LAKE SUCCESS, N.Y., Jan. 28, 2008 (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 months and year ended December 31, 2007.
Net income for the fourth quarter ended December 31, 2007 was $4.3 million, a decrease of $0.7 million, or 14.4%, from the $5.0 million earned in the fourth quarter of 2006. Diluted earnings per share for the fourth quarter was $0.22, a decrease of $0.03, or 12.0%, from the $0.25 earned in the comparable quarter a year ago. Excluding the previously announced $2.6 million, or $0.13 per diluted share, after-tax other-than-temporary impairment charge of the Company's investments in preferred stocks of Freddie Mac and Fannie Mae, net income for the fourth quarter of 2007 would have been $6.9 million, or $0.35 per diluted share, an increase of $1.9 million, or 38.2%, from the fourth quarter of 2006.
Net income for the year ended December 31, 2007 was $20.2 million, a decrease of $1.5 million, or 6.7%, from the $21.6 million earned in the comparable prior year. Diluted earnings per share for the year ended December 31, 2007 was $1.02, a decrease of $0.12, or 10.5%, from the $1.14 earned in the prior year. Excluding the above mentioned other-than-temporary impairment charge, net income for the year ended December 31, 2007 would have been $22.8 million, or $1.15 per diluted share, an increase of $1.2 million, or 5.4%, from the year ended December 31, 2006.
Core earnings, which exclude the effects of SFAS No. 159 and the other-than-temporary impairment charge, increased to $6.0 million, or $0.30 per diluted share, in the fourth quarter from $5.3 million, or $0.27 per diluted share, in the third quarter. The effect of changes in fair value recorded under SFAS No. 159 increased GAAP earnings by $0.05 and $0.02 per diluted share for the fourth quarter and third quarter, respectively. The other-than-temporary impairment charge reduced GAAP earnings by $0.13 per diluted share for the fourth quarter. For a reconciliation of core earnings and core earnings per share to GAAP net income and GAAP earnings per share, please refer to the tables in the section titled Reconciliation of GAAP and Core Earnings.
John R. Buran, President and Chief Executive Officer, stated: "We are pleased with the operating results we are reporting for the fourth quarter. Core earnings per share increased for the third consecutive quarter to $0.30 in the fourth quarter of 2007 from $0.27 in the third quarter of 2007, $0.26 in the second quarter of 2007 and $0.25 in the first quarter of 2007. The strategic initiatives we began in 2006 are contributing to the increase in core earnings, as we transition to a more "commercial-like" bank. We grew commercial business loans by $60.5 million during the year to $127.6 million at December 31, 2007. Our real estate lending business continues to be strong and asset quality remains solid. Our iGObanking.com(tm) internet branch, with deposits of $133.0 million at December 31, 2007, continues to perform better than planned, and has provided an additional source of funds to fund our loan growth.
"Loan originations and purchases were $180.6 million for the fourth quarter, and a record $759.9 million for the year, as demand for our loan products remained strong. Loans in process were $201.0 million at December 31, 2007, with $35.0 million resulting from new or expanded initiatives within our strategic plan. While non-performing loans increased to $5.9 million at December 31, 2007 from $4.8 million at September 30, 2007, they are only 0.22% of gross loans, as we continue to follow our strict underwriting standards. The Bank does not originate, or hold in portfolio, sub-prime mortgages.
"The Federal Open Market Committee ("FOMC") began lowering the overnight interest rate in the third quarter of 2007, and had lowered this rate 100 basis points to 4.25% at December 31, 2007. The positively-sloped interest rate curve that returned in the second quarter of this year steepened in the third and fourth quarters as short-term rates declined more than long-term rates declined. We are just now beginning to see the benefit of these interest rate reductions as our interest-bearing liabilities are now repricing downwards.
