Flushing Financial Corporation Reports Record Net Interest Income; Net Interest Margin Expansion Driven by Ability to Significantly Reduce Funding Costs | #riskmanagement | #security | #ceo

[ad_1]

SECOND QUARTER 20201 HIGHLIGHTS

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

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

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

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

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

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

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

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

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

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

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

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

 Summary of Strategic Objectives

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

Earnings Summary:

Net Interest Income

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

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

Provision for Credit Losses

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

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

Non-interest Income

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

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

Non-interest Expense

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

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

Provision for Income Taxes

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

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

Financial Condition Summary:

Loans:

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

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

                   
    For the three months ended  
    June 30,      March 31,     June 30,   
Loan type   2020     2020     2019  
Mortgage loans    3.79    3.93    4.75 %
Non-mortgage loans    1.99    4.23    5.01 %
Total loans    2.62    4.03    4.89 %
                   
Excluding PPP loans    3.71    4.03    4.89 %

Credit Quality:

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

Capital Management:

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

Conference Call Information:

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

About Flushing Financial Corporation

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

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

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in other documents filed by the Company with the Securities and Exchange Commission from time to time.  Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “goals”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.

– Statistical Tables Follow –

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
                               
    For the three months ended   For the six months ended
    June 30,   March 31,   June 30,   June 30,   June 30,
    2020   2020   2019   2020   2019
Interest and Dividend Income                              
Interest and fees on loans   $ 60,557     $ 61,109     $ 62,273     $ 121,666     $ 124,603  
Interest and dividends on securities:                              
Interest     4,182       5,256       6,811       9,438       13,720  
Dividends     11       15       19       26       38  
Other interest income     22       290       472       312       1,027  
Total interest and dividend income     64,772       66,670       69,575       131,442       139,388  
                               
Interest Expense                              
Deposits     9,971       18,778       22,827       28,749       44,296  
Other interest expense     6,084       7,066       6,739       13,150       13,280  
Total interest expense     16,055       25,844       29,566       41,899       57,576  
                               
Net Interest Income     48,717       40,826       40,009       89,543       81,812  
Provision for credit losses     9,619       7,178       1,474       16,797       2,446  
Net Interest Income After Provision for Credit Losses     39,098       33,648       38,535       72,746       79,366  
                               
Non-interest Income                              
Banking services fee income     944       798       1,059       1,742       2,032  
Net loss on sale of securities     (54 )     (37 )     (15 )     (91 )     (15 )
Net gain on sale of loans           42       114       42       177  
Net gain on sale of assets                 770             770  
Net gain (loss) from fair value adjustments     10,205       (5,993 )     (1,956 )     4,212       (4,036 )
Federal Home Loan Bank of New York stock dividends     881       964       826       1,845       1,729  
Life insurance proceeds     659                   659       43  
Bank owned life insurance     932       943       810       1,875       1,550  
Other income     170       419       843       589       1,144  
Total non-interest income (loss)     13,737       (2,864 )     2,451       10,873       3,394  
                               
Non-interest Expense                              
Salaries and employee benefits     16,184       18,620       15,668       34,804       34,834  
Occupancy and equipment     2,827       2,840       2,742       5,667       5,531  
Professional services     1,985       2,862       1,806       4,847       4,071  
FDIC deposit insurance     737       650       667       1,387       1,152  
Data processing     1,813       1,694       1,420       3,507       2,912  
Depreciation and amortization     1,555       1,536       1,497       3,091       3,015  
Other real estate owned/foreclosure expense (benefit)     45       (164 )     20       (119 )     97  
Net loss from sales of real estate owned           31             31        
Other operating expenses     3,609       4,311       3,338       7,920       7,965  
Total non-interest expense     28,755       32,380       27,158       61,135       59,577  
                               
Income (Loss) Before Income Taxes     24,080       (1,596 )     13,828       22,484       23,183  
                               
Provision (Benefit) for Income Taxes                              
Federal     4,307       989       2,981       5,296       4,924  
State and local     1,501       (1,195 )     291       306       635  
Total taxes     5,808       (206 )     3,272       5,602       5,559  
                               
Net Income (Loss)   $ 18,272     $ (1,390 )   $ 10,556     $ 16,882     $ 17,624  
                               
                               
Basic earnings (loss) per common share   $ 0.63     $ (0.05 )   $ 0.37     $ 0.58     $ 0.61  
Diluted earnings (loss) per common share   $ 0.63     $ (0.05 )   $ 0.37     $ 0.58     $ 0.61  
Dividends per common share   $ 0.21     $ 0.21     $ 0.21     $ 0.42     $ 0.42  
 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
                   
