Flushing Financial Corporation Reports Third Quarter GAAP Diluted EPS of $0.37 and Core Diluted EPS of $0.39

Reports 3.9% Annualized Loan Growth While Credit Quality Remains Strong

| Source: Flushing Financial Corporation Flushing Financial Corporation

THIRD QUARTER 2016

  • GAAP diluted EPS was $0.37, down 64.8% QoQ
  • Core diluted EPS was $0.39, flat QoQ
  • Net interest income was $41.7 million, up 6.1% YoY
  • Net interest margin was 2.94%, compared to 2.99% for the second quarter of 2016
  • Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, the net interest margin was 2.81%, a decrease of six basis points QoQ
  • GAAP ROAE was 8.4%, compared with 9.5% for the third quarter of 2015
  • Core ROAE was 8.9%, compared with 10.0% for the third quarter of 2015
  • GAAP ROAA was 0.7%, compared with 0.8% for the third quarter of 2015
  • Core ROAA was 0.8%, compared with 0.9% for the third quarter of 2015

UNIONDALE, N.Y., Oct. 25, 2016 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq:FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the three and nine months ended September 30, 2016.

John R. Buran, President and Chief Executive Officer, stated: “We are pleased to report core earnings per diluted common share of $0.39 for the third quarter of 2016.

“Our main focus continues to be growing multi-family, commercial real estate, and commercial business loans while maintaining our conservative underwriting standards. During the quarter ended September 30, 2016, loan originations for multi-family, commercial real estate and commercial business loans totaled 26%, 30% and 36%, respectively, of total loan production. We produced solid earnings this quarter through continued strong credit quality, a small uptick in the coupon rates on loan originations, and by reducing our expenses. We have begun to successfully execute on the strategy change to increase net interest income through increasing rates as opposed to increasing volume. The interest rates on our mortgage loan pipeline increased 11 basis points to 4.05% from 3.94% at June 30, 2016. This strategy shift positions the Company to reap the benefits of an increase in rates. Conversely, the cost of funds increased four basis points to 1.03% on a linked quarter basis, as rates on certain government deposits were raised.”

Core earnings, a non-GAAP measure, exclude the effects of net gains/losses from the sale of buildings and securities, net gains/losses from fair value adjustments, prepayment penalties from the extinguishment of debt, and the gain from life insurance proceeds.

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

Earnings Summary:

Quarter ended September 30, 2016 (3Q16) compared to the quarters ended September 30, 2015 (3Q15) and June 30, 2016 (2Q16).

Net Interest Income

Net interest income for 3Q16 was $41.7 million, an increase of 6.1% YoY but a decrease of 0.4% QoQ.

  • Average balance of total interest-earning assets of $5,684.4 million, increased $533.4 million, or 10.4% YoY and $71.5 million, or 1.3% QoQ
  • Yield on interest-earning assets of 3.91% decreased 12 basis points YoY and 2 basis points QoQ
  • Cost of interest-bearing liabilities of 1.09% remained unchanged YoY but increased 4 basis points QoQ
  • Net interest spread and net interest margin of 2.82% and 2.94%, respectively, decreased 12 basis points and 11 basis points, respectively YoY and decreased 6 basis points and 5 basis points, respectively QoQ
  • Includes prepayment penalty income from loans and securities of $1.5 million, compared with $2.2 million in 3Q15 and $1.4 million in 2Q16, and recovered interest from nonaccrual loans of $0.3 million, compared with $0.4 million in 3Q15 and $0.2 million in 2Q16
  • Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, the yield on interest-earning assets, would be 3.78%, compared with 3.83% in 3Q15 and 3.81% in 2Q16, and the net interest margin would be 2.81%, compared with 2.85% in 3Q15 and 2.87% in 2Q16
  • Cost of total deposits of 0.92% increased 4 basis points YoY and 8 basis points QoQ
  • Cost of borrowed funds of 1.58% decreased 16 basis points YoY and 12 basis points QoQ, primarily due to an increase in the average balance of lower-costing short-term borrowings

The following table shows the basis points increase (decrease) in the cost of interest-bearing liabilities: 

 Change in the Cost of Interest-Bearing Liabilities (bps)
  3Q16 vs.
  2Q163Q15
 Savings   1    2 
 NOW    8    10 
 Money market    10    23 
 Certificate of deposit   1    (6)
 Borrowings   (12)   (16)
 Total interest-bearing liabilities   4    - 
        

Non-interest Income

Non-interest income (excluding: net gains on sale of buildings and securities) for 3Q16 was $1.9 million, an increase of $0.3 million YoY and QoQ.

  • Increase in fair value adjustments of $0.3 million compared to 3Q15 and 2Q16

Non-interest Expense

Non-interest expense for 3Q16 was $26.3 million, an increase of $2.6 million, or 10.8% YoY but a decrease of $2.2 million, or 7.7% QoQ.

