UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
| For the quarterly period ended | |
or
| For the transition period from | to |
Commission file number
THE FIRST OF LONG ISLAND CORPORATION
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of principal executive offices) | (Zip Code) |
(
(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 |
| | | |
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.
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).
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 ☐ | |
| 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
As of July 31, 2024, the registrant had
| PART I. |
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| ITEM 1. |
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| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| ITEM 3. |
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| ITEM 4. |
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| PART II. |
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| ITEM 1. |
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| ITEM 1A. |
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| ITEM 2. |
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| ITEM 3. |
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| ITEM 4. |
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| ITEM 5. |
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| ITEM 6. |
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| June 30, | December 31, | |||||||
| (dollars in thousands) | 2024 | 2023 | ||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investment securities available-for-sale, at fair value | ||||||||
| Loans: | ||||||||
| Commercial and industrial | ||||||||
| Secured by real estate: | ||||||||
| Commercial mortgages | ||||||||
| Residential mortgages | ||||||||
| Home equity lines | ||||||||
| Consumer and other | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Restricted stock, at cost | ||||||||
| Bank premises and equipment, net | ||||||||
| Right-of-use asset - operating leases | ||||||||
| Bank-owned life insurance | ||||||||
| Pension plan assets, net | ||||||||
| Deferred income tax benefit | ||||||||
| Other assets | ||||||||
| $ | $ | |||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Checking | $ | $ | ||||||
| Savings, NOW and money market | ||||||||
| Time | ||||||||
| Overnight advances | ||||||||
| Other borrowings | ||||||||
| Operating lease liability | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Stockholders' Equity: | ||||||||
| Common stock, par value $ per share: | ||||||||
| Authorized, shares; | ||||||||
| Issued and outstanding, and shares | ||||||||
| Surplus | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss, net of tax | ( | ) | ( | ) | ||||
| $ | $ | |||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans | $ | $ | $ | $ | ||||||||||||
| Investment securities: | ||||||||||||||||
| Taxable | ||||||||||||||||
| Nontaxable | ||||||||||||||||
| Interest expense: | ||||||||||||||||
| Savings, NOW and money market deposits | ||||||||||||||||
| Time deposits | ||||||||||||||||
| Overnight advances | ||||||||||||||||
| Other borrowings | ||||||||||||||||
| Net interest income | ||||||||||||||||
| Provision (credit) for credit losses | ( | ) | ||||||||||||||
| Net interest income after provision (credit) for credit losses | ||||||||||||||||
| Noninterest income: | ||||||||||||||||
| Bank-owned life insurance | ||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||
| Net loss on sales of securities | ( | ) | ||||||||||||||
| Other | ||||||||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | ||||||||||||||||
| Occupancy and equipment | ||||||||||||||||
| Other | ||||||||||||||||
| Income before income taxes | ||||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Weighted average: | ||||||||||||||||
| Common shares | ||||||||||||||||
| Dilutive restricted stock units | ||||||||||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | ||||||||||||||||
| Cash dividends declared per share | ||||||||||||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Other comprehensive loss: | ||||||||||||||||
| Change in net unrealized holding losses on available-for-sale securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in funded status of pension plan | ||||||||||||||||
| Other comprehensive loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive income (loss) | $ | $ | $ | $ | ( | ) | ||||||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
| Six Months Ended June 30, 2024 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Common Stock | Retained | Comprehensive | ||||||||||||||||||||||
| (dollars in thousands) | Shares | Amount | Surplus | Earnings | Loss | Total | ||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Shares withheld upon the vesting and conversion of RSUs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Common stock issued under stock compensation plans | ||||||||||||||||||||||||
| Common stock issued under dividend reinvestment and stock purchase plan | ||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Cash dividends declared | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, March 31, 2024 | ( | ) | ||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||
| Shares withheld upon the vesting and conversion of RSUs | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Common stock issued under stock compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Cash dividends declared | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
| Six Months Ended June 30, 2023 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Common Stock | Retained | Comprehensive | ||||||||||||||||||||||
| (dollars in thousands) | Shares | Amount | Surplus | Earnings | Loss | Total | ||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||
| Shares withheld upon the vesting and conversion of RSUs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Common stock issued under stock compensation plans | ||||||||||||||||||||||||
| Common stock issued under dividend reinvestment and stock purchase plan | ||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Cash dividends declared | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||
| Shares withheld upon the vesting and conversion of RSUs | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Common stock issued under stock compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Cash dividends declared | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
See notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Six Months Ended June 30, | ||||||||
| (in thousands) | 2024 | 2023 | ||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Provision (credit) for credit losses | ( | ) | ||||||
| Credit provision for deferred income taxes | ( | ) | ( | ) | ||||
| Depreciation and amortization of premises and equipment | ||||||||
| Amortization of right-of-use asset - operating leases | ||||||||
| Premium amortization on investment securities, net | ||||||||
| Net loss on sales of securities | ||||||||
| Stock-based compensation expense | ||||||||
| Accretion of cash surrender value on bank-owned life insurance | ( | ) | ( | ) | ||||
| Pension expense | ||||||||
| Decrease in other liabilities | ( | ) | ( | ) | ||||
| Other increases in assets | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash Flows From Investing Activities: | ||||||||
| Available-for-sale securities: | ||||||||
| Proceeds from sales | ||||||||
| Proceeds from maturities and redemptions | ||||||||
| Purchases | ( | ) | ( | ) | ||||
| Net (increase) decrease in loans | ( | ) | ||||||
| Net decrease in restricted stock | ||||||||
| Purchases of premises and equipment, net | ( | ) | ( | ) | ||||
| Proceeds from disposition of premises and fixed assets | ||||||||
| Proceeds from death benefit of bank-owned life insurance | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash Flows From Financing Activities: | ||||||||
| Net increase (decrease) in deposits | ( | ) | ||||||
| Net decrease in overnight advances | ( | ) | ||||||
| Proceeds from other borrowings | ||||||||
| Repayment of other borrowings | ( | ) | ( | ) | ||||
| Proceeds from issuance of common stock, net of shares withheld | ( | ) | ||||||
| Repurchase of common stock | ( | ) | ||||||
| Cash dividends paid | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of year | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental Cash Flow Disclosures: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | ||||||||
| Operating cash flows from operating leases | ||||||||
| Noncash investing and financing activities: | ||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
| Cash dividends payable | ||||||||
See notes to unaudited consolidated financial statements
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 one wholly-owned subsidiary: FNY Service Corp., an investment company. The Bank and FNY Service Corp. jointly own another subsidiary, The First of Long Island REIT, Inc., a real estate investment trust. 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, 2023.
The consolidated financial information included herein as of and for the periods ended June 30, 2024 and 2023 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, 2023 consolidated balance sheet was derived from the Corporation's December 31, 2023 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 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 changes in the funded status of the Bank’s defined benefit pension plan, all net of related income taxes. Accumulated OCI is recognized as a separate component of stockholders’ equity.
The following table sets forth the components of accumulated OCI, net of tax.
| Current | ||||||||||||
| Balance | Period | Balance | ||||||||||
| (in thousands) | 12/31/2023 | Change | 6/30/2024 | |||||||||
| Unrealized holding loss on available-for-sale securities | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Unrealized actuarial loss on pension plan | ( | ) | ( | ) | ||||||||
| Accumulated other comprehensive loss, net of tax | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
The components of OCI and the related tax effects are as follows:
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Change in net unrealized holding gains or losses on available-for-sale securities: | ||||||||||||||||
| Change arising during the period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Reclassification adjustment for losses included in net income (1) | ||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Tax effect | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Change in funded status of pension plan: | ||||||||||||||||
| Amortization of net actuarial loss included in pension expense (2) | ||||||||||||||||
| Tax effect | ||||||||||||||||
| Other comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (1) | Represents net realized losses arising from the sale of AFS securities, included in the consolidated statements of income in the line item “Net loss on sales of securities.” See “Note 3 – Investment Securities” for the income tax benefit related to these net realized losses, included in the consolidated statements of income in the line item “Income tax expense.” |
| (2) | Represents the amortization of net actuarial loss relating to the Corporation’s defined benefit pension plan. This item is a component of net periodic pension cost and is included in the consolidated statements of income in the line item “Other noninterest income.” |
3 - INVESTMENT SECURITIES
The following tables set forth the amortized cost and estimated fair values of the Bank’s AFS investment securities at the dates indicated.
| June 30, 2024 | ||||||||||||||||
| Gross | Gross | |||||||||||||||
| Amortized | Unrealized | Unrealized | Fair | |||||||||||||
| (in thousands) | Cost | Gains | Losses | Value | ||||||||||||
| State and municipals | $ | $ | $ | ( | ) | $ | ||||||||||
| Pass-through mortgage securities | ( | ) | ||||||||||||||
| Collateralized mortgage obligations | ( | ) | ||||||||||||||
| SBA agency obligations | ( | ) | ||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||
| $ | $ | $ | ( | ) | $ | |||||||||||
| December 31, 2023 | ||||||||||||||||
| State and municipals | $ | $ | $ | ( | ) | $ | ||||||||||
| Pass-through mortgage securities | ( | ) | ||||||||||||||
| Collateralized mortgage obligations | ( | ) | ||||||||||||||
| SBA agency obligations | ( | ) | ||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||
| $ | $ | $ | ( | ) | $ | |||||||||||
Small Business Administration (“SBA”) agency obligations are floating rate, government guaranteed securities backed by $
At June 30, 2024 and December 31, 2023, investment securities with a carrying value of $
There were
There was
Securities With Unrealized Losses. The following tables set forth securities with unrealized losses at the dates indicated presented by the length of time the securities have been in a continuous unrealized loss position.
| June 30, 2024 | ||||||||||||||||||||||||
| Less than | 12 Months | |||||||||||||||||||||||
| 12 Months | or More | Total | ||||||||||||||||||||||
| Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
| (in thousands) | Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
| State and municipals | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| Pass-through mortgage securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Collateralized mortgage obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| SBA agency obligations | ( | ) | ( | ) | ||||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Total temporarily impaired | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||
| State and municipals | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| Pass-through mortgage securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Collateralized mortgage obligations | ( | ) | ( | ) | ||||||||||||||||||||
| SBA agency obligations | ( | ) | ( | ) | ||||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Total temporarily impaired | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
State and Municipals
At June 30, 2024, approximately $
Pass-through Mortgage Securities
At June 30, 2024, pass-through mortgage securities of approximately $
Collateralized Mortgage Obligations
At June 30, 2024, collateralized mortgage obligations of approximately $
SBA Agency Obligations
At June 30, 2024, SBA agency obligations of approximately $
Corporate Bonds
At June 30, 2024, approximately $
Each of the financial institutions is considered upper medium investment grade and rated A3 or higher. The unrealized loss is attributable to changes in credit spreads and interest rates and the illiquid nature of the securities. The Bank does not have the intent to sell these securities 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 June 30, 2024.