    June 30,   March 31,   December 31,
    2020   2020   2019
ASSETS                  
Cash and due from banks   $ 84,754     $ 157,184     $ 49,787  
Securities held-to-maturity:                  
Mortgage-backed securities     7,924       7,929       7,934  
Other securities     50,078       50,225       50,954  
Securities available for sale:                  
Mortgage-backed securities     442,507       489,556       523,849  
Other securities     232,803       225,856       248,651  
Loans:                  
Multi-family residential     2,285,555       2,272,343       2,238,591  
Commercial real estate     1,646,085       1,664,934       1,582,008  
One-to-four family ― mixed-use property     591,347       592,109       592,471  
One-to-four family ― residential     184,741       189,774       188,216  
Co-operative apartments     8,423       8,493       8,663  
Construction     69,433       66,727       67,754  
Small Business Administration     106,813       14,076       14,445  
Taxi medallion     3,269       3,281       3,309  
Commercial business and other     1,073,623       1,104,967       1,061,478  
Net unamortized premiums and unearned loan fees     13,986       15,384       15,271  
Allowance for loan losses     (36,710 )     (28,098 )     (21,751 )
Net loans     5,946,565       5,903,990       5,750,455  
Interest and dividends receivable     30,219       25,526       25,722  
Bank premises and equipment, net     27,018       27,899       28,676  
Federal Home Loan Bank of New York stock     56,400       74,000       56,921  
Bank owned life insurance     157,779       158,655       157,713  
Goodwill     16,127       16,127       16,127  
Other real estate owned, net     208       208       239  
Right of use asset     38,303       39,729       41,254  
Other assets     71,974       68,526       59,494  
Total assets   $ 7,162,659     $ 7,245,410     $ 7,017,776  
                   
LIABILITIES                  
Due to depositors:                  
Non-interest bearing   $ 581,881     $ 489,198     $ 435,072  
Certificate of deposit accounts     1,135,977       1,172,381       1,437,890  
Savings accounts     184,895       192,192       191,485  
Money market accounts     1,474,880       1,597,109       1,592,011  
NOW accounts     1,672,241       1,377,555       1,365,591  
Total deposits     5,049,874       4,828,435       5,022,049  
Mortgagors’ escrow deposits     48,525       73,051       44,375  
Borrowed funds     1,305,187       1,617,582       1,237,231  
Operating lease liability     45,897       47,726       49,367  
Other liabilities     141,255       128,933       85,082  
Total liabilities     6,590,738       6,695,727       6,438,104  
                   
STOCKHOLDERS’ EQUITY                  
Preferred stock (5,000,000 shares authorized; none issued)                  
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares issued at June 30, 2020, March 31, 2020 and December 31, 2019; 28,217,434 shares, 28,213,602 shares and 28,157,206 shares outstanding at June 30, 2020, March 31, 2020 and December 31, 2019, respectively)     315       315       315  
Additional paid-in capital     226,901       225,893       226,691  
Treasury stock (3,313,161 shares, 3,316,993 shares and 3,373,389 shares at June 30, 2020, March 31, 2020 and December 31, 2019, respectively)     (69,436 )     (69,540 )     (71,487 )
Retained earnings     437,663       425,455       433,960  
Accumulated other comprehensive loss, net of taxes     (23,522 )     (32,440 )     (9,807 )
Total stockholders’ equity     571,921       549,683       579,672  
                   
Total liabilities and stockholders’ equity   $ 7,162,659     $ 7,245,410     $ 7,017,776  
 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)
                                 
    At or for the three months ended   At or for the six months ended  
    June 30,   March 31,   June 30,   June 30,   June 30,  
    2020   2020   2019   2020   2019  
Per Share Data                                
Basic earnings (loss) per share   $ 0.63   $ (0.05 )   $ 0.37   $ 0.58   $ 0.61  
Diluted earnings (loss) per share   $ 0.63   $ (0.05 )   $ 0.37   $ 0.58   $ 0.61  
Average number of shares outstanding for:                                
Basic earnings per common share computation     28,866,984     28,852,819       28,760,816     28,859,901     28,691,303  
Diluted earnings per common share computation     28,866,984     28,852,819       28,760,816     28,859,901     28,691,309  
Shares outstanding     28,217,434     28,213,602       28,187,922     28,217,434     28,187,922  
Book value per common share (1)   $ 20.27   $ 19.48     $ 20.06   $ 20.27   $ 20.06  
Tangible book value per common share (2)   $ 19.71   $ 18.92     $ 19.50   $ 19.71   $ 19.50  
                                 
