SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_____________ to _____________
Commission file Number 0-12220
THE FIRST OF LONG ISLAND CORPORATION
- ----------------------------------------------------------------------------
(Exact Name Of Registrant As Specified In Its Charter)
NEW YORK 11-2672906
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10 GLEN HEAD ROAD, GLEN HEAD, NY 11545
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 671-4900
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
NONE N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value per share
- ------------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
[COVER PAGE 1 OF 2 PAGES]
Total number of pages, including cover pages - 65
The aggregate market value of the Corporation's voting stock (based on
the closing market price on March 12, 1997) held by non-affiliates was
$75,518,474 (excludes $9,912,652 representing the market value of common stock
beneficially owned by directors and executive officers of the Registrant).
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MARCH 12, 1997
- --------------------------- -----------------------------
Common Stock, $.10 par value 2,083,686
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's Annual Report to shareholders for the
fiscal year ended December 31, 1996 are incorporated by reference into Parts II
and IV.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held April 15, 1997 are incorporated by reference into Part
III.
EXHIBIT INDEX FOUND ON PAGE 14
[COVER PAGE 2 OF 2 PAGES]
1
PART I
ITEM 1. BUSINESS
GENERAL
The First of Long Island Corporation (the "Registrant" or the
"Corporation"), a one-bank holding Company, was incorporated on February 7, 1984
for the purpose of providing financial services through its wholly-owned
subsidiary, The First National Bank of Long Island (the "Bank").
The Bank was organized in 1927 as a national banking association under
the laws of the United States of America and was known as the First National
Bank of Glen Head through June 30, 1978. The Bank has a Trust and Investment
Services Department and conducts insurance business through The First of Long
Island Agency, Inc. (the "Agency"), a wholly-owned subsidiary.
The Bank is a community commercial bank and serves the financial needs of
privately owned businesses, professionals, consumers, public bodies, and other
organizations primarily in Nassau and Suffolk Counties, Long Island. The
principal business of the Bank has historically consisted of attracting business
and consumer checking, money market and savings deposits and investing those
funds in high quality investment securities, commercial and residential mortgage
loans, commercial loans, and home equity loans. The Corporation's loan portfolio
is primarily comprised of loans to borrowers in Nassau and Suffolk Counties and
real estate loans are principally secured by properties located in these
Counties.
A substantial portion of the Bank's investment securities portfolio is
comprised of U.S. Treasury securities, with lesser amounts invested in U.S.
government agency securities (modified pass-through, mortgage-backed securities
of Federal agencies), state and municipal securities, and collateralized
mortgage obligations. The Bank also regularly sells federal funds on an
overnight basis to a number of banking institutions.
The Bank offers a variety of deposit products having a wide range of
interest rates and terms. The principal products include checking accounts,
money market accounts, savings accounts, and time deposit accounts.
In addition to its loan and deposit products, the Bank offers other
services to its customers including the following:
ATM Banking Payroll Services
Collection Services Commercial PC Banking
Counter Checks and Certified Checks Safe Deposit Boxes
Credit Cards Securities Transactions
Drive-Through Banking Signature Guarantee Services
Fixed Rate Annuities Telephone Banking
Foreign Drafts Travelers Checks
Gift Checks and Personal Money Orders Trust and Investment Management Services
Merchant Credit Card Depository Services U.S. Savings Bonds
Mutual Funds Wire Transfers and Foreign Cables
Night Depository Services Withholding Tax Depository Services
The Trust and Investment Services Department provides investment
management, pension trust, personal trust, estate, and custody services and
engages in the sale of mutual funds.
The Agency is a licensed insurance agency which was organized in 1994
under the laws of the State of New York and is primarily engaged in the sale of
fixed-rate annuity products.
The Bank's main office is located in Glen Head and it has branch
offices in Roslyn Heights, Greenvale, Old Brookville, Woodbury, Northport, Lake
Success, Huntington, Hicksville, Mineola, Rockville Centre, New Hyde Park,
Locust Valley, Valley Stream, and Great Neck. The offices in Lake Success,
Hicksville, Mineola, Rockville Centre, New Hyde Park, Valley Stream, and Great
Neck are commercial banking facilities as opposed to full-service branches. The
main office and all the branch offices are located in Nassau and Suffolk
Counties.
The Bank's revenues are derived principally from interest on loans,
interest on investment securities, service charges and fees on deposit accounts,
and income from trust and investment management services.
The Bank did not commence, abandon, or significantly change any of its
lines of business during 1996.
The Bank encounters substantial competition in its banking business
from numerous other banking facilities which have offices located in one or more
of the communities served by the Bank. Principal competitors are branches of
large banks such as Citibank, Chase Manhattan Bank, Bank of New York, European
American Bank, and Fleet Bank.
LENDING ACTIVITIES
GENERAL. The Bank's loan portfolio is primarily comprised of loans to small
and medium-sized privately owned businesses, professionals, and consumers in
Nassau and Suffolk Counties. The Bank offers a full range of lending services
including commercial and residential mortgage loans, home equity loans,
commercial loans, consumer loans, and commercial and standby letters of credit.
