Flushing Financial Corporation Reports 2Q22 GAAP EPS of $0.81 and Core EPS of $0.70

Record Loan Closings; Loan Growth with Stable NIM QoQ

John R. Buran, President and CEO Commentary

UNIONDALE, N.Y., July 26, 2022 (GLOBE NEWSWIRE) -- The Company reported second quarter 2022 GAAP EPS of $0.81, up 32.8% YoY, with a ROAA of 1.22%, and ROAE of 15.0%. Core 2Q22 EPS was $0.70, a decrease of 4.1% YoY, with a ROAA of 1.05% and the ROAE of 12.90%.

“Record loan closings of $504 million drove a 3.4% YoY increase in net loans, excluding PPP. Core loan yields increased 11 bps QoQ compared to only 7 bps for core deposit costs. 2Q22 was the first quarter since 2020 where yields on loan closings exceeded yields on satisfactions excluding PPP. Despite our liability sensitive balance sheet, the NIM was stable QoQ, however, the pace and magnitude of rate increases this cycle are stronger than anticipated and will likely pressure the NIM going forward. A partial offset to this pressure is $986 million of loans that reprice within the quarter and an additional $1.3 billion of loans that are scheduled to reprice or mature through the end of 2023. The Bank continues to grow noninterest bearing deposits, which are now over 16% of average deposits, up from 14.2% a year ago. We opened our 25th branch this quarter in Elmhurst further expanding our footprint in the Asian community. Given the low risk nature of our loan portfolio (>87% real estate based, average LTVs of <38%, and strong debt coverage ratios), the Company is well positioned to handle any potential economic downturn affecting credit markets.”

- John R. Buran, President and CEO

NIM Stable QoQ; Loan Pipeline Remains Strong. Record net interest income of $64.7 million increased 6.0% YoY and 2.0% QoQ. NIM FTE was 3.35% in 2Q22 compared to 3.36% in 1Q22 and 3.14% a year ago. Core NIM FTE increased by 19 bps to 3.33% YoY and 2 bps QoQ. Period end net loans, excluding PPP, increased 2.6% QoQ, with commercial business and other loans growing 3.2%. Record loan closings, excluding PPP, were up 63% YoY and repayment speeds remained elevated. The Company continued to benefit from the merger disruption in our markets as we have hired 42 people, including 18 revenue producers since March 31, 2021 from institutions involved with mergers.

Returned 61% of Earnings in 2Q22; Tangible Book Value Per Share Increased 6% YoY. The Company repurchased 387,689 shares of common stock at an average price of $22.01 during the quarter. Book value and tangible book value per share were $22.38 and $21.71, respectively, while TCE/TA1 was 7.82% at June 30, 2022 compared to 8.05% at March 31, 2022.

Key Financial Metrics2


  2Q22  1Q22 4Q21 3Q21 2Q21
GAAP:           
EPS $0.81   $0.58 $0.58 $0.81  $0.61
ROAA (%)  1.22    0.91  0.89  1.26   0.93
ROAE (%)  15.00    10.83  10.77  15.42   11.95
NIM FTE3 (%)  3.35    3.36  3.29  3.34   3.14
Core:           
EPS $0.70   $0.61 $0.67 $0.88  $0.73
ROAA (%)  1.05    0.94  1.04  1.38   1.11
ROAE (%)  12.90    11.27  12.49  16.88   14.27
Core NIM FTE (%)  3.33    3.31  3.21  3.27   3.14
Efficiency Ratio (%)  52.3    58.9  58.7  52.3   53.4
Credit Quality:           
NPAs/Loans&REO (%)  0.72    0.21  0.23  0.31   0.26
ACLs/Loans (%)  0.58    0.57  0.56  0.55   0.64
ACLs/NPLs (%)  141.06    266.12  248.66  179.86   242.55
NCOs/Avg Loans (%)  (0.03)   0.06  -  (0.04)  0.05
Balance Sheet:           
Avg Loans ($B) $6.6   $6.6 $6.6 $6.6  $6.7
Avg Dep ($B) $6.4   $6.4 $6.5 $6.4  $6.5
Book Value/Share $22.38   $22.26 $22.26 $21.78  $21.16
Tangible BV/Share $21.71   $21.61 $21.61 $21.13  $20.51
TCE/TA (%)  7.82    8.05  8.22  8.04   7.80
            

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

2Q22 Highlights
  • Net interest income increased 2.0% QoQ (as average earning assets increased 2.2% QoQ), and 6.0% YoY to a record $64.7 million; Core net interest income grew 3.0% QoQ and 5.4% YoY to a record $64.4 million
  • Net interest margin FTE decreased 1 bps QoQ but increased 21 bps YoY to 3.35%; Core net interest margin FTE increased 2 bps QoQ and 19 bps YoY to 3.33%; Core NIM expansion QoQ was primarily driven by loan yields increasing greater than deposit costs
  • Excluding PPP, period end net loans increased 2.6% QoQ and 3.4% YoY; loan closings were a record $503.8 million in 2Q22, up 53.0% QoQ and 63.0% YoY
  • Average deposits, including mortgage escrow, increased 0.5% QoQ, but decreased 1.1% YoY to $6.4 billion, with core deposits comprising 87.3% of total average deposits; record average noninterest bearing deposits were up 13.1% YoY
  • Loan pipeline increased 34.7% YoY to $582.6 million
  • Provision for credit losses was $1.6 million in 2Q22 compared to a benefit for credit losses of $1.6 million in 2Q21; net recoveries were $0.5 million in 2Q22 compared to net charge-offs of $0.9 million in 2Q21
  • NPAs increased to $48.9 million, up from $14.1 million at 1Q22 and $17.6 million at 2Q21. The increase in NPAs primarily relates to a previously identified $24.1 million criticized investment security and related loan (combined LTV of 63%) and two commercial relationships (one was resolved after quarter end)
  • Tangible Common Equity to Tangible Assets was 7.82% down from 8.05% at 1Q22; the change in AOCI (primarily from rising rates) impacted this ratio by an additional 19 bps in 2Q22 compared to 1Q22
  • Repurchased 387,689 shares at an average price of $22.01; dividends and share repurchases were 61% of net income in 2Q22
Income Statement Highlights


              YoY QoQ
($000s, except EPS)  2Q22  1Q22 4Q21 3Q21 2Q21 Change Change
                   
Net Interest Income  $64,730  $63,479 $62,674  $63,364  $61,039  6.0 % 2.0 %
Provision (Benefit) for Credit Losses   1,590   1,358  761   (6,927)  (1,598) (199.5)  17.1  
Noninterest Income (Loss)   7,353   1,313  (280)  866   (3,210) (329.1)  460.0  
Noninterest Expense   35,522   38,794  38,807   36,345   34,011  4.4   (8.4) 
Income Before Income Taxes   34,971   24,640  22,826   34,812   25,416  37.6   41.9  
Provision for Income Taxes   9,936   6,421  4,743   9,399   6,158  61.4   54.7  
Net Income  $25,035  $18,219 $18,083  $25,413  $19,258  30.0   37.4  
Diluted EPS  $0.81  $0.58 $0.58  $0.81  $0.61  32.8   39.7  
Avg. Diluted Shares (000s)   30,937   31,254  31,353   31,567   31,677  (2.3)  (1.0) 
                   
Core Net Income1  $21,518  $18,969 $20,968  $27,829  $22,994  (6.4)  13.4  
Core EPS1  $0.70  $0.61 $0.67  $0.88  $0.73  (4.1)  14.8  

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $64.7 million in 2Q22 (an increase of 6.0% YoY, and 2.0% QoQ), compared to $63.5 million in 1Q22, $62.7 million in 4Q21, $63.4 million in 3Q21, and $61.0 million in 2Q21.

