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Flushing Financial Corporation Reports 1Q23 GAAP EPS of $0.17 and Core EPS of $0.10; Deposits Increase Sequentially and Year-Over-Year; Liquidity Remains Strong Outlines Action Plan to Enhance Business Model Resilience and Drive Profitability in Current

John R. Buran, President and CEO Commentary

“The inverted yield curve and the rising rate environment led to first quarter results below our expectations. To better adapt to the changing environment, we are accelerating the following actions to enhance the resilience of our business model and strengthen performance: 1) move more towards being interest rate neutral in the shorter term; 2) increase our focus on risk adjusted returns and profitability; 3) emphasize our brand of customer service and deep relationships to continue to expand the client base and enhance loyalty; 4) further tighten expense controls; 5) review new and existing lending relationships to prepare for the next credit cycle; and 6) preserve our strong liquidity and capital. We continue to experience solid deposit growth, which reflects our deep client relationships and ties to our communities. Further, our strong liquidity is expected to allow us to continue our long track record of dividend payments. While the environment has clearly become more challenging, we are confident that our decisive actions we are taking now will result in improved profitability in the future and set the stage for consistent and significantly higher returns.”

- John R. Buran, President and CEO

UNIONDALE, N.Y., April 25, 2023 (GLOBE NEWSWIRE) -- Strong Credit Quality Despite Loss on One Singular Relationship. Results for the quarter were impacted by our decision to fully charge off a $9.2 million business credit placed on non-accrual in 2Q22. This credit was a participation where the domestic borrower had a significant customer who shipped its product internationally and was impacted by world events. Existing credit protection became more questionable during the quarter which led to the decision to charge-off. Consistent with our long-standing history of conservative underwriting, the remainder of the credit portfolio continued to perform well as delinquencies improved 16 basis points and criticized and classified assets declined QoQ.

NIM Outlook; Solid Capital and Liquidity. While rising rates temporarily compress our net interest margin, the NIM should begin to rebound, on a lagged basis, after the Fed stops raising rates. To limit additional margin squeeze, we moved closer to interest rate neutral, achieving approximately 40% of our target for 2023 in the first quarter. Capital continues to be strong with a TCE1 of 7.73%. Liquidity is solid with $3.7 billion of availability while uninsured and uncollateralized deposits are a low $1.1 billion or 16.2% of total deposits.

Key Financial Metrics2


            
  1Q23  4Q22 3Q22 2Q22 1Q22
GAAP:           
EPS $0.17  $0.34 $0.76 $0.81  $0.58
ROAA (%) 0.24  0.48 1.11 1.22  0.91
ROAE (%) 3.02  6.06 13.91 15.00  10.83
NIM FTE3 (%) 2.27  2.70 3.07 3.35  3.36
Core:           
EPS $0.10  $0.57 $0.62 $0.70  $0.61
ROAA (%) 0.14  0.82 0.90 1.05  0.94
ROAE (%) 1.76  10.29 11.24 12.90  11.27
Core NIM FTE (%) 2.25  2.63 3.03 3.33  3.31
Credit Quality:           
NPAs/Loans & OREO (%) 0.61  0.77 0.72 0.72  0.21
ACLs/Loans (%) 0.56  0.58 0.59 0.58  0.57
ACLs/NPLs (%) 182.89  124.89 142.29 141.06  266.12
NCOs/Avg Loans (%) 0.54  0.05 0.02 (0.03) 0.06
Balance Sheet:           
Avg Loans ($B) $6.9  $6.9 $6.9 $6.6  $6.6
Avg Dep ($B) $6.8  $6.7 $6.3 $6.4  $6.4
Book Value/Share $22.84  $22.97 $22.47 $22.38  $22.26
Tangible BV/Share $22.18  $22.31 $21.81 $21.71  $21.61
TCE/TA (%) 7.73  7.82 7.62 7.82  8.05
            

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”)

1Q23 Highlights
  • Average total deposits increased 2.0% QoQ and 6.2% YoY to $6.8 billion, with core deposits comprising 75.3% of total average deposits; opened new Hauppauge branch during the quarter
  • Period end net loans declined slightly QoQ and increased 4.5% YoY; loan closings were $173.5 million down 22.9% QoQ and 47.3% YoY; the yield on closings increased 91 bps QoQ and 357 bps YoY to 7.01%
  • Loan pipeline decreased 59.9% YoY, but increased 5.5% QoQ to $266.1 million reflecting higher rates and greater client selectivity
  • Net interest margin FTE decreased 43 bps QoQ and 109 bps YoY to 2.27%; Core net interest margin FTE decreased 38 bps QoQ and 106 bps YoY to 2.25%; The decline in GAAP and Core NIM was primarily driven by our liability sensitive balance sheet resulting in liabilities repricing faster than assets; after a lag, the NIM is expected to expand when the Fed stops raising rates
  • Achieved 40% of our goal of moving towards interest rate neutral in 1Q23. These actions include adding $200 million hedge on investments, $50 million (net) of funding swaps, increasing floating rate securities, and extending funding
  • NPAs declined to $42.2 million from $53.4 million at 4Q22, but increased from $14.1 million at 1Q22
  • Provision for credit losses was $7.5 million in 1Q23 compared to $1.4 million in 1Q22; net charge-offs were $9.2 million in 1Q23 compared to $0.9 million in 1Q22
  • Tangible Common Equity to Tangible Assets was 7.73%, down from 7.82% at 4Q22; the change in accumulated other comprehensive loss, net of taxes negatively impacted this ratio by 2 bps in 1Q23; our swaps portfolio serves as a partial offset to the value of the AFS securities portfolio when rates change
  • Repurchased 159,516 shares at an average price of $19.14
Areas of Focus
Credit
Quality
  • Midtown Manhattan office exposure is 0.1% of net loans
  • The Company is a conservatively managed institution with a history of low and below industry levels of credit losses
  • Over 88% of the loan portfolio is collateralized by real estate with an average loan to value less than 37% and debt service coverage ratios for multifamily and commercial real estate, which together total 65% of the loan portfolio, of 1.9x; This strong level of coverage is expected to enable our borrowers to absorb the impact of higher operating costs and higher interest rates while still generating ample cash flows to cover required principal and interest payments
Interest
Rate
Risk
  • Historically the Company operated with a liability sensitive balance sheet resulting in liabilities repricing faster than assets when interest rates change
  • During 1Q23, the Company took significant actions to position the balance sheet towards a more interest rate risk neutral position
  • These actions, which include adding hedges, floating rate assets, and extending funding, resulted in achievement of 40% of our goal for 2023
Liquidity
  • Deposits increased nearly $250 million in the first quarter, and we see new opportunities for growth
  • The Company continues to have ample liquidity with $3.7 billion of undrawn lines and resources
  • Uninsured and uncollateralized deposits were only 16.2% of total deposits at March 31, 2023
  • Checking account openings were up 30% YoY in 1Q23
Customer Experience
  • Additional opportunities emerging as a result of a major competitor leaving the market
  • Approximately 33% of our branches are in Asian markets
  • Bensonhurst, our 27th branch, is expected to open in 2023 and will enhance our Asian branch presence
  • Digital banking usage continues to increase with double digit growth in monthly mobile deposit active uses and digital banking enrollment in March 2023 versus a year ago


