Celebrating 85 years. Safety, security, success. annual report

Transcription

1 Celebrating 85 years Safety, security, success 2012 annual report

2 A Message From The & CEO Dear Shareholders: I am pleased to report that The First of Long Island Corporation increased net income and earnings per share for the year. Net income increased by 4.8% to $20.4 million, and earnings per share increased 3.2% to $2.27. The increase in net income was primarily driven by loan growth, a decrease in our provision for loan losses and the growth of fee income. One of our core strategies remains changing the composition of our earning assets from securities to loans. Loans as a percentage of total assets increased from 48.7% at the beginning of this year to 54.4% at year end. While continuing to grow loans is essential to preserving our net interest margin, we must be measured and disciplined in our approach and maintain our cult-like dedication to asset quality. We must be careful not to compromise our credit underwriting standards, since credit quality and a fortress balance sheet have consistently been the hallmarks of our success. I am also pleased to inform you that our core deposit base continues to grow. Our market share of deposits on Long Island is now approaching 2%, up from approximately 1% just eight years ago. During 2012, the average balance of savings, NOW and money market deposits grew just over $93 million, or 12.5%, and the average balance of noninterest-bearing checking deposits grew just over $48 million, or 11.5%. Much of our checking deposit growth was associated with further penetration into small and middle-market commercial businesses in our marketplace. Deposits associated with banking relationships remain our most significant and fundamental source of funding. Growth in our core deposits was used to support growth in the average balance of loans outstanding of $126 million, or 13.3%. In a low interest rate environment, which we expect will persist for quite some time, double-digit loan growth remains key to our success. We have worked hard to maintain our excellent asset quality. At December 31, 2012, nonaccrual loans amounted to $4.1 million, or just.36% of total loans. Additionally, our $18.6 million allowance for loan losses is 4.5 times our nonaccrual loans. This level of coverage on nonaccrual loans positions us among the top banks in our national peer group. With negative GDP growth in the fourth quarter of 2012, we must remain vigilant in terms of economic challenges and expect the unexpected. The Bank remains extremely well capitalized. Capital serves as a buffer to absorb the impact of potential bumps in the road. The Corporation s Tier 1 leverage ratio at year-end 2012 was 9.29%. Considering our strong asset quality, this is a conservative ratio that positions us to meet unexpected challenges and allows us flexibility in choosing how assertive we want to be in growing the institution. During 2012, we continued our branch expansion. We planned to open our Lindenhurst location the first week in November, but those plans were interrupted by Super Storm Sandy. The Lindenhurst micro market was hit particularly hard, and our attention was temporarily diverted to assisting customers whose homes and businesses were adversely impacted by the storm. Despite these obstacles, we still managed to open the Lindenhurst branch in late December. We believe that continued branch expansion is consistent with creating long-term shareholder value, but, in light of the low interest rate environment, must be done at a very measured pace and in a way that will keep occupancy and other operating costs to a minimum. Accordingly, we will likely limit our branch openings to one or two per year, and thereby appropriately balance short-term challenges with the long-term goal of building franchise value. In 2013, we are planning to open two relatively small branches one in Massapequa Park and the other in Sayville. These locations will add to the distinct chain of branches we have constructed along the South Shore of Long Island and are key components of our long-term distribution strategy. In addition, we consolidated