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Flushing Financial Corporation Reports Record Net Interest Income; Net Interest Margin Expansion Driven by Ability to Significantly Reduce Funding Costs

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Flushing Financial Corporation (Nasdaq-GS: FFIC) reported strong second quarter results for 2020, with GAAP diluted EPS of $0.63, a significant improvement from ($0.05) in Q1 2020. The company achieved record GAAP net interest income of $48.7 million, up 19.3% QoQ, and a net interest margin of 2.87%, reflecting a rise of 43bps. Although the provision for credit losses increased to $9.6 million due to COVID-19, the loan pipeline remains robust at $310.8 million. Non-performing assets saw an uptick of 51% year-over-year, raising concerns about credit quality amidst economic challenges.

Positive
  • GAAP diluted EPS increased to $0.63, up from ($0.05) in Q1 2020.
  • Record GAAP net interest income of $48.7 million, up 19.3% QoQ.
  • Net interest margin expanded to 2.87%, rising 43bps QoQ.
  • Loan pipeline remains strong at $310.8 million.
Negative
  • Provision for credit losses increased to $9.6 million, impacting earnings.
  • Non-performing assets rose 51% YoY, raising credit quality concerns.

SECOND QUARTER 20201 HIGHLIGHTS

  • GAAP diluted EPS was $0.63, compared to ($0.05) in 1Q20 and $0.37 in 2Q19
  • Core diluted EPS was $0.36 compared to $0.19 in 1Q20 and $0.42 in 2Q19
  • Net interest margin was 2.87%, up 43bps QoQ and 42bps YoY
  • Core net interest margin was 2.85%, up 36bps QoQ and 45bps YoY
  • Record GAAP net interest income of $48.7 million, up 19.3% QoQ and 21.8% YoY
  • Record Core net interest income of $49.1 million, up 14.4% QoQ and 20.2% YoY
  • GAAP and core ROAE 13.1% and 7.4%, respectively, compared with (1.0)% and 3.8%, respectively in 1Q20
  • GAAP and core ROAA were 1.0% and 0.6%, respectively, compared with (0.1)% and 0.3%, respectively in 1Q20
  • Loan pipeline remains strong at $310.8 million
  • Provision for credit losses of $9.6 million, $0.25 after-tax per diluted common share, driven mainly by economic conditions arising from COVID-19 pandemic
  • Net charge-offs were $1.0 million, compared to $1.1 million in 1Q20

UNIONDALE, N.Y., July 21, 2020 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq-GS: FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the second quarter ended June 30, 2020.

John R. Buran, President and Chief Executive Officer stated, “I want to thank our employees for their outstanding work during these unprecedented times. The health and welfare of our employees and customers remain our highest priority.”

Mr. Buran continued, “We are pleased to announce our second quarter earnings totaled $18.3 million, or $0.63 per diluted common share.  Our GAAP earnings for the quarter were positively impacted by two items. First, we executed on our strategic objective to manage our cost of funds and improve funding mix. We achieved record net interest income as a result of  the Company’s quick response to the Fed decreasing interest rates in late March resulting in cost of funds decreasing 62 basis points from the previous quarter with additional opportunity to further reduce funding costs in the third quarter. Adding to the reduction of cost of funds in the second quarter, core deposits increased 7% while the net interest margin expanded 43 basis points from the previous quarter.”

“The second item positively affecting our GAAP net earnings was the non-cash fair value adjustment on our junior subordinated debt of $10.3 million, or $0.27 per diluted common share, after-tax, due to market conditions.”

“Core earnings for the quarter totaled $10.3 million, or $0.36 per diluted common share. Pre-provision pre-tax net revenue totaled $33.7 million, an increase of $28.1 million from the previous quarter. Non-performing assets at the end of the quarter were 29 basis points of total assets. Our loan portfolio is 88% collateralized by real estate with an average loan to value of less than 40%. Despite the current economic environment due to COVID-19, we have a long history and foundation built upon disciplined underwriting, good credit quality and a resilient seasoned loan portfolio with strong asset protection.”

“We continue to actively assist our customers during these turbulent times. As a result of COVID-19, we granted forbearances to our customers.  Originally, we granted forbearances for one to six months. In anticipation of an extended relief period, we have most recently predominately granted forbearance of principal and interest for six months. At the height of the request period, April and May 2020, COVID-19 forbearances peaked at $1.5 billion. By June 30, 2020, we reduced that number to $1.3 billion comprised of 82% real estate loans. Through July 10th, 63% of the $146 million in loans scheduled to return to regularly scheduled payments have done so.”

“Additionally, we have actively participated in the SBA Paycheck Protection Program originating $93 million of these loans. We are one of nine banks in the State of New York participating in the Main Street Lending Program. We are also a proud participant in the FHLBNY Small Business Recovery Grant Program, helping our customers and communities navigate through the current environment.”

“During this pandemic, our customers have utilized our enhanced technology platform with new mobile banking capabilities that went live in March 2020. Mobile deposits have increased over 13% from April 2020 through June 2020. Similarly, the usage of ATMs has increased with over 75% of all transactions now completed via ATM. The number of accounts enrolling in online banking and opening new accounts online has also grown during the current quarter to 19% of retail account openings.”

“Given the current economic environment at the end of the quarter, we adjusted our economic forecast in our current expected credit loss (“CECL”) model resulting in a provision for credit losses of $9.6 million, or $0.25 per diluted share, after-tax.  Our allowance for credit losses stands at 61 basis points of gross loans and 182% of non-performing loans. As a reminder, our maximum charge-offs were only 64 basis points in the midst of the Great Recession while industry peak charge-offs were nearly 5x.”

“As we previously disclosed, the pending acquisition of Empire Bancorp was delayed due to the severe instability and volatility in the U.S. financial and stock markets caused by the pandemic. The Company continues to believe that the merger offers benefits to both shareholders and customers of Empire Bancorp and Flushing. We will be refraining from any additional comments at this time.”

Mr. Buran concluded by saying, “Overall, we made good progress in the second quarter to achieve our strategic objectives.  Importantly, the Company remains committed to building and fostering an environment of diversity and inclusion in our workforce and the communities we serve. In light of recent events, we have formed a Diversity and Inclusion Committee chaired by the EVP/Director of Human Resources, reporting directly to me. The role of this Committee is to make recommendations ensuring Flushing Financial continues to provide a safe and inclusive environment for all employees and ensure our message of inclusion is supported by our actions and participation in community organizations.”

 Summary of Strategic Objectives

  • Manage cost of funds and continue to improve funding mix
  • Increase interest income by leveraging loan pricing opportunities and portfolio mix
  • Enhance core earnings power by improving scalability and efficiency
  • Manage credit risk
  • Remain well capitalized under all stress test scenarios

Earnings Summary:

Net Interest Income

Net interest income for 2Q20 was $48.7 million, an increase of $8.7 million, or 21.8% YoY and $7.9 million, or 19.3% QoQ.

