Flushing Financial Corporation Reports 3Q23 GAAP EPS of $0.32 and Core EPS of $0.31; Delivered Sequential EPS and GAAP NIM Expansion as Action Plan Continues to Progress; Opened 27th Branch Expanding Asian Market Presence

 | Source: Flushing Financial Corporation Flushing Financial Corporation

John R. Buran, President and CEO Commentary

“We delivered sequential EPS and GAAP NIM expansion through the continued execution of our action plan to drive long-term profitability while advancing our near-term areas of focus amid persisting challenges in the operating environment. In 3Q23, we made significant progress on delivering against all pillars of our action plan, including: 1) reduced interest rate risk and moved closer to our goal of interest rate neutrality, including the addition of $100 million of interest rate hedges; 2) increased yields on new loans 288 bps YoY and 34 bps QoQ, with an emphasis on floating rate loans and back-to-back swaps; 3) increased noninterest bearing deposits $46.6 million QoQ; 4) saw strength in debt service coverage for our multifamily and investor commercial real estate portfolios repricing through 2025, with our stress testing (200 bps increase in rates and 10% rise in operating expenses) indicating a resilient borrower base; Manhattan office buildings are minimal at 0.6% of net loans; 5) maintained stability in available liquidity and capital ratios; and 6) emphasized noninterest expenses. We’re confident that our ability to execute will guide us through the near-term challenges and enable the Bank to emerge as a strong and more profitable institution.”
 
- John R. Buran, President and CEO

UNIONDALE, N.Y., Oct. 31, 2023 (GLOBE NEWSWIRE) -- QoQ, EPS Increases; GAAP NIM Expands; Minimal Core NIM Compression. The Company reported third quarter 2023 GAAP EPS of $0.32, up 10.3% QoQ, but down 57.9% YoY. Core EPS totaled $0.31, an increase of 19.2% QoQ, but a decrease of 50.0% YoY. The improvement in core EPS QoQ was primarily driven by lower credit costs, higher noninterest income, and lower operating expenses, partially offset by slight NIM compression. GAAP NIM of 2.22% increased 4 bps QoQ but declined 85 bps YoY; while Core NIM of 2.14% compressed 3 bps QoQ and 89 bps YoY. Our actions to reduce interest rate risk, including adding interest rate hedges and floating rate loans, assisted in reducing the NIM compression and are beneficial in a “higher-for-longer” rate environment.

Strong Credit Quality; Stable Capital. Nonperforming assets decreased 23.2% YoY and 3.1% QoQ while net recoveries were $42,000 in 3Q23. Capital continues to be sound with TCE/TA1 of 7.59% at September 30, 2023, compared to 7.71% at June 30, 2023.

Key Financial Metrics2


                  
  3Q23  2Q23 1Q23 4Q22 3Q22  9M23  9M22
GAAP:                 
EPS $0.32  $0.29 $0.17 $0.34 $0.76  $0.77  $2.15
ROAA (%)  0.44   0.41  0.24  0.48  1.11   0.36   1.08
ROAE (%)  5.57   5.12  3.02  6.06  13.91   4.56   13.24
NIM FTE3 (%)  2.22   2.18  2.27  2.70  3.07   2.22   3.26
Core:                 
EPS $0.31  $0.26 $0.10 $0.57 $0.62  $0.67  $1.92
ROAA (%)  0.43   0.37  0.14  0.82  0.90   0.31   0.96
ROAE (%)  5.41   4.66  1.76  10.29  11.24   3.93   11.80
Core NIM FTE (%)  2.14   2.17  2.25  2.63  3.03   2.18   3.22
Credit Quality:                 
NPAs/Loans & OREO (%)  0.56   0.58  0.61  0.77  0.72   0.56   0.72
ACLs/Loans (%)  0.57   0.57  0.56  0.58  0.59   0.57   0.59
ACLs/NPLs (%)  225.38   207.08  182.89  124.89  142.29   225.38   142.29
NCOs/Avg Loans (%)  -   0.09  0.54  0.05  0.02   0.21   0.01
Balance Sheet:                 
Avg Loans ($B) $6.8  $6.8 $6.9 $6.9 $6.9  $6.8  $6.7
Avg Dep ($B) $6.8  $6.9 $6.8 $6.7 $6.3  $6.8  $6.4
Book Value/Share $23.15  $23.18 $22.84 $22.97 $22.47  $23.15  $22.47
Tangible BV/Share $22.48  $22.51 $22.18 $22.31 $21.81  $22.48  $21.81
TCE/TA (%)  7.59   7.71  7.73  7.82  7.62   7.59   7.62
                  

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”)

3Q23 Highlights
  • Net interest margin FTE increased 4 bps QoQ, but decreased 85 bps YoY to 2.22%; Core net interest margin FTE decreased 3 bps QoQ and 89 bps YoY to 2.14%; Both GAAP and Core NIMs benefited from $100 million of new interest rate hedges added during the quarter and the closing of $120.5 million of back-to-back swap loans that generate noninterest income immediately and interest income over the life of the loan while adding floating rate assets to provide additional interest rate risk neutralization
  • Average total deposits increased 8.6% YoY, but declined 1.2% QoQ to $6.8 billion; Noninterest bearing deposits increased $46.6 million QoQ despite new checking account openings declining 5% YoY in 3Q23; average CDs totaled $2.3 billion, up 116.6% YoY and 11.9% QoQ; growth in CDs generally lengthens the duration of customer deposits and helps reduce rate sensitivity
  • Bensonhurst branch opened on September 29, 2023, which expands our Asian market presence
  • Period end net loans decreased 0.8% YoY, but increased 0.9% QoQ; loan closings were $241.5 million down 47.9% YoY, but up 52.1% QoQ; the yield on closings increased 288 bps YoY and 34 bps QoQ to 7.48%
  • Loan pipeline increased 17.5% YoY, but decreased 12.6% QoQ to $363.3 million; approximately 60% of the loan pipeline consists of floating rate loans including back-to-back swap loans
  • NPAs declined to $38.4 million from $50.0 million a year ago and $39.6 million in the prior quarter
  • Provision for credit losses was $0.6 million in 3Q23 compared to $2.1 million in 3Q22 and $1.4 million in 2Q23; net recoveries were $42,000 in 3Q23 compared to net charge-offs of $0.3 million in 3Q22 and $1.6 million in 2Q23
  • Tangible Common Equity to Tangible Assets declined to 7.59% at 3Q23 compared to 7.71% at 2Q23
  • Repurchased 59,352 shares at an average price of $15.88 or a 29.4% discount to September 30, 2023, tangible book value of $22.48
Areas of Focus
Interest
Rate
Risk
  • Continued to take actions to position the Company’s balance sheet more towards interest rate risk neutral
  • During 3Q23, the Company added $100 million of interest rate hedges
  • Approximately 60% of the loan pipeline consists of floating rate loans including back-to-back loan swaps
  • Rate sensitivity to a +100 bps shock has been reduced by 66% over the past year
  • Increased noninterest bearing deposits by $46.6 million QoQ
Credit
Quality
  • Manhattan office buildings are minimal at 0.6% of net loans
  • Over 88% of the loan portfolio is collateralized by real estate with an average loan to value less than 36%
  • Debt service coverage ratio is 1.8x for multifamily and investor commercial real estate loans that reprice through 2025
Liquidity
  • The Company maintains ample liquidity with $3.7 billion of undrawn lines and resources
  • Uninsured and uncollateralized deposits were 16% of total deposits
  • Total deposits increased 9.1% YoY
  • Checking account openings were down 5.0% YoY in 3Q23
Customer Experience
  • Approximately 33% of our branches are in Asian communities
  • Bensonhurst, our 27th branch, opened on September 29, 2023
  • Digital banking usage continues to increase with double digit growth in monthly mobile deposit active users and digital banking enrollment in September 2023 versus a year ago


