UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

____________

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2021March 31, 2022

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to

Commission file number 001-32964

THE FIRST OF LONG ISLAND CORPORATION

(Exact name of registrant as specified in its charter)

 

New York

11-2672906

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

10 Glen Head Road, Glen Head, NY

 

11545

(Address of principal executive offices)

(Zip Code)

(516) 671-4900

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, $0.10 par value per share

FLIC

Nasdaq

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x   No ¨ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x   No ¨ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨

Accelerated Filer x

Non-Accelerated Filer ¨

Emerging Growth Company ¨

Smaller Reporting Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨   No x 

As of October 31, 2021,April 29, 2022, the registrant had 23,617,49423,125,403 shares of common stock, $0.10 par value per share, outstanding.


TABLE OF CONTENTS

PART I.

FINANCIAL INFORMATION

ITEM 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets

1

Consolidated Statements of Income

2

Consolidated Statements of Comprehensive Income

3

Consolidated Statements of Changes in Stockholders’ Equity

4

Consolidated Statements of Cash Flows

65

Notes to Unaudited Consolidated Financial Statements

76

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2017

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

2824

ITEM 4.

Controls and Procedures

3026

PART II.

OTHER INFORMATION

ITEM 1.

Legal Proceedings

3026

ITEM 1A.

Risk Factors

3026

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

3026

ITEM 3.

Defaults Upon Senior Securities

3026

ITEM 4.

Mine Safety Disclosures

3027

ITEM 5.

Other Information

3027

ITEM 6.

Exhibits

3127

Signatures

3329

 


PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30,

December 31,

March 31,

December 31,

(dollars in thousands)

2021

2020

2022

2021

Assets:

Cash and cash equivalents

$

259,066

$

211,182

$

85,811

$

43,675

Investment securities available-for-sale, at fair value

775,747

662,722

682,984

734,318

Loans:

Commercial and industrial

67,379

100,015

103,870

90,386

SBA Paycheck Protection Program

65,505

139,487

12,377

30,534

Secured by real estate:

Commercial mortgages

1,506,382

1,421,071

1,870,546

1,736,612

Residential mortgages

1,215,395

1,316,727

1,191,691

1,202,374

Home equity lines

46,072

54,005

45,820

44,139

Consumer and other

680

2,149

2,021

991

2,901,413

3,033,454

3,226,325

3,105,036

Allowance for credit losses

(29,516)

(33,037)

(30,287)

(29,831)

2,871,897

3,000,417

3,196,038

3,075,205

Restricted stock, at cost

19,935

20,814

18,123

21,524

Bank premises and equipment, net

37,768

38,830

37,971

37,523

Right-of-use asset - operating leases

9,903

12,212

8,006

8,438

Bank-owned life insurance

87,202

85,432

108,573

107,831

Pension plan assets, net

20,356

20,109

19,129

19,097

Deferred income tax benefit

1,462

1,375

15,338

3,987

Other assets

13,520

16,048

18,705

17,191

$

4,096,856

$

4,069,141

$

4,190,678

$

4,068,789

Liabilities:

Deposits:

Checking

$

1,393,555

$

1,208,073

$

1,479,806

$

1,400,998

Savings, NOW and money market

1,748,048

1,679,161

1,736,821

1,685,410

Time

229,943

434,354

328,763

228,837

3,371,546

3,321,588

3,545,390

3,315,245

Short-term borrowings

50,000

60,095

50,000

125,000

Long-term debt

226,002

246,002

186,322

186,322

Operating lease liability

11,462

13,046

10,609

11,259

Accrued expenses and other liabilities

17,963

21,292

8,896

17,151

3,676,973

3,662,023

3,801,217

3,654,977

Stockholders' Equity:

Common stock, par value $0.10 per share:

Authorized, 80,000,000 shares;

Issued and outstanding, 23,606,212 and 23,790,589 shares

2,361

2,379

Issued and outstanding, 23,106,070 and 23,240,596 shares

2,311

2,324

Surplus

101,197

105,547

89,362

93,480

Retained earnings

315,957

295,622

327,785

320,321

419,515

403,548

419,458

416,125

Accumulated other comprehensive income, net of tax

368

3,570

Accumulated other comprehensive loss, net of tax

(29,997)

(2,313)

419,883

407,118

389,461

413,812

$

4,096,856

$

4,069,141

$

4,190,678

$

4,068,789

See notes to unaudited consolidated financial statements

 

1


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Nine Months Ended

Three Months Ended

Three Months Ended

September 30,

September 30,

March 31,

(in thousands, except per share data)

2021

2020

2021

2020

2022

2021

Interest and dividend income:

Loans

$

79,431

$

83,349

$

25,975

$

26,461

$

27,386

$

26,706

Investment securities:

Taxable

6,269

9,972

2,191

3,223

1,668

1,833

Nontaxable

6,535

7,520

2,073

2,454

1,968

2,248

92,235

100,841

30,239

32,138

31,022

30,787

Interest expense:

Savings, NOW and money market deposits

3,451

7,946

1,191

1,307

763

1,066

Time deposits

4,818

8,487

921

2,559

945

2,304

Short-term borrowings

1,062

1,219

362

334

441

350

Long-term debt

3,468

6,177

1,157

2,020

868

1,165

12,799

23,829

3,631

6,220

3,017

4,885

Net interest income

79,436

77,012

26,608

25,918

28,005

25,902

Provision (credit) for credit losses

(3,058)

2,450

(1,449)

433

(986)

Net interest income after provision (credit) for credit losses

82,494

74,562

28,057

25,918

27,572

26,888

Noninterest income:

Investment services income

1,034

1,620

243

553

Bank-owned life insurance

742

579

Service charges on deposit accounts

2,170

2,267

752

661

726

683

Net gains on sales of securities

606

2,556

2,556

606

Other

5,404

4,502

1,860

1,586

1,956

1,664

9,214

10,945

2,855

5,356

3,424

3,532

Noninterest expense:

Salaries and employee benefits

29,663

28,278

9,748

9,365

9,755

10,070

Occupancy and equipment

10,446

9,324

4,102

3,191

2,951

3,277

Debt extinguishment

2,559

2,559

Other

8,910

8,496

2,891

3,024

3,063

3,102

49,019

48,657

16,741

18,139

15,769

16,449

Income before income taxes

42,689

36,850

14,171

13,135

15,227

13,971

Income tax expense

8,612

6,176

2,749

2,368

3,144

2,704

Net income

$

34,077

$

30,674

$

11,422

$

10,767

$

12,083

$

11,267

Weighted average:

Common shares

23,720,578

23,867,726

23,646,172

23,860,764

23,178,475

23,781,326

Dilutive stock options and restricted stock units

97,291

38,678

112,074

37,773

99,214

83,423

23,817,869

23,906,404

23,758,246

23,898,537

23,277,689

23,864,749

Earnings per share:

Basic

$1.44

$1.29

$0.48

$0.45

$0.52

$0.47

Diluted

1.43

1.28

0.48

0.45

0.52

0.47

Cash dividends declared per share

0.58

0.55

0.20

0.19

0.20

0.19

See notes to unaudited consolidated financial statements 

 

 

2


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) 

 

Nine Months Ended

Three Months Ended

September 30,

September 30,

(in thousands)

2021

2020

2021

2020

Net income

$

34,077

$

30,674

$

11,422

$

10,767

Other comprehensive income (loss):

Change in net unrealized holding gains on
  available-for-sale securities

(7,345)

77

(3,225)

485

Change in net unrealized loss on derivative instruments

2,815

(2,152)

315

1,250

Other comprehensive income (loss) before income taxes

(4,530)

(2,075)

(2,910)

1,735

Income tax benefit

(1,328)

(621)

(896)

521

Other comprehensive income (loss)

(3,202)

(1,454)

(2,014)

1,214

Comprehensive income

$

30,875

$

29,220

$

9,408

$

11,981

Three Months Ended March 31,

(in thousands)

2022

2021

Net income

$

12,083

$

11,267

Other comprehensive loss:

Change in net unrealized holding gains or losses on
  available-for-sale securities

(41,556)

(7,867)

Change in net unrealized loss on derivative instruments

1,547

1,614

Other comprehensive loss before income taxes

(40,009)

(6,253)

Income tax benefit

(12,325)

(1,858)

Other comprehensive loss

(27,684)

(4,395)

Comprehensive income (loss)

$

(15,601)

$

6,872

See notes to unaudited consolidated financial statements 

 

 

3


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

 

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Accumulated

Accumulated

Other

Other

Common Stock

Retained

Comprehensive

Common Stock

Retained

Comprehensive

(dollars in thousands)

Shares

Amount

Surplus

Earnings

Income (Loss)

Total

Shares

Amount

Surplus

Earnings

Loss

Total

Balance, January 1, 2021

23,790,589

$

2,379

$

105,547

$

295,622

$

3,570

$

407,118

Balance, January 1, 2022

23,240,596

$

2,324

$

93,480

$

320,321

$

(2,313)

$

413,812

Net income

11,267

11,267

12,083

12,083

Other comprehensive loss

(4,395)

(4,395)

(27,684)

(27,684)

Repurchase of common stock

(107,887)

(11)

(1,989)

(2,000)

(202,886)

(20)

(4,480)

(4,500)

Shares withheld upon the vesting

and conversion of RSUs

(16,918)

(2)

(318)

(320)

(25,628)

(3)

(542)

(545)

Common stock issued under

stock compensation plans

94,627

10

152

162

75,483

8

8

16

Common stock issued under

dividend reinvestment and

stock purchase plan

22,341

2

416

418

18,505

2

380

382

Stock-based compensation

390

390

516

516

Cash dividends declared

(4,518)

(4,518)

(4,619)

(4,619)

Balance, March 31, 2021

23,782,752

2,378

104,198

302,371

(825)

408,122

Net income

11,388

11,388

Other comprehensive income

3,207

3,207

Repurchase of common stock

(92,533)

(9)

(2,091)

(2,100)

Shares withheld upon the vesting

and conversion of RSUs

(1,431)

(31)

(31)

Common stock issued under

stock compensation plans

6,229

1

35

36

Stock-based compensation

525

525

Cash dividends declared

(4,503)

(4,503)

Balance, June 30, 2021

23,695,017

2,370

102,636

309,256

2,382

416,644

Net income

11,422

11,422

Other comprehensive loss

(2,014)

(2,014)

Repurchase of common stock

(100,845)

(10)

(2,190)

(2,200)

Shares withheld upon the vesting

and conversion of RSUs

(133)

(3)

(3)

Common stock issued under

stock compensation plans

2,207

37

37

Common stock issued under

dividend reinvestment and

stock purchase plan

9,966

1

203

204

Stock-based compensation

514

514

Cash dividends declared

(4,721)

(4,721)

Balance, September 30, 2021

23,606,212

$

2,361

$

101,197

$

315,957

$

368

$

419,883

Balance, March 31, 2022

23,106,070

$

2,311

$

89,362

$

327,785

$

(29,997)

$

389,461

See notes to unaudited consolidated financial statements


4


Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Accumulated

Accumulated

Other

Other

Common Stock

Retained

Comprehensive

Common Stock

Retained

Comprehensive

(dollars in thousands)

Shares

Amount

Surplus

Earnings

Income (Loss)

Total

Shares

Amount

Surplus

Earnings

Income (Loss)

Total

Balance, January 1, 2020

23,934,632

$

2,393

$

111,744

$

274,376

$

595

$

389,108

Effect of adopting ASU 2016-13

(2,325)

(2,325)

Balance at January 1, 2020 as adjusted

for change in accounting principle

23,934,632

2,393

111,744

272,051

595

386,783

Balance, January 1, 2021

23,790,589

$

2,379

$

105,547

$

295,622

$

3,570

$

407,118

Net income

9,148

9,148

11,267

11,267

Other comprehensive loss

(8,836)

(8,836)

(4,395)

(4,395)

Repurchase of common stock

(261,700)

(26)

(5,911)

(5,937)

(107,887)

(11)

(1,989)

(2,000)

Shares withheld upon the vesting

and conversion of RSUs

(66,142)

(6)

(1,521)

(1,527)

(16,918)

(2)

(318)

(320)

Common stock issued under

stock compensation plans

178,373

18

205

223

94,627

10

152

162

Common stock issued under

dividend reinvestment and

stock purchase plan

21,738

2

388

390

22,341

2

416

418

Stock-based compensation

251

251

390

390

Cash dividends declared

(4,286)

(4,286)

(4,518)

(4,518)

Balance, March 31, 2020

23,806,901

2,381

105,156

276,913

(8,241)

376,209

Net income

10,759

10,759

Other comprehensive income

6,168

6,168

Common stock issued under

stock compensation plans

41,725

4

32

36

Stock-based compensation

859

859

Cash dividends declared

(4,293)

(4,293)

Balance, June 30, 2020

23,848,626

2,385

106,047

283,379

(2,073)

389,738

Net income

10,767

10,767

Other comprehensive income

1,214

1,214

Common stock issued under

stock compensation plans

2,082

31

31

Common stock issued under

dividend reinvestment and

stock purchase plan

14,132

1

202

203

Stock-based compensation

315

315

Cash dividends declared

(4,534)

(4,534)

Balance, September 30, 2020

23,864,840

$

2,386

$

106,595

$

289,612

$

(859)

$

397,734

Balance, March 31, 2021

23,782,752

$

2,378

$

104,198

$

302,371

$

(825)

$

408,122

See notes to unaudited consolidated financial statements

 

54


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

2021

2020

2022

2021

Cash Flows From Operating Activities:

Net income

$

34,077

$

30,674

$

12,083

$

11,267

Adjustments to reconcile net income to net cash provided by operating activities:

Provision (credit) for credit losses

(3,058)

2,450

433

(986)

Provision (credit) for deferred income taxes

1,241

(1,458)

Provision for deferred income taxes

974

1,234

Depreciation and amortization of premises and equipment

3,336

3,141

804

1,023

Amortization of right-of-use asset - operating leases

1,558

1,635

432

519

Premium amortization on investment securities, net

1,685

1,182

466

661

Net gains on sales of securities

(606)

(2,556)

Net gain on sales of securities

(606)

Stock-based compensation expense

1,429

1,425

516

390

Accretion of cash surrender value on bank-owned life insurance

(1,770)

(1,731)

(742)

(579)

Pension credit

(247)

(197)

(32)

(82)

Decrease in other liabilities

(2,301)

(5,005)

(2,709)

(845)

Other decreases (increases) in assets

3,434

(2,713)

Other increases in assets

(1,498)

(223)

Net cash provided by operating activities

38,778

26,847

10,727

11,773

Cash Flows From Investing Activities:

Available-for-sale securities:

Proceeds from sales

54,192

64,453

54,192

Proceeds from maturities and redemptions

93,162

109,354

14,054

32,856

Purchases

(268,803)

(120,918)

(4,742)

(263,402)

Net decrease in loans

131,578

150,296

Net (increase) decrease in loans

(121,266)

6,749

Net decrease in restricted stock

879

8,870

3,401

757

Purchases of premises and equipment, net

(2,327)

(1,815)

(1,252)

(558)

Net cash provided by investing activities

8,681

210,240

Net cash used in investing activities

(109,805)

(169,406)

Cash Flows From Financing Activities:

Net increase in deposits

49,958

104,830

230,145

215,120

Net decrease in short-term borrowings

(10,095)

(133,002)

(75,000)

(3,289)

Proceeds from long-term debt

120,000

Repayment of long-term debt

(20,000)

(184,470)

(20,000)

Proceeds from issuance of common stock, net of shares withheld

401

(738)

(163)

231

Repurchase of common stock

(6,300)

(5,937)

(4,500)

(2,000)

Cash dividends paid

(13,539)

(12,886)

(9,268)

(9,037)

Net cash provided by (used in) financing activities

425

(112,203)

Net cash provided by financing activities

141,214

181,025

Net increase in cash and cash equivalents

47,884

124,884

42,136

23,392

Cash and cash equivalents, beginning of year

211,182

38,968

43,675

211,182

Cash and cash equivalents, end of period

$

259,066

$

163,852

$

85,811

$

234,574

Supplemental Cash Flow Disclosures:

Cash paid for:

Interest

$

13,276

$

24,109

$

2,932

$

4,929

Income taxes

8,411

7,432

430

157

Operating cash flows from operating leases

1,856

2,019

720

616

Noncash investing and financing activities:

Right-of-use assets obtained in exchange for operating lease liabilities

423

Cash dividends payable

4,721

4,534

 

See notes to unaudited consolidated financial statements 

 

65


NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

1 - BASIS OF PRESENTATION 

The accounting and reporting policies of The First of Long Island Corporation (“Corporation”) reflect banking industry practice and conform to generally accepted accounting principles (“GAAP”) in the United States.

