FLIC » Topics » Capital

This excerpt taken from the FLIC 10-Q filed May 8, 2009.

Capital

          The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well-capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 17.33%, 16.39% and 8.32%, respectively, at March 31, 2009 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeded at March 31, 2009.

          Total stockholders’ equity increased by $5,120,000, from $102,532,000 at December 31, 2008 to $107,652,000 at March 31, 2009. The increase is primarily comprised of net income of $3,928,000 and $2,170,000 of unrealized gains on available-for-sale securities, as partially offset by $1,296,000 in cash dividends declared.

          Stock Repurchase Program and Market Liquidity. Since 1988, the Corporation has had a stock repurchase program under which it has purchased, from time to time, shares of its own common stock in market or private transactions. The Corporation’s market transactions are generally intended to comply with the manner, timing, price and volume conditions set forth in SEC Rule 10b-18 and therefore, with respect to such transactions, provide the Corporation with safe harbor from liability for market manipulation under section 9(a)(2) and Rule 10b-5 of the Securities Exchange Act of 1934.

          The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock for the twelve months ended March 31, 2009 was 911,509 shares, a small portion (.5%) of which resulted from open market purchases by the Corporation under its share repurchase program.

          Russell Microcap Index. Frank Russell Company maintains a family of U.S. equity indices. The indices are reconstituted in June of each year based on market capitalization and do not reflect subjective opinions. All Indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

          The Corporation’s common stock is included in the Russell Microcap Index. When reconstituted in June 2008, the average market capitalization of companies in the Russell Microcap Index was $310 million, the median market capitalization was $169 million, the capitalization of the largest company in the index was $617 million, and the

20



capitalization of the smallest company in the index was $37 million. The Corporation’s market capitalization as of March 31, 2009 was approximately $145 million.

          The strong performance of the Corporation’s stock over the last year relative to the overall market should result in its stock being included in the Russell 3000 and 2000 Indexes when they are reconstituted in June 2009. The Corporation believes that migration of its stock from the Russell Microcap to the Russell 3000 and 2000 Indexes could improve the stock’s price, trading volume and liquidity. Conversely, if the Corporation’s market capitalization falls below the minimum necessary to be included in the Russell 3000 and 2000 Indexes or the Russell Microcap Index at any future reconstitution date, the opposite could occur.

These excerpts taken from the FLIC 10-K filed Mar 13, 2009.

Capital

          The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well-capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 17.27%, 16.29% and 8.03%, respectively, at December 31, 2008 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeds as of December 31, 2008.

          Total stockholders’ equity increased slightly from $102,384,000 at December 31, 2007 to $102,532,000 at December 31, 2008. The positive impact on stockholders’ equity of net income, unrealized gains on available-for-sale securities, and stock-based compensation transactions was almost entirely offset by stock repurchases, cash dividends declared, and a decrease in the funded status of the Bank’s pension plan.

          Stock Repurchase Program and Market Liquidity. Since 1988, the Corporation has had a stock repurchase program under which it has purchased from time to time shares of its own common stock in market or private transactions. Under plans approved by the Board of Directors in 2007 and 2008, the Corporation purchased 296,479 shares in 2008 and can purchase 114,011 shares in the future. The details of the Corporation’s purchases under the stock repurchase program during the fourth quarter of 2008 are set forth in the table that follows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period

 

Total
Number of
Shares
Purchased

 

Average
Price Paid
Per Share

 

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (1)

 

Maximum Number of
of Shares that May Yet
Be Purchased Under the
Plans or Programs (1)

 


 


 


 


 


 

October 1, 2008 to October 31, 2008

 

 

 

 

 

 

 

 

 

116,711

 

November 1, 2008 to November 30, 2008

 

2,500

 

 

$

21.40

 

 

2,500

 

 

 

114,211

 

December 1, 2008 to December 31, 2008

 

200

 

 

$

22.08

 

 

200

 

 

 

114,011

 


 

 

(1)

All shares purchased by the Corporation under its stock repurchase program in the fourth quarter of 2008 were purchased under a 200,000 share plan approved by the Corporation’s Board of Directors on February 21, 2008 and publicly announced on February 22, 2008. The Corporation’s share repurchase plans do not have fixed expiration dates.

