The First of Long Island Corporation (FLIC): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at The First of Long Island Corporation's competitive moat, and honestly, the picture isn't simple; the banking sector, especially in the dense NYC/Long Island area, is a pressure cooker right now. We see depositors holding real sway, with nearly 49.5% of their funds uninsured as of Q1 2025, meaning rate-sensitive customers can walk easily, while rivals are everywhere, from big regionals to nimble fintechs threatening substitutes. Given that their Q1 2025 net income was just $3.8 million, it's clear the five forces-especially intense rivalry and the threat of digital substitutes-are squeezing margins tight, so let's break down exactly where The First of Long Island Corporation stands against these headwinds.

The First of Long Island Corporation (FLIC) - Porter's Five Forces: Bargaining power of suppliers

When you look at The First of Long Island Corporation (FLIC), even right before its merger with ConnectOne Bancorp in mid-2025, the power held by its funding sources-primarily depositors-was a significant factor. In banking, deposits are the raw material, and when those suppliers have options or face systemic risk, their leverage goes up. For FLIC, this dynamic was quite pronounced in the first quarter of 2025.

Depositors hold power; the prompt states that 49.5% of deposits were uninsured in Q1 2025. That figure represents a substantial portion of the funding base sitting above the standard FDIC insurance limit, making those large commercial and high-net-worth retail depositors highly sensitive to perceived or actual institutional stability. If you recall the market jitters from 2023, that uninsured segment is always the first to vote with its feet, so to speak. The bank's reported Q1 2025 net income was $3.8 million, which, while positive, needed to be strong enough to keep that flight risk contained.

Rate-sensitive customers easily switch for higher yields on funds. This is the constant pressure in a competitive deposit market like the NYC/Long Island area. If FLIC couldn't keep its deposit rates competitive, those uninsured funds, which are the most mobile, would quickly migrate to institutions offering even a few extra basis points. This dynamic directly impacts the cost of funds for The First of Long Island Corporation.

The operational side also presents supplier power, particularly with technology. Core system and IT vendors impose high switching costs on FLIC. Migrating core banking software is a massive, multi-year, multi-million dollar undertaking, meaning that once a system is in place, the incumbent vendor has significant pricing power for renewals and upgrades. This is a classic high-barrier-to-exit situation that suppliers exploit.

Finally, the labor market for specialized banking talent is highly competitive in NYC/Long Island. You know the drill: finding experienced commercial lenders, risk managers, or compliance officers in that geography means paying top dollar. Data from late 2024 showed the NYC labor force participation rate hit a record 62.7%, indicating a tight market for skilled workers. For community banks like FLIC (which had $3.4 billion in deposits as of December 31, 2024, before growing to $11 billion in deposits post-merger), this competition drives up the single largest non-interest expense: compensation. For community banks under $100 billion in assets, executives reported a median compensation expense rise of 5% in 2024, reflecting this supplier pressure.

Here's a quick look at the supplier landscape metrics we are tracking:

The key takeaways on supplier power center on these vulnerabilities:

• Uninsured deposits represent a major, rate-sensitive funding pool.
• High operational dependence on entrenched core technology providers.
• Intense regional competition for specialized, high-value banking personnel.

The bank's ability to manage its cost of funds and talent acquisition directly counters this supplier leverage. Finance: draft the pro-forma cost of funds sensitivity analysis by Friday.

The First of Long Island Corporation (FLIC) - Porter's Five Forces: Bargaining power of customers

You're looking at the customer power within The First of Long Island Corporation (FLIC)'s operating environment as of late 2025. Honestly, for a community bank like FLIC, the customer's ability to dictate terms is significant, especially when looking at core products.

Borrowers have high choice from national and regional banks. While The First of Long Island Corporation (FLIC) operates with a community focus, the sheer volume of alternatives means customers can shop rates easily. For instance, in the commercial lending space, aggregate commercial loan pricing tightened from a weighted average of 2.63% in Q2 to 2.31% in Q3 2025, showing that competitive supply pressures are real across the industry. On the mortgage side, Long Island Commercial Mortgage Rates were quoted as low as 5.23% as of November 23, 2025, setting a competitive floor that The First of Long Island Corporation (FLIC) must respect on its own loan offerings.

Switching costs for basic deposit and loan products remain low. This is particularly evident in the liability side of the balance sheet. As of March 31, 2025, The First of Long Island Corporation (FLIC)'s uninsured deposits stood at 49.5% of total deposits. This high percentage signals that a significant portion of the funding base is highly mobile and sensitive to yield differentials, meaning customers can quickly move funds if a competitor offers a better rate, putting direct pressure on FLIC's funding costs.