Commercial loans include, among other things, short-term business loans, term
and installment loans, revolving credit term loans, and loans secured by
marketable securities, the cash surrender value of life insurance policies, or
deposit accounts. Consumer loans include, among other things, student loans
guaranteed by the Federal government, auto loans, unsecured home improvement
loans, unsecured personal loans, and overdraft checking lines.
The Bank makes both fixed and variable rate loans. Variable rate loans are
tied to and reprice with changes in either the Bank's prime interest rate or
U.S. Treasury rates. Commercial mortgage loans are made with terms usually not
to exceed fifteen years, while the maximum term on residential mortgage loans is
thirty years. Commercial and consumer loans generally mature within five years.
Fixed rate loans with a remaining maturity exceeding five years were
approximately $27.2 million at December 31, 1996, or 17.8% of the total loan
portfolio. Construction loans were $405,000 at December 31, 1996, or .3% of the
total portfolio. The Bank's current practice is to usually lend no more than 75%
of appraised value on residential mortgage loans, 65% on home equity loans and
70% on commercial mortgage loans.
The risks inherent in the Bank's loan portfolio primarily stem from the
following factors relating to borrower size and geographic concentration: first,
loans to small and medium-sized businesses sometimes involve a higher degree of
risk than those to larger companies because such businesses may have shorter
operating histories and higher debt-to-equity ratios than larger companies and
may lack sophistication in internal record keeping and financial and operational
controls; second, the ability of many of the Bank's borrowers to repay their
loans is dependent on the strength of the Long Island economy; and finally, if
it becomes necessary to foreclose a loan secured by real estate, the ability of
the Bank to fully realize its investment is dependent on the strength of the
Long Island real estate market. The Bank does not have any significant industry
concentrations or foreign loans.
Except home equity loans, loans from $300,000 to $500,000 require the
approval of the Management Loan Committee (home equity loans have more stringent
approval requirements). Loans in excess of $500,000 require the approval of the
Management Loan Committee and two members of the Board Loan Committee.
The Bank's lending is subject to written underwriting standards and loan
origination procedures, as approved by the Bank's Board of Directors and
contained in the Bank's loan policies. The Bank's loan policies allow for
exceptions and set forth the specific approvals required. Decisions on loan
applications are based on, among other things, the borrower's credit history,
the financial strength of the borrower, estimates of the borrower's ability to
repay the loan, and the value of the collateral, if any. All real estate
appraisals must meet the requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989.
PORTFOLIO COMPOSITION. The following table sets forth information
concerning the composition of the Bank's loan portfolio.
December 31,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------------------------------------------------------------------------
(in thousands)
Commercial $ 23,345 $ 21,708 $ 19,482 $ 19,514 $ 20,990
Real estate-construction 405 - - - -
Real estate-mortgage (1) 120,377 115,098 115,855 108,025 100,410
Consumer 8,999 9,671 8,961 9,337 9,386
Other 396 193 174 113 304
----------------------------------------------------------------------------
153,522 146,670 144,472 136,989 131,090
Unearned income (840) (796) (859) (812) (586)
--------------- ------------- -------------- ------------- -------------
152,682 145,874 143,613 136,177 130,504
Allowance for loan losses (3,600) (3,600) (3,600) (3,590) (3,503)
--------------- ------------- -------------- ------------- -------------
Net loans $ 149,082 $ 142,274 $ 140,013 $ 132,587 $ 127,001
=============== ============= ============== ============= =============
<FN>
(1) Includes borrowings under home equity lines and loans
</FN>
SELECTED MATURITY INFORMATION. The following table shows the maturity of
commercial, construction and other loans outstanding at December 31, 1996.
Maturity
-------------------------------------------------------------
After One
Within But Within After
One Year Five Years Five Years Total
-------------------------------------------------------------
(in thousands)
TYPES OF LOANS:
Commercial $ 14,087 $ 7,968 $ 1,290 $ 23,345
Real estate-construction 405 - - 405
Other 396 - - 396
--------------- ------------- -------------- -------------
$ 14,888 $ 7,968 $ 1,290 $ 24,146
=============== ============= ============== =============
RATE PROVISION:
Amounts with fixed interest rates $ 7,304 $ 1,360 $ - $ 8,664
Amounts with variable interest rates 7,584 6,608 1,290 15,482
--------------- ------------- -------------- -------------
$ 14,888 $ 7,968 $ 1,290 $ 24,146
=============== ============= ============== =============
COMMERCIAL LOANS. The Bank makes commercial loans on a demand basis,
short-term discounted basis, or installment basis. Short-term business loans are
generally due and payable within one year and should be self liquidating during
the normal course of the borrower's business cycle. Term and installment loans
are usually due and payable within five years. Generally, it is the policy of
the Bank to obtain personal guarantees of all owners on loans made to
privately-owned businesses.