"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 December 31, 2007
For the three months ended December 31, 2007, net interest income was $18.2 million, an increase of $1.3 million, or 7.8%, from $16.9 million for the three months ended December 31, 2006. An increase in the average balance of interest-earning assets of $532.3 million, to $3,151.5 million, was partially offset by a decrease in the net interest spread of 22 basis points to 2.11% for the quarter ended December 31, 2007 from 2.33% for the comparable period in 2006. The yield on interest-earning assets increased six basis points to 6.65% for the three months ended December 31, 2007 from 6.59% in the three months ended December 31, 2006. However, this was more than offset by an increase in the cost of funds of 28 basis points to 4.54% for the three months ended December 31, 2007 from 4.26% for the comparable prior year period. The net interest margin decreased 27 basis points to 2.31% for the three months ended December 31, 2007 from 2.58% for the three months ended December 31, 2006. Excluding prepayment penalty income, the net interest margin would have been 2.21% and 2.46% for the three month periods ended December 31, 2007 and 2006, respectively.
The increase in the yield of interest-earning assets is primarily due to an increase of $403.1 million in the average balance of the higher-yielding loan portfolio to $2,676.7 million. The yield on the mortgage loan portfolio was 6.85% for the three months ended December 31, 2007, the same as that for the three months ended December 31, 2006. The average balance of the lower-yielding securities portfolios increased $101.6 million, with the yield increasing 60 basis points to 5.35% in the three months ended December 31, 2007 from 4.75% in the three months ended December 31, 2006. The increase in the average balance of the securities portfolios is the result of several leverage transactions during the second half of 2007 that were completed to increase net interest income.
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 had reduced the overnight rate by 100 basis points between September and December 2007, the prior increases resulted in an increase in our cost of funds as new deposits were obtained at average rates higher than the average rate on existing deposits. Certificates of deposit, savings accounts and money market accounts increased 21 basis points, 122 basis points and 23 basis points, respectively, for the three months ended December 31, 2007 compared to the three months ended December 31, 2006, resulting in an increase in the cost of deposits of 34 basis points to 4.38% for the three months ended December 31, 2007 compared to the three months ended December 31, 2006. The cost of borrowed funds also increased nine basis points to 4.98% for the three months ended December 31, 2007 compared to the three months ended December 31, 2006. This was combined with increases in the average balance of certificates of deposit of $87.0 million and borrowed funds of $281.1 million. In addition, the combined average balances of lower-costing savings, money market and NOW accounts increased a total of $173.0 million.
Net interest income for the fourth quarter of 2007 increased $0.9 million from that reported for the third quarter of 2007, primarily due to a $221.7 million increase in the average balance of interest-earning assets. The net interest margin for the three months ended December 31, 2007 decreased six basis points to 2.31% from 2.37% for the quarter ended September 30, 2007. While the yield on interest-earning assets decreased four basis points during the quarter to 6.65%, the cost of interest-bearing liabilities was unchanged at 4.54%. Excluding prepayment penalty income, the net interest margin would have declined four basis points in the three months ended December 31, 2007 to 2.21% from 2.25% for the three months ended September 30, 2007, and the yield on interest-earning assets would have decreased two basis points.
Non-interest income decreased $2.5 million, or 97.3%, for the three months ended December 31, 2007 to $0.1 million, as compared to $2.6 million for the quarter ended December 31, 2006. Increases of $0.2 million in dividends received on Federal Home Loan Bank of New York ("FHLB-NY") stock, $0.2 million in Other Income, and $1.7 million attributed to changes in fair value of financial assets and financial liabilities carried at fair value under SFAS No. 159 were more than offset by the other-than-temporary impairment charge of $4.7 million.
Non-interest expense was $12.2 million for the three months ended December 31, 2007, an increase of $0.4 million, or 3.6%, from $11.7 million for the three months ended December 31, 2006. The increase from the comparable prior year period is primarily attributed to increases of: $0.1 million in depreciation primarily due to two additional branch locations, the business banking initiative and the internet banking division, $0.4 million in data processing expense, and $0.4 million in professional services, partially offset by a decrease of $0.6 million in other operating expense. The efficiency ratio was 57.2% and 60.2% for the three month periods ended December 31, 2007 and 2006, respectively.