Sales of AFS Securities. Sales of AFS securities were as follows:
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Proceeds | $ | $ | $ | $ | ||||||||||||
| Gains | $ | $ | $ | $ | ||||||||||||
| Losses | ( | ) | ||||||||||||||
| Net loss | $ | $ | ( | ) | $ | $ | ||||||||||
Income tax benefit related to the net realized losses for the six months ended June 30, 2023 was $
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 June 30, 2024 based on the earlier of their stated maturity or, if applicable, their pre-refunded date. The remaining securities in the Bank’s investment securities portfolio are mortgage and asset-backed securities, consisting of pass-through mortgage securities, collateralized mortgage obligations and SBA agency obligations. Although these securities are expected to have substantial periodic repayments, they are reflected in the table below in aggregate amounts.
| (in thousands) | Amortized Cost | Fair Value | ||||||
| Within one year | $ | $ | ||||||
| After 1 through 5 years | ||||||||
| After 5 through 10 years | ||||||||
| After 10 years | ||||||||
| Mortgage and asset-backed securities | ||||||||
| $ | $ | |||||||
4 - LOANS
The following table sets forth the loans outstanding by class of loans at the dates indicated.
| (in thousands) | June 30, 2024 | December 31, 2023 | ||||||
| Commercial and industrial | $ | $ | ||||||
| Commercial mortgages: | ||||||||
| Multifamily | ||||||||
| Other | ||||||||
| Owner-occupied | ||||||||
| Residential mortgages: | ||||||||
| Closed end | ||||||||
| Revolving home equity | ||||||||
| Consumer and other | ||||||||
| $ | $ | |||||||
Allowance for Credit Losses. 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. For loans individually evaluated, an allowance for credit losses (“ACL” or “allowance”) is estimated based on either the fair value of collateral or the discounted value of expected future cash flows. In estimating the fair value of real estate collateral, management utilizes appraisals or evaluations adjusted for costs to dispose and a distressed sale adjustment, if needed. Estimating the fair value of collateral other than real estate is also subjective in nature and sometimes requires difficult and complex judgements. Determining expected future cash flows can be more subjective than determining fair values. Expected future cash flows could differ significantly, both in timing and amount, from the cash flows actually received over the loan’s remaining life. Individually evaluated loans are excluded from the estimation of credit losses for the pooled portfolio.
For loans collectively evaluated for credit loss, management segregates its loan portfolio into distinct pools, certain of which are combined in reporting loans outstanding by class of loans: (1) commercial and industrial; (2) small business; (3) multifamily; (4) owner-occupied; (5) other commercial real estate; (6) construction and land development; (7) closed end residential mortgage; (8) revolving home equity; (9) consumer; and (10) municipal loans. Historical loss information from the Bank’s own loan portfolio from December 31, 2007 to present provides a basis for management’s assessment of expected credit losses. The choice of a historical look-back period that begins in 2007 covers an entire economic cycle and impacts the average historical loss rates used to calculate the final ACL. Due to the extensive loss data available, management selected the vintage approach to measure the historical loss component of credit losses for most of its loan pools. For the revolving home equity and small business pools, the lifetime PD/LGD (probability of default/loss given default) method is used to measure historical losses.
Modifications to borrowers experiencing financial difficulty are initially included in loans collectively evaluated for credit loss. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. A charge to the allowance for credit losses is generally not recorded upon modification.
Management believes that the methods selected fairly reflect the historical loss component of expected losses inherent in the Bank’s loan portfolio. However, since future losses could vary significantly from those experienced in the past, on a quarterly basis management adjusts its historical loss experience to reflect current and forecasted conditions. In doing so, management considers a variety of general qualitative and quantitative factors (“Q-factors”) and then subjectively determines the weight to assign to each in estimating losses. Qualitative characteristics include differences in underwriting standards, policies, lending staff and environmental risks. Management also considers whether further adjustments to historical loss information are needed to reflect the extent to which current conditions and reasonable and supportable forecasts over a year to year forecasting horizon differ from the conditions that existed during the historical loss period. These quantitative adjustments reflect changes to relevant data such as changes in unemployment rates, gross domestic product (“GDP”), vacancies, average growth in pools of loans, rent regulation status, delinquencies or other factors associated with the financial assets. The immediate reversion method is applied for periods beyond the forecasting horizon. The Bank’s ACL allocable to pools of loans that are collectively evaluated for credit loss results primarily from these qualitative and quantitative adjustments to historical loss experience. Because of the nature of the Q-factors and the degree of judgement involved in assessing their impact, management’s resulting estimate of losses may not accurately reflect current and future losses in the portfolio.
Growth in commercial mortgages and commercial and industrial loans, allowances on individually evaluated loans and chargeoffs were the main drivers of the provision recorded in the first six months of 2024, partially offset by declines in historical loss rates and a deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties.
The following tables present the activity in the ACL for the periods indicated.
| Balance at | Provision (Credit) for | Balance at | ||||||||||||||||||
| (in thousands) | 1/1/2024 | Chargeoffs | Recoveries | Credit Losses | 6/30/2024 | |||||||||||||||
| Commercial and industrial | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Commercial mortgages: | ||||||||||||||||||||
| Multifamily | ( | ) | ||||||||||||||||||
| Other | ( | ) | ||||||||||||||||||
| Owner-occupied | ( | ) | ||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||
| Closed end | ( | ) | ||||||||||||||||||
| Revolving home equity | ( | ) | ||||||||||||||||||
| Consumer and other | ( | ) | ||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ |
| |||||||||||||
| Balance at | Provision (Credit) for | Balance at | ||||||||||||||||||
| (in thousands) | 4/1/2024 | Chargeoffs | Recoveries | Credit Losses | 6/30/2024 | |||||||||||||||
| Commercial and industrial | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Commercial mortgages: | ||||||||||||||||||||
| Multifamily | ( | ) | ||||||||||||||||||
| Other | ||||||||||||||||||||
| Owner-occupied | ||||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||
| Closed end | ( | ) | ||||||||||||||||||
| Revolving home equity | ( | ) | ||||||||||||||||||
| Consumer and other | ( | ) | ||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
| Balance at | Provision (Credit) for | Balance at | ||||||||||||||||||
| (in thousands) | 1/1/2023 | Chargeoffs | Recoveries | Credit Losses | 6/30/2023 | |||||||||||||||
| Commercial and industrial | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Commercial mortgages: | ||||||||||||||||||||
| Multifamily | ( | ) | ||||||||||||||||||
| Other | ||||||||||||||||||||
| Owner-occupied | ||||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||
| Closed end | ( | ) | ( | ) | ||||||||||||||||
| Revolving home equity | ||||||||||||||||||||
| Consumer and other | ||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||
| Balance at | Provision (Credit) for | Balance at | ||||||||||||||||||
| (in thousands) | 4/1/2023 | Chargeoffs | Recoveries | Credit Losses | 6/30/2023 | |||||||||||||||
| Commercial and industrial | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Commercial mortgages: | ||||||||||||||||||||
| Multifamily | ( | ) | ||||||||||||||||||
| Other | ||||||||||||||||||||
| Owner-occupied | ||||||||||||||||||||
| Residential mortgages: | — | |||||||||||||||||||
| Closed end | ( | ) | ( | ) | ||||||||||||||||
| Revolving home equity | ( | ) | ||||||||||||||||||
| Consumer and other | ||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
Aging of Loans. The following tables present the aging of loans past due and loans on nonaccrual status by class of loans.
| June 30, 2024 | ||||||||||||||||||||||||||||||||
| Past Due | Nonaccrual | |||||||||||||||||||||||||||||||
| (in thousands) | 30-59 Days | 60-89 Days | 90 Days or More and Still Accruing | With an Allowance for Credit Loss | With No Allowance for Credit Loss | Total Past Due Loans & Nonaccrual Loans | Current | Total Loans | ||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial mortgages: | ||||||||||||||||||||||||||||||||
| Multifamily | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Owner-occupied | ||||||||||||||||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||||||||||||||
| Closed end | ||||||||||||||||||||||||||||||||
| Revolving home equity | ||||||||||||||||||||||||||||||||
| Consumer and other | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial mortgages: | — | |||||||||||||||||||||||||||||||
| Multifamily | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Owner-occupied | ||||||||||||||||||||||||||||||||
| Residential mortgages: | ||||||||||||||||||||||||||||||||
| Closed end | ||||||||||||||||||||||||||||||||
| Revolving home equity | ||||||||||||||||||||||||||||||||
| Consumer and other | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
At June 30, 2024, there was residential real estate loan for which formal foreclosure proceedings are in process with an amortized cost of $
Accrued interest receivable from loans totaled $
Loan Modifications. The Bank did not modify the terms of any loans for borrowers experiencing financial difficulty in the form of principal forgiveness, an interest reduction, an other-than-insignificant payment delay or a term extension during the previous twelve months.
Risk Characteristics. Credit risk within the Bank’s loan portfolio primarily stems from factors such as changes in the borrower’s financial condition, credit concentrations, changes in collateral values, economic conditions, rent regulation and environmental contamination of properties securing mortgage loans. The Bank’s commercial loans, including those secured by real estate mortgages, are primarily made to small and medium-sized businesses. Such loans sometimes involve a higher degree of risk than those to larger companies because such businesses may have shorter operating histories, higher debt-to-equity ratios and may lack sophistication in internal record keeping and financial and operational controls. In addition, most of the Bank’s loans are made to businesses and consumers on Long Island and in the boroughs of New York City (“NYC”), and a large percentage of these loans are mortgage loans secured by properties located in those areas. The primary sources of repayment for residential and commercial mortgage loans include employment and other income of the borrowers, the businesses of the borrowers and cash flows from the underlying properties. In the case of multifamily mortgage loans, a substantial portion of the underlying properties are rent stabilized or rent controlled. These sources of repayment are dependent on the strength of the local economy.
Credit Quality Indicators. The Bank categorizes loans into risk categories based on relevant information about the borrower’s ability to service their debt including, but not limited to, current financial information for the borrower and any guarantors, payment experience, credit underwriting documentation, public records, due diligence checks and current economic trends. Management analyzes loans 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. The Bank reviews at least
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
The following tables present the amortized cost basis of loans by class of loans, vintage and risk rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful. Also presented are gross chargeoffs and recoveries recorded in the current year-to-date period by year of origination.
| June 30, 2024 | ||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Revolving | |||||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Loans (1) | Total | ||||||||||||||||||||||||
| Commercial and industrial: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Current-period recoveries | ||||||||||||||||||||||||||||||||
| Current-period net chargeoffs | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Commercial mortgages – multifamily: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||
| Current-period recoveries | ||||||||||||||||||||||||||||||||
| Current-period net chargeoffs | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||
| Commercial mortgages – other: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Current-period recoveries | ||||||||||||||||||||||||||||||||
| Current-period net chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial mortgages – owner-occupied: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Current-period recoveries | ||||||||||||||||||||||||||||||||
| Current-period net chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Revolving | |||||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Loans (1) | Total | ||||||||||||||||||||||||
| Residential mortgages (2): | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Current-period recoveries | ||||||||||||||||||||||||||||||||
| Current-period net chargeoffs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Consumer and other: | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||
| Not Rated | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Current-period gross chargeoffs | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Current-period recoveries | ||||||||||||||||||||||||||||||||
| Current-period net chargeoffs | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Total Loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total net chargeoffs | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| (1) | Includes revolving lines converted to term of $ |
| (2) | Certain fixed rate residential mortgage loans are included in a fair value hedging relationship. The amortized cost excludes a contra asset of $ |
5 - STOCK-BASED COMPENSATION
The following table presents a summary of restricted stock units (“RSUs”) outstanding at June 30, 2024 and changes during the six month period then ended.
| Weighted- | ||||||||||||||||
| Weighted- | Average | Aggregate | ||||||||||||||
| Average | Remaining | Intrinsic | ||||||||||||||
| Number of | Grant-Date | Contractual | Value | |||||||||||||
| RSUs | Fair Value | Term (yrs.) | (in thousands) | |||||||||||||
| Outstanding at January 1, 2024 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Converted | ( | ) | ||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Outstanding at June 30, 2024 | $ | $ | ||||||||||||||
As of June 30, 2024, there was $
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.