Stockholders’ Equity                                
Stockholders’ equity   $ 571,921   $ 549,683     $ 565,390   $ 571,921   $ 565,390  
Tangible stockholders’ equity     556,086     533,848       549,549     556,086     549,549  
                                 
Average Balances                                
Total loans, net   $ 5,946,412   $ 5,794,866     $ 5,565,057   $ 5,870,640   $ 5,554,919  
Total interest-earning assets     6,809,835     6,719,857       6,540,134     6,764,846     6,530,692  
Total assets     7,206,059     7,106,998       6,891,541     7,156,529     6,879,905  
Total due to depositors     4,395,228     4,578,793       4,595,189     4,487,011     4,596,738  
Total interest-bearing liabilities     5,912,774     5,951,925       5,825,187     5,932,350     5,818,263  
Stockholders’ equity     557,414     576,597       560,624     567,006     556,645  
                                 
Performance Ratios (3)                                
Return on average assets     1.01 %   (0.08 )%     0.61 %   0.47 %   0.51 %
Return on average equity     13.11     (0.96 )     7.53     5.95     6.33  
Yield on average interest-earning assets (4)     3.81     3.98       4.26     3.89     4.28  
Cost of average interest-bearing liabilities     1.09     1.74       2.03     1.41     1.98  
Cost of funds     0.99     1.61       1.90     1.30     1.85  
Net interest rate spread during period (4)     2.72     2.24       2.23     2.48     2.30  
Net interest margin (4)     2.87     2.44       2.45     2.66     2.51  
Non-interest expense to average assets     1.60     1.82       1.58     1.71     1.73  
Efficiency ratio (5)     54.92     68.21       61.06     61.16     67.36  
Average interest-earning assets to average interest-bearing liabilities     1.15 X   1.13 X     1.12 X   1.14 X   1.12 X

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

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

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

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

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

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

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

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

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
 
                      June 2020 vs.               June 2020 vs.
    June 30,   March 31,   December 31,   December 2019   September 30,   June 30,   June 2019
(Dollars in thousands)   2020   2020   2019   % Change   2019   2019   % Change
Deposits                                      
Non-interest bearing   $ 581,881   $ 489,198   $ 435,072   33.7 %   $ 421,786   $ 413,813   40.6 %
Interest bearing:                                      
Certificate of deposit accounts     1,135,977     1,172,381     1,437,890   (21.0 )%     1,506,376     1,544,117   (26.4 )%
Savings accounts     184,895     192,192     191,485   (3.4 )%     193,497     196,820   (6.1 )%
Money market accounts     1,474,880     1,597,109     1,592,011   (7.4 )%     1,329,156     1,302,153   13.3 %
NOW accounts     1,672,241     1,377,555     1,365,591   22.5 %     1,461,694     1,368,813   22.2 %
Total interest-bearing deposits     4,467,993     4,339,237     4,586,977   (2.6 )%     4,490,723     4,411,903   1.3 %
                                       
Total deposits   $ 5,049,874   $ 4,828,435   $ 5,022,049   0.6 %   $ 4,912,509   $ 4,825,716   4.6 %
 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
                               
Loan Closings                               
    For the three months ended   For the six months ended
      June 30,    March 31,     June 30,      June 30,    June 30, 
(In thousands)   2020   2020   2019   2020   2019
Multi-family residential   $  59,654   $  67,318   $  55,629   $  126,972   $  82,843
Commercial real estate      8,003      99,571      42,700      107,574      56,641
One-to-four family – mixed-use property      8,117      13,455      12,885      21,572      29,308
One-to-four family – residential      2,674      8,413      7,884      11,087      11,770
Co-operative apartments      —      704      300      704      300
Construction      2,821      6,749      18,715      9,570      24,616
Small Business Administration (1)      93,241      57      2,255      93,298      2,584
Commercial business and other      59,287      102,448      156,029      161,735      286,359
Total   $  233,797   $  298,715   $  296,397   $  532,512   $  494,421

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

                                     
                                     
