FIRST QUARTER 20191 HIGHLIGHTS
UNIONDALE, N.Y., April 30, 2019 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq-GS: FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the first quarter ended March 31, 2019.
John R. Buran, President and Chief Executive Officer, stated, “While quarterly results were impacted by seasonal expense increases, fair market value adjustments, and provision expense, we were pleased to see several positive trends including net interest margin stabilization, loan yield improvement, loan pipeline growth, continued growth in the C&I portfolio and deposit growth, particularly in the Flushing market.”
“The most significant of these trends was the stabilization of the net interest margin. The net interest margin was flat in 1Q19 compared to 4Q18 while core net interest margin increased three basis points during the same period. Importantly, the pace of the increase in the cost of funds has slowed from the 26 bps increase in the cost of interest bearing liabilities between 2Q18 and 3Q18 to three basis points between 1Q19 and 4Q18. The yield on interest earning assets has increased more gradually over the same periods as a result of our strategic focus on rate over volume, resulting in easing of net interest margin pressure.”
“Another component of the net interest margin stabilization is the $2 billion of loans scheduled to upwardly reprice through 2021 an average of 96bps. We may not reprice to the full contractual rate but we will reprice somewhere between the market and the contract price as loans begin to refinance.”
“Additionally, the swap strategy remains an important component in stabilizing the net interest margin. For 1Q19, the forward swaps totaling $442 million provided a benefit of four basis points while the loan swaps totaling $284 million provided two basis points of benefit. Our strategic focus on yield over volume in loan pricing continues to aid in stabilizing the net interest margin as the yield on loan closings increased 12bps during 1Q19 and 75bps from 1Q18. Finally, the loan pipeline improved significantly in 1Q19, growing 40% to $275 million from $197 million at December 31, 2018. The loan pipeline has an average yield of 4.80% providing for additional yield growth in the portfolio with 53% of our pipeline from adjustable rate loans at March 31, 2019.”
“Our strategy on loan growth is to move our balance sheet toward more floating rate C&I business while simultaneously focusing on yield over volume on our mortgage business. During 1Q19, our C&I loan closings totaled over $130 million, representing over 65% of our total loan closings. This performance was part of a trend that has been seen over the past four quarters. During that time period C&I loans, which are primarily adjustable rate, represented 43% of new loan closings. On the mortgage side the yield on loan closings increased 35bps in 1Q19 from 4Q18 and 99bps from 1Q18. Mortgage loan closings were down in 1Q19, primarily due to the pipeline at December 31, 2018 being lower than historical norms, particularly in commercial real estate.”
“Total deposits increased $94.2 million, or 1.9% (non-annualized) QoQ. The majority of this increase was transaction deposits, which increased 4.3% (non-annualized) QoQ. The “Win Flushing” program, which focuses on increasing our deposit market share in the Asian Community of Flushing, Queens, was the centerpiece of our retail deposits growth of $72 million QoQ. As of March 31, 2019, we have captured $175 million of deposits, exceeding our target of $160 million in deposit growth by the end of 1Q19. The program was predicated on the conversion of Flushing branches to the Universal Banker model, which allows staff to spend more time with customers, increasing sales opportunities. In the branches that have been converted, we experienced an increase of approximately 100% in transactions processed at ATMs, to almost 55% of all branch transactions, reducing our customer’s reliance on tellers. As a result, branch sales have increased over 30%, as sales per employee increased approximately 50% due to our branch staff focusing more time on sales opportunities. As previously discussed, we expect to have the remaining branches converted to the Universal Banker model by the end of 2019. As of March 31, 2019, we had 15 out of our 19 total branches operating under the Universal Banker model.”
“Credit quality remained strong, as non-accrual and non-performing loans decreased by 3% in 1Q19. The quarter’s $0.9 million in charge-offs were mainly isolated to one commercial business loan relationship. The loan-to-value on our non-performing real estate loans at March 31, 2019 remained conservative at 33.9%.”
Mr. Buran continued, “The Company retains its focus on preserving strong risk management practices, including conservative underwriting standards and improving yields to achieve improved risk-adjusted returns.”
Mr. Buran concluded, “Overall, we remain well capitalized and committed to the successful execution of our strategic objectives of managing our funding mix, emphasizing loan yields over volume, improving scalability and efficiency of our branch network and continuing to manage credit risk.”
Summary of Strategic Objectives
Earnings Summary:
Net Interest Income
Net interest income for 1Q19 was $41.8 million, a decrease of $0.8 million, or 1.9% YoY (1Q19 compared to 1Q18) but an increase of $1.2 million, or 2.9% QoQ (1Q19 compared to 4Q18).
Provision for loan losses
The Company recorded a provision of $1.0 million compared to $0.4 million in 4Q18 and $0.2 million in 1Q18.
Non-interest Income
Non-interest income for 1Q19 was $0.9 million, a decrease of $2.3 million YoY, but an increase of $1.9 million QoQ.
Non-interest Expense
Non-interest expense for 1Q19 was $32.4 million, an increase of $1.1 million, or 3.6% YoY, and $6.7 million, or 25.9% QoQ.
Provision for Income Taxes
The provision for income taxes in 1Q19 was $2.3 million, a decrease of $0.7 million, or 22.5% YoY but an increase of $1.2 million, or 118.6% QoQ.
