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Flushing Financial Corporation Reports 3Q22 GAAP EPS of $0.76 and Core EPS of $0.62

Loan Growth Despite Rising Rates

John R. Buran, President and CEO Commentary

UNIONDALE, N.Y., Oct. 25, 2022 (GLOBE NEWSWIRE) -- The Company reported third quarter 2022 GAAP EPS of $0.76, down 6.2% YoY, with a ROAA of 1.11%, and ROAE of 13.91%. Core 3Q22 EPS was $0.62, a decrease of 29.5% YoY, with a ROAA of 0.90% and the ROAE of 11.24%.  

“We supported customers by achieving loan growth of 3.1% QoQ, excluding the impact of PPP loans, while increasing the origination yield by 68 bps for the quarter, as the quarter was dominated by Fed rate increases. Credit quality, a hallmark of the Company, remained solid with only 2 bps of net charge-offs this quarter. The Company opportunistically raised $65 million of subordinated debt capital to lock in funding at an attractive rate. The Fed rate movements resulted in the NIM compressing 28 bps during the third quarter given the rapid rise in rates. Despite the NIM pressure in the short term, loans are expected to reprice higher over time. Approximately $1.0 billion or 15% of loans reprice within 90 days of index changes and $1.9 billion or 27% of loans are expected to contractually reprice higher by 200 bps through the end of 2024. There are over $500 million of funding swaps that have attractive rates now and will reprice lower by approximately 70 bps through 2023. Our community focus continued to shine this quarter as we supported several events, including the Flushing and Port Jefferson Dragon Boat festivals and our Harvest Moon Reception.”

- John R. Buran, President and CEO

Loan Closings up 90.1% YoY; NIM Declined QoQ. Period end net loans, excluding PPP, increased 3.1% QoQ, with balanced growth between real estate and commercial business and other loans. Loan closings, excluding PPP, were up 90.1% YoY, while repayment speeds declined both YoY and QoQ. Despite the loan closings increasing, net interest income of $61.2 million decreased 3.4% YoY and 5.4% QoQ, primarily due to the increased funding costs. NIM FTE was 3.07% in 3Q22 compared to 3.35% in 2Q22 and 3.34% a year ago. Core NIM FTE decreased by 24 bps to 3.03% YoY and 30 bps QoQ. The Company hired 46 people, including 20 revenue producers, since March 31, 2021 from institutions involved with bank mergers.

Returned 40% of Earnings in 3Q22; Tangible Book Value Per Share Increased 3% YoY. The Company repurchased 131,174 shares of common stock at an average price of $20.47 during the quarter. Book value and tangible book value per share were $22.47 and $21.81, respectively, while TCE/TA1 was 7.62% at September 30, 2022 compared to 7.82% at June 30, 2022.

Key Financial Metrics2


  3Q22  2Q22 1Q22 4Q21 3Q21
GAAP:           
EPS $0.76  $0.81  $0.58 $0.58 $0.81 
ROAA (%)  1.11   1.22   0.91  0.89  1.26 
ROAE (%)  13.91   15.00   10.83  10.77  15.42 
NIM FTE3 (%)  3.07   3.35   3.36  3.29  3.34 
Core:           
EPS $0.62  $0.70  $0.61 $0.67 $0.88 
ROAA (%)  0.90   1.05   0.94  1.04  1.38 
ROAE (%)  11.24   12.90   11.27  12.49  16.88 
Core NIM FTE (%)  3.03   3.33   3.31  3.21  3.27 
Credit Quality:           
NPAs/Loans&REO (%)  0.72   0.72   0.21  0.23  0.31 
ACLs/Loans (%)  0.59   0.58   0.57  0.56  0.55 
ACLs/NPLs (%)  142.29   141.06   266.12  248.66  179.86 
NCOs/Avg Loans (%)  0.02   (0.03)  0.06  -  (0.04)
Balance Sheet:           
Avg Loans ($B) $6.9  $6.6  $6.6 $6.6 $6.6 
Avg Dep ($B) $6.3  $6.4  $6.4 $6.5 $6.4 
Book Value/Share $22.47  $22.38  $22.26 $22.26 $21.78 
Tangible BV/Share $21.81  $21.71  $21.61 $21.61 $21.13 
TCE/TA (%)  7.62   7.82   8.05  8.22  8.04 
            

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

3Q22 Highlights
  • Period end net loans, excluding PPP, increased 3.1% QoQ and 6.8% YoY; loan closings were $463.7 million at 4.60% in 3Q22, down 8.0% from record levels QoQ, but up 90.1% YoY while the yield increased 68 bps QoQ and 96 bps YoY
  • Loan pipeline decreased 41.8% YoY to $309.1 million as we become more selective in terms of rate and collateral type and borrowers adjusted to higher rates
  • Issued $65 million of subordinated notes at 6.00% during the 3Q22
  • NPAs increased to $50.0 million from $48.9 million at 2Q22 and from $20.2 million at 3Q21
  • Provision for credit losses was $2.1 million in 3Q22 compared to a benefit for credit losses of $6.9 million in 3Q21; net charge-offs were $0.3 million in 3Q22 compared to net recoveries of $0.6 million in 3Q21
  • Net interest income decreased 5.4% QoQ and 3.4% YoY to $61.2 million; Core net interest income declined 6.2% QoQ and 2.7% YoY to $60.4 million
  • Net interest margin FTE decreased 28 bps QoQ and 27 bps YoY to 3.07%; Core net interest margin FTE decreased 30 bps QoQ and 24 bps YoY to 3.03%; The decline in GAAP and Core NIM QoQ was primarily driven by our liability sensitive balance sheet resulting in liabilities repricing faster than assets over the near term but reversing as loans reprice over the next couple of years
  • Average deposits, including mortgage escrow, decreased 2.6% QoQ and 2.1% YoY to $6.3 billion, with core deposits comprising 83.1% of total average deposits
  • Signed a lease to open a new branch in Brooklyn expanding our Asian banking footprint
  • Tangible Common Equity to Tangible Assets was 7.62% down from 7.82% at 2Q22; the change in accumulated other comprehensive loss, net of taxes (primarily from rising rates) impacted this ratio by 18 bps in 3Q22 compared to 2Q22
  • Repurchased 131,174 shares at an average price of $20.47; dividends and share repurchases were 40% of net income in 3Q22

