SECOND QUARTER 2017¹

• GAAP diluted EPS was $0.44, up 4.8% QoQ but down 58.1% YoY, largely due to net gain on sale of buildings in 2Q16
• Record core diluted EPS was $0.46, up 17.9% YoY and 15.0% QoQ
• Record net interest income of $43.6 million, an improvement of 4.1% YoY and 0.5% QoQ
• Net interest margin was 2.95%, unchanged QoQ
• GAAP and core ROAE improved to 9.6% and 10.2%, compared with 9.5% and 9.1% in 1Q17
• GAAP and core ROAA was 0.8% and 0.9%, compared with 0.8% for both in 1Q17

UNIONDALE, N.Y., July 25, 2017 (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 and six months ended June 30, 2017.

John R. Buran, President and Chief Executive Officer, stated, “We are pleased to report record core earnings for the second quarter of 2017 driven by record net interest income and our continued discipline regarding non-interest expense. Credit quality continued to improve, as our non-performing assets have decreased by over 29% since the end of 2016 and net charge-offs remain minimal. We saw tangible results from our strategy change announced in mid-2016 to focus origination efforts on higher yielding loans.  The yield on recent quarter loan production increased 19 basis points over the prior quarter and 33 basis points from the comparable quarter of 2016. For the first time since 2010, quarterly new loan yields exceed that quarter’s average yield on total interest-earning assets. Our total loan portfolio, including loans held for sale, grew 2% during the recent quarter and 5% for the first six months of 2017 while meeting our strong underwriting standards.”

“We continue to implement our strategy of enhancing operational scalability and efficiency by converting our branch network to the more cost effective Universal Banker model.  We expect to convert half of our 19 branches by the end of 2017. Although total deposits increased 8% year-over-year, deposits declined 3% quarter-over-quarter primarily caused by seasonal government deposit outflows, which we anticipate returning in the fourth quarter.”

“As a result of recent rate increases by the Federal Reserve, we have started to experience some rate pressure on liabilities. During the recent quarter, our cost of funds increased 4 basis points due to a combination of an increase in the rates we pay on some of our deposit products to stay competitive within our market and the funding mix, as seasonal government deposit outflows were replaced by slightly more expensive borrowed funds.”

The Company retains its focus on preserving strong risk management practices, including conservative underwriting standards and improving yields to achieve improved risk-adjusted returns.

• In the second quarter, multi-family, commercial real estate, and commercial business loan originations and purchases represented 24%, 47%, and 19%, respectively, of all originations while maintaining conservative loan-to-values, debt coverage ratios, and increasing yield. 
• The average interest rate obtained for second quarter originations and purchases improved to 4.04% compared to 3.85% for 1Q17 and 3.71% for 2Q16.
• The average rate of mortgage loan applications in the pipeline totaled 4.17% at June 30, 2017, as compared to 4.20% at December 31, 2016 and 3.94% at June 30, 2016.
• Multi-family (excluding underlying co-operative mortgages), commercial real estate, and one-to-four family mixed-use property mortgage loans originated during the second quarter of 2017 had an increased yield of 4.19% compared to 4.01% for the previous quarter and 3.81% for the same quarter in 2016.  While the yields have been increasing, we have kept our asset quality as these loans had a low average loan-to-value ratio of 46.2% and an average debt coverage ratio of 198%.

Mr. Buran concluded, “Overall, we remain well capitalized and positioned to deliver profitable growth and long-term value to our shareholders as we continue to execute on our strategic objectives.”

^{_____________________
1} See the table entitled “Reconciliation of Non-GAAP Financial Measures.”

Summary of Strategic Objectives

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

Earnings Summary:

Quarter ended June 30, 2017 (2Q17) compared to the quarters ended June 30, 2016 (2Q16) and March 31, 2017 (1Q17).

June 30, 2017 compared to March 31, 2017 (“QoQ”); June 30, 2017 compared to June 30, 2016 (“YoY”).

Net Interest Income

Net interest income for 2Q17 was $43.6 million, an increase of 4.1% YoY and 0.5% QoQ.

• Net interest margin of 2.95%, decreased 4bps YoY but remains unchanged QoQ
• Net interest spread of 2.83%, decreased 5bps YoY and 1bp QoQ
• Net interest income includes prepayment penalty income from loans of $1.0 million in 2Q17 compared with $1.4 million in 2Q16 and $1.1 million in 1Q17, and recovered interest from nonaccrual loans of $0.3 million in 2Q17 compared with $0.2 million in 2Q16 and $0.5 million in 1Q17
• Net interest income includes $0.4 million in accelerated accretion of discount upon the call of CLO securities totaling $27.5 million
• Excluding prepayment penalty income, accelerated accretion of discount and recovered interest from nonaccrual loans, the yield on interest-earning assets would have improved to 3.82% in 2Q17, compared with 3.81% in 2Q16 and 3.80% in 1Q17, and the net interest margin would have decreased to 2.83% in 2Q17, compared with 2.87% in 2Q16 and 2.85% in 1Q17
• Average balance of total interest-earning assets of $5,919.0 million, increased $306.0 million, or 5.5% YoY and increased $45.2 million, or 0.8% QoQ
• Yield on interest-earning assets of 3.94%, increased 1bp YoY and 4bps QoQ
• Cost of interest-bearing liabilities of 1.11%, increased 6bps YoY and 5bps QoQ
• Cost of funds of 1.05%, increased 6bps YoY and 4bps QoQ, driven by an increase in rates paid on our core deposits and short-term borrowings  

Non-interest Income

Non-interest income for 2Q17 was $1.9 million, a decrease of $35.8 million YoY and $1.7 million QoQ.