REAL ESTATE MORTGAGE AND HOME EQUITY LOANS. The Bank makes residential and
commercial mortgage loans and home equity loans. Applicants for residential
mortgage loans and home equity loans will be considered for approval provided
they have satisfactory credit history and the Bank believes that there is
sufficient monthly income to service both the loan applied for and existing
debt. Applicants for commercial mortgage loans will be considered for approval
provided they, as well as any guarantors, have satisfactory credit history and
can demonstrate, through financial statements and otherwise, the ability to
repay. If the source of repayment is rental income, such income must be more
than sufficient to amortize the debt.
In processing requests for commercial mortgage loans, the Bank almost
always requires an environmental assessment to identify the possibility of
environmental contamination on or near the subject property. The extent of the
assessment procedures varies from property to property and is based on factors
such as whether or not the subject property is an industrial building, in close
proximity to a known environmentally hazardous area, or a suspected
environmental risk based on current or past use.
CONSUMER LOANS. The Bank makes student loans, auto loans, home improvement
loans, overdraft lines of credit and other consumer loans. Such loans may be
secured or unsecured and, with the exception of student loans, are generally
made on an installment basis over terms not
exceeding five years. In reviewing loans for approval, the Bank
considers, among other things, ability to repay, stability of employment and
residence, and past credit history.
PAST DUE, NONACCRUAL, AND RESTRUCTURED LOANS. The following table
presents selected information about the Bank's past due, nonaccrual and
restructured loans.
December 31,
--------------------------------------
1996 1995 1994 1993 1992
--------------------------------------
(in thousands)
Past due 90 days or more $ 31 $ 4 $ 3 $ 183 $ 15
Nonaccrual loans 659 843 516 448 1,017
Restructured Loans 876 816 824 1,022 133
Gross interest income that would
have been recorded during the year under
original terms:
Nonaccrual loans 60 97 36 43 137
Restructured loans 100 96 86 105 18
Gross interest income recorded during the year:
Nonaccrual loans 11 36 1 1 36
Restructured loans 87 82 61 78 15
Commitments for additional funds None None None None None
The accrual of interest on loans is generally discontinued when principal or
interest payments become past due 90 days or more. The bank does not have any
impaired loans except for loans disclosed above. Other than the loans included
in the above table, there were no material potential problem loans, either
individually or in the aggregate, at December 31, 1996.
While economic conditions in the Bank's market area continued to show
improvement during 1996, such conditions are still less than favorable. Future
levels of past due, nonperforming, and restructured loans will be affected by
the strength of the local economy.
ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is an amount
that management currently believes will be adequate to absorb possible future
losses on existing loans. The following table summarizes the changes in the
Bank's allowance for loan losses for the periods indicated.
Year Ended December 31,
-----------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -------------
(in thousands)
Balance, beginning of year $ 3,600 $ 3,600 $ 3,590 $ 3,503 $ 3,105
------------- ------------- ------------- ------------- -------------
Charge-offs:
Commercial (2) (3) (13) - -
Real estate-mortgage (1) - - - (121) (568)
Consumer and other (33) (21) (35) (24) (86)
------------- ------------- ------------- ------------- -------------
(35) (24) (48) (145) (654)
------------- ------------- ------------- ------------- -------------
Recoveries:
Commercial - - 6 5 5
Real estate-mortgage (1) 21 16 36 28 426
Consumer and other 14 8 16 24 21
------------- ------------- ------------- ------------- -------------
35 24 58 57 452
------------- ------------- ------------- ------------- -------------
Net (charge-offs) recoveries - - 10 (88) (202)
Provision charged to operations - - - 175 600
------------- ------------- ------------- ------------- -------------
Balance, end of year $ 3,600 $ 3,600 $ 3,600 $ 3,590 $ 3,503
============= ============= ============= ============= =============
Ratio of net (charge-offs) recoveries to
average loans outstanding - % - % .01% (.07)% (.16)%
============= ============= ============= ============= =============
(1) Includes borrowings under home equity lines and loans
The provision charged to operations and the related balance in the
allowance for loan losses is based upon periodic evaluations of the loan
portfolio by management. These evaluations consider a variety of factors
including, but not limited to, historical losses; a borrower's ability to repay;
the value of any related collateral; levels of and trends in delinquencies and
nonaccruing loans; trends in volume and terms of loans; changes in lending
policies and procedures; experience, ability and depth of lending staff;
national and local economic conditions; concentrations of credit; and
environmental risks. Future provisions for loans losses and chargeoff levels
will be affected by the strength of the local economy.
The following table shows the allocation of the total allowance for loan
losses, by loan type, at December 31 of the years indicated.
