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Flushing Financial Corporation Reports 4Q22 GAAP EPS of $0.34 and Core EPS of $0.57; Full Year 2022 GAAP EPS of $2.50 and Core EPS of $2.49

John R. Buran, President and CEO Commentary

UNIONDALE, N.Y., Jan. 26, 2023 (GLOBE NEWSWIRE) -- The Company reported fourth quarter 2022 GAAP EPS of $0.34, down 41.4% YoY, with ROAA of 0.48%, and ROAE of 6.06%. Core 4Q22 EPS was $0.57, a decrease of 14.9% YoY, with ROAA of 0.82% and ROAE of 10.29%. Full year 2022 GAAP EPS was $2.50, down 3.5% YoY with ROAA of 0.93% and ROAE of 11.44%. Core 2022 EPS was $2.49, a decline of 11.4% YoY with ROAA of 0.92% and ROAE of 11.42%.

“The Company recorded its second-best core earnings for 2022 despite the aggressive Fed movements and resultant net interest margin compression. The net interest margin compression is expected to be temporary and remain until the Fed ceases rate moves with recovery on a lag as funding pressures ease and loans reprice upwards. During the quarter, the yield on new loan originations totaled 6.10%, up 150 basis points QoQ and 259 basis points YoY. Average loans and deposits increased 4.9% and 3.4% respectively, YoY in 4Q22. Credit quality remains a hallmark of the Company with net charge-offs of only 5 basis points for the quarter and 2 basis points for the year as the real estate portfolio has strong debt service coverage ratios and low loan to values. The Company has a long history of solid credit quality. During the quarter, we sold $84.2 million of investment securities with an average yield of 1.17% recognizing a $10.9 million loss. The proceeds will be redeployed into higher yielding assets as we prepare for 2023 and beyond.”

- John R. Buran, President and CEO

Loan Growth of 4.4% YoY; NIM Declined QoQ. Period end net loans increased 4.4% YoY, with business loans comprising 38.3% of the growth; loans declined slightly QoQ. Loan closings of $225.2 million decreased 37.9% YoY, while repayment speeds declined both YoY and QoQ. Management has focused on full banking relationships choosing to forgo transactional business. Net interest income of $54.2 million decreased 13.5% YoY and 11.4% QoQ, primarily due to the increase in funding costs. NIM FTE was 2.70% in 4Q22 compared to 3.07% in 3Q22 and 3.29% a year ago. Core NIM FTE was 2.63% in 4Q22 compared to 3.03% in 3Q22 and 3.21% in 4Q21. Net charge-offs were only 5 bps in 4Q22, which is consistent with the loan portfolio having an average LTV <37%.

71% of 2022 Earnings Returned to Shareholders; TCE/TA1 Improves QoQ. The Company repurchased 374,862 shares of common stock at an average price of $20.16 during the quarter. Book value and tangible book value per share were $22.97 and $22.31, respectively, while TCE/TA was up 20 bps to 7.82% at December 31, 2022, compared to 7.62% at September 30, 2022.

Key Financial Metrics2


  4Q22
  3Q22
 2Q22 1Q22
 4Q21
  2022  2021
GAAP:                       
EPS $0.34   $0.76  $0.81  $0.58  $0.58   $2.50   $2.59 
ROAA (%) 0.48   1.11  1.22  0.91  0.89   0.93   1.00 
ROAE (%) 6.06   13.91  15.00  10.83  10.77   11.44   12.60 
NIM FTE3(%) 2.70   3.07  3.35  3.36  3.29   3.11   3.24 
Core:                       
EPS $0.57   $0.62  $0.70  $0.61  $0.67   $2.49   $2.81 
ROAA (%) 0.82   0.90  1.05  0.94  1.04   0.92   1.09 
ROAE (%) 10.29   11.24  12.90  11.27  12.49   11.42   13.68 
Core NIM FTE (%) 2.63   3.03  3.33  3.31  3.21   3.07   3.17 
Credit Quality:                       
NPAs/Loans&REO (%) 0.77   0.72  0.72  0.21  0.23   0.77   0.23 
ACLs/Loans (%) 0.58   0.59  0.58  0.57  0.56   0.58   0.56 
ACLs/NPLs (%) 124.89   142.29  141.06  266.12  248.66   124.89   248.66 
NCOs/Avg Loans (%) 0.05   0.02  (0.03) 0.06  -   0.02   0.05 
Balance Sheet:                       
Avg Loans ($B) $6.9   $6.9  $6.6  $6.6  $6.6   $6.7   $6.6 
Avg Dep ($B) $6.7   $6.3  $6.4  $6.4  $6.5   $6.5   $6.4 
Book Value/Share $22.97   $22.47  $22.38  $22.26  $22.26   $22.97   $22.26 
Tangible BV/Share $22.31   $21.81  $21.71  $21.61  $21.61   $22.31   $21.61 
TCE/TA (%) 7.82   7.62  7.82  8.05  8.22   7.82   8.22 

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”)

4Q22 Highlights
  • Period end net loans were stable QoQ and increased 4.4% YoY; loan closings were $225.2 million with a rate of 6.10% in 4Q22, down 51.4% QoQ and 37.9% YoY, while the yield on closings increased 150 bps QoQ and 259 bps YoY
  • Average deposits, including mortgage escrow, increased 6.4% QoQ and 3.4% YoY to $6.7 billion, with core deposits comprising 79.8% of total average deposits
  • Loan pipeline decreased 41.3% YoY to $252.2 million reflecting higher rates and greater client selectivity
  • $84.2 million of mortgage-based securities were sold at a loss of $10.9 million ($0.27 per share, net of tax) in 4Q22
  • Net interest income decreased 11.4% QoQ and 13.5% YoY to $54.2 million; Core net interest income declined 12.4% QoQ and 13.4% YoY to $52.9 million
  • Net interest margin FTE decreased 37 bps QoQ and 59 bps YoY to 2.70%; Core net interest margin FTE decreased 40 bps QoQ and 58 bps YoY to 2.63%; The decline in GAAP and Core NIM was primarily driven by our liability sensitive balance sheet resulting in liabilities repricing faster than assets; after a lag, the NIM is expected to expand when the Fed stops raising rates as loans continue to reprice higher, while the cost of funding is expected to remain steady
  • NPAs increased slightly to $53.4 million from $50.0 million at 3Q22 and from $14.9 million at 4Q21
  • Provision for credit losses was negligible in 4Q22 compared to $0.8 million in 4Q21; net charge-offs were $0.8 million in 4Q22 compared to net recoveries of $29 thousand in 4Q21
  • Tangible Common Equity to Tangible Assets was 7.82% up from 7.62% at 3Q22; the change in accumulated other comprehensive loss, net of taxes positively impacted this ratio by 11 bps in 4Q22
  • Repurchased 374,862 shares at an average price of $20.16; dividends and share repurchases were 71% of net income in 2022

