2,596,780 shares (1)
 
11.47%
50 Hudson Yards
   
   
New York, NY 10001
   
   
Dimensional Fund Advisors LP
 
1,154,523 shares (2)
 
5.10%
100 Vanguard Blvd.
   
   
Malvern, PA 19355
   
   
 
(1) Based on a Schedule 13G/A filed on February 5, 2025.
(2) Based on a Schedule 13G filed on January 23, 2025.
 
The following table sets forth certain information regarding the beneficial ownership of the Corporation's common stock as of March 7, 2025 by each of the
Corporation's directors, by each named executive officer of the Corporation, and by all directors and executive officers of the Corporation as a group. For
purposes of this table, a person is deemed to be the beneficial owner of any shares of common stock over which he or she has, or shares, directly or
indirectly, voting or investment power or as to which he or she has the right to acquire beneficial ownership at any time within 60 days after March 7, 2025.
 
Title of Class
  Beneficial Owner
 
Amount and Nature of
Beneficial Ownership (1)
 
Percent of Class
Common Stock
  Christopher Becker
 
105,561
 
.47%
($.10 par value)
  Paul T. Canarick
 
549,958
 
2.43%
 
  J. Abbott R. Cooper
 
174,039 (2)
 
.77%
 
  John J. Desmond
 
25,832
 
.11%
 
  Edward J. Haye
 
19,661
 
.09%
 
  Louisa M. Ives
 
14,083
 
.06%
 
  Peter Quick
 
69,595
 
.31%
 
  Denise Strain
 
31,104
 
.14%
 
  Milbrey Rennie Taylor
 
33,862
 
.15%
 
  Walter C. Teagle III
 
147,899
 
.65%
 
  Eric J. Tveter
 
27,815
 
.12%
 
  Janet T. Verneuille
 
19,837
 
.09%
 
  Christopher J. Hilton
 
33,663
 
.15%
 
  Susanne Pheffer
 
20,386
 
.09%
 
  Michael J. Spolarich
 
10,536
 
.05%
 
  Directors and Executive
   
   
 
  Officers as a group (17 persons)
 
1,330,100
 
5.88%
 
(1) Includes shares as to which a person (or spouse) directly or indirectly has or shares voting power and/or investment power (which includes the power to
dispose) and all shares which the person has a right to acquire within 60 days of the reporting date.
(2) Includes 166,633 shares beneficially owned by Driver Opportunity Partners I LP (“Driver LP”). As the controlling person of Driver LLC, the general
partner of Driver LP, Mr. Cooper may be deemed to be the beneficial owner of the shares owned by Driver LP. Mr. Cooper disclaims beneficial
ownership of any shares owned by Driver LP except to the extent of his pecuniary interest therein.
 
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
Certain Relationships with Related Transactions 
 
The Corporation’s Corporate Governance Guidelines require the Board to conduct an appropriate review of all related party transactions for potential
conflict of interest situations. Related party transactions are those required to be disclosed pursuant to Item 404 of Regulation S-K. The Board fulfills the
requirement to review related party transactions in conjunction with the Audit Committee, which is comprised entirely of independent directors. The
Governance and Nominating Committee is charged with the responsibility of reviewing and assessing the adequacy of and compliance with the
Corporation’s Corporate Governance Guidelines and recommending any proposed changes to the Board for approval.
 
The Bank has had, and expects to have in the future, banking transactions in the ordinary course of its business with directors, executive officers, principal
stockholders of the Corporation and their associates. Such transactions, including borrowings and loan commitments, are made in the ordinary course of
business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others and,
in the opinion of management, do not involve more than a normal risk of collectability nor do they present other unfavorable features.
 
Certain directors are officers, directors, partners or stockholders of companies or partnerships which, or associates of which, may have been customers of
the Bank in the ordinary course of business during 2024 and up to the present time. Additional transactions of this type may occur in the future. All such
transactions were effected on substantially the same terms as comparable transactions with other persons.
 
Independence of the Board of Directors
 
 
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
The consolidated financial statements of the Corporation for the year ended December 31, 2024 were audited by Crowe LLP (“Crowe”). The Audit
Committee has appointed Crowe as the Corporation’s independent registered public accounting firm to audit the Corporation’s consolidated financial
statements for the year ending December 31, 2025.  
 
Audit Fees
 
Crowe’s fees for audit services for 2024 and 2023 were $598,000 and $520,000, respectively. Audit services include the following: (1) professional services
rendered for the audit of the Corporation’s annual consolidated financial statements; (2) reviews of the consolidated financial statements included in the
Corporation’s Quarterly Reports on Form 10-Q; (3) a reading of the Corporation’s Annual Report on Form 10-K; and (4) rendering an opinion on the
effectiveness of the Corporation’s internal control over financial reporting.
 
Audit Related Fees
 
Audit related fees, as described in Item 9(e)(2) of Schedule 14A of the SEC’s Proxy Rules, are fees billed to the Corporation by its Independent Registered
Public Accounting Firm (“Independent Auditors”) for assurance and related services that are reasonably related to the performance of the audit or review of
the Corporation’s consolidated financial statements and are not audit fees as described in the previous paragraph. In 2024, audit related fees were $26,000.
In 2023, Crowe did not bill the Corporation for any audit related fees.
 
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Tax Fees
 
There were no tax fees paid to Crowe in 2024 and 2023.
 
