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Flushing Financial Corporation Reports 2Q23 GAAP EPS of $0.29 and Core EPS of $0.26; Delivered Sequential Improvements in Key Metrics; Progressing on Action Plan to Continue Enhancing Business Model Resilience and Drive Profitability

John R. Buran, President and CEO Commentary

“We delivered sequential improvements in key metrics in the second quarter amid continuing uncertainty in the operating environment. We experienced the lowest level of NIM compression of the past four quarters and achieved QoQ improvements in the loan pipeline and asset quality. Further, we increased deposit balances compared to past seasonal trends. As we continue to execute on the action plan announced last quarter, we are pleased with the progress we are making to enhance the resilience of our business model and strengthen performance: 1) continued to move more towards interest rate risk neutral with the addition of over $400 million of interest rate hedges and $250 million in forward hedges becoming effective; 2) the loan pipeline and yield increased 56% and 20 bps, respectively, QoQ; 3) checking account openings increased 10 % YoY; 4) reviewed new and existing relationships resulting in improved credit metrics and normalized net charge-offs; Manhattan office buildings are approximately 0.6% of net loans; 5) available liquidity and capital ratios remained stable; and 6) controlled noninterest expenses, which decreased 1% YoY. In addition, we repurchased approximately 530,000 shares in 2Q23 without a material effect on the tangible common equity ratio. Taken together, these actions support continued improvement of our profitability and liquidity while preparing us for a range of possible rate environments. While we remain conservative regarding our operating environment, our progress gives us cautious optimism for the remainder of the year. Looking ahead, we will continue to focus on positioning the Company for success with an emphasis on reducing interest rate risk, improving credit quality, liquidity, and the customer experience.”

- John R. Buran, President and CEO

UNIONDALE, N.Y., July 25, 2023 (GLOBE NEWSWIRE) -- EPS Improves QoQ; NIM Compression Slows. The Company reported second quarter 2023 GAAP EPS of $0.29, down 64% YoY, but up 71% QoQ. Core EPS totaled $0.26, a decrease of 63% YoY, but an increase of 160% QoQ. The improvement QoQ was primarily driven by the return to normalized credit costs, the absence of seasonal expenses, and the benefit derived from the interest rate hedge strategy. The interest rate hedges slowed the NIM compression, which was only 9 bps QoQ to 2.18%. The interest rate hedges, and other balance sheet actions, have reduced the liability sensitive position significantly over the past year and are beneficial in a “higher-for-longer” rate environment.

Credit Quality Improved; Strong Capital. QoQ, nonperforming assets and criticized and classified assets decreased 6% and 12%, respectively, while net charge offs were 9 basis points. Capital continues to be sound with a TCE1 of 7.71%, stable QoQ.

Key Financial Metrics2


                  
  2Q23  1Q23 4Q22 3Q22 2Q22  1H23  1H22
GAAP:                 
EPS $0.29  $0.17 $0.34 $0.76 $0.81   $0.46  $1.39
ROAA (%)  0.41   0.24  0.48  1.11  1.22    0.33   1.06
ROAE (%)  5.12   3.02  6.06  13.91  15.00    4.06   12.91
NIM FTE3 (%)  2.18   2.27  2.70  3.07  3.35    2.22   3.36
Core:                 
EPS $0.26  $0.10 $0.57 $0.62 $0.70   $0.36  $1.30
ROAA (%)  0.37   0.14  0.82  0.90  1.05    0.26   1.00
ROAE (%)  4.66   1.76  10.29  11.24  12.90    3.20   12.08
Core NIM FTE (%)  2.17   2.25  2.63  3.03  3.33    2.21   3.32
Credit Quality:                 
NPAs/Loans & OREO (%)  0.58   0.61  0.77  0.72  0.72    0.58   0.72
ACLs/Loans (%)  0.57   0.56  0.58  0.59  0.58    0.57   0.58
ACLs/NPLs (%)  207.08   182.89  124.89  142.29  141.06    207.08   141.06
NCOs/Avg Loans (%)  0.09   0.54  0.05  0.02  (0.03)   0.32   0.01
Balance Sheet:                 
Avg Loans ($B) $6.8  $6.9 $6.9 $6.9 $6.6   $6.9  $6.6
Avg Dep ($B) $6.9  $6.8 $6.7 $6.3 $6.4   $6.9  $6.4
Book Value/Share $23.18  $22.84 $22.97 $22.47 $22.38   $23.18  $22.38
Tangible BV/Share $22.51  $22.18 $22.31 $21.81 $21.71   $22.51  $21.71
TCE/TA (%)  7.71   7.73  7.82  7.62  7.82    7.71   7.82
                  

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”)