Income Statement Highlights


                   
              YoY QoQ
($000s, except EPS)  1Q23  4Q22 3Q22 2Q22 1Q22 Change Change
                   
Net Interest Income  $45,262  $54,201  $61,206 $64,730 $63,479 (28.7)% (16.5)%
Provision (Benefit) for Credit Losses  7,508  (12) 2,145 1,590 1,358 452.9   NM  
Noninterest Income (Loss)  6,908  (7,652) 8,995 7,353 1,313 NM   (190.3) 
Noninterest Expense  37,703  33,742  35,634 35,522 38,794 (2.8)  11.7  
Income Before Income Taxes  6,959  12,819  32,422 34,971 24,640 (71.8)  (45.7) 
Provision for Income Taxes  1,801  2,570  8,980 9,936 6,421 (72.0)  (29.9) 
Net Income  $5,158  $10,249  $23,442 $25,035 $18,219 (71.7)  (49.7) 
Diluted EPS  $0.17  $0.34  $0.76 $0.81 $0.58 (70.7)  (50.0) 
Avg. Diluted Shares (000s)  30,265  30,420  30,695 30,937 31,254 (3.2)  (0.5) 
                   
Core Net Income1  $3,003  $17,399  $18,953 $21,518 $18,969 (84.2)  (82.7) 
Core EPS1  $0.10  $0.57  $0.62 $0.70 $0.61 (83.6)  (82.5) 

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $45.3 million in 1Q23 compared to $54.2 million in 4Q22, $61.2 million in 3Q22, $64.7 million in 2Q22, and $63.5 million in 1Q22.

  • Net interest margin, FTE (“NIM”) of 2.27% decreased 109 bps YoY and 43 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 $1.1 million (6 bps to the NIM) in 1Q23 compared to $2.4 million (12 bps) in 4Q22, $2.2 million (11 bps) in 3Q22, $2.6 million (13 bps) in 2Q22, and $2.6 million (14 bps) in 1Q22
  • Excluding the items in the previous bullet, net interest margin was 2.21% in 1Q23, 2.58% in 4Q22, 2.96% in 3Q22, and 3.22% in both 2Q22 and 1Q22
  • In order to move more towards a neutral interest rate risk position, the following actions were taken:
    • Added $200 million of hedges against the investment portfolio converting securities yielding 1.90% into assets yielding 3.41%
    • Purchases $250.0 million of funding derivatives locking in funding at a weighted average cost of 3.72% with a duration approximately 3.2 years
    • Extended funding through FHLB advances totaling $71.7 million at 4.05%, with an average duration of 4.0 years
    • Purchased $66.7 million of floating (reprice within 90 days) rate securities with an initial weighted average yield of 6.45%
  • The totality of these actions equates to approximately 40% of the goal of moving towards interest rate neutral
  • Additionally, the balance sheet, as of March 31, 2023, consists of:        
    • Approximately $1.6 billion of assets were floating or swapped into floating rate assets
    • Funding derivatives totaled $921.5 million with $621.5 million effective at 2.53% for 2.4 years and $300.0 million forward starting at 1.80% with a remaining term of 2.7 years; this strategy was started in 2018
    • The Company has $2.5 billion of protection in place against a rising rate environment through floating assets and derivative strategy

The Company recorded a provision for credit losses of $7.5 million in 1Q23 compared to a benefit for credit losses of $12 thousand in 4Q22, a provision for credit losses of $2.1 million in 3Q22, $1.6 million in 2Q22, and $1.4 million in 1Q22.

  • Net charge-offs (recoveries) were $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), $(0.5) million in 2Q22 ((3) bps of average loans), and $0.9 million in 1Q22 (6 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) was $6.9 million in 1Q23, $(7.7) million in 4Q22, $9.0 million in 3Q22, $7.4 million in 2Q22, and $1.3 million in 1Q22.

  • Noninterest income included net gains (losses) from fair value adjustments of $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), $2.5 million in 2Q22 ($0.06 per share, net of tax), and $(1.8) million in 1Q22 ($(0.04) 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 have a yield that approximates 6.40%
  • Life insurance proceeds were $0.3 million ($0.01 per share) in 4Q22 and $1.5 million ($0.05 per share) in 2Q22
  • Absent all above items and other immaterial adjustments, core noninterest income was $4.3 million in 1Q23, up 37.4% YoY and 21.6% QoQ; investment product sales were a significant driver of the YOY and QoQ increase

Noninterest expense totaled $37.7 million in 1Q23 (a decrease of 2.8% YoY, but an increase of 11.7% QoQ) compared to $33.7 million in 4Q22, $35.6 million in 3Q22, $35.5 million in 2Q22, and $38.8 million in 1Q22.