Income Statement Highlights


              YoY QoQ
($000s, except EPS)  4Q22  3Q22 2Q22 1Q22 4Q21 Change Change
                 
Net Interest Income  $54,201   $61,206  $64,730  $63,479  $62,674  (13.5)% (11.4)%
Provision (Benefit) for Credit Losses  (12)  2,145  1,590  1,358  761  (101.6)  (100.6) 
Noninterest Income (Loss)  (7,652)  8,995  7,353  1,313  (280) 2,632.9   (185.1) 
Noninterest Expense  33,742   35,634  35,522  38,794  38,807  (13.1)  (5.3) 
Income Before Income Taxes  12,819   32,422  34,971  24,640  22,826  (43.8)  (60.5) 
Provision for Income Taxes  2,570   8,980  9,936  6,421  4,743  (45.8)  (71.4) 
Net Income  $10,249   $23,442  $25,035  $18,219  $18,083  (43.3)  (56.3) 
Diluted EPS  $0.34   $0.76  $0.81  $0.58  $0.58  (41.4)  (55.3) 
Avg. Diluted Shares (000s)  30,420   30,695  30,937  31,254  31,353  (3.0)  (0.9) 
                 
Core Net Income1  $17,399   $18,953  $21,518  $18,969  $20,968  (17.0)  (8.2) 
Core EPS1  $0.57   $0.62  $0.70  $0.61  $0.67  (14.9)  (8.1) 

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $54.2 million in 4Q22 compared to $61.2 million in 3Q22, $64.7 million in 2Q22, $63.5 million in 1Q22, and $62.7 million in 4Q21. Net interest income declined 1.8% in 2022 to $243.6 million compared to $248.0 million in 2021.

  • Net interest margin, FTE (“NIM”) of 2.70% decreased 59 bps YoY and 37 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 $2.4 million (12 bps to the NIM) in 4Q22 compared to $2.2 million (11 bps) in 3Q22, $2.6 million (13 bps) in 2Q22, $2.6 million (14 bps) in 1Q22, and $3.1 million (16 bps) in 4Q21
  • Excluding the items in the previous bullet, net interest margin was 2.58% in 4Q22, 2.96% in 3Q22, 3.22% in both 2Q22 and 1Q22, and 3.13% in 4Q21

The Company recorded a benefit for credit losses of $12 thousand in 4Q22, compared to 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. The provision for credit losses was $5.1 million in 2022 compared to a benefit for credit losses of $4.9 million in 2021.

  • Net charge-offs (recoveries) were $0.8 million in 4Q22 (5 bps of average loans), $0.3 million in 3Q22 (2 bps of average loans), $(0.5) million in 2Q22 ((3) bps of average loans), $0.9 million in 1Q22 (6 bps of average loans), and $(29) thousand in 4Q21 (negligible as compared to average loans)

Noninterest income (loss) was $(7.7) million in 4Q22, $9.0 million in 3Q22, $7.4 million in 2Q22, $1.3 million in 1Q22, and $(0.3) million in 4Q21. Noninterest income was $10.0 million in 2022 compared to $3.7 million in 2021.

  • Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds are being reinvested into securities that are expected to have an earn back period of 3 years or less
  • Noninterest income included net gains (losses) from fair value adjustments of $(0.6) million in 4Q22 (($0.02) per share, net of tax), $5.6 million in 3Q22 ($0.13 per share, net of tax), $2.5 million in 2Q22 ($0.06 per share, net of tax), $(1.8) million in 1Q22 ($(0.04) per share, net of tax), and $(5.1) million in 4Q21 ($(0.13) per share, net of tax)
  • Life insurance proceeds were $0.3 million ($0.01 per share) in 4Q22 and $1.5 million ($0.05 per share) in 2Q22
  • Absent all above items and other immaterial adjustments, core noninterest income was $3.5 million in 4Q22, down 27.4% YoY but up 4.7% 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; absent the effects of this dividend, core noninterest income increased 23% YoY

Noninterest expense totaled $33.7 million in 4Q22 (a decrease of 13.1% YoY and 5.3% QoQ) compared to $35.6 million in 3Q22, $35.5 million in 2Q22, and $38.8 million in both 1Q22 and 4Q21. Noninterest expense was $143.7 million in 2022 compared to $147.3 million in 2021.

  • Salaries and employee benefits includes $2.8 million benefit from a lower discount rate for certain benefit plans and $1.4 million benefit from an Employee Retention Tax Credit refund in 4Q22
  • 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 of increased compensation and benefits for all employees due to a record 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
  • Excluding the effects of the merger and other immaterial adjustments, core operating expenses were $33.6 million in 4Q22, down 13.1% YoY and 5.3% QoQ; excluding the Employee Retention Tax Credit refund and the benefit from the lower discount rate, 4Q22 core noninterest expense would have been $37.9 million
  • GAAP noninterest expense to average assets was 1.58% in 4Q22, 1.69% in 3Q22, 1.73% in 2Q22, 1.93% in 1Q22, and 1.92% in 4Q21

The provision for income taxes was $2.6 million in 4Q22, compared to $9.0 million in 3Q22, $9.9 million in 2Q22, $6.4 million in 1Q22, and $4.7 million in 4Q21. Provision for income taxes was $27.9 million in 2022 compared to $27.5 million in 2021.