2Q23 Highlights  
  • Net interest margin FTE decreased 117 bps YoY and 9 bps QoQ to 2.18%; Core net interest margin FTE decreased 116 bps YoY and 8 bps QoQ to 2.17%; Both GAAP and Core NIMs benefited from the $450 million of new hedges added in late 1Q23, an additional $400 million in 2Q23, and $250 million of forward hedges that became effective in 2Q23; Overall liability sensitivity has been reduced by 64% over the past year.
  • Average total deposits increased 7.1% YoY and 1.3% QoQ to $6.9 billion; average CDs totaled $2.0 billion, up 149.5% YoY and 21.9% QoQ; growth in CDs generally lengthens the duration of customer deposits and helps reduce rate sensitivity
  • Period end net loans increased 1.1% YoY, but decreased 1.0% QoQ; loan closings were $158.8 million down 68.5% YoY and 8.5% QoQ; the yield on closings increased 322 bps YoY and 13 bps QoQ to 7.14%
  • Loan pipeline decreased 28.7% YoY, but increased 56.1% QoQ to $415.5 million; nearly 35% of the loan pipeline consists of back-to-back loan swaps
  • NPAs declined to $39.6 million from $48.9 million a year ago and $42.2 million in the prior quarter
  • Provision for credit losses was $1.4 million in 2Q23 compared to $1.6 million in 2Q22 and $7.5 million in 1Q23; net charge-offs were $1.6 million in 2Q23 compared to net recoveries of $0.5 million in 2Q22 and net charge-offs of 9.2 million in 1Q23
  • Tangible Common Equity to Tangible Assets was stable at 7.71% at 2Q23 compared to 7.73% at 1Q23
  • Repurchased 528,815 shares at an average price of $12.94 or at a 42.5% discount to June 30, 2023 tangible book value of $22.51
Areas of Focus
Interest
Rate
Risk
  • Continued to take significant actions to position the Company’s balance sheet more towards interest rate risk neutral
  • During 2Q23, the Company added $400 million of interest rate hedges and an additional $250 million of forward hedges that became effective
  • Rate sensitivity to a +100 bps shock has been reduced by 64% over the past year.
Credit
Quality
  • Manhattan office buildings are approximately 0.6% of net loans
  • Over 88% of the loan portfolio is collateralized by real estate with an average loan to value less than 36%
  • Debt service coverage ratio of 1.8x for multifamily and investor commercial real estate loans that reprice through 2025
Liquidity
  • The Company maintains ample liquidity with $3.7 billion of undrawn lines and resources
  • Total deposits increased 4.9% YoY and 2Q23 balances were higher than normal seasonal declines
  • Checking account openings were up 9.6% YoY in 2Q23
Customer Experience
  • Additional opportunities emerging as competitors leave the market
  • Approximately 33% of our branches are in Asian communities
  • Bensonhurst, our 27th branch, is expected to open in the second half of 2023, and will enhance our Asian community branch presence
  • Digital banking usage continues to increase with double digit growth in monthly mobile deposit active users and digital banking enrollment in June 2023 versus a year ago


Income Statement Highlights


                   
              YoY QoQ
($000s, except EPS)  2Q23  1Q23 4Q22 3Q22 2Q22 Change Change
                   
Net Interest Income  $43,378  $45,262 $54,201  $61,206 $64,730 (33.0)% (4.2)%
Provision (Benefit) for Credit Losses   1,416   7,508  (12)  2,145  1,590 (10.9)  NM  
Noninterest Income (Loss)   5,122   6,908  (7,652)  8,995  7,353 (30.3)  (25.9) 
Noninterest Expense   35,279   37,703  33,742   35,634  35,522 (0.7)  (6.4) 
Income Before Income Taxes   11,805   6,959  12,819   32,422  34,971 (66.2)  69.6  
Provision for Income Taxes   3,177   1,801  2,570   8,980  9,936 (68.0)  76.4  
Net Income  $8,628  $5,158 $10,249  $23,442 $25,035 (65.5)  67.3  
Diluted EPS  $0.29  $0.17 $0.34  $0.76 $0.81 (64.2)  70.6  
Avg. Diluted Shares (000s)   30,090   30,265  30,420   30,695  30,937 (2.7)  (0.6) 
                   
Core Net Income1  $7,854  $3,003 $17,399  $18,953 $21,518 (63.5)  161.5  
Core EPS1  $0.26  $0.10 $0.57  $0.62 $0.70 (62.9)  160.0  
                      

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income decreased YoY and QoQ.

  • Net interest margin, FTE of 2.18% decreased 117 bps YoY and 9 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 $0.5 million (3 bps to the NIM) in 2Q23 compared to $1.1 million (6 bps) in 1Q23, $2.4 million (12 bps) in 4Q22, $2.2 million (11 bps) in 3Q22, and $2.6 million (13 bps) in 2Q22; Prepayment penalty income declined primarily due to the higher rate environment
  • Excluding the items in the previous bullet, net interest margin was 2.15% in 2Q23, 2.21% in 1Q23, 2.58% in 4Q22, 2.96% in 3Q22, and 3.22% in 2Q22
  • Quarterly NIM compression of 9 bps was the slowest decline in the past four quarters primarily due to the balance sheet actions taken in 1Q23 and 2Q23 that reduced liability sensitivity

The provision for credit losses declined YoY and QoQ.

  • Net charge-offs (recoveries) were $1.6 million in 2Q23 (9 bps of average loans), $9.2 million in 1Q23 (54 bps of average loans), $0.8 million in 4Q22 (5 bps of average loans), $0.3 million in 3Q22 (2 bps of average loans), and $(0.5) million in 2Q22 ((3) bps of average loans)
  • 1Q23 net charge-offs were primarily related to a commercial business relationship that was placed on nonaccrual in 2Q22

Noninterest income (loss) declined YoY and QoQ.

  • Noninterest income included net gains (losses) from fair value adjustments of $0.3 million in 2Q23 ($0.01 per share, net of tax), $2.6 million in 1Q23 ($0.06 per share, net of tax), $(0.6) million in 4Q22 ($(0.02) per share, net of tax), $5.6 million in 3Q22 ($0.13 per share, net of tax), and $2.5 million in 2Q22 ($0.06 per share, net of tax)
  • Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds were primarily reinvested in 1Q23 into floating rate securities that had a yield at that time that approximated 6.40%
  • Life insurance proceeds were $0.6 million ($0.02 per share) in 2Q23, $0.3 million ($0.01 per share) in 4Q22 and $1.5 million ($0.05 per share) in 2Q22
  • Absent all above items and other immaterial adjustments, core noninterest income was $4.3 million in 2Q23, up 29.9% YoY but down 0.5% QoQ

Noninterest expense decreased YoY and QoQ.

  • Given the challenging rate environment, management continues to actively review all noninterest expenses
  • Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22
  • Seasonal compensation expense was $4.1 million in 1Q23
  • Excluding the effects of other immaterial adjustments, core operating expenses were $35.2 million in 2Q23, down 0.6% YoY, and 6.4% QoQ
  • GAAP noninterest expense to average assets was 1.67% in 2Q23, 1.78% in 1Q23, 1.58% in 4Q22, 1.69% in 3Q22, and 1.73% in 2Q22

Provision for income taxes declined YoY and increased QoQ.

