SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
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 0-12220
THE FIRST OF LONG ISLAND CORPORATION
(Exact Name Of Registrant As Specified In Its Charter)
New York 11-2672906
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10 Glen Head Road, Glen Head, NY 11545
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 671-4900
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value per share
(Title of class)
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 _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
[Cover page 1 of 2 pages]
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The aggregate market value of the Corporation's voting stock (based on the
average bid and ask price of the stock on February 29, 2000) held by
non-affiliates was $78,957,399 (excludes $12,093,111 representing the market
value of common stock beneficially owned by directors and executive officers of
the Registrant).
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at February 29, 2000
Common Stock, $.10 par value 2,940,077
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's Annual Report to shareholders for the fiscal
year ended December 31, 1999 are incorporated by reference into Parts II and IV.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held April 18, 2000 are incorporated by reference into Part
III.
[Cover page 2 of 2 pages
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PART I
ITEM 1. BUSINESS
General
The First of Long Island Corporation (the "Registrant" or the
"Corporation"), 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 "Bank").
The Bank was organized in 1927 as a national banking association under the
laws of the United States of America and was known as the First National Bank of
Glen Head through June 30, 1978. The Bank has a Trust and Investment Services
Department and conducts insurance business through The First of Long Island
Agency, Inc. (the "Agency"), a wholly-owned subsidiary.
The Bank serves the financial needs of privately owned businesses,
professionals, consumers, public bodies, and other organizations primarily in
Nassau and Suffolk Counties, Long Island. The principal business of the Bank has
historically consisted of attracting business and consumer checking, money
market and savings deposits and investing those funds in investment securities,
commercial and residential mortgage loans, commercial loans, and home equity
loans and lines. The Corporation's loan portfolio is primarily comprised of
loans to borrowers in Nassau and Suffolk Counties and real estate loans are
principally secured by properties located in these Counties.
The Bank's investment securities portfolio is comprised of U.S. Treasury
securities, U.S. government agency securities (principally modified
pass-through, mortgage-backed securities of Federal agencies), state and
municipal securities, and collateralized mortgage obligations. The Bank also
regularly sells federal funds on an overnight basis to a number of banking
institutions.
The Bank offers a variety of deposit products having a wide range of
interest rates and terms. The principal products include checking accounts,
money market accounts, savings accounts, and time deposit accounts.
In addition to its loan and deposit products, the Bank offers other
services to its customers including the following:
o ATM Banking
o Collection Services
o Counter Checks and Certified Checks
o Drive-Through Banking
o Fixed Rate Annuities
o Foreign Drafts
o Gift Checks and Personal Money Orders
o Merchant Credit Card Depository Services
o Mutual Funds
o Night Depository Services
o Payroll Services
o PC Business Banking
o Safe Deposit Boxes
o Securities Transactions
o Signature Guarantee Services
o Telephone Banking
o Travelers Checks
o Trust and Investment Management Services
o U.S. Savings Bonds
o Wire Transfers and Foreign Cables
o Withholding Tax Depository Services
The Trust and Investment Services Department provides investment
management, pension trust, personal trust, estate, and custody services and
engages in the sale of mutual funds.
The Agency is a licensed insurance agency which was organized in 1994 under
the laws of the State of New York and is primarily engaged in the sale of fixed
rate annuity products.
During 1999, the Bank opened one new commercial banking office in Nassau
County, Long Island located in the town of Garden City. In the coming years, the
Bank will continue to search for favorable locations at which to establish new
branches, with continued emphasis on the commercial banking unit type.
In addition to the one new branch location discussed above, the Bank has a
main office located in Huntington, New York, eight other full service offices
(Glen Head, Greenvale, Locust Valley, Northport, Old Brookville, Rockville
Centre, Roslyn Heights, Woodbury) and eight other commercial banking offices
(Bohemia, Great Neck, Hauppauge, Hicksville, Lake Success, Mineola, New Hyde
Park, Valley Stream), all of which are in Nassau and Suffolk Counties.
The Bank's revenues are derived principally from interest on loans,
interest on investment securities, service charges and fees on deposit accounts,
and income from trust and investment management services.
The Bank did not commence, abandon, or significantly change any of its
lines of business during 1999.
The Bank encounters substantial competition in its banking business from
numerous other banking corporations which have offices located in the
communities served by the Bank. Principal competitors are branches of large
banks such as Citibank, Chase Manhattan Bank, Bank of New York, European
American Bank, and Fleet Bank, N.A.
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Lending Activities
General. The Bank's loan portfolio is primarily comprised of loans to small
and medium-sized privately owned businesses, professionals, and consumers in
Nassau and Suffolk Counties. The Bank offers a full range of lending services
including construction loans, commercial and residential mortgage loans, home
equity loans and lines, commercial loans, consumer loans, and commercial and
standby letters of credit. Commercial loans include, among other things,
short-term business loans; term and installment loans; revolving credit term
loans; and loans secured by marketable securities, the cash surrender value of
life insurance policies, or deposit accounts. Consumer loans include, among
other things, student loans guaranteed by the Federal government, auto loans,
unsecured home improvement loans, unsecured personal loans, overdraft checking
lines, and VISA(R) credit cards.
The Bank makes both fixed and variable rate loans. Variable rate loans are
tied to and reprice with changes in the Bank's prime interest rate, The Wall
Street Journal prime interest rate, or U.S. Treasury rates. Commercial mortgage
loans are made with terms usually not in excess of fifteen years, while the
maximum term on residential mortgage loans is thirty years. Commercial and
consumer loans generally mature within five years. The Bank's current practice
is to usually lend no more than 75% of appraised value on residential mortgage
loans, 65% on home equity loans and 70% on commercial mortgage loans.
The risks inherent in the Bank's loan portfolio primarily stem from the
following factors relating to borrower size, geographic concentration, and
environmental contamination: first, loans to small and medium-sized businesses
sometimes involve a higher degree of risk than those to larger companies because
such businesses may have shorter operating histories and higher debt-to-equity
ratios than larger companies and may lack sophistication in internal record
keeping and financial and operational controls; second, the ability of many of
the Bank's borrowers to repay their loans is dependent on the strength of the
Long Island economy; and finally, if it becomes necessary to foreclose a loan
secured by real estate, the ability of the Bank to fully realize its investment
is dependent on the strength of the Long Island real estate market and the
absence of environmental contamination. The Bank does not have any significant
industry concentrations or foreign loans.
Except residential mortgages and home equity products, loans from $300,000
to $500,000 require the approval of the Management Loan Committee (home equity
loans and lines have more stringent approval requirements). All loans in excess
of $500,000 require the approval of the Management Loan Committee and two
members of the Board Loan Committee, one of whom must be a non-management
director.
The Bank's lending is subject to written underwriting standards and loan
origination procedures, as approved by the Bank's Board of Directors and
contained in the Bank's loan policies. The Bank's loan policies allow for
exceptions and set forth the specific approvals required. Decisions on loan
applications are based on, among other things, 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, if any. All real estate
appraisals must meet the requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989.
Portfolio Composition and Selected Loan Maturity Information. The
composition of the Bank's loan portfolio and maturity and rate information for
the Bank's commercial and industrial loans can be found in "Note C - Loans" to
the Corporation's consolidated financial statements which have been incorporated
by reference into "Item 8. Financial Statements and Supplemental Data" of this
Form 10-K.
Commercial Loans. The Bank makes commercial loans on a demand basis,
short-term discounted basis, or installment 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. Term and installment loans
are usually due and payable within five years. Generally, it is the policy of
the Bank to obtain personal guarantees of principal owners on loans made to
privately-owned businesses.
Real Estate Mortgage and Home Equity Loans and Lines. The Bank makes
residential and commercial mortgage loans and home equity loans and establishes
home equity lines of credit. Applicants for residential mortgage loans and home
equity loans and lines will be considered for approval provided they have
satisfactory credit history and the Bank believes that there is sufficient
monthly income to service both the loan or line applied for and existing debt.
Applicants for commercial mortgage loans will be considered for approval
provided they, as well as any guarantors, have satisfactory credit history and
can demonstrate, through financial statements and otherwise, the ability to
repay. If the source of repayment is rental income, such income must be more
than sufficient to amortize the debt.
In processing requests for commercial mortgage loans, the Bank almost
always requires an environmental assessment to identify the possibility of
environmental contamination on or near the subject property. The extent of the
assessment procedures varies from property to property and is based on factors
such as whether or not the subject property is an industrial building, in close
proximity to a known environmentally hazardous area, or a suspected
environmental risk based on current or past use.
Construction Loans. The Bank makes loans to finance the construction of
both residential and commercial properties. The maturity of such loans generally
does exceed one year and advances are made as the construction progresses. The
advances require the submission of bills by the contractor, verification by a
Bank-approved inspector that the work has been performed, and obtaining title
insurance updates to insure that no intervening liens have been placed.
Consumer Loans and Lines. The Bank makes student loans, auto loans, home
improvement loans, and other consumer loans, establishes revolving overdraft
lines of credit, and issues VISA(R) credit cards. Consumer loans and lines may
be secured or unsecured.
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With the exception of student loans, consumer loans are generally made on an
installment basis over terms not exceeding five years. In reviewing loans and
lines for approval, the Bank considers, among other things, ability to repay,
stability of employment and residence, and past credit history.
Past Due, Nonaccrual, and Restructured Loans. Selected information about
the Bank's past due, nonaccrual, and restructured loans can be found in "Note C
- - Loans" to the Corporation's consolidated financial statements which have been
incorporated by reference into "Item 8. Financial Statements and Supplemental
Data" of this Form 10-K.
The accrual of interest on loans is generally discontinued when principal
or interest payments become past due 90 days or more. As of December 31, 1999,
the Bank did not have any impaired loans or material potential problem loans
except for the loans disclosed in "Note C" to its consolidated financial
statements.
Economic conditions in the Bank's market area were excellent during 1999.
Future levels of past due, nonperforming, and restructured loans will be
affected by the strength of the local economy.
Allowance for Loan Losses. The allowance for loan losses is an amount that
management currently believes will be adequate to absorb estimated inherent
losses in the Bank's loan portfolio. Changes in the Bank's allowance for loan
losses for each of the five years in the period ended December 31, 1999 and the
allocation of the Bank's allowance for loan losses by loan type at the end of
each of these years can be found in "Note C - Loans" to the Corporation's
consolidated financial statements which have been incorporated by reference into
"Item 8. Financial Statements and Supplemental Data" of this Form 10-K.
The allowance for loan losses is established through provisions for loan
losses charged against income. Amounts deemed to be uncollectible are charged
against the allowance for loan losses, and subsequent recoveries, if any, are
credited to the allowance. The allocated component of the allowance for loan
losses is comprised of (1) impairment losses identified as a result of
selectively reviewing individual credits plus (2) losses on loans that have not
been specifically reviewed but rather determined on a pooled basis taking into
account a variety of factors including historical losses; 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. The unallocated or general component of the allowance
is designed to cover losses in the portfolio that have not otherwise been
identified through the review of specific loans or pools of loans.
The amount of future chargeoffs and provisions for loan 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. In addition,
future provisions and chargeoffs could be affected by environmental impairment
of properties securing the Bank's mortgage loans. Loans secured by real estate
represent approximately 81% of total loans outstanding at December 31, 1999.
Since 1987, environmental audits have been instituted on commercial properties
and the scope of these audits has been increased over the succeeding years.
Under the Bank's current policy, an environmental audit is required on
practically all commercial-type properties that are considered for a mortgage
loan. At the present time, the Bank is not aware of any existing loans in the
portfolio where there is environmental pollution originating on the mortgaged
properties that would materially affect the value of the portfolio.
Investment Activities
General. The investment policy of the Bank, as approved by the Board of
Directors and supervised by both the Board and the Investment Committee, is
intended to promote investment practices which are both safe and sound and in
full compliance with the Federal Financial Institutions Examination Council
(FFIEC) Supervisory Policy Statement on Investment Securities and End-User
Derivative Activities and all other applicable regulations. Investment authority
will be granted and amended as is necessary by the Board of Directors.
The Bank's investment decisions seek to maximize income while keeping both
credit and market risk at acceptable levels, provide for the Bank's liquidity
needs, assist in managing interest rate sensitivity, and provide securities that
can be pledged, as needed, to secure deposits or borrowing lines.
The Bank's investment policy limits individual maturities to fifteen years
and average lives, in the case of collateralized mortgage obligations (CMOs) and
other mortgage-backed securities, to 10 years. At the time of purchase, bonds of
states and political subdivisions must generally be rated A or better, notes of
states and political subdivisions must generally be rated MIG-2 (or equivalent)
or better, and commercial paper must be rated A-1 or P-1. In addition,
management periodically reviews issuer credit ratings for all securities in the
Bank's portfolio other than those issued by the U.S. government or its agencies.
Any deterioration in the creditworthiness of an issuer will be analyzed and
appropriate action taken when deemed necessary. 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 such activity.
At December 31, 1999, the Bank had net unrealized losses of $2,740,000 in
its held-to-maturity portfolio, consisting of gross unrealized losses of
$3,068,000 and gross unrealized gains of $328,000. The unrealized gains and
losses were principally caused by decreases and increases, respectively, in
interest rates since the securities were purchased. The Bank has the intent and
ability to hold these securities to maturity and therefore expects that neither
the unrealized gains nor the unrealized losses will ever be realized.
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However, the effect of holding securities with unrealized gains or losses is
that more or less interest will be earned in future periods than could be earned
on securities purchased currently.
Portfolio Composition. The composition of the Bank's investment portfolio
can be found in "Note B - Investment Securities" to the Corporation's
consolidated financial statements which have been incorporated by reference into
"Item 8. Financial Statements and Supplemental Data" of this Form 10-K.
Maturity Information. The maturities and weighted average yields of the
Bank's investment securities at December 31, 1999 can be found in "Note B -
Investment Securities" to the Corporation's consolidated financial statements
which have been incorporated by reference into "Item 8. Financial Statements and
Supplemental Data" of this Form 10-K.
The Bank received dividends on its Federal Reserve Bank stock of $6,905 in
1999 representing a yield of 6.00%.
Sources of Funds
General. The Bank's primary sources of funds are deposits, cash flows from
operations, collection of principal and interest on loans, maturity and
redemption of investment securities, and interest earned on investment
securities and federal funds sold.
The Bank offers checking and interest-bearing deposit products. In addition
to business checking, the Bank has a variety of personal checking products
including "First Class", regular, budget, senior citizen and special checking.
Among other things, the personal products differ in minimum balance
requirements, monthly maintenance fees, and per check charges. The
interest-bearing deposit products, which have a wide range of interest rates and
terms, consist of checking, including interest on lawyer accounts (IOLA); three
money-market-type products, including a traditional money market savings
account, "Select Savings" - a statement savings account that earns a money
market rate, and "Diamond Savings" - a passbook savings account that earns a
money market rate; statement and passbook savings; escrow service; rent
security; savings certificates (3 month, 6 month and 1 to 6 year terms); large
and jumbo certificates; holiday club accounts; and individual retirement
accounts (savings certificates with terms of 1 to 6 years).
Total certificates of deposits, the majority of which mature within one
year, were $38,550,000, or 7.7% of total deposits, at December 31, 1999.
Certificates of deposit in amounts of $100,000 or more were $14,668,000 at
December 31, 1999, or 2.9% of total deposits.
The Bank relies primarily on customer service, calling programs,
competitive pricing, and advertising to attract and retain deposits. Currently,
the Bank solicits deposits only from its local market area and does not have any
deposits which qualify as brokered deposits under applicable Federal
regulations. The flow of deposits is influenced by general economic conditions,
changes in interest rates and competition.
Classification of Average Deposits. The classification of the Bank's
average deposits can be found in "Note E - Deposits" to the Corporation's
consolidated financial statements which have been incorporated by reference into
"Item 8. Financial Statements and Supplemental Data" of this Form 10-K.
Remaining Maturities of Time Deposits. The remaining maturities of the
Bank's time deposits in amounts of $100,000 or more at December 31, 1999 can be
found in "Note E - Deposits" to the Corporation's consolidated financial
statements which have been incorporated by reference into "Item 8. Financial
Statements and Supplemental Data" of this Form 10-K.
Competition
The heavy concentration of financial institutions in Nassau and Suffolk
Counties has led to keen competition for both loans and deposits. Competition in
originating commercial loans comes primarily from commercial institutions
located in the Bank's market area. The Bank competes for commercial loans on the
basis of the quality of service it provides to borrowers, the interest rates and
loan fees it charges, and the types of loans it offers.
The Bank attracts all of its deposits through its banking offices primarily
from the communities in which those banking offices are located. Competition for
deposits is principally from other commercial banks, savings banks, brokerage
firms and credit unions located in these communities. The Bank competes for
these deposits by offering a variety of account alternatives at competitive
rates, a competitive service charge schedule, a high level of customer service
and convenient branch locations.
Employees
As of December 31, 1999, the Bank had 164 full-time equivalent employees
and considers employee relations to be satisfactory. Employees of the Bank are
not represented by a collective bargaining unit.
Regulation
The Corporation is subject to the regulation and supervision of the Federal
Reserve Board and the Securities and Exchange Commission. The primary banking
agency responsible for regulating the Bank is the Comptroller of the Currency.
The Bank is also subject to regulation and supervision by the Federal Reserve
Board and the Federal Deposit Insurance Corporation.
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ITEM 2. PROPERTIES
The Corporation neither owns nor leases any real estate. Office facilities
of the Corporation are located at 10 Glen Head Road, Glen Head, NY in a building
owned by the Bank.
The Bank's designated main office is located at 253 New York Avenue,
Huntington, New York. Including the main office, the Bank owns a total of ten
buildings in fee and occupies ten other facilities under lease arrangements. All
of the facilities owned or leased by the Bank are in Nassau and Suffolk
Counties, New York.
The Corporation believes that the physical facilities of the Bank are
suitable and adequate at present and are being fully utilized.
ITEM 3. LEGAL PROCEEDINGS
Other than ordinary routine litigation incidental to the business, it is
believed that there are no material legal proceedings, either individually or in
the aggregate, to which the Corporation or the Bank is a party or to which any
of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None were submitted to a vote of security holders during the fourth quarter
of 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Corporation's common stock trades on the Nasdaq SmallCap Market tier of
the Nasdaq Stock Market under the symbol "FLIC". The table appearing on page (i)
of the Corporation's Annual Report to Shareholders for the fiscal year ended
December 31, 1999 showing the high and low sales prices, by quarter, for the
years ended December 31, 1999 and 1998 is incorporated herein by reference.
On February 29, 2000, there were 2,940,077 shares of the Corporation's
common stock outstanding with 761 holders of record. The holders of record
include banks and brokers who act as nominees, each of whom may represent more
than one stockholder.
During 1999 and 1998, the Corporation declared semi-annual cash dividends
aggregating $.64 and $.57 per share, respectively.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" appearing on page (i) of the Corporation's Annual
Report to Shareholders for the fiscal year ended December 31, 1999 is
incorporated herein by reference.
The Corporation's dividend payout ratio was 19.81%, 21.92% and 21.03% for
1999, 1998 and 1997, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on pages 4 through 11 of the Corporation's Annual Report
to Shareholders for the fiscal year ended December 31, 1999 is incorporated
herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk information included in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and appearing on
pages 9 through 11 of the Corporation's Annual Report to Shareholders for the
fiscal year ended December 31, 1999 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and report of independent public
accountants appearing on pages 14 through 37 of Corporation's Annual Report to
Shareholders for the fiscal year ended December 31, 1999 are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
"ELECTION OF DIRECTORS" appearing on pages 3 through 5 and "MANAGEMENT"
appearing on pages 7 and 8 of Registrant's Proxy Statement for its Annual
Meeting of Stockholders to be held April 18, 2000 are incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
"COMPENSATION OF DIRECTORS", "BOARD COMPENSATION COMMITTEE REPORT",
"COMPENSATION OF EXECUTIVE OFFICERS", "SUMMARY COMPENSATION TABLE",
"COMPENSATION PURSUANT TO PLANS", and
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"PERFORMANCE GRAPH" appearing on pages 5 and 8 through 16 of the Registrant's
Proxy Statement for its Annual Meeting of Stockholders to be held April 18, 2000
are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS" appearing on Pages 1 through
3 of Registrant's Proxy Statement for its Annual Meeting of Stockholders to be
held April 18, 2000 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"TRANSACTIONS WITH MANAGEMENT AND OTHERS" appearing on pages 16 and 17 of
Registrant's Proxy Statement for its Annual Meeting of Stockholders to be held
April 18, 2000 is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Consolidated Financial Statements
The following consolidated financial statements of the Corporation and its
subsidiary, and Report of Independent Public Accountants thereon, as required by
Item 8 of this report are incorporated herein by reference.
o Consolidated Balance Sheets - December 31, 1999 and 1998
o Consolidated Statements of Income - Years ended December 31, 1999, 1998 and
1997
o Consolidated Statement of Changes in Stockholders' Equity - Years ended
December 31, 1999, 1998 and 1997
o Consolidated Statements of Cash Flows - Years ended December 31, 1999, 1998
and 1997
o Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
None Applicable.
(a) 3. Listing of Exhibits
The following exhibits are submitted herewith.
<TABLE>
<CAPTION>
Exhibit No. Name Exhibits
- ----------- ---- --------
<S> <C> <C>
3 (i) Certificate of Incorporation, as amended *
3 (ii) By-laws, as amended
10.1 Incentive Compensation Plan **
10.2 1986 Stock Option and Appreciation Rights Plan ***
10.3 1996 Stock Option and Appreciation Rights Plan ****
10.4 Employment Agreement between Registrant and J. William Johnson,
dated January 31, 1996, as amended December 18, 1996, January 2, 1998,
and January 6, 1999 *****
10.5 Employment Agreement between Registrant and Arthur J. Lupinacci, Jr.,
dated July 1, 1999 (please note that Mr. Lupinacci's current base annual
salary is disclosed in Exhibit 99 to this Form 10-K Filing)
10.6 Amended Special Severance Agreement between Registrant and Donald L. Manfredonia,
dated July 1, 1999
10.7 Amended Special Severance Agreement between Registrant and Joseph G. Perri,
dated July 1, 1999
10.8 Amended Special Severance Agreement between Registrant and Richard Kick,
dated July 1, 1999
10.9 Amended Special Severance Agreement between Registrant and Mark D. Curtis,
dated July 1, 1999
13 Registrant's Annual Report to Shareholders for the fiscal year ended
December 31, 1999
21 Subsidiary of Registrant
23 Consent of Independent Public Accountants
27 Financial Data Schedule
99 Notice of 2000 Annual Meeting and Proxy Statement ******
</TABLE>
* Previously filed as part of Report on Form 10-K for 1998, filed on March 29,
1999, as exhibit 3(i), which exhibit is incorporated herein by reference.
** "Incentive Compensation Plan" and "Board Compensation Committee Report"
appearing on pages 12 and 8, respectively, of the Registrant's Proxy Statement
for its Annual Meeting of Stockholders to be held April 18, 2000 are
incorporated herein by reference.
*** Previously filed as an exhibit to Form 10-K which exhibit is incorporated
herein by reference.
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**** Previously filed as part of Report on Form 10-K for 1995, filed on March
22, 1996, as exhibit 10(b), which exhibit is incorporated herein by reference.
***** Employment agreement previously filed as part of Report on Form 10-K for
1995, filed on March 22, 1996, as exhibit 10(c), which exhibit is incorporated
herein by reference. The December 18, 1996, January 2, 1998, and January 6, 1999
amendments to Mr. Johnson's employment agreement each involved an increase in
Mr. Johnson's base annual salary, the dollar amounts of which were previously
disclosed in Form 10-K. Mr. Johnson's current base annual salary is disclosed in
Exhibit 99 to this Form 10-K Filing.
****** The Corporation's Proxy Statement for its Annual Meeting of Stockholders
to be held April 18, 2000 was submitted in electronic format on March 13, 2000
and is incorporated herein by reference.
(b) Reports on Form 8-K
On November 17, 1999, the Corporation filed a current report on Form 8-K to
report that on November 12, 1999 it had announced improprieties by one of its
employees that resulted in a misstatement of the Corporation's previously
reported earnings and a misappropriation of funds. The exhibits to the Form 8-K
included the text of the November 12, 1999 press release and the text of a press
release dated October 8, 1999 announcing the Corporation's earnings, before the
restatement, for the nine months ended September 30, 1999.
(c) Exhibits
Exhibits as listed under 14(a) 3. above are submitted as a separate section
of this report.
(d) Financial Statement Schedules - None
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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 21, 2000 By /s/ J. WILLIAM JOHNSON
------------------------------------
J. WILLIAM JOHNSON, President
(principal executive officer)
By /s/ MARK D. CURTIS
------------------------------------
MARK D. CURTIS,
Senior Vice President and Treasurer
(principal financial officer and
principal accounting 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/ J. WILLIAM JOHNSON President, Chairman MARCH 21, 2000
- ----------------------------- of the Board, Chief
J. William Johnson Executive Officer
/s/ ALLEN E. BUSCHING Director MARCH 21, 2000
- -----------------------------
Allen E. Busching
/s/ PAUL T. CANARICK Director MARCH 21, 2000
- -----------------------------
Paul T. Canarick
/s/ BEVERLY ANN GEHLMEYER Director MARCH 21, 2000
- -----------------------------
Beverly Ann Gehlmeyer
/s/ HOWARD THOMAS HOGAN, JR. Director MARCH 21, 2000
- -----------------------------
Howard Thomas Hogan, Jr.
