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Flushing Financial Corporation Reports First Quarter GAAP Net Income of $0.33 Per Diluted Common Share, a 10% Increase From the Same Period in 2015, Driven by Record Net Interest Income

FIRST QUARTER 2016

  • Core diluted earnings per common share, a non-GAAP measure, were $0.33, an increase of $0.02, or 6.5%, from the three months ended March 31, 2015, but a decrease of $0.09, or 21.4%, from the trailing quarter.
  • GAAP diluted earnings per common share were $0.33, an increase of $0.03, or 10.0%, from the three months ended March 31, 2015, but a decrease of $0.07, or 17.5%, from the trailing quarter.
  • Core return on average equity, a non-GAAP measure, was 8.1%, 7.9% and 10.3% for the three months ended March 31, 2016 and 2015 and December 31, 2015, respectively.
  • GAAP return on average equity was 8.0%, 7.6% and 9.9% for the three months ended March 31, 2016 and 2015 and December 31, 2015, respectively.
  • Core return on average assets, a non-GAAP measure, was 0.7%, 0.7% and 0.9% for the three months ended March 31, 2016 and 2015 and December 31, 2015, respectively.
  • GAAP return on average assets was 0.7%, 0.7% and 0.8% for the three months ended March 31, 2016 and 2015 and December 31, 2015, respectively.
  • The net interest margin was 3.00% for the three months ended March 31, 2016, an increase of two basis points from the trailing quarter.
  • Record net interest income totaled $41.1 million for the three months ended March 31, 2016.
  • Increased quarterly dividend by 6% to $0.17 per share.

UNIONDALE, N.Y., April 26, 2016 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq:FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the three months ended March 31, 2016.

John R. Buran, President and Chief Executive Officer, stated: “We are pleased to report another quarter of strong earnings, which was achieved through loan and deposit growth, as well as continued improvements in credit quality, which all contributed to the Company achieving record net interest income for the current quarter. As we grow our balance sheet we continue to focus on adding adjustable rate interest-earning assets and maintaining our prudent underwriting standards.

“Core diluted earnings per common share were $0.33 for the first quarter of 2016, which was a decrease of $0.09 from the trailing quarter. The first quarter’s non-interest expense included several seasonal items which will be reduced for the remainder of the year. These expenses included the annual restricted stock unit awards for employees and directors and an increase in payroll taxes. We anticipate a reduction in non-interest expense in the second quarter of 2016 of $2.8 million from the first quarter of 2016, which equates to approximately $0.06 per diluted common share, after tax.

“During the current quarter, loan originations and purchases totaled $229.2 million, a decrease of $166.4 million from the record originations and purchases achieved in the trailing quarter. Although we experienced a decrease in originations in the current period, we saw our loan pipeline increase 32% in the first quarter to $436.5 million, which we believe positions us well for the remainder of 2016. The current quarter’s originations and purchases included commercial real estate loans due to the higher yields and commercial business loans due to their adjustable rates. These loan categories represented more than 50% of the current quarter’s originations and purchases. We continue to position the balance sheet to hold a larger percentage of assets which will re-price as rates rise. The weighted average yield on loan originations and purchases increased to 3.77% for the first quarter of 2016 from 3.68% and 3.55% for the quarters ended December 31, 2015 and March 31, 2015, respectively. Our loan pipeline remains strong totaling $436.5 million at March 31, 2016. 

“Our credit quality for the first quarter continues to improve, as non-accrual loans decreased $0.7 million, or 3.1%, to $22.1 million at March 31, 2016 from $22.8 million at December 31, 2015.  Classified assets decreased by $1.9 million, or 4.2%, to $42.0 million at March 31, 2016 from $43.9 million at December 31, 2015. During the three months ended March 31, 2016, we recognized net recoveries of $0.5 million. Our strong underwriting standards coupled with our practice of obtaining updated appraisals and recording charge-offs, when necessary, has resulted in a 42.1% average loan-to-value for non-performing loans collateralized by real estate at March 31, 2016.

“Our net interest margin for the first quarter of 2016 was 3.00%, an increase of two basis points from the trailing quarter.   Included in net interest income are prepayment penalties and interest recovered from non-accrual loans. The first quarter of 2016 had an elevated level of prepayment penalty income, while interest recovered from non-accrual loans was slightly above the trailing quarter. Absent these two items in both periods, the net interest margin would have decreased by one basis point to 2.83% for the first quarter of 2016 from 2.84% for the fourth quarter of 2015.”

At March 31, 2016, the Bank was considered to be well-capitalized under all regulatory requirements, with Tier 1 leverage, Common Equity Tier 1, Tier 1 Risk-based, and Total Risk-based capital ratios of 8.65%, 12.51%, 12.51% and 13.06%, respectively. The Company also is subject to the same regulatory requirements.  At March 31, 2016, the Company’s capital ratios for Tier 1 leverage, Common Equity Tier 1, Tier 1 Risk-based, and Total Risk-based capital ratios were 8.65%, 11.84%, 12.52% and 13.07%, respectively.

Core earnings, a non-GAAP measure, exclude the effects of net losses from fair value adjustments and the gain from life insurance proceeds. Core earnings were $9.7 million for the three months ended March 31, 2016, an increase of $0.6 million, or 7.0%, from $9.1 million in the comparable prior year period. Core diluted earnings per common share were $0.33 for the three months ended March 31, 2016, an increase of $0.02, or 6.5%, from the comparable prior year period.

For a reconciliation of core earnings and core diluted earnings per common share to accounting principles generally accepted in the United States (“GAAP”) net income and GAAP diluted earnings per common share, please refer to the tables in the section titled “Reconciliation of GAAP Earnings and Core Earnings.”

Earnings Summary - Three Months Ended March 31, 2016

Net income for the three months ended March 31, 2016 was $9.6 million, an increase of $0.8 million, or 9.5%, compared to $8.7 million for the three months ended March 31, 2015.  Diluted earnings per common share were $0.33 for the three months ended March 31, 2016, an increase of $0.03, or 10.0%, from $0.30 for the three months ended March 31, 2015.