The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, The First National Bank of Long Island (“Bank”). The Bank has 2 wholly owned subsidiaries: FNY Service Corp. and The First of Long Island Agency, Inc. The Bank and FNY Service Corp. jointly own another subsidiary, The First of Long Island REIT, Inc., a real estate investment trust. The consolidated entity is referred to as the “Corporation” and the Bank and its subsidiaries are collectively referred to as the “Bank.” All intercompany balances and amounts have been eliminated. For further information refer to the consolidated financial statements and notes thereto included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2020.2021.

The consolidated financial information included herein as of and for the periods ended September 30,March 31, 2022 and 2021 and 2020 is unaudited. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The December 31, 20202021 consolidated balance sheet was derived from the Corporation's December 31, 20202021 audited consolidated financial statements. When appropriate, items in the prior year financial statements are reclassified to conform to the current period presentation.

Use of Estimates. In preparing the consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported asset and liability balances, revenue and expense amounts, and the disclosures provided, including disclosure of contingent assets and liabilities, based on available information. Actual results could differ significantly from those estimates. Information available which could affect these judgements include, but are not limited to, changes in interest rates, changes in the performance of the economy including the economic impact of the COVID-19 pandemic (“pandemic”) on both the allowance and provision for credit losses, and changes in the financial condition of borrowers.

2 - COMPREHENSIVE INCOME

Comprehensive income includes net income and other comprehensive income (loss) (“OCI”). OCI includes revenues, expenses, gains and losses that under GAAP are included in comprehensive income but excluded from net income. OCI for the Corporation consists of unrealized holding gains or losses on available-for-sale (“AFS”) securities and derivative instruments and changes in the funded status of the Bank’s defined benefit pension plan, all net of related income taxes. Accumulated OCI is recognized as a separate component of stockholders’ equity.

The components of OCI and the related tax effects are as follows:

Nine Months Ended

Three Months Ended

September 30,

September 30,

(in thousands)

2021

2020

2021

2020

Change in net unrealized holding gains (losses)

on available-for-sale securities:

Change arising during the period

$

(6,739)

$

2,633

$

(3,225)

$

3,041

Reclassification adjustment for gains included in net income (1)

(606)

(2,556)

(2,556)

(7,345)

77

(3,225)

485

Tax effect

(2,151)

25

(993)

146

(5,194)

52

(2,232)

339

Change in unrealized loss on derivative instruments:

Amount of gain (loss) during the period

266

(4,788)

(1)

(20)

Reclassification adjustment for net interest expense

included in net income (2)

2,549

2,636

316

1,270

2,815

(2,152)

315

1,250

Tax effect

823

(646)

97

375

1,992

(1,506)

218

875

Other comprehensive income (loss)

$

(3,202)

$

(1,454)

$

(2,014)

$

1,214

Three Months Ended

March 31,

(in thousands)

2022

2021

Change in net unrealized holding gains or losses on available-for-sale securities:

Change arising during the period

$

(41,556)

$

(7,261)

Reclassification adjustment for gains included in net income (1)

(606)

(41,556)

(7,867)

Tax effect

(12,800)

(2,311)

(28,756)

(5,556)

Change in unrealized loss on derivative instrument:

Amount of gain during the period

1,248

300

Reclassification adjustment for net interest expense included in net income (2)

299

1,314

1,547

1,614

Tax effect

475

453

1,072

1,161

Other comprehensive loss

$

(27,684)

$

(4,395)

(1) Represents net realized gains arising from the sale of available-for-saleAFS securities. These net gains are included in the consolidated statements of income in the line item “Net gains on sales of securities.”

(2) Represents the net interest expense recorded on derivative transactions and included in the consolidated statements of income under “Interest expense.”

 

76


The following table sets forth the components of accumulated OCI, net of tax:

Current

Current

Balance

Period

Balance

Balance

Period

Balance

(in thousands)

12/31/20

Change

9/30/21

12/31/21

Change

3/31/22

Unrealized holding gains on available-for-sale securities

$

9,425

$

(5,194)

$

4,231

Unrealized holding gains (losses) on available-for-sale securities

$

1,955

$

(28,756)

$

(26,801)

Unrealized actuarial loss on pension plan

(2,153)

(2,153)

(3,056)

(3,056)

Unrealized loss on derivative instruments

(3,702)

1,992

(1,710)

(1,212)

1,072

(140)

Accumulated other comprehensive income, net of tax

$

3,570

$

(3,202)

$

368

Accumulated other comprehensive loss, net of tax

$

(2,313)

$

(27,684)

$

(29,997)

3 - INVESTMENT SECURITIES

The following tables set forth the amortized cost and estimated fair values of the Bank’s AFS investment securities all of which were available-for-sale. There was 0 allowance for credit losses associated withat the investment securities portfolio at September 30, 2021 or December 31, 2020.dates indicated.

September 30, 2021

March 31, 2022

Gross

Gross

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

Amortized

Unrealized

Unrealized

Fair

(in thousands)

Cost

Gains

Losses

Value

Cost

Gains

Losses

Value

State and municipals

$

319,649

$

11,670

$

(556)

$

330,763

$

313,076

$

2,389

$

(6,608)

$

308,857

Pass-through mortgage securities

215,793

1,139

(4,170)

212,762

185,139

13

(16,878)

168,274

Collateralized mortgage obligations

115,194

134

(1,890)

113,438

104,502

1

(9,817)

94,686

Corporate bonds

119,000

90

(306)

118,784

119,000

(7,833)

111,167

$

769,636

$

13,033

$

(6,922)

$

775,747

$

721,717

$

2,403

$

(41,136)

$

682,984

December 31, 2020

December 31, 2021

State and municipals

$

348,260

$

15,951

$

$

364,211

$

315,747

$

11,600

$

(176)

$

327,171

Pass-through mortgage securities

128,843

2,881

(4)

131,720

187,494

54

(4,591)

182,957

Collateralized mortgage obligations

53,163

599

(51)

53,711

109,254

67

(3,239)

106,082

Corporate bonds

119,000

(5,920)

113,080

119,000

(892)

118,108

$

649,266

$

19,431

$

(5,975)

$

662,722

$

731,495

$

11,721

$

(8,898)

$

734,318

At September 30, 2021March 31, 2022 and December 31, 2020,2021, investment securities with a carrying value of $336.3$390.7 million and $380.7$425.0 million, respectively, were pledged as collateral to secure public deposits, borrowed funds and derivative liabilities.

There were 0 holdings of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity at September 30, 2021March 31, 2022 and December 31, 2020.2021.

There was 0 allowance for credit losses associated with the investment securities portfolio at March 31, 2022 or December 31, 2021.

Securities With Unrealized Losses. The following tables set forth securities with unrealized losses presented by the length of time the securities have been in a continuous unrealized loss position.

September 30, 2021

March 31, 2022

Less than

12 Months

Less than

12 Months

12 Months

or More

Total

12 Months

or More

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(in thousands)

Value

Loss

Value

Loss

Value

Loss

Value

Loss

Value

Loss

Value

Loss

State and municipals

$

21,749

$

(556)

$

$

$

21,749

$

(556)

$

95,119

$

(5,579)

$

3,125

$

(1,029)

$

98,244

$

(6,608)

Pass-through mortgage securities

184,447

(4,170)

184,447

(4,170)

46,412

(3,064)

120,764

(13,814)

167,176

(16,878)

Collateralized mortgage obligations

105,821

(1,890)

105,821

(1,890)

31,315

(3,033)

60,940

(6,784)

92,255

(9,817)

Corporate bonds

30,694

(306)

30,694

(306)

82,480

(5,520)

28,687

(2,313)

111,167

(7,833)

Total temporarily impaired

$

312,017

$

(6,616)

$

30,694

$

(306)

$

342,711

$

(6,922)

$

255,326

$

(17,196)

$

213,516

$

(23,940)

$

468,842

$

(41,136)

December 31, 2020

December 31, 2021

State and municipals

$

18,429

$

(176)

$

$

$

18,429

$

(176)

Pass-through mortgage securities

$

1,871

$

(4)

$

$

$

1,871

$

(4)

179,575

(4,529)

1,641

(62)

181,216

(4,591)

Collateralized mortgage obligations

24,970

(51)

24,970

(51)

99,305

(3,239)

99,305

(3,239)

Corporate bonds

113,080

(5,920)

113,080

(5,920)

87,620

(380)

30,488

(512)

118,108

(892)

Total temporarily impaired

$

26,841

$

(55)

$

113,080

$

(5,920)

$

139,921

$

(5,975)

$

384,929

$

(8,324)

$

32,129

$

(574)

$

417,058

$

(8,898)

 

87


State and Municipals

At September 30, 2021,March 31, 2022, approximately $21.7$98.2 million of state and municipal bonds had an unrealized loss of $556,000.$6.6 million. Each of the state and municipal bonds are considered high investment grade and rated Aa2/AA- or higher. The decline in value is attributable to changes in interest rates and illiquidity and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. The Bank does not intend to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. The fair value is expected to recover as the bonds approach maturity.

Pass-through Mortgage Securities

At September 30, 2021,March 31, 2022, approximately $184.4$167.2 million of pass-through mortgage security had an unrealized loss of $4.2$16.9 million. These securities were issued by U.S. government-sponsored agencies and are considered high investment grade. The decline in fair value is attributable to changes in interest rates and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. The Bank does not intend to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. The fair value is expected to recover as the bonds approach maturity.

Collateralized Mortgage Obligations

At September 30, 2021,March 31, 2022, approximately $105.8$92.3 million of collateralized mortgage obligations had an unrealized loss of $1.9$9.8 million. These securities were issued by U.S. government and government-sponsored agencies and are considered high investment grade. The decline in fair value is attributable to changes in interest rates and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. The Bank does not intend to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. The fair value is expected to recover as the bonds approach maturity.

Corporate Bonds

At September 30, 2021,March 31, 2022, approximately $30.7$111.2 million of the corporate bonds had an unrealized loss of $306,000.$7.8 million. The Bank’s corporate bond portfolio representsbonds represent senior unsecured debt obligations of 6 of the largest U.S. based financial institutions, including JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells FargoFargo. Each of the corporate bonds has a stated maturity of ten years and maturematures in 2028. The bonds reprice quarterly based on the ten year constant maturity swap rate.

Each of the financial institutions is considered upper medium investment grade and rated A3 or higher. The improvement in the unrealized loss during the quarter is attributable to a tighteningchanges in credit spreads and an increase in long-term interest rates.rates and the illiquid nature of the securities. The Bank does not intendhave the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. Each of these financial institutions has diversified revenue streams, is well capitalized and continues to make timely interest payments. Management evaluates the quarterly financial statements of each company to determine if full payment of principal and interest is in doubt and does not believe there is any impairment at September 30, 2021.March 31, 2022.

Sales of Available-for-SaleAFS Securities. Sales of available-for-saleAFS securities were as follows:

Nine Months Ended

Three Months Ended

Three Months Ended

September 30,

September 30,

March 31,

(in thousands)

2021

2020

2021

2020

2022

2021

Proceeds

$

54,192

$

64,453

$

$

64,453

$

$

54,192

Gains

$

622

$

2,556

$

$

2,556

$

$

622

Losses

(16)

(16)

Net gain

$

606

$

2,556

$

$

2,556

$

$

606

Income tax expense related to the net realized gains for the ninethree months ended September 30,March 31, 2021 was $187,000.

 

98


Maturities. The following table sets forth by maturity the amortized cost and fair value of the Bank’s state and municipal securities, and corporate bonds at September 30, 2021March 31, 2022 based on the earlier of their stated maturity or, if applicable, their pre-refunded date. The remaining securities in the Bank’s investment securities portfolio are mortgage-backed securities, consisting of pass-through mortgage securities and collateralized mortgage obligations. Although these securities are expected to have substantial periodic repayments they are reflected in the table below in aggregate amounts.

(in thousands)

Amortized Cost

Fair Value

Within one year

$

4,107

$

4,121

After 1 through 5 years

81,416

83,688

After 5 through 10 years

219,168

222,761

After 10 years

133,958

138,977

Mortgage-backed securities

330,987

326,200

$

769,636

$

775,747

(in thousands)

Amortized Cost

Fair Value

Within one year

$

8,161

$

8,179

After 1 through 5 years

89,105

89,486

After 5 through 10 years

211,006

203,407

After 10 years

123,804

118,952

Mortgage-backed securities

289,641

262,960

$

721,717

$

682,984

 

4 - LOANS

The following table sets forth the loans outstanding by class of loans at the dates indicated.

