FOURTH QUARTER 20161
- GAAP diluted EPS was $0.50, up 35.1%, and core diluted EPS was $0.40, up 2.6% QoQ
- Net interest income was $42.4 million, up 1.5%, and net interest margin was 2.96%, up 2bps QoQ
- Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, net interest margin was 2.81%, unchanged QoQ
- GAAP ROAE was 11.2%, compared with 9.9% and core ROAE was 9.1%, compared with 10.3% for 4Q15
- GAAP ROAA was 1.0%, compared with 0.8% and core ROAA was 0.8%, compared with 0.9% for 4Q15
- Raised $75.0 million of subordinated debt
- Sold two branch buildings for a pre-tax gain of $14.2 million
- Restructured balance sheet by prepaying $130.0 million in advances at an average cost of 2.82% and $40.0 million in repurchase agreements at an average cost of 3.45%, recording a prepayment penalty of $8.3 million
FULL YEAR 20161
- GAAP diluted EPS was a record $2.24, up 40.9%, and core diluted EPS was $1.52, up 2.0% YoY
- Net interest income was a record $167.1 million, up 8.2%, and net interest margin was 2.97%, down 7bps YoY
- Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, the net interest margin was 2.83%, down 5bps YoY
- GAAP ROAE was 13.1%, compared with 9.9% and core ROAE was 8.9%, compared with 9.3% for 2015
- GAAP ROAA was 1.1%, compared with 0.9% and core ROAA was 0.7%, compared with 0.8% for 2015
- Sold three branch buildings for a pre-tax gain of $48.0 million
UNIONDALE, N.Y., Jan. 31, 2017 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq:FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the fourth quarter and the year ended December 31, 2016.
John R. Buran, President and Chief Executive Officer, remarked, “The results achieved for the fourth quarter reflect the continued successful execution of our strategy to maintain net loan growth and increase net interest income by focusing on yield, as opposed to volume. We emphasized assets with the best risk-adjusted returns, resulting in strong GAAP and core diluted EPS of $0.50 and $0.40, respectively. We are pleased to see the beginning of a return to pricing power as the yield on originated loans and commitments in the pipeline have both increased quarter over quarter while we maintain consistently prudent underwriting standards.”
____________________________________
1 Core earnings and core diluted earnings per common share (“EPS”) are not Generally Accepted Accounting Principle (“GAAP”) measures. Core earnings exclude the effects of the net gains/losses from the sale of buildings and securities and from fair value adjustments, prepayment penalties from the extinguishment of debt, and gains from life insurance proceeds.
For a reconciliation of core earnings and core diluted EPS to net income and GAAP diluted EPS, please refer to the table entitled “Reconciliation of GAAP Earnings and Core Earnings.”
“We made progress on our drive to improve operational scalability and efficiency by reconfiguring our fourth branch to our ‘tellerless’ universal banker model. We continued to effectively manage credit risk posting another net recovery this quarter. Also, we continued to grow core deposits as our consumer and business checking balances improved.”
Strategic Update:
The Company completed several strategic actions in this extremely productive year to position itself for profitable growth in 2017 and beyond.
- Obtained favorable credit ratings with a Stable outlook for both the Company (A-/K2) and the Bank (BBB+/K2), from The Kroll Bond Rating Agency and raised $75.0 million of fixed-to-floating rate subordinated debt (5.25% fixed for five years) to fund balance sheet growth and further enhance our already strong regulatory capital ratios
- Restructured our balance sheet to further benefit as the spread between 2- and 10-year Treasury yields widens and to support net interest margin in a rising rate environment
- Sold two branch buildings in the fourth quarter, recognizing a pre-tax gain of $14.2 million, which brings the total for 2016 to three branch buildings sold for a pre-tax gain of $48.0 million
- Completed the renovation of two branches during 2016 to the Universal Banker model, which will result in savings in both personnel and occupancy costs, and developed plans to convert an additional three branches during 2017. This will provide our customers with cutting-edge technology and a higher-quality experience in 8 of our 19 branches.
- Obtained approval from the FDIC for two new full-service branches in the Flushing, Queens market, where we plan to move two of our traditional branches, as we continue to invest in technology and convert our branches to our Universal Banker model
- Piloted an in branch program, “LISA” (Live Interactive Service Assistant), which allows customers to experience a ‘Facetime™-like’ conversation with a dedicated banker until 11 p.m., 7 days a week
The strategic plan continues to emphasize the diversified growth of multi-family, commercial real estate (“CRE”), and commercial business loans while maintaining a conservative approach to managing risk. In the fourth quarter, $243.2 million of multi-family, CRE, and commercial business loans were originated, representing 86.1% of all originations while maintaining conservative loan-to-values, debt coverage ratios, and increasing yield.
Mr. Buran added, “Stress testing and portfolio management have enhanced our disciplined approach to due diligence and overall risk management of CRE concentration. Furthermore, recently raised subordinated debt reduced our regulatory CRE concentration from 613% in 3Q16 to 545% in 4Q16.”
The Company continues to focus on maintaining strong risk management practices, including conservative underwriting standards and improving yields to achieve desired risk-adjusted returns.
- The average interest rate obtained for fourth quarter originations was 3.81% compared to 3.74% for the linked quarter and 3.68% for the quarter ended December 31, 2015.
- The average rate of mortgage loan applications in the pipeline totaled 4.20% at December 31, 2016 as compared to 4.05% at September 30, 2016, and 3.94% 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 fourth quarter of 2016 had a low average loan-to-value ratio of 47.0% and an average debt coverage ratio of 203%
- The loan-to-value ratio on real estate dependent loans as of December 31, 2016 totaled just 40.5%.
- Stress test the regulatory CRE concentration as if a $10 billion institution and have internal stress tests validated by an independent third party
- Actively monitor and implement regulatory recommendations surrounding the enhanced due diligence of the regulatory CRE concentration
Buran concluded, “Overall, we remain well capitalized and positioned to deliver profitable growth and long-term value to our shareholders as we continue to execute on our strategic objectives.”
Summary of Strategic Objectives
- Increase core deposits and continue to improve funding mix
- Increase net interest income by leveraging loan pricing opportunities
- Enhance core earnings power by managing net interest margin and improving scalability and efficiency
- Manage credit risk
- Maintain well capitalized levels under all stress test scenarios
Earnings Summary:
Quarter ended December 31, 2016 (4Q16) compared to the quarters ended December 31, 2015 (4Q15) and September 30, 2016 (3Q16).
Net Interest Income
Net interest income for 4Q16 was $42.4 million, an increase of 7.4% YoY and an increase of 1.5% QoQ.