          The stock repurchase program has historically enhanced earnings per share and return on average stockholders’ equity. The program is estimated to have contributed four cents more to earnings per share in 2008 than 2007. The larger contribution to earnings per share this year is attributable to the full-year impact of the shares purchased in 2007 plus the pro rata impact of the shares purchased throughout 2008, taking into account the volume of shares purchased, the price paid per share, and current interest rates.

          The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under the safe harbor provisions of Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock in 2008 and 2007 was 979,245 and 615,795 shares, respectively. Open market purchases by the Corporation under its share repurchase program accounted for 14.6% of the trading volume in 2008 and 12.2% in 2007.

39



          Russell Microcap Index. Frank Russell Company (“Russell”) maintains a family of U.S. equity indices. The indices are reconstituted in June of each year based on market capitalization and do not reflect subjective opinions. All indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

          The Corporation’s common stock is included in the Russell Microcap Index. When reconstituted in June 2008, the average market capitalization of companies in the Russell Microcap Index was $310 million, the median market capitalization was $169 million, the capitalization of the largest company in the index was $617 million, and the capitalization of the smallest company in the index was $37 million. The Corporation’s market capitalization as of December 31, 2008 was approximately $171 million.

          The strong performance of the Corporation’s stock over the last year relative to the overall market should result in its stock being included in the Russell 3000 and 2000 Indexes when they are reconstituted in June 2009. The Corporation believes that migration of its stock from the Russell Microcap to the Russell 3000 and 2000 Indexes could improve the stock’s price, trading volume and liquidity. Conversely, if the Corporation’s market capitalization falls below the minimum necessary to be included in the Russell 3000 and 2000 Indexes or the Russell Microcap Index at any future reconstitution date, the opposite could occur.

           Performance Graph. The following graph compares the Corporation’s total stockholder return over a 5-year measurement period with the NASDAQ Market Index and the NASDAQ Bank Stocks Index.

(LINE GRAPH)

Capital

          The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well-capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 17.27%, 16.29% and 8.03%, respectively, at December 31, 2008 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeds as of December 31, 2008.

          Total stockholders’ equity increased slightly from $102,384,000 at December 31, 2007 to $102,532,000 at December 31, 2008. The positive impact on stockholders’ equity of net income, unrealized gains on available-for-sale securities, and stock-based compensation transactions was almost entirely offset by stock repurchases, cash dividends declared, and a decrease in the funded status of the Bank’s pension plan.

          Stock Repurchase Program and Market Liquidity. Since 1988, the Corporation has had a stock repurchase program under which it has purchased from time to time shares of its own common stock in market or private transactions. Under plans approved by the Board of Directors in 2007 and 2008, the Corporation purchased 296,479 shares in 2008 and can purchase 114,011 shares in the future. The details of the Corporation’s purchases under the stock repurchase program during the fourth quarter of 2008 are set forth in the table that follows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period

 

Total
Number of
Shares
Purchased

 

Average
Price Paid
Per Share

 

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (1)

 

Maximum Number of
of Shares that May Yet
Be Purchased Under the
Plans or Programs (1)

 


 


 


 


 


 

October 1, 2008 to October 31, 2008

 

 

 

 

 

 

 

 

 

116,711

 

November 1, 2008 to November 30, 2008

 

2,500

 

 

$

21.40

 

 

2,500

 

 

 

114,211

 

December 1, 2008 to December 31, 2008

 

200

 

 

$

22.08

 

 

200

 

 

 

114,011

 


 

 

(1)

All shares purchased by the Corporation under its stock repurchase program in the fourth quarter of 2008 were purchased under a 200,000 share plan approved by the Corporation’s Board of Directors on February 21, 2008 and publicly announced on February 22, 2008. The Corporation’s share repurchase plans do not have fixed expiration dates.