• Non-interest income included net losses from fair value adjustments of $1.2 million in 2Q17, $1.1 million in 2Q16 and $0.4 million in 1Q17
• 2Q16 included a gain of $33.8 million recorded from the sale of one of our properties in Flushing, Queens and a gain on the sale of securities of $2.4 million and 1Q17 included a gain from life insurance proceeds of $1.2 million
• Absent the above items non-interest income was $3.1 million, an increase of $0.5 million YoY and $0.2 million QoQ

Non-interest Expense

Non-interest expense for 2Q17 was $26.1 million, a decrease of $2.4 million, or 8.4%, YoY and $3.5 million, or 11.8% QoQ.

• 2Q16 included a non-recurring penalty of $2.1 million on the prepayment of $38.0 million in repurchase agreements and a write-down of $0.8 million on one OREO property. Absent these two items, non-interest expense increased $0.5 million, or 1.9% YoY, driven by increased salaries and benefits from annual salary increases and additions in staffing, partially offset by reductions in FDIC insurance expense, due to lower assessment rates, and decreased foreclosure expense due to continued improvement in asset quality
• Lower costs associated with FDIC insurance and foreclosure expense should be sustainable
• 1Q17 included the impact of annual grants of employee and director restricted stock unit awards totaling $3.3 million. Absent this item in 1Q17, non-interest expense decreased $0.2 million or 0.8%, primarily driven by decreased foreclosure expense
• The efficiency ratio improved to 55.8% from 57.1% in 2Q16 and 64.0% in 1Q17

Provision for Income Taxes

The provision for income taxes in 2Q17 was $6.8 million, a decrease of $13.9 million YoY but an increase of $1.5 million QoQ.

• Pre-tax income decreased by $31.7 million, or 61.9% YoY but increased $2.0 million, or 11.3% QoQ
• The effective tax rates were 34.7% in 2Q17, 40.5% in 2Q16 and 30.0% in 1Q17
• The improvement in the Company’s effective tax rate compared to 2Q16 was primarily due to a change in the accounting treatment of deductible stock compensation expense from prior years; in prior years, the tax impact of deductible stock compensation expense flowed through additional paid-in-capital and did not have an impact on the Company’s effective tax rate
• The increase in the Company’s effective tax rate compared to 1Q17 was primarily due to the requirement that stock compensation be treated, for tax purposes, as a discrete tax item in the period the shares vest; our stock awards generally vest in the first quarter, therefore reducing 1Q17 effective tax rate
• We anticipate the effective tax rate to approximate the 2Q17 rate for the remainder of the year

Financial Condition Summary:

Loans:

• Net loans held for investment were $5,023.5 million reflecting an increase of 1.4% QoQ (not annualized) and 4.4% year-to-date as we continue to focus on the origination of multi-family, commercial real estate and commercial business loans with a full relationship
• Loan originations and purchases of multi-family, commercial real estate and commercial business loans totaled $236.3 million for 2Q17, or 90.5% of loan production
• Loan pipeline was $279.1 million at June 30, 2017, compared to $303.1 million at March 31, 2017 and $329.8 million at June 30, 2016
• The loan-to-value ratio on our portfolio of real estate dependent loans as of June 30, 2017 totaled 39.8%

The following table shows the average rate received from loan originations and purchases for the periods indicated:

		For the three months ended
		June 30,			March 31,			June 30,
Loan type		2017			2017			2016
Mortgage loans		4.01	%		3.78	%		3.53	%
Non-mortgage loans		4.13	%		4.02	%		4.29	%
Total loans		4.04	%		3.85	%		3.71	%

Credit Quality:

• Non-performing loans totaled $15.5 million, a decrease of $6.0 million, or 27.8%, from $21.4 million at December 31, 2016
• Classified assets totaled $44.7 million, an increase of $0.7 million, or 1.7%, from $44.0 million at December 31, 2016, primarily due to an increase in substandard taxi medallion loans, partially offset by reductions in non-performing assets
• Loans classified as troubled debt restructured (TDR) totaled $21.4 million, an increase of $3.9 million, or 22.6%, from $17.4 million at December 31, 2016, attributable to the addition of five taxi medallion TDRs
• We anticipate continued low loss content in the portfolio, as our strong underwriting standards coupled with our practice of obtaining updated appraisals and recording charge-offs early in the delinquency process has resulted in a 38.5% average loan-to-value for non-performing loans collateralized by real estate at June 30, 2017
• No provision for loan losses was recorded in the six months ended June 30, 2017 or all of 2016 due to continued strong credit quality, with net charge-offs totaling $0.1 million for the six months ended June 30, 2017 and net recoveries of $0.7 million for all of 2016

