LAKE SUCCESS, N.Y., Oct. 16, 2007 (PRIME NEWSWIRE) -- Flushing Financial Corporation (the "Company") (Nasdaq:FFIC), the parent holding company for Flushing Savings Bank, FSB (the "Bank"), today announced its financial results for the three and nine months ended September 30, 2007.
Net income for the third quarter ended September 30, 2007 was $5.7 million, an increase of $0.4 million, or 7.8%, from the $5.3 million earned in the third quarter of 2006. Diluted earnings per share for the third quarter was $0.29, an increase of $0.02, or 7.4%, from the $0.27 earned in the comparable quarter a year ago.
Net income for the nine months ended September 30, 2007 was $15.9 million, a decrease of $0.7 million, or 4.4%, from the $16.6 million earned in the comparable 2006 period. Diluted earnings per share for the nine months ended September 30, 2007 was $0.80, a decrease of $0.09, or 10.1%, from the $0.89 earned in the comparable 2006 period.
Core earnings, which exclude the effects of SFAS No. 159, increased to $5.3 million, or $0.27 per diluted share, in the third quarter from $5.1 million, or $0.26 per diluted share, in the second quarter of 2007. The effect of changes in fair value recorded under SFAS No.159 increased GAAP earnings by $0.02 per diluted share for the third quarter, while decreasing GAAP earnings by $0.02 per diluted share in the second quarter.
John R. Buran, President and Chief Executive Officer, stated: "We are pleased with the operating results we are reporting for the third quarter. For the first time since the Federal Open Market Committee ("FOMC") began raising interest rates in 2004, the Company has put together two consecutive quarters of core earnings growth, as core earnings per share increased to $0.27 in the third quarter of 2007 from $0.26 in the second quarter of 2007 and $0.25 in the first quarter of 2007. Our strategic initiative to create a more "commercial-like" bank is contributing to revenue growth. We grew commercial business loans by $17.3 million during the third quarter. Expenses associated with our strategic shift have stabilized. Our real estate lending business continues to be strong and asset quality remains solid. Our iGObanking.com(tm) internet bank continues to perform better than planned, bringing in deposits at favorable interest rates.
"The Bank entered into several leverage transactions during the later part of September to take advantage of the abrupt widening of credit spreads seen in the financial markets. The Bank purchased $104.1 million of investment securities and financed the purchases with borrowings. The spread, on a tax adjusted basis, between the securities purchased and the borrowings incurred is approximately 200 basis points. While this had little effect on earnings for the third quarter, we expect these transactions to provide additional net interest income in future periods.
"Loan originations were $182.0 million for the third quarter as demand for our loan products remained strong. Loans in process were $218.7 million at September 30, 2007, with $46.9 million resulting from new or expanded initiatives within our strategic plan. Non-performing loans decreased to $4.8 million at September 30, 2007 from $6.5 million at June 30, 2007 as we continue to follow our strict underwriting standards. The Bank does not originate, or hold in portfolio, sub-prime mortgages.
"In the third quarter, the FOMC lowered the overnight interest rate 50 basis points to 4.75%. The positively-sloped interest rate curve that returned in the second quarter of this year steepened in the third quarter as short-term rates declined more than long-term rates declined. The benefit we should see from the reduction in the overnight interest rate and the steepening of the yield curve has a lag as our interest-bearing liabilities continued to reprice upwards faster then our interest-earning assets on a year-over-year basis.
"In summary, we remain pleased with the direction and pace of change in the organization as we move to a more 'commercial-like' banking institution. We continue to expand and leverage our strengths in multicultural banking, and mixed-use and multi-family lending, as we remain focused on delivering long-term value to our shareholders."
Earnings Summary - Three Months Ended September 30, 2007
For the three months ended September 30, 2007, net interest income was $17.3 million, an increase of $0.1 million, or 0.7%, from $17.2 million for the three months ended September 30, 2006. An increase in the average balance of interest-earning assets of $397.4 million, to $2,929.8 million, was partially offset by a decrease in the net interest spread of 33 basis points to 2.15% for the quarter ended September 30, 2007 from 2.48% for the comparable period in 2006. The yield on interest-earning assets increased 14 basis points to 6.69% for the three months ended September 30, 2007 from 6.55% in the three months ended September 30, 2006. However, this was more than offset by an increase in the cost of funds of 47 basis points to 4.54% for the three months ended September 30, 2007 from 4.07% for the comparable prior year period. The net interest margin decreased 35 basis points to 2.37% for the three months ended September 30, 2007 from 2.72% for the three months ended September 30, 2006. Excluding prepayment penalty income, the net interest margin would have been 2.25% and 2.58% for the three month periods ended September 30, 2007 and 2006, respectively.