          The stock repurchase program has historically enhanced earnings per share and return on average stockholders’ equity. The program is estimated to have contributed four cents more to earnings per share in 2008 than 2007. The larger contribution to earnings per share this year is attributable to the full-year impact of the shares purchased in 2007 plus the pro rata impact of the shares purchased throughout 2008, taking into account the volume of shares purchased, the price paid per share, and current interest rates.

          The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under the safe harbor provisions of Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock in 2008 and 2007 was 979,245 and 615,795 shares, respectively. Open market purchases by the Corporation under its share repurchase program accounted for 14.6% of the trading volume in 2008 and 12.2% in 2007.

39



          Russell Microcap Index. Frank Russell Company (“Russell”) maintains a family of U.S. equity indices. The indices are reconstituted in June of each year based on market capitalization and do not reflect subjective opinions. All indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

          The Corporation’s common stock is included in the Russell Microcap Index. When reconstituted in June 2008, the average market capitalization of companies in the Russell Microcap Index was $310 million, the median market capitalization was $169 million, the capitalization of the largest company in the index was $617 million, and the capitalization of the smallest company in the index was $37 million. The Corporation’s market capitalization as of December 31, 2008 was approximately $171 million.

          The strong performance of the Corporation’s stock over the last year relative to the overall market should result in its stock being included in the Russell 3000 and 2000 Indexes when they are reconstituted in June 2009. The Corporation believes that migration of its stock from the Russell Microcap to the Russell 3000 and 2000 Indexes could improve the stock’s price, trading volume and liquidity. Conversely, if the Corporation’s market capitalization falls below the minimum necessary to be included in the Russell 3000 and 2000 Indexes or the Russell Microcap Index at any future reconstitution date, the opposite could occur.

           Performance Graph. The following graph compares the Corporation’s total stockholder return over a 5-year measurement period with the NASDAQ Market Index and the NASDAQ Bank Stocks Index.

(LINE GRAPH)

Capital



          The
Corporation’s capital management policy is designed to build and maintain
capital levels that exceed regulatory standards. Under current regulatory
capital standards, banks are classified as well capitalized, adequately
capitalized or undercapitalized. Under such standards, a well-capitalized bank
is one that has a total risk-based capital ratio equal to or greater than 10%,
a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1
leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based
capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of
17.27%, 16.29% and 8.03%, respectively, at December 31, 2008 substantially
exceed the requirements for a well-capitalized bank. The Corporation (on a
consolidated basis) is subject to minimum risk-based and leverage capital
requirements, which the Corporation substantially exceeds as of December 31,
2008.



          Total
stockholders’ equity increased slightly from $102,384,000 at December 31, 2007
to $102,532,000 at December 31, 2008. The positive impact on stockholders’
equity of net income, unrealized gains on available-for-sale securities, and
stock-based compensation transactions was almost entirely offset by stock
repurchases, cash dividends declared, and a decrease in the funded status of
the Bank’s pension plan.



SIZE=2>          Stock Repurchase Program and Market Liquidity.
Since 1988, the Corporation has had a stock repurchase program under which it
has purchased from time to time shares of its own common stock in market or
private transactions. Under plans approved by the Board of Directors in 2007
and 2008, the Corporation purchased 296,479 shares in 2008 and can purchase
114,011 shares in the future. The details of the Corporation’s purchases under
the stock repurchase program during the fourth quarter of 2008 are set forth in
the table that follows.

































































































 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



Period



 



Total
Number
of
Shares

Purchased



 



Average
Price
Paid
Per
Share



 



Total Number of
Shares
Purchased as
Part
of Publicly
Announced
Plans
or
Programs (1)



 



Maximum Number of
of
Shares that May Yet
Be
Purchased Under the
Plans
or Programs (1)



 






 






 






 






 







 



October 1, 2008 to October 31,
2008



 





 



 



 





 



 





 



 



 



116,711



 



November 1, 2008 to November 30,
2008



 



2,500



 



 



$



21.40



 



 



2,500



 



 



 



114,211



 



December 1, 2008 to December 31,
2008



 



200



 



 



$



22.08



 



 



200



 



 



 



114,011



 

















 



 



(1)



All shares
purchased by the Corporation under its stock repurchase program in the fourth
quarter of 2008 were purchased under a 200,000 share plan approved by the
Corporation’s Board of Directors on February 21, 2008 and publicly announced
on February 22, 2008. The Corporation’s share repurchase plans do not have
fixed expiration dates.




