Exhibit 99.1











THE FIRST OF LONG ISLAND CORPORATION ANNOUNCES

18.4% INCREASE IN NET INCOME AND 14.0% INCREASE IN EPS FOR 2018



Glen Head, New York, January 30, 2019 (GLOBE NEWSWIRE) – The First of Long Island Corporation (Nasdaq: FLIC), the parent company of The First National Bank of Long Island, reported increases in net income and earnings per share for the three and twelve months ended December 31, 2018.  In the highlights that follow, all comparisons are of the current three or twelve-month period to the same period last year unless otherwise indicated.



2018 HIGHLIGHTS

 

FOURTH QUARTER HIGHLIGHTS



Analysis of 2018 Earnings

Net income for 2018 was $41.6 million, an increase of $6.5 million, or 18.4%, over 2017.  The increase is attributable to increases in net interest income of $6.0 million, or 6.2%, and noninterest income, before securities losses, of $2.7 million, or 26.5%, and decreases in the provision for loan losses and income tax expense of $6.6 million and $4.8 million, respectively.  These items were partially offset by an increase in noninterest expense of $5.1 million, or 9.2%, and securities losses of $10.4 million in 2018 versus $1.9 million last year.

The increase in net interest income is primarily attributable to growth in the average balance of loans of $419.4 million, or 15.2%, and improved yield on the taxable securities portfolio largely resulting from portfolio restructuring activities.  The positive impact of these items was partially offset by higher funding costs and a decline in prepayment penalties and late charges of $758,000.  Substantially all the loan growth occurred in commercial and residential mortgage loans.  Loan growth was funded with increases in the average balances of noninterest-bearing checking deposits, interest-bearing deposits, borrowings and stockholders’ equity.  Substantial contributors to the growth in deposits were new branch openings, the

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Bank’s ongoing municipal deposit initiative, deposit promotions and the issuance of brokered certificates of deposit.  The growth in stockholders’ equity was substantially attributable to net income and the issuance of shares under the Corporation’s Dividend Reinvestment and Stock Purchase Plan (the “DRP Plan”), partially offset by cash dividends declared, a decline in the after-tax value of available-for-sale securities and share purchases under the Corporation’s Stock Repurchase Program.

Net interest margin for 2018 was 2.64%, down 27 basis points from 2.91% for 2017.  The decrease in net interest margin is largely attributable to:

Management has implemented and will continue to implement a variety of measures designed to stabilize net interest margin.  These measures slowed the rate of decline in quarterly net interest margin in the second and third quarters of 2018 and made a significant contribution to the fourth quarter increase.  They include, among others, the following:

In addition to stabilizing net interest margin, slowing loan growth contributed to the reduction in the provision for loan losses this year.  Reducing the need for funding enabled the Bank to slow the pace of new branch openings thereby resulting in significant noninterest expense savings.  The pre-tax and after-tax loss in 2018 on securities portfolio restructuring activities totaled $10.4 million and $7.5 million, respectively, and the earn-back period, excluding the deleveraging transaction, is approximately 2.0 years.  Interest income and net interest margin in 2019 are expected to benefit from these transactions by approximately $3.7 million and 11 basis points, respectively, which will help to mitigate the ongoing downward pressure on net interest margin.

The mortgage loan pipeline at year-end 2018 was a modest $61 million, reflecting management’s tempered approach to loan growth.

The reduction in the provision for loan losses for 2018 versus 2017 is mainly due to improved economic conditions, a decline in historical loss rates and less loan growth in the current year, partially offset by a larger decline in specific reserves in 2017.  Net chargeoffs were essentially unchanged in 2018, amounting to $1.2 million versus $1.1 million last year. 

The increase in noninterest income, before securities losses, of $2.7 million, or 26.5%, is primarily attributable to a gain on the sale of bank premises of $1.2 million, a $565,000 bank-owned life insurance (“BOLI”) death benefit and increases of $566,000 in cash value accretion on BOLI and $356,000 in the net credit relating to the non-service cost components of the Bank’s defined benefit pension plan.  Cash value accretion increased because of purchases of BOLI during the first quarters of 2017 and 2018 of $25 million and $20 million, respectively.  The sale of bank premises consisted of the land and building of one bank branch whose deposits will be consolidated with a nearby branch.

The increase in noninterest expense of $5.1 million, or 9.2%, is primarily attributable to increases in salaries of $2.6 million, or 10.1%, employee benefits and other personnel expense of $1.3 million, or 17.5%, and occupancy and equipment expense of $1.4 million, or 14.1%.  Partially offsetting these increases was a valuation allowance of $725,000 recorded in the fourth quarter of 2017 on other real estate owned.  The increase in salaries is primarily due to new branch openings, additions to staff in the back office, normal annual salary adjustments and special salary-related accruals recorded in 2018.  The increase in employee benefits and other personnel expense is largely due to increases in incentive compensation expense, retirement plan expense and payroll tax expense.  The increase in occupancy and equipment expense is primarily due to the operating costs of new branches, increases in maintenance and repairs expense and a growth-related increase in depreciation on the Bank’s facilities and equipment.