  • 2Q16 includes a non-recurring penalty of $2.1 million on the prepayment of $38.0 million in repurchase agreements
  • Salaries and benefits increased YoY by $2.1 million primarily due to annual salary increases and additions in staffing and increased $0.8 million QoQ due to increased staffing and stock-based compensation costs as a result of the recent increase in the Company’s stock price
  • 3Q16 and 2Q16 both include a write-down of $0.8 million on one OREO property
  • Non-interest expense (excluding: salaries and benefits expense, prepayment penalty on borrowings and net gain/losses on sale of OREO) totaled $10.7 million, a decrease of $0.4 million, or 3.7% YoY and $0.8 million, or 7.1% QoQ
  • The efficiency ratio increased to 57.4% in 3Q16 from 56.2% in 3Q15 and 57.1% in 2Q16

Provision for Income Taxes

The provision for income taxes for 3Q16 was $6.7 million, essentially unchanged YoY but was a decrease of $14.1 million QoQ.

  • Income before income taxes decreased by $33.9 million QoQ, primarily due to the net gain from the Building Sale, which also reduced impact of preferential tax items in 2Q16
  • Effective tax rates of 38.5% in 3Q16, 40.5% in 2Q16 and 37.7% in 3Q15.

Loans:

  • Net loans were $4,719.5 million reflecting an increase of 1.0% QoQ (not annualized) and 8.1% 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 $777.5 million year-to-date, or 91.4% of loan production during the period
  • Total loan originations and purchases were $850.3 million year-to-date, an increase of $12.5 million YoY
  • Loan purchases, which are underwritten to the same standards as organic originations, were $138.0 million year-to-date, a decrease of $78.3 million YoY
  • Loan pipeline totaled $289.3 million at September 30, 2016 compared with $330.5 million at December 31, 2015
  • Multi-family (excluding underlying co-operative mortgages), commercial real estate and one-to-four family mixed-use property mortgage loans originated during the quarter had an average loan-to-value ratio of 41.9% and an average debt coverage ratio of 204%

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

  For the three months ended  
  September 30, June 30, September 30,  
Loan type  2016   2016   2015   
Mortgage loans  3.52%  3.53%  3.58%  
Non-mortgage loans  4.12%  4.29%  3.43%  
Total loans  3.74%  3.71%  3.56%  
         

Credit Quality:

  • Non-performing loans totaled $23.5 million, a decrease of $2.5 million, or 9.7%, from $26.1 million at December 31, 2015
  • Classified assets totaled $48.7 million, an increase of $4.8 million, or 10.9%, from $43.9 million at December 31, 2015, primarily due to an increase in substandard taxi medallion loans
  • Loans classified as troubled debt restructured totaled $8.2 million, a decrease of $1.3 million, or 13.7%, from $9.5 million at December 31, 2015
  • Strong underwriting standards coupled with our practice of obtaining updated appraisals and recording charge-offs, when necessary, has resulted in a 40.3% average loan-to-value for non-performing loans collateralized by real estate
  • Year-to-date, no provision for loan losses was recorded compared with a benefit of $1.6 million recorded in the comparable prior year period
  • 3Q16 included a charge-off of $0.4 million on one SBA loan
  • Net recoveries totaled $0.3 million year-to-date, amid continued improvement in credit conditions
  • We anticipate continued low loss content in the loan portfolio

Capital Management:

  • The Bank and Company are subject to the same regulatory capital requirements and at September 30, 2016, both were well-capitalized under all regulatory requirements
  • Year-to-date, stockholders’ equity increased $39.6 million, or 8.4% to $512.6 million due to net income of $50.6 million and an improvement in other comprehensive income of $5.8 million, mainly due to an increase in the fair value of the securities portfolio
  • Increases noted above were partially offset by the declaration and payment of dividends on the Company’s common stock of $0.51 per common share totaling $14.8 million and the purchase of 378,695 treasury shares, at an average price of $19.78 per share, for a total cost of $7.5 million
  • As of September 30, 2016, 520,905 shares may still be repurchased under the currently authorized stock repurchase program, which has no expiration or maximum dollar amount
  • Book value per common share was $17.90 at September 30, 2016, compared with $16.41 at December 31, 2015
  • Tangible book value per common share, a non-GAAP measure, was $17.35, compared with $15.86 at December 31, 2015

About Flushing Financial Corporation

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

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

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

- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
   For the three months ended For the nine months ended
   September 30, June 30, September 30, September 30,
    2016   2016   2015   2016   2015 
          