- Average balance of total interest-earning assets of $5,717.3 million increased $432.3 million, or 8.2% YoY and $32.9 million, or 0.6% QoQ
- Yield on interest-earning assets of 3.92% decreased five basis points YoY but increased one basis point QoQ
- Cost of interest-bearing liabilities of 1.08% decreased two basis points YoY and decreased one basis point QoQ, driven by an improvement in our funding mix
- Net interest margin of 2.96%, decreased two basis points YoY but increased two basis points QoQ
- Net interest spread of 2.84%, decreased three basis points YoY but increased two basis points QoQ
- Includes prepayment penalty income from loans and securities of $1.6 million in each of 4Q16 and 4Q15, compared with $1.5 million in 3Q16, and recovered interest from nonaccrual loans of $0.6 million, compared with $0.2 million in 4Q15 and $0.3 million in 3Q16
- Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, the yield on interest-earning assets, would have been 3.77% in 4Q16, compared with 3.83% in 4Q15 and 3.81% in 3Q16, and the net interest margin would have been 2.81% in 4Q16, compared with 2.84% in 4Q15 and 2.81% in 3Q16
- Cost of funds of 1.01% decreased three basis points YoY and decreased two basis points QoQ
Non-interest Income
Non-interest income (excluding: net gains on sale of buildings and net gain/losses on the sale of securities) for 4Q16 was $2.1 million, a decrease of $0.1 million, or 3.9% YoY, but an increase of $0.2 million, or 11.2% QoQ.
- Increase in fair value adjustments of $0.4 million and $0.3 million compared to 4Q15 and 3Q16, respectively
Non-interest Expense
Non-interest expense for 4Q16 was $35.4 million, an increase of $11.6 million, or 48.5% YoY, and an increase of $9.1 million, or 34.6% QoQ, largely driven by a $8.3 million non-recurring prepayment penalty.
- The $8.3 million non-recurring penalty on the prepayment of $130.0 million in advances and $40.0 million in repurchase agreements, as part of a balance sheet restructure, is expected to improve future net interest margin
- Salaries and benefits increased $3.2 million YoY primarily due to annual salary increases, additions in staffing and an increase in stock-based compensation and increased $1.0 million QoQ due to an increase in year-end incentive accruals from exceeding certain performance targets, and an increase in stock-based compensation costs because of an increase in the Company’s stock price
- 4Q16 and 3Q16 include write-downs of $0.2 and $0.8 million, respectively, on one OREO property that was sold in 4Q16
- Non-interest expense (excluding: salaries and benefits expense, prepayment penalty on borrowings and net gain/losses on sale of OREO) totaled $11.0 million, a decrease of $0.2 million, or 1.6% YoY, but an increase of $0.4 million, or 3.5% QoQ
- The efficiency ratio increased to 59.6% in 4Q16 from 56.0% in 4Q15 and 57.4% in 3Q16
Provision for Income Taxes
The provision for income taxes for 4Q16 was $8.1 million, an increase of $2.7 million YoY and an increase of $1.5 million QoQ.
- Income before income taxes increased by $5.3 million YoY and $5.1 million QoQ
- Effective tax rates of 36.2% in 4Q16, 38.5% in 3Q16 and 31.9% in 4Q15 were impacted by adjustments to the percentage of income allocated to New York City for municipal income taxes
Financial Condition Summary:
Loans:
- Net loans were $4,813.5 million reflecting an increase of 2.0% QoQ (not annualized) and 10.2% YoY as we continue to focus on the origination of multi-family, commercial real estate and commercial business loans with a full banking relationship
- Loan originations and purchases of multi-family, commercial real estate and commercial business loans totaled $1,020.7 million for the year, or 90.1% of loan production
- Loan purchases which are underwritten to the same standards as organic originations, were $186.7 million for the year, a decrease of $92.2 million YoY
- Loan pipeline totaled $310.9 million at December 31, 2016, compared to $289.3 million at September 30, 2016 and $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 47.0% and an average debt coverage ratio of 203%
The following table shows the average rate received from loan originations and purchases for the periods indicated:
| For the three months ended | |||||||||
| December 31, | September 30, | December 31, | |||||||
| Loan type | 2016 | 2016 | 2015 | ||||||
| Mortgage loans | 3.70 | % | 3.52 | % | 3.60 | % | |||
| Non-mortgage loans | 4.05 | % | 4.12 | % | 3.88 | % | |||
| Total loans | 3.81 | % | 3.74 | % | 3.68 | % | |||
Credit Quality:
- Non-performing loans totaled $21.4 million, a decrease of $4.7 million, or 17.9%, from $26.1 million at December 31, 2015
- Classified assets totaled $44.0 million, an increase of $0.1 million, or 0.2%, from $43.9 million at December 31, 2015, primarily due to an increase in substandard taxi medallion loans, partially offset by reductions in non-performing assets
- Loans classified as troubled debt restructured totaled $17.4 million, an increase of $7.9 million, or 83.4%, from $9.5 million at December 31, 2015, primarily due to the addition of restructured taxi medallion loans
- Strong underwriting standards coupled with our practice of obtaining updated appraisals and recording charge-offs early in the delinquency process has resulted in a 39.1% average loan-to-value for non-performing loans collateralized by real estate
- In 2016, no provision for loan losses was recorded compared with a benefit of $1.0 million recorded in the comparable prior year period
- Net recoveries totaled $0.7 million in 2016, amid continued improvement in credit conditions
- We anticipate continued low loss content in the loan portfolio given the average loan-to-value of 39.1% for non-performing loans collateralized by real estate using the appraised value at the time of origination
