The First of Long Island Corporation (FLIC): SWOT Analysis [10-2024 Updated]
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The First of Long Island Corporation (FLIC) Bundle
In the dynamic landscape of the banking industry, The First of Long Island Corporation (FLIC) stands as a noteworthy player, showcasing both resilience and potential for growth. As we delve into a comprehensive SWOT analysis for 2024, we'll uncover FLIC's key strengths, such as its strong capital position and consistent dividend payments, alongside challenges like declining net interest income. Join us as we explore the opportunities that lie ahead, including strategic mergers and technological advancements, while also addressing the threats posed by economic uncertainties and increased competition. Discover how FLIC is navigating these complexities to secure its future in the financial sector.
The First of Long Island Corporation (FLIC) - SWOT Analysis: Strengths
Strong capital position with a leverage ratio of approximately 10.13% as of September 30, 2024
The First of Long Island Corporation maintains a robust capital structure, evidenced by a leverage ratio of 10.13% as of September 30, 2024. This ratio surpasses the regulatory requirement of 9.00%, positioning the company favorably for growth and stability in the competitive banking sector.
Consistent dividend payments, with a dividend yield of 6.5% based on market value per share
FLIC demonstrates a strong commitment to returning value to its shareholders through regular dividend payments. As of September 30, 2024, the company declared a quarterly cash dividend of $0.21 per share, translating to a dividend yield of 6.5% based on the market value per share of $12.87.
Diverse loan portfolio, with commercial mortgages comprising 60% of total loans, enhancing risk management
The company's loan portfolio is well-diversified, with commercial mortgages making up 60% of total loans, amounting to approximately $2.0 billion. This diversification aids in effective risk management, as the average loan size stands at $2.4 million with a weighted average loan-to-value (LTV) ratio of 50.4%.
Increased net income of $13.8 million for the first nine months of 2024, despite economic challenges
In the face of economic pressures, FLIC reported a net income of $13.8 million for the first nine months of 2024. This performance reflects the company's resilience and ability to navigate challenging market conditions, although it represents a decrease from $20.2 million in the same period of 2023.
Availability of liquidity totaling approximately $915.7 million, providing robust financial flexibility
FLIC showcases significant liquidity with total available liquidity of approximately $915.7 million as of September 30, 2024. This liquidity includes $582.8 million in collateralized borrowing lines and $312.9 million in unencumbered cash and securities, ensuring ample financial flexibility for operational needs.
Effective cost management strategies, including a decrease in occupancy and equipment expenses by $685,000
Effective cost management is evident in FLIC's operations, with a reported decrease in occupancy and equipment expenses by $685,000 for the first nine months of 2024. This reduction is attributed to the ongoing branch optimization strategy and system efficiencies.
| Metric | Value |
|---|---|
| Leverage Ratio | 10.13% |
| Quarterly Dividend per Share | $0.21 |
| Dividend Yield | 6.5% |
| Commercial Mortgages as Percentage of Total Loans | 60% |
| Total Net Income (9 months 2024) | $13.8 million |
| Total Liquidity | $915.7 million |
| Decrease in Occupancy and Equipment Expenses | $685,000 |
The First of Long Island Corporation (FLIC) - SWOT Analysis: Weaknesses
Decline in net interest income by $11.7 million when comparing the first nine months of 2024 to the same period in 2023
Net interest income for the nine months ended September 30, 2024, was $55.2 million, down from $66.9 million for the same period in 2023, reflecting a decrease of $11.7 million or 17.7%. This decline is attributed mainly to a significant increase in interest expense, which rose to $71.1 million from $47.7 million year-over-year.
Increased provision for credit losses of $740,000, indicating potential deterioration in loan quality
The First of Long Island Corporation recorded a provision for credit losses of $740,000 for the first nine months of 2024, compared to a reversal of $1.2 million in the same period of 2023. This change signals potential concerns regarding the quality of the loan portfolio.
Declining average deposits by $89.6 million, which may impact liquidity and funding sources
Total average deposits decreased by $89.6 million when comparing the first nine months of 2024 to the same period in 2023. As of September 30, 2024, total deposits stood at approximately $3.3 billion, reflecting pressures on liquidity.
High percentage of uninsured and uncollateralized deposits, representing 29.1% of total deposits as of September 30, 2024
As of September 30, 2024, uninsured deposits comprised 29.1% of total deposits. This high percentage raises concerns regarding the stability and safety of the deposit base, especially in periods of financial uncertainty.
Increased noninterest expenses primarily due to merger and branch consolidation expenses totaling $1.4 million
Noninterest expenses increased by $254,000, or 0.5%, when comparing the first nine months of 2024 to the same period in 2023. This increase includes merger and branch consolidation expenses of $1.4 million.
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Net Interest Income | $55.2 million | $66.9 million | $(11.7 million) |
| Provision for Credit Losses | $740,000 | $(1.2 million) | $1.94 million |
| Average Deposits | $3.3 billion | $3.4 billion | $(89.6 million) |
| Uninsured Deposits | 29.1% | N/A | N/A |
| Noninterest Expenses | $49.5 million | $49.2 million | $254,000 |
The First of Long Island Corporation (FLIC) - SWOT Analysis: Opportunities
Potential for growth through strategic mergers and acquisitions, particularly with the pending merger with ConnectOne.
On September 4, 2024, FLIC entered a Merger Agreement with ConnectOne in an all-stock transaction. Shareholders of FLIC will receive 0.5175 shares of ConnectOne common stock for each share of FLIC common stock. This merger is expected to enhance operational scale and market presence.
Expansion of noninterest income through enhanced service offerings, such as bank-owned life insurance and service charges on deposit accounts.