  • Given the challenging rate environment, management continues to actively review all noninterest expenses
  • Salaries and employee benefits include $1.7 million and $1.4 million benefit from Employee Retention Tax Credit refunds in 1Q23 and 4Q22, respectively, and $2.8 million benefit from a lower discount rate for certain benefit plans in 4Q22
  • Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22
  • Seasonal compensation expense was $4.1 million and $4.3 million in 1Q23 and 1Q22, respectively
  • Excluding the effects of other immaterial adjustments, core operating expenses were $37.6 million in 1Q23, down 2.8% YoY but up 11.8% QoQ; excluding the Employee Retention Tax Credit refund and the benefit from the lower discount rate in 4Q22, 1Q23 and 4Q22 core noninterest expense would have been $39.3 million and $37.8 million, respectively
  • GAAP noninterest expense to average assets was 1.78% in 1Q23, 1.58% in 4Q22, 1.69% in 3Q22, 1.73% in 2Q22, and 1.93% in 1Q22

The provision for income taxes was $1.8 million in 1Q23 compared to $2.6 million in 4Q22, $9.0 million in 3Q22, $9.9 million in 2Q22, and $6.4 million in 1Q22.

  • The effective tax rate was 25.9% in 1Q23, 20.0% in 4Q22, 27.7% in 3Q22, 28.4% in 2Q22, and 26.1% in 1Q22
  • 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
  1Q23  4Q22 3Q22 2Q22 1Q22 Change Change
Averages ($MM)                 
Loans $6,871  $6,881 $6,861 $6,640 $6,579 4.4 % (0.1)%
Total Deposits 6,810  6,678 6,277 6,441 6,410 6.2   2.0  
                  
Credit Quality ($000s)                 
Nonperforming Loans $21,176  $32,382 $29,003 $27,948 $14,066 50.5 % (34.6)%
Nonperforming Assets 42,157  53,363 49,984 48,929 14,066 199.7   (21.0) 
Criticized and Classified Loans 58,130  68,093 61,684 57,145 59,548 (2.4)  (14.6) 
Criticized and Classified Assets 79,111  89,073 82,665 78,125 80,527 (1.8)  (11.2) 
Allowance for Credit Losses/Loans (%) 0.56  0.58 0.59 0.58 0.57 (1)bp (2)bps
                  
Capital                 
Book Value/Share $22.84  $22.97 $22.47 $22.38 $22.26 2.6 % (0.6)%
Tangible Book Value/Share 22.18  22.31 21.81 21.71 21.61 2.6   (0.6) 
Tang. Common Equity/Tang. Assets (%) 7.73  7.82 7.62 7.82 8.05 (32)bps (9)bps
Leverage Ratio (%) 8.58  8.61 8.74 8.91 9.05 (47)  (3) 

Average loans were $6.9 billion, an increase of 4.4% YoY and down 0.1% QoQ.

  • Maintain the credit strategy of loans secured by real estate with an emphasis on rent regulated multifamily
  • Period end net loans totaled $6.9 billion, up 4.5% YoY, but down 0.4% QoQ
  • Total loan closings were $173.5 million in 1Q23, $225.2 million in 4Q22, $463.7 million in 3Q22, $503.8 million in 2Q22, and $329.3 million in 1Q22; the loan pipeline was $266.1 million at March 31, 2023, down 59.9% YoY, but up 5.5% QoQ
  • The diversified loan portfolio is over 88% collateralized by real estate with an average loan-to-value ratio of <37%
  • Midtown Manhattan office exposure is 0.1% of net loans

Average total deposits were $6.8 billion, increasing 6.2% YoY and 2.0% QoQ.

  • Average core deposits (non-CD deposits) were 75.3% of total average deposits in 1Q23, compared to 86.1% a year ago
  • Average noninterest bearing deposits decreased 10.5% YoY in 1Q23 and 8.5% QoQ and comprised 13.2% of average total deposits in 1Q23 compared to 15.6% a year ago
  • Uninsured and uncollateralized deposits totaled $1.1 billion or 16.2% of total deposits; Bank liquidity remains strong with $3.7 billion of availability

Credit Quality: Nonperforming loans at the end of each quarter totaled $21.2 million at 1Q23, $32.4 million at 4Q22, $29.0 million at 3Q22, $27.9 million at 2Q22, and $14.1 million at 1Q22.

  • Criticized and classified loans were 84 bps of gross loans at 1Q23 compared to 98 bps at 4Q22, 89 bps at 3Q22, 85 bps at 2Q22, and 90 bps at 1Q22
  • Total delinquent loans improved 16 bps QoQ to 42 bps from 58 bps indicating further improvement in future credit quality
  • Allowance for credit losses were 182.9% of nonperforming loans at 1Q23 compared to 124.9% at 4Q22, and 266.1% at 1Q22

Capital: Book value per common share was $22.84 at 1Q23, up 2.6% YoY, but down 0.6% QoQ; tangible book value per common share, a non-GAAP measure, was $22.18 at 1Q23, up 2.6% YoY, but down 0.6% QoQ.

  • The Company paid a dividend of $0.22 per share; the Company has ample available liquidity to meet its obligations; Purchased 159,516 shares at an average price of $19.14 in 1Q23 with 434,946 shares remain subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.73% at 1Q23 compared to 7.82% at 4Q22 and 8.05% at 1Q22; the swaps portfolio serves as a partial offset to market value changes in the AFS securities portfolio
  • The Company and the Bank remain well capitalized under all applicable regulatory requirements

Conference Call Information And Second 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, April 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=LTE5H6Xo
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 2825200
  • The conference call will be simultaneously webcast and archived

Second Quarter 2023 Earnings Release Date:

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

A detailed announcement will be issued prior to the second 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
 March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands, except per share data)2023 2022 2022 2022 2022
Performance Ratios (1)                   
Return on average assets 0.24%  0.48%  1.11%  1.22 %  0.91%
Return on average equity 3.02   6.06   13.91   15.00    10.83 
Yield on average interest-earning assets (2) 4.61   4.44   4.10   3.85    3.77 
Cost of average interest-bearing liabilities 2.80   2.11   1.25   0.60    0.50 
Cost of funds 2.47   1.84   1.08   0.52    0.43 
Net interest rate spread during period (2) 1.81   2.33   2.85   3.25    3.27 
Net interest margin (2) 2.27   2.70   3.07   3.35    3.36 
Noninterest expense to average assets 1.78   1.58   1.69   1.73    1.93 
Efficiency ratio (3) 76.48   59.55   55.68   52.27    58.87 
Average interest-earning assets to
average interest-bearing liabilities
 1.19X  1.21X  1.22X  1.22 X  1.22X
                    
