REPORTS OF CONDITION

The following table sets forth in summary form the assets, liabilities, and capital accounts of the Bank at the dates indicated. Amounts applicable to all banks acquired prior to April 30, 1963 have been included for the entire period shown.

MATURITY SCHEDULE OF INVESTMENT PORTFOLIO

Securities carried on the Bank's books are stated at cost less amortization of bond premiums. No accretion of securities purchased at a discount is recognized in the accounts until such time as the securities mature or are sold. At April 30, 1963, the Bank owned $452,150 of Federal Reserve Bank stock and $100,000 of the stock of a small business investment company. The maturity schedule of the balance of the investment portfolio at April 30, 1963 was as follows:

The following table shows loans and discounts at the dates indicated. Amounts applicable to all banks acquired prior to April 30, 1963 have been included for the entire period shown.

(1) In addition, at April 30, 1963, the Bank was servicing approximately $30,000,000 of real estate loans for other financial institutions.

(2) The Bank charges all loan losses against its reserve for possible losses on loans and credits this reserve with all recoveries applicable to such loans. Transfers from income to this reserve each year are based on a number of considerations, among which is the size of the reserve in relation to loans and discounts. (See schedule of Reserve for Possible Losses on Loans.)

DEPOSITS

The following table shows deposits at the dates indicated. Amounts applicable to all banks acquired prior to April 30, 1963 have been included for the entire period shown.

The Bank owns land and the buildings containing its offices located at Copiague, Melville, Riverhead, Sag Harbor, and Southampton in Suffolk, and North Bellmore, Seaford, and Wantagh in Nassau. These properties are suitable and adequate for the Bank's present needs and would permit further expansion if it becomes necessary. Land, buildings, and equipment owned were carried on its books at April 30, 1963 at $3,697,000. The Bank leases its other offices under leases expiring at various dates through May 1984. In 1962 aggregate annual rentals on the leased properties amounted to $278,357.

ELECTRONIC DATA PROCESSING

The Bank has been a pioneer in the data processing field and was the first bank headquartered on Long Island to service checking accounts by computer. In May 1962, it opened its Data Center at Melville, Suffolk County, at which its IBM 1401 computer system is now servicing over 50,000 special checking accounts, as well as the Bank's employees' payroll and deposit accounts. The Center also services on punched card tabulating equipment installment loans, mortgage servicing and escrow accounts, the Bank's investment portfolio, official checks, bank money orders, and Christmas Club accounts. The Bank contemplates servicing regular and commercial checking accounts and savings accounts on its computer in the near future.

COMPETITION

The Bank encounters keen competition from other financial institutions, which have approximately 238 commercial bank offices, nineteen savings bank offices, and fifty-four savings and loan association offices in Nassau and Suffolk Counties, and also from institutions which maintain no offices but solicit business in the counties. Of the 311 offices of competing financial institutions in the counties, 215 were located in Nassau and ninety-six in Suffolk as of April 30, 1963.

Effective as of July 1, 1960, the New York Banking Law was amended to permit New York City savings and commercial banks to open de novo branch offices in Nassau County, but not in Suffolk County. Under the amendment, subject to appropriate state or federal agencies' approval, any New York City savings bank may open one branch in Nassau County, and any New York City commercial bank may open any number of branches there. Between July 1, 1960 and April 30, 1963, according to the Nassau County Clearing House Association, thirteen New York City savings bank branch applications were approved by governmental authorities and the offices opened in Nassau County. Twelve New York City commercial bank de novo branch applications were approved and eleven offices have been opened; five additional applications were pending at April 30, 1963.

NASSAU AND SUFFOLK COUNTIES

The Nassau-Suffolk area constitutes the Bank's operating territory (see Map). As measured by population, effective buying income, and retail sales, Suffolk and Nassau Counties have grown substantially faster than either New York State or the United States since 1950.

The aircraft industry was for many years the dominant manufacturing factor in the two counties. In recent years this dominance has been challenged by expanding activity in the electronics, construction, engineering, chemical, precision machinery, scientific equipment, and publishing industries. Transportation, communication, commerce, and service activities have also increased sharply with a resultant expansion of employment and purchasing power.

The dynamic growth of Suffolk and Nassau Counties (with areas of 915 and 317 square miles, respectively) during the period 1950-1962 is indicated by the following selected statistics:

(1) U. S. Bureau of the Census for 1950 and 1960 (as of April); Long Island Lighting Company for 1958, 1959, 1961, and 1962 (as of January 1). Long Island Lighting Company estimates for Suffolk and Nassau Counties as of January 1, 1963 were 770,000 and 1,373,000, respectively.

(2) and (3) Sales Management: Survey of Buying Power.

DIRECTORS AND OFFICERS

MANAGEMENT AND PERSONNEL

The directors and executive officers of the Bank are the following:

All the officers named above have been employed by the Bank for longer than five years, except Mr. Van Sant, who was elected to his present post effective April 1, 1963 after six years as Vice President of Long Island Trust Company, Garden City, New York.

REMUNERATION

The following table shows the aggregate direct remuneration paid or set aside during 1962 by the Bank to or for the benefit of (i) the individual whose aggregate direct remuneration exceeded $30,000, and (ii) all persons as a group who were directors or executive officers of the Bank at any time during 1962. It also presents current estimated annual benefits upon retirement of said individual and said group, as to which there was no change during 1962. No indirect remuneration was paid, set aside, or accrued for any of the foregoing during 1962.

(1) Amounts shown, other than those attributable to Mr. Maass, are payable under the Bank's Retirement Income Plan (see "Employees"). Such amounts assume present levels of remuneration and retirement at normal retirement age. Mr. Maass, who is 65, has an Agreement with the Bank which provides that upon his retirement he will receive during his lifetime monthly pension payments in amounts equal to 50% of his average basic monthly salary earned during the twelve months preceding his retirement. Upon his death the payments will terminate. The Agreement has no mandatory retirement provisions and no expiration date. Mr. Maass is not covered by the Bank's Retirement Income Plan.