Flushing Financial Corporation Reports 1Q23 GAAP EPS of $0.17 and Core EPS of $0.10; Deposits Increase Sequentially and Year-Over-Year; Liquidity Remains Strong Outlines Action Plan to Enhance Business Model Resilience and Drive Profitability in Current Environment

Rhea-AI Summary

In its first quarter of 2023, the company reported lower-than-expected results due to a challenging interest rate environment, with net income at $5.16 million, a 71.7% decrease year-over-year. Despite this, deposits increased by 6.2% year-over-year to reach $6.8 billion, reflecting strong customer relationships. The net interest margin (NIM) decreased to 2.27%, down from 2.70% in the prior quarter, primarily due to liabilities repricing faster than assets. The company took decisive actions to stabilize its business model, including moving towards an interest rate-neutral position and tightening expense controls. Key financial metrics include a tangible common equity ratio of 7.73%. A loss was incurred on the charge-off of a $9.2 million business credit. A conference call discussing these results is scheduled for April 26, 2023.

Positive

• Solid deposit growth of 6.2% year-over-year to $6.8 billion.
• Continued strong liquidity with $3.7 billion available.
• Tangible common equity at a solid 7.73%.

Negative

• Net income decreased 71.7% year-over-year to $5.16 million.
• Net interest margin fell to 2.27%, down from 2.70% in the previous quarter.
• Charged off $9.2 million in business credit, impacting earnings.

John R. Buran, President and CEO Commentary

“The inverted yield curve and the rising rate environment led to first quarter results below our expectations. To better adapt to the changing environment, we are accelerating the following actions to enhance the resilience of our business model and strengthen performance: 1) move more towards being interest rate neutral in the shorter term; 2) increase our focus on risk adjusted returns and profitability; 3) emphasize our brand of customer service and deep relationships to continue to expand the client base and enhance loyalty; 4) further tighten expense controls; 5) review new and existing lending relationships to prepare for the next credit cycle; and 6) preserve our strong liquidity and capital. We continue to experience solid deposit growth, which reflects our deep client relationships and ties to our communities. Further, our strong liquidity is expected to allow us to continue our long track record of dividend payments. While the environment has clearly become more challenging, we are confident that our decisive actions we are taking now will result in improved profitability in the future and set the stage for consistent and significantly higher returns.” - John R. Buran, President and CEO

UNIONDALE, N.Y., April 25, 2023 (GLOBE NEWSWIRE) -- Strong Credit Quality Despite Loss on One Singular Relationship. Results for the quarter were impacted by our decision to fully charge off a $9.2 million business credit placed on non-accrual in 2Q22. This credit was a participation where the domestic borrower had a significant customer who shipped its product internationally and was impacted by world events. Existing credit protection became more questionable during the quarter which led to the decision to charge-off. Consistent with our long-standing history of conservative underwriting, the remainder of the credit portfolio continued to perform well as delinquencies improved 16 basis points and criticized and classified assets declined QoQ.

NIM Outlook; Solid Capital and Liquidity. While rising rates temporarily compress our net interest margin, the NIM should begin to rebound, on a lagged basis, after the Fed stops raising rates. To limit additional margin squeeze, we moved closer to interest rate neutral, achieving approximately 40% of our target for 2023 in the first quarter. Capital continues to be strong with a TCE¹ of 7.73%. Liquidity is solid with $3.7 billion of availability while uninsured and uncollateralized deposits are a low $1.1 billion or 16.2% of total deposits.

Key Financial Metrics2

		1Q23			4Q22		3Q22		2Q22			1Q22
GAAP:
EPS		$0.17			$0.34		$0.76		$0.81			$0.58
ROAA (%)		0.24			0.48		1.11		1.22			0.91
ROAE (%)		3.02			6.06		13.91		15.00			10.83
NIM FTE3 (%)		2.27			2.70		3.07		3.35			3.36
Core:
EPS		$0.10			$0.57		$0.62		$0.70			$0.61
ROAA (%)		0.14			0.82		0.90		1.05			0.94
ROAE (%)		1.76			10.29		11.24		12.90			11.27
Core NIM FTE (%)		2.25			2.63		3.03		3.33			3.31
Credit Quality:
NPAs/Loans & OREO (%)		0.61			0.77		0.72		0.72			0.21
ACLs/Loans (%)		0.56			0.58		0.59		0.58			0.57
ACLs/NPLs (%)		182.89			124.89		142.29		141.06			266.12
NCOs/Avg Loans (%)		0.54			0.05		0.02		(0.03	)		0.06
Balance Sheet:
Avg Loans ($B)		$6.9			$6.9		$6.9		$6.6			$6.6
Avg Dep ($B)		$6.8			$6.7		$6.3		$6.4			$6.4
Book Value/Share		$22.84			$22.97		$22.47		$22.38			$22.26
Tangible BV/Share		$22.18			$22.31		$21.81		$21.71			$21.61
TCE/TA (%)		7.73			7.82		7.62		7.82			8.05

¹ Tangible Common Equity (“TCE”)/Total Assets (“TA”) ² See “Reconciliation of GAAP Earnings and Core Earnings”, “Reconciliation of GAAP Revenue and Pre-Provision Pre-Tax Net Revenue”, and “Reconciliation of GAAP Net Interest Margin to Core Net Interest Income and Net Interest Margin.” ³ Net Interest Margin (“NIM”) Fully Taxable Equivalent (“FTE”)

1Q23 Highlights

• Average total deposits increased 2.0% QoQ and 6.2% YoY to $6.8 billion, with core deposits comprising 75.3% of total average deposits; opened new Hauppauge branch during the quarter
• Period end net loans declined slightly QoQ and increased 4.5% YoY; loan closings were $173.5 million down 22.9% QoQ and 47.3% YoY; the yield on closings increased 91 bps QoQ and 357 bps YoY to 7.01%
• Loan pipeline decreased 59.9% YoY, but increased 5.5% QoQ to $266.1 million reflecting higher rates and greater client selectivity
• Net interest margin FTE decreased 43 bps QoQ and 109 bps YoY to 2.27%; Core net interest margin FTE decreased 38 bps QoQ and 106 bps YoY to 2.25%; The decline in GAAP and Core NIM was primarily driven by our liability sensitive balance sheet resulting in liabilities repricing faster than assets; after a lag, the NIM is expected to expand when the Fed stops raising rates
• Achieved 40% of our goal of moving towards interest rate neutral in 1Q23. These actions include adding $200 million hedge on investments, $50 million (net) of funding swaps, increasing floating rate securities, and extending funding
• NPAs declined to $42.2 million from $53.4 million at 4Q22, but increased from $14.1 million at 1Q22
• Provision for credit losses was $7.5 million in 1Q23 compared to $1.4 million in 1Q22; net charge-offs were $9.2 million in 1Q23 compared to $0.9 million in 1Q22
• Tangible Common Equity to Tangible Assets was 7.73%, down from 7.82% at 4Q22; the change in accumulated other comprehensive loss, net of taxes negatively impacted this ratio by 2 bps in 1Q23; our swaps portfolio serves as a partial offset to the value of the AFS securities portfolio when rates change
• Repurchased 159,516 shares at an average price of $19.14

