0000740663-17-000007.txt : 20170809 0000740663-17-000007.hdr.sgml : 20170809 20170809111048 ACCESSION NUMBER: 0000740663-17-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 62 CONFORMED PERIOD OF REPORT: 20170630 FILED AS OF DATE: 20170809 DATE AS OF CHANGE: 20170809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST OF LONG ISLAND CORP CENTRAL INDEX KEY: 0000740663 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 112672906 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32964 FILM NUMBER: 171016853 BUSINESS ADDRESS: STREET 1: 10 GLEN HEAD RD CITY: GLEN HEAD STATE: NY ZIP: 11545 BUSINESS PHONE: 5166714900 MAIL ADDRESS: STREET 1: 10 GLEN HEAD ROAD CITY: GLEN HEAD STATE: NY ZIP: 11545 10-Q 1 flic-20170630x10q.htm 10-Q flic 20170630 10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

____________



FORM 10-Q



(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





 

 

 

 

For the quarterly period ended

June 30, 2017

 



or



[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





 

 

 

 

For the transition period from

to

 



Commission file number 001-32964



THE FIRST OF LONG ISLAND CORPORATION

(Exact name of registrant as specified in its charter)

 



 

New York

11-2672906

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)



 



10 Glen Head Road, Glen Head, NY

11545

(Address of principal executive offices)

(Zip Code)

(516) 671-4900

(Registrant's telephone number, including area code)



Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    No  



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes    No  



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.





 

Large accelerated filer 

Accelerated filer 

Non‑accelerated filer   (Do not check if a smaller reporting company)

Emerging growth company 

Smaller reporting company 

 



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    No  



Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.





 

 

Title of Each Class

 

Outstanding at July  31, 2017

Common stock, $.10 par value per share

 

24,382,495




 

TABLE OF CONTENTS





 

 

PART I.

FINANCIAL INFORMATION

 

ITEM 1.

Financial Statements

 



Consolidated Balance Sheets (Unaudited) – June 30, 2017 and December 31, 2016



Consolidated Statements of Income (Unaudited) – Six and Three Months Ended June 30, 2017 and 2016



Consolidated Statements of Comprehensive Income (Unaudited) – Six and Three Months Ended June 30, 2017 and 2016



Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Six Months Ended June 30, 2017 and 2016



Consolidated Statements of Cash Flows (Unaudited) – Six Months Ended June 30, 2017 and 2016



Notes to Unaudited Consolidated Financial Statements

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

30 

ITEM 4.

Controls and Procedures

32 

PART II.

OTHER INFORMATION

32 

ITEM 1.

Legal Proceedings

32 

ITEM 1A.  

Risk Factors

32 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32 

ITEM 3.

Defaults Upon Senior Securities

32 

ITEM 4.

Mine Safety Disclosures

32 

ITEM 5.

Other Information

32 

ITEM 6.

Exhibits

32 



Signatures

34 



 



 


 

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 





 

 

 

 

 

 



 

 

 

 

 

 



 

June 30,

 

December 31,

(dollars in thousands)

 

2017

 

2016



 

 

 

 

 

 

Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

56,710 

 

$

36,929 



 

 

 

 

 

 

Investment securities:

 

 

 

 

 

 

Held-to-maturity, at amortized cost (fair value of $9,372 and $11,637)

 

 

9,201 

 

 

11,387 

Available-for-sale, at fair value

 

 

739,573 

 

 

815,299 



 

 

748,774 

 

 

826,686 

Loans:

 

 

 

 

 

 

Commercial and industrial

 

 

123,791 

 

 

126,038 

Secured by real estate:

 

 

 

 

 

 

Commercial mortgages

 

 

1,128,454 

 

 

1,085,198 

Residential mortgages

 

 

1,427,555 

 

 

1,238,431 

Home equity lines

 

 

88,392 

 

 

86,461 

Consumer and other

 

 

5,864 

 

 

9,293 



 

 

2,774,056 

 

 

2,545,421 

Allowance for loan losses

 

 

(32,136)

 

 

(30,057)



 

 

2,741,920 

 

 

2,515,364 



 

 

 

 

 

 

Restricted stock, at cost

 

 

30,530 

 

 