The fair values of the Corporation’s financial assets and liabilities measured at fair value on a recurring basis are set forth in the table that follows. The fair values of AFS securities are determined on a recurring basis using matrix pricing (Level 2 inputs). Matrix pricing, which is a mathematical technique widely used in the industry to value debt securities, does not rely exclusively on quoted prices for the specific securities but rather on the relationship of such securities to other benchmark quoted securities. Where no significant other observable inputs were available, Level 3 inputs were used. The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.
| Fair Value Measurements Using: | ||||||||||||||||
| Quoted Prices | Significant | |||||||||||||||
| in Active | Other | Significant | ||||||||||||||
| Markets for | Observable | Unobservable | ||||||||||||||
| Identical Assets | Inputs | Inputs | ||||||||||||||
| (in thousands) | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| June 30, 2024: | ||||||||||||||||
| Financial Assets: | ||||||||||||||||
| Available-for-Sale Securities: | ||||||||||||||||
| State and municipals | $ | $ | $ | $ | ||||||||||||
| Pass-through mortgage securities | ||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||
| SBA agency obligations | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| Derivative - interest rate swaps | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| December 31, 2023: | ||||||||||||||||
| Financial Assets: | ||||||||||||||||
| Available-for-Sale Securities: | ||||||||||||||||
| State and municipals | $ | $ | $ | $ | ||||||||||||
| Pass-through mortgage securities | ||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||
| SBA agency obligations | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| Derivative - interest rate swaps | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
State and municipal AFS securities measured using Level 3 inputs. The Bank held non-rated bond anticipation notes with a book value of $
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 | June 30, 2024 | December 31, 2023 | ||||||||||||||||||
| Fair Value | Carrying | Carrying | ||||||||||||||||||
| (in thousands) | Hierarchy | Amount | Fair Value | Amount | Fair Value | |||||||||||||||
| Financial Assets: | ||||||||||||||||||||
| Cash and cash equivalents | Level 1 | $ | $ | $ | $ | |||||||||||||||
| Loans, net | Level 3 | |||||||||||||||||||
| Restricted stock | n/a | n/a | n/a | |||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||
| Checking deposits | Level 1 | |||||||||||||||||||
| Savings, NOW and money market deposits | Level 1 | |||||||||||||||||||
| Time deposits | Level 2 | |||||||||||||||||||
| Overnight advances | Level 1 | |||||||||||||||||||
| Other borrowings | Level 2 | |||||||||||||||||||
|
|
|
7 – DERIVATIVES
As part of its asset liability management activities, the Corporation may utilize interest rate swaps to help manage its interest rate risk position. The notional amount of an interest rate swap does not represent the amount exchanged by the parties. The exchange of cash flows is determined by reference to the notional amount and the other terms of the interest rate swap agreements.
Fair Value Hedge. On March 16, 2023, the Bank entered into a year interest rate swap with a notional amount totaling million which was designated as a fair value hedge of certain fixed rate residential mortgages. The Bank pays a fixed rate of
The following table summarizes information about the interest rate swap designated as a fair value hedge.
| June 30, 2024 | |||
| Notional amount |
| ||
| Fixed pay rate | | ||
| Overnight receive rate | | ||
| Maturity |
The following table presents the amount recorded on the balance sheet related to cumulative basis adjustments for the fair value hedge as of the periods indicated.
| June 30, | December 31, | |||||||
| (in thousands) | 2024 | 2023 | ||||||
| Loans - Residential Mortgages: | ||||||||
| Carrying amount of the hedged asset (1) | $ | $ | ||||||
| Fair value hedging adjustment included in the carrying amount of the hedged asset | ( | ) | ( | ) | ||||
| (1) | This amount represents the amortized cost basis of the closed loan portfolio used to designate the hedging relationship in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedge period. At June 30, 2024, the amortized cost basis of the closed portfolio used in this hedging relationship was $ |
During the first six months of 2024, the Bank recorded a $
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. and The First of Long Island REIT, 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 diluted earnings per share for the first six months of 2024 were $9.2 million and $0.41, respectively, compared to $13.4 million and $0.59, respectively, for the same period last year. Dividends per share remained flat at $0.42 for the first six months of 2024, as compared to the first six months of 2023. Returns on average assets (“ROA”) and average equity (“ROE”) for the first six months of 2024 were 0.44% and 4.93%, respectively, compared to 0.64% and 7.27%, respectively, for the same period last year. Book value per share was $16.71 at June 30, 2024 versus $16.83 at year-end 2023.
Analysis of Earnings - Six Month Periods. Net income and diluted earnings per share for the first six months of 2024 were $9.2 million and $0.41, respectively, compared to $13.4 million and $0.59, respectively, versus the same period last year. The principal drivers of the change in earnings were a decline in net interest income of $8.9 million and an increase in the provision for credit losses of $1.6 million, partially offset by a loss on the sales of securities of $3.5 million in the first six months of 2023 and decreases in noninterest expense of $1.0 million and income tax expense of $1.4 million. The first six months of 2024 produced an ROA of 0.44%, ROE of 4.93%, net interest margin of 1.80%, and an efficiency ratio of 75.00%.
Net interest income declined when comparing the first six months of 2024 and 2023 due to an increase in interest expense of $18.8 million that was partially offset by a $9.9 million increase in interest income. The cost of interest-bearing liabilities increased 128 basis points ("bps") while the yield on interest-earning assets increased 45 bps when comparing the six-month periods. The Bank's balance sheet remains liability sensitive but the pace of repricing of average interest-earning assets is beginning to match the pace of repricing of average interest-bearing liabilities, which stabilized the net interest margin over the first six months of 2024.
The Bank recorded a provision for credit losses of $570,000 for the first six months of 2024, compared to a provision reversal of $1.1 million in the same period last year. The decline in the ACL in 2024 was driven largely by declines in historical loss rates and allowances on individually evaluated loans, partially offset by a deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties. The Bank’s ACL to total loans (reserve coverage ratio) remained stable at 0.88% of total loans at June 30, 2024 as compared to 0.88% at March 31, 2024 and 0.89% at December 31, 2023. Past due loans and nonaccrual loans were $942,000 and $2.4 million, respectively, at June 30, 2024. Overall credit quality of the loan and investment portfolios remain strong.
Noninterest income, excluding the loss on the sales of securities in the 2023 period, increased $454,000 when comparing the six-month periods. Recurring components of noninterest income including bank-owned life insurance (“BOLI”) and service charges on deposit accounts had increases of 7.8% and 10.5%, respectively. Other noninterest income increased 8.2% and included increases of $287,000 in merchant card services and $121,000 in pension income, which were partially offset by a gain on disposition of premises and fixed assets of $240,000 in 2023.
Noninterest expense declined $1.0 million for the first six months of 2024, as compared to the first six months of 2023. Reductions in occupancy and equipment expense of $397,000, telecommunications expense of $285,000, professional fees of $268,000 and salaries and employee benefits of $145,000 drove the decline. The decrease in occupancy and equipment expense was largely due to the ongoing branch optimization strategy, which resulted in closing various locations. Telecommunications expense decreased mainly due to efficiencies associated with system upgrades. Salaries and employee benefits declined largely due to a decrease in incentive compensation expense.
Income tax expense decreased $1.4 million and the effective tax rate (income tax expense as a percentage of pre-tax book income) declined from 11.6% to 3.9% when comparing the six-month periods. The decline in the effective tax rate is mainly due to an increase in the percentage of pre-tax income derived from the Bank’s REIT and BOLI. The decrease in income tax expense reflects the lower effective tax rate and a decline in pre-tax income.
Liquidity. Total average deposits declined by $81.0 million when comparing the first six months of 2024 and 2023, reflecting industry trends. At June 30, 2024, overnight advances and other borrowings were down $70.0 million and $42.5 million, respectively, from year-end 2023.
The Bank had $1.1 billion in collateralized borrowing lines with the Federal Home Loan Bank ("FHLB") of New York and the Federal Reserve Bank ("FRB") at June 30, 2024, as well as a $20 million unsecured line of credit with a correspondent bank. We also had $282.5 million in unencumbered cash and securities. In total, we had approximately $1.4 billion of available liquidity at June 30, 2024.
Capital. The Corporation’s capital position remains strong with a Leverage Ratio of approximately 9.91% at June 30, 2024. Book value per share was $16.71 at June 30, 2024, versus $16.83 at December 31, 2023. The accumulated OCI component of stockholders’ equity is mainly comprised of a net unrealized loss in the AFS securities portfolio due to higher market interest rates. The Bank declared its quarterly cash dividend of $0.21 per share during the quarter. There were no share repurchases during the quarter. The Board and management continue to evaluate both capital management tools to provide the best opportunity to maximize shareholder value.
Net Interest Income
Average Balance Sheet; Interest Rates and Interest Differential. The following tables set forth the average daily balances for each major category of assets, liabilities and stockholders’ equity as well as the amounts and average rates earned or paid on each major category of interest-earning assets and interest-bearing liabilities. The average balances of loans include nonaccrual loans. The average balances of investment securities exclude unrealized gains and losses on AFS securities.