Areas of Focus
Credit Quality	Midtown Manhattan office exposure is 0.1% of net loans The Company is a conservatively managed institution with a history of low and below industry levels of credit losses Over 88% of the loan portfolio is collateralized by real estate with an average loan to value less than 37% and debt service coverage ratios for multifamily and commercial real estate, which together total 65% of the loan portfolio, of 1.9x; This strong level of coverage is expected to enable our borrowers to absorb the impact of higher operating costs and higher interest rates while still generating ample cash flows to cover required principal and interest payments
Interest Rate Risk	Historically the Company operated with a liability sensitive balance sheet resulting in liabilities repricing faster than assets when interest rates change During 1Q23, the Company took significant actions to position the balance sheet towards a more interest rate risk neutral position These actions, which include adding hedges, floating rate assets, and extending funding, resulted in achievement of 40% of our goal for 2023
Liquidity	Deposits increased nearly $250 million in the first quarter, and we see new opportunities for growth The Company continues to have ample liquidity with $3.7 billion of undrawn lines and resources Uninsured and uncollateralized deposits were only 16.2% of total deposits at March 31, 2023 Checking account openings were up 30% YoY in 1Q23
Customer Experience	Additional opportunities emerging as a result of a major competitor leaving the market Approximately 33% of our branches are in Asian markets Bensonhurst, our 27th branch, is expected to open in 2023 and will enhance our Asian branch presence Digital banking usage continues to increase with double digit growth in monthly mobile deposit active uses and digital banking enrollment in March 2023 versus a year ago

Income Statement Highlights

															YoY				QoQ
($000s, except EPS)			1Q23			4Q22			3Q22		2Q22		1Q22		Change				Change
Net Interest Income			$45,262			$54,201			$61,206		$64,730		$63,479		(28.7	)	%		(16.5	)	%
Provision (Benefit) for Credit Losses			7,508			(12	)		2,145		1,590		1,358		452.9				NM
Noninterest Income (Loss)			6,908			(7,652	)		8,995		7,353		1,313		NM				(190.3	)
Noninterest Expense			37,703			33,742			35,634		35,522		38,794		(2.8	)			11.7
Income Before Income Taxes			6,959			12,819			32,422		34,971		24,640		(71.8	)			(45.7	)
Provision for Income Taxes			1,801			2,570			8,980		9,936		6,421		(72.0	)			(29.9	)
Net Income			$5,158			$10,249			$23,442		$25,035		$18,219		(71.7	)			(49.7	)
Diluted EPS			$0.17			$0.34			$0.76		$0.81		$0.58		(70.7	)			(50.0	)
Avg. Diluted Shares (000s)			30,265			30,420			30,695		30,937		31,254		(3.2	)			(0.5	)
Core Net Income1			$3,003			$17,399			$18,953		$21,518		$18,969		(84.2	)			(82.7	)
Core EPS1			$0.10			$0.57			$0.62		$0.70		$0.61		(83.6	)			(82.5	)

¹ See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $45.3 million in 1Q23 compared to $54.2 million in 4Q22, $61.2 million in 3Q22, $64.7 million in 2Q22, and $63.5 million in 1Q22.

• Net interest margin, FTE (“NIM”) of 2.27% decreased 109 bps YoY and 43 bps QoQ
• Prepayment penalty income from loans and securities, net reversals and recoveries of interest from nonaccrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $1.1 million (6 bps to the NIM) in 1Q23 compared to $2.4 million (12 bps) in 4Q22, $2.2 million (11 bps) in 3Q22, $2.6 million (13 bps) in 2Q22, and $2.6 million (14 bps) in 1Q22
• Excluding the items in the previous bullet, net interest margin was 2.21% in 1Q23, 2.58% in 4Q22, 2.96% in 3Q22, and 3.22% in both 2Q22 and 1Q22
• In order to move more towards a neutral interest rate risk position, the following actions were taken:
  • Added $200 million of hedges against the investment portfolio converting securities yielding 1.90% into assets yielding 3.41%
  • Purchases $250.0 million of funding derivatives locking in funding at a weighted average cost of 3.72% with a duration approximately 3.2 years
  • Extended funding through FHLB advances totaling $71.7 million at 4.05%, with an average duration of 4.0 years
  • Purchased $66.7 million of floating (reprice within 90 days) rate securities with an initial weighted average yield of 6.45%
• The totality of these actions equates to approximately 40% of the goal of moving towards interest rate neutral
• Additionally, the balance sheet, as of March 31, 2023, consists of:        
  • Approximately $1.6 billion of assets were floating or swapped into floating rate assets
  • Funding derivatives totaled $921.5 million with $621.5 million effective at 2.53% for 2.4 years and $300.0 million forward starting at 1.80% with a remaining term of 2.7 years; this strategy was started in 2018
  • The Company has $2.5 billion of protection in place against a rising rate environment through floating assets and derivative strategy
    

The Company recorded a provision for credit losses of $7.5 million in 1Q23 compared to a benefit for credit losses of $12 thousand in 4Q22, a provision for credit losses of $2.1 million in 3Q22, $1.6 million in 2Q22, and $1.4 million in 1Q22.

• Net charge-offs (recoveries) were $9.2 million in 1Q23 (54 bps of average loans), $0.8 million in 4Q22 (5 bps of average loans), $0.3 million in 3Q22 (2 bps of average loans), $(0.5) million in 2Q22 ((3) bps of average loans), and $0.9 million in 1Q22 (6 bps of average loans)
• 1Q23 net charge-offs were primarily related to a commercial business relationship that was placed on nonaccrual in 2Q22

Noninterest income (loss) was $6.9 million in 1Q23, $(7.7) million in 4Q22, $9.0 million in 3Q22, $7.4 million in 2Q22, and $1.3 million in 1Q22.

• Noninterest income included net gains (losses) from fair value adjustments of $2.6 million in 1Q23 ($0.06 per share, net of tax), $(0.6) million in 4Q22 ($(0.02) per share, net of tax), $5.6 million in 3Q22 ($0.13 per share, net of tax), $2.5 million in 2Q22 ($0.06 per share, net of tax), and $(1.8) million in 1Q22 ($(0.04) per share, net of tax)
• Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds were primarily reinvested in 1Q23 into floating rate securities that have a yield that approximates 6.40%
• Life insurance proceeds were $0.3 million ($0.01 per share) in 4Q22 and $1.5 million ($0.05 per share) in 2Q22
• Absent all above items and other immaterial adjustments, core noninterest income was $4.3 million in 1Q23, up 37.4% YoY and 21.6% QoQ; investment product sales were a significant driver of the YOY and QoQ increase

Noninterest expense totaled $37.7 million in 1Q23 (a decrease of 2.8% YoY, but an increase of 11.7% QoQ) compared to $33.7 million in 4Q22, $35.6 million in 3Q22, $35.5 million in 2Q22, and $38.8 million in 1Q22.