Capital Management:

• The Company and Bank are subject to the same regulatory requirements and at June 30, 2017, both were well capitalized under all applicable regulatory requirements
• During six months ended June 30, 2017, stockholders’ equity increased $20.2 million, or 3.9%, to $534.1 million due to net income of $25.0 million and $1.8 million of other comprehensive income, partially offset by the declaration and payment of dividends on the Company’s common stock
• During the six months ended June 30, 2017, the Company repurchased 10,000 treasury shares at an average cost of $27.80 per share; as of June 30, 2017, up to 485,905 shares may be repurchased under the current authorized stock repurchase program, which has no expiration or maximum dollar limit
• Book value per common share increased to $18.54 at June 30, 2017, from $17.95 at December 31, 2016 and $17.77 at June 30, 2016
• Tangible book value per common share, a non-GAAP measure, increased to $18.00 at June 30, 2017, from $17.40 at December 31, 2016 and $17.22 at June 30, 2016

Inaugural Conference Call Information:

• John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer, will host a conference call on Wednesday, July 26, 2017 at 9:30 AM (ET) to discuss the Company’s strategy and results for the second quarter of 2017
• Dial-in for Live Call: 1-888-317-6016
• Webcast: https://services.choruscall.com/links/ffic170726.html 
• Dial-in for Replay: 1-877-344-7529
• The conference call will be simultaneously webcast and archived through 5:00 PM (ET) on September 30, 2017

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. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. 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, 2016 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 INCOME (Dollars in thousands, except per share data) (Unaudited)
			For the three months ended												For the six months ended
			June 30,				March 31,				June 30,				June 30,
				2017				2017				2016				2017				2016
Interest and Dividend Income
Interest and fees on loans			$	51,631			$	50,885			$	48,413			$	102,516			$	95,971
Interest and dividends on securities:
Interest				6,432				6,095				6,510				12,527				13,102
Dividends				123				121				120				244				239
Other interest income				129				153				48				282				142
Total interest and dividend income				58,315				57,254				55,091				115,569				109,454
Interest Expense
Deposits				9,510				8,980				8,097				18,490				16,070
Other interest expense				5,188				4,885				5,105				10,073				10,362
Total interest expense				14,698				13,865				13,202				28,563				26,432
Net Interest Income				43,617				43,389				41,889				87,006				83,022
Provision for loan losses				-				-				-				-				-
Net Interest Income After Provision for Loan Losses				43,617				43,389				41,889				87,006				83,022
Non-interest Income
Banking services fee income				1,014				874				973				1,888				1,949
Net gain on sale of securities				-				-				2,363				-				2,363
Net gain on sale of loans				34				210				3				244				344
Net gain on sale of buildings				-				-				33,814				-				33,814
Net loss from fair value adjustments				(1,159	)			(378	)			(1,115	)			(1,537	)			(2,102	)
Federal Home Loan Bank of New York stock dividends				643				823				582				1,466				1,205
Gains from life insurance proceeds				6				1,161				-				1,167				411
Bank owned life insurance				807				795				694				1,602				1,389
Other income				603				204				403				807				884
Total non-interest income				1,948				3,689				37,717				5,637				40,257
Non-interest Expense
Salaries and employee benefits				15,424				17,104				13,968				32,528				30,229
Occupancy and equipment				2,654				2,496				2,352				5,150				4,722
Professional services				1,919				1,996				2,027				3,915				4,177
FDIC deposit insurance				503				326				940				829				1,844
Data processing				1,321				1,203				1,199				2,524				2,290
Depreciation and amortization				1,155				1,165				1,062				2,320				2,094
Other real estate owned/foreclosure (income) expense				(96	)			351				405				255				558
Prepayment penalty on borrowings				-				-				2,082				-				2,082
Other operating expenses				3,185				4,923				4,419				8,108				8,955
Total non-interest expense				26,065				29,564				28,454				55,629				56,951
Income Before Income Taxes				19,500				17,514				51,152				37,014				66,328
Provision for Income Taxes
Federal				5,576				4,749				15,203				10,325				19,950
State and local				1,199				505				5,514				1,704				6,382
Total taxes				6,775				5,254				20,717				12,029				26,332
Net Income			$	12,725			$	12,260			$	30,435			$	24,985			$	39,996
Basic earnings per common share			$	0.44			$	0.42			$	1.05			$	0.86			$	1.38
Diluted earnings per common share			$	0.44			$	0.42			$	1.05			$	0.86			$	1.38
Dividends per common share			$	0.18			$	0.18			$	0.17			$	0.36			$	0.34