two of our New York City branches. This will have a positive effect on our operating expenses, and we expect no significant loss of business. As we have become the largest nationally chartered commercial bank headquartered on Long Island, our commitment to the communities we serve has grown. For example, our support of not-for-profit organizations such as the INN (Interfaith Nutritional Network), Habitat for Humanity, The American Breast Cancer Society, and Toys for Tots, has evolved not only in terms of monetary donations, but also in terms of personal involvement. Our employees dedicate time and effort to a number of very worthy causes, and I applaud and support them in this regard. As an organization grows in size and stature within a particular geography, there is always a responsibility to give back to the community it serves. It is our intention to remain a bank that is sensitive to community needs. As I look to the year ahead, there are several critical challenges that must be met. Certainly the low interest rate environment and its corresponding effect on our net interest margin remains an issue. Additionally, the banking industry remains one of the most regulated We have worked hard to maintain our excellent asset quality. industries in the country. The cost of regulation continues to escalate year after year without, in my opinion, balanced thoughtfulness as to how it negatively impacts our ability to efficiently serve our customers and enhance shareholder value. Lastly, the economy remains fragile. Unemployment rates continue to hover close to 8%. In some geographic areas real estate values are rising, but off much lower foundational values. Disposable income levels are disturbing and government spending must be addressed. Regardless of these significant obstacles, The First National Bank of Long Island has consistently been able to grow earnings per share and preserve the integrity of our balance sheet. I am confident our core strategies will continue to be executed in a way that fulfills our fiduciary duty of creating long-term value for our shareholders. Michael N. Vittorio and Chief Executive Officer 2012 ANNUAL REPORT 3

3 85 Years of Safety, Security, Success 85 Years of Safety, Security, Success 1920 s 1930 s 1940 s 1950 s 1960 s 1970 s October 1, 1927 The First National Bank of Glen Head opens for business in Glen Head. G. Thomas Powell is. Personal Loan Department established, loan limits are between $50 and $1, Home Loan Plan introduced Auto Loan Department formed. Finance charges 25% lower than competition, 24-month term available Bank celebrates its 20th anniversary State-of-the- Art teller machines installed; tellers will no longer need to make pen and ink entries in passbooks Robert S. Miller, who was first employee of the Bank, is elected to office of Bank opens Roslyn branch Bank opens Greenvale branch Bank opens Northport branch equipped with town s only drive-up window Anthony D. Famighetti becomes of The First National Bank of Glen Head The First National Bank of Glen Head celebrates 40 years as the Bankway to the North Shore Bank opens Old Brookville branch Edward F. Ned McAdams elected Bank opens Woodbury branch Bank changes its name to The First National Bank of Long Island J. William Johnson elected. 50 th Anniversary 1977 $70,189,714 6 branches CELEBRATING 85 YEARS OF SUCCESS In the early 1920 s, Long Island s North Shore farmers and business owners traveled to New York City, approximately 30 miles away, to complete their everyday banking transactions and receive loans. Due to the distance, this became very difficult. Thanks to the hard work of area farmers and business owners, $50,000 in capital was raised and The First National Bank of Glen Head officially opened its doors on October 1, 1927 in Glen Head, New York. This branch, located on the corner of Roosevelt Street and Glen Head Road, still stands today. The original officers of the Bank included G. Thomas Powell, ; Harry Tappen, ; and Robert S. Miller, Cashier. In 1978, The First National Bank of Glen Head officially changed its name to The First National Bank of Long Island. On October 1, 2012, The First National Bank