/s/ J. DOUGLAS MAXWELL, JR. Director MARCH 21, 2000
- -----------------------------
J. Douglas Maxwell, Jr.
/s/ JOHN R. MILLER III Director MARCH 21, 2000
- -----------------------------
John R. Miller III
/s/ WALTER C. TEAGLE III Director MARCH 21, 2000
- -----------------------------
Walter C. Teagle III
8
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT BEGINS
ON SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
- ------- ----------- --------------
<S> <C> <C>
3 (i) Certificate of Incorporation, as amended *
3 (ii) By-laws, as amended 10
10.1 Incentive Compensation Plan **
10.2 1986 Stock Option and Appreciation Rights Plan ***
10.3 1996 Stock Option and Appreciation Rights Plan ****
10.4 Employment Agreement Between Registrant and J. William Johnson,
dated January 31, 1996, as amended December 18, 1996, January 2, 1998,
and January 6, 1999 *****
10.5 Employment Agreement between Registrant and Arthur J. Lupinacci, Jr.,
dated July 1, 1999 (please note that Mr. Lupinacci's current base annual
salary is disclosed in Exhibit 99 to this Form 10-K Filing) 21
10.6 Amended Special Severance Agreement between Registrant and Donald L.
Manfredonia, dated July 1, 1999 26
10.7 Amended Special Severance Agreement between Registrant and Joseph G. Perri,
dated July 1, 1999 31
10.8 Amended Special Severance Agreement between Registrant and Richard Kick,
dated July 1, 1999 36
10.9 Amended Special Severance Agreement between Registrant and Mark D. Curtis,
dated July 1, 1999 41
13 Registrant's Annual Report to Shareholders for the fiscal year ended
December 31, 1999 46
21 Subsidiary of Registrant 98
23 Consent of Independent Public Accountants 99
27 Financial Data Schedule 101
99 Notice of 2000 Annual Meeting and Proxy Statement ******
</TABLE>
* Previously filed as part of Report on Form 10-K for 1998, filed on March 29,
1999, as exhibit 3(i), which exhibit is incorporated herein by reference.
** "Incentive Compensation Plan" and "Board Compensation Committee Report"
appearing on pages 12 and 8, respectively, of the Registrant's Proxy Statement
for its Annual Meeting of Stockholders to be held April 18, 2000 are
incorporated herein by reference.
*** Previously filed as an exhibit to Form 10-K which exhibit is incorporated
herein by reference.
**** Previously filed as part of Report on Form 10-K for 1995, filed on March
22, 1996, as exhibit 10(b), which exhibit is incorporated herein by reference.
***** Previously filed as part of Report on Form 10-K for 1995, filed on March
22, 1996, as exhibit 10(c), which exhibit is incorporated herein by reference.
The December 18, 1996, January 2, 1998, and January 6, 1999 amendments to Mr.
Johnson's employment agreement each involved an increase in Mr. Johnson's base
annual salary, the dollar amounts of which were previously disclosed in Form
10-K. Mr. Johnson's current base annual salary is disclosed in Exhibit 99 to
this Form 10-K Filing.
****** The Corporation's Proxy Statement for its Annual Meeting of Stockholders
to be held April 18, 2000 was submitted in electronic format on March 13, 2000
and is incorporated herein by reference.
9
EXHIBIT 3 (ii) - BY-LAWS, AS AMENDED
10
<PAGE>
BYLAWS OF
THE FIRST OF LONG ISLAND CORPORATION
ARTICLE I
OFFICES; CORPORATE SEAL
Section 1. Corporation Office. The office of the corporation in New York
shall be that set forth in the Certificate of Incorporation or in the most
recent amendment of the Certificate of Incorporation or resolution of the Board
of Directors filed with the Secretary of State of New York changing the
corporation office.
Section 2. Other Offices. The corporation may have such other offices,
within or without the State of New York, as the Board of Directors shall, from
time to time, determine.
Section 3. Corporate Seal. The corporate seal of the corporation shall
consist of the name of the corporation and the name of the State of
incorporation and shall be in such form and bear such other inscription as the
Board of Directors may determine. The failure to use such seal, however, shall
not affect the validity of any documents executed on behalf of the corporation.
ARTICLE II
SHAREHOLDER MEETINGS
Section 1. Place and Time of Meetings. Meetings of the shareholders may be
held at any place, within or without the State of New York, designated by the
Board of Directors and, in the absence of such designation, shall be held at the
office of the corporation in the State of New York. The Board of Directors shall
designate the time of day for each meeting and, in the absence of such
designation, every meeting of shareholders shall be held at three-thirty o'clock
p.m.
Section 2. Annual Meetings.
(a) Unless otherwise designated by the Board of Directors, the annual
meeting of the shareholders shall be held on the third Tuesday of April of each
year; provided, however, that the interval between two consecutive annual
meetings shall not be more than thirteen (13) months nor less than ten (10)
months.
(b) At the annual meeting the shareholders, voting as provided in the
Certificate of Incorporation, shall elect directors, and shall transact such
other business as may properly come before them.
Section 3. Special Meetings. A special meeting of the shareholders may be
held at any time and for any purpose and may only be called by the President or
the Board of Directors.
11
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Section 4. Quorum; Adjourned Meetings. The presence, in person or by proxy,
of the holders of a majority of the shares entitled to vote at any annual or
special meeting shall constitute a quorum for the transaction of business. In
the absence of a quorum, any meeting may be adjourned to a subsequent date,
provided notice of such adjournment is mailed to each shareholder entitled to
vote at least five (5) days before such adjourned meeting. If a quorum is
present, a meeting may be adjourned from time to time without notice other than
announcement at such meeting. At adjourned meetings at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally noticed. If a quorum is present, the shareholders may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 5. Voting. At any meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote either in person or by proxy.
Each shareholder, unless the Certificate of Incorporation provides otherwise,
shall have one vote for each share having voting power registered in his name on
the books of the corporation. Upon the demand of any shareholder, the vote upon
any question before the meeting shall be by ballot. All questions shall be
decided by a majority vote of the number of shares entitled to vote and
represented at the meeting at the time of the vote except where otherwise
required by applicable law, the Certificate of Incorporation, or these Bylaws.
Section 6. Closing of Books. The Board of Directors may fix a time, not
more than fifty (50) nor less than ten (10) days preceding the date of any
meeting of shareholders, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, such meeting,
notwithstanding any transfer of shares on the books of the corporation after any
record date so fixed. The Board of Directors may close the books of the
corporation against the transfer of shares during the whole or any part of such
period. If the Board of Directors fails to fix a record date for determination
of the shareholders entitled to notice of, and to vote at, any meeting of
shareholders, the record date shall be the fiftieth (50th) day preceding the
date of such meeting.
Section 7. Notice of Meetings. There shall be mailed to each shareholder,
shown by the books of the corporation to be a holder of record of voting shares,
at his address as shown by the books of the corporation, a notice setting out
the time and place of each annual meeting and each special meeting, which notice
shall be mailed not less than ten (10) days nor more than fifty (50) days prior
thereto; except that notice of a meeting at which there is to be considered
either (i) an agreement of merger or consolidation, (ii) a proposal to dispose
of all or substantially all of the property and assets of the corporation, (iii)
a proposal to dissolve the corporation, or (iv) a proposal to amend the
Certificate of Incorporation, shall be mailed to all shareholders, whether
entitled to vote or not, at least thirty (30) days prior to the date of such
meeting. Every notice of any special meeting shall state the purpose or purposes
for which the meeting has been called, pursuant to Section 3 of this Article,
and the business transacted at all special meetings shall be confined to the
purpose or purposes stated in the notice.
12
<PAGE>
Section 8. Waiver of Notice. Any shareholder, or the representative
entitled to vote any shares so represented, may waive notice of any shareholder
meeting by executing a written waiver of such notice either before, at or after
such meeting; provided, however, that the attendance of any stockholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 9. Written Action. Any action which might be taken at a meeting of
the shareholders may be taken without a meeting if done in accordance with
Section 615 of the New York Business Corporation Law, as the same may be amended
from time to time, or in accordance with such other statutory provision as may
be substituted therefor.
ARTICLE III
DIRECTORS
Section 1. General. The property, affairs and business of the corporation
shall be managed by the Board of Directors, each of whom shall be at least
eighteen years of age.
Section 2. Number and Qualifications. The Board of Directors of the
corporation shall consist of not less than five nor more than fifteen directors,
the exact number within such minimum and maximum limits to be fixed and
determined from time to time by resolution of a majority of the full Board of
Directors; provided, however, that no decrease in number shall shorten the term
of any incumbent director. Directors should own a minimum of two hundred (200)
shares.
Section 3. Term. The Board of Directors shall be divided into two classes,
Class I and Class II, which shall be as nearly equal in number as possible. Each
director shall serve a term ending on the date of the second annual meeting
following the annual meeting at which such director was elected; provided,
however, that each initial director in Class I shall hold office until the
annual meeting of shareholders in 1985; and each initial director in Class II
shall hold office until the annual meeting of shareholders in 1986.
Section 4. Nominations.
(a) Nominations for the election of directors may be made by the Board of
Directors or by any shareholder entitled to vote for the election of directors.
Such nominations shall be made by notice in writing, delivered or mailed by
first class United States mail, postage prepaid, to the Secretary of the
corporation not less than fourteen (14) days nor more than fifty (50) days prior
to any meeting of the shareholders called for the election of directors;
provided, however, that if less than twenty-one (21) days' notice of the meeting
is given to shareholders, such written notice shall be delivered or mailed, as
prescribed, to the Secretary of the corporation not later than the close of the
seventh day following the day on which notice of the meeting was mailed to
shareholders. Notice of nominations which are proposed by the Board of Directors
shall be given by the Chairman on behalf of the Board.
13
<PAGE>
(b) Each notice under subsection (a) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee
and (iii) the number of shares of stock of the corporation which are
beneficially owned by each such nominee.
(c) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Section 5. Organization Meeting. As soon as practicable after each annual
election of directors, the Board of Directors shall meet at the office of the
corporation, or at such other place within or without the State of New York as
may be designated by the Board of Directors, for the purpose of electing the
officers of the corporation and for the transaction of such other business as
shall come before the meeting.
Section 6. Regular Meeting. The regular meetings of the Board of Directors
shall be held, without notice, at the office of the corporation on the third
Tuesday of each January, April, July and October. When any regular meeting of
the Board falls upon a holiday, the meeting shall be held on the next banking
business day unless the Board shall designate some other day.
Section 7. Special Meetings. Special meetings of the Board of Directors may
be called at any time by the Chairman, the President or at the request of three
(3) or more of the directors and shall be held at such time and place as may be
designated in the notice of such meeting.
Section 8. Notice of Meetings. Notice of special meetings of the Board of
Directors shall be given at least twenty-four (24) hours in advance thereof by
mail, telephone, telegram, facsimile transmission, or in person.
Section 9. Waiver of Notice. Notice of any meeting of the Board of
Directors may be waived by a director either before, at, or after such meeting
in a writing signed by such director; provided, however, that a director, by his
attendance and participation in any action taken at any meeting of the Board of
Directors, shall be deemed to have waived notice of such meeting.
Section 10. Director and Committee Action by Conference Telephone. Any one
or more members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of a conference
telephone or similar equipment which allows all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
Section 11. Quorum. A majority of the whole Board of Directors shall
constitute a quorum for the transaction of business, except that when a vacancy
or vacancies exist, a majority of the remaining directors shall constitute a
quorum.
Section 12. Vacancies, Increases in Number. Any vacancy occurring in the
Board of Directors (by death, resignation, removal for cause, increase in number
pursuant to Section 2, or otherwise) may be filled by the affirmative vote of a
majority of the
14
<PAGE>
remaining directors of the class in which the vacancy occurs. A director elected
to fill a vacancy shall be elected to serve until the next annual meeting of
shareholders, at which time a new director will be elected for that position.
Section 13. Removal. At any meeting of shareholders called expressly for
that purpose, any director or the entire Board of Directors may be removed, with
cause, pursuant to the provisions of the Certificate of Incorporation. In the
event that the entire Board or any one or more directors be so removed, new
directors shall be elected at the same meeting.
Section 14. Retirement. Each director shall retire at the annual meeting
following his attaining the age of seventy-five (75).
Section 15. Chairman of the Board. The Board of Directors shall appoint one
of its members to be Chairman of the Board to serve at the pleasure of the
Board. The Chairman so appointed may also be Chief Executive Officer of the
Bank. He shall preside at the Annual Meeting of Shareholders and at all meetings
of the Board of Directors. In addition to any specific powers conferred by these
Bylaws, he shall also have and may exercise such further powers and duties as
from time to time may be conferred upon or assigned to him by the Board of
Directors.
Section 16. Secretary to the Board. The Board of Directors may appoint a
Secretary to the Board who shall keep the minutes of its meetings instead of the
Secretary of the Corporation. The said person need not be a member of the Board
of Directors.
Section 17. Committees. The Board of Directors may establish such
committees from time to time, making such regulations as it deems advisable with
respect to the membership, authority and procedures of such committee of the
Board of Directors; provided, however, that in no event shall a committee have
power to amend these Bylaws.
Section 18. Compensation. Directors who are not salaried officers of this
corporation may receive such fixed sum per meeting attended or such fixed annual
sum as may be determined, from time to time by resolution of the Board of
Directors. All directors may receive their expenses, if any, of attendance at
meetings of the Board of Directors or any committee thereof, if approved by
resolution of the Board of Directors. Nothing herein contained shall be
construed to preclude any director from serving this corporation in any other
Capacity and receiving proper compensation therefor.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of this corporation shall be a Chief
Executive Officer, a President, one or more Vice Presidents, a Secretary, and a
Treasurer, and such other officers as the Board of Directors, in its discretion,
may deem necessary. Any two offices, except those of President and Secretary,
may be held by one person.
15
<PAGE>
Section 2. Election, Term of Office, Qualifications. At each organization
meeting of the Board of Directors the Board shall elect all of the officers of
the corporation. All officers of the corporation except the President shall hold
office until the annual meeting of the Board next succeeding their election to
office, or until the election and qualification of their respective successors.
The President shall continue to hold office until the election and qualification
of his successor.
Section 3. Chief Executive Officer. The Board of Directors shall appoint
one of its members to be Chief Executive Officer of the corporation, who may
also serve as Chairman and/or President. The Chief Executive Officer shall have
general executive powers, and shall have and may exercise any and all other
powers and duties pertaining by law, regulation or practice, to the office of
Chief Executive Officer, or imposed by these Bylaws. He shall also have and may
exercise such further powers and duties as from time to time may be conferred
upon, or assigned to, him by the Board of Directors.
Section 4. President. The Board of Directors shall appoint one of its
members to be President of the corporation. He may also be Chief Executive
Officer of the corporation, and, in the absence of the Chairman, he shall
preside at meetings of the Board of Directors and at the Annual Meeting of
Shareholders. He shall have general executive powers, and, in addition to any
specific powers conferred by these Bylaws, he shall also have and may exercise
such further powers and duties as from time to time may be conferred upon or
assigned to him by the Board of Directors or the Chief Executive Officer. In the
absence of the Chief Executive Officer, he shall perform all the duties of the
Chief Executive Officer.
Section 5. Vice President. Each Vice President shall have such powers and
shall perform such duties as may be specified in the Bylaws or prescribed by the
Board of Directors or by the President. In the event of absence or disability of
the President, Vice Presidents shall succeed to his power and duties in the
order designated by the Board of Directors.
Section 6. Secretary. The Secretary shall keep accurate minutes of all
meetings of the shareholders and the Board of Directors, shall give proper
notice of meetings of shareholders and directors, and shall perform such other
duties and have such other powers as the Board of Directors or the President may
from time to time prescribe. However, the Board of Directors may, in its
discretion, appoint additionally a Secretary to the Board who shall keep the
minutes of its meetings instead of the Secretary of the Corporation.
Section 7. Treasurer. The Treasurer, subject to the order of the Board of
Directors, shall have the care and custody of the money, funds, valuable papers,
and documents of the corporation (other than his own bond, if any, which shall
be in the custody of the President), and shall have and exercise, under the
supervision of the Board of Directors, all the powers and duties commonly
incident to his office, and shall give bond in such form and amount and with
such sureties as shall be required by the Board of Directors. The Treasurer
shall keep accurate accounts of all monies of the corporation received or
disbursed. He shall deposit all monies, drafts and checks in the name of, and to
the credit of, the corporation in such banks and depositaries as a majority of
the
16
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whole Board of Directors shall from time to time designate. He shall have power
to endorse for deposit all notes, checks and drafts received by the corporation.
He shall disburse the funds of the corporation in the manner prescribed by the
Board of Directors, making proper vouchers therefor. He shall render to the
President and the directors, whenever required, an account of all his
transactions as Treasurer and of the financial condition of the corporation and
shall perform such other duties as may be prescribed from time to time by the
Board of Directors or by the President.
Section 8. Additional Officers and Agents. The Board of Directors, at its
discretion, may appoint a general manager, one or more assistant treasurers, one
or more assistant secretaries, and such other officers or agents as it may deem
advisable, and may prescribe the duties of any such officer or agent.
ARTICLE V
SHARES
Section I. Stock Certificates. Certificates of stock shall bear the seal of
the corporation engraved thereon, and the signature of two persons. One shall be
the signature of the Chairman of the Board, a Vice Chairman of the Board, the
President or a Vice President. The other shall be the signature of the
Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Such signatures may be manual signatures or facsimiles thereof. If the transfer
agent or registrar of the corporation is other than the corporation, an
affiliate or its employee, a certificate bearing facsimile signatures shall be
manually countersigned by the transfer agent or registrar of the corporation,
and the requirement for such countersignature by any such independent transfer
agent or registrar shall be conspicuously noted on the face of the certificate.
Each certificate shall recite on its face that the stock represented thereby is
transferable only upon the books of the corporation upon surrender of the
certificate properly endorsed.
Section 2. Transfers. Shares of stock shall be transferable on the books of
the corporation, and a transfer book shall be kept in which all transfers of
stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to his shares, succeed to all rights and liabilities of the
prior holder of such shares.
Section 3. Loss of Certificates. Any shareholder claiming loss or
destruction of a share certificate shall make an affidavit of that fact and,
unless waived by the Chief Executive Officer or Treasurer, shall give the
corporation a bond of indemnity to indemnify the corporation against any claim
which may be made against it on account of the reissue of such certificate,
whereupon a new certificate may be issued in the same tenor and for the same
number of shares as the one alleged to have been destroyed or lost.
17
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ARTICLE VI
DIVIDENDS
Section 1. Dividends. Subject to the provisions of the Certificate of
Incorporation, these Bylaws and applicable law, the Board of Directors may
declare dividends from paid-in surplus, earned surplus or from net earnings for
the current or preceding fiscal year of the corporation at such times and in
such amounts as the Board shall deem advisable.
Section 2. Record Date. Subject to any provisions of the Certificate of
Incorporation, the Board of Directors may fix a date preceding the date fixed
for the payment of any dividend or allotment of other rights as the record date
for the determination of the shareholders entitled to receive payment of such
dividend or allotment of such rights; and in such case only shareholders of
record on the date so fixed shall be entitled to receive such payment or
allotment notwithstanding any transfer of shares on the books of the corporation
after such record date. The Board of Directors may close the books of the
corporation against the transfer of shares during the whole or any part of such
period.
ARTICLE VII
BOOKS AND RECORDS; FISCAL YEAR
Section 1. Books and Records. The Board of Directors of the corporation
shall cause to be kept in the office of the corporation:
(a) a share register, giving the names and addresses of the shareholders,
the number and classes of shares held by each, and the dates on which the
certificates therefor were issued;
(b) records of all proceedings of shareholders and directors;
(c) such other records and books of account as shall be necessary and
appropriate to the conduct of the corporate business; and
(d) Bylaws of the corporation and all amendments thereto.
Section 2. Fiscal Year. The fiscal year of the corporation shall be the
calendar year.
ARTICLE VIII
INSPECTION OF BOOKS
Section 1. Examination by Shareholders. Every shareholder of the
corporation and every holder of a voting trust certificate shall have the right
to examine, in person or by agent or attorney authorized in writing to represent
the shareholder, at any reasonable time or times, for any proper purpose, and at
the place or places where usually kept, the share register, books of account and
records of the proceedings of the shareholders and directors and to make
extracts therefrom.
18
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Section 2. Information to Shareholders. Upon written request by a
shareholder of the corporation, the Board of Directors shall furnish to him a
statement of profit and loss for the last fiscal year and a balance sheet
containing a summary of the assets and liabilities as of the close of such
fiscal year.
ARTICLE IX
INDEMNIFICATION, CONTRACT WITH THE CORPORATION AND
LIABILITY INSURANCE
Section 1. Indemnification. Any person who at any time (i) shall serve or
shall have served as a director, officer, or employee of the corporation or (ii)
at the request of the corporation, shall serve or shall have served any other
corporation, association, partnership, limited liability company, joint venture,
trust, employee benefit plan or other enterprise as a director, trustee,
officer, employee, or in any other capacity, and the heirs, executors and
administrators of such person, shall be indemnified by the corporation in
accordance with and to the fullest extent permitted by New York law, including
the Business Corporation Law of the State of New York, as the same exists or may
hereafter be amended. The foregoing right of indemnification or reimbursement
shall not be exclusive of other rights to which such person may be entitled.
Section 2. Contract with the Corporation. The provisions of this Article IX
shall be deemed to be a contract between the corporation and each director and
officer of the corporation who serves in any such capacity at any time while
this Article IX and the relevant provisions of New York law, as the same exists
or may hereafter be amended, may be in existence; and any amendment of any such
law or of this Article IX shall not affect any rights or obligations then
existing with respect to any state of facts then or theretofore existing or any
action, suit or proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts.
Section 3. Liability Insurance. The corporation shall have the power, to
the fullest extent permitted by New York law, as the same exists or may
hereafter be amended, to purchase and maintain insurance on behalf of any person
who is or was a director or officer against any liability asserted against him
and incurred by him in such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against any
such liability under the provisions of this Article IX.
19
<PAGE>
ARTICLE X
AMENDMENTS
Section 1. Subject to Section 2 of this Article, these Bylaws may be
amended by a vote of the majority of the whole Board of Directors at any
meeting.
Section 2. Notwithstanding the provisions of Section 1 of this Article, the
shareholders may amend or repeal any Bylaw by affirmative vote of seventy
percent (70%) or more of the outstanding shares of capital stock of the
corporation entitled to vote generally, cast at any annual meeting or at any
special meeting of shareholders called for such purpose.
20
EXHIBIT 10.5 - EMPLOYMENT AGREEMENT BETWEEN REGISTRANT AND ARTHUR J. LUPINACCI,
JR.
21
<PAGE>
THE FIRST OF LONG ISLAND CORPORATION
10 GLEN HEAD ROAD
GLEN HEAD, NEW YORK 11545
July 1, 1999
Mr. Arthur J. Lupinacci, Jr.
Dear Mr. Lupinacci:
This letter employment agreement (the "Agreement") supersedes and replaces
your Special Severance Agreement dated as of November 20, 1998. The terms and
conditions of your employment by The First of Long Island Corporation ("FLIC"),
and its subsidiary, The First National Bank of Long Island (the "Bank"), are as
follows:
1. TERM; RENEWAL
The Initial Term of the Agreement shall run from July 1, 1999 through and
including December 31, 2000, and if not terminated as described below, the
Agreement shall, on July 1 of each year, automatically be extended for an
additional year, resulting in a new one and one-half year term (the "Renewal
Terms"), with such modifications hereto as the parties shall agree in writing;
provided, however, that the Agreement shall not be so extended in the event that
you or FLIC provides written notice of non-extension to the other party no later
than April 30 of any such year. Notwithstanding the foregoing, FLIC may not
provide such notice of non-extension during any period of time in which the
Board of Directors of FLIC is actively negotiating a transaction the
consummation of which would constitute a Change of Control Event (as hereinafter
defined).
2. CAPACITY
(a) You shall be employed in the capacity of Executive Vice President of
FLIC and such other senior executive title or titles of FLIC or the Bank as may
from time to time be determined by the Board of Directors of the Bank and FLIC.
You shall be the senior administrative officer of the Bank, with such duties and
responsibilities as shall be assigned to you by the Chief Executive Officer or
by the Board of Directors of the Bank. You shall be responsible to the Chief
Executive Officer of FLIC and the Bank.
(b) You agree to devote your full time and attention and best efforts to
the faithful and diligent performance of your duties to FLIC and the Bank and
shall serve and further the best interests and enhance the reputation of FLIC
and the Bank to the best of your ability. Nothing herein shall be construed as
preventing you from serving as a member of the board of directors of any
non-profit organization.
3. COMPENSATION
As full compensation for your services, you shall receive the following
from FLIC or, in the discretion of FLIC, it shall cause the following to be paid
or provided by the Bank:
(a) A Base Annual Salary of not less than One Hundred Eighty Five Thousand
Five Hundred Dollars ($185,500.00), payable semimonthly; provided, however, that
no later than January 15 of each year that this Agreement shall remain in
effect, the Chief Executive Officer and the Board of Directors of FLIC shall
review your compensation, without any commitment, to determine whether to
increase your Base Annual Salary hereunder. In the event that the Board of
Directors of FLIC does, from time to time, increase your Base Annual Salary, the
increased amount shall be your Base Annual Salary for all purposes of this
Agreement, and such increased amount shall be the minimum amount payable
hereunder.
(b) Such other benefits as are consistent with the personnel benefits
provided by the Bank and FLIC to its officers and employees.
(c) The use of an appropriate automobile furnished by the Bank.
22
<PAGE>
(d) The funding and payment of the Bank's obligations under The First
National Bank of Long Island Supplemental Executive Retirement Program through
the related Trust Agreement.
4. TERMINATION PAYMENT.
A. You will be entitled to a payment (the "Termination Payment") equal to
One Hundred Fifty Per Cent (150%) of your then current Base Annual Salary and
FLIC shall make such Termination Payment to you, in the event of, and within ten
(10) days after, the occurrence of any of the following:
(i) Your employment is terminated by the Bank, provided, however, that
you shall not be entitled to receive such payment if such termination is
due to gross and substantial dishonesty on your part;
(ii) You resign your employment with the Bank for any reason during
the period beginning on the thirty-first day after a Change of Control
Event (as hereinafter defined) and ending on the sixtieth day after such
event; or
(iii) You resign your employment with the Bank for Good Reason (as
hereinafter defined) within twenty-four months after a Change of Control
Event.
B. FLIC may elect to discharge its obligation to make the Termination
Payment by causing the Bank, its wholly owned subsidiary, to do so.
5. NON-WAIVER.
Your failure to resign upon the occurrence of a particular event
constituting Good Reason hereunder shall not bar you from resigning upon the
subsequent occurrence of any other or further event constituting Good Reason,
and thereby becoming eligible to receive the Termination Payment, provided that
such resignation occurs within twenty-four months after a Change of Control
Event.