  • The effective tax rate was 26.9% in 2Q23, 25.9% in 1Q23, 20.0% in 4Q22, 27.7% in 3Q22, and 28.4% in 2Q22
  • The 4Q22 effective tax rate declined due to preferential tax items having a larger impact due to lower levels of pre-tax income
  • The 2Q22 effective tax rate includes a loss of certain state and city tax deductions and a resolution of certain examinations by taxing authorities

 
Balance Sheet, Credit Quality, and Capital Highlights


                  
             YoY QoQ
  2Q23  1Q23 4Q22 3Q22 2Q22 Change Change
Averages ($MM)                 
Loans $6,830  $6,871 $6,881 $6,861 $6,640 2.9 % (0.6)%
Total Deposits  6,900   6,810  6,678  6,277  6,441 7.1   1.3  
                  
Credit Quality ($000s)                 
Nonperforming Loans $18,637  $21,176 $32,382 $29,003 $27,948 (33.3)% (12.0)%
Nonperforming Assets  39,618   42,157  53,363  49,984  48,929 (19.0)  (6.0) 
Criticized and Classified Loans  48,675   58,130  68,093  61,684  57,145 (14.8)  (16.3) 
Criticized and Classified Assets  69,656   79,111  89,073  82,665  78,125 (10.8)  (12.0) 
Allowance for Credit Losses/Loans (%)  0.57   0.56  0.58  0.59  0.58 (1)bp 1 bps
                  
Capital                 
Book Value/Share $23.18  $22.84 $22.97 $22.47 $22.38 3.6 % 1.5 %
Tangible Book Value/Share  22.51   22.18  22.31  21.81  21.71 3.7   1.5  
Tang. Common Equity/Tang. Assets (%)  7.71   7.73  7.82  7.62  7.82 (11)bps (2)bps
Leverage Ratio (%)  8.56   8.58  8.61  8.74  8.91 (35)  (2) 
 


Average loans
increased YoY but declined QoQ.

  • Maintain the credit strategy of loans secured by real estate with a greater emphasis on back-to-back swap originations
  • Period end net loans totaled $6.8 billion, up 1.1% YoY, but down 1.0% QoQ
  • Total loan closings were $158.8 million in 2Q23, $173.5 million in 1Q23, $225.2 million in 4Q22, $463.7 million in 3Q22, and $503.8 million in 2Q22; the loan pipeline was $415.5 million at June 30, 2023, down 28.7% YoY, but up 56.1% QoQ; closings were impacted by customers adjusting to the higher rate environment
  • The diversified loan portfolio is over 88% collateralized by real estate with an average loan-to-value ratio of <36%
  • Manhattan office buildings are approximately 0.6% of net loans

Average total deposits increased YoY and QoQ.

  • Average CDs totaled $2.0 billion, up 149.5% YoY and 21.9% QoQ; CDs generally lengthen the duration of customer deposits and reduce sensitivity to rising rates
  • Average noninterest bearing deposits decreased 18.7% YoY and 5.2% QoQ in 2Q23 and comprised 12.3% of average total deposits in 2Q23 compared to 16.2% a year ago

Credit Quality: Nonperforming loans declined YoY and QoQ.

  • Criticized and classified loans were 71 bps of gross loans at 2Q23 compared to 84 bps at 1Q23, 98 bps at 4Q22, 89 bps at 3Q22, and 85 bps at 2Q22
  • Allowance for credit losses were 207.1% of nonperforming loans at 2Q23 compared to 182.9% at 1Q23, and 141.1% at 2Q22

Capital: Book value per common share and tangible book value per common share, a non-GAAP measure, both increased YoY and QoQ.

  • The Company paid a dividend of $0.22 per share in 2Q23 and has ample available liquidity to meet its obligations
  • The Company repurchased 528,815 shares in 2Q23 at an average price of $12.94, representing a 42.5% discount to tangible book value, with 906,131 shares remaining subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.71% at 2Q23 compared to 7.73% at 1Q23 and 7.82% at 2Q22
  • The Company and the Bank remain well capitalized under all applicable regulatory requirements

Conference Call Information and Third Quarter Earnings Release Date

Conference Call Information:

  • John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer and Treasurer, will host a conference call on Wednesday, July 26, 2023, at 9:30 AM (ET) to discuss the Company’s first quarter results and strategy.
  • Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
  • Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Nb7q4ytY
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 7017400
  • The conference call will be simultaneously webcast and archived

Third Quarter 2023 Earnings Release Date:

The Company plans to release Third Quarter 2023 financial results after the market close on October 31, 2023; followed by a conference call at 9:30 AM (ET) on November 1, 2023.

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

About Flushing Financial Corporation

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

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

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

#FF

 
Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
                             
  At or for the three months ended  At or for the six months ended 
 (Dollars in thousands, except per share data) June 30,  March 31, December 31, September 30, June 30,   June 30,  June 30,  
    2023 2023 2022 2022 2022  2023    2022    
Performance Ratios (1)                             
Return on average assets  0.41%    0.24%    0.48%    1.11%    1.22 %     0.33%   1.06%
Return on average equity  5.12   3.02   6.06   13.91   15.00     4.06  12.91 
Yield on average interest-earning assets (2)  4.84   4.61   4.44   4.10   3.85     4.73  3.81 
Cost of average interest-bearing liabilities  3.15   2.80   2.11   1.25   0.60     2.97  0.55 
Cost of funds  2.80   2.47   1.84   1.08   0.52     2.63  0.48 
Net interest rate spread during period (2)  1.69   1.81   2.33   2.85   3.25     1.76  3.26 
Net interest margin (2)  2.18   2.27   2.70   3.07   3.35     2.22  3.36 
Noninterest expense to average assets  1.67   1.78   1.58   1.69   1.73     1.72  1.83 
Efficiency ratio (3)  74.02   76.48   59.55   55.68   52.27     75.27  55.52 
Average interest-earning assets to
average interest-bearing liabilities
  1.18X  1.19X  1.21X  1.22X  1.22 X   1.19X 1.22X
                             