of Long Island celebrated 85 years of service. We are very proud of our achievements, especially our branch footprint of 35 branch locations on Long Island and in Manhattan. Our plans to expand in selected markets will continue since our goal is to provide you with the personalized service you deserve as the Bank Where Everyone Knows Your Name. Most importantly, we would like to say Thank You to all our customers for banking with us. We look forward to servicing your personal and business financial needs in the years to come. 75 th Anniversary 1981 Bank opens Lake Success branch, first Commercial Banking Office hour automated teller introduced at Glen Head branch; one of the first banks on Long Island to introduce a 24-Hour Banking ATM The First of Long Island Corporation (the holding company) was formed. The First National Bank of Long Island becomes wholly owned subsidiary of newly formed First of Long Island Corporation First stock split (1 for 1) Bank opens Huntington branch FLIC listed on NASDAQ; trading begins. Second stock split (3 for 2) Bank opens Hicksville branch $120,658,802 EXCEEDED $100 Million 1988 $273,590,840 EXCEEDED $250 Million 1990 Bank introduces the first low cost Home Equity Line of Credit offered on Long Island - known as StarLine Bank opens New Hyde Park branch Bank introduces shorter term, low rate Residential Mortgages Bank opens Locust Valley branch Bank opens Great Neck branch Bank web site goes live on World Wide Web Bank opens Rockville Centre, Hauppauge and Bohemia branches Bank opens Garden City branch $547,622,000 EXCEEDED $500 Million 2000 Bank opens New Highway and Allen Boulevard branches Bank opens Deer Park branch Michael N. Vittorio named & CEO of Bank and Corporation Bank opens three branches in Manhattan The bank introduces its new tagline Where Everyone Knows Your Name Walter C. Teagle III elected Non-Executive Chairman of the board Bank opens Merrick branch Bank opens Smithtown branch, the first Select Service Banking Center Bank opens Northport Village branch Bank opens Babylon branch Bank opens Port Jefferson Station, Bayville and Valley Stream branches $792,342,000 EXCEEDED $750 Million 19 branches Year End Stock Price $ $1,069,019,000 EXCEEDED $1 Billion 25 branches 2010 Bank opens Cold Spring Harbor, East Meadow, Bellmore and Sea Cliff branches Bank opens Point Lookout and Massapequa branches Bank opens Lindenhurst branch. $2,108,290, $2,022,407,000 EXCEEDED $2 Billion 35 branches Year End Stock Price $26.32 Year End Stock Price $ s 1990 s ANNUAL REPORT s Today

4 Customer Experience London Jewelers 85 Years of Parallel Success The relationship with the bank started in 1995 when we were doing expansion in Manhasset. We were working with another bank and we met with The First National Bank of Long Island to see if they would be interested in being involved with us. They responded within twentyfour hours that they would be there to help us with whatever we needed. It was amazing, within one day they reported back to us and it was the start of the most incredible relationship you could ever imagine between an independent retailer like London Jewelers and The First National Bank of Long Island. Since the mid-1920s, both The First National Bank of Long Island and their client, the world-renowned London Jewelers, have served the Long Island community with unmatched, elite service and attention to the details that create loyal, long-term relationships with consumers. Both The First National Bank of Long Island and London Jewelers are each proud to be celebrating not only 85 years of success, but also their continued business partnership. Both institutions remain dedicated to building on the legacies they have established over decades of service to Long Island. They care about us, they watch over us - we speak all the time. It s not like the typical large bank today. What they do fits our needs. Sometimes we can be a little demanding, but there is always give and take and we come up with a compromise that makes us happy and makes the bank happy. We think that is a critical part of our partnership. We like to be proud of the people that we do business with that s something we take a lot of pride in, picking the right people to do business with. And once we find the right partner, it s very hard to change our minds. A lot of banks have come to us wanting our business, and we will always sit and listen, but our allegiance is to the bank that has taken care of us since They ve been very instrumental in the growth of our business and we can never forget that. - Mark and Candy Udell, London Jewelers They ve been very instrumental in helping the growth of our business, and we can never forget that ANNUAL REPORT 7