• Given the challenging rate environment, management continues to actively review all noninterest expenses
• Salaries and employee benefits include $1.7 million and $1.4 million benefit from Employee Retention Tax Credit refunds in 1Q23 and 4Q22, respectively, and $2.8 million benefit from a lower discount rate for certain benefit plans in 4Q22
• Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22
• Seasonal compensation expense was $4.1 million and $4.3 million in 1Q23 and 1Q22, respectively
• Excluding the effects of other immaterial adjustments, core operating expenses were $37.6 million in 1Q23, down 2.8% YoY but up 11.8% QoQ; excluding the Employee Retention Tax Credit refund and the benefit from the lower discount rate in 4Q22, 1Q23 and 4Q22 core noninterest expense would have been $39.3 million and $37.8 million, respectively
• GAAP noninterest expense to average assets was 1.78% in 1Q23, 1.58% in 4Q22, 1.69% in 3Q22, 1.73% in 2Q22, and 1.93% in 1Q22

The provision for income taxes was $1.8 million in 1Q23 compared to $2.6 million in 4Q22, $9.0 million in 3Q22, $9.9 million in 2Q22, and $6.4 million in 1Q22.

• The effective tax rate was 25.9% in 1Q23, 20.0% in 4Q22, 27.7% in 3Q22, 28.4% in 2Q22, and 26.1% in 1Q22
• The 4Q22 effective tax rate declined due to preferential tax items having a larger impact due to lower levels of pre-tax income
• The 2Q22 effective tax rate includes a loss of certain state and city tax deductions and a resolution of certain examinations by taxing authorities
  
  

Balance Sheet, Credit Quality, and Capital Highlights

													YoY				QoQ
		1Q23			4Q22		3Q22		2Q22		1Q22		Change				Change
Averages ($MM)
Loans		$6,871			$6,881		$6,861		$6,640		$6,579		4.4		%		(0.1	)	%
Total Deposits		6,810			6,678		6,277		6,441		6,410		6.2				2.0
Credit Quality ($000s)
Nonperforming Loans		$21,176			$32,382		$29,003		$27,948		$14,066		50.5		%		(34.6	)	%
Nonperforming Assets		42,157			53,363		49,984		48,929		14,066		199.7				(21.0	)
Criticized and Classified Loans		58,130			68,093		61,684		57,145		59,548		(2.4	)			(14.6	)
Criticized and Classified Assets		79,111			89,073		82,665		78,125		80,527		(1.8	)			(11.2	)
Allowance for Credit Losses/Loans (%)		0.56			0.58		0.59		0.58		0.57		(1	)	bp		(2	)	bps
Capital
Book Value/Share		$22.84			$22.97		$22.47		$22.38		$22.26		2.6		%		(0.6	)	%
Tangible Book Value/Share		22.18			22.31		21.81		21.71		21.61		2.6				(0.6	)
Tang. Common Equity/Tang. Assets (%)		7.73			7.82		7.62		7.82		8.05		(32	)	bps		(9	)	bps
Leverage Ratio (%)		8.58			8.61		8.74		8.91		9.05		(47	)			(3	)

Average loans were $6.9 billion, an increase of 4.4% YoY and down 0.1% QoQ.

• Maintain the credit strategy of loans secured by real estate with an emphasis on rent regulated multifamily
• Period end net loans totaled $6.9 billion, up 4.5% YoY, but down 0.4% QoQ
• Total loan closings were $173.5 million in 1Q23, $225.2 million in 4Q22, $463.7 million in 3Q22, $503.8 million in 2Q22, and $329.3 million in 1Q22; the loan pipeline was $266.1 million at March 31, 2023, down 59.9% YoY, but up 5.5% QoQ
• The diversified loan portfolio is over 88% collateralized by real estate with an average loan-to-value ratio of <37%
• Midtown Manhattan office exposure is 0.1% of net loans
  

Average total deposits were $6.8 billion, increasing 6.2% YoY and 2.0% QoQ.

• Average core deposits (non-CD deposits) were 75.3% of total average deposits in 1Q23, compared to 86.1% a year ago
• Average noninterest bearing deposits decreased 10.5% YoY in 1Q23 and 8.5% QoQ and comprised 13.2% of average total deposits in 1Q23 compared to 15.6% a year ago
• Uninsured and uncollateralized deposits totaled $1.1 billion or 16.2% of total deposits; Bank liquidity remains strong with $3.7 billion of availability
  

Credit Quality: Nonperforming loans at the end of each quarter totaled $21.2 million at 1Q23, $32.4 million at 4Q22, $29.0 million at 3Q22, $27.9 million at 2Q22, and $14.1 million at 1Q22.

• Criticized and classified loans were 84 bps of gross loans at 1Q23 compared to 98 bps at 4Q22, 89 bps at 3Q22, 85 bps at 2Q22, and 90 bps at 1Q22
• Total delinquent loans improved 16 bps QoQ to 42 bps from 58 bps indicating further improvement in future credit quality
• Allowance for credit losses were 182.9% of nonperforming loans at 1Q23 compared to 124.9% at 4Q22, and 266.1% at 1Q22
  

Capital: Book value per common share was $22.84 at 1Q23, up 2.6% YoY, but down 0.6% QoQ; tangible book value per common share, a non-GAAP measure, was $22.18 at 1Q23, up 2.6% YoY, but down 0.6% QoQ.

• The Company paid a dividend of $0.22 per share; the Company has ample available liquidity to meet its obligations; Purchased 159,516 shares at an average price of $19.14 in 1Q23 with 434,946 shares remain subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
• Tangible common equity to tangible assets was 7.73% at 1Q23 compared to 7.82% at 4Q22 and 8.05% at 1Q22; the swaps portfolio serves as a partial offset to market value changes in the AFS securities portfolio
• The Company and the Bank remain well capitalized under all applicable regulatory requirements
  
  

Conference Call Information And Second Quarter Earnings Release Date

Conference Call Information:

• John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer and Treasurer, will host a conference call on Wednesday, April 26, 2023, at 9:30 AM (ET) to discuss the Company’s first quarter results and strategy.
• Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
• Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=LTE5H6Xo
• Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
• Replay Access Code: 2825200
• The conference call will be simultaneously webcast and archived

Second Quarter 2023 Earnings Release Date:

The Company plans to release Second Quarter 2023 financial results after the market close on July 25, 2023; followed by a conference call at 9:30 AM (ET) on July 26, 2023.

A detailed announcement will be issued prior to the second quarter’s close confirming the date and time of the earnings release.