(in thousands)

September 30, 2021

December 31, 2020

March 31, 2022

December 31, 2021

Commercial and industrial

$

67,379 

$

100,015 

$

103,870

$

90,386

SBA PPP

65,505 

139,487 

12,377

30,534

Commercial mortgages:

Multifamily

771,801 

776,976 

942,880

864,207

Other

584,199 

513,176 

734,259

700,872

Owner-occupied

150,382 

130,919 

193,407

171,533

Residential mortgages:

Closed end

1,215,395 

1,316,727 

1,191,691

1,202,374

Revolving home equity

46,072 

54,005 

45,820

44,139

Consumer and other

680 

2,149 

2,021

991

$

2,901,413 

$

3,033,454 

$

3,226,325

$

3,105,036

Management identifies loans in the Bank’s portfolio that must be individually evaluated for loss due to disparate risk characteristics or information suggesting that the Bank will be unable to collect all the principal and interest due. For loans individually evaluated, a specific reserve is estimated based on either the fair value of collateral or the discounted value of expected future cash flows. In estimating the fair value of real estate collateral, management utilizes appraisals or evaluations adjusted for costs to dispose and a distressed sale adjustment, if needed. Estimating the fair value of collateral other than real estate is also subjective in nature and sometimes requires difficult and complex judgements. Determining expected future cash flows can be more subjective than determining fair values. Expected future cash flows could differ significantly, both in timing and amount, from the cash flows actually received over the loan’s remaining life. Individually evaluated loans are excluded from the estimation of credit losses for the pooled portfolio.

For loans collectively evaluated for credit loss, management segregates its loan portfolio into eleven distinct pools, certain of which are combined in reporting loans outstanding by class of loans: (1) commercial and industrial; (2) small business credit scored; (3) multifamily; (4) owner-occupied; (5) other commercial real estate; (6) construction and land development; (7) closed end residential mortgage; (8) revolving home equity; (9) consumer; (10) municipal loans; and (11) Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans. Historical loss information from the Bank’s own loan portfolio from December 31, 2007 to present provides a basis for management’s assessment of expected credit losses. The choice of a historical look-back period that begins in 2007 covers an entire economic cycle and impacts the average historical loss rates used to calculate the final allowance for credit losses (“ACL” or “allowance”). Due to the extensive historical loss data available, management has determined thatselected the vintage approach is the most appropriate method of measuringto measure the historical loss component of credit losses inherent in its portfolio for most of its loan pools. For the revolving home equity and small business credit scored pools, the migration approach was selectedPD/LGD (probability of default/loss given default) method is used to measure historical losses since contractual lives are not readily discernable and balances can fluctuate throughout the life of the lines. Finally, nolosses. No historical loss method was applied to the SBA PPP loan pool which is a new pool with no loss experience and is 100% guaranteed by the federal government.

Management believes that the methods selected fairly reflect the historical loss component of expected losses inherent in the Bank’s loan portfolio. However, since future losses could vary significantly from those experienced in the past, on a quarterly basis management adjusts its historical loss experience to reflect current and forecasted conditions. In doing so, management considers a variety of general qualitative and quantitative factors (“Q-factors”) and then subjectively determines the weight to assign to each in estimating losses. Qualitative characteristics include among others, differences in underwriting standards, policies, lending staff and environmental risks. Management also considers whether further adjustments to historical loss information are needed to reflect the extent to which current

10


conditions and reasonable and supportable forecasts over a one year to two year forecasting horizon differ from the conditions that existed during the historical loss period. These quantitative adjustments reflect changes to relevant data such as changes in unemployment rates, GDP,gross

9


domestic product (“GDP”), vacancies, average growth in pools of loans, delinquencies or other factors associated with the financial assets. The allowance for SBA PPP loans represents an estimate of potential loss due to documentation and processing deficiencies. The immediate reversion method is applied for periods beyond the forecasting horizon. The Bank’s ACL allocable to pools of loans that are collectively evaluated for credit loss results primarily from these qualitative and quantitative adjustments to historical loss experience. Because of the nature of the Q-factors and the degree of judgement involved in assessing their impact, management’s resulting estimate of losses may not accurately reflect current and future losses in the portfolio.

The following risks reflectedGrowth in commercial mortgages and commercial and industrial loans was the main driver of the provision recorded in the Bank’s Q-factors showed improvement in the thirdfirst quarter of 2021 and, together with a decline2022, partially offset by declines in historical loss rates, were the key driversimprovements in estimating the ACL at September 30, 2021:

average growth rates in the residential mortgageeconomic conditions and commercial and industrial loan pools,

past due and problem loans, and

current and forecasted economic conditions.other portfolio metrics.

The following tables present the activity in the ACL for the periods indicated.

(in thousands)

Balance at
1/1/2021

Chargeoffs

Recoveries

Provision (Credit) for Credit Losses

Balance at
9/30/2021

Balance at
1/1/2022

Chargeoffs

Recoveries

Provision (Credit) for Credit Losses

Balance at
3/31/22

Commercial and industrial

$

1,416

$

227

$

188

$

(519)

$

858

$

888

$

4

$

27

$

131

$

1,042 

SBA PPP

209

(111)

98

46

(27)

19 

Commercial mortgages:

Multifamily

9,474

544

(1,103)

7,827

8,154

230

8,384 

Other

4,913

859

5,772

6,478

237

6,715 

Owner-occupied

1,905

165

91

180

2,011

2,515

207

2,722 

Residential mortgages:

Closed end

14,706

79

19

(2,205)

12,441

11,298

(282)

11,016 

Revolving home equity

407

254

(156)

505

449

(73)

376 

Consumer and other

7

1

1

(3)

4

3

10

13 

$

33,037

$

1,016

$

553

$

(3,058)

$

29,516

$

29,831

$

4

$

27

$

433

$

30,287

(in thousands)

Balance at
7/1/2021

Chargeoffs

Recoveries

Provision (Credit) for Credit Losses

Balance at
9/30/2021

Commercial and industrial

$

1,008

$

$

20

$

(170)

$

858

SBA PPP

141

(43)

98

Commercial mortgages:

Multifamily

8,613

292

(494)

7,827

Other

5,363

409

5,772

Owner-occupied

1,895

116

2,011

Residential mortgages:

Closed end

13,316

16

(891)

12,441

Revolving home equity

628

254

(377)

505

Consumer and other

4

1

1

4

$

30,968

$

293

$

290

$

(1,449)

$

29,516


11


(in thousands)

Balance at
1/1/2020

Impact of
ASC 326
Adoption

Chargeoffs

Recoveries

Provision (Credit) for Credit Losses

Balance at
9/30/2020

Balance at
1/1/2021

Chargeoffs

Recoveries

Provision (Credit) for Credit Losses

Balance at
3/31/21

Commercial and industrial

$

1,493

$

(244)

$

1,124

$

295

$

995

$

1,415

$

1,416

$

135

$

12

$

(150)

$

1,143

SBA PPP

250

250

209

60

269

Commercial mortgages:

Multifamily

7,151

1,059

298

778

8,690

9,474

250

(150)

9,074

Other

3,498

(47)

502

1

993

3,943

4,913

54

4,967

Owner-occupied

921

778

(77)

1,622

1,905

165

91

80

1,911

Residential mortgages:

Closed end

15,698

1,356

175

2

(566)

16,315

14,706

(1,070)

13,636

Revolving home equity

515

(6)

33

78

554

407

192

599

Consumer and other

13

(8)

3

2

(1)

3

7

(2)

5

$

29,289

$

2,888

$

2,135

$

300

$

2,450

$

32,792

$

33,037

$

550

$

103

$

(986)

$

31,604

(in thousands)

Balance at
7/1/2020

Chargeoffs

Recoveries

Provision (Credit) for Credit Losses

Balance at
9/30/2020

Commercial and industrial

$

1,593

$

309

$

38

$

93

$

1,415

SBA PPP

249

1

250

Commercial mortgages:

Multifamily

8,856

298

132

8,690

Other

3,860

502

1

584

3,943

Owner-occupied

1,622

1,622

Residential mortgages:

Closed end

17,384

156

(913)

16,315

Revolving home equity

482

33

105

554

Consumer and other

5

(2)

3

$

34,051

$

1,298

$

39

$

$

32,792

 

1210


Aging of Loans. The following tables present the aging of loans past due and loans on nonaccrual status by class of loans.

September 30, 2021

March 31, 2022

Past Due

Nonaccrual

Past Due

Nonaccrual

With an

With No

Total Past

With an

With No

Total Past

90 Days or

Allowance

Allowance

Due Loans &

90 Days or

Allowance

Allowance

Due Loans &

More and

for Credit

for Credit

Nonaccrual

Total

More and

for Credit

for Credit

Nonaccrual

Total

(in thousands)

30-59 Days

60-89 Days

Still Accruing

Loss

Loss

Loans

Current

Loans

30-59 Days

60-89 Days

Still Accruing

Loss

Loss

Loans

Current

Loans

Commercial and industrial

$

87 

$

$

$

$

$

87 

$

67,292 

$

67,379 

$

$

$

$

$

$

$

103,867 

$

103,870 

SBA PPP

379 

26 

405 

65,100 

65,505 

209 

209 

12,168 

12,377 

Commercial mortgages:

Multifamily

951 

951 

770,850 

771,801 

942,880 

942,880 

Other

584,199 

584,199 

734,259 

734,259 

Owner-occupied

150,382 

150,382 

193,407 

193,407 

Residential mortgages:

Closed end

130 

1,235 

1,365 

1,214,030 

1,215,395 

899 

1,235 

2,134 

1,189,557 

1,191,691 

Revolving home equity

46,072 

46,072 

45,818 

45,820 

Consumer and other

672 

680 

2,021 

2,021 

$

1,555 

$

26 

$

$

$

1,235 

$

2,816 

$

2,898,597 

$

2,901,413 

$

1,111 

$

$

$

$

1,235 

$

2,348 

$

3,223,977 

$

3,226,325 

December 31, 2020

December 31, 2021

Commercial and industrial

$

65 

$

$

$

$

$

65 

$

99,950 

$

100,015 

$

128 

$

$

$

$

$

128 

$

90,258 

$

90,386 

SBA PPP

139,487 

139,487 

259 

259 

30,275 

30,534 

Commercial mortgages:

Multifamily

776,976 

776,976 

864,207 

864,207 

Other

513,176 

513,176 

700,872 

700,872 

Owner-occupied

494 

494 

130,425 

130,919 

171,533 

171,533 

Residential mortgages:

Closed end

1,357 

261 

1,618 

1,315,109 

1,316,727 

1,235 

1,235 

1,201,139 

1,202,374 

Revolving home equity

367 

367 

53,638 

54,005 

44,139 

44,139 

Consumer and other

2,149 

2,149 

73 

73 

918 

991 

$

1,422 

$

$

$

$

1,122 

$

2,544 

$

3,030,910 

$

3,033,454 

$

460 

$

$

$

$

1,235 

$

1,695 

$

3,103,341 

$

3,105,036 

There were 0 loans in the process of foreclosure 0r did the Bank hold any foreclosed residential real estate property at September 30, 2021March 31, 2022 or December 31, 2020.2021.

Accrued interest receivable from loans totaled $8.6 million and $8.0 million and $9.7 million at September 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, and is included in the line item “Other assets” on the consolidated balance sheets.

Troubled Debt Restructurings. A restructuring constitutes a troubled debt restructuring (“TDR”) when it includes a concession by the Bank and the borrower is experiencing financial difficulty. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The Bank performs the evaluation under its internal underwriting policy.

The Bank did 0t modify any loans in a TDR during the first ninethree months of 20212022 or 2020.2021.

At September 30, 2021March 31, 2022 and December 31, 2020,2021, the Bank had 0 allowance allocated to TDRs and 0 commitments to lend additional amounts in connection with loans that were classified as TDRs.

There were 0 TDRs for which there was a payment default during the three months ended September 30,March 31, 2022 and 2021 and 2020 that were modified during the 12-month period prior to default. A loan is in payment default once it is 90 days contractually past due under the modified terms.

 

1311


Risk Characteristics. Credit risk within the Bank’s loan portfolio primarily stems from factors such as changes in the borrower’s financial condition, credit concentrations, changes in collateral values, economic conditions including those arising from the pandemic, rent regulation and environmental contamination of properties securing mortgage loans. The Bank’s commercial loans, including those secured by real estate mortgages, are primarily made to small and medium-sized businesses. Such loans sometimes involve a higher degree of risk than those to larger companies because such businesses may have shorter operating histories, higher debt-to-equity ratios and may lack sophistication in internal record keeping and financial and operational controls. In addition, most of the Bank’s loans are made to businesses and consumers on Long Island and in the boroughs of New York City (“NYC”), and a large percentage of these loans are mortgage loans secured by properties located in those areas. The primary sources of repayment for residential and commercial mortgage loans include employment and other income of the borrowers, the businesses of the borrowers and cash flows from the underlying properties. In the case of multifamily mortgage loans, a substantial portion of the underlying properties are rent stabilized or rent controlled. These sources of repayment are dependent on, among other things, the strength of the local economy.

Credit Quality Indicators. The Bank categorizes loans into risk categories based on relevant information about the borrower’s ability to service their debt including, but not limited to, current financial information for the borrower and any guarantors, payment experience, credit underwriting documentation, public records, due diligence checks and current economic trends. Management analyzes loans individually and classifies them using risk rating matrices consistent with regulatory guidance as follows.

Watch: The borrower’s cash flow has a high degree of variability and subject to economic downturns. Liquidity is strained and the ability of the borrower to access traditional sources of credit is diminished.

Special Mention: The borrower has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to risk sufficient to warrant adverse classification.

Substandard: Loans are inadequately protected by the current sound worth and paying capacity of the borrower or the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans have all the inherent weaknesses of those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on existing facts, conditions and values, highly questionable and improbable.

Risk ratings on commercial and industrial loans and commercial mortgages are initially assigned during the underwriting process and affirmed as part of the approval process. The ratings are periodically reviewed and evaluated based on borrower contact, credit department review or independent loan review.

The Bank's loan risk rating and review policy establishes requirements for the annual review of commercial real estate and commercial and industrial loans. The requirements include details of the scope of coverage and selection process based on loan-type and risk rating. AtThe Bank reviews at least 80% of the recorded investment ofits commercial real estate loans as of December 31 of the prior year must be reviewed annually.portfolio on an annual basis. Lines of credit are also reviewed annually at each proposed reaffirmation. The frequency of the review of other loans is determined by minimum principal balance thresholds and the Bank’s ongoing assessments of the borrower’s condition.

Residential mortgage loans, revolving home equity lines and other consumer loans are initially evaluated utilizing the borrower’s credit score. A credit score is a tool used in the Bank’s loan approval process, and a minimum score of 680 is generally required for new loans. Credit scores for each borrower are updated at least annually. However, regardless of credit score, loans may be classified, criticized or placed on management’s watch list if relevant information comes to light.