Income Statement Highlights


              YoY QoQ
($000s, except EPS)  3Q22  2Q22 1Q22 4Q21 3Q21 Change Change
                   
Net Interest Income  $61,206  $64,730 $63,479 $62,674  $63,364  (3.4)% (5.4)%
Provision (Benefit) for Credit Losses   2,145   1,590  1,358  761   (6,927) (131.0)  34.9  
Noninterest Income (Loss)   8,995   7,353  1,313  (280)  866  938.7   22.3  
Noninterest Expense   35,634   35,522  38,794  38,807   36,345  (2.0)  0.3  
Income Before Income Taxes   32,422   34,971  24,640  22,826   34,812  (6.9)  (7.3) 
Provision for Income Taxes   8,980   9,936  6,421  4,743   9,399  (4.5)  (9.6) 
Net Income  $23,442  $25,035 $18,219 $18,083  $25,413  (7.8)  (6.4) 
Diluted EPS  $0.76  $0.81 $0.58 $0.58  $0.81  (6.2)  (6.2) 
Avg. Diluted Shares (000s)   30,695   30,937  31,254  31,353   31,567  (2.8)  (0.8) 
                   
Core Net Income1  $18,953  $21,518 $18,969 $20,968  $27,829  (31.9)  (11.9) 
Core EPS1  $0.62  $0.70 $0.61 $0.67  $0.88  (29.5)  (11.4) 

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $61.2 million in 3Q22 compared to $64.7 million in 2Q22, $63.5 million in 1Q22, $62.7 million in 4Q21, and $63.4 million in 3Q21.

  • Net interest margin, FTE (“NIM”) of 3.07% decreased 27 bps YoY and 28 bps QoQ
  • Prepayment penalty income from loans and securities, net reversals and recoveries of interest from nonaccrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $2.2 million (11 bps to the NIM) in 3Q22 compared to $2.6 million (13 bps) in 2Q22, $2.6 million (14 bps) in 1Q22, $3.1 million (16 bps) in 4Q21, and $3.4 million (19 bps) in 3Q21
  • Excluding the items in the previous bullet, net interest margin was 2.96% in 3Q22, 3.22% in 2Q22 and in 1Q22, 3.13% in 4Q21, and 3.15% in 3Q21

The Company recorded a provision for credit losses of $2.1 million in 3Q22, $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.

  • 3Q22 provision for credit losses of $2.1 million was primarily due to increased reserves on two previously identified credits and loan growth
  • Net charge-offs (recoveries) were $0.3 million in 3Q22 (2 bps of average loans), $(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), and $(0.6) million in 3Q21 ((4) bps of average loans)

Noninterest income (loss) was $9.0 million in 3Q22, $7.4 million in 2Q22, $1.3 million in 1Q22, $(0.3) million in 4Q21, and $0.9 million in 3Q21.

  • Noninterest income included net gains (losses) from fair value adjustments of $5.6 million in 3Q22 or $0.13 per share, net of tax, $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, and $(2.3) million in 3Q21 or $(0.05) per share, net of tax
  • 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 $3.4 million in 3Q22, up 6.4% YoY, and 2.6% QoQ
  • 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 $35.6 million in 3Q22 (a decrease of 2.0% YoY, but an increase of 0.3% QoQ) compared to $35.5 million in 2Q22, $38.8 million in 1Q22, $38.8 million in 4Q21, and $36.3 million in 3Q21.

  • Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22
  • 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 and $2.1 million of pre-tax merger charges ($0.05 per share, net of tax) in 3Q21
  • Excluding the effects of the merger and other immaterial adjustments, core operating expenses were $35.5 million in 3Q22, up 4.1% YoY and 0.3% QoQ
  • GAAP noninterest expense to average assets was 1.69% in 3Q22, 1.73% in 2Q22, 1.93% in 1Q22, 1.92%in 4Q21, and 1.80% in 3Q21

The provision for income taxes was $9.0 million in 3Q22 compared to $9.9 million in 2Q22, $6.4 million in 1Q22, $4.7 million in 4Q21, and $9.4 million in 3Q21.

  • The effective tax rate was 27.7% in 3Q22, 28.4% in 2Q22, 26.1% in 1Q22, 20.8% in 4Q21, and 27.0% in 3Q21
  • The 2Q22 effective tax rate includes a loss of a certain state and city tax deductions and a resolution of certain examinations by taxing authorities
  • The 4Q21 effective tax rate declined due to lower levels of taxable state income and higher percentage of permanent differences

Balance Sheet, Credit Quality, and Capital Highlights


             YoY QoQ
  3Q22  2Q22 1Q22 4Q21 3Q21 Change Change
Average Loans And Deposits ($MM)                 
Loans $6,861  $6,640 $6,579 $6,558 $6,633 3.4 % 3.3 %
Deposits  6,277   6,441  6,410  6,459  6,408 (2.1)  (2.6) 
                  