6. INELIGIBILITY FOR TERMINATION PAYMENT.
Regardless of whether a Change of Control Event shall have occurred, you
shall not be entitled to any Termination Payment in the event that your
employment is terminated by reason of your death, normal retirement or
disability.
7. DEFINITIONS.
A. "Good Reason" for resignation by you of your employment shall mean the
occurrence (without your express written consent) of any one of the following
acts or omissions to act by FLIC or the Bank:
(i) The assignment to you of any duties materially inconsistent with
the nature and status of your responsibilities immediately prior to a
Change of Control Event, or a substantial adverse alteration in the nature
or status of your responsibilities from those in effect immediately prior
to the Change of Control Event; provided, however, that a redesignation of
your title shall not in and of itself constitute Good Reason if your
overall duties and status within FLIC and the Bank are not substantially
adversely affected.
(ii) The failure by FLIC or the Bank to pay you any portion of your
current compensation, or to pay you any portion of an installment of a
deferred compensation amount under any deferred compensation program,
within fourteen (14) days of the date such compensation is due.
B. "Change of Control Event" shall mean the occurrence of any one of the
following:
(i) Continuing Outside Directors (as hereinafter defined) no longer
constitute at least two-thirds (2/3) of Outside Directors (as hereinafter
defined) of FLIC;
(ii) There shall be consummated a merger or consolidation of FLIC,
unless at least two-thirds (2/3) of Continuing Outside Directors are to
continue to constitute at least two-thirds (2/3) of Continuing Directors;
(iii) At least two-thirds (2/3) of Continuing Outside Directors
determine that action taken by stockholders constitutes a Change of Control
Event; or
(iv) The Bank shall cease to be a wholly-owned subsidiary of FLIC.
C. "Continuing Outside Director" shall mean any individual who is not an
employee of FLIC or the Bank and who (i) is a director of FLIC as of the date
hereof, (ii) prior to election as a director is nominated by at least two-thirds
(2/3) of the Continuing
23
<PAGE>
Outside Directors, or (iii) following election as a director is designated a
Continuing Outside Director by at least two-thirds (2/3) of Continuing Outside
Directors.
D. "Outside Director" shall mean an individual who is not an employee of
FLIC or the Bank who is a director of FLIC.
8. INSURANCE.
8.1 In the event that you shall cease to be employed by the Bank under
circumstances entitling you to receive a Termination Payment hereunder, you
shall be entitled to the following insurance coverage:
(a) Health Insurance. FLIC shall, at no cost to you, continue to cover
you under, or provide you with, family medical and dental coverage
subsequent to the date of termination of your employment. Such coverage
shall be continued until January 31, 2006, and shall be no less favorable
than your medical and dental coverage in effect on such termination date;
provided, however, that if such termination date is subsequent to the
occurrence of a Change of Control Event, the coverage to be provided
hereunder shall be no less favorable than the coverage in effect
immediately prior to the occurrence of such Change of Control Event.
(b) Additional Insurance. FLIC shall also continue to cover you under,
or provide you with insurance coverage no less favorable than that provided
by, your disability, group term life and any other insurance policies in
effect on the date of termination of your employment for a period ending on
the date which is eighteen (18) months after such termination date.
8.2 Notwithstanding the provisions of the foregoing Sections 8.1(a) and
8.1(b), the obligation of FLIC to provide the health and other insurance
coverage described therein shall cease, as to each such policy and form of
coverage, on the date when another employer makes available to you benefits
which are substantially comparable to those described in such sections,
regardless of whether the benefits made available by such employer require a
contribution on your part.
9. DEATH.
In the event of your death subsequent to termination of your employment,
all payments and benefits due you hereunder shall be paid to your designated
beneficiary or beneficiaries or, if you have not designated a beneficiary or
beneficiaries, to your estate.
10. MISCELLANEOUS.
10.1 Legal Expenses. FLIC shall pay all costs and expenses incurred by you
or us, including attorneys' fees and disbursements (at least monthly in the case
of costs and expenses incurred by you), in connection with any legal proceedings
(including, but not limited to, arbitration), whether or not instituted by you
or us, relating to the interpretation or enforcement of any provision of this
Agreement in connection with the termination of your employment. FLIC also
agrees to pay prejudgment interest on any money judgment obtained by you as a
result of such proceedings, calculated at the prime interest rate of the Bank as
in effect from time to time from the date that payment should have been made to
you hereunder. Notwithstanding the foregoing, in the event that any legal
proceedings referred to above result in a final non-appealable determination
that your employment was terminated because of gross and substantial dishonesty
on your part, FLIC shall have no further obligation to you under this section
and you shall refund to FLIC all amounts previously paid to you pursuant to this
section.
10.2 Binding Effect; Successors. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by you and us, your heirs and your
and our respective legal representatives, successors and assigns. If FLIC shall
be merged into or consolidated with another entity, the provisions hereof shall
be binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation. We shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of FLIC, by agreement in form and
substance satisfactory to you, to expressly assume and agree to perform
hereunder in the same manner and to the same extent that we would be required to
perform hereunder if no such succession had taken place. The provisions hereof
shall continue to apply to each subsequent merger, consolidation or transfer of
assets of such subsequent employer.
10.3 Notices. Any notices required to be given under this Agreement shall,
unless otherwise agreed to by you and us, be in writing and shall be sent by
certified mail, return receipt requested, to FLIC at 10 Glen Head Road, Glen
Head, New York 11545, Attention: Board of Directors, and to you at the home
address which you have designated in writing; or at such other address as you or
we may designate in writing, respectively.
10.4 Waiver; Modification. No waiver or modification in whole or in part of
this Agreement, or any term or condition hereof, shall be effective against any
party unless in writing and duly signed by the party sought to be bound. Any
waiver of any breach of any provision hereof or any right or power by any party
on one occasion shall not be construed as a waiver of, or a bar to, the exercise
of such right or power on any other occasion or as a waiver of any subsequent
breach.
24
<PAGE>
10.5 Separability. Any provision of this Agreement which is unenforceable
or invalid in any respect in any jurisdiction shall be ineffective in such
jurisdiction to the extent that it is unenforceable or invalid without affecting
the remaining provisions hereof, which shall continue in full force and effect.
The enforceability or invalidity of a provision of the Agreement in one
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.6 Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
If this Agreement is satisfactory to you, would you kindly indicate your
acceptance by signing and returning the enclosed copy thereof to the Bank.
Very truly yours,
THE FIRST OF LONG ISLAND CORPORATION
By:/s/ J. William Johnson
-------------------------
J. William Johnson, President
Accepted and agreed to as
of the 1st day of July, 1999
/s/ Arthur J. Lupinacci
- -----------------------
Arthur J. Lupinacci, Jr.
25
EXHIBIT 10.6 - AMENDED SPECIAL SEVERANCE AGREEMENT BETWEEN REGISTRANT AND DONALD
L. MANFREDONIA
26
<PAGE>
THE FIRST OF LONG ISLAND CORPORATION
AMENDED SPECIAL SEVERANCE AGREEMENT
AGREEMENT dated as of July 1, 1999 by and between THE FIRST OF LONG ISLAND
CORPORATION (hereinafter referred to as "FLIC") and DONALD L. MANFREDONIA
(hereinafter referred to as the "Officer").
1. Term.
The term of this agreement shall be for a period of one (1) year
commencing on the date hereof. The term shall be automatically renewed for
additional one (1) year terms, unless the Board of Directors of FLIC chooses not
to renew and notifies Officer of such intention not to renew at least thirty
(30) days prior to the end of a term; provided, however, that FLIC may not
decline to renew during any period of time in which the Board of Directors is
actively negotiating a transaction the consummation of which would result in
Officer becoming entitled to a Termination Payment hereunder.
2. Termination Payment.
A. Officer will be entitled to a payment (the "Termination Payment") equal
to One Hundred Twenty-Five Per Cent (125%) of his then current annual base
salary (the dollar amount so calculated being hereafter referred to as the "Full
Severance"), and FLIC shall make such Termination Payment to Officer, in the
event of the occurrence of any of the following:
(i) The employment of Officer is terminated by The First National Bank
Of Long Island ("FNBLI") within twenty-four months after a Change Of
Control Event (as hereinafter defined);
(ii) Officer resigns his employment with FNBLI for Good Reason (as
hereinafter defined) within twenty-four months after a Change of Control
Event; or
(iii) The employment of Officer is terminated by FNBLI within
twenty-four months after any entity, person or group shall have acquired
more than twenty per cent (20%) of the voting shares of FLIC and, at the
time of such termination, the Chief Executive Officer of FNBLI serving in
that capacity as of the first day of the term hereof, or of the then
current renewal term, as the case may be, shall have ceased to be employed
by FNBLI in such capacity.
B. Officer will be entitled to a Termination Payment equal to Sixty Six and
Two Thirds Per Cent (66 2/3%) of the Full Severance in the event that Officer
shall resign for any reason during the period beginning on the thirty-first day
after a Change of Control Event and ending on the sixtieth day after such event.
C. In the event that Officer shall become entitled to a Termination Payment
pursuant to Section 2(A) or 2(B) hereof, FLIC shall, at no cost to Officer,
continue to provide family medical and dental coverage to Officer for a period
of twelve (12) months after Officer ceases to be employed by FNBLI, on terms and
conditions substantially the same as FNBLI may, from time to time, make
available to its employees generally during such period; provided, however, that
the obligation of FLIC to provide such coverage
27
<PAGE>
shall cease on the date when another employer makes substantially comparable
coverage available to Officer, regardless of whether the benefits made available
by such employer require a contribution on the part of Officer.
D. FLIC may elect to discharge its obligation to make the Termination
Payment and provide such insurance coverage by causing FNBLI, its wholly owned
subsidiary, to do so.
3. Non-Waiver.
The failure of Officer to resign upon the occurrence of a particular event
constituting Good Reason hereunder shall not bar the Officer from resigning upon
the subsequent occurrence of any other or further event constituting Good
Reason, and thereby becoming eligible to receive the Termination Payment,
provided that such resignation occurs within twenty-four months after a Change
of Control Event.
4. Ineligibility For Termination Payment.
Regardless of whether a Change of Control Event shall have occurred,
Officer shall not be entitled to any Termination Payment in the event that his
employment is terminated (i) by reason of his death, normal retirement or
disability, or (ii) by FNBLI for Cause (as hereinafter defined).
5. Definitions.
A. "Good Reason" for resignation by Officer of his employment shall mean
the occurrence (without the Officer's express written consent) of any one of the
following acts or omissions to act by FLIC or FNBLI:
(i) The assignment to Officer of any duties materially inconsistent
with the nature and status of his responsibilities immediately prior to a
Change of Control Event, or a substantial adverse alteration in the nature
or status of his responsibilities from those in effect immediately prior to
the Change of Control Event; provided, however, that a redesignation of his
title shall not in and of itself constitute Good Reason if his overall
duties and status within FLIC and FNBLI are not substantially adversely
affected.
(ii) A reduction in his annual base salary as in effect at the time of
a Change of Control Event. For purposes hereof, "annual base salary" shall
mean regular basic annual compensation prior to any reduction therein under
a salary reduction agreement pursuant to Section 401(k) or Section 125 of
the Internal Revenue Code and, without limitation, shall exclude fees,
bonuses, incentive awards or similar payments.
(iii) The failure by FLIC or FNBLI to pay Officer any portion of his
current compensation, or to pay him any portion of an installment of a
deferred compensation amount under any deferred compensation program,
within fourteen (14) days of the date such compensation is due.
B. "Cause" shall mean any of the following:
(i) The willful and continued failure by Officer to substantially
perform his duties, as they may be defined by FLIC or FNBLI from time to
time, or to abide by the written policies of FLIC or FNBLI after a written
demand for substantial performance
28
<PAGE>
is delivered to him by the Chief Executive Officer of FLIC or FNBLI, as the
case may be, which specifically identifies the manner in which he has
failed substantially to perform his duties or has failed to abide by such
written policies, and
(ii) The willful engaging by Officer in conduct which is materially
injurious to FLIC or FNBLI, monetarily or otherwise. For the purpose of the
preceding sentence, no act, or failure to act, on the part of Officer shall
be deemed "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act, or failure to act, was in
the best interest of FLIC or FNBLI, as the case may be.
C. "Change of Control Event" shall mean the occurrence of any one of the
following:
(i) Continuing Outside Directors (as hereinafter defined) no longer
constitute at lease two-thirds (2/3) of Outside Directors (as hereinafter
defined) of FLIC;
(ii) There shall be consummated a merger or consolidation of FLIC,
unless at least two-thirds (2/3) of Continuing Outside Directors are to
continue to constitute at least two-thirds (2/3) of Continuing Directors;
(iii) At least two-thirds (2/3) of Continuing Outside Directors
determine that action taken by stockholders constitutes a Change of Control
Event; or
(iv) FNBLI is no longer a wholly-owned subsidiary of FLIC.
D. "Continuing Outside Director" shall mean any individual who is not an
employee of FLIC or FNBLI and who (i) is a director of FLIC as of the date
hereof, (ii) prior to election as a director is nominated by at least two-thirds
(2/3) of the Continuing Outside Directors, or (iii) following election as a
director is designated a Continuing Outside Director by at least two-thirds
(2/3) of Continuing Outside Directors.
E. "Outside Director" shall mean an individual who is not an employee of
FLIC or FNBLI who is a director of FLIC.
6. Withholding Taxes; Other Deductions.
FLIC and FNBLI shall have the right (i) to deduct from any payments due
under this Agreement amounts sufficient to cover withholding as required by law
for any federal, state or local taxes and any amounts due from the Officer to
FLIC or FNBLI and (ii) to take such other action as may be necessary to satisfy
any such withholding or other obligations, including but not limited to
withholding amounts equal to such taxes or obligations from any other amounts
due or to become due from FLIC or FNBLI to Officer.
7. Miscellaneous.
A. Prior Agreement Superseded. This Agreement supersedes and replaces the
Special Severance Agreement between FNBLI and Officer dated November 20, 1998.
B. Employment at Will. Nothing contained herein shall be construed as an
agreement that Officer will continue to be employed by FNBLI for any particular
period of time and the employment of Officer may be terminated by FNBLI at any
time.
C. Accrued Rights. The determination of the Board of Directors of FLIC not
to renew this Agreement shall not
29
<PAGE>
deprive Officer of any right that has accrued to Officer during the term hereof
by reason of the occurrence during the term of this Agreement of an event
described in Section "2" hereof.
D. Notices. Any notices required to be given under this Agreement shall be
in writing and shall be sent by certified mail, return receipt requested, to
FLIC at 10 Glen Head Road, Glen Head, New York 11545, Attention: Chief Executive
Officer, and to you at your residence address as reflected in the records of
FLIC; or to such other address as either party may designate by written notice
to the other.
E. Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
THE FIRST OF LONG ISLAND CORPORATION
By: /s/ J. William Johnson, Chairman
--------------------------------
J. William Johnson, Chairman
/s/ Donald L. Manfredonia
-------------------------
Donald L. Manfredonia
30
EXHIBIT 10.7 - AMENDED SPECIAL SEVERANCE AGREEMENT BETWEEN REGISTRANT AND
JOSEPH G. PERRI
31
<PAGE>
THE FIRST OF LONG ISLAND CORPORATION
AMENDED SPECIAL SEVERANCE AGREEMENT
AGREEMENT dated as of July 1, 1999 by and between THE FIRST OF LONG ISLAND
CORPORATION (hereinafter referred to as "FLIC") JOSEPH G. PERRI (hereinafter
referred to as the "Officer").
1. Term.
The term of this agreement shall be for a period of one (1) year commencing
on the date hereof. The term shall be automatically renewed for additional one
(1) year terms, unless the Board of Directors of FLIC chooses not to renew and
notifies Officer of such intention not to renew at least thirty (30) days prior
to the end of a term; provided, however, that FLIC may not decline to renew
during any period of time in which the Board of Directors is actively
negotiating a transaction the consummation of which would result in Officer
becoming entitled to a Termination Payment hereunder.
2. Termination Payment.
A. Officer will be entitled to a payment (the "Termination Payment") equal
to One Hundred Per Cent (100%) of his then current annual base salary (the
dollar amount so calculated being hereafter referred to as the "Full
Severance"), and FLIC shall make such Termination Payment to Officer, in the
event of the occurrence of any of the following:
(i) The employment of Officer is terminated by The First National Bank
Of Long Island ("FNBLI") within twenty-four months after a Change Of
Control Event (as hereinafter defined);
(ii) Officer resigns his employment with FNBLI for Good Reason (as
hereinafter defined) within twenty-four months after a Change of Control
Event; or
(iii) The employment of Officer is terminated by FNBLI within
twenty-four months after any entity, person or group shall have acquired
more than twenty per cent (20%) of the voting shares of FLIC and, at the
time of such termination, the Chief Executive Officer of FNBLI serving in
that capacity as of the first day of the term hereof, or of the then
current renewal term, as the case may be, shall have ceased to be employed
by FNBLI in such capacity.
B. Officer will be entitled to a Termination Payment equal to Sixty Six and
Two Thirds Per Cent (66 2/3%) of the Full Severance in the event that Officer
shall resign for any reason during the period beginning on the thirty-first day
after a Change of Control Event and ending on the sixtieth day after such event.
C. In the event that Officer shall become entitled to a Termination Payment
pursuant to Section 2(A) or 2(B) hereof, FLIC shall, at no cost to Officer,
continue to provide family medical and dental coverage to Officer for a period
of twelve (12) months after Officer ceases to be employed by FNBLI, on terms and
conditions substantially the same as FNBLI may, from time to time, make
available to its employees generally during such period; provided, however, that
the obligation of FLIC to provide such coverage
32
<PAGE>
shall cease on the date when another employer makes substantially comparable
coverage available to Officer, regardless of whether the benefits made available
by such employer require a contribution on the part of Officer.
D. FLIC may elect to discharge its obligation to make the Termination
Payment and provide such insurance coverage by causing FNBLI, its wholly owned
subsidiary, to do so.
3. Non-Waiver.
The failure of Officer to resign upon the occurrence of a particular event
constituting Good Reason hereunder shall not bar the Officer from resigning upon
the subsequent occurrence of any other or further event constituting Good
Reason, and thereby becoming eligible to receive the Termination Payment,
provided that such resignation occurs within twenty-four months after a Change
of Control Event.
4. Ineligibility For Termination Payment.
Regardless of whether a Change of Control Event shall have occurred,
Officer shall not be entitled to any Termination Payment in the event that his
employment is terminated (i) by reason of his death, normal retirement or
disability, or (ii) by FNBLI for Cause (as hereinafter defined).
5. Definitions.
A. "Good Reason" for resignation by Officer of his employment shall mean
the occurrence (without the Officer's express written consent) of any one of the
following acts or omissions to act by FLIC or FNBLI:
(i) The assignment to Officer of any duties materially inconsistent
with the nature and status of his responsibilities immediately prior to a
Change of Control Event, or a substantial adverse alteration in the nature
or status of his responsibilities from those in effect immediately prior to
the Change of Control Event; provided, however, that a redesignation of his
title shall not in and of itself constitute Good Reason if his overall
duties and status within FLIC and FNBLI are not substantially adversely
affected.
(ii) A reduction in his annual base salary as in effect at the time of
a Change of Control Event. For purposes hereof, "annual base salary" shall
mean regular basic annual compensation prior to any reduction therein under
a salary reduction agreement pursuant to Section 401(k) or Section 125 of
the Internal Revenue Code and, without limitation, shall exclude fees,
bonuses, incentive awards or similar payments.
(iii) The failure by FLIC or FNBLI to pay Officer any portion of his
current compensation, or to pay him any portion of an installment of a
deferred compensation amount under any deferred compensation program,
within fourteen (14) days of the date such compensation is due.
B. "Cause" shall mean any of the following:
(i) The willful and continued failure by Officer to substantially
perform his duties, as they may be defined by FLIC or FNBLI from time to
time, or to abide by the written policies of FLIC or FNBLI after a written
demand for substantial performance
33
<PAGE>
is delivered to him by the Chief Executive Officer of FLIC or FNBLI, as the
case may be, which specifically identifies the manner in which he has
failed substantially to perform his duties or has failed to abide by such
written policies, and
(ii) The willful engaging by Officer in conduct which is materially
injurious to FLIC or FNBLI, monetarily or otherwise. For the purpose of the
preceding sentence, no act, or failure to act, on the part of Officer shall
be deemed "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act, or failure to act, was in
the best interest of FLIC or FNBLI, as the case may be.
C. "Change of Control Event" shall mean the occurrence of any one of the
following:
(i) Continuing Outside Directors (as hereinafter defined) no longer
constitute at lease two-thirds (2/3) of Outside Directors (as hereinafter
defined) of FLIC;
(ii) There shall be consummated a merger or consolidation of FLIC,
unless at least two-thirds (2/3) of Continuing Outside Directors are to
continue to constitute at least two-thirds (2/3) of Continuing Directors;
(iii) At least two-thirds (2/3) of Continuing Outside Directors
determine that action taken by stockholders constitutes a Change of Control
Event; or
(iv) FNBLI is no longer a wholly-owned subsidiary of FLIC.
D. "Continuing Outside Director" shall mean any individual who is not an
employee of FLIC or FNBLI and who (i) is a director of FLIC as of the date
hereof, (ii) prior to election as a director is nominated by at least two-thirds
(2/3) of the Continuing Outside Directors, or (iii) following election as a
director is designated a Continuing Outside Director by at least two-thirds
(2/3) of Continuing Outside Directors.
E. "Outside Director" shall mean an individual who is not an employee of
FLIC or FNBLI who is a director of FLIC.
6. Withholding Taxes; Other Deductions.
FLIC and FNBLI shall have the right (i) to deduct from any payments due
under this Agreement amounts sufficient to cover withholding as required by law
for any federal, state or local taxes and any amounts due from the Officer to
FLIC or FNBLI and (ii) to take such other action as may be necessary to satisfy
any such withholding or other obligations, including but not limited to
withholding amounts equal to such taxes or obligations from any other amounts
due or to become due from FLIC or FNBLI to Officer.
7. Miscellaneous.
A. Prior Agreement Superseded. This Agreement supersedes and replaces the
Special Severance Agreement between FNBLI and Officer dated November 20, 1998.
B. Employment at Will. Nothing contained herein shall be construed as an
agreement that Officer will continue to be employed by FNBLI for any particular
period of time and the employment of Officer may be terminated by FNBLI at any
time.
C. Accrued Rights. The determination of the Board of Directors of FLIC not
to renew this Agreement shall not
34
<PAGE>
deprive Officer of any right that has accrued to Officer during the term hereof
by reason of the occurrence during the term of this Agreement of an event
described in Section "2" hereof.
D. Notices. Any notices required to be given under this Agreement shall be
in writing and shall be sent by certified mail, return receipt requested, to
FLIC at 10 Glen Head Road, Glen Head, New York 11545, Attention: Chief Executive
Officer, and to you at your residence address as reflected in the records of
FLIC; or to such other address as either party may designate by written notice
to the other.
E. Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
THE FIRST OF LONG ISLAND CORPORATION
By: /s/ J. William Johnson, Chairman
--------------------------------
J. William Johnson, Chairman
/s/ Joseph G. Perri
--------------------------------
Joseph G. Perri
35
EXHIBIT 10.8 - AMENDED SPECIAL SEVERANCE AGREEMENT BETWEEN REGISTRANT AND
RICHARD KICK
36
<PAGE>
THE FIRST OF LONG ISLAND CORPORATION
AMENDED SPECIAL SEVERANCE AGREEMENT
AGREEMENT dated as of July 1, 1999 by and between THE FIRST OF LONG ISLAND
CORPORATION (hereinafter referred to as "FLIC") and RICHARD KICK (hereinafter
referred to as the "Officer").
1. Term.
The term of this agreement shall be for a period of one (1) year commencing
on the date hereof. The term shall be automatically renewed for additional one
(1) year terms, unless the Board of Directors of FLIC chooses not to renew and
notifies Officer of such intention not to renew at least thirty (30) days prior
to the end of a term; provided, however, that FLIC may not decline to renew
during any period of time in which the Board of Directors is actively
negotiating a transaction the consummation of which would result in Officer
becoming entitled to a Termination Payment hereunder.
2. Termination Payment.
A. Officer will be entitled to a payment (the "Termination Payment") equal
to One Hundred Per Cent (100%) of his then current annual base salary (the
dollar amount so calculated being hereafter referred to as the "Full
Severance"), and FLIC shall make such Termination Payment to Officer, in the
event of the occurrence of any of the following:
(i) The employment of Officer is terminated by The First National Bank
Of Long Island ("FNBLI") within twenty-four months after a Change Of
Control Event (as hereinafter defined);
(ii) Officer resigns his employment with FNBLI for Good Reason (as
hereinafter defined) within twenty-four months after a Change of Control
Event; or
(iii) The employment of Officer is terminated by FNBLI within
twenty-four months after any entity, person or group shall have acquired
more than twenty per cent (20%) of the voting shares of FLIC and, at the
time of such termination, the Chief Executive Officer of FNBLI serving in
that capacity as of the first day of the term hereof, or of the then
current renewal term, as the case may be, shall have ceased to be employed
by FNBLI in such capacity.
B. Officer will be entitled to a Termination Payment equal to Sixty Six and
Two Thirds Per Cent (66 2/3%) of the Full Severance in the event that Officer
shall resign for any reason during the period beginning on the thirty-first day
after a Change of Control Event and ending on the sixtieth day after such event.
C. In the event that Officer shall become entitled to a Termination Payment
pursuant to Section 2(A) or 2(B) hereof, FLIC shall, at no cost to Officer,
continue to provide family medical and dental coverage to Officer for a period
of twelve (12) months after Officer ceases to be employed by FNBLI, on terms and
conditions substantially the same as FNBLI may, from time to time, make
available to its employees generally during such period; provided, however, that
the obligation of FLIC to provide such coverage
37
<PAGE>
shall cease on the date when another employer makes substantially comparable
coverage available to Officer, regardless of whether the benefits made available
by such employer require a contribution on the part of Officer.
D. FLIC may elect to discharge its obligation to make the Termination
Payment and provide such insurance coverage by causing FNBLI, its wholly owned
subsidiary, to do so.