 

1412


The following tables presenttable presents the amortized cost basis of loans by class of loans, vintage and risk rating for the periods indicated.rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful.

September 30, 2021

March 31, 2022

Term Loans by Origination Year

Revolving

Term Loans by Origination Year

Revolving

(in thousands)

2021

2020

2019

2018

2017

Prior

Loans (1)

Total

2022

2021

2020

2019

2018

Prior

Loans (1)

Total

Commercial and industrial:

Pass

$

16,160 

$

12,721 

$

7,332 

$

1,637 

$

3,405 

$

7,364 

$

17,111 

$

65,730 

$

7,746 

$

36,360 

$

17,281 

$

7,339 

$

12,620 

$

4,529 

$

17,731 

$

103,606 

Watch

249 

1,400 

1,649 

264 

264 

Special Mention

Substandard

Doubtful

$

16,160 

$

12,970 

$

8,732 

$

1,637 

$

3,405 

$

7,364 

$

17,111 

$

67,379 

$

7,746 

$

36,360 

$

17,545 

$

7,339 

$

12,620 

$

4,529 

$

17,731 

$

103,870 

SBA PPP:

Pass

$

64,993 

$

512 

$

$

$

$

$

$

65,505 

$

$

12,165 

$

212 

$

$

$

$

$

12,377 

Watch

Special Mention

Substandard

Doubtful

$

64,993 

$

512 

$

$

$

$

$

$

65,505 

$

$

12,165 

$

212 

$

$

$

$

$

12,377 

Commercial mortgages – multifamily:

Commercial mortgages – multifamily:

Commercial mortgages – multifamily:

Pass

$

78,833 

$

40,740 

$

149,303 

$

153,626 

$

137,240 

$

204,319 

$

$

764,061 

$

116,834 

$

183,343 

$

40,310 

$

143,804 

$

143,884 

$

305,607 

$

307 

$

934,089 

Watch

1,269 

1,269 

2,389 

2,389 

Special Mention

Substandard

6,471 

6,471 

6,402 

6,402 

Doubtful

$

78,833 

$

40,740 

$

149,303 

$

153,626 

$

143,711 

$

205,588 

$

$

771,801 

$

116,834 

$

183,343 

$

40,310 

$

143,804 

$

146,273 

$

312,009 

$

307 

$

942,880 

Commercial mortgages – other:

Commercial mortgages – other:

Commercial mortgages – other:

Pass

$

100,522 

$

116,587 

$

43,777 

$

47,474 

$

45,351 

$

219,239 

$

$

572,950 

$

60,606 

$

231,887 

$

116,826 

$

38,371 

$

45,999 

$

232,584 

$

72 

$

726,345 

Watch

5,383 

5,383 

947 

1,170 

2,117 

Special Mention

Substandard

5,866 

5,866 

5,797 

5,797 

Doubtful

$

100,522 

$

116,587 

$

43,777 

$

47,474 

$

45,351 

$

230,488 

$

$

584,199 

$

60,606 

$

231,887 

$

116,826 

$

38,371 

$

46,946 

$

239,551 

$

72 

$

734,259 

Commercial mortgages – owner-occupied:

Commercial mortgages – owner-occupied:

Commercial mortgages – owner-occupied:

Pass

$

38,943 

$

20,687 

$

36,895 

$

3,100 

$

8,778 

$

35,986 

$

$

144,389 

$

20,699 

$

63,248 

$

23,710 

$

42,385 

$

2,928 

$

40,095 

$

342 

$

193,407 

Watch

5,993 

5,993 

Special Mention

Substandard

Doubtful

$

38,943 

$

20,687 

$

42,888 

$

3,100 

$

8,778 

$

35,986 

$

$

150,382 

$

20,699 

$

63,248 

$

23,710 

$

42,385 

$

2,928 

$

40,095 

$

342 

$

193,407 

Residential mortgages:

Residential mortgages:

Residential mortgages:

Pass

$

131,938 

$

40,995 

$

19,122 

$

223,983 

$

284,136 

$

513,030 

$

46,072 

$

1,259,276 

$

54,443 

$

177,591 

$

38,212 

$

17,584 

$

196,498 

$

705,005 

$

45,820 

$

1,235,153 

Watch

291 

291 

483 

483 

Special Mention

Substandard

922 

978 

1,900 

917 

958 

1,875 

Doubtful

$

131,938 

$

40,995 

$

19,122 

$

224,905 

$

284,136 

$

514,299 

$

46,072 

$

1,261,467 

$

54,443 

$

177,591 

$

38,212 

$

17,584 

$

197,415 

$

706,446 

$

45,820 

$

1,237,511 

Consumer and other:

Pass

$

78 

$

$

124 

$

12 

$

16 

$

327 

$

$

559 

$

375 

$

$

$

108 

$

$

136 

$

467 

$

1,086 

Watch

Special Mention

Substandard

Doubtful

Not Rated

121 

121 

935 

935 

$

78 

$

$

124 

$

12 

$

16 

$

327 

$

121 

$

680 

$

375 

$

$

$

108 

$

$

136 

$

1,402 

$

2,021 

Total Loans

$

431,467 

$

232,493 

$

263,946 

$

430,754 

$

485,397 

$

994,052 

$

63,304 

$

2,901,413 

$

260,703 

$

704,594 

$

236,815 

$

249,591 

$

406,182 

$

1,302,766 

$

65,674 

$

3,226,325 

(1) Includes commercial and industrial and residential mortgage lines converted to term of $5.1$5.9 million and $9.5$8.8 million, respectively.

 

1513


December 31, 2020

Term Loans by Origination Year

Revolving

(in thousands)

2020

2019

2018

2017

2016

Prior

Loans (1)

Total

Commercial and industrial:

Pass

$

22,848 

$

8,789 

$

7,542 

$

6,033 

$

5,505 

$

19,086 

$

20,473 

$

90,276 

Watch

1,508 

4,000 

1,842 

7,350 

Special Mention

48 

65 

115 

301 

529 

Substandard

1,298 

400 

162 

1,860 

Doubtful

$

24,194 

$

10,697 

$

7,607 

$

10,148 

$

5,505 

$

21,391 

$

20,473 

$

100,015 

SBA PPP:

Pass

$

139,487 

$

$

$

$

$

$

$

139,487 

Watch

Special Mention

Substandard

Doubtful

$

139,487 

$

$

$

$

$

$

$

139,487 

Commercial mortgages – multifamily:

Pass

$

25,719 

$

152,142 

$

160,998 

$

152,648 

$

30,342 

$

242,527 

$

$

764,376 

Watch

3,772 

2,267 

6,039 

Special Mention

Substandard

6,561 

6,561 

Doubtful

$

25,719 

$

152,142 

$

160,998 

$

162,981 

$

32,609 

$

242,527 

$

$

776,976 

Commercial mortgages – other:

Pass

$

117,602 

$

44,398 

$

49,873 

$

50,547 

$

105,512 

$

137,960 

$

$

505,892 

Watch

1,403 

1,403 

Special Mention

Substandard

5,881 

5,881 

Doubtful

$

117,602 

$

44,398 

$

49,873 

$

50,547 

$

105,512 

$

145,244 

$

$

513,176 

Commercial mortgages – owner-occupied:

Pass

$

11,444 

$

37,406 

$

8,751 

$

9,493 

$

12,388 

$

43,009 

$

$

122,491 

Watch

6,094 

6,094 

Special Mention

Substandard

1,840 

494 

2,334 

Doubtful

$

11,444 

$

43,500 

$

8,751 

$

11,333 

$

12,388 

$

43,503 

$

$

130,919 

Residential mortgages:

Pass

$

38,759 

$

21,964 

$

279,329 

$

339,700 

$

253,873 

$

381,842 

$

53,223 

$

1,368,690 

Watch

298 

414 

712 

Special Mention

Substandard

457 

505 

368 

1,330 

Doubtful

$

38,759 

$

21,964 

$

279,786 

$

339,700 

$

253,873 

$

382,645 

$

54,005 

$

1,370,732 

Consumer and other:

Pass

$

106 

$

198 

$

$

25 

$

236 

$

296 

$

$

864 

Watch

Special Mention

Substandard

229 

229 

Doubtful

Not Rated

1,056 

1,056 

$

106 

$

427 

$

$

25 

$

236 

$

296 

$

1,056 

$

2,149 

Total Loans

$

357,311 

$

273,128 

$

507,018 

$

574,734 

$

410,123 

$

835,606 

$

75,534 

$

3,033,454 

(1)Includes commercial and industrial and residential mortgage lines converted to term of $2.9 million and $10.5 million, respectively.

16


5 - STOCK-BASED COMPENSATION 

 

The following tables presenttable presents a summary of restricted stock units (“RSUs”) and options outstanding at September 30, 2021March 31, 2022 and changes during the ninethree month period then ended. Of the 221,136249,726 RSUs outstanding at quarter end, 70,46291,891 are scheduled to vest during 2021.

2022.

Weighted-

Weighted-

Average

Aggregate

Average

Remaining

Intrinsic

Number of

Grant-Date

Contractual

Value

RSUs

Fair Value

Term (yrs.)

(in thousands)

Outstanding at January 1, 2021

164,996

$

20.95

Granted

142,313

16.06

Converted

(80,959)

21.47

Forfeited

(5,214)

17.46

Outstanding at September 30, 2021

221,136

$

17.69

1.01

$

4,555

Weighted-

Weighted-

Average

Aggregate

Average

Remaining

Intrinsic

Number of

Exercise

Contractual

Value

Options

Price

Term (yrs.)

(in thousands)

Outstanding at January 1, 2021

11,031

$

13.18

Exercised

(10,281)

12.90

Outstanding at September 30, 2021

750

$

17.06

3.68

$

3

Weighted-

Weighted-

Average

Aggregate

Average

Remaining

Intrinsic

Number of

Grant-Date

Contractual

Value

RSUs

Fair Value

Term (yrs.)

(in thousands)

Outstanding at January 1, 2022

207,359

$

17.70

Granted

117,114

19.96

Converted

(74,747)

18.47

Outstanding at March 31, 2022

249,726

$

18.53

1.47

$

4,860

As of September 30, 2021,March 31, 2022, there was $2.0$3.4 million of total unrecognized compensation cost related to non-vested RSUs. The total cost is expected to be recognized over a weighted-average period of 1.12.0 years.

2021 Equity Incentive Plan. On April 20, 2021, the stockholders of the Corporation approved the 2021 Equity Incentive Plan (“2021 Plan”). Under the 2021 Plan, awards may be granted to employees and non-employee directors as stock options, restricted stock awards or RSUs, with a one year minimum vesting period for at least 95% of the awards granted. The Corporation has 750,000 shares of common stock reserved for awards under the 2021 Plan, plus 23,167 shares that remained available for grant as full value restricted stock units or restricted stock awards under the 2014 Equity Incentive Plan (“2014 Plan”). RSUs granted under the 2014 Plan that expire or are forfeited after April 20, 2021 will be added to the number of shares of common stock reserved for issuance of awards under the 2021 Plan. NaN further awards will be made under the 2014 Plan. At September 30, 2021, 754,696 equity awards remain available to be granted under the 2021 Plan.

 

6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Recorded at Fair Value. When measuring fair value, the Corporation uses a fair value hierarchy, which is designed to maximize the use of observable inputs and minimize the use of unobservable inputs. The hierarchy involves three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Corporation can access at the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Corporation’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

1714


The fair values of the Corporation’s financial assets and liabilities measured at fair value on a recurring basis are set forth in the table that follows. The fair values of available-for-saleAFS securities are determined on a recurring basis using matrix pricing (Level 2 inputs). Matrix pricing, which is a mathematical technique widely used in the industry to value debt securities, does not rely exclusively on quoted prices for the specific securities but rather on the relationship of such securities to other benchmark quoted securities. Where no significant other observable inputs were available, Level 3 inputs were used. The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.

Fair Value Measurements Using:

Fair Value Measurements Using:

Quoted Prices

Significant

Quoted Prices

Significant

in Active

Other

Significant

in Active

Other

Significant

Markets for

Observable

Unobservable

Markets for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Identical Assets

Inputs

Inputs

(in thousands)

Total

(Level 1)

(Level 2)

(Level 3)

Total

(Level 1)

(Level 2)

(Level 3)

September 30, 2021:

March 31, 2022:

Financial Assets:

Available-for-Sale Securities:

State and municipals

$

330,763

$

$

329,793

$

970

$

308,857

$

$

307,855

$

1,002

Pass-through mortgage securities

212,762

212,762

168,274

168,274

Collateralized mortgage obligations

113,438

113,438

94,686

94,686

Corporate bonds

118,784

118,784

111,167

111,167

$

775,747

$

$

774,777

$

970

$

682,984

$

$

681,982

$

1,002

Financial Liabilities:

Derivative - interest rate swaps

$

2,470

$

$

2,470

$

$

203

$

$

203

$

December 31, 2020:

December 31, 2021:

Financial Assets:

Available-for-Sale Securities:

State and municipals

$

364,211

$

$

362,776

$

1,435

$

327,171

$

$

326,201

$

970

Pass-through mortgage securities

131,720

131,720

182,957

182,957

Collateralized mortgage obligations

53,711

53,711

106,082

106,082

Corporate bonds

113,080

113,080

118,108

118,108

$

662,722

$

$

661,287

$

1,435

$

734,318

$

$

733,348

$

970

Financial Liabilities:

Derivative - interest rate swaps

$

5,285

$

$

5,285

$

$

1,750

$

$

1,750

$

State and municipal available-for-saleAFS securities measured using Level 3 inputs. The Bank held 67 non-rated bond anticipation notes with a book value of $1.0 million at September 30, 2021.March 31, 2022. These bonds have a one year maturity and are issued by local municipalities that are customers of the Bank. Due to the short duration of the bonds, book value approximates fair value at September 30, 2021.March 31, 2022.

There were 0 assetsPremises and Facilities. Premises and facilities held-for-sale of $3.8 million are reported in the line item “Other assets” in the consolidated balance sheets and are measured at lower of cost or fair value on a nonrecurring basis at September 30, 2021 orMarch 31, 2022 and December 31, 2020.2021.

Financial Instruments Not Recorded at Fair Value. Fair value estimates are made at a specific point in time. Such estimates are generally subjective in nature and dependent upon a number of significant assumptions associated with each financial instrument or group of similar financial instruments, including estimates of discount rates, liquidity, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Corporation’s entire holdings of a particular financial instrument, or the income tax consequences of realizing gains or losses on the sale of financial instruments.

 

1815


The following table sets forth the carrying amounts and estimated fair values of financial instruments that are not recorded at fair value in the Corporation’s financial statements.