Loan Composition 
                                     
                    June 2020 vs.               June 2020 vs.
  June 30,   March 31,   December 31,   December 2019   September 30,     June 30,   June 2019
(Dollars in thousands) 2020   2020   2019   % Change   2019   2019   % Change
Loans held for investment:                                    
Multi-family residential $ 2,285,555     $ 2,272,343     $ 2,238,591     2.1 %   $ 2,232,305     $ 2,263,875     1.0 %
Commercial real estate   1,646,085       1,664,934       1,582,008     4.1 %     1,559,581       1,524,693     8.0 %
One-to-four family ― mixed-use property   591,347       592,109       592,471     (0.2 )%     587,100       582,264     1.6 %
One-to-four family ― residential   184,741       189,774       188,216     (1.8 )%     184,432       184,024     0.4 %
Co-operative apartments   8,423       8,493       8,663     (2.8 )%     9,089       8,137     3.5 %
Construction   69,433       66,727       67,754     2.5 %     64,234       58,503     18.7 %
Small Business Administration (1)   106,813       14,076       14,445     639.4 %     3,982       14,511     636.1 %
Taxi medallion   3,269       3,281       3,309     (1.2 )%     3,513       3,555     (8.0 )%
Commercial business and other   1,073,623       1,104,967       1,061,478     1.1 %     1,096,164       983,573     9.2 %
Net unamortized premiums and unearned loan fees   13,986       15,384       15,271     (8.4 )%     15,363       15,278     (8.5 )%
Allowance for loan losses   (36,710 )     (28,098 )     (21,751 )   68.8 %     (22,035 )     (21,510 )   70.7 %
Net loans $ 5,946,565     $ 5,903,990     $ 5,750,455     3.4 %   $ 5,743,728     $ 5,616,903     5.9 %

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

                               
                               
Net Loans Activity                              
    Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,
(In thousands)    2020   2020   2019   2019   2019
Loans originated and purchased   $ 233,797     $ 298,715     $ 269,736     $ 398,143     $ 296,397  
Principal reductions     (180,182 )     (137,189 )     (255,977 )     (266,894 )     (243,263 )
Loans sold           (498 )     (7,129 )     (3,553 )     (1,970 )
Loan charge-offs     (1,030 )     (1,259 )     (95 )     (431 )     (1,114 )
Foreclosures                             (239 )
Net change in deferred fees and costs     (1,398 )     113       (92 )     85       (144 )
Net change in the allowance for loan losses     (8,612 )     (6,347 )     284       (525 )     (495 )
Total loan activity   $ 42,575     $ 153,535     $ 6,727     $ 126,825     $ 49,172  
                                         
 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)
 
Non-Performing Assets                                
    June 30,   March 31,   December 31,   September 30,   June 30,  
(Dollars in thousands)   2020   2020   2019   2019   2019  
Loans 90 Days Or More Past Due and Still Accruing:                                
Multi-family residential   $   $   $ 445   $ 445   $  
Commercial business and other     150                  
Total     150         445     445      
                                 
Non-accrual Loans:                                
Multi-family residential     3,688     2,741     2,296     3,132     2,008  
Commercial real estate     2,671     8     367     872     1,488  
One-to-four family – mixed-use property     2,511     607     274     683     1,752  
One-to-four family – residential     6,412     5,158     5,139     5,050     5,411  
Small Business Administration     1,321     1,518     1,151     1,151     1,224  
Taxi medallion(1)     1,757     1,761     1,641     1,352     1,361  
Commercial business and other(1)     1,678     4,959     1,945     2,020     2,458  
Total     20,038     16,752     12,813     14,260     15,702  
                                 
Total Non-performing Loans     20,188     16,752     13,258     14,705     15,702  
                                 
Other Non-performing Assets:                                
Real estate acquired through foreclosure     208     208     239     239     239  
Other asset acquired through foreclosure     35     35     35     35     35  
Total     243     243     274     274     274  
                                 
Total Non-performing Assets   $ 20,431   $ 16,995   $ 13,532   $ 14,979   $ 15,976  
                                 
Non-performing Assets to Total Assets     0.29 %   0.23 %   0.19 %   0.21 %   0.23 %
Allowance For Loan Losses to Non-performing Loans     181.8 %   167.7 %   164.1 %   149.8 %   137.0 %