Average Balances                            
Total loans, net $6,829,648  $6,871,192  $6,881,245  $6,861,463  $6,640,331    $6,850,305 $6,609,676 
Total interest-earning assets  7,986,020   7,996,677   8,045,691   7,979,070   7,740,683     7,991,320  7,655,999 
Total assets  8,461,827   8,468,311   8,518,019   8,442,657   8,211,763     8,465,051  8,131,065 
Total deposits  6,899,617   6,810,485   6,678,383   6,276,613   6,440,904     6,855,299  6,425,569 
Total interest-bearing liabilities  6,756,859   6,703,558   6,662,209   6,553,087   6,337,374     6,730,357  6,279,265 
Stockholders' equity  673,943   683,071   676,165   674,282   667,456     678,481  670,219 
                             
Per Share Data                                  
Book value per common share (4) $23.18  $22.84  $22.97  $22.47  $22.38    $23.18 $22.38 
Tangible book value per common share (5) $22.51  $22.18  $22.31  $21.81  $21.71    $22.51 $21.71 
                             
Stockholders' Equity                                  
Stockholders' equity $671,303  $673,459  $677,157  $670,719  $670,812    $671,303 $670,812 
Tangible stockholders' equity  651,898   653,932   657,504   650,936   650,894     651,898  650,894 
                             
Consolidated Regulatory Capital Ratios                                   
Tier 1 capital $735,810  $737,138  $746,880  $749,526  $739,776    $735,810 $739,776 
Common equity Tier 1 capital  689,876   690,846   698,258   701,532   686,258     689,876  686,258 
Total risk-based capital  963,840   965,384   975,709   979,021   903,047     963,840  903,047 
Risk Weighted Assets  6,649,252   6,659,532   6,640,542   6,689,284   6,522,710     6,649,252  6,522,710 
                             
Tier 1 leverage capital (well capitalized = 5%)  8.56%    8.58%    8.61%    8.74%    8.91 %     8.56%   8.91%  
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  10.38   10.37   10.52   10.49   10.52     10.38  10.52 
Tier 1 risk-based capital
(well capitalized = 8.0%)
  11.07   11.07   11.25   11.20   11.34     11.07  11.34 
Total risk-based capital
(well capitalized = 10.0%)
  14.50   14.50   14.69   14.64   13.84     14.50  13.84 
                             
Capital Ratios                                   
Average equity to average assets  7.96%    8.07%    7.94%    7.99%    8.13 %     8.02%   8.24%  
Equity to total assets  7.92   7.94   8.04   7.84   8.04     7.92  8.04 
Tangible common equity to tangible assets (6)  7.71   7.73   7.82   7.62   7.82     7.71  7.82 
                             
Asset Quality                                   
Nonaccrual loans (7) $18,637  $21,176  $29,782  $27,003  $27,848    $18,637 $27,848 
Nonperforming loans  18,637   21,176   32,382   29,003   27,948     18,637  27,948 
Nonperforming assets  39,618   42,157   53,363   49,984   48,929     39,618  48,929 
Net charge-offs (recoveries)  1,560   9,234   811   290   (501)    10,794  434 
                             
Asset Quality Ratios                                   
Nonperforming loans to gross loans  0.27%    0.31%    0.47%    0.42%    0.41 %     0.27%   0.41%  
Nonperforming assets to total assets  0.47   0.50   0.63   0.58   0.59     0.47  0.59 
Allowance for credit losses to gross loans  0.57   0.56   0.58   0.59   0.58     0.57  0.58 
Allowance for credit losses to
nonperforming assets
  97.41   91.87   75.79   82.56   80.57     97.41  80.57 
Allowance for credit losses to
nonperforming loans
  207.08   182.89   124.89   142.29   141.06     207.08  141.06 
Net charge-offs (recoveries) to average loans  0.09   0.54   0.05   0.02   (0.03)    0.32  0.01 
                             
Full-service customer facilities  26   26   25   25   25     26  25 


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

         

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 For the three months ended   For the six months ended
 (In thousands, except per share data)June 30, March 31, December 31, September 30, June 30,   June 30, June 30,
2023 2023 2022  2022 2022   2023 2022
Interest and Dividend Income                      
Interest and fees on loans$85,377 $82,889 $81,033  $75,546 $69,192   $168,266 $136,708
Interest and dividends on securities:                      
Interest 9,172  7,240  6,511   5,676  4,929    16,412  8,674
Dividends 30  29  24   17  11    59  19
Other interest income 1,982  1,959  1,702   506  159    3,941  210
Total interest and dividend income 96,561  92,117  89,270   81,745  74,291    188,678  145,611
                       
Interest Expense                      
Deposits 46,249  39,056  27,226   11,965  4,686    85,305  8,094
Other interest expense 6,934  7,799  7,843   8,574  4,875    14,733  9,308
Total interest expense 53,183  46,855  35,069   20,539  9,561    100,038  17,402
                       
Net Interest Income 43,378  45,262  54,201   61,206  64,730    88,640  128,209
Provision (benefit) for credit losses 1,416  7,508  (12)  2,145  1,590    8,924  2,948
Net Interest Income After Provision
(Benefit) for Credit Losses
 41,962  37,754  54,213   59,061  63,140    79,716  125,261
                       
Noninterest Income (Loss)                      
Banking services fee income 1,780  1,411  1,231   1,351  1,166    3,191  2,540
Net loss on sale of securities     (10,948)          
Net gain on sale of loans 54  54  46     73    108  73
Net gain on disposition of assets     104           
Net gain (loss) from fair value adjustments 294  2,619  (622)  5,626  2,533    2,913  724
Federal Home Loan Bank of New York
stock dividends
 534  697  658   538  407    1,231  804
Life insurance proceeds 561    286     1,536    561  1,536
Bank owned life insurance 1,134  1,109  1,126   1,132  1,115    2,243  2,229
Other income 765  1,018  467   348  523    1,783  760
Total noninterest income (loss) 5,122  6,908  (7,652)  8,995  7,353    12,030  8,666
                       