  • The effective tax rate was 20.0% in 4Q22, 27.7% in 3Q22, 28.4% in 2Q22, 26.1% in 1Q22, and 20.8% in 4Q21; for the year, the effective tax rate was 26.6% compared to 25.2% in 2021
  • The 4Q22 effective tax rate declined due to preferential tax items having a larger impact due to lower levels of pre-tax income
  • The 2Q22 effective tax rate includes a loss of 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
  4Q22  3Q22 2Q22 1Q22 4Q21 Change Change
Average Loans And Deposits ($MM)                 
Loans $6,881   $6,861  $6,640  $6,579  $6,558  4.9 % 0.3 %
Deposits 6,678   6,277  6,441  6,410  6,459  3.4   6.4  
                  
Credit Quality ($000s)                 
Nonperforming Loans $32,382   $29,003  $27,948  $14,066  $14,934  116.8 % 11.7 %
Nonperforming Assets 53,363   49,984  48,929  14,066  14,934  257.3   6.8  
Criticized and Classified Loans 68,092   61,684  57,145  59,548  57,650  18.1   10.4  
Criticized and Classified Assets 89,073   82,665  78,125  80,527  78,628  13.3   7.8  
Troubled Debt Restructured Loans 11,779   14,757  14,758  15,124  12,714  (7.4)  (20.2) 
Allowance for Credit Losses/Loans (%) 0.58   0.59  0.58  0.57  0.56  2 bps (1)bp
                  
Capital                 
Book Value/Share $22.97   $22.47  $22.38  $22.26  $22.26  3.2 % 2.2 %
Tangible Book Value/Share 22.31   21.81  21.71  21.61  21.61  3.2   2.3  
Tang. Common Equity/Tang. Assets (%) 7.82   7.62  7.82  8.05  8.22  (40)bps 20 bps
Leverage Ratio (%) 8.61   8.74  8.91  9.05  8.98  (37)  (13) 

Average loans were $6.9 billion, an increase of 4.9% YoY and 0.3% QoQ. Average loans for 2022 were $6.7 billion, an 1.5% increase from $6.6 billion in 2021.

  • Period end net loans totaled $6.9 billion, up 4.4% YoY, but down 0.3% QoQ
  • Total loan closings were $225.2 million in 4Q22, $463.7 million in 3Q22, $503.8 million in 2Q22, $329.3 million in 1Q22, and $362.7 million in 4Q21
  • The loan pipeline was $252.2 million at December 31, 2022, down 41.3% YoY and 18.4% QoQ

Average Deposits totaled $6.7 billion, increasing 3.4% YoY and 6.4% QoQ. Average deposits were $6.5 billion in 2022, up 0.6% compared to $6.4 billion in 2021.

  • Average core deposits (non-CD deposits) were 79.8% of total average deposits (including escrow deposits) in 4Q22, compared to 85.3% a year ago
  • Average noninterest bearing deposits increased 0.3% YoY in 4Q22, but decreased 6.7% QoQ and comprised 14.7% of total average deposits (including escrow deposits) in 4Q22 compared to 15.1% a year ago

Credit Quality: Nonperforming loans held at the end of each quarter totaled $32.4 million at 4Q22, $29.0 million at 3Q22, $27.9 million at 2Q22, $14.1 million at 1Q22, and $14.9 million at 4Q21.

  • Criticized and classified loans were 98 bps of gross loans at 4Q22 compared to 89 bps at 3Q22, 85 bps at 2Q22, 90 bps at 1Q22, and 87 bps at 4Q21
  • Over 88% of gross loans are collateralized by real estate with an average loan-to-value ratio of <37% as of December 31, 2022
  • Allowance for credit losses were 124.9% of nonperforming loans at 4Q22 compared to 142.3% at 3Q22 and 248.7% a year ago

Capital: Book value per common share was $22.97 at 4Q22, up 2.2% QoQ and 3.2% YoY; tangible book value per common share, a non-GAAP measure, was $22.31 at 4Q22, up 2.3% QoQ and 3.2% YoY.

  • The Company paid a dividend of $0.22 per share and repurchased 374,862 shares at an average price of $20.16 in 4Q22
  • At the end of 4Q22, 594,462 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 7.82% at 4Q22 compared to 7.62% at 3Q22 and 8.22% at 4Q21
  • The Company and the Bank remain well capitalized under all applicable regulatory requirements
  • The leverage ratio was 8.61% at 4Q22 compared to 8.74% at 3Q22 and 8.98% at 4Q21

Conference Call Information And First 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 Friday, January 27, 2023, at 9:30 AM (ET) to discuss the Company’s fourth quarter and full year 2022 results and strategy.
  • Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
  • Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=54kQH0yX
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 8079034
  • The conference call will be simultaneously webcast and archived

First Quarter 2023 Earnings Release Date:

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

A detailed announcement will be issued prior to the first 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 year ended 
  December 31, September 30, June 30, March 31, December 31,  December 31, December 31, 
(Dollars in thousands, except per share data) 2022 2022 2022 2022 2021  2022 2021 
Performance Ratios(1)                            
Return on average assets  0.48%  1.11%  1.22 %  0.91%  0.89 %   0.93% 1.00%
Return on average equity  6.06   13.91   15.00    10.83   10.77     11.44  12.60 
Yield on average interest-earning assets(2)  4.44   4.10   3.85    3.77   3.77     4.05  3.77 
Cost of average interest-bearing liabilities  2.11   1.25   0.60    0.50   0.58     1.13  0.63 
Cost of funds  1.84   1.08   0.52    0.43   0.50     0.98  0.55 
Net interest rate spread during period(2)  2.33   2.85   3.25    3.27   3.19     2.92  3.14 
Net interest margin(2)  2.70   3.07   3.35    3.36   3.29     3.11  3.24 
Noninterest expense to average assets  1.58   1.69   1.73    1.93   1.92     1.73  1.81 
Efficiency ratio(3)  59.55   55.68   52.27    58.87   58.66     55.22  55.72 
Average interest-earning assets to
average interest-bearing liabilities
  1.21X  1.22X  1.22 X  1.22X  1.22 X   1.22X 1.20X
                             