Return on average equity increased to 8.0% for the three months ended March 31, 2016 from 7.6% for the three months ended March 31, 2015. Return on average assets was 0.7% for both the three months ended March 31, 2016 and 2015.

For the three months ended March 31, 2016, net interest income was a record of $41.1 million, an increase of $3.6 million, or 9.5%, from $37.6 million for the three months ended March 31, 2015. The increase in net interest income was primarily due to an increase of $629.1 million in the average balance of interest-earning assets to $5,490.7 million for the three months ended March 31, 2016 from $4,861.6 million for the comparable prior year period. The yield earned on interest-earning assets decreased 12 basis points to 3.96% for the quarter ended March 31, 2016 from 4.08% for the comparable prior year period. The cost of interest-bearing liabilities decreased two basis points to 1.07% for the three months ended March 31, 2016 as compared to 1.09% for the three months ended March 31, 2015. The effects of the above on both the net interest spread and net interest margin was a decrease of 10 basis points to 2.89% and a decrease of nine basis points to 3.00%, respectively, for the quarter ended March 31, 2016, compared to the quarter ended March 31, 2015. Included in net interest income was prepayment penalty income from loans for the three months ended March 31, 2016 and 2015 totaling $2.2 million and $1.2 million, respectively, along with recovered interest from non-accrual loans totaling $0.1 million and $0.6 million, respectively. Without the prepayment penalty income and recovered interest, the net interest margin for the three months ended March 31, 2016 would have been 2.83%, a decrease of 11 basis points, as compared to 2.94% for the three months ended March 31, 2015.

The decline in the yield on interest-earning assets of 12 basis points was primarily due to a 20 basis point reduction in the yield of total loans, net to 4.33% for the three months ended March 31, 2016 from 4.53% for the three months ended March 31, 2015. The yield on interest-earning assets was positively impacted by an increase of $541.6 million in the average balance of higher yielding total loans, net to $4,389.3 million for the three months ended March 31, 2016 from $3,847.7 million for the comparable prior year period. Additionally, the yield on the securities portfolio increased 17 basis points to 2.64% for three months ended March 31, 2016, from 2.47% for the comparable prior year period. The 20 basis point decrease in the yield on the total loans, net was primarily due to the decline in the rates earned on new loan originations and purchases, as compared to the existing portfolio, loans modifying to lower rates, and higher yielding loans prepaying. The 17 basis point increase in the yield on the securities portfolio was primarily due to the current year purchases totaling $62.1 million at an average yield of 2.88%. Excluding prepayment penalty income and recovered interest from loans, the yield on total loans, net, would have decreased 21 basis points to 4.13% for the three months ended March 31, 2016 from 4.34% for the three months ended March 31, 2015.

The decline in the cost of interest-bearing liabilities of two basis points was primarily due to a decrease of 19 basis points in the cost of certificates of deposit. The decrease in the cost of certificates of deposit was primarily due to maturing issuances being replaced at lower rates. This decrease was partially offset by increases of 20 basis points, five basis points, four basis points and four basis points in the cost of money market, savings, NOW accounts and borrowed funds, respectively, for the three months ended March 31, 2016 from the comparable prior year period. The cost of money market accounts increased primarily due to our shifting Government NOW deposits to a money market product which does not require us to provide collateral, allowing us to invest these funds in higher yielding assets. The cost of savings accounts increased as we raised the rate we pay on some of our savings products to attract additional deposits. The cost of NOW accounts increased primarily due to an increase in the rate we pay on our premium business checking product. The cost of borrowed funds increased due to maturing issuances being replaced at higher rates, as we look to extend the term of our borrowings. Additionally, the cost of interest-bearing liabilities was reduced by an increase in the average balance of lower costing core deposits during the three months ended March 31, 2016 to $2,342.1 million from $2,022.3 million for the comparable prior year period, partially offset by increases of $141.4 million and $106.4 million in the average balance of higher costing borrowed funds and certificates of deposit, respectively, during the three months ended March 31, 2016 as compared to the three months ended March 31, 2015.

The net interest margin for the three months ended March 31, 2016 was 3.00%, an increase of two basis points from 2.98% for the three months ended December 31, 2015. The cost of interest-bearing liabilities decreased three basis points during the three months ended March 31, 2016 to 1.07%, while the yield on interest-earning assets decreased one basis point to 3.96% from the three months ended December 31, 2015. The yield on total loans, net decreased one basis point to 4.33% for the three months ended March 31, 2015 from 4.34% for the three months ended December 31, 2015, while the yield on total securities increased one basis point to 2.64% for the three months ended March 31, 2016 from 2.63% for the three months ended December 31, 2015. Included in net interest income was prepayment penalty income from loans for the three months ended March 31, 2016 and December 31, 2015 totaling $2.2 million and $1.6 million, respectively, along with recovered interest from non-accrual loans totaling $0.1 million and $0.2 million, respectively. Without the prepayment penalty income and recovered interest, the net interest margin for the three months ended March 31, 2016 would have been 2.83%, a decrease of one basis point, as compared to 2.84% for the three months ended December 31, 2015.

During the three months ended March 31, 2016 no provision for loan losses was recorded compared to a benefit of $0.7 million recorded during the comparable prior year period. No provision was recorded during the three months ended March 31, 2016 due to the quarterly analysis of the adequacy of the allowance for loan losses indicating that the reserve was at an appropriate level. During the three months ended March 31, 2016, the Bank recorded net recoveries totaling $0.5 million, as we continued to see improvement in credit conditions. During the three months ended March 31, 2016, non-accrual loans decreased $0.7 million to $22.1 million from $22.8 million at December 31, 2015. The current average loan-to-value ratio for our non-performing loans collateralized by real estate was 42.1% at March 31, 2016. When we have obtained properties through foreclosure, we have been able to sell the properties at amounts that approximate book value. The Bank continues to maintain conservative underwriting standards. We anticipate that we will continue to see low loss content in our loan portfolio.