| Six Months Ended June 30, |
||||||||||||||||||||||||
| 2024 |
2023 |
|||||||||||||||||||||||
| Average |
Interest/ |
Average |
Average |
Interest/ |
Average |
|||||||||||||||||||
| (dollars in thousands) |
Balance |
Dividends |
Rate |
Balance |
Dividends |
Rate |
||||||||||||||||||
| Assets: |
||||||||||||||||||||||||
| Interest-earning bank balances |
$ | 83,341 | $ | 2,271 | 5.48 | % | $ | 44,889 | $ | 1,067 | 4.79 | % | ||||||||||||
| Investment securities: |
||||||||||||||||||||||||
| Taxable |
629,958 | 12,201 | 3.87 | 533,866 | 8,216 | 3.08 | ||||||||||||||||||
| Nontaxable (1) |
153,001 | 2,427 | 3.17 | 234,036 | 3,762 | 3.21 | ||||||||||||||||||
| Loans (1) |
3,236,620 | 67,653 | 4.18 | 3,270,722 | 61,890 | 3.78 | ||||||||||||||||||
| Total interest-earning assets |
4,102,920 | 84,552 | 4.12 | 4,083,513 | 74,935 | 3.67 | ||||||||||||||||||
| Allowance for credit losses |
(28,639 | ) | (30,811 | ) | ||||||||||||||||||||
| Net interest-earning assets |
4,074,281 | 4,052,702 | ||||||||||||||||||||||
| Cash and due from banks |
32,751 | 30,388 | ||||||||||||||||||||||
| Premises and equipment, net |
31,093 | 32,024 | ||||||||||||||||||||||
| Other assets |
120,772 | 116,229 | ||||||||||||||||||||||
| $ | 4,258,897 | $ | 4,231,343 | |||||||||||||||||||||
| Liabilities and Stockholders' Equity: |
||||||||||||||||||||||||
| Savings, NOW & money market deposits |
$ | 1,576,447 | 21,520 | 2.75 | $ | 1,675,355 | 13,386 | 1.61 | ||||||||||||||||
| Time deposits |
638,028 | 14,036 | 4.42 | 510,461 | 7,301 | 2.88 | ||||||||||||||||||
| Total interest-bearing deposits |
2,214,475 | 35,556 | 3.23 | 2,185,816 | 20,687 | 1.91 | ||||||||||||||||||
| Overnight advances |
9,560 | 267 | 5.62 | 20,845 | 546 | 5.28 | ||||||||||||||||||
| Other borrowings |
487,541 | 11,627 | 4.80 | 374,285 | 7,435 | 4.01 | ||||||||||||||||||
| Total interest-bearing liabilities |
2,711,576 | 47,450 | 3.52 | 2,580,946 | 28,668 | 2.24 | ||||||||||||||||||
| Checking deposits |
1,131,917 | 1,241,566 | ||||||||||||||||||||||
| Other liabilities |
39,137 | 37,541 | ||||||||||||||||||||||
| 3,882,630 | 3,860,053 | |||||||||||||||||||||||
| Stockholders' equity |
376,267 | 371,290 | ||||||||||||||||||||||
| $ | 4,258,897 | $ | 4,231,343 | |||||||||||||||||||||
| Net interest income (1) |
$ | 37,102 | $ | 46,267 | ||||||||||||||||||||
| Net interest spread (1) |
0.60 | % | 1.43 | % | ||||||||||||||||||||
| Net interest margin (1) |
1.80 | % | 2.25 | % | ||||||||||||||||||||
| (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%. |
| Three Months Ended June 30, |
||||||||||||||||||||||||
| 2024 |
2023 |
|||||||||||||||||||||||
| Average |
Interest/ |
Average |
Average |
Interest/ |
Average |
|||||||||||||||||||
| (dollars in thousands) |
Balance |
Dividends |
Rate |
Balance |
Dividends |
Rate |
||||||||||||||||||
| Assets: |
||||||||||||||||||||||||
| Interest-earning bank balances |
$ | 111,565 | $ | 1,520 | 5.48 | % | $ | 40,668 | $ | 520 | 5.13 | % | ||||||||||||
| Investment securities: |
||||||||||||||||||||||||
| Taxable |
621,059 | 5,959 | 3.84 | 599,558 | 5,094 | 3.40 | ||||||||||||||||||
| Nontaxable (1) |
152,585 | 1,212 | 3.18 | 165,559 | 1,300 | 3.14 | ||||||||||||||||||
| Loans |
3,229,796 | 34,110 | 4.22 | 3,253,952 | 31,483 | 3.87 | ||||||||||||||||||
| Total interest-earning assets |
4,115,005 | 42,801 | 4.16 | 4,059,737 | 38,397 | 3.78 | ||||||||||||||||||
| Allowance for credit losses |
(28,330 | ) | (30,204 | ) | ||||||||||||||||||||
| Net interest-earning assets |
4,086,675 | 4,029,533 | ||||||||||||||||||||||
| Cash and due from banks |
33,798 | 29,768 | ||||||||||||||||||||||
| Premises and equipment, net |
30,929 | 32,263 | ||||||||||||||||||||||
| Other assets |
120,660 | 117,288 | ||||||||||||||||||||||
| $ | 4,272,062 | $ | 4,208,852 | |||||||||||||||||||||
| Liabilities and Stockholders' Equity: |
||||||||||||||||||||||||
| Savings, NOW & money market deposits |
$ | 1,618,812 | 11,437 | 2.84 | $ | 1,673,101 | 7,611 | 1.82 | ||||||||||||||||
| Time deposits |
632,201 | 7,059 | 4.49 | 513,414 | 4,232 | 3.31 | ||||||||||||||||||
| Total interest-bearing deposits |
2,251,013 | 18,496 | 3.30 | 2,186,515 | 11,843 | 2.17 | ||||||||||||||||||
| Overnight advances |
275 | 4 | 5.85 | 32,747 | 438 | 5.36 | ||||||||||||||||||
| Other borrowings |
470,824 | 5,615 | 4.80 | 378,654 | 4,002 | 4.24 | ||||||||||||||||||
| Total interest-bearing liabilities |
2,722,112 | 24,115 | 3.56 | 2,597,916 | 16,283 | 2.51 | ||||||||||||||||||
| Checking deposits |
1,137,244 | 1,201,585 | ||||||||||||||||||||||
| Other liabilities |
38,259 | 37,391 | ||||||||||||||||||||||
| 3,897,615 | 3,836,892 | |||||||||||||||||||||||
| Stockholders' equity |
374,447 | 371,960 | ||||||||||||||||||||||
| $ | 4,272,062 | $ | 4,208,852 | |||||||||||||||||||||
| Net interest income (1) |
$ | 18,686 | $ | 22,114 | ||||||||||||||||||||
| Net interest spread (1) |
0.60 | % | 1.27 | % | ||||||||||||||||||||
| Net interest margin (1) |
1.80 | % | 2.17 | % | ||||||||||||||||||||
| (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 investment securities had been made in 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%. |
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.
| Six Months Ended June 30, |
Three Months Ended June 30, |
|||||||||||||||||||||||
| 2024 Versus 2023 |
2024 Versus 2023 |
|||||||||||||||||||||||
| 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 |
$ | 1,029 | $ | 175 | $ | 1,204 | $ | 964 | $ | 36 | $ | 1,000 | ||||||||||||
| Investment securities: |
||||||||||||||||||||||||
| Taxable |
1,644 | 2,341 | 3,985 | 189 | 676 | 865 | ||||||||||||||||||
| Nontaxable |
(1,283 | ) | (52 | ) | (1,335 | ) | (104 | ) | 16 | (88 | ) | |||||||||||||
| Loans |
(717 | ) | 6,480 | 5,763 | (234 | ) | 2,861 | 2,627 | ||||||||||||||||
| Total interest income |
673 | 8,944 | 9,617 | 815 | 3,589 | 4,404 | ||||||||||||||||||
| Interest Expense: |
||||||||||||||||||||||||
| Savings, NOW & money market deposits |
(811 | ) | 8,945 | 8,134 | (291 | ) | 4,117 | 3,826 | ||||||||||||||||
| Time deposits |
2,149 | 4,586 | 6,735 | 1,111 | 1,716 | 2,827 | ||||||||||||||||||
| Overnight advances |
(313 | ) | 34 | (279 | ) | (469 | ) | 35 | (434 | ) | ||||||||||||||
| Other borrowings |
2,532 | 1,660 | 4,192 | 1,048 | 565 | 1,613 | ||||||||||||||||||
| Total interest expense |
3,557 | 15,225 | 18,782 | 1,399 | 6,433 | 7,832 | ||||||||||||||||||
| Decrease in net interest income |
$ | (2,884 | ) | $ | (6,281 | ) | $ | (9,165 | ) | $ | (584 | ) | $ | (2,844 | ) | $ | (3,428 | ) | ||||||
Net Interest Income
Net interest income on a tax-equivalent basis for the six months ended June 30, 2024 was $37.1 million, a decrease of $9.2 million, or 19.8%, from the same period of 2023. Net interest income declined due to an increase in interest expense of $18.8 million that was partially offset by a $9.9 million increase in interest income. The cost of interest-bearing liabilities increased 128 bps while the yield on interest-earning assets increased 45 bps when comparing the first six months of 2024 and 2023. Net interest margin for the first six months of 2024 was 1.80% compared to 2.25% for the same period of 2023.
Noninterest Income
Noninterest income includes BOLI, service charges on deposit accounts, gains or losses on sales of securities, and all other items of income, other than interest, resulting from the business activities of the Corporation.
Noninterest income, excluding the loss on the sales of securities in the 2023 period, increased $454,000 when comparing the six-month periods of 2024 and 2023. Recurring components of noninterest income including BOLI and service charges on deposit accounts had increases of 7.8% and 10.5%, respectively. Other noninterest income increased 8.2% and included increases of $287,000 in merchant card services and $121,000 in pension income, which were partially offset by a gain on disposition of premises and fixed assets of $240,000 in 2023.
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.
Noninterest expense declined $1.0 million, or 3.1%, when comparing the six-month periods of 2024 and 2023. Reductions in occupancy and equipment expense of $397,000, telecommunications expense of $285,000, professional fees of $268,000 and salaries and employee benefits of $145,000 drove the decline. The decrease in occupancy and equipment expense was largely due to the ongoing branch optimization strategy, which resulted in closing various locations. Telecommunications expense decreased mainly due to efficiencies associated with system upgrades. Salaries and employee benefits declined largely due to a decrease in incentive compensation expense.
Income Taxes
Income tax expense decreased $1.4 million and the effective tax rate declined from 11.6% to 3.9% when comparing the six-month periods of 2024 and 2023. The decline in the effective tax rate is mainly due to an increase in the percentage of pre-tax income derived from the Bank’s REIT and BOLI. The decrease in income tax expense reflects the lower effective tax rate and a decline in pre-tax income.
Results of Operations - Second Quarter 2024 Versus Second Quarter 2023
Net income for the second quarter of 2024 of $4.8 million decreased $2.1 million, or 30.5%, from $6.9 million earned in the same quarter of last year. The decrease is mainly attributable to a $3.4 million decline in net interest income for substantially the same reasons discussed above with respect to the six-month periods along with a $570,000 increase in the provision for credit losses. Partially offsetting the decrease in net interest income was reductions in salaries and employee benefits and occupancy and equipment expense of $354,000 and $286,000, respectively, for substantially the same reasons previously discussed. The quarter produced an ROA of 0.45%, ROE of 5.15%, net interest margin of 1.80% and an efficiency ratio of 73.55%.
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 the results of credit reviews performed by the Bank’s independent loan review consultants and the Bank’s credit department. In addition, and in consultation with the Bank’s Chief Financial Officer, the ACL Committee is responsible for implementing and maintaining accounting policies and procedures surrounding the calculation of the required allowance. The Loan Committee of the Board reviews and approves the Bank’s loan policy at least once each calendar year. The Bank’s ACL is reviewed and ratified by the Loan Committee on a quarterly basis and is subject to periodic examination by the Office of the Comptroller of the Currency (“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 in economic conditions over a one year to two year forecasting horizon, such as unemployment rates, GDP, vacancy rates or other relevant factors. The immediate reversion method is applied for periods beyond the forecasting horizon. The ACL is an amount that management currently believes will be adequate to absorb expected lifetime losses in the Bank’s loan portfolio. The process for estimating credit losses and determining the ACL as of any balance sheet date is subjective in nature and requires material estimates and judgements. Actual results could differ significantly from those estimates.
The ACL is measured on a collective (pool) basis when similar risk characteristics exist. Management segregates its loan portfolio into distinct pools: (1) commercial and industrial; (2) small business; (3) multifamily; (4) owner-occupied; (5) other commercial real estate; (6) construction and land development; (7) residential mortgage; (8) revolving home equity; (9) consumer; and (10) municipal loans. The vintage method is applied to measure the historical loss component of lifetime credit losses inherent in most of its loan pools. For the revolving home equity and small business pools, the lifetime PD/LGD method is used to measure historical losses.
Management believes that the methods selected fairly reflect the historical loss component of expected losses inherent in the Bank’s loan portfolio. However, since future losses could vary significantly from those experienced in the past, on a quarterly basis management adjusts its historical loss experience to reflect current conditions and reasonable and supportable forecasts. In doing so, management considers a variety of Q-factors and then subjectively determines the weight to assign to each in estimating losses. The factors include: (1) changes in lending policies and procedures; (2) experience, ability and depth of lending staff; (3) trends in average loan growth and concentrations; (4) changes in the quality of the loan review function; (5) delinquencies; (6) environmental risks; (7) current and forecasted economic conditions as judged by things such as unemployment levels and GDP; (8) changes in the value of underlying collateral as judged by things such as median home prices and forecasted vacancy rates in the Bank’s service area; (9) rent regulation status of multifamily properties; and (10) direction and magnitude of risks in the portfolio. The Bank’s ACL allocable to its loan pools results primarily from these Q-factor adjustments to historical loss experience with the largest sensitivity of the ACL arising from loan growth, loan concentrations and economic forecasts of unemployment, GDP and vacancies. At June 30, 2024, the ACL was composed approximately 80% of Q-factors, 19% of historical losses and 1% reserves on individually evaluated loans. Because of the nature of the Q-factors and the difficulty in assessing their impact, management’s resulting estimate of losses may not accurately reflect lifetime losses in the portfolio.