Large commercial customers negotiate aggressively on loan pricing. These clients often have the volume and credit quality to demand better terms than the general market. For context on the pressure this puts on profitability, The First of Long Island Corporation (FLIC)'s Net Interest Margin (NIM) for Q1 2025 was 1.91%. This margin is the direct result of the spread between what they earn on assets and what they pay for liabilities-a spread constantly squeezed by large customer negotiations and competitive deposit pricing.

The First of Long Island Corporation (FLIC)'s community focus offers slight differentiation, but products are commoditized. While the bank was founded in 1927 and serves its local market, the core banking products are largely undifferentiated from competitors. This commoditization is reflected in the overall return metrics. For Q1 2025, The First of Long Island Corporation (FLIC) posted a Return on Assets (ROA) of just 0.37% and a Return on Equity (ROE) of 3.98%. These figures suggest that despite the local focus, the bank is operating in a highly competitive pricing environment where superior returns are difficult to capture.

Here's a quick look at key financial metrics from the most recent reported quarter that illustrate the environment FLIC's customers operate within:

The power of the customer is further illustrated by the need to maintain strong capital and liquidity to even participate in the market:

• Liquidity available as of March 31, 2025, was $878.1 million.
• The leverage ratio stood at approximately 10.29% on March 31, 2025.
• The quarterly cash dividend declared was $0.21 per share.
• Book value per share was $16.91 on March 31, 2025.

To counter this customer power, The First of Long Island Corporation (FLIC) must focus on non-rate related value. For example, the bank's loan portfolio composition as of December 31, 2023, showed commercial real estate loans at 64% and other business loans at approximately 25% of the total. These segments are where large customers exert the most negotiation leverage, demanding rates closer to the tightened aggregate market pricing of 2.31% seen in Q3 2025. If onboarding takes 14+ days, churn risk rises, even for a community bank.

The First of Long Island Corporation (FLIC) - Porter's Five Forces: Competitive rivalry

You're looking at a market, Long Island and the greater NYC area, that is absolutely saturated with financial institutions. This density translates directly into fierce competitive rivalry for The First of Long Island Corporation, even as it transitions into the larger ConnectOne Bancorp entity.

The rivalry here isn't just about the big players; it's intensely local. Direct rivals include a mix of much larger regional banks-the super-regionals with national platforms-and a host of smaller, relationship-focused community banks. For community banks like the former FLIC, the fiercest competition for core services like commercial lending and deposit gathering often comes from similar-sized institutions that understand the local nuances. Still, the larger entities bring scale that smaller banks struggle to match.

To be fair, products across the board are largely undifferentiated in the traditional sense. When core offerings like checking accounts or standard commercial loans look the same on paper, competition inevitably shifts to price-loan rates and deposit yields-which squeezes margins. This pressure is evident in the standalone performance of The First of Long Island Corporation; its net income for the first quarter of 2025 was $3.8 million, a notable step down from the $4.4 million reported in the first quarter of 2024. That $3.8 million figure, reported on March 31, 2025, reflects the tight operating margins inherent in this highly competitive environment.

The industry consolidation, signaled by the merger focus, is a direct response to these rivalry pressures. The successful merger of The First of Long Island Corporation into ConnectOne Bancorp, completed around June 1, 2025, is a clear indicator of the need for greater scale to compete effectively. The combined ConnectOne entity now boasts approximately $14 billion in total assets, $11 billion in total deposits, and $11 billion in total loans. This combination aims to create one of the top 5 community banks on Long Island by deposit market share, suggesting that survival and growth depend on achieving this critical mass.

The struggle to differentiate is real, especially against digital-first competitors who use product 'featurization'-like offering early access to direct deposits-to win customers. For community banks, capability gaps persist; for instance, surveys show that 40% of these institutions struggle to offer competitive loan rates, and over 35% cannot provide the high-yield savings options customers are looking for.

Here's a quick look at the financial context leading into the merger, which highlights the margin pressure:

The competitive environment forces strategic moves, leading to the integration we just saw. The former FLIC leadership joining the ConnectOne Board, including Christopher Becker as Vice Chairman, is an attempt to bring local relationship expertise to the larger platform to better combat these competitive forces.

The key competitive factors you must watch now that the merger is complete include:

• Maintaining deposit share against larger regional banks.
• Leveraging the new scale to close product capability gaps.
• Defending against nonbank lenders in specialized segments.
• Controlling integration costs post-merger.
• Sustaining local customer loyalty during brand transition.

Finance: draft the pro-forma efficiency ratio for the combined entity for Q2 2025 by Friday.

The First of Long Island Corporation (FLIC) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for The First of Long Island Corporation (FLIC) is substantial, driven by digital alternatives offering superior pricing and convenience for core banking and wealth services. You see this pressure across deposits, payments, lending, and asset management.