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except per share data) (Unaudited)
				June 30,				March 31,				December 31,
					2017				2017				2016
ASSETS
Cash and due from banks				$	48,539			$	51,215			$	35,857
Securities held-to-maturity:
	Mortgage-backed securities				7,983				-				-
	Other securities				24,451				36,406				37,735
Securities available for sale:
	Mortgage-backed securities				520,012				537,905				516,476
	Other securities				317,693				346,238				344,905
Loans held for sale					30,565				-				-
Loans:
	Multi-family residential				2,243,643				2,261,946				2,178,504
	Commercial real estate				1,349,634				1,268,770				1,246,132
	One-to-four family ― mixed-use property				556,906				561,355				558,502
	One-to-four family ― residential				181,213				184,201				185,767
	Co-operative apartments				7,069				7,216				7,418
	Construction				16,842				12,413				11,495
	Small Business Administration				10,591				10,519				15,198
	Taxi medallion				18,303				18,832				18,996
	Commercial business and other				644,262				632,503				597,122
	Net unamortized premiums and unearned loan fees				17,217				16,836				16,559
	Allowance for loan losses				(22,157	)			(22,211	)			(22,229	)
			Net loans		5,023,523				4,952,380				4,813,464
Interest and dividends receivable					21,439				20,602				20,228
Bank premises and equipment, net					26,592				26,026				26,561
Federal Home Loan Bank of New York stock					66,630				57,384				59,173
Bank owned life insurance					130,631				129,824				132,508
Goodwill					16,127				16,127				16,127
Other assets					51,051				57,378				55,453
			Total assets	$	6,285,236			$	6,231,485			$	6,058,487
LIABILITIES
Due to depositors:
	Non-interest bearing			$	349,302			$	344,028			$	333,163
	Interest-bearing:
		Certificate of deposit accounts			1,332,377				1,411,819				1,372,115
		Savings accounts			325,815				254,822				254,283
		Money market accounts			837,565				851,129				843,370
		NOW accounts			1,368,441				1,487,120				1,362,484
			Total interest-bearing deposits		3,864,198				4,004,890				3,832,252
Mortgagors' escrow deposits					41,303				61,828				40,216
Borrowed funds					1,425,779				1,227,852				1,266,563
Other liabilities					70,563				67,485				72,440
			Total liabilities		5,751,145				5,706,083				5,544,634
STOCKHOLDERS' EQUITY
Preferred stock (5,000,000 shares authorized; none issued)					-				-				-
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares
	issued at June 30, 2017, March 31, 2017 and December 31, 2016; 28,803,937
	shares, 28,811,160 shares and 28,632,904 shares outstanding at June 30, 2017,
	March 31, 2017 and December 31, 2016, respectively)				315				315				315
Additional paid-in capital					216,447				215,501				214,462
Treasury stock (2,726,658 shares, 2,719,435 shares and 2,897,691 shares at
	June 30, 2017, March 31, 2017 and December 31, 2016, respectively)				(51,483	)			(51,224	)			(53,754	)
Retained earnings					375,388				367,944				361,192
Accumulated other comprehensive loss, net of taxes					(6,576	)			(7,134	)			(8,362	)
			Total stockholders' equity		534,091				525,402				513,853
			Total liabilities and stockholders' equity	$	6,285,236			$	6,231,485			$	6,058,487

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share data) (Unaudited)
		At or for the three months ended									At or for the six months ended
		June 30,			March 31,			June 30,			June 30,
			2017			2017			2016			2017			2016
Per Share Data
Basic earnings per share		$	0.44		$	0.42		$	1.05		$	0.86		$	1.38
Diluted earnings per share		$	0.44		$	0.42		$	1.05		$	0.86		$	1.38
Average number of shares outstanding for:
Basic earnings per common share computation			29,135,339			29,019,070			29,022,122			29,077,526			29,059,393
Diluted earnings per common share computation			29,135,945			29,022,745			29,034,454			29,080,182			29,072,813
Shares outstanding			28,803,937			28,811,160			28,631,243			28,803,937			28,631,243
Book value per common share (1)		$	18.54		$	18.24		$	17.77		$	18.54		$	17.77
Tangible book value per common share (2)		$	18.00		$	17.69		$	17.22		$	18.00		$	17.22
Stockholders' Equity
Stockholders' equity			534,091			525,402			508,883			534,091			508,883
Tangible stockholders' equity			518,355			509,666			493,163			518,355			493,163
Average Balances
Total loans, net		$	4,962,734		$	4,868,048		$	4,567,019		$	4,915,652		$	4,478,175
Total interest-earning assets			5,918,981			5,873,799			5,612,935			5,896,514			5,551,825
Total assets			6,218,072			6,168,848			5,897,858			6,193,596			5,836,304
Total due to depositors			4,065,810			4,088,031			3,779,256			4,076,859			3,762,762
Total interest-bearing liabilities			5,287,720			5,254,640			5,046,162			5,271,271			5,002,863
Stockholders' equity			529,451			517,800			486,261			523,658			482,843
Performance Ratios (3)
Return on average assets			0.82	%		0.79	%		2.06	%		0.81	%		1.37	%
Return on average equity			9.61			9.47			25.04			9.54			16.57
Yield on average interest-earning assets			3.94			3.90			3.93			3.92			3.94
Cost of average interest-bearing liabilities			1.11			1.06			1.05			1.08			1.06
Interest rate spread during period			2.83			2.84			2.88			2.84			2.88
Net interest margin			2.95			2.95			2.99			2.95			2.99
Non-interest expense to average assets			1.68			1.92			1.93			1.80			1.95
Efficiency ratio (4)			55.80			63.98			57.09			59.87			60.78
Average interest-earning assets to average
interest-bearing liabilities			1.12	X		1.12	X		1.11	X		1.12	X		1.11	X