The increase in the yield of interest-earning assets is primarily due to an increase of $432.8 million in the average balance of the higher-yielding loan portfolio to $2,598.4 million, combined with a $33.4 million decrease in the average balance of the lower-yielding securities portfolios. The yield on the mortgage loan portfolio increased one basis point to 6.86% for the three months ended September 30, 2007 from 6.85% for the three months ended September 30, 2006. In an effort to increase the yield on interest-earning assets, we continued to fund a portion of the growth in the higher-yielding mortgage loan portfolio through repayments received on the lower-yielding securities portfolio.
The increase in the cost of interest-bearing liabilities is primarily attributed to the FOMC increasing overnight rates for seventeen consecutive meetings through June 2006. Although the FOMC reduced the overnight rate by 50 basis points in September 2007, the prior increases resulted in an increase in our cost of funds as new deposits were obtained at rates higher than the average rate on existing deposits. Certificates of deposit, savings accounts and money market accounts increased 51 basis points, 109 basis points and 30 basis points, respectively, for the three months ended September 30, 2007 compared to the three months ended September 30, 2006, resulting in an increase in the cost of deposits of 59 basis points to 4.30% for the three months ended September 30, 2007 compared to the three months ended September 30, 2006. The cost of borrowed funds also increased 22 basis points to 5.08% for the three months ended September 30, 2007 compared to the three months ended September 30, 2006. This was combined with increases in the average balance of certificates of deposit of $166.4 million and borrowed funds of $133.4 million. In addition, the combined average balances of lower-costing savings, money market and NOW accounts increased a total of $104.4 million.
Net interest income for the third quarter of 2007 declined $0.7 million from that reported for the second quarter of 2007, primarily due to a $0.6 million decrease in income recorded from loan fees which are included in interest income, primarily prepayment penalty income. The net interest margin for the three months ended September 30, 2007 decreased 20 basis points to 2.37% from 2.57% for the quarter ended June 30, 2007. The yield on interest-earning assets decreased five basis points during the quarter, while the cost of interest-bearing liabilities increased 15 basis points. Excluding prepayment penalty income, the net interest margin would have declined 13 basis points in the three months ended September 30, 2007 to 2.25% from 2.38% for the three months ended June 30, 2007, and the yield on interest-earning assets would have increased two basis points.
Non-interest income increased $1.4 million, or 58.9%, for the three months ended September 30, 2007 to $3.8 million, as compared to $2.4 million for the quarter ended September 30, 2006. This was primarily attributed to increases of $0.2 million in dividends received on Federal Home Loan Bank of New York ("FHLB-NY") stock, $0.4 million in Other Income, and $0.8 million attributed to changes in fair value of financial assets and financial liabilities carried at fair value under SFAS No. 159.
Non-interest expense was $12.1 million for the three months ended September 30, 2007, an increase of $0.9 million, or 8.3%, from $11.2 million for the three months ended September 30, 2006. The increase from the comparable prior year period is primarily attributed to increases of: $0.4 million in employee salary and benefit expenses primarily related to additional employees for the business banking initiative and the internet banking division, $0.2 million in depreciation primarily due to two additional branch locations, the business banking initiative and the internet banking division, $0.2 million in professional services, and $0.2 million in data processing expense. The efficiency ratio was 59.5% and 57.0% for the three month periods ended September 30, 2007 and 2006, respectively.
Net income for the three months ended September 30, 2007 was $5.7 million, an increase of $0.4 million or 7.8%, as compared to $5.3 million for the three months ended September 30, 2006. Diluted earnings per share was $0.29 for the three months ended September 30, 2007, an increase of $0.02, or 7.4%, from $0.27 in the three months ended September 30, 2006.
Return on average equity was 10.29% for the three months ended September 30, 2007 compared to 10.21% for the three months ended September 30, 2006. Return on average assets was 0.74% for the three months ended September 30, 2007 compared to 0.79% for the three months ended September 30, 2006.
Earnings Summary - Nine months Ended September 30, 2007
For the nine months ended September 30, 2007, net interest income was $52.7 million, an increase of $1.9 million, or 3.8%, from $50.8 million for the nine months ended September 30, 2006. An increase in the average balance of interest-earning assets of $440.5 million, to $2,817.2 million, was partially offset by a decrease in the net interest spread of 33 basis points to 2.28% for the nine months ended September 30, 2007 from 2.61% for the comparable period in 2006. The yield on interest-earning assets increased 22 basis points to 6.68% for the nine months ended September 30, 2007 from 6.46% in the nine months ended September 30, 2006. However, this was more than offset by an increase in the cost of funds of 55 basis points to 4.40% for the nine months ended September 30, 2007 from 3.85% for the comparable prior year period. The net interest margin decreased 36 basis points to 2.49% for the nine months ended September 30, 2007 from 2.85% for the nine months ended September 30, 2006. Excluding prepayment penalty income, the net interest margin would have been 2.36% and 2.69% for the nine month periods ended September 30, 2007 and 2006, respectively.