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The decrease in income tax expense of $4.8 million is due to: (1) a reduction in the statutory federal income tax rate from 35% in 2017 to 21% in 2018; (2) recognition in 2018 of tax benefits of New York State and New York City net operating loss carryforwards that originated in 2017 of $542,000; (3) recognition of $717,000 in tax benefits related to accelerated tax depreciation resulting from a cost segregation study; and (4) higher tax benefits in the 2018 period from BOLI.  These items are the major contributors to the decline in the Corporation’s effective tax rate from 22.0% in 2017 to 10.9% in 2018.  Management expects the Corporation’s effective tax rate to normalize in the range of 15% to 16% in 2019.

Analysis of Earnings – Fourth Quarter 2018 Versus Fourth Quarter 2017

Net income for the fourth quarter of 2018 was $10.1 million, representing an increase of $2.5 million, or 33.4%, over $7.6 million earned in the same quarter last year.  The increase is primarily attributable to increases in net interest income of $1.8 million and noninterest income, before securities losses, of $1.5 million, and a decrease in the provision for loan losses of $4.0 million.  These items were partially offset by increases in noninterest expense and income tax expense of $446,000 and $765,000, respectively, and securities losses of $5.4 million in 2018 versus $1.9 million in 2017.

The increase in net interest income largely occurred for the same reasons discussed with respect to the full year period and because of an increase in prepayment penalties and late charges of $283,000. The increase in noninterest income, before securities losses, was mainly due to the aforementioned gain on the sale of bank premises and higher cash value accretion on BOLI.  The decrease in the provision for loan losses was primarily attributable to improved economic conditions and lower loan growth and lower net chargeoffs in the fourth quarter of 2018, partially offset by a decrease in specific reserves in the 2017 period.  The increase in noninterest expense largely occurred for the same reasons discussed with respect to the full year period.  The increase in income tax expense is mainly due to higher pre-tax income in the current quarter and a $909,000 credit to income tax expense in the 2017 quarter resulting from the passage of the Tax Cuts and Jobs Act, partially offset by the aforementioned reduction in the statutory federal income tax rate.

Analysis of Earnings – Fourth Quarter Versus Third Quarter 2018

Net income for the fourth quarter of 2018 was relatively unchanged from the third quarter at $10.1 million.  Net interest income increased $884,000, noninterest income, before securities losses, increased $1.2 million and the provision for loan losses decreased $534,000.  These items were almost completely offset by increases in noninterest expense and income tax expense of $847,000 and $1.3 million, respectively.  The increase in net interest income was mainly due to an increase in prepayment penalties and late charges of $424,000 and improved yield on the securities portfolio, partially offset by higher funding costs.  The increase in noninterest income, before securities losses, was mainly due to the aforementioned gain on the sale of bank premises.   The decrease in the provision for loan losses, from a credit provision of $1.8 million in the third quarter to a credit provision of $2.3 million in the fourth quarter, was mainly due to an improvement in economic conditions partially offset by provisioning for loan growth.  The increase in noninterest expense was primarily due to higher salaries, marketing and consulting expense.  The increase in income tax expense was driven by higher pretax earnings in the fourth quarter and a $717,000 tax credit in the third quarter resulting from accelerated tax depreciation from a cost segregation study.

Asset Quality

The Bank’s allowance for loan losses to total loans (reserve coverage ratio) was 1.15% at year-end 2017 and trended down to .94% by December 31, 2018.

The provision (credit) for loan losses was ($1.8 million) and $4.9 million in 2018 and 2017, respectively.  The credit provision in 2018 was driven mainly by an improvement in economic conditions and a reduction in historical losses, partially offset by loan growth and net chargeoffs.  The provision in 2017 was driven by loan growth and net chargeoffs, partially offset by improved economic conditions and a decline in specific reserves.

The credit quality of the Bank’s loan and securities portfolios remain excellent.  Nonaccrual loans, troubled debt restructurings and loans past due 30 through 89 days all remain at very low levels.

Capital

The Corporation’s Tier 1 leverage capital ratio was approximately 9.4% at December 31, 2018 and its risk-based capital ratios remain strong.  The strength of the Corporation’s balance sheet positions the Corporation for continued growth in a measured and disciplined fashion.