Interest and Dividend Income          
Interest and fees on loans $  49,181  $  48,413  $  45,243  $  145,152  $  132,861 
Interest and dividends on securities:          
  Interest    6,173     6,510     6,508     19,275     18,366 
  Dividends    121     120     119     360     355 
Other interest income    49     48     43     191     96 
  Total interest and dividend income    55,524     55,091     51,913     164,978     151,678 
            
Interest Expense          
Deposits    8,520     8,097     7,701     24,590     22,596 
Other interest expense    5,291     5,105     4,902     15,653     14,078 
  Total interest expense    13,811     13,202     12,603     40,243     36,674 
            
Net Interest Income    41,713     41,889     39,310     124,735     115,004 
Benefit for loan losses    -      -      (370)  -     (1,620)
Net Interest Income After Benefit for Loan Losses    41,713     41,889     39,680     124,735     116,624 
            
Non-interest Income          
Banking services fee income    826     973     778     2,775     2,560 
Net gain on sale of securities  -     2,363     103     2,363     167 
Net gain on sale of loans     240     3     306     584     355 
Net gain on sale of buildings  -   33,814   -     33,814     6,537 
Net loss from fair value adjustments    (823)    (1,115)    (1,094)    (2,925)    (921)
Federal Home Loan Bank of New York stock dividends    665     582     480     1,870     1,455 
Gains from life insurance proceeds    47   -   -     458   - 
Bank owned life insurance    707     694     725     2,096     2,157 
Other income    191     403     399     1,075     1,264 
  Total non-interest income    1,853     37,717     1,697     42,110     13,574 
            
Non-interest Expense          
Salaries and employee benefits    14,795     13,968     12,648     45,024     40,471 
Occupancy and equipment    2,576     2,352     2,443     7,298     7,791 
Professional services    1,730     2,027     1,907     5,907     5,036 
FDIC deposit insurance    536     940     817     2,380     2,377 
Data processing    939     1,199     1,178     3,229     3,425 
Depreciation and amortization    1,169     1,062     993     3,263     2,528 
Other real estate owned/foreclosure expense    273     405     110     831     717 
Prepayment penalty on borrowings  -     2,082   -     2,082   - 
Other operating expenses    4,259     4,419     3,612     13,214     11,550 
  Total non-interest expense    26,277     28,454     23,708     83,228     73,895 
            
Income Before Income Taxes    17,289     51,152     17,669     83,617     56,303 
            
Provision for Income Taxes          
Federal    5,568     15,203     5,375     25,518     16,782 
State and local    1,087     5,514     1,286     7,469     4,946 
  Total taxes    6,655     20,717     6,661     32,987     21,728 
            
Net Income $  10,634  $  30,435  $  11,008  $  50,630  $  34,575 
            
            
Basic earnings per common share $  0.37  $  1.05  $  0.38  $  1.75  $  1.18 
Diluted earnings per common share $  0.37  $  1.05  $  0.38  $  1.75  $  1.18 
Dividends per common share $  0.17  $  0.17  $  0.16  $  0.51  $  0.48 
            

 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
 
    September 30, June 30, December 31,
     2016   2016   2015 
ASSETS      
Cash and due from banks$  47,880  $  50,165  $  42,363 
Securities held-to-maturity:     
 Other securities   33,274     28,410     6,180 
Securities available for sale:     
 Mortgage-backed securities   545,067     580,500     668,740 
 Other securities   365,812     368,611     324,657 
Loans:      
 Multi-family residential   2,171,289     2,159,138     2,055,228 
 Commercial real estate   1,195,266     1,146,400     1,001,236 
 One-to-four family ― mixed-use property   555,691     566,702     573,043 
 One-to-four family ― residential   183,993     190,251     187,838 
 Co-operative apartments   7,494     7,571     8,285 
 Construction   11,250     9,899     7,284 
 Small Business Administration   14,339     14,718     12,194 
 Taxi medallion   20,536     20,641     20,881 
 Commercial business and other   564,972     564,084     506,622 
 Net unamortized premiums and unearned loan fees   16,447     16,875     15,368 
 Allowance for loan losses   (21,795)    (22,198)    (21,535)
   Net loans   4,719,482     4,674,081     4,366,444 
Interest and dividends receivable   19,833     20,390     18,937 
Bank premises and equipment, net   26,000     24,470     25,622 
Federal Home Loan Bank of New York stock   65,185     67,195     56,066 
Bank owned life insurance   115,807     115,100     115,536 
Goodwill    16,127     16,127     16,127 
Other assets   44,788     41,678     63,962 
   Total assets$  5,999,255  $  5,986,727  $  5,704,634 
         