Level of

September 30, 2021

December 31, 2020

Level of

March 31, 2022

December 31, 2021

Fair Value

Carrying

Carrying

Fair Value

Carrying

Carrying

(in thousands)

Hierarchy

Amount

Fair Value

Amount

Fair Value

Hierarchy

Amount

Fair Value

Amount

Fair Value

Financial Assets:

Cash and cash equivalents

Level 1

$

259,066

$

259,066

$

211,182

$

211,182

Level 1

$

85,811

$

85,811

$

43,675

$

43,675

Loans(1)

Level 3

2,871,897

2,852,674

3,000,417

2,998,325

Level 3

3,196,038

3,064,328

3,075,205

3,048,791

Restricted stock

Level 1

19,935

19,935

20,814

20,814

n/a

18,123

n/a

21,524

n/a

Financial Liabilities:

Checking deposits

Level 1

1,393,555

1,393,555

1,208,073

1,208,073

Level 1

1,479,806

1,479,806

1,400,998

1,400,998

Savings, NOW and money market deposits

Level 1

1,748,048

1,748,048

1,679,161

1,679,161

Level 1

1,736,821

1,736,821

1,685,410

1,685,410

Time deposits(1)

Level 2

229,943

235,810

434,354

444,155

Level 2

328,763

326,036

228,837

232,973

Short-term borrowings

Level 1

50,000

50,000

60,095

60,095

Level 1

50,000

50,000

125,000

125,000

Long-term debt(1)

Level 2

226,002

230,789

246,002

253,617

Level 2

186,322

185,505

186,322

188,413

(1) The decrease in fair value of loans, time deposits and long-term debt are due to an increase in interest rates.

7 – DERIVATIVES

As part of its asset liability management activities, the Corporation utilizes an interest rate swapsswap to help manage its interest rate risk position. The notional amount of an interest rate swap does not represent the amount exchanged by the parties. The exchange of cash flows is determined by reference to the notional amount and the other terms of the interest rate swap agreements.agreement.

The Bank entered into ana five year interest rate swap with a notional amount totaling $50 million on January 17, 2019, which was designated as a cash flow hedge of certain Federal Home Loan Bank (“FHLB”) advances included in short term borrowings on the consolidated balance sheet.sheets. The swap was determined to be fully effective during the periods presented and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swap is recorded in other liabilities, with changes in fair value net of related income taxes recorded in OCI. The amount included in accumulated OCI would be reclassified to current earnings should the hedge no longer be considered effective. The Corporation expects the hedge to remain fully effective during the remaining term of the swap.

On May 22, 2021 a second interest rate swap with a notional amount totaling $150 million expired and the Bank repaid $150 million of brokered certificates of deposit (“CDs”) used in the cash flow hedge.

The following table summarizes information about the interest rate swapsswap designated as a cash flow hedges.hedge.

September 30, 2021

December 31, 2020

March 31, 2022

December 31, 2021

Notional amount

$50 million

$200 million

$50 million

$50 million

Weighted average fixed pay rate

2.62%

2.83%

2.62%

2.62%

Weighted average 3-month LIBOR receive rate

0.14%

0.22%

0.23%

0.13%

Weighted average maturity

2.30 Years

1.06 Years

1.80 Years

2.05 Years

Interest expense recorded on the swap transactions, which totaled $2.5 million$299,000 and $2.6$1.3 million for the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively, is recorded as a component of interest expense in the consolidated statements of income. Amounts reported in accumulated OCI related to swaps will be reclassified to interest expense as interest payments are made on the Bank’s variable-rate liabilities. During the ninethree months ended September 30, 2021,March 31, 2022, the Corporation had $2.5 million$299,000 of reclassifications to interest expense. During the next 12 months, the Corporation estimates that $859,000$265,000 will be reclassified as an increase to interest expense.

19


The following table presents the net gains and losses recorded in the consolidated statements of income and the consolidated statements of comprehensive income relating to interest rate swaps.

Nine Months Ended

Three Months Ended

Three Months Ended

September 30,

September 30,

March 31,

(in thousands)

2021

2020

2021

2020

2022

2021

Interest rate contracts:

Amount of gain (loss) recognized in OCI (effective portion)

$

266

$

(4,788)

$

(1)

$

(20)

Amount of gain recognized in OCI (effective portion)

$

1,248

$

300

Amount of loss reclassified from OCI to interest expense

2,549

2,636

316

1,270

299

1,314

Amount of loss recognized in other noninterest income (ineffective portion)

16


The following table reflects the amounts relating to the interest rate swapsswap included in the consolidated balance sheets at the periods indicated.

September 30, 2021

December 31, 2020

March 31, 2022

December 31, 2021

Notional

Fair Value

Notional

Fair Value

Notional

Fair Value

Notional

Fair Value

(in thousands)

Amount

Asset

Liability

Amount

Asset

Liability

Amount

Asset

Liability

Amount

Asset

Liability

Included in other liabilities

$

$

2,470

$

$

5,285

$

$

203

$

$

1,750

Interest rate swap hedging brokered CDs

$

$

150,000

Interest rate swap hedging FHLB advances

$

50,000

$

50,000

$

50,000

$

50,000

Credit Risk Related Contingent Features. The Bank’s agreement with its interest rate swap counterparty sets forth minimum collateral posting thresholds. If the termination value of the swap is a net asset position, the counterparty may be required to post collateral against its obligations to the Bank under the agreement. However, if the termination value of the swap is a net liability position, the Bank may be required to post collateral to the counterparty. At September 30, 2021,March 31, 2022, the Bank was in compliance with the collateral posting provisions of its counterparty. The total amount of collateral posted was approximately $2.8$3.5 million. If the Bank had breached any of these provisions at September 30, 2021,March 31, 2022, it could have been required to settle its obligations under the agreement at the termination value.

8 – IMPACT OF ISSUED BUT NOT YET EFFECTIVE ACCOUNTING STANDARDS

The pronouncements discussed in this section are not intended to be an all-inclusive list, but rather only those pronouncements that could potentially have an impact on the Corporation’s financial position, results of operations or disclosures.

In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2022-2 “Financial Instruments (Topic 326) Troubled Debt Restructurings and Vintage Disclosures” which affect entities that have adopted ASU 2016-13 “Measurement of Credit Losses on Financial Instruments” (“CECL”). The amendments in the ASU that relate to TDRs eliminate the TDR recognition and measurement guidance and instead require than an entity evaluate whether the modification represents a new loan or a continuation of an existing loan, while also enhancing disclosure requirements. The amendments that relate to vintage disclosures require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of CECL. Gross write-offs must be included in the vintage disclosures required by CECL. For entities that have adopted CECL such as the Corporation, the amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should generally be applied prospectively. Early adoption is permitted, including adoption in an interim period. An entity may elect to early adopt the amendments related to TDRs separately from the amendments related to vintage disclosures. The adoption of ASU 2022-2 will modify the Corporation’s disclosures but is not expected to have a material impact on its financial position or results of operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management's discussion and analysis of The First of Long Island Corporation’s financial condition and operating results during the periods included in the accompanying consolidated financial statements and should be read in conjunction with such financial statements. The Corporation’s financial condition and operating results principally reflect those of its wholly-owned subsidiary, The First National Bank of Long Island, and subsidiaries wholly-owned by the Bank, either directly or indirectly, FNY Service Corp., The First of Long Island REIT, Inc. and The First of Long Island Agency, Inc. The consolidated entity is referred to as the Corporation and the Bank and its subsidiaries are collectively referred to as the Bank. The Bank’s primary service area is Nassau and Suffolk Counties on Long Island and the NYC boroughs of Queens, Brooklyn and Manhattan.

Overview

Net income and earnings per share for the first nine monthsquarter of 20212022 were $34.1$12.1 million and $1.43$.52 respectively, compared to $30.7$11.3 million and $1.28,$.47, respectively, for the same period last year. Dividends per share increased 5.5%5.3%, from $.55$.19 for the first nine monthsquarter of 20202021 to $.58$.20 for the current period. Returns on average assets (“ROA”)(ROA) and average equity (“ROE”)(ROE) for the first nine monthsquarter of 20212022 were 1.09%1.19% and 10.96%11.94%, respectively, versus .98%compared to 1.11% and 10.49%11.17%, respectively, for the same period last year. Book value per share was $17.79$16.86 at the close of the current period, compared to $17.11$17.81 at year-end 2020.2021.

Analysis of Earnings – NineThree Month Periods. Net income for the first nine monthsquarter of 20212022 was $34.1$12.1 million, an increase of $3.4 million, or 11.1%,$816,000 versus the same periodquarter last year. The increase is due to growth in net interest income of $2.4$2.1 million or 3.1%, and noninterest income, netexcluding $606,000 of gains on sales of securities in 2021, of $219,000,$498,000, and a declinedecrease in the provision for credit lossesnoninterest expense of $5.5 million.$680,000. These items were partially offset by increases in noninterest expense, netthe provision for credit losses of debt extinguishment costs, of $2.9$1.4 million and income tax expense of $2.4 million.$440,000.

The increase in net interest income reflects a favorable shift in the mix of funding as an increase in average checking deposits of $247.9 million and a decline in average interest-bearing liabilities of $258.9 million resulted in average checking deposits comprising a larger portion of total funding. TheAlso contributing to the increase is also attributablewas a decline in interest expense in 2022 due to higher income from SBA PPP loans of $3.2 million. PPP income for the 2021 period was $5.1 million driven by an average balance of $129.3 million and a weighted average yield earned of 5.3%. In addition, the repaymentmaturity of a maturing$150 million interest rate swap in May 2021 lowered the cost of funds in the 2021 period by $1.5 million.

 

2017


Partially offsetting the favorable impact of the above items on net interest income was a decline in the average balance of loans of $169.2 million. In addition, the current market yields on loans2021 and investments are below the runoff yields on both portfolios, which exerts downward pressure on net interest income. The average yield on interest-earning assets declined 31 basis points (“bps”) from 3.44% for the first nine months of 2020 to 3.13% for the current nine-month period. The negative impact of declining asset yields on net interest income was substantially offset through reductions in non-maturityrates paid on nonmaturity and time deposit rates.deposits. The average cost of interest-bearing liabilities declined 48 bps28 basis points (“bps”) from 1.19%the first quarter of 2021 to the current quarter. The increase in net interest income is also attributable to an increase in average loans outstanding, largely driven by commercial mortgage originations. Although the average balance of loans increased, the loan portfolio yield declined from 3.55% for the first nine months of 20202021 quarter to .71%3.47% for the current nine-month period.quarter mostly due to a decline in income from SBA PPP loans.

Net interest margin for the first nine monthsquarter of 20212022 was 2.70% versus 2.64%2.90% as compared to 2.86% and 2.69% for the 2020 period.2021 fourth and first quarters, respectively. Income fromon PPP loans improved net interest margin by 6 bps, 11 bps and 9 bps in those quarters, respectively. The current yield curve is favorable to net interest margin. The direction of the margin for the first nine monthsremainder of 2021 by 8 bps. As of September 30, 2021,2022 is largely dependent on changes in the Bank had $67.8 million of outstanding PPP loans with unearned fees of $2.3 million. We expect most of the outstanding PPP loan portfolio will be fully satisfied by March 31, 2022.yield curve and balance sheet mix as well as competitive conditions.

The mortgage loan pipeline was $165During the first quarter of 2022 we originated $261 million at September 30, 2021of loans with a weighted average rate of approximately 3.0%. Sluggish loan demand and competition among bank and non-bank lenders continues to put pressure on the pipeline and originations. The expansion3.11% which includes $199 million of our lending teams helped grow commercial mortgages by $174.5at a weighted average rate of 3.13%. The mortgage loan pipeline was $175 million since September 30, 2020with a weighted average rate of 3.36% at March 31, 2022. While these rates are below the March 31, 2022 loan portfolio yield, current reinvestment rates for both the securities and now comprise 54.4%loan portfolios are generally higher.

The provision for credit losses increased $1.4 million when comparing the first quarter periods of total mortgages compared to 48.1%2022 and 2021, from a year ago. While commercial and industrial linescredit of credit have increased, line utilization remains low contributing$986,000 in the 2021 quarter to a decreasecharge of $433,000 in commercialthe 2022 quarter. The provision for the current quarter was mainly due to an increase in outstanding mortgage loans partially offset by economic conditions and industrial loans outstanding. We believe the economic impact of the pandemic and the stimulus packages passed by Congress contributed to decreased loan demand, lower levels of outstanding balances on existing credit lines and the high level of cash on our balance sheet.historical loss rates.

The increase in noninterest income, netexcluding $606,000 of gains on sales of securities of $219,000in 2021, is primarily attributable to increases ina final transition payment from LPL Financial for the non-service cost componentsconversion of the Bank’s defined benefit pension planretail broker and advisory accounts. The increase also includes higher fees from debit and credit cards.cards and income from bank-owned life insurance (“BOLI”). These itemsamounts were partially offset by a decrease in investment services income as the shift to an outside service provider resulted in less assets under management. Assets under management will likely decline further through year-end 2021 as the Bank transitions from its legacy trust and investment businesses to a single platform with LPL Financial.

The provision for credit losses decreased $5.5 million when comparing the nine-month periods from a provision of $2.5 million in the 2020 period to a credit of $3.1 million in the 2021 period. The credit provision for the current period was mainly due to improvements in economic conditions, asset quality and other portfolio metrics, and a decline in outstanding residential mortgage loans, partially offset by net chargeoffs of $463,000. The net chargeoffs were mainly the result of sales of four commercial mortgages.

The increasedecrease in noninterest expense net of debt extinguishmentwas primarily due to declines in salaries and benefits expense and occupancy and equipment expense, and a decrease in the provision for unfunded commitments. The decrease in salaries and benefits is mainly due to a decline in overtime pay and branch closures in 2021. These decreases were partially offset by salary and benefit costs of $2.9 million includes charges of $1.2 million related to the previously announced closing and consolidation of eight branches as part of our branch optimization strategy. The Bank expects $2.2 million of additional closing-related expense in the fourth quarter of 2021. The increase in noninterest expense also includes higher salaries and employee benefits related to staffing our new Riverhead Branch, building our lendingbranch locations and credit teams, normal salary adjustmentshiring additional experienced banking professionals. The decrease in occupancy and an increase in the service cost component of the Bank’s pension plan. Also contributing to the increaseequipment expense was higher FDIC insurance expense due to an assessment credit in 2020.lower rent, depreciation and maintenance and repair costs from the 2021 branch closures.

Income tax expense increased $2.4 million due to growth in pre-tax earnings in 2021 and an increase in the effective tax rate (income tax expense as a percentage of pre-tax book income) increased when comparing the first quarter of 2021 to 20.2% for the 2021 period from 16.8% for the 2020 period.current quarter. The increase in the effective tax rate is mainly due to a decrease in the percentage of pre-tax income derived from tax-exempt municipal securitiesassets in 2022. The increase in income tax expense reflects the higher effective tax rate and bank-owned life insurancean increase in 2021 and a change in New York State (“NYS”) tax law to implement a capital taxpre-tax earnings in the secondcurrent quarter of 2021.as compared to the 2021 quarter.