Net income for the three months ended December 31, 2007 was $4.3 million, a decrease of $0.7 million or 14.4%, as compared to $5.0 million for the three months ended December 31, 2006. Diluted earnings per share was $0.22 for the three months ended December 31, 2007, a decrease of $0.03, or 12.0%, from $0.25 in the three months ended December 31, 2006.
Return on average equity was 7.56% for the three months ended December 31, 2007 compared to 9.36% for the three months ended December 31, 2006. Return on average assets was 0.52% for the three months ended December 31, 2007 compared to 0.72% for the three months ended December 31, 2006.
Earnings Summary -- Year Ended December 31, 2007
For the year ended December 31, 2007, net interest income was $70.9 million, an increase of $3.2 million, or 4.8%, from $67.7 million for the year ended December 31, 2006. An increase in the average balance of interest-earning assets of $463.6 million, to $2,901.4 million, was partially offset by a decrease in the net interest spread of 31 basis points to 2.23% for the year ended December 31, 2007 from 2.54% for the year ended December 31, 2006. The yield on interest-earning assets increased 17 basis points to 6.67% for the year ended December 31, 2007 from 6.50% for the year ended December 31, 2006. However, this was more than offset by an increase in the cost of funds of 48 basis points to 4.44% for the year ended December 31, 2007 from 3.96% for the year ended December 31, 2006. The net interest margin decreased 34 basis points to 2.44% for the year ended December 31, 2007 from 2.78% for the year ended December 31, 2006. Excluding prepayment penalty income, the net interest margin would have been 2.32% and 2.63% for the years ended December 31, 2007 and 2006, respectively.
The increase in the yield of interest-earning assets is primarily due to an increase of $451.6 million in the average balance of the higher-yielding loan portfolio to $2,534.3 million. The yield on the mortgage loan portfolio increased six basis points to 6.87% for the year ended December 31, 2007 from 6.81% for the year ended December 31, 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. The average balance of the lower-yielding securities portfolios increased $11.3 million, with the yield increasing 49 basis points to 5.08% for the year ended December 31, 2007 from 4.59% for the year ended December 31, 2006. The increase in the average balance of the securities portfolios is the result of several leverage transactions during the second half of 2007 that were completed to increase net interest income.
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 had reduced the overnight rate by 100 basis points between September and December 2007, the prior increases resulted in an increase in our cost of funds as new deposits were obtained at average rates higher than the average rate on existing deposits. Certificates of deposit, savings accounts and money market accounts increased 51 basis points, 92 basis points and 48 basis points, respectively, for the year ended December 31, 2007 compared to the year ended December 31, 2006, resulting in an increase in the cost of deposits of 59 basis points to 4.26% for the year ended December 31, 2007 compared to the year ended December 31, 2006. The cost of borrowed funds also increased 24 basis points to 4.97% for the year ended December 31, 2007 compared to the year ended December 31, 2006. This was combined with increases in the average balance of certificates of deposit of $167.2 million and borrowed funds of $182.5 million. In addition, the combined average balances of lower-costing savings, money market and NOW accounts increased a total of $118.7 million.
Non-interest income increased $0.5 million, or 4.7%, for the year ended December 31, 2007 to $10.3 million, as compared to $9.8 million for the year ended December 31, 2006. This was primarily attributed to increases of $0.2 million on BOLI due to the purchase of additional BOLI, $1.0 million in dividends received on FHLB-NY stock, $1.1 million in Other Income, and $2.7 million attributed to changes in fair value of financial assets and financial liabilities carried at fair value under SFAS No. 159, which were partially offset by the other-than-temporary impairment charge of $4.7 million.
Non-interest expense was $50.1 million for the year ended December 31, 2007, an increase of $7.3 million, or 17.2%, from $42.7 million for the year ended December 31, 2006. The increase from the comparable prior year period is primarily attributed to increases of: $3.2 million in employee salary and benefit expenses related to additional employees for the additional branches, business banking initiative and the internet banking division, $1.0 million in occupancy and equipment costs primarily related to increased rental expense, $0.8 million in depreciation primarily due to additional locations, $1.1 million in professional services, $1.0 million in data processing expense, and $0.3 million in other operating expenses primarily related to the additional branches and employees. The efficiency ratio was 60.2% and 55.2% for the years ended December 31, 2007 and 2006, respectively.