All Other Fees
 
In neither of the last two fiscal years was the Corporation billed by Crowe for any fees other than those described above under the captions “Audit Fees,”
“Audit Related Fees” and “Tax Fees.”
 
Audit Committee Approval of Audit Related, Tax and Other Fees
 
There were no Audit Related, Tax or other fees billed by or paid to Crowe in 2024 and 2023.
 
Engagement of Independent Auditors to Perform Audit Services and Non-Audit Services
 
On an annual basis, and in accordance with the terms of written engagement letters, the Audit Committee has engaged the Corporation’s Independent
Auditors to perform audit services as previously defined.
 
In addition, from time to time the Audit Committee has engaged the Corporation’s Independent Auditors to perform non-audit services such as providing
tax advice and performing tax compliance work. The Audit Committee will not engage the Independent Auditors to perform any non-audit service or pre-
approve any non-audit service that could impair, in fact or appearance, the independence of the Independent Auditors. In addition, the Audit Committee
will not pre-approve any non-audit service if such pre-approval constitutes delegation to management of the Audit Committee’s responsibilities under the
1934 Act.
 
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PART IV
 
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
(a) 1. Consolidated Financial Statements
 
The following consolidated financial statements of the Corporation and its subsidiary and report of independent registered public accounting firm thereon
as required by this Item are included in Part II, Item 8.
 
Consolidated Balance Sheets
 
Consolidated Statements of Income
 
Consolidated Statements of Comprehensive Income
 
Consolidated Statement of Changes in Stockholders' Equity
 
Consolidated Statements of Cash Flows
 
Notes to Consolidated Financial Statements
 
Report of Independent Registered Public Accounting Firm (PCAOB ID 173)
 
(a) 2. Financial Statement Schedules
 
None applicable.
 
(a) 3. Listing of Exhibits
 
See Index of Exhibits that follows.
 
ITEM 16. FORM 10-K SUMMARY
 
Not applicable.
 
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INDEX OF EXHIBITS
 
Exhibit No.
Description of Exhibit 
2.1
Agreement and Plan of Merger dated September 4, 2024 by and between ConnectOne Bancorp, Inc., and The First of Long Island
Corporation (incorporated by reference to Exhibit 2.1 to Registrant's Form 8-K filed on September 5, 2024)
3(i)
Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(i) of Registrant’s Form 10-Q filed May 10, 2018)
3(ii)
By-laws, as amended (incorporated by reference to Exhibit 3(ii) of Registrant’s Form 8-K filed April 25, 2017)
4(vi)
Description of Registrant’s Common Stock (incorporated by reference to Exhibit 4(vi) of Registrant’s Form 10-K filed March 10, 2020)
10.1
The First of Long Island Corporation 2014 Equity Incentive Plan (incorporated by reference to Appendix A of Registrant’s Proxy
Statement filed March 17, 2014)
10.2
The First of Long Island Corporation 2021 Equity Incentive Plan (incorporated by reference to Appendix A of Registrant’s Proxy
Statement filed March 12, 2021)
10.3
The First of Long Island Corporation 2016 Cash Incentive Plan (incorporated by reference to Appendix A of Registrant’s Proxy
Statement filed March 15, 2016)
10.4
Amended and Restated Employment Agreement between Registrant and Christopher Becker, as amended (incorporated by reference to
Exhibit 10.12 of Registrant’s Form 8-K filed February 18, 2022)
10.5
Employment Agreement between Registrant and Janet T. Verneuille, the First Amendment and the Second Amendment thereto
(incorporated by reference to Exhibit 10.2 of Registrant’s Form 10-Q filed August 9, 2019, Exhibit 10.13 of Registrant’s Form 8-K filed
February 18, 2022 and Exhibit 10.6 of Registrant’s Form 10-K filed March 8, 2024)
10.6
Employment Agreement between Registrant and Christopher J. Hilton, the First Amendment and the Second Amendment
thereto (incorporated by reference to Exhibit 10.9 of Registrant's Form 10-K filed March 15, 2019, Exhibit 10.13 of Registrant's Form
8-K filed February 18, 2022and Exhibit 10.8 of Registrant’s Form 10-K filed March 8, 2024)
10.7
Employment Agreement between Registrant and Susanne Pheffer, and the First Amendment thereto (incorporated by reference to
Exhibits 10.10 of Registrants Form 10-K filed March 12, 2021and Exhibit 10.13 of Registrant's Form 8-K filed February 18, 2022)
10.8
Employment Agreement between Registrant and Michael J. Spolarich, and the First Amendment thereto (incorporated by reference to
Exhibits 10.8 and 10.9 of Registrants Form 10-K filed March 9, 2023)
10.9
Cooperation Agreement by and among Registrant, Driver Opportunity Partners I LP, Driver Management Company LLC and J. Abbott
R. Cooper (incorporated by reference to Exhibit 10.1 of Registrant’s 8-K filed on January 9, 2023)
19.1
Insider Trading Policy
19.2
Insider Trading Policy Addendum
21
Subsidiary information included in Part 1, “Business” of this Form 10-K
23
Consent of Crowe LLP, Independent Registered Public Accounting Firm
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
Certification of Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(b) and U.S.C. Section 1350
97
Clawback Policy
101
The following materials from the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024, formatted in
iXBRL (Inline Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Income, (3)
Consolidated Statements of Comprehensive Income, (4) Consolidated Statement of Changes in Stockholders’ Equity, (5) Consolidated
Statements of Cash Flows and (6) Notes to Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
 
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SIGNATURES
 
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: March 12, 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)
 
 
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.
 