Average Balances                            
Total loans, net $6,881,245  $6,861,463  $6,640,331   $6,578,680  $6,558,285    $6,741,590 $6,644,317 
Total interest-earning assets  8,045,691   7,979,070   7,740,683    7,570,373   7,627,256     7,835,654  7,672,954 
Total assets  8,518,019   8,442,657   8,211,763    8,049,470   8,090,701     8,307,137  8,143,372 
Total due to depositors  5,616,064   5,157,715   5,298,855    5,336,983   5,397,802     5,352,635  5,416,020 
Total interest-bearing liabilities  6,662,209   6,553,087   6,337,374    6,220,510   6,276,221     6,444,805  6,398,666 
Stockholders' equity  676,165   674,282   667,456    673,012   671,474     672,742  648,946 
                             
Per Share Data                            
Book value per common share(4) $22.97  $22.47  $22.38   $22.26  $22.26    $22.97 $22.26 
Tangible book value per common share(5) $22.31  $21.81  $21.71   $21.61  $21.61    $22.31 $21.61 
                             
Stockholders' Equity                            
Stockholders' equity $677,157  $670,719  $670,812   $675,813  $679,628    $677,157 $679,628 
Tangible stockholders' equity  657,504   650,936   650,894    656,085   659,758     657,504  659,758 
                             
Consolidated Regulatory Capital Ratios                            
Tier 1 capital $746,880  $749,526  $739,776   $731,536  $726,174    $746,880 $726,174 
Common equity Tier 1 capital  698,258   701,532   686,258    675,434   671,494     698,258  671,494 
Total risk-based capital  975,709   979,021   903,047    892,861   885,469     975,709  885,469 
Risk Weighted Assets  6,640,542   6,689,284   6,522,710    6,232,020   6,182,095     6,640,542  6,182,095 
                             
Tier 1 leverage capital (well capitalized = 5%)  8.61%  8.74%  8.91 %  9.05%  8.98 %   8.61% 8.98%
Common equity Tier 1 risk-based capital
(well capitalized = 6.5%)
  10.52   10.49   10.52    10.84   10.86     10.52  10.86 
Tier 1 risk-based capital
(well capitalized = 8.0%)
  11.25   11.20   11.34    11.74   11.75     11.25  11.75 
Total risk-based capital
(well capitalized = 10.0%)
  14.69   14.64   13.84    14.33   14.32     14.69  14.32 
                             
Capital Ratios                            
Average equity to average assets  7.94%  7.99%  8.13 %  8.36%  8.30 %   8.10% 7.97%
Equity to total assets  8.04   7.84   8.04    8.27   8.45     8.04  8.45 
Tangible common equity to tangible assets(6)  7.82   7.62   7.82    8.05   8.22     7.82  8.22 
                             
Asset Quality                            
Nonaccrual loans(7) $29,782  $27,003  $27,848   $14,066  $14,933    $29,782 $14,933 
Nonperforming loans  32,382   29,003   27,948    14,066   14,933     32,382  14,933 
Nonperforming assets  53,363   49,984   48,929    14,066   14,933     53,363  14,933 
Net charge-offs (recoveries)  811   290   (501)   935   (29)    1,535  3,119 
                             
Asset Quality Ratios                            
Nonperforming loans to gross loans  0.47%  0.42%  0.41 %  0.21%  0.23 %   0.47% 0.23%
Nonperforming assets to total assets  0.63   0.58   0.59    0.17   0.19     0.63  0.19 
Allowance for credit losses to gross loans  0.58   0.59   0.58    0.57   0.56     0.58  0.56 
Allowance for credit losses to
nonperforming assets
  75.79   82.56   80.57    266.12   248.66     75.79  248.66 
Allowance for credit losses to
nonperforming loans
  124.89   142.29   141.06    266.12   248.66     124.89  248.66 
Net charge-offs (recoveries) to average loans  0.05   0.02   (0.03)   0.06        0.02  0.05 
                             
Full-service customer facilities  25   25   25    24   24     25  24 

(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 year ended
 December 31, September 30, June 30, March 31, December 31,   December 31, December 31,
(In thousands, except per share data)2022 2022 2022 2022 2021   2022 2021
Interest and Dividend Income                      
Interest and fees on loans$81,033  $75,546 $69,192 $67,516  $68,113    $293,287  $274,331 
Interest and dividends on securities:                      
Interest 6,511   5,676  4,929  3,745   3,536     20,861   13,999 
Dividends 24   17  11  8   7     60   29 
Other interest income 1,702   506  159  51   74     2,418   203 
Total interest and dividend income 89,270   81,745  74,291  71,320   71,730     316,626   288,562 
                       
Interest Expense                      
Deposits 27,226   11,965  4,686  3,408   3,975     47,285   20,324 
Other interest expense 7,843   8,574  4,875  4,433   5,081     25,725   20,269 
Total interest expense 35,069   20,539  9,561  7,841   9,056     73,010   40,593 
                       
Net Interest Income 54,201   61,206  64,730  63,479   62,674     243,616   247,969 
Provision (benefit) for credit losses (12)  2,145  1,590  1,358   761     5,081   (4,944)
Net Interest Income After Provision (Benefit) for Credit Losses 54,213   59,061  63,140  62,121   61,913     238,535   252,913 
                       
Noninterest Income (Loss)                      
Banking services fee income 1,231   1,351  1,166  1,374   1,142     5,122   5,965 
Net gain (loss) on sale of securities (10,948)              (10,948)  113 
Net gain on sale of loans 46     73     46     119   335 
Net gain on disposition of assets 104               104   621 
Net gain (loss) from fair value adjustments (622)  5,626  2,533  (1,809)  (5,140)    5,728   (12,995)
Federal Home Loan Bank of New York
stock dividends
 658   538  407  397   417     2,000   2,097 
Life insurance proceeds 286     1,536          1,822    
Bank owned life insurance 1,126   1,132  1,115  1,114   1,023     4,487   4,044 
Other income 467   348  523  237   2,232     1,575   3,507 
Total noninterest income (loss) (7,652)  8,995  7,353  1,313   (280)    10,009   3,687 
                       