31,763 

Bank premises and equipment, net

 

 

35,654 

 

 

34,361 

Bank-owned life insurance

 

 

58,842 

 

 

33,097 

Pension plan assets, net

 

 

17,384 

 

 

17,316 

Other assets

 

 

15,480 

 

 

14,804 



 

$

3,705,294 

 

$

3,510,320 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Checking

 

$

850,316 

 

$

808,311 

Savings, NOW and money market

 

 

1,647,281 

 

 

1,519,749 

Time, $100,000 and over

 

 

203,825 

 

 

178,918 

Time, other

 

 

114,186 

 

 

101,739 



 

 

2,815,608 

 

 

2,608,717 



 

 

 

 

 

 

Short-term borrowings

 

 

136,017 

 

 

207,012 

Long-term debt

 

 

412,362 

 

 

379,212 

Accrued expenses and other liabilities

 

 

9,061 

 

 

9,481 

Deferred income taxes payable

 

 

1,971 

 

 

68 



 

 

3,375,019 

 

 

3,204,490 

Stockholders' Equity:

 

 

 

 

 

 

Common stock, par value $.10 per share: 

 

 

 

 

 

 

Authorized, 40,000,000 shares;

 

 

 

 

 

 

Issued and outstanding,  24,129,266 and 23,699,107 shares

 

 

2,413 

 

 

2,370 

Surplus

 

 

111,569 

 

 

101,738 

Retained earnings

 

 

214,787 

 

 

203,326 



 

 

328,769 

 

 

307,434 

Accumulated other comprehensive income (loss), net of tax

 

 

1,506 

 

 

(1,604)



 

 

330,275 

 

 

305,830 



 

$

3,705,294 

 

$

3,510,320 



See notes to unaudited consolidated financial statements

 

 

1


 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended

 

Three Months Ended



 

June 30,

 

June 30,

(dollars in thousands, except per share data)

 

2017

 

2016

 

2017

 

2016



 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

46,637 

 

$

40,055 

 

$

23,718 

 

$

20,241 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

4,077 

 

 

3,910 

 

 

1,875 

 

 

2,020 

Nontaxable

 

 

6,754 

 

 

6,823 

 

 

3,377 

 

 

3,420 



 

 

57,468 

 

 

50,788 

 

 

28,970 

 

 

25,681 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Savings, NOW and money market deposits

 

 

3,065 

 

 

2,343 

 

 

1,574 

 

 

1,410 

Time deposits

 

 

2,549 

 

 

2,674 

 

 

1,361 

 

 

1,299 

Short-term borrowings

 

 

729 

 

 

131 

 

 

340 

 

 

Long-term debt

 

 

3,672 

 

 

3,666 

 

 

1,902 

 

 

1,692 



 

 

10,015 

 

 

8,814 

 

 

5,177 

 

 

4,408 

Net interest income

 

 

47,453 

 

 

41,974 

 

 

23,793 

 

 

21,273 

Provision for loan losses

 

 

2,081 

 

 

392 

 

 

1,293 

 

 

139 

Net interest income after provision for loan losses

 

 

45,372 

 

 

41,582 

 

 

22,500 

 

 

21,134 



 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management Division income

 

 

1,050 

 

 

990 

 

 

528 

 

 

514 

Service charges on deposit accounts

 

 

1,394 

 

 

1,290 

 

 

691 

 

 

656 

Net gains on sales of securities

 

 

58 

 

 

1,844 

 

 

 

 

1,844 

Other

 

 

1,967 

 

 

1,361 

 

 

1,129 

 

 

717 



 

 

4,469 

 

 

5,485 

 

 

2,349 

 

 

3,731 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries

 

 

11,862 

 

 

11,049 

 

 

5,938 

 

 

5,471 

Employee benefits

 

 

3,591 

 

 

3,449 

 

 

1,782 

 

 

1,780 

Occupancy and equipment

 

 

5,021 

 

 

4,579 

 

 

2,500 

 

 

2,202 

Debt extinguishment

 

 

 —

 

 

1,756 

 

 

 —

 

 

1,756 

Other

 

 

5,675 

 

 

6,470 

 

 

2,915 

 

 

3,663 



 

 

26,149 

 

 