The increase in the yield of interest-earning assets is primarily due to an increase of $468.0 million in the average balance of the higher-yielding loan portfolio to $2,486.3 million, combined with a $19.1 million decrease in the average balance of the lower-yielding securities portfolios. The yield on the mortgage loan portfolio increased nine basis points to 6.88% for the nine months ended September 30, 2007 from 6.79% for the nine months ended September 30, 2006. This increase is primarily due to the average rate on new loans originated during the past twelve months being above the average rate on the loan portfolio. In an effort to increase the yield on interest-earning assets, we continued to fund a portion of the growth in the higher-yielding mortgage loan portfolio through repayments received on the lower-yielding securities portfolio.
The increase in the cost of interest-bearing liabilities is primarily attributed to the FOMC increasing overnight rates for seventeen consecutive meetings through June 2006. Although the FOMC reduced the overnight rate by 50 basis points in September 2007, the prior increases resulted in an increase in our cost of funds as new deposits were obtained at rates higher than the average rate on existing deposits. Certificates of deposit, savings accounts and money market accounts increased 62 basis points, 79 basis points and 59 basis points, respectively, for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006, resulting in an increase in the cost of deposits of 66 basis points to 4.14% for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006. The cost of borrowed funds also increased 30 basis points to 4.97% for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006. This was combined with increases in the average balance of certificates of deposit of $194.2 million and borrowed funds of $149.3 million. In addition, the combined average balances of lower-costing savings, money market and NOW accounts increased a total of $100.3 million.
Non-interest income increased $3.0 million, or 41.9%, for the nine months ended September 30, 2007 to $10.2 million, as compared to $7.2 million for the nine months ended September 30, 2006. This was primarily attributed to increases of: $0.2 million on BOLI due to the purchase of additional BOLI, $0.7 million in dividends received on FHLB-NY stock, $1.0 million in Other Income, and $1.0 million attributed to changes in fair value of financial assets and financial liabilities carried at fair value under SFAS No. 159.
Non-interest expense was $37.9 million for the nine months ended September 30, 2007, an increase of $6.9 million, or 22.3%, from $31.0 million for the nine months ended September 30, 2006. The increase from the comparable prior year period is primarily attributed to increases of: $3.3 million in employee salary and benefit expenses related to additional employees for the additional branches, business banking initiative and the internet banking division, $0.9 million in occupancy and equipment costs primarily related to increased rental expense, $0.6 million in depreciation primarily due to additional locations, $0.6 million in professional services, $0.6 million in data processing expense, and $0.9 million in other operating expenses primarily related to the additional branches and employees. The efficiency ratio was 61.2% and 53.5% for the three month periods ended September 30, 2007 and 2006, respectively.
Net income for the nine months ended September 30, 2007 was $15.9 million, a decrease of $0.7 million or 4.4%, as compared to $16.6 million for the nine months ended September 30, 2006. Diluted earnings per share was $0.80 for the nine months ended September 30, 2007, a decrease of $0.09, or 10.1%, from $0.89 in the nine months ended September 30, 2006.
Return on average equity was 9.70% for the nine months ended September 30, 2007 compared to 11.82% for the nine months ended September 30, 2006. Return on average assets was 0.71% for the nine months ended September 30, 2007 compared to 0.89% for the nine months ended September 30, 2006.
Balance Sheet Summary
Effective January 1, 2007, the Company elected the early adoption of SFAS No. 157 and 159. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Upon adoption, the Company selected the fair value measurement option for various pre-existing financial assets and financial liabilities, including mortgage-backed securities with a fair value of $139.4 million, mutual funds with a fair value of $20.6 million, common stock with a fair value of $0.6 million, FHLB borrowings with a fair value of $98.8 million, and junior subordinated debt (commonly known as trust preferred securities) with a fair value of $21.3 million. On a going-forward basis, the Company currently plans to carry the financial assets and financial liabilities which will replace the above noted items at fair value, and will evaluate other purchases of investments and acquisition of new debt to determine if they should be carried at cost or fair value. The initial fair value measurement of these items resulted in a reduction of stockholders' equity of $2.2 million as of January 1, 2007. This one-time charge is comprised of a $5.8 million cumulative-effect adjustment, net of tax, recorded as a reduction of retained earnings, partially offset by a $3.6 million reduction in accumulated other comprehensive loss related to the election of the fair value option for certain securities available for sale. The Bank's regulatory capital was reduced $5.4 million as of January 1, 2007 as a result of the adoption of SFAS No. 159. The Bank remains well-capitalized under regulatory capital requirements after the adoption of SFAS No. 159. During the nine months ended September 30, 2007, the Company elected to measure at fair value junior subordinated debt (commonly know as trust preferred securities) with a face amount of $41.2 million that was issued during June 2007, and $20.6 million that was issued in July 2007.