Noninterest Expense                      
Salaries and employee benefits 18,178   21,438  21,109  23,649   25,223     84,374   88,310 
Occupancy and equipment 3,701   3,541  3,760  3,604   3,579     14,606   14,002 
Professional services 2,130   2,570  2,285  2,222   1,152     9,207   7,439 
FDIC deposit insurance 485   738  615  420   391     2,258   2,951 
Data processing 1,421   1,367  1,383  1,424   1,757     5,595   7,044 
Depreciation and amortization 1,535   1,488  1,447  1,460   1,521     5,930   6,425 
Other real estate owned/foreclosure expense 35   143  32  84   129     294   323 
Other operating expenses 6,257   4,349  4,891  5,931   5,055     21,428   20,828 
Total noninterest expense 33,742   35,634  35,522  38,794   38,807     143,692   147,322 
                       
Income Before Provision for Income Taxes 12,819   32,422  34,971  24,640   22,826     104,852   109,278 
                       
Provision for Income Taxes 2,570   8,980  9,936  6,421   4,743     27,907   27,485 
                       
Net Income$10,249  $23,442 $25,035 $18,219  $18,083    $76,945  $81,793 
                       
Basic earnings per common share$0.34  $0.76 $0.81 $0.58  $0.58    $2.50  $2.59 
Diluted earnings per common share$0.34  $0.76 $0.81 $0.58  $0.58    $2.50  $2.59 
Dividends per common share$0.22  $0.22 $0.22 $0.22  $0.21    $0.88  $0.84 
                       
Basic average shares 30,420   30,695  30,937  31,254   31,353     30,823   31,550 
Diluted average shares 30,420   30,695  30,937  31,254   31,353     30,823   31,550 
                            


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2022 2022 2022 2022 2021
ASSETS               
Cash and due from banks $151,754  $164,693  $137,026  $186,407  $81,723 
Securities held-to-maturity:               
Mortgage-backed securities  7,875   7,880   7,885   7,890   7,894 
Other securities  65,836   66,032   66,230   66,327   49,974 
Securities available for sale:               
Mortgage-backed securities  384,283   468,366   510,934   553,828   572,184 
Other securities  351,074   351,495   346,720   286,041   205,052 
Loans  6,934,769   6,956,674   6,760,393   6,607,264   6,638,105 
Allowance for credit losses  (40,442)  (41,268)  (39,424)  (37,433)  (37,135)
Net loans  6,894,327   6,915,406   6,720,969   6,569,831   6,600,970 
Interest and dividends receivable  45,048   42,571   38,811   37,308   38,698 
Bank premises and equipment, net  21,750   22,376   22,285   22,752   23,338 
Federal Home Loan Bank of New York stock  45,842   62,489   50,017   33,891   35,937 
Bank owned life insurance  213,131   212,353   211,220   211,867   210,754 
Goodwill  17,636   17,636   17,636   17,636   17,636 
Core deposit intangibles  2,017   2,147   2,282   2,420   2,562 
Right of use asset  43,289   44,885   46,687   48,475   50,200 
Other assets  179,084   179,090   160,885   125,160   148,989 
Total assets $8,422,946  $8,557,419  $8,339,587  $8,169,833  $8,045,911 
                
LIABILITIES               
Deposits $6,437,183  $6,054,761  $6,350,000  $6,373,400  $6,333,532 
Mortgagors' escrow deposits  48,159   70,544   57,577   79,495   51,913 
Borrowed funds  1,052,973   1,572,830   1,089,621   877,122   815,544 
Operating lease liability  46,125   48,330   50,346   52,292   54,155 
Other liabilities  161,349   140,235   121,231   111,711   111,139 
Total liabilities  7,745,789   7,886,700   7,668,775   7,494,020   7,366,283 
                
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  264,332   263,755   262,860   261,837   263,375 
Treasury stock  (98,535)  (90,977)  (88,342)  (79,834)  (75,293)
Retained earnings  547,507   543,894   527,217   508,973   497,889 
Accumulated other comprehensive loss, net of taxes  (36,488)  (46,294)  (31,264)  (15,504)  (6,684)
Total stockholders' equity  677,157   670,719   670,812   675,813   679,628 
                
Total liabilities and stockholders' equity $8,422,946  $8,557,419  $8,339,587  $8,169,833  $8,045,911 
                
(In thousands)               
Issued shares  34,088   34,088   34,088   34,088   34,088 
Outstanding shares  29,476   29,851   29,980   30,367   30,526 
Treasury shares  4,612   4,237   4,108   3,721   3,561 
                     


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

AVERAGE BALANCE SHEETS
(Unaudited)

  For the three months ended   For the year ended
  December 31,  September 30, June 30, March 31, December 31,    December 31,  December 31, 
(In thousands) 2022 2022 2022 2022 2021   2022 2021
Interest-earning Assets:                       
Mortgage loans, net $5,338,612 $5,340,694 $5,178,029 $5,152,070 $5,140,233   $5,253,104 $5,146,195
Other loans, net  1,542,633  1,520,769  1,462,302  1,426,610  1,418,052    1,488,486  1,498,122
Total loans, net  6,881,245  6,861,463  6,640,331  6,578,680  6,558,285    6,741,590  6,644,317
Taxable securities:                       
Mortgage-backed securities  549,204  568,854  594,923  580,670  595,538    573,314  550,136
Other securities  371,897  362,629  333,158  226,744  207,482    324,112  239,208
Total taxable securities  921,101  931,483  928,081  807,414  803,020    897,426  789,344
Tax-exempt securities:                       
Other securities  67,022  67,211  67,315  57,611  50,834    64,822  50,831
Total tax-exempt securities  67,022  67,211  67,315  57,611  50,834    64,822  50,831
Interest-earning deposits and
federal funds sold
  176,323  118,913  104,956  126,668  215,117    131,816  188,462
Total interest-earning assets  8,045,691  7,979,070  7,740,683  7,570,373  7,627,256    7,835,654  7,672,954
Other assets  472,328  463,587  471,080  479,097  463,445    471,483  470,418
Total assets $8,518,019 $8,442,657 $8,211,763 $8,049,470 $8,090,701   $8,307,137 $8,143,372
                        
