SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
(Mark One)
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X
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the quarterly period ended MARCH 31, 1997
OR
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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 0-12220
THE FIRST OF LONG ISLAND CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
NEW YORK 11-2672906
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
10 GLEN HEAD ROAD, GLEN HEAD, NEW YORK 11545
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (516) 671-4900
Not Applicable
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(Former Name, Former Address and Former Fiscal Year, if
Changed Since Last Report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 1, 1997
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Common stock, par value 2,083,487
$.10 per share
Total Number of Pages, Including Cover Page - 16
<PAGE>
THE FIRST OF LONG ISLAND CORPORATION
MARCH 31, 1997
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
ITEM 1. CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996 1
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1996 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 5-11
PART II. OTHER INFORMATION 12
SIGNATURES 13
<PAGE>
<TABLE>
<S> <C> <C>
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CONSOLIDATED THE FIRST OF LONG ISLAND CORPORATION
BALANCE SHEETS AND SUBSIDIARY
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MARCH 31, December 31,
1997 1996*
------------- -------------
ASSETS:
Cash and due from banks ....................................... $ 17,298,000 $ 18,930,000
Federal funds sold ............................................ 31,500,000 38,500,000
------------- -------------
Cash and cash equivalents ..................................... 48,798,000 57,430,000
------------- -------------
Investment securities:
Held-to-maturity, at amortized cost (approximate fair
value of $148,750,000 and $142,095,000) ....................... 150,309,000 141,850,000
Available-for-sale, at fair value (amortized cost
of $81,016,000 and $79,964,000) ............................... 80,113,000 80,417,000
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230,422,000 222,267,000
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Loans:
Commercial and industrial ..................................... 25,233,000 23,345,000
Secured by real estate ........................................ 120,513,000 120,782,000
Consumer ...................................................... 8,217,000 8,999,000
Other ......................................................... 1,139,000 396,000
------------- -------------
155,102,000 153,522,000
Less: Unearned income ......................................... (833,000) (840,000)
Allowance for loan losses ............................... (3,603,000) (3,600,000)
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150,666,000 149,082,000
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Bank premises and equipment ................................... 4,973,000 5,044,000
Deferred income tax benefits .................................. 1,344,000 897,000
Other assets .................................................. 6,478,000 6,182,000
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$ 442,681,000 $ 440,902,000
============= =============
LIABILITIES:
Deposits:
Checking ...................................................... $ 121,518,000 $ 123,160,000
Savings and money market ...................................... 224,950,000 222,892,000
Time, other ................................................... 27,181,000 26,509,000
Time, $100,000 and over ....................................... 12,069,000 11,800,000
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385,718,000 384,361,000
Accrued expenses and other liabilities ........................ 1,402,000 2,372,000
Income taxes payable .......................................... 807,000 --
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387,927,000 386,733,000
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COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.10 per share:
Authorized, 5,000,000 shares;
Issued and outstanding, 2,083,686 and 2,088,784 shares ........ 208,000 209,000
Surplus ....................................................... 6,739,000 6,924,000
Retained earnings ............................................. 48,412,000 46,733,000
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55,359,000 53,866,000
Unrealized gains (losses) on available-for-sale securities .... (605,000) 303,000
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54,754,000 54,169,000
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$ 442,681,000 $ 440,902,000
============= =============
*Reclassified to conform with the current period's presentation
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
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CONSOLIDATED STATEMENTS THE FIRST OF LONG ISLAND CORPORATION
OF INCOME AND SUBSIDIARY
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<TABLE>
Three Months
Ended March 31,
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1997 1996
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<S> <C> <C>
INTEREST INCOME:
Loans ....................................... $3,370,000 $3,311,000
Investment securities:
Taxable ..................................... 2,896,000 2,856,000
Nontaxable .................................. 493,000 473,000
Federal funds sold .......................... 449,000 383,000
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7,208,000 7,023,000
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INTEREST EXPENSE:
Savings and money market deposits ........... 1,692,000 1,668,000
Time deposits ............................... 454,000 428,000
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2,146,000 2,096,000
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Net interest income ......................... 5,062,000 4,927,000
PROVISION FOR LOAN LOSSES ................... -- --
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Net interest income after provision
for loan losses ............................. 5,062,000 4,927,000
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NONINTEREST INCOME:
Trust Department income ..................... 313,000 269,000
Service charges on deposit accounts ......... 627,000 589,000
Other ....................................... 100,000 104,000
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1,040,000 962,000
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NONINTEREST EXPENSE:
Salaries .................................... 1,634,000 1,547,000
Employee benefits ........................... 674,000 577,000
Occupancy and equipment expense ............. 470,000 501,000
Other operating expenses .................... 791,000 774,000
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3,569,000 3,399,000
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Income before income taxes .................. 2,533,000 2,490,000
INCOME TAX EXPENSE .......................... 854,000 831,000
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NET INCOME .................................. $1,679,000 $1,659,000
========== ==========
Weighted average number of common and
common equivalent shares outstanding ........ 2,136,795 2,133,603
========== ==========
EARNINGS PER SHARE .......................... $ .79 $ .78
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<S> <C> <C>
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CONSOLIDATED STATEMENTS THE FIRST OF LONG ISLAND
OF CASH FLOWS CORPORATION AND SUBSIDIARY
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Three Months Ended March 31,
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Increase (Decrease) in Cash and Cash Equivalents 1997 1996*
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................ $ 1,679,000 $ 1,659,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ......................... 148,000 157,000
Premium amortization (discount accretion) on investment
securities, net ....................................... (269,000) (310,000)
Increase in other assets .............................. (296,000) (478,000)
Decrease in accrued expenses and other liabilities .... (260,000) (356,000)
Increase in income taxes payable ...................... 807,000 525,000
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Net cash provided by operating activities ............. 1,809,000 1,197,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and redemptions of
investment securities:
Held-to-maturity ...................................... 13,581,000 10,388,000
Available-for-sale .................................... 387,000 1,200,000
Purchase of investment securities:
Held-to-maturity ...................................... (21,720,000) (11,772,000)
Available-for-sale .................................... (1,489,000) (10,683,000)
Net increase in loans to customers .................... (1,584,000) (2,052,000)
Purchases of bank premises and equipment .............. (77,000) (166,000)
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Net cash used in investing activities ................. (10,902,000) (13,085,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in total deposits ........................ 1,357,000 10,839,000
Proceeds from exercise of stock options ............... 2,000 45,000
Repurchase and retirement of common stock ............. (188,000) (51,000)
Cash dividends paid ................................... (710,000) (615,000)
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Net cash provided by financing activities ............. 461,000 10,218,000
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Net decrease in cash and cash equivalents ............. (8,632,000) (1,670,000)
Cash and cash equivalents, beginning of period ........ 57,430,000 54,284,000
------------ ------------
Cash and cash equivalents, end of period .............. $ 48,798,000 $ 52,614,000
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Unrealized losses on available-for-sale securities $ (1,355,000) $ (878,000)
</TABLE>
The Corporation made interest payments of $2,102,000 and $2,089,000 and
income tax payments of $46,000 and $306,000 during the three months ended March
31, 1997 and 1996, respectively.
*Reclassified to conform with the current period's presentation
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
4
THE FIRST OF LONG ISLAND CORPORATION AND SUBSIDIARY
MARCH 31, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
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 (collectively referred to as the "Corporation").
The consolidated financial information included herein as of and for
the periods ended March 31, 1997 and 1996 is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods. The December 31, 1996 consolidated
balance sheet was derived from the Company's December 31, 1996 audited
consolidated financial statements.
2. DEPOSIT ACCOUNTS
Beginning in the first quarter of 1997, the Bank established a
noninterest-bearing sweep account for each commercial checking account. Although
the sweep accounts are savings accounts, they are included in checking deposits
in the accompanying consolidated balance sheet. The sweep accounts were
established to reduce the reserves the Bank is required to maintain against
deposits and thereby increase funds available for investment.
3. SUBSEQUENT EVENT
At the annual meeting of stockholders held April 15, 1997, the
Corporation's stockholders approved an amendment of the certificate of
incorporation to increase the number of authorized shares of common stock from 5
million shares to 20 million shares. The primary purpose of the increase was to
insure that sufficient shares are available for the distribution to stockholders
in the event that the Corporation's Board of Directors authorizes future stock
dividends or stock splits.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following is management's discussion and analysis of certain
significant factors that have affected the Corporation's financial condition and
operating results during the periods included in the accompanying consolidated
financial statements, and should be read in conjunction with such financial
statements. The Corporation's financial condition and operating results
principally reflect those of its wholly-owned subsidiary, The First National
Bank of Long Island (the "Bank"). The Corporation's primary service area is
Nassau and Suffolk Counties, Long Island.