5 Board of Directors & Executive Officers Community Outreach Board of Directors The First of Long Island Corporation Allen E. Busching J. Douglas Maxwell Jr. Principal Director B&B Capital NIRx Medical Technologies LLC (consulting and private investment) (medical technology) Paul T. Canarick Stephen V. Murphy & Principal Paul Todd, Inc. S.V. Murphy & Co., Inc. (construction company) (investment banking) Alexander L. Cover Milbrey Rennie Taylor Management Consultant Strategic and Media Consultant (private practice) Howard Thomas Hogan Jr., Esq. Director Hogan & Hogan (attorney at law) Walter C. Teagle III Chairman Teagle Management, Inc. (private investment firm) Chairman The Teagle Foundation, Inc. Managing General Partner Gulo Capital Partners L.P. (private investment partnership) Michael N. Vittorio & Chief Executive Officer As a successful financial institution, our corporate responsibility is to give back to the communities that we serve and help those in need, especially on Long Island. The Bank s Community Service Committee continues to help our organization fulfill our corporate responsibility. The Committee includes many bank employees who volunteer their time and efforts to help support various organizations such as The INN, Habitat for Humanity, The American Breast Cancer Society, Special Olympics and Toys for Tots. Thank you to our employees and customers for their generosity. Super Storm Sandy Relief The First National Bank of Long Island is proud of the efforts made on behalf of its customers and the communities it serves in the aftermath of Super Storm Sandy. The bank worked to ease the hardships faced by victims of the storm by providing financial relief, food, shelter, clothing and necessary clean-up supplies. John T. Lane Retired Managing Director J.P. Morgan & Co. Executive Officers The First National Bank of Long Island From left to right (Standing): Stephen V. Murphy, Allen E. Busching, Paul T. Canarick, Howard Thomas Hogan Jr., Esq. and Alexander L. Cover. From left to right (Sitting): John T. Lane, Milbrey Rennie Taylor, J. Douglas Maxwell Jr., Michael N. Vittorio and Walter C. Teagle III. The Interfaith Nutrition Network (INN) For the second year in a row, The First National Bank of Long Island supported The Interfaith Nutrition Network (The INN), in Hempstead, New York. Thanks to the generous donations from customers and bank employees, more than 1,300 pounds of tuna fish was donated to the soup kitchen that feeds the hungry and homeless here on Long Island. Michael N. Vittorio & Chief Executive Officer Mark D. Curtis Executive Chief Financial Officer & Cashier Brian J. Keeney Executive Executive Trust Officer Sallyanne K. Ballweg Senior Executive Richard Kick Executive Senior Operations Officer Donald L. Manfredonia Executive Senior Lending Officer Make A Difference Award In 2012, The First National Bank of Long Island introduced the Make A Difference Community Service Award. The Bank s first winners were Caroline Mennella and Pets4Luv, a non-profit, animal rescue and adoption center. Caroline actively volunteered her time to the organization and is motivated towards making a difference in her community by finding homes for adoptable pets. Richard P. Perro Executive Branch Distribution Christopher Becker Executive Chief Risk Officer From left to right: Donald L. Manfredonia, Sallyanne K. Ballweg, Brian J. Keeney, Michael N. Vittorio, Richard Kick and Mark D. Curtis. Not pictured: Christopher Becker and Richard P. Perro ANNUAL REPORT 9