1996 1995 1994 1993 1992
---------------------------------------------------------------------------------
Percent of Percent of Percent of Percent of Percent of
Loans in Loans in Loans in Loans in Loans in
Each Each Each Each Each
Category Category Category Category Category
To Total To Total To Total To Total To Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
------ ----- ----- ----- ------ ----- ----- ----- ----- -----
(dollars in thousands)
Commercial $ 530 15.3% $ 563 14.9% $ 574 13.6% $ 652 14.3% $ 849 16.1%
Real estate-construction -- .3 -- -- -- -- -- -- -- --
Real estate-mortgage (1) 2,185 78.8 2,241 78.9 2,326 80.7 2,096 79.3 1,511 76.9
Consumer and other 174 5.6 196 6.2 148 5.7 217 6.4 253 7.0
------ ----- ----- ----- ------ ----- ----- ----- ----- -----
Total allocated 2,889 100.0 3,000 100.0 3,048 100.0 2,965 100.0 2,613 100.0
Unallocated 711 -- 600 -- 552 -- 625 -- 890 --
------ ----- ----- ----- ------ ----- ----- ----- ----- -----
$3,600 100.0% $3,600 100.0% $3,600 100.0% $3,590 100.0% $3,503 100.0%
====== ===== ===== ===== ====== ===== ===== ===== ===== =====
(1) Includes borrowings under home equity lines and loans
INVESTMENT ACTIVITIES
GENERAL. The investment policy of the Bank, as approved by the Board of
Directors and supervised by both the Board and the Investment Committee, is
intended to promote investment practices which are both safe and sound and in
full
compliance with the Federal Reserve Board Supervisory Policy Statement on
Securities Activities and all other applicable regulations. Investment authority
will be granted and amended as is necessary by the Board of Directors.
The Bank's investment decisions seek to maximize income while keeping both
credit and market risk at acceptable levels, provide for the Bank's liquidity
needs, assist in managing interest rate sensitivity, and provide securities that
can be pledged, as needed, to secure deposits or borrowing lines.
The Bank's investment policy limits individual maturities to twelve
years and average lives, in the case of collateralized mortgage obligations
(CMO's) and other mortgage-backed securities, to 10 years. At the time of
purchase, bonds of states and political subdivisions must generally be rated A
or better, notes of states and political subdivisions must generally be rated
MIG-2 (or equivalent) or better, and commercial paper must be rated A-1 or P-1.
In addition, management periodically reviews issuer credit ratings for all
securities in the Bank's portfolio other than those issued by the U.S.
government or its agencies. Any deterioration in the creditworthiness of an
issuer will be analyzed and appropriate action taken when deemed necessary. The
Bank has not engaged in the purchase and sale of securities for the primary
purpose of producing trading profits and its current investment policy does not
allow such activity.
The Bank does not purchase or currently hold any high risk mortgage
derivative products as defined by the Federal Financial Institutions Examination
Council Supervisory Policy Statement on Securities Activities. High risk
mortgage derivative products are generally those that possess average life or
price volatility in excess of a benchmark fixed rate, 30-year, mortgage-backed
pass-through security.
At December 31, 1996, the Bank had gross unrealized losses of $940,000
in it held-to-maturity portfolio. These unrealized losses were principally
caused by an increase in interest rates since the securities were purchased,
resulting in a decrease in market value. The Bank has the intent and ability to
hold these securities to maturity and therefore expects to realize their full
face amount. However, the effect of holding securities with yields below those
currently available in the marketplace is that less interest will be earned in
future periods than could be earned on securities purchased currently.
PORTFOLIO COMPOSITION. The following table shows the composition of the
Bank's investment portfolio.
December 31,
------------------------------
1996 1995 1994
-------- -------- --------
HELD TO MATURITY: (in thousands)
U.S. Treasury $ 72,512 $ 80,861 $ 67,781
U.S. Government Agencies 29,811 36,238 42,924
State and Municipals 32,527 33,975 37,117
Collateralized Mortgage Obligations 7,000 8,604 9,956
Commercial Paper -- -- 9,981
-------- -------- --------
$141,850 $159,678 $167,759
======== ======== ========
AVAILABLE FOR SALE:
U.S. Treasury $ 51,427 $ 39,293 $ 35,227
State and Municipals 10,402 6,864 4,355
Collateralized Mortgage Obligations 18,461 11,272 5,164
Other 127 127 127
-------- -------- --------
$ 80,417 $ 57,556 $ 44,873
======== ======== ========
Total investment securities $222,267 $217,234 $212,632
======== ======== ========
MATURITY INFORMATION. The following tables set forth the maturities and
weighted average cost yields of the Corporation's investment securities at
December 31, 1996.