OVERVIEW
Net income for the first quarter of 1997 was $1,679,000, or $.79 per
share, as compared to $1,659,000, or $.78 per share, for the same quarter in
1996. Return on average total assets (ROA) and average stockholders' equity
(ROE) were 1.55% and 12.53%, respectively, for the first quarter of 1997 as
compared to 1.57% and 13.39%, respectively, for the same quarter in 1996. When
comparing the first quarter of 1997 to the same quarter in 1996, net interest
income after the provision for loan losses increased by $135,000 and noninterest
income increased by $78,000. The positive effect of these changes was
substantially offset by increases in noninterest expense and income tax expense
of $170,000 and $23,000, respectively.
Total assets and deposits increased modestly during the first quarter
of 1997 amounting to $442,681,000 and $385,718,000, respectively, at March 31,
1997 as compared to $440,902,000 and $384,361,000, respectively, at December 31,
1996. During the same time period, capital before unrealized gains or losses on
available-for-sale securities grew by $1,493,000, or 11.1% on an annualized
basis. The Corporation's capital ratios continue to be substantially in excess
of current regulatory requirements and liquidity continues to be strong.
NET INTEREST INCOME
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.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31,
------------------------------------------------------------------------
1997 1996
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Average Average Average Average
Balance Interest Rate Balance Interest Rate
----------- ---------- ------------- ----------- ---------- ------------
(DOLLARS IN THOUSANDS)
ASSETS
Federal funds sold $ 34,547 $ 449 5.27% $ 28,812 $ 383 5.35%
Investment Securities
Taxable 185,312 2,896 6.34 180,706 2,856 6.36
Nontaxable (1) 42,876 745 6.95 41,286 718 6.96
Loans (1)(2) 152,524 3,381 8.99 146,667 3,325 9.12
----------- ---------- ------------- ----------- ---------- ------------
Total interest-earning assets 415,259 7,471 7.29 397,471 7,282 7.36
---------- ------------- ---------- ------------
Allowance for loan losses (3,601) (3,603)
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Net interest-earning assets 411,658 393,868
Cash and due from banks 17,739 20,067
Premises and equipment, net 5,030 5,105
Other assets 6,145 6,262
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$ 440,572 $ 425,302
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Savings and money market deposits $ 222,419 1,692 3.09 $ 218,083 1,668 3.08
Time deposits 39,309 454 4.68 36,238 428 4.75
----------- ---------- ------------- ----------- ---------- ------------
Total interest-bearing deposits 261,728 2,146 3.33 254,321 2,096 3.31
----------- ---------- ------------- ----------- ---------- ------------
Checking deposits (3) 122,287 118,898
Other liabilities 2,212 2,234
----------- -----------
386,227 375,453
Stockholders' equity 54,345 49,849
----------- -----------
$ 440,572 $ 425,302
=========== ===========
Net interest income (1) $ 5,325 $ 5,186
========== ==========
Net interest spread (1) 3.96% 4.05%
============= ============
Net yield on interest-earning assets (1) 5.20% 5.25%
============= ============
<FN>
(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 $1.52 in the first quarters of 1997 and 1996 based on a
Federal income tax rate of 34%.
(2)For the purpose of these computations, nonaccruing loans are included in the
daily average loan amounts outstanding.
(3)Includes official check and treasury tax and loan balances.
</FN>
</TABLE>
<PAGE>
Net interest income on a tax-equivalent basis increased by $139,000, or
2.7%, from $5,186,000 for the three months ended March 31, 1996 to $5,325,000
for the comparable period in 1997. The increase is primarily attributable to an
increase in the average volume of interest-earning assets. The positive effect
of this factor was partially offset by an increase in the average volume of
interest-bearing deposit accounts and a 13 basis point decrease in the average
rate earned on the Bank's loan portfolio. The decrease in loan yield coupled
with a 2 basis point increase in the cost of total deposits are the primary
reasons why net interest spread and yield decreased from 4.05% and 5.25%,
respectively, for the first quarter of 1996 to 3.96% and 5.20%, respectively,
for the same quarter in 1997.
INCREASE IN AVERAGE VOLUME OF INTEREST-EARNING ASSETS AND
INTEREST-BEARING DEPOSITS. Total average interest-earning assets increased by
$17,788,000, or 4.5%, from $397,471,000 for the three months ended March 31,
1996 to $415,259,000 for the comparable period in 1997. During the same time
period, total average interest-bearing deposits increased by $7,407,000, or
2.9%, from $254,321,000 to $261,728,000. The increase in interest-earning assets
caused interest earned to increase by approximately $307,000 while the increase
in interest-bearing liabilities caused interest paid to increase by
approximately $69,000, the combined effect of which resulted in an increase in
net interest income of $238,000.