Income Statement Highlights


              YoY QoQ
($000s, except EPS)  3Q23  2Q23 1Q23 4Q22 3Q22 Change Change
                 
Net Interest Income  $44,427  $43,378 $45,262 $54,201  $61,206 (27.4)% 2.4%
Provision (Benefit) for Credit Losses   596   1,416  7,508  (12)  2,145 (72.2) (57.9)
Noninterest Income (Loss)   3,476   5,122  6,908  (7,652)  8,995 (61.4) (32.1)
Noninterest Expense   34,415   35,279  37,703  33,742   35,634 (3.4) (2.4)
Income Before Income Taxes   12,892   11,805  6,959  12,819   32,422 (60.2) 9.2 
Provision for Income Taxes   3,493   3,177  1,801  2,570   8,980 (61.1) 9.9 
Net Income  $9,399  $8,628 $5,158 $10,249  $23,442 (59.9) 8.9 
Diluted EPS  $0.32  $0.29 $0.17 $0.34  $0.76 (57.9) 10.3 
Avg. Diluted Shares (000s)   29,703   30,090  30,265  30,420   30,695 (3.2) (1.3)
                 
Core Net Income1  $9,135  $7,854 $3,003 $17,399  $18,953 (51.8) 16.3 
Core EPS1  $0.31  $0.26 $0.10 $0.57  $0.62 (50.0) 19.2 

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income decreased YoY but increased QoQ.

  • Net interest margin, FTE of 2.22% decreased 85 bps YoY, but increased 4 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 $2.6 million (13 bps to the NIM) compared to $0.5 million (3 bps) in 2Q23, $1.1 million (6 bps) in 1Q23, $2.4 million (12 bps) in 4Q22, and $2.2 million (11 bps) in 3Q22
  • Excluding the items in the previous bullet, net interest margin was 2.09% in 3Q23, 2.15% in 2Q23, 2.21% in 1Q23, 2.58% in 4Q22, and 2.96% in 3Q22

The provision for credit losses declined YoY and QoQ.

  • Net charge-offs (recoveries) were $(42,000) in 3Q23 (less than (1) bp of average loans) compared to $1.6 million in 2Q23 (9 bps), $9.2 million in 1Q23 (54 bps of average loans), $0.8 million in 4Q22 (5 bps of average loans), and $0.3 million in 3Q22 (2 bps of average loans)
  • 1Q23 net charge-offs were primarily related to a commercial business relationship that was placed on nonaccrual in 2Q22

Noninterest income (loss) declined YoY and QoQ.

  • Noninterest income included net gains (losses) from fair value adjustments of $(1.2) million in 3Q23 ($(0.03) per share, net of tax), $0.3 million in 2Q23 ($0.01 per share, net of tax), $2.6 million in 1Q23 ($0.06 per share, net of tax), $(0.6) million in 4Q22 ($(0.02) per share, net of tax), and $5.6 million in 3Q22 ($0.13 per share, net of tax)
  • Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds were primarily reinvested in 1Q23 into floating rate securities that had a yield at that time that approximated 6.40%
  • Life insurance proceeds were $23,000 in 3Q23 (less than $0.01 per share), $0.6 million ($0.02 per share) in 2Q23, and $0.3 million ($0.01 per share) in 4Q22
  • Absent all above items and other immaterial adjustments, core noninterest income was $4.7 million in 3Q23, up 39.5% YoY and 10.1% QoQ
  • Back-to-back swap loan closings of $120.5 million in 3Q23 (compared to $11.5 million in 2Q23) contributed to the growth in core noninterest income; the Company earns fee income on back-to-back swap loan closings

Noninterest expense decreased YoY and QoQ.

  • Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22; Seasonal compensation expense was $4.1 million in 1Q23
  • Excluding the effects of other immaterial adjustments, core operating expenses were $34.3 million in 3Q23, down 3.4% YoY, and 2.4% QoQ
  • GAAP noninterest expense to average assets was 1.62% in 3Q23, 1.67% in 2Q23, 1.78% in 1Q23, 1.58% in 4Q22, and 1.69% in 3Q22
  • Noninterest expense largely includes $3.3 million benefit from Employee Retention Tax Credit refunds in 3Q23 and $7.0 million year to date; these refunds are not expected to be repeated in 2024

Provision for income taxes declined YoY and increased QoQ.

  • The effective tax rate was 27.1% in 3Q23, 26.9% in 2Q23, 25.9% in 1Q23, 20.0% in 4Q22, and 27.7% in 3Q22
  • The 4Q22 effective tax rate declined due to preferential tax items having a larger impact due to lower levels of pre-tax income
Balance Sheet, Credit Quality, and Capital Highlights


             YoY QoQ
  3Q23  2Q23 1Q23 4Q22 3Q22 Change Change
Averages ($MM)               
Loans $6,813  $6,830 $6,871 $6,881 $6,861 (0.7)% (0.2)%
Total Deposits  6,819   6,900  6,810  6,678  6,277 8.6  (1.2)
                
Credit Quality ($000s)               
Nonperforming Loans $17,405  $18,637 $21,176 $32,382 $29,003 (40.0)% (6.6)%
Nonperforming Assets  38,386   39,618  42,157  53,363  49,984 (23.2) (3.1)
Criticized and Classified Loans  74,169   48,675  58,130  68,093  61,684 20.2  52.4 
Criticized and Classified Assets  95,150   69,656  79,111  89,073  82,665 15.1  36.6 
Allowance for Credit Losses/Loans (%)  0.57   0.57  0.56  0.58  0.59 (2) bps - bps
                
Capital               
Book Value/Share $23.15  $23.18 $22.84 $22.97 $22.47 3.0% (0.1)%
Tangible Book Value/Share  22.48   22.51  22.18  22.31  21.81 3.1  (0.1)
Tang. Common Equity/Tang. Assets (%)  7.59   7.71  7.73  7.82  7.62 (3) bps (12) bps
Leverage Ratio (%)  8.54   8.56  8.58  8.61  8.74 (20) (2)
                       

Average loans decreased YoY and QoQ.