Interest-bearing Liabilities:                       
Deposits:                       
Savings accounts $146,598 $154,545 $156,785 $156,592 $154,471   $153,605 $157,640
NOW accounts  1,972,134  1,808,608  2,089,851  2,036,914  2,115,619    1,976,238  2,165,762
Money market accounts  2,146,649  2,136,829  2,231,743  2,253,630  2,177,928    2,191,768  2,059,431
Certificate of deposit accounts  1,350,683  1,057,733  820,476  889,847  949,784    1,031,024  1,033,187
Total due to depositors  5,616,064  5,157,715  5,298,855  5,336,983  5,397,802    5,352,635  5,416,020
Mortgagors' escrow accounts  82,483  68,602  97,496  71,509  84,617    80,021  77,552
Total interest-bearing deposits  5,698,547  5,226,317  5,396,351  5,408,492  5,482,419    5,432,656  5,493,572
Borrowings  963,662  1,326,770  941,023  812,018  793,802    1,012,149  905,094
Total interest-bearing liabilities  6,662,209  6,553,087  6,337,374  6,220,510  6,276,221    6,444,805  6,398,666
Noninterest-bearing demand deposits  979,836  1,050,296  1,044,553  1,001,571  976,803    1,019,090  922,741
Other liabilities  199,809  164,992  162,380  154,377  166,203    170,500  173,019
Total liabilities  7,841,854  7,768,375  7,544,307  7,376,458  7,419,227    7,634,395  7,494,426
Equity  676,165  674,282  667,456  673,012  671,474    672,742  648,946
Total liabilities and equity $8,518,019 $8,442,657 $8,211,763 $8,049,470 $8,090,701   $8,307,137 $8,143,372
                        
Net interest-earning assets $1,383,482 $1,425,983 $1,403,309 $1,349,863 $1,351,035   $1,390,849 $1,274,288
                        


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)

  For the three months ended  For the year ended
  December 31, September 30, June 30, March 31, December 31,  December 31, December 31,
(Dollars in thousands) 2022 2022 2022 2022 2021  2022 2021
Interest Income:                             
Mortgage loans, net $60,946  $58,374  $54,775   $53,970   $54,260   $228,065  $217,580 
Other loans, net  20,087   17,172   14,417    13,546    13,853    65,222   56,751 
Total loans, net  81,033   75,546   69,192    67,516    68,113    293,287   274,331 
Taxable securities:                             
Mortgage-backed securities  2,425   2,466   2,356    2,167    2,125    9,414   8,335 
Other securities  3,723   2,839   2,090    1,119    993    9,771   4,001 
Total taxable securities  6,148   5,305   4,446    3,286    3,118    19,185   12,336 
Tax-exempt securities:                             
Other securities  489   492   625    591    538    2,197   2,142 
Total tax-exempt securities  489   492   625    591    538    2,197   2,142 
Interest-earning deposits and federal funds sold  1,702   506   159    51    74    2,418   203 
Total interest-earning assets  89,372   81,849   74,422    71,444    71,843    317,087   289,012 
Interest Expense:                             
Deposits:                             
Savings accounts $59  $53  $50   $49   $53   $211  $255 
NOW accounts  9,515   3,640   1,405    793    1,021    15,353   5,453 
Money market accounts  10,532   5,280   1,952    1,275    1,428    19,039   7,271 
Certificate of deposit accounts  7,037   2,948   1,273    1,289    1,471    12,547   7,340 
Total due to depositors  27,143   11,921   4,680    3,406    3,973    47,150   20,319 
Mortgagors' escrow accounts  83   44   6    2    2    135   5 
Total interest-bearing deposits  27,226   11,965   4,686    3,408    3,975    47,285   20,324 
Borrowings  7,843   8,574   4,875    4,433    5,081    25,725   20,269 
Total interest-bearing liabilities  35,069   20,539   9,561    7,841    9,056    73,010   40,593 
Net interest income- tax equivalent $54,303  $61,310  $64,861   $63,603   $62,787   $244,077  $248,419 
Included in net interest income above:                             
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans $1,080  $1,368  $2,281   $1,716   $1,497   $6,445  $6,627 
Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income  936   28   (60)   (129)   1,122    775   2,079 
Purchase accounting adjustments  342   775   367    1,058    462    2,542   3,049 
Interest-earning Assets Yields:                             
Mortgage loans, net  4.57%  4.37%  4.23 %  4.19 %  4.22%   4.34%  4.23%
Other loans, net  5.21   4.52   3.94    3.80    3.91    4.38   3.79 
Total loans, net  4.71   4.40   4.17    4.11    4.15    4.35   4.13 
Taxable securities:                             
Mortgage-backed securities  1.77   1.73   1.58    1.49    1.43    1.64   1.52 
Other securities  4.00   3.13   2.51    1.97    1.91    3.01   1.67 
Total taxable securities  2.67   2.28   1.92    1.63    1.55    2.14   1.56 
Tax-exempt securities:(1)                             
Other securities  2.92   2.93   3.71    4.10    4.23    3.39   4.21 
Total tax-exempt securities  2.92   2.93   3.71    4.10    4.23    3.39   4.21 
Interest-earning deposits and federal funds sold  3.86   1.70   0.61    0.16    0.14    1.83   0.11 
Total interest-earning assets(1)  4.44%  4.10%  3.85 %  3.77 %  3.77%   4.05%  3.77%
Interest-bearing Liabilities Yields:                             
Deposits:                             
Savings accounts  0.16%  0.14%  0.13 %  0.13 %  0.14%   0.14%  0.16%
NOW accounts  1.93   0.81   0.27    0.16    0.19    0.78   0.25 
Money market accounts  1.96   0.99   0.35    0.23    0.26    0.87   0.35 
Certificate of deposit accounts  2.08   1.11   0.62    0.58    0.62    1.22   0.71 
Total due to depositors  1.93   0.92   0.35    0.26    0.29    0.88   0.38 
Mortgagors' escrow accounts  0.40   0.26   0.02    0.01    0.01    0.17   0.01 
Total interest-bearing deposits  1.91   0.92   0.35    0.25    0.29    0.87   0.37 
Borrowings  3.26   2.58   2.07    2.18    2.56    2.54   2.24 
Total interest-bearing liabilities  2.11%  1.25%  0.60 %  0.50 %  0.58%   1.13%  0.63%
                              