6 Branch Locations THE LARGEST INDEPENDENT COMMERCIAL BANK HEADQUARTERED ON LONG ISLAND Full Service Offices Commercial Banking Offices 1 BABYLON 42 Deer Park Avenue Babylon, NY (631) Colleen A. Vogelsberg 6 GARDEN CITY 1050 Franklin Avenue Garden City, NY (516) Carol A. Kolesar COMING 13SOON! MASSAPEQUA PARK 1049 Park Blvd. Massapequa Park, NY (516) Paul W. Jervis, Jr. 19 ROCKVILLE CENTRE 310 Merrick Road Rockville Centre, NY (516) Linda Roldan 25 BOHEMIA 30 Orville Drive Bohemia, NY (631) Kathleen M. Crowe 32 NEW HYDE PARK 243 Jericho Turnpike New Hyde Park, NY (516) Susan Costabile BAYVILLE 282 Bayville Avenue Bayville, NY (516) Keith DeCuir Elizabeth A. Materia BELLMORE 408 Bedford Avenue Bellmore, NY (516) Joseph V. Nappi Toni Valente COLD SPRING HARBOR 147 Main Street Cold Spring Harbor, NY (631) Colleen De Stefano EAST MEADOW 1975 Hempstead Turnpike East Meadow, NY (516) Larry McGovern Toni Valente GLEN HEAD 10 Glen Head Road Glen Head, NY (516) Mark T. Branca GREENVALE 7 Glen Cove Road Greenvale, NY (516) Christina Marotta HUNTINGTON 253 New York Avenue Huntington, NY (631) Frank M. Plesche Lindenhurst 1 East Montauk Highway Lindenhurst, NY (631) Michelle Moreira-Jodice LOCUST VALLEY 108 Forest Avenue Locust Valley, NY (516) Elizabeth A. Materia MASSAPEQUA 574 Broadway Massapequa, NY (516) Ava S. Magner MERRICK 1810 Merrick Avenue Merrick, NY (516) Toni Valente NORTHPORT 711 Fort Salonga Road Northport, NY (631) Mary T. Sullivan NORTHPORT VILLAGE 105 Main Street Northport, NY (631) Vincent P. Bartilucci Mary T. Sullivan OLD BROOKVILLE 209 Glen Head Road Old Brookville, NY (516) Henry C. Suhr POINT LOOKOUT 26A Lido Boulevard Point Lookout, NY (516) Linda A. Rowse Linda Roldan 20 COMING 21SOON! ROSLYN HEIGHTS 130 Mineola Avenue Roslyn Heights, NY (516) Lorraine Russo SAYVILLE 215 West Main Street Sayville, NY SEA CLIFF 299 Sea Cliff Avenue Sea Cliff, NY (516) Kirk B. Thomas Elizabeth A. Materia VALLEY STREAM 127 East Merrick Road Valley Stream, NY (516) Julie Freund WOODBURY 800 Woodbury Road, Suite M Woodbury, NY (516) Marianne T. Plummer DEER PARK 60 East Industry Court Deer Park, NY (631) Joanne Maiorana-Davis FARMINGDALE 22 Allen Boulevard Farmingdale, NY (631) Paula C. Lavrado FARMINGDALE 2091 New Highway Farmingdale, NY (631) Michael S. Gervase GREAT NECK 536 Northern Boulevard Great Neck, NY (516) Joanne Bosco HAUPPAUGE 330 Motor Parkway Hauppauge, NY (631) JoAnn Diamond HICKSVILLE 106 Old Country Road Hicksville, NY (516) Abul Quadir Select Service Banking Centers PORT JEFFERSON STATION Davis Professional Park 5225 Nesconset Highway Building 4, Suite 21 Port Jefferson Station, NY (631) Susan Donovan MANHATTAN 232 Madison Avenue New York, NY (212) Judith A. Ferdinand Doris M. Burkett 225 Broadway, Suite 703 New York, NY (212) Gladys Ruggiero LAKE SUCCESS 3000 Marcus Avenue Lake Success, NY (516) Jerry Scansarole SMITHTOWN 285 Middle Country Road, Suite 104 Smithtown, NY (631) Frances A. Koslow 2012 ANNUAL REPORT 11

7 NEW BRANCH Lindenhurst On December 27, 2012, The First National Bank of Long Island opened a full service branch on the South Shore of Long Island in Lindenhurst, New York. The branch attracted over $20 million in deposits in its first nine weeks of operation and has been welcomed by local residents and business owners. Selected Financial Data INCOME STATEMENT DATA: (dollars in thousands, except per share data) Interest Income... $76,229 $76,312 $72,403 $66,286 $59,686 Interest Expense... 16,127 17,567 16,774 18,334 16,743 Net Interest Income... 60,102 58,745 55,629 47,952 42,943 Provision for Loan Losses... 3,628 4,061 3,973 4,285 1,945 Net Income... 20,393 19,457 18,392 13,463 12,962 PER SHARE DATA: Basic Earnings... $2.29 $2.22 $2.33 $1.87 $1.79 Diluted Earnings Cash Dividends Declared Dividend Payout Ratio % 40.91% 36.52% 41.30% 37.08% Book Value... $22.81 $21.53 $17.99 $16.15 $14.25 Tangible Book Value BALANCE SHEET DATA AT YEAR END:... $2,108,290 $2,022,407 $1,711,023 $1,675,169 $1,261,609 Loans... 1,147, , , , ,134 Allowance for Loan Losses... 18,624 16,572 14,014 10,346 6,076 Deposits... 1,633,076 1,502,868 1,292,938 1,277, ,337 Borrowed Funds , , , , ,122 Stockholders' Equity , , , , ,532 AVERAGE BALANCE SHEET DATA:... $2,057,608 $1,852,611 $1,657,396 $1,413,632 $1,181,655 Loans... 