OFFERING CIRCULAR

200,000 SHARES

THE FRANKLIN NATIONAL BANK

OF LONG ISLAND

4.60% Cumulative Preferred Stock

Par Value $100 Per Share

Dividends cumulative from and including date of issue (expected to be October 16, 1962), payable the first days of February, May, August and November.

The above described shares of Cumulative Preferred Stock of The Franklin National Bank of Long Island are being offered by the several Underwriters named herein, subject to the approval of the shareholders of the Bank and subject to prior sale, when, as and if issued and accepted by the Underwriters and subject to approval of certain legal matters by Cravath, Swaine & Moore, counsel for the Underwriters, and LeBoeuf, Lamb & Leiby, counsel for the Bank.

OFFERING PRICE $100 PER SHARE

Plus accrued dividends from date of issue

THE ISSUANCE AND SALE OF THE CUMULATIVE PREFERRED STOCK ARE SUBJECT TO THE APPROVAL OF THE COMPTROLLER OF THE CURRENCY OF THE UNITED STATES. THE COMPTROLLER OF THE CURRENCY HAS NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR.

EASTMAN DILLON, UNION SECURITIES & Co.

The date of this Offering Circular is September 24, 1962.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING IF COMMENCED MAY BE DISCONTINUED AT ANY TIME.

No person has been authorized to give any information or to make any representations not contained in this Offering Circular in connection with any offering of the Preferred Stock, and, if given or made, such information must not be relied upon as having been authorized by the Bank or by the Underwriters. This Offering Circular does not constitute an offer by any person in any state to any person to whom it is unlawful to make such offer.

Condensed Comparative Statement of Earnings

Comparative Reconciliation of Surplus and Undivided Profits....
Reconciliation of Capital Stock

10

10

10

20-226 0-63- -13

The following is a copy of a letter which the Representative of the Underwriters has received from the Chairman of the Board of The Franklin National Bank of Long Island:

THE FRANKLIN NATIONAL BANK
OF LONG ISLAND

Mineola, New York
September 24, 1962

Eastman Dillon, Union Securities & Co.

One Chase Manhattan Plaza

New York, New York

Gentlemen:

We submit the following information in connection with the purchase by you and the other several Underwriters of 200,000 shares of 4.60% Cumulative Preferred Stock, par value $100 per share (herein sometimes called the "Preferred Stock"), of The Franklin National Bank of Long Island (herein sometimes called the "Bank”).

On September 20, 1962, the Board of Directors of the Bank authorized the issuance and sale of the Preferred Stock, subject to the approval of stockholders and of the Comptroller of the Currency of the United States. A meeting of the stockholders of the Bank has been called for October 15, 1962 for the purpose of authorizing the issuance of the Preferred Stock. The Comptroller of the Currency has informally approved the issuance of the Preferred Stock and it is expected that formal approval of the Comptroller will be granted on October 16, 1962, simultaneously with payment by the Underwriters for the Preferred Stock.

The continuing growth of the Bank has made it advisable to increase its capital funds. The sale of the 200,000 shares of Preferred Stock will result in the Bank having a total of capital, surplus and undivided profits (including reserve for possible loan losses) of more than $98,500,000.

HISTORY AND BUSINESS

The Bank is the largest commercial bank on Long Island, and the twenty-seventh largest in the United States, in terms of deposits at June 30, 1962. The Bank was chartered in 1926 under the National Banking Act as The Franklin Square National Bank and opened for business in November of that year. The present name was adopted in October, 1957. A proposal to change the name to Franklin National Bank will be submitted to stockholders on October 15, 1962.

Since 1950 the Bank has opened 25 new branch offices and acquired 21 other offices through mergers and consolidations. During this period deposits have risen from less than $41,000,000 at June 30, 1950, to $906,549,000 at June 30, 1962, and resources have mounted from less than $45,000,000 at the earlier date to almost $993,595,000 at June 30, 1962. Approximately 78% of the Bank's growth in deposits since 1950 reflects internally generated growth, including growth in acquired banks, and 22% is the direct result of acquisitions of other banks.

Territory Served

At June 30, 1962, the Bank operated 47 banking offices in Nassau and Suffolk Counties, Long Island.