Principal Maturing
-------------------------------------------------------------------------
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
------------------ ---------------- ---------------- ----------------
Amount Yield Amount Yield Amount Yield Amount Yield
---------- ------ -------- ------ -------- ------ -------- ------
(dollars in thousands)
SECURITIES HELD TO MATURITY:
U.S. Treasury $ 25,214 6.32% $ 47,298 6.01% $ - - % $ - - %
U. S. Government Agencies (1) 513 6.90 8,731 6.29 7,381 8.08 13,186 7.00
State and Municipals (2) 4,032 6.01 15,182 6.92 13,313 7.26
Collateralized Mortagage
Obligations (1) - - 805 8.24 - - 6,195 6.91
--------- ----- --------- ----- --------- ----- --------- -----
$ 29,759 6.29% $ 72,016 6.26% $ 20,694 7.55% $19,381 6.97%
========= ===== ========= ===== ========= ===== ========= =====
Principal Maturing
-------------------------------------------------------------------------
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
------------------ ---------------- ---------------- ----------------
Amount Yield Amount Yield Amount Yield Amount Yield
---------- ------ -------- ------ -------- ------ -------- ------
(dollars in thousands)
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury $ 5,601 6.94% $ 45,826 6.18% $ - - % $ - -%
State and Municipals (2) 364 5.41 3,635 6.59 5,813 7.38 590 7.74
Collateralized Mortagage
Obligations (1) - - 57 8.40 - - 18,404 6.56
--------- ----- --------- ----- --------- ----- --------- -----
Total debt securities 5,965 6.85 49,518 6.21 5,813 7.38 18,994 6.60
Equity securities (3) - - - - - - 127 6.70
--------- ----- --------- ----- --------- ----- --------- -----
$ 5,965 6.85% $ 49,518 6.21% $ 5,813 7.38% $19,121 6.60%
========= ===== ========= ===== ========= ===== ========= =====
<FN>
(1)Maturities shown are stated maturities. Securities backed by mortgages are
expected to have substantial periodic repayments resulting in weighted
average lives considerably shorter than would be surmised from the above
tables.
(2) Yields on tax-exempt obligations have been computed on a tax-equivalent basis.
(3) $115,000 is Federal Reserve Bank Stock
</FN>
The Bank received dividends on its Federal Reserve Bank stock of $6,924 in
1996 representing a yield of 6.00%.
SOURCES OF FUNDS
GENERAL. The Bank's primary sources of funds are deposits, retained
earnings, repayment of principal and interest on loans, maturity and redemption
of investment securities, interest earned on investment securities and federal
funds sold, and other funds provided from operations.
The Bank offers checking and interest-bearing deposit products. In addition
to business checking, the Bank has a variety of personal checking products
including First Class, regular, budget, senior citizen and special checking.
Among other things, the personal products differ in minimum balance
requirements, monthly maintenance fees, and per check charges. The
interest-bearing deposit products, which have a wide range of interest rates and
terms, include checking, personal and nonpersonal money market savings, personal
and nonpersonal statement savings, a variety of passbook savings accounts,
savings certificates (3 month, 6 month and 1 to 6 year terms), large and jumbo
certificates, holiday club accounts and individual retirement accounts (savings
certificates with terms of 1 to 6 years).
Certificates of deposits, the majority of which mature within one year,
were approximately $38,309,000, or 10% of total deposits, at December 31, 1996.
Certificates of deposit in amounts of $100,000 or more were $11,800,000 at
December 31, 1996, or 3.1% of total deposits.
The Bank relies primarily on customer service, calling programs,
competitive pricing, and advertising to attract and retain deposits. Currently,
the Bank solicits deposits only from its local market area and does not have any
deposits which qualify as brokered deposits under applicable Federal
regulations. The flow of deposits is influenced by general economic conditions,
changes in interest rates and competition.
CLASSIFICATION OF AVERAGE DEPOSITS. The following table shows the
classification of average deposits of the Bank.
1996 1995 1994
-------------------------- ------------------------- ------------------------
Average Average Average Average Average Average
Balance Rate Paid Balance Rate Paid Balance Rate Paid
------------ ------------ ------------ ----------- ----------- -----------
(dollars in thousands)
Checking (1) $123,832 - % $115,010 - % $104,329 - %
Savings and
money market 222,319 3.05 213,250 3.36 216,043 2.42
Time deposits 36,940 4.61 35,416 4.88 27,302 3.44
------------ ------------ ------------ ----------- ----------- -----------
$383,091 2.21% $363,676 2.45% $347,674 1.77%
============ ============ ============ =========== =========== ===========
<FN>
(1) Includes official check and treasury tax and loan balances
</FN>
REMAINING MATURITIES OF TIME DEPOSITS. At December 31, 1996, the
remaining maturities of the Bank's time deposits in amounts of $100,000 or more
were as follows:
(in thousands)
3 months or less $ 7,884
Over 3 through 6 months 2,798
Over 6 through 12 months 662
Over 12 months 456
-------
$11,800
=======
NET INTEREST INCOME
RATE/VOLUME ANALYSIS. The following table sets forth the effect of
changes in volume, changes in rates, and changes in rate/volume on
tax-equivalent interest income, interest expense and net interest income.
