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

Thursday, January 26, 2023 05:30 PM | GlobeNewswire via QuoteMedia

Mentioned in this article

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

John R. Buran, President and CEO Commentary

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

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

- John R. Buran, President and CEO

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

71% of 2022 Earnings Returned to Shareholders; TCE/TA 1 Improves QoQ. The Company repurchased 374,862 shares of common stock at an average price of $20.16 during the quarter. Book value and tangible book value per share were $22.97 and $22.31, respectively, while TCE/TA was up 20 bps to 7.82% at December 31, 2022, compared to 7.62% at September 30, 2022.

Key Financial Metrics 2


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

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

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

Income Statement Highlights


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

1 See Reconciliation of GAAP Earnings and Core Earnings

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

  • Net interest margin, FTE (“NIM”) of 2.70% decreased 59 bps YoY and 37 bps QoQ
  • Prepayment penalty income from loans and securities, net reversals and recoveries of interest from nonaccrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $2.4 million (12 bps to the NIM) in 4Q22 compared to $2.2 million (11 bps) in 3Q22, $2.6 million (13 bps) in 2Q22, $2.6 million (14 bps) in 1Q22, and $3.1 million (16 bps) in 4Q21
  • Excluding the items in the previous bullet, net interest margin was 2.58% in 4Q22, 2.96% in 3Q22, 3.22% in both 2Q22 and 1Q22, and 3.13% in 4Q21

The Company recorded a benefit for credit losses of $12 thousand in 4Q22, compared to a provision for credit losses of $2.1 million in 3Q22, $1.6 million in 2Q22, $1.4 million in 1Q22, and $0.8 million in 4Q21. The provision for credit losses was $5.1 million in 2022 compared to a benefit for credit losses of $4.9 million in 2021.

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

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

  • Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds are being reinvested into securities that are expected to have an earn back period of 3 years or less
  • Noninterest income included net gains (losses) from fair value adjustments of $(0.6) million in 4Q22 (($0.02) per share, net of tax), $5.6 million in 3Q22 ($0.13 per share, net of tax), $2.5 million in 2Q22 ($0.06 per share, net of tax), $(1.8) million in 1Q22 ($(0.04) per share, net of tax), and $(5.1) million in 4Q21 ($(0.13) per share, net of tax)
  • Life insurance proceeds were $0.3 million ($0.01 per share) in 4Q22 and $1.5 million ($0.05 per share) in 2Q22
  • Absent all above items and other immaterial adjustments, core noninterest income was $3.5 million in 4Q22, down 27.4% YoY but up 4.7% QoQ
  • Included in 4Q21 core noninterest income was a one-time $2.0 million ($0.05 per share, net of tax) dividend received on retirement plan investments; absent the effects of this dividend, core noninterest income increased 23% YoY

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

  • Salaries and employee benefits includes $2.8 million benefit from a lower discount rate for certain benefit plans and $1.4 million benefit from an Employee Retention Tax Credit refund in 4Q22
  • Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22
  • Included in 1Q22 noninterest expense was $4.3 million of seasonal compensation expense; 4Q21 noninterest expense included a one-time $4.3 million of increased compensation and benefits for all employees due to a record earnings in 2021 and employee performance through the pandemic
  • Noninterest expense included $17 thousand pre-tax merger benefit (<$0.01 per share, net of tax) in 4Q21
  • Excluding the effects of the merger and other immaterial adjustments, core operating expenses were $33.6 million in 4Q22, down 13.1% YoY and 5.3% QoQ; excluding the Employee Retention Tax Credit refund and the benefit from the lower discount rate, 4Q22 core noninterest expense would have been $37.9 million
  • GAAP noninterest expense to average assets was 1.58% in 4Q22, 1.69% in 3Q22, 1.73% in 2Q22, 1.93% in 1Q22, and 1.92% in 4Q21