Non-interest income for the three months ended March 31, 2016 was $2.5 million, an increase of $0.6 million, or 31.6%, from $1.9 million for the three months ended March 31, 2015. The increase in non-interest income was primarily due to net gains of $0.4 million and $0.3 million from life insurance proceeds and from the sale of loans, respectively.

Non-interest expense was $28.5 million for the three months ended March 31, 2016, an increase of $2.6 million, or 9.9%, from $25.9 million for the three months ended March 31, 2015. The increase in non-interest expense was primarily due to an increase of $1.6 million in salaries and benefits primarily due to annual salary increases and additions in staffing in retail, audit and compliance departments, as well as increases in production incentives and the cost of split dollar life insurance benefits. The first quarter also included an increase of $0.8 million in other operating expenses, primarily due to increased compliance costs and an increase of $0.4 million in professional services expense from increased legal and consulting expenses. Additionally, the first quarter included an increase of $0.4 million in depreciation and amortization expense, primarily due to the opening of two new branches along with the move to our new corporate headquarters both occurring in 2015. The three months ended March 31, 2015 included $0.5 million in one-time expenses stemming from ATM fraud losses. The efficiency ratio improved to 64.5% for the three months ended March 31, 2016 from 64.9% for the three months ended March 31, 2015.

The provision for income taxes for the three months ended March 31, 2016 was $5.6 million, an increase of $0.1 million, or 1.2%, from $5.5 million for the comparable prior year period. The increase was primarily due to an increase of $0.9 million, or 6.3%, in income before income taxes, partially offset by a reduction in the effective tax rate to 37.0% for the three months ended March 31, 2016 from 38.8% in the comparable prior year period. The decrease in the effective tax rate reflects the impact of a change in New York City tax law enacted in 2015, which based on the Company’s lending mix and certain other factors, reduced our New York City tax liability. Additionally, the decrease in the effective tax rate reflects the greater impact that preferential tax items had on the Company’s tax liability during the three months ended March 31, 2016 compared to the three months ended March 31, 2015.

Balance Sheet Summary – At March 31, 2016

Total assets at March 31, 2016 were $5,813.1 million, an increase of $108.4 million, or 1.9%, from $5,704.6 million at December 31, 2015. Total loans, net increased $70.1 million, or 1.6%, during the three months ended March 31, 2016 to $4,436.5 million from $4,366.4 million at December 31, 2015. Loan originations and purchases were $229.2 million for the three months ended March 31, 2016, a decrease of $77.3 million from $306.5 million for the three months ended March 31, 2015. During the three months ended March 31, 2016, we continued to focus on the origination of multi-family residential, commercial real estate and commercial business loans with a full relationship. The loan pipeline remained strong, totaling $436.5 million at March 31, 2016 compared to $330.5 million at December 31, 2015.

The following table shows loan originations and purchases for the periods indicated. The table includes loan purchases of $12.0 million, $62.6 million and $111.3 million for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively.

    For the three months ending
    March 31,   December 31,   March 31,
(In thousands)   2016     2015     2015
Multi-family residential   $ 69,643     $ 104,622     $ 126,746
Commercial real estate     62,137       157,005       86,395
One-to-four family – mixed-use property     18,245       23,390       14,981
One-to-four family – residential     9,493       6,135       13,103
Construction     1,687       1,613       542
Small Business Administration     6,001       2,548       1,248
Commercial business and other     62,034       100,279       63,507
Total   $ 229,240     $ 395,592     $ 306,522
                       

The average rate on mortgage loan originations and purchases was 3.78%, 3.60% and 3.59% for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively. The average rate on non-mortgage loan originations and purchases was 3.73%, 3.88% and 3.40% for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively. The average rate on total loan originations and purchases was 3.77%, 3.68% and 3.55% for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively.

The Bank maintains its conservative underwriting standards that include, among other things, a loan-to-value ratio of 75% or less and a debt coverage ratio of at least 125%. Multi-family residential, commercial real estate and one-to-four family mixed-use property mortgage loans originated during the first quarter of 2016 had an average loan-to-value ratio of 38.7% and an average debt coverage ratio of 248%.

The Bank experienced improvements in its non-accrual loans during the three months ended March 31, 2016, and recorded net recoveries totaling $0.5 million during the same period. The Bank reviews its delinquencies on a loan by loan basis working with borrowers to help them meet their obligations and return them back to current status. The Bank takes a proactive approach to managing delinquent loans, including conducting site examinations and encouraging borrowers to meet with a Bank representative. The Bank at times will develop short-term payment plans that enable certain borrowers to bring their loans current and has employees experienced in loan workouts to manage the delinquent loans.

The Bank restructures certain problem loans by either: reducing the interest rate until the next reset date, extending the amortization period thereby lowering the monthly payments, deferring a portion of the interest payment, changing the loan to interest only payments for a limited time period or by combining more than one of these options. These restructurings have not included a reduction of principal balance. The Bank believes that restructuring these loans in this manner will allow certain borrowers to become and remain current on their loans. These restructured loans are classified as troubled debt restructured (“TDR”). Loans which have been current for six consecutive months at the time they are restructured as TDR remain on accrual status. Loans which were delinquent at the time they are restructured as a TDR are placed on non-accrual status until they have made timely payments for six consecutive months. Loans that are restructured as TDR but are not performing in accordance with the restructured terms are excluded from the TDR table below, as they are placed on non-accrual status and reported as non-performing loans.