Noninterest Expense                      
Salaries and employee benefits 19,493  20,887  18,178   21,438  21,109    40,380  44,758
Occupancy and equipment 3,534  3,793  3,701   3,541  3,760    7,327  7,364
Professional services 2,657  2,483  2,130   2,570  2,285    5,140  4,507
FDIC deposit insurance 943  977  485   738  615    1,920  1,035
Data processing 1,473  1,435  1,421   1,367  1,383    2,908  2,807
Depreciation and amortization 1,482  1,510  1,535   1,488  1,447    2,992  2,907
Other real estate owned/foreclosure expense 150  165  35   143  32    315  116
Other operating expenses 5,547  6,453  6,257   4,349  4,891    12,000  10,822
Total noninterest expense 35,279  37,703  33,742   35,634  35,522    72,982  74,316
                       
Income Before Provision for Income Taxes 11,805  6,959  12,819   32,422  34,971    18,764  59,611
                       
Provision for Income Taxes 3,177  1,801  2,570   8,980  9,936    4,978  16,357
                       
Net Income$8,628 $5,158 $10,249  $23,442 $25,035   $13,786 $43,254
                       
Basic earnings per common share$0.29 $0.17 $0.34  $0.76 $0.81   $0.46 $1.39
Diluted earnings per common share$0.29 $0.17 $0.34  $0.76 $0.81   $0.46 $1.39
Dividends per common share$0.22 $0.22 $0.22  $0.22 $0.22   $0.44 $0.44
                       
Basic average shares 30,090  30,265  30,420   30,695  30,937    30,177  31,095
Diluted average shares 30,090  30,265  30,420   30,695  30,937    30,177  31,095


 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
 
  June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2023  2023  2022  2022  2022 
ASSETS               
Cash and due from banks $160,053  $176,747  $151,754  $164,693  $137,026 
Securities held-to-maturity:               
Mortgage-backed securities  7,865   7,870   7,875   7,880   7,885 
Other securities, net  65,469   65,653   65,836   66,032   66,230 
Securities available for sale:               
Mortgage-backed securities  365,911   380,110   384,283   468,366   510,934 
Other securities  503,645   431,818   351,074   351,495   346,720 
Loans  6,832,425   6,904,176   6,934,769   6,956,674   6,760,393 
Allowance for credit losses  (38,593)  (38,729)  (40,442)  (41,268)  (39,424)
Net loans  6,793,832   6,865,447   6,894,327   6,915,406   6,720,969 
Interest and dividends receivable  52,911   46,836   45,048   42,571   38,811 
Bank premises and equipment, net  22,182   21,567   21,750   22,376   22,285 
Federal Home Loan Bank of New York stock  36,168   38,779   45,842   62,489   50,017 
Bank owned life insurance  213,164   214,240   213,131   212,353   211,220 
Goodwill  17,636   17,636   17,636   17,636   17,636 
Core deposit intangibles  1,769   1,891   2,017   2,147   2,282 
Right of use asset  41,526   42,268   43,289   44,885   46,687 
Other assets  191,752   168,259   179,084   179,090   160,885 
Total assets $8,473,883  $8,479,121  $8,422,946  $8,557,419  $8,339,587 
                
LIABILITIES               
Total deposits $6,723,690  $6,734,090  $6,485,342  $6,125,305  $6,407,577 
Borrowed funds  857,400   887,509   1,052,973   1,572,830   1,089,621 
Operating lease liability  44,402   45,353   46,125   48,330   50,346 
Other liabilities  177,088   138,710   161,349   140,235   121,231 
Total liabilities  7,802,580   7,805,662   7,745,789   7,886,700   7,668,775 
                
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  263,744   262,876   264,332   263,755   262,860 
Treasury stock  (104,574)  (97,760)  (98,535)  (90,977)  (88,342)
Retained earnings  547,811   545,786   547,507   543,894   527,217 
Accumulated other comprehensive loss, net of taxes  (36,019)  (37,784)  (36,488)  (46,294)  (31,264)
Total stockholders' equity  671,303   673,459   677,157   670,719   670,812 
                
Total liabilities and stockholders' equity $8,473,883  $8,479,121  $8,422,946  $8,557,419  $8,339,587 
                
(In thousands)               
Issued shares  34,088   34,088   34,088   34,088   34,088 
Outstanding shares  28,961   29,488   29,476   29,851   29,980 
Treasury shares  5,127   4,600   4,612   4,237   4,108 

  

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)
 
  For the three months ended   For the six months ended
  June 30, March 31, December 31, September 30, June 30,   June 30, June 30,
(In thousands) 2023 2023 2022 2022 2022   2023 2022
Interest-earning Assets:                       
Mortgage loans, net $5,308,567 $5,333,274 $5,338,612 $5,340,694 $5,178,029   $5,320,852 $5,165,121
Other loans, net  1,521,081  1,537,918  1,542,633  1,520,769  1,462,302    1,529,453  1,444,555
Total loans, net  6,829,648  6,871,192  6,881,245  6,861,463  6,640,331    6,850,305  6,609,676
Taxable securities:                       
Mortgage-backed securities  448,620  457,911  549,204  568,854  594,923    453,240  587,836
Other securities  471,600  411,723  371,897  362,629  333,158    441,827  280,245
Total taxable securities  920,220  869,634  921,101  931,483  928,081    895,067  868,081
Tax-exempt securities:                       
Other securities  66,632  66,828  67,022  67,211  67,315    66,730  62,490
Total tax-exempt securities  66,632  66,828  67,022  67,211  67,315    66,730  62,490
Interest-earning deposits and
federal funds sold
  169,520  189,023  176,323  118,913  104,956    179,218  115,752
Total interest-earning assets  7,986,020  7,996,677  8,045,691  7,979,070  7,740,683    7,991,320  7,655,999
Other assets  475,807  471,634  472,328  463,587  471,080    473,731  475,066
Total assets $8,461,827 $8,468,311 $8,518,019 $8,442,657 $8,211,763   $8,465,051 $8,131,065
                        