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

  • The effective tax rate was 20.0% in 4Q22, 27.7% in 3Q22, 28.4% in 2Q22, 26.1% in 1Q22, and 20.8% in 4Q21; for the year, the effective tax rate was 26.6% compared to 25.2% in 2021
  • The 4Q22 effective tax rate declined due to preferential tax items having a larger impact due to lower levels of pre-tax income
  • The 2Q22 effective tax rate includes a loss of a certain state and city tax deductions and a resolution of certain examinations by taxing authorities
  • The 4Q21 effective tax rate declined due to lower levels of taxable state income and higher percentage of permanent differences
Balance Sheet, Credit Quality, and Capital Highlights


YoY QoQ
4Q22 3Q22 2Q22 1Q22 4Q21 Change Change
Average Loans And Deposits ($MM)
Loans $6,881 $6,861 $6,640 $6,579 $6,558 4.9 % 0.3 %
Deposits 6,678 6,277 6,441 6,410 6,459 3.4 6.4
Credit Quality ($000s)
Nonperforming Loans $32,382 $29,003 $27,948 $14,066 $14,934 116.8 % 11.7 %
Nonperforming Assets 53,363 49,984 48,929 14,066 14,934 257.3 6.8
Criticized and Classified Loans 68,092 61,684 57,145 59,548 57,650 18.1 10.4
Criticized and Classified Assets 89,073 82,665 78,125 80,527 78,628 13.3 7.8
Troubled Debt Restructured Loans 11,779 14,757 14,758 15,124 12,714 (7.4 ) (20.2 )
Allowance for Credit Losses/Loans (%) 0.58 0.59 0.58 0.57 0.56 2 bps (1 ) bp
Capital
Book Value/Share $22.97 $22.47 $22.38 $22.26 $22.26 3.2 % 2.2 %
Tangible Book Value/Share 22.31 21.81 21.71 21.61 21.61 3.2 2.3
Tang. Common Equity/Tang. Assets (%) 7.82 7.62 7.82 8.05 8.22 (40 ) bps 20 bps
Leverage Ratio (%) 8.61 8.74 8.91 9.05 8.98 (37 ) (13 )

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

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

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

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

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

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

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

  • The Company paid a dividend of $0.22 per share and repurchased 374,862 shares at an average price of $20.16 in 4Q22
  • At the end of 4Q22, 594,462 shares remain subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.82% at 4Q22 compared to 7.62% at 3Q22 and 8.22% at 4Q21
  • The Company and the Bank remain well capitalized under all applicable regulatory requirements
  • The leverage ratio was 8.61% at 4Q22 compared to 8.74% at 3Q22 and 8.98% at 4Q21

Conference Call Information And First Quarter Earnings Release Date

Conference Call Information:

  • John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer and Treasurer, will host a conference call on Friday, January 27, 2023, at 9:30 AM (ET) to discuss the Company’s fourth quarter and full year 2022 results and strategy.
  • Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
  • Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=54kQH0yX
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 8079034
  • The conference call will be simultaneously webcast and archived

First Quarter 2023 Earnings Release Date:

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

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

About Flushing Financial Corporation

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

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

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “goals”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.

Investor Contact: Susan K. Cullen, SEVP, CFO and Treasurer, 718-961-5400

#FF

- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)

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

(See footnotes on next page)

______________________________
(1) Ratios are presented on an annualized basis, where appropriate.
(2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(3) Efficiency ratio, a non-GAAP measure, was calculated by dividing noninterest expense (excluding merger expense, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization of purchase accounting adjustments) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges and net amortization of purchase accounting adjustments) and noninterest income (excluding life insurance proceeds, net gains and losses from the sale or disposition of securities, assets and fair value adjustments).
(4) Calculated by dividing stockholders’ equity by shares outstanding.
(5) Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure, by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7) Excludes performing nonaccrual TDR loans.