  • Period end net loans totaled $6.9 billion, down 0.8% YoY, but up 0.9% QoQ
  • Total loan closings were $241.5 million in 3Q23, $158.8 million in 2Q23, $173.5 million in 1Q23, $225.2 million in 4Q22, and $463.7 million in 3Q22; the loan pipeline was $363.3 million at September 30, 2023, up 17.5% YoY, but down 12.6% QoQ
  • The diversified loan portfolio is over 88% collateralized by real estate with an average loan-to-value ratio of less than 36%
  • Manhattan office buildings are approximately 0.6% of net loans

Average total deposits increased YoY but declined QoQ.

  • Average CDs totaled $2.3 billion, up 116.6% YoY and 11.9% QoQ; CDs generally lengthen the duration of customer deposits and reduce sensitivity to rising rates
  • Average noninterest bearing deposits decreased 18.9% YoY, but increased 0.2% QoQ in 3Q23 and comprised 12.5% of average total deposits in 3Q23 compared to 16.7% a year ago
  • Period end noninterest bearing deposits decreased 11.9% YoY, but increased 5.6% QoQ

Credit Quality: Nonperforming loans declined YoY and QoQ.

  • Criticized and classified loans were 108 bps of gross loans at 3Q23 compared to 71 bps at 2Q23, 84 bps at 1Q23, 98 bps at 4Q22, and 89 bps at 3Q22
  • Allowance for credit losses were 225.4% of nonperforming loans at 3Q23 compared to 207.1 % at 2Q23, and 142.3% at 3Q22

Capital: Book value per common share and tangible book value per common share, a non-GAAP measure, increased YoY but declined slightly QoQ to $23.15 and $22.48, respectively.

  • The Company paid a dividend of $0.22 per share in 3Q23 and has ample available liquidity to meet its obligations
  • The Company repurchased 59,352 shares in 3Q23 at an average price of $15.88, representing a 29.4% discount to tangible book value, with 846,779 shares remaining subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.59% at 3Q23 compared to 7.71% at 2Q23 and 7.62% at 3Q22
Conference Call Information and Fourth 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, November 1, 2023, at 9:30 AM (ET) to discuss the Company’s third 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=trpzpC32
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 2779651
  • The conference call will be simultaneously webcast and archived

Fourth Quarter 2023 Earnings Release Date:

The Company plans to release Fourth Quarter 2023 financial results after the market close on January 25, 2024; followed by a conference call at 11:00 AM (ET) on January 26, 2024.

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

About Flushing Financial Corporation

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

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

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

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 nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(Dollars in thousands, except per share data) 2023 2023 2023 2022 2022  2023 2022
Performance Ratios (1)                            
Return on average assets  0.44%  0.41%  0.24%  0.48%  1.11%   0.36%  1.08%
Return on average equity  5.57   5.12   3.02   6.06   13.91    4.56   13.24 
Yield on average interest-earning assets (2)  5.20   4.84   4.61   4.44   4.10    4.88   3.91 
Cost of average interest-bearing liabilities  3.52   3.15   2.80   2.11   1.25    3.16   0.79 
Cost of funds  3.13   2.80   2.47   1.84   1.08    2.80   0.68 
Net interest rate spread during period (2)  1.68   1.69   1.81   2.33   2.85    1.72   3.12 
Net interest margin (2)  2.22   2.18   2.27   2.70   3.07    2.22   3.26 
Noninterest expense to average assets  1.62   1.67   1.78   1.58   1.69    1.69   1.78 
Efficiency ratio (3)  72.33   74.02   76.48   59.55   55.68    74.30   55.57 
Average interest-earning assets to average interest bearing liabilities  1.18X  1.18X  1.19X  1.21X  1.22X   1.19X  1.22X
                             
Average Balances                            
Total loans, net $6,813,019  $6,829,648  $6,871,192  $6,881,245  $6,861,463   $6,837,740  $6,694,528 
Total interest-earning assets  8,017,460   7,986,020   7,996,677   8,045,691   7,979,070    8,000,129   7,764,873 
Total assets  8,504,364   8,461,827   8,468,311   8,518,019   8,442,657    8,478,299   8,236,070 
Total deposits  6,819,397   6,899,617   6,810,485   6,678,383   6,276,613    6,843,200   6,375,372 
Total interest-bearing liabilities  6,771,860   6,756,859   6,703,558   6,662,209   6,553,087    6,744,342   6,371,542 
Stockholders' equity  675,513   673,943   683,071   676,165   674,282    677,481   671,588 
                             
Per Share Data                            
Book value per common share (4) $23.15  $23.18  $22.84  $22.97  $22.47   $23.15  $22.47 
Tangible book value per common share (5) $22.48  $22.51  $22.18  $22.31  $21.81   $22.48  $21.81 
                             
Stockholders' Equity                            
Stockholders' equity $669,141  $671,303  $673,459  $677,157  $670,719   $669,141  $670,719 
Tangible stockholders' equity  649,854   651,898   653,932   657,504   650,936    649,854   650,936 
                             
Consolidated Regulatory Capital Ratios                            
Tier 1 capital $739,364  $735,810  $737,138  $746,880  $749,526   $739,364  $749,526 
Common equity Tier 1 capital  692,914   689,876   690,846   698,258   701,532    692,914   701,532 
Total risk-based capital  968,152   963,840   965,384   975,709   979,021    968,152   979,021 
Risk Weighted Assets  6,802,385   6,649,252   6,659,532   6,640,542   6,689,284    6,802,385   6,689,284 
                             
Tier 1 leverage capital (well capitalized = 5%)  8.54%  8.56%  8.58%  8.61%  8.74%   8.54%  8.74%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  10.19   10.38   10.37   10.52   10.49    10.19   10.49 
Tier 1 risk-based capital (well capitalized = 8.0%)  10.87   11.07   11.07   11.25   11.20    10.87   11.20 
Total risk-based capital (well capitalized = 10.0%)  14.23   14.50   14.50   14.69   14.64    14.23   14.64 
                             