Net income for the year ended December 31, 2007 was $20.2 million, a decrease of $1.5 million or 6.7%, as compared to $21.6 million for the year ended December 31, 2006. Diluted earnings per share was $1.02 for the year ended December 31, 2007, a decrease of $0.12, or 10.5%, from $1.14 in the year ended December 31, 2006.
Return on average equity was 9.15% for the year ended December 31, 2007 compared to 11.14% for the year ended December 31, 2006. Return on average assets was 0.66% for the year ended December 31, 2007 compared to 0.84% for the year ended December 31, 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 year ended December 31, 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. The Company also elected to measure at fair value securities that were purchased during the year ended December 31, 2007 at a cost of $21.4 million.
At December 31, 2007, total assets were $3,354.5 million, an increase of $518.0 million, or 18.3%, from $2,836.5 million at December 31, 2006. Total loans, net increased $377.4 million, or 16.2%, during the year ended December 31, 2007 to $2,702.1 million from $2,324.7 million at December 31, 2006. At December 31, 2007, loans in process totaled $201.0 million, compared to $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 year
ended December 31, ended December 31,
-------------------- --------------------
(In thousands) 2007 2006 2007 2006
---------------------------------------------------------------------
Multi-family residential $ 64,111 $ 63,925 $ 231,342 $ 166,744
Commercial real estate 31,029 40,522 168,342 153,891
One-to-four family -
mixed-use property 30,176 39,845 159,331 154,456
One-to-four family -
residential 10,117 5,045 37,225 13,911
Construction 18,853 15,386 56,626 75,087
Commercial business and
other loans 26,336 15,973 107,033 71,494
--------- --------- --------- ---------
Total $ 180,622 $ 180,696 $ 759,899 $ 635,583
========= ========= ========= =========
Loan purchases included in the table above totaled $2.5 million for the three months ended December 31, 2007. There were no loan purchases for the three months ended December 31, 2006. There were $11.6 million and $5.1 million in loan purchases for the years ended December 31, 2007 and 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 $5.9 million at December 31, 2007 compared to $3.1 million at December 31, 2006. Total non-performing assets as a percentage of total assets was 0.18% at December 31, 2007 compared to 0.11% at December 31, 2006. The ratio of allowance for loan losses to total non-performing loans was 112.6% at December 31, 2007, compared to 225.7% at December 31, 2006.
During the year ended December 31, 2007, mortgage-backed securities increased $73.9 million to $362.7 million, while other securities increased $35.6 million to $77.4 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. During the fourth quarter of 2007, the Bank purchased $34.1 million of mortgage-backed securities and $22.2 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 year ended December 31, 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 $3,120.9 million at December 31, 2007, an increase of $502.8 million, or 19.2%, from December 31, 2006. During the year ended December 31, 2007, due to depositors increased $258.6 million to $2,003.0 million, primarily as a result of an increase of $64.4 million in certificates of deposit, of which $55.9 million were new brokered deposits, while core deposits increased $194.1 million. Borrowed funds increased $240.1 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 $2.7 million during the year ended December 31, 2007.
Total stockholders' equity increased $15.2 million, or 7.0%, to $233.7 million at December 31, 2007 from $218.4 million at December 31, 2006. Net income of $20.2 million for the year ended December 31, 2007 was partially offset by $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 $9.4 million of cash dividends declared and paid during the year ended December 31, 2007. The exercise of stock options increased stockholders' equity by $1.8 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 $10.96 at December 31, 2007 compared to $10.34 per share at December 31, 2006.
Under its current stock repurchase program, the Company repurchased 38,000 shares during the year ended December 31, 2007, at a total cost of $0.6 million, or an average of $16.52 per share. At December 31, 2007, 362,050 shares remain to be repurchased under the current stock repurchase program. Through December 31, 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. The Company calculated core earnings by subtracting the other-than-temporary impairment charge and the fair value gain recorded under SFAS No. 159. The Company adopted SFAS No. 159 effective January 1, 2007.