Financial Condition Summary:
Loans:
The following table shows the weighted average rate received from loan closings for the periods indicated:
For the three months ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
Loan type | 2019 | 2018 | 2018 | |||||||
Mortgage loans | 5.14 | % | 4.79 | % | 4.15 | % | ||||
Non-mortgage loans | 4.96 | % | 5.11 | % | 4.43 | % | ||||
Total loans | 5.02 | % | 4.90 | % | 4.27 | % | ||||
Credit Quality:
Capital Management:
Conference Call Information:
About Flushing Financial Corporation
Flushing Financial Corporation (Nasdaq: FFIC) 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, professionals, corporate clients, and public entities by offering a full complement of deposit, loan, equipment finance, and cash management services through its banking offices located in Queens, Brooklyn, Manhattan, and on Long Island. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. Flushing Bank is an Equal Housing Lender. The Bank also operates an online banking division consisting of iGObanking.com®, which offers competitively priced deposit products to consumers nationwide, and BankPurely®, an eco-friendly, healthier lifestyle community brand.
Additional information on Flushing Bank and 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, 2018 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”, “goals”, “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.
1 See the tables entitled “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Income and Net Interest Margin to Core Net Interest Income and Net Interest Margin.”
- 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 | |||||||||||||
March 31 | December 31, | March 31 | |||||||||||
2019 | 2018 | 2018 | |||||||||||
Interest and Dividend Income | |||||||||||||
Interest and fees on loans | $ | 62,330 | $ | 60,722 | $ | 55,017 | |||||||
Interest and dividends on securities: | |||||||||||||
Interest | 6,909 | 6,376 | 5,468 | ||||||||||
Dividends | 19 | 18 | 14 | ||||||||||
Other interest income | 555 | 317 | 287 | ||||||||||
Total interest and dividend income | 69,813 | 67,433 | 60,786 | ||||||||||
Interest Expense | |||||||||||||
Deposits | 21,469 | 20,174 | 12,110 | ||||||||||
Other interest expense | 6,541 | 6,623 | 6,067 | ||||||||||
Total interest expense | 28,010 | 26,797 | 18,177 | ||||||||||
Net Interest Income | 41,803 | 40,636 | 42,609 | ||||||||||
Provision for loan losses | 972 | 422 | 153 | ||||||||||
Net Interest Income After Provision for Loan Losses | 40,831 | 40,214 | 42,456 | ||||||||||
Non-interest Income | |||||||||||||
Banking services fee income | 973 | 1,065 | 948 | ||||||||||
Net loss on sale of securities | - | (1,920 | ) | - | |||||||||
Net gain (loss) on sale of loans | 63 | - | (263 | ) | |||||||||
Net gain on sale of assets | - | 1,141 | - | ||||||||||
Net loss from fair value adjustments | (2,080 | ) | (3,585 | ) | (100 | ) | |||||||
Federal Home Loan Bank of New York stock dividends | 903 | 946 | 876 | ||||||||||
Life insurance proceeds | 43 | - | 776 | ||||||||||
Bank owned life insurance | 740 | 779 | 762 | ||||||||||
Other income | 301 | 588 | 201 | ||||||||||
Total non-interest income (loss) | 943 | (986 | ) | 3,200 | |||||||||
Non-interest Expense | |||||||||||||
Salaries and employee benefits | 19,166 | 15,094 | 18,455 | ||||||||||
Occupancy and equipment | 2,789 | 2,551 | 2,577 | ||||||||||
Professional services | 2,265 | 1,821 | 2,185 | ||||||||||
FDIC deposit insurance | 485 | 472 | 500 | ||||||||||
Data processing | 1,492 | 1,409 | 1,401 | ||||||||||
Depreciation and amortization | 1,518 | 1,464 | 1,389 | ||||||||||
Other real estate owned/foreclosure expense (benefit) | 77 | (128 | ) | 96 | |||||||||
Other operating expenses | 4,627 | 3,077 | 4,691 | ||||||||||
Total non-interest expense | 32,419 | 25,760 | 31,294 | ||||||||||
Income Before Income Taxes | 9,355 | 13,468 | 14,362 | ||||||||||
Provision for Income Taxes | |||||||||||||
Federal | 1,943 | 349 | 2,607 | ||||||||||
State and local | 344 | 697 | 343 | ||||||||||
Total taxes | 2,287 | 1,046 | 2,950 | ||||||||||
Net Income | $ | 7,068 | $ | 12,422 | $ | 11,412 | |||||||
Basic earnings per common share | $ | 0.25 | $ | 0.44 | $ | 0.39 | |||||||
Diluted earnings per common share | $ | 0.25 | $ | 0.44 | $ | 0.39 | |||||||