(1)	Calculated by dividing stockholders’ equity by shares outstanding.
(2)	Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(3)	Ratios are presented on an annualized basis, where appropriate.
(4)	Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding OREO expense, prepayment penalties from the extinguishment of debt 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, net gain and losses from the sale of securities, life insurance proceeds, and sale of buildings).

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands) (Unaudited)
		At or for the six				At or for the year					At or for the six
		months ended				ended					months ended
		June 30, 2017				December 31, 2016					June 30, 2016
Selected Financial Ratios and Other Data
Regulatory capital ratios (for Flushing Financial Corporation):
Tier 1 capital		$	558,756			$	539,228				$	516,551
Common equity Tier 1 capital			524,830				506,432					490,015
Total risk-based capital			655,913				636,457					538,749
Tier 1 leverage capital (well capitalized = 5%)			9.00	%			9.00	%				8.80	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			11.43				11.79					11.45
Tier 1 risk-based capital (well capitalized = 8.0%)			12.17				12.56					12.07
Total risk-based capital (well capitalized = 10.0%)			14.29				14.82					12.59
Regulatory capital ratios (for Flushing Bank only):
Tier 1 capital		$	624,074			$	607,033				$	522,961
Common equity Tier 1 capital			624,074				607,033					522,961
Total risk-based capital			646,231				629,262					545,159
Tier 1 leverage capital (well capitalized = 5%)			10.04	%			10.12	%				8.89	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			13.58				14.12					12.20
Tier 1 risk-based capital (well capitalized = 8.0%)			13.58				14.12					12.20
Total risk-based capital (well capitalized = 10.0%)			14.07				14.64					12.72
Capital ratios:
Average equity to average assets			8.45	%			8.40	%				8.27	%
Equity to total assets			8.50				8.48					8.50
Tangible common equity to tangible assets (1)			8.27				8.24					8.26
Asset quality:
Non-accrual loans (2)		$	14,130			$	21,030				$	20,381
Non-performing loans			15,459				21,416					21,923
Non-performing assets			15,459				21,949					25,591
Net charge-offs/ (recoveries)			72				(694	)				(663	)
Asset quality ratios:
Non-performing loans to gross loans			0.31	%			0.44	%				0.47	%
Non-performing assets to total assets			0.25				0.36					0.43
Allowance for loan losses to gross loans			0.44				0.46					0.47
Allowance for loan losses to non-performing assets			143.33				101.28					86.74
Allowance for loan losses to non-performing loans			143.33				103.80					101.25
Full-service customer facilities			19				19					19

