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A 'First' in Banking: Under the Radar

Stocks in this article: FLIC C BAC

NEW YORK ( TheStreet) -- If you're looking to invest in a company that has a slick Web site, flashy logo or cool name, First of Long Island (FLIC) probably isn't for you. What the bank lacks in flash, it makes up for in solidity and growth.

As banks like Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) shook under the weight of terrible risk-control decisions and massive leverage, leading to the need for government intervention, Glen Head, New York-based First of Long Island was plugging away, earning comfortable profits in the traditional manner that a bank does: borrowing at a low rate and lending out at a higher one.

First of Long Island's stock has climbed 37% over the past year and currently yields almost 3% more in dividends. It outperforms the S&P 500 Index by 18%. While other financial stocks have shot through the roof in 2009, First of Long Island has had a much slower burn due to the fact that it didn't suffer a massive loss at the end of 2008. It's much better suited for investors who may be more risk-averse than the big-name financials.

With annual revenue growth of 12.4% in the second quarter and analysts predicting a pace of 5.3% for the third quarter, the bank's outlook seems bright. Earnings never cratered for First of Long Island since the bank didn't place heavy bets on derivatives or toxic mortgage assets.

Earnings are expected to increase in the third quarter by more than 6%, far surpassing the estimated 33% decrease for the S&P 500. A quick glance at the balance sheet may lead some to think that the bank has high leverage. However, compared with similar banks, the numbers are in line with the averages, and, considering the composition of assets, the bank is far safer than big banks that have bet on high-yielding, though risky, securities rather than government-backed securities.

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