Dividends per common share | $ | 0.21 | $ | 0.20 | $ | 0.20 | |||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
March 31, | December 31, | March 31, | ||||||||||||
2019 | 2018 | 2018 | ||||||||||||
ASSETS | ||||||||||||||
Cash and due from banks | $ | 58,677 | $ | 118,561 | $ | 91,959 | ||||||||
Securities held-to-maturity: | ||||||||||||||
Mortgage-backed securities | 7,949 | 7,953 | 7,968 | |||||||||||
Other securities | 22,532 | 24,065 | 23,267 | |||||||||||
Securities available for sale: | ||||||||||||||
Mortgage-backed securities | 579,185 | 557,953 | 512,781 | |||||||||||
Other securities | 266,839 | 264,702 | 216,480 | |||||||||||
Loans: | ||||||||||||||
Multi-family residential | 2,256,447 | 2,269,048 | 2,286,803 | |||||||||||
Commercial real estate | 1,529,001 | 1,542,547 | 1,426,847 | |||||||||||
One-to-four family ― mixed-use property | 582,049 | 577,741 | 566,930 | |||||||||||
One-to-four family ― residential | 188,615 | 190,350 | 190,115 | |||||||||||
Co-operative apartments | 7,903 | 8,498 | 6,826 | |||||||||||
Construction | 54,933 | 50,600 | 23,887 | |||||||||||
Small Business Administration | 15,188 | 15,210 | 20,004 | |||||||||||
Taxi medallion | 3,891 | 4,539 | 6,617 | |||||||||||
Commercial business and other | 935,297 | 877,763 | 768,440 | |||||||||||
Net unamortized premiums and unearned loan fees | 15,422 | 15,188 | 16,395 | |||||||||||
Allowance for loan losses | (21,015 | ) | (20,945 | ) | (20,542 | ) | ||||||||
Net loans | 5,567,731 | 5,530,539 | 5,292,322 | |||||||||||
Interest and dividends receivable | 27,226 | 25,485 | 22,578 | |||||||||||
Bank premises and equipment, net | 29,798 | 30,418 | 31,314 | |||||||||||
Federal Home Loan Bank of New York stock | 51,182 | 57,282 | 54,045 | |||||||||||
Bank owned life insurance | 131,794 | 131,788 | 130,653 | |||||||||||
Goodwill | 16,127 | 16,127 | 16,127 | |||||||||||
Right of Use Asset | 44,033 | - | - | |||||||||||
Other assets | 64,377 | 69,303 | 83,277 | |||||||||||
Total assets | $ | 6,867,450 | $ | 6,834,176 | $ | 6,482,771 | ||||||||
LIABILITIES | ||||||||||||||
Due to depositors: | ||||||||||||||
Non-interest bearing | $ | 401,064 | $ | 413,747 | $ | 377,861 | ||||||||
Certificate of deposit accounts | 1,511,770 | 1,563,310 | 1,499,326 | |||||||||||
Savings accounts | 201,811 | 210,022 | 246,888 | |||||||||||
Money market accounts | 1,352,843 | 1,427,992 | 1,032,409 | |||||||||||
NOW accounts | 1,542,606 | 1,300,852 | 1,479,319 | |||||||||||
Total deposits | 5,010,094 | 4,915,923 | 4,635,803 | |||||||||||
Mortgagors' escrow deposits | 70,115 | 44,861 | 65,979 | |||||||||||
Borrowed funds | 1,116,416 | 1,250,843 | 1,177,101 | |||||||||||
Operating Lease Liability | 52,510 | - | - | |||||||||||
Other liabilities | 58,756 | 73,085 | 68,581 | |||||||||||
Total liabilities | 6,307,891 | 6,284,712 | 5,947,464 | |||||||||||
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 March 31, 2019, December 31, 2018 and March 31, 2018; 28,187,184 | ||||||||||||||
shares, 27,983,637 shares and 28,546,443 shares outstanding at March 31, 2019, | ||||||||||||||
December 31, 2018 and March 31, 2018, respectively) | 315 | 315 | 315 | |||||||||||
Additional paid-in capital | 222,859 | 222,720 | 219,115 | |||||||||||
Treasury stock (3,343,411 shares, 3,546,958 shares and 2,984,152 shares at | ||||||||||||||
March 31, 2019, December 31, 2018 and March 31, 2018, respectively) | (70,929 | ) | (75,146 | ) | (60,737 | ) | ||||||||
Retained earnings | 417,856 | 414,327 | 388,568 | |||||||||||
Accumulated other comprehensive loss, net of taxes | (10,542 | ) | (12,752 | ) | (11,954 | ) | ||||||||
Total stockholders' equity | 559,559 | 549,464 | 535,307 | |||||||||||
Total liabilities and stockholders' equity | $ | 6,867,450 | $ | 6,834,176 | $ | 6,482,771 | ||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)
At or for the three months ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
2019 | 2018 | 2018 | ||||||||
Per Share Data | ||||||||||
Basic earnings per share | $ | 0.25 | $ | 0.44 | $ | 0.39 | ||||
Diluted earnings per share | $ | 0.25 | $ | 0.44 | $ | 0.39 | ||||
Average number of shares outstanding for: | ||||||||||
Basic earnings per common share computation | 28,621,018 | 28,422,215 | 28,974,156 | |||||||
Diluted earnings per common share computation | 28,621,030 | 28,422,517 | 28,974,757 | |||||||