About Flushing Financial Corporation

Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, an FDIC insured, New York State—chartered commercial bank that operates banking offices in Queens, Brooklyn, Manhattan, and on Long Island. The Bank has been building relationships with families, business owners, and communities since 1929. Today, it offers the products, services, and conveniences associated with large commercial banks, including a full complement of deposit, loan, equipment finance, and cash management services. Rewarding customers with personalized attention and bankers that can communicate in the languages prevalent within these multicultural markets is what makes the Bank uniquely different. As an Equal Housing Lender and leader in real estate lending, the Bank’s experienced lending teams create mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. The Bank also fosters relationships with consumers nationwide through its online banking division with the iGObanking® and BankPurely® brands.

Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at FlushingBank.com. Flushing Financial Corporation’s earnings release and presentation slides will be available prior to the conference call at www.FlushingBank.com under Investor Relations.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “goals”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.

#FF

- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)

	At or for the three months ended
	March 31,				December 31,				September 30,				June 30,					March 31,
(Dollars in thousands, except per share data)	2023				2022				2022				2022					2022
Performance Ratios (1)
Return on average assets		0.24	%			0.48	%			1.11	%			1.22		%			0.91	%
Return on average equity		3.02				6.06				13.91				15.00					10.83
Yield on average interest-earning assets (2)		4.61				4.44				4.10				3.85					3.77
Cost of average interest-bearing liabilities		2.80				2.11				1.25				0.60					0.50
Cost of funds		2.47				1.84				1.08				0.52					0.43
Net interest rate spread during period (2)		1.81				2.33				2.85				3.25					3.27
Net interest margin (2)		2.27				2.70				3.07				3.35					3.36
Noninterest expense to average assets		1.78				1.58				1.69				1.73					1.93
Efficiency ratio (3)		76.48				59.55				55.68				52.27					58.87
Average interest-earning assets to average interest-bearing liabilities		1.19	X			1.21	X			1.22	X			1.22		X			1.22	X
Average Balances
Total loans, net	$	6,871,192			$	6,881,245			$	6,861,463			$	6,640,331				$	6,578,680
Total interest-earning assets		7,996,677				8,045,691				7,979,070				7,740,683					7,570,373
Total assets		8,468,311				8,518,019				8,442,657				8,211,763					8,049,470
Total deposits		6,810,485				6,678,383				6,276,613				6,440,904					6,410,063
Total interest-bearing liabilities		6,703,558				6,662,209				6,553,087				6,337,374					6,220,510
Stockholders’ equity		683,071				676,165				674,282				667,456					673,012
Per Share Data
Book value per common share (4)	$	22.84			$	22.97			$	22.47			$	22.38				$	22.26
Tangible book value per common share (5)	$	22.18			$	22.31			$	21.81			$	21.71				$	21.61
Stockholders’ Equity
Stockholders’ equity	$	673,459			$	677,157			$	670,719			$	670,812				$	675,813
Tangible stockholders’ equity		653,932				657,504				650,936				650,894					656,085
Consolidated Regulatory Capital Ratios
Tier 1 capital	$	737,138			$	746,880			$	749,526			$	739,776				$	731,536
Common equity Tier 1 capital		690,846				698,258				701,532				686,258					675,434
Total risk-based capital		965,384				975,709				979,021				903,047					892,861
Risk Weighted Assets		6,659,532				6,640,542				6,689,284				6,522,710					6,232,020
Tier 1 leverage capital (well capitalized = 5%)		8.58	%			8.61	%			8.74	%			8.91		%			9.05	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)		10.37				10.52				10.49				10.52					10.84
Tier 1 risk-based capital (well capitalized = 8.0%)		11.07				11.25				11.20				11.34					11.74
Total risk-based capital (well capitalized = 10.0%)		14.50				14.69				14.64				13.84					14.33
Capital Ratios
Average equity to average assets		8.07	%			7.94	%			7.99	%			8.13		%			8.36	%
Equity to total assets		7.94				8.04				7.84				8.04					8.27
Tangible common equity to tangible assets (6)		7.73				7.82				7.62				7.82					8.05
Asset Quality
Nonaccrual loans (7)	$	21,176			$	29,782			$	27,003			$	27,848				$	14,066
Nonperforming loans		21,176				32,382				29,003				27,948					14,066
Nonperforming assets		42,157				53,363				49,984				48,929					14,066
Net charge-offs (recoveries)		9,234				811				290				(501	)				935
Asset Quality Ratios
Nonperforming loans to gross loans		0.31	%			0.47	%			0.42	%			0.41		%			0.21	%
Nonperforming assets to total assets		0.50				0.63				0.58				0.59					0.17
Allowance for credit losses to gross loans		0.56				0.58				0.59				0.58					0.57
Allowance for credit losses to nonperforming assets		91.87				75.79				82.56				80.57					266.12
Allowance for credit losses to nonperforming loans		182.89				124.89				142.29				141.06					266.12
Net charge-offs (recoveries) to average loans		0.54				0.05				0.02				(0.03	)				0.06
Full-service customer facilities		26				25				25				25					24

⁽¹⁾ Ratios are presented on an annualized basis, where appropriate.
⁽²⁾ Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
⁽³⁾ Efficiency ratio, a non-GAAP measure, was calculated by dividing core noninterest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of core net interest income and core noninterest income.
⁽⁴⁾ Calculated by dividing stockholders’ equity by shares outstanding.
⁽⁵⁾ Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure, by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
⁽⁶⁾ See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
⁽⁷⁾ Excludes performing nonaccrual TDR loans in periods prior to 1Q23.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	For the three months ended
	March 31,			December 31,				September 30,			June 30,			March 31,
(In thousands, except per share data)	2023			2022				2022			2022			2022
Interest and Dividend Income
Interest and fees on loans	$	82,889		$	81,033			$	75,546		$	69,192		$	67,516
Interest and dividends on securities:
Interest		7,240			6,511				5,676			4,929			3,745
Dividends		29			24				17			11			8
Other interest income		1,959			1,702				506			159			51
Total interest and dividend income		92,117			89,270				81,745			74,291			71,320
Interest Expense
Deposits		39,056			27,226				11,965			4,686			3,408
Other interest expense		7,799			7,843				8,574			4,875			4,433
Total interest expense		46,855			35,069				20,539			9,561			7,841
Net Interest Income		45,262			54,201				61,206			64,730			63,479
Provision (benefit) for credit losses		7,508			(12	)			2,145			1,590			1,358
Net Interest Income After Provision (Benefit) for Credit Losses		37,754			54,213				59,061			63,140			62,121
Noninterest Income (Loss)
Banking services fee income		1,411			1,231				1,351			1,166			1,374
Net loss on sale of securities		—			(10,948	)			—			—			—
Net gain on sale of loans		54			46				—			73			—
Net gain on disposition of assets		—			104				—			—			—
Net gain (loss) from fair value adjustments		2,619			(622	)			5,626			2,533			(1,809	)
Federal Home Loan Bank of New York stock dividends		697			658				538			407			397
Life insurance proceeds		—			286				—			1,536			—
Bank owned life insurance		1,109			1,126				1,132			1,115			1,114
Other income		1,018			467				348			523			237
Total noninterest income (loss)		6,908			(7,652	)			8,995			7,353			1,313
Noninterest Expense
Salaries and employee benefits		20,887			18,178				21,438			21,109			23,649
Occupancy and equipment		3,793			3,701				3,541			3,760			3,604
Professional services		2,483			2,130				2,570			2,285			2,222
FDIC deposit insurance		977			485				738			615			420
Data processing		1,435			1,421				1,367			1,383			1,424
Depreciation and amortization		1,510			1,535				1,488			1,447			1,460
Other real estate owned/foreclosure expense		165			35				143			32			84
Other operating expenses		6,453			6,257				4,349			4,891			5,931
Total noninterest expense		37,703			33,742				35,634			35,522			38,794
Income Before Provision for Income Taxes		6,959			12,819				32,422			34,971			24,640
Provision for Income Taxes		1,801			2,570				8,980			9,936			6,421
Net Income	$	5,158		$	10,249			$	23,442		$	25,035		$	18,219
Basic earnings per common share	$	0.17		$	0.34			$	0.76		$	0.81		$	0.58
Diluted earnings per common share	$	0.17		$	0.34			$	0.76		$	0.81		$	0.58
Dividends per common share	$	0.22		$	0.22			$	0.22		$	0.22		$	0.22
Basic average shares		30,265			30,420				30,695			30,937			31,254
Diluted average shares		30,265			30,420				30,695			30,937			31,254