LIABILITIES     
Due to depositors:     
 Non-interest bearing$  320,060  $  317,112  $  269,469 
 Interest-bearing:     
  Certificate of deposit accounts   1,384,551     1,411,550     1,403,302 
  Savings accounts   258,058     260,528     261,748 
  Money market accounts   733,361     452,589     472,489 
  NOW accounts   1,296,475     1,453,540     1,448,695 
   Total interest-bearing deposits   3,672,445     3,578,207     3,586,234 
Mortgagors' escrow deposits   49,276     45,905     36,844 
Borrowed funds    1,360,515     1,444,751     1,271,676 
Other liabilities   84,338     91,869     67,344 
   Total liabilities   5,486,634     5,477,844     5,231,567 
         
STOCKHOLDERS' EQUITY     
Preferred stock (5,000,000 shares authorized; none issued)   -     -     - 
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares     
 issued at September 30, 2016, June 30, 2016 and December 31, 2015; 28,632,796     
 shares, 28,631,243 shares and 28,830,558 shares outstanding at September 30, 2016,     
 June 30, 2016 and December 31, 2015, respectively)   315     315     315 
Additional paid-in capital   213,488     212,613     210,652 
Treasury stock (2,897,799 shares, 2,899,352 shares and 2,700,037 shares at     
 September 30, 2016, June 30, 2016 and December 31, 2015, respectively)   (53,373)    (53,351)    (48,868)
Retained earnings   351,942     346,218     316,530 
Accumulated other comprehensive income (loss), net of taxes   249     3,088     (5,562)
   Total stockholders' equity   512,621     508,883     473,067 
         
   Total liabilities and stockholders' equity$  5,999,255  $  5,986,727  $  5,704,634 
         

 


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 nine months ended 
  September 30, June 30, September 30, September 30, 
   2016   2016   2015   2016   2015  
Per Share Data           
Basic earnings per share $  0.37  $  1.05  $  0.38  $  1.75  $  1.18  
Diluted earnings per share $  0.37  $  1.05  $  0.38  $  1.75  $  1.18  
Average number of shares outstanding for:           
  Basic earnings per common share computation    28,861,101     29,022,122     28,926,735     28,992,813     29,188,269  
  Diluted earnings per common share computation    28,874,979     29,034,454     28,946,496     29,006,423     29,209,369  
Shares outstanding    28,632,796     28,631,243     28,830,210     28,632,796     28,830,210  
Book value per common share (1) $  17.90  $  17.77  $  16.34  $  17.90  $  16.34  
Tangible book value per common share (2) $  17.35  $  17.22  $  15.80  $  17.35  $  15.80  
            
Stockholders' Equity           
Stockholders' equity    512,621     508,883     471,190     512,621     471,190  
Tangible stockholders' common equity    496,901     493,163     455,469     496,901     455,469  
            
Average Balances           
Total loans, net $  4,686,593  $  4,567,019  $  4,069,650  $  4,548,154  $  3,967,239  
Total interest-earning assets    5,684,413     5,612,935     5,151,015     5,596,342     5,016,512  
Total assets    5,976,725     5,897,858     5,427,619     5,883,453     5,291,093  
Total due to depositors    3,673,731     3,779,256     3,473,264     3,732,869     3,403,656  
Total interest-bearing liabilities    5,059,620     5,046,162     4,643,161     5,021,921     4,526,229  
Stockholders' equity    508,974     486,261     464,180     491,617     463,316  
            
Performance Ratios (3)           
Return on average assets    0.71 %   2.06 %   0.81 %   1.15 %   0.87 %
Return on average equity    8.36     25.04     9.49     13.73     9.95  
Yield on average interest-earning assets    3.91     3.93     4.03     3.93     4.03  
Cost of average interest-bearing liabilities    1.09     1.05     1.09     1.07     1.08  
Interest rate spread during period    2.82     2.88     2.94     2.86     2.95  
Net interest margin    2.94     2.99     3.05     2.97     3.06  
Non-interest expense to average assets    1.76     1.93     1.75     1.89     1.86  
Efficiency ratio (4)    57.37     57.09     56.18     59.64     59.46  
Average interest-earning assets to average           
  interest-bearing liabilities    1.12 X   1.11 X   1.11 X   1.11 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 “Reconciliation of GAAP Earnings and Core Earnings”.

(3)   Ratios are presented on an annualized basis.  