Shares outstanding | 28,187,184 | 27,983,637 | 28,546,443 | |||||||
Book value per common share (1) | $ | 19.85 | $ | 19.64 | $ | 18.75 | ||||
Tangible book value per common share (2) | $ | 19.29 | $ | 19.07 | $ | 18.20 | ||||
Stockholders' Equity | ||||||||||
Stockholders' equity | $ | 559,559 | $ | 549,464 | $ | 535,307 | ||||
Tangible stockholders' equity | 543,722 | 533,627 | 519,471 | |||||||
Average Balances | ||||||||||
Total loans, net | $ | 5,544,667 | $ | 5,438,418 | $ | 5,231,377 | ||||
Total interest-earning assets | 6,521,142 | 6,364,456 | 6,098,706 | |||||||
Total assets | 6,868,140 | 6,681,161 | 6,403,396 | |||||||
Total due to depositors | 4,598,305 | 4,453,200 | 4,176,457 | |||||||
Total interest-bearing liabilities | 5,811,263 | 5,654,560 | 5,442,554 | |||||||
Stockholders' equity | 552,621 | 541,067 | 529,281 | |||||||
Performance Ratios (3) | ||||||||||
Return on average assets | 0.41 | % | 0.74 | % | 0.71 | % | ||||
Return on average equity | 5.12 | 9.18 | 8.62 | |||||||
Yield on average interest-earning assets (4) | 4.29 | 4.25 | 4.00 | |||||||
Cost of average interest-bearing liabilities | 1.93 | 1.90 | 1.34 | |||||||
Cost of funds | 1.80 | 1.77 | 1.25 | |||||||
Interest rate spread during period (4) | 2.36 | 2.35 | 2.66 | |||||||
Net interest margin (4) | 2.57 | 2.57 | 2.81 | |||||||
Non-interest expense to average assets | 1.89 | 1.54 | 1.95 | |||||||
Efficiency ratio (5) | 70.37 | 58.53 | 69.34 | |||||||
Average interest-earning assets to average | ||||||||||
interest-bearing liabilities | 1.12 | X | 1.13 | X | 1.12 | X | ||||
(1) | Calculated by dividing stockholders’ equity by shares outstanding. | ||
(2) | Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”. | ||
(3) | Ratios are presented on an annualized basis, where appropriate. | ||
(4) | Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented. | ||
(5) | Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding accelerated employee benefits upon officers death, OREO expense and the net gain/loss from the sale of OREO) by the total of net interest income (excluding net losses from fair value adjustments on qualifying hedges) and non-interest income (excluding net gains and losses from the sale of securities, assets and fair value adjustments and life insurance proceeds). |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
At or for the three | At or for the year | At or for the three | ||||||||||
ended | ended | months ended | ||||||||||
March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||||
Selected Financial Ratios and Other Data | ||||||||||||
Regulatory capital ratios (for Flushing Financial Corporation): | ||||||||||||
Tier 1 capital | $ | 594,196 | $ | 586,582 | $ | 568,635 | ||||||
Common equity Tier 1 capital | 552,793 | 546,230 | 531,305 | |||||||||
Total risk-based capital | 690,211 | 682,527 | 664,177 | |||||||||
Tier 1 leverage capital (well capitalized = 5%) | 8.63 | % | 8.74 | % | 8.86 | % | ||||||
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 10.90 | 10.98 | 11.17 | |||||||||
Tier 1 risk-based capital (well capitalized = 8.0%) | 11.72 | 11.79 | 11.95 | |||||||||
Total risk-based capital (well capitalized = 10.0%) | 13.61 | 13.72 | 13.96 | |||||||||
Regulatory capital ratios (for Flushing Bank only): | ||||||||||||
Tier 1 capital | $ | 663,467 | $ | 660,782 | $ | 637,091 | ||||||
Common equity Tier 1 capital | 663,467 | 660,782 | 637,091 | |||||||||
Total risk-based capital | 684,482 | 681,727 | 657,633 | |||||||||
Tier 1 leverage capital (well capitalized = 5%) | 9.64 | % | 9.85 | % | 9.92 | % | ||||||
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 13.08 | 13.28 | 13.39 | |||||||||
Tier 1 risk-based capital (well capitalized = 8.0%) | 13.08 | 13.28 | 13.39 | |||||||||
Total risk-based capital (well capitalized = 10.0%) | 13.49 | 13.70 | 13.82 | |||||||||
Capital ratios: | ||||||||||||
Average equity to average assets | 8.05 | % | 8.22 | % | 8.27 | % | ||||||
Equity to total assets | 8.15 | 8.04 | 8.26 | |||||||||
Tangible common equity to tangible assets (1) | 7.94 | 7.83 | 8.03 | |||||||||
Asset quality: | ||||||||||||
Non-accrual loans (2) | $ | 15,735 | $ | 16,253 | $ | 14,972 | ||||||
Non-performing loans | 15,735 | 16,253 | 16,640 | |||||||||
Non-performing assets | 15,770 | 16,288 | 17,384 | |||||||||
Net charge-offs/ (recoveries) | 902 | (19 | ) | (38 | ) | |||||||