Average Balances                   
Total loans, net$6,871,192  $6,881,245  $6,861,463  $6,640,331   $6,578,680 
Total interest-earning assets 7,996,677   8,045,691   7,979,070   7,740,683    7,570,373 
Total assets 8,468,311   8,518,019   8,442,657   8,211,763    8,049,470 
Total deposits 6,810,485   6,678,383   6,276,613   6,440,904    6,410,063 
Total interest-bearing liabilities 6,703,558   6,662,209   6,553,087   6,337,374    6,220,510 
Stockholders’ equity 683,071   676,165   674,282   667,456    673,012 
                    
Per Share Data                   
Book value per common share (4)$22.84  $22.97  $22.47  $22.38   $22.26 
Tangible book value per common share (5)$22.18  $22.31  $21.81  $21.71   $21.61 
                    
Stockholders’ Equity                   
Stockholders’ equity$673,459  $677,157  $670,719  $670,812   $675,813 
Tangible stockholders’ equity 653,932   657,504   650,936   650,894    656,085 
                    
Consolidated Regulatory Capital Ratios                   
Tier 1 capital$737,138  $746,880  $749,526  $739,776   $731,536 
Common equity Tier 1 capital 690,846   698,258   701,532   686,258    675,434 
Total risk-based capital 965,384   975,709   979,021   903,047    892,861 
Risk Weighted Assets 6,659,532   6,640,542   6,689,284   6,522,710    6,232,020 
                    
Tier 1 leverage capital (well capitalized = 5%) 8.58%  8.61%  8.74%  8.91 %  9.05%
Common equity Tier 1 risk-based capital
(well capitalized = 6.5%)
 10.37   10.52   10.49   10.52    10.84 
Tier 1 risk-based capital (well capitalized = 8.0%) 11.07   11.25   11.20   11.34    11.74 
Total risk-based capital (well capitalized = 10.0%) 14.50   14.69   14.64   13.84    14.33 
                    
Capital Ratios                   
Average equity to average assets 8.07%  7.94%  7.99%  8.13 %  8.36%
Equity to total assets 7.94   8.04   7.84   8.04    8.27 
Tangible common equity to tangible assets (6) 7.73   7.82   7.62   7.82    8.05 
                    
Asset Quality                   
Nonaccrual loans (7)$21,176  $29,782  $27,003  $27,848   $14,066 
Nonperforming loans 21,176   32,382   29,003   27,948    14,066 
Nonperforming assets 42,157   53,363   49,984   48,929    14,066 
Net charge-offs (recoveries) 9,234   811   290   (501)   935 
                    
Asset Quality Ratios                   
Nonperforming loans to gross loans 0.31%  0.47%  0.42%  0.41 %  0.21%
Nonperforming assets to total assets 0.50   0.63   0.58   0.59    0.17 
Allowance for credit losses to gross loans 0.56   0.58   0.59   0.58    0.57 
Allowance for credit losses to nonperforming assets 91.87   75.79   82.56   80.57    266.12 
Allowance for credit losses to nonperforming loans 182.89   124.89   142.29   141.06    266.12 
Net charge-offs (recoveries) to average loans 0.54   0.05   0.02   (0.03)   0.06 
                    
Full-service customer facilities 26   25   25   25    24 

(1) Ratios are presented on an annualized basis, where appropriate.
(2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(3) Efficiency ratio, a non-GAAP measure, was calculated by dividing 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 (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7) Excludes performing nonaccrual TDR loans in periods prior to 1Q23.

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

               
 For the three months ended
 March 31, December 31, September 30, June 30, March 31,
(In thousands, except per share data)2023 2022 2022 2022 2022
Interest and Dividend Income              
Interest and fees on loans$82,889 $81,033  $75,546 $69,192 $67,516 
Interest and dividends on securities:              
Interest 7,240  6,511   5,676  4,929  3,745 
Dividends 29  24   17  11  8 
Other interest income 1,959  1,702   506  159  51 
Total interest and dividend income 92,117  89,270   81,745  74,291  71,320 
               
Interest Expense              
Deposits 39,056  27,226   11,965  4,686  3,408 
Other interest expense 7,799  7,843   8,574  4,875  4,433 
Total interest expense 46,855  35,069   20,539  9,561  7,841 
               
Net Interest Income 45,262  54,201   61,206  64,730  63,479 
Provision (benefit) for credit losses 7,508  (12)  2,145  1,590  1,358 
Net Interest Income After Provision (Benefit) for Credit Losses 37,754  54,213   59,061  63,140  62,121 
               
Noninterest Income (Loss)              
Banking services fee income 1,411  1,231   1,351  1,166  1,374 
Net loss on sale of securities   (10,948)       
Net gain on sale of loans 54  46     73   
Net gain on disposition of assets   104        
Net gain (loss) from fair value adjustments 2,619  (622)  5,626  2,533  (1,809)
Federal Home Loan Bank of New York stock dividends 697  658   538  407  397 
Life insurance proceeds   286     1,536   
Bank owned life insurance 1,109  1,126   1,132  1,115  1,114 
Other income 1,018  467   348  523  237 
Total noninterest income (loss) 6,908  (7,652)  8,995  7,353  1,313 
               
Noninterest Expense              
Salaries and employee benefits 20,887  18,178   21,438  21,109  23,649 
Occupancy and equipment 3,793  3,701   3,541  3,760  3,604 
Professional services 2,483  2,130   2,570  2,285  2,222 
FDIC deposit insurance 977  485   738  615  420 
Data processing 1,435  1,421   1,367  1,383  1,424 
Depreciation and amortization 1,510  1,535   1,488  1,447  1,460 
Other real estate owned/foreclosure expense 165  35   143  32  84 
Other operating expenses 6,453  6,257   4,349  4,891  5,931 
Total noninterest expense 37,703  33,742   35,634  35,522  38,794 
               