Credit Quality ($000s)                 
Nonperforming Loans $29,003  $27,948 $14,066 $14,934 $20,217 43.5 % 3.8 %
Nonperforming Assets  49,984   48,929  14,066  14,934  20,217 147.2   2.2  
Criticized and Classified Loans  61,684   57,145  59,548  57,650  68,913 (10.5)  7.9  
Criticized and Classified Assets  82,665   78,125  80,527  78,628  89,889 (8.0)  5.8  
Troubled Debt Restructured Loans  14,757   14,758  15,124  12,714  13,097 12.7   (0.0) 
Allowance for Credit Losses/Loans (%)  0.59   0.58  0.57  0.56  0.55 4 bps 1 bp
                  
Capital                 
Book Value/Share $22.47  $22.38 $22.26 $22.26 $21.78 3.2 % 0.4 %
Tangible Book Value/Share  21.81   21.71  21.61  21.61  21.13 3.2   0.5  
Tang. Common Equity/Tang. Assets (%)  7.62   7.82  8.05  8.22  8.04 (42)bps (20)bps
Leverage Ratio (%)  8.74   8.91  9.05  8.98  8.83 (9)  (17) 


Average loans
were $6.9 billion, an increase of 3.4% YoY and 3.3% QoQ.

  • Period end net loans, excluding PPP loans, totaled $6.9 billion, up 6.8% YoY and 3.1% QoQ
  • Total loan closings were $463.7 million in 3Q22, $503.8 million in 2Q22, $329.3 million in 1Q22, $362.7 million in 4Q21, and $243.9 million in 3Q21
  • The loan pipeline was $309.1 million at September 30, 2022, down 41.8% YoY and 46.9% QoQ

Average Deposits totaled $6.3 billion, decreasing 2.1% YoY and 2.6% QoQ.

  • Average core deposits (non-CD deposits) were 83.1% of total average deposits (including escrow deposits) in 3Q22, compared to 83.8% a year ago
  • Average noninterest bearing deposits increased 12.5% YoY and 0.5% QoQ and comprised 16.7% of total average deposits (including escrow deposits) in 3Q22 compared to 14.6% a year ago

Credit Quality: Nonperforming loans held at the end of each quarter totaled $29.0 million at 3Q22, $27.9 million at 2Q22, $14.1 million at 1Q22, $14.9 million at 4Q21, and $20.2 million at 3Q21.

  • Criticized and classified were 89 bps of loans at 3Q22 compared to 85 bps at 2Q22, 90 bps at 1Q22, 87 bps at 4Q21, and 104 bps at 3Q21
  • 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 3Q22, 2Q22, 1Q22, 4Q21, and 3Q21
  • Over 88% of gross loans are collateralized by real estate with an average loan-to-value ratio of <37% as of September 30, 2022
  • Allowance for credit losses were 142.3% of nonperforming loans at 3Q22 compared to 141.1% at 2Q22 and 179.9% a year ago

Capital: Book value per common share was $22.47 at 3Q22, up 0.4% QoQ and 3.2% YoY; tangible book value per common share, a non-GAAP measure, was $21.81 at 3Q22, up 0.5% QoQ and 3.2% YoY.

  • The Company paid a dividend of $0.22 per share and repurchased 131,174 shares at an average price of $20.47 in 3Q22
  • At the end of 3Q22, 969,324 shares remain subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.62% at 3Q22 compared to 7.82% at 2Q22 and 8.04% at 3Q21
  • The Company and the Bank remain well capitalized under all applicable regulatory requirements
  • The leverage ratio was 8.74% at 3Q22 compared to 8.91% at 2Q22 and 8.83% at 3Q21

Conference Call Information And Fourth Quarter Earnings Release Date

Conference Call Information:

  • John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer and Treasurer, will host a conference call on Wednesday, October 26, 2022, at 9:30 AM (ET) to discuss the Company’s third quarter 2022 results and strategy.
  • Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
  • Webcast: https://services.choruscall.com/mediaframe/webcast.html?webcastid=xiCFFixk
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 8005279
  • The conference call will be simultaneously webcast and archived

Fourth Quarter 2022 Earnings Release Date:

The Company plans to release Fourth Quarter and full year 2022 financial results after the market close on January 24, 2023; followed by a conference call at 9:30 AM (ET) on January 25, 2023.

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

About Flushing Financial Corporation

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

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

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 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 nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(Dollars in thousands, except per share data) 2022 2022 2022 2021 2021  2022 2021
Performance Ratios (1)                                 
Return on average assets  1.11 %  1.22 %  0.91 %  0.89 %  1.26 %   1.08 %  1.04 %
Return on average equity  13.91    15.00    10.83    10.77    15.42     13.24    13.24  
Yield on average interest-earning assets (2)  4.10    3.85    3.77    3.77    3.84     3.91    3.77  
Cost of average interest-bearing liabilities  1.25    0.60    0.50    0.58    0.61     0.79    0.65  
Cost of funds  1.08    0.52    0.43    0.50    0.53     0.68    0.57  
Net interest rate spread during period (2)  2.85    3.25    3.27    3.19    3.23     3.12    3.12  
Net interest margin (2)  3.07    3.35    3.36    3.29    3.34     3.26    3.22  
Noninterest expense to average assets  1.69    1.73    1.93    1.92    1.80     1.78    1.77  
Efficiency ratio (3)  55.68    52.27    58.87    58.66    52.28     55.57    54.72  
Average interest-earning assets to
average interest-bearing liabilities
  1.22 X  1.22 X  1.22 X  1.22 X  1.21 X   1.22 X  1.19 X
                                  