1,073, , , , ,356 Allowance for Loan Losses... 18,098 15,013 11,954 6,357 4,947 Deposits... 1,578,233 1,439,647 1,310,507 1,101, ,490 Borrowed Funds , , , , ,275 Stockholders' Equity , , , , ,710 FINANCIAL RATIOS: Return on Average Assets (ROA)....99% 1.05% 1.11%.95% 1.10% Return on Average Stockholders' Equity (ROE) % 11.15% 12.94% 12.15% 12.87% Average Equity to Average Assets % 9.42% 8.58% 7.84% 8.52% The First National Bank of Long Island will continue to expand its branch footprint in 2013 by opening two more full services branches, with Massapequa Park opening early in 2013 and Sayville, slated to open by the end of the year. Stock PRICES AND CASH DIVIDENDS The Corporation s common stock trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market under the symbol FLIC. The following table sets forth high and low sales prices and dividends declared, by quarter, for the years ended December 31, 2012 and Dividends Quarter High Low Declared First $28.25 $25.10 $.23 Second $29.10 $26.27 $.23 Third $31.71 $27.78 $.25 Fourth $31.80 $26.25 $ Dividends Quarter High Low Declared First $29.61 $26.05 Second $28.00 $25.35 Third $28.15 $21.90 Fourth $27.95 $21.55 $.22 $.22 $.23 $ ANNUAL REPORT 13

8 Shareholder Value Balance Sheet Growth Enhancing shareholder value through earnings growth remains a top priority. Over the last five years, our stock outperformed the NASDAQ Market Index and the NASDAQ Bank Stocks Index by a wide margin. Our book value per share grew at a compound annual growth rate of 12.5% from $14.25 at year-end 2008 to $22.81 at year-end Our cash dividend grew at a compound annual growth rate of 9.8% from $.66 per share in 2008 to $.96 per share in Mark D. Curtis Executive Chief Financial Officer and Cashier Net Income Net income grew at a compound annual growth rate of 12% from $12.9 million in 2008 to $20.4 million in 2012 despite a very challenging interest rate environment and an ever-increasing number of new and complex regulatory requirements. in millions Performance Graph The following graph compares the Corporation s total stockholder return with the NASDAQ Market Index and the NASDAQ Bank Stocks Index over a 5-year measurement period assuming $100 invested on January 1, 2008 and dividends reinvested in the Corporation s stock. Total assets grew by $846 million, or 67%, from $1.3 billion at year-end 2008 to $2.1 billion at year-end in millions Total Loans We continue to change the composition of our earning assets from securities to loans. We expect that this strategy will enhance returns, build franchise value and drive both relationships and deposit growth. Total loans grew by $489 million, or 74%, from $658 million at year-end 2008 to $1.1 billion at year-end The Bank has a long history of success by actively managing key risks in areas such as credit, the allowance for loan losses, interest rate risk and liquidity. However, operational risk, information technology risk and reputation risk, among others, no longer take a back seat to these traditional areas of focus. Our teams regularly consider new risks and strengthen our policies and procedures to mitigate risk in all areas. Christopher Becker Executive Chief Risk Officer DIVIDENDS PER SHARE Our current annualized cash dividend of $1.00 per share represents a yield of almost 3.4% on our current stock price. in millions Total Deposits Total deposits grew by $733 million, or 81%, from $900 million at year-end 2008 to $1.6 billion at year-end Book Value Per Share Book value per share grew by 60% from $14.25 at year-end 2008 to $22.81 at year-end in millions ANNUAL REPORT 15