At September 30, 2007, total assets were $3,241.2 million, an increase of $404.6 million, or 14.3%, from $2,836.5 million at December 31, 2006. Total loans, net increased $324.7 million, or 14.0%, during the nine months ended September 30, 2007 to $2,649.4 million from $2,324.7 million at December 31, 2006. At September 30, 2007, loans in process totaled $218.7 million, compared to $274.7 million at September 30, 2006 and $291.9 million at December 31, 2006.
The following table shows loan originations and purchases for the periods indicated.
For the three months For the nine months
ended September 30, ended September 30,
------------------- -------------------
(In thousands) 2007 2006 2007 2006
--------------------------------------------------------------------
Multi-family residential $ 53,632 $ 38,160 $167,231 $102,819
Commercial real estate 36,607 39,042 137,313 113,369
One-to-four family
- mixed-use property 37,421 48,293 129,155 114,611
One-to-four family
- residential 9,570 2,350 27,108 8,866
Construction 12,397 28,374 37,773 59,701
Commercial business
and other loans 32,404 18,343 80,697 55,521
-------- -------- -------- --------
Total $182,031 $174,562 $579,277 $454,887
======== ======== ======== ========
Loan purchases included in the table above totaled $9.1 million for nine months ended September 30, 2007. There were no loan purchases for the three months ended September 30, 2007. There were $3.1 million and $5.1 million in loan purchases for the three and nine months ended September 30, 2006, respectively. Loans acquired on June 30, 2006 in the purchase of Atlantic Liberty are excluded from the table above.
As the Bank continues to increase its loan portfolio, management continues to adhere to the Bank's strict underwriting standards. As a result, the Bank has been able to minimize charge-offs of losses from impaired loans and maintain asset quality. Non-performing assets were $4.8 million at September 30, 2007 compared to $3.1 million at December 31, 2006 and $3.3 million at September 30, 2006. Total non-performing assets as a percentage of total assets was 0.15% at September 30, 2007 compared to 0.11% at December 31, 2006 and 0.12% as of September 30, 2006. The ratio of allowance for loan losses to total non-performing loans was 141.0% at September 30, 2007, compared to 226% at December 31, 2006 and 216% at September 30, 2006.
During the nine months ended September 30, 2007, mortgage-backed securities increased $48.8 million to $337.6 million, while other securities increased $21.6 million to $63.4 million. During September 2007, as a result of the widening spreads seen in the financial markets, the Bank purchased $78.0 million of mortgage-backed securities and $26.1 million of other securities in a series of transactions that were financed with borrowings. The spread, on a tax adjusted basis, between the securities purchased and the borrowings incurred is approximately 200 basis points. While these transactions will reduce the net interest margin, they will increase net interest income. Principal repayments on the securities portfolio during the nine months ended September 30, 2007 were reinvested in higher yielding loans. Other securities primarily consist of securities issued by government agencies and mutual or bond funds that invest in government and government agency securities.
Total liabilities were $3,012.2 million at September 30, 2007, an increase of $394.1 million, or 15.1%, from December 31, 2006. During the nine months ended September 30, 2007, due to depositors increased $234.6 million to $1,979.0 million, primarily as a result of an increase of $83.4 million in certificates of deposit, of which $40.6 million were new brokered deposits, while core deposits increased $151.2 million. Borrowed funds increased $148.8 million, primarily due to the funds borrowed to purchase the securities noted above. During the third quarter of 2007, the Company issued junior subordinated debt with a face amount of $20.6 million, and called junior subordinated debt with a face amount of $20.6 million that was issued in 2002. This is in addition to the second quarter issuance of junior subordinated debt with a face amount of $41.2 million. The $61.8 million of junior subordinated debt was issued with a weighted average fixed rate of interest for the first five years of 6.96%, and then adjusts quarterly at a weighted average rate equal to three month LIBOR plus 142 basis points. The junior subordinated debt that was called in July adjusted quarterly at a rate equal to three month LIBOR plus 365 basis points. In July 2007, the Company used $30.0 million of the funds obtained from issuing this debt to increase its investment in the Bank, thereby increasing the Bank's regulatory capital to support further asset growth. In addition, mortgagors' escrow deposits increased $12.2 million during the nine months ended September 30, 2007.