  • Net interest margin, FTE (“NIM”) of 3.35% increased 21 bps YoY, but decreased 1 bp QoQ; PPP loans caused a 2 bps, 3 bps, 3 bps, and 2 bps positive impact on the NIM in 2Q22, 1Q22, 4Q21, and 3Q21, respectively, and were neutral in 2Q21
  • 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 $2.6 million (13 bps to the NIM) in 2Q22 compared to $2.6 million (14 bps) in 1Q22, $3.1 million (16 bps) in 4Q21, $3.4 million (19 bps) in 3Q21, and $1.9 million (10 bps) in 2Q21
  • Excluding the items in the previous bullet, net interest margin was 3.22% in 2Q22 and in 1Q22, 3.13% in 4Q21, 3.15% in 3Q21, and 3.04% in 2Q21, or an increase of 17 bps YoY and stable QoQ
  • Net PPP loan fees were $0.5 million in 2Q22, $0.9 million in 1Q22, $1.2 million in 4Q21, $1.3 million in 3Q21, and $1.2 million in 2Q21

The Company recorded a provision for credit losses of $1.6 million in 2Q22, $1.4 million in 1Q22, and $0.8 million in 4Q21 compared to a benefit for credit losses of $6.9 million in 3Q21 and $1.6 million in 2Q21.

  • 2Q22 provision for credit losses of $1.6 million was primarily due to loan growth
  • Net charge-offs (recoveries) were $(0.5) million in 2Q22 ((3) bps of average loans), $0.9 million in 1Q22 (6 bps of average loans), $(29) thousand in 4Q21 (negligible as compared to average loans), $(0.6) million in 3Q21 ((4) bps of average loans), and $0.9 million in 2Q21 (5 bps of average loans)

Noninterest income (loss) was $7.4 million in 2Q22, $1.3 million in 1Q22, $(0.3) million in 4Q21, $0.9 million in 3Q21, and $(3.2) million in 2Q21.

  • Noninterest income included net gains (losses) from fair value adjustments of $2.5 million in 2Q22 or $0.06 per share, net of tax, $(1.8) million in 1Q22 or $(0.04) per share, net of tax, $(5.1) million in 4Q21 or $(0.13) per share, net of tax, $(2.3) million in 3Q21 or $(0.05) per share, net of tax, and $(6.5) million or $(0.15) per share, net of tax in 2Q21
  • Life insurance proceeds were $1.5 million ($0.05 per share) in 2Q22
  • Absent all above items and other immaterial adjustments, core noninterest income was $3.3 million in 2Q22, up 2.1% YoY, and 5.2% QoQ
  • After a pilot program, the Company made the decision to suspend its agreement with NYDIG to offer bitcoin services; all pilot program customers have been notified and all accounts have been closed; the financial impact was immaterial
  • Included in 4Q21 core noninterest income was a one-time $2.0 million ($0.05 per share, net of tax) dividend received on retirement plan investments

Noninterest expense totaled $35.5 million in 2Q22 (an increase of 4.4% YoY, but a decrease of 8.4% QoQ) compared to $38.8 million in 1Q22, $38.8 million in 4Q21, $36.3 million in 3Q21, and $34.0 million in 2Q21.

  • Included in 1Q22 noninterest expense was $4.3 million of seasonal compensation expense; 4Q21 noninterest expense included a one-time $4.3 million ($0.11 per share, net of tax) of increased compensation and benefits for all employees due to a record year of earnings in 2021 and employee performance through the pandemic
  • Noninterest expense included $17 thousand pre-tax merger benefit (<$0.01 per share, net of tax) in 4Q21, $2.1 million of pre-tax merger charges ($0.05 per share, net of tax) in 3Q21, and $0.5 million of pre-tax merger benefits ($(0.01) per share, net of tax) in 2Q21
  • Excluding the effects of the merger and other immaterial adjustments, core operating expenses were $35.4 million in 2Q22, up 3.0% YoY, but down 8.5% QoQ
  • The efficiency ratio was 52.3% in 2Q22, 58.9% in 1Q22, 58.7% in 4Q21, 52.3% in 3Q21, and 53.4% in 2Q21

The provision for income taxes was $9.9 million in 2Q22 compared to $6.4 million in 1Q22, $4.7 million in 4Q21, $9.4 million in 3Q21, and $6.2 million in 2Q21.

  • The effective tax rate was 28.4% in 2Q22, 26.1% in 1Q22, 20.8% in 4Q21, 27.0% in 3Q21, and 24.2% in 2Q21
  • The 2Q22 effective tax rate includes a loss of a certain state and city tax deductions and a resolution of certain examinations
  • The 4Q21 effective tax rate declined due to lower levels of taxable state income and higher percentage of permanent differences
  • The 2Q21 effective tax rate includes $0.8 million benefit from a state tax rate change; absent this benefit the effective tax rate would have been 27.2%
Balance Sheet, Credit Quality, and Capital Highlights


             YoY QoQ
  2Q22  1Q22 4Q21 3Q21 2Q21 Change Change
Average Loans And Deposits ($MM)                 
Loans $6,640  $6,579 $6,558 $6,633 $6,687 (0.7)% 0.9 %
Deposits  6,441   6,410  6,459  6,408  6,511 (1.1)  0.5  
                  
Credit Quality ($000s)                 
Nonperforming Loans $27,948  $14,066 $14,934 $20,217 $17,592 58.9 % 98.7 %
Nonperforming Assets  48,929   14,066  14,934  20,217  17,592 178.1   247.9  
Criticized and Classified Loans  57,145   59,548  57,650  68,913  69,161 (17.4)  (4.0) 
Criticized and Classified Assets  78,125   80,527  78,628  89,889  90,135 (13.3)  (3.0) 
Allowance for Credit Losses/Loans (%)  0.58   0.57  0.56  0.55  0.64 (6)bps 1 bp
                  
Capital                 
Book Value/Share $22.38  $22.26 $22.26 $21.78 $21.16 5.8 % 0.5 %
Tangible Book Value/Share  21.71   21.61  21.61  21.13  20.51 5.9   0.5  
Tang. Common Equity/Tang. Assets (%)  7.82   8.05  8.22  8.04  7.80 2 bps (23)bps
Leverage Ratio (%)  8.91   9.05  8.98  8.83  8.50 41   (14) 

Average loans were $6.6 billion, a decrease of 0.7% YoY, but up 0.9% QoQ.