          The
stock
repurchase program has historically enhanced earnings per share and return on
average stockholders’ equity. The program is estimated to have contributed four
cents more to earnings per share in 2008 than 2007. The larger contribution to
earnings per share this year is attributable to the full-year impact of the
shares purchased in 2007 plus the pro rata impact of the shares purchased
throughout 2008, taking into account the volume of shares purchased, the price
paid per share, and current interest rates.



          The
Corporation
periodically reevaluates whether it wants to continue purchasing shares of its
own common stock in open market transactions under the safe harbor provisions
of Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s
common stock is limited, the Corporation believes that a reduction or
discontinuance of its share repurchase program could adversely impact market
liquidity for its common stock, the price of its common stock, or both. The
publicly reported trading volume in the Corporation’s common stock in 2008 and
2007 was 979,245 and 615,795 shares, respectively. Open market purchases by the
Corporation under its share repurchase program accounted for 14.6% of the
trading volume in 2008 and 12.2% in 2007.



39







SIZE=2>          Russell Microcap Index. Frank
Russell Company (“Russell”) maintains a family of U.S. equity indices. The
indices are reconstituted in June of each year based on market capitalization
and do not reflect subjective opinions. All indices are subsets of the Russell
3000E Index, which represents most of the investable U. S. equity market.



          The
Corporation’s common stock is included in the Russell Microcap Index. When
reconstituted in June 2008, the average market capitalization of companies in
the Russell Microcap Index was $310 million, the median market capitalization
was $169 million, the capitalization of the largest company in the index was
$617 million, and the capitalization of the smallest company in the index was
$37 million. The Corporation’s market capitalization as of December 31, 2008
was approximately $171 million.



          The
strong performance of the Corporation’s stock over the last year relative to
the overall market should result in its stock being included in the Russell
3000 and 2000 Indexes when they are reconstituted in June 2009. The Corporation
believes that migration of its stock from the Russell Microcap to the Russell
3000 and 2000 Indexes could improve the stock’s price, trading volume and
liquidity. Conversely, if the Corporation’s market capitalization falls below
the minimum necessary to be included in the Russell 3000 and 2000 Indexes or
the Russell Microcap Index at any future reconstitution date, the opposite
could occur.



SIZE=2>          
Performance
Graph.
The following graph compares the
Corporation’s total stockholder return over a 5-year measurement period with
the NASDAQ Market Index and the NASDAQ Bank Stocks Index.



(LINE GRAPH)



Capital



          The
Corporation’s capital management policy is designed to build and maintain
capital levels that exceed regulatory standards. Under current regulatory
capital standards, banks are classified as well capitalized, adequately
capitalized or undercapitalized. Under such standards, a well-capitalized bank
is one that has a total risk-based capital ratio equal to or greater than 10%,
a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1
leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based
capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of
17.27%, 16.29% and 8.03%, respectively, at December 31, 2008 substantially
exceed the requirements for a well-capitalized bank. The Corporation (on a
consolidated basis) is subject to minimum risk-based and leverage capital
requirements, which the Corporation substantially exceeds as of December 31,
2008.



          Total
stockholders’ equity increased slightly from $102,384,000 at December 31, 2007
to $102,532,000 at December 31, 2008. The positive impact on stockholders’
equity of net income, unrealized gains on available-for-sale securities, and
stock-based compensation transactions was almost entirely offset by stock
repurchases, cash dividends declared, and a decrease in the funded status of
the Bank’s pension plan.