Total stockholders' equity increased $10.5 million, or 4.8%, to $228.9 million at September 30, 2007 from $218.4 million at December 31, 2006. Net income of $15.9 million for the nine months ended September 30, 2007 was partially offset by a net after tax decrease of $0.1 million on the market value of securities available for sale, $0.6 million in treasury shares purchased through the Company's stock repurchase program, a $2.2 million charge related to the adoption of SFAS No. 159, and $7.0 million of cash dividends declared and paid during the nine months ended September 30, 2007. The exercise of stock options increased stockholders' equity by $1.3 million, including the income tax benefit realized by the Company upon the exercise of the options. An adjustment to the purchase price of Atlantic Liberty Financial Corporation, related to stock options, increased stockholders' equity by $1.3 million. Goodwill was also increased $1.3 million for this adjustment. Book value per share was $10.77 at September 30, 2007, compared to $10.34 per share at December 31, 2006 and $10.19 per share at September 30, 2006.
Under its current stock repurchase program, the Company repurchased 38,000 shares during the nine months ended September 30, 2007, at a total cost of $0.6 million, or an average of $16.52 per share. At September 30, 2007, 362,050 shares remain to be repurchased under the current stock repurchase program. Through September 30, 2007, the Company had repurchased approximately 48% of the common shares issued in connection with the Company's initial public offering at a cost of $118.6 million.
Reconciliation of GAAP 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 have not adopted SFAS No. 159. Core earnings should not be considered in isolation or as a substitute for GAAP earnings. For the three and nine months ended September 30, 2007, the Company calculated core earnings by subtracting the fair value gain recorded under SFAS No.159. The Company adopted SFAS No. 159 effective January 1, 2007.
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
2007 2007
-------- --------
(In thousands, except
per share data)
GAAP net income $ 5,727 $ 15,894
Net gain under SFAS No. 159 (789) (960)
Income tax effect 348 424
-------- --------
Core net income $ 5,286 $ 15,358
======== ========
GAAP diluted earnings per share $ 0.29 $ 0.80
Net after tax effect of SFAS No. 159 $ (0.02) $ (0.03)
-------- --------
Core diluted earnings per share $ 0.27 $ 0.77
======== ========
"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, 2006 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.
Flushing Financial Corporation is the holding company for Flushing Savings Bank, FSB, a federally chartered stock savings bank insured by the Federal Deposit Insurance Corporation (FDIC). The Bank conducts its business through fourteen banking offices located in Queens, Brooklyn, Manhattan and Nassau County, and its internet banking division, "iGObanking.com(tm)".
Additional information on Flushing Financial Corporation may be obtained by visiting the Company's website at http://www.flushingsavings.com.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, September 30, December 31,
except per share data) 2007 2006
--------------------------------------------------------------------
ASSETS (Unaudited)
------
Cash and due from banks $ 28,653 $ 29,251
Securities available for sale:
Mortgage-backed securities 337,638 288,851
Other securities 63,379 41,736
Loans:
Multi-family residential 960,570 870,912
Commercial real estate 608,030 519,552
One-to-four family -- mixed-use property 667,738 588,092
One-to-four family -- residential 162,146 161,889
Co-operative apartments 7,968 8,059
Construction 124,739 104,488
Small Business Administration 17,933 17,521
Commercial business and other 93,650 50,899
Net unamortized premiums and
unearned loan fees 13,458 10,393
Allowance for loan losses (6,824) (7,057)
----------- -----------
Net loans 2,649,408 2,324,748
Interest and dividends receivable 15,524 13,332
Bank premises and equipment, net 24,426 23,042
Federal Home Loan Bank of New York stock 39,384 36,160
Bank owned life insurance 41,811 40,516
Goodwill 16,127 14,818
Core deposit intangible 2,928 3,279
Other assets 21,875 20,788
----------- -----------