Capital Management:
- The Company and Bank are subject to the same regulatory requirements and at December 31, 2016, both were well-capitalized under all regulatory requirements
- For the year, stockholders’ equity increased $40.8 million, or 8.6%, to $513.9 million due to net income of $64.9 million, partially offset by a decline in other comprehensive income of $2.8 million, the declaration and payment of dividends on the Company’s common stock, and the repurchase of 403,695 shares
- As of December 31, 2016, the Company had 495,905 shares that may be repurchased under the current authorized stock repurchase program, which has no expiration or maximum dollar limit
- Book value per common share was $17.95 at December 31, 2016, compared to $17.90 at September 30, 2016 and $16.41 at December 31, 2015
- Tangible book value, a non-GAAP measure, per common share was $17.40 at December 31, 2016, compared to $17.35 at September 30, 2016 and $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 twelve months ended | ||||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| Interest and Dividend Income | |||||||||||||||||||||
| Interest and fees on loans | $ | 49,973 | $ | 49,181 | $ | 45,859 | $ | 195,125 | $ | 178,720 | |||||||||||
| Interest and dividends on securities: | |||||||||||||||||||||
| Interest | 5,866 | 6,173 | 6,461 | 25,141 | 24,827 | ||||||||||||||||
| Dividends | 121 | 121 | 118 | 481 | 473 | ||||||||||||||||
| Other interest income | 59 | 49 | 30 | 250 | 126 | ||||||||||||||||
| Total interest and dividend income | 56,019 | 55,524 | 52,468 | 220,997 | 204,146 | ||||||||||||||||
| Interest Expense | |||||||||||||||||||||
| Deposits | 8,760 | 8,520 | 7,740 | 33,350 | 30,336 | ||||||||||||||||
| Other interest expense | 4,908 | 5,291 | 5,312 | 20,561 | 19,390 | ||||||||||||||||
| Total interest expense | 13,668 | 13,811 | 13,052 | 53,911 | 49,726 | ||||||||||||||||
| Net Interest Income | 42,351 | 41,713 | 39,416 | 167,086 | 154,420 | ||||||||||||||||
| Provision (benefit) for loan losses | - | - | 664 | - | (956 | ) | |||||||||||||||
| Net Interest Income After Provision (Benefit) for Loan Losses | 42,351 | 41,713 | 38,752 | 167,086 | 155,376 | ||||||||||||||||
| Non-interest Income | |||||||||||||||||||||
| Banking services fee income | 983 | 826 | 1,245 | 3,758 | 3,805 | ||||||||||||||||
| Net (loss) gain on sale of securities | (839 | ) | - | - | 1,524 | 167 | |||||||||||||||
| Net gain on sale of loans | - | 240 | 67 | 584 | 422 | ||||||||||||||||
| Net gain on sale of buildings | 14,204 | - | - | 48,018 | 6,537 | ||||||||||||||||
| Net loss from fair value adjustments | (509 | ) | (823 | ) | (920 | ) | (3,434 | ) | (1,841 | ) | |||||||||||
| Federal Home Loan Bank of New York stock dividends | 794 | 665 | 514 | 2,664 | 1,969 | ||||||||||||||||
| Gains from life insurance proceeds | 2 | 47 | - | 460 | - | ||||||||||||||||
| Bank owned life insurance | 701 | 707 | 723 | 2,797 | 2,880 | ||||||||||||||||
| Other income | 90 | 191 | 516 | 1,165 | 1,780 | ||||||||||||||||
| Total non-interest income | 15,426 | 1,853 | 2,145 | 57,536 | 15,719 | ||||||||||||||||
| Non-interest Expense | |||||||||||||||||||||
| Salaries and employee benefits | 15,801 | 14,795 | 12,622 | 60,825 | 53,093 | ||||||||||||||||
| Occupancy and equipment | 2,550 | 2,576 | 2,415 | 9,848 | 10,206 | ||||||||||||||||
| Professional services | 1,813 | 1,730 | 2,038 | 7,720 | 7,074 | ||||||||||||||||
| FDIC deposit insurance | 613 | 536 | 859 | 2,993 | 3,236 | ||||||||||||||||
| Data processing | 1,135 | 939 | 1,046 | 4,364 | 4,471 | ||||||||||||||||
| Depreciation and amortization | 1,187 | 1,169 | 1,051 | 4,450 | 3,579 | ||||||||||||||||
| Other real estate owned/foreclosure expense | 476 | 273 | 225 | 1,307 | 942 | ||||||||||||||||
| Prepayment penalty on borrowings | 8,274 | - | - | 10,356 | - | ||||||||||||||||
| Other operating expenses | 3,526 | 4,259 | 3,568 | 16,740 | 15,118 | ||||||||||||||||
| Total non-interest expense | 35,375 | 26,277 | 23,824 | 118,603 | 97,719 | ||||||||||||||||
| Income Before Income Taxes | 22,402 | 17,289 | 17,073 | 106,019 | 73,376 | ||||||||||||||||
| Provision for Income Taxes | |||||||||||||||||||||
| Federal | 8,062 | 5,568 | 5,061 | 33,580 | 21,843 | ||||||||||||||||
| State and local | 54 | 1,087 | 378 | 7,523 | 5,324 | ||||||||||||||||
| Total taxes | 8,116 | 6,655 | 5,439 | 41,103 | 27,167 | ||||||||||||||||
| Net Income | $ | 14,286 | $ | 10,634 | $ | 11,634 | $ | 64,916 | $ | 46,209 | |||||||||||
| Basic earnings per common share | $ | 0.50 | $ | 0.37 | $ | 0.40 | $ | 2.24 | $ | 1.59 | |||||||||||
| Diluted earnings per common share | $ | 0.50 | $ | 0.37 | $ | 0.40 | $ | 2.24 | $ | 1.59 | |||||||||||
| Dividends per common share | $ | 0.17 | $ | 0.17 | $ | 0.16 | $ | 0.68 | $ | 0.64 | |||||||||||
| FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||
| 2016 | 2016 | 2015 | ||||||||||||
| ASSETS | ||||||||||||||
| Cash and due from banks | $ | 35,857 | $ | 47,880 | $ | 42,363 | ||||||||
| Securities held-to-maturity: | ||||||||||||||
| Other securities | 37,735 | 33,274 | 6,180 | |||||||||||
| Securities available for sale: | ||||||||||||||
| Mortgage-backed securities | 516,476 | 545,067 | 668,740 | |||||||||||
| Other securities | 344,905 | 365,812 | 324,657 | |||||||||||
| Loans: | ||||||||||||||
| Multi-family residential | 2,178,504 | 2,171,289 | 2,055,228 | |||||||||||
| Commercial real estate | 1,246,132 | 1,195,266 | 1,001,236 | |||||||||||
| One-to-four family ― mixed-use property | 558,502 | 555,691 | 573,043 | |||||||||||
| One-to-four family ― residential | 185,767 | 183,993 | 187,838 | |||||||||||