3. Non-Waiver.
The failure of Officer to resign upon the occurrence of a particular event
constituting Good Reason hereunder shall not bar the Officer from resigning upon
the subsequent occurrence of any other or further event constituting Good
Reason, and thereby becoming eligible to receive the Termination Payment,
provided that such resignation occurs within twenty-four months after a Change
of Control Event.
4. Ineligibility For Termination Payment.
Regardless of whether a Change of Control Event shall have occurred,
Officer shall not be entitled to any Termination Payment in the event that his
employment is terminated (i) by reason of his death, normal retirement or
disability, or (ii) by FNBLI for Cause (as hereinafter defined).
5. Definitions.
A. "Good Reason" for resignation by Officer of his employment shall mean
the occurrence (without the Officer's express written consent) of any one of the
following acts or omissions to act by FLIC or FNBLI:
(i) The assignment to Officer of any duties materially inconsistent
with the nature and status of his responsibilities immediately prior to a
Change of Control Event, or a substantial adverse alteration in the nature
or status of his responsibilities from those in effect immediately prior to
the Change of Control Event; provided, however, that a redesignation of his
title shall not in and of itself constitute Good Reason if his overall
duties and status within FLIC and FNBLI are not substantially adversely
affected.
(ii) A reduction in his annual base salary as in effect at the time of
a Change of Control Event. For purposes hereof, "annual base salary" shall
mean regular basic annual compensation prior to any reduction therein under
a salary reduction agreement pursuant to Section 401(k) or Section 125 of
the Internal Revenue Code and, without limitation, shall exclude fees,
bonuses, incentive awards or similar payments.
(iii) The failure by FLIC or FNBLI to pay Officer any portion of his
current compensation, or to pay him any portion of an installment of a
deferred compensation amount under any deferred compensation program,
within fourteen (14) days of the date such compensation is due.
B. "Cause" shall mean any of the following:
(i) The willful and continued failure by Officer to substantially
perform his duties, as they may be defined by FLIC or FNBLI from time to
time, or to abide by the written policies of FLIC or FNBLI after a written
demand for substantial performance
38
<PAGE>
is delivered to him by the Chief Executive Officer of FLIC or FNBLI, as the
case may be, which specifically identifies the manner in which he has
failed substantially to perform his duties or has failed to abide by such
written policies, and
(ii) The willful engaging by Officer in conduct which is materially
injurious to FLIC or FNBLI, monetarily or otherwise. For the purpose of the
preceding sentence, no act, or failure to act, on the part of Officer shall
be deemed "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act, or failure to act, was in
the best interest of FLIC or FNBLI, as the case may be.
C. "Change of Control Event" shall mean the occurrence of any one of the
following:
(i) Continuing Outside Directors (as hereinafter defined) no longer
constitute at lease two-thirds (2/3) of Outside Directors (as hereinafter
defined) of FLIC;
(ii) There shall be consummated a merger or consolidation of FLIC,
unless at least two-thirds (2/3) of Continuing Outside Directors are to
continue to constitute at least two-thirds (2/3) of Continuing Directors;
(iii) At least two-thirds (2/3) of Continuing Outside Directors
determine that action taken by stockholders constitutes a Change of Control
Event; or
(iv) FNBLI is no longer a wholly-owned subsidiary of FLIC.
D. "Continuing Outside Director" shall mean any individual who is not an
employee of FLIC or FNBLI and who (i) is a director of FLIC as of the date
hereof, (ii) prior to election as a director is nominated by at least two-thirds
(2/3) of the Continuing Outside Directors, or (iii) following election as a
director is designated a Continuing Outside Director by at least two-thirds
(2/3) of Continuing Outside Directors.
E. "Outside Director" shall mean an individual who is not an employee of
FLIC or FNBLI who is a director of FLIC.
6. Withholding Taxes; Other Deductions.
FLIC and FNBLI shall have the right (i) to deduct from any payments due
under this Agreement amounts sufficient to cover withholding as required by law
for any federal, state or local taxes and any amounts due from the Officer to
FLIC or FNBLI and (ii) to take such other action as may be necessary to satisfy
any such withholding or other obligations, including but not limited to
withholding amounts equal to such taxes or obligations from any other amounts
due or to become due from FLIC or FNBLI to Officer.
7. Miscellaneous.
A. Prior Agreement Superseded. This Agreement supersedes and replaces the
Special Severance Agreement between FNBLI and Officer dated November 20, 1998.
B. Employment at Will. Nothing contained herein shall be construed as an
agreement that Officer will continue to be employed by FNBLI for any particular
period of time and the employment of Officer may be terminated by FNBLI at any
time.
C. Accrued Rights. The determination of the Board of Directors of FLIC not
to renew this Agreement shall not
39
<PAGE>
deprive Officer of any right that has accrued to Officer during the term hereof
by reason of the occurrence during the term of this Agreement of an event
described in Section "2" hereof.
D. Notices. Any notices required to be given under this Agreement shall be
in writing and shall be sent by certified mail, return receipt requested, to
FLIC at 10 Glen Head Road, Glen Head, New York 11545, Attention: Chief Executive
Officer, and to you at your residence address as reflected in the records of
FLIC; or to such other address as either party may designate by written notice
to the other.
E. Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
THE FIRST OF LONG ISLAND CORPORATION
By: /s/ J. William Johnson, Chairman
--------------------------------
J. William Johnson, Chairman
/s/ Richard Kick
--------------------------------
Richard Kick
40
EXHIBIT 10.9 - AMENDED SPECIAL SEVERANCE AGREEMENT BETWEEN REGISTRANT AND
MARK D. CURTIS
41
<PAGE>
THE FIRST OF LONG ISLAND CORPORATION
AMENDED SPECIAL SEVERANCE AGREEMENT
AGREEMENT dated as of July 1, 1999 by and between THE FIRST OF LONG ISLAND
CORPORATION (hereinafter referred to as "FLIC") and MARK D. CURTIS (hereinafter
referred to as the "Officer").
1. Term.
The term of this agreement shall be for a period of one (1) year commencing
on the date hereof. The term shall be automatically renewed for additional one
(1) year terms, unless the Board of Directors of FLIC chooses not to renew and
notifies Officer of such intention not to renew at least thirty (30) days prior
to the end of a term; provided, however, that FLIC may not decline to renew
during any period of time in which the Board of Directors is actively
negotiating a transaction the consummation of which would result in Officer
becoming entitled to a Termination Payment hereunder.
2. Termination Payment.
A. Officer will be entitled to a payment (the "Termination Payment") equal
to One Hundred Per Cent (100%) of his then current annual base salary (the
dollar amount so calculated being hereafter referred to as the "Full
Severance"), and FLIC shall make such Termination Payment to Officer, in the
event of the occurrence of any of the following:
(i) The employment of Officer is terminated by The First National Bank
Of Long Island ("FNBLI") within twenty-four months after a Change Of
Control Event (as hereinafter defined);
(ii) Officer resigns his employment with FNBLI for Good Reason (as
hereinafter defined) within twenty-four months after a Change of Control
Event; or
(iii) The employment of Officer is terminated by FNBLI within
twenty-four months after any entity, person or group shall have acquired
more than twenty per cent (20%) of the voting shares of FLIC and, at the
time of such termination, the Chief Executive Officer of FNBLI serving in
that capacity as of the first day of the term hereof, or of the then
current renewal term, as the case may be, shall have ceased to be employed
by FNBLI in such capacity.
B. Officer will be entitled to a Termination Payment equal to Sixty Six and
Two Thirds Per Cent (66 2/3%) of the Full Severance in the event that Officer
shall resign for any reason during the period beginning on the thirty-first day
after a Change of Control Event and ending on the sixtieth day after such event.
C. In the event that Officer shall become entitled to a Termination Payment
pursuant to Section 2(A) or 2(B) hereof, FLIC shall, at no cost to Officer,
continue to provide family medical and dental coverage to Officer for a period
of twelve (12) months after Officer ceases to be employed by FNBLI, on terms and
conditions substantially the same as FNBLI may, from time to time, make
available to its employees generally during such period; provided, however, that
the obligation of FLIC to provide such coverage
42
<PAGE>
shall cease on the date when another employer makes substantially comparable
coverage available to Officer, regardless of whether the benefits made available
by such employer require a contribution on the part of Officer.
D. FLIC may elect to discharge its obligation to make the Termination
Payment and provide such insurance coverage by causing FNBLI, its wholly owned
subsidiary, to do so.
3. Non-Waiver.
The failure of Officer to resign upon the occurrence of a particular event
constituting Good Reason hereunder shall not bar the Officer from resigning upon
the subsequent occurrence of any other or further event constituting Good
Reason, and thereby becoming eligible to receive the Termination Payment,
provided that such resignation occurs within twenty-four months after a Change
of Control Event.
4. Ineligibility For Termination Payment.
Regardless of whether a Change of Control Event shall have occurred,
Officer shall not be entitled to any Termination Payment in the event that his
employment is terminated (i) by reason of his death, normal retirement or
disability, or (ii) by FNBLI for Cause (as hereinafter defined).
5. Definitions.
A. "Good Reason" for resignation by Officer of his employment shall mean
the occurrence (without the Officer's express written consent) of any one of the
following acts or omissions to act by FLIC or FNBLI:
(i) The assignment to Officer of any duties materially inconsistent
with the nature and status of his responsibilities immediately prior to a
Change of Control Event, or a substantial adverse alteration in the nature
or status of his responsibilities from those in effect immediately prior to
the Change of Control Event; provided, however, that a redesignation of his
title shall not in and of itself constitute Good Reason if his overall
duties and status within FLIC and FNBLI are not substantially adversely
affected.
(ii) A reduction in his annual base salary as in effect at the time of
a Change of Control Event. For purposes hereof, "annual base salary" shall
mean regular basic annual compensation prior to any reduction therein under
a salary reduction agreement pursuant to Section 401(k) or Section 125 of
the Internal Revenue Code and, without limitation, shall exclude fees,
bonuses, incentive awards or similar payments.
(iii) The failure by FLIC or FNBLI to pay Officer any portion of his
current compensation, or to pay him any portion of an installment of a
deferred compensation amount under any deferred compensation program,
within fourteen (14) days of the date such compensation is due.
B. "Cause" shall mean any of the following:
(i) The willful and continued failure by Officer to substantially
perform his duties, as they may be defined by FLIC or FNBLI from time to
time, or to abide by the written policies of FLIC or FNBLI after a written
demand for substantial performance
43
<PAGE>
is delivered to him by the Chief Executive Officer of FLIC or FNBLI, as the
case may be, which specifically identifies the manner in which he has
failed substantially to perform his duties or has failed to abide by such
written policies, and
(ii) The willful engaging by Officer in conduct which is materially
injurious to FLIC or FNBLI, monetarily or otherwise. For the purpose of the
preceding sentence, no act, or failure to act, on the part of Officer shall
be deemed "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act, or failure to act, was in
the best interest of FLIC or FNBLI, as the case may be.
C. "Change of Control Event" shall mean the occurrence of any one of the
following:
(i) Continuing Outside Directors (as hereinafter defined) no longer
constitute at lease two-thirds (2/3) of Outside Directors (as hereinafter
defined) of FLIC;
(ii) There shall be consummated a merger or consolidation of FLIC,
unless at least two-thirds (2/3) of Continuing Outside Directors are to
continue to constitute at least two-thirds (2/3) of Continuing Directors;
(iii) At least two-thirds (2/3) of Continuing Outside Directors
determine that action taken by stockholders constitutes a Change of Control
Event; or
(iv) FNBLI is no longer a wholly-owned subsidiary of FLIC.
D. "Continuing Outside Director" shall mean any individual who is not an
employee of FLIC or FNBLI and who (i) is a director of FLIC as of the date
hereof, (ii) prior to election as a director is nominated by at least two-thirds
(2/3) of the Continuing Outside Directors, or (iii) following election as a
director is designated a Continuing Outside Director by at least two-thirds
(2/3) of Continuing Outside Directors.
E. "Outside Director" shall mean an individual who is not an employee of
FLIC or FNBLI who is a director of FLIC.
6. Withholding Taxes; Other Deductions.
FLIC and FNBLI shall have the right (i) to deduct from any payments due
under this Agreement amounts sufficient to cover withholding as required by law
for any federal, state or local taxes and any amounts due from the Officer to
FLIC or FNBLI and (ii) to take such other action as may be necessary to satisfy
any such withholding or other obligations, including but not limited to
withholding amounts equal to such taxes or obligations from any other amounts
due or to become due from FLIC or FNBLI to Officer.
7. Miscellaneous.
A. Prior Agreement Superseded. This Agreement supersedes and replaces the
Special Severance Agreement between FNBLI and Officer dated November 20, 1998.
B. Employment at Will. Nothing contained herein shall be construed as an
agreement that Officer will continue to be employed by FNBLI for any particular
period of time and the employment of Officer may be terminated by FNBLI at any
time.
C. Accrued Rights. The determination of the Board of Directors of FLIC not
to renew this Agreement shall not
44
<PAGE>
deprive Officer of any right that has accrued to Officer during the term hereof
by reason of the occurrence during the term of this Agreement of an event
described in Section "2" hereof.
D. Notices. Any notices required to be given under this Agreement shall be
in writing and shall be sent by certified mail, return receipt requested, to
FLIC at 10 Glen Head Road, Glen Head, New York 11545, Attention: Chief Executive
Officer, and to you at your residence address as reflected in the records of
FLIC; or to such other address as either party may designate by written notice
to the other.
E. Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
THE FIRST OF LONG ISLAND CORPORATION
By: /s/ J. William Johnson, Chairman
--------------------------------
J. William Johnson, Chairman
/s/ Mark D. Curtis
--------------------------------
Mark D. Curtis
45
EXHIBIT 13 - REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1999
46
<PAGE>
1999
ANNUAL REPORT
[PHOTO OMITTED]
Oyster Sloop Christeen
[LOGO] The First of Long Island
The First of Long Island Corporation
47
<PAGE>
Cover
Oyster Sloop CHRISTEEN
In 1883, Alfred W. Van Cott built the CHRISTEEN in Glenwood Landing, Long
Island, New York for Captain William Smith of Oyster Bay. The CHRISTEEN, the
only Maritime National Historic Landmark on Long Island, is a wooden gaff-rigged
sloop measuring 40' long on deck with a 15' beam and 4' draft. Once a common
sight to Long Island Sound, she is one of the few survivors and is the only one
with an Oyster Bay birthright. The CHRISTEEN is the oldest documented American
vessel still operating in the United States.
A group of Oyster Bay residents formed the Christeen Preservation
Corporation and purchased her for $1 from the Friends of the Bay. The sloop was
then moved to the carpenter's shed at the Jakobson's Shipyard in Oyster Bay for
restoration. Under the direction of Shipwright David Short, thousands of
volunteer hours have been logged.
The newly restored CHRISTEEN was launched on October 2, 1999 and will
become the centerpiece of a program to promote awareness of the region's rich
maritime heritage. The oyster sloop will become a floating laboratory and marine
education classroom in the waters of Oyster Bay Harbor where the vessel once
harvested oysters.
If you would like to become a part of this historic endeavor, by making a
donation or volunteering your time, please call Clint Smith at (516) 922-1098.
48
<PAGE>
SELECTED FINANCIAL DATA
The following is selected consolidated financial data(1) for the past five
years. This data should be read in conjunction with the information contained
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the accompanying consolidated financial
statements and related notes.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: (2)
Total Interest Income ......................... $ 33,963,000 $ 32,682,000 $ 30,401,000 $ 28,585,000 $ 28,017,000
Total Interest Expense ........................ 9,513,000 9,867,000 9,197,000 8,492,000 8,899,000
Net Interest Income ........................... 24,450,000 22,815,000 21,204,000 20,093,000 19,118,000
Provision for Loan Losses (Credit) ............ -- (100,000) (100,000) -- --
Net Income .................................... 9,034,000 8,236,000 7,415,000 6,641,000 5,943,000
PER SHARE DATA: (2)
Basic Earnings ................................ $ 2.97 $ 2.65 $ 2.38 $ 2.12 $ 1.89
Diluted Earnings .............................. 2.92 2.60 2.33 2.08 1.86
Cash Dividends Declared ....................... .64 .57 .49 .43 .37
Stock Splits/Dividends Declared ............... -- -- 3-for-2 -- 3-for-2
Book Value .................................... $ 21.68 $ 20.59 $ 18.55 $ 16.97 $ 15.45
BALANCE SHEET DATA AT PERIOD END:
Total Assets .................................. $ 570,551,000 $ 546,127,000 $ 483,316,000 $ 439,941,000 $ 424,943,000
Total Loans ................................... 182,774,000 170,718,000 154,730,000 152,682,000 145,874,000
Allowance for Loan Losses ..................... 2,033,000 3,651,000 3,579,000 3,600,000 3,600,000
Total Deposits ................................ 503,189,000 479,231,000 422,759,000 384,361,000 373,955,000
Stockholders' Equity .......................... 64,233,000 63,744,000 57,743,000 53,157,000 48,578,000
AVERAGE BALANCE SHEET DATA:
Total Assets .................................. $ 554,561,000 $ 508,982,000 $ 459,391,000 $ 435,822,000 $ 411,137,000
Total Loans ................................... 176,078,000 164,063,000 153,733,000 150,090,000 143,677,000
Allowance for Loan Losses ..................... 2,835,000 3,643,000 3,597,000 3,606,000 3,607,000
Total Deposits ................................ 486,532,000 445,266,000 402,392,000 383,091,000 363,676,000
Stockholders' Equity .......................... 65,406,000 61,037,000 55,116,000 50,342,000 45,278,000
FINANCIAL RATIOS: (2)
Return on Average Total Assets (ROA) .......... 1.63% 1.62% 1.61% 1.52% 1.45%
Return on Average Stockholders' Equity (ROE) .. 13.81% 13.49% 13.45% 13.19% 13.13%
Average Equity to Average Assets .............. 11.79% 11.99% 12.00% 11.55% 11.01%
</TABLE>
(1) Restated - See Note A to Consolidated Financial Statements.
(2) Net income, earnings per share, ROA, and ROE for 1999 are before a $945,000
($.31 per share) credit resulting from a transition adjustment to the
allowance for loan losses.
STOCK PRICES
The Corporation's Common Stock trades on The Nasdaq SmallCap Market tier of
The Nasdaq Stock Market under the symbol FLIC. The following table sets forth
high and low sales prices for the years ended December 31, 1999 and 1998.
1999 1998
-------------------- ----------------------
Quarter High Low High Low
------- -------- -------- -------- ---------
First $ 43 3/4 $ 40 1/2 $ 54 $ 40
Second 40 3/4 36 52 46 3/4
Third 37 1/4 26 48 1/2 41 1/8
Fourth 33 1/4 28 7/8 44 37
At December 31, 1999, there were 768 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.
49
<PAGE>
CONTENTS
Selected Financial Data (i)
Letter to Stockholders 1
Management's Discussion and Analysis of Financial Condition and
Results of Operations 4
Management's Responsibility for Financial Reporting 12
Consolidated Financial Statements and Notes 14
Report of Independent Public Accountants 37
Directors--The First of Long Island Corporation, The First National
Bank of Long Island 38
Senior Management--The First National Bank of Long Island 39
Officers--The First of Long Island Corporation, The First National
Bank of Long Island 40
Business Development Board--The First National Bank of Long Island 41
Official Staff--The First National Bank of Long Island 42
BUSINESS OF THE CORPORATION
The First of Long Island Corporation ("Corporation") is a one-bank holding
company organized under the laws of the State of New York. Its primary business
is the operation of its sole subsidiary, The First National Bank of Long Island
("Bank").
The Bank was organized in 1927 under national banking laws and became the
sole subsidiary of the Corporation under a plan of reorganization effected April
30, 1984.
The Bank is a full service commercial bank which provides a broad range of
financial services to individual, professional, corporate, institutional, and
government customers through its eighteen branch system on Long Island.
The First of Long Island Agency, Inc. was organized in 1994 under the laws
of the State of New York, as a subsidiary of the Bank to conduct business as a
licensed insurance agency engaged in the sale of insurance, primarily fixed
annuity products.
The Bank is subject to regulation and supervision of the Federal Reserve
Board, the Comptroller of the Currency, and the Federal Deposit Insurance
Corporation which also insures its deposits. The Comptroller of the Currency is
the primary banking agency responsible for regulating the subsidiary Bank. In
addition, the Corporation is subject to the regulations and supervision of the
Federal Reserve Board and the Securities and Exchange Commission.
ANNUAL MEETING NOTICE
The Annual Meeting of Stockholders will be held at the Old Brookville
office of The First National Bank of Long Island, 209 Glen Head Road, Glen Head,
New York 11545 on Tuesday, April 18, 2000 at 3:30 P.M.
Executive Office Transfer Agent and Registrar
The First of Long Island Corporation Registrar and Transfer Company
10 Glen Head Road 10 Commerce Drive
Glen Head, New York 11545 Cranford, New Jersey 07016-3572
(516) 671-4900 (800) 368-5948
www.firstofli.com www.rtco.com
50
<PAGE>
A Letter To Our Stockholders
[PHOTO OMITTED]
J. William Johnson
Chairman and Chief Executive Officer
51
<PAGE>
To Our Stockholders, Customers and Friends
I am pleased to report to you on the year 1999, which was perhaps one of
the busiest, most challenging and rewarding years in recent memory. The First of
Long Island enjoyed a strong year in earnings with earnings per share reaching
$2.92 before a special credit. This was a 12% growth over the $2.60 that was
earned in 1998. The special non-recurring credit relating to the allowance for
loan losses added an additional $.31 to earnings per share bringing total 1999
earnings per share to $3.23. Net income before the special credit was
$9,034,000. We were also pleased to be able to increase our dividend for the
21st consecutive year. The dividend declared this past December was $.34 per
share which is an increase of 13% over the amount declared in June. Total
dividends declared in 1999 were $.64 per share.
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
Earnings per share
1979 $ .12
1980 $ .23
1981 $ .25
1982 $ .31
1983 $ .39
1984 $ .57
1985 $ .87
1986 $1.02
1987 $1.09
1988 $1.25
1989 $1.29
1990 $1.37
1991 $1.29
1992 $1.55
1993 $1.66
1994 $1.82
1995 $1.86
1996 $2.08
1997 $2.33
1998 $2.60
1999 $2.92
On a fully diluted basis
Without question, the most important factor favorably impacting the
earnings growth was a substantial increase in checking balances, which were on
average 10% greater than the prior year. The principal reason for the growth was
the amount of commercial checking balances solicited by our officers. Their
ability to accomplish these highest ever balances was augmented by our opening
four branches between February 1998 and January 1999. Growth in service charge
income and money market type savings accounts also had a favorable impact on the
earnings increase.
From year-end 1998 to year-end 1999, loans secured by real estate grew
approximately $15,200,000 or 12%. The largest category of increase was
residential mortgage loans which were up $9,200,000 or 21%. The growth in
residential mortgages is believed to be caused by three factors: a sales
commitment on our part, a strong housing market and mortgage refinancing
particularly in the first half of the year. We were also very pleased with a
significant increase in new commercial mortgages with closings totaling
$20,000,000.
A common measure of a bank's financial performance is Return on Assets. The
Bank continued to experience a strong return. As depicted in the accompanying
chart, Return on Assets was 1.63% in 1999 and has averaged 1.57% for the past
five years. In 1998, the financial performance of The First of Long Island was
acclaimed in US Banker as we were rated "3rd" in nation among the top 200
mid-sized, publicly traded banks in the nation. This year in the June 1999
edition of US Banker we moved up a notch and were rated "2nd" in nation among
the mid-sized banks.
This past year we devoted considerable activity to our data processing
applications. In the first quarter of 1999, we completed the installation of our
new branch automation system which resulted in an entire new front-end
processing system for all of our branches. Now, every teller and branch platform
employee has a PC at his or her workstation. January 1, 2000 and the next few
days saw the culmination of the very substantial efforts that went into making
our data processing systems Y2K compliant and providing contingency plans should
there be a problem. We were confident that we would meet the Y2K challenge
successfully but it's still very nice to be through that important date!
52
<PAGE>
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
Cash Dividends Declared Per Share
1979 $ .01
1980 $ .03
1981 $ .03
1982 $ .05
1983 $ .07
1984 $ .08
1985 $ .12
1986 $ .15
1987 $ .17
1988 $ .19
1989 $ .19
1990 $ .23
1991 $ .25
1992 $ .28
1993 $ .31
1994 $ .34
1995 $ .37
1996 $ .43
1997 $ .49
1998 $ .57
1999 $ .64
As we move into the year 2000, important items on our agenda include PC
Banking, which we expect to introduce on the Internet in the first half of the
year. PC Banking is already available to our business customers on a dedicated
telephone line, but that will be converted to an Internet program and a similar
system will also be available to all other customers. The First of Long Island
has offered telephone banking for some time. This very popular service as well
as PC Banking will be expanded to have bill payment available as an added
feature. In 2000 and beyond, we will continue our emphasis on opening commercial
banking offices. We have currently targeted certain areas, although finding
suitable units within those areas can often be difficult. This method of
expansion has proved successful and we will work to locate sites in those
targeted areas as well as in additional areas in the future.
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
Return on Average Assets
1995 1.45%
1996 1.52%
1997 1.61%
1998 1.62%
1999 1.63%
Looking forward to the next century is tremendously challenging. We are in
the midst of the greatest sustained economic growth in recent history.
Technology, particularly the PC and the Internet, fueled by improved
telecommunications, is radically changing our lives, while creating uncertainty
as to its ultimate effect. We are also challenged by the possibility of interest
being paid on corporate checking balances. Yet at the same time the public's
acceptance and demand for our services has never been stronger. This is
particularly true for the customers we focus on: privately-owned businesses,
professionals and the service conscious consumer. I sincerely believe that the
quality of personal service provided at The First of Long Island is unequalled
by any of our competitors, and it is provided at a reasonable price. We will
strive hard to maintain that high quality of customer service and to increase
our customer base. As we stated last year, we look forward to the future with
some concern but with confidence that The First of Long Island will continue to
be a premier financial institution, not only on Long Island, but in the United
States as a whole.