Interest-bearing Liabilities:                       
Deposits:                       
Savings accounts $124,041 $134,945 $146,598 $154,545 $156,785   $129,463 $156,689
NOW accounts  2,026,950  1,970,555  1,972,134  1,808,608  2,089,851    1,998,909  2,063,529
Money market accounts  1,754,574  2,058,523  2,146,649  2,136,829  2,231,743    1,905,709  2,242,626
Certificate of deposit accounts  2,046,960  1,679,517  1,350,683  1,057,733  820,476    1,864,254  854,970
Total due to depositors  5,952,525  5,843,540  5,616,064  5,157,715  5,298,855    5,898,335  5,317,814
Mortgagors' escrow accounts  97,410  70,483  82,483  68,602  97,496    84,021  84,574
Total interest-bearing deposits  6,049,935  5,914,023  5,698,547  5,226,317  5,396,351    5,982,356  5,402,388
Borrowings  706,924  789,535  963,662  1,326,770  941,023    748,001  876,877
Total interest-bearing liabilities  6,756,859  6,703,558  6,662,209  6,553,087  6,337,374    6,730,357  6,279,265
Noninterest-bearing demand deposits  849,682  896,462  979,836  1,050,296  1,044,553    872,943  1,023,181
Other liabilities  181,343  185,220  199,809  164,992  162,380    183,270  158,400
Total liabilities  7,787,884  7,785,240  7,841,854  7,768,375  7,544,307    7,786,570  7,460,846
Equity  673,943  683,071  676,165  674,282  667,456    678,481  670,219
Total liabilities and equity $8,461,827 $8,468,311 $8,518,019 $8,442,657 $8,211,763   $8,465,051 $8,131,065
                        
Net interest-earning assets $1,229,161 $1,293,119 $1,383,482 $1,425,983 $1,403,309   $1,260,963 $1,376,734


 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)
                              
  For the three months ended  For the six months ended
  June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
(Dollars in thousands) 2023 2023 2022 2022 2022  2023 2022
Interest Income:                             
Mortgage loans, net $63,688   $62,054  $60,946  $58,374  $54,775    $125,742   $108,745  
Other loans, net  21,689    20,835   20,087   17,172   14,417     42,524    27,963  
Total loans, net  85,377    82,889   81,033   75,546   69,192     168,266    136,708  
Taxable securities:                             
Mortgage-backed securities  2,976    2,281   2,425   2,466   2,356     5,257    4,523  
Other securities  5,847    4,611   3,723   2,839   2,090     10,458    3,209  
Total taxable securities  8,823    6,892   6,148   5,305   4,446     15,715    7,732  
Tax-exempt securities:                             
Other securities  480    477   489   492   625     957    1,216  
Total tax-exempt securities  480    477   489   492   625     957    1,216  
Interest-earning deposits and federal funds sold  1,982    1,959   1,702   506   159     3,941    210  
Total interest-earning assets  96,662    92,217   89,372   81,849   74,422     188,879    145,866  
Interest Expense:                             
Deposits:                             
Savings accounts $140   $126  $59  $53  $50    $266   $99  
NOW accounts  16,152    13,785   9,515   3,640   1,405     29,937    2,198  
Money market accounts  14,625    14,102   10,532   5,280   1,952     28,727    3,227  
Certificate of deposit accounts  15,281    11,007   7,037   2,948   1,273     26,288    2,562  
Total due to depositors  46,198    39,020   27,143   11,921   4,680     85,218    8,086  
Mortgagors' escrow accounts  51    36   83   44   6     87    8  
Total interest-bearing deposits  46,249    39,056   27,226   11,965   4,686     85,305    8,094  
Borrowings  6,934    7,799   7,843   8,574   4,875     14,733    9,308  
Total interest-bearing liabilities  53,183    46,855   35,069   20,539   9,561     100,038    17,402  
Net interest income- tax equivalent $43,479   $45,362  $54,303  $61,310  $64,861    $88,841   $128,464  
Included in net interest income above:                             
Prepayment penalties received on loans and securities and net of reversals and recovered interest
from nonaccrual loans
 $315   $680  $1,080  $1,368  $2,281    $995   $3,997  
Net gains/(losses) from fair value adjustments on qualifying hedges included in net interest income  (205)   100   936   28   (60)    (105)   (189) 
Purchase accounting adjustments  340    306   342   775   367     646    1,425  
Interest-earning Assets Yields:                             
Mortgage loans, net  4.80 %  4.65%  4.57%  4.37%  4.23 %   4.73 %  4.21 %
Other loans, net  5.70    5.42   5.21   4.52   3.94     5.56    3.87  
Total loans, net  5.00    4.83   4.71   4.40   4.17     4.91    4.14  
Taxable securities:                             
Mortgage-backed securities  2.65    1.99   1.77   1.73   1.58     2.32    1.54  
Other securities  4.96    4.48   4.00   3.13   2.51     4.73    2.29  
Total taxable securities  3.84    3.17   2.67   2.28   1.92     3.51    1.78  
Tax-exempt securities: (1)                             
Other securities  2.88    2.86   2.92   2.93   3.71     2.87    3.89  
Total tax-exempt securities  2.88    2.86   2.92   2.93   3.71     2.87    3.89  
Interest-earning deposits and federal funds sold  4.68    4.15   3.86   1.70   0.61     4.40    0.36  
Total interest-earning assets (1)  4.84 %  4.61%  4.44%  4.10%  3.85 %   4.73 %  3.81 %
Interest-bearing Liabilities Yields:                             
Deposits:                             
Savings accounts  0.45 %  0.37%  0.16%  0.14%  0.13 %   0.41 %  0.13 %
NOW accounts  3.19    2.80   1.93   0.81   0.27     3.00    0.21  
Money market accounts  3.33    2.74   1.96   0.99   0.35     3.01    0.29  
Certificate of deposit accounts  2.99    2.62   2.08   1.11   0.62     2.82    0.60  
Total due to depositors  3.10    2.67   1.93   0.92   0.35     2.89    0.30  
Mortgagors' escrow accounts  0.21    0.20   0.40   0.26   0.02     0.21    0.02  
Total interest-bearing deposits  3.06    2.64   1.91   0.92   0.35     2.85    0.30  
Borrowings  3.92    3.95   3.26   2.58   2.07     3.94    2.12  
Total interest-bearing liabilities  3.15 %  2.80%  2.11%  1.25%  0.60 %   2.97 %  0.55 %
                              