Asset Quality. The Bank’s allowance for credit losses to total loans (reserve coverage ratio) was 1.02%.94% at September 30, 2021March 31, 2022 as compared to 1.09%.96% at December 31, 2020. Excluding PPP loans, the reserve coverage ratio was 1.04% and 1.13%, respectively.2021. The decrease in the reserve coverage ratio was mainly due to improvements in economic conditions asset quality and other portfolio metrics.historical loss rates. Nonaccrual loans, TDRs and loans past due 30 through 89 days remain at low levels.

Key Initiatives and Challenges We Face. We continue focusing on the Bank’s strategic initiatives supporting the expansiongrowth of our balance sheet and profitability of oura profitable relationship banking business. Such initiatives include improving the quality of technology through continuing digital enhancements, optimizing our branch network across a larger geography, using new branding an enhancedand “CommunityFirst” focus to improve name recognition, enhancing our website a branch optimization strategy that expandsand social media presence including the geographic footprintpromotion of the branch network into eastern Long IslandFirstInvestments, and ongoing recruitment of additional seasonedexperienced banking professionals. While incremental relationship-based lendingprofessionals to support our growth and loans from third party sources have increased our loan pipeline, continued growth in lending will be dependent on increased business productivity in the economy. Management continuestechnology initiatives. We also continue to focus on the areas of cybersecurity, environmental, social and governance practices.

The Bank began occupying its leased office space at 275 Broadhollow Road in Melville, N.Y. to act as our new corporate headquartersin April 2022. The consolidation of back-office staff into this one facility will produce a more collaborative work environment and to create a state-of-the-art branch. The Bank is looking to sell some of the buildings it owns in Glen Head and move certain employees to the new location in the first half of 2022.strengthened culture.

During the pandemic we experienced a notable increase in the use of our mobile deposit functionality as well as our cash management offerings. We continually assess our branch network for efficiencies while remaining cognizant of our customers’ branch banking needs.

 

2118


During the third quarter we announced a continuation of our branch optimization strategy with the closure and consolidation of eight branches into nearby locations on November 30, 2021. The optimization of the legacy branch network supports the expansion geographically with de novo branching and the reallocation of resources to lenders and digital banking products.

Low interest rates and competition continue to exert pressure on operating results and growth. Current lending and investing market rates are below the rates earned on loan and securities repayments. The net spread on securities purchased is significantly below the Bank’s current net interest margin, and the net spread on new lending is near our current margin. If current conditions continue, we expect downward pressure on the net interest margin in 2022.

Net Interest Income

Average Balance Sheet; Interest Rates and Interest Differential. The following table sets forth the average daily balances for each major category of assets, liabilities and stockholders’ equity as well as the amounts and average rates earned or paid on each major category of interest-earning assets and interest-bearing liabilities. The average balances of investment securities include unrealized gains and losses on available-for-saleAFS securities, and the average balances of loans include nonaccrual loans.

Nine Months Ended September 30,

Three Months Ended March 31,

2021

2020

2022

2021

Average

Interest/

Average

Average

Interest/

Average

Average

Interest/

Average

Average

Interest/

Average

(dollars in thousands)

Balance

Dividends

Rate

Balance

Dividends

Rate

Balance

Dividends

Rate

Balance

Dividends

Rate

Assets:

Interest-earning bank balances

$

217,501

$

204

.13

%

$

111,979

$

159

.19

%

$

27,675

$

14

.21

%

$

155,272

$

39

.10

%

Investment securities:

Taxable

456,244

6,065

1.77

356,512

9,813

3.67

418,871

1,654

1.58

401,531

1,794

1.79

Nontaxable (1)

351,254

8,272

3.14

375,570

9,519

3.38

321,335

2,491

3.10

361,715

2,846

3.15

Loans (1)

2,977,583

79,435

3.56

3,146,738

83,353

3.53

3,160,058

27,387

3.47

3,013,009

26,707

3.55

Total interest-earning assets

4,002,582

93,976

3.13

3,990,799

102,844

3.44

3,927,939

31,546

3.21

3,931,527

31,386

3.19

Allowance for credit losses

(31,905)

(33,286)

(29,850)

(32,896)

Net interest-earning assets

3,970,677

3,957,513

3,898,089

3,898,631

Cash and due from banks

34,026

33,144

32,482

32,951

Premises and equipment, net

38,362

39,588

37,882

38,700

Other assets

132,527

135,351

158,479

134,770

$

4,175,592

$

4,165,596

$

4,126,932

$

4,105,052

Liabilities and Stockholders' Equity:

Savings, NOW & money market deposits

$

1,808,349

3,451

.26

$

1,687,377

7,946

.63

$

1,688,054

763

.18

$

1,707,546

1,066

.25

Time deposits

324,419

4,818

1.99

486,181

8,487

2.33

277,667

945

1.38

421,394

2,304

2.22

Total interest-bearing deposits

2,132,768

8,269

.52

2,173,558

16,433

1.01

1,965,721

1,708

.35

2,128,940

3,370

.64

Short-term borrowings

55,238

1,062

2.57

81,509

1,219

2.00

124,333

441

1.44

58,661

350

2.42

Long-term debt

228,383

3,468

2.03

420,255

6,177

1.96

186,322

868

1.89

233,224

1,165

2.03

Total interest-bearing liabilities

2,416,389

12,799

.71

2,675,322

23,829

1.19

2,276,376

3,017

.54

2,420,825

4,885

.82

Checking deposits

1,315,768

1,067,839

1,416,223

1,243,728

Other liabilities

27,856

31,878

24,031

31,401

3,760,013

3,775,039

3,716,630

3,695,954

Stockholders' equity

415,579

390,557

410,302

409,098

$

4,175,592

$

4,165,596

$

4,126,932

$

4,105,052

Net interest income (1)

$

81,177

$

79,015

$

28,529

$

26,501

Net interest spread (1)

2.42

%

2.25

%

2.67

%

2.37

%

Net interest margin (1)

2.70

%

2.64

%

2.90

%

2.69

%

(1)Tax-equivalent basis. Interest income on a tax-equivalent basis includes the additional amount of interest income that would have been earned if the Corporation's investment in tax-exempt loans and investment securities had been made in loans and investment securities subject to federal income taxes yielding the same after-tax income. The tax-equivalent amount of $1.00 of nontaxable income was $1.27 in each period presented, using the statutory federal income tax rate of 21%.

 

2219


Rate/Volume Analysis. The following table sets forth the effect of changes in volumes and rates on tax-equivalent interest income, interest expense and net interest income. The changes attributable to the combined impact of volume and rate have been allocated to the changes due to volume and the changes due to rate.

Nine Months Ended September 30,

Three Months Ended March 31,

2021 Versus 2020

2022 Versus 2021

Increase (decrease) due to changes in:

Increase (decrease) due to changes in:

Net

Net

(in thousands)

Volume

Rate

Change

Volume

Rate

Change

Interest Income:

Interest-earning bank balances

$

112

$

(67)

$

45

$

(47)

$

22

$

(25)

Investment securities:

Taxable

2,247

(5,995)

(3,748)

77

(217)

(140)

Nontaxable

(595)

(652)

(1,247)

(313)

(42)

(355)

Loans

(4,513)

595

(3,918)

1,276

(596)

680

Total interest income

(2,749)

(6,119)

(8,868)

993

(833)

160

Interest Expense:

Savings, NOW & money market deposits

527

(5,022)

(4,495)

(12)

(291)

(303)

Time deposits

(2,534)

(1,135)

(3,669)

(645)

(714)

(1,359)

Short-term borrowings

(453)

296

(157)

275

(184)

91

Long-term debt

(2,908)

199

(2,709)

(222)

(75)

(297)

Total interest expense

(5,368)

(5,662)

(11,030)

(604)

(1,264)

(1,868)

Increase (decrease) in net interest income

$

2,619

$

(457)

$

2,162

$

1,597

$

431

$

2,028

Net Interest Income

Net interest income on a tax-equivalent basis for the ninethree months ended September 30, 2021March 31, 2022 was $81.2$28.5 million, an increase of $2.2$2.0 million, or 2.7%7.7%, from $79.0$26.5 million for the same period of 2020.2021. The increase in net interest income reflects a favorable shift in the mix of funding as an increase in average checking deposits of $247.9$172.5 million, or 23.2%13.9%, and a decline in average interest-bearing liabilities of $258.9$144.4 million, or 9.7%6.0%, resulted in average checking deposits comprising a larger portion of total funding. TheAlso contributing to the increase is also attributablewas a decline in interest expense of $1.1 million in 2022 due to higher income from SBA PPP loans of $3.2 million. PPP income for the 2021 period was $5.1 million driven by an average balance of $129.3 million and a weighted average yield earned of 5.3%. In addition, the repaymentmaturity of a maturing$150 million interest rate swap in May 2021 lowered the cost of fundsand reductions in the 2021 period by $1.5 million.

Partially offsetting the favorable impact of the above itemsrates paid on net interest income was a decline in the average balance of loans of $169.2 million, or 5.4%. In addition, the current market yields on loans and investments are below the runoff yields on both portfolios, which exerts downward pressure on net interest income. The average yield on interest-earning assets declined 31 bps from 3.44% for the first nine months of 2020 to 3.13% for the current nine-month period. The negative impact of declining asset yields on net interest income was substantially offset through reductions in non-maturitynonmaturity and time deposit rates.deposits. The average cost of interest-bearing liabilities declined 4828 bps from 1.19%.82% for the first nine monthsquarter of 20202021 to .71%.54% for the current nine-month period.quarter. The increase in net interest income is also attributable to an increase of $147 million in average loans outstanding to $3.2 billion at March 31, 2022, largely driven by commercial mortgage originations. Although the average balance of loans increased, the loan portfolio yield declined from 3.55% for the 2021 quarter to 3.47% for the current quarter due to a decline in income from SBA PPP loans of $1.2 million which reduced the portfolio yield by 8 bps. PPP income for the current quarter was $743,000 for a weighted average yield of 14.8% and contributed 8 bps to the current quarters loan portfolio yield of 3.47%.

Net interest margin for the first nine monthsquarter of 20212022 was 2.70% versus 2.64%2.90% as compared to 2.86% and 2.69% for the 2020 period.2021 fourth and first quarters, respectively. Income on PPP loans improved net interest margin for the first nine months of 2021 by 8 bps. As of September 30, 2021, the Bank had $67.8 million of outstanding PPP loans with unearned fees of $2.3 million. We expect most of the outstanding PPP loan portfolio to be fully satisfied by March 31, 2022.6 bps, 11 bps and 9 bps in those quarters, respectively.

The mortgage loan pipeline was $165During the first quarter of 2022 we originated $261 million at September 30, 2021of loans with a weighted average rate of approximately 3.0%. Sluggish loan demand and competition among bank and non-bank lenders continue to put pressure on the pipeline and originations. The expansion3.11% which includes $199 million of our lending teams helped grow commercial mortgages by $174.5at a weighted average rate of 3.13%. The mortgage loan pipeline was $175 million since September 30, 2020with a weighted average rate of 3.36% at March 31, 2022. While these rates are below the March 31, 2022 loan portfolio yield, current reinvestment rates for both the securities and now comprise 54.4% of total mortgages compared to 48.1% a year ago. While commercial and industrial lines of credit have increased, line utilization remains low contributing to a decrease in commercial and industrial loans outstanding. We believe the economic impact of the pandemic and the stimulus packages passed by Congress contributed to decreased loan demand, lower levels of outstanding balances on existing credit lines and the high level of cash on our balance sheet.portfolios are generally higher.

Noninterest Income

Noninterest income includes BOLI, service charges on deposit accounts, investment services income, gains or losses on sales of securities, and all other items of income, other than interest, resulting from the business activities of the Corporation.

The increase in noninterest income netof $498,000, excluding $606,000 of gains on sales of securities of $219,000in 2021, is primarily attributable to increases ina final transition payment of $477,000 from LPL Financial for the non-service cost componentsconversion of the Bank’s defined benefit pension plan of $413,000retail broker and advisory accounts. The increase also includes higher fees from debit and credit cards of $417,000.$199,000 and income from BOLI of $163,000. These itemsamounts were partially offset by a decrease in investment services income of $586,000$323,000 as the shift to an outside service provider resulted in less assets under management.

 

2320


in less assets under management. Assets under management will likely decline further through year-end 2021 as the Bank transitions from its legacy trust and investment businesses to a single platform with LPL Financial.

Noninterest Expense

Noninterest expense is comprised of salaries and employee benefits, occupancy and equipment expense and other operating expenses incurred in supporting the various business activities of the Corporation.

The increasedecrease in noninterest expense net of debt extinguishment costs, of $2.9 million includes charges of $1.2 million related$680,000 was primarily due to the previously announced closing and consolidation of eight branches as part of our branch optimization strategy. The $1.2 million includes severance-related salarydeclines in salaries and benefits expense of $123,000,$315,000 and occupancy and equipment expense relatedof $326,000, and a decrease in the provision for unfunded commitments. The decrease in salaries and benefits is mainly due to a decline in overtime pay and branch closures in 2021. These decreases were partially offset by salary and benefit costs of our new branch locations and hiring additional experienced banking professionals. The decrease in occupancy and equipment expense was due to lower rent, depreciation and asset disposals of $1.1 million,maintenance and telecom contract breakagerepair costs of $40,000. The Bank expects $2.2 million of additional closing-related expense infrom the fourth quarter of 2021. The increase in noninterest expense also includes higher salaries and employee benefits related to staffing our new Riverhead Branch, building our lending and credit teams, normal salary adjustments and an increase in the service cost component of the Bank’s pension plan. Also contributing to the increase was higher FDIC insurance expense due to an assessment credit in 2020.2021 branch closures.

Income Taxes

Income tax expense increased $2.4 million due to growth in pre-tax earnings in 2021$440,000 and an increase in the effective tax rate increased from 19.4% to 20.2% for20.6% when comparing the first quarter of 2021 period from 16.8% forto the 2020 period.current quarter. The increase in the effective tax rate is mainly due to a decrease in the percentage of pre-tax income derived from tax-exempt municipal securities and bank-owned life insuranceassets in 2021 and a change in NYS tax law to implement a capital tax in the second quarter of 2021.