| Co-operative apartments | 7,418 | 7,494 | 8,285 | |||||||||||
| Construction | 11,495 | 11,250 | 7,284 | |||||||||||
| Small Business Administration | 15,198 | 14,339 | 12,194 | |||||||||||
| Taxi medallion | 18,996 | 20,536 | 20,881 | |||||||||||
| Commercial business and other | 597,122 | 564,972 | 506,622 | |||||||||||
| Net unamortized premiums and unearned loan fees | 16,559 | 16,447 | 15,368 | |||||||||||
| Allowance for loan losses | (22,229 | ) | (21,795 | ) | (21,535 | ) | ||||||||
| Net loans | 4,813,464 | 4,719,482 | 4,366,444 | |||||||||||
| Interest and dividends receivable | 20,228 | 19,833 | 18,937 | |||||||||||
| Bank premises and equipment, net | 26,561 | 26,000 | 25,622 | |||||||||||
| Federal Home Loan Bank of New York stock | 59,173 | 65,185 | 56,066 | |||||||||||
| Bank owned life insurance | 132,508 | 115,807 | 115,536 | |||||||||||
| Goodwill | 16,127 | 16,127 | 16,127 | |||||||||||
| Other assets | 55,453 | 44,788 | 63,962 | |||||||||||
| Total assets | $ | 6,058,487 | $ | 5,999,255 | $ | 5,704,634 | ||||||||
| LIABILITIES | ||||||||||||||
| Due to depositors: | ||||||||||||||
| Non-interest bearing | $ | 333,163 | $ | 320,060 | $ | 269,469 | ||||||||
| Interest-bearing: | ||||||||||||||
| Certificate of deposit accounts | 1,372,115 | 1,384,551 | 1,403,302 | |||||||||||
| Savings accounts | 254,283 | 258,058 | 261,748 | |||||||||||
| Money market accounts | 843,370 | 733,361 | 472,489 | |||||||||||
| NOW accounts | 1,362,484 | 1,296,475 | 1,448,695 | |||||||||||
| Total interest-bearing deposits | 3,832,252 | 3,672,445 | 3,586,234 | |||||||||||
| Mortgagors' escrow deposits | 40,216 | 49,276 | 36,844 | |||||||||||
| Borrowed funds | 1,266,563 | 1,360,515 | 1,271,676 | |||||||||||
| Other liabilities | 72,440 | 84,338 | 67,344 | |||||||||||
| Total liabilities | 5,544,634 | 5,486,634 | 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 December 31, 2016, September 30, 2016 and December 31, 2015; 28,632,904 | ||||||||||||||
| shares, 28,632,796 shares and 28,830,558 shares outstanding at December 31, 2016, | ||||||||||||||
| September 30, 2016 and December 31, 2015, respectively) | 315 | 315 | 315 | |||||||||||
| Additional paid-in capital | 214,462 | 213,488 | 210,652 | |||||||||||
| Treasury stock (2,897,691 shares, 2,897,799 shares and 2,700,037 shares at | ||||||||||||||
| December 31, 2016, September 30, 2016 and December 31, 2015, respectively) | (53,754 | ) | (53,373 | ) | (48,868 | ) | ||||||||
| Retained earnings | 361,192 | 351,942 | 316,530 | |||||||||||
| Accumulated other comprehensive income (loss), net of taxes | (8,362 | ) | 249 | (5,562 | ) | |||||||||
| Total stockholders' equity | 513,853 | 512,621 | 473,067 | |||||||||||
| Total liabilities and stockholders' equity | $ | 6,058,487 | $ | 5,999,255 | $ | 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 twelve months ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Per Share Data | ||||||||||||||||
| Basic earnings per share | $ | 0.50 | $ | 0.37 | $ | 0.40 | $ | 2.24 | $ | 1.59 | ||||||
| Diluted earnings per share | $ | 0.50 | $ | 0.37 | $ | 0.40 | $ | 2.24 | $ | 1.59 | ||||||
| Average number of shares outstanding for: | ||||||||||||||||
| Basic earnings per common share computation | 28,849,783 | 28,861,101 | 28,862,319 | 28,956,859 | 29,106,112 | |||||||||||
| Diluted earnings per common share computation | 28,859,665 | 28,874,979 | 28,878,829 | 28,969,582 | 29,126,108 | |||||||||||
| Shares outstanding | 28,632,904 | 28,632,796 | 28,830,558 | 28,632,904 | 28,830,558 | |||||||||||
| Book value per common share (1) | $ | 17.95 | $ | 17.90 | $ | 16.41 | $ | 17.95 | $ | 16.41 | ||||||
| Tangible book value per common share (2) | $ | 17.40 | $ | 17.35 | $ | 15.86 | $ | 17.40 | $ | 15.86 | ||||||
| Stockholders' Equity | ||||||||||||||||
| Stockholders' equity | $ | 513,853 | $ | 512,621 | $ | 473,067 | $ | 513,853 | $ | 473,067 | ||||||
| Tangible stockholders' common equity | 498,115 | 496,901 | 457,346 | 498,115 | 457,346 | |||||||||||
| Average Balances | ||||||||||||||||
| Total loans, net | $ | 4,757,124 | $ | 4,686,593 | $ | 4,230,033 | $ | 4,600,682 | $ | 4,033,478 | ||||||
| Total interest-earning assets | 5,717,298 | 5,684,413 | 5,284,978 | 5,626,748 | 5,084,179 | |||||||||||
| Total assets | 6,003,125 | 5,976,725 | 5,569,011 | 5,913,534 | 5,361,144 | |||||||||||
| Total due to depositors | 3,796,337 | 3,673,731 | 3,507,037 | 3,748,822 | 3,429,714 | |||||||||||
| Total interest-bearing liabilities | 5,077,893 | 5,059,620 | 4,765,134 | 5,035,989 | 4,586,446 | |||||||||||
| Stockholders' equity | 512,317 | 508,974 | 470,765 | 496,820 | 465,194 | |||||||||||
| Performance Ratios (3) | ||||||||||||||||
| Return on average assets | 0.95 | % | 0.71 | % | 0.84 | % | 1.10 | % | 0.86 | % | ||||||
| Return on average equity | 11.15 | 8.36 | 9.89 | 13.07 | 9.93 | |||||||||||
| Yield on average interest-earning assets | 3.92 | 3.91 | 3.97 | 3.93 | 4.02 | |||||||||||
| Cost of average interest-bearing liabilities | 1.08 | 1.09 | 1.10 | 1.07 | 1.08 | |||||||||||
| Interest rate spread during period | 2.84 | 2.82 | 2.87 | 2.86 | 2.94 | |||||||||||
| Net interest margin | 2.96 | 2.94 | 2.98 | 2.97 | 3.04 | |||||||||||
| Non-interest expense to average assets | 2.36 | 1.76 | 1.71 | 2.01 | 1.82 | |||||||||||
| Efficiency ratio (4) | 59.63 | 57.37 | 56.00 | 59.64 | 58.57 | |||||||||||
| Average interest-earning assets to average | ||||||||||||||||
| interest-bearing liabilities | 1.13 | X | 1.12 | X | 1.11 | X | 1.12 | X | 1.11 | X | ||||||
(1) Calculated by dividing stockholders’ equity by shares outstanding.
(2) Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Reconciliation of GAAP Earnings and Core Earnings”.
(3) Ratios are presented on an annualized basis, where appropriate.