Asset quality ratios: | ||||||||||||
Non-performing loans to gross loans | 0.28 | % | 0.29 | % | 0.31 | % | ||||||
Non-performing assets to total assets | 0.23 | 0.24 | 0.27 | |||||||||
Allowance for loan losses to gross loans | 0.38 | 0.38 | 0.39 | |||||||||
Allowance for loan losses to non-performing assets | 133.26 | 128.60 | 118.17 | |||||||||
Allowance for loan losses to non-performing loans | 133.55 | 128.87 | 123.45 | |||||||||
Full-service customer facilities | 19 | 19 | 18 | |||||||||
(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 | |||||||||||||||||||
March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | ||||||||||||||
Balance | Interest | Cost | Balance | Interest | Cost | Balance | Interest | Cost | |||||||||||
(Dollars in thousands) | |||||||||||||||||||
Interest-earning Assets: | |||||||||||||||||||
Mortgage loans, net | $ | 4,619,587 | $ | 50,845 | 4.40 | % | $ | 4,555,895 | $ | 49,789 | 4.37 | % | $ | 4,442,870 | $ | 46,112 | 4.15 | % | |
Other loans, net | 925,080 | 11,485 | 4.97 | 882,523 | 10,933 | 4.96 | 788,507 | 8,905 | 4.52 | ||||||||||
Total loans, net (1) (2) | 5,544,667 | 62,330 | 4.50 | 5,438,418 | 60,722 | 4.47 | 5,231,377 | 55,017 | 4.21 | ||||||||||
Taxable securities: | |||||||||||||||||||
Mortgage-backed | |||||||||||||||||||
securities | 573,397 | 4,248 | 2.96 | 558,693 | 4,004 | 2.87 | 524,710 | 3,507 | 2.67 | ||||||||||
Other securities | 241,863 | 2,211 | 3.66 | 184,592 | 1,586 | 3.44 | 131,078 | 1,121 | 3.42 | ||||||||||
Total taxable securities | 815,260 | 6,459 | 3.17 | 743,285 | 5,590 | 3.01 | 655,788 | 4,628 | 2.82 | ||||||||||
Tax-exempt securities: (3) | |||||||||||||||||||
Other securities | 58,173 | 594 | 4.08 | 114,079 | 1,018 | 3.57 | 124,125 | 1,081 | 3.48 | ||||||||||
Total tax-exempt securities | 58,173 | 594 | 4.08 | 114,079 | 1,018 | 3.57 | 124,125 | 1,081 | 3.48 | ||||||||||
Interest-earning deposits | |||||||||||||||||||
and federal funds sold | 103,042 | 555 | 2.15 | 68,674 | 317 | 1.85 | 87,416 | 287 | 1.31 | ||||||||||
Total interest-earning | |||||||||||||||||||
assets | 6,521,142 | 69,938 | 4.29 | 6,364,456 | 67,647 | 4.25 | 6,098,706 | 61,013 | 4.00 | ||||||||||
Other assets | 346,998 | 316,705 | 304,690 | ||||||||||||||||
Total assets | $ | 6,868,140 | $ | 6,681,161 | $ | 6,403,396 | |||||||||||||
Interest-bearing Liabilities: | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Savings accounts | $ | 205,775 | 361 | 0.70 | $ | 213,091 | 392 | 0.74 | $ | 265,895 | 389 | 0.59 | |||||||
NOW accounts | 1,488,859 | 6,031 | 1.62 | 1,312,834 | 4,968 | 1.51 | 1,540,465 | 3,148 | 0.82 | ||||||||||
Money market accounts | 1,380,172 | 6,821 | 1.98 | 1,348,873 | 6,523 | 1.93 | 1,025,727 | 3,075 | 1.20 | ||||||||||
Certificate of deposit | |||||||||||||||||||
accounts | 1,523,499 | 8,203 | 2.15 | 1,578,402 | 8,276 | 2.10 | 1,344,370 | 5,463 | 1.63 | ||||||||||
Total due to depositors | 4,598,305 | 21,416 | 1.86 | 4,453,200 | 20,159 | 1.81 | 4,176,457 | 12,075 | 1.16 | ||||||||||
Mortgagors' escrow | |||||||||||||||||||
accounts | 62,174 | 53 | 0.34 | 71,108 | 15 | 0.08 | 58,960 | 35 | 0.24 | ||||||||||
Total interest-bearing | |||||||||||||||||||
deposits | 4,660,479 | 21,469 | 1.84 | 4,524,308 | 20,174 | 1.78 | 4,235,417 | 12,110 | 1.14 | ||||||||||
Borrowings | 1,150,784 | 6,541 | 2.27 | 1,130,252 | 6,623 | 2.34 | 1,207,137 | 6,067 | 2.01 | ||||||||||
Total interest-bearing | |||||||||||||||||||
liabilities | 5,811,263 | 28,010 | 1.93 | 5,654,560 | 26,797 | 1.90 | 5,442,554 | 18,177 | 1.34 | ||||||||||
Non interest-bearing | |||||||||||||||||||
demand deposits | 398,829 | 406,501 | 364,983 | ||||||||||||||||
Other liabilities | 105,427 | 79,033 | 66,578 | ||||||||||||||||
Total liabilities | 6,315,519 | 6,140,094 | 5,874,115 | ||||||||||||||||
Equity | 552,621 | 541,067 | 529,281 | ||||||||||||||||
Total liabilities and | |||||||||||||||||||
equity | $ | 6,868,140 | $ | 6,681,161 | $ | 6,403,396 | |||||||||||||
Net interest income / | |||||||||||||||||||
net interest rate spread (tax equivalent) (3) | $ | 41,928 | 2.36 | % | $ | 40,850 | 2.35 | % | $ | 42,836 | 2.66 | % | |||||||
Net interest-earning assets / | |||||||||||||||||||
net interest margin (tax equivalent) | $ | 709,879 | 2.57 | % | $ | 709,896 | 2.57 | % | $ | 656,152 | 2.81 | % | |||||||