/s/ J. William Johnson
J. William Johnson
Chairman and Chief Executive Officer
53
<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
1999 Versus 1998 Summary. Before a transition adjustment to the allowance
for loan losses, the Corporation earned $2.92 per share in 1999 as compared to
$2.60 in 1998, an increase of 12%. Based on 1999 net income of $9,034,000 before
the transition adjustment, the Corporation returned 1.63% on average total
assets and 13.81% on average total equity as compared to returns of 1.62% and
13.49% in 1998. Total assets and deposits were $570,551,000 and $503,189,000,
respectively, at December 31, 1999, representing increases over prior year-end
balances of almost 5%. Despite a significantly increased level of activity under
the Corporation's stock repurchase program, total capital before unrealized
gains and losses on available-for-sale securities grew by $3,089,000 in 1999, or
approximately 5%, and the Corporation's capital ratios continue to substantially
exceed the current regulatory criteria for a well-capitalized bank. In addition,
the Corporation's liquidity continues to be strong.
The most important factor in the increase in earnings for 1999 before the
transition adjustment was an increase in checking account balances. Average
checking balances for 1999 were up almost $16 million, or just over 10%. As in
prior years, the Bank was able to use the growth of checking balances as a key
strategy in increasing earnings per share. Also important to the earnings
increase was growth in money market savings type balances and service charge
income.
When comparing year-end balances, the Bank's mortgage loan portfolio grew
by 11.5% in 1999 as compared to 8.8% in 1998 and .7% in 1997. The 1999 growth is
comprised of an increase in commercial mortgages of almost 8% and an increase in
residential mortgages, including home equity loans and lines, of 16%. Commercial
mortgages continue to be the Bank's most important loan product. The increased
growth rate for mortgage loans experienced in the last two years was primarily
attributable to increased solicitation efforts coupled with excellent conditions
in the Long Island economy.
The Bank's portfolios of tax-exempt securities and collateralized mortgage
obligations ("CMOs") grew during 1999, while the U.S. Treasury portfolio
declined. This occurred as a result of management's efforts to take advantage of
the better returns afforded by municipal securities and CMOs relative to the
Treasury sector. Savings and money market deposits were up 7.7% when comparing
year-end 1999 to 1998 primarily because of growth in "Select Savings" and
nonpersonal money market balances. The Select Savings product is a statement
savings account that earns a higher money market rate.
1999 was a successful year from the standpoint of the Corporation's stock
repurchase program in that the Corporation was able to repurchase almost 143,000
shares of common stock, representing approximately 5% of total shares
outstanding at the beginning of the year. This compares to repurchases of
approximately 34,000 and 53,000 shares in 1998 and 1997, respectively. The stock
repurchase program has been used by management to enhance both earnings per
share and return on average stockholders' equity (ROE).
1998 Versus 1997 Summary. The Corporation earned $2.60 per share in 1998 as
compared to $2.33 in 1997, an increase of almost 12%. Based on 1998 net income
of $8,236,000, the Corporation returned 1.62% on average total assets and 13.49%
on average total equity, representing returns just slightly above those realized
in 1997. Total assets and deposits were $546,127,000 and $479,231,000,
respectively, at December 31, 1998, representing increases over prior year-end
balances of approximately 13%. Total capital before unrealized gains on
available-for-sale securities grew by $5,202,000, or approximately 9%, during
1998.
The most significant reason for the positive results in 1998 was an
increase in average checking balances of $21,699,000, or a bit more than 16%. As
in prior years, the Bank was able to use the growth of checking balances as a
key strategy in increasing earnings per share. Other factors that positively
impacted 1998 results were the growth of capital, an 11.7% increase in service
charge income, and commercial loan growth.
54
<PAGE>
The Bank's portfolios of tax-exempt securities and collateralized mortgage
obligations ("CMOs") grew substantially during 1998, while the U.S. Treasury
portfolio declined. The reason for this change in mix in the portfolio during
1998 is the same as that already discussed with respect to 1999. Savings and
money market deposits were up 9.5% when comparing year-end 1998 to 1997
primarily because of growth in "Select Savings" and "Advantage" balances. The
Advantage product is an interest-bearing checking account. Advantage balances
grew largely because of increased solicitation of IOLA (interest on lawyer)
accounts.
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.
<TABLE>
<CAPTION>
1999 1998 1997
---------------------------- --------------------------- ---------------------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
--------- -------- ------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets: (dollars in thousands)
Federal funds sold................... $ 69,860 $ 3,439 4.92% $ 56,355 $ 2,953 5.24% $ 47,664 $ 2,580 5.41%
Investment securities:
Taxable ........................... 192,824 11,646 6.04 194,380 12,039 6.19 188,456 11,828 6.28
Nontaxable (1) .................... 84,040 5,705 6.79 69,334 4,706 6.79 46,897 3,264 6.96
Loans (1) (2) ....................... 176,078 15,171 8.62 164,063 14,661 8.94 153,733 13,862 9.02
-------- -------- ------- -------- -------- ------- -------- -------- --------
Total interest-earning assets (1) ... 522,802 35,961 6.88 484,132 34,359 7.10 436,750 31,534 7.22
-------- ------- -------- ------- -------- -------- --------
Allowance for loan losses ........... (2,835) (3,643) (3,597)
-------- -------- --------
Net interest-earning assets.......... 519,967 480,489 433,153
Cash and due from banks.............. 20,954 17,429 16,214
Premises and equipment, net ......... 6,444 5,424 4,948
Other assets ........................ 7,196 5,640 5,076
-------- -------- --------
$554,561 $508,982 $459,391
======== ======== ========
Liabilities and
Stockholders' Equity:
Savings and money
market deposits ................... $278,148 7,984 2.87 $250,236 7,998 3.20 $229,639 7,309 3.18
Time deposits ....................... 37,652 1,529 4.06 40,249 1,869 4.64 39,671 1,888 4.76
-------- -------- ------- -------- -------- ------- -------- -------- --------
Total interest-bearing deposits ..... 315,800 9,513 3.01 290,485 9,867 3.40 269,310 9,197 3.42
-------- -------- ------- -------- -------- ------- -------- -------- --------
Checking deposits (3) ............... 170,732 154,781 133,082
Other liabilities ................... 2,623 2,679 1,883
-------- -------- --------
489,155 447,945 404,275
Stockholders' equity ................ 65,406 61,037 55,116
-------- -------- --------
$554,561 $508,982 $459,391
======== ======== ========
Net interest income (1) ............. $ 26,448 $ 24,492 $ 22,337
======== ======== ========
Net interest spread (1) ............. 3.87% 3.70% 3.80%
======= ======= =======
Net interest yield (1)............... 5.06% 5.06% 5.11%
======= ======= =======
</TABLE>
(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
Bank'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 each year presented, 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.
55
<PAGE>
Rate/Volume Analysis. The following table sets forth the effect of changes
in volumes, rates, and rate/volume on tax-equivalent interest income, interest
expense and net interest income.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 versus 1998 1998 versus 1997
Increase (decrease) due to changes in: Increase (decrease) due to changes in:
---------------------------------------- ---------------------------------------
Rate/ Net Rate/ Net
Volume Rate Volume(2) Change Volume Rate Volume(2) Change
------- ------- --------- ------- ------- ------- --------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income:
Federal funds sold ........ $ 708 $ (179) $ (43) $ 486 $ 470 $ (82) $ (15) $ 373
Investment securities:
Taxable ................. (96) (299) 2 (393) 372 (156) (5) 211
Nontaxable (1) .......... 998 1 -- 999 1,562 (81) (39) 1,442
Loans (1) ................. 1,074 (525) (39) 510 931 (124) (8) 799
------- ------- ------- ------- ------- ------- ------- -------
Total interest income ..... 2,684 (1,002) (80) 1,602 3,335 (443) (67) 2,825
------- ------- ------- ------- ------- ------- ------- -------
Interest Expense:
Savings and money
market deposits ......... 892 (815) (91) (14) 656 31 2 689
Time deposits ............. (121) (235) 16 (340) 28 (46) (1) (19)
------- ------- ------- ------- ------- ------- ------- -------
Total interest expense .... 771 (1,050) (75) (354) 684 (15) 1 670
------- ------- ------- ------- ------- ------- ------- -------
Increase (decrease) in net
interest income ......... $ 1,913 $ 48 $ (5) $ 1,956 $ 2,651 $ (428) $ (68) $ 2,155
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(1) Tax-equivalent basis.
(2) Represents the change not solely attributable to change in rate or change
in volume but a combination of these two factors.
Net Interest Income - 1999 Versus 1998
Net interest income on a tax-equivalent basis increased by $1,956,000, or
8.0%, from $24,492,000 in 1998 to $26,448,000 in 1999. As can be seen from the
above rate/volume analysis, the increase is primarily attributable to a positive
volume variance of $1,913,000.
The positive volume variance was largely caused by growth in average
checking deposits and the use of such funds to purchase investment securities
and originate loans. When comparing 1999 to 1998, average checking deposits
increased by $15,951,000, or 10.3%. Also contributing to the positive volume
variance was growth in the overall balance of money market type products and
stockholders' equity and the use of such funds to purchase investment
securities, originate loans, and increase the Bank's overnight position in
federal funds sold. When comparing 1999 to 1998, the average balance for money
market type products increased by $28,689,000, or 13.9%, and average
stockholders' equity increased by $4,369,000, or 7.2%.
Funding interest-earning asset growth with growth in checking deposits and
capital has a greater impact on net interest income than funding such growth
with interest-bearing deposits because checking deposits and capital, unlike
interest-bearing deposits, have no associated interest cost. The growth of
checking balances has historically been one of the Corporation's key strategies
for increasing earnings per share.
The Bank's calling program is a significant factor that favorably impacted
the growth in average checking balances noted when comparing 1999 to 1998, and
competitive pricing is a significant contributing factor with respect to the
growth in average interest-bearing deposits noted during the same period. In
addition, the growth in both checking and interest-bearing deposits is also
attributable to new branch openings in 1998 and early 1999, the Bank's attention
to customer service and excellent conditions in the local economy.
Net interest spread and yield were 3.87% and 5.06%, respectively, for 1999
as compared to 3.70% and 5.06%, respectively, for 1998. It would appear that a
principal cause for the increase in spread was that in January 1999 the Bank
lowered the rates paid on its traditional savings and interest-bearing checking
products to more closely align them with local market conditions. However, it
should be noted that during the latter half of 1999 the federal funds target
rate
56
<PAGE>
increased by 75 basis points and the Bank increased its prime lending rate and
the rates paid on its money market type products by a like amount. As more fully
discussed in the Market Risk section of this Discussion and Analysis of
Financial Condition and Results of Operations, an increase in interest rates
should initially have a negative impact on net interest income, while a
sustained increase should have the opposite effect.
In 1999, nontaxable investment securities represented 16.1% of total
average interest-earning assets, up from 14.3% in 1998 and 10.7% in 1997 . The
continued increase in nontaxable securities resulted from management's efforts
to grow the longer-term, municipal securities portfolio in light of the
favorable returns offered by municipals relative to U.S. Treasury securities.
Net Interest Income - 1998 Versus 1997
Net interest income on a tax-equivalent basis increased by $2,155,000, or
9.6%, from $22,337,000 in 1997 to $24,492,000 in 1998. As can be seen from the
Rate/Volume Analysis, the increase was primarily comprised of a positive volume
variance of $2,651,000 and a negative rate variance of $428,000.
The positive volume variance was largely caused by growth in average
checking deposits and stockholders' equity and the use of such funds to purchase
investment securities and originate loans. When comparing 1998 to 1997, average
checking deposits increased by $21,699,000, or 16.3%, and average stockholders'
equity increased by $5,921,000, or 10.7%.
Also contributing to the positive volume variance was growth in the overall
balance of money market type products. The resulting funds were used to increase
the Bank's overnight position in federal funds sold and to purchase securities
and originate loans. When comparing 1998 to 1997, the average balance for money
market type products increased by $25,091,000, or 13.8%. The reasons for the
growth in checking and money market type products during 1998 are the same as
those already discussed with respect to 1999.
Net interest spread and yield were 3.70% and 5.06%, respectively, for 1998
as compared to 3.80% and 5.11%, respectively, for 1997. It would appear that the
principal cause for the decreases in spread and yield was a generally lower
level of interest rates.
Noninterest Income, Noninterest Expense, and Income Taxes
Noninterest income consists primarily of service charges on deposit
accounts and Trust Department income. Noninterest income was $4,966,000 and
$4,596,000 in 1999 and 1998, respectively, representing increases over prior
year amounts of $370,000, or 8.1%, and $634,000, or 16.0%. The increase for 1999
is largely comprised of increases in account maintenance/activity charges and
insufficient funds charges. The increase for 1998 was largely comprised of
increases in Trust Department income, account maintenance/activity charges, and
insufficient funds charges.
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 was
$16,321,000 and $15,469,000 in 1999 and 1998, respectively, representing
increases over prior year amounts of $852,000, or 5.5%, and $1,184,000, or 8.3%.
The increase for 1999 is primarily attributable to an increase in salaries of
$404,000, an increase in occupancy and equipment expense of $233,000, and an
increase in other operating expenses of $318,000. The increase in salaries is
primarily attributable to normal annual salary increases and new branch
openings. The Bank opened two commercial banking offices in Suffolk County, Long
Island in the third quarter of 1998, and an additional commercial banking office
in Nassau County, Long Island in January 1999. The increase in occupancy and
equipment expense is primarily attributable to the new branch openings and
significant equipment upgrades made principally in the Bank's branch system. The
increase in other operating expenses, which includes computer service expense,
is partially attributable to the new branch openings and equipment upgrades.
The increase in noninterest expense for 1998 was primarily attributable to
increases in salaries and other operating expenses of $633,000 and $323,000,
respectively. The increase in salaries was primarily attributable to normal
annual salary increases and the opening of a full-service branch in Rockville
Centre, Nassau County, Long Island in February of 1998 (the Bank simultaneously
closed its Rockville Centre commercial banking office) and two new commercial
banking offices in Suffolk County, Long Island in the third quarter of 1998. The
increase in other operating expenses was largely attributable to the new branch
openings.
Income tax expense as a percentage of book income was 31.0%, 31.6%, and
32.5% in 1999, 1998 and 1997, respectively. The decrease in the percentage over
the last two years is primarily attributable to an increase in the size of the
Bank's tax-exempt securities portfolio.
57
<PAGE>
Allowance and Provision For Loan Losses
The allowance for loan losses was $2,033,000 at December 31, 1999 as
compared to $3,651,000 at December 31, 1998, representing 1.1% and 2.1% of total
loans, respectively. The reduction in the allowance during 1999 is primarily due
to a $1,600,000 transition adjustment made in the second quarter. The transition
adjustment was made in response to guidance issued by staff members of the
Financial Accounting Standards Board and further guidance issued by staff
members of the Securities and Exchange Commission.
The allowance for loan losses is an amount that management currently
believes will be adequate to absorb estimated inherent losses in the Bank's loan
portfolio. In estimating a range for such losses the Bank selectively reviews
individual credits in its portfolio and, for those loans deemed to be impaired,
measures impairment losses based on either the fair value of collateral or the
discounted value of expected future cash flows. Losses for loans that are not
specifically reviewed are determined on a pooled basis taking into account a
variety of factors including historical losses; 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.
In addition to reviewing its own portfolio, management also considers
relevant loan loss statistics for the Bank's peer group. Because the process for
estimating credit losses and determining the allowance for loan losses as of any
balance sheet date is subjective in nature and requires material estimates,
there is not an exact amount but rather a range for what constitutes an
appropriate allowance.
The amount of future chargeoffs and provisions for loan 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. In addition,
future provisions and chargeoffs could be affected by environmental impairment
of properties securing the Bank's mortgage loans. Loans secured by real estate
represent approximately 81% of total loans outstanding at December 31, 1999.
Since 1987, environmental audits have been instituted for commercial mortgages,
and the scope of these audits has been increased over the succeeding years.
Under the Bank's current policy, an environmental audit is required on
practically all commercial-type properties that are considered for a mortgage
loan. At the present time, the Bank is not aware of any existing loans in the
portfolio where there is environmental pollution originating on the mortgaged
properties that would materially affect the value of the portfolio.
Asset Quality
The Corporation has identified certain assets as risk elements. These
assets present more than the normal risk that the Bank 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, 1998.
December 31,
--------------------
1999 1998
----- -----
(dollars in thousands)
Nonaccruing loans .................................... $ 28 $ 22
Foreclosed real estate ................................ -- --
----- -----
Total nonperforming assets .......................... 28 22
Troubled debt restructurings .......................... -- --
Loans past due 90 days or more as to
principal or interest payments and still accruing ... 5 --
----- -----
Total risk elements ................................. $ 33 $ 22
===== =====
Nonaccruing loans as a percentage of total loans ...... .02% .01%
===== =====
Nonperforming assets as a percentage of total loans
and foreclosed real estate .......................... .02% .01%
===== =====
Risk elements as a percentage of total loans and
foreclosed real estate .............................. .02% .01%
===== =====
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
58
<PAGE>
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 29.88%,
28.98% and 11.24%, respectively, at December 31, 1999 substantially exceed the
requirements for a well-capitalized bank.
Total stockholders' equity increased by $489,000 from $63,744,000 at
December 31, 1998 to $64,233,000 at December 31, 1999. The increase in
stockholders' equity is primarily attributable to the combined effect of net
income of $9,979,000, repurchases of common stock amounting to $5,116,000,
unrealized losses on available-for-sale securities of $2,600,000, and cash
dividends declared of $1,915,000.
Cash Flows and Liquidity
Cash Flows. During 1999, cash and cash equivalents decreased by $7,162,000.
This decrease, along with $10,485,000 in cash provided by operations and
$23,958,000 in deposit growth were the primary sources of funding increases in
investment securities and loans of $21,480,000 and $12,074,000, respectively,
repurchases of common stock amounting to $5,116,000, cash dividends paid of
$1,837,000, and capital expenditures of $1,235,000.
As reflected in the accompanying consolidated balance sheet, the
$23,958,000 growth in deposits from year-end 1998 to year-end 1999 is comprised
of an increase in checking deposits of $3,576,000, or 2.0%, and an increase in
total interest-bearing deposits of $20,382,000, or 6.7%. The increase in
interest-bearing deposits is primarily attributable to growth in money market
balances. The increase in the loan portfolio during 1999 is primarily
attributable to an increase in mortgage loans of $15,241,000, or 11.5%.
Liquidity. The Corporation's primary sources of liquidity are its
overnight position in federal funds sold; its short-term investment securities
portfolio which generally consists of securities purchased to mature within one
year and securities with average lives of one year or less; maturities and
monthly payments on the balance of the investment securities portfolio and the
loan portfolio; and, to the extent not pledged, investment securities designated
as available-for-sale. At December 31, 1999, the Corporation had $64,000,000 in
federal funds sales, a short-term securities portfolio of $20,655,000, and
available-for-sale securities not subject to pledge agreements of $72,611,000.
The Corporation's liquidity is enhanced by its stable deposit base which
primarily consists of checking, savings and money market accounts. Such accounts
comprised 92.3% of total deposits at December 31, 1999, while time deposits of
$100,000 and over and other time deposits comprised only 2.9% and 4.8%,
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.
Market Risk
The Bank invests in interest-earning assets which are funded by
interest-bearing deposits, noninterest-bearing deposits, and capital. The Bank's
results of operations are subject to risk resulting from interest rate
fluctuations generally and from having assets and liabilities that have
different maturity, repricing, prepayment/withdrawal characteristics or do not
have a direct interest cost. The Bank defines interest rate risk as the risk
that the Bank's earnings and/or net portfolio value (defined below) will change
when interest rates change. The principal objective of the Bank's
asset/liability management activities is to maximize net interest income while
at the same time maintaining acceptable levels of interest rate and liquidity
risk and facilitating the funding needs of the Bank.
Because the Bank's interest-bearing deposit accounts generally reprice
faster than its loans and investment securities, a decrease in interest rates
should initially have a positive impact on net interest income. However, since
approximately 45% of the Bank's average interest-earning assets are funded by
noninterest-bearing checking deposits and capital, a sustained decrease in
interest rates should have a negative impact on net interest income as such
assets reprice at lower rates without an offsetting reduction in interest
expense. The opposite should be true of an increase in interest rates.
The Bank monitors and controls interest rate risk through a variety of
techniques including the use of interest rate sensitivity models and traditional
interest rate sensitivity gap analysis. Through use of the models, the Bank
projects future net interest income and then estimates the effect on projected
net interest income of various changes in interest rates and balance sheet
growth rates. The Bank also uses the models to calculate the change in net
portfolio value ("NPV") over a range of interest rate change scenarios. Net
portfolio value is the present value of expected future cash flows from assets
less the present value of expected cash flows from liabilities. Traditional gap
analysis involves arranging the Bank's interest-earning assets and
interest-bearing liabilities by repricing periods and then computing the
difference, or
59
<PAGE>
interest-rate sensitivity gap, between the assets and liabilities which are
estimated to reprice during each time period and cumulatively through the end of
each time period.
Both interest rate sensitivity modeling and gap analysis involve a variety
of significant estimates and assumptions and are done at a specific point in
time. Interest rate sensitivity modeling requires, among other things, estimates
of: (1) how much and when yields and costs on individual categories of
interest-earning assets and interest-bearing liabilities will adjust because of
projected changes in market interest rates; (2) future cash flows; and (3)
discount rates.
Gap analysis requires estimates as to when individual categories of
interest sensitive assets and liabilities will reprice and assumes that assets
and liabilities assigned to the same repricing period will reprice at the same
time and in the same amount. Like sensitivity modeling, gap analysis does not
fully take into account the fact that the repricing of some assets and
liabilities is discretionary and subject to competitive and other pressures.
Changes in the estimates and assumptions made for interest rate sensitivity
modeling and gap analysis could have a significant impact on projected results
and conclusions. Therefore, these techniques may not accurately reflect the
actual impact of general interest rate movements on the Bank's net interest
income or net portfolio value.
The following table is provided pursuant to the market risk disclosure
rules set forth in Item 305 of Regulation S-K of the Securities and Exchange
Commission. The information provided in the table is based on significant
estimates and assumptions and constitutes a "forward looking statement" within
the meaning of that term as set forth in Rule 175 of the Securities Act of 1933
and Rule 3b-6 of the Securities Act of 1934. The base case information in the
table shows (1) an estimate of the Corporation's NPV at December 31, 1999
arrived at by discounting estimated future cash flows at current market rates
and (2) an estimate of net interest income for 2000 assuming that maturing
assets or liabilities are replaced with new balances of the same type, in the
same amount, and at current rate levels. The rate change information in the
table shows estimates of NPV at December 31, 1999 and net interest income for
2000 assuming rate changes of plus 100 and 200 basis points and minus 100 and
200 basis points. Rate changes are assumed to be shock or immediate changes and
occur uniformly across the yield curve regardless of the duration to maturity or
repricing of specific assets and liabilities. In projecting future net interest
income under the indicated rate change scenarios, activity is simulated by
replacing maturing balances with new balances of the same type, in the same
amount, but at the current rate level and adjusting repricing balances to the
current rate level.
Based on the foregoing assumptions and as depicted in the table below, an
immediate decrease in interest rates would have a positive effect on net
interest income over a one-year time period. This is principally because the
Bank's interest-bearing deposit accounts reprice faster than its loans and
investment securities. However, over a longer period of time, and assuming that
interest rates remain stable after the initial rate decrease, the impact should
be negative. This occurs primarily because with the passage of time more loans
and investment securities will reprice at the lower rates and, as previously
stated, there will be no offsetting reduction in interest expense for those
loans and investment securities funded by noninterest-bearing checking deposits
and capital. The opposite should be true of an immediate increase in interest
rates and with rate stabilization at that level.
Net Portfolio Value (NPV) Net Interest Income
at December 31, 1999 for 2000
------------------------- --------------------
Percent Percent
Change Change
From From
Rate Change Scenario Amount Base Case Amount Base Case
- -------------------- ------ --------- ------ ---------
(dollars in thousands)
+ 200 basis point rate shock .... $35,780 (40.6)% $22,327 (10.9)%
+ 100 basis point rate shock .... 47,656 (20.9) 23,692 (5.5)
Base case (no rate change)..... 60,219 -- 25,059 --
- - 100 basis point rate shock .... 73,573 22.2 26,425 5.5
- - 200 basis point rate shock .... 87,826 45.8 27,511 9.8
60
<PAGE>
The following table summarizes the Corporation's cumulative interest rate
sensitivity gap at December 31, 1999 based upon significant estimates and
assumptions that the Corporation believes to be reasonable.
<TABLE>
<CAPTION>
Repricing Date
-------------------------------------------------------------------------------------------
Over Over Over
Three Six One Year
Three Months Months Total Through Over Non-
Months Through Through Within Five Five interest-
or Less Six Months One Year One Year Years Years Sensitive Total
---------- ----------- ---------- ----------- ---------- ----------- ----------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold ............... $ 64,000 $ -- $ -- $ 64,000 $ -- $ -- $ -- $ 64,000
Investment securities ............ 27,131 13,814 18,947 59,892 144,964 88,267 (2,260) 290,863
Loans ............................ 62,144 14,421 28,837 105,402 59,404 17,418 (1,483) 180,741
Other assets ..................... -- -- -- -- -- -- 34,947 34,947
--------- --------- --------- --------- --------- --------- --------- ---------
153,275 28,235 47,784 229,294 204,368 105,685 31,204 570,551
--------- --------- --------- --------- --------- --------- --------- ---------
Liabilities and Stockholders' Equity:
Checking deposits ................ -- -- -- -- -- -- 178,622 178,622
Savings and money market deposits 215,042 5,903 9,394 230,339 22,130 33,548 -- 286,017
Time deposits .................... 21,861 8,778 5,072 35,711 2,784 55 -- 38,550
Other liabilities ................ -- -- -- -- -- -- 3,129 3,129
Stockholders' equity ............. -- -- -- -- -- -- 64,233 64,233
--------- --------- --------- --------- --------- --------- --------- ---------
236,903 14,681 14,466 266,050 24,914 33,603 245,984 570,551
--------- --------- --------- --------- --------- --------- --------- ---------
Interest-rate sensitivity gap ....... $ (83,628) $ 13,554 $ 33,318 $ (36,756) $ 179,454 $ 72,082 $(214,780) $ --
========= ========= ========= ========= ========= ========= ========= =========
Cumulative interest-rate
sensitivity gap .................... $ (83,628) $ (70,074) $ (36,756) $ (36,756) $ 142,698 $ 214,780 $ -- $ --
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
Year 2000
The Bank transitioned into the new millennium with no systems or other Year
2000 problems. As a result of the Year 2000 issue, the Bank accelerated the
upgrading of its communication systems and equipment used in its branch system.