Net interest rate spread
(tax equivalent)(1)
  2.33%  2.85%  3.25 %  3.27 %  3.19%   2.92%  3.14%
Net interest margin (tax equivalent)(1)  2.70%  3.07%  3.35 %  3.36 %  3.29%   3.11%  3.24%
Ratio of interest-earning assets to interest-bearing liabilities  1.21X  1.22X  1.22 X  1.22 X  1.22X   1.22X  1.20X

 

_____________________________
(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

                 2022 vs. 2022 vs.
  December 31, September 30, June 30, March 31, December 31, 2022 2021
(Dollars in thousands) 2022 2022 2022 2022 2021 % Change % Change
Noninterest bearing $921,238 $992,378 $1,081,208 $1,041,027 $967,621 (7.2)% (4.8)%
Interest bearing:                     
Certificate of deposit accounts  1,526,338  1,036,107  906,943  886,317  946,575 47.3   61.2  
Savings accounts  143,641  150,552  154,670  158,542  156,554 (4.6)  (8.2) 
Money market accounts  2,099,776  2,113,256  2,229,993  2,362,390  2,342,003 (0.6)  (10.3) 
NOW accounts  1,746,190  1,762,468  1,977,186  1,925,124  1,920,779 (0.9)  (9.1) 
Total interest-bearing deposits  5,515,945  5,062,383  5,268,792  5,332,373  5,365,911 9.0   2.8  
Total deposits $6,437,183 $6,054,761 $6,350,000 $6,373,400 $6,333,532 6.3 % 1.6 %

Loan Composition

                 2022 vs. 2022 vs.
  December 31, September 30, June 30, March 31, December 31, 2022 2021
(Dollars in thousands) 2022 2022 2022 2022 2021 % Change % Change
Multifamily residential $2,601,384  $2,608,192  $2,531,858  $2,500,570  $2,517,026  (0.3)% 3.4 %
Commercial real estate  1,913,040   1,914,326   1,864,507   1,764,927   1,775,629  (0.1)  7.7  
One-to-four family ―
mixed-use property
  554,314   560,885   561,100   563,679   571,795  (1.2)  (3.1) 
One-to-four family ― residential  235,067   233,469   242,729   248,226   268,255  0.7   (12.4) 
Co-operative apartments  6,179   7,015   8,130   8,248   8,316  (11.9)  (25.7) 
Construction  70,951   63,651   72,148   68,488   59,761  11.5   18.7  
Mortgage Loans  5,380,935   5,387,538   5,280,472   5,154,138   5,200,782  (0.1)  3.5  
                      
Small Business Administration(1)  23,275   27,712   40,572   59,331   93,811  (16.0)  (75.2) 
Commercial business and other  1,521,548   1,532,497   1,431,417   1,387,155   1,339,273  (0.7)  13.6  
Nonmortgage loans  1,544,823   1,560,209   1,471,989   1,446,486   1,433,084  (1.0)  7.8  
                      
Net unamortized premiums and
unearned loan fees(2)
  9,011   8,927   7,932   6,640   4,239  0.9   112.6  
Allowance for credit losses  (40,442)  (41,268)  (39,424)  (37,433)  (37,135) (2.0)  8.9  
Net loans $6,894,327  $6,915,406  $6,720,969  $6,569,831  $6,600,970  (0.3)% 4.4 %

_____________________________
(1) Includes $5.2 million, $9.6 million, $22.2 million, $43.2 million, and $77.4 million of PPP loans at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.
(2) Includes $5.4 million, $5.8 million, $6.6 million, $6.9 million, and $8.0 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

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

Loan Closings

  For the three months ended  For the year ended
  December 31,  September 30, June 30, March 31, December 31,   December 31,  December 31, 
(In thousands) 2022 2022 2022 2022 2021  2022 2021
Multifamily residential $65,347 $173,980 $136,902 $98,180 $79,648  $474,409 $246,964
Commercial real estate  20,750  77,777  164,826  45,102  64,916   308,455  168,482
One-to-four family –
mixed-use property
  4,489  12,383  12,228  8,498  12,440   37,598  41,110
One-to-four family – residential  7,485  4,102  4,211  9,237  5,162   25,035  70,548
Co-operative apartments        24  413   24  413
Construction  7,301  7,170  8,319  8,802  17,033   31,592  38,124
Mortgage Loans  105,372  275,412  326,486  169,843  179,612   877,113  565,641
                       
Small Business Administration(1)  665  46  2,750    270   3,461  143,363
Commercial business and other  119,191  188,202  174,551  159,476  182,858   641,420  544,958
Nonmortgage Loans  119,856  188,248  177,301  159,476  183,128   644,881  688,321
                       
Total Closings $225,228 $463,660 $503,787 $329,319 $362,740  $1,521,994 $1,253,962

 

____________________________
(1) Includes $138.7 million of PPP closings for the year ended December 31, 2021.

Weighted Average Rate on Loan Closings

  For the three months ended
  December 31, September 30, June 30, March 31, December 31,
Loan type 2022 2022 2022 2022 2021
Mortgage loans 5.59% 4.37% 3.76% 3.61% 3.77%
Nonmortgage loans 6.57  4.93  4.21  3.27  3.24 
Total loans 6.10% 4.60% 3.92% 3.44% 3.51%
                


