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The First Of Long Island Corporation Announces 9.5% Increase In Net Income For The First Quarter Of 2013

Stocks in this article: FLIC

GLEN HEAD, N.Y., April 30, 2013 (GLOBE NEWSWIRE) -- The First of Long Island Corporation (Nasdaq:FLIC), the parent company of The First National Bank of Long Island, reported that net income and earnings per share for the first quarter of 2013 were $5.6 million and $.62, respectively, representing increases over the same quarter last year of 9.5% and 6.9%, respectively. Dividends per share were $.25 for the first quarter of 2013, or 8.7% more than the $.23 per share declared in the same quarter last year. Returns on average assets (ROA) and average equity (ROE) for the first quarter of 2013 were 1.09% and 11.10%, respectively, versus 1.01% and 10.67%, respectively, for the first quarter of 2012. A decrease in unrealized gains on available-for-sale securities accounts for a significant portion of the increase in ROE and is the reason the Corporation's book value per share decreased from $22.81 at year-end 2012 to $22.71 at the end of the current quarter. The credit quality of the Bank's loan portfolio remains excellent and the loan pipeline is strong.

Analysis of First Quarter Earnings

The increase in net income for the first quarter of 2013 is primarily attributable to a decrease in the provision for loan losses of $1.3 million, as partially offset by increases in noninterest expense of $603,000 and income tax expense of $330,000. Because of the low interest rate environment, net interest income for the quarter only increased by $136,000, or .9%, and net interest margin declined by 6 basis points despite significant growth in the average balances of loans and noninterest-bearing checking deposits. A low interest rate environment negatively impacts net interest income and net interest margin primarily because: (1) the benefit of no cost funding in the form of noninterest-bearing checking deposits and capital is reduced; (2) cash received from payments and prepayments of higher yielding loans and securities is used to originate or purchase lower yielding loans and securities; (3) the rates on some loans are modified downward to dissuade borrowers from refinancing elsewhere, while other loans prepay in full resulting in the immediate writeoff of deferred costs; and (4) prepayment speeds on mortgage securities are high, thereby necessitating the faster amortization of purchase premiums.

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