The total cost of the upgrades was approximately $1,500,000. Other than the cost
of the equipment upgrades, the Bank met its Year 2000 commitment using internal
resources and without incurring significant incremental expenses.
Regulatory Matters
Pending Legislation. Commercial checking deposits currently account for
approximately 26% of the Bank's total deposits. Congress is currently
considering legislation that would allow customers to cover checks by sweeping
funds from interest-bearing deposit accounts each business day and repeal the
prohibition of the payment of interest on corporate checking deposits in the
future. Although management currently believes that the Bank's earnings could be
more severely impacted by permitting the payment of interest on corporate
checking deposits than the daily sweeping of funds from interest-bearing
accounts to cover checks, either could have a material adverse impact on the
Bank's future results of operations.
Examinations. The subsidiary Bank was examined by the Office of the
Comptroller of the Currency in the fourth quarter of 1999. The examination was a
regularly scheduled safety and soundness examination and also included a review
of the Bank's compliance with the Community Reinvestment Act and consumer
compliance laws and the Bank's Year 2000 preparedness. Management is not aware,
nor has it been apprised, of any recommendations by regulatory authorities that
involve a material effect on the Corporation's liquidity, capital resources, or
operations.
Forward Looking Statements
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" contains various forward looking statements with respect to
financial performance and business matters. Such statements are contained in
sentences including the words "expect" or "could" or "should" or "would". The
Corporation cautions that these forward looking statements are subject to
numerous assumptions, risks and uncertainties, and therefore actual results
could differ materially from those contemplated by the forward looking
statements. In addition, the Corporation assumes no duty to update forward
looking statements.
61
<PAGE>
MANAGEMENT'S RESPONSIBILITY
FOR FINANCIAL REPORTING
The management of The First of Long Island Corporation is responsible for
the preparation of the financial statements, related financial data and other
information in this annual report. The financial statements are prepared in
accordance with generally accepted accounting principles and include amounts
based on management's estimates and judgment where appropriate. Financial
information appearing throughout this annual report is consistent with the
financial statements.
In meeting its responsibility both for the reliability and integrity of
these statements and information, management depends on its accounting systems
and related internal control structures. These systems and controls have been
designed to provide reasonable assurances that assets are safeguarded and that
transactions are authorized and recorded in accordance with established
procedures and that reliable records are maintained. As an integral part of the
internal control structure, the Corporation maintains a staff of internal
auditors who monitor compliance with and assess the effectiveness of the
internal control structure and coordinate audit coverage with the independent
auditors.
The Corporation's Examining Committee of the Board of Directors, composed
solely of outside directors, meets regularly with the Corporation's internal
auditors, independent auditors and regulatory examiners to review matters
relating to financial reporting, internal control structure and the nature,
extent and results of the audit effort. The independent auditors, internal
auditors and banking regulators have direct access to the Examining Committee
with or without management present.
The financial statements for each of the three years in the period ended
December 31, 1999 have been audited by Arthur Andersen LLP, independent public
accountants, who render an independent professional opinion on management's
financial statements. Their appointment was approved by the Board of Directors.
The examinations provide an objective assessment of the degree to which the
Corporation's management meets its responsibility for financial reporting. Their
opinions on the financial statements are based on auditing procedures which
include reviewing internal control structures and performing selected tests of
transactions and records as deemed appropriate. These auditing procedures are
designed to provide a reasonable level of assurance that the financial
statements are fairly presented in all material respects.
62
<PAGE>
Superior Service & Commitment To Excellence
[PHOTOS OMITTED]
The Anthony D. Famighetti Award
A commitment to excellence is the predominant characteristic we look for when
selecting the recipient of The Anthony D. Famighetti Award. Each year at our
Annual Meeting, we recognize that employee who continually demonstrates a
dedication to their job and the Bank and who performs at a level that far
exceeds what is expected.
We are proud to include the previous winners of this most prestigious award in
our 1999 Annual Report.
Top Photo
Catherine Irvin, employed since 1984; Eveline Ratte, employed since 1987; James
Clavell, employed since 1981; Susan J. Hempton, employed since 1980; Elissa A.
Toussaint, employed since 1987
Bottom Photo
Mary Lou Martin, employed since 1975; Constance Miller, employed since 1989;
Henry A. Kramer, employed since 1982; Betsy Gustafson, employed since 1974;
Gretchen Nesky, employed since 1973
Missing from photo:
Denise M. Haynes employed since 1986
63
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
Assets:
Cash and due from banks .................................. $ 21,174,000 $ 16,336,000
Federal funds sold ....................................... 64,000,000 76,000,000
------------- -------------
Cash and cash equivalents .............................. 85,174,000 92,336,000
------------- -------------
Investment securities:
Held-to-maturity, at amortized cost (fair
value of $187,258,000 and $191,252,000) ........ 189,998,000 187,633,000
Available-for-sale, at fair value (amortized cost
of $103,125,000 and $84,878,000) ............... 100,865,000 87,021,000
------------- -------------
290,863,000 274,654,000
------------- -------------
Loans:
Commercial and industrial ......................... 30,296,000 28,748,000
Secured by real estate ............................ 147,598,000 132,357,000
Consumer .......................................... 5,284,000 6,366,000
Other ............................................. 549,000 4,119,000
------------- -------------
183,727,000 171,590,000
Unearned income ................................... (953,000) (872,000)
------------- -------------
182,774,000 170,718,000
Allowance for loan losses ......................... (2,033,000) (3,651,000)
------------- -------------
180,741,000 167,067,000
------------- -------------
Bank premises and equipment .............................. 6,746,000 6,312,000
Prepaid income taxes ..................................... 194,000 153,000
Deferred income tax benefits ............................. 1,197,000 116,000
Other assets ............................................. 5,636,000 5,489,000
------------- -------------
$ 570,551,000 $ 546,127,000
============= =============
Liabilities:
Deposits:
Checking .......................................... $ 178,622,000 $ 175,046,000
Savings and money market .......................... 286,017,000 265,684,000
Time, other ....................................... 23,882,000 25,446,000
Time, $100,000 and over ........................... 14,668,000 13,055,000
------------- -------------
503,189,000 479,231,000
Accrued expenses and other liabilities ................... 3,129,000 3,152,000
------------- -------------
506,318,000 482,383,000
------------- -------------
Commitments and Contingent Liabilities
Stockholders' Equity:
Common stock, par value $.10 per share:
Authorized, 20,000,000 shares;
Issued and outstanding, 2,962,803 and 3,095,971 shares 296,000 310,000
Surplus .................................................. 2,258,000 4,219,000
Retained earnings ........................................ 63,013,000 57,949,000
------------- -------------
65,567,000 62,478,000
Accumulated other comprehensive income (loss), net of tax (1,334,000) 1,266,000
------------- -------------
64,233,000 63,744,000
------------- -------------
$ 570,551,000 $ 546,127,000
============= =============
</TABLE>
See notes to consolidated financial statements
64
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------------------
Year Ended December 31,
---------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Interest income:
Loans ..................................................... $ 15,113,000 $ 14,584,000 $ 13,839,000
Investment securities:
Taxable ............................................... 11,646,000 12,039,000 11,828,000
Nontaxable ............................................ 3,765,000 3,106,000 2,154,000
Federal funds sold ........................................ 3,439,000 2,953,000 2,580,000
------------ ------------ ------------
33,963,000 32,682,000 30,401,000
------------ ------------ ------------
Interest expense:
Savings and money market deposits ......................... 7,984,000 7,998,000 7,309,000
Time deposits ............................................. 1,529,000 1,869,000 1,888,000
------------ ------------ ------------
9,513,000 9,867,000 9,197,000
------------ ------------ ------------
Net interest income ................................... 24,450,000 22,815,000 21,204,000
Provision for loan losses (credit) ............................ -- (100,000) (100,000)
------------ ------------ ------------
Net interest income after provision for loan losses (credit) .. 24,450,000 22,915,000 21,304,000
------------ ------------ ------------
Noninterest income:
Trust Department income ................................... 1,153,000 1,116,000 842,000
Service charges on deposit accounts ....................... 3,258,000 2,986,000 2,674,000
Other ..................................................... 555,000 494,000 446,000
------------ ------------ ------------
4,966,000 4,596,000 3,962,000
------------ ------------ ------------
Noninterest expense:
Salaries .................................................. 7,686,000 7,282,000 6,649,000
Employee benefits ......................................... 2,682,000 2,785,000 2,732,000
Occupancy and equipment expense ........................... 2,188,000 1,955,000 1,780,000
Other operating expenses .................................. 3,765,000 3,447,000 3,124,000
------------ ------------ ------------
16,321,000 15,469,000 14,285,000
------------ ------------ ------------
Income before income taxes and transition
adjustment to allowance for loan losses ............. 13,095,000 12,042,000 10,981,000
Income tax expense ............................................ 4,061,000 3,806,000 3,566,000
------------ ------------ ------------
Net income before transition adjustment to
allowance for loan losses ........................ 9,034,000 8,236,000 7,415,000
Transition adjustment to allowance for loan
losses, net of income taxes of $655,000 ..................... 945,000 -- --
------------ ------------ ------------
Net Income ............................................ $ 9,979,000 $ 8,236,000 $ 7,415,000
============ ============ ============
Weighted average:
Common shares ............................................. 3,041,536 3,105,496 3,117,530
Dilutive stock options .................................... 50,137 66,336 64,044
------------ ------------ ------------
3,091,673 3,171,832 3,181,574
============ ============ ============
Earnings per share before transition adjustment to allowance
for loan losses:
Basic ..................................................... $2.97 $2.65 $2.38
============ ============ ============
Diluted ................................................... $2.92 $2.60 $2.33
============ ============ ============
Earnings per share:
Basic ..................................................... $3.28 $2.65 $2.38
============ ============ ============
Diluted ................................................... $3.23 $2.60 $2.33
============ ============ ============
</TABLE>
See notes to consolidated financial statements
65
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Other
Common Stock Compre- Compre-
----------------------- hensive Retained hensive
Shares Amount Surplus Income Earnings Income (Loss) Total
---------- ---------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 ........... 2,088,784 $ 209,000 $ 6,924,000 $46,733,000 $ 303,000 $54,169,000
Prior period adjustment ......... (1,012,000) (1,012,000)
Net Income ...................... $ 7,415,000 7,415,000 7,415,000
Repurchase and retirement
of common stock ............... (53,059) (5,000) (2,439,000) (2,444,000)
Exercise of stock options ....... 39,649 4,000 733,000 737,000
Unrealized gains on available-
for-sale-securities, net of
tax of $175,000 ............. 164,000 164,000 164,000
-----------
Comprehensive income ............ $ 7,579,000
===========
3-for-2 stock split ............. 1,037,687 103,000 (103,000)
Cash dividends declared -
$.49 per share ................ (1,539,000) (1,539,000)
Tax benefit of stock options .... 253,000 253,000
---------- ---------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 ......... 3,113,061 311,000 5,471,000 51,494,000 467,000 57,743,000
Net Income ...................... $ 8,236,000 8,236,000 8,236,000
Repurchase and retirement
of common stock ............... (33,637) (3,000) (1,563,000) (1,566,000)
Exercise of stock options ....... 16,547 2,000 216,000 218,000
Unrealized gains on available-
for-sale-securities, net of
tax of $553,000 ............. 799,000 799,000 799,000
-----------
Comprehensive income ............ $ 9,035,000
===========
Cash in lieu of fractional shares
on 3-for-2 stock split ........ (14,000) (14,000)
Cash dividends declared -
$.57 per share ................ (1,767,000) (1,767,000)
Tax benefit of stock options .... 95,000 95,000
---------- ---------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 ......... 3,095,971 310,000 4,219,000 57,949,000 1,266,000 63,744,000
Net Income ...................... $ 9,979,000 9,979,000 9,979,000
Repurchase and retirement
of common stock ............... (142,797) (15,000) (5,101,000) (5,116,000)
Exercise of stock options ....... 9,629 1,000 136,000 137,000
Unrealized losses on available-
for-sale-securities, net of
tax of $1,803,000 ........... (2,600,000) (2,600,000) (2,600,000)
-----------
Comprehensive income ............ $ 7,379,000
===========
Cash dividends declared -
$.64 per share ................ (1,915,000) (1,915,000)
Tax benefit of stock options .... 4,000 4,000
Transfer from retained
earnings to surplus ........... 3,000,000 (3,000,000)
---------- ---------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 ......... 2,962,803 $ 296,000 $ 2,258,000 $63,013,000 $(1,334,000) $64,233,000
========== ========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
66
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents 1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income ................................................................... $ 9,979,000 $ 8,236,000 $ 7,415,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses (credit) ........................................ -- (100,000) (100,000)
Transition adjustment to allowance for loan losses, net of income taxes ... (945,000) -- --
Deferred income tax provision (credit) .................................... 67,000 114,000 (63,000)
Depreciation and amortization ............................................. 801,000 613,000 528,000
Premium amortization (discount accretion) on investment securities, net ... 868,000 (46,000) (814,000)
Decrease (increase) in prepaid income taxes ............................... (37,000) 11,000 294,000
Increase in other assets .................................................. (147,000) (476,000) (320,000)
Increase (decrease) in accrued expenses and other liabilities ............. (101,000) 239,000 271,000
------------ ------------ ------------
Net cash provided by operating activities .............................. 10,485,000 8,591,000 7,211,000
------------ ------------ ------------
Cash Flows From Investing Activities:
Proceeds from maturities and redemptions of investment securities:
Held-to-maturity .......................................................... 67,042,000 64,533,000 51,565,000
Available-for-sale ........................................................ 9,718,000 4,669,000 6,443,000
Purchase of investment securities:
Held-to-maturity .......................................................... (69,999,000) (61,320,000) (70,360,000)
Available-for-sale ........................................................ (28,241,000) (33,718,000) (11,649,000)
Net increase in loans to customers ........................................... (12,074,000) (15,816,000) (1,969,000)
Purchases of bank premises and equipment ..................................... (1,235,000) (1,888,000) (521,000)
------------ ------------ ------------
Net cash used in investing activities .................................. (34,789,000) (43,540,000) (26,491,000)
------------ ------------ ------------
Cash Flows From Financing Activities:
Net increase in total deposits ............................................... 23,958,000 56,472,000 38,398,000
Proceeds from exercise of stock options ...................................... 137,000 218,000 737,000
Repurchase and retirement of common stock .................................... (5,116,000) (1,566,000) (2,444,000)
Cash dividends paid .......................................................... (1,837,000) (1,668,000) (1,419,000)
Cash in lieu of fractional shares on 3-for-2 stock split ..................... -- (14,000) --
------------ ------------ ------------
Net cash provided by financing activities .............................. 17,142,000 53,442,000 35,272,000
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents ........................... (7,162,000) 18,493,000 15,992,000
Cash and cash equivalents, beginning of year ................................... 92,336,000 73,843,000 57,851,000
------------ ------------ ------------
Cash and cash equivalents, end of year ......................................... $ 85,174,000 $ 92,336,000 $ 73,843,000
============ ============ ============
Supplemental Schedule of Noncash:
Investing Activities
Unrealized gains (losses) on available-for-sale securities ................... $ (4,403,000) $ 1,351,000 $ 339,000
Transfer of available-for-sale securities to held-to-maturity category ....... -- -- 28,886,000
Financing Activities
Tax benefit from exercise of employee stock options .......................... 4,000 95,000 253,000
Cash dividends payable ....................................................... 1,007,000 929,000 830,000
</TABLE>
The Corporation made interest payments of $9,523,000, $9,858,000, and $9,158,000
and income tax payments of $4,031,000, $3,683,000, and $3,335,000 in 1999, 1998
and 1997, respectively.
See notes to consolidated financial statements
67
<PAGE>
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 (the "Corporation") and its wholly-owned subsidiary, The
First National Bank of Long Island (the "Bank"). The Corporation's financial
condition and operating results principally reflect those of the Bank. All
intercompany balances and amounts have been eliminated.
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. Actual results could differ
significantly from those estimates.
The accounting and reporting policies of the Corporation reflect banking
industry practice and conform to generally accepted accounting principles. The
following is a summary of the significant accounting policies.
Investment Securities
Current accounting standards require that investment securities be
classified as held-to-maturity, trading, or available-for-sale. 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. Held-to-maturity securities are those debt
securities which the Bank has the intent and ability to hold to maturity, and
are reported at amortized cost. Available-for-sale securities are those debt and
equity securities which are neither held-to-maturity securities nor trading
securities and are reported at fair value, with unrealized gains and losses, net
of the related income tax effect, included in accumulated other comprehensive
income.
Realized gains and losses on the sale of available-for-sale securities are
determined using the specific identification method.
Loans and Allowance For Loan Losses
Loans are reported at their outstanding principal balance less any
chargeoffs, the allowance for loan losses, and any unearned income. Interest on
loans is credited to income based on the principal amount outstanding. Unearned
discounts are recognized as income over the terms of the loans by the interest
method. Nonrefundable loan origination fees are deferred and amortized as yield
adjustments over the lives of the related loans.
The accrual of interest income is generally discontinued when a loan
becomes 90 days past due as to principal or interest payments. In addition, any
accrued but unpaid interest is reversed against current period income. All of
the Bank's nonaccruing loans are considered impaired under Statement of
Financial Accounting Standards No. 114 "Accounting by Creditors for Impairment
of a Loan" ("SFAS No. 114"). The valuation allowance for nonaccrual and other
impaired loans is reported within the overall allowance for loan losses.
The allowance for loan losses is established through provisions for loan
losses charged against income. Amounts deemed to be uncollectible are charged
against the allowance for loan losses, and subsequent recoveries, if any, are
credited to the allowance.
The allowance for loan losses is an amount that management currently
believes will be adequate to absorb estimated inherent losses in the Bank's loan
portfolio. In estimating a range for such losses the Bank selectively reviews
individual credits in its portfolio and, for those loans deemed to be impaired,
measures impairment losses based on either the fair value of collateral or the
discounted value of expected future cash flows. Losses for loans that are not
specifically reviewed are determined on a pooled basis taking into account a
variety of factors including historical losses; 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.
In addition to reviewing its own portfolio, management also considers
relevant loan loss statistics for the Bank's peer group. Because the process for
estimating credit losses and determining the allowance for loan losses as of any
balance sheet date is subjective in nature and requires material estimates,
there is not an exact amount but rather a range for what constitutes an
appropriate allowance.
68
<PAGE>
Bank Premises and Equipment
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 between thirty-one and
forty years. Building improvements are depreciated using the straight-line
method over the remaining lives of the buildings. Leasehold improvements are
amortized using the straight-line method over the remaining lives of the leases
or their estimated useful lives, whichever is shorter. The lives of the
respective leases range between five and fifteen years. Furniture, fixtures, and
equipment are depreciated over their estimated useful lives which range between
three and seven years. The straight-line method of depreciation is used for
furniture, fixtures, and equipment acquired after 1997, and the 150% declining
balance method is used for assets acquired previously.
Checking Deposits
Each of the Bank's commercial checking accounts has a related
noninterest-bearing sweep account. The sole purpose of the sweep accounts is to
reduce the noninterest-bearing reserve balances that the Bank is required to
maintain with the Federal Reserve Bank, and thereby increase funds available for
investment. Although the sweep accounts are classified as savings accounts for
regulatory purposes, they are included in checking deposits in the accompanying
consolidated balance sheets.
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.
Fair Values of Financial Instruments
The following methods and assumptions are used by the Corporation in
estimating fair values of financial instruments as disclosed herein.
Cash and cash equivalents. The carrying amount of cash and cash equivalents
is their fair value.
Investment securities. For investment securities, fair values are based on
quoted market prices.
Loans. Fair values are estimated for portfolios of loans with similar
financial characteristics. The total loan portfolio is first divided into
adjustable and fixed rate interest terms. For adjustable rate loans that are
subject to immediate repricing, the carrying amount less the related allowance
for loan losses is a reasonable estimate of fair value. For adjustable rate
loans that are subject to repricing over time and fixed rate loans, fair value
is calculated by discounting anticipated future repricing amounts or cash flows
using discount rates equivalent to the rates at which the Bank would currently
make loans which are similar with regard to collateral, maturity, and the type
of borrower. The discounted value of the repricing amounts and cash flows is
reduced by the related allowance for loan losses to arrive at an estimate of
fair value.
Deposit liabilities. The fair value of deposits with no stated maturity,
such as noninterest-bearing demand deposits, money market accounts, and savings
accounts, is equal to their carrying amount at December 31 of each year. The
fair value of time deposits is based on the discounted value of contractual cash
flows. The discount rate is equivalent to the rate currently offered by the Bank
for deposits of similar size, type and maturity. In 1998, the carrying value for
time deposits was deemed to be a reasonable estimate of fair value.
Accrued interest receivable and payable. For these short-term instruments,
the carrying amount is a reasonable estimate of fair value.
Off-balance-sheet assets and liabilities. The fair value of
off-balance-sheet commitments to extend credit and letters of credit is
estimated using fees currently charged to enter into similar agreements.
69
<PAGE>
Stockholders' Equity
Earnings Per Share. The Corporation adopted Statement of Financial
Accounting Standards No. 128 "Earnings Per Share" ("SFAS No. 128") in the fourth
quarter of 1997. All comparative earnings per share data provided for earlier
periods have been restated to conform to the provisions of this Statement.
Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted average number of common shares outstanding for the
period. Diluted earnings per share, which reflects the potential dilution that
could occur if outstanding and exercisable stock options were exercised and
resulted in the issuance of common stock that then shared in the earnings of the
Corporation, is computed by dividing net income by the weighted average number
of common shares and dilutive stock options. Other than stock options and the
Rights described in Note H, 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 Split. On December 17, 1997, the Corporation declared a 3-for-2 stock
split which was paid on February 2, 1998 by means of a 50% stock dividend. All
share and per share amounts included in the consolidated financial statements,
notes thereto, and related Selected Financial Data for years prior to 1997 have
been adjusted to reflect the effect of the split.
Stock Repurchase Programs. Since 1988, the Corporation has had stock
repurchase programs under which it can purchase shares of its own common stock
in market or private transactions. As of December 31, 1999, and in accordance
with prior approval by its Board of Directors, the Corporation could purchase
24,476 shares of stock under the latest programs.
In 1997, under the normal terms and conditions of the Corporation's stock
repurchase programs, and after approval by the Corporation's full Board of
Directors, the Corporation purchased 15,627 shares of common stock from its
Chairman and Chief Executive Officer for $656,334.
Comprehensive Income
Comprehensive income includes net income and all other changes in equity
during a period except those resulting from investments by owners and
distributions to owners. Other comprehensive income includes revenues, expenses,
gains, and losses that under generally accepted accounting principles are
included in comprehensive income but excluded from net income.
Comprehensive income and accumulated other comprehensive income are
reported net of related income taxes. Accumulated other comprehensive income for
the Corporation consists solely of unrealized holding gains or losses on
available-for-sale securities.
Stock-Based Compensation
The Corporation accounts for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" ("APB No. 25") and related
Interpretations. Accordingly, compensation cost for stock options is measured as
the excess, if any, of the quoted market price of the Corporation's stock at the
date of grant over the amount an employee must pay to acquire the stock.
Compensation costs for stock appreciation rights are recorded annually based on
the quoted market price of the Corporation's stock at the end of the period.
Trust and Investment Services Division
Assets held in a fiduciary capacity are not assets of the Corporation and,
accordingly, are not included in the accompanying financial statements. Trust
fees are recorded on the accrual basis.
Prior Period Adjustment
In November 1999, the Corporation learned of improprieties in its Trust
Department that resulted in a misstatement of Trust Department income and a
misappropriation of funds. Each year included in the Selected Financial Data has
been restated to correct the misstatement. In addition, the consolidated
financial statements, notes thereto, and quarterly financial data have also been
restated. The restatement increased 1999 earnings by $9,000, decreased 1998
earnings by $132,000, and decreased 1997 earnings by $211,000. For purposes of
the consolidated financial statements, the impact of the restatement on earnings
for years prior to 1997, net of applicable income taxes, is reflected in the
statement of changes in stockholders' equity as a prior period adjustment.
70
<PAGE>
Report of Independent Public Accountants
The notes to consolidated financial statements include selected information
as of December 31, 1997, 1996 and 1995 and for the years ended December 31, 1996
and 1995 that is not covered by the Report of Independent Public Accountants.
This information has been presented in order to comply with the Form 10-K
reporting requirements.
New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting For Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). This Statement establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133, as later amended by SFAS No. 137, is effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000. The Corporation is still
assessing the impact, if any, of SFAS No. 133 on its accounting and disclosures.