Capital Ratios                            
Average equity to average assets  7.94%  7.96%  8.07%  7.94%  7.99%   7.99%  8.15%
Equity to total assets  7.80   7.92   7.94   8.04   7.84    7.80   7.84 
Tangible common equity to tangible assets (6)  7.59   7.71   7.73   7.82   7.62    7.59   7.62 
                             
Asset Quality                            
Nonaccrual loans (7) $17,405  $18,637  $21,176  $29,782  $27,003   $17,405  $27,003 
Nonperforming loans  17,405   18,637   21,176   32,382   29,003    17,405   29,003 
Nonperforming assets  38,386   39,618   42,157   53,363   49,984    38,386   49,984 
Net charge-offs (recoveries)  (42)  1,560   9,234   811   290    10,752   724 
                             
Asset Quality Ratios                            
Nonperforming loans to gross loans  0.25%  0.27%  0.31%  0.47%  0.42%   0.25%  0.42%
Nonperforming assets to total assets  0.45   0.47   0.50   0.63   0.58    0.45   0.58 
Allowance for credit losses to gross loans  0.57   0.57   0.56   0.58   0.59    0.57   0.59 
Allowance for credit losses to nonperforming assets  102.19   97.41   91.87   75.79   82.56    102.19   82.56 
Allowance for credit losses to nonperforming loans  225.38   207.08   182.89   124.89   142.29    225.38   142.29 
Net charge-offs (recoveries) to average loans  —   0.09   0.54   0.05   0.02    0.21   0.01 
                             
Full-service customer facilities  27   26   26   25   25    27   25 
                              

(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 core noninterest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of core net interest income and core noninterest income.
(4) Calculated by dividing stockholders’ equity by shares outstanding.
(5) Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure, by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets. See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7) Excludes performing nonaccrual TDR loans in periods prior to 1Q23.

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

 For the three months ended  For the nine months ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(In thousands, except per share data)2023 2023 2023 2022 2022  2023 2022
Interest and Dividend Income                          
Interest and fees on loans$91,466  $85,377  $82,889  $81,033  $75,546   $259,732  $212,254 
Interest and dividends on securities:                          
Interest 10,383   9,172   7,240   6,511   5,676    26,795   14,350 
Dividends 33   30   29   24   17    92   36 
Other interest income 2,154   1,982   1,959   1,702   506    6,095   716 
Total interest and dividend income 104,036   96,561   92,117   89,270   81,745    292,714   227,356 
                           
Interest Expense                          
Deposits 50,066   46,249   39,056   27,226   11,965    135,371   20,059 
Other interest expense 9,543   6,934   7,799   7,843   8,574    24,276   17,882 
Total interest expense 59,609   53,183   46,855   35,069   20,539    159,647   37,941 
                           
Net Interest Income 44,427   43,378   45,262   54,201   61,206    133,067   189,415 
Provision (benefit) for credit losses 596   1,416   7,508   (12)  2,145    9,520   5,093 
Net Interest Income After Provision (Benefit) for Credit Losses 43,831   41,962   37,754   54,213   59,061    123,547   184,322 
                           
Noninterest Income (Loss)                          
Banking services fee income 2,636   1,780   1,411   1,231   1,351    5,827   3,891 
Net loss on sale of securities —   —   —   (10,948)  —    —   — 
Net gain on sale of loans —   54   54   46   —    108   73 
Net gain on disposition of assets —   —   —   104   —    —   — 
Net gain (loss) from fair value adjustments (1,246)  294   2,619   (622)  5,626    1,667   6,350 
Federal Home Loan Bank of New York stock dividends 624   534   697   658   538    1,855   1,342 
Life insurance proceeds 23   561   —   286   —    584   1,536 
Bank owned life insurance 1,157   1,134   1,109   1,126   1,132    3,400   3,361 
Other income 282   765   1,018   467   348    2,065   1,108 
Total noninterest income (loss) 3,476   5,122   6,908   (7,652)  8,995    15,506   17,661 
                           
Noninterest Expense                          
Salaries and employee benefits 17,825   19,493   20,887   18,178   21,438    58,205   66,196 
Occupancy and equipment 3,371   3,534   3,793   3,701   3,541    10,698   10,905 
Professional services 3,042   2,657   2,483   2,130   2,570    8,182   7,077 
FDIC deposit insurance 912   943   977   485   738    2,832   1,773 
Data processing 1,422   1,473   1,435   1,421   1,367    4,330   4,174 
Depreciation and amortization 1,482   1,482   1,510   1,535   1,488    4,474   4,395 
Other real estate owned/foreclosure expense 185   150   165   35   143    500   259 
Other operating expenses 6,176   5,547   6,453   6,257   4,349    18,176   15,171 
Total noninterest expense 34,415   35,279   37,703   33,742   35,634    107,397   109,950 
                           
Income Before Provision for Income Taxes 12,892   11,805   6,959   12,819   32,422    31,656   92,033 
                           
Provision for Income Taxes 3,493   3,177   1,801   2,570   8,980    8,471   25,337 
                           
Net Income$9,399  $8,628  $5,158  $10,249  $23,442   $23,185  $66,696 
                           
Basic earnings per common share$0.32  $0.29  $0.17  $0.34  $0.76   $0.77  $2.15 
Diluted earnings per common share$0.32  $0.29  $0.17  $0.34  $0.76   $0.77  $2.15 
Dividends per common share$0.22  $0.22  $0.22  $0.22  $0.22   $0.66  $0.66 
                           
Basic average shares 29,703   30,090   30,265   30,420   30,695    30,017   30,960 
Diluted average shares 29,703   30,090   30,265   30,420   30,695    30,017   30,960 
                             