27,303 

 

 

13,135 

 

 

14,872 

Income before income taxes

 

 

23,692 

 

 

19,764 

 

 

11,714 

 

 

9,993 

Income tax expense

 

 

5,478 

 

 

4,400 

 

 

2,581 

 

 

2,264 

Net income

 

$

18,214 

 

$

15,364 

 

$

9,133 

 

$

7,729 



 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$.76

 

 

$.70

 

 

$.38

 

 

$.34

Diluted

 

 

.75

 

 

.69

 

 

.37

 

 

.34



 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

 

.28

 

 

.27

 

 

.14

 

 

.13



See notes to unaudited consolidated financial statements 

 

 

2


 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) 

 





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended

 

Three Months Ended



 

June 30,

 

June 30,

(dollars in thousands)

 

2017

 

2016

 

2017

 

2016

Net income

 

$

18,214 

 

$

15,364 

 

$

9,133 

 

$

7,729 



 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Change in net unrealized holding gains on
  available-for-sale securities

 

 

5,351 

 

 

10,653 

 

 

4,280 

 

 

5,511 

Change in funded status of pension plan

 

 

 

 

122 

 

 

 

 

61 

Other comprehensive income before income taxes

 

 

5,360 

 

 

10,775 

 

 

4,284 

 

 

5,572 

Income tax expense

 

 

2,250 

 

 

4,607 

 

 

1,798 

 

 

2,335 

Other comprehensive income

 

 

3,110 

 

 

6,168 

 

 

2,486 

 

 

3,237 

Comprehensive income

 

$

21,324 

 

$

21,532 

 

$

11,619 

 

$

10,966 



See notes to unaudited consolidated financial statements 

 

 

3


 

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended June 30, 2017



 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 



 

Common Stock

 

 

 

 

Retained

 

Comprehensive

 

 

 

(dollars in thousands)

 

Shares

 

Amount

 

Surplus

 

Earnings

 

Income (Loss)

 

Total

Balance, January 1, 2017

 

23,699,107 

 

$

2,370 

 

$

101,738 

 

$

203,326 

 

$

(1,604)

 

$

305,830 

Net income

 

 

 

 

 

 

 

 

 

 

18,214 

 

 

 

 

 

18,214 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

3,110 

 

 

3,110 

Shares withheld upon the vesting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and conversion of RSUs

 

(19,339)

 

 

(2)

 

 

(525)

 

 

 

 

 

 

 

 

(527)

Common stock issued under

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock compensation plans

 

126,878 

 

 

13 

 

 

618 

 

 

 

 

 

 

 

 

631 

Common stock issued under

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

dividend reinvestment and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock purchase plan

 

322,620 

 

 

32 

 

 

8,407 

 

 

 

 

 

 

 

 

8,439 

Stock-based compensation

 

 

 

 

 

 

 

1,331 

 

 

 

 

 

 

 

 

1,331 

Cash dividends declared

 

 

 

 

 

 

 

 

 

 

(6,753)

 

 

 

 

 

(6,753)

Balance, June 30, 2017

 

24,129,266 

 

$

2,413 

 

$

111,569 

 

$

214,787 

 

$

1,506 

 

$

330,275 









 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended June 30, 2016



 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 



 

Common Stock

 

 

 

 

Retained

 

Comprehensive

 

 

 

(dollars in thousands)

 

Shares

 

Amount

 

Surplus

 

Earnings

 

Income

 

Total

Balance, January 1, 2016

 

14,116,677 

 

$

1,412 

 

$

56,931 

 

$

185,069 

 

$

7,524 

 

$

250,936 

Net income

 

 

 

 

 

 

 

 

 

 

15,364 

 

 

 

 

 

15,364 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

6,168 

 

 

6,168 

Common stock issued in public

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

offering, net of issuance costs

 

1,300,000 

 

 

130 

 

 

35,132 

 

 

 

 

 

 

 

 

35,262 

Shares withheld upon the vesting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and conversion of RSUs

 

(13,393)

 

 

(1)

 

 

(369)

 

 

 

 

 

 

 

 

(370)

Common stock issued under

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock compensation plans

 

82,762 

 

 

 

 

462 

 

 

 