Three Months Ended Year Ended
-------------------------------------- ----------
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2007 2007 2007 2007 2007
-------- -------- -------- -------- --------
(In thousands, except per share data)
GAAP net income $ 5,386 $ 4,781 $ 5,727 $ 4,291 $ 20,185
Net (gain) loss
under SFAS No. 159,
net of tax (449) 354 (441) (964) (1,500)
Other-than-temporary
impairment charge,
net of tax -- -- -- 2,632 2,632
-------- -------- -------- -------- --------
Core net income $ 4,937 $ 5,135 $ 5,286 $ 5,959 $ 21,317
======== ======== ======== ======== ========
GAAP net income $ 0.27 $ 0.24 $ 0.29 $ 0.22 $ 1.02
Net (gain) loss
under SFAS No. 159,
charge, net of tax (0.02) 0.02 (0.02) (0.05) (0.08)
Other-than-temporary
impairment charge,
net of tax -- -- -- 0.13 0.13
-------- -------- -------- -------- --------
Core net income $ 0.25 $ 0.26 $ 0.27 $ 0.30 $ 1.07
======== ======== ======== ======== ========
"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, except per share December 31, December 31,
data) 2007 2006
---------------------------------------------------------------------
ASSETS (Unaudited)
------
Cash and due from banks $ 36,148 $ 29,251
Securities available for sale:
Mortgage-backed securities 362,729 288,851
Other securities 77,371 41,736
Loans:
Multi-family residential 964,455 870,912
Commercial real estate 623,368 519,552
One-to-four family -- mixed-use property 686,921 588,092
One-to-four family -- residential 161,666 161,889
Co-operative apartments 7,070 8,059
Construction 122,220 104,488
Small Business Administration 18,922 17,521
Commercial business and other 110,046 50,899
Net unamortized premiums and unearned
loan fees 14,083 10,393
Allowance for loan losses (6,633) (7,057)
----------- -----------
Net loans 2,702,118 2,324,748
Interest and dividends receivable 15,768 13,332
Bank premises and equipment, net 23,936 23,042
Federal Home Loan Bank of New York stock 42,669 36,160
Bank owned life insurance 52,260 40,516
Goodwill 16,127 14,818
Core deposit intangible 2,810 3,279
Other assets 22,583 20,788
----------- -----------
Total assets $ 3,354,519 $ 2,836,521
=========== ===========
LIABILITIES
-----------
Due to depositors:
Non-interest bearing $ 69,299 $ 80,061
Interest-bearing:
Certificate of deposit accounts 1,167,399 1,102,976
Savings accounts 354,746 262,980
Money market accounts 340,694 251,197
NOW accounts 70,817 47,181
----------- -----------
Total interest-bearing deposits 1,933,656 1,664,334
Mortgagors' escrow deposits 22,492 19,755
Borrowed funds 1,072,551 832,413
Other liabilities 22,867 21,543
----------- -----------
Total liabilities 3,120,865 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; 21,321,564 shares
issued and outstanding at December 31,
2007; 21,165,052 shares issued, and
21,131,274 shares outstanding, at
December 31, 2006) 213 212
Additional paid-in capital 74,861 71,079
Treasury stock (none and 33,778 shares
at December 31, 2007 and 2006,
respectively) -- (592)
Unearned compensation (2,110) (2,897)
Retained earnings 161,598 156,879
Accumulated other comprehensive loss, net
of taxes (908) (6,266)
----------- -----------
Total stockholders' equity 233,654 218,415
----------- -----------
Total liabilities and stockholders'
equity $ 3,354,519 $ 2,836,521
=========== ===========
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months For the year
ended December 31, ended December 31,
(Dollars in thousands, except ------------------- -----------------
per share data) 2007 2006 2007 2006
---------------------------------------------------------------------
Interest and dividend income
----------------------------
Interest and fees on loans $ 46,117 $ 39,053 $174,987 $142,090