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

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES NET INTEREST MARGIN (Dollars in thousands) (Unaudited)
	For the three months ended
	June 30, 2017						March 31, 2017						June 30, 2016
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost		Balance		Interest		Cost
Interest-earning Assets:
Mortgage loans, net	$	4,297,697	$	44,879	4.18	%	$	4,213,482	$	44,429	4.22	%	$	3,983,615	$	42,969	4.31	%
Other loans, net		665,037		6,752	4.06			654,566		6,456	3.95			583,404		5,444	3.73
Total loans, net (1)		4,962,734		51,631	4.16			4,868,048		50,885	4.18			4,567,019		48,413	4.24
Taxable securities:
Mortgage-backed
securities		532,938		3,420	2.57			529,942		3,367	2.54			599,247		3,707	2.47
Other securities		217,599		2,361	4.34			239,345		2,072	3.46			249,956		2,133	3.41
Total taxable securities		750,537		5,781	3.08			769,287		5,439	2.83			849,203		5,840	2.75
Tax-exempt securities: (2)
Other securities		145,812		774	2.12			146,502		777	2.12			147,230		790	2.15
Total tax-exempt securities		145,812		774	2.12			146,502		777	2.12			147,230		790	2.15
Interest-earning deposits
and federal funds sold		59,898		129	0.86			89,962		153	0.68			49,483		48	0.39
Total interest-earning
assets		5,918,981		58,315	3.94			5,873,799		57,254	3.90			5,612,935		55,091	3.93
Other assets		299,091						295,049						284,923
Total assets	$	6,218,072					$	6,168,848					$	5,897,858
Interest-bearing Liabilities:
Deposits:
Savings accounts	$	279,723		399	0.57		$	254,255	$	307	0.48		$	265,856		306	0.46
NOW accounts		1,517,726		2,331	0.61			1,568,267		2,207	0.56			1,612,704		1,962	0.49
Money market accounts		858,066		1,651	0.77			860,779		1,499	0.70			483,317		681	0.56
Certificate of deposit
accounts		1,410,295		5,099	1.45			1,404,730		4,940	1.41			1,417,379		5,121	1.45
Total due to depositors		4,065,810		9,480	0.93			4,088,031		8,953	0.88			3,779,256		8,070	0.85
Mortgagors' escrow
accounts		73,838		30	0.16			54,616		27	0.20			67,728		27	0.16
Total interest-bearing
deposits		4,139,648		9,510	0.92			4,142,647		8,980	0.87			3,846,984		8,097	0.84
Borrowings		1,148,072		5,188	1.81			1,111,993		4,885	1.76			1,199,178		5,105	1.70
Total interest-bearing
liabilities		5,287,720		14,698	1.11			5,254,640		13,865	1.06			5,046,162		13,202	1.05
Non interest-bearing
demand deposits		336,036						330,215						296,597
Other liabilities		64,865						66,193						68,838
Total liabilities		5,688,621						5,651,048						5,411,597
Equity		529,451						517,800						486,261
Total liabilities and
equity	$	6,218,072					$	6,168,848					$	5,897,858
Net interest income /
net interest rate spread			$	43,617	2.83	%			$	43,389	2.84	%			$	41,889	2.88	%
Net interest-earning assets /
net interest margin	$	631,261			2.95	%	$	619,159			2.95	%	$	566,773			2.99	%
Ratio of interest-earning
assets to interest-bearing
liabilities					1.12	X					1.12	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 $0.3 million, $0.6 million and $1.0 million for the three months ended June 30, 2017, March 31, 2017 and June 30, 2016, respectively.
(2)	Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES NET INTEREST MARGIN (Dollars in thousands) (Unaudited)
	For the six months ended
	June 30, 2017							June 30, 2016
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
Interest-earning Assets:
Mortgage loans, net	$	4,255,822	$	89,308	4.20	%		$	3,911,470	$	85,423	4.37	%
Other loans, net		659,830		13,208	4.00				566,705		10,548	3.72
Total loans, net (1)		4,915,652		102,516	4.17				4,478,175		95,971	4.29
Taxable securities:
Mortgage-backed
securities		531,448		6,787	2.55				629,006		7,881	2.51
Other securities		228,412		4,433	3.88				239,973		3,878	3.23
Total taxable securities		759,860		11,220	2.95				868,979		11,759	2.71
Tax-exempt securities: (2)
Other securities		146,155		1,551	2.12				137,293		1,582	2.30
Total tax-exempt securities		146,155		1,551	2.12				137,293		1,582	2.30
Interest-earning deposits
and federal funds sold		74,847		282	0.75				67,378		142	0.42
Total interest-earning
assets		5,896,514		115,569	3.92				5,551,825		109,454	3.94
Other assets		297,082							284,479
Total assets	$	6,193,596						$	5,836,304
Interest-bearing Liabilities:
Deposits:
Savings accounts	$	267,059		706	0.53			$	264,150		604	0.46
NOW accounts		1,542,857		4,538	0.59				1,617,241		3,884	0.48
Money market accounts		859,415		3,150	0.73				470,606		1,287	0.55
Certificate of deposit
accounts		1,407,528		10,039	1.43				1,410,765		10,242	1.45
Total due to depositors		4,076,859		18,433	0.90				3,762,762		16,017	0.85
Mortgagors' escrow
accounts		64,280		57	0.18				58,838		53	0.18
Total interest-bearing
deposits		4,141,139		18,490	0.89				3,821,600		16,070	0.84
Borrowings		1,130,132		10,073	1.78				1,181,263		10,362	1.75
Total interest-bearing
liabilities		5,271,271		28,563	1.08				5,002,863		26,432	1.06
Non interest-bearing
demand deposits		333,142							285,267
Other liabilities		65,525							65,331
Total liabilities		5,669,938							5,353,461
Equity		523,658							482,843
Total liabilities and
equity	$	6,193,596						$	5,836,304
Net interest income /
net interest rate spread			$	87,006	2.84	%				$	83,022	2.88	%
Net interest-earning assets /
net interest margin	$	625,243			2.95	%		$	548,962			2.99	%
Ratio of interest-earning
assets to interest-bearing
liabilities					1.12	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 $1.0 million and $2.5 million for the six months ended June 30, 2017 and 2016, respectively.
(2)	Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES DEPOSIT COMPOSITION (Unaudited)
													June 2017 vs.									June 2017 vs.
				June 30,			March 31,			December 31,			December 2016			September 30,			June 30,			June 2016
(Dollars in thousands)				2017			2017			2016			% Change			2016			2016			% Change
Deposits
Non-interest bearing				$	349,302		$	344,028		$	333,163		4.8	%		$	320,060		$	317,112		10.2	%
Interest bearing:
	Certificate of deposit
		accounts			1,332,377			1,411,819			1,372,115		-2.9	%			1,384,551			1,411,550		-5.6	%
	Savings accounts				325,815			254,822			254,283		28.1	%			258,058			260,528		25.1	%
	Money market accounts				837,565			851,129			843,370		-0.7	%			733,361			452,589		85.1	%
	NOW accounts				1,368,441			1,487,120			1,362,484		0.4	%			1,296,475			1,453,540		-5.9	%
		Total interest-bearing
			deposits		3,864,198			4,004,890			3,832,252		0.8	%			3,672,445			3,578,207		8.0	%
			Total deposits	$	4,213,500		$	4,348,918		$	4,165,415		1.2	%		$	3,992,505		$	3,895,319		8.2	%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES LOANS (Unaudited)
Loan Origination and Purchases
		For the three months									For the six months ended
		June 30,			March 31,			June 30,			June 30,
(In thousands)		2017			2017			2016			2017			2016
Multi-family residential		$	63,469		$	126,708		$	162,364		$	190,177		$	232,007
Commercial real estate			123,559			35,732			114,007			159,291			176,144
One-to-four family – mixed-use property			13,656			18,542			11,630			32,198			29,875
One-to-four family – residential			4,860			5,920			4,195			10,780			13,688
Co-operative apartments			-			-			470			-			470
Construction			4,429			2,544			2,427			6,973			4,114
Small Business Administration			1,870			641			314			2,511			6,315
Taxi medallion			-			-			-			-			-
Commercial business and other			49,312			76,484			92,456			125,796			154,490
Total		$	261,155		$	266,571		$	387,863		$	527,726		$	617,103