  • Period end net loans, excluding PPP loans, totaled $6.7 billion, up 3.4% YoY and 2.6% QoQ
  • Total loan closings were a record $503.8 million in 2Q22, $329.3 million in 1Q22, $362.7 million in 4Q21, $243.9 million in 3Q21, and $324.4 million ($309.0 million excluding PPP) in 2Q21
  • The loan pipeline was $582.6 million at June 30, 2022, up 34.7% YoY, but down 12.2% from record levels QoQ
  • PPP loans held at the end of each quarter totaled $22.2 million at 2Q22, $43.2 million at 1Q22, $77.4 million at 4Q21, $130.8 million at 3Q21, and $197.3 million at 2Q21; forgiven PPP loans were $21.0 million in 2Q22, $34.1 million in 1Q22, $53.4 million in 4Q21, $66.5 million in 3Q21, and $69.2 million in 2Q21

Average Deposits totaled $6.4 billion, decreasing 1.1% YoY, but up 0.5% QoQ.

  • Average core deposits (non-CD deposits) increased to 87.3% of total average deposits (including escrow deposits) in 2Q22, compared to 84.0% a year ago
  • Average noninterest bearing deposits increased 13.1% YoY and 4.3% QoQ and comprised 16.2% of total average deposits (including escrow deposits) in 2Q22 compared to 14.2% a year ago

Credit Quality: Nonperforming loans held at the end of each quarter totaled $27.9 million at 2Q22, $14.1 million at 1Q22, $14.9 million at 4Q21, $20.2 million at 3Q21, and $17.6 million at 2Q21.

  • The $13.8 million QoQ increase in NPLs was primarily driven by three previously identified as criticized and classified commercial business credits (one resolved subsequent to quarter end)
  • Nonperforming assets totaled $48.9 million, up from $14.1 million at 1Q22 and $17.6 million at 2Q21; the increase in nonperforming assets primarily relates to a previously disclosed criticized investment security and loan totaling $24.1 million that has a combined LTV of 63%
  • Criticized and classified loans totaled $57.1 million at 2Q22 (85 bps of loans), $59.5 million at 1Q22 (90 bps of loans), $57.7 million at 4Q21 (87 bps of loans), $68.9 million at 3Q21 (104 bps of loans), and $69.2 million at 2Q21 (103 bps of loans)
  • Criticized and classified assets are composed of criticized and classified loans, as detailed above, plus one criticized investment security totaling $21.0 million in each quarter of 2Q22, 1Q22, 4Q21, and 3Q21
  • Loans classified as troubled debt restructured (TDR) totaled $14.8 million at 2Q22 compared to $15.1 million at 1Q22 and $15.5 million a year ago
  • Over 87% of gross loans are collateralized by real estate with an average loan-to-value ratio of <38% as of June 30, 2022
  • Allowance for credit losses were 0.58% of loans at 2Q22 compared to 0.57% at 1Q22 and 0.64% a year ago
  • Allowance for credit losses were 141.1% of nonperforming loans at 2Q22 compared to 266.1% at 1Q22 and 242.6% a year ago

Capital: Book value per common share was $22.38 at 2Q22, up 0.5% QoQ and 5.8% YoY; tangible book value per common share, a non-GAAP measure, was $21.71 at 2Q22, up 0.5% QoQ and 5.9% YoY.

  • The Company paid a dividend of $0.22 per share and repurchased 387,689 shares at an average price of $22.01 in 2Q22
  • During the quarter, the Board of Directors authorized an increase of 1 million shares to the current share repurchase program; as of the end of 2Q22, 1,100,498 shares remain subject to repurchase under the authorized stock repurchase programs, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.82% at 2Q22 compared to 8.05% at 1Q22 and 7.80% at 2Q21
  • The Company and the Bank remain well capitalized under all applicable regulatory requirements
  • The leverage ratio was 8.91% at 2Q22 compared to 9.05% at 1Q22 and 8.50% at 2Q21
Conference Call Information And Third 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, will host a conference call on Wednesday, July 27, 2022, at 9:30 AM (ET) to discuss the Company’s second quarter 2022 results and strategy.
  • Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
  • Webcast: https://services.choruscall.com/links/ffic220727.html
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 3593053
  • The conference call will be simultaneously webcast and archived

Third Quarter 2022 Earnings Release Date:

The Company plans to release Third Quarter 2022 financial results after the market close on October 25, 2022; followed by a conference call at 9:30 AM (ET) on October 26, 2022.

A detailed announcement will be issued prior to the third 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 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, 2021 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.

Investor Contact: Susan K. Cullen, SEVP, CFO and Treasurer, 718-961-5400

#FF

Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)

                             
  At or for the three months ended  At or for the six months ended 
  June 30,  March 31, December 31, September 30, June 30,   June 30,  June 30,  
(Dollars in thousands, except per share data)    2022 2022 2021 2021 2021  2022    2021    
Performance Ratios (1)                             
Return on average assets  1.22 %    0.91%    0.89 %    1.26 %    0.93%     1.06%   0.93%
Return on average equity  15.00    10.83   10.77    15.42    11.95    12.91  12.11 
Yield on average interest-earning assets (2)  3.85    3.77   3.77    3.84    3.69    3.81  3.73 
Cost of average interest-bearing liabilities  0.60    0.50   0.58    0.61    0.66    0.55  0.67 
Cost of funds  0.52    0.43   0.50    0.53    0.57    0.48  0.59 
Net interest rate spread during period (2)  3.25    3.27   3.19    3.23    3.03    3.26  3.06 
Net interest margin (2)  3.35    3.36   3.29    3.34    3.14    3.36  3.16 
Noninterest expense to average assets  1.73    1.93   1.92    1.80    1.65    1.83  1.76 
Efficiency ratio (3)  52.27    58.87   58.66    52.28    53.38    55.52  55.96 
Average interest-earning assets to
average interest-bearing liabilities
  1.22 X  1.22X  1.22 X  1.21 X  1.19X   1.22X 1.19X
                             
Average Balances                            
Total loans, net $6,640,331   $6,578,680  $6,558,285   $6,633,301   $6,686,888   $6,609,676 $6,693,644 
Total interest-earning assets  7,740,683    7,570,373   7,627,256    7,608,317    7,790,174    7,655,999  7,729,035 
Total assets  8,211,763    8,049,470   8,090,701    8,072,918    8,263,553    8,131,065  8,205,954 
Total due to depositors  5,298,855    5,336,983   5,397,802    5,406,423    5,495,936    5,317,814  5,430,158 
Total interest-bearing liabilities  6,337,374    6,220,510   6,276,221    6,310,859    6,532,891    6,279,265  6,505,534 
Stockholders' equity  667,456    673,012   671,474    659,288    644,690    670,219  632,238 
                             
Per Share Data                                  
Book value per common share (4) $22.38   $22.26  $22.26   $21.78   $21.16   $22.38 $21.16 
Tangible book value per common share (5) $21.71   $21.61  $21.61   $21.13   $20.51   $21.71 $20.51 
                             
Stockholders' Equity                                  
Stockholders' equity $670,812   $675,813  $679,628   $668,096   $655,167   $670,812 $655,167 
Tangible stockholders' equity  650,894    656,085   659,758    648,039    634,959    650,894  634,959 
                             