SIZE=2>          Stock Repurchase Program and Market Liquidity.
Since 1988, the Corporation has had a stock repurchase program under which it
has purchased from time to time shares of its own common stock in market or
private transactions. Under plans approved by the Board of Directors in 2007
and 2008, the Corporation purchased 296,479 shares in 2008 and can purchase
114,011 shares in the future. The details of the Corporation’s purchases under
the stock repurchase program during the fourth quarter of 2008 are set forth in
the table that follows.

































































































 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



Period



 



Total
Number
of
Shares

Purchased



 



Average
Price
Paid
Per
Share



 



Total Number of
Shares
Purchased as
Part
of Publicly
Announced
Plans
or
Programs (1)



 



Maximum Number of
of
Shares that May Yet
Be
Purchased Under the
Plans
or Programs (1)



 






 






 






 






 







 



October 1, 2008 to October 31,
2008



 





 



 



 





 



 





 



 



 



116,711



 



November 1, 2008 to November 30,
2008



 



2,500



 



 



$



21.40



 



 



2,500



 



 



 



114,211



 



December 1, 2008 to December 31,
2008



 



200



 



 



$



22.08



 



 



200



 



 



 



114,011



 

















 



 



(1)



All shares
purchased by the Corporation under its stock repurchase program in the fourth
quarter of 2008 were purchased under a 200,000 share plan approved by the
Corporation’s Board of Directors on February 21, 2008 and publicly announced
on February 22, 2008. The Corporation’s share repurchase plans do not have
fixed expiration dates.




          The
stock
repurchase program has historically enhanced earnings per share and return on
average stockholders’ equity. The program is estimated to have contributed four
cents more to earnings per share in 2008 than 2007. The larger contribution to
earnings per share this year is attributable to the full-year impact of the
shares purchased in 2007 plus the pro rata impact of the shares purchased
throughout 2008, taking into account the volume of shares purchased, the price
paid per share, and current interest rates.



          The
Corporation
periodically reevaluates whether it wants to continue purchasing shares of its
own common stock in open market transactions under the safe harbor provisions
of Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s
common stock is limited, the Corporation believes that a reduction or
discontinuance of its share repurchase program could adversely impact market
liquidity for its common stock, the price of its common stock, or both. The
publicly reported trading volume in the Corporation’s common stock in 2008 and
2007 was 979,245 and 615,795 shares, respectively. Open market purchases by the
Corporation under its share repurchase program accounted for 14.6% of the
trading volume in 2008 and 12.2% in 2007.



39







SIZE=2>          Russell Microcap Index. Frank
Russell Company (“Russell”) maintains a family of U.S. equity indices. The
indices are reconstituted in June of each year based on market capitalization
and do not reflect subjective opinions. All indices are subsets of the Russell
3000E Index, which represents most of the investable U. S. equity market.



          The
Corporation’s common stock is included in the Russell Microcap Index. When
reconstituted in June 2008, the average market capitalization of companies in
the Russell Microcap Index was $310 million, the median market capitalization
was $169 million, the capitalization of the largest company in the index was
$617 million, and the capitalization of the smallest company in the index was
$37 million. The Corporation’s market capitalization as of December 31, 2008
was approximately $171 million.



          The
strong performance of the Corporation’s stock over the last year relative to
the overall market should result in its stock being included in the Russell
3000 and 2000 Indexes when they are reconstituted in June 2009. The Corporation
believes that migration of its stock from the Russell Microcap to the Russell
3000 and 2000 Indexes could improve the stock’s price, trading volume and
liquidity. Conversely, if the Corporation’s market capitalization falls below
the minimum necessary to be included in the Russell 3000 and 2000 Indexes or
the Russell Microcap Index at any future reconstitution date, the opposite
could occur.



SIZE=2>          
Performance
Graph.
The following graph compares the
Corporation’s total stockholder return over a 5-year measurement period with
the NASDAQ Market Index and the NASDAQ Bank Stocks Index.



(LINE GRAPH)



This excerpt taken from the FLIC 10-Q filed Nov 10, 2008.