Signatures
 
Titles
 
Date
 
 
 
 
 
/s/ WALTER C. TEAGLE III 
 
Non‑executive Chairman of the Board
 
March 12, 2025
Walter C. Teagle III
 
 
 
 
 
 
 
 
 
/s/ CHRISTOPHER BECKER
 
Director
 
March 12, 2025
Christopher Becker
 
 
 
 
 
 
 
 
 
/s/ PAUL T. CANARICK
 
Director
 
March 12, 2025
Paul T. Canarick
 
 
 
 
 
 
 
 
 
/s/ J. ABBOTT R. COOPER
 
Director
 
March 12, 2025
J. Abbott R. Cooper
 
 
 
 
 
 
 
 
 
/s/ JOHN J. DESMOND
 
Director
 
March 12, 2025
John J. Desmond
 
 
 
 
 
 
 
 
 
/s/ EDWARD J. HAYE
 
Director
 
March 12, 2025
Edward J. Haye
 
 
 
 
 
 
 
 
 
/s/ LOUISA M. IVES
 
Director
 
March 12, 2025
Louisa M. Ives
 
 
 
 
 
 
 
 
 
/s/ PETER QUICK
 
Director
 
March 12, 2025
Peter Quick
 
 
 
 
 
 
 
 
 
/s/ DENISE STRAIN
 
Director
 
March 12, 2025
Denise Strain
 
 
 
 
 
 
 
 
 
/s/ MILBREY RENNIE TAYLOR
 
Director
 
March 12, 2025
Milbrey Rennie Taylor
 
 
 
 
 
 
 
 
 
/s/ ERIC J. TVETER
 
Director
 
March 12, 2025
Eric J. Tveter
 
 
 
 
 
109

 
Exhibit 19.1
                                                                                                                                                                                                                                                 
 
 
 
 
INSIDER TRADING POLICY
 
 
 
 
 
 
 
 
 
 
 
1

 
 
 
 
INDEX
 
 
Page
        Topical Subject Matter
1
Cover Sheet
2
Index
3
Overview
3-5
Statement of Policies
5-6
Transactions Under Company Plans
6
Additional Prohibited Transactions
6
Strict Compliance Expected
7
Certification
 
 
 
 
2

 
 
OVERVIEW
 
The First of Long Island Corporation (the “Company”) is a public company the common stock of which is traded on the NASDAQ Stock
Market and registered under the Securities and Exchange Act of 1934 (the “Exchange Act”). Pursuant to the Exchange Act, the Company files
periodic reports and proxy statements with the Securities and Exchange Commission (the “SEC”). The First National Bank of Long Island (the
“Bank”) is the Company’s wholly owned subsidiary.
 
The purchase or sale of securities while aware of any material nonpublic information, or the disclosure of material nonpublic information to
others who then trade in the Company’s securities, is prohibited by the federal securities laws. Insider trading violations are pursued vigorously
by the SEC and the U.S. Attorneys and are punished severely. While the regulatory authorities concentrate their efforts on the individuals who
trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other
“controlling persons” if they fail to take reasonable steps to prevent insider trading by company personnel.
 
The Company’s Board of Directors has adopted this Policy Statement both to satisfy the Company’s obligation to prevent insider trading and to
help Company personnel avoid the severe consequences associated with violations of insider trading laws. This Policy Statement is also
intended to prevent even the appearance of improper conduct on the part of anyone employed by or associated with the Company (not just so-
called insiders). We have all worked hard over the years to establish a reputation for integrity and ethical conduct, and we do not want to have
that reputation damaged.
 
The consequences of an insider trading violation can be severe:
 
Traders and Tippers. Company personnel who trade on insider information are subject to the following penalties:
 
 
●
A civil penalty of up to three times the profit gained or loss avoided;
 
 
●
A criminal fine of up to $5,000,000 (no matter how small the profit); and
 
 
●
A jail term of up to twenty years.
 
An employee who tips information to a person who then trades is subject to the same penalties as the tipee, even if the employee did not trade
and did not profit from the tipee’s trading.
 
Control Persons. The Company and its supervisory personnel, if they fail to take appropriate steps to prevent illegal insider trading, are subject
to the following penalties:
 
 
●
A civil penalty of up to $1,000,000 or, if greater, three times the profit gained or loss avoided as a result of the employee’s violation;
 
 
●
A criminal penalty of up to $5,000,000, for an individual, or $25,000,000 for a non-natural person; and
 
 
●
A jail term of up to twenty years.
 
STATEMENT OF POLICIES
 
It is the policy of the Company that no director, officer or other employee of the Company (references to the Company include the Bank and
other subsidiaries of the Company or the Bank) who is aware of material nonpublic information relating to the Company may, directly or
through family members or other persons or entities, (a) buy or sell securities of the Company (other than pursuant to a pre-approved trading
plan that complies with SEC Rule 10b5-1), or engage in any other action to take personal advantage of that information, or (b) pass that
information on to others outside the Company, including family and friends. In addition, it is the policy of the Company that no director, officer
or other employee of the Company who, in the course of working for the
 
3

 
 
Company, learns of material nonpublic information about a company with which the Company does business, including a customer or supplier
of the Company, may trade in that company’s securities until the information becomes public or is no longer material.
 
Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are
not excepted from the policy. The securities laws do not recognize such mitigating circumstances, and, in any event, even the appearance of an
improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standard of conduct.
 
Policy Regarding the Confidentiality of Information Regarding the Company and the Disclosure of Information to Others. Personnel of the
Company should not discuss internal matters or developments with anyone outside of the Company, except as required in the performance of
regular corporate duties. Personnel of the Company with knowledge of material nonpublic information should only disclose such information
to other such personnel on a need-to-know basis. The Company is required under Regulation FD of the federal securities laws to avoid the
selective disclosure of material nonpublic information. The Company has established procedures for releasing material information in a manner
designed to achieve broad public dissemination of the information immediately upon its release. You may not, therefore, disclose information
to anyone outside the Company or its business in an internet “chat room” or similar internet-based form.
 
Material Information. Material information is any information that a reasonable investor would consider important in making a decision to buy,
hold, or sell securities. Any information that could be expected to materially affect the Company’s stock price, whether it is positive or
negative, should be considered material. Some examples of information that could be regarded as material under the circumstances are:
 
 
●
Information about earnings or losses that are material and/or inconsistent with prior performance trends;
 
 
●
A pending or proposed merger, acquisition or tender offer;
 
 
●
A pending or proposed acquisition or disposition of a significant asset;
 
 
●
A change in dividend policy, the declaration of a stock split, or an offering of additional securities;
 
 
●
Development of a significant new product or process;
 
 
●
Knowledge regarding a significant cybersecurity incident;
 
 
●
Impending bankruptcy or the existence of severe liquidity problems;
 
 
●
The gain or loss of a significant customer or supplier.
 
Twenty-Twenty Hindsight. Remember, anyone scrutinizing your transactions will be doing so after the fact, with the benefit of hindsight. As a
practical matter, before engaging in any transaction, you should carefully consider how enforcement authorities and others might view the
transaction in hindsight.
 
4

 
 
When Information is “Public”. If you are aware of material nonpublic information, you may not trade until the information has been disclosed
broadly to the marketplace (such as by press release or an SEC filing) and the investing public has had time to absorb the information fully. To
avoid the appearance of impropriety, as a general rule, information should not be considered fully absorbed by the marketplace until the
beginning of the second business day after the information is released. If, for example, the Company were to make an announcement on a
Monday, you should not trade in the Company’s securities until Wednesday. If an announcement were made on a Friday (or before the market
opens on Monday), Tuesday generally would be the first eligible trading day.
 
Transactions by Family Members. The insider trading policy also applies to your family members who reside with you, anyone else who lives
in your household, and any family members who do not live in your household but whose transactions in company securities are directed by
you or are subject to your influence or control (such as parents or children who consult with you before they trade in Company securities). You
are responsible for the transactions of these and other persons and therefore should make them aware of the need to confer with you before they
trade in the Company’s securities.
 
Applicability of Policy to Inside Information Regarding Other Companies. This policy and the guidelines described herein also apply to
material nonpublic information relating to other companies, including the Company’s customers, vendors, suppliers or acquisition candidates
(“business partners”) when that information is obtained in the course of employment with, or other services performed on behalf of, the
Company. Civil and criminal penalties and termination of employment may result from trading on inside information regarding the Company’s
business partners. All employees should treat material nonpublic information about the Company’s business partners with the same care
required with respect to information related directly to the Company.
 
Black Out Periods Relating to Earnings Releases. As a precaution, the Company specifically prohibits directors, senior officers and certain
designated employees from engaging in any transaction involving a purchase or sale of the Company’s securities during any period
commencing 15 days prior to the end of each calendar quarter (i.e., March 16, June 15, September 15, December 16) and ending at the close of
business on the trading day following the date of public disclosure of financial information (the “black-out period”) for that quarter or year end.
This policy is set forth in an Addendum to this Memorandum. It should be noted that just because an individual is not specifically “blacked-
out” from trading, he/she remains subject to the general prohibition against trading while in possession of material, nonpublic information
about the Company. Any person who possesses material nonpublic information regarding the Company is prohibited from entering into
transactions involving the Company’s stock until such information becomes available to the public.
 
TRANSACTIONS UNDER COMPANY PLANS
 
Stock Option Exercises. The Company’s insider trading policy does not apply to the exercise of an employee stock option for cash, or to the
exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares subject to an option to satisfy tax
withholding requirements. The policy does apply, however, to any sale of stock following exercise or as part of a broker-assisted cashless
exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
 
5

 
 
Dividend Reinvestment and Stock Purchase Plan. The Company’s insider trading policy does not apply to dividend reinvestment under the
Company’s Dividend Reinvestment and Stock Purchase Plan. The policy does apply, however, to stock purchases under the Company’s
Dividend Reinvestment and Stock Purchase Plan. Directors, senior officers and other designated employees are prohibited from participating in
stock purchases under the Company’s Dividend Reinvestment and Stock Purchase Plan.
 
ADDITIONAL PROHIBITED TRANSACTIONS
 
The Company considers it improper and inappropriate for any director, officer or other employee of the Company to engage in short-term or
speculative transactions in the Company’s securities. It therefore is the Company’s policy that directors, officers and other employees may not
engage in any of the following transactions:
 
Short-term Trading. Short-term trading of the Company’s securities may be distracting to the individual and may unduly focus the individual on
the Company’s short-term stock market performance instead of the Company’s long-term business objectives. For these reasons, any director,
officer or other employee of the Company who purchases Company securities in the open market may not sell any company securities of the
same class during the six months following the purchase.
 