Ratio of interest-earning | |||||||||||||||||||
assets to interest-bearing | |||||||||||||||||||
liabilities | 1.12 | X | 1.13 | X | 1.12 | 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 $0.5 million, $0.5 million and $0.1 million for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively. | ||
(2) | Loan interest income includes net losses from fair value adjustments on qualifying hedges of $0.6 million, none and none for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively. | ||
(3) | Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented totaling $125,000, $214,000 and $227,000, respectively. |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
March 2019 vs. | March 2019 vs. | |||||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | December 2018 | March 31, | March 2018 | ||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2018 | 2018 | % Change | 2018 | % Change | |||||||||||||||||
Deposits | ||||||||||||||||||||||||
Non-interest bearing | $ | 401,064 | $ | 413,747 | $ | 398,606 | $ | 388,467 | -3.1 | % | $ | 377,861 | 6.1 | % | ||||||||||
Interest bearing: | ||||||||||||||||||||||||
Certificate of deposit | ||||||||||||||||||||||||
accounts | 1,511,770 | 1,563,310 | 1,562,962 | 1,452,016 | -3.3 | % | 1,499,326 | 0.8 | % | |||||||||||||||
Savings accounts | 201,811 | 210,022 | 216,976 | 225,815 | -3.9 | % | 246,888 | -18.3 | % | |||||||||||||||
Money market accounts | 1,352,843 | 1,427,992 | 1,223,640 | 1,069,835 | -5.3 | % | 1,032,409 | 31.0 | % | |||||||||||||||
NOW accounts | 1,542,606 | 1,300,852 | 1,255,464 | 1,422,745 | 18.6 | % | 1,479,319 | 4.3 | % | |||||||||||||||
Total interest-bearing | ||||||||||||||||||||||||
deposits | 4,609,030 | 4,502,176 | 4,259,042 | 4,170,411 | 2.4 | % | 4,257,942 | 8.2 | % | |||||||||||||||
Total deposits | $ | 5,010,094 | $ | 4,915,923 | $ | 4,657,648 | $ | 4,558,878 | 1.9 | % | $ | 4,635,803 | 8.1 | % |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
Loan Closings
For the three months | |||||||||||
March 31 | December 31, | March 31 | |||||||||
(In thousands) | 2019 | 2018 | 2018 | ||||||||
Multi-family residential | $ | 27,214 | $ | 85,095 | $ | 81,181 | |||||
Commercial real estate | 13,941 | 95,772 | 71,554 | ||||||||
One-to-four family – mixed-use property | 16,423 | 28,924 | 16,068 | ||||||||
One-to-four family – residential | 3,886 | 7,356 | 16,968 | ||||||||
Co-operative apartments | - | 948 | - | ||||||||
Construction | 5,901 | 8,968 | 14,679 | ||||||||
Small Business Administration | 329 | 1,304 | 1,967 | ||||||||
Commercial business and other | 130,330 | 116,365 | 139,407 | ||||||||
Total | $ | 198,024 | $ | 344,732 | $ | 341,824 | |||||
Loan Composition
March 2019 vs. | March 2019 vs. | |||||||||||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | December 2018 | March 31, | March 2018 | ||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2018 | 2018 | % Change | 2018 | % Change | |||||||||||||||||||||||
Loans held for investment: | ||||||||||||||||||||||||||||||
Multi-family residential | $ | 2,256,447 | $ | 2,269,048 | $ | 2,235,370 | $ | 2,247,852 | -0.6 | % | $ | 2,286,803 | -1.3 | % | ||||||||||||||||
Commercial real estate | 1,529,001 | 1,542,547 | 1,460,555 | 1,471,894 | -0.9 | % | 1,426,847 | 7.2 | % | |||||||||||||||||||||
One-to-four family ― | ||||||||||||||||||||||||||||||
mixed-use property | 582,049 | 577,741 | 565,302 | 564,474 | 0.7 | % | 566,930 | 2.7 | % | |||||||||||||||||||||
One-to-four family ― residential | 188,615 | 190,350 | 188,975 | 187,741 | -0.9 | % | 190,115 | -0.8 | % | |||||||||||||||||||||
Co-operative apartments | 7,903 | 8,498 | 7,771 | 7,839 | -7.0 | % | 6,826 | 15.8 | % | |||||||||||||||||||||
Construction | 54,933 | 50,600 | 40,239 | 33,826 | 8.6 | % | 23,887 | 130.0 | % | |||||||||||||||||||||
Small Business Administration | 15,188 | 15,210 | 14,322 | 14,405 | -0.1 | % | 20,004 | -24.1 | % | |||||||||||||||||||||
Taxi medallion | 3,891 | 4,539 | 6,078 | 6,225 | -14.3 | % | 6,617 | -41.2 | % | |||||||||||||||||||||
Commercial business and other | 935,297 | 877,763 | 846,224 | 783,904 | 6.6 | % | 768,440 | 21.7 | % | |||||||||||||||||||||
Net unamortized premiums | ||||||||||||||||||||||||||||||
and unearned loan fees | 15,422 | 15,188 | 15,226 | 15,647 | 1.5 | % | 16,395 | -5.9 | % | |||||||||||||||||||||