Capital

          The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well-capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 18.26%, 17.33% and 8.24%, respectively, at September 30, 2008 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeded at September 30, 2008.

          Total stockholders’ equity increased slightly from $102,384,000 at December 31, 2007 to $102,398,000 at September 30, 2008. Net income of $9,732,000 was largely offset by $5,666,000 expended for share repurchases and $3,450,000 in cash dividends declared. In addition, there were $1,381,000 of unrealized losses on available-for-sale securities because market yields on securities increased.

          Stock Repurchase Program and Market Liquidity. Since 1988, the Corporation has had a stock repurchase program under which it has purchased, from time to time, shares of its own common stock in market or private transactions. The Corporation’s market transactions are generally intended to comply with the manner, timing, price and volume conditions set forth in SEC Rule 10b-18 and therefore, with respect to such transactions, provide the Corporation with safe harbor from liability for market manipulation under section 9(a)(2) and Rule 10b-5 of the Securities Exchange Act of 1934.

          The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock for the twelve months ended September 30, 2008 was 802,497 shares, 25.4% of which resulted from open market purchases by the Corporation under its share repurchase program.

18



          Russell Microcap Index. Frank Russell Company maintains a family of U.S. equity indices. The indices are reconstituted in June of each year based on market capitalization and do not reflect subjective opinions. All Indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

          The Corporation’s common stock is included in the Russell Microcap Index. When reconstituted in June 2008, the average market capitalization of companies in the Russell Microcap Index was $310 million, the median market capitalization was $169 million, the capitalization of the largest company in the index was $617 million, and the capitalization of the smallest company in the index was $37 million. The Corporation’s market capitalization as of September 30, 2008 was approximately $174 million.

          The Corporation believes that inclusion in the Russell Microcap Index positively impacts the price, trading volume and liquidity of its common stock. Conversely, if the Corporation’s market capitalization falls below the minimum necessary to be included in the Russell Microcap Index at any future annual reconstitution date, the Corporation believes that this could adversely affect the price, volume and liquidity of its common stock.

This excerpt taken from the FLIC 10-Q filed Aug 8, 2008.

Capital

          The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well-capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 19.10%, 18.19% and 8.26%, respectively, at June 30, 2008 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeded at June 30, 2008.

          Total stockholders’ equity decreased by $3,141,000, from $102,384,000 at December 31, 2007 to $99,243,000 at June 30, 2008. The decrease is largely attributable to $5,458,000 expended for share repurchases, $2,352,000 of depreciation in value of available-for-sale securities, and $2,157,000 in cash dividends declared, as partially offset by net income of $6,164,000. The depreciation in the value of available-for-sale securities occurred because market yields on mortgage securities increased and the credit ratings on municipal bond insurers declined. Despite the reduced ratings of insurers, 98% of the Corporation’s municipal securities are rated “A” or better.

          Stock Repurchase Program and Market Liquidity. Since 1988, the Corporation has had a stock repurchase program under which it has purchased, from time to time, shares of its own common stock in market or private transactions. The Corporation’s market transactions are generally intended to comply with the manner, timing, price and volume conditions set forth in SEC Rule 10b-18 and therefore, with respect to such transactions, provide the Corporation with safe harbor from liability for market manipulation under section 9(a)(2) and Rule 10b-5 of the Securities Exchange Act of 1934.

          The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock for the twelve months ended June 30, 2008 was 678,616 shares, 32.2% of which resulted from open market purchases by the Corporation under its share repurchase program.

          Russell Microcap Index. Frank Russell Company maintains a family of U.S. equity indices. The indices are reconstituted in June of each year based on market capitalization and do not reflect subjective opinions. All Indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

          The Corporation’s common stock is included in the Russell Microcap Index. The average market capitalization of companies in the Russell Microcap Index is $310 million, the median market capitalization is $169 million, the capitalization of the largest company in the index is $617 million, and the capitalization of the smallest company in the index is $37 million. The Corporation’s market capitalization as of June 30, 2008 was approximately $142 million.