Loans that do not share similar risk characteristics are evaluated on an individual basis. Such disparate risk characteristics may include internal or external credit ratings, risk ratings, collateral type, size of loan, effective interest rate, term, geographic location, industry or historical or expected loss pattern. Estimated losses for loans individually evaluated are based on either the fair value of collateral or the discounted value of expected future cash flows. For all collateral dependent loans evaluated on an individual basis, credit losses are measured based on the fair value of the collateral. In estimating the fair value of real estate collateral, management utilizes appraisals or evaluations adjusted for costs to dispose and a distressed sale adjustment, if needed. Estimating the fair value of collateral other than real estate is also subjective in nature and sometimes requires difficult and complex judgements. Determining expected future cash flows can be more subjective than determining fair values. Expected future cash flows could differ significantly, both in timing and amount, from the cash flows received over the loan’s remaining life. Individually evaluated loans are not included in the estimation of credit losses from the pooled portfolio.
Asset Quality
Information about the Corporation’s risk elements is set forth below. Risk elements include nonaccrual loans, other real estate owned, loans that are contractually past due 30 days or more and modifications made to borrowers experiencing financial difficulty. These risk elements present more than the normal risk that the Corporation will be unable to eventually collect or realize their full carrying value.
| June 30, |
December 31, |
|||||||
| (in thousands) |
2024 |
2023 |
||||||
| Loans including modifications to borrowers experiencing financial difficulty: |
||||||||
| Modified and performing according to their modified terms |
$ | 426 | $ | 431 | ||||
| Past due 30 through 89 days |
942 | 3,086 | ||||||
| Past due 90 days or more and still accruing |
— | — | ||||||
| Nonaccrual |
2,370 | 1,053 | ||||||
| 3,738 | 4,570 | |||||||
| Other real estate owned |
— | — | ||||||
| $ | 3,738 | $ | 4,570 | |||||
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.
The ACL decreased $508,000 during the first six months of 2024, amounting to $28.5 million, or 0.88% of total loans, at June 30, 2024 compared to $29.0 million, or 0.89% of total loans, at December 31, 2023. During the first six months of 2024, the Bank had loan chargeoffs of $1.1 million, recoveries of $37,000 and recorded a provision for credit loss of $570,000. The decline in the ACL in 2024 was driven largely by declines in historical loss rates and allowances on individually evaluated loans, partially offset by a deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties. During the first six months of 2023, the Bank had loan chargeoffs of $442,000, recoveries of $33,000 and recorded a reversal of $1.1 million from the ACL. The reversal from the ACL in the 2023 period was mainly due to improvements in historical loss rates and declines in outstanding loans, average growth rates and concentrations of credit, partially offset by deteriorating economic conditions and net chargeoffs of $409,000.
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 “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 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% of the Bank’s total loans outstanding at June 30, 2024. The majority of these loans are collateralized by properties located on Long Island and in the boroughs of NYC. While business activity in the New York metropolitan area has improved, inflation, increasing interest rates and government regulation pose economic challenges and may result in higher chargeoffs and provisions.
Future provisions and chargeoffs could also be affected by environmental impairment of properties securing the Bank’s mortgage loans. At the present time, management is not aware of any environmental pollution originating on or near properties securing the Bank’s loans that would materially affect the carrying value of such loans.
Cash Flows and Liquidity
The $3.3 billion loan portfolio was comprised of $1.9 billion of commercial mortgages, $1.2 billion of residential mortgages and $150.6 million of commercial and industrial loans. Approximately $649 million, or 20.0%, will reprice by June 30,2025, of which $300 million is related to the three-year interest rate swap transaction previously discussed. The Bank expects an additional $240 million, or 7%, of the loan portfolio to reprice from approximately 3.51% to 7.31% from June 30,2025 to June 30, 2026 based on current rates. We expect approximately $361 million of cash inflows from the mortgage loan portfolio over the next twelve months.
During the first six months of 2024, total deposits grew $92.5 million or 2.8%, to $3.4 billion at June 30, 2024. The increase was attributable to growth in savings, NOW and money market deposits of $81.7 million and time deposits of $20.7 million, partially offset by a decline in noninterest-bearing checking deposits of $9.9 million. Noninterest-bearing checking deposits of $1.1 billion represent 33.4% of total deposits. Brokered time deposits increased $807,000 during the first six months of 2024, totaling $175.2 million, or 5.2%, of total deposits. Brokered time deposits have a weighted average cost of 4.90% and an average maturity of approximately eight months, of which $45.0 million, or 26%, will mature in the third quarter of 2024 with an average cost of 4.95%. Reciprocal deposits under the Insured Cash Sweep (“ICS”) program were $14.7 million at June 30, 2024.
There were no overnight advances at June 30, 2024, compared to $70.0 million at year-end 2023. Other borrowings decreased $42.5 million, or 9.0%, during the first six months of 2024, to $430.0 million at June 30, 2024. Maturities of $142.5 million with a weighted average rate of 4.62% were partially offset by new borrowings of $100.0 million with a weighted average rate of 4.72%. Other borrowings at June 30, 2024 had a weighted average cost of 4.72% and an average maturity of nine months.
Liquidity. The Bank has a board committee approved liquidity policy and liquidity contingency plan, which are intended to ensure that the Bank has sufficient liquidity to meet the ongoing needs of its customers in terms of credit and deposit outflows, take advantage of earnings enhancement opportunities and respond to liquidity stress conditions should they arise.
The Bank has both internal and external sources of liquidity that can be used to fund loan growth and accommodate deposit outflows. The Bank’s primary internal sources of liquidity are maturities and monthly payments from its investment securities and loan portfolios, operations and sales of investment securities designated as AFS. At June 30, 2024, the Bank had approximately $245.1 million of unencumbered AFS securities.
The Bank is a member of the 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 federal funds under its existing line and the Corporation can raise funds through its Dividend Reinvestment and Stock Purchase Plan ("DRIP"). However, the Bank’s FRB of New York membership, FHLB of New York membership and federal funds line do not represent legal commitments to extend credit to the Bank. The amount that the Bank can potentially borrow is currently dependent on the amount of unencumbered eligible securities and loans that the Bank can use as collateral and the collateral margins required by the lenders. In addition, the Corporation may not be successful in raising funds from the issuance of its stock under the DRIP or otherwise. The Bank’s borrowing capacity may be adjusted by the FRB of New York or the FHLB of New York and may take into account factors such as the Bank’s tangible common equity ratio, collateral margins required by the lender or other factors. A possible future downgrade of securities and loans pledged as collateral could also impact the amount of available funding. Regulatory or strategic changes affecting the access to and availability of funding from the FHLB and FRB could adversely impact the Bank's liquidity.
The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards and appropriately provide for growth. The leverage ratio of the Corporation and the Bank at June 30, 2024 were 9.91% and 9.89%, respectively, and satisfies 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.
The Corporation has a stock repurchase program under which it is authorized to purchase shares of its common stock from time to time through open market purchases, privately negotiated transactions, or in any other manner that is compliant with applicable securities laws. The stock repurchase program does not obligate the Corporation to purchase shares and there is no guarantee as to the exact number of shares that may be repurchased pursuant to this program, which is subject to market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity and other factors deemed appropriate. No shares were repurchased in the second quarter of 2024. The Corporation can repurchase another $13.0 million under the Board-approved repurchase program.
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 and/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.
Through the use of interest rate sensitivity modeling, the Bank projects net interest income over a five-year period assuming a static balance sheet and no changes in interest rates from current levels. Utilization of a static balance sheet ensures that interest rate risk embedded in the Bank’s current balance sheet is not masked by assumed balance sheet growth or contraction. Net interest income is projected over a five-year time period utilizing various interest rate change scenarios, including both ramped and shocked changes as well as changes in the shape of the yield curve. The interest rate scenarios modeled are based on the shape of the current yield curve and the relative level of rates and management’s expectations as to potential future yield curve shapes and rate levels.
The Bank also uses interest rate sensitivity modeling to calculate EVE in the current rate environment assuming shock increases and decreases in interest rates. EVE is the difference between the present value of expected future cash flows from the Bank’s assets and the present value of the expected future cash flows from the Bank’s liabilities. Present values are determined using discount rates that management believes are reflective of current market conditions. EVE can capture long-term interest rate risk that would not be captured in a five-year projection of net interest income.
The rate change information in the following table shows estimates of net interest income for the year ending June 30, 2025 and calculations of EVE at June 30, 2024 assuming rate changes of plus and minus 100, 200 and 300 bps. The rate change scenarios were selected based on the relative level of current interest rates and: (1) are assumed to be shock or immediate changes for both EVE and net interest income; (2) occur uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities; and (3) impact the repricing and reinvestment of all assets and liabilities, except nonmaturity deposits, by the full amount of the rate change. In projecting future net interest income under the indicated rate change scenarios, activity is simulated by assuming that cash flows from maturing assets and liabilities are reinvested in a mix of assets and liabilities that is intended to reflect a static balance sheet. The changes in EVE from the base case have not been tax affected.
| Economic Value of Equity |
Net Interest Income for |
|||||||||||||||
| at June 30, 2024 |
Year Ending June 30, 2025 |
|||||||||||||||
| Percent Change |
Percent Change |
|||||||||||||||
| From |
From |
|||||||||||||||
| Rate Change Scenario (dollars in thousands) |
Amount |
Base Case |
Amount |
Base Case |
||||||||||||
| + 300 basis point rate shock |
$ | 381,067 | -23.2 | % | $ | 67,928 | -12.7 | % | ||||||||
| + 200 basis point rate shock |
415,665 | -16.2 | % | 71,092 | -8.6 | % | ||||||||||
| + 100 basis point rate shock |
459,493 | -7.4 | % | 74,767 | -3.9 | % | ||||||||||
| Base case (no rate change) |
496,251 | — | 77,786 | — | ||||||||||||
| - 100 basis point rate shock |
528,250 | 6.4 | % | 80,594 | 3.6 | % | ||||||||||
| - 200 basis point rate shock |
540,189 | 8.9 | % | 82,143 | 5.6 | % | ||||||||||
| - 300 basis point rate shock |
533,571 | 7.5 | % | 82,964 | 6.7 | % | ||||||||||
As shown in the preceding table, assuming a static balance sheet, an immediate increase in interest rates of 100, 200 or 300 bps could negatively impact the Bank’s net interest income for the year ended June 30,2025 because the Bank might need to increase the rates paid on its nonmaturity deposits to remain competitive and any time deposits or borrowings that mature would reprice at a higher interest rate. In addition, the Bank’s securities portfolio, excluding corporate bonds and SBA agency obligations, and a large portion of its loan portfolio do not immediately reprice with changes in market rates. At June 30, 2024, approximately $874 million, or 22.4%, of the Bank's loans and securities reprice or mature within one year. An immediate decrease in interest rates of 100, 200 or 300 bps could positively impact the Bank’s net interest income for the same time period because the Bank would pay less for time deposits or borrowings that mature and reprice at a lower interest rate and would be able to reduce non-maturity deposit rates while the downward repricing of its assets would lag. The positive impact on net interest income of an immediate decrease in interest rates is somewhat constrained because the decrease is assumed to occur uniformly across the inverted yield curve. Changes in management’s estimates as to the rates that will need to be paid on nonmaturity deposits could have a material impact on the net interest income amounts shown for each scenario in the table.
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 expected future credit losses; assessments of market risk; and statements of the ability to achieve financial and other goals. Forward-looking statements are typically identified by words such as “would,” “should,” “could,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties which may change over time. Forward-looking statements speak only as of the date they are made. We do not assume any duty and do not undertake to update our forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that we anticipated in our forward-looking statements and future results could differ materially from historical performance.