9 C O N S O L I D A T E D B A L A N C E S H E E T S December 31 (dollars in thousands) Assets: Cash and due from banks... $ 41,871 $ 29,101 Temporary investments Cash and cash equivalents... 42,191 29,495 Investment securities: Held-to-maturity, at amortized cost (fair value of $46,958 and $66,077)... 44,167 62,085 Available-for-sale, at fair value , , , ,041 Loans: Commercial and industrial... 54,339 42,572 Secured by real estate: Commercial mortgages , ,875 Residential mortgages , ,374 Home equity lines... 81,124 90,616 Consumer... 4,335 4,596 1,142, ,033 Net deferred loan origination costs... 4,432 2,826 1,147, ,859 Allowance for loan losses... (18,624) (16,572) 1,128, ,287 Restricted stock, at cost... 13,104 12,284 Bank premises and equipment, net... 24,563 21,809 Bank-owned life insurance... 13,665 13,165 Pension plan assets, net... 10,900 6,132 Prepaid FDIC assessment... 1,855 2,770 Other assets... 11,651 11,424 $ 2,108,290 $ 2,022,407 Liabilities: Deposits: Checking... $ 528,940 $ 435,517 Savings, NOW and money market , ,009 Time, $100,000 and over , ,691 Time, other... 91,116 96,651 1,633,076 1,502,868 Short-term borrowings , ,227 Long-term debt , ,500 Accrued expenses and other liabilities... 7,880 9,347 Deferred income taxes payable... 13,330 11,118 1,902,920 1,833,060 Commitments and Contingent Liabilities Stockholders' Equity: Common stock, par value $.10 per share: Authorized, 20,000,000 shares; Issued and outstanding, 9,001,686 and 8,793,932 shares Surplus... 42,643 37,507 Retained earnings , , , ,659 Accumulated other comprehensive income, net of tax... 16,740 17, , ,347 $ 2,108,290 $ 2,022,407 C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E Year Ended December 31 (dollars in thousands, except per share data) Interest and dividend income: Loans... $ 49,651 $ 47,777 $ 45,660 Investment securities: Taxable... 13,836 16,662 16,879 Nontaxable... 12,742 11,873 9,864 76,229 76,312 72,403 Interest expense: Savings, NOW and money market deposits... 3,393 4,035 4,049 Time deposits... 5,803 6,052 5,977 Short-term borrowings Long-term debt... 6,736 7,387 6,640 16,127 17,567 16,774 Net interest income... 60,102 58,745 55,629 Provision for loan losses... 3,628 4,061 3,973 Net interest income after provision for loan losses... 56,474 54,684 51,656 Noninterest income: Investment Management Division income... 1,624 1,539 1,465 Service charges on deposit accounts... 3,053 3,186 3,465 Net gains on sales of available-for-sale securities... 3, ,719 Other... 1,898 1,563 1,284 10,188 6,426 7,933 Noninterest expense: Salaries... 16,360 15,785 15,458 Employee benefits... 5,035 5,066 5,303 Occupancy and equipment... 7,265 7,148 6,486 Debt extinguishment... 3, Other operating... 8,780 8,710 8,579 41,252 36,709 35,826 Income before income taxes... 25,410 24,401 23,763 Income tax expense... 5,017 4,944 5,371 Net Income... $ 20,393 $ 19,457 $ 18,392 Weighted average: Common shares... 8,915,226 8,761,895 7,899,241 Dilutive stock options and restricted stock units... 85,541 93, ,436 9,000,767 8,854,964 8,007,677 Earnings per share: Basic... $2.29 $2.22 $2.33 Diluted... $2.27 $2.20 $2.30 Cash dividends declared per share... $.96 $.90 $ ANNUAL REPORT 17

10 Officers & Official Staff Business Advisory Board Officers The First of Long Island Corporation Michael N. Vittorio & Chief Executive Officer Mark D. Curtis Senior & Treasurer Richard Kick Senior William Aprigliano Robert J. Colosa Chief Auditor Sallyanne K. Ballweg Senior & Secretary Brian J. Keeney Senior Donald L. Manfredonia Senior Christopher Becker Official Staff The First National Bank of Long Island ADMINISTRATION Michael N. Vittorio & Chief Executive Officer Sallyanne K. Ballweg Senior Executive BRANCH ADMINISTRATION Richard P. Perro Executive Allison Stansfield Senior, Eastern District & Manhattan Manager Cathy C. O Malley and Western District Manager Giuseppe Sparacino and Branch Operations Manager COMMERCIAL BANKING James P. Johnis Senior Robert A. Pizza MUNICIPAL BANKING Yve L. Sullivan NASSAU COUNTY REGIONAL OFFICE Robert F. Eisen Dante D. Mancini Jane F. Reed & Senior Commercial Banker NEW YORK CITY REGIONAL OFFICE Alessandro Scichilone SUFFOLK COUNTY REGIONAL OFFICE Margaret M. Curran-Rusch Stephen Durso Richard B. Smith PERSONAL BANKING Patricia A. DeMasi COMMERCIAL LENDING Donald L. Manfredonia Executive Paul J. Daley Senior John G. Fitzpatrick Richard O Rourke Kevin J. Talty CREDIT DEPARTMENT Anne Marie Stefanucci Senior Lisa M. Woltmann DATA PROCESSING Jose Diaz Senior FINANCE Mark D. Curtis Executive, Chief Financial Officer & Cashier William Aprigliano Senior & Chief Accounting Officer Frank A. Milley Senior & Chief Investment Officer Lisa A. DiIorio & Controller Howard F. Hoeberlein Senior Matthew