Year Ended December 31,
--------------------------------------------------------------------------------------
1996 versus 1995 1995 versus 1994
Increase (decrease) due to changes in: Increase (decrease) due to changes in:
------------------------------------------ -------------------------------------------
Rate/ Net Rate/ Net
Volume Rate Volume (2) Change Volume Rate Volume (2) Change
---------- --------- ----------- --------- ---------- --------- ----------- ---------
(in thousands)
INTEREST INCOME:
Federal funds sold $193 $(179) $(18) $(4) $850 $196 $280 $1,326
Investment securities
Taxable 817 (471) (29) 317 (174) 632 (5) 453
Nontaxable (1) 109 (60) - 49 (11) (218) - (229)
Loans (1) 587 (316) (11) 260 187 1,315 23 1,525
---------- --------- ----------- --------- ---------- --------- ----------- ---------
Total interest income 1,706 (1,026) (58) 622 852 1,925 298 3,075
---------- --------- ----------- --------- ---------- --------- ----------- ---------
INTEREST EXPENSE:
Savings and money
market deposits 305 (661) (27) (383) (68) 2,030 (28) 1,934
Time deposits 74 (96) (2) (24) 279 393 118 790
---------- --------- ----------- --------- ---------- --------- ----------- ---------
Total interest expense 379 (757) (29) (407) 211 2,423 90 2,724
---------- --------- ----------- --------- ---------- --------- ----------- ---------
Increase (decrease) in net
interest income $1,327 $(269) $(29) $1,029 $641 $(498) $208 $351
========== ========= =========== ========= ========== ========= =========== =========
<FN>
(1) Tax-equivalent basis
(2) Represents the change not solely attributable to change in rate or change in volume but a combination of these two
factors
</FN>
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.
1996 1995 1994
--------------------------------- ------------------------------- -----------------------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
----------- --------- --------- ---------- --------- --------- ---------- --------- -------
(dollars in thousands)
ASSETS
Federal funds sold $ 36,460 $ 1,923 5.27% $ 33,140 $ 1,927 5.81% $ 13,730 $ 601 4.38%
Investment Securities
Taxable 180,574 11,383 6.30 168,163 11,066 6.58 170,968 10,613 6.21
Nontaxable (1) 41,763 2,917 6.98 40,238 2,868 7.13 40,379 3,097 7.67
Loans (1)(2) 150,090 13,407 8.93 143,677 13,147 9.15 141,399 11,622 8.22
----------- --------- --------- ---------- --------- --------- ---------- --------- -------
Total interest-earning assets 408,887 29,630 7.25 385,218 29,008 7.53 366,476 25,933 7.08
--------- --------- --------- --------- --------- -------
Allowance for loan losses (3,606) (3,607) (3,602)
----------- ---------- ----------
Net interest-earning assets 405,281 381,611 362,874
Cash and due from banks 19,853 19,297 17,290
Premises and equipment, net 5,050 5,007 5,128
Other assets 6,475 5,802 5,251
----------- ---------- ----------
$436,659 $411,717 $390,543
=========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Savings and
money market deposits $222,319 6,788 3.05 $213,250 7,171 3.36 $216,043 5,237 2.42
Time deposits 36,940 1,704 4.61 35,416 1,728 4.88 27,302 938 3.44
----------- --------- --------- ---------- --------- --------- ---------- --------- -------
Total interest-bearing deposits 259,259 8,492 3.28 248,666 8,899 3.58 243,345 6,175 2.54
----------- --------- --------- ---------- --------- --------- ---------- --------- -------
Checking deposits(3) 123,832 115,010 104,329
Other 2,339 2,133 1,864
----------- ---------- ----------
385,430 365,809 349,538
Stockholders' equity 51,229 45,908 41,005
----------- ---------- ----------
$436,659 $411,717 $390,543
=========== ========== ==========
Net interest income (1) $ 21,138 $20,109 $19,758
========= ========= ==========
Net interest spread (1) 3.97% 3.95% 4.54%
========= ========= ========
Net yield on interest-earning assets (1) 5.17% 5.22% 5.39%
========= ========= ========
<FN>
(1)Tax-equivalent basis. Interest income on a tax-equivalent basis includes the
additional amount of interest income that would have been earned if the
Corporation's investment in tax-exempt loans and investment securities had
been made in loans and investment securities subject to Federal income taxes
yielding the same after-tax income. The tax-equivalent amount of $1.00 of
nontaxable income was $1.52 in 1996, 1995 and 1994 based on a Federal income
tax rate of 34%.
(2)For the purpose of these computations, nonaccruing loans are included in the
daily average loan amounts outstanding.
(3)Includes official check and treasury tax and loan balances
</FN>
COMPETITION
The heavy concentration of financial institutions in Nassau and Suffolk
Counties has lead to keen competition for both loans and deposits. Competition
in originating commercial loans comes primarily from commercial institutions
located in the Bank's market area. The Bank competes for commercial loans on the
basis of the quality of service it provides to borrowers, the interest rates and
loan fees it charges, and the types of loans it offers.
The Bank attracts all of its deposits through its banking offices
primarily from the communities in which those banking offices are located.
Competition for deposits is principally from other commercial banks, savings
banks, brokerage firms and credit unions located in these communities. The Bank
competes for these deposits by offering a variety of account alternatives at
competitive rates, a competitive service charge schedule, a high level of
customer service and convenient branch locations.
EMPLOYEES
As of December 31, 1996, the Bank had 119 full-time employees and 78
part-time employees and considers employee relations to be satisfactory.
Employees of the Bank are not represented by a collective bargaining unit.