 

 

 

 

 

470 

Common stock issued under

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

dividend reinvestment and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock purchase plan

 

104,648 

 

 

10 

 

 

2,889 

 

 

 

 

 

 

 

 

2,899 

Stock-based compensation

 

 

 

 

 

 

 

914 

 

 

 

 

 

 

 

 

914 

Cash dividends declared

 

 

 

 

 

 

 

 

 

 

(5,991)

 

 

 

 

 

(5,991)

Balance, June 30, 2016

 

15,590,694 

 

$

1,559 

 

$

95,959 

 

$

194,442 

 

$

13,692 

 

$

305,652 



See notes to unaudited consolidated financial statements

 

 

4


 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 





 

 

 

 

 

 



 

 

 

 

 

 



 

Six Months Ended



 

June 30,

(dollars in thousands)

 

2017

 

2016

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net income

 

$

18,214 

 

$

15,364 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Provision for loan losses

 

 

2,081 

 

 

392 

Provision (credit) for deferred income taxes

 

 

(348)

 

 

594 

Depreciation and amortization

 

 

1,713 

 

 

1,590 

Premium amortization on investment securities, net

 

 

1,608 

 

 

1,880 

Net gains on sales of securities

 

 

(58)

 

 

(1,844)

Net loss on sales of loans held-for-sale

 

 

 —

 

 

Loss on debt extinguishment

 

 

 —

 

 

1,756 

Stock-based compensation expense

 

 

1,331 

 

 

914 

Common stock issued in lieu of cash for director fees

 

 

27 

 

 

 —

Accretion of cash surrender value on bank-owned life insurance

 

 

(745)

 

 

(467)

Pension expense (credit)

 

 

(59)

 

 

Increase in other assets

 

 

(676)

 

 

(2,098)

Decrease in accrued expenses and other liabilities

 

 

(501)

 

 

(3,138)

Net cash provided by operating activities

 

 

22,587 

 

 

14,957 

Cash Flows From Investing Activities:

 

 

 

 

 

 

Proceeds from sales of investment securities:

 

 

 

 

 

 

Held-to-maturity

 

 

355 

 

 

123 

Available-for-sale

 

 

40,011 

 

 

40,989 

Proceeds from maturities and redemptions of investment securities:

 

 

 

 

 

 

Held-to-maturity

 

 

3,762 

 

 

3,384 

Available-for-sale

 

 

58,931 

 

 

48,646 

Purchases of investment securities:

 

 

 

 

 

 

Held-to-maturity

 

 

(1,883)

 

 

(1,287)

Available-for-sale

 

 

(19,462)

 

 

(203,374)

Proceeds from sales of loans held-for-sale

 

 

 —

 

 

100 

Net increase in loans

 

 

(228,637)

 

 

(105,400)

Net decrease in restricted stock

 

 

1,233 

 

 

5,361 

Purchases of premises and equipment, net

 

 

(3,006)

 

 

(2,787)

Purchase of bank-owned life insurance

 

 

(25,000)

 

 

 —

Net cash used in investing activities

 

 

(173,696)

 

 

(214,245)

Cash Flows From Financing Activities:

 

 

 

 

 

 

Net increase in deposits

 

 

206,891 

 

 

340,180 

Net decrease in short-term borrowings

 

 

(70,995)

 

 

(153,836)

Proceeds from long-term debt

 

 

42,050 

 

 

23,500 

Repayment of long-term debt

 

 

(8,900)

 

 

(31,756)

Proceeds from issuance of common stock, net

 

 

8,439 

 

 

38,161 

Proceeds from exercise of stock options

 

 

604 

 

 

470 

Repurchase and retirement of common stock

 

 

(527)

 

 

(370)

Cash dividends paid

 

 

(6,672)

 

 

(5,670)

Net cash provided by financing activities

 

 

170,890 

 

 

210,679 

Net increase in cash and cash equivalents

 

 

19,781 

 

 

11,391 

Cash and cash equivalents, beginning of year

 

 

36,929 

 

 

39,635 

Cash and cash equivalents, end of period

 

$

56,710 

 

$

51,026 

Supplemental Cash Flow Disclosures:

 

 

 

 

 

 

  Cash paid for:

 

 

 

 

 

 

     Interest

 

$

10,008 

 

$

12,048 

     Income taxes

 

 

5,933 

 

 

4,857 

Noncash investing and financing activities:

 

 

 

 

 

 

     Cash dividends payable

 

 

3,449 

 

 

3,144 

 

See notes to unaudited consolidated financial statements 

 

5


 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

1 - BASIS OF PRESENTATION 



The accounting and reporting policies of The First of Long Island Corporation (“Corporation”) reflect banking industry practice and conform to generally accepted accounting principles in the United States. In preparing the consolidated financial statements, management is required to make estimates, such as the allowance for loan losses, and assumptions that affect the reported asset and liability balances, revenue and expense amounts, and the disclosure of contingent assets and liabilities. Actual results could differ significantly from those estimates.



The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, The First National Bank of Long Island (“Bank”). The Bank has two wholly owned subsidiaries: FNY Service Corp., an investment company, and The First of Long Island Agency, Inc. The Bank and FNY Service Corp. jointly own another subsidiary, The First of Long Island REIT, Inc., a real estate investment trust. The consolidated entity is referred to as the “Corporation” and the Bank and its subsidiaries are collectively referred to as the “Bank.” All intercompany balances and amounts have been eliminated. For further information refer to the consolidated financial statements and notes thereto included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2016.



The consolidated financial information included herein as of and for the periods ended June 30, 2017 and 2016 is unaudited. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The December 31, 2016 consolidated balance sheet was derived from the Corporation's December 31, 2016 audited consolidated financial statements. When appropriate, items in the prior year financial statements are reclassified to conform to the current period presentation.



In the fourth quarter of 2016, the Corporation adopted Accounting Standards Update (“ASU”) 2016-09 “Improvements to Employee Share-Based Payment Accounting.” Earnings for the first three quarters of 2016 were adjusted retroactively to reflect the adoption of the ASU effective as of January 1, 2016. The ASU increased net income in the first half of 2017 and 2016 through credits to income tax expense by $597,000 and $314,000, respectively, and in the second quarter of 2017 and 2016 by $312,000 and $109,000, respectively.

 

2  - EARNINGS PER SHARE



The following table sets forth the calculation of basic and diluted earnings per share (“EPS”) for the periods indicated.







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended

 

Three Months Ended



 

June 30,

 

June 30,

(dollars in thousands, except per share data)

 

2017

 

2016

 

2017

 

2016

Net income

 

$

18,214 

 

$

15,364 

 

$

9,133 

 

$

7,729 

Income allocated to participating securities (1)

 

 

68 

 

 

65 

 

 

34 

 

 

33 

Income allocated to common stockholders

 

$

18,146 

 

$

15,299 

 

$

9,099 

 

$

7,696 



 

 

 

 

 

 

 

 

 

 

 

 

Weighted average:

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

 

23,975,687 

 

 

21,902,417 

 

 

24,091,447 

 

 

22,529,255 

Dilutive stock options and restricted stock units (1)

 

 

257,063 

 

 

266,330 

 

 

249,901 

 

 

257,975 



 

 

24,232,750 

 

 

22,168,747 

 

 

24,341,348 

 

 

22,787,230 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$.76

 

 

$.70

 

 

$.38

 

 

$.34

Diluted

 

 

.75

 

 

.69

 

 

.37

 

 

.34



(1) Restricted stock units (“RSUs”) awarded in 2016 accrue dividends at the same rate as the dividends declared by the Board of Directors on the Corporation’s common stock. For purposes of computing EPS, these RSUs are considered to participate with common stock in the earnings of the Corporation and, therefore, the Corporation is required to calculate basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings.

 

 

6


 

3 - COMPREHENSIVE INCOME



Comprehensive income includes net income and other comprehensive income. Other comprehensive income includes revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but excluded from net income. Other comprehensive income for the Corporation consists of unrealized holding gains or losses on available-for-sale securities and changes in the funded status of the Bank’s defined benefit pension plan, both net of related income taxes. Accumulated other comprehensive income or loss is recognized as a separate component of stockholders’ equity.