Income Before Provision for Income Taxes 6,959  12,819   32,422  34,971  24,640 
               
Provision for Income Taxes 1,801  2,570   8,980  9,936  6,421 
               
Net Income$5,158 $10,249  $23,442 $25,035 $18,219 
               
Basic earnings per common share$0.17 $0.34  $0.76 $0.81 $0.58 
Diluted earnings per common share$0.17 $0.34  $0.76 $0.81 $0.58 
Dividends per common share$0.22 $0.22  $0.22 $0.22 $0.22 
               
Basic average shares 30,265  30,420   30,695  30,937  31,254 
Diluted average shares 30,265  30,420   30,695  30,937  31,254 
                 


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

               
 March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2023 2022 2022 2022 2022
ASSETS              
Cash and due from banks$176,747  $151,754  $164,693  $137,026  $186,407 
Securities held-to-maturity:              
Mortgage-backed securities 7,870   7,875   7,880   7,885   7,890 
Other securities 65,653   65,836   66,032   66,230   66,327 
Securities available for sale:              
Mortgage-backed securities 380,110   384,283   468,366   510,934   553,828 
Other securities 431,818   351,074   351,495   346,720   286,041 
Loans 6,904,176   6,934,769   6,956,674   6,760,393   6,607,264 
Allowance for credit losses (38,729)  (40,442)  (41,268)  (39,424)  (37,433)
Net loans 6,865,447   6,894,327   6,915,406   6,720,969   6,569,831 
Interest and dividends receivable 46,836   45,048   42,571   38,811   37,308 
Bank premises and equipment, net 21,567   21,750   22,376   22,285   22,752 
Federal Home Loan Bank of New York stock 38,779   45,842   62,489   50,017   33,891 
Bank owned life insurance 214,240   213,131   212,353   211,220   211,867 
Goodwill 17,636   17,636   17,636   17,636   17,636 
Core deposit intangibles 1,891   2,017   2,147   2,282   2,420 
Right of use asset 42,268   43,289   44,885   46,687   48,475 
Other assets 168,259   179,084   179,090   160,885   125,160 
Total assets$8,479,121  $8,422,946  $8,557,419  $8,339,587  $8,169,833 
               
LIABILITIES              
Total deposits$6,734,090  $6,485,342  $6,125,305  $6,407,577  $6,452,895 
Borrowed funds 887,509   1,052,973   1,572,830   1,089,621   877,122 
Operating lease liability 45,353   46,125   48,330   50,346   52,292 
Other liabilities 138,710   161,349   140,235   121,231   111,711 
Total liabilities 7,805,662   7,745,789   7,886,700   7,668,775   7,494,020 
               
STOCKHOLDERS' EQUITY              
Preferred stock (5,000,000 shares authorized; none issued)              
Common stock ($0.01 par value; 100,000,000 shares authorized) 341   341   341   341   341 
Additional paid-in capital 262,876   264,332   263,755   262,860   261,837 
Treasury stock (97,760)  (98,535)  (90,977)  (88,342)  (79,834)
Retained earnings 545,786   547,507   543,894   527,217   508,973 
Accumulated other comprehensive loss, net of taxes (37,784)  (36,488)  (46,294)  (31,264)  (15,504)
Total stockholders' equity 673,459   677,157   670,719   670,812   675,813 
               
Total liabilities and stockholders' equity$8,479,121  $8,422,946  $8,557,419  $8,339,587  $8,169,833 
               
(In thousands)              
Issued shares 34,088   34,088   34,088   34,088   34,088 
Outstanding shares 29,488   29,476   29,851   29,980   30,367 
Treasury shares 4,600   4,612   4,237   4,108   3,721 
                    

  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

               
 For the three months ended
 March 31, December 31, September 30, June 30, March 31,
(In thousands)2023 2022 2022 2022 2022
Interest-earning Assets:              
Mortgage loans, net$5,333,274 $5,338,612 $5,340,694 $5,178,029 $5,152,070
Other loans, net 1,537,918  1,542,633  1,520,769  1,462,302  1,426,610
Total loans, net 6,871,192  6,881,245  6,861,463  6,640,331  6,578,680
Taxable securities:              
Mortgage-backed securities 457,911  549,204  568,854  594,923  580,670
Other securities 411,723  371,897  362,629  333,158  226,744
Total taxable securities 869,634  921,101  931,483  928,081  807,414
Tax-exempt securities:              
Other securities 66,828  67,022  67,211  67,315  57,611
Total tax-exempt securities 66,828  67,022  67,211  67,315  57,611
Interest-earning deposits and federal funds sold 189,023  176,323  118,913  104,956  126,668
Total interest-earning assets 7,996,677  8,045,691  7,979,070  7,740,683  7,570,373
Other assets 471,634  472,328  463,587  471,080  479,097
Total assets$8,468,311 $8,518,019 $8,442,657 $8,211,763 $8,049,470
               
Interest-bearing Liabilities:              
Deposits:              
Savings accounts$134,945 $146,598 $154,545 $156,785 $156,592
NOW accounts 1,970,555  1,972,134  1,808,608  2,089,851  2,036,914
Money market accounts 2,058,523  2,146,649  2,136,829  2,231,743  2,253,630
Certificate of deposit accounts 1,679,517  1,350,683  1,057,733  820,476  889,847
Total due to depositors 5,843,540  5,616,064  5,157,715  5,298,855  5,336,983
Mortgagors' escrow accounts 70,483  82,483  68,602  97,496  71,509
Total interest-bearing deposits 5,914,023  5,698,547  5,226,317  5,396,351  5,408,492
Borrowings 789,535  963,662  1,326,770  941,023  812,018
Total interest-bearing liabilities 6,703,558  6,662,209  6,553,087  6,337,374  6,220,510
Noninterest-bearing demand deposits 896,462  979,836  1,050,296  1,044,553  1,001,571
Other liabilities 185,220  199,809  164,992  162,380  154,377
Total liabilities 7,785,240  7,841,854  7,768,375  7,544,307  7,376,458
Equity 683,071  676,165  674,282  667,456  673,012
Total liabilities and equity$8,468,311 $8,518,019 $8,442,657 $8,211,763 $8,049,470
               