The following table shows loans classified as TDR that are performing according to their restructured terms at the periods indicated:

    March 31,   December 31,
(In thousands)   2016   2015
Accrual Status:        
Multi-family residential   $ 2,611   $ 2,626
Commercial real estate     2,358     2,371
One-to-four family - mixed-use property     2,042     2,052
One-to-four family - residential     341     343
Small business administration     32     34
Commercial business and other     2,038     2,083
             
Total performing troubled debt restructured   $ 9,422   $ 9,509
         

Interest income on loans is recognized on the accrual basis. The accrual of income on loans is discontinued when certain factors, such as contractual delinquency of 90 days or more, indicate reasonable doubt as to the timely collectability of such income. Additionally, uncollected interest previously recognized on non-accrual loans is reversed from interest income at the time the loan is placed on non-accrual status. Loans in default 90 days or more, as to their maturity date but not their payments, continue to accrue interest as long as the borrower continues to remit monthly payments.

The following table shows non-performing assets, at the periods indicated:

    March 31,   December 31,   September 30,   June 30,   March 31,
(Dollars in thousands)   2016   2015   2015   2015   2015
Loans 90 days or more past due                    
and still accruing:                    
Multi-family residential   $ 792     $ 233     $ 516     $ -     $ -  
Commercial real estate     1,083       1,183       253       416       753  
One-to-four family - mixed-use property     743       611       1,293       353       195  
One-to-four family - residential     13       13       13       13       13  
Construction     570       1,000       -       -       -  
Commercial business and other     -       220       222       315       1,932  
Total     3,201       3,260       2,297       1,097       2,893  
                     
Non-accrual loans:                    
Multi-family residential     3,518       3,561       4,686       6,352       6,902  
Commercial real estate     3,295       2,398       2,407       2,694       3,021  
One-to-four family - mixed-use property     5,519       5,952       5,446       6,238       7,224  
One-to-four family - residential     8,861       10,120       10,441       11,329       11,212  
Small business administration     201       218       234       170       232  
Taxi Medallion     196       -       -       -       -  
Commercial business and other     511       568       3,089       679       1,035  
Total     22,101       22,817       26,303       27,462       29,626  
                     
Total non-performing loans     25,302       26,077       28,600       28,559       32,519  
                     
Other non-performing assets:                    
Real estate acquired through foreclosure     4,602       4,932       4,855       4,255       5,252  
Total     4,602       4,932       4,855       4,255       5,252  
                     
Total non-performing assets   $ 29,904     $ 31,009     $ 33,455     $ 32,814     $ 37,771  
                     
Non-performing assets to total assets     0.51 %     0.54 %     0.61 %     0.61 %     0.71 %
Allowance for loan losses to non-performing loans     86.9 %     82.6 %     80.3 %     80.8 %     74.6 %
                     

Included in loans over 90 days past due and still accruing were nine loans totaling $3.2 million and ten loans totaling $3.3 million at March 31, 2016 and December 31, 2015, respectively, which are past their respective maturity dates and are still remitting payments. The Bank is actively working with these borrowers to extend the loans maturity or repay these loans.

Included in non-performing loans was one loan totaling $0.4 million at March 31, 2016 and December 31, 2015 which was restructured as TDR and not performing in accordance with its restructured terms.

During the three months ended March 31, 2016, 12 loans totaling $3.4 million were added to non-accrual loans, five loans totaling $0.9 million were returned to performing status, six loans totaling $0.9 million were paid in full, five loans totaling $1.7 million were sold, and one loan totaling $0.5 million was transferred to other real estate owned.

Performing loans delinquent 60 to 89 days were $1.4 million at March 31, 2016, a decrease of $0.9 million from $2.4 million at December 31, 2015. Performing loans delinquent 30 to 59 days were $20.0 million at March 31, 2016, a decrease of $5.2 million from $25.2 million at December 31, 2015.

The following table shows net loan charge-offs (recoveries) for the periods indicated:

      Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,
(In thousands)   2016
2015
2015
2015
2015
Multi-family residential   $ 29     $ (35 )   $ 54     $ 112     $ 74  
Commercial real estate     -       -       (100 )     18       (54 )
One-to-four family – mixed-use property     (173 )     18       73       350       75  
One-to-four family – residential     (299 )     97       (300 )     17       153  
Co-operative apartments     -       -       -       -       -  
Small Business Administration     (31 )     17       4       (7 )     (20 )
Commercial business and other     16       2,005       10       1       43  
Total net loan charge-offs (recoveries)   $ (458 )   $ 2,102     $ (259 )   $ 491     $ 271  
             

The Bank considers a loan impaired when, based upon current information, we believe it is probable that we will be unable to collect all amounts due, both principal and interest, according to the original contractual terms of the loan. All non-accrual loans are considered impaired. Impaired loans are measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The property value of impaired mortgage loans is internally reviewed on a quarterly basis using multiple valuation approaches in evaluating the underlying collateral. These include obtaining a third party appraisal, or for internally reviewed loans an income approach or a sales approach. When obtained, third party appraisals are used. The income approach is used for income producing properties, and uses current revenues less operating expenses to determine the net cash flow of the property. Once the net cash flow is determined, the value of the property is calculated using an appropriate capitalization rate for the property. The sales approach uses comparable sales prices in the market. In the absence of a third party appraisal, greater reliance is placed on the income approach to value the collateral. The loan balance of impaired mortgage loans is then compared to the property’s updated fair value. We consider fair value to be 85% of the market value of the real estate securing the loan. The loan balance which exceeds fair value is generally charged-off against the allowance for loan losses.

During the three months ended March 31, 2016, the Bank sold five non-performing loans for proceeds totaling $1.7 million, realizing a gain on sale of $23,000. Additionally, during the three months ended March 31, 2016, the Bank sold four performing loans at carrying value, for total proceeds of $0.6 million and six performing SBA loans for proceeds totaling $3.5 million, realizing a gain on sale of $0.3 million.

During the three months ended March 31, 2016, mortgage-backed securities decreased $0.3 million to $668.4 million from $668.7 million at December 31, 2015. The decrease in mortgage-backed securities during the three months ended March 31, 2016 was primarily due to principal repayments of $21.3 million and the amortization of premiums totaling $0.6 million, which were partially offset by an increase of $11.5 million in the fair value of mortgage-backed securities and purchases of $10.1 million at an average yield of 2.63%.