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

	March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)	2023				2022				2022				2022				2022
ASSETS
Cash and due from banks	$	176,747			$	151,754			$	164,693			$	137,026			$	186,407
Securities held-to-maturity:
Mortgage-backed securities		7,870				7,875				7,880				7,885				7,890
Other securities		65,653				65,836				66,032				66,230				66,327
Securities available for sale:
Mortgage-backed securities		380,110				384,283				468,366				510,934				553,828
Other securities		431,818				351,074				351,495				346,720				286,041
Loans		6,904,176				6,934,769				6,956,674				6,760,393				6,607,264
Allowance for credit losses		(38,729	)			(40,442	)			(41,268	)			(39,424	)			(37,433	)
Net loans		6,865,447				6,894,327				6,915,406				6,720,969				6,569,831
Interest and dividends receivable		46,836				45,048				42,571				38,811				37,308
Bank premises and equipment, net		21,567				21,750				22,376				22,285				22,752
Federal Home Loan Bank of New York stock		38,779				45,842				62,489				50,017				33,891
Bank owned life insurance		214,240				213,131				212,353				211,220				211,867
Goodwill		17,636				17,636				17,636				17,636				17,636
Core deposit intangibles		1,891				2,017				2,147				2,282				2,420
Right of use asset		42,268				43,289				44,885				46,687				48,475
Other assets		168,259				179,084				179,090				160,885				125,160
Total assets	$	8,479,121			$	8,422,946			$	8,557,419			$	8,339,587			$	8,169,833
LIABILITIES
Total deposits	$	6,734,090			$	6,485,342			$	6,125,305			$	6,407,577			$	6,452,895
Borrowed funds		887,509				1,052,973				1,572,830				1,089,621				877,122
Operating lease liability		45,353				46,125				48,330				50,346				52,292
Other liabilities		138,710				161,349				140,235				121,231				111,711
Total liabilities		7,805,662				7,745,789				7,886,700				7,668,775				7,494,020
STOCKHOLDERS' EQUITY
Preferred stock (5,000,000 shares authorized; none issued)		—				—				—				—				—
Common stock ($0.01 par value; 100,000,000 shares authorized)		341				341				341				341				341
Additional paid-in capital		262,876				264,332				263,755				262,860				261,837
Treasury stock		(97,760	)			(98,535	)			(90,977	)			(88,342	)			(79,834	)
Retained earnings		545,786				547,507				543,894				527,217				508,973
Accumulated other comprehensive loss, net of taxes		(37,784	)			(36,488	)			(46,294	)			(31,264	)			(15,504	)
Total stockholders' equity		673,459				677,157				670,719				670,812				675,813
Total liabilities and stockholders' equity	$	8,479,121			$	8,422,946			$	8,557,419			$	8,339,587			$	8,169,833
(In thousands)
Issued shares		34,088				34,088				34,088				34,088				34,088
Outstanding shares		29,488				29,476				29,851				29,980				30,367
Treasury shares		4,600				4,612				4,237				4,108				3,721

  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

	For the three months ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(In thousands)	2023			2022			2022			2022			2022
Interest-earning Assets:
Mortgage loans, net	$	5,333,274		$	5,338,612		$	5,340,694		$	5,178,029		$	5,152,070
Other loans, net		1,537,918			1,542,633			1,520,769			1,462,302			1,426,610
Total loans, net		6,871,192			6,881,245			6,861,463			6,640,331			6,578,680
Taxable securities:
Mortgage-backed securities		457,911			549,204			568,854			594,923			580,670
Other securities		411,723			371,897			362,629			333,158			226,744
Total taxable securities		869,634			921,101			931,483			928,081			807,414
Tax-exempt securities:
Other securities		66,828			67,022			67,211			67,315			57,611
Total tax-exempt securities		66,828			67,022			67,211			67,315			57,611
Interest-earning deposits and federal funds sold		189,023			176,323			118,913			104,956			126,668
Total interest-earning assets		7,996,677			8,045,691			7,979,070			7,740,683			7,570,373
Other assets		471,634			472,328			463,587			471,080			479,097
Total assets	$	8,468,311		$	8,518,019		$	8,442,657		$	8,211,763		$	8,049,470
Interest-bearing Liabilities:
Deposits:
Savings accounts	$	134,945		$	146,598		$	154,545		$	156,785		$	156,592
NOW accounts		1,970,555			1,972,134			1,808,608			2,089,851			2,036,914
Money market accounts		2,058,523			2,146,649			2,136,829			2,231,743			2,253,630
Certificate of deposit accounts		1,679,517			1,350,683			1,057,733			820,476			889,847
Total due to depositors		5,843,540			5,616,064			5,157,715			5,298,855			5,336,983
Mortgagors' escrow accounts		70,483			82,483			68,602			97,496			71,509
Total interest-bearing deposits		5,914,023			5,698,547			5,226,317			5,396,351			5,408,492
Borrowings		789,535			963,662			1,326,770			941,023			812,018
Total interest-bearing liabilities		6,703,558			6,662,209			6,553,087			6,337,374			6,220,510
Noninterest-bearing demand deposits		896,462			979,836			1,050,296			1,044,553			1,001,571
Other liabilities		185,220			199,809			164,992			162,380			154,377
Total liabilities		7,785,240			7,841,854			7,768,375			7,544,307			7,376,458
Equity		683,071			676,165			674,282			667,456			673,012
Total liabilities and equity	$	8,468,311		$	8,518,019		$	8,442,657		$	8,211,763		$	8,049,470
Net interest-earning assets	$	1,293,119		$	1,383,482		$	1,425,983		$	1,403,309		$	1,349,863