(4) Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding OREO expense, prepayment penalties from the extinguishment of debt and the net gain/loss from the sale of OREO) by the total of net interest income and non-interest income (excluding net gains and losses from fair value adjustments, net gain and losses from the sale of securities, life insurance proceeds, and sale of buildings).
| FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | |||||||||
| SELECTED CONSOLIDATED FINANCIAL DATA | |||||||||
| (Dollars in thousands) | |||||||||
| (Unaudited) | |||||||||
| At or for the year | At or for the year | ||||||||
| ended | ended | ||||||||
| December 31, 2016 | December 31, 2015 | ||||||||
| Selected Financial Ratios and Other Data | |||||||||
| Regulatory capital ratios (for Flushing Financial Corporation): | |||||||||
| Tier 1 capital | $ | 539,228 | $ | 490,919 | |||||
| Common equity Tier 1 capital | 506,432 | 462,883 | |||||||
| Total risk-based capital | 636,457 | 512,454 | |||||||
| Tier 1 leverage capital (well capitalized = 5%) | 9.00 | % | 8.84 | % | |||||
| Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 11.79 | 11.83 | |||||||
| Tier 1 risk-based capital (well capitalized = 8.0%) | 12.56 | 12.55 | |||||||
| Total risk-based capital (well capitalized = 10.0%) | 14.82 | 13.10 | |||||||
| Regulatory capital ratios (for Flushing Bank only): | |||||||||
| Tier 1 capital | $ | 607,033 | $ | 494,690 | |||||
| Common equity Tier 1 capital | 607,033 | 494,690 | |||||||
| Total risk-based capital | 629,262 | 516,226 | |||||||
| Tier 1 leverage capital (well capitalized = 5%) | 10.12 | % | 8.89 | % | |||||
| Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 14.12 | 12.62 | |||||||
| Tier 1 risk-based capital (well capitalized = 8.0%) | 14.12 | 12.62 | |||||||
| Total risk-based capital (well capitalized = 10.0%) | 14.64 | 13.17 | |||||||
| Capital ratios: | |||||||||
| Average equity to average assets | 8.40 | % | 8.68 | % | |||||
| Equity to total assets | 8.48 | 8.29 | |||||||
| Tangible stockholders' common equity to tangible assets (1) | 8.24 | 8.04 | |||||||
| Asset quality: | |||||||||
| Non-accrual loans (2) | $ | 21,030 | $ | 22,817 | |||||
| Non-performing loans | 21,416 | 26,077 | |||||||
| Non-performing assets | 21,949 | 31,009 | |||||||
| Net charge-offs/ (recoveries) | (694 | ) | 2,605 | ||||||
| Asset quality ratios: | |||||||||
| Non-performing loans to gross loans | 0.44 | % | 0.60 | % | |||||
| Non-performing assets to total assets | 0.36 | 0.54 | |||||||
| Allowance for loan losses to gross loans | 0.46 | 0.49 | |||||||
| Allowance for loan losses to non-performing assets | 101.28 | 69.45 | |||||||
| Allowance for loan losses to non-performing loans | 103.80 | 82.58 | |||||||
| Full-service customer facilities | 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 | ||||||||||||||||||
| December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||
| Balance | Interest | Cost | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||
| Interest-earning Assets: | ||||||||||||||||||
| Mortgage loans, net | $ | 4,140,511 | $ | 44,219 | 4.27 | % | $ | 4,093,240 | $ | 43,777 | 4.28 | % | $ | 3,697,169 | $ | 41,184 | 4.46 | % |
| Other loans, net | 616,613 | 5,754 | 3.73 | 593,353 | 5,402 | 3.64 | 532,864 | 4,675 | 3.51 | |||||||||
| Total loans, net (1) | 4,757,124 | 49,973 | 4.20 | 4,686,593 | 49,179 | 4.20 | 4,230,033 | 45,859 | 4.34 | |||||||||
| Taxable securities: | ||||||||||||||||||
| Mortgage-backed | ||||||||||||||||||
| securities | 514,527 | 3,002 | 2.33 | 554,515 | 3,350 | 2.42 | 674,103 | 4,281 | 2.54 | |||||||||
| Other securities | 248,765 | 2,203 | 3.54 | 245,477 | 2,162 | 3.52 | 199,258 | 1,501 | 3.01 | |||||||||
| Total taxable securities | 763,292 | 5,205 | 2.73 | 799,992 | 5,512 | 2.76 | 873,361 | 5,782 | 2.65 | |||||||||
| Tax-exempt securities: (2) | ||||||||||||||||||
| Other securities | 147,184 | 782 | 2.13 | 148,004 | 784 | 2.12 | 128,024 | 797 | 2.49 | |||||||||
| Total tax-exempt securities | 147,184 | 782 | 2.13 | 148,004 | 784 | 2.12 | 128,024 | 797 | 2.49 | |||||||||
| Interest-earning deposits | ||||||||||||||||||
| and federal funds sold | 49,698 | 59 | 0.47 | 49,824 | 49 | 0.39 | 53,560 | 30 | 0.22 | |||||||||
| Total interest-earning | ||||||||||||||||||
| assets | 5,717,298 | 56,019 | 3.92 | 5,684,413 | 55,524 | 3.91 | 5,284,978 | 52,468 | 3.97 | |||||||||
| Other assets | 285,827 | 292,312 | 284,033 | |||||||||||||||
| Total assets | $ | 6,003,125 | $ | 5,976,725 | $ | 5,569,011 | ||||||||||||
| Interest-bearing Liabilities: | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Savings accounts | $ | 256,677 | 309 | 0.48 | $ | 258,884 | 306 | 0.47 | $ | 262,103 | 299 | 0.46 | ||||||
| NOW accounts | 1,370,618 | 2,028 | 0.59 | 1,384,368 | 1,979 | 0.57 | 1,405,933 | 1,746 | 0.50 | |||||||||
| Money market accounts | 780,233 | 1,315 | 0.67 | 601,709 | 990 | 0.66 | 463,551 | 536 | 0.46 | |||||||||
| Certificate of deposit | ||||||||||||||||||
| accounts | 1,388,809 | 5,081 | 1.46 | 1,428,770 | 5,213 | 1.46 | 1,375,450 | 5,134 | 1.49 | |||||||||
| Total due to depositors | 3,796,337 | 8,733 | 0.92 | 3,673,731 | 8,488 | 0.92 | 3,507,037 | 7,715 | 0.88 | |||||||||
| Mortgagors' escrow | ||||||||||||||||||
| accounts | 58,151 | 27 | 0.19 | 48,840 | 32 | 0.26 | 54,121 | 25 | 0.18 | |||||||||
| Total interest-bearing | ||||||||||||||||||