J. Mankowski & Assistant Controller GENERAL SERVICES Daniel Sapanara HUMAN RESOURCES Susan J. Hempton INFORMATION TECHNOLOGY SERVICES Conrad Lissade INVESTMENT MANAGEMENT DIVISION Brian J. Keeney Executive & Executive Trust Officer Josephine Buckley Jane Carmody Sharon E. Pazienza LOAN CENTER Rose A. Florio Robert B. Jacobs MARKETING Laura C. Ierulli OPERATIONS ADMINISTRATION Richard Kick Executive Betsy Gustafson Senior RESIDENTIAL MORTGAGE Frederick T. Hughes RISK MANAGEMENT Christopher Becker Executive & Chief Risk Officer Ann Marie Tarantino, Chief Compliance Officer & Risk Officer Robert J. Colosa and Chief Auditor Joseph R. Albanese, Esq. Managing Partner Albanese & Albanese LLP Bernard Esquenet Chief Executive Officer The Ruhof Corporation Susan Hirschfeld Mohr J. W. Hirschfeld Agency, Inc. Frank Shahery Convermat Corporation Howard Annenberg Shannen Promotions, Inc. Robert Giambalvo, CPA Giambalvo, Stalzer & Company, CPAs, P.C. James Panos, Esq. Attorney James Panos, Attorney at Law Lloyd Straus & Chief Operating Officer North American Partners in Anesthesia, LLP Nicola Arena Chairman Mediterranean Shipping Co. (USA) Kevin J. Harding, Esq. Partner Harding and Harding John G. Passarelli, M.D. Medical Director Long Island Eye Surgical Care P.C. Long Island Ambulatory Surgery Center, LLC H. Craig Treiber The Treiber Group/ Arthur J. Gallagher Richard Arote A.D.E. Systems Inc. Herbert Kotler, Esq. Jay Pitti Chief Executive Officer Merrick House & Gardens Sal J. Turano Abstracts Incorporated Thomas Burke Chief Executive Officer Ophthalmic Consultants of Long Island James J. Lynch Partner Lynch Legal Associates LLP Melvin Schreiber, CPA Managing Member Moses & Schreiber Candy Udell London Jewelers Frank DellaFera Fera Pharmaceuticals, LLC John I. Martinelli Principal Owen Petersen & Co., LLP Arthur C. Schupbach, Esq. Partner Schupbach, Williams & Pavone LLP Mark Udell Chief Exectuive Officer London Jewelers COUNSEL Schupbach, Williams & Pavone LLP SEC COUNSEL Luse Gorman Pomerenk & Schick, PC INDEPENDENT AUDITORS Crowe Horwath LLP ANNUAL REPORT ON FORM 10-K A copy of the Corporation s annual report on Form 10-K for 2012, filed with the Securities and Exchange Commission, may be obtained without charge upon written request to Mark D. Curtis, Senior and Treasurer, The First of Long Island Corporation, 10 Glen Head Road, PO Box 67, Glen Head, New York EXECUTIVE OFFICE The First of Long Island Corporation 10 Glen Head Road, Glen Head, New York (516) TRANSFER AGENT AND REGISTRAR Registrar and Transfer Company 10 Commerce Drive, Cranford, New Jersey (800) ANNUAL MEETING NOTICE The Annual Meeting of Stockholders will be held at The Carltun, Eisenhower Park, 1899 hempstead Turnpike, East Meadow, New York on Tuesday, April 16, 2013 at 3:30 P.M. Arthur Ventura Badge Agency, Inc. George J. Walsh Partner Thompson Hine LLP John W. Walter CEO & National Security Systems, Inc. Executive Trump Management, Inc. Robert A. Wilkie, Esq. Partner Wilkie & Wilkie Mark Wurzel Calico Cottage Inc ANNUAL REPORT 19

11 Business of the Corporation The First of Long Island Corporation ( Corporation ) is a onebank holding company organized under the laws of the State of New York. Its primary business is the operation of its sole subsidiary, The First National Bank of Long Island ( Bank ). The Bank was organized in 1927 under national banking laws and became the sole subsidiary of the Corporation under a plan of reorganization effected April 30,1984. The Bank is a full service commercial bank which provides a broad range of financial services to individual, professional, corporate, institutional and government customers through its thirty-five branch system on Long Island and in Manhattan. The Bank is subject to regulation and supervision of the Federal Reserve Board, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation which also insures its deposits. The Comptroller of the Currency is the primary banking agency responsible for regulating the subsidiary Bank. In addition, the Corporation is subject to the regulations and supervision of the Federal Reserve Board and the Securities and Exchange Commission. Long Island (516) Manhattan (212)