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

                               
Net Charge-Offs (Recoveries)                              
    Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,
(In thousands)   2020   2020   2019   2019   2019
Multi-family residential   $ (7 )   $ (6 )   $ (14 )   $ 183     $ (10 )
Commercial real estate                 (30 )           (7 )
One-to-four family – mixed-use property     3       (78 )     119       (140 )     (2 )
One-to-four family – residential     (3 )     (5 )     (3 )     (3 )     110  
Small Business Administration     165       (7 )     (8 )     (32 )     (16 )
Taxi medallion                             (50 )
Commercial business and other     849       1,245       (98 )     150       954  
Total net loan charge-offs (recoveries)   $ 1,007     $ 1,149     $ (34 )   $ 158     $ 979  
                                                     
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FORBEARANCES DETAIL
(Dollars in thousands)
(Unaudited)
                                                     
    Balances by Risk Rating (1)     Forbearances (2)   Backed by Mortgages (1)  
    Pass   Criticized/
 Classified
  Total   % of
Total
Loans
    Balance   % of
Sector
    Balance   % of
Total
  LTV  
Higher Risk Segments                                                    
Restaurants and Catering Halls   $ 67,420   $ 2,196   $ 69,616   1.2 %   $ 24,420   35.1 %   $ 58,764   84.4 % 38.6 %
Hotels     172,916         172,916   2.9       114,627   66.3       162,093   93.7   53.8  
Travel and Leisure     180,138         180,138   3.0       37,670   20.9       74,192   41.2   48.4  
Retail Services     76,494         76,494   1.3       21,168   27.7       38,760   50.7   61.9  
CRE – Shopping Center     255,192         255,192   4.3       124,958   49.0       255,192   100.0   44.4  
CRE – Single Tenant     133,937     337     134,274   2.2       44,311   33.0       134,274   100.0   41.8  
CRE – Strip Mall     286,131     2,050     288,181   4.8       139,344   48.4       288,181   100.0   45.1  
Transportation     107,207     7,800     115,007   1.9       14,756   12.8       26,155   22.7   53.0  
Contractors     184,948     1,399     186,347   3.1       16,142   8.7       121,365   65.1   51.9  
Schools and Child Care     43,674         43,674   0.7       12,441   28.5       35,193   80.6   43.4  
Subtotal   $ 1,508,057   $ 13,782   $ 1,521,839   25.5 %   $ 549,837   36.1 %   $ 1,194,169   78.5 % 46.5 %
                                                     
Lower Risk Segments   $ 4,412,763   $ 34,687   $ 4,447,450   74.5 %   $ 728,307   16.4 %   $ 4,059,435   91.3 % 36.4 %
                                                     
Total   $ 5,920,820   $ 48,469   $ 5,969,289   100.0 %   $ 1,278,144   21.4 %   $ 5,253,604   88.0 % 38.1 %

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

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

Non-cash Fair Value Adjustments to GAAP Earnings

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

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

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

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
                               
    Three Months Ended   Six Months Ended
    June 30,    March 31,   June 30,    June 30,    June 30, 
    2020    2020    2019    2020    2019 
                               
GAAP income (loss) before income taxes   $  24,080     $  (1,596 )   $  13,828     $  22,484     $  23,183  
                               
Net (gain) loss from fair value adjustments      (10,205 )      5,993        1,956        (4,212 )      4,036  
Net loss on sale of securities      54        37        15        91        15  
Life insurance proceeds      (659 )      —        —        (659 )      (43 )
Net gain on sale of assets      —        —        (770 )      —        (770 )
Net loss from fair value adjustments on qualifying hedges      365        2,073        818        2,438        1,455  
Accelerated employee benefits upon Officer’s death      —        —        —        —        455  
Merger expense      194        929        —        1,123        —  
                               
Core income before taxes      13,829        7,436        15,847        21,265        28,331  
                               
Provision for income taxes for core income      3,532        1,936        3,771        5,468        6,804  
                               
Core net income   $  10,297     $  5,500     $  12,076     $  15,797     $  21,527  
                               
GAAP diluted earnings (loss) per common share   $  0.63     $  (0.05 )   $  0.37     $  0.58     $  0.61  
                               
Net (gain) loss from fair value adjustments, net of tax      (0.27 )      0.15        0.05        (0.11 )      0.10  
Net loss on sale of securities, net of tax      —        —        —        —        —  
Life insurance proceeds      (0.02 )      —        —        (0.02 )      —  
Net gain on sale of assets, net of tax      —        —        (0.02 )      —        (0.02 )
Net loss from fair value adjustments on qualifying hedges, net of tax      0.01        0.05        0.02        0.06        0.04  
Accelerated employee benefits upon Officer’s death, net of tax      —        —        —        —        0.01  
Merger expense, net of tax      0.01        0.02        —        0.03        —  
                               