Interest and dividends on
securities:
Interest 5,107 3,961 16,687 15,302
Dividends 810 83 1,181 320
Other interest income 370 56 707 672
-------- -------- -------- --------
Total interest and dividend
income 52,404 43,153 193,562 158,384
-------- -------- -------- --------
Interest expense
----------------
Deposits 21,166 16,898 78,017 56,857
Other interest expense 13,011 9,351 44,607 33,823
-------- -------- -------- --------
Total interest expense 34,177 26,249 122,624 90,680
-------- -------- -------- --------
Net interest income 18,227 16,904 70,938 67,704
Provision for loan losses -- -- -- --
-------- -------- -------- --------
Net interest income after
provision for loan losses 18,227 16,904 70,938 67,704
-------- -------- -------- --------
Non-interest income
-------------------
Loan fee income 677 793 3,171 2,938
Banking services fee income 429 366 1,566 1,462
Net gain on sale of loans
held for sale 20 32 270 550
Net gain on sale of loans 187 82 430 182
Other-than-temporary impairment
charge on securities (4,710) -- (4,710) --
Net gain on sale of securities -- -- -- 81
Net gain from fair value
adjustments 1,725 -- 2,685 --
Federal Home Loan Bank of
New York stock dividends 735 501 2,654 1,695
Bank owned life insurance 448 441 1,743 1,553
Other income 558 402 2,444 1,334
-------- -------- -------- --------
Total non-interest income 69 2,617 10,253 9,795
-------- -------- -------- --------
Non-interest expense
--------------------
Salaries and employee benefits 5,418 5,471 23,564 20,356
Occupancy and equipment 1,659 1,592 6,527 5,542
Professional services 1,698 1,271 5,220 4,170
Data processing 1,033 616 3,605 2,591
Depreciation and amortization 623 485 2,417 1,655
Other operating expenses 1,737 2,312 8,743 8,428
-------- -------- -------- --------
Total non-interest expense 12,168 11,747 50,076 42,742
-------- -------- -------- --------
Income before income taxes 6,128 7,774 31,115 34,757
-------- -------- -------- --------
Provision for income taxes
--------------------------
Federal 1,652 2,351 9,272 10,729
State and local 185 413 1,658 2,389
-------- -------- -------- --------
Total taxes 1,837 2,764 10,930 13,118
-------- -------- -------- --------
Net income $ 4,291 $ 5,010 $ 20,185 $ 21,639
======== ======== ======== ========
Basic earnings per share $ 0.22 $ 0.26 $ 1.03 $ 1.16
Diluted earnings per share $ 0.22 $ 0.25 $ 1.02 $ 1.14
Dividends per share $ 0.12 $ 0.11 $ 0.48 $ 0.44
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
At or for the three months At or for the year
ended December 31, ended December 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Per Share Data
--------------
Basic earnings per
share $0.22 $0.26 $1.03 $1.16
Diluted earnings
per share $0.22 $0.25 $1.02 $1.14
Average number of
shares outstanding
for:
Basic earnings
per share
computation 19,721,998 19,499,896 19,624,965 18,639,265
Diluted earnings
per share
computation 19,930,865 19,783,485 19,861,491 18,932,242
Book value per
share (based on
21,321,564 and
21,131,274 shares
outstanding at
December 31, 2007
and 2006,
respectively) $10.96 $10.34 $10.96 $10.34
Average Balances
----------------
Total loans, net $ 2,676,660 $ 2,273,606 $ 2,534,250 $ 2,082,645
Total interest-
earning assets 3,151,483 2,619,214 2,901,435 2,437,818
Total assets 3,323,689 2,767,937 3,066,401 2,563,724
Total due to
depositors 1,931,553 1,671,469 1,831,394 1,545,553
Total interest-
bearing
liabilities 3,011,371 2,466,880 2,761,618 2,290,152
Stockholders'
equity 227,078 214,175 220,607 194,236
Performance
Ratios(1)
------------
Return on average
assets 0.52% 0.72% 0.66% 0.84%
Return on average
equity 7.56 9.36 9.15 11.14
Yield on average
interest-earning