Total assets $ 3,241,153 $ 2,836,521
=========== ===========
LIABILITIES
-----------
Due to depositors:
Non-interest bearing $ 65,301 $ 80,061
Interest-bearing:
Certificate of deposit accounts 1,186,400 1,102,976
Savings accounts 327,069 262,980
Money market accounts 338,816 251,197
NOW accounts 61,399 47,181
----------- -----------
Total interest-bearing deposits 1,913,684 1,664,334
Mortgagors' escrow deposits 31,958 19,755
Borrowed funds 981,261 832,413
Other liabilities 20,026 21,543
----------- -----------
Total liabilities 3,012,230 2,618,106
----------- -----------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock ($0.01 par value;
5,000,000 shares authorized;
none issued) -- --
Common stock ($0.01 par value;
40,000,000 shares authorized;
21,263,640 shares issued and
outstanding at September 30,
2007; 21,165,052 shares issued,
and 21,131,274 shares outstanding,
at December 31, 2006) 213 212
Additional paid-in capital 73,904 71,079
Treasury stock (none and
33,778 shares at September 30, 2007
and December 31, 2006, respectively) -- (592)
Unearned compensation (2,306) (2,897)
Retained earnings 159,785 156,879
Accumulated other comprehensive
loss, net of taxes (2,673) (6,266)
----------- -----------
Total stockholders' equity 228,923 218,415
----------- -----------
Total liabilities and
stockholders' equity $ 3,241,153 $ 2,836,521
=========== ===========
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months For the nine months
ended September 30, ended September 30,
(Dollars in thousands, -------------------- -------------------
except per share data) 2007 2006 2007 2006
--------------------------------------------------------------------
Interest and dividend income
----------------------------
Interest and fees on loans $44,839 $37,188 $128,870 $103,037
Interest and dividends on
securities:
Interest 3,834 4,013 11,580 11,341
Dividends 165 84 371 237
Other interest income 158 188 337 616
------- ------- -------- --------
Total interest and
dividend income 48,996 41,473 141,158 115,231
------- ------- -------- --------
Interest expense
----------------
Deposits 20,543 15,225 56,851 39,959
Other interest expense 11,117 9,024 31,596 24,472
------- ------- -------- --------
Total interest expense 31,660 24,249 88,447 64,431
------- ------- -------- --------
Net interest income 17,336 17,224 52,711 50,800
Provision for loan losses -- -- -- --
------- ------- -------- --------
Net interest income after
provision for loan losses 17,336 17,224 52,711 50,800
------- ------- -------- --------
Non-interest income
-------------------
Loan fee income 702 636 2,494 2,145
Banking services fee income 369 386 1,137 1,096
Net gain on sale of loans
held for sale 11 158 250 518
Net gain on sale of loans 106 -- 243 100
Net gain on sale of securities -- -- -- 81
Net gain from fair value
adjustments 789 -- 960 --
Federal Home Loan Bank of
New York stock dividends 681 435 1,919 1,194
Bank owned life insurance 442 441 1,295 1,112
Other income 690 329 1,886 932
------- ------- -------- --------
Total non-interest income 3,790 2,385 10,184 7,178
------- ------- -------- --------
Non-interest expense
--------------------
Salaries and employee
benefits 5,765 5,318 18,146 14,885
Occupancy and equipment 1,635 1,580 4,868 3,950
Professional services 1,131 965 3,522 2,899
Data processing 861 681 2,572 1,975
Depreciation and amortization 597 439 1,794 1,170
Other operating expenses 2,117 2,195 7,006 6,116
------- ------- -------- --------
Total non-interest
expense 12,106 11,178 37,908 30,995
------- ------- -------- --------
Income before income taxes 9,020 8,431 24,987 26,983
------- ------- -------- --------
Provision for income taxes
--------------------------
Federal 2,658 2,574 7,620 8,378
State and local 635 545 1,473 1,976
------- ------- -------- --------
Total taxes 3,293 3,119 9,093 10,354
------- ------- -------- --------
Net income $ 5,727 $ 5,312 $ 15,894 $ 16,629
======= ======= ======== ========
Basic earnings per share $ 0.29 $ 0.27 $ 0.81 $ 0.91
Diluted earnings per share $ 0.29 $ 0.27 $ 0.80 $ 0.89
Dividends per share $ 0.12 $ 0.11 $ 0.36 $ 0.33
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
At or At or
for the three months for the nine months
ended September 30, ended September 30,