  • Net interest margin of 2.87%, increased 42bps YoY and 43bps QoQ
  • Net interest spread of 2.72%, increased 49bps YoY and 48bps QoQ
  • Yield on average interest-earning assets of 3.81%, decreased 45bps YoY and 17bps QoQ
  • Cost of average interest-bearing liabilities of 1.09%, decreased 94bpsYoY and 65bps QoQ
  • Cost of funds of 0.99%, decreased 91bps YoY and 62bps QoQ
  • Average balance of total interest-earning assets of $6,809.9 million, increased $269.7 million, or 4.1%, YoY and $90.0 million, or 1.3%, QoQ
  • Net interest income includes prepayment penalty income from loans totaling $0.7 million in 2Q20, $0.8 million in 1Q20 and $1.1 million in 2Q19; recovered interest from delinquent loans of $0.1 million in 2Q20, $0.4 million in 1Q20 and $0.5 million in 2Q19; net losses from fair value adjustments on qualifying hedges totaling $0.4 million in 2Q20, $2.1 million in 1Q20 and $0.8 million in 2Q19
  • Absent all above items noted in the preceding bullet, the net interest margin was 2.85% in 2Q20, an increase of 45bps YoY and 36bps QoQ

Provision for Credit Losses

The Company recorded a provision for credit losses of $9.6 million in 2Q20 compared to a provision of $7.2 million in 1Q20 and a provision of $1.5 million in 2Q19.

  • 2Q20 and 1Q20 provision for credit losses were primarily driven by the negative economic forecast resulting from the impact of COVID-19
  • Net charge-offs of $1.0 million in 2Q20, $1.1 million in 1Q20 and $1.0 million in 2Q19

Non-interest Income

Non-interest income for 2Q20 was $13.7 million, an increase of $11.3 million YoY, and $16.6 million QoQ.

  • Non-interest income included net gains from fair value adjustments of $10.2 million in 2Q20; net losses from fair value adjustments of $6.0 million and $2.0 million in 1Q20 and 2Q19, respectively
  • Additionally, non-interest income included life insurance proceeds totaling $0.7 million in 2Q20, net gain on sale of assets of $0.8 million and capital gain of $0.5 million, both in 2Q19
  • Absent all above items, non-interest income was $2.9 million in 2Q20, a decrease of $0.2 million, or 7.7% YoY, and $0.3 million, or 8.2% QoQ

Non-interest Expense

Non-interest expense for 2Q20 was $28.8 million, a decrease of $3.6 million, or 11.2 % QoQ, and an increase of $1.6 million or 5.9% YoY.

  • Non-interest expense improved QoQ primarily due to 1Q20 including seasonal expenses, and increased YoY primarily due to Company growth
  • Additionally, non-interest expense included merger expenses totaling $0.2 million in 2Q20 and $0.9 million in 1Q20
  • The ratio of non-interest expense to average assets was 1.60% in 2Q20 compared to 1.82% in 1Q20 and 1.58% in 2Q19
  • The efficiency ratio improved to 54.9% in 2Q20 compared to 68.2% in 1Q20 and 61.1% in 2Q19

Provision for Income Taxes

The provision for income taxes in 2Q20 was $5.8 million, compared to benefit of $0.2 million in 1Q20 and a provision of $3.3 million in 2Q19.

  • Pre-tax income increased by $10.3 million YoY and $25.7 million QoQ
  • The effective tax rates were 24.1% in 2Q20, 12.9% in 1Q20 and 23.7% in 2Q19

Financial Condition Summary:

Loans:

  • Net loans held for investment were $5,946.6 million reflecting an increase of 3.4% from December 31, 2019, as we continue to focus on the origination of full banking relationship loans through C&I loans, multi-family loans and commercial real estate
  • SBA Paycheck Protection Program (“PPP”) closings totaled $93.2 million in 2Q20
  • Loan closings of commercial business loans, multi-family loans and commercial real estate totaled $126.9 million for 2Q20, or 90.3% of loan production, excluding PPP closings
  • Loan pipeline was $310.8 million at June 30, 2020, compared to $324.5 million at December 31, 2019

The following table shows the weighted average rate received from loan closings for the periods indicated:

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58%; width:58%; min-width:58%;"> 1%; width:1%; min-width:1%;"> 12%; width:12%; min-width:12%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 12%; width:12%; min-width:12%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 12%; width:12%; min-width:12%;"> 1%; width:1%; min-width:1%;"> 
  For the three months ended 
  June 30,   March 31,  June 30,  
Loan type 2020  2020  2019 
Mortgage loans  3.79%   3.93%   4.75%
Non-mortgage loans  1.99%   4.23%   5.01%
Total loans  2.62%   4.03%   4.89%
          
Excluding PPP loans  3.71%   4.03%   4.89%

Credit Quality:

  • Non-performing loans totaled $20.2 million, an increase of $6.9 million, or 52.3%, from $13.3 million at December 31, 2019
  • Non-performing assets totaled $20.4 million, an increase of $6.9 million, or 51.0%, from $13.5 million at December 31, 2019
  • Classified assets totaled $25.1 million, an increase of $0.5 million, or 2.0%, from $24.6 million at December 31, 2019
  • Loans classified as troubled debt restructured (TDR) totaled $6.0 million, a decrease of $0.5 million, or 8.2%, from $6.5 million at December 31, 2019
  • 799 active COVID-19 forbearances outstanding at July 10th for loans with a combined principal balance of $1.3 billion at the time of forbearance; total combined deferment of $36.4 million in principal, interest and escrow
  • Over 88% of our gross loans are collateralized by real estate
  • The loan-to-value ratio on our portfolio of real estate dependent loans as of June 30, 2020 totaled 38.1%
  • Net charge-offs totaled $1.0 million

Capital Management:

  • The Company and Bank, at June 30, 2020, were both well capitalized under all applicable regulatory requirements
  • Through 2Q20, stockholders’ equity decreased $7.8 million, or 1.3%, from December 31, 2019, to $571.9 million primarily due to unrealized losses in the fair value of securities and interest rate swaps, coupled with the declaration and payment of dividends on the Company’s common stock, partially offset by net income of $16.9 million
  • During 2Q20, the Company did not repurchase any shares; as of June 30, 2020, up to 284,806 shares remained subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Book value per common share was $20.27 at June 30, 2020, compared to $20.59 at December 31, 2019
  • Tangible book value per common share, a non-GAAP measure, was $19.71 at June 30, 2020, compared to $20.02 at December 31, 2019

Conference Call Information:

  • John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer, will host a conference call on Wednesday, July 22, 2020 at 9:30 AM (ET) to discuss the Company’s strategy and results for the second quarter
  • Dial-in for Live Call: 1-877-509-5836
  • Webcast: https://services.choruscall.com/links/ffic200722.html
  • Dial-in for Replay: 1-877-344-7529
  • Replay Access Code: 10138500
  • The conference call will be simultaneously webcast and archived through July 22, 2021

About Flushing Financial Corporation

Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, a New York State-chartered commercial bank insured by the Federal Deposit Insurance Corporation. The Bank serves consumers, businesses, professionals, corporate clients, and public entities by offering a full complement of deposit, loan, equipment finance, and cash management services through its banking offices located in Queens, Brooklyn, Manhattan, and on Long Island. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. Flushing Bank is an Equal Housing Lender. The Bank also operates an online banking division consisting of iGObanking.com®, which offers competitively priced deposit products to consumers nationwide, and BankPurely®, an eco-friendly, healthier lifestyle community brand.

Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at http://www.flushingbank.com.

“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, 2019 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.

- Statistical Tables Follow -

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
                
  For the three months ended For the six months ended
  June 30, March 31, June 30, June 30, June 30,
  2020 2020 2019 2020 2019
Interest and Dividend Income               
40%; width:40%; min-width:40%;">Interest and fees on loans1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">60,5571%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">61,1091%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">62,2731%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">121,6661%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">124,6031%; width:1%; min-width:1%;"> 
Interest and dividends on securities:               
Interest  4,182   5,256   6,811   9,438   13,720 
Dividends  11   15   19   26   38 
Other interest income  22   290   472   312   1,027 
Total interest and dividend income  64,772   66,670   69,575   131,442   139,388 
                
Interest Expense               
Deposits  9,971   18,778   22,827   28,749   44,296 
Other interest expense  6,084   7,066   6,739   13,150   13,280 
Total interest expense  16,055   25,844   29,566   41,899   57,576 
                
Net Interest Income  48,717   40,826   40,009   89,543   81,812 
Provision for credit losses  9,619   7,178   1,474   16,797   2,446 
Net Interest Income After Provision for Credit Losses  39,098   33,648   38,535   72,746   79,366 
                
Non-interest Income               
Banking services fee income  944   798   1,059   1,742   2,032 
Net loss on sale of securities  (54)  (37)  (15)  (91)  (15)
Net gain on sale of loans  —   42   114   42   177 
Net gain on sale of assets  —   —   770   —   770 
Net gain (loss) from fair value adjustments  10,205   (5,993)  (1,956)  4,212   (4,036)
Federal Home Loan Bank of New York stock dividends  881   964   826   1,845   1,729 
Life insurance proceeds  659   —   —   659   43 
Bank owned life insurance  932   943   810   1,875   1,550 
Other income  170   419   843   589   1,144 
Total non-interest income (loss)  13,737   (2,864)  2,451   10,873   3,394 
                
Non-interest Expense               
Salaries and employee benefits  16,184   18,620   15,668   34,804   34,834 
Occupancy and equipment  2,827   2,840   2,742   5,667   5,531 
Professional services  1,985   2,862   1,806   4,847   4,071 
FDIC deposit insurance  737   650   667   1,387   1,152 
Data processing  1,813   1,694   1,420   3,507   2,912 
Depreciation and amortization  1,555   1,536   1,497   3,091   3,015 
Other real estate owned/foreclosure expense (benefit)  45   (164)  20   (119)  97 
Net loss from sales of real estate owned  —   31   —   31   — 
Other operating expenses  3,609   4,311   3,338   7,920   7,965 
Total non-interest expense  28,755   32,380   27,158   61,135   59,577 
                
Income (Loss) Before Income Taxes  24,080   (1,596)  13,828   22,484   23,183 
                
Provision (Benefit) for Income Taxes               
Federal  4,307   989   2,981   5,296   4,924 
State and local  1,501   (1,195)  291   306   635 
Total taxes  5,808   (206)  3,272   5,602   5,559 
                
Net Income (Loss) $18,272  $(1,390) $10,556  $16,882  $17,624 
                
                
Basic earnings (loss) per common share $0.63  $(0.05) $0.37  $0.58  $0.61 
Diluted earnings (loss) per common share $0.63  $(0.05) $0.37  $0.58  $0.61 
Dividends per common share $0.21  $0.21  $0.21  $0.42  $0.42 


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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
          
  June 30, March 31, December 31,
  2020 2020 2019
ASSETS         
55%; width:55%; min-width:55%;">Cash and due from banks1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$12%; width:12%; min-width:12%;">84,7541%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$12%; width:12%; min-width:12%;">157,1841%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$12%; width:12%; min-width:12%;">49,7871%; width:1%; min-width:1%;"> 
Securities held-to-maturity:         
Mortgage-backed securities  7,924   7,929   7,934 
Other securities  50,078   50,225   50,954 
Securities available for sale:         
Mortgage-backed securities  442,507   489,556   523,849 
Other securities  232,803   225,856   248,651 
Loans:         
Multi-family residential  2,285,555   2,272,343   2,238,591 
Commercial real estate  1,646,085   1,664,934   1,582,008 
One-to-four family ― mixed-use property  591,347   592,109   592,471 
One-to-four family ― residential  184,741   189,774   188,216 
Co-operative apartments  8,423   8,493   8,663 
Construction  69,433   66,727   67,754 
Small Business Administration  106,813   14,076   14,445 
Taxi medallion  3,269   3,281   3,309 
Commercial business and other  1,073,623   1,104,967   1,061,478 
Net unamortized premiums and unearned loan fees  13,986   15,384   15,271 
Allowance for loan losses  (36,710)  (28,098)  (21,751)
Net loans  5,946,565   5,903,990   5,750,455 
Interest and dividends receivable  30,219   25,526   25,722 
Bank premises and equipment, net  27,018   27,899   28,676 
Federal Home Loan Bank of New York stock  56,400   74,000   56,921 
Bank owned life insurance  157,779   158,655   157,713 
Goodwill  16,127   16,127   16,127 
Other real estate owned, net  208   208   239 
Right of use asset  38,303   39,729   41,254 
Other assets  71,974   68,526   59,494 
Total assets $7,162,659  $7,245,410  $7,017,776 
          
LIABILITIES         
Due to depositors:         
Non-interest bearing $581,881  $489,198  $435,072 
Certificate of deposit accounts  1,135,977   1,172,381   1,437,890 
Savings accounts  184,895   192,192   191,485 
Money market accounts  1,474,880   1,597,109   1,592,011 
NOW accounts  1,672,241   1,377,555   1,365,591 
Total deposits  5,049,874   4,828,435   5,022,049 
Mortgagors' escrow deposits  48,525   73,051   44,375 
Borrowed funds  1,305,187   1,617,582   1,237,231 
Operating lease liability  45,897   47,726   49,367 
Other liabilities  141,255   128,933   85,082 
Total liabilities  6,590,738   6,695,727   6,438,104 
          