During the three months ended March 31, 2016, other securities, including securities held-to-maturity, increased $49.9 million, or 15.1%, to $380.7 million from $330.8 million at December 31, 2015. The increase in other securities during the three months ended March 31, 2016 was primarily due to purchases of $52.1 million at an average yield of 2.93% and an increase of $0.4 million in the fair value of other securities, which was partially offset by maturities totaling $2.0 million and the amortization of premiums totaling $0.7 million. Other securities primarily consist of securities issued by mutual or bond funds that invest in government and government agency securities, municipal bonds, collateralized loan obligations and corporate bonds.

Total liabilities were $5,325.3 million at March 31, 2016, an increase of $93.7 million, or 1.8%, from $5,231.6 million at December 31, 2015. During the three months ended March 31, 2016, due to depositors increased $151.6 million, or 3.9%, to $4,007.3 million, due to an increase of $192.8 million in core deposits, which was partially offset by a decrease of $41.2 million in certificates of deposit. The increase in core deposits was due to increases of $162.2 million, $13.3 million, $11.0 million and $6.3 million in NOW, money market, demand and savings accounts, respectively. Borrowed funds decreased $80.9 million during the three months ended March 31, 2016. The decrease in borrowed funds was primarily due to a net decrease in short-term borrowings totaling $90.0 million at an average cost of 0.53% and the maturity of $71.7 million in long-term borrowings at an average cost of 0.93%, which was partially offset by the addition of $81.8 million in long-term borrowings at an average cost of 1.49%.

Total stockholders’ equity increased $14.7 million, or 3.1%, to $487.8 million at March 31, 2016 from $473.1 million at December 31, 2015. Stockholders’ equity increased primarily due to net income of $9.6 million, an increase in other comprehensive income totaling $6.9 million, primarily due to an increase in the fair value of the securities portfolio and the net impact totaling $3.6 million from the vesting and exercising of shares of employee and director stock plans. These increases were partially offset by the declaration and payment of dividends on the Company’s common stock of $0.17 per common share totaling $5.0 million and the purchase of 15,300 treasury shares, at an average price of $19.82 per share, for a total cost of $0.3 million. Book value per common share was $16.83 at March 31, 2016 compared to $16.41 at December 31, 2015. Tangible book value per common share, a non-GAAP measure, was $16.29 at March 31, 2016 compared to $15.86 at December 31, 2015.

During the quarter ended March 31, 2016, the Company repurchased 15,300 shares of the Company’s common stock at an average cost of 19.82 per share. At March 31, 2016, 884,300 shares may still be repurchased under the currently authorized stock repurchase program. Stock will be purchased under the current stock repurchase program from time to time, in the open market or through private transactions, subject to market conditions. There is no expiration or maximum dollar amount under this authorization.

Reconciliation of GAAP Earnings and Core Earnings

Although core earnings are not a measure of performance calculated in accordance with GAAP, the Company believes that its core earnings are an important indication of performance through ongoing operations. The Company believes that core earnings are useful to management and investors in evaluating its ongoing operating performance, and in comparing its performance with other companies in the banking industry, particularly those that do not carry financial assets and financial liabilities at fair value. Core earnings should not be considered in isolation or as a substitute for GAAP earnings. During the periods presented, the Company calculated core earnings by adding, net of tax, the net loss recorded from fair value adjustments and subtracted the gain from life insurance proceeds.

    Three Months Ended
    March 31,   March 31,   December 31,
     2016     2015     2015 
    (dollars in thousands, except per share data)
         
GAAP income before income taxes $   15,176   $   14,279   $   17,073  
         
Net loss from fair value adjustments     987       595       920  
Gain from life insurance proceeds     (411 )     -       -  
         
Core income before taxes     15,752       14,874       17,993  
         
Provision for income taxes for core income     6,041       5,801       5,820  
         
Core net income $   9,711   $   9,073   $   12,173  
         
GAAP diluted earnings per common share $   0.33   $   0.30   $   0.40  
         
Net loss from fair value adjustments, net of tax     0.02       0.01       0.02  
Gain from life insurance proceeds     (0.01 )     -        -   
         
Core diluted earnings per common share* $   0.33   $   0.31   $   0.42  
         
         
Core net income, as calculated above $   9,711   $   9,073   $   12,173  
Average assets     5,774,750       5,132,959       5,569,011  
Average equity     479,424       460,105       470,765  
Core return on average assets (annualized)   0.67 %   0.71 %   0.87 %
Core return on average equity (annualized)   8.10 %   7.89 %   10.34 %
         
         
* Core diluted earnings per common share may not foot due to rounding.    
     

About Flushing Financial Corporation

Flushing Financial Corporation is the holding company for Flushing Bank, a New York State-chartered commercial bank insured by the Federal Deposit Insurance Corporation. The Bank serves consumers, businesses, and public entities by offering a full complement of deposit, loan, and cash management services through its 19 banking offices located in Queens, Brooklyn, Manhattan, and Nassau County. The Bank also operates an online banking division, iGObanking.com®, which offers competitively priced deposit products to consumers nationwide.

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

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 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”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.

- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
 
        March 31,   December 31,
        2016   2015
ASSETS        
Cash and due from banks $ 51,417     $ 42,363  
Securities held-to-maturity:      
  Other securities   7,885       6,180  
Securities available for sale:      
  Mortgage-backed securities   668,412       668,740  
  Other securities   372,851       324,657  
Loans:        
  Multi-family residential   2,039,794       2,055,228  
  Commercial real estate   1,058,028       1,001,236  
  One-to-four family ― mixed-use property   571,846       573,043  
  One-to-four family ― residential   191,158       187,838  
  Co-operative apartments   8,182       8,285  
  Construction   7,472       7,284  
  Small Business Administration   14,701       12,194  
  Taxi medallion   20,757       20,881  
  Commercial business and other   531,322       506,622  
  Net unamortized premiums and unearned loan fees   15,281       15,368  
  Allowance for loan losses   (21,993 )     (21,535 )
      Net loans   4,436,548       4,366,444  
Interest and dividends receivable   19,369       18,937  
Bank premises and equipment, net   25,130       25,622  
Federal Home Loan Bank of New York stock   53,368       56,066  
Bank owned life insurance   114,405       115,536  
Goodwill     16,127       16,127  
Other assets   47,555       63,962  
      Total assets $ 5,813,067     $ 5,704,634  
             
LIABILITIES      
Due to depositors:      
  Non-interest bearing $ 280,450     $ 269,469  
  Interest-bearing:      
    Certificate of deposit accounts   1,362,062       1,403,302  
    Savings accounts   268,057       261,748  
    Money market accounts   485,774       472,489  
    NOW accounts   1,610,932       1,448,695  
      Total interest-bearing deposits   3,726,825       3,586,234  
Mortgagors' escrow deposits   56,612       36,844  
Borrowed funds   1,190,789       1,271,676  
Other liabilities   70,612       67,344  
      Total liabilities   5,325,288       5,231,567  
             
STOCKHOLDERS' EQUITY      
Preferred stock (5,000,000 shares authorized; none issued)   -       -  
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595      
  shares issued at March 31, 2016 and December 31, 2015; 28,986,566      
  shares and 28,830,558 shares outstanding at March 31, 2016 and      
  December 31, 2015, respectively)   315       315  
Additional paid-in capital   211,735       210,652  
Treasury stock (2,544,029 shares and 2,700,037 shares at March 31, 2016      
  and December 31, 2015, respectively)   (46,307 )     (48,868 )
Retained earnings   320,725       316,530  
Accumulated other comprehensive loss, net of taxes   1,311       (5,562 )
      Total stockholders' equity   487,779       473,067  
             
      Total liabilities and stockholders' equity $ 5,813,067     $ 5,704,634  
             


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
      For the three months ended
      March 31,   December 31,   March 31,
      2016
  2015
  2015
               
Interest and dividend income            
Interest and fees on loans   $ 47,558     $ 45,859     $ 43,534  
Interest and dividends on securities:            
Interest     6,592       6,461       5,870  
Dividends     119       118       118  
Other interest income     94       30       21  
Total interest and dividend income     54,363       52,468       49,543  
               
Interest expense            
Deposits     7,973       7,740       7,458  
Other interest expense     5,257       5,312       4,531  
Total interest expense     13,230       13,052       11,989  
               
Net interest income     41,133       39,416       37,554  
Provision (benefit) for loan losses     -       664       (734 )
Net interest income after provision (benefit) for loan losses     41,133       38,752       38,288  
               
Non-interest income            
Banking services fee income     976       1,245       884  
Net gain on sale of loans     341       67       2  
Net loss from fair value adjustments     (987 )     (920 )     (595 )
Federal Home Loan Bank of New York stock dividends     623       514       518  
Gain from life insurance proceeds     411       -       -  
Bank owned life insurance     695       723       717  
Other income     481       516       404  
Total non-interest income     2,540       2,145       1,930  
               
Non-interest expense            
Salaries and employee benefits     16,261       12,622       14,666  
Occupancy and equipment     2,370       2,415       2,713  
Professional services     2,150       2,038       1,779  
FDIC deposit insurance     904       859       749  
Data processing     1,091       1,046       1,075  
Depreciation and amortization     1,032       1,051       668  
Other real estate owned/foreclosure expense     153       225       520  
Other operating expenses     4,536       3,568       3,769  
Total non-interest expense     28,497       23,824       25,939  
               
Income before income taxes     15,176       17,073       14,279  
               
Provision for income taxes            
Federal     4,747       5,061       4,252  
State and local     868       378       1,294  
Total taxes     5,615       5,439       5,546  
               
Net income   $ 9,561     $ 11,634     $ 8,733  
               
               
Basic earnings per common share   $ 0.33     $ 0.40     $ 0.30  
Diluted earnings per common share   $ 0.33     $ 0.40     $ 0.30  
Dividends per common share   $ 0.17     $ 0.16     $ 0.16  
               


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)
               
    At or for the three months ending
 
    March 31,   December 31,   March 31,  
    2016
  2015
  2015
 
Per Share Data              
Basic earnings per share   $ 0.33     $ 0.40     $ 0.30    
Diluted earnings per share   $ 0.33     $ 0.40     $ 0.30    
Average number of shares outstanding for:              
Basic earnings per common share computation     29,096,663       28,862,319       29,397,452    
Diluted earnings per common share computation     29,111,172       28,878,829       29,418,543    
Book value per common share (1)   $ 16.83     $ 16.41     $ 15.84    
Tangible book value per common share (2)   $ 16.29     $ 15.86     $ 15.31    
               
Average Balances              
Total loans, net   $ 4,389,331     $ 4,230,033     $ 3,847,720    
Total interest-earning assets     5,490,714       5,284,978       4,861,642    
Total assets     5,774,750       5,569,011       5,132,959    
Total due to depositors     3,746,268       3,507,037       3,320,082    
Total interest-bearing liabilities     4,959,563       4,765,134       4,389,842    
Stockholders' equity     479,424       470,765       460,105    
Performance Ratios (3)              
Return on average assets     0.66   %   0.84   %   0.68   %
Return on average equity     7.98       9.89       7.59    
Yield on average interest-earning assets     3.96       3.97       4.08    
Cost of average interest-bearing liabilities     1.07       1.10       1.09    
Interest rate spread during period     2.89       2.87       2.99    
Net interest margin     3.00       2.98       3.09    
Non-interest expense to average assets     1.97       1.71       2.02    
Efficiency ratio (4)     64.50       56.00       64.85    
Average interest-earning assets to average              
interest-bearing liabilities     1.11   X   1.11   X   1.11   X
   