71
<PAGE>
NOTE B - INVESTMENT SECURITIES
The following table sets forth the amortized cost and estimated fair values
of the Bank's investment securities at December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
1999
====================================================================
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Held-to-Maturity Securities:
U.S. Treasury ............................................ $ 62,288 $ 59 $ (353) $ 61,994
U.S. government agencies ................................. 20,998 52 (630) 20,420
Commercial paper ......................................... 12,467 -- -- 12,467
State and municipals ..................................... 35,107 200 (167) 35,140
Collateralized mortgage obligations ...................... 59,138 17 (1,918) 57,237
--------- --------- --------- ---------
$ 189,998 $ 328 $ (3,068) $ 187,258
========= ========= ========= =========
Available-for-Sale Securities:
U.S. Treasury ............................................ $ 46,561 $ 67 $ (352) $ 46,276
State and municipals ..................................... 56,437 41 (2,016) 54,462
Equity ................................................... 127 -- -- 127
--------- --------- --------- ---------
$ 103,125 $ 108 $ (2,368) $ 100,865
========= ========= ========= =========
<CAPTION>
1998
====================================================================
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Held-to-Maturity Securities:
U.S. Treasury ............................................ $ 61,339 $ 1,665 $ -- $ 63,004
U.S. government agencies ................................. 27,316 417 (210) 27,523
State and municipals ..................................... 43,751 1,355 (26) 45,080
Collateralized mortgage obligations ...................... 55,227 594 (176) 55,645
--------- --------- --------- ---------
$ 187,633 $ 4,031 $ (412) $ 191,252
========= ========= ========= =========
Available-for-Sale Securities:
U.S. Treasury ............................................ $ 47,287 $ 1,328 $ -- $ 48,615
State and municipals ..................................... 37,464 856 (41) 38,279
Equity ................................................... 127 -- -- 127
--------- --------- --------- ---------
$ 84,878 $ 2,184 $ (41) $ 87,021
========= ========= ========= =========
<CAPTION>
1997
====================================================================
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Held-to-Maturity Securities:
U.S. Treasury ............................................ $ 79,679 $ 596 $ (67) $ 80,208
U.S. government agencies ................................. 23,010 268 (271) 23,007
State and municipals ..................................... 46,055 967 (27) 46,995
Collateralized mortgage obligations ...................... 41,833 385 (71) 42,147
--------- --------- --------- ---------
$ 190,577 $ 2,216 $ (436) $ 192,357
========= ========= ========= =========
Available-for-Sale Securities:
U.S. Treasury ............................................ $ 44,859 $ 609 $ (26) $ 45,442
State and municipals ..................................... 11,066 211 (2) 11,275
Equity ................................................... 127 -- -- 127
--------- --------- --------- ---------
$ 56,052 $ 820 $ (28) $ 56,844
========= ========= ========= =========
</TABLE>
At December 31, 1999 and 1998, investment securities with a carrying value
of $32,499,000 and $51,312,000, respectively, were pledged as collateral to
secure public deposits and for other purposes.
72
<PAGE>
Maturities and Average Yields. The following table sets forth the
maturities and weighted average yields of the Bank's investment securities at
December 31, 1999.
<TABLE>
<CAPTION>
Principal Maturing (1)
------------------------------------------------------------------------
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
--------------- ----------------- ---------------- ---------------
Amount Yield Amount Yield Amount Yield Amount Yield
------- ----- ------- ----- ------- ----- ------- -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-Maturity Securities:
U.S. Treasury ........................................ $14,023 5.59% $48,265 6.05% $ -- --% $ -- --%
U.S. government agencies ............................. 2,203 5.68 4,596 6.51 8,662 6.23 5,537 6.27
Commercial paper ..................................... 12,467 5.76 -- -- -- -- -- --
State and municipals (2) ............................. 5,242 7.14 20,608 7.20 9,257 7.18 -- --
Collateralized mortgage obligations .................. -- -- -- -- 5,616 6.24 53,522 6.35
------- ----- ------- ----- ------- ----- ------- -----
$33,935 5.90% $73,469 6.40% $23,535 6.61% $59,059 6.34%
======= ===== ======= ===== ======= ===== ======= =====
<CAPTION>
Principal Maturing (1)
------------------------------------------------------------------------
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
--------------- ----------------- ---------------- ---------------
Amount Yield Amount Yield Amount Yield Amount Yield
------- ----- ------- ----- ------- ----- ------- -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-Sale Securities:
U.S. Treasury ........................................ $12,023 6.03% $34,253 6.06% $ -- --% $ -- --%
State and municipals (2).............................. 263 6.97 4,826 7.38 34,775 6.70 14,598 7.02
------- ----- ------- ----- ------- ----- ------- -----
Total debt securities................................. 12,286 6.05 39,079 6.22 34,775 6.70 14,598 7.02
Equity ............................................... -- -- -- -- -- -- 127 7.96
------- ----- ------- ----- ------- ----- ------- -----
$12,286 6.05% $39,079 6.22% $34,775 6.70% $14,725 7.03%
======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
(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. Securities backed by mortgages, which include the U.S.
government agencies and collateralized mortgage obligations shown above,
are expected to have substantial periodic repayments resulting in weighted
average lives considerably shorter than would be surmised from the above
table.
(2) Yields on tax-exempt obligations have been computed on a tax-equivalent
basis.
NOTE C - LOANS
The following table sets forth major classifications of loans.
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Commercial and industrial ................ $ 30,296 $ 28,748 $ 25,686 $ 23,345 $ 21,708
Secured by real estate ................... 147,598 132,357 121,620 120,782 115,098
Consumer ................................. 5,284 6,366 7,152 8,999 9,671
Other .................................... 549 4,119 1,101 396 193
--------- --------- --------- --------- ---------
183,727 171,590 155,559 153,522 146,670
Unearned income .......................... (953) (872) (829) (840) (796)
--------- --------- --------- --------- ---------
182,774 170,718 154,730 152,682 145,874
Allowance for loan losses ................ (2,033) (3,651) (3,579) (3,600) (3,600)
--------- --------- --------- --------- ---------
$ 180,741 $ 167,067 $ 151,151 $ 149,082 $ 142,274
========= ========= ========= ========= =========
</TABLE>
73
<PAGE>
Allowance For Loan Losses. In the second quarter of 1999, the Bank made a
transition adjustment to reduce its allowance for loan losses by $1,600,000. The
transition adjustment was made in response to guidance issued by staff members
of the Financial Accounting Standards Board in April 1999 and further guidance
issued by staff members of the Securities and Exchange Commission.
The following table sets forth changes in the Bank's allowance for loan
losses.
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance, beginning of year ...................... $ 3,651 $ 3,579 $ 3,600 $ 3,600 $ 3,600
------- ------- ------- ------- -------
Loans charged off:
Commercial and industrial ..................... (32) (50) -- (2) (3)
Secured by real estate ........................ -- -- -- -- --
Consumer and other ............................ (28) (49) (59) (33) (21)
------- ------- ------- ------- -------
(60) (99) (59) (35) (24)
------- ------- ------- ------- -------
Recoveries of loans charged off:
Commercial and industrial ..................... -- -- -- -- --
Secured by real estate ........................ 16 257 120 21 16
Consumer and other ............................ 26 14 18 14 8
------- ------- ------- ------- -------
42 271 138 35 24
------- ------- ------- ------- -------
Net (chargeoffs) recoveries ..................... (18) 172 79 -- --
Provision for loan losses (credit) .............. -- (100) (100) -- --
Transition adjusment ............................ (1,600) -- -- -- --
------- ------- ------- ------- -------
Balance, end of year ............................ $ 2,033 $ 3,651 $ 3,579 $ 3,600 $ 3,600
======= ======= ======= ======= =======
Ratio of net (chargeoffs) recoveries to
average loans outstanding ..................... (.01)% .10% .05% --% --%
======= ======= ======= ======= =======
</TABLE>
Allocation of Allowance For Loan Losses. The following table sets forth the
allocation of the Bank's total allowance for loan losses by loan type.
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------- ----------------- ----------------- ----------------- ----------------
% of % of % of % of % of
Loans Loans Loans Loans Loans
To Total To Total To Total To Total To Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
------ ------- ------ ------- ------ ------- ------ ------- ------ -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial .......................... $ 397 16.5% $ 730 16.9% $ 564 16.6% $ 530 15.3% $ 563 14.9%
Real-estate secured ................. 1,304 80.8 2,325 77.5 2,099 78.6 2,185 79.1 2,241 78.9
Consumer and other .................. 137 2.7 249 5.6 211 4.8 174 5.6 196 6.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total allocated ................... 1,838 100.0 3,304 100.0 2,874 100.0 2,889 100.0 3,000 100.0
Unallocated ......................... 195 -- 347 -- 705 -- 711 -- 600 --
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
$2,033 100.0% $3,651 100.0% $3,579 100.0% $3,600 100.0% $3,600 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
74
<PAGE>
Selected Loan Maturity Information. The following table sets forth maturity
and rate information for the Bank's commercial and industrial loans at December
31, 1999.
<TABLE>
<CAPTION>
Maturity
-------------------------------------------------------------------
After One
Within But Within After
One Year Five Years Five Years Total
-------- ---------- ---------- -------
(in thousands)
<S> <C> <C> <C> <C>
Commercial and industrial loans:
Fixed rate ......................................... $ 6,256 $ 3,226 $ 418 $ 9,900
Variable rate ...................................... 8,091 10,102 2,203 20,396
------- ------- ------- -------
$14,347 $13,328 $ 2,621 $30,296
======= ======= ======= =======
</TABLE>
Past Due, Nonaccrual, and Restructured Loans. The following table sets
forth selected information about the Bank's nonaccrual, past due, and
restructured loans.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
At December 31: (in thousands)
<S> <C> <C> <C> <C> <C>
Loans past due 90 days or more as to principal or
interest payments and still accruing ................................. $ 5 $ -- $ 49 $ 31 $ 4
Nonaccrual loans ..................................................... 28 22 382 659 843
Restructured loans ................................................... -- -- 6 19 48
Year Ended December 31:
Gross interest income that would have been recorded during the year
under original terms:
Nonaccrual loans ..................................................... 4 2 55 60 97
Restructured loans ................................................... -- -- 1 3 7
Gross interest income recorded during the year:
Nonaccrual loans ..................................................... 3 2 32 11 36
Restructured loans ................................................... -- -- 1 2 6
Commitments for additional funds ....................................... None None None None None
</TABLE>
In addition to the past due and nonaccrual loans noted above, as of
December 31, 1999 the Corporation's portfolio of performing loans included
$5,249,000 of loans considered to be impaired under SFAS No. 114. Of the
Corporation's total impaired loans, $4,379,000 had a related allowance for loan
losses of $576,000 and the balance had no related allowance for loan losses. The
average recorded investment during 1999 in loans considered to be impaired as of
December 31, 1999 was $5,989,000. Interest income recognized during 1999 on
loans considered to be impaired as of December 31, 1999 and during the period in
1999 that such loans were impaired amounted to $272,000. All such interest
income was recognized using the accrual method of accounting.
Certain directors, including their immediate families and companies in
which they are principal owners, and executive officers were loan customers of
the Bank during 1999 and 1998. Such loans 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
other persons, and do not involve more than the normal risk of collectibility or
present other unfavorable features. The aggregate amount of these loans was
approximately $1,388,000 and $1,203,000 at December 31, 1999 and 1998,
respectively. During 1999, $587,000 of new loans to such persons were made and
repayments totaled $402,000. There were no loans to directors or executive
officers which were nonaccruing at December 31, 1999 or 1998.
75
<PAGE>
NOTE D - PREMISES AND EQUIPMENT
Bank premises and equipment consist of the following:
December 31,
------------------------
1999 1998
-------- -------
(in thousands)
Land ............................................. $ 1,274 $ 1,274
Buildings ........................................ 4,618 4,507
Leasehold improvements ........................... 1,234 1,134
Furniture and equipment .......................... 9,659 8,635
-------- --------
16,785 15,550
Accumulated depreciation and amortization ........ (10,039) (9,238)
-------- --------
$ 6,746 $ 6,312
======== ========
A building occupied by one of the Bank's branch offices is leased from a
director of the Corporation and the Bank. The lease, which is dated 1992 and has
a term of approximately ten years, currently provides for annual base rentals of
$26,588, plus certain charges for real estate taxes and common area maintenance.
The Bank may cancel this lease at any time by giving the director ninety days
written notice. The Bank believes that the terms of this lease are comparable to
those that could have been obtained from other persons.
NOTE E - DEPOSITS
The following table sets forth major classifications of average deposits.
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------------------
1999 1998 1997
--------------------- --------------------- ----------------------
Average Average Average Average Average Average
Balance Rate Paid Balance Rate Paid Balance Rate Paid
------- --------- ------- --------- ------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Checking ................. $170,732 --% $154,781 --% $133,082 --%
Savings and money market.. 278,148 2.87 250,236 3.20 229,639 3.18
Time deposits ............ 37,652 4.06 40,249 4.64 39,671 4.76
-------- ---- -------- ---- -------- ----
$486,532 1.96% $445,266 2.22% $402,392 2.28%
======== ==== ======== ==== ======== ====
</TABLE>
Time Deposits of $100,000 and Over. The following table sets forth the
remaining maturities of the Bank's time deposits in amounts of $100,000 or more
at December 31, 1999.
Remaining Maturity Amount
- ------------------------------------------------------------- -------------
(in thousands)
3 months or less .................................. $ 11,158
Over 3 through 6 months ........................... 2,437
Over 6 through 12 months .......................... 873
Over 12 months .................................... 200
------------
$ 14,668
============
76
<PAGE>
NOTE F - INCOME TAXES
The Corporation and its subsidiary file a consolidated federal income tax
return. Income taxes charged to earnings in 1999, 1998, and 1997 had effective
tax rates of 31.0%, 31.6%, and 32.5%, respectively. The following table sets
forth a reconciliation of the statutory federal income tax rate to the
Corporation's effective tax rate.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Statutory federal income tax rate ......................................... 34.0% 34.0% 34.0%
State income taxes, net of federal income tax benefit ..................... 6.0 5.8 5.6
Tax-exempt interest on securities and loans, net of
disallowed cost of funding .............................................. (9.3) (8.4) (6.6)
Other...................................................................... .3 .2 (.5)
---- ---- ----
31.0% 31.6% 32.5%
==== ==== ====
</TABLE>
Provision For Income Taxes. The following table sets forth the components
of the provision for income taxes.
Year Ended December 31,
----------------------------------
1999 1998 1997
------- ------- -------
(in thousands)
Currently payable:
Federal .............................. $ 2,818 $ 2,663 $ 2,733
State ................................. 1,176 1,029 896
------- ------- -------
3,994 3,692 3,629
------- ------- -------
Deferred:
Federal ............................... 49 85 (96)
State ................................. 18 29 33
------- ------- -------
67 114 (63)
------- ------- -------
$ 4,061 $ 3,806 $ 3,566
======= ======= =======
In addition to the provision shown in the table above, in 1999 the
Corporation provided deferred federal and state income taxes of $487,000 and
$168,000, respectively, on the $1,600,000 transition adjustment to the allowance
for loan losses.
Net Deferred Tax Asset. The following table sets forth the components of
the Bank's net deferred tax asset.
December 31,
------------------
1999 1998
------ ------
Deferred tax assets: (in thousands)
Unrealized losses on available-for-sale securities ..... $ 925 $ --
Allowance for loan losses .............................. 383 1,038
Supplemental executive retirement expense .............. 59 55
Interest on nonperforming loans ........................ 20 38
Postretirement benefits expense ........................ 35 32
Accrued professional fees .............................. 12 12
------ ------
1,434 1,175
Valuation allowance ...................................... -- --
------ ------
1,434 1,175
------ ------
Deferred tax liabilities:
Pension expense ........................................ 202 157
Accretion on bonds ..................................... 3 18
Depreciation ........................................... 32 6
Unrealized gains on available-for-sale securities ...... -- 878
------ ------
237 1,059
------ ------
Net deferred tax asset ................................... $1,197 $ 116
====== ======
77
<PAGE>
NOTE G - COMMITMENTS AND CONTINGENT LIABILITIES
Financial Instruments With Off-Balance-Sheet Risk. The Bank is a party to
financial instruments with off-balance-sheet risk in the normal course of
business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit, standby letters of credit, and
commercial letters of credit. These instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the consolidated
balance sheets.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to financial instruments for commitments to extend credit, standby
letters of credit, and commercial letters of credit is represented by the
contractual notional amount of these instruments. The Bank uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments. At December 31, financial instruments whose
contract amounts represent credit risk are as follows:
1999 1998
------- -------
(in thousands)
Commitments to extend credit ...................... $33,064 $33,319
Standby letters of credit ......................... 1,283 1,566
Commercial letters of credit ...................... 13 464
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 Bank's standby letters of credit extend through October 2000. 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. The
extent of collateral held for these commitments at December 31, 1999 varied from
0% to 100%, and averaged 60%.
Commercial letters of credit are conditional commitments issued by the Bank
to assure the payment by a customer to a supplier. All of the Bank's commercial
letters of credit extend for less than one year. The credit risk involved in
issuing commercial letters of credit is the same as that discussed in the
preceding paragraph for standby letters of credit. The Bank generally obtains
personal guarantees supporting these commitments.
Commitments to extend credit are legally binding agreements to lend to a
customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since some of the commitments are
expected to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. 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
security interests in business assets, mortgages on commercial and residential
real estate, deposit accounts with the Bank or other financial institutions, and
securities.
Concentrations of Credit Risk. Virtually all of the Bank's loans, personal
and commercial, are to borrowers who are domiciled on Long Island. As a result,
the income of many of the Bank's borrowers is dependent on the Long Island
economy. In addition, virtually all of the Bank's real estate loans involve
mortgages on Long Island properties. Thus, the Bank's loan portfolio is
susceptible to the economy of Long Island.
Lease Commitments. At December 31, 1999, minimum annual rental commitments
under noncancelable operating leases are as follows:
Year Amount
------------------------------------------ ----------------
(in thousands)
2000 ..................................... $ 309
2001 ..................................... 269
2002 ..................................... 262
2003 ..................................... 224
2004 ..................................... 187
Thereafter ............................... 372
-------
$ 1,623
=======
78
<PAGE>
In addition, the Bank has various renewal options on the above leases. Rent
expense was $352,000, $286,000, and $261,000 in 1999, 1998, and 1997,
respectively.
NOTE H - SHAREHOLDER PROTECTION RIGHTS PLAN
On July 16, 1996, the Board of Directors of the Corporation (the "Board")
adopted a Shareholder Protection Rights Plan and declared a dividend of one
right ("Right") on each outstanding share of the Corporation's common stock (the
"Common Stock"). The dividend was paid on July 31, 1996 to shareholders of
record as of the same date.
In the absence of an event of the type described below, the Rights will be
evidenced by and trade with the Common Stock and will not be exercisable.
However, the Rights will separate from the Common Stock and become exercisable
following the earlier of (1) the tenth business day, or such later date as the
Board may decide, after any person or persons (collectively referred to as
"person") commences a tender offer that would result in such person holding a
total of 20% or more of the outstanding Common Stock, or (2) ten business days
after, or such earlier or later date as the Board may decide, the announcement
by the Corporation that any person has acquired 20% or more of the outstanding
Common Stock.
When separated from the Common Stock, each Right will entitle the holder to
purchase one share of Common Stock for $83 (the "Exercise Price"). However, in
the event that the Corporation has announced that any person has acquired 20% or
more of the outstanding Common Stock, the Rights owned by that person will be
automatically void and each other Right will automatically become a right to
buy, for the Exercise Price, that number of shares of Common Stock having a
market value of twice the Exercise Price. Also, if any person acquires 20% or
more of the outstanding Common Stock, the Board can require that, in lieu of
exercise, each outstanding Right be exchanged for one share of Common Stock.
The Rights may be redeemed by action of the Board at a price of $.01 per
Right at any time prior to announcement by the Corporation that any person has
acquired 20% or more of the outstanding Common Stock. The Exercise Price and the
number of Rights outstanding are subject to adjustment to prevent dilution. The
Rights expire ten years from the date of their issuance.
NOTE I - STOCK-BASED COMPENSATION
The Corporation has two stock option and appreciation rights plans (the
"Plans"). The 1996 Plan was approved by the Corporation's Board of Directors on
January 16, 1996 and subsequently approved by its stockholders. Under the 1996
Plan, options to purchase up to 360,000 shares of common stock are available to
be granted to key employees of the Corporation and its subsidiaries through
January 15, 2006. Each option, which may be granted with or without a stock
appreciation right attached, is granted at a price equal to the fair market
value of one share of the Corporation's stock on the date of grant and is
exercisable in whole or in part at certain times commencing six months from the
date of grant and ending ten years after the date of grant. The 1996 Plan also
provides for the granting of stand-alone stock appreciation rights. At December
31, 1999, options to purchase 39,766 shares of Common Stock were outstanding and
exercisable with respect to the 1996 Plan. No stock appreciation rights have
been granted under the 1996 Plan, either attached to options or on a stand-alone
basis.
The 1986 Plan was approved by the Corporation's Board of Directors on
January 21, 1986 and subsequently approved by its stockholders. Under the 1986
Plan, as later amended, options to purchase up to 387,675 shares of common stock
were available to be granted to key employees of the Corporation and its
subsidiaries through January 21, 1996. The terms of the 1986 Plan are
substantially the same as those of the 1996 Plan. At December 31, 1999, options
to purchase 71,254 shares of Common Stock were outstanding and exercisable under
the 1986 Plan and there were no outstanding stock appreciation rights.
Compensation costs recognized for stock appreciation rights granted under the
1986 Plan amounted to $143,000 for the year ended December 31, 1997. No
compensation costs were recognized in 1999 or 1998.
The Corporation has chosen to account for stock-based compensation using
the intrinsic value method prescribed in APB No. 25. Since each option is
granted at a price equal to the fair market value of one share of the
Corporation's stock on the date of grant, no compensation cost has been
recognized.
79
<PAGE>
The following table compares reported net income and earnings per share to
net income and earnings per share on a pro forma basis assuming that the
Corporation accounted for stock-based compensation under SFAS No. 123
"Accounting For Stock Based Compensation."
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(in thousands except per share data)
<S> <C> <C> <C>
Net Income Before Transition Adjustment
To Allowance For Loan Losses:
As Reported ................................... $ 9,034 $ 8,236 $ 7,415
Pro Forma ..................................... 8,846 8,098 7,312
Net Income:
As Reported ................................... $ 9,979 $ 8,236 $ 7,415
Pro Forma ..................................... 9,791 8,098 7,312
Earnings Per Share Before Transition Adjustment
To Allowance For Loan Losses:
As Reported:
Basic ....................................... $ 2.97 $ 2.65 $ 2.38
Diluted ..................................... 2.92 2.60 2.33
Pro Forma:
Basic ....................................... $ 2.91 $ 2.61 $ 2.35
Diluted ..................................... 2.86 2.55 2.30
Earnings Per Share:
As Reported:
Basic ....................................... $ 3.28 $ 2.65 $ 2.38
Diluted ..................................... 3.23 2.60 2.33
Pro Forma:
Basic ....................................... $ 3.22 $ 2.61 $ 2.35
Diluted ..................................... 3.17 2.55 2.30
</TABLE>
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
1995. Future awards are anticipated under the 1996 Plan.
Stock Option Activity. The following table sets forth stock option activity
and the weighted average fair value of options granted.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------------
1999 1998 1997
------------------------ ----------------------- -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- ------ -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year ............... 113,599 $20.48 115,796 $16.76 155,677 $14.14
Granted ...................................... 15,100 41.56 14,650 42.03 20,057 24.34
Exercised .................................... (9,629) 14.26 (16,497) 13.17 (59,488) 12.40
Forfeited..................................... (8,050) 30.10 (350) 38.99 (450) 24.33
-------- ------ -------- ------ -------- ------
Outstanding, end of year ..................... 111,020 $23.19 113,599 $20.48 115,796 $16.76
======== ====== ======== ====== ======== ======
Exercisable, end of year ..................... 111,020 $23.19 113,399 $20.44 115,796 $16.76
======== ====== ======== ====== ======== ======
Weighted average fair value of options granted $ 12.43 $ 9.42 $ 5.14
======== ======== ========
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model using the following weighted average
assumptions: risk-free interest rates of 6.81%, 4.77%, and 5.56% for options
granted in 1999, 1998, and 1997, respectively; volatility of 15.00%, 13.40%, and
11.30% for options granted in 1999,
80
<PAGE>
1998, and 1997, respectively; expected dividend yield of 1.5% for options
granted in 1999 and 1998 and 2% for options granted in 1997; and expected lives
of 7 years for options granted in 1999, 1998 and 1997.
Stock Options Outstanding. The following table sets forth information about
outstanding and exercisable stock options at December 31, 1999.
<TABLE>
<CAPTION>
Outstanding and Exercisable Stock Options
------------------------------------------
Weighted Average
------------------------
Remaining
Contractual Exercise
Range of Exercise Prices Number Life (yrs.) Price
- ----------------------------------------------------------- ------- ----------- --------
<S> <C> <C> <C>
$9.01 to $15.00 ........................................... 20,301 2.21 $ 11.56
$15.01 to $25.00 ......................................... 65,019 5.59 19.47
$25.01 to $45.00 .......................................... 25,700 8.56 41.80
------- ------ -------
111,020 5.66 $ 23.19
======= ====== =======
</TABLE>
NOTE J - RETIREMENT PLANS
The Bank has a defined benefit pension plan (the "Pension Plan") covering
eligible employees. The provisions of the Pension Plan are governed by the rules
and regulations contained in the Prototype Plan of the New York State Bankers
Retirement System (the "Retirement System") and the Retirement System Adoption
Agreement executed by the Bank. For investment purposes, the Pension Plan's
contributions are pooled with the contributions of the other participants in the
Retirement System. Assets of the Pension Plan are invested in various debt and
equity securities.
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 varying percentages of average annual compensation during
defined periods of creditable service. The Bank makes annual contributions to
the Pension Plan in an amount sufficient to fund these benefits and participants
contribute 2% of their compensation. The Bank's funding policy, the entry age
normal cost-frozen initial liability method, is consistent with the funding
requirements of federal law and regulations. Employees become fully vested after
four years of participation in the Pension Plan (no vesting occurs during the
four-year period).
Net Pension Cost. The following table sets forth the components of net
periodic pension cost.
1999 1998 1997
----- ----- -----
(in thousands)
Service cost ......................... $ 341 $ 319 $ 247
Interest cost ........................ 364 345 311
Expected return on plan assets ....... (509) (522) (423)
Net amortization and deferral ........ (44) (44) (44)
----- ----- -----
Net pension cost ..................... $ 152 $ 98 $ 91
===== ===== =====
Significant Actuarial Assumptions. The following table sets forth the
significant actuarial assumptions as of the end of each plan year.
1999 1998 1997
----- ----- -----
Discount rate .................................... 6.00% 6.00% 7.00%
Rate of increase in compensation levels .......... 5.00% 4.50% 5.00%
Expected long-term rate of return on plan assets.. 7.00% 7.50% 8.00%
81
<PAGE>
Funded Status of The Plan. The following table sets forth the change in the
benefit obligation and Plan assets for each Plan year and, as of the end of each
Plan year, the funded status of the Plan and prepaid benefit cost.