Short Sales. Short sales of the Company’s securities evidence an expectation on the part of the seller that the securities will decline in value, and
therefore signal to the market that the seller has no confidence in the Company or its short-term prospects. In addition, short sales may reduce
the seller’s incentive to improve the Company’s performance. For these reasons, short sales of the Company’s securities are prohibited by this
Policy Statement. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales.
 
Hedging. Hedging the Company’s securities may allow the individual to own the Company’s securities without the full risks and rewards of
ownership, potentially separating the interests of the individual from the interests of stockholders. For these reasons, hedging the Company’s
securities with the use of financial instruments (including prepaid variable forward contracts, equity swaps, calls, puts, collars, and exchange
funds) that offset a decrease in the market value of the company’s equity securities and any other transaction with comparable economic
consequences are prohibited by this Policy Statement.
 
Post-Termination Transactions. This Policy Statement continues to apply to your transactions in Company securities even after you have
terminated employment. If you are in possession of material nonpublic information when your employment terminates, you may not trade in
Company securities until that information has become public or is no longer material.
 
STRICT COMPLIANCE EXPECTED
 
The Company expects the strictest compliance with these procedures by all personnel at every level. Failure to follow these procedures may
result in severe legal difficulties for you, as well as for the Company. A failure to follow both the letter and the spirit of this Policy Statement
shall be considered a matter of extreme seriousness and may be grounds for termination of employment or other disciplinary action, whether or
not the failure to comply results in a violation of law. Needless to say, a violation of law, or even an SEC investigation that does not result in
prosecution, can tarnish the Company’s and an individual’s reputation and irreparably damage a career.
 
Company Assistance. Any person who has a question about this Policy Statement or its application to any proposed transaction may obtain
additional guidance from the Chief Financial Officer or, in their absence, the Chief Risk Officer. Ultimately, however, the responsibility for
adhering to this Policy Statement and avoiding unlawful transactions rests with the individual employee.
 
6

 
 
CERTIFICATION
 
I certify that:
 
I have read and understand the Insider Trading Policy dated December 19, 2024. I understand that the Chief Financial Officer, or, in their
absence, the Chief Risk Officer are available to answer any questions I have regarding the insider trading policy.
 
I will comply with this policy for as long as I am subject to the policy.
 
Signature:                                                                  
 
Date:                                                                          
 
Print Name:                                                               
 
 
7
 

 
Exhibit 19.2
                                                                                                                                                                                                                                                        
                                                                        
 
 
 
 
 
 
 
 
 
 
ADDENDUM TO THE COMPANY’S INSIDER TRADING
POLICY
 
 
 
 
 
 
1

 
 
ADDENDUM TO THE COMPANY’S INSIDER TRADING POLICY
 
To:         Directors, Senior Officers and Designated Employees First of Long Island Corporation
First National Bank of Long Island
 
From:     Janet Verneuille
Senior Executive Vice President and Chief Financial Officer
Date:     December 19, 2024
 
Re:         Addendum to the Company’s Insider Trading Policy
 
 
The First of Long Island Corporation (“Company”) is a public company the common stock of which is traded on the NASDAQ Stock Market and
registered under the Securities and Exchange Act of 1934 (the “Exchange Act”). Pursuant to the Exchange Act, the Company files periodic reports and
proxy statements with the Securities and Exchange Commission (the “SEC”). The First National Bank of Long Island (“Bank”) is the Company’s wholly
owned subsidiary.
 
As a public company, the directors, officers and employees of the Company have a responsibility not to participate in the market for the Company’s
Common Stock while in possession of “material information” about the Company that has not been publicly disclosed. Under the Insider Trading and
Securities Enforcement Act of 1988 (“Act”), the Company can be held liable for employee violations of the insider trading laws, unless it has adopted
policies and procedures to prevent insider trading. Recent efforts by the SEC to police insider trading laws have highlighted the need for awareness of the
responsibilities and potential liability in this area. Executive officers and directors of the Company are also subject to various reporting obligations
regarding their ownership, and changes in their ownership, of Company common stock.
 
The Company has adopted an insider trading policy that is applicable to all employees, officers and directors. This memorandum addresses additional
restrictions that are applicable only to Directors, Senior Officers and certain designated employees of the Company.
 
1.    Restrictions on Purchases and Sales During Quarterly “Blackout” Periods The following additional procedure with respect to the participation in the
market for the Company’s Common Stock by the directors and senior officers (as defined hereinafter) of the Company have been adopted by the Board of
Directors in order to assure compliance with the federal securities laws. It should be emphasized that these procedures are designed to: (i) avoid even the
appearance of trading on insider information, (ii) as a cautionary matter, eliminate the ongoing question of when knowledge of unreported quarterly and
year-end financial information may be considered “material” under the insider trading laws, and (iii) enable the Company to assure that the insider trading
reporting requirements of Section 16 of the Securities Exchange Act of 1934 are being complied with. This is in addition to the general prohibition on
participation in the market for the Common Stock while in possession of material, nonpublic information, regardless of the time period.
 
