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FO

FIRST OF LONG ISLAND CORP (FLIC)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 showed linked-quarter stabilization and slight improvement: net interest margin ticked up to 1.80% (from 1.79% in Q1), EPS rose to $0.21 (from $0.20), noninterest income improved, and noninterest expense declined; year-over-year results remain pressured by higher funding costs, with EPS down from $0.31 in Q2 2023 .
  • Management reiterated margin has likely “bottomed,” highlighting NIM sensitivity of roughly 4–5 bps for each 25 bps Fed cut, and noted wholesale/CD repricing is largely behind them—setting up for gradual expansion if rates ease and funding mix improves .
  • Credit quality remains strong despite a single new nonperforming multifamily loan; ACL coverage stayed at 0.88% of total loans, nonaccruals were $2.37m, and net charge-offs were ~ $421k in the quarter (specific reserve of ~$276k) .
  • Operating discipline continued: noninterest income and noninterest expense beat internal guidance for the second straight quarter; management now expects service charge improvements to remain stable and expenses to be comparable to H1 levels for the rest of 2024 .
  • Street consensus from S&P Global was unavailable for FLIC this quarter, so an external beat/miss framing isn’t possible; near-term catalysts include incremental NIM lift if rates fall, continued remix toward commercial lending, and expense control persistence .

What Went Well and What Went Wrong

  • What Went Well

    • Margin and earnings stabilized: “our margin increased to 1.8% … certainly a positive indicator for stabilization,” with linked-quarter improvements in ROA, ROE, efficiency, NII, and EPS .
    • Fees and costs outperformed guidance: “our noninterest income and noninterest expense beat our guidance for the second straight quarter,” with noninterest income at $2.86m and noninterest expense at $15.85m in Q2 .
    • Funding mix and liquidity improved: average interest-bearing deposits rose $73.1m, average higher-cost borrowings decreased $52m; total available liquidity of ~$1.4b at quarter-end .

  • What Went Wrong

    • Y/Y compression persisted: NII fell $3.4m vs Q2 2023 and NIM was 1.80% vs 2.17% last year; EPS declined to $0.21 from $0.31 .
    • Modest uptick in nonperformers: nonaccrual loans rose to $2.37m (from $1.17m in Q1), driven by one multifamily credit (partial charge-off ~$175k); net charge-offs totaled ~$421k .
    • Deposit repricing drag still evident: cost of interest-bearing liabilities increased to 3.56% in Q2 (from 3.47% in Q1 and 2.51% in Q2’23), reflecting ongoing competitive funding pressures .

Financial Results

  • Income statement and ratios
MetricQ2 2023Q1 2024Q2 2024
Net Interest Income ($mm)$21.84 $18.16 $18.43
Noninterest Income ($mm)$2.68 $2.77 $2.86
Noninterest Expense ($mm)$16.52 $16.21 $15.85
Net Income ($mm)$6.90 $4.44 $4.80
Diluted EPS ($)$0.31 $0.20 $0.21
Net Interest Margin (%)2.17 1.79 1.80
ROA (%)0.66 0.42 0.45
ROE (%)7.44 4.72 5.15
Efficiency Ratio (%)66.61 76.48 73.55
  • Balance sheet and credit KPIs (period-end)
MetricDec 31, 2023Mar 31, 2024Jun 30, 2024
Total Loans ($mm)$3,248.06 $3,236.57 $3,251.14
Total Deposits ($mm)$3,270.99 $3,326.51 $3,363.44
Overnight Advances ($mm)$70.00 $0.00 $0.00
Other Borrowings ($mm)$472.50 $515.00 $430.00
ACL / Total Loans (%)0.89 0.88 0.88
Nonaccrual Loans ($mm)$1.05 $1.17 $2.37
Past Due 30–89 Days ($mm)$3.09 $0.29 $0.94
Book Value/Share ($)$16.83 $16.78 $16.71
Leverage Ratio (%)10.10 10.00 9.91
Available Liquidity ($bn)~1.5 ~1.5 ~1.4
  • Earning asset yield and funding cost (quarterly averages)
MetricQ2 2023Q1 2024Q2 2024
Yield on Interest-Earning Assets (%)3.78 4.08 4.16
Cost of Interest-Bearing Liabilities (%)2.51 3.47 3.56
  • Loan mix (period-end)
Category ($mm)Dec 31, 2023Jun 30, 2024
Commercial & Industrial$116.16 $150.59
Commercial Mortgages$1,919.71 $1,936.69
Residential Mortgages$1,166.89 $1,122.87
Home Equity Lines$44.07 $39.67
Consumer & Other$1.23 $1.33
Total Loans$3,248.06 $3,251.14

Notes: Q2 noninterest income $2.86m included service charge and merchant card gains; Q2 NII benefited ~$1.2m from a fixed-to-floating swap (matures Mar-2026) .