Consolidated Regulatory Capital Ratios                                   
Tier 1 capital $739,776   $731,536  $726,174   $711,276   $697,591   $739,776 $697,591 
Common equity Tier 1 capital  686,258    675,434   671,494    661,340    649,367    686,258  649,367 
Total risk-based capital  903,047    892,861   885,469    832,255    823,494    903,047  823,494 
Risk Weighted Assets  6,522,710    6,232,020   6,182,095    6,194,207    6,344,076    6,522,710  6,344,076 
                             
Tier 1 leverage capital
(well capitalized = 5%)
  8.91 %    9.05%    8.98 %    8.83 %    8.50%     8.91%   8.50%  
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  10.52    10.84   10.86    10.68    10.24    10.52  10.24 
Tier 1 risk-based capital
(well capitalized = 8.0%)
  11.34    11.74   11.75    11.48    11.00    11.34  11.00 
Total risk-based capital
(well capitalized = 10.0%)
  13.84    14.33   14.32    13.44    12.98    13.84  12.98 
                             
Capital Ratios                                   
Average equity to average assets  8.13 %    8.36%    8.30 %    8.17 %    7.80%     8.24%   7.70%  
Equity to total assets  8.04    8.27   8.45    8.27    8.03    8.04  8.03 
Tangible common equity to tangible assets (6)  7.82    8.05   8.22    8.04    7.80    7.82  7.80 
                             
Asset Quality                                   
Nonaccrual loans (7) $27,848   $14,066  $14,933   $18,292   $17,391   $27,848 $17,391 
Nonperforming loans  27,948    14,066   14,933    20,217    17,592    27,948  17,592 
Nonperforming assets  48,929    14,066   14,933    20,217    17,592    48,929  17,592 
Net charge-offs (recoveries)  (501)   935   (29)   (619)   902    434  3,767 
                             
Asset Quality Ratios                                   
Nonperforming loans to gross loans  0.41 %    0.21%    0.23 %    0.31 %    0.26%     0.41%   0.26%  
Nonperforming assets to total assets  0.59    0.17   0.19    0.25    0.22    0.59  0.22 
Allowance for credit losses to gross loans  0.58    0.57   0.56    0.55    0.64    0.58  0.64 
Allowance for credit losses to
nonperforming assets
  80.57    266.12   248.66    179.86    242.55    80.57  242.55 
Allowance for credit losses to
nonperforming loans
  141.06    266.12   248.66    179.86    242.55    141.06  242.55 
Net charge-offs (recoveries) to average loans  (0.03)   0.06       (0.04)   0.05    0.01  0.11 
                             
Full-service customer facilities  25    24   24    24    25    25  25 

(See footnotes on next page)


(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 noninterest expense (excluding merger expense, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization of purchase accounting adjustments) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges and net amortization of purchase accounting adjustments) and noninterest income (excluding life insurance proceeds, net gains and losses from the sale or disposition of securities, assets and fair value adjustments).

(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.

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

                       
 For the three months ended   For the six months ended
 June 30,  March 31, December 31, September 30, June 30,    June 30,  June 30, 
(In thousands, except per share data)2022 2022  2021  2021  2021    2022 2021 
Interest and Dividend Income                       
Interest and fees on loans$69,192 $67,516  $68,113  $69,198  $67,999    $136,708 $137,020 
Interest and dividends on securities:                      
Interest 4,929  3,745   3,536   3,706   3,685     8,674  6,757 
Dividends 11  8   7   7   7     19  15 
Other interest income 159  51   74   42   51     210  87 
Total interest and dividend income 74,291  71,320   71,730   72,953   71,742     145,611  143,879 
                       
Interest Expense                      
Deposits 4,686  3,408   3,975   4,705   5,539     8,094  11,644 
Other interest expense 4,875  4,433   5,081   4,884   5,164     9,308  10,304 
Total interest expense 9,561  7,841   9,056   9,589   10,703     17,402  21,948 
                       
Net Interest Income 64,730  63,479   62,674   63,364   61,039     128,209  121,931 
Provision (benefit) for credit losses 1,590  1,358   761   (6,927)  (1,598)    2,948  1,222 
Net Interest Income After Provision (Benefit)
for Credit Losses
 63,140  62,121   61,913   70,291   62,637     125,261  120,709 
                       
Noninterest Income (Loss)                      
Banking services fee income 1,166  1,374   1,142   865   1,233     2,540  3,958 
Net gain (loss) on sale of securities         (10)  123       123 
Net gain on sale of loans 73     46   131   127     73  158 
Net gain on disposition of assets                   621 
Net gain (loss) from fair value adjustments 2,533  (1,809)  (5,140)  (2,289)  (6,548)    724  (5,566)
Federal Home Loan Bank of New York
stock dividends
 407  397   417   491   500     804  1,189 
Life insurance proceeds 1,536                1,536   
Bank owned life insurance 1,115  1,114   1,023   1,015   1,009     2,229  2,006 
Other income 523  237   2,232   663   346     760  612 
Total noninterest income (loss) 7,353  1,313   (280)  866   (3,210)    8,666  3,101 
                       
Noninterest Expense                      
Salaries and employee benefits 21,109  23,649   25,223   20,544   19,879     44,758  42,543 
Occupancy and equipment 3,760  3,604   3,579   3,534   3,522     7,364  6,889 
Professional services 2,285  2,222   1,152   1,899   1,988     4,507  4,388 
FDIC deposit insurance 615  420   391   618   729     1,035  1,942 
Data processing 1,383  1,424   1,757   1,759   1,419     2,807  3,528 
Depreciation and amortization 1,447  1,460   1,521   1,627   1,638     2,907  3,277 
Other real estate owned/foreclosure expense 32  84   129   182   22     116  12 
Other operating expenses 4,891  5,931   5,055   6,182   4,814     10,822  9,591 
Total noninterest expense 35,522  38,794   38,807   36,345   34,011     74,316  72,170 
                       
Income Before Provision for Income Taxes 34,971  24,640   22,826   34,812   25,416     59,611  51,640 
                       
Provision for Income Taxes 9,936  6,421   4,743   9,399   6,158     16,357  13,343 
                       
Net Income$25,035 $18,219  $18,083  $25,413  $19,258    $43,254 $38,297 
                       
Basic earnings per common share$0.81 $0.58  $0.58  $0.81  $0.61    $1.39 $1.21 
Diluted earnings per common share$0.81 $0.58  $0.58  $0.81  $0.61    $1.39 $1.21 
Dividends per common share$0.22 $0.22  $0.21  $0.21  $0.21    $0.44 $0.42 
                       
Basic average shares 30,937  31,254   31,353   31,567   31,677     31,095  31,641 
Diluted average shares 30,937  31,254   31,353   31,567   31,677     31,095  31,641 