The components of other comprehensive income and the related tax effects are as follows:

 





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended

 

Three Months Ended



 

June 30,

 

June 30,



 

2017

 

2016

 

2017

 

2016



 

(in thousands)

Change in net unrealized holding gains on
  available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

Change arising during the period

 

$

5,408 

 

$

12,480 

 

$

4,280 

 

$

7,338 

Reclassification adjustment for gains included in net income (1)

 

 

(57)

 

 

(1,827)

 

 

 —

 

 

(1,827)

Change in net unrealized holding gains on
  available-for-sale securities

 

 

5,351 

 

 

10,653 

 

 

4,280 

 

 

5,511 

Tax effect

 

 

2,246 

 

 

4,608 

 

 

1,796 

 

 

2,310 



 

 

3,105 

 

 

6,045 

 

 

2,484 

 

 

3,201 

Change in funded status of pension plan:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net actuarial loss included in pension expense (2)

 

 

 

 

122 

 

 

 

 

61 

Tax effect

 

 

 

 

(1)

 

 

 

 

25 



 

 

 

 

123 

 

 

 

 

36 

Other comprehensive income

 

$

3,110 

 

$

6,168 

 

$

2,486 

 

$

3,237 



(1) Reclassification adjustment represents net realized gains arising from the sale of available-for-sale securities. The net realized gains are included in the consolidated statements of income in the line item, “Net gains on sales of securities.” See “Note 4 – Investment Securities” for the income tax expense related to the net realized gains, which is included in the consolidated statements of income in the line item, “Income tax expense.”



(2) Represents the amortization into expense of net actuarial loss relating to the Corporation’s defined benefit pension plan. This item is included in net periodic pension cost (see Note 7) and in the consolidated statements of income in the line item, “Employee benefits.” The related income tax expense is included in the consolidated statements of income in the line item, “Income tax expense.”



The following table sets forth the components of accumulated other comprehensive income (loss), net of tax:







 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

 

 

 

Current

 

 

 



 

Balance

 

Period

 

Balance



 

12/31/16

 

Change

 

6/30/17



 

(in thousands)

Unrealized holding gains on available-for-sale securities

 

$

1,654 

 

$

3,105 

 

$

4,759 

Unrealized actuarial losses on pension plan

 

 

(3,258)

 

 

 

 

(3,253)

   Accumulated other comprehensive income (loss), net of tax

 

$

(1,604)

 

$

3,110 

 

$

1,506 



 

 

7


 

4 - INVESTMENT SECURITIES



The following tables set forth the amortized cost and estimated fair values of the Bank’s investment securities.







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

June 30, 2017



 

 

 

 

Gross

 

Gross

 

 

 



 

Amortized

 

Unrealized

 

Unrealized

 

Fair



 

Cost

 

Gains

 

Losses

 

Value

Held-to-Maturity Securities:

 

(in thousands)

State and municipals

 

$

8,362 

 

$

117 

 

$

 —

 

$

8,479 

Pass-through mortgage securities

 

 

334 

 

 

28 

 

 

 —

 

 

362 

Collateralized mortgage obligations

 

 

505 

 

 

26 

 

 

 —

 

 

531 



 

$

9,201 

 

$

171 

 

$

 —

 

$

9,372 

Available-for-Sale Securities:

 

 

 

 

 

 

 

 

 

 

 

 

State and municipals

 

$

443,586 

 

$

12,735 

 

$

(1,477)

 

$

454,844 

Pass-through mortgage securities

 

 

158,948 

 

 

116 

 

 

(2,347)

 

 

156,717 

Collateralized mortgage obligations

 

 

129,063 

 

 

249 

 

 

(1,300)

 

 

128,012 



 

$

731,597 

 

$

13,100 

 

$

(5,124)

 

$

739,573 



 

 

 

 

 

 

 

 

 

 

 

 



 

December 31, 2016

Held-to-Maturity Securities:

 

 

 

 

 

 

 

 

 

 

 

 

State and municipals

 

$

10,419 

 

$

177 

 

$

 —

 

$

10,596 

Pass-through mortgage securities

 

 

361 

 

 

33 

 

 

 —

 

 

394 

Collateralized mortgage obligations

 

 

607 

 

 

40 

 

 

 —

 

 

647 



 

$

11,387