<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------------------
1999 1998 1997
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Change in projected benefit obligation
Projected benefit obligation at beginning of year ................... $ 6,180 $ 5,021 $ 4,094
Service cost ........................................................ 473 415 329
Plan participants' contributions .................................... (132) (96) (82)
Expenses ............................................................ (60) (76) (61)
Interest cost ....................................................... 364 345 311
Benefits paid ....................................................... (265) (189) (220)
Assumption changes and other ........................................ 647 760 650
------- ------- -------
Projected benefit obligation at end of year ......................... 7,207 6,180 5,021
------- ------- -------
Change in plan assets
Fair value of plan assets at beginning of year ...................... 6,884 6,567 5,308
Actual return on plan assets ........................................ 1,057 298 1,201
Employer contribution ............................................... 3 188 257
Plan participants' contributions .................................... 132 96 82
Benefits paid ....................................................... (265) (189) (220)
Expenses ............................................................ (60) (76) (61)
------- ------- -------
Fair value of plan assets at end of year ............................ 7,751 6,884 6,567
------- ------- -------
Funded status ....................................................... 544 704 1,546
Unrecognized net actuarial loss (gain) .............................. 282 315 (574)
Unrecognized prior service cost ..................................... (35) (39) (42)
Unrecognized transition asset ....................................... (167) (208) (248)
------- ------- -------
Prepaid benefit cost ................................................ $ 624 $ 772 $ 682
======= ======= =======
</TABLE>
The Bank has a combined profit sharing/401(k) plan (the "Profit Sharing
Plan"). Employees are eligible to participate provided they are at least 21
years of age and have completed one year of service in which they worked 1,000
hours if full-time or 700 hours if part-time. Participants may elect to
contribute, on a tax-deferred basis, up to 10% 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 "Additional" contributions to
each participant's account based on the amount of the participant's tax deferred
contributions and make profit sharing contributions to each participant's
account equal to a percentage of the participant's compensation, as defined.
Participants are fully vested in their elective contributions and, after five
years of participation in the Profit Sharing Plan, are fully vested (20% vesting
per year) in the Additional and profit sharing contributions made by the Bank.
Additional contributions were $103,000, $106,000, and $93,000 for 1999, 1998,
and 1997, respectively, and profit sharing contributions were $430,000,
$416,000, and $403,000, respectively.
On August 3, 1995, the Bank adopted The First National Bank of Long Island
Supplemental Executive Retirement Program ("SERP"). The SERP provides benefits
to certain employees, designated by the Compensation Committee of the Board of
Directors, whose benefits under the Pension Plan and Profit Sharing Plan are
limited by the applicable provisions of the Internal Revenue Code. The benefit
under the SERP is equal to the additional amount the employee would be entitled
to under the Pension and Profit Sharing Plans in the absence of such Internal
Revenue Code limitations. The effective date of the SERP, which superseded the
Bank's previous supplemental retirement benefit plan, was January 1, 1994. SERP
expense was $49,000, $413,000 and $337,000 in 1999, 1998 and 1997, respectively.
The decrease in SERP expense for 1999 is primarily attributable to an increase
in interest rates and the resulting impact on the calculation of the Bank's
obligation under the SERP.
82
<PAGE>
NOTE K - OTHER OPERATING EXPENSES
Expenses included in other operating expenses which exceed one percent of
the aggregate of total interest income and noninterest income in 1999, 1998, and
1997 are as follows:
1999 1998 1997
---- ---- ----
(in thousands)
Computer services .............. $487 $393 $365
Insurance ...................... 407 395 420
Marketing ...................... 397 441 386
NOTE L - REGULATORY MATTERS
Capital. The Corporation is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on the Corporation's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Corporation must meet specific capital guidelines that involve
quantitative measures of the Corporation's assets, liabilities, and certain
off-balance-sheet items calculated under regulatory accounting practices. The
Corporation's capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors.
Under current regulations, banks are classified as well capitalized,
adequately capitalized or undercapitalized. The following table sets forth the
Corporation's capital ratios at December 31, 1999 and 1998 and the minimum
ratios necessary to be classified as well capitalized and adequately
capitalized. The Corporation's capital ratios at December 31, 1999 and 1998
substantially exceed the requirements for a well-capitalized bank.
<TABLE>
<CAPTION>
Corporation's Capital Ratios
at December 31:
---------------------------- Well Adequately
1999 1998 Capitalized Capitalized
----- ----- ----------- -----------
<S> <C> <C> <C> <C>
Total Risk-Based Capital Ratio .... 29.88% 31.33% 10.00% 8.00%
Tier 1 Risk-Based Capital Ratio .... 28.98 30.08 6.00 4.00
Tier 1 Leverage Capital Ratio ...... 11.24 11.72 5.00 4.00
</TABLE>
Other Matters. The amount of dividends paid by the Bank to the Corporation
is subject to restrictions under Federal Reserve Board Regulation H. Under
Regulation H, the Bank is required to obtain regulatory approval for the payment
of dividends during any one calendar year that exceed the Bank's net income for
the calendar year plus the retained net income for the two preceding calendar
years. At December 31, 1999, the Bank had retained net income for the current
and two preceding calendar years of $13,460,000.
Regulation D of the Board of Governors of The Federal Reserve System
requires banks to maintain reserves against certain deposit balances. The Bank's
average reserve requirement for 1999 was approximately $3,904,000.
Under national banking laws and related statutes, the Bank is limited as to
the amount it may loan to the Corporation, unless such loans are collateralized
by specified obligations. At December 31, 1999, the maximum amount available for
transfer from the Bank to the Corporation in the form of loans approximated
$9,411,000.
83
<PAGE>
NOTE M - FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates are made at a specific point in time and are based on
existing on and off-balance-sheet financial instruments. 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, 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 tax consequences of
realizing gains or losses on the sale of financial instruments.
The following table sets forth the carrying/contract amounts and estimated
fair values of the Corporation's financial instruments at December 31, 1999 and
1998.
<TABLE>
<CAPTION>
1999 1998
----------------------------- ----------------------------
Carrying/ Carrying/
Contract Contract
Amount Fair Value Amount Fair Value
-------- -------- -------- ----------
(in thousands)
Financial Assets:
<S> <C> <C> <C> <C>
Cash and due from banks .................................... $ 21,174 $ 21,174 $ 16,336 $ 16,336
Federal funds sold ......................................... 64,000 64,000 76,000 76,000
Held-to-maturity securities ................................ 189,998 187,258 187,633 191,252
Available-for-sale securities .............................. 100,865 100,865 87,021 87,021
Loans ...................................................... 180,741 179,417 167,067 167,829
Accrued interest receivable ................................ 4,183 4,183 4,164 4,164
Financial Liabilities:
Checking deposits .......................................... 178,622 178,622 175,046 175,046
Savings and money market deposits .......................... 286,017 286,017 265,684 265,684
Time deposits .............................................. 38,550 38,500 38,501 38,501
Accrued interest payable ................................... 185 185 197 197
Off-Balance-Sheet Liabilities:
Commitments to extend credit ............................... 33,064 -- 33,319 --
Standby and commercial letters of credit ................... 1,296 13 2,030 17
</TABLE>
NOTE N - PARENT COMPANY FINANCIAL INFORMATION
Condensed financial information for The First of Long Island Corporation
(parent company only) is as follows:
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS December 31,
-------------------------
1999 1998
-------- --------
Assets: (in thousands)
<S> <C> <C>
Checking and money market accounts with subsidiary ...... $ 2,493 $ 2,375
Investment in subsidiary bank, at equity ................ 62,742 62,211
Other assets ............................................ 5 87
-------- --------
$ 65,240 $ 64,673
======== ========
Liabilities:
Cash dividends payable ................................. $ 1,007 $ 929
-------- --------
Stockholders' equity:
Common stock ............................................ 296 310
Surplus ................................................. 2,258 4,219
Retained earnings ....................................... 63,013 57,949
-------- --------
65,567 62,478
Accumulated other comprehensive income
(loss), net of tax ................................... (1,334) 1,266
-------- --------
64,233 63,744
-------- --------
$ 65,240 $ 64,673
======== ========
</TABLE>
84
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF INCOME Year ended December 31,
----------------------------------
1999 1998 1997
------ ------ ------
Income: (in thousands)
<S> <C> <C> <C>
Dividends from subsidiary bank ............. $6,850 $3,000 $2,400
Interest on deposits with subsidiary bank .. 53 52 72
------ ------ ------
6,903 3,052 2,472
------ ------ ------
Expenses:
Employee benefits .......................... -- -- 143
Other operating expenses ................... 56 29 29
------ ------ ------
56 29 172
------ ------ ------
Income before undistributed earnings of
subsidiary bank ............................ 6,847 3,023 2,300
Equity in undistributed earnings ........... 3,132 5,213 5,115
------ ------ ------
Net income ................................. $9,979 $8,236 $7,415
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS Year ended December 31,
---------------------------------------
Increase (Decrease) in Cash and Cash Equivalents* 1999 1998 1997
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income .............................................. $ 9,979 $ 8,236 $ 7,415
Adjustments to reconcile net income to net cash
provided by operating activities:
Undistributed earnings of subsidiary bank ........ (3,132) (5,213) (5,115)
Decrease in other assets ......................... 87 261 --
Decrease in accrued expenses and other liabilities -- -- (173)
------- ------- -------
Net cash provided by operating activities ........... 6,934 3,284 2,127
------- ------- -------
Cash Flows From Financing Activities:
Repurchase and retirement of common stock ............... (5,116) (1,566) (2,444)
Proceeds from exercise of stock options ................. 137 218 737
Cash dividends paid ..................................... (1,837) (1,668) (1,419)
Cash in lieu of fractional shares on 3-for-2 stock split -- (14) --
------- ------- -------
Net cash used in financing activities ............... (6,816) (3,030) (3,126)
------- ------- -------
Net increase (decrease) in cash and cash equivalents ...... 118 254 (999)
Cash and cash equivalents, beginning of year .............. 2,375 2,121 3,120
------- ------- -------
Cash and cash equivalents, end of year .................... $ 2,493 $ 2,375 $ 2,121
======= ======= =======
Supplemental Schedule of Noncash Financing Activities:
Tax benefit from exercise of employee stock options ..... $ 4 $ 95 $ 253
Cash dividends payable .................................. 1,007 929 830
</TABLE>
*Cash and cash equivalents include the checking and money market accounts with
the Corporation's wholly-owned bank subsidiary.
85
<PAGE>
NOTE O - QUARTERLY FINANCIAL DATA (Unaudited)*
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
-------- -------- -------- -------- --------
(in thousands, except per share data)
1999
<S> <C> <C> <C> <C> <C>
Interest income .................................... $ 8,178 $ 8,251 $ 8,646 $ 8,888 $ 33,963
Interest expense ................................... 2,243 2,176 2,440 2,654 9,513
Net interest income ................................ 5,935 6,075 6,206 6,234 24,450
Provision for loan losses (credit) ................. -- -- -- -- --
Noninterest income ................................. 1,351 1,242 1,239 1,134 4,966
Noninterest expense ................................ 4,165 4,095 4,086 3,975 16,321
Income before income taxes and transition adjustment
to allowance for loan losses ..................... 3,121 3,222 3,359 3,393 13,095
Income taxes ....................................... 959 1,011 1,048 1,043 4,061
Net income before transition adjustment to
allowance for loan losses ...................... 2,162 2,211 2,311 2,350 9,034
Transition adjustment to allowance for loan
losses, net of income taxes of $655,000 ........ -- 945 -- -- 945
Net income ......................................... 2,162 3,156 2,311 2,350 9,979
Earnings per share before transition
adjustment to allowance for loan losses:
Basic ............................................ .70 .72 .76 .79 2.97
Diluted .......................................... .69 .71 .75 .77 2.92
Earnings per share:
Basic ............................................ .70 1.03 .76 .79 3.28
Diluted .......................................... .69 1.02 .75 .77 3.23
Comprehensive income ............................... 1,526 1,845 2,185 1,823 7,379
1998
Interest income .................................... $ 7,789 $ 8,095 $ 8,410 $ 8,388 $ 32,682
Interest expense ................................... 2,374 2,437 2,591 2,465 9,867
Net interest income ................................ 5,415 5,658 5,819 5,923 22,815
Provision for loan losses (credit) ................. -- (100) -- -- (100)
Noninterest income ................................. 1,094 1,202 1,170 1,130 4,596
Noninterest expense ................................ 3,715 3,840 3,966 3,948 15,469
Income before income taxes ......................... 2,794 3,120 3,023 3,105 12,042
Income taxes ....................................... 891 1,006 948 961 3,806
Net income ......................................... 1,903 2,114 2,075 2,144 8,236
Earnings per share:
Basic ............................................ .61 .68 .67 .69 2.65
Diluted .......................................... .60 .66 .66 .68 2.60
Comprehensive income ............................... 1,855 2,173 3,051 1,956 9,035
</TABLE>
*Restated - See Note A to Consolidated Financial Statements
86
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Stockholders and Board of Directors of
The First of Long Island Corporation:
We have audited the accompanying restated consolidated balance sheets of
The First of Long Island Corporation and subsidiary as of December 31, 1999 and
1998 and the related restated consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1999 (see Note A). These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The First of Long Island
Corporation and subsidiary as of December 31, 1999 and 1998 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States.
/s/ Arthur Andersen LLP
New York, New York
January 17, 2000
87
<PAGE>
Directors
THE FIRST OF LONG ISLAND CORPORATION
THE FIRST NATIONAL BANK OF LONG ISLAND
[PHOTO OMITTED]
J. William Johnson, Chairman and Chief Executive Officer
[PHOTO OMITTED]
John R. Miller III, President and Publisher, Equal Opportunity
Publications, Inc. (publishing)
[PHOTO OMITTED]
Howard Thomas Hogan, Jr., Hogan & Hogan (lawyer, private practice)
[PHOTO OMITTED]
Beverly Ann Gehlmeyer, Tax Manager and Principal, Gehlmeyer & Gehlmeyer, P.C.
(certified public accounting firm)
[PHOTO OMITTED]
Paul T. Canarick, President and Principal, Paul Todd, Inc. (construction
company)
[PHOTO OMITTED]
J. Douglas Maxwell, Jr., Chairman and Chief Executive Officer, NIRx Medical
Technologies Corp. (medical technology)
[PHOTO OMITTED]
Allen E. Busching, Principal, B&B Capital (consulting and private investment
firm)
[PHOTO OMITTED]
Walter C. Teagle III, Executive Vice President, Lexent Inc. (telecommunication
services)
88
<PAGE>
Senior Management
[PHOTO OMITTED]
Left to Right
Donald L. Manfredonia, Arthur J. Lupinacci, Jr.,
Mark D. Curtis, Richard Kick, Joseph G. Perri
89
<PAGE>
OFFICERS
The First of Long Island Corporation
J. William Johnson
Chairman and Chief Executive Officer
Arthur J. Lupinacci, Jr.
Executive Vice President and Chief Administrative Officer
Mark D. Curtis
Senior Vice President and Treasurer
Richard Kick
Senior Vice President
Donald L. Manfredonia
Senior Vice President
Joseph G. Perri
Senior Vice President and Secretary
Wayne B. Drake
Assistant Treasurer
EXECUTIVE OFFICERS
The First National Bank of Long Island
Chairman and Chief Executive Officer
J. William Johnson
Executive Vice Presidents
Arthur J. Lupinacci, Jr.
Chief Administrative Officer
Donald L. Manfredonia
Senior Lending Officer
Senior Vice Presidents
Mark D. Curtis
Chief Financial Officer and Cashier
Richard Kick
Senior Operations and Senior Retail Loan Officer
Joseph G. Perri
Senior Commercial Marketing Officer
90
<PAGE>
BUSINESS DEVELOPMENT BOARD
[PHOTO OMITTED]
Kenneth R. Latham, Chairman of the Board, Latham Bros. Lumber Company, Inc.
[PHOTO OMITTED]
Herbert Haber, CPA, Certified Public Accountant
[PHOTO OMITTED]
Thomas N. Dufek, CPA, Partner, Kilgannon, Furey, Dufek & Company
[PHOTO OMITTED]
Kevin J. Harding, Esq., Partner, Harding and Harding
[PHOTO OMITTED]
Herbert Kotler, Esq., Attorney
[PHOTO OMITTED]
Susan Hirschfeld Mohr, President, J. W. Hirschfeld Agency, Inc.
[PHOTO OMITTED]
Richard E. Nussbaum, CPA, Managing Partner, Nussbaum Yates & Wolpow, P.C.
[PHOTO OMITTED]
Arthur C. Schupbach, Esq., Partner, Schupbach, Williams & Pavone LLP
[PHOTO OMITTED]
H. Craig Treiber, President/CEO, The Treiber Insurance Group
[PHOTO OMITTED]
Emil V. Cianciulli, Esq., Partner, Cianciulli & Meng, P.C.
[PHOTO OMITTED]
David Black, CPA, David Black & Associates, Inc.
[PHOTO OMITTED]
Lawrence F. Steiner, President, Universal Unlimited, Inc.
[PHOTO OMITTED]
Kenneth R. Going, President, GOING SIGN CO. Inc.
[PHOTO OMITTED]
Alan B. Katcher, Chief Executive Officer, Terry Alan Adv. Co., Inc.
[PHOTO OMITTED]
Zachary Levy, Esq., Attorney
[PHOTO OMITTED]
Bernard Esquenet, Chief Executive Officer, The Ruhof Corp.
[PHOTO OMITTED]
Quentin Sammis, President, Coldwell Banker Sammis
[PHOTO OMITTED]
William L. Edwards, Real Estate Investor
[PHOTO OMITTED]
Christopher S. Byczek, Esq., Partner, Trager, Cronin & Byczek, LLP
[PHOTO OMITTED]
Howard S. Cohen, President, Mount Carmel Cemetery Assoc.
[PHOTO OMITTED]
Arthur Ventura, President, Badge Agency
[PHOTO OMITTED]
Mark Wurzel, President, Calico Cottage, Inc.
[PHOTO OMITTED]
John A. Burns, Jr., Esq., Counsel, Forchelli, Curto, Schwartz, Mineo, Carlino &
Cohn LLP
91
<PAGE>
Official Staff
Vice Presidents
Albert Arena
Commercial Banking
Archie J. Arrington
Manager, Roslyn Heights
Lester J. Bach
Manager, Great Neck
James Clavell
Branch Administration
Robert F. Covino
Manager, Bohemia
Kitty W. Craig
Auditing
Paul J. Daley
Commercial Banking
Wayne B. Drake
Finance
Stephen Durso
Commercial Banking
Betsy Gustafson
Deposit Operations
Robert M. Heyssel, Jr.
Trust and Investment Services
Peter J. Hoey
Data Center
James P. Johnis
Commercial Banking
Donna M. Kelly
Human Resources
George P. Knott
Manager, Woodbury
Henry A. Kramer
Commercial Banking
Concepcion L. Larrea
Manager, Greenvale
Raffaella Marciari
Manager, Rockville Centre
Colette Masom
Controller, Finance
Edward V. Mirabella
Commercial Banking
John J. Mulder, Jr.
Manager, Glen Head
John T. Noonan
Manager, Locust Valley
Sharon E. Pazienza
Trust and Investment Services
William Pyszczymuka
Manager, Huntington
William W. Riley
Commercial Banking
Michael J. Spolarich
Commercial Banking
<PAGE>
Henry C. Suhr
Manager, Northport
Assistant Vice Presidents
Peter J. Arebalo
Manager, Valley Stream
Joanne Buckley
Trust and Investment Services
Aldo G. Columbano
Finance
Margaret Curran
Commercial Banking
Linda A. Cutter
Manager, New Hyde Park
Margaret M. DeBonis
Auditing
Barbara D. Hefner
Compliance and Procedures
Susan J. Hempton
Human Resources
David Lippa
Glen Head
Jenny Malandruccolo
Huntington
Dorothy Miller
Manager, Hicksville
Gretchen B. Nesky
Commercial Banking
Lee Nunez
Manager, Lake Success
Ronald Pimental
Branch Administration
Frank Plesche
Manager, Old Brookville
Frederick G. Ruff
General Services
Mark A. Ryan
Manager, Hauppauge
Carole Ann Snayd
Roslyn Heights
Philip R. Thompson
Manager, Garden City
Elissa A. Toussaint
Northport
Herta Tscherne
Manager, Mineola
Financial Services Officer
Francine McDonald
Trust and Investment Services
Senior Mortgage Advisor
John F. Darcy
Loan Center
93
<PAGE>
Mortgage Originators
Daniel P. Bennett
Commercial Banking
Stephen B. Hill
Loan Center
Frederick T. Hughes
Loan Center
Assistant Cashiers
Monica T. Baker
Branch Administration
Robert B. Jacobs
Loan Center
Arlyne H. Kramer
Hicksville
Mary Lou Martin
Locust Valley
Caroline V. McIntyre
Old Brookville
June E. Pipito
Woodbury
Operations Manager
Quyen T. Pham
Trust and Investment Services
Assistant Managers
Allison C. Brown
Rockville Centre
Ann J. Cristodero
Loan Center
Alison A. Hazell
Deposit Operations
Catherine Irvin
Finance
Rosemary Kerrane
Mineola
Patricia Ovalle-Wood
Greenvale
Eveline Ratte
Loan Center
Administrative and Executive Assistants
Elaine Ballinger
Glen Head
Cathy Balseiro
Auditing
Andrea L. De Pol
Roslyn Heights
Karen Di Lecce
Compliance and Procedures
Anna S. Fleming
Loan Center
Lorraine Fogarty
Branch Administration
94
<PAGE>
Margaret Hanrahan
Huntington
Barbara Johnson
Loan Center
Patricia Lacorazza
Loan Center
Carmela Lalonde
Deposit Operations
Conrad A. Lissade
Data Center
Dawn LoBracio
Trust and Investment Services
Donna M. Long
Deposit Operations
Christina Marvullo
Data Center
Constance Miller
Administration
Lee Mintz
Branch Administration
Cheryl A. Romanski
Finance
Lori A. Ruggiero
Data Center
Susan Sciacca
Branch Administration
Anne Urtnowski
Marketing
Anne J. Virgadamo
Huntington
Maureen P. Zebrowski
Commercial Banking
Counsel
SCHUPBACH, WILLIAMS & PAVONE LLP
Independent Auditors
ARTHUR ANDERSEN LLP
FORM 10-K REPORT
A copy of the Corporation's annual report on Form 10-K for 1999, filed with the
Securities and Exchange Commission, may be obtained without charge upon written
request to Mark D. Curtis, Senior Vice President and Treasurer, The First of
Long Island Corporation, 10 Glen Head Road, PO Box 67, Glen Head, New York
11545-0067.
95
<PAGE>
FULL SERVICE OFFICES
10 Glen Head Road
Glen Head, NY 11545
(516) 671-4900
7 Glen Cove Road
Greenvale, NY 11548
(516) 621-8811
253 New York Avenue
Huntington, NY 11743
(631) 427-4143
108 Forest Avenue
Locust Valley, NY 11560
(516) 671-2299
711 Fort Salonga Road
Northport, NY 11768
(631) 261-4000
209 Glen Head Road
Old Brookville, NY 11545
(516) 759-9002
310 Merrick Road
Rockville Centre, NY 11570
(516) 763-5533
130 Mineola Avenue
Roslyn Heights, NY 11577
(516) 621-1900
800 Woodbury Road
Woodbury, NY 11797
(516) 364-3434
COMMERCIAL BANKING OFFICES
30 Orville Drive
Bohemia, NY 11716
(631) 218-2500
1050 Franklin Avenue
Garden City, NY 11530
(516) 742-6262
536 Northern Boulevard
Great Neck, NY 11021
(516) 482-6666
330 Motor Parkway
Hauppauge, NY 11788
(631) 952-2900
96
<PAGE>
106 Old Country Road
Hicksville, NY 11801
(516) 932-7150
3000 Marcus Avenue
Lake Success, NY 11042
(516) 775-3133
194 First Street
Mineola, NY 11501
(516) 742-1144
200 Jericho Turnpike
New Hyde Park, NY 11040
(516) 328-3100
133 E. Merrick Road
Valley Stream, NY 11580
(516) 825-0202
TRUST AND INVESTMENT SERVICES
800 Woodbury Road
Woodbury, NY 11797
(516) 364-3436
97
EXHIBIT 21 - SUBSIDIARY OF REGISTRANT
SUBSIDIARY OF REGISTRANT
THE FIRST NATIONAL BANK OF LONG ISLAND
10 GLEN HEAD ROAD
GLEN HEAD, NY 11545
98
EXHIBIT 23 - CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
99
<PAGE>
[ARTHUR ANDERSEN LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated January 17, 2000, incorporated by reference in this Form
10-K, into the Company's previously filed Registration Statement No. 33-44393.
/s/ ARTHUR ANDERSEN LLP
March 21, 2000
100
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial information incorporated by reference from the 1999
Annual Report which is filed herewith as Exhibit 13 and is qualified in its
entirety by reference to such financial information.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Dec-31-1999
<CASH> 21,174,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 64,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 100,865,000
<INVESTMENTS-CARRYING> 189,998,000
<INVESTMENTS-MARKET> 187,258,000
<LOANS> 182,774,000
<ALLOWANCE> 2,033,000
<TOTAL-ASSETS> 570,551,000
<DEPOSITS> 503,189,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,129,000
<LONG-TERM> 0
0
0
<COMMON> 296,000
<OTHER-SE> 63,937,000
<TOTAL-LIABILITIES-AND-EQUITY> 570,551,000
<INTEREST-LOAN> 15,113,000
<INTEREST-INVEST> 15,411,000
<INTEREST-OTHER> 3,439,000
<INTEREST-TOTAL> 33,963,000
<INTEREST-DEPOSIT> 9,513,000
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 24,450,000
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 16,321,000
<INCOME-PRETAX> 13,095,000
<INCOME-PRE-EXTRAORDINARY> 9,034,000
<EXTRAORDINARY> 0
<CHANGES> 945,000
<NET-INCOME> 9,979,000
<EPS-BASIC> 3.28
<EPS-DILUTED> 3.23
<YIELD-ACTUAL> 5.06
<LOANS-NON> 28,000
<LOANS-PAST> 5,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,651,000
<CHARGE-OFFS> 60,000
<RECOVERIES> 42,000
<ALLOWANCE-CLOSE> 2,033,000
<ALLOWANCE-DOMESTIC> 2,033,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