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

  September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2023 2023 2023 2022 2022
ASSETS               
Cash and due from banks $200,926  $160,053  $176,747  $151,754  $164,693 
Securities held-to-maturity:               
Mortgage-backed securities  7,860   7,865   7,870   7,875   7,880 
Other securities, net  65,271   65,469   65,653   65,836   66,032 
Securities available for sale:               
Mortgage-backed securities  337,879   365,911   380,110   384,283   468,366 
Other securities  505,784   503,645   431,818   351,074   351,495 
Loans  6,896,074   6,832,425   6,904,176   6,934,769   6,956,674 
Allowance for credit losses  (39,228)  (38,593)  (38,729)  (40,442)  (41,268)
Net loans  6,856,846   6,793,832   6,865,447   6,894,327   6,915,406 
Interest and dividends receivable  55,660   52,911   46,836   45,048   42,571 
Bank premises and equipment, net  21,302   22,182   21,567   21,750   22,376 
Federal Home Loan Bank of New York stock  43,821   36,168   38,779   45,842   62,489 
Bank owned life insurance  214,321   213,164   214,240   213,131   212,353 
Goodwill  17,636   17,636   17,636   17,636   17,636 
Core deposit intangibles  1,651   1,769   1,891   2,017   2,147 
Right of use asset  41,404   41,526   42,268   43,289   44,885 
Other assets  206,922   191,752   168,259   179,084   179,090 
Total assets $8,577,283  $8,473,883  $8,479,121  $8,422,946  $8,557,419 
                
LIABILITIES               
Total deposits $6,681,509  $6,723,690  $6,734,090  $6,485,342  $6,125,305 
Borrowed funds  1,001,010   857,400   887,509   1,052,973   1,572,830 
Operating lease liability  43,067   44,402   45,353   46,125   48,330 
Other liabilities  182,556   177,088   138,710   161,349   140,235 
Total liabilities  7,908,142   7,802,580   7,805,662   7,745,789   7,886,700 
                
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  264,486   263,744   262,876   264,332   263,755 
Treasury stock  (105,433)  (104,574)  (97,760)  (98,535)  (90,977)
Retained earnings  550,678   547,811   545,786   547,507   543,894 
Accumulated other comprehensive loss, net of taxes  (40,931)  (36,019)  (37,784)  (36,488)  (46,294)
Total stockholders' equity  669,141   671,303   673,459   677,157   670,719 
                
Total liabilities and stockholders' equity $8,577,283  $8,473,883  $8,479,121  $8,422,946  $8,557,419 
                
(In thousands)               
Issued shares  34,088   34,088   34,088   34,088   34,088 
Outstanding shares  28,905   28,961   29,488   29,476   29,851 
Treasury shares  5,183   5,127   4,600   4,612   4,237 
                     

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

  For the three months ended  For the nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(In thousands) 2023 2023 2023 2022 2022  2023 2022
Interest-earning Assets:                             
Mortgage loans, net $5,314,215  $5,308,567  $5,333,274  $5,338,612  $5,340,694   $5,318,616  $5,224,289 
Other loans, net  1,498,804   1,521,081   1,537,918   1,542,633   1,520,769    1,519,124   1,470,239 
Total loans, net  6,813,019   6,829,648   6,871,192   6,881,245   6,861,463    6,837,740   6,694,528 
Taxable securities:                             
Mortgage-backed securities  436,181   448,620   457,911   549,204   568,854    447,491   581,439 
Other securities, net  528,091   471,600   411,723   371,897   362,629    470,898   308,008 
Total taxable securities  964,272   920,220   869,634   921,101   931,483    918,389   889,447 
Tax-exempt securities:                             
Other securities  66,438   66,632   66,828   67,022   67,211    66,631   64,081 
Total tax-exempt securities  66,438   66,632   66,828   67,022   67,211    66,631   64,081 
Interest-earning deposits and federal funds sold  173,731   169,520   189,023   176,323   118,913    177,369   116,817 
Total interest-earning assets  8,017,460   7,986,020   7,996,677   8,045,691   7,979,070    8,000,129   7,764,873 
Other assets  486,904   475,807   471,634   472,328   463,587    478,170   471,197 
Total assets $8,504,364  $8,461,827  $8,468,311  $8,518,019  $8,442,657   $8,478,299  $8,236,070 
                              
Interest-bearing Liabilities:                             
Deposits:                             
Savings accounts $115,437  $124,041  $134,945  $146,598  $154,545   $124,736  $155,966 
NOW accounts  1,907,781   2,026,950   1,970,555   1,972,134   1,808,608    1,968,199   1,977,621 
Money market accounts  1,584,308   1,754,574   2,058,523   2,146,649   2,136,829    1,797,398   2,206,973 
Certificate of deposit accounts  2,290,669   2,046,960   1,679,517   1,350,683   1,057,733    2,007,954   923,301 
Total due to depositors  5,898,195   5,952,525   5,843,540   5,616,064   5,157,715    5,898,287   5,263,861 
Mortgagors' escrow accounts  69,525   97,410   70,483   82,483   68,602    79,136   79,192 
Total interest-bearing deposits  5,967,720   6,049,935   5,914,023   5,698,547   5,226,317    5,977,423   5,343,053 
Borrowings  804,140   706,924   789,535   963,662   1,326,770    766,919   1,028,489 
Total interest-bearing liabilities  6,771,860   6,756,859   6,703,558   6,662,209   6,553,087    6,744,342   6,371,542 
Noninterest-bearing demand deposits  851,677   849,682   896,462   979,836   1,050,296    865,777   1,032,319 
Other liabilities  205,314   181,343   185,220   199,809   164,992    190,699   160,621 
Total liabilities  7,828,851   7,787,884   7,785,240   7,841,854   7,768,375    7,800,818   7,564,482 
Equity  675,513   673,943   683,071   676,165   674,282    677,481   671,588 
Total liabilities and equity $8,504,364  $8,461,827  $8,468,311  $8,518,019  $8,442,657   $8,478,299  $8,236,070 
                              
Net interest-earning assets $1,245,600  $1,229,161  $1,293,119  $1,383,482  $1,425,983   $1,255,787  $1,393,331 
                              