Quarterly Blackout Periods. During the period commencing 15 days prior to the end of each calendar quarter (i.e., March 16, June 15, September 15,
December 16) and ending at the close of business on the trading day following the date of public disclosure of financial information (black- out period),
directors and senior officers should refrain from participating, directly or indirectly, in the market for the Common Stock. The prohibition on trading
during the blackout periods is in addition to the general prohibition, which could apply at any time during the year, on trading while in possession of
material, nonpublic information regarding the Company.
 
2

 
 
Temporary Blackout Periods. The Company may also institute temporary blackout periods, during which trading in the Company’s securities is
prohibited, in the event of a material corporate development. Notice of temporary blackout periods will be distributed by means of a written or electronic
communication and may include employees in addition to those addressed in this memorandum. For example, the Company may institute a temporary
blackout period due to a significant cybersecurity incident that includes additional employees as deemed appropriate.
 
2.    Margin Accounts and Pledges. Securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to
meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan.
Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material, nonpublic information or is not permitted to trade in
Company securities, directors or executive officers may not hold Company securities in a margin account or pledge Company securities as collateral for
any other loan. An exception to this prohibition may be granted, in the sole discretion of the Board and in limited circumstances, after giving
consideration to, among other factors, the number of shares proposed to be pledged as a percentage of the director’s or executive officer’s total shares
held. If Company securities are pledged as collateral for margin purchases or a loan by a director or executive officer, the Chief Financial Officer must be
informed. The SEC requires annual proxy statement disclosure as to the number of shares pledged by directors and executive officers.
 
3.    Pre-Clearance of All Trades. Prior to placing any order to purchase or sell the Company’s Common Stock, the Chief Financial Officer or, in their
absence, the Chief Risk Officer must be notified. Such notification is also required prior to exercising any options to purchase the Company’s Common
Stock. It should be noted that the exercise of a stock option is not considered to be a purchase under the federal securities laws and is therefore exempt
from Section 16(b) of the Securities Exchange Act of 1934 pertaining to short-swing profits.
 
Pre-clearance of all trades will enable the Company to better assure compliance with the prohibition on trading during the quarterly blackout periods or
while in possession of material, nonpublic information, as well as the reporting obligations (e.g., Forms 4, 5 and 144 under Section 16(a) or Rule 144 of
the federal securities laws) relating to changes in stock ownership or notice of proposed sale by executive officers and directors. As a result of the
foregoing, there cannot be “standing orders” to purchase or sell that extend beyond the day for which trading was cleared.
 
4.    Pre-Notification. The Chief Financial Officer or, in their absence, the Chief Risk Officer will notify the Chairman of the Board or the Chairman of
the Audit Committee of the intention of any director or executive officer to sell shares of the Company’s Common Stock. If the Chairman of the Board
intends to sell, then the Audit Committee Chair shall be notified and vice versa.
 
The following positions are hereby designated “senior officer” positions for purposes of the foregoing restrictions:
 
●
All Senior Vice President and Above
 
●
All Members of the Management Executive Committee
 
●
All Employees that Work in the Internal Audit Department
 
●
All Employees that Work in the Finance Department
 
●
All Employees that Work in the Marketing Department
 
●
Assistants to Executive Officers
 
3

 
 
CERTIFICATION
 
I certify that:
 
I have read and understand the Addendum to the Company’s Insider Trading Policy dated December 19, 2024 covering pre-clearance procedures and
blackout periods (collectively, the “Insider Trading Policy”). I understand that the Chief Financial Officer, or, in their absence, the Chief Risk Officer are
available to answer any questions I have regarding the insider trading policy.
 
I will comply with this policy for as long as I am subject to the policy. 
 
Signature:                                                                  
 
Date:                                                                          
 
Print Name:                                                               
 
4

Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-223775 on Form S-3, and Registration Statement Nos., 333-196920 and
333-257391on Form S-8 of The First of Long Island Corporation of our report dated March 12, 2025, with respect to the consolidated financial statements
of The First of Long Island Corporation and the effectiveness of internal control over financial reporting, which report appears in this Annual Report on
Form 10-K of The First of Long Island Corporation for the year ended December 31, 2024.
New York, New York
/s/ Crowe LLP
March 12, 2025
Crowe LLP
 
 
 

Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)
I, Christopher Becker, certify that:
 
1)
I have reviewed this Form 10-K of The First of Long Island Corporation (“Registrant”);
 
 
2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
 
 
3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
 
4)
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the Registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
 
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most
recent fiscal quarter (the Registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial reporting; and
 
 
5)
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal
control over financial reporting.
Date: March 12, 2025
By /s/ CHRISTOPHER BECKER
CHRISTOPHER BECKER
PRESIDENT & CHIEF EXECUTIVE OFFICER
(principal executive officer)
 

Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)
I, Janet T. Verneuille, certify that:
 
1)
I have reviewed this Form 10-K of The First of Long Island Corporation (“Registrant”);
 
 
2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
 
 
3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
 
4)
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the Registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
 
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most
recent fiscal quarter (the Registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial reporting; and
 
 
5)
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal
control over financial reporting.
Date: March 12, 2025
By /s/ JANET T. VERNEUILLE
JANET T. VERNEUILLE
SENIOR EXECUTIVE VICE PRESIDENT, 
CHIEF FINANCIAL OFFICER & TREASURER
(principal financial officer)
 