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

                
  June 30,     March 31,    December 31,    September 30,    June 30, 
(Dollars in thousands) 2022 2022 2021 2021 2021
ASSETS                    
Cash and due from banks $137,026  $186,407  $81,723  $178,598  $145,971 
Securities held-to-maturity:               
Mortgage-backed securities  7,885   7,890   7,894   7,899   7,904 
Other securities  66,230   66,327   49,974   49,989   49,986 
Securities available for sale:               
Mortgage-backed securities  510,934   553,828   572,184   584,145   596,661 
Other securities  346,720   286,041   205,052   212,654   224,784 
Loans  6,760,393   6,607,264   6,638,105   6,630,354   6,718,806 
Allowance for credit losses  (39,424)  (37,433)  (37,135)  (36,363)  (42,670)
Net loans  6,720,969   6,569,831   6,600,970   6,593,991   6,676,136 
Interest and dividends receivable  38,811   37,308   38,698   40,912   43,803 
Bank premises and equipment, net  22,285   22,752   23,338   24,018   26,438 
Federal Home Loan Bank of New York stock  50,017   33,891   35,937   36,158   41,630 
Bank owned life insurance  211,220   211,867   210,754   184,730   183,715 
Goodwill  17,636   17,636   17,636   17,636   17,636 
Core deposit intangibles  2,282   2,420   2,562   2,708   2,859 
Right of use asset  46,687   48,475   50,200   50,155   51,972 
Other assets  160,885   125,160   148,989   93,741   89,850 
Total assets $8,339,587  $8,169,833  $8,045,911  $8,077,334  $8,159,345 
                
LIABILITIES                    
Deposits $6,350,000  $6,373,400  $6,333,532  $6,421,391  $6,298,790 
Mortgagors' escrow deposits  57,577   79,495   51,913   67,207   58,230 
Borrowed funds  1,089,621   877,122   815,544   752,925   971,827 
Operating lease liability  50,346   52,292   54,155   54,239   56,151 
Other liabilities  121,231   111,711   111,139   113,476   119,180 
Total liabilities  7,668,775   7,494,020   7,366,283   7,409,238   7,504,178 
                
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  262,860   261,837   263,375   262,009   260,958 
Treasury stock  (88,342)  (79,834)  (75,293)  (71,738)  (65,335)
Retained earnings  527,217   508,973   497,889   486,418   467,620 
Accumulated other comprehensive loss, net of taxes  (31,264)  (15,504)  (6,684)  (8,934)  (8,417)
Total stockholders' equity  670,812   675,813   679,628   668,096   655,167 
                
Total liabilities and stockholders' equity $8,339,587  $8,169,833  $8,045,911  $8,077,334  $8,159,345 
                
(In thousands)               
Issued shares  34,088   34,088   34,088   34,088   34,088 
Outstanding shares  29,980   30,367   30,526   30,676   30,962 
Treasury shares  4,108   3,721   3,561   3,412   3,126 

  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

                        
  For the three months ended   For the six months ended
  June 30,  March 31, December 31, September 30, June 30,    June 30,  June 30, 
(In thousands) 2022 2022 2021 2021 2021   2022 2021
Interest-earning Assets:                              
Mortgage loans, net $5,178,029 $5,152,070 $5,140,233 $5,158,213 $5,130,400   $5,165,121 $5,143,117
Other loans, net  1,462,302  1,426,610  1,418,052  1,475,088  1,556,488    1,444,555  1,550,527
Total loans, net  6,640,331  6,578,680  6,558,285  6,633,301  6,686,888    6,609,676  6,693,644
Taxable securities:                              
Mortgage-backed securities  594,923  580,670  595,538  590,732  578,134    587,836  506,424
Other securities  333,158  226,744  207,482  217,763  232,020    280,245  266,234
Total taxable securities  928,081  807,414  803,020  808,495  810,154    868,081  772,658
Tax-exempt securities:                              
Other securities  67,315  57,611  50,834  50,832  50,830    62,490  50,829
Total tax-exempt securities  67,315  57,611  50,834  50,832  50,830    62,490  50,829
Interest-earning deposits and
federal funds sold
  104,956  126,668  215,117  115,689  242,302    115,752  211,904
Total interest-earning assets  7,740,683  7,570,373  7,627,256  7,608,317  7,790,174    7,655,999  7,729,035
Other assets  471,080  479,097  463,445  464,601  473,379    475,066  476,919
Total assets $8,211,763 $8,049,470 $8,090,701 $8,072,918 $8,263,553   $8,131,065 $8,205,954
                        
Interest-bearing Liabilities:                              
Deposits:                              
Savings accounts $156,785 $156,592 $154,471 $153,120 $153,113   $156,689 $161,549
NOW accounts  2,089,851  2,036,914  2,115,619  2,107,866  2,255,581    2,063,529  2,220,677
Money market accounts  2,231,743  2,253,630  2,177,928  2,107,473  2,043,257    2,242,626  1,974,781
Certificate of deposit accounts  820,476  889,847  949,784  1,037,964  1,043,985    854,970  1,073,151
Total due to depositors  5,298,855  5,336,983  5,397,802  5,406,423  5,495,936    5,317,814  5,430,158
Mortgagors' escrow accounts  97,496  71,509  84,617  68,562  91,545    84,574  78,531
Total interest-bearing deposits  5,396,351  5,408,492  5,482,419  5,474,985  5,587,481    5,402,388  5,508,689
Borrowings  941,023  812,018  793,802  835,874  945,410    876,877  996,845
Total interest-bearing liabilities  6,337,374  6,220,510  6,276,221  6,310,859  6,532,891    6,279,265  6,505,534
Noninterest-bearing demand deposits  1,044,553  1,001,571  976,803  933,443  923,220    1,023,181  889,821
Other liabilities  162,380  154,377  166,203  169,328  162,752    158,400  178,361
Total liabilities  7,544,307  7,376,458  7,419,227  7,413,630  7,618,863    7,460,846  7,573,716
Equity  667,456  673,012  671,474  659,288  644,690    670,219  632,238
Total liabilities and equity $8,211,763 $8,049,470 $8,090,701 $8,072,918 $8,263,553   $8,131,065 $8,205,954
                        
Net interest-earning assets $1,403,309 $1,349,863 $1,351,035 $1,297,458 $1,257,283   $1,376,734 $1,223,501