Net interest rate spread
(tax equivalent) (1)
  1.69 %  1.81%  2.33%  2.85%  3.25 %   1.76 %  3.26 %
Net interest margin (tax equivalent) (1)  2.18 %  2.27%  2.70%  3.07%  3.35 %   2.22 %  3.36 %
Ratio of interest-earning assets to interest-bearing liabilities  1.18 X  1.19X  1.21X  1.22X  1.22 X   1.19 X  1.22 X


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


 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT and LOAN COMPOSITION
(Unaudited)
Deposit Composition
                 2Q23 vs. 2Q23 vs.
  June 30, March 31, December 31, September 30, June 30, 1Q23 2Q22
(Dollars in thousands) 2023 2023 2022 2022 2022 % Change % Change
Noninterest bearing $827,820 $872,254 $921,238 $992,378 $1,081,208 (5.1)% (23.4)%
Interest bearing:                     
Certificate of deposit accounts  2,232,696  1,880,260  1,526,338  1,036,107  906,943 18.7   146.2  
Savings accounts  118,886  128,245  143,641  150,552  154,670 (7.3)  (23.1) 
Money market accounts  1,594,637  1,855,781  2,099,776  2,113,256  2,229,993 (14.1)  (28.5) 
NOW accounts  1,891,834  1,918,977  1,746,190  1,762,468  1,977,186 (1.4)  (4.3) 
Total interest-bearing deposits  5,838,053  5,783,263  5,515,945  5,062,383  5,268,792 0.9   10.8  
Total due to depositors  6,665,873  6,655,517  6,437,183  6,054,761  6,350,000 0.2   5.0  
Mortgagors' escrow deposits  57,817  78,573  48,159  70,544  57,577 (26.4)  0.4  
Total deposits $6,723,690 $6,734,090 $6,485,342 $6,125,305 $6,407,577 (0.2)% 4.9 %


Loan Composition                     
                 2Q23 vs. 2Q23 vs.
  June 30, March 31, December 31, September 30, June 30, 1Q23 2Q22
(Dollars in thousands) 2023  2023  2022  2022  2022  % Change % Change
Multifamily residential $2,593,955  $2,601,174  $2,601,384  $2,608,192  $2,531,858  (0.3)% 2.5 %
Commercial real estate  1,917,749   1,904,293   1,913,040   1,914,326   1,864,507  0.7   2.9  
One-to-four family ―
mixed-use property
  542,368   549,207   554,314   560,885   561,100  (1.2)  (3.3) 
One-to-four family ― residential  224,039   232,302   235,067   233,469   242,729  (3.6)  (7.7) 
Co-operative apartments  6,016   6,115   6,179   7,015   8,130  (1.6)  (26.0) 
Construction  57,325   60,486   70,951   63,651   72,148  (5.2)  (20.5) 
Mortgage Loans  5,341,452   5,353,577   5,380,935   5,387,538   5,280,472  (0.2)  1.2  
                      
Small Business Administration (1)  22,404   22,860   23,275   27,712   40,572  (2.0)  (44.8) 
Commercial business and other  1,466,358   1,518,756   1,521,548   1,532,497   1,431,417  (3.5)  2.4  
Nonmortgage loans  1,488,762   1,541,616   1,544,823   1,560,209   1,471,989  (3.4)  1.1  
                      
Gross loans  6,830,214   6,895,193   6,925,758   6,947,747   6,752,461  (0.9)  1.2  
Net unamortized premiums and
unearned loan fees (2)
  2,211   8,983   9,011   8,927   7,932  (75.4)  (72.1) 
Allowance for credit losses  (38,593)  (38,729)  (40,442)  (41,268)  (39,424) (0.4)  (2.1) 
Net loans $6,793,832  $6,865,447  $6,894,327  $6,915,406  $6,720,969  (1.0)% 1.1 %


________________
(1)Includes $4.0 million, $4.8 million, $5.2 million, $9.6 million, and $22.2 million of PPP loans at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.
(2)Includes $4.8 million, $5.1 million, $5.4 million, $5.8 million, and $6.6 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.


 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS and RATES
(Unaudited)
 
Loan Closings                      
                       
  For the three months ended  For the six months ended
  June 30, March 31, December 31, September 30, June 30,   June 30, June 30,
(In thousands) 2023 2023 2022 2022 2022  2023 2022
Multifamily residential $31,901 $42,164 $65,347 $173,980 $136,902  $74,065 $235,082
Commercial real estate  38,523  15,570  20,750  77,777  164,826   54,093  209,928
One-to-four family –
mixed-use property
  5,812  4,938  4,489  12,383  12,228   10,750  20,726
One-to-four family – residential  63  4,296  7,485  4,102  4,211   4,359  13,448
Co-operative apartments               24
Construction  8,811  10,592  7,301  7,170  8,319   19,403  17,121
Mortgage Loans  85,110  77,560  105,372  275,412  326,486   162,670  496,329
                       
Small Business Administration  820  318  665  46  2,750   1,138  2,750
Commercial business and other  72,850  95,668  119,191  188,202  174,551   168,518  334,027
Nonmortgage Loans  73,670  95,986  119,856  188,248  177,301   169,656  336,777
                       
Total Closings $158,780 $173,546 $225,228 $463,660 $503,787  $332,326 $833,106


Weighted Average Rate on Loan Closings    
                
  For the three months ended
  June 30, March 31, December 31, September 30, June 30,
Loan type 2023 2023 2022 2022 2022
Mortgage loans 6.62% 6.30% 5.59% 4.37% 3.76%
Nonmortgage loans 7.76  7.58  6.57  4.93  4.21 
Total loans 7.14% 7.01% 6.10% 4.60% 3.92%
                