                           
(1)  Calculated by dividing common stockholders’ equity of $487.8 million, $473.1 million and $465.9 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively, by 28,986,566, 28,830,558 and 29,407,259 shares outstanding at March 31, 2016, December 31, 2015 and March 31, 2015, respectively.
(2)  Calculated by dividing tangible common stockholders’ equity, a non-GAAP measure, of $472.1 million, $457.3 million and $450.2 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively, by 28,986,566, 28,830,558 and 29,407,259 shares outstanding at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. Tangible common stockholders’ equity is total stockholders’ equity less intangible assets (goodwill, net of deferred taxes).
(3)  Ratios for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015 are presented on an annualized basis.
(4)  Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of net interest income and non-interest income (excluding net gains and losses from fair value adjustments and life insurance proceeds).
 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
                   
    At or for the three     At or for the year     At or for the three  
    months ended     ended     months ended  
    March 31, 2016     December 31, 2015     March 31, 2015  
                   
Selected Financial Ratios and Other Data                  
                   
Regulatory capital ratios (for Flushing Financial Corporation):                  
Tier 1 capital   $ 497,698       $ 490,919       $ 475,860    
Common equity Tier 1 capital     470,685         462,883         448,564    
Total risk-based capital     519,691         512,454         499,951    
                   
Tier 1 leverage capital (well capitalized = 5%)     8.65   %     8.84   %     9.32   %
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)     11.84         11.83         12.37    
Tier 1 risk-based capital (well capitalized = 8.0%)     12.52         12.55         13.12    
Total risk-based capital (well capitalized = 10.0%)     13.07         13.10         13.79    
                   
Regulatory capital ratios (for Flushing Bank only):                  
Tier 1 capital   $ 498,308       $ 494,690       $ 474,337    
Common equity Tier 1 capital     498,308         494,690         474,337    
Total risk-based capital     520,300         516,226         498,428    
                   
Tier 1 leverage capital (well capitalized = 5%)     8.65   %     8.89   %     9.28   %
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)     12.51         12.62         13.06    
Tier 1 risk-based capital (well capitalized = 8.0%)     12.51         12.62         13.06    
Total risk-based capital (well capitalized = 10.0%)     13.06         13.17         13.72    
                   
Capital ratios:                  
Average equity to average assets     8.30   %     8.68   %     8.96   %
Equity to total assets     8.39         8.29         8.84    
Tangible common equity to tangible assets     8.14         8.04         8.57    
                   
Asset quality:                  
Non-accrual loans (excludes performing non-accrual TDR)   $ 22,101       $ 22,817       $ 29,626    
Non-performing loans     25,302         26,077         32,519    
Non-performing assets     29,904         31,009         37,771    
Net charge-offs/ (recoveries)     (458 )       2,605         271    
                   
Asset quality ratios:                  
Non-performing loans to gross loans     0.57   %     0.60   %     0.82   %
Non-performing assets to total assets     0.51         0.54         0.72    
Allowance for loan losses to gross loans     0.49         0.49         0.60    
Allowance for loan losses to non-performing assets     73.54         69.45         63.78    
Allowance for loan losses to non-performing loans     86.92         82.58         74.08    
                   
Full-service customer facilities     19         19         17    
                   


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
     
  For the three months ended  
  March 31, 2016   December 31, 2015   March 31, 2015  
  Average   Yield/   Average   Yield/   Average   Yield/  
  Balance Interest Cost   Balance Interest Cost   Balance Interest Cost  
                                                 
  (Dollars in thousands)  
Interest-earning assets:                        
Mortgage loans, net (1) $ 3,839,325   $ 42,454   4.42 % $ 3,697,169   $ 41,184   4.46 % $ 3,358,603   $ 39,440   4.70 %
Other loans, net (1)   550,006     5,104   3.71     532,864     4,675   3.51     489,117     4,094   3.35  
Total loans, net   4,389,331     47,558   4.33     4,230,033     45,859   4.34     3,847,720     43,534   4.53  
Taxable securities:                        
Mortgage-backed                        
securities   658,764     4,174   2.53     674,103     4,281   2.54     702,507     4,381   2.49  
Other securities   229,991     1,745   3.03     199,258     1,501   3.01     129,943     720   2.22  
Total taxable securities   888,755     5,919   2.66     873,361     5,782   2.65     832,450     5,101   2.45  
Tax-exempt securities: (2)                        
Other securities   127,355     792   2.49     128,024     797   2.49     137,987     887   2.57  
Total tax-exempt securities   127,355     792   2.49     128,024     797   2.49     137,987     887   2.57  
Interest-earning deposits                        
and federal funds sold   85,273     94   0.44     53,560     30   0.22     43,485     21   0.19  
Total interest-earning                        
assets   5,490,714     54,363   3.96     5,284,978     52,468   3.97     4,861,642     49,543   4.08  
Other assets   284,036           284,033           271,317        
Total assets $ 5,774,750         $ 5,569,011         $ 5,132,959        
                         
                         
Interest-bearing liabilities:                        
Deposits:                        
Savings accounts $ 262,443     298   0.45   $ 262,103     299   0.46   $ 266,208     264   0.40  
NOW accounts   1,621,779     1,922   0.47     1,405,933     1,746   0.50     1,451,446     1,550   0.43  
Money market accounts   457,895     606   0.53     463,551     536   0.46     304,662     253   0.33  
Certificate of deposit                        
accounts   1,404,151     5,121   1.46     1,375,450     5,134   1.49     1,297,766     5,368   1.65  
Total due to depositors   3,746,268     7,947   0.85     3,507,037     7,715   0.88     3,320,082     7,435   0.90  
Mortgagors' escrow                        
accounts   49,947     26   0.21     54,121     25   0.18     47,840     23   0.19  
Total interest-bearing                        
deposits   3,796,215     7,973   0.84     3,561,158     7,740   0.87     3,367,922     7,458   0.89  
Borrowings   1,163,348     5,257   1.81     1,203,976     5,312   1.76     1,021,920     4,531   1.77  
Total interest-bearing                        
liabilities   4,959,563     13,230   1.07     4,765,134     13,052   1.10     4,389,842     11,989   1.09  
Non interest-bearing                        
demand deposits   273,937           270,651           233,685        
Other liabilities   61,826           62,461           49,327        
Total liabilities   5,295,326           5,098,246           4,672,854        
Equity   479,424           470,765           460,105        
Total liabilities and                        
equity $ 5,774,750         $ 5,569,011         $ 5,132,959        
                         