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)

	For the three months ended
	March 31,				December 31,				September 30,				June 30,					March 31,
(Dollars in thousands)	2023				2022				2022				2022					2022
Interest Income:
Mortgage loans, net	$	62,054			$	60,946			$	58,374			$	54,775				$	53,970
Other loans, net		20,835				20,087				17,172				14,417					13,546
Total loans, net		82,889				81,033				75,546				69,192					67,516
Taxable securities:
Mortgage-backed securities		2,281				2,425				2,466				2,356					2,167
Other securities		4,611				3,723				2,839				2,090					1,119
Total taxable securities		6,892				6,148				5,305				4,446					3,286
Tax-exempt securities:
Other securities		477				489				492				625					591
Total tax-exempt securities		477				489				492				625					591
Interest-earning deposits and federal funds sold		1,959				1,702				506				159					51
Total interest-earning assets		92,217				89,372				81,849				74,422					71,444
Interest Expense:
Deposits:
Savings accounts	$	126			$	59			$	53			$	50				$	49
NOW accounts		13,785				9,515				3,640				1,405					793
Money market accounts		14,102				10,532				5,280				1,952					1,275
Certificate of deposit accounts		11,007				7,037				2,948				1,273					1,289
Total due to depositors		39,020				27,143				11,921				4,680					3,406
Mortgagors' escrow accounts		36				83				44				6					2
Total interest-bearing deposits		39,056				27,226				11,965				4,686					3,408
Borrowings		7,799				7,843				8,574				4,875					4,433
Total interest-bearing liabilities		46,855				35,069				20,539				9,561					7,841
Net interest income- tax equivalent	$	45,362			$	54,303			$	61,310			$	64,861				$	63,603
Included in net interest income above:
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans	$	680			$	1,080			$	1,368			$	2,281				$	1,716
Net gains/(losses) from fair value adjustments on qualifying hedges included in interest income		100				936				28				(60	)				(129	)
Purchase accounting adjustments		306				342				775				367					1,058
Interest-earning Assets Yields:
Mortgage loans, net		4.65	%			4.57	%			4.37	%			4.23		%			4.19		%
Other loans, net		5.42				5.21				4.52				3.94					3.80
Total loans, net		4.83				4.71				4.40				4.17					4.11
Taxable securities:
Mortgage-backed securities		1.99				1.77				1.73				1.58					1.49
Other securities		4.48				4.00				3.13				2.51					1.97
Total taxable securities		3.17				2.67				2.28				1.92					1.63
Tax-exempt securities: (1)
Other securities		2.86				2.92				2.93				3.71					4.10
Total tax-exempt securities		2.86				2.92				2.93				3.71					4.10
Interest-earning deposits and federal funds sold		4.15				3.86				1.70				0.61					0.16
Total interest-earning assets (1)		4.61	%			4.44	%			4.10	%			3.85		%			3.77		%
Interest-bearing Liabilities Yields:
Deposits:
Savings accounts		0.37	%			0.16	%			0.14	%			0.13		%			0.13		%
NOW accounts		2.80				1.93				0.81				0.27					0.16
Money market accounts		2.74				1.96				0.99				0.35					0.23
Certificate of deposit accounts		2.62				2.08				1.11				0.62					0.58
Total due to depositors		2.67				1.93				0.92				0.35					0.26
Mortgagors’ escrow accounts		0.20				0.40				0.26				0.02					0.01
Total interest-bearing deposits		2.64				1.91				0.92				0.35					0.25
Borrowings		3.95				3.26				2.58				2.07					2.18
Total interest-bearing liabilities		2.80	%			2.11	%			1.25	%			0.60		%			0.50		%
Net interest rate spread (tax equivalent) (1)		1.81	%			2.33	%			2.85	%			3.25		%			3.27		%
Net interest margin (tax equivalent) (1)		2.27	%			2.70	%			3.07	%			3.35		%			3.36		%
Ratio of interest-earning assets to interest-bearing liabilities		1.19	X			1.21	X			1.22	X			1.22		X			1.22		X

_____________________________
⁽¹⁾ Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT and LOAN COMPOSITION
(Unaudited)

Deposit Composition

																	1Q23 vs.				1Q23 vs.
		March 31,			December 31,			September 30,			June 30,			March 31,			4Q22				1Q22
(Dollars in thousands)		2023			2022			2022			2022			2022			% Change				% Change
Noninterest bearing		$	872,254		$	921,238		$	992,378		$	1,081,208		$	1,041,027		(5.3	)	%		(16.2	)	%
Interest bearing:
Certificate of deposit accounts			1,880,260			1,526,338			1,036,107			906,943			886,317		23.2				112.1
Savings accounts			128,245			143,641			150,552			154,670			158,542		(10.7	)			(19.1	)
Money market accounts			1,855,781			2,099,776			2,113,256			2,229,993			2,362,390		(11.6	)			(21.4	)
NOW accounts			1,918,977			1,746,190			1,762,468			1,977,186			1,925,124		9.9				(0.3	)
Total interest-bearing deposits			5,783,263			5,515,945			5,062,383			5,268,792			5,332,373		4.8				8.5
Total due to depositors			6,655,517			6,437,183			6,054,761			6,350,000			6,373,400		3.4				4.4
Mortgagors' escrow deposits			78,573			48,159			70,544			57,577			79,495		63.2				(1.2	)
Total deposits		$	6,734,090		$	6,485,342		$	6,125,305		$	6,407,577		$	6,452,895		3.8		%		4.4		%

Loan Composition

																						1Q23 vs.				1Q23 vs.
		March 31,				December 31,				September 30,				June 30,				March 31,				4Q22				1Q22
(Dollars in thousands)		2023				2022				2022				2022				2022				% Change				% Change
Multifamily residential		$	2,601,174			$	2,601,384			$	2,608,192			$	2,531,858			$	2,500,570			—		%		4.0		%
Commercial real estate			1,904,293				1,913,040				1,914,326				1,864,507				1,764,927			(0.5	)			7.9
One-to-four family ― mixed-use property			549,207				554,314				560,885				561,100				563,679			(0.9	)			(2.6	)
One-to-four family ― residential			232,302				235,067				233,469				242,729				248,226			(1.2	)			(6.4	)
Co-operative apartments			6,115				6,179				7,015				8,130				8,248			(1.0	)			(25.9	)
Construction			60,486				70,951				63,651				72,148				68,488			(14.7	)			(11.7	)
Mortgage Loans			5,353,577				5,380,935				5,387,538				5,280,472				5,154,138			(0.5	)			3.9
Small Business Administration (1)			22,860				23,275				27,712				40,572				59,331			(1.8	)			(61.5	)
Commercial business and other			1,518,756				1,521,548				1,532,497				1,431,417				1,387,155			(0.2	)			9.5
Nonmortgage loans			1,541,616				1,544,823				1,560,209				1,471,989				1,446,486			(0.2	)			6.6
Net unamortized premiums and unearned loan fees (2)			8,983				9,011				8,927				7,932				6,640			(0.3	)			35.3
Allowance for credit losses			(38,729	)			(40,442	)			(41,268	)			(39,424	)			(37,433	)		(4.2	)			3.5
Net loans		$	6,865,447			$	6,894,327			$	6,915,406			$	6,720,969			$	6,569,831			(0.4	)	%		4.5		%