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

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


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2022 2022 2022 2022 2021
ASSETS
Cash and due from banks $ 151,754 $ 164,693 $ 137,026 $ 186,407 $ 81,723
Securities held-to-maturity:
Mortgage-backed securities 7,875 7,880 7,885 7,890 7,894
Other securities 65,836 66,032 66,230 66,327 49,974
Securities available for sale:
Mortgage-backed securities 384,283 468,366 510,934 553,828 572,184
Other securities 351,074 351,495 346,720 286,041 205,052
Loans 6,934,769 6,956,674 6,760,393 6,607,264 6,638,105
Allowance for credit losses (40,442 ) (41,268 ) (39,424 ) (37,433 ) (37,135 )
Net loans 6,894,327 6,915,406 6,720,969 6,569,831 6,600,970
Interest and dividends receivable 45,048 42,571 38,811 37,308 38,698
Bank premises and equipment, net 21,750 22,376 22,285 22,752 23,338
Federal Home Loan Bank of New York stock 45,842 62,489 50,017 33,891 35,937
Bank owned life insurance 213,131 212,353 211,220 211,867 210,754
Goodwill 17,636 17,636 17,636 17,636 17,636
Core deposit intangibles 2,017 2,147 2,282 2,420 2,562
Right of use asset 43,289 44,885 46,687 48,475 50,200
Other assets 179,084 179,090 160,885 125,160 148,989
Total assets $ 8,422,946 $ 8,557,419 $ 8,339,587 $ 8,169,833 $ 8,045,911
LIABILITIES
Deposits $ 6,437,183 $ 6,054,761 $ 6,350,000 $ 6,373,400 $ 6,333,532
Mortgagors' escrow deposits 48,159 70,544 57,577 79,495 51,913
Borrowed funds 1,052,973 1,572,830 1,089,621 877,122 815,544
Operating lease liability 46,125 48,330 50,346 52,292 54,155
Other liabilities 161,349 140,235 121,231 111,711 111,139
Total liabilities 7,745,789 7,886,700 7,668,775 7,494,020 7,366,283
STOCKHOLDERS' EQUITY
Preferred stock (5,000,000 shares authorized; none issued)
Common stock ($0.01 par value; 100,000,000 shares authorized) 341 341 341 341 341
Additional paid-in capital 264,332 263,755 262,860 261,837 263,375
Treasury stock (98,535 ) (90,977 ) (88,342 ) (79,834 ) (75,293 )
Retained earnings 547,507 543,894 527,217 508,973 497,889
Accumulated other comprehensive loss, net of taxes (36,488 ) (46,294 ) (31,264 ) (15,504 ) (6,684 )
Total stockholders' equity 677,157 670,719 670,812 675,813 679,628
Total liabilities and stockholders' equity $ 8,422,946 $ 8,557,419 $ 8,339,587 $ 8,169,833 $ 8,045,911
(In thousands)
Issued shares 34,088 34,088 34,088 34,088 34,088
Outstanding shares 29,476 29,851 29,980 30,367 30,526
Treasury shares 4,612 4,237 4,108 3,721 3,561


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

AVERAGE BALANCE SHEETS
(Unaudited)

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


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)

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

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

Loan Composition

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

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

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

Loan Closings

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


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

Weighted Average Rate on Loan Closings

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


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ASSET QUALITY
(Unaudited)

Allowance for Credit Losses

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

Nonperforming Assets

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

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

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

Non-cash Fair Value Adjustments to GAAP Earnings

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

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

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

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Unaudited)