          The Corporation believes that inclusion in the Russell Microcap Index positively impacts the price, trading volume and liquidity of its common stock. Conversely, if the

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Corporation’s market capitalization falls below the minimum necessary to be included in the Russell Microcap Index at any future annual reconstitution date, the Corporation believes that this could adversely affect the price, volume and liquidity of its common stock.

This excerpt taken from the FLIC 10-Q filed May 12, 2008.

Capital

          The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well-capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 19.23%, 18.34% and 8.75%, respectively, at March 31, 2008 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeded at March 31, 2008.

          Total stockholders’ equity decreased by $1,518,000, from $102,384,000 at December 31, 2007 to $100,866,000 at March 31, 2008. The decrease is largely attributable to $4,657,000 expended for share repurchases and $1,077,000 in cash dividends declared, as partially offset by net income of $2,857,000 and a $918,000 increase in unrealized gains on available-for-sale securities. Also impacting stockholders’ equity, but to a much lesser extent, are proceeds from the exercise of stock options of $277,000 and stock-based compensation of $164,000.

          Stock Repurchase Program and Market Liquidity. Since 1988, the Corporation has had a stock repurchase program under which it has purchased, from time to time, shares of its own common stock in market or private transactions. The Corporation’s market transactions are generally intended to comply with the manner, timing, price and volume conditions set forth in SEC Rule 10b-18 and therefore, with respect to such transactions, provide the Corporation with safe harbor from liability for market manipulation under section 9(a)(2) and Rule 10b-5 of the Securities Exchange Act of 1934.

          The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock for the year ended March 31, 2008 was 591,670 shares, 36.3% of which resulted from open market purchases by the Corporation under its share repurchase program.

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          Russell Microcap Index. Frank Russell Company maintains a family of U.S. equity indices. The indices are reconstituted in June of each year based on market capitalization and do not reflect subjective opinions. All Indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

          The Corporation’s common stock is included in the Russell Microcap Index. The average market capitalization of companies in the Russell Microcap Index is $300.9 million, the median market capitalization is $260.1 million, the capitalization of the largest company in the index is $711.4 million, and the capitalization of the smallest company in the index is $78.6 million. The Corporation’s market capitalization as of March 31, 2008 was approximately $139 million.

          The Corporation believes that inclusion in the Russell Microcap Index positively impacts the price, trading volume and liquidity of its common stock. Conversely, if the Corporation’s market capitalization falls below the minimum necessary to be included in the Russell Microcap Index at any future annual reconstitution date, the Corporation believes that this could adversely affect the price, volume and liquidity of its common stock.

This excerpt taken from the FLIC 10-Q filed Nov 8, 2007.

Capital

        The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well-capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 20.93%, 20.05% and 9.67%, respectively, at September 30, 2007 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeded at September 30, 2007.


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        Total stockholders’ equity increased by $3,947,000, from $95,561,000 at December 31, 2006 to $99,508,000 at September 30, 2007. The increase is largely attributable to net income of $8,444,000, as partially offset by $3,254,000 in cash dividends declared and $2,527,000 expended for share repurchases. Also contributing to the increase, but to a much lesser extent, are proceeds from the exercise of stock options, stock-based compensation and unrealized gains on available-for-sale securities.

        Stock Repurchase Program and Market Liquidity.  Since 1988, the Corporation has had a stock repurchase program under which it has purchased, from time to time, shares of its own common stock in market or private transactions. The Corporation’s market transactions are generally intended to comply with the manner, timing, price and volume conditions set forth in SEC Rule 10b-18 and therefore, with respect to such transactions, provide the Corporation with safe harbor from liability for market manipulation under section 9(a)(2) and Rule 10b-5 of the Securities Exchange Act of 1934.

        The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock for the year ended September 30, 2007 was 628,547 shares, 4.6% of which resulted from open market purchases by the Corporation under its share repurchase program.