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ASSET QUALITY
(Unaudited)

Allowance for Credit Losses

  For the three months ended  For the year ended
  December 31,  September 30, June 30, March 31, December 31,   December 31,   December 31, 
(Dollars in thousands) 2022 2022 2022 2022 2021  2022  2021
Allowance for credit losses                              
Beginning balances $41,268   $39,424   $37,433   $37,135   $36,363    $37,135    $45,153  
                               
Net loan charge-off (recoveries):                              
Multifamily residential  132        (1)            131     33  
Commercial real estate                            64  
One-to-four family – mixed-use property                  1          (100) 
One-to-four family – residential  17    2    (2)   (2)   (3)    15     (157) 
Small Business Administration  (9)   (12)   13    1,015    (7)    1,007     (34) 
Taxi medallion          (435)   (12)        (447)    1,301  
Commercial business and other  671    300    (76)   (66)   (20)    829     2,012  
Total  811    290    (501)   935    (29)    1,535     3,119  
                               
Provision (benefit) for loan losses  (15)   2,134    1,490    1,233    743     4,842     (4,899) 
                               
Ending balance $40,442   $41,268   $39,424   $37,433   $37,135    $40,442    $37,135  
                               
Gross charge-offs $1,938   $324   $50   $1,036   $7    $3,348    $5,134  
Gross recoveries  1,127    34    551    101    36     1,813     2,015  
                               
Allowance for credit losses to gross loans  0.58 %  0.59 %  0.58 %  0.57 %  0.56 %   0.58 %   0.56 %
Net loan charge-offs (recoveries) to average loans  0.05    0.02    (0.03)   0.06         0.02     0.05  

Nonperforming Assets

  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2022 2022 2022 2022 2021
Loans 90 Days Or More Past Due and
Still Accruing:
                    
Commercial real estate $  $2,000  $  $  $ 
Construction  2,600             
Commercial business and other        100       
Total  2,600   2,000   100       
                     
Nonaccrual Loans:                    
Multifamily residential  3,206   3,414   3,414   3,414   2,431 
Commercial real estate  237   1,851   242   5   613 
One-to-four family - mixed-use property(1)  790   790   790   790   1,309 
One-to-four family - residential  4,425   4,655   5,055   7,387   7,725 
Construction        856       
Small Business Administration  937   937   937   937   937 
Commercial business and other(1)  20,187   15,356   16,554   1,533   1,918 
Total  29,782   27,003   27,848   14,066   14,933 
                     
Total Nonperforming Loans (NPLs)  32,382   29,003   27,948   14,066   14,933 
                     
Total Nonaccrual HTM Securities  20,981   20,981   20,981       
                     
Total Nonperforming Assets $53,363  $49,984  $48,929  $14,066  $14,933 
                     
Nonperforming Assets to Total Assets  0.63%  0.58%  0.59%  0.17%  0.19%
Allowance for Credit Losses to NPLs  124.9%  142.3%  141.1%  266.1%  248.7%

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

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 year ended
(Dollars in thousands, December 31,  September 30, June 30, March 31, December 31,   December 31,  December 31, 
except per share data) 2022 2022 2022 2022 2021  2022 2021
                              
GAAP income before income taxes $12,819   $32,422   $34,971   $24,640   $22,826    $104,852   $109,278  
                              
Net (gain) loss from fair value adjustments (Noninterest income (loss))  622    (5,626)   (2,533)   1,809    5,140     (5,728)   12,995  
Net (gain) loss on sale of securities (Noninterest income (loss))  10,948                     10,948    (113) 
Life insurance proceeds
(Noninterest income (loss))
  (286)       (1,536)            (1,822)     
Net gain on disposition of assets (Noninterest income (loss))  (104)                    (104)   (621) 
Net (gain) loss from fair value adjustments on qualifying hedges
(Interest and fees on loans)
  (936)   (28)   60    129    (1,122)    (775)   (2,079) 
Net amortization of purchase accounting adjustments (Various)  (219)   (650)   (237)   (924)   (324)    (2,030)   (2,489) 
Merger (benefit) expense (Various)                  (17)        2,562  
                              
Core income before taxes  22,844    26,118    30,725    25,654    26,503     105,341    119,533  
                              
Provision for income taxes for core income  5,445    7,165    9,207    6,685    5,535     28,502    30,769  
                              
Core net income $17,399   $18,953   $21,518   $18,969   $20,968    $76,839   $88,764  
                              
GAAP diluted earnings per common share $0.34   $0.76   $0.81   $0.58   $0.58    $2.50   $2.59  
Net (gain) loss from fair value adjustments, net of tax  0.02    (0.13)   (0.06)   0.04    0.13     (0.14)   0.31  
Net loss on sale of securities, net of tax  0.27                     0.26      
Life insurance proceeds  (0.01)       (0.05)            (0.06)     
Net gain on disposition of assets, net of tax                           (0.01) 
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax  (0.02)               (0.03)    (0.02)   (0.05) 
Net amortization of purchase accounting adjustments, net of tax  (0.01)   (0.02)   (0.01)   (0.02)   (0.01)    (0.05)   (0.06) 
Merger (benefit) expense, net of tax                           0.06  
NYS tax change                           (0.02) 
                              
Core diluted earnings per common share(1) $0.57   $0.62   $0.70   $0.61   $0.67    $2.49   $2.81  
                              
Core net income, as calculated above $17,399   $18,953   $21,518   $18,969   $20,968    $76,839   $88,764  
Average assets  8,518,019    8,442,657    8,211,763    8,049,470    8,090,701     8,307,137    8,143,372  
Average equity  676,165    674,282    667,456    673,012    671,474     672,742    648,946  
Core return on average assets(2)  0.82 %  0.90 %  1.05 %  0.94 %  1.04 %   0.92 %  1.09 %
Core return on average equity(2)  10.29 %  11.24 %