As a result of changes last year in New York State law with respect to branch banking, the Bank is expanding its banking operations into New York City. In the fall of 1963, the first two New York City offices, which are presently under construction, will be opened. One will be located at Hanover Square in the financial district and the other will be located in the midtown area, on Madison Avenue at 48th Street. The opening of these offices in New York City will allow the Bank for the first time to act as transfer agent and to perform related financial functions for corporations listed on the New York Stock Exchange, and will place the Bank in a better position to handle the accounts of national corporations having executive offices in New York City. Business

The Bank is engaged in a general banking business which includes all of the usual deposit functions of commercial banking as well as individual, business, installment and mortgage loans. It endeavors to key its services to the specific requirements of its area, offering over 100 different customer services.

Particular emphasis is placed on loan activities and income from this source represents a greater proportion of total income than in the case of most commercial banks. The Bank's loan departments include business loans, personal loans, small business loans, mortgage loans and equipment loans. The Bank evaluates each loan request on the basis of the ability, integrity and potential financial success of the borrower as well as on traditional financial considerations.

The Bank has pioneered a number of banking services. It was the first bank to provide marine financing for Long Island boat owners. In 1950, a Small Business Loan Department was established to meet the special needs of an area characterized by numerous relatively small enterprises. The Bank also originated Charge Account Banking, which enables buyers to make purchases at any one of many retail stores and receive only a single statement at the end of each month, with the Bank handling most of the paper work and crediting each merchant's account, thereby enabling him to avoid tying up his working capital in accounts receivable. Charge Account Banking has since been adopted by some of the nation's largest banks.

Regulation

The Bank is a member of the Federal Reserve System, and deposits are insured by the Federal Deposit Insurance Corporation to the extent provided by law. As a national bank, the Bank is subject to examination by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System.

Competition

The Bank encounters keen competition from the more than 40 banks in Nassau and Suffolk Counties and also from the New York City banks which solicit business in Long Island. Under the same amendments to the New York State banking law which made it possible for the Bank to expand into New York City, New York City banks may now open branch offices in Nassau County. When the Bank commences operations in New York City, it will be in competition with the many large and well established banks there.

Expansion of Nassau and Suffolk Counties

The population of Nassau County has increased from 673,000 in 1950 to 1,346,000 in 1961. During the same period, the population of Suffolk County has grown from 276,000 to 739,000. This combined population of over 2,085,000 is larger than that of many states and per capita income in the area is among the highest in the country. About 80% of the families in the two counties own their homes.

The growth in population has been accompanied by substantial gains in industrial employment and commercial development. The aircraft, electronics, construction, engineering, chemical, precision machinery, scientific equipment and publishing industries are some examples of the wide range of activities in the area. While the aircraft industry has traditionally accounted for a substantial portion of manufacturing employment, hundreds of other firms have moved into Long Island in recent years, and employment in commercial and service activities has also expanded markedly. As a result, aircraft manufacturing presently accounts for less than 10% of Long Island's total employment. About two-thirds of the labor force of Nassau and Suffolk Counties is locally employed compared with less than one-half so employed at the end of World War II. Retail sales in Nassau and Suffolk Counties are approaching a $21⁄2 billion annual rate. Many large shopping centers, containing branches of the leading New York City department stores, supermarkets, variety chains and specialty shops, have been established in recent years. With Suffolk County still sparsely settled and more than three times as large as Nassau County, future growth prospects there also appear promising.

Management Policies

Management policies have been directed to (1) expansion of facilities; (2) development of sound loan policies; (3) introduction of new banking practices; (4) vigorous promotional programs; and (5) strict attention to efficient operating procedures. Through the acquisition of other banks, the opening of new branches and modernization of existing facilities, the Bank has established a large network of appropriately decorated offices at locations it considers favorable with display windows and ample parking facilities. Drive-in banking accommodations are provided at many of its offices.

The management emphasizes efficient operation. The Bank's management staff in relation to total personnel and resources is small as compared to many commercial banks, and modest executive and central administrative offices contribute to low overhead costs. Simplified procedures, monthly departmental budgets, regular measurement and control of personnel productivity and application of electronic data processing where desirable have all contributed to the Bank's efficiency and profits.

Litigation

The Bank is a party defendant in various legal proceedings including among others: (i) suits by a former borrowing group claiming damages in the total approximate amount of $3,000,000; (ii) proceedings by a trustee in bankruptcy claiming preferential payments made to the Bank in the approximate amount of $162,000; and (iii) a proceeding by a trustee in bankruptcy to compel a turn over of certain securities previously replevied by the Bank having an approximate value of $390,000. In the opinion of trial counsel for the Bank good and meritorious defenses exist as to the claims made against the Bank.