        Russell Microcap Index. Frank Russell Company maintains a family of U.S. equity indices. The indices are reconstituted in June of each year based on market capitalization and do not reflect subjective opinions. All Indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

        The Corporation’s common stock is included in the Russell Microcap Index. The average market capitalization of companies in the Russell Microcap Index is $300.9 million, the median market capitalization is $260.1 million, the capitalization of the largest company in the index is $711.4 million, and the capitalization of the smallest company in the index is $78.6 million. The Corporation’s market capitalization as of September 30, 2007 was approximately $158 million.

        The Corporation believes that inclusion in the Russell Microcap Index positively impacts the price, trading volume and liquidity of its common stock. Conversely, if the Corporation’s market capitalization falls below the minimum necessary to be included in the Russell Microcap Index at any future annual reconstitution date, the Corporation believes that this could adversely affect the price, volume and liquidity of its common stock.

This excerpt taken from the FLIC 10-Q filed May 10, 2007.

Capital

        The Corporation’s capital management policy is designed to build and maintain capital levels that exceed regulatory standards. Under current regulatory capital standards, banks are classified as well capitalized, adequately capitalized or undercapitalized. Under such standards, a well capitalized bank is one that has a total risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio equal to or greater than 5%. The Bank’s total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 21.58%, 20.69% and 9.53%, respectively, at March 31, 2007 substantially exceed the requirements for a well-capitalized bank. The Corporation (on a consolidated basis) is subject to minimum risk-based and leverage capital requirements, which the Corporation substantially exceeds as of March 31, 2007.

        Total stockholders’ equity increased by $2,242,000, from $95,561,000 at December 31, 2006 to $97,803,000 at March 31, 2007. The increase is largely attributable to net income of $2,628,000, as partially offset by $1,065,000 in cash dividends declared. Also contributing to the increase, but to a much lesser extent, are proceeds from the exercise of stock options, stock-based compensation and unrealized gains on available-for-sale securities.

        Stock Repurchase Program and Market Liquidity.  Since 1988, the Corporation has had a stock repurchase program under which it has purchased, from time to time, shares of its own common stock in market or private transactions. The Corporation’s market transactions are generally intended to comply with the manner, timing, price and volume conditions set forth in SEC Rule 10b-18 and therefore, with respect to such transactions, provide the Corporation with safe harbor from liability for market manipulation under section 9(a)(2) and Rule 10b-5 of the Securities Exchange Act of 1934.

        The Corporation periodically reevaluates whether it wants to continue purchasing shares of its own common stock in open market transactions under Rule 10b-18 or otherwise. Because the trading volume in the Corporation’s common stock is limited, the Corporation believes that a reduction or discontinuance of its share repurchase program could adversely impact market liquidity for its common stock, the price of its common stock, or both. The publicly reported trading volume in the Corporation’s common stock for the year ended March 31, 2007 was 380,962 shares, 6.0% of which resulted from open market purchases by the Corporation under its share repurchase program.


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        Russell Microcap Index. Frank Russell Company (“Russell”) maintains a family of U.S. equity indices. The indices are reconstituted effective the last Friday in June of each year based on market capitalization and do not reflect subjective opinions. All Indices are subsets of the Russell 3000E Index, which represents most of the investable U. S. equity market.

        The Corporation’s common stock is included in the Russell Microcap Index. The Russell Microcap Index includes the smallest 1,000 companies in terms of market capitalization in the small-cap Russell 2000 Index plus the next 1,000 smaller companies. The average market capitalization of companies in the Russell Microcap Index is $255.5 million, the median market capitalization is $218.2 million, the capitalization of the largest company in the index is $612.1 million, and the capitalization of the smallest company in the index is $67.3 million. The Corporation’s market capitalization as of March 31, 2007 was approximately $169 million.

        The Corporation believes that inclusion in the Russell Microcap Index will positively impact the price, trading volume and liquidity of its common stock. Conversely, if the Corporation’s market capitalization falls below the minimum necessary to be included in the Russell Microcap Index at any future annual reconstitution date, the Corporation believes that this could adversely affect the price, volume and liquidity of its common stock.

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