STOCKHOLDERS' EQUITY         
Preferred stock (5,000,000 shares authorized; none issued)  —   —   — 
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares issued at June 30, 2020, March 31, 2020 and December 31, 2019; 28,217,434 shares, 28,213,602 shares and 28,157,206 shares outstanding at June 30, 2020, March 31, 2020 and December 31, 2019, respectively)  315   315   315 
Additional paid-in capital  226,901   225,893   226,691 
Treasury stock (3,313,161 shares, 3,316,993 shares and 3,373,389 shares at June 30, 2020, March 31, 2020 and December 31, 2019, respectively)  (69,436)  (69,540)  (71,487)
Retained earnings  437,663   425,455   433,960 
Accumulated other comprehensive loss, net of taxes  (23,522)  (32,440)  (9,807)
Total stockholders' equity  571,921   549,683   579,672 
          
Total liabilities and stockholders' equity $7,162,659  $7,245,410  $7,017,776 


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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)
                 
  At or for the three months ended At or for the six months ended 
  June 30, March 31, June 30, June 30, June 30, 
  2020 2020 2019 2020 2019 
Per Share Data                
43%; width:43%; min-width:43%;">Basic earnings (loss) per share1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">0.631%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">(0.051%; width:1%; min-width:1%;">)1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">0.371%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">0.581%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">0.611%; width:1%; min-width:1%;"> 
Diluted earnings (loss) per share $0.63 $(0.05) $0.37 $0.58 $0.61 
Average number of shares outstanding for:                
Basic earnings per common share computation  28,866,984  28,852,819   28,760,816  28,859,901  28,691,303 
Diluted earnings per common share computation  28,866,984  28,852,819   28,760,816  28,859,901  28,691,309 
Shares outstanding  28,217,434  28,213,602   28,187,922  28,217,434  28,187,922 
Book value per common share (1) $20.27 $19.48  $20.06 $20.27 $20.06 
Tangible book value per common share (2) $19.71 $18.92  $19.50 $19.71 $19.50 
                 
Stockholders' Equity                
Stockholders' equity $571,921 $549,683  $565,390 $571,921 $565,390 
Tangible stockholders' equity  556,086  533,848   549,549  556,086  549,549 
                 
Average Balances                
Total loans, net $5,946,412 $5,794,866  $5,565,057 $5,870,640 $5,554,919 
Total interest-earning assets  6,809,835  6,719,857   6,540,134  6,764,846  6,530,692 
Total assets  7,206,059  7,106,998   6,891,541  7,156,529  6,879,905 
Total due to depositors  4,395,228  4,578,793   4,595,189  4,487,011  4,596,738 
Total interest-bearing liabilities  5,912,774  5,951,925   5,825,187  5,932,350  5,818,263 
Stockholders' equity  557,414  576,597   560,624  567,006  556,645 
                 
Performance Ratios (3)                
Return on average assets  1.01% (0.08)%  0.61% 0.47% 0.51%
Return on average equity  13.11  (0.96)  7.53  5.95  6.33 
Yield on average interest-earning assets (4)  3.81  3.98   4.26  3.89  4.28 
Cost of average interest-bearing liabilities  1.09  1.74   2.03  1.41  1.98 
Cost of funds  0.99  1.61   1.90  1.30  1.85 
Net interest rate spread during period (4)  2.72  2.24   2.23  2.48  2.30 
Net interest margin (4)  2.87  2.44   2.45  2.66  2.51 
Non-interest expense to average assets  1.60  1.82   1.58  1.71  1.73 
Efficiency ratio (5)  54.92  68.21   61.06  61.16  67.36 
Average interest-earning assets to average interest-bearing liabilities  1.15X 1.13X  1.12X 1.14X 1.12X

_____________________
(1) Calculated by dividing stockholders’ equity by shares outstanding.
(2) 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”.
(3) Ratios are presented on an annualized basis, where appropriate.
(4) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(5) Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding accelerated employee benefits upon officer’s death, merger expense, OREO expense and the net gain/loss from the sale of OREO) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges) and non-interest income (excluding life insurance proceeds, net gains and losses from the sale of securities and fair value adjustments).

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
57%; width:57%; min-width:57%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 12%; width:12%; min-width:12%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 12%; width:12%; min-width:12%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 12%; width:12%; min-width:12%;"> 1%; width:1%; min-width:1%;"> 
  At or for the six At or for the year At or for the six 
  months ended ended months ended 
  June 30, 2020 December 31, 2019 June 30, 2019 
           
Selected Financial Ratios and Other Data          
           
Regulatory capital ratios (for Flushing Financial Corporation):          
Tier 1 capital $617,620 $615,500 $600,730 
Common equity Tier 1 capital  583,238  572,651  558,848 
Total risk-based capital  726,291  712,251  697,240 
           
Tier 1 leverage capital (well capitalized = 5%)  8.64% 8.73% 8.72%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  10.79  10.95  10.60 
Tier 1 risk-based capital (well capitalized = 8.0%)  11.42  11.77  11.39 
Total risk-based capital (well capitalized = 10.0%)  13.43  13.62  13.22 
           
Regulatory capital ratios (for Flushing Bank only):          
Tier 1 capital $683,521 $680,749 $667,882 
Common equity Tier 1 capital  683,521  680,749  667,882 
Total risk-based capital  717,192  702,500  689,392 
           
Tier 1 leverage capital (well capitalized = 5%)  9.56% 9.65% 9.69%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  12.63  13.02  12.66 
Tier 1 risk-based capital (well capitalized = 8.0%)  12.63  13.02  12.66 
Total risk-based capital (well capitalized = 10.0%)  13.25  13.43  13.07 
           
Capital ratios:          
Average equity to average assets  7.92% 8.08% 8.09%
Equity to total assets  7.98  8.26  8.14 
Tangible common equity to tangible assets (1)  7.78  8.05  7.93 
           
Asset quality:          
Non-accrual loans (2) $20,038 $12,813 $15,702 
Non-performing loans  20,188  13,258  15,702 
Non-performing assets  20,431  13,532  15,976 
Net charge-offs  2,156  2,005  1,881 
           
Asset quality ratios:          
Non-performing loans to gross loans  0.34% 0.23% 0.28%
Non-performing assets to total assets  0.29  0.19  0.23 
Allowance for loan losses to gross loans  0.61  0.38  0.38 
Allowance for loan losses to non-performing assets  179.68  160.73  134.64 
Allowance for loan losses to non-performing loans  181.85  164.05  136.99 
           
Full-service customer facilities  20  20  19 

_____________________
(1) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(2) Excludes performing non-accrual TDR loans.