| deposits | 3,854,488 | 8,760 | 0.91 | 3,722,571 | 8,520 | 0.92 | 3,561,158 | 7,740 | 0.87 | |||||||||
| Borrowings | 1,223,405 | 4,908 | 1.60 | 1,337,049 | 5,291 | 1.58 | 1,203,976 | 5,312 | 1.76 | |||||||||
| Total interest-bearing | ||||||||||||||||||
| liabilities | 5,077,893 | 13,668 | 1.08 | 5,059,620 | 13,811 | 1.09 | 4,765,134 | 13,052 | 1.10 | |||||||||
| Non interest-bearing | ||||||||||||||||||
| demand deposits | 331,232 | 318,188 | 270,651 | |||||||||||||||
| Other liabilities | 81,683 | 89,943 | 62,461 | |||||||||||||||
| Total liabilities | 5,490,808 | 5,467,751 | 5,098,246 | |||||||||||||||
| Equity | 512,317 | 508,974 | 470,765 | |||||||||||||||
| Total liabilities and | ||||||||||||||||||
| equity | $ | 6,003,125 | $ | 5,976,725 | $ | 5,569,011 | ||||||||||||
| Net interest income / | ||||||||||||||||||
| net interest rate spread | $ | 42,351 | 2.84 | % | $ | 41,713 | 2.82 | % | $ | 39,416 | 2.87 | % | ||||||
| Net interest-earning assets / | ||||||||||||||||||
| net interest margin | $ | 639,405 | 2.96 | % | $ | 624,793 | 2.94 | % | $ | 519,844 | 2.98 | % | ||||||
| Ratio of interest-earning | ||||||||||||||||||
| assets to interest-bearing | ||||||||||||||||||
| liabilities | 1.13 | X | 1.12 | X | 1.11 | X | ||||||||||||
(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.9 million, $0.9 million and $1.1 million for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
| FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | |||||||||||||
| NET INTEREST MARGIN | |||||||||||||
| (Dollars in thousands) | |||||||||||||
| (Unaudited) | |||||||||||||
| For the year ended | |||||||||||||
| December 31, 2016 | December 31, 2015 | ||||||||||||
| Average | Yield/ | Average | Yield/ | ||||||||||
| Balance | Interest | Cost | Balance | Interest | Cost | ||||||||
| Interest-earning Assets: | |||||||||||||
| Mortgage loans, net | $ | 4,014,734 | $ | 173,419 | 4.32 | % | $ | 3,524,331 | $ | 161,115 | 4.57 | % | |
| Other loans, net | 585,948 | 21,706 | 3.70 | 509,147 | 17,605 | 3.46 | |||||||
| Total loans, net (1) | 4,600,682 | 195,125 | 4.24 | 4,033,478 | 178,720 | 4.43 | |||||||
| Taxable securities: | |||||||||||||
| Mortgage-backed | |||||||||||||
| securities | 581,505 | 14,231 | 2.45 | 693,893 | 17,309 | 2.49 | |||||||
| Other securities | 243,567 | 8,243 | 3.38 | 163,604 | 4,398 | 2.69 | |||||||
| Total taxable securities | 825,072 | 22,474 | 2.72 | 857,497 | 21,707 | 2.53 | |||||||
| Tax-exempt securities: (2) | |||||||||||||
| Other securities | 142,472 | 3,148 | 2.21 | 134,807 | 3,593 | 2.67 | |||||||
| Total tax-exempt securities | 142,472 | 3,148 | 2.21 | 134,807 | 3,593 | 2.67 | |||||||
| Interest-earning deposits | |||||||||||||
| and federal funds sold | 58,522 | 250 | 0.43 | 58,397 | 126 | 0.22 | |||||||
| Total interest-earning | |||||||||||||
| assets | 5,626,748 | 220,997 | 3.93 | 5,084,179 | 204,146 | 4.02 | |||||||
| Other assets | 286,786 | 276,965 | |||||||||||
| Total assets | $ | 5,913,534 | $ | 5,361,144 | |||||||||
| Interest-bearing Liabilities: | |||||||||||||
| Deposits: | |||||||||||||
| Savings accounts | $ | 260,948 | 1,219 | 0.47 | $ | 264,891 | 1,151 | 0.43 | |||||
| NOW accounts | 1,496,712 | 7,891 | 0.53 | 1,432,609 | 6,593 | 0.46 | |||||||
| Money market accounts | 581,390 | 3,592 | 0.62 | 380,595 | 1,551 | 0.41 | |||||||
| Certificate of deposit | |||||||||||||
| accounts | 1,409,772 | 20,536 | 1.46 | 1,351,619 | 20,943 | 1.55 | |||||||
| Total due to depositors | 3,748,822 | 33,238 | 0.89 | 3,429,714 | 30,238 | 0.88 | |||||||
| Mortgagors' escrow | |||||||||||||
| accounts | 56,152 | 112 | 0.20 | 52,364 | 98 | 0.19 | |||||||
| Total interest-bearing | |||||||||||||
| deposits | 3,804,974 | 33,350 | 0.88 | 3,482,078 | 30,336 | 0.87 | |||||||
| Borrowings | 1,231,015 | 20,561 | 1.67 | 1,104,368 | 19,390 | 1.76 | |||||||
| Total interest-bearing | |||||||||||||
| liabilities | 5,035,989 | 53,911 | 1.07 | 4,586,446 | 49,726 | 1.08 | |||||||
| Non interest-bearing | |||||||||||||
| demand deposits | 305,096 | 250,488 | |||||||||||
| Other liabilities | 75,629 | 59,016 | |||||||||||
| Total liabilities | 5,416,714 | 4,895,950 | |||||||||||
| Equity | 496,820 | 465,194 | |||||||||||
| Total liabilities and | |||||||||||||
| equity | $ | 5,913,534 | $ | 5,361,144 | |||||||||
| Net interest income / | |||||||||||||
| net interest rate spread | $ | 167,086 | 2.86 | % | $ | 154,420 | 2.94 | % | |||||
| Net interest-earning assets / | |||||||||||||
| net interest margin | $ | 590,759 | 2.97 | % | $ | 497,733 | 3.04 | % | |||||
| Ratio of interest-earning | |||||||||||||
| assets to interest-bearing | |||||||||||||
| liabilities | 1.12 | X | 1.11 | X | |||||||||
(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $4.2 million for each of the years ended December 31, 2016 and 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
| FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | |||||||||||||||||||||||
| DEPOSIT COMPOSITION | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| December 2016 vs. | December 2016 vs. | ||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | September, 2016 | December 31, | December 2015 | |||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2016 | % Change | 2015 | % Change | ||||||||||||||||
| Deposits | |||||||||||||||||||||||
| Non-interest bearing | $ | 333,163 | $ | 320,060 | $ | 317,112 | $ | 280,450 | 4.1 | % | $ | 269,469 | 23.6 | % | |||||||||