REGULATION
The Corporation is subject to the regulation and supervision of the
Federal Reserve Board and the Securities and Exchange Commission. The primary
banking agency responsible for regulating the Bank is the Comptroller of the
Currency. The Bank is also subject to regulation and supervision by the Federal
Reserve Board and the Federal Deposit Insurance Corporation.
ITEM 2. PROPERTIES
The Corporation neither owns nor leases any real estate. Office
facilities of the Corporation are located at 10 Glen Head Road, Glen Head, NY in
a building owned by the Bank.
The Bank's main office is located at 10 Glen Head Road, Glen Head, New
York. Including the main office, the Bank owns a total of 10 buildings in fee
and occupies seven other facilities under lease arrangements. All of the
facilities owned or leased by the Bank are in Nassau and Suffolk Counties, New
York.
The Corporation believes that the physical facilities of the Bank are
suitable and adequate at present and are being fully utilized.
ITEM 3. LEGAL PROCEEDINGS
Other than ordinary routine litigation incidental to the business, it is
believed that there are no material legal proceedings, either individually or in
the aggregate, to which the Corporation or the Bank is a party or to which any
of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None were submitted to a vote of security holders during the fourth
quarter of 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Corporation's common stock is traded on the Nasdaq National Market
System under the symbol "FLIC". The table appearing on page (i) of the
Corporation's Annual Report to Shareholders for the fiscal year ended December
31, 1996 showing the high and low bid quotations, by quarter, for the years
ended December 31, 1996 and 1995 is incorporated herein by reference. The
over-the-counter market quotations shown in the table may reflect interdealer
prices, without retail mark-up, mark-down, or commission and may not necessarily
represent actual transactions.
On February 27, 1997, there were 2,083,686 shares of the Corporation's
common stock outstanding with 800 holders of record. The holders of record
include banks and brokers who act as nominees, each of whom may represent more
than one stockholder.
During 1996 and 1995, the Corporation declared semi-annual cash dividends
aggregating $.64 and $.56 per share, respectively.
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data appearing on page (i) of the Corporation's
Annual Report to Shareholders for the fiscal year ended December 31, 1996 is
incorporated herein by reference.
The Corporation's dividend payout ratio was 19.81%, 19.24% and 18.02%
for 1996, 1995 and 1994, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations appearing on pages 4 through 11 of the Corporation's Annual Report
to Shareholders for the fiscal year ended December 31, 1996 is incorporated
herein by reference.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS No. 128").
SFAS No. 128 specifies the computation, presentation, and disclosure
requirements for Earnings per Share ("EPS") by all entities with publicly held
common stock or potential stock. SFAS 128 supersedes Accounting Principles Board
Opinion No. 15 "Earnings per Share" ("APB 15"), and supersedes or amends related
pronouncements.
SFAS No. 128 replaces the presentation of primary and fully-diluted EPS
required by APB 15 with basic and diluted EPS. Unlike primary EPS, basic EPS
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS, computed similarly to fully-diluted EPS, reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Entities with simple capital structures, that is, with only common stock
outstanding, shall present basic EPS on the face of the income statement. All
other entities shall present basic and diluted EPS on the face of the income
statement with equal prominence. In addition, a reconciliation of the numerators
and denominators of the basic and diluted EPS computations is required.
SFAS No. 128 is effective for financial statements for interim and annual
periods ending after December 15, 1997. Early application is not permitted and
SFAS No. 128 requires restatement of all prior-period EPS data presented. The
adoption of SFAS No. 128 will not have a material impact on the Corporation.
In March 1997, the Financial Accounting Standards Board also issued
Statement of Financial Accounting Standards No. 129 "Disclosure of Information
about Capital Structure" ("SFAS No. 129"). SFAS No. 129 is effective for
financial statements for periods ending after December 15, 1997. SFAS No. 129
does not change disclosure requirements for the Corporation.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and report of independent public
accountants appearing on pages 14 through 33 of Corporation's Annual Report to
Shareholders for the fiscal year ended December 31, 1996 are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
"ELECTION OF DIRECTORS" appearing on pages 3 and 4 and "MANAGEMENT"
appearing on pages 6 and 7 of Registrant's Proxy Statement for its Annual
Meeting of Stockholders to be held April 15, 1997 are incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
"COMPENSATION OF DIRECTORS", "SUMMARY COMPENSATION TABLE",
"COMPENSATION PURSUANT TO PLANS", and "PERFORMANCE GRAPH" appearing on page 5
and pages 7 through 13 of the Registrant's Proxy Statement for its Annual
Meeting of Stockholders to be held April 15, 1997 are incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS" appearing on Pages 1
through 3 of Registrant's Proxy Statement for its Annual Meeting of Stockholders
to be held April 15, 1997 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"TRANSACTIONS WITH MANAGEMENT AND OTHERS" appearing on page 14 of
Registrant's Proxy Statement for its Annual Meeting of Stockholders to be held
April 15, 1997 is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Consolidated Financial Statements
The following consolidated financial statements of the Corporation and its
subsidiary, and Report of Independent Public Accountants thereon, as required by
Item 8 of this report are incorporated herein by reference.