assets 6.65 6.59 6.67 6.50
Cost of average
interest-bearing
liabilities 4.54 4.26 4.44 3.96
Interest rate
spread during
period 2.11 2.33 2.23 2.54
Net interest margin 2.31 2.58 2.44 2.78
Non-interest
expense to average
assets 1.46 1.70 1.63 1.67
Efficiency ratio 57.18 60.18 60.20 55.21
Average interest-
earning assets
to average
interest-bearing
liabilities 1.05X 1.06X 1.05X 1.06X
(1) Ratios for the quarters ended December 31, 2007 and 2006 are
presented on an annualized basis.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
At or for the At or for the
year ended year ended
December 31, December 31,
2007 2006
------------- -------------
Selected Financial Ratios and Other Data
----------------------------------------
Regulatory capital ratios (for Flushing
Savings Bank only):
Tangible capital (minimum
requirement = 1.5%) 7.28% 6.91%
Leverage and core capital (minimum
requirement = 3%) 7.28 6.91
Total risk-based capital (minimum
requirement = 8%) 11.06 10.99
Capital ratios:
Average equity to average assets 7.19% 7.58%
Equity to total assets 6.97 7.70
Asset quality:
Non-performing loans $5,893 $3,126
Non-performing assets 5,893 3,126
Net charge-offs 424 81
Asset quality ratios:
Non-performing loans to gross loans 0.22% 0.13%
Non-performing assets to total assets 0.18 0.11
Allowance for loan losses to gross loans 0.25 0.30
Allowance for loan losses to
non-performing assets 112.57 225.72
Allowance for loan losses to
non-performing loans 112.57 225.72
Full-service customer facilities 14 12
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in Thousands)
(Unaudited)
For the three months ended December 31,
-----------------------------------------------------
2007 2006
-----------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
-------------------------- --------------------------
Assets
Interest-earning
assets:
Mortgage loans,
net(1) $2,556,546 $43,811 6.85% $2,210,587 $37,847 6.85%
Other loans,
net(1) 120,114 2,306 7.68 63,019 1,206 7.65
-------------------------- --------------------------
Total loans,
net 2,676,660 46,117 6.89 2,273,606 39,053 6.87
-------------------------- --------------------------
Mortgage-backed
securities 363,215 4,697 5.17 302,956 3,577 4.72
Other
securities 79,156 1,220 6.17 37,786 467 4.94
-------------------------- --------------------------
Total
securities 442,371 5,917 5.35 340,742 4,044 4.75
-------------------------- --------------------------
Interest-
earning
deposits and
federal funds
sold 32,452 370 4.56 4,866 56 4.60
-------------------------- --------------------------
Total interest-
earning assets 3,151,483 52,404 6.65 2,619,214 43,153 6.59
-------------- --------------
Other assets 172,206 148,723
---------- ----------
Total assets $3,323,689 $2,767,937
========== ==========
Liabilities and
Equity
Interest-bearing
liabilities:
Deposits:
Savings
accounts $ 349,158 2,482 2.84 $ 263,997 1,067 1.62
NOW accounts 65,666 350 2.13 45,550 51 0.45
Money market
accounts 334,946 3,654 4.36 267,179 2,756 4.13
Certificate
of deposit
accounts 1,181,783 14,664 4.96 1,094,743 13,006 4.75
-------------------------- --------------------------
Total due to
depositors 1,931,553 21,150 4.38 1,671,469 16,880 4.04
Mortgagors'
escrow
accounts 33,976 16 0.19 30,646 18 0.23
-------------------------- --------------------------
Total
deposits 1,965,529 21,166 4.31 1,702,115 16,898 3.97
Borrowed funds 1,045,842 13,011 4.98 764,765 9,351 4.89
-------------------------- --------------------------
Total
interest-
bearing
liabilities 3,011,371 34,177 4.54 2,466,880 26,249 4.26
-------------- --------------
Non interest-
bearing
deposits 65,757 65,514
Other
liabilities 19,483 21,368
---------- ----------
Total