Net interest-earning assets$1,293,119 $1,383,482 $1,425,983 $1,403,309 $1,349,863


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

 
 For the three months ended
 March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2023 2022 2022 2022 2022
Interest Income:                   
Mortgage loans, net$62,054  $60,946  $58,374  $54,775   $53,970  
Other loans, net 20,835   20,087   17,172   14,417    13,546  
Total loans, net 82,889   81,033   75,546   69,192    67,516  
Taxable securities:                   
Mortgage-backed securities 2,281   2,425   2,466   2,356    2,167  
Other securities 4,611   3,723   2,839   2,090    1,119  
Total taxable securities 6,892   6,148   5,305   4,446    3,286  
Tax-exempt securities:                   
Other securities 477   489   492   625    591  
Total tax-exempt securities 477   489   492   625    591  
Interest-earning deposits and
federal funds sold
 1,959   1,702   506   159    51  
Total interest-earning assets 92,217   89,372   81,849   74,422    71,444  
Interest Expense:                   
Deposits:                   
Savings accounts$126  $59  $53  $50   $49  
NOW accounts 13,785   9,515   3,640   1,405    793  
Money market accounts 14,102   10,532   5,280   1,952    1,275  
Certificate of deposit accounts 11,007   7,037   2,948   1,273    1,289  
Total due to depositors 39,020   27,143   11,921   4,680    3,406  
Mortgagors' escrow accounts 36   83   44   6    2  
Total interest-bearing deposits 39,056   27,226   11,965   4,686    3,408  
Borrowings 7,799   7,843   8,574   4,875    4,433  
Total interest-bearing liabilities 46,855   35,069   20,539   9,561    7,841  
Net interest income- tax equivalent$45,362  $54,303  $61,310  $64,861   $63,603  
Included in net interest income above:                   
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans$680  $1,080  $1,368  $2,281   $1,716  
Net gains/(losses) from fair value adjustments on qualifying hedges included in interest income 100   936   28   (60)   (129) 
Purchase accounting adjustments 306   342   775   367    1,058  
Interest-earning Assets Yields:                   
Mortgage loans, net 4.65%  4.57%  4.37%  4.23 %  4.19 %
Other loans, net 5.42   5.21   4.52   3.94    3.80  
Total loans, net 4.83   4.71   4.40   4.17    4.11  
Taxable securities:                   
Mortgage-backed securities 1.99   1.77   1.73   1.58    1.49  
Other securities 4.48   4.00   3.13   2.51    1.97  
Total taxable securities 3.17   2.67   2.28   1.92    1.63  
Tax-exempt securities: (1)                   
Other securities 2.86   2.92   2.93   3.71    4.10  
Total tax-exempt securities 2.86   2.92   2.93   3.71    4.10  
Interest-earning deposits and
federal funds sold
 4.15   3.86   1.70   0.61    0.16  
Total interest-earning assets (1) 4.61%  4.44%  4.10%  3.85 %  3.77 %
Interest-bearing Liabilities Yields:                   
Deposits:                   
Savings accounts 0.37%  0.16%  0.14%  0.13 %  0.13 %
NOW accounts 2.80   1.93   0.81   0.27    0.16  
Money market accounts 2.74   1.96   0.99   0.35    0.23  
Certificate of deposit accounts 2.62   2.08   1.11   0.62    0.58  
Total due to depositors 2.67   1.93   0.92   0.35    0.26  
Mortgagors’ escrow accounts 0.20   0.40   0.26   0.02    0.01  
Total interest-bearing deposits 2.64   1.91   0.92   0.35    0.25  
Borrowings 3.95   3.26   2.58   2.07    2.18  
Total interest-bearing liabilities 2.80%  2.11%  1.25%  0.60 %  0.50 %
                    
Net interest rate spread (tax equivalent) (1) 1.81%  2.33%  2.85%  3.25 %  3.27 %
Net interest margin (tax equivalent) (1) 2.27%  2.70%  3.07%  3.35 %  3.36 %
Ratio of interest-earning assets to
interest-bearing liabilities
 1.19X  1.21X  1.22X  1.22 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

                    
                 1Q23 vs. 1Q23 vs.
  March 31, December 31, September 30, June 30, March 31, 4Q22 1Q22
(Dollars in thousands) 2023 2022 2022 2022 2022 % Change % Change
Noninterest bearing $872,254 $921,238 $992,378 $1,081,208 $1,041,027 (5.3)% (16.2)%
Interest bearing:                     
Certificate of deposit accounts  1,880,260  1,526,338  1,036,107  906,943  886,317 23.2   112.1  
Savings accounts  128,245  143,641  150,552  154,670  158,542 (10.7)  (19.1) 
Money market accounts  1,855,781  2,099,776  2,113,256  2,229,993  2,362,390 (11.6)  (21.4) 
NOW accounts  1,918,977  1,746,190  1,762,468  1,977,186  1,925,124 9.9   (0.3) 
Total interest-bearing deposits  5,783,263  5,515,945  5,062,383  5,268,792  5,332,373 4.8   8.5  
Total due to depositors  6,655,517  6,437,183  6,054,761  6,350,000  6,373,400 3.4   4.4  
Mortgagors' escrow deposits  78,573  48,159  70,544  57,577  79,495 63.2   (1.2) 
Total deposits $6,734,090 $6,485,342 $6,125,305 $6,407,577 $6,452,895 3.8 % 4.4 %