While the increase in interest-earning assets was partially funded by
the increase in interest-bearing deposits, the remainder was funded by increases
in average checking deposits and capital of $3,389,000 and $4,496,000,
respectively, and a reduction in average cash and due from banks of $2,328,000.
The increase in both interest-bearing deposits and checking deposits is
believed to be largely attributable to the Bank's attention to customer service
as well as calling programs and competitive pricing. It should be noted that
although the amount of solicited commercial checking balances has been
reasonably good for the past twelve months, the overall growth in checking
balances has been relatively modest when comparing the first quarters of 1996
and 1997. The increase in capital is attributable to the retention of net income
and, to a much lesser extent, the exercise of employee stock options. The effect
of these items was partially offset by the payment of semi-annual cash dividends
and repurchase and retirement of common stock under the Corporation's stock
repurchase program. As more fully described in Note 2 to the consolidated
financial statements, the decrease in average cash and due from banks is
partially attributable to a reduction in reserve balances maintained with the
Federal Reserve Bank caused by the implementation of commercial checking and
Advantage Checking sweep accounts.
When comparing the first quarter of 1997 to the same quarter in 1996,
the percentage of average interest-earning assets represented by federal funds
sold increased from 7.2% to 8.3% while the percentage represented by taxable
investment securities decreased from 45.5% to 44.6%. The percentage of
interest-earning assets represented by nontaxable investment securities and
loans remained relatively consistent representing 10.4% and 36.9%, respectively,
for the first quarter of 1996 versus 10.3% and 36.7%, respectively, for the same
quarter in 1997. The change in the percentage of average interest-earning assets
represented by federal funds sold and taxable investment securities did not have
a significant impact on net interest income.
DECREASE IN YIELD ON LOAN PORTFOLIO. The yield on the Bank's loan
portfolio decreased by 13 basis points when comparing the first quarter of 1997
to the same quarter in 1996. This decrease, which is largely attributable to a
25 basis point decrease in the Bank's prime lending rate in February 1996,
caused interest earned on the loan portfolio to decrease by approximately
$47,000.
<PAGE>
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses was $3,603,000 at March 31, 1997 as
compared to $3,600,000 at December 31, 1996, representing 2.3% and 2.4% of total
loans, respectively, and 436.2% and 546.3% of nonaccruing loans, respectively.
The change in the allowance during the first quarter of 1997 is due to
recoveries of $8,000 and chargeoffs of $5,000.
The allowance for loan losses is an amount that management currently
believes will be adequate to absorb possible future losses on existing loans.
The provision charged to operations, if any, and the related balance in the
allowance for loan losses is based upon periodic evaluations of the loan
portfolio by management. These evaluations consider a variety of factors
including, but not limited to, historical losses; a borrower's ability to repay;
the value of any related collateral; levels of and trends in delinquencies and
nonaccruing loans; trends in volume and terms of loans; changes in lending
policies and procedures; experience, ability and depth of lending staff;
national and local economic conditions; concentrations of credit; and
environmental risks.
No provision for loan losses was deemed necessary for the first quarter
of 1997. The amount of future chargeoffs and provisions for loans losses will be
affected by, among other things, economic conditions on Long Island. Such
conditions affect the financial strength of the Bank's borrowers and the value
of real estate collateral securing the Bank's mortgage loans. Loans secured by
real estate represent 78.1% of total loans outstanding at March 31, 1997.
<PAGE>
ASSET QUALITY
The Company has identified certain assets as risk elements. These
assets include nonaccruing loans, foreclosed real estate, loans that are
contractually past due 90 days or more as to principal or interest payments and
still accruing and troubled debt restructurings. These assets present more than
the normal risk that the Company will be unable to eventually collect or realize
their full carrying value. As shown in the table that follows, the total level
of risk elements has not changed materially since December 31, 1996.