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

                              
  For the three months ended  For the six months ended
  June 30,  March 31, December 31, September 30, June 30,   June 30,  June 30, 
(Dollars in thousands) 2022 2022 2021 2021 2021  2022 2021
Interest Income:                                    
Mortgage loans, net $54,775   $53,970   $54,260  $55,114  $52,987    $108,745   $108,206 
Other loans, net  14,417    13,546    13,853   14,084   15,012     27,963    28,814 
Total loans, net  69,192    67,516    68,113   69,198   67,999     136,708    137,020 
Taxable securities:                                    
Mortgage-backed securities  2,356    2,167    2,125   2,279   2,233     4,523    3,931 
Other securities  2,090    1,119    993   1,008   1,037     3,209    2,000 
Total taxable securities  4,446    3,286    3,118   3,287   3,270     7,732    5,931 
Tax-exempt securities:                                    
Other securities  625    591    538   539   535     1,216    1,065 
Total tax-exempt securities  625    591    538   539   535     1,216    1,065 
Interest-earning deposits and federal funds sold  159    51    74   42   51     210    87 
Total interest-earning assets  74,422    71,444    71,843   73,066   71,855     145,866    144,103 
Interest Expense:                                    
Deposits:                                    
Savings accounts $50   $49   $53  $61  $66    $99   $141 
NOW accounts  1,405    793    1,021   1,227   1,499     2,198    3,205 
Money market accounts  1,952    1,275    1,428   1,683   2,060     3,227    4,160 
Certificate of deposit accounts  1,273    1,289    1,471   1,734   1,913     2,562    4,135 
Total due to depositors  4,680    3,406    3,973   4,705   5,538     8,086    11,641 
Mortgagors' escrow accounts  6    2    2      1     8    3 
Total interest-bearing deposits  4,686    3,408    3,975   4,705   5,539     8,094    11,644 
Borrowings  4,875    4,433    5,081   4,884   5,164     9,308    10,304 
Total interest-bearing liabilities  9,561    7,841    9,056   9,589   10,703     17,402    21,948 
Net interest income- tax equivalent $64,861   $63,603   $62,787  $63,477  $61,152    $128,464   $122,155 
Included in net interest income above:                             
Prepayment penalties received on loans and securities and net of reversals and recovered interest
from nonaccrual loans
 $2,281   $1,716   $1,497  $2,136  $2,046    $3,997   $2,993 
Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income  (60)   (129)   1,122   194   (664)    (189)   763 
Purchase accounting adjustments  367    1,058    462   1,100   565     1,425    1,487 
Interest-earning Assets Yields:                                    
Mortgage loans, net  4.23 %    4.19 %    4.22%    4.27%    4.13 %     4.21 %    4.21%  
Other loans, net  3.94    3.80    3.91   3.82   3.86     3.87    3.72 
Total loans, net  4.17    4.11    4.15   4.17   4.07     4.14    4.09 
Taxable securities:                                    
Mortgage-backed securities  1.58    1.49    1.43   1.54   1.54     1.54    1.55 
Other securities  2.51    1.97    1.91   1.85   1.79     2.29    1.50 
Total taxable securities  1.92    1.63    1.55   1.63   1.61     1.78    1.54 
Tax-exempt securities: (1)                                    
Other securities  3.71    4.10    4.23   4.24   4.21     3.89    4.19 
Total tax-exempt securities  3.71    4.10    4.23   4.24   4.21     3.89    4.19 
Interest-earning deposits and federal funds sold  0.61    0.16    0.14   0.15   0.08     0.36    0.08 
Total interest-earning assets  3.85 %    3.77 %    3.77%    3.84%    3.69 %     3.81 %    3.73%  
Interest-bearing Liabilities Yields:                                    
Deposits:                                    
Savings accounts  0.13 %    0.13 %    0.14%    0.16%    0.17 %     0.13 %    0.17%  
NOW accounts  0.27    0.16    0.19   0.23   0.27     0.21    0.29 
Money market accounts  0.35    0.23    0.26   0.32   0.40     0.29    0.42 
Certificate of deposit accounts  0.62    0.58    0.62   0.67   0.73     0.60    0.77 
Total due to depositors  0.35    0.26    0.29   0.35   0.40     0.30    0.43 
Mortgagors' escrow accounts  0.02    0.01    0.01           0.02    0.01 
Total interest-bearing deposits  0.35    0.25    0.29   0.34   0.40     0.30    0.42 
Borrowings  2.07    2.18    2.56   2.34   2.18     2.12    2.07 
Total interest-bearing liabilities  0.60 %    0.50 %    0.58%    0.61%    0.66 %     0.55 %    0.67%  
                              
Net interest rate spread (tax equivalent)  3.25 %    3.27 %    3.19%    3.23%    3.03 %     3.26 %    3.06%  
Net interest margin (tax equivalent)  3.35 %    3.36 %    3.29%    3.34%    3.14 %     3.36 %    3.16%  
Ratio of interest-earning assets to interest-bearing liabilities  1.22 X  1.22 X  1.22X  1.21X  1.19 X   1.22 X  1.19X



(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

                      
                 June 2022 vs. June 2022 vs.
  June 30,  March 31, December 31, September 30, June 30,  March 2022 June 2021
(Dollars in thousands)    2022 2022 2021 2021 2021    % Change    % Change
Noninterest bearing $1,081,208 $1,041,027 $967,621 $941,259 $945,491 3.9 % 14.4 %
Interest bearing:                            
Certificate of deposit accounts  906,943  886,317  946,575  1,040,098  1,020,615 2.3   (11.1) 
Savings accounts  154,670  158,542  156,554  152,306  152,931 (2.4)  1.1  
Money market accounts  2,229,993  2,362,390  2,342,003  2,152,085  2,057,188 (5.6)  8.4  
NOW accounts  1,977,186  1,925,124  1,920,779  2,135,643  2,122,565 2.7   (6.8) 
Total interest-bearing deposits  5,268,792  5,332,373  5,365,911  5,480,132  5,353,299 (1.2)  (1.6) 
Total deposits $6,350,000 $6,373,400 $6,333,532 $6,421,391 $6,298,790 (0.4)%   0.8 %

Loan Composition

                      
                 June 2022 vs. June 2022 vs.
  June 30,  March 31, December 31, September 30, June 30,  March 2022 June 2021
(Dollars in thousands)    2022  2022  2021  2021  2021     % Change    % Change
Multifamily residential $2,531,858  $2,500,570  $2,517,026  $2,498,980  $2,542,010  1.3 %   (0.4)%  
Commercial real estate  1,864,507   1,764,927   1,775,629   1,745,855   1,726,895  5.6   8.0  
One-to-four family ― mixed-use property  561,100   563,679   571,795   579,100   582,211  (0.5)  (3.6) 
One-to-four family ― residential  242,729   248,226   268,255   280,343   288,652  (2.2)  (15.9) 
Co-operative apartments  8,130   8,248   8,316   7,804   7,883  (1.4)  3.1  
Construction  72,148   68,488   59,761   71,464   62,802  5.3   14.9  
Mortgage Loans  5,280,472   5,154,138   5,200,782   5,183,546   5,210,453  2.5   1.3  
                      
Small Business Administration (1)  40,572   59,331   93,811   148,855   215,158  (31.6)  (81.1) 
Commercial business and other  1,431,417   1,387,155   1,339,273   1,294,688   1,291,526  3.2   10.8  
Nonmortgage loans  1,471,989   1,446,486   1,433,084   1,443,543   1,506,684  1.8   (2.3) 
                      
Net unamortized premiums and unearned loan fees (2)  7,932   6,640   4,239   3,265   1,669  19.5   375.3  
Allowance for credit losses  (39,424)  (37,433)  (37,135)  (36,363)  (42,670) 5.3   (7.6) 
Net loans $6,720,969  $6,569,831  $6,600,970  $6,593,991  $6,676,136  2.3 %   0.7 %  
                      



(1) Includes $22.2 million, $43.2 million, $77.4 million, $130.8 million, and $197.3 million of PPP loans at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.

(2) Includes $6.6 million, $6.9 million, $8.0 million, $8.6 million, and $9.7 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.