Loan Composition

                      
                 1Q23 vs. 1Q23 vs.
  March 31, December 31, September 30, June 30, March 31, 4Q22 1Q22
(Dollars in thousands) 2023 2022 2022 2022 2022 % Change % Change
Multifamily residential $2,601,174  $2,601,384  $2,608,192  $2,531,858  $2,500,570   % 4.0 %
Commercial real estate  1,904,293   1,913,040   1,914,326   1,864,507   1,764,927  (0.5)  7.9  
One-to-four family ―
mixed-use property
  549,207   554,314   560,885   561,100   563,679  (0.9)  (2.6) 
One-to-four family ― residential  232,302   235,067   233,469   242,729   248,226  (1.2)  (6.4) 
Co-operative apartments  6,115   6,179   7,015   8,130   8,248  (1.0)  (25.9) 
Construction  60,486   70,951   63,651   72,148   68,488  (14.7)  (11.7) 
Mortgage Loans  5,353,577   5,380,935   5,387,538   5,280,472   5,154,138  (0.5)  3.9  
                      
Small Business Administration (1)  22,860   23,275   27,712   40,572   59,331  (1.8)  (61.5) 
Commercial business and other  1,518,756   1,521,548   1,532,497   1,431,417   1,387,155  (0.2)  9.5  
Nonmortgage loans  1,541,616   1,544,823   1,560,209   1,471,989   1,446,486  (0.2)  6.6  
                      
Net unamortized premiums and
unearned loan fees (2)
  8,983   9,011   8,927   7,932   6,640  (0.3)  35.3  
Allowance for credit losses  (38,729)  (40,442)  (41,268)  (39,424)  (37,433) (4.2)  3.5  
Net loans $6,865,447  $6,894,327  $6,915,406  $6,720,969  $6,569,831  (0.4)% 4.5 %
                      

_____________________________
(1) Includes $4.8 million, $5.2 million, $9.6 million, $22.2 million, and $43.2 million of PPP loans at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.
(2) Includes $5.1 million, $5.4 million, $5.8 million, $6.6 million, and $6.9 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.


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

Loan Closings

                
  For the three months ended
  March 31, December 31, September 30, June 30, March 31,
(In thousands) 2023 2022 2022 2022 2022
Multifamily residential $42,164 $65,347 $173,980 $136,902 $98,180
Commercial real estate  15,570  20,750  77,777  164,826  45,102
One-to-four family – mixed-use property  4,938  4,489  12,383  12,228  8,498
One-to-four family – residential  4,296  7,485  4,102  4,211  9,237
Co-operative apartments          24
Construction  10,592  7,301  7,170  8,319  8,802
Mortgage Loans  77,560  105,372  275,412  326,486  169,843
                
Small Business Administration  318  665  46  2,750  
Commercial business and other  95,668  119,191  188,202  174,551  159,476
Nonmortgage Loans  95,986  119,856  188,248  177,301  159,476
                
Total Closings $173,546 $225,228 $463,660 $503,787 $329,319


Weighted Average Rate on Loan Closings

                
  For the three months ended
  March 31, December 31, September 30, June 30, March 31,
Loan type 2023 2022 2022 2022 2022
Mortgage loans 6.30% 5.59% 4.37% 3.76% 3.61%
Nonmortgage loans 7.58  6.57  4.93  4.21  3.27 
Total loans 7.01% 6.10% 4.60% 3.92% 3.44%
                


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)

Allowance for Credit Losses

                     
  For the three months ended
  March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2023 2022 2022 2022 2022
Allowance for credit losses - loans                    
Beginning balances $40,442   $41,268   $39,424   $37,433   $37,135  
                     
Net loan charge-off (recoveries):                    
Multifamily residential  (1)   132        (1)     
One-to-four family – residential  (36)   17    2    (2)   (2) 
Small Business Administration  (6)   (9)   (12)   13    1,015  
Taxi medallion              (435)   (12) 
Commercial business and other  9,277    671    300    (76)   (66) 
Total  9,234    811    290    (501)   935  
                     
Provision (benefit) for loan losses  7,521    (15)   2,134    1,490    1,233  
                     
Ending balance $38,729   $40,442   $41,268   $39,424   $37,433  
                     
Gross charge-offs $9,298   $1,938   $324   $50   $1,036  
Gross recoveries  64    1,127    34    551    101  
                     
Allowance for credit losses - loans to gross loans  0.56 %  0.58 %  0.59 %  0.58 %  0.57 %
Net loan charge-offs (recoveries) to average loans  0.54    0.05    0.02    (0.03)   0.06  
                          

Nonperforming Assets

                     
  March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2023 2022 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  3,628   3,206   3,414   3,414   3,414 
Commercial real estate     237   1,851   242   5 
One-to-four family - mixed-use property(1)  790   790   790   790   790 
One-to-four family - residential  4,961   4,425   4,655   5,055   7,387 
Construction           856    
Small Business Administration  937   937   937   937   937 
Commercial business and other(1)  10,860   20,187   15,356   16,554   1,533 
Total  21,176   29,782   27,003   27,848   14,066 
                     
Total Nonperforming Loans (NPLs)  21,176   32,382   29,003   27,948   14,066 
                     
Total Nonaccrual HTM Securities  20,981   20,981   20,981   20,981    
                     
Total Nonperforming Assets $42,157  $53,363  $49,984  $48,929  $14,066 
                     
Nonperforming Assets to Total Assets  0.50%  0.63%  0.58%  0.59%  0.17%
Allowance for Credit Losses to NPLs  182.9%  124.9%  142.3%  141.1%  266.1%

_____________________________
(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 and 1Q22; 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 and 1Q22.