<TABLE>
<S> <C> <C>
March 31, December 31,
1997 1996
---- ------
(DOLLARS IN THOUSANDS)
Nonaccruing loans ................................. $826 $ 659
Foreclosed real estate ............................ -- --
---- ------
Total nonperforming assets ........................ 826 659
Troubled debt restructurings ...................... 843 876
Loans past due 90 days or more as to
principal or interest payments and still accruing (1) 225 31
---- ------
Total risk elements ............................... $ 1,894 $ 1,566
==== ======
Nonaccruing loans as a percentage of total loans .. 0.54% 0.43%
==== ======
Nonperforming assets as a percentage of total loans
and foreclosed real estate ........................ 0.54% 0.43%
==== ======
Risk elements as a percentage of total loans and
foreclosed real estate ............................ 1.23% 1.03%
==== ======
<FN>
(1) Includes a $199,000 loan which was restructured in April 1997.
</FN>
</TABLE>
NONINTEREST INCOME, NONINTEREST EXPENSE, AND INCOME TAXES
Noninterest income consists primarily of service charges on deposit
accounts and Trust Department income. Noninterest income increased by $78,000,
or 8.1%, from $962,000 for the first quarter of 1996 to $1,040,000 for the same
quarter in 1997. The increase is primarily attributable to an increase in the
volume of overdraft checks and resulting return check charges and an increase in
fees earned on estate accounts. Service charge pricing adjustments, if any,
during 1997 will be very limited.
<PAGE>
Noninterest expense is comprised of salaries, employee benefits,
occupancy and equipment expense and other operating expenses incurred in
supporting the various business activities of the Corporation. Noninterest
expense increased by $170,000, or 5.0%, from $3,399,000 for the first quarter of
1996 to $3,569,000 for the same quarter in 1997. The increase is primarily
attributable to increases in salaries and stock appreciation rights expense of
$87,000 and $43,000, respectively. The increase in salaries is primarily
attributable to normal annual salary increases while the increase in stock
appreciation rights expense is attributable to the fact that the Corporation's
stock appreciated more during the first quarter of 1997 than the same quarter in
1996.
Income tax expense as a percentage of book income was 33.7% and 33.4%
for the first quarters of 1997 and 1996, respectively. These percentages vary
from the statutory Federal income tax rate of 34% primarily because of state and
local income taxes and tax-exempt interest on municipal securities.
CAPITAL
The Corporation's capital management policy is designed to build and
maintain capital levels that exceed regulatory standards. Under current
regulatory capital standards, banks are classified as well capitalized,
adequately capitalized or undercapitalized. Under such standards, a well
capitalized bank is one that has a total risk-based capital ratio equal to or
greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%,
and a Tier 1 leverage capital ratio equal to or greater than 5%. The
Corporation's total risk-based capital, Tier 1 risk-based capital and Tier 1
leverage capital ratios of 33.9%, 32.6% and 12.6%, respectively, at March 31,
1997 substantially exceed the requirements for a well capitalized bank.
Total stockholders' equity increased by $585,000, or 4.3% on an
annualized basis, from $54,169,000 at December 31, 1996 to $54,754,000 at March
31, 1997. The increase in stockholders' equity is attributable to the combined
effect of net income of $1,679,000, unrealized losses on available-for-sale
securities of $908,000, proceeds from the exercise of stock options of $2,000,
and repurchases of common stock amounting to $188,000.
As more fully described in Note 3 to the Consolidated Financial
Statements, on April 15, 1997 the Corporation's stockholders approved an
increase in the number of authorized shares of common stock from 5 million to 20
million shares.
CASH FLOWS AND LIQUIDITY
CASH FLOWS. During the three months ended March 31, 1997, cash and cash
equivalents decreased by $8,632,000. This decrease, along with $1,809,000 in
cash provided by operations and $1,357,000 in cash provided by deposit growth,
was used to fund growth in the investment securities portfolio of $9,241,000,
growth in the loan portfolio of $1,584,000, cash dividends of $710,000,
repurchases of common stock under the Corporation's stock repurchase program
amounting to $188,000 and capital expenditures of $77,000.
<PAGE>
As reflected in the accompanying consolidated balance sheet, the
$1,357,000 growth in deposits is comprised of an increase in total
interest-bearing deposits of $2,999,000 and a decrease in checking deposits of
$1,642,000. The decrease in checking deposits is believed to be somewhat
attributable to a seasonal trend.
The $1,584,000 increase in total loans during the first quarter of 1997
is primarily attributable to an increase in commercial and industrial loans of
$1,888,000 as offset by decreases in loans secured by real estate and consumer
loans of $269,000 and $782,000, respectively. The decrease in loans secured by
real estate is primarily attributable to a decrease in commercial mortgage loans
of $467,000. Loans secured by real estate have historically accounted for a
major portion of the loan portfolio and represent 78.1% of the total portfolio
at March 31, 1997. The decrease in consumer loans is primarily attributable to
the bulk sale of student loans that had moved from in-school to repayment
status. Management currently expects to make similar sales in the future as
additional student loans enter repayment status.