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
36%; width:36%; min-width:36%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 4%; width:4%; min-width:4%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 4%; width:4%; min-width:4%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 4%; width:4%; min-width:4%;"> 1%; width:1%; min-width:1%;"> 
  For the three months ended 
  June 30, 2020  March 31, 2020  June 30, 2019 
  Average    Yield/  Average    Yield/  Average    Yield/ 
  Balance Interest Cost  Balance Interest Cost  Balance Interest Cost 
                            
    
Interest-earning Assets:                           
Mortgage loans, net $4,762,068 $49,719 4.18% $4,697,531 $49,412 4.21% $4,590,429 $50,206 4.37%
Other loans, net  1,184,344  10,838 3.66   1,097,335  11,697 4.26   974,628  12,067 4.95 
Total loans, net (1) (2)  5,946,412  60,557 4.07   5,794,866  61,109 4.22   5,565,057  62,273 4.48 
Taxable securities:                           
Mortgage-backed securities  465,365  2,327 2.00   507,912  3,040 2.39   585,892  4,225 2.88 
Other securities  243,867  1,358 2.23   243,726  1,697 2.79   242,560  2,135 3.52 
Total taxable securities  709,232  3,685 2.08   751,638  4,737 2.52   828,452  6,360 3.07 
Tax-exempt securities: (3)                           
Other securities  60,280  643 4.27   63,535  676 4.26   56,064  595 4.25 
Total tax-exempt securities  60,280  643 4.27   63,535  676 4.26   56,064  595 4.25 
Interest-earning deposits and federal funds sold  93,911  22 0.09   109,818  290 1.06   90,561  472 2.08 
Total interest-earning assets  6,809,835  64,907 3.81   6,719,857  66,812 3.98   6,540,134  69,700 4.26 
Other assets  396,224        387,141        351,407      
Total assets $7,206,059       $7,106,998       $6,891,541      
                            
                            
Interest-bearing Liabilities:                           
Deposits:                           
Savings accounts $188,587  74 0.16  $194,026  281 0.58  $200,349  348 0.69 
NOW accounts  1,440,147  2,099 0.58   1,419,739  4,648 1.31   1,541,956  6,641 1.72 
Money market accounts  1,580,652  3,208 0.81   1,697,783  7,042 1.66   1,336,526  6,974 2.09 
Certificate of deposit accounts  1,185,842  4,564 1.54   1,267,245  6,767 2.14   1,516,358  8,802 2.32 
Total due to depositors  4,395,228  9,945 0.91   4,578,793  18,738 1.64   4,595,189  22,765 1.98 
Mortgagors' escrow accounts  87,058  26 0.12   65,503  40 0.24   83,799  62 0.30 
Total interest-bearing deposits  4,482,286  9,971 0.89   4,644,296  18,778 1.62   4,678,988  22,827 1.95 
Borrowings  1,430,488  6,084 1.70   1,307,629  7,066 2.16   1,146,199  6,739 2.35 
Total interest-bearing liabilities  5,912,774  16,055 1.09   5,951,925  25,844 1.74   5,825,187  29,566 2.03 
Non interest-bearing demand deposits  560,637        449,761        394,642      
Other liabilities  175,234        128,715        111,088      
Total liabilities  6,648,645        6,530,401        6,330,917      
Equity  557,414        576,597        560,624      
Total liabilities and equity $7,206,059       $7,106,998       $6,891,541      
                            
Net interest income / net interest rate spread (tax equivalent) (3)    $48,852 2.72%    $40,968 2.24%    $40,134 2.23%
                            
Net interest-earning assets / net interest margin (tax equivalent) $897,061    2.87% $767,932    2.44% $714,947    2.45%
                            
Ratio of interest-earning assets to interest-bearing liabilities       1.15X       1.13X       1.12X

_____________________
(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.3 million, $0.2 million and $0.4 million for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

(2) Loan interest income includes net losses from fair value adjustments on qualifying hedges of $0.4 million, $2.1 million and $0.8 million for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.
(3) Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented totaling $0.1 million in each period.

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
42%; width:42%; min-width:42%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 8%; width:8%; min-width:8%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 8%; width:8%; min-width:8%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 8%; width:8%; min-width:8%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 8%; width:8%; min-width:8%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;"> 1%; width:1%; min-width:1%;"> 
  For the six months ended 
  June 30, 2020  June 30, 2019 
  Average   Yield/  Average   Yield/ 
  Balance Interest Cost  Balance Interest Cost 
Interest-earning Assets:                   
Mortgage loans, net $4,729,800 $99,131  4.19% $4,604,928 $101,051 4.39%
Other loans, net  1,140,840  22,535  3.95   949,991  23,552 4.96 
Total loans, net (1) (2)  5,870,640  121,666  4.14   5,554,919  124,603 4.49 
Taxable securities:                   
Mortgage-backed securities  486,638  5,367  2.21   579,679  8,473 2.92 
Other securities  243,796  3,055  2.51   242,214  4,346 3.59 
Total taxable securities  730,434  8,422  2.31   821,893  12,819 3.12 
Tax-exempt securities: (3)                   
Other securities  61,908  1,319  4.26   57,113  1,189 4.16 
Total tax-exempt securities  61,908  1,319  4.26   57,113  1,189 4.16 
Interest-earning deposits and federal funds sold  101,864  312  0.61   96,767  1,027 2.12 
Total interest-earning assets  6,764,846  131,719  3.89   6,530,692  139,638 4.28 
Other assets  391,683         349,213      
Total assets $7,156,529        $6,879,905      
                    
                    
Interest-bearing Liabilities:                   
Deposits:                   
Savings accounts $191,307  355  0.37  $203,047  709 0.70 
NOW accounts  1,429,943  6,747  0.94   1,515,554  12,672 1.67 
Money market accounts  1,639,217  10,250  1.25   1,358,228  13,795 2.03 
Certificate of deposit accounts  1,226,544  11,331  1.85   1,519,909  17,005 2.24 
Total due to depositors  4,487,011  28,683  1.28   4,596,738  44,181 1.92 
Mortgagors' escrow accounts  76,281  66  0.17   73,046  115 0.31 
Total interest-bearing deposits  4,563,292  28,749  1.26   4,669,784  44,296 1.90 
Borrowings  1,369,058  13,150  1.92   1,148,479  13,280 2.31 
Total interest-bearing liabilities  5,932,350  41,899  1.41   5,818,263  57,576 1.98 
Non interest-bearing demand deposits  505,199         396,724      
Other liabilities  151,974         108,273      
Total liabilities  6,589,523         6,323,260      
Equity  567,006         556,645      
Total liabilities and equity $7,156,529        $6,879,905      
                    
Net interest income / net interest rate spread
 (tax equivalent) (3)		    $89,820  2.48%    $82,062 2.30%
Net interest-earning assets / net interest margin (tax equivalent) $832,496     2.66% $712,429    2.51%
Ratio of interest-earning assets to interest-bearing liabilities        1.14X       1.12X

_____________________
(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.5 million and $0.9 million for the six months ended June 30, 2020 and June 30, 2019, respectively.
(2) Loan interest income includes net losses from fair value adjustments on qualifying hedges of $2.4 million and $1.5 million for the six months ended June 30, 2020 and June 30, 2019, respectively.
(3) Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented totaling $0.3 million for each of the six month periods ended June 30, 2020 and 2019.