Loan Composition
																June 30, 2017 vs.												June 2017 vs.
				June 30,				March 31,				December 31,				December 2016				September 30,				June 30,				June 2016
(Dollars in thousands)					2017				2017				2016			% Change					2016				2016			% Change
Loans held for investment:
Multi-family residential				$	2,243,643			$	2,261,946			$	2,178,504			3.0	%			$	2,171,289			$	2,159,138			3.9	%
Commercial real estate					1,349,634				1,268,770				1,246,132			8.3	%				1,195,266				1,146,400			17.7	%
One-to-four family ―
	mixed-use property				556,906				561,355				558,502			-0.3	%				555,691				566,702			-1.7	%
One-to-four family ― residential					181,213				184,201				185,767			-2.5	%				183,993				190,251			-4.8	%
Co-operative apartments					7,069				7,216				7,418			-4.7	%				7,494				7,571			-6.6	%
Construction					16,842				12,413				11,495			46.5	%				11,250				9,899			70.1	%
Small Business Administration					10,591				10,519				15,198			-30.3	%				14,339				14,718			-28.0	%
Taxi medallion					18,303				18,832				18,996			-3.6	%				20,536				20,641			-11.3	%
Commercial business and other					644,262				632,503				597,122			7.9	%				564,972				564,084			14.2	%
Net unamortized premiums
	and unearned loan fees				17,217				16,836				16,559			4.0	%				16,447				16,875			2.0	%
Allowance for loan losses					(22,157	)			(22,211	)			(22,229	)		-0.3	%				(21,795	)			(22,198	)		-0.2	%
			Net loans	$	5,023,523			$	4,952,380			$	4,813,464			4.4	%			$	4,719,482			$	4,674,081			7.5	%

Loans Held for Investment Activity
		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
(In thousands)			2017				2017				2016				2016				2016
Loans originated and purchased		$	261,155			$	266,571			$	282,592			$	233,243			$	387,863
Principal reductions			(143,195	)			(122,897	)			(187,780	)			(183,583	)			(149,308	)
Loans transferred to held-for-sale			(30,565	)			-				-				-				-
Loans sold			(16,337	)			(4,874	)			-				(3,693	)			(2,310	)
Loan charged-offs			(350	)			(179	)			(370	)			(541	)			(101	)
Foreclosures			-				-				(138	)			-				-
Net change in deferred (fees) and costs			381				277				112				(428	)			1,594
Net change in the allowance for loan losses			54				18				(434	)			403				(205	)
	Total loan activity	$	71,143			$	138,916			$	93,982			$	45,401			$	237,533