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

Loan Closings

                       
  For the three months ended  For the six months ended
  June 30,  March 31, December 31, September 30, June 30,    June 30,  June 30, 
(In thousands)    2022 2022 2021 2021 2021     2022    2021
Multifamily residential $136,902 $98,180 $79,648 $41,850 $66,913  $235,082 $125,466
Commercial real estate  164,826  45,102  64,916  48,447  37,963   209,928  55,119
One-to-four family – mixed-use property  12,228  8,498  12,440  12,823  7,135   20,726  15,847
One-to-four family – residential  4,211  9,237  5,162  2,761  59,494   13,448  62,625
Co-operative apartments    24  413       24  
Construction  8,319  8,802  17,033  8,687  5,281   17,121  12,404
Mortgage Loans  326,486  169,843  179,612  114,568  176,786   496,329  271,461
                       
Small Business Administration (1)  2,750    270  415  17,585   2,750  142,678
Commercial business and other  174,551  159,476  182,858  128,946  130,036   334,027  233,154
Nonmortgage Loans  177,301  159,476  183,128  129,361  147,621   336,777  375,832
                       
Total Closings $503,787 $329,319 $362,740 $243,929 $324,407  $833,106 $647,293



(1) Includes $15.5 million and $138.7 million of PPP closings for the three and six months ended June 30, 2021, respectively.

Weighted Average Rate on Loan Closings

                
  For the three months ended
     June 30,  March 31, December 31, September 30, June 30, 
Loan type 2022 2022 2021 2021 2021
Mortgage loans 3.76%   3.61%   3.77%   3.80%   3.53%  
Nonmortgage loans 4.21  3.27  3.24  3.49  3.23 
Total loans 3.92%   3.44%   3.51%   3.64%   3.39%  
                
Excluding PPP loans 3.92%   3.44%   3.51%   3.64%   3.51%  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)
Allowance for Credit Losses

                               
  For the three months ended  For the six months ended
     June 30,  March 31, December 31, September 30, June 30,   June 30,      June 30, 
(Dollars in thousands)    2022 2022 2021 2021 2021  2022  2021
Allowance for credit losses                              
Beginning balances $37,433   $37,135   $36,363   $42,670   $45,099     37,135     45,153  
                               
Net loan charge-off (recoveries):                              
Multifamily residential     (1)                                  $(1)      $33  
Commercial real estate                                                 64  
One-to-four family – mixed-use property                   1       (123)      3                22  
One-to-four family – residential     (2)      (2)      (3)      (147)      (2)       (4)       (7) 
Small Business Administration     13       1,015       (7)      (8)      (9)       1,028        (19) 
Taxi medallion     (435)      (12)             (1,235)      (222)       (447)       2,536  
Commercial business and other     (76)      (66)      (20)      894       1,132        (142)       1,138  
Total     (501)   935    (29)   (619)   902     434     3,767  
                               
Provision (benefit) for loan losses  1,490    1,233    743    (6,926)   (1,527)    2,723     1,284  
                               
Ending balance $39,424   $37,433   $37,135   $36,363   $42,670    $39,424    $42,670  
                                         
Gross charge-offs $50   $1,036   $7   $1,019   $1,186    $1,086    $4,108  
Gross recoveries  551    101    36    1,638    284     652     341  
                               
Allowance for credit losses to gross loans  0.58 %  0.57 %  0.56 %  0.55 %  0.64 %   0.58 %   0.64 %
Net loan charge-offs (recoveries) to average loans  (0.03)   0.06        (0.04)   0.05     0.01     0.11  

Nonperforming Assets

                     
     June 30,  March 31, December 31, September 30, June 30, 
(Dollars in thousands)    2022 2022 2021 2021 2021
Loans 90 Days Or More Past Due and Still Accruing:                         
Multifamily residential $  $  $  $  $201 
Construction           873    
Commercial business and other  100         1,052    
Total  100         1,925   201 
                          
Nonaccrual Loans:                         
Multifamily residential  3,414   3,414   2,431   4,192   4,669 
Commercial real estate  242   5   613   613   8 
One-to-four family - mixed-use property (1)  790   790   1,309   2,204   2,309 
One-to-four family - residential  5,055   7,387   7,725   7,807   6,940 
Construction  856             
Small Business Administration  937   937   937   976   976 
Commercial business and other(1)  16,554   1,533   1,918   2,500   2,489 
Total  27,848   14,066   14,933   18,292   17,391 
                          
Total Nonperforming Loans (NPLs)  27,948   14,066   14,933   20,217   17,592 
                          
Total Nonaccrual HTM Securities  20,981             
                          
Total Nonperforming Assets $48,929  $14,066  $14,933  $20,217  $17,592 
                          
Nonperforming Assets to Total Assets  0.59%    0.17%    0.19%    0.25%    0.22%  
Allowance for Credit Losses to NPLs  141.1%    266.1%    248.7%    179.9%    242.6%  



(1) Not included in the above analysis are nonaccrual performing TDR one-to-four family - mixed use property loans totaling $0.3 million each in 2Q22, 1Q22, 4Q21, 3Q21, and 2Q21; nonaccrual performing TDR commercial business loans totaling $2.8 million in 2Q22 and 1Q22, less than $0.1 million in 4Q21 and 3Q21, and $2.2 million in 2Q21.

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 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 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, Base Net Interest Income FTE, Base Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Base 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 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.

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

                               
  For the three months ended   For the six months ended
(Dollars in thousands,     June 30,  March 31, December 31, September 30, June 30,    June 30,  June 30, 
except per share data) 2022 2022 2021 2021 2021   2022 2021
                               
GAAP income before income taxes $34,971   $24,640   $22,826   $34,812   $25,416     $59,611   $51,640  
                               
Net (gain) loss from fair value adjustments (Noninterest income (loss))  (2,533)   1,809    5,140    2,289    6,548      (724)   5,566  
Net (gain) loss on sale of securities (Noninterest income (loss))              10    (123)         (123) 
Life insurance proceeds
(Noninterest income (loss))
  (1,536)                     (1,536)     
Net gain on disposition of assets (Noninterest income (loss))                            (621) 
Net (gain) loss from fair value adjustments on qualifying hedges
(Interest and fees on loans)
  60    129    (1,122)   (194)   664      189    (763) 
Net amortization of purchase accounting adjustments (Various)  (237)   (924)   (324)   (958)   (418)     (1,161)   (1,207) 
Merger (benefit) expense (Various)          (17)   2,096    (490)         483  
                               
Core income before taxes  30,725    25,654    26,503    38,055    31,597      56,379    54,975  
                               
Provision for income taxes for core income  9,207    6,685    5,535    10,226    8,603      15,892    15,008  
                               
Core net income $21,518   $18,969   $20,968   $27,829   $22,994     $40,487   $39,967  
                               
GAAP diluted earnings per common share $0.81   $0.58   $0.58   $0.81   $0.61     $1.39   $1.21  
Net (gain) loss from fair value adjustments, net of tax  (0.06)   0.04    0.13    0.05    0.15      (0.02)   0.13  
Net loss on sale of securities, net of tax                              
Life insurance proceeds  (0.05)                     (0.05)     
Net gain on disposition of assets, net of tax                            (0.01) 
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax          (0.03)       0.02          (0.02) 
Net amortization of purchase accounting adjustments, net of tax  (0.01)   (0.02)   (0.01)   (0.02)   (0.01)     (0.03)   (0.03) 
Merger (benefit) expense, net of tax              0.05    (0.01)         0.01  
NYS tax change                  (0.02)         (0.02) 
                               
Core diluted earnings per common share(1) $0.70   $0.61   $0.67   $0.88   $0.73     $1.30   $1.26  
                               