| Interest bearing: | |||||||||||||||||||||||
| Certificate of deposit | |||||||||||||||||||||||
| accounts | 1,372,115 | 1,384,551 | 1,411,550 | 1,362,062 | (0.9 | %) | 1,403,302 | (2.2 | %) | ||||||||||||||
| Savings accounts | 254,283 | 258,058 | 260,528 | 268,057 | (1.5 | %) | 261,748 | (2.9 | %) | ||||||||||||||
| Money market accounts | 843,370 | 733,361 | 452,589 | 485,774 | 15.0 | % | 472,489 | 78.5 | % | ||||||||||||||
| NOW accounts | 1,362,484 | 1,296,475 | 1,453,540 | 1,610,932 | 5.1 | % | 1,448,695 | (6.0 | %) | ||||||||||||||
| Total interest-bearing | |||||||||||||||||||||||
| deposits | 3,832,252 | 3,672,445 | 3,578,207 | 3,726,825 | 4.4 | % | 3,586,234 | 6.9 | % | ||||||||||||||
| Total deposits | $ | 4,165,415 | $ | 3,992,505 | $ | 3,895,319 | $ | 4,007,275 | 4.3 | % | $ | 3,855,703 | 8.0 | % | |||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
Loan Origination and Purchases
| For the three months | For the year ended | ||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||
| (In thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||
| Multi-family residential | $ | 77,812 | $ | 61,378 | $ | 104,622 | $ | 371,197 | $ | 373,843 | |||||
| Commercial real estate | 77,607 | 68,970 | 157,005 | 322,721 | 452,089 | ||||||||||
| One-to-four family – mixed-use property | 20,242 | 12,618 | 23,390 | 62,735 | 68,295 | ||||||||||
| One-to-four family – residential | 7,770 | 3,362 | 6,135 | 24,820 | 40,831 | ||||||||||
| Co-operative apartments | - | - | - | 470 | 1,625 | ||||||||||
| Construction | 9,738 | 1,920 | 1,613 | 15,772 | 4,999 | ||||||||||
| Small Business Administration | 1,662 | 470 | 2,548 | 8,447 | 11,261 | ||||||||||
| Commercial business and other | 87,761 | 84,525 | 100,279 | 326,776 | 280,518 | ||||||||||
| Total | $ | 282,592 | $ | 233,243 | $ | 395,592 | $ | 1,132,938 | $ | 1,233,461 | |||||
Loan Composition
| December 2016 vs. | December 2016 vs. | |||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | September 2016 | December 31, | December 2015 | ||||||||||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2016 | % Change | 2015 | % Change | |||||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||||||||
| Multi-family residential | $ | 2,178,504 | $ | 2,171,289 | $ | 2,159,138 | $ | 2,039,794 | 0.3 | % | $ | 2,055,228 | 6.0 | % | ||||||||||||||||
| Commercial real estate | 1,246,132 | 1,195,266 | 1,146,400 | 1,058,028 | 4.3 | % | 1,001,236 | 24.5 | % | |||||||||||||||||||||
| One-to-four family ― | ||||||||||||||||||||||||||||||
| mixed-use property | 558,502 | 555,691 | 566,702 | 571,846 | 0.5 | % | 573,043 | (2.5 | %) | |||||||||||||||||||||
| One-to-four family ― residential | 185,767 | 183,993 | 190,251 | 191,158 | 1.0 | % | 187,838 | (1.1 | %) | |||||||||||||||||||||
| Co-operative apartments | 7,418 | 7,494 | 7,571 | 8,182 | (1.0 | %) | 8,285 | (10.5 | %) | |||||||||||||||||||||
| Construction | 11,495 | 11,250 | 9,899 | 7,472 | 2.2 | % | 7,284 | 57.8 | % | |||||||||||||||||||||
| Small Business Administration | 15,198 | 14,339 | 14,718 | 14,701 | 6.0 | % | 12,194 | 24.6 | % | |||||||||||||||||||||
| Taxi medallion | 18,996 | 20,536 | 20,641 | 20,757 | (7.5 | %) | 20,881 | (9.0 | %) | |||||||||||||||||||||
| Commercial business and other | 597,122 | 564,972 | 564,084 | 531,322 | 5.7 | % | 506,622 | 17.9 | % | |||||||||||||||||||||
| Net unamortized premiums | ||||||||||||||||||||||||||||||
| and unearned loan fees | 16,559 | 16,447 | 16,875 | 15,281 | 0.7 | % | 15,368 | 7.7 | % | |||||||||||||||||||||
| Allowance for loan losses | (22,229 | ) | (21,795 | ) | (22,198 | ) | (21,993 | ) | 2.0 | % | (21,535 | ) | 3.2 | % | ||||||||||||||||
| Net loans | $ | 4,813,464 | $ | 4,719,482 | $ | 4,674,081 | $ | 4,436,548 | 2.0 | % | $ | 4,366,444 | 10.2 | % | ||||||||||||||||
Loan Activity
| Three Months Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (In thousands) | 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||
| Loans originated and purchased | $ | 282,592 | $ | 233,243 | $ | 387,863 | $ | 229,240 | $ | 395,592 | ||||||||||
| Principal reductions | (187,780 | ) | (183,583 | ) | (149,308 | ) | (152,521 | ) | (206,125 | ) | ||||||||||
| Loans sold | - | (3,693 | ) | (2,310 | ) | (5,515 | ) | (1,164 | ) | |||||||||||
| Loan charged-offs | (370 | ) | (541 | ) | (101 | ) | (147 | ) | (2,478 | ) | ||||||||||
| Foreclosures | (138 | ) | - | - | (408 | ) | (34 | ) | ||||||||||||
| Net change in deferred (fees) and costs | 112 | (428 | ) | 1,594 | (87 | ) | 1,239 | |||||||||||||
| Net change in the allowance for loan losses | (434 | ) | 403 | (205 | ) | (458 | ) | 1,438 | ||||||||||||
| Total loan activity | $ | 93,982 | $ | 45,401 | $ | 237,533 | $ | 70,104 | $ | 188,468 | ||||||||||
| FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | ||||||||||||||||||||||
| NON-PERFORMING ASSETS and NET CHARGE-OFFS | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||||
| Loans 90 Days Or More Past Due | ||||||||||||||||||||||
| and Still Accruing: | ||||||||||||||||||||||
| Multi-family residential | $ | - | $ | - | $ | 574 | $ | 792 | $ | 233 | ||||||||||||
| Commercial real estate | - | 1,183 | 320 | 1,083 | 1,183 | |||||||||||||||||
| One-to-four family - mixed-use property | 386 | 470 | 635 | 743 | 611 | |||||||||||||||||
| One-to-four family - residential | - | - | 13 | 13 | 13 | |||||||||||||||||