Average Balances                                 
Total loans, net $6,861,463   $6,640,331   $6,578,680   $6,558,285   $6,633,301    $6,694,528   $6,673,309  
Total interest-earning assets  7,979,070    7,740,683    7,570,373    7,627,256    7,608,317     7,764,873    7,688,354  
Total assets  8,442,657    8,211,763    8,049,470    8,090,701    8,072,918     8,236,070    8,161,121  
Total due to depositors  5,157,715    5,298,855    5,336,983    5,397,802    5,406,423     5,263,861    5,422,158  
Total interest-bearing liabilities  6,553,087    6,337,374    6,220,510    6,276,221    6,310,859     6,371,542    6,439,928  
Stockholders' equity  674,282    667,456    673,012    671,474    659,288     671,588    641,354  
                                  
Per Share Data                                 
Book value per common share (4) $22.47   $22.38   $22.26   $22.26   $21.78    $22.47   $27.78  
Tangible book value per common share (5) $21.81   $21.71   $21.61   $21.61   $21.13    $21.81   $21.13  
                                  
Stockholders' Equity                                 
Stockholders' equity $670,719   $670,812   $675,813   $679,628   $668,096    $670,719   $668,096  
Tangible stockholders' equity  650,936    650,894    656,085    659,758    648,039     650,936    648,039  
                                  
Consolidated Regulatory Capital Ratios                                 
Tier 1 capital $749,526   $739,776   $731,536   $726,174   $711,276    $749,526   $711,276  
Common equity Tier 1 capital  701,532    686,258    675,434    671,494    661,340     701,532    661,340  
Total risk-based capital  979,021    903,047    892,861    885,469    832,255     979,021    832,255  
Risk Weighted Assets  6,689,284    6,522,710    6,232,020    6,182,095    6,194,207     6,689,284    6,194,207  
                                  
Tier 1 leverage capital
(well capitalized = 5%)
  8.74 %  8.91 %  9.05 %  8.98 %  8.83 %   8.74 %  8.83 %
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  10.49    10.52    10.84    10.86    10.68     10.49    10.68  
Tier 1 risk-based capital
(well capitalized = 8.0%)
  11.20    11.34    11.74    11.75    11.48     11.20    11.48  
Total risk-based capital
(well capitalized = 10.0%)
  14.64    13.84    14.33    14.32    13.44     14.64    13.44  
                                  
Capital Ratios                                 
Average equity to average assets  7.99 %  8.13 %  8.36 %  8.30 %  8.17 %   8.15 %  7.86 %
Equity to total assets  7.84    8.04    8.27    8.45    8.27     7.84    8.27  
Tangible common equity to tangible assets (6)  7.62    7.82    8.05    8.22    8.04     7.62    8.04  
                                  
Asset Quality                                 
Nonaccrual loans (7) $27,003   $27,848   $14,066   $14,933   $18,292    $27,003   $18,292  
Nonperforming loans  29,003    27,948    14,066    14,933    20,217     29,003    20,217  
Nonperforming assets  49,984    48,929    14,066    14,933    20,217     49,984    20,217  
Net charge-offs (recoveries)  290    (501)   935    (29)   (619)    724    3,148  
                                  
Asset Quality Ratios                                 
Nonperforming loans to gross loans  0.42 %  0.41 %  0.21 %  0.23 %  0.31 %   0.42 %  0.31 %
Nonperforming assets to total assets  0.58    0.59    0.17    0.19    0.25     0.58    0.25  
Allowance for credit losses to gross loans  0.59    0.58    0.57    0.56    0.55     0.59    0.55  
Allowance for credit losses to
nonperforming assets
  82.56    80.57    266.12    248.66    179.86     82.56    179.86  
Allowance for credit losses to
nonperforming loans
  142.29    141.06    266.12    248.66    179.86     142.29    179.86  
Net charge-offs (recoveries) to average loans  0.02    (0.03)   0.06        (0.04)    0.01    0.06  
                                  
Full-service customer facilities  25    25    24    24    24     25    24  

____________
(1) Ratios are presented on an annualized basis, where appropriate.
(2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(3) Efficiency ratio, a non-GAAP measure, was calculated by dividing 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 nine months ended
 September 30, June 30, March 31, December 31, September 30,   September 30, September 30,
(In thousands, except per share data)2022 2022 2022  2021  2021    2022 2021 
Interest and Dividend Income                      
Interest and fees on loans$75,546 $69,192 $67,516  $68,113  $69,198    $212,254 $206,218 
Interest and dividends on securities:                      
Interest 5,676  4,929  3,745   3,536   3,706     14,350  10,463 
Dividends 17  11  8   7   7     36  22 
Other interest income 506  159  51   74   42     716  129 
Total interest and dividend income 81,745  74,291  71,320   71,730   72,953     227,356  216,832 
                       
Interest Expense                      
Deposits 11,965  4,686  3,408   3,975   4,705     20,059  16,349 
Other interest expense 8,574  4,875  4,433   5,081   4,884     17,882  15,188 
Total interest expense 20,539  9,561  7,841   9,056   9,589     37,941  31,537 
                       
Net Interest Income 61,206  64,730  63,479   62,674   63,364     189,415  185,295 
Provision (benefit) for credit losses 2,145  1,590  1,358   761   (6,927)    5,093  (5,705)
Net Interest Income After Provision (Benefit)
for Credit Losses
 59,061  63,140  62,121   61,913   70,291     184,322  191,000 
                       
Noninterest Income (Loss)                      
Banking services fee income 1,351  1,166  1,374   1,142   865     3,891  4,823 
Net gain (loss) on sale of securities           (10)      113 
Net gain on sale of loans   73     46   131     73  289 
Net gain on disposition of assets                  621 
Net gain (loss) from fair value adjustments 5,626  2,533  (1,809)  (5,140)  (2,289)    6,350  (7,855)
Federal Home Loan Bank of New York
stock dividends
 538  407  397   417   491     1,342  1,680 
Life insurance proceeds   1,536             1,536   
Bank owned life insurance 1,132  1,115  1,114   1,023   1,015     3,361  3,021 
Other income 348  523  237   2,232   663     1,108  1,275 
Total noninterest income (loss) 8,995  7,353  1,313   (280)  866     17,661  3,967 
                       