Accrued expenses and other liabilities decreased from $2,372,000 at
December 31, 1996 to $1,402,000 at March 31, 1997. The decrease is primarily
attributable to the payment of cash dividends and incentive compensation and
contributions to the Bank's profit sharing plan, all of which were accrued at
December 31, 1996.
As noted above, capital expenditures for the first quarter of 1997 were
$77,000. Budgeted expenditures for the full year are $1,100,000 and management
currently expects that actual expenditures will be within the budgeted amount.
Capital expenditures are intended to cover the cost of establishing new
branches, improving existing facilities, and replacing or upgrading furniture
and equipment. Management is actively searching for favorable locations at which
to establish new branches, particularly of the commercial banking unit
configuration.
LIQUIDITY. The Corporation's primary sources of liquidity are its
overnight position in federal funds sold, its short-term investment securities
portfolio which consists of securities purchased to mature within approximately
one year, maturities and monthly payments on the balance of the investment
securities portfolio, and investment securities designated as
available-for-sale. At March 31, 1997, the Corporation had $31,500,000 in
federal funds sales, a short-term securities portfolio of $20,136,000, and
available-for-sale securities of $80,113,000. The Corporation's liquidity is
enhanced by its stable deposit base which primarily consists of checking,
savings and money market accounts. Such accounts comprised 89.8% of total
deposits at March 31, 1997, while time deposits of $100,000 and over and other
time deposits comprised only 4.2% and 7.0%, respectively. The Bank attracts all
of its deposits through its banking offices primarily from the communities in
which those banking offices are located and does not rely on brokered deposits.
In addition, the Bank has not historically relied on purchased or borrowed funds
as sources of liquidity.
<PAGE>
INTEREST RATE SENSITIVITY
The Corporation's net interest income is affected by changes in market
interest rates. The Corporation's sensitivity to interest rate fluctuations has
not changed materially since December 31, 1996.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS No. 128").
SFAS No. 128 specifies the computation, presentation, and disclosure
requirements for Earnings per Share ("EPS") by all entities with publicly held
common stock or potential stock. SFAS 128 supersedes Accounting Principles Board
Opinion No. 15 "Earnings per Share" ("APB 15"), and supersedes or amends related
pronouncements.
SFAS No. 128 replaces the presentation of primary and fully-diluted EPS
required by APB 15 with basic and diluted EPS. Unlike primary EPS, basic EPS
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS, computed similarly to fully-diluted EPS, reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Entities with simple capital structures, that is, with only common stock
outstanding, shall present basic EPS on the face of the income statement. All
other entities shall present basic and diluted EPS on the face of the income
statement with equal prominence. In addition, a reconciliation of the numerators
and denominators of the basic and diluted EPS computations is required.
SFAS No. 128 is effective for financial statements for interim and annual
periods ending after December 15, 1997. Early application is not permitted and
SFAS No. 128 requires restatement of all prior-period EPS data presented. The
adoption of SFAS No. 128 will not have a material impact on the Corporation.
In March 1997, the Financial Accounting Standards Board also issued
Statement of Financial Accounting Standards No. 129 "Disclosure of Information
about Capital Structure" ("SFAS No. 129"). SFAS No. 129 is effective for
financial statements for periods ending after December 15, 1997. SFAS No. 129
does not change disclosure requirements for the Corporation.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. NONE
ITEMS 2. NONE
ITEMS 3. NONE
ITEM 4. NONE
ITEM 5. NONE
ITEM 6. (a) EXHIBITS: Exhibit 27 - Financial Data Schedule
is submitted herewith.
(b) REPORTS ON FORM 8-K - NONE
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS 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)
DATE: MAY 14, 1997 /S/ J. WILLIAM JOHNSON
-------------- ------------------------------
J. WILLIAM JOHNSON, PRESIDENT
(principal executive officer)
/S/ MARK D. CURTIS
------------------------------
MARK D. CURTIS
VICE PRESIDENT AND TREASURER
(principal financial and accounting officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations contained in the FORM 10-Q and is
qualified in its entirety by reference to such financial statments.
</LEGEND>
<CIK> 0000740663
<NAME> THE FIRST OF LONG ISLAND CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 17,298,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 31,500,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 80,113,000
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<ALLOWANCE> (3,603,000)
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0
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