The deliberate slowing of balance sheet growth has eliminated the need to raise capital through the DRP Plan and has provided the Corporation with an opportunity to control capital growth through stock repurchases at what management believes to be very attractive pricing.  In this regard, effective with the second quarter 2018 cash dividend, the Corporation

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reduced the optional quarterly cash purchase limit per shareholder under the DRP Plan from $75,000 to $5,000.  This change substantially reduced the number of shares issued under the DRP Plan resulting in less dilution to earnings per share.  Sale of shares under the DRP Plan contributed $18.2 million and $22.6 million to capital in 2018 and 2017, respectively, with a substantial portion of the 2018 amount generated during the first half of the year.  In addition, in October 2018, the Corporation’s Board of Directors approved a common stock repurchase program in an amount up to $20 million.  Under this program, the Corporation may repurchase shares from time to time through open market purchases, privately negotiated transactions or in any manner that is compliant with applicable securities laws.

Key Strategic Initiatives and Challenges We Face

The Bank’s strategy remains focused on increasing shareholder value through loan and deposit growth when conditions warrant and the maintenance of stellar credit quality, a strong efficiency ratio and an optimal amount of capital.  We currently have fifty-two branches in Nassau and Suffolk Counties, Long Island and the New York City boroughs of Queens, Brooklyn and Manhattan and will continue to open new branches but at a slower pace.  In addition, management is also focused on growing noninterest income from existing and potential new sources, which may include the development or acquisition of fee-based businesses.

As previously discussed, in response to the flattening yield curve management implemented a variety of measures designed to stabilize net interest margin and reduce operating expenses and thereby enable continued earnings growth.  Additional steps are likely.  As a result of actions already taken, quarterly net interest margin increased in the fourth quarter of 2018 as compared to the third quarter.  However, net interest margin remains under pressure and is expected to be negatively impacted by further deposit repricings and increases in the federal funds rate.  Management will continue to be measured and disciplined in its approach to the deposit repricings, deposit rate promotions and loan growth, and will not meaningfully loosen its underwriting standards to improve net interest margin.  Assuming the persistence of the relatively flat yield curve, management believes that net interest margin for 2019 could be approximately 2.55%.

With respect to its lending activities, the Bank will continue to prudently manage concentration and credit risk and maintain its broker and correspondent relationships.  Commercial mortgage loans will be emphasized over residential mortgage loans because of the better yield and shorter duration that such mortgages generally provide.  Small business credit scored loans, equipment finance loans and SBA loans, along with the Bank’s traditional commercial and industrial loan products, will be originated to diversify the Bank’s loan portfolio and help mitigate the impact on net interest margin of the flattening yield curve.

In the current environment, banking regulators are concerned about, among other things, growth, commercial real estate concentrations, underwriting of commercial real estate and commercial and industrial loans, capital levels, liquidity, cyber security and predatory sales practices.  Regulatory requirements, the cost of compliance and vigilant supervisory oversight are exerting downward pressure on revenues and upward pressure on required capital levels and operating expenses.





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 CONSOLIDATED BALANCE SHEETS

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CONSOLIDATED STATEMENTS OF INCOME

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EARNINGS PER SHARE

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FINANCIAL RATIOS

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PROBLEM AND POTENTIAL PROBLEM LOANS AND ASSETS

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AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL

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(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. For 2018, the tax-equivalent amount of $1.00 of nontaxable income was $1.27 using the statutory federal income tax rate of 21%. For 2017, the tax-equivalent amount of $1.00 of nontaxable income was $1.54 using the statutory federal income tax rate of 35%.

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AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL

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(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. For 2018, the tax-equivalent amount of $1.00 of nontaxable income was $1.27 using the statutory federal income tax rate of 21%. For 2017, the tax-equivalent amount of $1.00 of nontaxable income was $1.54 using the statutory federal income tax rate of 35%.



Forward Looking Information



This earnings release contains various “forward-looking statements” within the meaning of that term as set forth in Rule 175 of the Securities Act of 1933 and Rule 3b-6 of the Securities Exchange Act of 1934.  Such statements are generally contained in sentences including the words “may” or “expect” or “could” or “should” or “would” or “believe” or “anticipate”.  The Corporation cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements.  Factors that could cause future results to vary from current management expectations include, but are not limited to, changing economic conditions; legislative and regulatory changes; monetary and fiscal policies of the federal

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government; changes in interest rates; deposit flows and the cost of funds; demand for loan products; competition; changes in management’s business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; and other factors discussed in the “risk factors” section of the Corporation’s filings with the Securities and Exchange Commission (“SEC”).  The forward-looking statements are made as of the date of this press release, and the Corporation assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

For more detailed financial information please see the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2018.  The Form 10-K will be available through the Bank’s website at www.fnbli.com on or about March 15, 2019, after it is electronically filed with the SEC.  Our SEC filings are also available on the SEC’s website at www.sec.gov. 





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