(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). See “Reconciliation of GAAP Earnings and Core Earnings”.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
 
  At or for the nine  At or for the year  At or for the nine 
  months ended  ended  months ended 
  September 30, 2016  December 31, 2015  September 30, 2015 
          
Selected Financial Ratios and Other Data         
          
Regulatory capital ratios (for Flushing Financial Corporation):         
  Tier 1 capital $  523,428   $  490,919   $  482,684  
  Common equity Tier 1 capital    496,605      462,883      455,153  
  Total risk-based capital    545,223      512,454      505,657  
          
  Tier 1 leverage capital (well capitalized = 5%)    8.80 %    8.84 %    8.93 %
  Common equity Tier 1 risk-based capital (well capitalized = 6.5%)    11.72      11.83      12.01  
  Tier 1 risk-based capital (well capitalized = 8.0%)    12.35      12.55      12.74  
  Total risk-based capital (well capitalized = 10.0%)    12.87      13.10      13.34  
          
Regulatory capital ratios (for Flushing Bank only):         
  Tier 1 capital $  528,168   $  494,690   $  488,327  
  Common equity Tier 1 capital    528,168      494,690      488,327  
  Total risk-based capital    549,963      516,226      511,300  
          
  Tier 1 leverage capital (well capitalized = 5%)    8.88 %    8.89 %    9.02 %
  Common equity Tier 1 risk-based capital (well capitalized = 6.5%)    12.44      12.62      12.86  
  Tier 1 risk-based capital (well capitalized = 8.0%)    12.44      12.62      12.86  
  Total risk-based capital (well capitalized = 10.0%)    12.96      13.17      13.47  
          
Capital ratios:         
  Average equity to average assets    8.36 %    8.68 %    8.76 %
  Equity to total assets    8.54      8.29      8.56  
  Tangible stockholders' common equity to tangible assets (1)    8.30      8.04      8.30  
          
Asset quality:         
  Non-accrual loans (2) $  21,882   $  22,817   $  26,303  
  Non-performing loans    23,535      26,077      28,600  
  Non-performing assets    26,374      31,009      33,455  
  Net charge-offs/ (recoveries)    (260)     2,605      503  
          
Asset quality ratios:         
  Non-performing loans to gross loans    0.50 %    0.60 %    0.68 %
  Non-performing assets to total assets    0.44      0.54      0.61  
  Allowance for loan losses to gross loans    0.46      0.49      0.55  
  Allowance for loan losses to non-performing assets    82.64      69.45      68.67  
  Allowance for loan losses to non-performing loans    92.61      82.58      80.32  
          
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 
 September 30, 2016  June 30, 2016 September 30, 2015 
 Average Yield/  Average Yield/ Average Yield/ 
 BalanceInterestCost  BalanceInterestCost BalanceInterestCost 
Interest-earning Assets:             
  Mortgage loans, net $  4,093,240 $  43,777   4.28% $  3,983,615 $  42,969   4.31%$  3,561,262 $  40,754   4.58%
  Other loans, net    593,353    5,402   3.64     583,404    5,444   3.73    508,388    4,489   3.53 
  Total loans, net (1)   4,686,593    49,179   4.20     4,567,019    48,413   4.24    4,069,650    45,243   4.45 
 Taxable securities:             
  Mortgage-backed             
    securities   554,515    3,350   2.42     599,247    3,707   2.47    692,777    4,307   2.49 
  Other securities   245,477    2,162   3.52     249,956    2,133   3.41    176,072    1,290   2.93 
  Total taxable securities   799,992    5,512   2.76     849,203    5,840   2.75    868,849    5,597   2.58 
 Tax-exempt securities: (2) (3)             
  Other securities   148,004    784   2.12     147,230    790   2.15    136,043    1,030   3.03 
  Total tax-exempt securities   148,004    784   2.12     147,230    790   2.15    136,043    1,030   3.03 
  Interest-earning deposits             
    and federal funds sold   49,824    49   0.39     49,483    48   0.39    76,473    43   0.22 
Total interest-earning              
  assets   5,684,413    55,524   3.91     5,612,935    55,091   3.93    5,151,015    51,913   4.03 
Other assets   292,312        284,923       276,604    
  Total assets$  5,976,725     $  5,897,858    $  5,427,619    
              
              
Interest-bearing Liabilities:             
  Deposits:             
Savings accounts$  258,884    306   0.47  $  265,856    306   0.46 $  262,535    297   0.45 
NOW accounts   1,384,368    1,979   0.57     1,612,704    1,962   0.49    1,398,358    1,646   0.47 
Money market accounts   601,709    990   0.66     483,317    681   0.56    420,860    455   0.43 
Certificate of deposit             
      accounts   1,428,770    5,213   1.46     1,417,379    5,121   1.45    1,391,511    5,276   1.52 
  Total due to depositors   3,673,731    8,488   0.92     3,779,256    8,070   0.85    3,473,264    7,674   0.88 
  Mortgagors' escrow             
    accounts   48,840    32   0.26     67,728    27   0.16    44,606    27   0.24 
  Total interest-bearing             
    deposits   3,722,571    8,520   0.92     3,846,984    8,097   0.84    3,517,870    7,701   0.88 
  Borrowings   1,337,049    5,291   1.58     1,199,178    5,105   1.70    1,125,291    4,902   1.74 
  Total interest-bearing             
        liabilities   5,059,620    13,811   1.09     5,046,162    13,202   1.05    4,643,161    12,603   1.09 
Non interest-bearing             
  demand deposits   318,188        296,597       254,435    
Other liabilities   89,943        68,838       65,843    
  Total liabilities   5,467,751        5,411,597       4,963,439    
Equity   508,974        486,261       464,180    
  Total liabilities and             
        equity$  5,976,725     $  5,897,858    $  5,427,619    
              