| Construction | - | - | - | 570 | 1,000 | |||||||||||||||||
| Commercial business and other | - | - | - | - | 220 | |||||||||||||||||
| Total | 386 | 1,653 | 1,542 | 3,201 | 3,260 | |||||||||||||||||
| Non-accrual Loans: | ||||||||||||||||||||||
| Multi-family residential | 1,837 | 1,649 | 3,162 | 3,518 | 3,561 | |||||||||||||||||
| Commercial real estate | 1,148 | 1,157 | 2,299 | 3,295 | 2,398 | |||||||||||||||||
| One-to-four family - mixed-use property | 4,025 | 4,534 | 6,005 | 5,519 | 5,952 | |||||||||||||||||
| One-to-four family - residential | 8,241 | 8,340 | 8,406 | 8,861 | 10,120 | |||||||||||||||||
| Small business administration | 1,886 | 2,132 | 185 | 201 | 218 | |||||||||||||||||
| Taxi Medallion | 3,825 | 3,971 | 196 | 196 | - | |||||||||||||||||
| Commercial business and other | 68 | 99 | 128 | 511 | 568 | |||||||||||||||||
| Total | 21,030 | 21,882 | 20,381 | 22,101 | 22,817 | |||||||||||||||||
| Total Non-performing Loans | 21,416 | 23,535 | 21,923 | 25,302 | 26,077 | |||||||||||||||||
| Other Non-performing Assets: | ||||||||||||||||||||||
| Real estate acquired through foreclosure | 533 | 2,839 | 3,668 | 4,602 | 4,932 | |||||||||||||||||
| Total | 533 | 2,839 | 3,668 | 4,602 | 4,932 | |||||||||||||||||
| Total Non-performing Assets | $ | 21,949 | $ | 26,374 | $ | 25,591 | $ | 29,904 | $ | 31,009 | ||||||||||||
| Non-performing Assets to Total Assets | 0.36 | % | 0.44 | % | 0.43 | % | 0.51 | % | 0.54 | % | ||||||||||||
| Allowance For Loan Losses to Non-performing Loans | 103.8 | % | 92.6 | % | 101.3 | % | 86.9 | % | 82.6 | % | ||||||||||||
Net Charge-Offs (Recoveries)
| Three Months Ended | |||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||
| (In thousands) | 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Multi-family residential | $ | (103 | ) | $ | 79 | $ | (183 | ) | $ | 29 | $ | (35 | ) | ||||||||
| Commercial real estate | - | (11 | ) | - | - | - | |||||||||||||||
| One-to-four family – mixed-use property | (520 | ) | 24 | 36 | (173 | ) | 18 | ||||||||||||||
| One-to-four family – residential | 40 | - | 7 | (299 | ) | 97 | |||||||||||||||
| Small Business Administration | 186 | 317 | (42 | ) | (31 | ) | 17 | ||||||||||||||
| Taxi Medallion | 142 | - | - | - | - | ||||||||||||||||
| Commercial business and other | (179 | ) | (6 | ) | (23 | ) | 16 | 2,005 | |||||||||||||
| Total net loan charge-offs (recoveries) | $ | (434 | ) | $ | 403 | $ | (205 | ) | $ | (458 | ) | $ | 2,102 | ||||||||
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 | Twelve Months Ended | ||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP income before income taxes | $ | 22,402 | $ | 17,289 | $ | 17,073 | $ | 106,019 | $ | 73,376 | |||||||
| Net loss from fair value adjustments | 509 | 823 | 920 | 3,434 | 1,841 | ||||||||||||
| Net loss (gain) on sale of securities | 839 | - | - | (1,524 | ) | (167 | ) | ||||||||||
| Gain from life insurance proceeds | (2 | ) | (47 | ) | - | (460 | ) | - | |||||||||
| Net gain on sale of buildings | (14,204 | ) | - | - | (48,018 | ) | (6,537 | ) | |||||||||
| Prepayment penalty on borrowings | 8,274 | - | - | 10,356 | - | ||||||||||||
| Core income before taxes | 17,818 | 18,065 | 17,993 | 69,807 | 68,513 | ||||||||||||
| Provision for income taxes for core income | 6,227 | 6,736 | 5,820 | 25,855 | 25,067 | ||||||||||||
| Core net income | $ | 11,591 | $ | 11,329 | $ | 12,173 | $ | 43,952 | $ | 43,446 | |||||||
| GAAP diluted earnings per common share | $ | 0.50 | $ | 0.37 | $ | 0.40 | $ | 2.24 | $ | 1.59 | |||||||
| Net loss from fair value adjustments, net of tax | 0.01 | 0.03 | 0.02 | 0.07 | 0.03 | ||||||||||||
| Net loss (gain) on sale of securities, net of tax | 0.02 | - | - | (0.03 | ) | - | |||||||||||
| Gain from life insurance proceeds | - | - | - | (0.02 | ) | - | |||||||||||
| Net gain on sale of buildings, net of tax | (0.29 | ) | - | - | (0.95 | ) | (0.13 | ) | |||||||||
| Prepayment penalty on borrowings, net of tax | 0.17 | - | - | 0.21 | - | ||||||||||||
| Core diluted earnings per common share* | $ | 0.40 | $ | 0.39 | $ | 0.42 | $ | 1.52 | $ | 1.49 | |||||||
| Core net income, as calculated above | $ | 11,591 | $ | 11,329 | $ | 12,173 | $ | 43,952 | $ | 43,446 | |||||||
| Average assets | 6,003,125 | 5,976,725 | 5,569,011 | 5,913,534 | 5,361,144 | ||||||||||||
| Average equity | 512,317 | 508,974 | 470,765 | 496,820 | 465,194 | ||||||||||||
| Core return on average assets** | 0.77 | % | 0.76 | % | 0.87 | % | 0.74 | % | 0.81 | % | |||||||
| Core return on average equity** | 9.05 | % | 8.90 | % | 10.34 | % | 8.85 | % | 9.34 | % | |||||||
| * 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) | |||||||||||
| December 31, | December 31, | ||||||||||
| (Dollars in thousands) | 2016 | 2015 | |||||||||
| Total Equity | $ | 513,853 | $ | 473,067 | |||||||
| Less: | |||||||||||
| Goodwill | (16,127 | ) | (16,127 | ) | |||||||
| Intangible deferred tax liabilities | 389 | 406 | |||||||||
| Tangible Stockholders' Common Equity | $ | 498,115 | $ | 457,346 | |||||||
| Total Assets | $ | 6,058,487 | $ | 5,704,634 | |||||||
| Less: | |||||||||||
| Goodwill | (16,127 | ) | (16,127 | ) | |||||||
| Intangible deferred tax liabilities | 389 | 406 | |||||||||
| Tangible Assets | $ | 6,042,749 | $ | 5,688,913 | |||||||
| Tangible Stockholders' Common Equity to Tangible Assets | 8.24 | % | 8.04 | % | |||||||