----------------------- -----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Per Share Data
--------------
Basic earnings
per share $ 0.29 $ 0.27 $ 0.81 $ 0.91
Diluted earnings
per share $ 0.29 $ 0.27 $ 0.80 $ 0.89
Average number of
shares outstanding
for:
Basic earnings
per share
computation 19,673,754 19,451,788 19,592,265 18,349,236
Diluted earnings
per share
computation 19,891,397 19,751,863 19,829,250 18,644,743
Book value per
share (based on
21,263,640 and
21,115,105 shares
outstanding at
September 30, 2007
and 2006,
respectively) $ 10.77 $ 10.19 $ 10.77 $ 10.19
Average Balances
----------------
Total loans, net $2,598,430 $2,165,583 $2,486,257 $2,018,291
Total interest-
earning assets 2,929,804 2,532,407 2,817,168 2,376,687
Total assets 3,094,014 2,674,937 2,979,695 2,494,905
Total due to
depositors 1,883,700 1,612,938 1,797,640 1,503,121
Total interest-
bearing lia-
bilities 2,788,743 2,381,900 2,677,451 2,230,597
Stockholders'
equity 222,697 208,140 218,426 187,517
Performance Ratios(a)
--------------
Return on average
assets 0.74% 0.79% 0.71% 0.89%
Return on average
equity 10.29 10.21 9.70 11.82
Yield on average
interest-earning
assets 6.69 6.55 6.68 6.46
Cost of average
interest-bearing
liabilities 4.54 4.07 4.40 3.85
Interest rate spread
during period 2.15 2.48 2.28 2.61
Net interest margin 2.37 2.72 2.49 2.85
Non-interest expense
to average assets 1.57 1.67 1.70 1.66
Efficiency ratio 59.53 57.00 61.24 53.53
Average interest-
earning assets to
average interest-
bearing liabilities 1.05 X 1.06 X 1.05 X 1.07 X
(a) Ratios for the quarters and nine months ended September 30, 2007
and 2006 are presented on an annualized basis.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
At or At or
for the nine for the year
months ended ended
September 30, December 31,
2007 2006
------------ ------------
Selected Financial Ratios
and Other Data
-------------------------
Regulatory capital ratios
(for Flushing Savings Bank only):
Tangible capital (minimum
requirement = 1.5%) 7.38% 6.91%
Leverage and core capital
(minimum requirement = 3%) 7.38 6.91
Total risk-based capital
(minimum requirement = 8%) 11.43 10.99
Capital ratios:
Average equity to average assets 7.33% 7.58%
Equity to total assets 7.06 7.70
Asset quality:
Non-performing loans $ 4,840 $ 3,126
Non-performing assets 4,840 3,126
Net charge-offs 233 81
Asset quality ratios:
Non-performing loans to
gross loans 0.18% 0.13%
Non-performing assets to
total assets 0.15 0.11
Allowance for loan losses
to gross loans 0.26 0.30
Allowance for loan losses
to non-performing assets 141.00 225.72
Allowance for loan losses
to non-performing loans 141.00 225.72
Full-service customer facilities 14 12
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in Thousands)
(Unaudited)
For the three months ended September 30,
----------------------------------------------------
2007 2006
-------------------------- ------------------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------------------------- ------------------------
Assets
-------
Interest-earning
assets:
Mortgage loans,
net (a) $2,495,318 $42,795 6.86% $2,115,274 $36,212 6.85%
Other loans,
net (a) 103,112 2,044 7.93 50,309 976 7.76
---------- ------- ---- ---------- ------- ----
Total loans,
net 2,598,430 44,839 6.90 2,165,583 37,188 6.87
---------- ------- ---- ---------- ------- ----
Mortgage-backed
securities 275,833 3,414 4.95 314,101 3,641 4.64
Other
securities 42,397 585 5.52 37,504 456 4.86
---------- ------- ---- ---------- ------- ----
Total
securities 318,230 3,999 5.03 351,605 4,097 4.66
---------- ------- ---- ---------- ------- ----
Interest-earning
deposits and
federal funds
sold 13,144 158 4.81 15,219 188 4.94
---------- ------- ---- ---------- ------- ----
Total interest-
earning assets 2,929,804 48,996 6.69 2,532,407 41,473 6.55
---------- ------- ---- ---------- ------- ----
Other assets 164,210 142,530
---------- ----------
Total
assets $3,094,014 $2,674,937
========== ==========
Liabilities
and Equity
----------
Interest-bearing
liabilities:
Deposits:
Savings
accounts $ 317,896 2,080 2.62 $ 271,591 1,036 1.53
NOW accounts 60,620 274 1.81 46,696 53 0.45
Money market
accounts 316,390 3,439 4.35 272,213 2,756 4.05
Certificate
of deposit
accounts 1,188,794 14,728 4.96 1,022,438 11,364 4.45
---------- ------- ---- ---------- ------- ----