Online-only banks offer superior deposit rates, a defintely strong substitute.

Online-only banks directly challenge FLIC's deposit base by offering Annual Percentage Yields (APYs) that are multiples of the national average. For instance, the national average savings account yield as of November 26, 2025, was only 0.62% APY. This gap forces customers to move cash out of traditional accounts to capture better returns. For context, FLIC's Net Interest Margin (NIM) for the nine months ending September 30, 2024, was 1.83%.

Fintech platforms substitute traditional payment and lending services.

Fintechs are capturing significant transaction volume and lending activity through digital-first experiences. The U.S. fintech market size is projected to be valued at $95.2 Bn in 2025. Payment services represent the dominant segment, accounting for over 35% share of this market in 2025. On the lending side, about 46% of U.S. consumers used digital lending or finance apps in 2025. The global fintech lending market itself is valued at $590 billion in 2025.

Credit unions and non-bank lenders compete for small business financing.

While banks remain the largest source of small business loans, non-bank lenders and credit unions are aggressively taking share, especially in areas where community banks might be slower to adapt. Nationally, credit unions approved 15% of small business loans in 2025, while online lenders captured 30% of the market. This is despite credit union commercial loan portfolios having ballooned by 217% since 2014. For New York specifically, SBA loan providers funded a total volume of $1.1 billion across 4,388 businesses in FY 2023.

• Small bank full approval rate (2023): 52%.
• Credit union full approval rate (2023): 51%.
• Online lender full approval rate (2023): 31%.
• Credit union denial rate (2023): 24%.

Brokerage firms substitute wealth management and trust services.

The wealth management sector is seeing a structural shift away from traditional bank-affiliated models toward independent Registered Investment Advisors (RIAs), which are often housed within or affiliated with brokerage platforms. The global wealth management market size is expected to reach $2.1 trillion in 2025. This shift is a direct substitute for the trust and advisory services FLIC offers. For example, the RIA sector saw a 66% increase in Financial Advisor (FA) count between 2012 and 2022, while the four major wirehouses saw a 10% drop. Projections suggest RIA growth could cause the combined market share of Merrill Lynch, Wells Fargo, UBS, and Morgan Stanley to fall from 34.1% to 27.7%.

You need to monitor how FLIC's NIM performance compares to peers like First Bancorp, which reported a Q3 2025 NIM of 2.70%, driven by a total liability cost of 3.21% for the nine months ending September 30, 2025.

Finance: model the deposit outflow risk based on the top HYSA rates versus the current cost of funds for Q4 2025 by Friday.

The First of Long Island Corporation (FLIC) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers for a new bank to set up shop in The First of Long Island Corporation (FLIC)'s market, and honestly, the hurdles are steep. High regulatory capital requirements act as a primary barrier to entry. New entrants must meet stringent minimum capital ratios to even start operating. For instance, the minimum capital requirement is 4.5 percent Common Equity Tier 1, with a 6 percent Tier 1 capital requirement and an 8 percent total capital requirement.

The scale of existing players shows the financial muscle required. The First of Long Island Corporation (FLIC)'s last traded market cap was $269.21 million. While FLIC was acquired in mid-2025, this figure reflects the valuation scale in the local market that a new entrant would need to compete against, even if they start smaller.

New bank charters are complex and time-consuming to obtain. The application process itself is a major deterrent. The total cost to prepare an application often exceeds seven figures. Furthermore, application and licensing expenses alone can range from $500,000 to $1 million, excluding the necessary capital reserve to actually operate. The timeframe for receiving all required regulatory approvals often takes well in excess of a year, though some recent approvals have been granted in about a year. Even a conditionally approved de novo bank in late 2025, like Erebor Bank, faced conditions including enhanced scrutiny for three years and a minimum 12% Tier 1 leverage ratio.

Here's a quick look at the financial commitment regulators demand from new banks:

Digital-only banks (neobanks) pose a threat by avoiding branch costs. They are growing fast, which means they can undercut established players on overhead. The global neobanking market is projected to grow from $210.16 billion in 2025 to $3,406.47 billion by 2032. In North America specifically, the market was valued at $47,833.68 million in 2024 and is expected to grow at a CAGR of 46.4% through 2031. This digital shift means new, lean competitors can enter the market without the massive fixed costs of physical locations.

Still, establishing local brand loyalty takes years, protecting FLIC somewhat, even post-merger. Consumers in established markets often stick with what they know, especially for complex services. However, the threat is clear from consumer behavior trends:

• Global digital banking users total about 3.6 billion.
• Approximately 1.4 billion people remain completely unbanked globally.
• About 30 percent of Gen Z and Millennial customers use digital banks as primary options.

This shows where new entrants will focus their efforts for growth.