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
(Dollars in thousands,  March 31, December 31, September 30, June 30, March 31,
except per share data) 2023 2022 2022 2022 2022
                     
GAAP income before income taxes $6,959   $12,819   $32,422   $34,971   $24,640  
                     
Net (gain) loss from fair value adjustments
(Noninterest income (loss))
  (2,619)   622    (5,626)   (2,533)   1,809  
Net loss on sale of securities
(Noninterest income (loss))
      10,948              
Life insurance proceeds (Noninterest income (loss))      (286)       (1,536)     
Net gain on disposition of assets
(Noninterest income (loss))
      (104)             
Net (gain) loss from fair value adjustments on qualifying hedges (Interest and fees on loans)  (100)   (936)   (28)   60    129  
Net amortization of purchase accounting adjustments (Various)  (188)   (219)   (650)   (237)   (924) 
                     
Core income before taxes  4,052    22,844    26,118    30,725    25,654  
                     
Provision for core income taxes  1,049    5,445    7,165    9,207    6,685  
                     
Core net income $3,003   $17,399   $18,953   $21,518   $18,969  
                     
GAAP diluted earnings per common share $0.17   $0.34   $0.76   $0.81   $0.58  
Net (gain) loss from fair value adjustments, net of tax  (0.06)   0.02    (0.13)   (0.06)   0.04  
Net loss on sale of securities, net of tax      0.27              
Life insurance proceeds      (0.01)       (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)   (0.02)   (0.01)   (0.02) 
                     
Core diluted earnings per common share(1) $0.10   $0.57   $0.62   $0.70   $0.61  
                     
Core net income, as calculated above $3,003   $17,399   $18,953   $21,518   $18,969  
Average assets  8,468,311    8,518,019    8,442,657    8,211,763    8,049,470  
Average equity  683,071    676,165    674,282    667,456    673,012  
Core return on average assets(2)  0.14 %  0.82 %  0.90 %  1.05 %  0.94 %
Core return on average equity(2)  1.76 %  10.29 %  11.24 %  12.90 %  11.27 %

_____________________________
(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 
  March 31, December 31, September 30, June 30, March 31, 
(Dollars in thousands) 2023 2022 2022 2022 2022 
                 
GAAP Net interest income $45,262  $54,201  $61,206  $64,730  $63,479  
Net (gain) loss from fair value adjustments on qualifying hedges  (100)  (936)  (28)  60   129  
Net amortization of purchase accounting adjustments  (306)  (342)  (775)  (367)  (1,058) 
Core Net interest income $44,856  $52,923  $60,403  $64,423  $62,550  
                 
GAAP Noninterest income (loss) $6,908  $(7,652) $8,995  $7,353  $1,313  
Net (gain) loss from fair value adjustments  (2,619)  622   (5,626)  (2,533)  1,809  
Net loss on sale of securities     10,948           
Life insurance proceeds     (286)     (1,536)    
Net gain on sale of assets     (104)          
Core Noninterest income $4,289  $3,528  $3,369  $3,284  $3,122  
                 
GAAP Noninterest expense $37,703  $33,742  $35,634  $35,522  $38,794  
Net amortization of purchase accounting adjustments  (118)  (123)  (125)  (130)  (134) 
Core Noninterest expense $37,585  $33,619  $35,509  $35,392  $38,660  
                 
Net interest income $45,262  $54,201  $61,206  $64,730  $63,479  
Noninterest income (loss)  6,908   (7,652)  8,995   7,353   1,313  
Noninterest expense  (37,703)  (33,742)  (35,634)  (35,522)  (38,794) 
Pre-provision pre-tax net revenue $14,467  $12,807  $34,567  $36,561  $25,998  
                 
Core:                
Net interest income $44,856  $52,923  $60,403  $64,423  $62,550  
Noninterest income  4,289   3,528   3,369   3,284   3,122  
Noninterest expense  (37,585)  (33,619)  (35,509)  (35,392)  (38,660) 
Pre-provision pre-tax net revenue $11,560  $22,832  $28,263  $32,315  $27,012  
Efficiency Ratio  76.5 % 59.6 % 55.7 % 52.3 % 58.9 %
                      

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

                    
 For the three months ended
 March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2023 2022 2022 2022 2022
GAAP net interest income$45,262   $54,201   $61,206   $64,730   $63,479  
Net (gain) loss from fair value adjustments on qualifying hedges (100)   (936)   (28)   60    129  
Net amortization of purchase accounting adjustments (306)   (342)   (775)   (367)   (1,058) 
Tax equivalent adjustment 100    102    104    131    124  
Core net interest income FTE$44,956   $53,025   $60,507   $64,554   $62,674  
                    
Total average interest-earning assets (1)$8,001,271   $8,050,601   $7,984,558   $7,746,640   $7,577,053  
Core net interest margin FTE 2.25 %  2.63 %  3.03 %  3.33 %  3.31 %
                    
GAAP interest income on total loans, net$82,889   $81,033   $75,546   $69,192   $67,516  
Net (gain) loss from fair value adjustments on qualifying hedges - loans (101)   (936)   (28)   60    129  
Net amortization of purchase accounting adjustments (316)   (372)   (783)   (357)   (1,117) 
Core interest income on total loans, net$82,472   $79,725   $74,735   $68,895   $66,528  
                    
Average total loans, net (1)$6,876,495   $6,886,900   $6,867,758   $6,647,131   $6,586,253  
Core yield on total loans 4.80 %  4.63 %  4.35 %  4.15 %  4.04 %

_____________________________
(1) Excludes purchase accounting average balances for all periods presented.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)

                     
  March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2023 2022 2022 2022 2022
Total Equity $673,459   $677,157   $670,719   $670,812   $675,813  
Less:                    
Goodwill  (17,636)   (17,636)   (17,636)   (17,636)   (17,636) 
Core deposit Intangibles  (1,891)   (2,017)   (2,147)   (2,282)   (2,420) 
Intangible deferred tax liabilities                  328  
Tangible Stockholders' Common Equity $653,932   $657,504   $650,936   $650,894   $656,085  
                     
Total Assets $8,479,121   $8,422,946   $8,557,419   $8,339,587   $8,169,833  
Less:                    
Goodwill  (17,636)   (17,636)   (17,636)   (17,636)   (17,636) 
Core deposit Intangibles  (1,891)   (2,017)   (2,147)   (2,282)   (2,420) 
Intangible deferred tax liabilities                  328  
Tangible Assets $8,459,594   $8,403,293   $8,537,636   $8,319,669   $8,150,105  
                     
Tangible Stockholders' Common Equity to Tangible Assets  7.73 %  7.82 %  7.62 %  7.82 %  8.05 %
                     

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