Noninterest Expense                      
Salaries and employee benefits 21,438  21,109  23,649   25,223   20,544     66,196  63,087 
Occupancy and equipment 3,541  3,760  3,604   3,579   3,534     10,905  10,423 
Professional services 2,570  2,285  2,222   1,152   1,899     7,077  6,287 
FDIC deposit insurance 738  615  420   391   618     1,773  2,560 
Data processing 1,367  1,383  1,424   1,757   1,759     4,174  5,287 
Depreciation and amortization 1,488  1,447  1,460   1,521   1,627     4,395  4,904 
Other real estate owned/foreclosure expense 143  32  84   129   182     259  194 
Other operating expenses 4,349  4,891  5,931   5,055   6,182     15,171  15,773 
Total noninterest expense 35,634  35,522  38,794   38,807   36,345     109,950  108,515 
                       
Income Before Provision for Income Taxes 32,422  34,971  24,640   22,826   34,812     92,033  86,452 
                       
Provision for Income Taxes 8,980  9,936  6,421   4,743   9,399     25,337  22,742 
                       
Net Income$23,442 $25,035 $18,219  $18,083  $25,413    $66,696 $63,710 
                       
Basic earnings per common share$0.76 $0.81 $0.58  $0.58  $0.81    $2.15 $2.02 
Diluted earnings per common share$0.76 $0.81 $0.58  $0.58  $0.81    $2.15 $2.02 
Dividends per common share$0.22 $0.22 $0.22  $0.21  $0.21    $0.66 $0.63 
                       
Basic average shares 30,695  30,937  31,254   31,353   31,567     30,960  31,616 
Diluted average shares 30,695  30,937  31,254   31,353   31,567     30,960  31,616 


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

  September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2022  2022  2022  2021  2021 
ASSETS               
Cash and due from banks $164,693  $137,026  $186,407  $81,723  $178,598 
Securities held-to-maturity:               
Mortgage-backed securities  7,880   7,885   7,890   7,894   7,899 
Other securities  66,032   66,230   66,327   49,974   49,989 
Securities available for sale:               
Mortgage-backed securities  468,366   510,934   553,828   572,184   584,145 
Other securities  351,495   346,720   286,041   205,052   212,654 
Loans  6,956,674   6,760,393   6,607,264   6,638,105   6,630,354 
Allowance for credit losses  (41,268)  (39,424)  (37,433)  (37,135)  (36,363)
Net loans  6,915,406   6,720,969   6,569,831   6,600,970   6,593,991 
Interest and dividends receivable  42,571   38,811   37,308   38,698   40,912 
Bank premises and equipment, net  22,376   22,285   22,752   23,338   24,018 
Federal Home Loan Bank of New York stock  62,489   50,017   33,891   35,937   36,158 
Bank owned life insurance  212,353   211,220   211,867   210,754   184,730 
Goodwill  17,636   17,636   17,636   17,636   17,636 
Core deposit intangibles  2,147   2,282   2,420   2,562   2,708 
Right of use asset  44,885   46,687   48,475   50,200   50,155 
Other assets  179,090   160,885   125,160   148,989   93,741 
Total assets $8,557,419  $8,339,587  $8,169,833  $8,045,911  $8,077,334 
                
LIABILITIES               
Deposits $6,054,761  $6,350,000  $6,373,400  $6,333,532  $6,421,391 
Mortgagors' escrow deposits  70,544   57,577   79,495   51,913   67,207 
Borrowed funds  1,572,830   1,089,621   877,122   815,544   752,925 
Operating lease liability  48,330   50,346   52,292   54,155   54,239 
Other liabilities  140,235   121,231   111,711   111,139   113,476 
Total liabilities  7,886,700   7,668,775   7,494,020   7,366,283   7,409,238 
                
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  263,755   262,860   261,837   263,375   262,009 
Treasury stock  (90,977)  (88,342)  (79,834)  (75,293)  (71,738)
Retained earnings  543,894   527,217   508,973   497,889   486,418 
Accumulated other comprehensive loss, net of taxes  (46,294)  (31,264)  (15,504)  (6,684)  (8,934)
Total stockholders' equity  670,719   670,812   675,813   679,628   668,096 
                
Total liabilities and stockholders' equity $8,557,419  $8,339,587  $8,169,833  $8,045,911  $8,077,334 
                
(In thousands)               
Issued shares  34,088   34,088   34,088   34,088   34,088 
Outstanding shares  29,851   29,980   30,367   30,526   30,676 
Treasury shares  4,237   4,108   3,721   3,561   3,412 

  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

  For the three months ended   For the nine months ended
  September 30, June 30, March 31, December 31, September 30,   September 30, September 30,
(In thousands) 2022 2022 2022 2021 2021   2022 2021
Interest-earning Assets:                       
Mortgage loans, net $5,340,694 $5,178,029 $5,152,070 $5,140,233 $5,158,213   $5,224,289 $5,148,204
Other loans, net  1,520,769  1,462,302  1,426,610  1,418,052  1,475,088    1,470,239  1,525,105
Total loans, net  6,861,463  6,640,331  6,578,680  6,558,285  6,633,301    6,694,528  6,673,309
Taxable securities:                       
Mortgage-backed securities  568,854  594,923  580,670  595,538  590,732    581,439  534,836
Other securities  362,629  333,158  226,744  207,482  217,763    308,008  249,899
Total taxable securities  931,483  928,081  807,414  803,020  808,495    889,447  784,735
Tax-exempt securities:                       
Other securities  67,211  67,315  57,611  50,834  50,832    64,081  50,830
Total tax-exempt securities  67,211  67,315  57,611  50,834  50,832    64,081  50,830
Interest-earning deposits and federal funds sold  118,913  104,956  126,668  215,117  115,689    116,817  179,480
Total interest-earning assets  7,979,070  7,740,683  7,570,373  7,627,256  7,608,317    7,764,873  7,688,354
Other assets  463,587  471,080  479,097  463,445  464,601    471,197  472,767
Total assets $8,442,657 $8,211,763 $8,049,470 $8,090,701 $8,072,918   $8,236,070 $8,161,121
                        