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
 
           June 2020 vs.       June 2020 vs.
  June 30, March 31, December 31, December 2019 September 30, June 30, June 2019
(Dollars in thousands) 2020 2020 2019 % Change 2019 2019 % Change
Deposits                   
30%; width:30%; min-width:30%;">Non-interest bearing1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$8%; width:8%; min-width:8%;">581,8811%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$8%; width:8%; min-width:8%;">489,1981%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$8%; width:8%; min-width:8%;">435,0721%; width:1%; min-width:1%;"> 8%; width:8%; min-width:8%;">33.71%; width:1%; min-width:1%;">%1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$8%; width:8%; min-width:8%;">421,7861%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$8%; width:8%; min-width:8%;">413,8131%; width:1%; min-width:1%;"> 8%; width:8%; min-width:8%;">40.61%; width:1%; min-width:1%;">%
Interest bearing:                   
Certificate of deposit accounts  1,135,977  1,172,381  1,437,890 (21.0)%  1,506,376  1,544,117 (26.4)%
Savings accounts  184,895  192,192  191,485 (3.4)%  193,497  196,820 (6.1)%
Money market accounts  1,474,880  1,597,109  1,592,011 (7.4)%  1,329,156  1,302,153 13.3%
NOW accounts  1,672,241  1,377,555  1,365,591 22.5%  1,461,694  1,368,813 22.2%
Total interest-bearing deposits  4,467,993  4,339,237  4,586,977 (2.6)%  4,490,723  4,411,903 1.3%
                    
Total deposits $5,049,874 $4,828,435 $5,022,049 0.6% $4,912,509 $4,825,716 4.6%


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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
40%; width:40%; min-width:40%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 10%; width:10%; min-width:10%;"> 
Loan Closings                
  For the three months ended For the six months ended
   June 30,  March 31,  June 30,   June 30,  June 30, 
(In thousands) 2020 2020 2019 2020 2019
Multi-family residential $ 59,654 $ 67,318 $ 55,629 $ 126,972 $ 82,843
Commercial real estate   8,003   99,571   42,700   107,574   56,641
One-to-four family – mixed-use property   8,117   13,455   12,885   21,572   29,308
One-to-four family – residential   2,674   8,413   7,884   11,087   11,770
Co-operative apartments   —   704   300   704   300
Construction   2,821   6,749   18,715   9,570   24,616
Small Business Administration (1)   93,241   57   2,255   93,298   2,584
Commercial business and other   59,287   102,448   156,029   161,735   286,359
Total $ 233,797 $ 298,715 $ 296,397 $ 532,512 $ 494,421

_____________________
(1) Includes $93.2 million of PPP closings for the three and six months ended June 30, 2020.

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Loan Composition 
                   
          June 2020 vs.       June 2020 vs.
 June 30, March 31, December 31, December 2019 September 30,  June 30, June 2019
(Dollars in thousands)2020
 2020
 2019
 % Change 2019
 2019
 % Change
Loans held for investment:                  
33%; width:33%; min-width:33%;">Multi-family residential1%; width:1%; min-width:1%;">$7%; width:7%; min-width:7%;">2,285,5551%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$7%; width:7%; min-width:7%;">2,272,3431%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$7%; width:7%; min-width:7%;">2,238,5911%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;">2.11%; width:1%; min-width:1%;">%1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$7%; width:7%; min-width:7%;">2,232,3051%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$7%; width:7%; min-width:7%;">2,263,8751%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;">1.01%; width:1%; min-width:1%;">%
Commercial real estate 1,646,085   1,664,934   1,582,008  4.1%  1,559,581   1,524,693  8.0%
One-to-four family ― mixed-use property 591,347   592,109   592,471  (0.2)%  587,100   582,264  1.6%
One-to-four family ― residential 184,741   189,774   188,216  (1.8)%  184,432   184,024  0.4%
Co-operative apartments 8,423   8,493   8,663  (2.8)%  9,089   8,137  3.5%
Construction 69,433   66,727   67,754  2.5%  64,234   58,503  18.7%
Small Business Administration (1) 106,813   14,076   14,445  639.4%  3,982   14,511  636.1%
Taxi medallion 3,269   3,281   3,309  (1.2)%  3,513   3,555  (8.0)%
Commercial business and other 1,073,623   1,104,967   1,061,478  1.1%  1,096,164   983,573  9.2%
Net unamortized premiums and unearned loan fees 13,986   15,384   15,271  (8.4)%  15,363   15,278  (8.5)%
Allowance for loan losses (36,710)  (28,098)  (21,751) 68.8%  (22,035)  (21,510) 70.7%
Net loans$5,946,565  $5,903,990  $5,750,455  3.4% $5,743,728  $5,616,903  5.9%

_____________________
(1) Includes $93.2 million of PPP loans at June 30, 2020.

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Net Loans Activity               
  Three Months Ended
  June 30, March 31, December 31, September 30, June 30,
(In thousands)  2020
 2020
 2019
 2019
 2019
40%; width:40%; min-width:40%;">Loans originated and purchased1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">233,7971%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">298,7151%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">269,7361%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">398,1431%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">296,3971%; width:1%; min-width:1%;"> 
Principal reductions  (180,182)  (137,189)  (255,977)  (266,894)  (243,263)
Loans sold  —   (498)  (7,129)  (3,553)  (1,970)
Loan charge-offs  (1,030)  (1,259)  (95)  (431)  (1,114)
Foreclosures  —   —   —   —   (239)
Net change in deferred fees and costs  (1,398)  113   (92)  85   (144)
Net change in the allowance for loan losses  (8,612)  (6,347)  284   (525)  (495)
Total loan activity $42,575  $153,535  $6,727  $126,825  $49,172 
                     


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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)
 
44%; width:44%; min-width:44%;">Non-Performing Assets1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 9%; width:9%; min-width:9%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 9%; width:9%; min-width:9%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 9%; width:9%; min-width:9%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 9%; width:9%; min-width:9%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 9%; width:9%; min-width:9%;"> 1%; width:1%; min-width:1%;"> 
  June 30, March 31, December 31, September 30, June 30, 
(Dollars in thousands) 2020 2020 2019 2019 2019 
Loans 90 Days Or More Past Due and Still Accruing:                
Multi-family residential $— $— $445 $445 $— 
Commercial business and other  150  —  —  —  — 
Total  150  —  445  445  — 
                 