 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)
 
Allowance for Credit Losses                              
                               
  For the three months ended  For the six months ended
  June 30, March 31, December 31, September 30, June 30,  June 30,  June 30,
(Dollars in thousands) 2023 2023 2022 2022 2022  2023  2022
Allowance for credit losses - loans                              
Beginning balances $38,729   $40,442   $41,268   $39,424   $37,433    $40,442    $37,135  
                               
Net loan charge-off (recoveries):                              
Multifamily residential      (1)   132        (1)    (1)    (1) 
Commercial real estate  8                     8       
One-to-four family – residential  4    (36)   17    2    (2)    (32)    (4) 
Small Business Administration  (158)   (6)   (9)   (12)   13     (164)    1,028  
Taxi medallion                  (435)         (447) 
Commercial business and other  1,706    9,277    671    300    (76)    10,983     (142) 
Total  1,560    9,234    811    290    (501)    10,794     434  
                               
Provision (benefit) for loan losses  1,424    7,521    (15)   2,134    1,490     8,945     2,723  
                               
Ending balance $38,593   $38,729   $40,442   $41,268   $39,424    $38,593    $39,424  
                               
Gross charge-offs $1,731   $9,298   $1,938   $324   $50    $11,029    $1,086  
Gross recoveries  171    64    1,127    34    551     235     652  
                               
Allowance for credit losses - loans to gross loans  0.57 %  0.56 %  0.58 %  0.59 %  0.58 %   0.57 %   0.58 %
Net loan charge-offs (recoveries) to average loans  0.09    0.54    0.05    0.02    (0.03)    0.32     0.01  


Nonperforming Assets                    
                     
  June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2023 2023 2022 2022 2022
Loans 90 Days Or More Past Due and Still Accruing:                    
Commercial real estate $  $  $  $2,000  $ 
Construction        2,600       
Commercial business and other              100 
Total        2,600   2,000   100 
                     
Nonaccrual Loans:                    
Multifamily residential  3,206   3,628   3,206   3,414   3,414 
Commercial real estate        237   1,851   242 
One-to-four family - mixed-use property(1)  790   790   790   790   790 
One-to-four family - residential  5,218   4,961   4,425   4,655   5,055 
Construction              856 
Small Business Administration  1,119   937   937   937   937 
Commercial business and other(1)  8,304   10,860   20,187   15,356   16,554 
Total  18,637   21,176   29,782   27,003   27,848 
                     
Total Nonperforming Loans (NPLs)  18,637   21,176   32,382   29,003   27,948 
                     
Total Nonaccrual HTM Securities  20,981   20,981   20,981   20,981   20,981 
                     
Total Nonperforming Assets $39,618  $42,157  $53,363  $49,984  $48,929 
                     
Nonperforming Assets to Total Assets  0.47%  0.50%  0.63%  0.58%  0.59%
Allowance for Credit Losses to NPLs  207.1%  182.9%  124.9%  142.3%  141.1%


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


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

Non-cash Fair Value Adjustments to GAAP Earnings

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

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

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

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Unaudited)
 
  For the three months ended   For the six months ended
(Dollars in thousands,  June 30, March 31, December 31, September 30, June 30,   June 30, June 30,
except per share data) 2023 2023 2022 2022 2022   2023 2022
                               
GAAP income before income taxes $11,805   $6,959   $12,819   $32,422   $34,971     $18,764   $59,611  
                               
Net (gain) loss from fair value adjustments (Noninterest income (loss))  (294)   (2,619)   622    (5,626)   (2,533)     (2,913)   (724) 
Net loss on sale of securities (Noninterest income (loss))          10,948                    
Life insurance proceeds (Noninterest income (loss))  (561)       (286)       (1,536)     (561)   (1,536) 
Net gain on disposition of assets (Noninterest income (loss))          (104)                   
Net (gain) loss from fair value adjustments on qualifying hedges (Net interest income)  205    (100)   (936)   (28)   60      105    189  
Net amortization of purchase accounting adjustments and intangibles (Various)  (227)   (188)   (219)   (650)   (237)     (415)   (1,161) 
                               
Core income before taxes  10,928    4,052    22,844    26,118    30,725      14,980    56,379  
                               
Provision for core income taxes  3,074    1,049    5,445    7,165    9,207      4,123    15,892  
                               
Core net income $7,854   $3,003   $17,399   $18,953   $21,518     $10,857   $40,487  
                               
GAAP diluted earnings per common share $0.29   $0.17   $0.34   $0.76   $0.81     $0.46   $1.39  
Net (gain) loss from fair value adjustments, net of tax  (0.01)   (0.06)   0.02    (0.13)   (0.06)     (0.07)   (0.02) 
Net loss on sale of securities, net of tax          0.27                    
Life insurance proceeds  (0.02)       (0.01)       (0.05)     (0.02)   (0.05) 
Net gain on disposition of assets, net of tax                              
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax          (0.02)                   
Net amortization of purchase accounting adjustments, net of tax  (0.01)   (0.01)   (0.01)   (0.02)   (0.01)     (0.01)   (0.03) 
                               
Core diluted earnings per common share(1) $0.26   $0.10   $0.57   $0.62   $0.70     $0.36   $1.30  
                               
Core net income, as calculated above $7,854   $3,003   $17,399   $18,953   $21,518     $10,857   $40,487  
Average assets  8,461,827    8,468,311    8,518,019    8,442,657    8,211,763      8,465,051    8,131,065  
Average equity  673,943    683,071    676,165    674,282    667,456      678,481    670,219  
Core return on average assets(2)  0.37 %  0.14 %  0.82 %  0.90 %  1.05 %    0.26 %  1.00 %
Core return on average equity(2)  4.66 %  1.76 %  10.29 %  11.24 %  12.90 %    3.20 %  12.08 %


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


  
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Unaudited)
 
  
  For the three months ended    For the six months ended 
  June 30, March 31, December 31, September 30, June 30,    June 30, June 30, 
(Dollars in thousands) 2023  2023  2022  2022  2022     2023  2022