liabilities 3,096,611 2,553,762
Equity 227,078 214,175
---------- ----------
Total
liabilities
and equity $3,323,689 $2,767,937
========== ==========
Net interest
income / net
interest rate
spread $18,227 2.11% $16,904 2.33%
============== ==============
Net interest-
earning assets
/ net interest
margin $ 140,112 2.31% $ 152,334 2.58%
========== ===== ========== =====
Ratio of
interest-
earning assets
to interest-
bearing
liabilities 1.05X 1.06X
===== =====
(1) Loan interest income includes loan fee income (which includes net
amortization of deferred fees and costs, late charges, and
prepayment penalties) of approximately $0.9 million and $0.9
million for the three-month periods ended December 31, 2007 and
2006, respectively.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in Thousands)
(Unaudited)
For the year ended December 31,
--------------------------------------------------------
2007 2006
--------------------------- ---------------------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
--------------------------- ---------------------------
Assets
Interest-
earning
assets:
Mortgage
loans,
net(1) $2,438,479 $167,537 6.87% $2,035,145 $138,524 6.81%
Other loans,
net(1) 95,771 7,450 7.78 47,500 3,566 7.51
--------------------------- ---------------------------
Total loans,
net 2,534,250 174,987 6.90 2,082,645 142,090 6.82
--------------------------- ---------------------------
Mortgage-
backed
securities 300,196 14,945 4.98 302,527 13,865 4.58
Other
securities 51,767 2,923 5.65 38,113 1,757 4.61
--------------------------- ---------------------------
Total
securities 351,963 17,868 5.08 340,640 15,622 4.59
--------------------------- ---------------------------
Interest-
earning
deposits and
federal
funds sold 15,222 707 4.64 14,533 672 4.62
--------------------------- ---------------------------
Total
interest-
earning
assets 2,901,435 193,562 6.67 2,437,818 158,384 6.50
--------------- ---------------
Other assets 164,966 125,906
---------- ----------
Total
assets $3,066,401 $2,563,724
========== ==========
Liabilities
and Equity
Interest-
bearing
liabilities:
Deposits:
Savings
accounts $ 310,457 7,574 2.44 $ 265,421 4,031 1.52
NOW
accounts 57,915 913 1.58 43,052 202 0.47
Money market
accounts 294,402 12,425 4.22 235,642 8,804 3.74
Certificate
of deposit
accounts 1,168,620 57,029 4.88 1,001,438 43,757 4.37
--------------------------- ---------------------------
Total due
to
depositors 1,831,394 77,941 4.26 1,545,553 56,794 3.67
Mortgagors'
escrow
accounts 32,403 76 0.23 29,275 63 0.22
--------------------------- ---------------------------
Total
deposits 1,863,797 78,017 4.19 1,574,828 56,857 3.61
Borrowed
funds 897,821 44,607 4.97 715,324 33,823 4.73
--------------------------- ---------------------------
Total
interest-
bearing
liabilities
2,761,618 122,624 4.44 2,290,152 90,680 3.96
--------------- ---------------
Non interest-
bearing
deposits 65,508 60,991
Other
liabilities 18,668 18,345
---------- ----------
Total
liabilities
2,845,794 2,369,488
Equity 220,607 194,236
---------- ----------
Total
liabilities
and
equity $3,066,401 $2,563,724
========== ==========
Net interest
income / net
interest rate
spread $70,938 2.23% $ 67,704 2.54%
=============== ===============
Net interest-
earning
assets / net
interest
margin $ 139,817 2.44% $147,666 2.78%
========== ===== ======== =====
Ratio of
interest-
earning
assets to
interest-
bearing
liabilities 1.05X 1.06X
===== =====
(1) Loan interest income includes loan fee income (which includes net
amortization of deferred fees and costs, late charges, and
prepayment penalties) of approximately $3.7 million and $3.8
million for the years ended December 31, 2007 and 2006,
respectively.