Allowance for loan losses | (21,015 | ) | (20,945 | ) | (20,309 | ) | (20,220 | ) | 0.3 | % | (20,542 | ) | 2.3 | % | ||||||||||||||||
Net loans | $ | 5,567,731 | $ | 5,530,539 | $ | 5,359,753 | $ | 5,313,587 | 0.7 | % | $ | 5,292,322 | 5.2 | % |
Net Loans Activity
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(In thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
Loans originated and purchased | $ | 198,024 | $ | 344,732 | $ | 308,825 | $ | 255,410 | $ | 341,824 | ||||||||||
Principal reductions | (158,815 | ) | (173,061 | ) | (257,902 | ) | (226,030 | ) | (202,059 | ) | ||||||||||
Loans sold | (1,043 | ) | - | (4,027 | ) | (7,273 | ) | (2,703 | ) | |||||||||||
Loan charged-offs | (1,138 | ) | (211 | ) | (220 | ) | (416 | ) | (85 | ) | ||||||||||
Foreclosures | - | - | - | - | (744 | ) | ||||||||||||||
Net change in deferred fees and costs | 234 | (38 | ) | (421 | ) | (748 | ) | (368 | ) | |||||||||||
Net change in the allowance for loan losses | (70 | ) | (636 | ) | (89 | ) | 322 | (191 | ) | |||||||||||
Total loan activity | $ | 37,192 | $ | 170,786 | $ | 46,166 | $ | 21,265 | $ | 135,674 |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||||
Loans 90 Days Or More Past Due | |||||||||||||||||||||
and Still Accruing: | |||||||||||||||||||||
Commercial real estate | $ | - | $ | - | $ | 111 | $ | - | $ | 1,668 | |||||||||||
Construction | - | - | - | 730 | - | ||||||||||||||||
Total | - | - | 111 | 730 | 1,668 | ||||||||||||||||
Non-accrual Loans: | |||||||||||||||||||||
Multi-family residential | 2,009 | 2,410 | 862 | 2,165 | 2,193 | ||||||||||||||||
Commercial real estate | 1,050 | 1,379 | 1,398 | 1,448 | 1,894 | ||||||||||||||||
One-to-four family - mixed-use property | 1,305 | 928 | 795 | 2,157 | 2,396 | ||||||||||||||||
One-to-four family - residential | 5,708 | 6,144 | 6,610 | 6,969 | 7,542 | ||||||||||||||||
Co-operative apartments | - | - | - | 575 | - | ||||||||||||||||
Construction | 950 | - | - | - | - | ||||||||||||||||
Small Business Administration | 1,227 | 1,267 | 1,395 | - | 41 | ||||||||||||||||
Taxi medallion(1) | 1,372 | 613 | 712 | 743 | 906 | ||||||||||||||||
Commercial business and other | 2,114 | 3,512 | 761 | 2 | - | ||||||||||||||||
Total | 15,735 | 16,253 | 12,533 | 14,059 | 14,972 | ||||||||||||||||
Total Non-performing Loans | 15,735 | 16,253 | 12,644 | 14,789 | 16,640 | ||||||||||||||||
Other Non-performing Assets: | |||||||||||||||||||||
Real estate acquired through foreclosure | - | - | - | - | 638 | ||||||||||||||||
Other asset acquired through foreclosure | 35 | 35 | 35 | 35 | 106 | ||||||||||||||||
Total | 35 | 35 | 35 | 35 | 744 | ||||||||||||||||
Total Non-performing Assets | $ | 15,770 | $ | 16,288 | $ | 12,679 | $ | 14,824 | $ | 17,384 | |||||||||||
Non-performing Assets to Total Assets | 0.23 | % | 0.24 | % | 0.19 | % | 0.23 | % | 0.27 | % | |||||||||||
Allowance For Loan Losses to Non-performing Loans | 133.6 | % | 128.9 | % | 160.6 | % | 136.7 | % | 123.5 | % | |||||||||||
(1) Not included in the above analysis are non-accrual performing TDR taxi medallion loans totaling $2.5 million in 1Q19, $3.9 million in 4Q18, $5.4 million in 3Q18, $5.5 million in 2Q18 and $5.7 million in 1Q18.
Net Charge-Offs (Recoveries)
Three Months Ended | ||||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||
(In thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||||
Multi-family residential | $ | (13 | ) | $ | (4 | ) | $ | 18 | $ | 28 | $ | 51 | ||||||||||
Commercial real estate | - | - | - | - | - | |||||||||||||||||
One-to-four family – mixed-use property | (85 | ) | (18 | ) | (36 | ) | (79 | ) | - | |||||||||||||
One-to-four family – residential | (4 | ) | (199 | ) | (258 | ) | (4 | ) | (107 | ) | ||||||||||||
Small Business Administration | (4 | ) | 170 | 134 | 18 | 19 | ||||||||||||||||
Taxi medallion | (84 | ) | (143 | ) | 40 | 353 | - | |||||||||||||||
Commercial business and other | 1,092 | (20 | ) | 13 | 6 | (1 | ) | |||||||||||||||
Total net loan charge-offs (recoveries) | $ | 902 | $ | (214 | ) | $ | (89 | ) | $ | 322 | $ | (38 | ) | |||||||||
Core Diluted EPS, Core ROAE, Core ROAA, Core Net Interest Income, Core Yield on Total Loans, Core Net Interest Margin and tangible book value per common share are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and non-interest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.