Net interest income /             
  net interest rate spread $  41,713   2.82%  $  41,889   2.88% $  39,310   2.94%
              
Net interest-earning assets /             
  net interest margin$  624,793    2.94% $  566,773    2.99%$  507,854    3.05%
              
Ratio of interest-earning             
  assets to interest-bearing             
  liabilities    1.12X     1.11X    1.11X
              

(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 , $1.0 million and $1.4 million for the three months ended September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
(3) Includes prepayment penalty income of approximately $26,000 and $0.2 million for the three months ended September 30, 2016 and 2015. There was no prepayment penalty income during the three months ended June 30, 2016.

     

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
 
 For the nine months ended 
 September 30, 2016  September 30, 2015 
 Average Yield/  Average Yield/ 
 BalanceInterestCost  BalanceInterestCost 
Interest-earning Assets:         
  Mortgage loans, net $  3,972,502 $  129,200   4.34% $  3,466,085 $  119,931   4.61%
  Other loans, net    575,652    15,950   3.69     501,154    12,930   3.44 
  Total loans, net (1)   4,548,154    145,150   4.26     3,967,239    132,861   4.47 
 Taxable securities:         
  Mortgage-backed         
    securities   603,994    11,231   2.48     700,563    13,028   2.48 
  Other securities   241,821    6,040   3.33     151,589    2,897   2.55 
  Total taxable securities   845,815    17,271   2.72     852,152    15,925   2.49 
 Tax-exempt securities: (2) (3)         
  Other securities   140,889    2,366   2.24     137,093    2,796   2.72 
  Total tax-exempt securities   140,889    2,366   2.24     137,093    2,796   2.72 
  Interest-earning deposits         
    and federal funds sold   61,484    191   0.41     60,028    96   0.21 
Total interest-earning          
  assets   5,596,342    164,978   3.93     5,016,512    151,678   4.03 
Other assets   287,111        274,581    
  Total assets$  5,883,453     $  5,291,093    
          
          
Interest-bearing Liabilities:         
  Deposits:         
    Savings accounts$  262,382    910   0.46  $  265,831    852   0.43 
    NOW accounts   1,539,050    5,863   0.51     1,441,598    4,847   0.45 
    Money market accounts   514,626    2,277   0.59     352,639    1,015   0.38 
    Certificate of deposit         
      accounts   1,416,811    15,455   1.45     1,343,588    15,809   1.57 
     Total due to depositors   3,732,869    24,505   0.88     3,403,656    22,523   0.88 
    Mortgagors' escrow         
      accounts   55,481    85   0.20     51,772    73   0.19 
     Total interest-bearing         
      deposits   3,788,350    24,590   0.87     3,455,428    22,596   0.87 
  Borrowings   1,233,571    15,653   1.69     1,070,801    14,078   1.75 
    Total interest-bearing         
      liabilities   5,021,921    40,243   1.07     4,526,229    36,674   1.08 
Non interest-bearing         
  demand deposits   296,321        243,693    
Other liabilities   73,594        57,855    
    Total liabilities   5,391,836        4,827,777    
Equity   491,617        463,316    
    Total liabilities and         
      equity$  5,883,453     $  5,291,093    
          
Net interest income /         
  net interest rate spread $  124,735   2.86%  $  115,004   2.95%
          
Net interest-earning assets /         
  net interest margin$  574,421    2.97% $  490,283    3.06%
          
Ratio of interest-earning         
  assets to interest-bearing         
  liabilities    1.11X     1.11X
          

(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $3.4 million and $3.2 million for the nine months ended September 30, 2016 and 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
(3) Includes prepayment penalty income of approximately $26,000 and $0.2 million for the nine months ended September 30, 2016 and 2015.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
 