Core net income, as calculated above $21,518   $18,969   $20,968   $27,829   $22,994     $40,487   $39,967  
Average assets  8,211,763    8,049,470    8,090,701    8,072,918    8,263,553      8,131,065    8,205,954  
Average equity  667,456    673,012    671,474    659,288    644,690      670,219    632,238  
Core return on average assets(2)  1.05 %    0.94 %    1.04 %    1.38 %    1.11 %      1.00 %    0.97 %
Core return on average equity(2)  12.90 %    11.27 %    12.49 %    16.88 %    14.27 %      12.08 %    12.64 %



(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      For the six months ended 
     June 30,  March 31, December 31, September 30, June 30,    June 30,     June 30,  
(Dollars in thousands) 2022     2022     2021     2021     2021    2022  2021  
                         
GAAP Net interest income $64,730  $63,479  $62,674  $63,364  $61,039    $128,209  $121,931  
Net (gain) loss from fair value adjustments on qualifying hedges  60   129   (1,122)  (194)  664     189   (763) 
Net amortization of purchase accounting adjustments  (367)  (1,058)  (462)  (1,100)  (565)    (1,425)  (1,487) 
Core Net interest income $64,423  $62,550  $61,090  $62,070  $61,138    $126,973  $119,681  
                         
GAAP Noninterest income (loss) $7,353  $1,313  $(280) $866  $(3,210)   $8,666  $3,101  
Net (gain) loss from fair value adjustments  (2,533)  1,809   5,140   2,289   6,548     (724)  5,566  
Net gain (loss) on sale of securities           10   (123)       (123) 
Life insurance proceeds  (1,536)                (1,536)    
Net gain on sale of assets                      (621) 
Core Noninterest income $3,284  $3,122  $4,860  $3,165  $3,215    $6,406  $7,923  
                         
GAAP Noninterest expense $35,522  $38,794  $38,807  $36,345  $34,011    $74,316  $72,170  
Net amortization of purchase accounting adjustments  (130)  (134)  (138)  (142)  (147)    (264)  (280) 
Merger expense (benefit)        17   (2,096)  490        (483) 
Core Noninterest expense $35,392  $38,660  $38,686  $34,107  $34,354    $74,052  $71,407  
                         
Net interest income $64,730  $63,479  $62,674  $63,364  $61,039    $128,209  $121,931  
Noninterest income (loss)  7,353   1,313   (280)  866   (3,210)    8,666   3,101  
Noninterest expense  (35,522)  (38,794)  (38,807)  (36,345)  (34,011)    (74,316)  (72,170) 
Pre-provision pre-tax net revenue $36,561  $25,998  $23,587  $27,885  $23,818    $62,559  $52,862  
                         
Core:                        
Net interest income $64,423  $62,550  $61,090  $62,070  $61,138    $126,973  $119,681  
Noninterest income  3,284   3,122   4,860   3,165   3,215     6,406   7,923  
Noninterest expense  (35,392)  (38,660)  (38,686)  (34,107)  (34,354)    (74,052)  (71,407) 
Pre-provision pre-tax net revenue $32,315  $27,012  $27,264  $31,128  $29,999    $59,327  $56,197  
Efficiency Ratio  52.3 % 58.9 % 58.7 % 52.3 % 53.4 %   55.5 % 56.0 %


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

                             
  For the three months ended  For the six months ended 
     June 30,  March 31, December 31, September 30, June 30,   June 30,     June 30,  
(Dollars in thousands) 2022 2022 2021 2021 2021  2022  2021  
GAAP net interest income $64,730   $63,479   $62,674   $63,364   $61,039    $128,209  $121,931  
Net (gain) loss from fair value adjustments on qualifying hedges  60    129    (1,122)   (194)   664     189   (763) 
Net amortization of purchase accounting adjustments  (367)   (1,058)   (462)   (1,100)   (565)    (1,425)  (1,487) 
Tax equivalent adjustment  131    124    113    113    113     255   224  
Core net interest income FTE $64,554   $62,674   $61,203   $62,183   $61,251    $127,228  $119,905  
Prepayment penalties received on loans and securities, net of reversals and recoveries of interest from nonaccrual loans  (2,281)   (1,716)   (1,497)   (2,136)   (2,046)    (3,997)  (2,993) 
Base net interest income FTE $62,273   $60,958   $59,706   $60,047   $59,205    $123,231  $116,912  
                             
Total average interest-earning assets (1) $7,746,640   $7,577,053   $7,634,601   $7,616,332   $7,799,176    $7,662,315  $7,738,344  
Core net interest margin FTE  3.33 %    3.31 %    3.21 %    3.27 %    3.14 %     3.32 %   3.10 %  
Base net interest margin FTE  3.22 %    3.22 %    3.13 %    3.15 %    3.04 %     3.22 %   3.02 %  
                             
GAAP interest income on total loans, net $69,192   $67,516   $68,113   $69,198   $67,999    $136,708  $137,020  
Net (gain) loss from fair value adjustments on qualifying hedges  60    129    (1,122)   (194)   664     189   (763) 
Net amortization of purchase accounting adjustments  (357)   (1,117)   (535)   (1,126)   (624)    (1,474)  (1,352) 
Core interest income on total loans, net $68,895   $66,528   $66,456   $67,878   $68,039    $135,423  $134,905  
Prepayment penalties received on loans, net of reversals and recoveries of interest from nonaccrual loans  (2,333)   (1,716)   (1,497)   (2,135)   (2,046)    (4,049)  (2,993) 
Base interest income on total loans, net $66,562   $64,812   $64,959   $65,743   $65,993    $131,374  $131,912  
                             
Average total loans, net (1) $6,647,131   $6,586,253   $6,566,654   $6,642,434   $6,697,103    $6,616,860  $6,704,237  
Core yield on total loans  4.15 %    4.04 %    4.05 %    4.09 %    4.06 %     4.09 %   4.02 %  
Base yield on total loans  4.01 %    3.94 %    3.96 %    3.96 %    3.94 %     3.97 %   3.94 %  



(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)

                     
     June 30,  March 31, December 31, September 30, June 30, 
(Dollars in thousands) 2022 2022 2021 2021 2021
Total Equity $670,812   $675,813   $679,628   $668,096   $655,167  
Less:                         
Goodwill  (17,636)   (17,636)   (17,636)   (17,636)   (17,636) 
Core deposit Intangibles  (2,282)   (2,420)   (2,562)   (2,708)   (2,859) 
Intangible deferred tax liabilities      328    328    287    287  
Tangible Stockholders' Common Equity $650,894   $656,085   $659,758   $648,039   $634,959  
                     
Total Assets $8,339,587   $8,169,833   $8,045,911   $8,077,334   $8,159,345  
Less:                         
Goodwill  (17,636)   (17,636)   (17,636)   (17,636)   (17,636) 
Core deposit Intangibles  (2,282)   (2,420)   (2,562)   (2,708)   (2,859) 
Intangible deferred tax liabilities      328    328    287    287  
Tangible Assets $8,319,669   $8,150,105   $8,026,041   $8,057,277   $8,139,137  
                     
Tangible Stockholders' Common Equity to Tangible Assets  7.82 %    8.05 %    8.22 %    8.04 %    7.80 %
                     

 


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