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES NON-PERFORMING ASSETS and NET CHARGE-OFFS (Unaudited)
			June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)				2017				2017				2016				2016				2016
Loans 90 Days Or More Past Due
	and Still Accruing:
Multi-family residential			$	-			$	-			$	-			$	-			$	574
Commercial real estate				-				75				-				1,183				320
One-to-four family - mixed-use property				-				-				386				470				635
One-to-four family - residential				-				-				-				-				13
Construction				602				602				-				-				-
Taxi medallion				727				-				-				-				-
Commercial business and other				-				-				-				-				-
	Total			1,329				677				386				1,653				1,542
Non-accrual Loans:
Multi-family residential				1,537				1,354				1,837				1,649				3,162
Commercial real estate				1,948				1,462				1,148				1,157				2,299
One-to-four family - mixed-use property				2,971				3,328				4,025				4,534				6,005
One-to-four family - residential				7,616				7,847				8,241				8,340				8,406
Small Business Administration				53				58				1,886				2,132				185
Taxi medallion				-				3,771				3,825				3,971				196
Commercial business and other				5				38				68				99				128
	Total			14,130				17,858				21,030				21,882				20,381
	Total Non-performing Loans			15,459				18,535				21,416				23,535				21,923
Other Non-performing Assets:
Real estate acquired through foreclosure				-				-				533				2,839				3,668
	Total			-				-				533				2,839				3,668
	Total Non-performing Assets		$	15,459			$	18,535			$	21,949			$	26,374			$	25,591
Non-performing Assets to Total Assets				0.25	%			0.30	%			0.36	%			0.44	%			0.43	%
Allowance For Loan Losses to Non-performing Loans				143.3	%			119.8	%			103.8	%			92.6	%			101.3	%

Net Charge-Offs (Recoveries)
			Three Months Ended
			June 30,				March 31,				December 31,				September 30,				June 30,
(In thousands)				2017				2017				2016				2016				2016
Multi-family residential			$	(53	)		$	(16	)		$	(103	)		$	79			$	(183	)
Commercial real estate				4				(68	)			-				(11	)			-
One-to-four family – mixed-use property				(67	)			34				(520	)			24				36
One-to-four family – residential				170				-				40				-				7
Small Business Administration				14				26				186				317				(42	)
Taxi medallion				-				54				142				-				-
Commercial business and other				(14	)			(12	)			(179	)			(6	)			(23	)
Total net loan charge-offs (recoveries)			$	54			$	18			$	(434	)		$	403			$	(205	)

Core Diluted EPS, Core ROAE, Core ROAA, 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 in tabular form at the end of this release. The Company believes that these measures are useful for both investors and management to understand the effects of certain non-interest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.

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

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS (Dollars in thousands, except per share data) (Unaudited)
		Three Months Ended										Six Months Ended
		June 30,			March 31,			June 30,				June 30,			June 30,
			2017			2017			2016				2017			2016
GAAP income before income taxes		$	19,500		$	17,514		$	51,152			$	37,014		$	66,328
Net loss from fair value adjustments			1,159			378			1,115				1,537			2,102
Net gain on sale of securities			-			-			(2,363	)			-			(2,363	)
Gain from life insurance proceeds			(6	)		(1,161	)		-				(1,167	)		(411	)
Net gain on sale of buildings			-			-			(33,814	)			-			(33,814	)
Prepayment penalty on borrowings			-			-			2,082				-			2,082
Core income before taxes			20,653			16,731			18,172				37,384			33,924
Provision for income taxes for core income			7,129			5,020			6,851				12,149			12,892
Core net income		$	13,524		$	11,711		$	11,321			$	25,235		$	21,032
GAAP diluted earnings per common share		$	0.44		$	0.42		$	1.05			$	0.86		$	1.38
Net (gain) loss from fair value adjustments, net of tax			0.02			0.01			0.02				0.04			0.04
Net gain on sale of securities, net of tax			-			-			(0.05	)			-			(0.05	)
Gain from life insurance proceeds			-			(0.04	)		-				(0.04	)		(0.01	)
Net gain on sale of buildings, net of tax			-			-			(0.67	)			-			(0.67	)
Prepayment penalty on borrowings			-			-			0.04				-			0.04
Core diluted earnings per common share*		$	0.46		$	0.40		$	0.39			$	0.87		$	0.72
Core net income, as calculated above		$	13,524		$	11,711		$	11,321			$	25,235		$	21,032
Average assets			6,218,072			6,168,848			5,897,858				6,193,596			5,836,304
Average equity			529,451			517,800			486,261				523,658			482,843
Core return on average assets**			0.87	%		0.76	%		0.77	%			0.81	%		0.72	%
Core return on average equity**			10.22	%		9.05	%		9.31	%			9.64	%		8.71	%
*  Core diluted earnings per common share may not foot due to rounding.
**  Ratios are calculated on an annualized basis.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CALCULATION OF TANGIBLE STOCKHOLDERS’ COMMON EQUITY to TANGIBLE ASSETS (Unaudited)
						June 30,			December 31,			June 30,
(Dollars in thousands)							2017			2016			2016
Total Equity						$	534,091		$	513,853		$	508,883
Less:
	Goodwill						(16,127	)		(16,127	)		(16,127	)
	Intangible deferred tax liabilities						391			389			407
		Tangible Stockholders' Common Equity				$	518,355		$	498,115		$	493,163
Total Assets						$	6,285,236		$	6,058,487		$	5,986,727
Less:
	Goodwill						(16,127	)		(16,127	)		(16,127	)
	Intangible deferred tax liabilities						391			389			407
		Tangible Assets				$	6,269,500		$	6,042,749		$	5,971,007
Tangible Stockholders' Common Equity to Tangible Assets							8.27	%		8.24	%		8.26	%

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