_____________________________
⁽¹⁾ Includes $4.8 million, $5.2 million, $9.6 million, $22.2 million, and $43.2 million of PPP loans at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.
⁽²⁾ Includes $5.1 million, $5.4 million, $5.8 million, $6.6 million, and $6.9 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS and RATES
(Unaudited)

Loan Closings

		For the three months ended
		March 31,			December 31,			September 30,			June 30,			March 31,
(In thousands)		2023			2022			2022			2022			2022
Multifamily residential		$	42,164		$	65,347		$	173,980		$	136,902		$	98,180
Commercial real estate			15,570			20,750			77,777			164,826			45,102
One-to-four family – mixed-use property			4,938			4,489			12,383			12,228			8,498
One-to-four family – residential			4,296			7,485			4,102			4,211			9,237
Co-operative apartments			—			—			—			—			24
Construction			10,592			7,301			7,170			8,319			8,802
Mortgage Loans			77,560			105,372			275,412			326,486			169,843
Small Business Administration			318			665			46			2,750			—
Commercial business and other			95,668			119,191			188,202			174,551			159,476
Nonmortgage Loans			95,986			119,856			188,248			177,301			159,476
Total Closings		$	173,546		$	225,228		$	463,660		$	503,787		$	329,319

Weighted Average Rate on Loan Closings

		For the three months ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Loan type		2023			2022			2022			2022			2022
Mortgage loans		6.30	%		5.59	%		4.37	%		3.76	%		3.61	%
Nonmortgage loans		7.58			6.57			4.93			4.21			3.27
Total loans		7.01	%		6.10	%		4.60	%		3.92	%		3.44	%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)

Allowance for Credit Losses

		For the three months ended
		March 31,					December 31,					September 30,					June 30,					March 31,
(Dollars in thousands)		2023					2022					2022					2022					2022
Allowance for credit losses - loans
Beginning balances		$	40,442				$	41,268				$	39,424				$	37,433				$	37,135
Net loan charge-off (recoveries):
Multifamily residential			(1	)				132					—					(1	)				—
One-to-four family – residential			(36	)				17					2					(2	)				(2	)
Small Business Administration			(6	)				(9	)				(12	)				13					1,015
Taxi medallion			—					—					—					(435	)				(12	)
Commercial business and other			9,277					671					300					(76	)				(66	)
Total			9,234					811					290					(501	)				935
Provision (benefit) for loan losses			7,521					(15	)				2,134					1,490					1,233
Ending balance		$	38,729				$	40,442				$	41,268				$	39,424				$	37,433
Gross charge-offs		$	9,298				$	1,938				$	324				$	50				$	1,036
Gross recoveries			64					1,127					34					551					101
Allowance for credit losses - loans to gross loans			0.56		%			0.58		%			0.59		%			0.58		%			0.57		%
Net loan charge-offs (recoveries) to average loans			0.54					0.05					0.02					(0.03	)				0.06

Nonperforming Assets

		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2023				2022				2022				2022				2022
Loans 90 Days Or More Past Due and Still Accruing:
Commercial real estate		$	—			$	—			$	2,000			$	—			$	—
Construction			—				2,600				—				—				—
Commercial business and other			—				—				—				100				—
Total			—				2,600				2,000				100				—
Nonaccrual Loans:
Multifamily residential			3,628				3,206				3,414				3,414				3,414
Commercial real estate			—				237				1,851				242				5
One-to-four family - mixed-use property(1)			790				790				790				790				790
One-to-four family - residential			4,961				4,425				4,655				5,055				7,387
Construction			—				—				—				856				—
Small Business Administration			937				937				937				937				937
Commercial business and other(1)			10,860				20,187				15,356				16,554				1,533
Total			21,176				29,782				27,003				27,848				14,066
Total Nonperforming Loans (NPLs)			21,176				32,382				29,003				27,948				14,066
Total Nonaccrual HTM Securities			20,981				20,981				20,981				20,981				—
Total Nonperforming Assets		$	42,157			$	53,363			$	49,984			$	48,929			$	14,066
Nonperforming Assets to Total Assets			0.50	%			0.63	%			0.58	%			0.59	%			0.17	%
Allowance for Credit Losses to NPLs			182.9	%			124.9	%			142.3	%			141.1	%			266.1	%

_____________________________
⁽¹⁾ Adopted ASU No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023; Not included in the above analysis are nonaccrual performing TDR one-to-four family - mixed use property loans totaling $0.2 million in 4Q22 and in 3Q22 and $0.3 million in 2Q22 and 1Q22; nonaccrual performing TDR commercial business loans totaling less than $0.1 million in 4Q22, $2.9 million in 3Q22, and $2.8 million in 2Q22 and 1Q22.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS

Non-cash Fair Value Adjustments to GAAP Earnings

The variance in GAAP and core earnings is partly driven by the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to borrowings carried at fair value under the fair value option.

Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Core Noninterest Income, Core Noninterest Expense and Tangible Book Value per common share are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and noninterest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as this measure is commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.

These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Unaudited)

		For the three months ended
(Dollars in thousands,		March 31,					December 31,					September 30,					June 30,					March 31,
except per share data)		2023					2022					2022					2022					2022
GAAP income before income taxes		$	6,959				$	12,819				$	32,422				$	34,971				$	24,640
Net (gain) loss from fair value adjustments (Noninterest income (loss))			(2,619	)				622					(5,626	)				(2,533	)				1,809
Net loss on sale of securities (Noninterest income (loss))			—					10,948					—					—					—
Life insurance proceeds (Noninterest income (loss))			—					(286	)				—					(1,536	)				—
Net gain on disposition of assets (Noninterest income (loss))			—					(104	)				—					—					—
Net (gain) loss from fair value adjustments on qualifying hedges (Interest and fees on loans)			(100	)				(936	)				(28	)				60					129
Net amortization of purchase accounting adjustments (Various)			(188	)				(219	)				(650	)				(237	)				(924	)
Core income before taxes			4,052					22,844					26,118					30,725					25,654
Provision for core income taxes			1,049					5,445					7,165					9,207					6,685
Core net income		$	3,003				$	17,399				$	18,953				$	21,518				$	18,969
GAAP diluted earnings per common share		$	0.17				$	0.34				$	0.76				$	0.81				$	0.58
Net (gain) loss from fair value adjustments, net of tax			(0.06	)				0.02					(0.13	)				(0.06	)				0.04
Net loss on sale of securities, net of tax			—					0.27					—					—					—
Life insurance proceeds			—					(0.01	)				—					(0.05	)				—
Net gain on disposition of assets, net of tax			—					—					—					—					—
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax			—					(0.02	)				—					—					—
Net amortization of purchase accounting adjustments, net of tax			(0.01	)				(0.01	)				(0.02	)				(0.01	)				(0.02	)
Core diluted earnings per common share(1)		$	0.10				$	0.57				$	0.62				$	0.70				$	0.61
Core net income, as calculated above		$	3,003				$	17,399				$	18,953				$	21,518				$	18,969
Average assets			8,468,311					8,518,019					8,442,657					8,211,763					8,049,470
Average equity			683,071					676,165					674,282					667,456					673,012
Core return on average assets(2)			0.14		%			0.82		%			0.90		%			1.05		%			0.94		%
Core return on average equity(2)			1.76		%			10.29		%			11.24		%			12.90		%			11.27		%