Guidance Changes

Metric/TopicPeriodPrevious GuidanceCurrent Guidance/UpdateChange
Net interest margin sensitivityForward+4–5 bps NIM per 25 bps Fed cut (over time) Reiterated; unchanged Maintained
Noninterest income2024 (quarterly)~ $2.6m/quarter Recent increases in service charges expected to remain stable; merchant fees to trend consistent to H1 for H2’24 Maintained (positive bias)
Noninterest expense2024 (quarterly)~ $16.25m/quarter Expect last two quarters comparable to first two quarters Maintained/slightly lower vs guide (Q2 at $15.85m)
Effective tax rate202412–13% (early-year view) Now ~4% annualized for 2024 Lowered
Effective tax rate2025N/AEarly view “maybe ~7%,” dependent on earnings mix New disclosure
Loan growth (net)2024Low single-digit Confirmed low single-digit including residential runoff Maintained
Residential mortgage strategyOngoingHalted new originations since H2’23 Continue halt; may consider purchases to diversify, focus on C&I/owner-occupied Maintained
DividendQuarterly$0.21/share Declared $0.21 for Q2; continued evaluation Maintained
BuybackProgramAuthorization outstanding $13m remains; may revisit as earnings improve Maintained/monitored

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23, Q1’24)Current Period (Q2’24)Trend
NIM trajectoryExpected bottoming Q4’23–Q1’24; recovery H2’24 if rates fall NIM 1.80% (+1 bp q/q); stabilization affirmed Stabilizing; poised to expand if cuts
Funding repricingRetail CDs largely at market; wholesale repricing finalized in Q1’24 “Very little left” to reprice upward; CDs/wholesale “largely behind us” Tailwind building
Loan mix shiftEmphasis on C&I/owner-occupied; low single-digit growth outlook Q2 originations ~$70m at ~7% yield; pipeline $137m at ~6.75% proj. rate Continued remix toward commercial
Multifamily risk/resetExtensive disclosures; DSCRs strong pre-reset; watch rent-regulated One MF NPL; 2H’24 resets $65m to ~7% from ~4.24%; proactive borrower outreach Proactive risk mgmt; low issues
Expense control2024 opex guide ~ $16.25m/quarter Q2 opex $15.85m; H2 expected comparable to H1 Better-than-guide
Tax rateEarly 2024 guide 12–13% 2024E ~4% given tax-advantaged mix Lower
Technology/branchesNew core/live in Q1’24; ongoing branch optimization New Southold branch opened; 41 branches; deposit base up ~$220m since 2019 with fewer branches Efficiency gains sustained
Liquidity~$1.5bn at 12/31 and 3/31 ~$1.4bn at 6/30 Strong, modestly lower with deleveraging

Management Commentary

  • “After 6 consecutive quarters of net interest margin decline… our margin increased to 1.8%… certainly a positive indicator for stabilization.” – CEO Chris Becker .
  • “Our noninterest income and noninterest expense beat our guidance for the second straight quarter.” – CEO Chris Becker .
  • “We anticipate noninterest expenses for the last 2 quarters of '24 will be comparable to the first 2 quarters.” – CFO Janet Verneuille .
  • “Each 25 basis point cut could improve margin by 4 to 5 basis points.” – CEO Chris Becker .
  • “The repricing of wholesale funding … and brokered CDs to current market rates remained largely behind us.” – CFO Janet Verneuille .

Q&A Highlights

  • NIM leverage to rate cuts: Management reaffirmed NIM sensitivity of ~4–5 bps per 25 bps cut; posture remains conservative pending mix dynamics .
  • Credit update: Net charge-offs ~ $400k; one new nonperforming multifamily credit (partial charge-off ~$175k) drove NPL uptick; still the only multifamily NPL .
  • Funding costs: Minimal upward repricing left on CDs/wholesale; retail CDs largely at market .
  • Loan growth outlook: Low single-digit net growth maintained; residential originations paused; strategy focused on C&I/owner-occupied .
  • Capital return: $13m remains under buyback; management may revisit as profitability improves .

Estimates Context

  • S&P Global consensus estimates: unavailable for FLIC this quarter via our data connection (tool returned no CIQ mapping), so we cannot assess formal external beats/misses versus Wall Street consensus [GetEstimates error].
  • Internal guidance context: Q2 continued to outperform management’s quarterly guidance on noninterest income and noninterest expense for a second consecutive quarter, indicating upward bias to internal assumptions even as NIM stabilizes .

Key Takeaways for Investors

  • Margin at/near trough with asymmetric upside to Fed cuts: each 25 bps cut adds ~4–5 bps to NIM; wholesale/CD repricing largely complete, positioning NIM to expand as rates ease .
  • Operating discipline is a differentiator: Q2 noninterest income and expense both beat internal guidance again; H2 expenses expected comparable to H1, supporting earnings resilience .
  • Credit quality remains robust despite one-off NPL: ACL coverage steady at 0.88% of loans; proactive outreach on upcoming resets should help contain losses; watch small subset of multifamily repricings .
  • Balance sheet remix continues: C&I and owner-occupied growth (+$42m combined in Q2) offsets planned residential runoff; originations near 7% yields support asset repricing .
  • Capital return optionality intact: dividend maintained at $0.21; $13m buyback capacity provides a lever as earnings improve and valuation permits .
  • Liquidity and capital remain sound: ~ $1.4b available liquidity and ~9.9% leverage ratio at quarter-end underpin flexibility through rate and credit cycles .
  • Near-term setup: absent Street estimates, trade the narrative—evidence of NIM bottoming, expense over-delivery, and benign credit vs. lingering funding cost pressure and macro uncertainty on rate timing .

Additional source references and data tables (press release/8-K):

  • Earnings press release and 8-K with full financials and ratios .
  • Q2 2024 earnings call transcript with detailed commentary, guidance, and Q&A .
  • Prior quarter reference: Q1 2024 8-K and call transcript .
  • Dividend declaration and Q2 call logistics press releases .