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Income - Years ended December 31, 1996, 1995
and 1994
Consolidated Statements of Changes in Stockholders' Equity -Years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years ended December 31, 1996,
1995 and 1994
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
None Applicable.
(a) 3. Listing of Exhibits
The following exhibits are submitted herewith.
EXHIBIT NO. NAME EXHIBITS
- ----------- ---- --------
3 (i) Certificate of Incorporation, as amended *
3 (ii) By-laws, as amended *
10.1 Incentive Plan *
10.2 1986 Stock Option and Appreciation Rights Plan *
10.3 1996 Stock Option and Appreciation Rights Plan **
10.4 Employment Agreement Between Registrant and J. William Johnson,
dated January 31, 1996, as amended December 18, 1996 ***
13 Registrant's Annual Report to Shareholders for the fiscal year ended
December 31, 1996
21 Subsidiary of Registrant
23 Consent of Independent Public Accountants
27 Financial Data Schedule
99 Notice of 1997 Annual Meeting and Proxy Statement ****
<FN>
*Previously filed as an exhibit to Form 10-K which exhibit is incorporated
herein by reference.
** Previously filed as part of Report on Form 10-K for 1995, filed on March 22,
1996, as exhibit 10(b).
*** Employment agreement previously filed as part of Report on Form 10-K for
1995, filed on March 22, 1996, as exhibit 10(c). The amendment increased Mr.
Johnson's base annual salary from $280,000 to $295,000.
****The Corporation's Proxy Statement for its Annual Meeting of Stockholders to
be held April 15, 1997 was submitted in electronic format on March 4, 1997
and is incorporated herein by reference.
</FN>
(b) Reports on Form 8-K
There were no reports filed on Form 8-K for the three-month period
ended December 31, 1996.
(c) Exhibits
Exhibits as listed under 14(a) 3. above are submitted as a separate
section of this report.
(d) Financial Statement Schedules
None
Signatures
Pursuant to the requirements of Section l3 or l5(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE FIRST OF LONG ISLAND CORPORATION
(Registrant)
Dated: March 21, 1997 By /S/ J. WILLIAM JOHNSON
-----------------------
J. WILLIAM JOHNSON, President
(principal executive officer)
By /S/ MARK D. CURTIS
-----------------------
MARK D. CURTIS,
Vice President and Treasurer
(principal financial officer and
principal accounting officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
SIGNATURES TITLES DATE
/S/ J. WILLIAM JOHNSON President, Chairman MARCH 21, 1997
- ---------------------- of the Board, Chief --------------
J. William Johnson Executive Officer
/S/ PAUL T. CANARICK Director MARCH 21, 1997
- -------------------- --------------
Paul T. Canarick
/S/ WILLIAM J. CATACOSINOS Director MARCH 21, 1997
- -------------------------- --------------
William J. Catacosinos
/S/ BEVERLY ANN GEHLMEYER Director MARCH 21, 1997
- ------------------------- --------------
Beverly Ann Gehlmeyer
/S/ HOWARD THOMAS HOGAN, JR. Director MARCH 21, 1997
- ------------------------- --------------
Howard Thomas Hogan, Jr.
/S/ J. DOUGLAS MAXWELL, JR. Director MARCH 21, 1997
- ------------------------- --------------
J. Douglas Maxwell, Jr.
/S/ JOHN R. MILLER III Director MARCH 21, 1997
- ----------------------- --------------
John R. Miller III
/S/ WALTER C. TEAGLE III Director MARCH 21, 1997
- ------------------------ --------------
Walter C. Teagle III
EXHIBIT INDEX
EXHIBIT BEGINS
ON SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
- ------- -------------------------------------------------------------------------------- ------------
3 (i) Certificate of Incorporation, as amended *
3 (ii) By-laws, as amended *
10.1 Incentive Plan *
10.2 1986 Stock Option and Appreciation Rights Plan *
10.3 1996 Stock Option and Appreciation Rights Plan **
10.4 Employment Agreement Between Registrant and J. William Johnson,
dated January 31, 1996, as amended December 18, 1996 ***
13 Registrant's Annual Report to Shareholders for the fiscal year ended
December 31, 1996 17
21 Subsidiaries of Registrant 60
23 Consent of Independent Public Accountants 62
27 Financial Data Schedule 64
99 Notice of 1997 Annual Meeting and Proxy Statement ****
<FN>
*Previously filed as an exhibit to Form 10-K which exhibit is incorporated
herein by reference.
** Previously filed as part of Report on Form 10-K for 1995, filed on March 22,
1996, as exhibit 10(b).
*** Previously filed as part of Report on Form 10-K for 1995, filed on March 22,
1996, as exhibit 10(c).
****The Corporation's Proxy Statement for its Annual Meeting of Stockholders to
be held April 15, 1997 was submitted in electronic format on March 4, 1997
and is incorporated herein by reference.
</FN>