_____________________________
⁽¹⁾ Core diluted earnings per common share may not foot due to rounding.
⁽²⁾ Ratios are calculated on an annualized basis.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Unaudited)

		For the three months ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2023				2022				2022				2022				2022
GAAP Net interest income		$	45,262			$	54,201			$	61,206			$	64,730			$	63,479
Net (gain) loss from fair value adjustments on qualifying hedges			(100	)			(936	)			(28	)			60				129
Net amortization of purchase accounting adjustments			(306	)			(342	)			(775	)			(367	)			(1,058	)
Core Net interest income		$	44,856			$	52,923			$	60,403			$	64,423			$	62,550
GAAP Noninterest income (loss)		$	6,908			$	(7,652	)		$	8,995			$	7,353			$	1,313
Net (gain) loss from fair value adjustments			(2,619	)			622				(5,626	)			(2,533	)			1,809
Net loss on sale of securities			—				10,948				—				—				—
Life insurance proceeds			—				(286	)			—				(1,536	)			—
Net gain on sale of assets			—				(104	)			—				—				—
Core Noninterest income		$	4,289			$	3,528			$	3,369			$	3,284			$	3,122
GAAP Noninterest expense		$	37,703			$	33,742			$	35,634			$	35,522			$	38,794
Net amortization of purchase accounting adjustments			(118	)			(123	)			(125	)			(130	)			(134	)
Core Noninterest expense		$	37,585			$	33,619			$	35,509			$	35,392			$	38,660
Net interest income		$	45,262			$	54,201			$	61,206			$	64,730			$	63,479
Noninterest income (loss)			6,908				(7,652	)			8,995				7,353				1,313
Noninterest expense			(37,703	)			(33,742	)			(35,634	)			(35,522	)			(38,794	)
Pre-provision pre-tax net revenue		$	14,467			$	12,807			$	34,567			$	36,561			$	25,998
Core:
Net interest income		$	44,856			$	52,923			$	60,403			$	64,423			$	62,550
Noninterest income			4,289				3,528				3,369				3,284				3,122
Noninterest expense			(37,585	)			(33,619	)			(35,509	)			(35,392	)			(38,660	)
Pre-provision pre-tax net revenue		$	11,560			$	22,832			$	28,263			$	32,315			$	27,012
Efficiency Ratio			76.5		%		59.6		%		55.7		%		52.3		%		58.9		%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
to CORE NET INTEREST INCOME
(Unaudited)

	For the three months ended
	March 31,					December 31,					September 30,					June 30,					March 31,
(Dollars in thousands)	2023					2022					2022					2022					2022
GAAP net interest income	$	45,262				$	54,201				$	61,206				$	64,730				$	63,479
Net (gain) loss from fair value adjustments on qualifying hedges		(100	)				(936	)				(28	)				60					129
Net amortization of purchase accounting adjustments		(306	)				(342	)				(775	)				(367	)				(1,058	)
Tax equivalent adjustment		100					102					104					131					124
Core net interest income FTE	$	44,956				$	53,025				$	60,507				$	64,554				$	62,674
Total average interest-earning assets (1)	$	8,001,271				$	8,050,601				$	7,984,558				$	7,746,640				$	7,577,053
Core net interest margin FTE		2.25		%			2.63		%			3.03		%			3.33		%			3.31		%
GAAP interest income on total loans, net	$	82,889				$	81,033				$	75,546				$	69,192				$	67,516
Net (gain) loss from fair value adjustments on qualifying hedges - loans		(101	)				(936	)				(28	)				60					129
Net amortization of purchase accounting adjustments		(316	)				(372	)				(783	)				(357	)				(1,117	)
Core interest income on total loans, net	$	82,472				$	79,725				$	74,735				$	68,895				$	66,528
Average total loans, net (1)	$	6,876,495				$	6,886,900				$	6,867,758				$	6,647,131				$	6,586,253
Core yield on total loans		4.80		%			4.63		%			4.35		%			4.15		%			4.04		%

_____________________________
⁽¹⁾ Excludes purchase accounting average balances for all periods presented.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)

		March 31,					December 31,					September 30,					June 30,					March 31,
(Dollars in thousands)		2023					2022					2022					2022					2022
Total Equity		$	673,459				$	677,157				$	670,719				$	670,812				$	675,813
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit Intangibles			(1,891	)				(2,017	)				(2,147	)				(2,282	)				(2,420	)
Intangible deferred tax liabilities			—					—					—					—					328
Tangible Stockholders' Common Equity		$	653,932				$	657,504				$	650,936				$	650,894				$	656,085
Total Assets		$	8,479,121				$	8,422,946				$	8,557,419				$	8,339,587				$	8,169,833
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit Intangibles			(1,891	)				(2,017	)				(2,147	)				(2,282	)				(2,420	)
Intangible deferred tax liabilities			—					—					—					—					328
Tangible Assets		$	8,459,594				$	8,403,293				$	8,537,636				$	8,319,669				$	8,150,105
Tangible Stockholders' Common Equity to Tangible Assets			7.73		%			7.82		%			7.62		%			7.82		%			8.05		%

FAQ

What are the key financial results for FFIC in Q1 2023?

In Q1 2023, FFIC reported a net income of $5.16 million, a 71.7% decrease year-over-year.

How much did FFIC's deposits increase in Q1 2023?

Deposits increased by 6.2% year-over-year to $6.8 billion.

What is FFIC's net interest margin for Q1 2023?

FFIC's net interest margin for Q1 2023 was 2.27%, down from 2.70% in the previous quarter.

What actions is FFIC taking to adapt to the current market conditions?

FFIC is focusing on becoming interest rate neutral, tightening expense controls, and enhancing customer service.

When will FFIC hold its conference call to discuss Q1 2023 results?

FFC will host a conference call on April 26, 2023, at 9:30 AM ET.