            September 2016 vs.   September 2016 vs. 
    September 30, June 30, March 31, December 31, December 2015 September 30, September 2015 
(Dollars in thousands) 2016   2016   2016   2015  % Change  2015  % Change 
Deposits               
Non-interest bearing$  320,060  $  317,112  $  280,450  $  269,469   18.8% $  257,196   24.4% 
Interest bearing:              
 Certificate of deposit              
  accounts   1,384,551     1,411,550     1,362,062     1,403,302   (1.3%)    1,386,945   (0.2%) 
 Savings accounts   258,058     260,528     268,057     261,748   (1.4%)    261,400   (1.3%) 
 Money market accounts   733,361     452,589     485,774     472,489   55.2%    438,457   67.3% 
 NOW accounts   1,296,475     1,453,540     1,610,932     1,448,695   (10.5%)    1,338,715   (3.2%) 
  Total interest-bearing              
   deposits   3,672,445     3,578,207     3,726,825     3,586,234   2.4%    3,425,517   7.2% 
                  
   Total deposits$  3,992,505  $  3,895,319  $  4,007,275  $  3,855,703   3.5% $  3,682,713   8.4% 
                  

 

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
Loan Origination and Purchases
     
  For the three months For the nine months ended
  September 30, June 30, September 30, September 30,
(In thousands)  2016   2016   2015   2016   2015 
Multi-family residential $  61,378  $  162,364  $  91,306  $  293,385  $  268,481 
Commercial real estate    68,970     114,007     151,358     245,114     295,084 
One-to-four family – mixed-use property    12,618     11,630     20,008     42,493     44,905 
One-to-four family – residential    3,362     4,195     12,618     17,050     34,696 
Co-operative apartments  -     470     1,915     470     2,365 
Construction    1,920     2,427     1,999     6,034     3,386 
Small Business Administration    470     314     2,232     6,785     8,713 
Taxi Medallion  -   -   -   -   - 
Commercial business and other    84,525     92,456     53,028     239,015     180,239 
  Total $  233,243  $  387,863  $  334,464  $  850,346  $  837,869 
           

 

Loan Composition
                 
            September 30, 2016 vs.   September 2016 vs.
    September 30, June 30, March 31, December 31, December 2015 September 30, September 2015
(Dollars in thousands) 2016   2016   2016   2015  % Change  2015  % Change
Loans:                
Multi-family residential$  2,171,289  $  2,159,138  $  2,039,794  $  2,055,228   5.6%  $  2,043,740   6.2% 
Commercial real estate   1,195,266     1,146,400     1,058,028     1,001,236   19.4%     857,806   39.3% 
One-to-four family ―               
 mixed-use property   555,691     566,702     571,846     573,043   (3.0%)     568,401   (2.2%) 
One-to-four family ― residential   183,993     190,251     191,158     187,838   (2.0%)     191,430   (3.9%) 
Co-operative apartments   7,494     7,571     8,182     8,285   (9.5%)     9,122   (17.8%) 
Construction   11,250     9,899     7,472     7,284   54.4%     5,671   98.4% 
Small Business Administration   14,339     14,718     14,701     12,194   17.6%     10,540   36.0% 
Taxi medallion   20,536     20,641     20,757     20,881   (1.7%)     21,025   (2.3%) 
Commercial business and other   564,972     564,084     531,322     506,622   11.5%     479,085   17.9% 
Net unamortized premiums               
 and unearned loan fees   16,447     16,875     15,281     15,368   7.0%     14,129   16.4% 
Allowance for loan losses   (21,795)    (22,198)    (21,993)    (21,535)  1.2%     (22,973)  (5.1%) 
   Net loans$  4,719,482  $  4,674,081  $  4,436,548  $  4,366,444   8.1%  $  4,177,976   13.0% 

 

Loan Activity
 
  Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
(In thousands)  2016   2015   2016   2015   2015 
Loans originated and purchased$  233,243  $  387,863  $  229,240  $  395,592  $  334,464 
Principal reductions   (183,583)    (149,307)    (152,521)    (206,125)    (155,794)
Loans transferred to held-for-sale -   -   -   -   - 
Loans sold    (3,693)    (2,310)    (5,515)    (1,164)    (8,800)
Loan charged-offs   (541)    (102)    (147)    (2,478)    (168)
Foreclosures  -   -     (408)    (34)    (773)
Net change in deferred (fees) and costs   (428)    1,594     (87)    1,239     878 
Net change in the allowance for loan losses   403     (205)    (458)    1,438     111 
 Total loan activity$  45,401  $  237,533  $  70,104  $  188,468  $  169,918 

 



 

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)
 
   September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands)  2016   2016   2016   2015   2015 
Loans 90 Days Or More Past Due          
 and Still Accruing:          
Multi-family residential $  -  $  574  $  792  $  233  $  516 
Commercial real estate    1,183     320     1,083     1,183     253 
One-to-four family - mixed-use property    470     635     743     611     1,293 
One-to-four family - residential    -     13     13     13     13 
Construction    -     -     570     1,000     - 
Commercial business and other    -     -     -     220     222 
 Total    1,653     1,542     3,201     3,260     2,297 
            