Our forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; fluctuations in the trading price of our common stock; changes in interest rates and the rate of inflation; changes in the shape of the yield curve; changes in deposit flows, and in the demand for deposit and loan products and other financial services; 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, 2023, in Part I under “Item 1A. 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 Securities and Exchange Commission ("SEC") from time to time.
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 second quarter of 2024 that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
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.
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, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Stock Repurchases. The Corporation's Board of Directors approved a $30 million common stock repurchase program that was announced on January 31, 2022, pursuant to which the Corporation is authorized to purchase shares of its common stock from time to time through open market purchases, privately negotiated transactions, or in any other manner that is compliant with applicable securities laws. The Corporation did not repurchase any shares in the second quarter of 2024. The Corporation can repurchase another $13.0 million of its common stock under the Board-approved repurchase program and the program does not have a fixed expiration date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
(c) Securities Trading Plan of Directors and Executive Officers
During the three months ended June 30, 2024, of the directors or executive officers of the Corporation adopted or terminated any contract, instruction or written plan for the purchase or sale of the Corporation's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement," as that term is used in SEC regulations.
See Index of Exhibits that follows.
INDEX OF EXHIBITS
| Exhibit No. |
Description of Exhibit |
| 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 |
|
| 101 |
The following materials from the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, 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) |
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: August 1, 2024 |
By /s/ CHRISTOPHER BECKER |
|
| Christopher Becker, President & Chief Executive Officer |
||
| (principal executive officer) |
||
| By /s/ JANET T. VERNEUILLE |
||
| Janet T. Verneuille, Senior Executive Vice President, |
||
| Chief Financial Officer & Treasurer |
||
| (principal financial officer) |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)
I, Christopher Becker, certify that:
|
1) |
I have reviewed this Form 10-Q of The First of Long Island Corporation (“Registrant”); |
|
2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
|
4) |
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d) |
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
|
5) |
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: August 1, 2024
|
By /s/ CHRISTOPHER BECKER |
||
|
Christopher Becker |
||
|
President & Chief Executive Officer |
||
|
(principal executive officer) |
||
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)
I, Janet T. Verneuille, certify that:
|
1) |
I have reviewed this Form 10-Q of The First of Long Island Corporation (“Registrant”); |
|
2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
|
4) |
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d) |
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
|
5) |
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: August 1, 2024
|
By /s/ JANET T. VERNEUILLE |
||
| Janet T. Verneuille | ||
|
Senior Executive Vice President, Chief Financial Officer |
||
|
& Treasurer |
||
|
(principal financial officer) |
||
Exhibit 32
CERTIFICATION PURSUANT TO RULE 13a-14(b)
AND 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of The First of Long Island Corporation (“Corporation”) on Form 10-Q for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on August 1, 2024 (“Report”), we, Christopher Becker, President and Chief Executive Officer of the Corporation and Janet T. Verneuille, Senior Executive Vice President, Chief Financial Officer and Treasurer of the Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the accompanying Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
Date: August 1, 2024
|
By /s/ CHRISTOPHER BECKER |
|
|
Christopher Becker |
|
|
President & Chief Executive Officer |
|
|
(principal executive officer) |
|
|
By /s/ JANET T. VERNEUILLE |
|
|
Janet T. Verneuille |
|
|
Senior Executive Vice President, Chief Financial Officer |
|
|
& Treasurer |
|
|
(principal financial officer) |
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Common stock, par value (in dollars per share) | $ 0.1 | $ 0.1 |
| Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
| Common stock, shares issued (in shares) | 22,517,881 | 22,590,942 |
| Common stock, shares outstanding (in shares) | 22,517,881 | 22,590,942 |
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Interest and dividend income: | ||||
| Loans | $ 34,110 | $ 31,483 | $ 67,653 | $ 61,888 |
| Investment securities: | ||||
| Taxable | 7,479 | 5,614 | 14,472 | 9,283 |
| Nontaxable | 957 | 1,027 | 1,917 | 2,972 |
| Interest and Dividend Income, Operating | 42,546 | 38,124 | 84,042 | 74,143 |
| Interest expense: | ||||
| Savings, NOW and money market deposits | 11,437 | 7,611 | 21,520 | 13,386 |
| Time deposits | 7,059 | 4,232 | 14,036 | 7,301 |
| Overnight advances | 4 | 438 | 267 | 546 |
| Other borrowings | 5,615 | 4,002 | 11,627 | 7,435 |
| Interest Expense, Operating | 24,115 | 16,283 | 47,450 | 28,668 |
| Net interest income | 18,431 | 21,841 | 36,592 | 45,475 |
| Provision (credit) for credit losses | 570 | 0 | 570 | (1,056) |
| Net interest income after provision (credit) for credit losses | 17,861 | 21,841 | 36,022 | 46,531 |
| Noninterest income: | ||||
| Bank-owned life insurance | 857 | 794 | 1,697 | 1,574 |
| Service charges on deposit accounts | 821 | 753 | 1,701 | 1,540 |
| Net loss on sales of securities | 0 | 0 | 0 | (3,489) |
| Other | 1,186 | 1,135 | 2,240 | 2,070 |
| Noninterest Income | 2,864 | 2,682 | 5,638 | 1,695 |
| Noninterest expense: | ||||
| Salaries and employee benefits | 9,500 | 9,854 | 19,474 | 19,619 |
| Occupancy and equipment | 3,110 | 3,396 | 6,324 | 6,721 |
| Other | 3,239 | 3,267 | 6,257 | 6,748 |
| Noninterest Expense | 15,849 | 16,517 | 32,055 | 33,088 |
| Income before income taxes | 4,876 | 8,006 | 9,605 | 15,138 |
| Income tax expense | 78 | 1,107 | 372 | 1,758 |
| Net income | $ 4,798 | $ 6,899 | $ 9,233 | $ 13,380 |
| Weighted average: | ||||
| Common shares (in shares) | 22,510,359 | 22,551,568 | 22,515,464 | 22,522,663 |
| Dilutive restricted stock units (in shares) | 50,494 | 33,309 | 62,161 | 59,910 |
| Weighted Average Number of Shares Outstanding, Diluted | 22,560,853 | 22,584,877 | 22,577,625 | 22,582,573 |
| Earnings per share: | ||||
| Basic (in dollars per share) | $ 0.21 | $ 0.31 | $ 0.41 | $ 0.59 |
| Diluted (in dollars per share) | 0.21 | 0.31 | 0.41 | 0.59 |
| Cash dividends declared per share (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.42 | $ 0.42 |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Net income | $ 4,798 | $ 6,899 | $ 9,233 | $ 13,380 |
| Other comprehensive loss: | ||||
| Change in net unrealized holding losses on available-for-sale securities | (2,142) | (10,617) | (3,931) | (5,197) |
| Change in funded status of pension plan | 200 | 255 | 400 | 509 |
| Other comprehensive loss before income taxes | (1,942) | (10,362) | (3,531) | (4,688) |
| Income tax benefit | (595) | (3,182) | (992) | (1,357) |
| Other comprehensive loss | (1,347) | (7,180) | (2,539) | (3,331) |
| Comprehensive income (loss) | $ 3,451 | $ (281) | $ 6,694 | $ 10,049 |
Note 1 - Basis of Presentation |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Notes to Financial Statements | |
| Significant Accounting Policies [Text Block] |
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 one wholly-owned subsidiary: FNY Service Corp., an investment company. The Bank and FNY Service Corp. jointly own another subsidiary, The First of Long Island REIT, Inc., a real estate investment trust. 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, 2023.
The consolidated financial information included herein as of and for the periods ended June 30, 2024 and 2023 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, 2023 consolidated balance sheet was derived from the Corporation's December 31, 2023 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 and changes in the financial condition of borrowers. |
Note 2 - Comprehensive Income |
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive Income (Loss) Note [Text Block] |
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 changes in the funded status of the Bank’s defined benefit pension plan, all net of related income taxes. Accumulated OCI is recognized as a separate component of stockholders’ equity.
The following table sets forth the components of accumulated OCI, net of tax.
The components of OCI and the related tax effects are as follows:
|
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Note 3 - Investment Securities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] |
3 - INVESTMENT SECURITIES
The following tables set forth the amortized cost and estimated fair values of the Bank’s AFS investment securities at the dates indicated.
Small Business Administration (“SBA”) agency obligations are floating rate, government guaranteed securities backed by $87.7 million of commercial mortgages and $25.9 million of equipment finance loans at June 30, 2024.
At June 30, 2024 and December 31, 2023, investment securities with a carrying value of $301.3 million and $203.9 million, respectively, were pledged as collateral to secure public deposits and borrowed funds.
There were no holdings of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity at June 30, 2024 and December 31, 2023.
There was no allowance for credit losses associated with the investment securities portfolio at June 30, 2024 or December 31, 2023.
Securities With Unrealized Losses. The following tables set forth securities with unrealized losses at the dates indicated presented by the length of time the securities have been in a continuous unrealized loss position.
State and Municipals
At June 30, 2024, approximately $129.9 million of state and municipal bonds had an unrealized loss of $16.8 million. Substantially all the state and municipal bonds are considered high investment grade and rated Aa2/AA- or higher. The unrealized loss 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 has the ability to hold 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 June 30, 2024, pass-through mortgage securities of approximately $131.0 million had an unrealized loss of $29.2 million. These securities were issued by U.S. government and government-sponsored agencies and are considered high investment grade. The unrealized loss is attributable to changes in interest rates and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. The Bank has the ability to hold 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 June 30, 2024, collateralized mortgage obligations of approximately $115.8 million had an unrealized loss of $22.2 million. These securities were issued by U.S. government and government-sponsored agencies and are considered high investment grade. The unrealized loss is attributable to changes in interest rates and not credit quality. The issuers continue to make timely principal and interest payments on the bonds. The Bank has the ability to hold 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.
SBA Agency Obligations
At June 30, 2024, SBA agency obligations of approximately $92.6 million had an unrealized loss of $918,000. These securities were issued by the SBA, a U.S. government agency and are considered high investment grade. The unrealized loss is attributable to changes in interest rates and not credit quality. The issuer continues to make timely principal and interest payments on the bonds. The Bank has the ability to hold 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 June 30, 2024, approximately $111.5 million of corporate bonds had an unrealized loss of $7.5 million. The corporate bonds represent senior unsecured debt obligations of of the largest U.S. based financial institutions, including JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo. Each of the corporate bonds has a stated maturity of years and matures in 2028. The bonds reprice quarterly based on the year constant maturity swap rate.
Each of the financial institutions is considered upper medium investment grade and rated A3 or higher. The unrealized loss is attributable to changes in credit spreads and interest rates and the illiquid nature of the securities. The Bank does not have the intent to sell these securities 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 June 30, 2024.
Sales of AFS Securities. Sales of AFS securities were as follows:
Income tax benefit related to the net realized losses for the six months ended June 30, 2023 was $1.1 million and is included in the consolidated statements of income in the line item “Income tax expense.”
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 June 30, 2024 based on the earlier of their stated maturity or, if applicable, their pre-refunded date. The remaining securities in the Bank’s investment securities portfolio are mortgage and asset-backed securities, consisting of pass-through mortgage securities, collateralized mortgage obligations and SBA agency obligations. Although these securities are expected to have substantial periodic repayments, they are reflected in the table below in aggregate amounts.
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Note 4 - Loans |
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
4 - LOANS
The following table sets forth the loans outstanding by class of loans at the dates indicated.