These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
2019 | 2018 | 2018 | |||||||||
GAAP income before income taxes | $ | 9,355 | $ | 13,468 | $ | 14,362 | |||||
Net loss from fair value adjustments | 2,080 | 3,585 | 100 | ||||||||
Net loss on sale of securities | - | 1,920 | - | ||||||||
Gain from life insurance proceeds | (43 | ) | - | (776 | ) | ||||||
Net gain on sale of assets | - | (1,141 | ) | - | |||||||
Net losses from fair value adjustments on qualifying hedges | 637 | - | - | ||||||||
Accelerated employee benefits upon Officer's death | 455 | - | - | ||||||||
Core income before taxes | 12,484 | 17,832 | 13,686 | ||||||||
Provision for income taxes for core income | 3,033 | 2,395 | 2,982 | ||||||||
Core net income | $ | 9,451 | $ | 15,437 | $ | 10,704 | |||||
GAAP diluted earnings per common share | $ | 0.25 | $ | 0.44 | $ | 0.39 | |||||
Net loss from fair value adjustments, net of tax | 0.05 | 0.09 | - | ||||||||
Net loss on sale of securities, net of tax | - | 0.05 | - | ||||||||
Gain from life insurance proceeds | - | - | (0.03 | ) | |||||||
Net gain on sale of assets, net of tax | - | (0.03 | ) | - | |||||||
Net losses from fair value adjustments on qualifying hedges, net of tax | 0.02 | - | - | ||||||||
Accelerated employee benefits upon Officer's death, net of tax | 0.01 | - | - | ||||||||
Core diluted earnings per common share1 | $ | 0.33 | $ | 0.54 | $ | 0.37 | |||||
Core net income, as calculated above | $ | 9,451 | $ | 15,437 | $ | 10,704 | |||||
Average assets | 6,868,140 | 6,681,161 | 6,403,396 | ||||||||
Average equity | 552,621 | 541,067 | 529,281 | ||||||||
Core return on average assets2 | 0.55 | % | 0.92 | % | 0.67 | % | |||||
Core return on average equity2 | 6.84 | % | 11.41 | % | 8.09 | % | |||||
(1) Core diluted earnings per common share may not foot due to rounding. | |||||||||||
(2) Ratios are calculated on an annualized basis. | |||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
To CORE NET INTEREST INCOME and NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
Three Months Ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
2019 | 2018 | 2018 | |||||||||
GAAP net interest income | $ | 41,803 | $ | 40,636 | $ | 42,609 | |||||
Net losses from fair value adjustments on qualifying hedges | 637 | - | - | ||||||||
Core net interest income | $ | 42,440 | $ | 40,636 | $ | 42,609 | |||||
GAAP interest income on total loans, net | $ | 62,330 | $ | 60,722 | $ | 55,017 | |||||
Net losses from fair value adjustments on qualifying hedges | 637 | - | - | ||||||||
Prepayment penalties received on loans | (805 | ) | (892 | ) | (913 | ) | |||||
Net recoveries of interest from non-accrual loans | (714 | ) | (276 | ) | (166 | ) | |||||
Core interest income on total loans, net | $ | 61,448 | $ | 59,554 | $ | 53,938 | |||||
Average total loans, net | $ | 5,544,667 | $ | 5,438,418 | $ | 5,231,377 | |||||
Core yield total loans, net | 4.43 | % | 4.38 | % | 4.12 | % | |||||
Net interest income tax equivalent | $ | 41,928 | $ | 40,850 | $ | 42,836 | |||||
Net losses from fair value adjustments on qualifying hedges | 637 | - | - | ||||||||
Prepayment penalties received on loans | (805 | ) | (892 | ) | (913 | ) | |||||
Net recoveries of interest from non-accrual loans | (714 | ) | (276 | ) | (166 | ) | |||||
Net interest income used in calculation of Core net interest margin | $ | 41,046 | $ | 39,682 | $ | 41,757 | |||||
Total average interest-earning assets | $ | 6,521,142 | $ | 6,364,456 | $ | 6,098,706 | |||||
Core net interest margin | 2.52 | % | 2.49 | % | 2.74 | % |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)
March 31, | December 31, | March 31, | ||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2018 | |||||||||||
Total Equity | $ | 559,559 | $ | 549,464 | $ | 535,307 | ||||||||
Less: | ||||||||||||||
Goodwill | (16,127 | ) | (16,127 | ) | (16,127 | ) | ||||||||
Intangible deferred tax liabilities | 290 | 290 | 291 | |||||||||||
Tangible Stockholders' Common Equity | $ | 543,722 | $ | 533,627 | $ | 519,471 | ||||||||
Total Assets | $ | 6,867,450 | $ | 6,834,176 | $ | 6,482,771 | ||||||||
Less: | ||||||||||||||
Goodwill | (16,127 | ) | (16,127 | ) | (16,127 | ) | ||||||||
Intangible deferred tax liabilities | 290 | 290 | 291 | |||||||||||
Tangible Assets | $ | 6,851,613 | $ | 6,818,339 | $ | 6,466,935 | ||||||||
Tangible Stockholders' Common Equity to Tangible Assets | 7.94 | % | 7.83 | % | 8.03 | % |
Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400