Exhibit 32
CERTIFICATION PURSUANT TO RULE 13a-14(b)
AND 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of The First of Long Island Corporation (“Corporation”) on Form 10-K for the year ended December 31, 2024 as
filed with the Securities and Exchange Commission on March 12, 2025, (“Report”), we, Christopher Becker, President and Chief Executive Officer of the
Corporation and Janet T. Verneuille, Senior Executive Vice President, Chief Financial Officer and Treasurer of the Corporation, hereby certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
Date: March 12, 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)
 

 
Exhibit 97
 
 
 
 
 
 
 
 
 
 
 
CLAWBACK POLICY
 
 

 
 
 
The Board of Directors (the “Board”) of The First of Long Island Corporation (the “Company”) believes that it is in the best interests of the Company and
its shareholders to adopt this Clawback Policy (this “Policy”), which provides for the recovery of Erroneously Awarded Compensation in the event the
Company is required to prepare an Accounting Restatement.
 
This Policy shall be interpreted to comply with the clawback rules found in 17 C.F.R. §240.10D-1 promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and the related listing rules of the national securities exchange or national securities association (the “Exchange”)
on which the Company has listed securities, and, to the extent this Policy is in any manner deemed inconsistent with such rules, this Policy shall be treated
as retroactively amended to be compliant with such rules.
 
1.    Definitions.
 
 
(a) “Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting
requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements
that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the
current period or left uncorrected in the current period.
 
 
(b) “Accounting Restatement Date” means the earlier to occur of: (i) the date the Board, a committee of the Board, or the officer or officers of the
Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is
required to prepare an Accounting Restatement or (ii) the date a court, regulatory agency, or other legally authorized body directs the Company to
prepare an Accounting Restatement.
 
 
(c) “Erroneously Awarded Compensation”  means, in the event of an Accounting Restatement, the amount of Incentive-Based Compensation
previously received that exceeds the amount of Incentive-Based Compensation that otherwise would have been received had it been determined
based on the restated amounts in such Accounting Restatement. The amount of Erroneously Awarded Compensation shall be determined on a
gross basis without regard to any taxes paid by the relevant Executive Officer; provided, however, that for Incentive-Based Compensation based
on the Company’s stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical
recalculation directly from the information in an Accounting Restatement: (i) the amount of Erroneously Awarded Compensation shall be based
on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-
Based Compensation was received and (ii) the Company must maintain documentation of the determination of such reasonable estimate and
provide such documentation to the Exchange.
 
 
(d) “Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting
officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales,
administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making
functions for the Company. An executive officer of the Company’s parent or subsidiary is deemed an “Executive Officer” if the executive officer
performs policy making functions for the Company.
 
 
(e) “Financial Reporting Measure”  means any measure that is determined and presented in accordance with the accounting principles used in
preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measure; provided, however, that a
Financial Reporting Measure is not required to be presented within the Company’s financial statements or included in a filing with the Securities
and Exchange Commission to qualify as a “Financial Reporting Measure.” For purposes of this Policy, “Financial Reporting Measure” includes,
but is not limited to, stock price and total shareholder return.
 
 
(f)
“Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a
Financial Reporting Measure.
 
 
(g) “Received” means incentive-based compensation received in the Company’s fiscal period during which the financial reporting measure specified
in the incentive-based compensation award is attained, even if the payment or grant of the incentive-based compensation occurs after the end of
that period.
 
 

 
 
2.         Application of the Policy. This Policy shall only apply in the event that the Company is required to prepare an Accounting Restatement
and it shall apply to all Incentive-Based Compensation Received by a person: (a) after beginning service as an Executive Officer; (b) who served as an
Executive Officer at any time during the performance period for such Incentive-Based Compensation; (c) while the Company had a class of securities
listed on an Exchange; and (d) during the three completed fiscal years immediately preceding the Accounting Restatement Date.  In addition to such last
three completed fiscal years, the immediately preceding clause (d) includes any transition period that results from a change in the Company’s fiscal year
within or immediately following such three completed fiscal years; provided, however, that a transition period between the last day of the Company’s
previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to twelve months shall be deemed a completed fiscal year.
 
3.         Recovery Period. The Incentive-Based Compensation subject to clawback is the Incentive-Based Compensation Received during the
three completed fiscal years immediately preceding an Accounting Restatement Date; provided that the individual served as an Executive Officer at any
time during the performance period applicable to the Incentive-Based Compensation in question. Notwithstanding the foregoing, the Policy shall only
apply if the Incentive-Based Compensation is Received (1) while the Company has a class of securities listed on an Exchange, and (2) on or after October
2, 2023.
 
4.              Erroneously Awarded Compensation. The amount of Erroneously Awarded Compensation subject to this Policy is the amount of
Incentive-Based Compensation Received that exceeds the amount of Incentive Based-Compensation that otherwise would have been Received had it been
determined based on the restated amounts in the Company’s financial statements and shall be computed without regard to any taxes paid.  For Incentive-
Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to
mathematical recalculation directly from the information in an Accounting Restatement: (1) the amount shall be based on a reasonable estimate of the
effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received; and (2)
the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the Exchange.  The Board
shall determine, in its sole discretion, the timing and method for promptly recouping Erroneously Awarded Compensation hereunder, which may include
without limitation (a) seeking reimbursement of all or part of any cash or equity-based award, (b) cancelling prior cash or equity-based awards, whether
vested or unvested or paid or unpaid, (c) cancelling or offsetting against any planned future cash or equity-based awards, (d) forfeiture of deferred
compensation, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated
thereunder and (e) any other method authorized by applicable law or contract. Subject to compliance with any applicable law, the Board may affect
recovery under this Policy from any amount otherwise payable to the Executive Officer, including amounts payable to such individual under any
otherwise applicable Company plan or program, including base salary, bonuses or commissions and compensation previously deferred by the Executive
Officer.
 