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

  For the three months ended  For the nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(Dollars in thousands) 2023 2023 2023 2022 2022  2023 2022
Interest Income:                           
Mortgage loans, net $68,931  $63,688  $62,054  $60,946  $58,374   $194,673  $167,119 
Other loans, net  22,535   21,689   20,835   20,087   17,172    65,059   45,135 
Total loans, net  91,466   85,377   82,889   81,033   75,546    259,732   212,254 
Taxable securities:                           
Mortgage-backed securities  3,031   2,976   2,281   2,425   2,466    8,288   6,989 
Other securities  7,003   5,847   4,611   3,723   2,839    17,461   6,048 
Total taxable securities  10,034   8,823   6,892   6,148   5,305    25,749   13,037 
Tax-exempt securities:                           
Other securities  484   480   477   489   492    1,441   1,708 
Total tax-exempt securities  484   480   477   489   492    1,441   1,708 
Interest-earning deposits and federal funds sold  2,154   1,982   1,959   1,702   506    6,095   716 
Total interest-earning assets  104,138   96,662   92,217   89,372   81,849    293,017   227,715 
Interest Expense:                           
Deposits:                           
Savings accounts $130  $140  $126  $59  $53   $396  $152 
NOW accounts  16,843   16,152   13,785   9,515   3,640    46,780   5,838 
Money market accounts  14,386   14,625   14,102   10,532   5,280    43,113   8,507 
Certificate of deposit accounts  18,639   15,281   11,007   7,037   2,948    44,927   5,510 
Total due to depositors  49,998   46,198   39,020   27,143   11,921    135,216   20,007 
Mortgagors' escrow accounts  68   51   36   83   44    155   52 
Total interest-bearing deposits  50,066   46,249   39,056   27,226   11,965    135,371   20,059 
Borrowings  9,543   6,934   7,799   7,843   8,574    24,276   17,882 
Total interest-bearing liabilities  59,609   53,183   46,855   35,069   20,539    159,647   37,941 
Net interest income- tax equivalent $44,529  $43,479  $45,362  $54,303  $61,310   $133,370  $189,774 
Included in net interest income above:                           
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans $857  $315  $680  $1,080  $1,368   $1,852  $5,365 
Net gains/(losses) from fair value adjustments on qualifying hedges included in interest income  1,348   (205)  100   936   28    1,243   (161)
Purchase accounting adjustments  347   340   306   342   775    993   2,200 
Interest-earning Assets Yields:                           
Mortgage loans, net  5.19%  4.80%  4.65%  4.57%  4.37%   4.88%  4.27%
Other loans, net  6.01   5.70   5.42   5.21   4.52    5.71   4.09 
Total loans, net  5.37   5.00   4.83   4.71   4.40    5.06   4.23 
Taxable securities:                           
Mortgage-backed securities  2.78   2.65   1.99   1.77   1.73    2.47   1.60 
Other securities  5.30   4.96   4.48   4.00   3.13    4.94   2.62 
Total taxable securities  4.16   3.84   3.17   2.67   2.28    3.74   1.95 
Tax-exempt securities: (1)                           
Other securities  2.91   2.88   2.86   2.92   2.93    2.88   3.55 
Total tax-exempt securities  2.91   2.88   2.86   2.92   2.93    2.88   3.55 
Interest-earning deposits and federal funds sold  4.96   4.68   4.15   3.86   1.70    4.58   0.82 
Total interest-earning assets (1)  5.20%  4.84%  4.61%  4.44%  4.10%   4.88%  3.91%
Interest-bearing Liabilities Yields:                           
Deposits:                           
Savings accounts  0.45%  0.45%  0.37%  0.16%  0.14%   0.42%  0.13%
NOW accounts  3.53   3.19   2.80   1.93   0.81    3.17   0.39 
Money market accounts  3.63   3.33   2.74   1.96   0.99    3.20   0.51 
Certificate of deposit accounts  3.25   2.99   2.62   2.08   1.11    2.98   0.80 
Total due to depositors  3.39   3.10   2.67   1.93   0.92    3.06   0.51 
Mortgagors' escrow accounts  0.39   0.21   0.20   0.40   0.26    0.26   0.09 
Total interest-bearing deposits  3.36   3.06   2.64   1.91   0.92    3.02   0.50 
Borrowings  4.75   3.92   3.95   3.26   2.58    4.22   2.32 
Total interest-bearing liabilities  3.52%  3.15%  2.80%  2.11%  1.25%   3.16%  0.79%
                            
Net interest rate spread (tax equivalent) (1)  1.68%  1.69%  1.81%  2.33%  2.85%   1.72%  3.12%
Net interest margin (tax equivalent) (1)  2.22%  2.18%  2.27%  2.70%  3.07%   2.22%  3.26%
Ratio of interest-earning assets to interest-bearing liabilities  1.18X  1.18X  1.19X  1.21X  1.22X   1.19X  1.22X

_______________
(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

                      3Q23 vs. 3Q23 vs.
  September 30, June 30, March 31, December 31, September 30, 2Q23 3Q22
(Dollars in thousands) 2023 2023 2023 2022 2022 % Change % Change
Noninterest bearing $874,420  $827,820  $872,254  $921,238  $992,378  5.6% (11.9)%
Interest bearing:                        
Certificate of deposit accounts  2,321,369   2,232,696   1,880,260   1,526,338   1,036,107  4.0  124.0 
Savings accounts  112,730   118,886   128,245   143,641   150,552  (5.2) (25.1)
Money market accounts  1,551,176   1,594,637   1,855,781   2,099,776   2,113,256  (2.7) (26.6)
NOW accounts  1,749,802   1,891,834   1,918,977   1,746,190   1,762,468  (7.5) (0.7)
Total interest-bearing deposits  5,735,077   5,838,053   5,783,263   5,515,945   5,062,383  (1.8) 13.3 
Total due to depositors  6,609,497   6,665,873   6,655,517   6,437,183   6,054,761  (0.8) 9.2 
Mortgagors' escrow deposits  72,012   57,817   78,573   48,159   70,544  24.6  2.1 
Total deposits $6,681,509  $6,723,690  $6,734,090  $6,485,342  $6,125,305  (0.6)% 9.1%
                           

Loan Composition

                 3Q23 vs. 3Q23 vs.
  September 30, June 30, March 31, December 31, September 30, 2Q23 3Q22
(Dollars in thousands) 2023 2023 2023 2022 2022 % Change % Change
Multifamily residential $2,614,219  $2,593,955  $2,601,174  $2,601,384  $2,608,192  0.8% 0.2%
Commercial real estate  1,953,243   1,917,749   1,904,293   1,913,040   1,914,326  1.9  2.0 
One-to-four family ― mixed-use property  537,744   542,368   549,207   554,314   560,885  (0.9) (4.1)
One-to-four family ― residential  222,874   230,055   238,417   241,246   240,484  (3.1) (7.3)
Construction  59,903   57,325   60,486   70,951   63,651  4.5  (5.9)
Mortgage Loans  5,387,983   5,341,452   5,353,577   5,380,935   5,387,538  0.9  — 
                    
Small Business Administration  21,896   22,404   22,860   23,275   27,712  (2.3) (21.0)
Commercial business and other  1,487,775   1,466,358   1,518,756   1,521,548   1,532,497  1.5  (2.9)
Nonmortgage loans  1,509,671   1,488,762   1,541,616   1,544,823   1,560,209  1.4  (3.2)
                    
Gross loans  6,897,654   6,830,214   6,895,193   6,925,758   6,947,747  1.0  (0.7)
Net unamortized (premiums) and unearned loan (cost) fees (1)  (1,580)  2,211   8,983   9,011   8,927  (171.5) (117.7)
Allowance for credit losses  (39,228)  (38,593)  (38,729)  (40,442)  (41,268) 1.6  (4.9)
Net loans $6,856,846  $6,793,832  $6,865,447  $6,894,327  $6,915,406  0.9% (0.8)%

_______________
(1) Includes $4.4 million, $4.8 million, $5.1 million, $5.4 million, and $5.8 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively.