Interest-bearing Liabilities:                       
Deposits:                       
Savings accounts $154,545 $156,785 $156,592 $154,471 $153,120   $155,966 $158,708
NOW accounts  1,808,608  2,089,851  2,036,914  2,115,619  2,107,866    1,977,621  2,182,660
Money market accounts  2,136,829  2,231,743  2,253,630  2,177,928  2,107,473    2,206,973  2,019,497
Certificate of deposit accounts  1,057,733  820,476  889,847  949,784  1,037,964    923,301  1,061,293
Total due to depositors  5,157,715  5,298,855  5,336,983  5,397,802  5,406,423    5,263,861  5,422,158
Mortgagors' escrow accounts  68,602  97,496  71,509  84,617  68,562    79,192  75,171
Total interest-bearing deposits  5,226,317  5,396,351  5,408,492  5,482,419  5,474,985    5,343,053  5,497,329
Borrowings  1,326,770  941,023  812,018  793,802  835,874    1,028,489  942,599
Total interest-bearing liabilities  6,553,087  6,337,374  6,220,510  6,276,221  6,310,859    6,371,542  6,439,928
Noninterest-bearing demand deposits  1,050,296  1,044,553  1,001,571  976,803  933,443    1,032,319  904,522
Other liabilities  164,992  162,380  154,377  166,203  169,328    160,621  175,317
Total liabilities  7,768,375  7,544,307  7,376,458  7,419,227  7,413,630    7,564,482  7,519,767
Equity  674,282  667,456  673,012  671,474  659,288    671,588  641,354
Total liabilities and equity $8,442,657 $8,211,763 $8,049,470 $8,090,701 $8,072,918   $8,236,070 $8,161,121
                        
Net interest-earning assets $1,425,983 $1,403,309 $1,349,863 $1,351,035 $1,297,458   $1,393,331 $1,248,426


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

  For the three months ended  For the nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(Dollars in thousands) 2022 2022 2022 2021 2021  2022 2021
Interest Income:                             
Mortgage loans, net $58,374  $54,775   $53,970   $54,260  $55,114   $167,119   $163,320 
Other loans, net  17,172   14,417    13,546    13,853   14,084    45,135    42,898 
Total loans, net  75,546   69,192    67,516    68,113   69,198    212,254    206,218 
Taxable securities:                             
Mortgage-backed securities  2,466   2,356    2,167    2,125   2,279    6,989    6,210 
Other securities  2,839   2,090    1,119    993   1,008    6,048    3,008 
Total taxable securities  5,305   4,446    3,286    3,118   3,287    13,037    9,218 
Tax-exempt securities:                             
Other securities  492   625    591    538   539    1,708    1,604 
Total tax-exempt securities  492   625    591    538   539    1,708    1,604 
Interest-earning deposits and federal funds sold  506   159    51    74   42    716    129 
Total interest-earning assets  81,849   74,422    71,444    71,843   73,066    227,715    217,169 
Interest Expense:                             
Deposits:                             
Savings accounts $53  $50   $49   $53  $61   $152   $202 
NOW accounts  3,640   1,405    793    1,021   1,227    5,838    4,432 
Money market accounts  5,280   1,952    1,275    1,428   1,683    8,507    5,843 
Certificate of deposit accounts  2,948   1,273    1,289    1,471   1,734    5,510    5,869 
Total due to depositors  11,921   4,680    3,406    3,973   4,705    20,007    16,346 
Mortgagors' escrow accounts  44   6    2    2       52    3 
Total interest-bearing deposits  11,965   4,686    3,408    3,975   4,705    20,059    16,349 
Borrowings  8,574   4,875    4,433    5,081   4,884    17,882    15,188 
Total interest-bearing liabilities  20,539   9,561    7,841    9,056   9,589    37,941    31,537 
Net interest income- tax equivalent $61,310  $64,861   $63,603   $62,787  $63,477   $189,774   $185,632 
Included in net interest income above:                             
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans $1,368  $2,281   $1,716   $1,497  $2,136   $5,365   $5,130 
Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income  28   (60)   (129)   1,122   194    (161)   957 
Purchase accounting adjustments  775   367    1,058    462   1,100    2,200    2,587 
Interest-earning Assets Yields:                             
Mortgage loans, net  4.37%  4.23 %  4.19 %  4.22%  4.27%   4.27 %  4.23%
Other loans, net  4.52   3.94    3.80    3.91   3.82    4.09    3.75 
Total loans, net  4.40   4.17    4.11    4.15   4.17    4.23    4.12 
Taxable securities:                             
Mortgage-backed securities  1.73   1.58    1.49    1.43   1.54    1.60    1.55 
Other securities  3.13   2.51    1.97    1.91   1.85    2.62    1.60 
Total taxable securities  2.28   1.92    1.63    1.55   1.63    1.95    1.57 
Tax-exempt securities: (1)                             
Other securities  2.93   3.71    4.10    4.23   4.24    3.55    4.21 
Total tax-exempt securities  2.93   3.71    4.10    4.23   4.24    3.55    4.21 
Interest-earning deposits and federal funds sold  1.70   0.61    0.16    0.14   0.15    0.82    0.10 
Total interest-earning assets  4.10%  3.85 %  3.77 %  3.77%  3.84%   3.91 %  3.77%
Interest-bearing Liabilities Yields:                             
Deposits:                             
Savings accounts  0.14%  0.13 %  0.13 %  0.14%  0.16%   0.13 %  0.17%
NOW accounts  0.81   0.27    0.16    0.19   0.23    0.39    0.27 
Money market accounts  0.99   0.35    0.23    0.26   0.32    0.51    0.39 
Certificate of deposit accounts  1.11   0.62    0.58    0.62   0.67    0.80    0.74 
Total due to depositors  0.92   0.35    0.26    0.29   0.35    0.51    0.40 
Mortgagors' escrow accounts  0.26   0.02    0.01    0.01       0.09    0.01 
Total interest-bearing deposits  0.92   0.35    0.25    0.29   0.34    0.50    0.40 
Borrowings  2.58   2.07    2.18    2.56   2.34    2.32    2.15 
Total interest-bearing liabilities  1.25%  0.60 %  0.50 %  0.58%  0.61%   0.79 %  0.65%
                              