Results of Operations – Third Quarter 2021 Versus Third Quarter 2020

Net income for the third quarter of 2021 of $11.4 million increased $655,000, or 6.1%, from $10.8 million earned in the same quarter of last year.2022. The increase is mainly attributable toin income tax expense reflects the higher effective tax rate and an increase in net interest income of $690,000 and a credit provision of $1.4 millionpre-tax earnings in the 2021 period. Partially offsetting these items were increases in noninterest expense, net of debt extinguishment costs, of $1.2 million and income tax expense of $381,000. Net interest margin of 2.71% for the current quarter increased 5 bps as compared to 2.66% for the third quarter of last year. The variances in each of these items occurred for substantially the same reasons discussed above with respect to the nine-month periods.2021 quarter.

Critical Accounting Policies and Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported asset and liability balances and revenue and expense amounts. Our determination of the ACL is a critical accounting estimate because it is based on our subjective evaluation of a variety of factors at a specific point in time and involves difficult and complex judgements about matters that are inherently uncertain. In the event that management’s estimate needs to be adjusted based on additional information that comes to light after the estimate is made or changes in circumstances, such adjustment could result in the need for a significantly different ACL and thereby materially impact, either positively or negatively, the Bank’s results of operations.

The Bank’s Allowance for Credit Losses Committee (“ACL Committee”), which is a management committee chaired by the Chief Credit Officer, meets on a quarterly basis and is responsible for determining the ACL after considering among other things, the results of credit reviews performed by the Bank’s independent loan review functionconsultants and the Bank’s credit department. In addition, and in consultation with the Bank’s Chief Financial Officer, the ACL Committee is responsible for implementing and maintaining accounting policies and procedures surrounding the calculation of the required allowance. The Loan Committee of the Board reviews and approves the Bank’s Loan Policy at least once each calendar year. The Bank’s ACL is reviewed and ratified by the Loan Committee on a quarterly basis and is subject to periodic examination by the Office of the Comptroller of the Currency (“OCC”)(OCC), whose safety and soundness examination includes a determination as to the adequacy of the allowance to absorb current expected credit losses.

The ACL is a valuation amount that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the Bank’s loan portfolio. The allowance is established through provisions for credit losses charged against income. When available information confirms that specific loans, or portions thereof, are uncollectible, these amounts are charged against the ACL, and subsequent recoveries, if any, are credited to the allowance.

Management estimates the ACL balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical loss information from the Bank’s own loan portfolio has been compiled since December 31, 2007 and generally provides a starting point for management’s assessment of expected credit losses. A historical look-back period that begins in 2007 covers an entire economic cycle and impacts the average historical loss rates used to calculate the final ACL. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as for current and potential future changes

24


in economic conditions over a one year to two year forecasting horizon, such as unemployment rates, GDP, vacancy rates or other relevant factors. The immediate reversion method is applied for periods beyond the forecasting horizon. The ACL is an amount that management currently believes will be adequate to absorb expected lifetime losses in the Bank’s loan portfolio. The process for estimating credit losses and determining the ACL as of any balance sheet date is subjective in nature and requires material estimates and judgements. Actual results could differ significantly from those estimates.

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. Management segregates its loan portfolio into eleven distinct pools: (1) commercial and industrial; (2) small business credit scored; (3) multifamily; (4) owner-occupied; (5) other commercial real estate; (6) construction and land development; (7) residential mortgage; (8) revolving home equity; (9) consumer; (10) municipal loans; and (11) SBA PPP loans. The vintage method is applied to measure the historical loss component of lifetime credit losses inherent in most of its loan pools. For the revolving home equity and small business credit scored pools, the migrationPD/LGD method was selectedis used to measure historical losses; no historical loss method was applied to the SBA PPP loan pool. Management believes that the methods selected fairly reflect the historical loss component of expected losses inherent in the Bank’s loan portfolio. However, since future losses could vary significantly from those experienced in the past, on a quarterly basis management adjusts its historical loss experience to reflect current conditions and reasonable and supportable forecasts. In doing so, management considers a variety of general

21


qualitative and quantitative factors and then subjectively determines the weight to assign to each in estimating losses. The factors include, among others:include: (1) changes in lending policies and procedures; (2) experience, ability and depth of lending staff; (3) trends in the nature and volume of loans; (4) changes in the quality of the loan review function; (5) delinquencies; (6) environmental risks; (7) current and forecasted economic conditions as judged by things such as national and local unemployment levels and GDP; (8) changes in the value of underlying collateral as judged by things such as median home prices and forecasted vacancy rates in the Bank’s service area; and (9) direction and magnitude of changes in the economy. The Bank’s ACL allocable to its loan pools results primarily from these qualitative and quantitativeQ-factor adjustments to historical loss experience.experience with the largest sensitivity of the ACL and provision arising from loan growth and concentrations, credit quality and forecasts of unemployment, GDP, vacancies and economic conditions. Because of the nature of the qualitative factorsQ-factors and the difficulty in assessing their impact, management’s resulting estimate of losses may not accurately reflect lifetime losses in the portfolio.

Loans that do not share similar risk characteristics are evaluated on an individual basis. Such disparate risk characteristics may include internal or external credit ratings, risk ratings, collateral type, size of loan, effective interest rate, term, geographic location, industry or historical or expected loss pattern. Estimated losses for loans individually evaluated are based on either the fair value of collateral or the discounted value of expected future cash flows. For all collateral dependent loans evaluated on an individual basis, credit losses are measured based on the fair value of the collateral. In estimating the fair value of real estate collateral, management utilizes appraisals or evaluations adjusted for costs to dispose and a distressed sale adjustment, if needed. Estimating the fair value of collateral other than real estate is also subjective in nature and sometimes requires difficult and complex judgements. Determining expected future cash flows can be more subjective than determining fair values. Expected future cash flows could differ significantly, both in timing and amount, from the cash flows received over the loan’s remaining life. Individually evaluated loans are not included in the estimation of credit losses from the pooled portfolio.

TDRs are individually evaluated for loss and generally reported at the present value of estimated future cash flows using the loan’s effective rate at inception. However, if a TDR is a collateral dependent loan, the loan is reported at the fair value of the collateral.

 

25


Asset Quality

The Corporation has identified certain assets asInformation about the Corporation’s risk elements. These assetselements is set forth below. Risk elements include nonaccrual loans, other real estate owned, loans that are contractually past due 9030 days or more as to principal or interest payments and still accruingTDRs, and TDRs. These assets present more than the normal risk that the Corporation will be unable to eventually collect or realize their full carrying value. Information about the Corporation’s risk elements is set forth below.

September 30,

December 31,

(dollars in thousands)

2021

2020

Nonaccrual loans:

Troubled debt restructurings

$

$

494

Other

1,235

628

Total nonaccrual loans

1,235

1,122

Loans past due 90 days or more and still accruing

Other real estate owned

Total nonperforming assets

1,235

1,122

Troubled debt restructurings - performing

563

815

Total risk elements

$

1,798

$

1,937

Nonaccrual loans as a percentage of total loans

.04%

.04%

Nonperforming assets as a percentage of total loans and other real estate owned

.04%

.04%

Risk elements as a percentage of total loans and other real estate owned

.06%

.06%

March 31,

December 31,

(in thousands)

2022

2021

Loans, excluding troubled debt restructurings:

Past due 30 through 89 days

$

1,113

$

460

Past due 90 days or more and still accruing

Nonaccrual

1,235

1,235

2,348

1,695

Troubled debt restructurings:

Performing according to their modified terms

547

554

Past due 30 through 89 days

Past due 90 days or more and still accruing

Nonaccrual

547

554

Total past due, nonaccrual and restructured loans:

Restructured and performing according to their modified terms

547

554

Past due 30 through 89 days

1,113

460

Past due 90 days or more and still accruing

Nonaccrual

1,235

1,235

2,895

2,249

Other real estate owned

$

2,895

$

2,249

The disclosure of other potential problem loans can be found in “Note 4 – Loans” to the Corporation’s consolidated financial statements of this Form 10-Q.

Allowance and Provision for Credit Losses

The ACL is established through provisions for credit losses charged against income. When available information confirms that specific loans, or portions thereof, are uncollectible, these amounts are charged off against the ACL, and subsequent recoveries, if any, are credited to the ACL.

22


The ACL decreased $3.5 millionincreased $456,000 during the first nine monthsquarter of 2021,2022, amounting to $29.5$30.3 million, or 1.02%.94% of total loans, at September 30, 2021March 31, 2022 compared to $33.0$29.8 million, or 1.09%.96% of total loans, at December 31, 2020. Excluding SBA PPP loans, the reserve coverage ratio was 1.04% and 1.13% at September 30, 2021 and December 31, 2020, respectively.2021. During the first nine monthsquarter of 2022, the Bank had loan chargeoffs of $4,000, recoveries of $27,000 and recorded a provision of $433,000. During the first quarter of 2021, the Bank had loan chargeoffs of $1.0 million,$550,000, recoveries of $553,000$103,000 and recorded a credit provision of $3.1 million. During$986,000. The provision in the first nine months of 2020, the Bank had loan chargeoffs of $2.1 million, recoveries of $300,000current period was mainly due to portfolio growth, partially offset by economic conditions, asset quality and recorded a provision for credit losses of $2.5 million.other portfolio metrics. The credit provision in the current2021 period was mainly due to improvements in economic conditions, asset quality and other portfolio metrics and a decline in outstanding residential mortgage loans, partially offset by net chargeoffs. The provision in the 2020 period was mainly attributable to the pandemic.

The ACL is an amount that management currently believes will be adequate to absorb expected lifetime losses in the Bank’s loan portfolio. As more fully discussed in “Application of Critical“Critical Accounting Policies and Estimates,” the process for estimating credit losses and determining the ACL as of any balance sheet date is subjective in nature and requires material estimates and judgements. Actual results could differ significantly from those estimates. Other detailed information on the Bank’s loan portfolio and ACL can be found in “Note 4 – Loans” to the Corporation’s consolidated financial statements included in this Form 10-Q.

The amount of future chargeoffs and provisions for credit losses will be affected by among other things, economic conditions on Long Island and in the boroughs of NYC. Such conditions could affect the financial strength of the Bank’s borrowers and will affect the value of real estate collateral securing the Bank’s mortgage loans. Loans secured by real estate represent approximately 95%96% of the Bank’s total loans outstanding at September 30, 2021.March 31, 2022. The majority of these loans are collateralized by properties located on Long Island and in the boroughs of NYC. While business activity in the NYCNew York metropolitan area has improved since the pandemic lows of 2020,started to improve, the pace of the recovery is slow and remains uncertain. These challenges may result in higher drawdowns by customers on the Bank’s lending commitments and higher past due and nonaccrual loans, TDRs and credit losses.

Future provisions and chargeoffs could also be affected by environmental impairment of properties securing the Bank’s mortgage loans. At the present time, management is not aware of any environmental pollution originating on or near properties securing the Bank’s loans that would materially affect the carrying value of such loans.

26


Cash Flows and Liquidity

Cash Flows. The Corporation’s primary sources of cash are deposits, maturities and amortization of loans and investment securities, operations and borrowings. The Corporation uses cash from these and other sources to fund loan growth, purchase investment securities, repay borrowings, expand and improve its physical facilities, pay cash dividends, repurchase its common stock and for general corporate purposes.

The Corporation’s cash and cash equivalent position at September 30, 2021March 31, 2022 was $259.1$85.8 million, up from $211.2$43.7 million at December 31, 2020.2021. The increase occurred primarily because cash provided by deposit growth, paydowns or repayments of securities and loans and operations exceeded cash used to repay borrowings, purchase securities, repurchase common stock and pay cash dividends.

Securities increased $113.0decreased $51.3 million during the first nine monthsquarter of 2021,2022, from $662.7$734.3 million at year-end 20202021 to $775.7$683.0 million at September 30, 2021.March 31, 2022. The increasedecrease is primarily attributable to purchases of $268.8 million, partially offset by sales of $54.2 million and maturities and redemptions of $93.2$14.1 million and unrealized losses of $41.6 million during the period, partially offset by purchases of $4.7 million.

During the first ninethree months of 2021,2022, total deposits grew $50.0$230.1 million, or 1.5%6.9%, to $3.4$3.5 billion at September 30, 2021.March 31, 2022. The increase was attributable to growth in checking deposits of $185.5$78.8 million, and savings, NOW and money market deposits of $68.9$51.4 million partially offset by a decreaseand time deposits of $99.9 million. The increase in time deposits of $204.4 million. The decrease in time deposits includeswas due to the maturitypurchase of $150.0 million in brokered CDs used to hedge an interest rate swap which expired in May 2021.

On November 28, 2021, corporate bonds with a current fair value of $31.7 million and a weighted average fixed rate of 5.10% will convert to a floating rate and reprice on a quarterly basis off the ten year swap rate. At current rates, the weighted average floating rate would be 1.55% and would reduce net interest income in the fourth quarter by approximately $102,000. On a full quarter basis, the impact to net interest income would be approximately $281,000. The remaining $87.1 million of the corporate bond portfolio are floating rate securities and reprice on a quarterly basis off the ten year swap rate.totaling $105 million.

Liquidity. The Bank has a board committee approved liquidity policy and liquidity contingency plan, which are intended to ensure that the Bank has sufficient liquidity at all times to meet the ongoing needs of its customers in terms of credit and deposit outflows, take advantage of earnings enhancement opportunities and respond to liquidity stress conditions should they arise.

The Bank has both internal and external sources of liquidity that can be used to fund loan growth and accommodate deposit outflows. The Bank’s primary internal sources of liquidity are overnight investments, maturities and monthly payments on its investment securities and loan portfolios, operations and investment securities designated as available-for-sale.AFS. At September 30, 2021,March 31, 2022, the Bank had approximately $320.6$181.1 million of unencumbered available-for-saleAFS securities.

The Bank is a member of the Federal Reserve Bank (“FRB”) of New York and the FHLB of New York and has a federal funds line with a commercial bank. In addition to customer deposits, the Bank’s primary external sources of liquidity are secured borrowings from the FRB of New York and FHLB of New York. In addition, the Bank can purchase overnight federaldraw funds under its existing line and the Corporation can raise funds through its Dividend Reinvestment and Stock Purchase Plan. However, the Bank’s FRB of New York membership, FHLB of New York membership and federal fundsunsecured line do not represent legal commitments to extend credit to the Bank. The amount that the Bank can potentially borrow is currently dependent on the amount of unencumbered eligible securities and loans that the Bank can use as collateral and the collateral margins required by the lenders. Based on the Bank’s unencumbered securities and loan collateral, a substantial portion

23


of which is in place at the FRB of New York and FHLB of New York, the Bank had a borrowing capacity of approximately $1.8$1.9 billion at September 30, 2021.March 31, 2022.