For the three months ended For the year ended
(Dollars in thousands, December 31, September 30, June 30, March 31, December 31, December 31, December 31,
except per share data) 2022 2022 2022 2022 2021 2022 2021
GAAP income before income taxes $ 12,819 $ 32,422 $ 34,971 $ 24,640 $ 22,826 $ 104,852 $ 109,278
Net (gain) loss from fair value adjustments (Noninterest income (loss)) 622 (5,626 ) (2,533 ) 1,809 5,140 (5,728 ) 12,995
Net (gain) loss on sale of securities (Noninterest income (loss)) 10,948 10,948 (113 )
Life insurance proceeds
(Noninterest income (loss))
(286 ) (1,536 ) (1,822 )
Net gain on disposition of assets (Noninterest income (loss)) (104 ) (104 ) (621 )
Net (gain) loss from fair value adjustments on qualifying hedges
(Interest and fees on loans)
(936 ) (28 ) 60 129 (1,122 ) (775 ) (2,079 )
Net amortization of purchase accounting adjustments (Various) (219 ) (650 ) (237 ) (924 ) (324 ) (2,030 ) (2,489 )
Merger (benefit) expense (Various) (17 ) 2,562
Core income before taxes 22,844 26,118 30,725 25,654 26,503 105,341 119,533
Provision for income taxes for core income 5,445 7,165 9,207 6,685 5,535 28,502 30,769
Core net income $ 17,399 $ 18,953 $ 21,518 $ 18,969 $ 20,968 $ 76,839 $ 88,764
GAAP diluted earnings per common share $ 0.34 $ 0.76 $ 0.81 $ 0.58 $ 0.58 $ 2.50 $ 2.59
Net (gain) loss from fair value adjustments, net of tax 0.02 (0.13 ) (0.06 ) 0.04 0.13 (0.14 ) 0.31
Net loss on sale of securities, net of tax 0.27 0.26
Life insurance proceeds (0.01 ) (0.05 ) (0.06 )
Net gain on disposition of assets, net of tax (0.01 )
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax (0.02 ) (0.03 ) (0.02 ) (0.05 )
Net amortization of purchase accounting adjustments, net of tax (0.01 ) (0.02 ) (0.01 ) (0.02 ) (0.01 ) (0.05 ) (0.06 )
Merger (benefit) expense, net of tax 0.06
NYS tax change (0.02 )
Core diluted earnings per common share (1) $ 0.57 $ 0.62 $ 0.70 $ 0.61 $ 0.67 $ 2.49 $ 2.81
Core net income, as calculated above $ 17,399 $ 18,953 $ 21,518 $ 18,969 $ 20,968 $ 76,839 $ 88,764
Average assets 8,518,019 8,442,657 8,211,763 8,049,470 8,090,701 8,307,137 8,143,372
Average equity 676,165 674,282 667,456 673,012 671,474 672,742 648,946
Core return on average assets (2) 0.82 % 0.90 % 1.05 % 0.94 % 1.04 % 0.92 % 1.09 %
Core return on average equity (2) 10.29 % 11.24 % 12.90 % 11.27 % 12.49 % 11.42 % 13.68 %

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

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Unaudited)

For the three months ended For the year ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
(Dollars in thousands) 2022 2022 2022 2022 2021 2022 2021
GAAP Net interest income $ 54,201 $ 61,206 $ 64,730 $ 63,479 $ 62,674 $ 243,616 $ 247,969
Net (gain) loss from fair value adjustments on qualifying hedges (936 ) (28 ) 60 129 (1,122 ) (775 ) (2,079 )
Net amortization of purchase accounting adjustments (342 ) (775 ) (367 ) (1,058 ) (462 ) 3,016 (3,049 )
Core Net interest income $ 52,923 $ 60,403 $ 64,423 $ 62,550 $ 61,090 $ 245,857 $ 242,841
GAAP Noninterest income (loss) $ (7,652 ) $ 8,995 $ 7,353 $ 1,313 $ (280 ) $ 10,009 $ 3,687
Net (gain) loss from fair value adjustments 622 (5,626 ) (2,533 ) 1,809 5,140 (5,728 ) 12,995
Net gain (loss) on sale of securities 10,948 10,948 (113 )
Life insurance proceeds (286 ) (1,536 ) (1,822 )
Net gain on sale of assets (104 ) (104 ) (621 )
Core Noninterest income $ 3,528 $ 3,369 $ 3,284 $ 3,122 $ 4,860 $ 13,303 $ 15,948
GAAP Noninterest expense $ 33,742 $ 35,634 $ 35,522 $ 38,794 $ 38,807 $ 143,692 $ 147,322
Net amortization of purchase accounting adjustments (123 ) (125 ) (130 ) (134 ) (138 ) (578 ) (560 )
Merger expense (benefit) 17 (2,562 )
Core Noninterest expense $ 33,619 $ 35,509 $ 35,392 $ 38,660 $ 38,686 $ 143,114 $ 144,200
Net interest income $ 54,201 $ 61,206 $ 64,730 $ 63,479 $ 62,674 $ 243,616 $ 247,969
Noninterest income (loss) (7,652 ) 8,995 7,353 1,313 (280 ) 10,009 3,687
Noninterest expense (33,742 ) (35,634 ) (35,522 ) (38,794 ) (38,807 ) (143,692 ) (147,322 )
Pre-provision pre-tax net revenue $ 12,807 $ 34,567 $ 36,561 $ 25,998 $ 23,587 $ 109,933 $ 104,334
Core:
Net interest income $ 52,923 $ 60,403 $ 64,423 $ 62,550 $ 61,090 $ 245,857 $ 242,841
Noninterest income 3,528 3,369 3,284 3,122 4,860 13,303 15,948
Noninterest expense (33,619 ) (35,509 ) (35,392 ) (38,660 ) (38,686 ) (143,114 ) (144,200 )
Pre-provision pre-tax net revenue $ 22,832 $ 28,263 $ 32,315 $ 27,012 $ 27,264 $ 116,046 $ 114,589
Efficiency Ratio 59.6 % 55.7 % 52.3 % 58.9 % 58.7 % 55.2 % 55.7 %