Allowance for Credit Losses. 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. For loans individually evaluated, an allowance for credit losses (“ACL” or “allowance”) is estimated based on either the fair value of collateral or the discounted value of expected future cash flows. In estimating the fair value of real estate collateral, management utilizes appraisals or evaluations adjusted for costs to dispose and a distressed sale adjustment, if needed. Estimating the fair value of collateral other than real estate is also subjective in nature and sometimes requires difficult and complex judgements. Determining expected future cash flows can be more subjective than determining fair values. Expected future cash flows could differ significantly, both in timing and amount, from the cash flows actually received over the loan’s remaining life. Individually evaluated loans are excluded from the estimation of credit losses for the pooled portfolio.
For loans collectively evaluated for credit loss, management segregates its loan portfolio into distinct pools, certain of which are combined in reporting loans outstanding by class of loans: (1) commercial and industrial; (2) small business; (3) multifamily; (4) owner-occupied; (5) other commercial real estate; (6) construction and land development; (7) closed end residential mortgage; (8) revolving home equity; (9) consumer; and (10) municipal loans. Historical loss information from the Bank’s own loan portfolio from December 31, 2007 to present provides a basis for management’s assessment of expected credit losses. The choice of a historical look-back period that begins in 2007 covers an entire economic cycle and impacts the average historical loss rates used to calculate the final ACL. Due to the extensive loss data available, management selected the vintage approach to measure the historical loss component of credit losses for most of its loan pools. For the revolving home equity and small business pools, the lifetime PD/LGD (probability of default/loss given default) method is used to measure historical losses.
Modifications to borrowers experiencing financial difficulty are initially included in loans collectively evaluated for credit loss. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. A charge to the allowance for credit losses is generally not recorded upon modification.
Management believes that the methods selected fairly reflect the historical loss component of expected losses inherent in the Bank’s loan portfolio. However, since future losses could vary significantly from those experienced in the past, on a quarterly basis management adjusts its historical loss experience to reflect current and forecasted conditions. In doing so, management considers a variety of general qualitative and quantitative factors (“Q-factors”) and then subjectively determines the weight to assign to each in estimating losses. Qualitative characteristics include differences in underwriting standards, policies, lending staff and environmental risks. Management also considers whether further adjustments to historical loss information are needed to reflect the extent to which current conditions and reasonable and supportable forecasts over a year to year forecasting horizon differ from the conditions that existed during the historical loss period. These quantitative adjustments reflect changes to relevant data such as changes in unemployment rates, gross domestic product (“GDP”), vacancies, average growth in pools of loans, rent regulation status, delinquencies or other factors associated with the financial assets. The immediate reversion method is applied for periods beyond the forecasting horizon. The Bank’s ACL allocable to pools of loans that are collectively evaluated for credit loss results primarily from these qualitative and quantitative adjustments to historical loss experience. Because of the nature of the Q-factors and the degree of judgement involved in assessing their impact, management’s resulting estimate of losses may not accurately reflect current and future losses in the portfolio.
Growth in commercial mortgages and commercial and industrial loans, allowances on individually evaluated loans and chargeoffs were the main drivers of the provision recorded in the first six months of 2024, partially offset by declines in historical loss rates and a deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties.
The following tables present the activity in the ACL for the periods indicated.
Aging of Loans. The following tables present the aging of loans past due and loans on nonaccrual status by class of loans.
At June 30, 2024, there was residential real estate loan for which formal foreclosure proceedings are in process with an amortized cost of $844,000. This loan is included in the column "Nonaccrual - With Allowance for Credit Loss" in the June 30, 2024 table above. The Bank did hold any foreclosed residential real estate property at June 30, 2024. There were no loans in the process of foreclosure nor did the Bank hold any foreclosed residential real estate property at December 31, 2023.
Accrued interest receivable from loans totaled $10.6 million and $10.4 million at June 30, 2024 and December 31, 2023, respectively, and is included in the line item “Other assets” on the consolidated balance sheets.
Loan Modifications. The Bank did not modify the terms of any loans for borrowers experiencing financial difficulty in the form of principal forgiveness, an interest reduction, an other-than-insignificant payment delay or a term extension during the previous twelve months.
Risk Characteristics. Credit risk within the Bank’s loan portfolio primarily stems from factors such as changes in the borrower’s financial condition, credit concentrations, changes in collateral values, economic conditions, rent regulation and environmental contamination of properties securing mortgage loans. The Bank’s commercial loans, including those secured by real estate mortgages, are primarily made to small and medium-sized businesses. Such loans sometimes involve a higher degree of risk than those to larger companies because such businesses may have shorter operating histories, higher debt-to-equity ratios and may lack sophistication in internal record keeping and financial and operational controls. In addition, most of the Bank’s loans are made to businesses and consumers on Long Island and in the boroughs of New York City (“NYC”), and a large percentage of these loans are mortgage loans secured by properties located in those areas. The primary sources of repayment for residential and commercial mortgage loans include employment and other income of the borrowers, the businesses of the borrowers and cash flows from the underlying properties. In the case of multifamily mortgage loans, a substantial portion of the underlying properties are rent stabilized or rent controlled. These sources of repayment are dependent on the strength of the local economy.
Credit Quality Indicators. The Bank categorizes loans into risk categories based on relevant information about the borrower’s ability to service their debt including, but not limited to, current financial information for the borrower and any guarantors, payment experience, credit underwriting documentation, public records, due diligence checks and current economic trends. Management analyzes loans 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. The Bank reviews at least 80% of its commercial real estate loan portfolio on an annual basis and uses a third-party review firm as part of its credit quality monitoring program. Lines of credit are also reviewed annually at each proposed reaffirmation. The frequency of the review of other loans is determined by minimum principal balance thresholds and the Bank’s ongoing assessments of the borrower’s condition.
Residential mortgage loans, revolving home equity lines and other consumer loans are initially evaluated utilizing the borrower’s credit score. A credit score is a tool used in the Bank’s loan approval process, and a minimum score of 680 is generally required for new loans. Credit scores for each borrower are updated at least annually. However, regardless of credit score, loans may be classified, criticized or placed on management’s watch list if relevant information comes to light.
The following tables present the amortized cost basis of loans by class of loans, vintage and risk rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful. Also presented are gross chargeoffs and recoveries recorded in the current year-to-date period by year of origination.
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Note 5 - Stock-based Compensation |
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| Share-Based Payment Arrangement [Text Block] |
5 - STOCK-BASED COMPENSATION
The following table presents a summary of restricted stock units (“RSUs”) outstanding at June 30, 2024 and changes during the six month period then ended.
As of June 30, 2024, there was $3.0 million of unrecognized compensation cost related to non-vested RSUs. The total cost is expected to be recognized over a weighted-average period of 1.6 years. |
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Note 6 - Fair Value of Financial Instruments |
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| Fair Value Disclosures [Text Block] |
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.
The fair values of the Corporation’s financial assets and liabilities measured at fair value on a recurring basis are set forth in the table that follows. The fair values of AFS securities are determined on a recurring basis using matrix pricing (Level 2 inputs). Matrix pricing, which is a mathematical technique widely used in the industry to value debt securities, does not rely exclusively on quoted prices for the specific securities but rather on the relationship of such securities to other benchmark quoted securities. Where no significant other observable inputs were available, Level 3 inputs were used. The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.
State and municipal AFS securities measured using Level 3 inputs. The Bank held non-rated bond anticipation notes with a book value of $172,000 at June 30, 2024. These bonds have a 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 June 30, 2024.
Land and Buildings. Premises and facilities held-for-sale of
$383,000 were sold for their carrying value in the
second quarter
of
2024. These assets were measured at the lower of cost or fair value on a nonrecurring basis and reported in the line item “Other assets” in the consolidated balance sheets at
December 31, 2023.
Financial Instruments Not Recorded at Fair Value. Fair value estimates are made at a specific point in time. Such estimates are generally subjective in nature and dependent upon a number of significant assumptions associated with each financial instrument or group of similar financial instruments, including estimates of discount rates, liquidity, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do
not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at
one time the Corporation’s entire holdings of a particular financial instrument, or the income tax consequences of realizing gains or losses on the sale of financial instruments.
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.
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Note 7 - Derivatives |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Derivative Instruments and Hedging Activities Disclosure [Text Block] |
7 – DERIVATIVES
As part of its asset liability management activities, the Corporation may utilize interest rate swaps to help manage its interest rate risk position. The notional amount of an interest rate swap does not represent the amount exchanged by the parties. The exchange of cash flows is determined by reference to the notional amount and the other terms of the interest rate swap agreements.
Fair Value Hedge. On March 16, 2023, the Bank entered into a year interest rate swap with a notional amount totaling million which was designated as a fair value hedge of certain fixed rate residential mortgages. The Bank pays a fixed rate of 3.82% and receives a floating rate based on the secured overnight financing rate (“SOFR”) for the life of the agreement without an exchange of the underlying notional amount. The hedge was determined to be effective during the quarter ended June 30, 2024 and the Corporation expects the hedge to remain effective during the remaining term of the swap. The gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk is recognized in interest income.
The following table summarizes information about the interest rate swap designated as a fair value hedge.
The following table presents the amount recorded on the balance sheet related to cumulative basis adjustments for the fair value hedge as of the periods indicated.