Non-accrual Loans:          
Multi-family residential    1,649     3,162     3,518     3,561     4,686 
Commercial real estate    1,157     2,299     3,295     2,398     2,407 
One-to-four family - mixed-use property    4,534     6,005     5,519     5,952     5,446 
One-to-four family - residential    8,340     8,406     8,861     10,120     10,441 
Small business administration    2,132     185     201     218     234 
Taxi Medallion    3,971     196     196     -     - 
Commercial business and other    99     128     511     568     3,089 
 Total    21,882     20,381     22,101     22,817     26,303 
            
 Total Non-performing Loans    23,535     21,923     25,302     26,077     28,600 
            
Other Non-performing Assets:          
Real estate acquired through foreclosure    2,839     3,668     4,602     4,932     4,855 
 Total    2,839     3,668     4,602     4,932     4,855 
            
 Total Non-performing Assets $  26,374  $  25,591  $  29,904  $  31,009  $  33,455 
            
Non-performing Assets to Total Assets  0.44%  0.43%  0.51%  0.54%  0.61%
Allowance For Loan Losses to Non-performing Loans  92.6%  101.3%  86.9%  82.6%  80.3%
            


Net Charge-Offs (Recoveries)
 
   Three Months Ended 
   September 30, June 30, March 31, December 31, September 30, 
(In thousands)  2016   2016   2016   2015   2015  
Multi-family residential $  79  $  (183) $  29  $  (35) $  54  
Commercial real estate    (11)    -     -     -     (100) 
One-to-four family – mixed-use property    24     36     (173)    18     73  
One-to-four family – residential    -     7     (299)    97     (300) 
Co-operative apartments    -     -     -     -     -  
Small Business Administration    317     (42)    (31)    17     4  
Commercial business and other    (6)    (23)    16     2,005     10  
  Total net loan charge-offs (recoveries) $  403  $  (205) $  (458) $  2,102  $  (259) 
             

Core Diluted EPS, Core ROAE, Core ROAA, tangible book value per common share and tangible common stockholders’ equity 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 share and tangible common stockholders’ equity are 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 Nine Months Ended
  September 30,June 30,September 30, September 30,September 30,
   2016  2016  2015   2016  2015 
   
        
GAAP income before income taxes$  17,289 $  51,152 $  17,669  $  83,617 $  56,303 
        
Net (gain) loss from fair value adjustments   823    1,115    1,094     2,925    921 
Net gain on sale of securities   -    (2,363)   (103)    (2,363)   (167)
Gain from life insurance proceeds   (47)   -    -     (458)   - 
Net gain on sale of buildings   -    (33,814)   -     (33,814)   (6,537)
Prepayment penalty on borrowings   -    2,082    -     2,082    - 
        
Core income before taxes   18,065    18,172    18,660     51,989    50,520 
        
Provision for income taxes for core income   6,736    6,851    7,087     19,628    19,247 
        
Core net income$  11,329 $  11,321 $  11,573  $  32,361 $  31,273 
        
GAAP diluted earnings per common share$  0.37 $  1.05 $  0.38  $  1.75 $  1.18 
        
Net loss from fair value adjustments, net of tax   0.03    0.02    0.02     0.06    0.02 
Net gain on sale of securities, net of tax -    (0.05) -     (0.05) - 
Gain from life insurance proceeds -  -  -     (0.02) - 
Net gain on sale of buildings, net of tax -    (0.67) -     (0.67)   (0.13)
Prepayment penalty on borrowings -    0.04  -     0.04  - 
        
Core diluted earnings per common share*$  0.39 $  0.39 $  0.40  $  1.12 $  1.07 
        
        
Core net income, as calculated above$  11,329 $  11,321 $  11,573  $  32,361 $  31,273 
Average assets   5,976,725    5,897,858    5,427,619     5,883,453    5,291,093 
Average equity   508,974    486,261    464,180     491,617    463,316 
Core return on average assets** 0.76% 0.77% 0.85%  0.73% 0.79%
Core return on average equity** 8.90% 9.31% 9.97%  8.78% 9.00%
        
        
        
* 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)
 
      September 30,December 31,
(Dollars in thousands)   2016  2015 
Total Equity  $  512,621 $  473,067 
Less:      
 Goodwill     (16,127)   (16,127)
 Intangible deferred tax liabilities     407    406 
  Tangible Stockholders' Common Equity$  496,901 $  457,346 
        
Total Assets  $  5,999,255 $  5,704,634 
Less:      
 Goodwill     (16,127)   (16,127)
 Intangible deferred tax liabilities     407    406 
  Tangible Assets  $  5,983,535 $  5,688,913 
        
Tangible Stockholders' Common Equity to Tangible Assets 8.30% 8.04%

            











    

        

        
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