Total due
to depos-
itors 1,883,700 20,521 4.36 1,612,938 15,209 3.77
Mortgagors'
escrow
accounts 29,491 22 0.30 26,795 16 0.24
---------- ------- ---- ---------- ------- ----
Total
deposits 1,913,191 20,543 4.30 1,639,733 15,225 3.71
Borrowed funds 875,552 11,117 5.08 742,167 9,024 4.86
---------- ------- ---- ---------- ------- ----
Total
interest-
bearing lia-
bilities 2,788,743 31,660 4.54 2,381,900 24,249 4.07
---------- ------- ---- ---------- ------- ----
Non interest-
bearing deposits 65,017 64,642
Other liabilities 17,557 20,255
---------- ----------
Total
liabilities 2,871,317 2,466,797
Equity 222,697 208,140
---------- ----------
Total
liabilities
and equity $3,094,014 $2,674,937
========== ==========
Net interest
income/net
interest rate
spread $17,336 2.15% $17,224 2.48%
======= ==== ======= ====
Net interest-
earning
assets/net
interest
margin $ 141,061 2.37% $ 150,507 2.72%
========== ==== ========== ====
Ratio of interest-
earning assets to
interest-bearing
liabilities 1.05 X 1.06 X
==== ====
(a) Loan interest income includes loan fee income (which includes net
amortization of deferred fees and costs, late charges, and
prepayment penalties) of approximately $0.8 million and
$0.9 million for the three-month periods ended September 30, 2007
and 2006, respectively.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in Thousands)
(Unaudited)
For the nine months ended September 30,
----------------------------------------------------
2007 2006
-------------------------- ------------------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------------------------- ------------------------
Assets
------
Interest-earning
assets:
Mortgage
loans,
net (a) $2,398,690 $123,726 6.88% $1,976,021 $100,677 6.79%
Other loans,
net (a) 87,567 5,144 7.83 42,270 2,360 7.44
---------- -------- ---- ---------- -------- ----
Total loans,
net 2,486,257 128,870 6.91 2,018,291 103,037 6.81
---------- -------- ---- ---------- -------- ----
Mortgage-backed
securities 278,959 10,248 4.90 302,382 10,288 4.54
Other
securities 42,537 1,703 5.34 38,223 1,290 4.50
---------- -------- ---- ---------- -------- ----
Total
securities 321,496 11,951 4.96 340,605 11,578 4.53
---------- -------- ---- ---------- -------- ----
Interest-earning
deposits and
federal funds
sold 9,415 337 4.77 17,791 616 4.62
---------- -------- ---- ---------- -------- ----
Total interest-
earning
assets 2,817,168 141,158 6.68 2,376,687 115,231 6.46
---------- -------- ---- ---------- -------- ----
Other assets 162,527 118,218
---------- ----------
Total
assets $2,979,695 $2,494,905
========== ==========
Liabilities
and Equity
-----------
Interest-bearing
liabilities:
Deposits:
Savings
accounts $ 297,416 5,092 2.28 $ 265,901 2,964 1.49
NOW
accounts 55,303 563 1.36 42,211 151 0.48
Money market
accounts 280,738 8,771 4.17 225,015 6,048 3.58
Certificate
of deposit
accounts 1,164,183 42,365 4.85 969,994 30,751 4.23
---------- -------- ---- ---------- -------- ----
Total due
to depos-
itors 1,797,640 56,791 4.21 1,503,121 39,914 3.54
Mortgagors'
escrow
accounts 31,873 60 0.25 28,813 45 0.21
---------- -------- ---- ---------- -------- ----
Total de-
posits 1,829,513 56,851 4.14 1,531,934 39,959 3.48
Borrowed
funds 847,938 31,596 4.97 698,663 24,472 4.67
---------- -------- ---- ---------- -------- ----
Total
interest-
bearing lia-
bilities 2,677,451 88,447 4.40 2,230,597 64,431 3.85
---------- -------- ---- ---------- -------- ----
Non interest-
bearing
deposits 65,425 59,466
Other
liabilities 18,393 17,325
---------- ----------
Total lia-
bilities 2,761,269 2,307,388
Equity 218,426 187,517
---------- ----------
Total lia-
bilities
and equity $2,979,695 $2,494,905
========== ==========
Net interest
income/net
interest rate
spread $ 52,711 2.28% $ 50,800 2.61%
======== ==== ======== ====
Net interest-
earning
assets/net
interest
margin $ 139,717 2.49% $ 146,090 2.85%
========== ==== ========== ====
Ratio of
interest-earning
assets to
interest-bearing
liabilities 1.05 X 1.07 X
==== ====
(a) Loan interest income includes loan fee income (which includes net
amortization of deferred fees and costs, late charges, and
prepayment penalties) of approximately $2.8 million and
$2.9 million for the nine-month periods ended September 30, 2007
and 2006, respectively.