During the first six months of 2024, the Bank recorded a $2.2 million credit from the swap transaction as a component of interest income in the consolidated statements of income. |
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Insider Trading Arrangements |
6 Months Ended |
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| Insider Trading Arr Line Items | |
| Material Terms of Trading Arrangement [Text Block] |
(c) Securities Trading Plan of Directors and Executive Officers
During the three months ended June 30, 2024, of the directors or executive officers of the Corporation adopted or terminated any contract, instruction or written plan for the purchase or sale of the Corporation's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement," as that term is used in SEC regulations. |
| Rule 10b5-1 Arrangement Terminated [Flag] | false |
| Rule 10b5-1 Arrangement Adopted [Flag] | false |
| Non-Rule 10b5-1 Arrangement Terminated [Flag] | false |
| Non-Rule 10b5-1 Arrangement Adopted [Flag] | false |
Note 2 - Comprehensive Income (Tables) |
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Note 3 - Investment Securities (Tables) |
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| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Available-for-Sale Securities Reconciliation [Table Text Block] |
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| Debt Securities, Available-for-Sale, Unrealized Loss Position, Fair Value [Table Text Block] |
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| Realized Gain (Loss) on Investments [Table Text Block] |
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| Investments Classified by Contractual Maturity Date [Table Text Block] |
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Note 4 - Loans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financing Receivable, Loans Outstanding By Class Of Loans [Table Text Block] |
|
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| Financing Receivable, Allowance for Credit Loss [Table Text Block] |
|
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| Financing Receivable, Past Due [Table Text Block] |
|
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| Financing Receivable Credit Quality Indicators [Table Text Block] |
|
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Note 5 - Stock-based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block] |
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Note 6 - Fair Value of Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value, Assets Measured on Recurring Basis [Table Text Block] |
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| Fair Value, by Balance Sheet Grouping [Table Text Block] |
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Note 7 - Derivatives (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Interest Rate Derivatives [Table Text Block] |
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| Schedule of Derivative Assets at Fair Value [Table Text Block] |
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Note 2 - Comprehensive Income (Loss) - Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 |
Mar. 31, 2024 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|||||
| Change arising during the period | $ (2,142) | $ (10,617) | $ (3,931) | $ (8,686) | ||||||
| Reclassification adjustment for losses included in net income (1) | [1] | 0 | 0 | 0 | 3,489 | |||||
| Other Comprehensive Income (Loss), Available-for-Sale Securities Adjustment, before Tax, Portion Attributable to Parent | (2,142) | (10,617) | (3,931) | (5,197) | ||||||
| Tax effect | (656) | (3,260) | (1,115) | (1,513) | ||||||
| Other Comprehensive Income (Loss), Available-for-Sale Securities Adjustment, Net of Tax, Portion Attributable to Parent | (1,486) | (7,357) | (2,816) | (3,684) | ||||||
| Amortization of net actuarial loss included in pension expense (2) | [2] | 200 | 255 | 400 | 509 | |||||
| Tax effect | 61 | 78 | 123 | 156 | ||||||
| Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax and Reclassification Adjustment, Attributable to Parent | 139 | 177 | 277 | 353 | ||||||
| Other comprehensive loss | $ (1,347) | $ (1,192) | $ (7,180) | $ 3,849 | $ (2,539) | $ (3,331) | ||||
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Note 3 - Investment Securities - Sales of AFS Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Proceeds | $ 0 | $ 0 | $ 0 | $ 145,451 |
| Gains | 0 | 0 | 0 | 0 |
| Losses | 0 | 0 | 0 | (3,489) |
| Net loss | $ 0 | $ 0 | $ 0 | $ (3,489) |
Note 3 - Investment Securities - Schedule of Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Within one year, amortized cost | $ 1,077 | |
| Within one year, fair value | 1,076 | |
| After 1 through 5 years, amortized cost | 135,740 | |
| After 1 through 5 years, fair value | 127,180 | |
| After 5 through 10 years, amortized cost | 36,864 | |
| After 5 through 10 years, fair value | 33,266 | |
| After 10 years, amortized cost | 97,731 | |
| After 10 years, fair value | 85,620 | |
| Mortgage and asset-backed securities, amortized cost | 462,387 | |
| Mortgage and asset-backed securities, fair value | 410,847 | |
| Debt Securities, Available-for-Sale, Amortized Cost | 733,799 | $ 767,756 |
| Debt Securities, Available-for-Sale | $ 657,989 | $ 695,877 |
Note 4 - Loans - Classification of Loans Outstanding (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Loans receivable | $ 3,251,139 | $ 3,248,064 |
| Commercial Portfolio Segment [Member] | ||
| Loans receivable | 150,587 | 116,163 |
| Commercial Real Estate Portfolio Segment [Member] | ||
| Loans receivable | 1,936,691 | 1,919,714 |
| Commercial Real Estate Portfolio Segment [Member] | Multifamily [Member] | ||
| Loans receivable | 868,286 | 857,163 |
| Commercial Real Estate Portfolio Segment [Member] | Other Loan [Member] | ||
| Loans receivable | 819,682 | 829,090 |
| Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Loan 1 [Member] | ||
| Loans receivable | 248,723 | 233,461 |
| Residential Portfolio Segment [Member] | Home Equity Loan [Member] | ||
| Loans receivable | 1,122,866 | 1,166,887 |
| Residential Portfolio Segment [Member] | Revolving Home Equity Line [Member] | ||
| Loans receivable | 39,665 | 44,070 |
| Consumer And Other Portfolio Segment [Member] | ||
| Loans receivable | $ 1,330 | $ 1,230 |
Note 5 - Stock-based Compensation (Details Textual) $ in Millions |
6 Months Ended |
|---|---|
|
Jun. 30, 2024
USD ($)
| |
| Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 3 |
| Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year) | 1 year 7 months 6 days |
Note 5 - Stock-based Compensation - Summary of RSUs Outstanding (Details) - Restricted Stock Units (RSUs) [Member] $ / shares in Units, $ in Thousands |
6 Months Ended |
|---|---|
|
Jun. 30, 2024
USD ($)
$ / shares
shares
| |
| Outstanding, number of RSUs (in shares) | shares | 213,879 |
| Outstanding, weighted average grant-date fair value (in dollars per share) | $ / shares | $ 16.04 |
| Granted, number of RSUs (in shares) | shares | 231,467 |
| Granted, weighted average grant-date fair value (in dollars per share) | $ / shares | $ 10.54 |
| Converted, number of RSUs (in shares) | shares | (84,607) |
| Converted, weighted average grant-date fair value (in dollars per share) | $ / shares | $ 14.04 |
| Forfeited, number of RSUs (in shares) | shares | (3,144) |
| Forfeited, weighted average grant-date fair value (in dollars per share) | $ / shares | $ 11.77 |
| Outstanding, number of RSUs (in shares) | shares | 357,595 |
| Outstanding, weighted average grant-date fair value (in dollars per share) | $ / shares | $ 12.99 |
| Outstanding, weighted average remaining contractual term (Year) | 1 year 3 months 25 days |
| Outstanding, aggregate intrinsic value | $ | $ 3,583 |
Note 6 - Fair Value of Financial Instruments (Details Textual) |
6 Months Ended | |
|---|---|---|
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
|
| Debt Securities, Available-for-Sale | $ 657,989,000 | $ 695,877,000 |
| Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 657,989,000 | 695,877,000 |
| Assets, Fair Value Disclosure | 661,759,000 | 696,459,000 |
| Fair Value, Recurring [Member] | Premises And Facilities [Member] | ||
| Assets, Fair Value Disclosure | 383,000 | |
| Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 172,000 | 192,000 |
| Assets, Fair Value Disclosure | $ 172,000 | $ 192,000 |
| US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | ||
| Number Of Non-Rated Bond Anticipation Notes | 3 | |
| Debt Securities, Available-for-Sale | $ 172,000 | |
| Debt Securities, Maturity Period (Year) | 1 year |
Note 6 - Fair Value of Financial Instruments - Financial Instruments Recorded at Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Debt Securities, Available-for-Sale | $ 657,989 | $ 695,877 |
| Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 657,989 | 695,877 |
| Assets, Fair Value Disclosure | 661,759 | 696,459 |
| Fair Value, Recurring [Member] | Interest Rate Swap [Member] | ||
| Derivative - interest rate swaps | 3,770 | 582 |
| Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| Assets, Fair Value Disclosure | 0 | 0 |
| Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Interest Rate Swap [Member] | ||
| Derivative - interest rate swaps | 0 | 0 |
| Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Debt Securities, Available-for-Sale | 657,817 | 695,685 |
| Assets, Fair Value Disclosure | 661,587 | 696,267 |
| Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member] | ||
| Derivative - interest rate swaps | 3,770 | 582 |
| Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Debt Securities, Available-for-Sale | 172 | 192 |
| Assets, Fair Value Disclosure | 172 | 192 |
| Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Interest Rate Swap [Member] | ||
| Derivative - interest rate swaps | 0 | 0 |
| US States and Political Subdivisions Debt Securities [Member] | ||
| Debt Securities, Available-for-Sale | 135,639 | 143,621 |
| US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 135,639 | 143,621 |
| US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Debt Securities, Available-for-Sale | 135,467 | 143,429 |
| US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Debt Securities, Available-for-Sale | 172 | 192 |
| Passthrough Mortgage Securities [Member] | ||
| Debt Securities, Available-for-Sale | 132,267 | 138,603 |
| Passthrough Mortgage Securities [Member] | Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 132,267 | 138,603 |
| Passthrough Mortgage Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| Passthrough Mortgage Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Debt Securities, Available-for-Sale | 132,267 | 138,603 |
| Passthrough Mortgage Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| Collateralized Debt Obligations [Member] | ||
| Debt Securities, Available-for-Sale | 164,931 | 182,262 |
| Collateralized Debt Obligations [Member] | Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 164,931 | 182,262 |
| Collateralized Debt Obligations [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| Collateralized Debt Obligations [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Debt Securities, Available-for-Sale | 164,931 | 182,262 |
| Collateralized Debt Obligations [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| US Government Agencies Debt Securities [Member] | Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 113,649 | 125,476 |
| US Government Agencies Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| US Government Agencies Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Debt Securities, Available-for-Sale | 113,649 | 125,476 |
| US Government Agencies Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| Corporate Bond Securities [Member] | ||
| Debt Securities, Available-for-Sale | 111,503 | 105,915 |
| Corporate Bond Securities [Member] | Fair Value, Recurring [Member] | ||
| Debt Securities, Available-for-Sale | 111,503 | 105,915 |
| Corporate Bond Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Debt Securities, Available-for-Sale | 0 | 0 |
| Corporate Bond Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Debt Securities, Available-for-Sale | 111,503 | 105,915 |
| Corporate Bond Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Debt Securities, Available-for-Sale | $ 0 | $ 0 |
Note 6 - Fair Value of Financial Instruments - Financial Instruments Not Recorded at Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Restricted stock | $ 27,530 | $ 32,659 | ||
| Checking deposits | 1,123,244 | 1,133,184 | ||
| Savings, NOW and money market deposits | 1,628,078 | 1,546,369 | ||
| Time deposits | 612,119 | 591,433 | ||
| Reported Value Measurement [Member] | ||||
| Restricted stock | 27,530 | 32,659 | ||
| Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member] | ||||
| Cash and cash equivalents | 67,289 | 60,887 | ||
| Checking deposits | 1,123,244 | 1,133,184 | ||
| Savings, NOW and money market deposits | 1,628,078 | 1,546,369 | ||
| Overnight advances | 0 | 70,000 | ||
| Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | ||||
| Cash and cash equivalents | 67,289 | 60,887 | ||
| Checking deposits | 1,123,244 | 1,133,184 | ||
| Savings, NOW and money market deposits | 1,628,078 | 1,546,369 | ||
| Time deposits | 606,939 | 586,856 | ||
| Overnight advances | 0 | 70,000 | ||
| Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member] | ||||
| Loans, net | [1] | 3,222,655 | 3,219,072 | |
| Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member] | ||||
| Loans, net | [1] | 2,938,018 | 2,945,864 | |
| Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | ||||
| Time deposits | 612,119 | 591,433 | ||
| Other borrowings | 430,000 | 472,500 | ||
| Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | ||||
| Other borrowings | $ 428,506 | $ 471,276 | ||
| ||||
Note 7 - Derivatives (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Mar. 16, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
| Interest Income (Expense), Operating | $ 18,431 | $ 21,841 | $ 36,592 | $ 45,475 | ||
| Residential Portfolio Segment [Member] | ||||||
| Derivative, Notional Amount | 3,800 | 3,800 | ||||
| Hedged Asset, Fair Value Hedge, Portfolio Layer Method, Hedged Layer, Fair Value, Cumulative Increase (Decrease), Excluded from Amortized Cost | 455,700 | 455,700 | ||||
| Hedged Asset, Fair Value Hedge, Portfolio Layer Method, Hedged Layer, Fair Value, Cumulative Increase (Decrease) | $ (3,691) | (3,691) | $ (506) | |||
| Fair Value Hedging [Member] | ||||||
| Derivative, Term of Contract (Year) | 3 years | |||||
| Derivative, Notional Amount | $ 300,000 | |||||
| Derivative, Fixed Interest Rate | 3.82% | |||||
| Interest Income (Expense), Operating | $ 2,200 | |||||
Note 7 - Derivatives - Fair Value Hedge (Details) - Fair Value Hedging [Member] - USD ($) $ in Billions |
Jun. 30, 2024 |
Mar. 16, 2023 |
|---|---|---|
| Notional amount | $ 0.3 | |
| Fixed pay rate | 3.82% | |
| Interest Rate Swap [Member] | ||
| Notional amount | $ 0.3 | |
| Fixed pay rate | 3.82% | |
| Overnight SOFR receive rate | 5.33% | |
| Maturity (Year) | 1 year 8 months 15 days |
Note 7 - Derivatives - Fair Value Hedge (Details) (Parentheticals) |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Debt Instrument, Variable Interest Rate, Type [Extensible Enumeration] | Secured Overnight Financing Rate (SOFR) [Member] |
Note 7 - Derivative - Hedged Asset Amounts (Details) - Residential Portfolio Segment [Member] - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Carrying amount of the hedged asset (1) | [1] | $ 452,030 | $ 465,495 | |
| Hedged Asset, Fair Value Hedge, Portfolio Layer Method, Hedged Layer, Fair Value, Cumulative Increase (Decrease) | $ (3,691) | $ (506) | ||
| ||||