Net interest income /                        
net interest rate spread   $ 41,133   2.89 %   $ 39,416   2.87 %   $ 37,554   2.99 %
                         
Net interest-earning assets /                        
net interest margin $ 531,151     3.00 % $ 519,844     2.98 % $ 471,800     3.09 %
                         
Ratio of interest-earning                        
assets to interest-bearing                        
liabilities     1.11 X     1.11 X     1.11 X
                         
(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $1.5 million, $1.1 million and $0.7 million for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
                         


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)
               
            March 31, December 31,
(In thousands)     2016
2015
Total Equity     $ 487,779   $ 473,067  
Less:            
  Goodwill       (16,127 )   (16,127 )
  Intangible deferred tax liabilities       407     406  
    Tangible Common Equity     $ 472,059   $ 457,346  
               
               
Total Assets     $ 5,813,067   $ 5,704,634  
Less:            
  Goodwill       (16,127 )   (16,127 )
  Intangible deferred tax liabilities       407     406  
    Tangible Assets     $ 5,797,347   $ 5,688,913  
               
               
Tangible Common Equity to Tangible Assets   8.14 %   8.04 %
             


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION and LOAN ACTIVITY
(Unaudited)
                                 
Loan Composition
                                 
                March 2016 vs.               March 2016 vs.
        March 31,   December 31,   December 2015   September 30,   June 30,   March 31,   March 2015
(Dollars in thousands)   2016       2015     % Change     2015       2015       2015     % Change
Loans:                            
Multi-family residential $ 2,039,794     $ 2,055,228       -0.8 %   $ 2,043,740     $ 2,017,891     $ 2,013,249       1.3 %
Commercial real estate   1,058,028       1,001,236       5.7 %     857,806       726,136       687,823       53.8 %
One-to-four family ―                          
  mixed-use property   571,846       573,043       -0.2 %     568,401       567,060       573,927       -0.4 %
One-to-four family ― residential   191,158       187,838       1.8 %     191,430       189,573       190,366       0.4 %
Co-operative apartments   8,182       8,285       -1.2 %     9,122       7,681       9,413       -13.1 %
Construction   7,472       7,284       2.6 %     5,671       3,673       2,828       164.2 %
Small Business Administration   14,701       12,194       20.6 %     10,540       12,181       8,005       83.6 %
Taxi medallion   20,757       20,881       -0.6 %     21,025       21,211       21,346       -2.8 %
Commercial business and other   531,322       506,622       4.9 %     479,085       472,485       477,823       11.2 %
Net unamortized premiums                          
  and unearned loan fees   15,281       15,368       -0.6 %     14,129       13,251       13,274       15.1 %
Allowance for loan losses   (21,993 )     (21,535 )     2.1 %     (22,973 )     (23,084 )     (24,091 )     -8.7 %
      Net loans $ 4,436,548     $ 4,366,444       1.6 %   $ 4,177,976     $ 4,008,058     $ 3,973,963       11.6 %
                                                             


Loan Activity            
               
        Three Months Ended
          March 31,   December 31, September 30, June 30, March 31,
(In thousands)       2016     2015     2015     2015     2015  
Loans originated and purchased   $   229,240   $   395,592   $   334,464   $   196,883   $   306,522  
Principal reductions         (152,521 )     (206,125 )     (155,794 )     (158,829 )     (118,248 )
Loans transferred to held-for-sale       -        -        -        (300 )     -   
Loans sold           (5,515 )     (1,164 )     (8,800 )     (3,601 )     (1,427 )
Loan charged-offs         (147 )     (2,478 )     (168 )     (803 )     (396 )
Foreclosures         (408 )     (34 )     (773 )     (239 )     (325 )
Net change in deferred (fees) and costs       (87 )     1,239       878       (23 )     1,555  
Net change in the allowance for loan losses       (458 )     1,438       111       1,007       1,005  
  Total loan activity   $   70,104   $   188,468   $   169,918   $   34,095   $   188,686  

 

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
                                 
                March 2016 vs.               March 2016 vs.
        March 31,   December 31,   December 2015   September 30,   June 30,   March 31,   March 2015
(In thousands)   2016       2015     % Change     2015       2015       2015     % Change
Deposits                            
Non-interest bearing $   280,450     $   269,469       4.1 %   $   257,196     $   257,575     $   250,084       12.1 %
Interest bearing:                          
  Certificate of deposit                          
    accounts     1,362,062         1,403,302       -2.9 %       1,386,945         1,375,506         1,292,721       5.4 %
  Savings accounts     268,057         261,748       2.4 %       261,400         264,718         269,610       -0.6 %
  Money market accounts     485,774         472,489       2.8 %       438,457         399,191         301,587       61.1 %
  NOW accounts     1,610,932         1,448,695       11.2 %       1,338,715         1,357,412         1,438,239       12.0 %
    Total interest-bearing                          
      deposits     3,726,825         3,586,234       3.9 %       3,425,517         3,396,827         3,302,157       12.9 %
                                 
      Total deposits $   4,007,275     $   3,855,703       3.9 %   $   3,682,713     $   3,654,402     $   3,552,241       12.8 %
                                 
Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer		
Flushing Financial Corporation			
(718) 961-5400