Net interest rate spread
(tax equivalent)
  2.85%  3.25 %  3.27 %  3.19%  3.23%   3.12 %  3.12%
Net interest margin (tax equivalent)  3.07%  3.35 %  3.36 %  3.29%  3.34%   3.26 %  3.22%
Ratio of interest-earning assets to interest-bearing liabilities  1.22X  1.22 X  1.22 X  1.22X  1.21X   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

                 September 2022 vs. September 2022 vs.
  September 30, June 30, March 31, December 31, September 30, June 2022 September 2021
(Dollars in thousands) 2022 2022 2022 2021 2021 % Change % Change
Noninterest bearing $992,378 $1,081,208 $1,041,027 $967,621 $941,259 (8.2)% 5.4 %
Interest bearing:                     
Certificate of deposit accounts  1,036,107  906,943  886,317  946,575  1,040,098 14.2   (0.4) 
Savings accounts  150,552  154,670  158,542  156,554  152,306 (2.7)  (1.2) 
Money market accounts  2,113,256  2,229,993  2,362,390  2,342,003  2,152,085 (5.2)  (1.8) 
NOW accounts  1,762,468  1,977,186  1,925,124  1,920,779  2,135,643 (10.9)  (17.5) 
Total interest-bearing deposits  5,062,383  5,268,792  5,332,373  5,365,911  5,480,132 (3.9)  (7.6) 
Total deposits $6,054,761 $6,350,000 $6,373,400 $6,333,532 $6,421,391 (4.6)% (5.7)%


Loan Composition

                      
                 September 2022 vs. September 2022 vs.
  September 30, June 30, March 31, December 31, September 30, June 2022 September 2021
(Dollars in thousands) 2022  2022  2022  2021  2021  % Change % Change
Multifamily residential $2,608,192  $2,531,858  $2,500,570  $2,517,026  $2,498,980  3.0 % 4.4 %
Commercial real estate  1,914,326   1,864,507   1,764,927   1,775,629   1,745,855  2.7   9.6  
One-to-four family ― mixed-use property  560,885   561,100   563,679   571,795   579,100     (3.1) 
One-to-four family ― residential  233,469   242,729   248,226   268,255   280,343  (3.8)  (16.7) 
Co-operative apartments  7,015   8,130   8,248   8,316   7,804  (13.7)  (10.1) 
Construction  63,651   72,148   68,488   59,761   71,464  (11.8)  (10.9) 
Mortgage Loans  5,387,538   5,280,472   5,154,138   5,200,782   5,183,546  2.0   3.9  
                      
Small Business Administration (1)  27,712   40,572   59,331   93,811   148,855  (31.7)  (81.4) 
Commercial business and other  1,532,497   1,431,417   1,387,155   1,339,273   1,294,688  7.1   18.4  
Nonmortgage loans  1,560,209   1,471,989   1,446,486   1,433,084   1,443,543  6.0   8.1  
                      
Net unamortized premiums and unearned loan fees (2)  8,927   7,932   6,640   4,239   3,265  12.5   173.4  
Allowance for credit losses  (41,268)  (39,424)  (37,433)  (37,135)  (36,363) 4.7   13.5  
Net loans $6,915,406  $6,720,969  $6,569,831  $6,600,970  $6,593,991  2.9 % 4.9 %
                      

____________
(1) Includes $9.6 million, $22.2 million, $43.2 million, $77.4 million, and $130.8 million of PPP loans at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, respectively.
(2) Includes $5.8 million, $6.6 million, $6.9 million, $8.0 million, and $8.6 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, respectively.