For the nine months ended September 30, 2024, noninterest income increased by $1.4 million compared to the prior year, with bank-owned life insurance (BOLI) revenue rising by 8.0% to $2.57 million and service charges on deposit accounts increasing by 13.4% to $2.54 million.
Leveraging technology to improve operational efficiency and customer service, enhancing competitive positioning.
FLIC has implemented system upgrades that have led to efficiencies, particularly in telecommunications expenses, which decreased by $383,000 in the first nine months of 2024. Additionally, the ongoing branch optimization strategy is expected to streamline operations and reduce costs further.
Increasing demand for commercial real estate financing in the evolving economic landscape.
As of September 30, 2024, multifamily loans constituted 44% of FLIC's commercial real estate portfolio, amounting to $862.0 million. The average loan size for these multifamily loans was $2.4 million, with a weighted average loan-to-value (LTV) ratio of 50.4%. This sector is anticipated to grow as demand for commercial real estate financing increases amid economic recovery.
Opportunity to capitalize on favorable market conditions if interest rates stabilize or decline, improving net interest margins.
The net interest margin for the first nine months of 2024 was 1.83%, down from 2.21% in the same period of 2023. However, if interest rates stabilize or decline, FLIC could see an improvement in net interest income due to a potential increase in the yield on interest-earning assets.
| Metric | 2024 (YTD) | 2023 (YTD) | Change (%) |
|---|---|---|---|
| Net Income | $13.8 million | $20.2 million | -31.8% |
| Diluted Earnings Per Share | $0.61 | $0.89 | -31.5% |
| Net Interest Income | $56.0 million | $68.0 million | -17.7% |
| Noninterest Income | $8.8 million | $3.9 million | 123.1% |
| Book Value Per Share | $17.25 | $16.83 | 2.5% |
| Leverage Ratio | 10.13% | Not available | Not applicable |
The First of Long Island Corporation (FLIC) - SWOT Analysis: Threats
Economic uncertainties, including inflation and rising interest rates, posing risks to loan performance and credit quality.
As of September 30, 2024, the First of Long Island Corporation reported a net interest income of $55.2 million, a decline from $66.9 million in the same period in 2023, largely attributed to an increase in interest expense which rose to $71.1 million from $47.7 million. Inflation and rising interest rates have led to a provision for credit losses of $740,000 for the first nine months of 2024, compared to a reversal of $1.2 million in the prior year. The allowance for credit losses (ACL) stood at $28.6 million, or 0.88% of total loans. The economic conditions have indicated a deterioration affecting the credit quality of loans secured by real estate, which constitutes approximately 95% of the Bank's total loans outstanding.
Increased competition in the banking sector, particularly from fintech companies and larger banking institutions.
Competition has intensified in the banking sector, especially from fintech companies offering innovative financial services. The Bank's net income for the first nine months of 2024 was $13.8 million, down from $20.2 million in 2023, reflecting pressure from both traditional and non-traditional competitors. As of September 30, 2024, the Bank's total deposits were $3.3 billion, which saw a reduction in noninterest-bearing checking deposits by $11.3 million. The Bank's efficiency ratio was reported at 76.39%, indicating potential inefficiencies relative to rising competition.
Regulatory changes that may impact operations and profitability, particularly in the context of community banking regulations.
The First of Long Island Corporation has adopted the community bank leverage ratio (CBLR) framework, which requires a leverage ratio greater than 9.00%. As of September 30, 2024, the Corporation's leverage ratio was 10.13%. Changes in community banking regulations could impact the operational flexibility and profitability of the Bank, especially in light of its ongoing merger and consolidation efforts, which have incurred $1.4 million in expenses. The effective tax rate has also seen fluctuations, dropping to -0.3% from 11.6% year-on-year.
Potential adverse effects from the merger on employee morale and customer retention during the integration phase.
The ongoing merger activities have raised concerns regarding employee morale and customer retention. The merger expenses recorded in the third quarter of 2024 amounted to $866,000, impacting the operational stability of the Bank. The integration process may lead to disruptions, as indicated by the $1.4 million in branch consolidation expenses incurred. Employee turnover and customer attrition could pose significant risks to maintaining service quality and operational efficiency during this transitional phase.
Environmental risks associated with real estate collateral, which may impact loan valuations and credit loss estimates.
Environmental risks surrounding properties that secure the Bank’s mortgage loans are a concern, especially as approximately 95% of the total loan portfolio is backed by real estate. The Bank's multifamily loans, which represent 44% of its commercial real estate portfolio, amounted to $862 million as of September 30, 2024. Any adverse environmental changes could lead to significant fluctuations in loan valuations and necessitate higher provisions for credit losses, which are already being affected by current economic conditions.
| Financial Metric | 2024 (YTD) | 2023 (YTD) |
|---|---|---|
| Net Interest Income | $55.2 million | $66.9 million |
| Provision for Credit Losses | $740,000 | $(1.2 million) |
| Allowance for Credit Losses | $28.6 million (0.88% of total loans) | $29.0 million (0.89% of total loans) |
| Total Deposits | $3.3 billion | N/A |
| Efficiency Ratio | 76.39% | N/A |
| Merger Expenses | $1.4 million | N/A |
| Multifamily Loans | $862 million | N/A |
In conclusion, The First of Long Island Corporation (FLIC) demonstrates a resilient business model characterized by a strong capital position and consistent dividend payments. However, challenges such as declining net interest income and increased competition present hurdles that must be navigated carefully. By capitalizing on strategic opportunities like mergers and technological advancements, FLIC has the potential to enhance its market standing and drive future growth despite the threats posed by economic uncertainties and regulatory changes.
Article updated on 8 Nov 2024
Resources:
- The First of Long Island Corporation (FLIC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The First of Long Island Corporation (FLIC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The First of Long Island Corporation (FLIC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.