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

Loan Closings

  For the three months ended  For the nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(In thousands) 2023 2023 2023 2022 2022  2023 2022
Multifamily residential $75,655  $31,901  $42,164  $65,347  $173,980   $149,720  $409,062 
Commercial real estate  70,197   38,523   15,570   20,750   77,777    124,290   287,705 
One-to-four family – mixed-use property  6,028   5,812   4,938   4,489   12,383    16,778   33,109 
One-to-four family – residential  1,070   63   4,296   7,485   4,102    5,429   17,574 
Construction  6,971   8,811   10,592   7,301   7,170    26,374   24,291 
Mortgage Loans  159,921   85,110   77,560   105,372   275,412    322,591   771,741 
                              
Small Business Administration  —   820   318   665   46    1,138   2,796 
Commercial business and other  81,549   72,850   95,668   119,191   188,202    250,067   522,229 
Nonmortgage Loans  81,549   73,670   95,986   119,856   188,248    251,205   525,025 
                              
Total Closings $241,470  $158,780  $173,546  $225,228  $463,660   $573,796  $1,296,766 
                              

Weighted Average Rate on Loan Closings

  For the three months ended
  September 30, June 30, March 31, December 31, September 30,
Loan type 2023 2023 2023 2022 2022
Mortgage loans 7.22% 6.62% 6.30% 5.59% 4.37%
Nonmortgage loans 8.00  7.76  7.58  6.57  4.93 
Total loans 7.48% 7.14% 7.01% 6.10% 4.60%
                

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)

Allowance for Credit Losses

  For the three months ended  For the nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(Dollars in thousands) 2023 2023 2023 2022 2022  2023 2022
Allowance for credit losses - loans                      
Beginning balances $38,593  $38,729  $40,442  $41,268  $39,424   $40,442  $37,135 
                       
Net loan charge-off (recoveries):                      
Multifamily residential  —   —   (1)  132   —    (1)  (1)
Commercial real estate  —   8   —   —   —    8   — 
One-to-four family – residential  (6)  4   (36)  17   2    (38)  (2)
Small Business Administration  (48)  (158)  (6)  (9)  (12)   (212)  1,016 
Taxi medallion  —   —   —   —   —    —   (447)
Commercial business and other  12   1,706   9,277   671   300    10,995   158 
Total  (42)  1,560   9,234   811   290    10,752   724 
                       
Provision (benefit) for loan losses  593   1,424   7,521   (15)  2,134    9,538   4,857 
                       
Ending balance $39,228  $38,593  $38,729  $40,442  $41,268   $39,228  $41,268 
                       
Gross charge-offs $21  $1,731  $9,298  $1,938  $324   $11,050  $1,410 
Gross recoveries  63   171   64   1,127   34    298   686 
                       
Allowance for credit losses - loans to gross loans  0.57%  0.57%  0.56%  0.58%  0.59%   0.57%  0.59%
Net loan charge-offs (recoveries) to average loans  —   0.09   0.54   0.05   0.02    0.21   0.01 
                              

Nonperforming Assets

  September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2023 2023 2023 2022 2022
Loans 90 Days Or More Past Due and Still Accruing:                    
Commercial real estate $—  $—  $—  $—  $2,000 
Construction  —   —   —   2,600   — 
Commercial business and other  —   —   —   —   — 
Total  —   —   —   2,600   2,000 
                     
Nonaccrual Loans:                    
Multifamily residential  3,206   3,206   3,628   3,206   3,414 
Commercial real estate  —   —   —   237   1,851 
One-to-four family - mixed-use property(1)  1,075   790   790   790   790 
One-to-four family - residential  4,161   5,218   4,961   4,425   4,655 
Small Business Administration  1,255   1,119   937   937   937 
Commercial business and other(1)  7,708   8,304   10,860   20,187   15,356 
Total  17,405   18,637   21,176   29,782   27,003 
                     
Total Nonperforming Loans (NPLs)  17,405   18,637   21,176   32,382   29,003 
                     
Total Nonaccrual HTM Securities  20,981   20,981   20,981   20,981   20,981 
                     
Total Nonperforming Assets $38,386  $39,618  $42,157  $53,363  $49,984 
                     
Nonperforming Assets to Total Assets  0.45%  0.47%  0.50%  0.63%  0.58%
Allowance for Credit Losses to NPLs  225.4%  207.1%  182.9%  124.9%  142.3%

_______________
(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; nonaccrual performing TDR commercial business loans totaling less than $0.1 million in 4Q22 and $2.9 million in 3Q22.

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

Non-cash Fair Value Adjustments to GAAP Earnings

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

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

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

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

  For the three months ended  For the nine months ended
(Dollars in thousands,  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
except per share data) 2023 2023 2023 2022 2022  2023 2022
                       
GAAP income before income taxes $12,892  $11,805  $6,959  $12,819  $32,422   $31,656  $92,033 
                       
Net (gain) loss from fair value adjustments (Noninterest income (loss))  1,246   (294)  (2,619)  622   (5,626)   (1,667)  (6,350)
Net loss on sale of securities (Noninterest income (loss))  —   —   —   10,948   —    —   — 
Life insurance proceeds (Noninterest income (loss))  (23)  (561)  —   (286)  —    (584)  (1,536)
Net gain on disposition of assets (Noninterest income (loss))  —   —   —   (104)  —    —   — 
Net (gain) loss from fair value adjustments on qualifying hedges (Net interest income)  (1,348)  205   (100)  (936)  (28)   (1,243)  161 
Net amortization of purchase accounting adjustments and intangibles (Various)  (237)  (227)  (188)  (219)  (650)   (652)  (1,811)
                       
Core income before taxes  12,530   10,928   4,052   22,844   26,118    27,510   82,497 
                       
Provision for core income taxes  3,395   3,074   1,049   5,445   7,165    7,518   23,057 
                       