Non-accrual Loans:                
Multi-family residential  3,688  2,741  2,296  3,132  2,008 
Commercial real estate  2,671  8  367  872  1,488 
One-to-four family - mixed-use property  2,511  607  274  683  1,752 
One-to-four family - residential  6,412  5,158  5,139  5,050  5,411 
Small Business Administration  1,321  1,518  1,151  1,151  1,224 
Taxi medallion(1)  1,757  1,761  1,641  1,352  1,361 
Commercial business and other(1)  1,678  4,959  1,945  2,020  2,458 
Total  20,038  16,752  12,813  14,260  15,702 
                 
Total Non-performing Loans  20,188  16,752  13,258  14,705  15,702 
                 
Other Non-performing Assets:                
Real estate acquired through foreclosure  208  208  239  239  239 
Other asset acquired through foreclosure  35  35  35  35  35 
Total  243  243  274  274  274 
                 
Total Non-performing Assets $20,431 $16,995 $13,532 $14,979 $15,976 
                 
Non-performing Assets to Total Assets  0.29% 0.23% 0.19% 0.21% 0.23%
Allowance For Loan Losses to Non-performing Loans  181.8% 167.7% 164.1% 149.8% 137.0%

_____________________
(1) Not included in the above analysis are non-accrual performing TDR taxi medallion loans totaling $1.5 million in 2Q20, $1.5 million in 1Q20, $1.7 million in 4Q19, $2.2 million in 3Q19, and $2.2 million in 2Q19 and non-accrual performing TDR commercial business loans totaling $1.0 million in 1Q20, $1.0 million in 1Q20, $0.9 million in 4Q19 and $1.0 million in 3Q19.

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Net Charge-Offs (Recoveries)               
  Three Months Ended
  June 30, March 31, December 31, September 30, June 30,
(In thousands) 2020
 2020
 2019
 2019
 2019
40%; width:40%; min-width:40%;">Multi-family residential1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">(71%; width:1%; min-width:1%;">)1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">(61%; width:1%; min-width:1%;">)1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">(141%; width:1%; min-width:1%;">)1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">1831%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">(101%; width:1%; min-width:1%;">)
Commercial real estate  —   —   (30)  —   (7)
One-to-four family – mixed-use property  3   (78)  119   (140)  (2)
One-to-four family – residential  (3)  (5)  (3)  (3)  110 
Small Business Administration  165   (7)  (8)  (32)  (16)
Taxi medallion  —   —   —   —   (50)
Commercial business and other  849   1,245   (98)  150   954 
Total net loan charge-offs (recoveries) $1,007  $1,149  $(34) $158  $979 


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24%; width:24%; min-width:24%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 7%; width:7%; min-width:7%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FORBEARANCES DETAIL
(Dollars in thousands)
(Unaudited)
                           
  Balances by Risk Rating (1)  Forbearances (2) Backed by Mortgages (1) 
  Pass Criticized/
 Classified		 Total % of
Total
Loans		  Balance % of
Sector		  Balance % of
Total		 LTV 
Higher Risk Segments                          
Restaurants and Catering Halls $67,420 $2,196 $69,616 1.2% $24,420 35.1% $58,764 84.4%38.6%
Hotels  172,916  —  172,916 2.9   114,627 66.3   162,093 93.7 53.8 
Travel and Leisure  180,138  —  180,138 3.0   37,670 20.9   74,192 41.2 48.4 
Retail Services  76,494  —  76,494 1.3   21,168 27.7   38,760 50.7 61.9 
CRE - Shopping Center  255,192  —  255,192 4.3   124,958 49.0   255,192 100.0 44.4 
CRE - Single Tenant  133,937  337  134,274 2.2   44,311 33.0   134,274 100.0 41.8 
CRE - Strip Mall  286,131  2,050  288,181 4.8   139,344 48.4   288,181 100.0 45.1 
Transportation  107,207  7,800  115,007 1.9   14,756 12.8   26,155 22.7 53.0 
Contractors  184,948  1,399  186,347 3.1   16,142 8.7   121,365 65.1 51.9 
Schools and Child Care  43,674  —  43,674 0.7   12,441 28.5   35,193 80.6 43.4 
Subtotal $1,508,057 $13,782 $1,521,839 25.5% $549,837 36.1% $1,194,169 78.5%46.5%
                           
Lower Risk Segments $4,412,763 $34,687 $4,447,450 74.5% $728,307 16.4% $4,059,435 91.3%36.4%
                           
Total $5,920,820 $48,469 $5,969,289 100.0% $1,278,144 21.4% $5,253,604 88.0%38.1%

_____________________
(1) At June 30, 2020
(2) Represents dollar amount granted through 07/10/20


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 primarily due to the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to swaps designated to protect against rising rates and borrowing carried at fair value under the fair value option. As the swaps get closer to maturity, the volatility in fair value adjustments will dissipate. In a declining interest rate environment, the movement in the curve exaggerates our mark-to-market loss position. In a rising interest rate environment or a steepening of the yield curve, the loss position would experience an improvement.

Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income, Core Yield on Total Loans, Core Net Interest Margin 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 non-interest 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 these are measures 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.


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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
                
  Three Months Ended Six Months Ended
  June 30,  March 31, June 30,  June 30,  June 30, 
  2020  2020  2019  2020  2019 
                
40%; width:40%; min-width:40%;">GAAP income (loss) before income taxes1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 24,0801%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> (1,5961%; width:1%; min-width:1%;">)1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 13,8281%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 22,4841%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 23,1831%; width:1%; min-width:1%;"> 
                
Net (gain) loss from fair value adjustments   (10,205)   5,993    1,956    (4,212)   4,036 
Net loss on sale of securities   54    37    15    91    15 
Life insurance proceeds   (659)   —    —    (659)   (43)
Net gain on sale of assets   —    —    (770)   —    (770)
Net loss from fair value adjustments on qualifying hedges   365    2,073    818    2,438    1,455 
Accelerated employee benefits upon Officer's death   —    —    —    —    455 
Merger expense   194    929    —    1,123    — 
                
Core income before taxes   13,829    7,436    15,847    21,265    28,331 
                
Provision for income taxes for core income   3,532    1,936    3,771    5,468    6,804 
                
Core net income $ 10,297  $ 5,500  $ 12,076  $ 15,797  $ 21,527 
                
GAAP diluted earnings (loss) per common share $ 0.63  $ (0.05) $ 0.37  $ 0.58  $ 0.61 
                
Net (gain) loss from fair value adjustments, net of tax   (0.27)   0.15    0.05    (0.11)   0.10 
Net loss on sale of securities, net of tax   —    —    —    —    — 
Life insurance proceeds   (0.02)   —    —    (0.02)   — 
Net gain on sale of assets, net of tax   —    —    (0.02)   —    (0.02)
Net loss from fair value adjustments on qualifying hedges, net of tax   0.01    0.05    0.02    0.06    0.04 
Accelerated employee benefits upon Officer's death, net of tax   —    —    —    —    0.01 
Merger expense, net of tax   0.01    0.02    —    0.03    — 
                