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

Loan Closings

  For the three months ended  For the nine months ended
  September 30, June 30, March 31, December 31, September 30,   September 30, September 30,
(In thousands) 2022 2022 2022 2021 2021  2022 2021
Multifamily residential $173,980 $136,902 $98,180 $79,648 $41,850  $409,062 $167,316
Commercial real estate  77,777  164,826  45,102  64,916  48,447   287,705  103,566
One-to-four family – mixed-use property  12,383  12,228  8,498  12,440  12,823   33,109  28,670
One-to-four family – residential  4,102  4,211  9,237  5,162  2,761   17,550  65,386
Co-operative apartments      24  413     24  
Construction  7,170  8,319  8,802  17,033  8,687   24,291  21,091
Mortgage Loans  275,412  326,486  169,843  179,612  114,568   771,741  386,029
                       
Small Business Administration (1)  46  2,750    270  415   2,796  143,093
Commercial business and other  188,202  174,551  159,476  182,858  128,946   522,229  362,100
Nonmortgage Loans  188,248  177,301  159,476  183,128  129,361   525,025  505,193
                       
Total Closings $463,660 $503,787 $329,319 $362,740 $243,929  $1,296,766 $891,222

____________
(1) Includes $138.7 million of PPP closings for the nine months ended September 30, 2021.

Weighted Average Rate on Loan Closings

  For the three months ended
  September 30, June 30, March 31, December 31, September 30,
Loan type 2022 2022 2022 2021 2021
Mortgage loans 4.37% 3.76% 3.61% 3.77% 3.80%
Nonmortgage loans 4.93  4.21  3.27  3.24  3.49 
Total loans 4.60% 3.92% 3.44% 3.51% 3.64%
                


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

  For the three months ended  For the nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30,  September 30,
(Dollars in thousands) 2022 2022 2022 2021 2021  2022  2021
Allowance for credit losses                              
Beginning balances $39,424   $37,433   $37,135   $36,363   $42,670     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)         (101) 
One-to-four family – residential  2    (2)   (2)   (3)   (147)    (2)    (154) 
Small Business Administration  (12)   13    1,015    (7)   (8)    1,016     (27) 
Taxi medallion      (435)   (12)       (1,235)    (447)    1,301  
Commercial business and other  300    (76)   (66)   (20)   894     158     2,032  
Total  290    (501)   935    (29)   (619)    724     3,148  
                               
Provision (benefit) for loan losses  2,134    1,490    1,233    743    (6,926)    4,857     (5,642) 
                               
Ending balance $41,268   $39,424   $37,433   $37,135   $36,363    $41,268    $36,363  
                               
Gross charge-offs $324   $50   $1,036   $7   $1,019    $1,410    $5,127  
Gross recoveries  34    551    101    36    1,638     686     1,979  
                               
Allowance for credit losses to gross loans  0.59 %  0.58 %  0.57 %  0.56 %  0.55 %   0.59 %   0.55 %
Net loan charge-offs (recoveries) to average loans  0.02    (0.03)   0.06        (0.04)    0.01     0.06  


Nonperforming Assets

  September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2022 2022 2022 2021 2021
Loans 90 Days Or More Past Due and Still Accruing:                    
Commercial real estate $2,000  $  $  $  $ 
Construction              873 
Commercial business and other     100         1,052 
Total  2,000   100         1,925 
                     
Nonaccrual Loans:                    
Multifamily residential  3,414   3,414   3,414   2,431   4,192 
Commercial real estate  1,851   242   5   613   613 
One-to-four family - mixed-use property (1)  790   790   790   1,309   2,204 
One-to-four family - residential  4,655   5,055   7,387   7,725   7,807 
Construction     856          
Small Business Administration  937   937   937   937   976 
Commercial business and other(1)  15,356   16,554   1,533   1,918   2,500 
Total  27,003   27,848   14,066   14,933   18,292 
                     
Total Nonperforming Loans (NPLs)  29,003   27,948   14,066   14,933   20,217 
                     
Total Nonaccrual HTM Securities  20,981   20,981          
                     
Total Nonperforming Assets $49,984  $48,929  $14,066  $14,933  $20,217 
                     
Nonperforming Assets to Total Assets  0.58%  0.59%  0.17%  0.19%  0.25%
Allowance for Credit Losses to NPLs  142.3%  141.1%  266.1%  248.7%  179.9%

____________
(1) Not included in the above analysis are nonaccrual performing TDR one-to-four family - mixed use property loans totaling $0.2 million in 3Q22 and $0.3 million each in 2Q22, 1Q22, 4Q21, and 3Q21; nonaccrual performing TDR commercial business loans totaling $2.9 million in 3Q22, $2.8 million in 2Q22 and 1Q22, less than $0.1 million each in 4Q21 and 3Q21.


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

Non-cash Fair Value Adjustments to GAAP Earnings

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

Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Core Noninterest Income, Core Noninterest Expense and Tangible Book Value per common share are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and noninterest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as 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 nine months ended
(Dollars in thousands,  September 30, June 30, March 31, December 31, September 30,   September 30, September 30,
except per share data) 2022 2022 2022 2021 2021   2022 2021
                               
GAAP income before income taxes $32,422   $34,971   $24,640   $22,826   $34,812     $92,033   $86,452  
                               
Net (gain) loss from fair value adjustments (Noninterest income (loss))  (5,626)   (2,533)   1,809    5,140    2,289      (6,350)   7,855  
Net (gain) loss on sale of securities (Noninterest income (loss))                  10          (113) 
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)
  (28)   60    129    (1,122)   (194)     161    (957) 
Net amortization of purchase accounting adjustments (Various)  (650)   (237)   (924)   (324)   (958)     (1,811)   (2,165) 
Merger (benefit) expense (Various)              (17)   2,096          2,579  
                               
Core income before taxes  26,118    30,725    25,654    26,503    38,055      82,497    93,030  
                               
Provision for income taxes for core income  7,165    9,207    6,685    5,535    10,226      23,057    25,234  
                               
Core net income $18,953   $21,518   $18,969   $20,968   $27,829     $59,440   $67,796  
                               
GAAP diluted earnings per common share $0.76   $0.81   $0.58   $0.58   $0.81     $2.15   $2.02  
Net (gain) loss from fair value adjustments, net of tax  (0.13)   (0.06)   0.04    0.13    0.05      (0.15)   0.18  
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) 
Net amortization of purchase accounting adjustments, net of tax  (0.02)   (0.01)   (0.02)   (0.01)   (0.02)