Core net income $9,135  $7,854  $3,003  $17,399  $18,953   $19,992  $59,440 
                       
GAAP diluted earnings per common share $0.32  $0.29  $0.17  $0.34  $0.76   $0.77  $2.15 
Net (gain) loss from fair value adjustments, net of tax  0.03   (0.01)  (0.06)  0.02   (0.13)   (0.04)  (0.15)
Net loss on sale of securities, net of tax  —   —   —   0.27   —    —   — 
Life insurance proceeds  —   (0.02)  —   (0.01)  —    (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  (0.03)  —   —   (0.02)  —    (0.03)  — 
Net amortization of purchase accounting adjustments, net of tax  (0.01)  (0.01)  (0.01)  (0.01)  (0.02)   (0.02)  (0.04)
                       
Core diluted earnings per common share(1) $0.31  $0.26  $0.10  $0.57  $0.62   $0.67  $1.92 
                       
Core net income, as calculated above $9,135  $7,854  $3,003  $17,399  $18,953   $19,992  $59,440 
Average assets  8,504,364   8,461,827   8,468,311   8,518,019   8,442,657    8,478,299   8,236,070 
Average equity  675,513   673,943   683,071   676,165   674,282    677,481   671,588 
Core return on average assets(2)  0.43%  0.37%  0.14%  0.82%  0.90%   0.31%  0.96%
Core return on average equity(2)  5.41%  4.66%  1.76%  10.29%  11.24%   3.93%  11.80%

_______________
(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 nine months ended
  September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
(Dollars in thousands) 2023 2023 2023 2022 2022  2023 2022
                       
GAAP Net interest income $44,427  $43,378  $45,262  $54,201  $61,206   $133,067  $189,415 
Net (gain) loss from fair value adjustments on qualifying hedges  (1,348)  205   (100)  (936)  (28)   (1,243)  161 
Net amortization of purchase accounting adjustments  (347)  (340)  (306)  (342)  (775)   (993)  (2,200)
Core Net interest income $42,732  $43,243  $44,856  $52,923  $60,403   $130,831  $187,376 
                       
GAAP Noninterest income (loss) $3,476  $5,122  $6,908  $(7,652) $8,995   $15,506  $17,661 
Net (gain) loss from fair value adjustments  1,246   (294)  (2,619)  622   (5,626)   (1,667)  (6,350)
Net loss on sale of securities  —   —   —   10,948   —    —   — 
Life insurance proceeds  (23)  (561)  —   (286)  —    (584)  (1,536)
Net gain on sale of assets  —   —   —   (104)  —    —   — 
Core Noninterest income $4,699  $4,267  $4,289  $3,528  $3,369   $13,255  $9,775 
                       
GAAP Noninterest expense $34,415  $35,279  $37,703  $33,742  $35,634   $107,397  $109,950 
Net amortization of purchase accounting adjustments  (110)  (113)  (118)  (123)  (125)   (341)  (389)
Core Noninterest expense $34,305  $35,166  $37,585  $33,619  $35,509   $107,056  $109,561 
                       
Net interest income $44,427  $43,378  $45,262  $54,201  $61,206   $133,067  $189,415 
Noninterest income (loss)  3,476   5,122   6,908   (7,652)  8,995    15,506   17,661 
Noninterest expense  (34,415)  (35,279)  (37,703)  (33,742)  (35,634)   (107,397)  (109,950)
Pre-provision pre-tax net revenue $13,488  $13,221  $14,467  $12,807  $34,567   $41,176  $97,126 
                       
Core:                      
Net interest income $42,732  $43,243  $44,856  $52,923  $60,403   $130,831  $187,376 
Noninterest income  4,699   4,267   4,289   3,528   3,369    13,255   9,775 
Noninterest expense  (34,305)  (35,166)  (37,585)  (33,619)  (35,509)   (107,056)  (109,561)
Pre-provision pre-tax net revenue $13,126  $12,344  $11,560  $22,832  $28,263   $37,030  $87,590 
Efficiency Ratio  72.3%  74.0%  76.5%  59.6%  55.7%   74.3%  55.6%
                              

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 nine months ended
 September 30, June 30, March 31, December 31, September 30,  September 30,September 30,
(Dollars in thousands)2023 2023 2023 2022 2022  20232022
GAAP net interest income$44,427  $43,378  $45,262  $54,201  $61,206   $133,067 $189,415 
Net (gain) loss from fair value adjustments on qualifying hedges (1,348)  205   (100)  (936)  (28)   (1,243) 161 
Net amortization of purchase accounting adjustments (347)  (340)  (306)  (342)  (775)   (993) (2,200)
Tax equivalent adjustment 102   101   100   102   104    303  359 
Core net interest income FTE$42,834  $43,344  $44,956  $53,025  $60,507   $131,134 $187,735 
                     
Total average interest-earning assets (1)$8,021,424  $7,990,331  $8,001,271  $8,050,601  $7,984,558   $8,004,417 $7,770,910 
Core net interest margin FTE 2.14%  2.17%  2.25%  2.63%  3.03%   2.18% 3.22%
                     
GAAP interest income on total loans, net$91,466  $85,377  $82,889  $81,033  $75,546   $259,732 $212,254 
Net (gain) loss from fair value adjustments on qualifying hedges - loans (1,379)  157   (101)  (936)  (28)   (1,323) 161 
Net amortization of purchase accounting adjustments (358)  (345)  (316)  (372)  (783)   (1,019) (2,256)
Core interest income on total loans, net$89,729  $85,189  $82,472  $79,725  $74,735   $257,390 $210,159 
                     
Average total loans, net (1)$6,817,642  $6,834,644  $6,876,495  $6,886,900  $6,867,758   $6,842,712 $6,701,413 
Core yield on total loans 5.26%  4.99%  4.80%  4.63%  4.35%   5.02% 4.18%
                            

_______________
(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)

  September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2023 2023 2023 2022 2022
Total Equity $669,141  $671,303  $673,459  $677,157  $670,719 
Less:               
Goodwill  (17,636)  (17,636)  (17,636)  (17,636)  (17,636)
Core deposit intangibles  (1,651)  (1,769)  (1,891)  (2,017)  (2,147)
Tangible Stockholders' Common Equity $649,854  $651,898  $653,932  $657,504  $650,936 
                
Total Assets $8,577,283  $8,473,883  $8,479,121  $8,422,946  $8,557,419 
Less:               
Goodwill  (17,636)  (17,636)  (17,636)  (17,636)  (17,636)
Core deposit intangibles  (1,651)  (1,769)  (1,891)  (2,017)  (2,147)
Tangible Assets $8,557,996  $8,454,478  $8,459,594  $8,403,293  $8,537,636 
                
Tangible Stockholders' Common Equity to Tangible Assets  7.59%  7.71%  7.73%  7.82%  7.62%
                

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EARNINGS BANKING WEBCAST