Core diluted earnings per common share(1)   $  0.36     $  0.19     $  0.42     $  0.55     $  0.75  
                               
                               
Core net income, as calculated above   $  10,297     $  5,500     $  12,076     $  15,797     $  21,527  
Average assets      7,206,059        7,106,998        6,891,541        7,156,529        6,879,905  
Average equity      557,414        576,597        560,624        567,006        556,645  
Core return on average assets(2)      0.57      0.31      0.70      0.44      0.63 %
Core return on average equity(2)      7.39      3.82      8.62      5.57      7.73 %

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

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Dollars in thousands)
(Unaudited)
                               
    Three Months Ended   Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
    2020   2020   2019   2020   2019
                               
Net interest income   $ 48,717     $ 40,826     $ 40,009     $ 89,543     $ 81,812  
                               
Non-interest income (loss)     13,737       (2,864 )     2,451       10,873       3,394  
Non-interest expense     (28,755 )     (32,380 )     (27,158 )     (61,135 )     (59,577 )
                               
                               
Pre-provision pre-tax net revenue (1)   $ 33,699     $ 5,582     $ 15,302     $ 39,281     $ 25,629  
                               

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

 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
To CORE NET INTEREST INCOME and NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
                               
    Three Months Ended   Six Months Ended
    June 30,    March 31,   June 30,    June 30,    June 30, 
    2020   2020   2019   2020   2019
GAAP net interest income   $  48,717     $  40,826     $  40,009     $  89,543     $  81,812  
Net loss from fair value adjustments on qualifying hedges      365        2,073        818        2,438        1,455  
Core net interest income   $  49,082     $  42,899     $  40,827     $  91,981     $  83,267  
                               
                               
GAAP interest income on total loans, net   $  60,557     $  61,109     $  62,273     $  121,666     $  124,603  
Net loss from fair value adjustments on qualifying hedges      365        2,073        818        2,438        1,455  
Prepayment penalties received on loans      (702 )      (753 )      (1,120 )      (1,455 )      (1,925 )
Net recoveries of interest from non-accrual loans      (74 )      (436 )      (519 )      (510 )      (1,233 )
Core interest income on total loans, net   $  60,146     $  61,993     $  61,452     $  122,139     $  122,900  
Average total loans, net   $  5,946,412     $  5,794,866     $  5,565,057     $  5,870,640     $  5,554,919  
Core yield on total loans      4.05      4.28      4.42      4.16      4.42 %
                               
                               
Net interest income tax equivalent   $  48,852     $  40,968     $  40,134     $  89,820     $  82,062  
Net loss from fair value adjustments on qualifying hedges      365        2,073        818        2,438        1,455  
Prepayment penalties received on loans and securities      (702 )      (753 )      (1,120 )      (1,455 )      (1,925 )
Net recoveries of interest from non-accrual loans      (74 )      (436 )      (519 )      (510 )      (1,233 )
Net interest income used in calculation of Core net interest margin   $  48,441     $  41,852     $  39,313     $  90,293     $  80,359  
Total average interest-earning assets   $  6,809,835     $  6,719,857     $  6,540,134     $  6,764,846     $  6,530,692  
Core net interest margin      2.85      2.49      2.40      2.67      2.46 %
 
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)
 
    June 30,   December 31,   June 30,
(Dollars in thousands)   2020   2020   2019
Total Equity   $ 571,921     $ 579,672     $ 565,390  
Less:                  
Goodwill     (16,127 )     (16,127 )     (16,127 )
Intangible deferred tax liabilities     292       292       286  
Tangible Stockholders’ Common Equity   $ 556,086     $ 563,837     $ 549,549  
                   
Total Assets   $ 7,162,659     $ 7,017,776     $ 6,945,634  
Less:                  
Goodwill     (16,127 )     (16,127 )     (16,127 )
Intangible deferred tax liabilities     292       292       286  
Tangible Assets   $ 7,146,824     $ 7,001,941     $ 6,929,793  
                   
Tangible Stockholders’ Common Equity to Tangible Assets     7.78 %     8.05 %     7.93 %

_____________________

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

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

[ad_2]

Click here for the original source.

Leave a Reply

Your email address will not be published. Required fields are marked *