Capital

Stockholders’ equity was $419.9$389.5 million at September 30, 2021March 31, 2022 versus $407.1$413.8 million at December 31, 2020.2021. The increasedecrease was mainly due to net incomeunrealized losses of $34.1$28.8 million partially offset byon the Bank’s AFS investment securities, cash dividends declared of $13.7$4.6 million and common stock repurchases of $6.3$4.5 million, partially offset by net income of $12.1 million. The net unrealized losses of $28.8 million on the AFS investment securities portfolio were due to an increase in interest rates during the quarter. The fair value of the AFS investment securities portfolio is expected to continue to decline with further increases in interest rates.

The Corporation and the Bank have elected to adopt the community bank leverage ratio (“CBLR”) framework, which requires a leverage ratio of greater than 9.00%. As a qualifying community banking organization, the Corporation and the Bank may opt out of the CBLR framework in any subsequent quarter by completing its regulatory agency reporting using the traditional capital rules.

The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards and appropriately provide for growth. The Leverage Ratios of both the Corporation and the Bank at September 30, 2021March 31, 2022 were 10.07%10.15% and 9.96%, which satisfiesrespectively, and satisfy the well capitalized ratio requirements under the Prompt Corrective Action statutes. The Corporation and the Bank elected the optional five-year transition period provided by the federal banking agencies for recognizing the regulatory capital impact of the implementation of CECL.

27


On April 6, 2020, the federal banking agencies issued interim final rules pursuant to section 4012 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), temporarily lowering the CBLR requirement to 8.50% for calendar year 2021 and returning to 9.00% in 2022. The CARES Act also provides that, during the same period, if a qualifying community banking organization falls no more than 1% below the CBLR, it will have a two-quarter grace period to satisfy the CBLR.

The Corporation has a stock repurchase program under which it is authorized to purchase up to $65 million in shares of its common stock from time to time through open market purchases, privately negotiated transactions, or in any other manner that is compliant with applicable securities laws. During the first nine monthsquarter of 2021,2022, the Corporation repurchased 301,265202,886 shares of its common stock at a total cost of $6.3$4.5 million. Total repurchases completed since the commencement of the program in 2018 amount to 2,441,865 shares at a cost of $53.9 million.The Corporation can repurchase another $28.4 million under Board approved repurchase programs. We expect to continue our repurchase program during the fourth quarterremainder of 2021 and in 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Bank invests in interest-earning assets, which are funded by interest-bearing deposits and borrowings, noninterest-bearing deposits and capital. The Bank’s results of operations are subject to risk resulting from interest rate fluctuations generally and having assets and liabilities that have different maturity, repricing and prepayment/withdrawal characteristics. The Bank defines interest rate risk as the risk that the Bank's net interest income andand/or economic value of equity (“EVE”) will change when interest rates change. The principal objective of the Bank’s asset liability management activities is to optimize current and future net interest income while at the same time maintain acceptable levels of interest rate and liquidity risk and facilitate the funding needs of the Bank.

The Bank monitors and manages interest rate risk through a variety of techniques including traditional gap analysis and the use of interest rate sensitivity models. Both gap analysis and interest rate sensitivity modeling involve a variety of significant estimates and assumptions and are done at a specific point in time. Changes in the estimates and assumptions made in gap analysis and interest rate sensitivity modeling could have a significant impact on projected results and conclusions. Therefore, these techniques may not accurately reflect the actual impact of changes in the interest rate environment on the Bank’s net interest income or EVE.

UsingThrough the use of interest rate sensitivity modeling, the Bank projects net interest income over a five-year period assuming a static balance sheet and no changes in interest rates from current levels. Utilization of a static balance sheet ensures that interest rate risk embedded in the Bank’s current balance sheet is not masked by assumed balance sheet growth or contraction. Net interest income is projected over a five-year time period utilizing various interest rate change scenarios, including both ramped and shocked changes as well as changes in the shape of the yield curve. The interest rate scenarios modeled are based on the shape of the current yield curve and the relative level of rates and management’s expectations as to potential future yield curve shapes and rate levels.

The Bank also uses interest rate sensitivity modeling to calculate EVE in the current rate environment assuming shock increases and decreases in interest rates. EVE is the difference between the present value of expected future cash flows from the Bank’s assets and the present value of the expected future cash flows from the Bank’s liabilities. Present values are determined using discount rates that management believes are reflective of current market conditions. EVE can capture long-term interest rate risk that would not be captured in a five-year projection of net interest income.

In utilizing interest rate sensitivity modeling to project net interest income and calculate EVE, management makes a variety of estimates and assumptions which include among others, the following: (1) how much and when yields and costs on individual categories of interest-earning assets and interest-bearing liabilities will change in response to projected changes in market interest rates; (2) future cash flows, including prepayments of mortgage assets and calls of municipal securities; (3) cash flow reinvestment assumptions; (4) appropriate discount rates to be applied to loan, deposit and borrowing cash flows; and (5) decay or runoff rates for nonmaturity deposits such as checking, savings, NOW and money market accounts. The repricing of loans and borrowings and the reinvestment of loan and security cash flows are generally assumed to be impacted by the full amount of each assumed rate change, while the repricing of nonmaturity deposits is not.

24


For nonmaturity deposits, management makes estimates of how much and when it will need to change the rates paid on the Bank’s various nonmaturity deposit products in response to changes in general market interest rates. These estimates are based on among other things, product type, management’s experience with needed deposit rate adjustments in prior interest rate change cycles, the results of a nonmaturity deposit study conducted by an independent consultant and updated on a periodic basis and management’s assessment of competitive conditions in its marketplace.

The information provided in the following table is based on a variety of estimates and assumptions that management believes to be reasonable, the more significant of which are set forth hereinafter. The base case information in the table shows: (1) a calculation of the Corporation’s EVE at September 30, 2021March 31, 2022 arrived at by discounting estimated future cash flows at rates that management believes are reflective of current market conditions; and (2) an estimate of net interest income for the year ending September 30, 2022March 31, 2023 assuming a static balance sheet, the adjustment of repricing balances to current rate levels, and the reinvestment at current rate levels of cash flows from maturing assets and liabilities in a mix of assets and liabilities that is intended to substantially reflect the Bank’s strategic plan. In addition, in calculating EVE, cash flows for nonmaturity deposits are assumed to have an overall life of 6.06.1 years based on the current mix of such deposits and the most recently updated nonmaturity deposit study.

28


The rate change information in the following table shows estimates of net interest income for the year ending September 30, 2022March 31, 2023 and calculations of EVE at September 30, 2021March 31, 2022 assuming rate changes of plus 100, 200 and 300 bps and minus 100 bps. The rate change scenarios were selected based on current interest rates and: (1) are assumed to be shock or immediate changes for both EVE and net interest income; (2) occur uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities; and (3) impact the repricing and reinvestment of all assets and liabilities, except nonmaturity deposits, by the full amount of the rate change. In projecting future net interest income under the indicated rate change scenarios, activity is simulated by assuming that cash flows from maturing assets and liabilities are reinvested in a mix of assets and liabilities that is intended to substantially reflect the Bank’s strategic plan. The changes in EVE from the base case have not been tax affected.

Economic Value of Equity

Net Interest Income for

Economic Value of Equity

Net Interest Income for

at September 30, 2021

Year Ending September 30, 2022

at March 31, 2022

Year Ending March 31, 2023

Percent Change

Percent Change

Percent Change

Percent Change

From

From

From

From

Rate Change Scenario (dollars in thousands)

Amount

Base Case

Amount

Base Case

Amount

Base Case

Amount

Base Case

+ 300 basis point rate shock

$

643,509

-6.3%

$

100,442

-0.4%

$

695,419

-10.4%

$

107,361

-7.1%

+ 200 basis point rate shock

665,048

-3.2%

101,073

0.2%

725,248

-6.5%

110,175

-4.7%

+ 100 basis point rate shock

685,192

-0.2%

101,479

0.6%

757,768

-2.3%

113,220

-2.0%

Base case (no rate change)

686,723

100,881

775,743

115,559

- 100 basis point rate shock

607,366

-11.6%

95,731

-5.1%

735,498

-5.2%

111,264

-3.7%

As shown in the preceding table, assuming a static balance sheet, an immediate increase in interest rates of 100, 200 or 300 bps would have a de minimuscould negatively impact onthe Bank’s net interest income for the year ending September 30, 2022ended March 31, 2023 because the Bank might need to increase inthe rates paid on its nonmaturity deposits to remain competitive and any long-term borrowings that mature would be offset by the deployment of excess cash intoreprice at a higher yielding securities and loans.interest rate. In addition, the Bank’s noninterest bearing checking deposits, equal to 34%securities portfolio, excluding corporate bonds, and a significant portion of total assets at September 30, 2021, also help to mitigate the impact of rising rates on net interest income.

The de minimis impact on net interest income described above would be negatively impacted by a reduction in excess liquidity because, unlike nonmaturity deposits and short-term borrowings, the Bank’s securities and almost all its loans areloan portfolio does not subject to immediate repricingimmediately reprice with changes in market rates.

An immediate decrease in interest rates of 100 bps wouldcould also negatively impact the Bank’s net interest income and EVE for the same time period due to the inability to reduce interest rates on deposit accounts below zero. Changes in management’s estimates as to the rates that will need to be paid on nonmaturity deposits could have a significant impact on the net interest income amounts shown for each scenario in the table.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated into it by reference contain or may contain various forward-looking statements. These forward-looking statements include statements of goals; intentions and expectations; estimates of risks and of future costs and benefits; assessments of probable credit losses; assessments of market risk; and statements of the ability to achieve financial and other goals. Forward-looking statements are typically identified by words such as “would,” “should,” “could,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties which may change over time. Forward-looking statements speak only as of the date they are made. We do not assume any duty and do not undertake to update our forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that we anticipated in our forward-looking statements and future results could differ materially from historical performance.

Our forward-looking statements are subject to the following principal risks and uncertainties: the recent and continuing global pandemic, general economic conditions and trends, either nationally or locally; conditions in the securities markets; fluctuations in the trading price of our common stock; changes in interest rates;rates and the rate of inflation; changes in the shape of the yield curve; changes in deposit

25


flows, and in the demand for deposit and loan products and other financial services; changes in real estate values; changes in the quality or composition of our loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; our ability to retain key members of management; changes in legislation, regulation, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. We provide greater detail regarding some of these factors in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020,2021, in Part I under “Item 1A. Risk Factors.” Our forward-looking statements may also be subject to other risks and uncertainties, including those that we may discuss elsewhere in other documents we file with the SEC from time to time.

 

29


ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

 

The Corporation’s Principal Executive Officer and Principal Financial Officer have evaluated the Corporation’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report. Based upon that evaluation, they have concluded that the Corporation’s disclosure controls and procedures are effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting that occurred during the thirdfirst quarter of 20212022 that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. 

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Corporation is involved in various legal actions and claims arising in the normal course of its business. In the opinion of management, these legal actions and claims are not expected to have a material adverse impact on the Corporation's financial condition and results of operations.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors, in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Stock Repurchases. The Corporation has a stock repurchase program under which it is authorized to purchase shares of its common stock from time to time through open market purchases, privately negotiated transactions, or in any other manner that is compliant with applicable securities laws. The details of the Corporation’s purchases under the stock repurchase program in the thirdfirst quarter of 20212022 are set forth in the table that follows.

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number of Shares

Maximum Dollar Value of

Total Number

Average

Purchased as Part of

Shares that May Yet

of Shares

Price Paid

Publicly Announced

be Purchased Under

Period

Purchased

Per Share

Plans or Programs

the Plans or Programs (1)

July 2021

$13,253,794

August 2021

100,845

$21.816

100,845

$11,053,810

September 2021

$11,053,810

Total

100,845

$21.816

100,845

Total Number of Shares

Maximum Dollar Value of

Total Number

Average

Purchased as Part of

Shares that May Yet

of Shares

Price Paid

Publicly Announced

be Purchased Under

Period

Purchased

Per Share

Plans or Programs

the Plans or Programs (1)

January 2022

$32,853,158

February 2022

179,587

$22.273

179,587

$28,853,158

March 2022

23,299

$21.460

23,299

$28,353,157

Total

202,886

$22.180

202,886

(1) On October 26, 2018, theThe Corporation’s Board of Directors approved a $20 million stock repurchase program, which was announced on October 30, 2018. An additional $30 million was approved on April 16, 2019 and announced on April 18, 2019. On January 30, 2020, the Board of Directors approved an additional2019 and another $15 million in stock repurchases, which was announced on January 31, 2020, for a total program size of $65 million. The Corporation’s Board of Directors approved a new $30 million common stock repurchase program which was announced on January 31, 2022. The Corporation’s stock repurchase program does not have a fixed expiration date.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

 

26


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable

 

30


ITEM 6. EXHIBITS

See Index of Exhibits that follows.


 

3127


INDEX OF EXHIBITS

Exhibit No.

Description of Exhibit 

10.1

Amended and Restated Employment Agreement between Registrant and Christopher Becker, as amended (incorporated by reference to Exhibit 10.12 of Registrant’s Form 8-K filed February 18, 2022)

10.2

Employment Agreement between Registrant and Jay P. McConie (incorporated by reference to Exhibit 10.3 of Registrant’s Form 8-K filed January 3, 2020 and Exhibit 10.13 of Registrant’s 8-K filed on February 18, 2022)

10.3

Employment Agreement between Registrant and Christopher J. Hilton (incorporated by reference to Exhibit 10.9 of Registrant’s Form 10-K filed March 15, 2019 and Exhibit 10.13 of Registrant’s 8-K filed on February 18, 2022)

10.4

Employment Agreement between Registrant and Janet T. Verneuille (incorporated by reference to Exhibit 10.2 of Registrant’s Form 10-Q filed August 9, 201931.1and Exhibit 10.13 of Registrant’s 8-K filed on February 18, 2022)

10.5

Employment Agreement between Registrant and Susanne Pheffer (incorporated by reference to Exhibit 10.10 of Registrant’s Form 10-K filed March 12, 2021and Exhibit 10.13 of Registrant’s 8-K filed on February 18, 2022)

31.1

Certification of Principal Executive Officer pursuant to Rule 13a-14(a)

31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a)

32

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) and U.S.C. Section 1350

101

The following materials from the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021,March 31, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

 

 

3228


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: November 3, 2021May 5, 2022

By /s/ CHRISTOPHER BECKER

 

 

Christopher Becker, President & Chief Executive Officer

 

 

(principal executive officer)

 

 

 

 

 

By /s/ JAY P. MCCONIE

 

 

Jay P. McConie, Executive Vice President, Chief

 

 

Financial Officer & Treasurer

 

 

(principal financial officer)

 

 

 

 

 

By /s/ WILLIAM APRIGLIANO

 

 

William Aprigliano, First Senior Vice President & Chief

 

 

Chief Accounting Officer

 

 

(principal accounting officer)

 

 

 

3329