Core diluted earnings per common share(1) $ 0.36  $ 0.19  $ 0.42  $ 0.55  $ 0.75 
                
                
Core net income, as calculated above $ 10,297  $ 5,500  $ 12,076  $ 15,797  $ 21,527 
Average assets   7,206,059    7,106,998    6,891,541    7,156,529    6,879,905 
Average equity   557,414    576,597    560,624    567,006    556,645 
Core return on average assets(2)   0.57%    0.31%    0.70%    0.44%    0.63%
Core return on average equity(2)   7.39%    3.82%    8.62%    5.57%    7.73%

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

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Dollars in thousands)
(Unaudited)
                
  Three Months Ended Six Months Ended
  June 30, March 31, June 30, June 30, June 30,
  2020 2020 2019 2020 2019
                
40%; width:40%; min-width:40%;">Net interest income1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">48,7171%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">40,8261%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">40,0091%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">89,5431%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">81,8121%; width:1%; min-width:1%;"> 
                
Non-interest income (loss)  13,737   (2,864)  2,451   10,873   3,394 
Non-interest expense  (28,755)  (32,380)  (27,158)  (61,135)  (59,577)
                
                
Pre-provision pre-tax net revenue (1) $33,699  $5,582  $15,302  $39,281  $25,629 
                

_____________________
(1) Includes non-cash net gains and (losses) from fair value adjustments totaling $9.8 million, ($8.1) million and ($2.8) million for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively and $1.8 million and ($5.5) million for the six months ended June 30, 2020 and 2019, respectively.

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
To CORE NET INTEREST INCOME and NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
                
  Three Months Ended Six Months Ended
  June 30,  March 31, June 30,  June 30,  June 30, 
  2020 2020 2019 2020 2019
40%; width:40%; min-width:40%;">GAAP net interest income1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 48,7171%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 40,8261%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 40,0091%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 89,5431%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;"> 81,8121%; width:1%; min-width:1%;"> 
Net loss from fair value adjustments on qualifying hedges   365    2,073    818    2,438    1,455 
Core net interest income $ 49,082  $ 42,899  $ 40,827  $ 91,981  $ 83,267 
                
                
GAAP interest income on total loans, net $ 60,557  $ 61,109  $ 62,273  $ 121,666  $ 124,603 
Net loss from fair value adjustments on qualifying hedges   365    2,073    818    2,438    1,455 
Prepayment penalties received on loans   (702)   (753)   (1,120)   (1,455)   (1,925)
Net recoveries of interest from non-accrual loans   (74)   (436)   (519)   (510)   (1,233)
Core interest income on total loans, net $ 60,146  $ 61,993  $ 61,452  $ 122,139  $ 122,900 
Average total loans, net $ 5,946,412  $ 5,794,866  $ 5,565,057  $ 5,870,640  $ 5,554,919 
Core yield on total loans   4.05%    4.28%    4.42%    4.16%    4.42%
                
                
Net interest income tax equivalent $ 48,852  $ 40,968  $ 40,134  $ 89,820  $ 82,062 
Net loss from fair value adjustments on qualifying hedges   365    2,073    818    2,438    1,455 
Prepayment penalties received on loans and securities   (702)   (753)   (1,120)   (1,455)   (1,925)
Net recoveries of interest from non-accrual loans   (74)   (436)   (519)   (510)   (1,233)
Net interest income used in calculation of Core net interest margin $ 48,441  $ 41,852  $ 39,313  $ 90,293  $ 80,359 
Total average interest-earning assets $ 6,809,835  $ 6,719,857  $ 6,540,134  $ 6,764,846  $ 6,530,692 
Core net interest margin   2.85%    2.49%    2.40%    2.67%    2.46%


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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)
 
  June 30, December 31, June 30,
(Dollars in thousands) 2020
 2020
 2019
55%; width:55%; min-width:55%;">Total Equity1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$12%; width:12%; min-width:12%;">571,9211%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$12%; width:12%; min-width:12%;">579,6721%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$12%; width:12%; min-width:12%;">565,3901%; width:1%; min-width:1%;"> 
Less:         
Goodwill  (16,127)  (16,127)  (16,127)
Intangible deferred tax liabilities  292   292   286 
Tangible Stockholders' Common Equity $556,086  $563,837  $549,549 
          
Total Assets $7,162,659  $7,017,776  $6,945,634 
Less:         
Goodwill  (16,127)  (16,127)  (16,127)
Intangible deferred tax liabilities  292   292   286 
Tangible Assets $7,146,824  $7,001,941  $6,929,793 
          
Tangible Stockholders' Common Equity to Tangible Assets  7.78%  8.05%  7.93%

_____________________

1 See the tables entitled “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Income and Net Interest Margin to Core Net Interest Income and Net Interest Margin.”

Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400


FAQ

What was Flushing Financial Corporation's EPS for Q2 2020?

Flushing Financial Corporation reported a GAAP diluted EPS of $0.63 for Q2 2020.

How much did net interest income increase in Q2 2020 for FFIC?

Net interest income for Q2 2020 was $48.7 million, an increase of 19.3% quarter-over-quarter.

What was the net interest margin for FFIC in Q2 2020?

The net interest margin for Flushing Financial Corporation in Q2 2020 was 2.87%, up 43 basis points from the previous quarter.

What challenges did Flushing Financial Corporation face in Q2 2020?

The company faced challenges such as an increase in the provision for credit losses to $9.6 million and a rise in non-performing assets by 51% year-over-year.

What is the loan pipeline for Flushing Financial Corporation as of June 30, 2020?

As of June 30, 2020, Flushing Financial Corporation's loan pipeline stood at $310.8 million.

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Flushing Financial Corp

NASDAQ:FFIC

FFIC Rankings

#3218 Ranked by Market Cap
#465 Ranked by Dividends

FFIC Latest News

Apr 23, 2024
Flushing Financial Corporation Reports 1Q24 GAAP and Core EPS of $0.12 and $0.14, Respectively; Excellent Quality Driven by Low Risk Credit Profile
Mar 21, 2024
Flushing Financial Corporation To Host First Quarter 2024 Earnings Conference Call
Feb 27, 2024
Flushing Financial Corporation Declares Quarterly Dividend of $0.22 per Share
Feb 27, 2024
Flushing Financial Corporation To Meet With Institutional Investors
Jan 25, 2024
Flushing Financial Corporation Reports 2023 and 4Q23 GAAP EPS of $0.96 and $0.27, and Core EPS of $0.83 and $0.25, Respectively; Continues to Successfully Execute On Its Action Plan

FFIC Stock Data

438.07M
29.07M
4.72%
66.09%
2.18%
Banks - Regional
State Commercial Banks
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United States of America
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