 

 
 
5.         Recovery Exceptions. The Company shall recover reasonably promptly any Erroneously Awarded Compensation except to the extent that
the conditions of paragraphs (a), (b) or (c) below apply.  The Compensation Committee of the Board (the “Committee”) shall determine the repayment
schedule for each amount of Erroneously Awarded Compensation in a manner that complies with this “reasonably promptly” requirement.   Such
determination shall be consistent with any applicable legal guidance by the Securities and Exchange Commission, judicial opinion, or otherwise.  The
determination of “reasonably promptly” may vary from case to case and the Committee is authorized to adopt additional rules to further describe what
repayment schedules satisfy this requirement.
 
(a)         Erroneously Awarded Compensation need not be recovered if the direct expense paid to a third party to assist in enforcing the Policy
would exceed the amount to be recovered and the Committee has made a determination that recovery would be impracticable. Before
concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on expense of
enforcement, the Company shall make a reasonable attempt to recover such Erroneously Awarded Compensation, document such
reasonable attempt(s) to recover, and provide that documentation to the Exchange, as required.
 
(b)         If applicable, Erroneously Awarded Compensation need not be recovered if recovery would violate home country law where that law was
adopted prior to November 28, 2022.  Before concluding that it would be impracticable to recover any amount of Erroneously Awarded
Compensation based on violation of home country law, the Company shall obtain an opinion of home country counsel, acceptable to the
Exchange, that recovery would result in such a violation and shall provide such opinion to the Exchange.
 
(c)         Erroneously Awarded Compensation need not be recovered if recovery would likely cause an otherwise tax-qualified retirement plan,
under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Section 401(a)(13) or
Section 411(a) of the Code and regulations thereunder.
 
6.         Committee Decisions. Decisions of the Committee with respect to this Policy shall be final, conclusive and binding on all Executive
Officers subject to this Policy, unless determined by a court of competent jurisdiction to be an abuse of discretion.  Any members of the Committee, and
any other members of the Board who assist in the administration of this Policy, shall not be personally liable for any action, determination or interpretation
made with respect to this Policy and shall be fully indemnified by the Company to the fullest extent under applicable law and Company policy with
respect to any such action, determination or interpretation. The foregoing sentence shall not limit any other rights to indemnification of the members of
the Committee or Board under applicable law or Company policy.
 
7.         No Indemnification. Notwithstanding anything to the contrary in any other policy of the Company, the governing documents of the
Company or any agreement between the Company and an Executive Officer, no Executive Officer shall be indemnified by the Company against the loss
of any Erroneously Awarded Compensation.   Further, the Company is prohibited from paying or reimbursing an Executive Officer for purchasing
insurance to cover any such loss.  Nothing in this Policy prohibits any Executive Officer from purchasing, at their own expense, insurance to cover any
such loss.
 
8.          Agreement to Policy by Executive Officers. The Committee shall take reasonable steps to inform Executive Officers of this Policy and
the Executive Officers shall acknowledge receipt and adherence to this Policy in writing.
 
9.          Exhibit Filing Requirement. A copy of this Policy and any amendments thereto shall be filed as an exhibit to the Company’s Annual
Report on Form 10-K.
 
10.        Amendment. The Board may amend, modify or supplement all or any portion of this Policy at any time and from time to time in its
discretion.
 
11.       Interaction with other Clawback Policies. This Policy shall be the only clawback policy applicable to an Executive Officer and this Policy
shall supersede any other clawback provision or policy maintained by the Company which would otherwise apply to an Executive Officer. 
Notwithstanding the foregoing, to the extent that the application of this Policy would provide for the clawback of Incentive-Based Compensation that the
Company has recovered pursuant to Section 304 of the Sarbanes-Oxley Act or applicable law, the amount the Executive Officer has already reimbursed
the Company pursuant to Section 304 of the Sarbanes-Oxley Act or applicable law will be credited to the amount of the required clawback under this
Policy.
 
 

 
 
 
[TO BE SIGNED BY EACH OF THE COMPANY’S EXECUTIVE OFFICERS]
 
 
Clawback Policy Acknowledgment
 
I, undersigned, agree and acknowledge that I am fully bound by, and subject to, all of the terms and conditions of The First of Long Island Corporation
Clawback Policy (as may be amended, restated, supplemented or otherwise modified from time to time, the “Policy”) and that I have been provided a copy
of the Policy and understand the Policy. In the event of any inconsistency between the Policy and the terms of any employment or similar agreement to
which I am a party, or the terms of any compensation plan, program or agreement under which any compensation has been granted, awarded, earned or
paid, the terms of the Policy shall govern. If the Committee determines that any amounts granted, awarded, earned or paid to me must be forfeited or
reimbursed to the Company, I will promptly take all actions necessary to effectuate such forfeiture and/or reimbursement.
 
 
 
 
 
 
 
 
 
 
Signature: ______________________________________
 
Date: _________________
Print Name/Title: ___________________________________