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 For the year ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
(Dollars in thousands) 2022 2022 2022 2022 2021 2022 2021
GAAP net interest income $ 54,201 $ 61,206 $ 64,730 $ 63,479 $ 62,674 $ 243,616 $ 247,969
Net (gain) loss from fair value adjustments on qualifying hedges (936 ) (28 ) 60 129 (1,122 ) (775 ) (2,079 )
Net amortization of purchase accounting adjustments (342 ) (775 ) (367 ) (1,058 ) (462 ) 3,016 (3,049 )
Tax equivalent adjustment 102 104 131 124 113 461 450
Core net interest income FTE $ 53,025 $ 60,507 $ 64,554 $ 62,674 $ 61,203 $ 246,318 $ 243,291
Total average interest-earning assets (1) $ 8,050,601 $ 7,984,558 $ 7,746,640 $ 7,577,053 $ 7,634,601 $ 7,841,407 $ 7,681,441
Core net interest margin FTE 2.63 % 3.03 % 3.33 % 3.31 % 3.21 % 3.14 % 3.17 %
GAAP interest income on total loans, net $ 81,033 $ 75,546 $ 69,192 $ 67,516 $ 68,113 $ 293,287 $ 274,331
Net (gain) loss from fair value adjustments on qualifying hedges (936 ) (28 ) 60 129 (1,122 ) (775 ) (2,079 )
Net amortization of purchase accounting adjustments (372 ) (783 ) (357 ) (1,117 ) (535 ) 2,628 (3,013 )
Core interest income on total loans, net $ 79,725 $ 74,735 $ 68,895 $ 66,528 $ 66,456 $ 295,140 $ 269,239
Average total loans, net (1) $ 6,886,900 $ 6,867,758 $ 6,647,131 $ 6,586,253 $ 6,566,654 $ 6,748,165 $ 6,653,980
Core yield on total loans 4.63 % 4.35 % 4.15 % 4.04 % 4.05 % 4.37 % 4.05 %

___________________________
(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)

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2022 2022 2022 2022 2021
Total Equity $ 677,157 $ 670,719 $ 670,812 $ 675,813 $ 679,628
Less:
Goodwill (17,636 ) (17,636 ) (17,636 ) (17,636 ) (17,636 )
Core deposit Intangibles (2,017 ) (2,147 ) (2,282 ) (2,420 ) (2,562 )
Intangible deferred tax liabilities 328 328
Tangible Stockholders' Common Equity $ 657,504 $ 650,936 $ 650,894 $ 656,085 $ 659,758
Total Assets $ 8,422,946 $ 8,557,419 $ 8,339,587 $ 8,169,833 $ 8,045,911
Less:
Goodwill (17,636 ) (17,636 ) (17,636 ) (17,636 ) (17,636 )
Core deposit Intangibles (2,017 ) (2,147 ) (2,282 ) (2,420 ) (2,562 )
Intangible deferred tax liabilities 328 328
Tangible Assets $ 8,403,293 $ 8,537,636 $ 8,319,669 $ 8,150,105 $ 8,026,041
Tangible Stockholders' Common Equity to Tangible Assets 7.82 % 7.62 % 7.82 % 8.05 % 8.22 %

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