Flushing Financial Corporation Reports 2Q23 GAAP EPS of $0.29 and Core EPS of $0.26; Delivered Sequential Improvements in Key Metrics; Progressing on Action Plan to Continue Enhancing Business Model Resilience and Drive Profitability

Flushing Financial Corporation

John R. Buran, President and CEO Commentary

“We delivered sequential improvements in key metrics in the second quarter amid continuing uncertainty in the operating environment. We experienced the lowest level of NIM compression of the past four quarters and achieved QoQ improvements in the loan pipeline and asset quality. Further, we increased deposit balances compared to past seasonal trends. As we continue to execute on the action plan announced last quarter, we are pleased with the progress we are making to enhance the resilience of our business model and strengthen performance: 1) continued to move more towards interest rate risk neutral with the addition of over $400 million of interest rate hedges and $250 million in forward hedges becoming effective; 2) the loan pipeline and yield increased 56% and 20 bps, respectively, QoQ; 3) checking account openings increased 10 % YoY; 4) reviewed new and existing relationships resulting in improved credit metrics and normalized net charge-offs; Manhattan office buildings are approximately 0.6% of net loans; 5) available liquidity and capital ratios remained stable; and 6) controlled noninterest expenses, which decreased 1% YoY. In addition, we repurchased approximately 530,000 shares in 2Q23 without a material effect on the tangible common equity ratio. Taken together, these actions support continued improvement of our profitability and liquidity while preparing us for a range of possible rate environments. While we remain conservative regarding our operating environment, our progress gives us cautious optimism for the remainder of the year. Looking ahead, we will continue to focus on positioning the Company for success with an emphasis on reducing interest rate risk, improving credit quality, liquidity, and the customer experience.”

- John R. Buran, President and CEO

UNIONDALE, N.Y., July 25, 2023 (GLOBE NEWSWIRE) -- EPS Improves QoQ; NIM Compression Slows. The Company reported second quarter 2023 GAAP EPS of $0.29, down 64% YoY, but up 71% QoQ. Core EPS totaled $0.26, a decrease of 63% YoY, but an increase of 160% QoQ. The improvement QoQ was primarily driven by the return to normalized credit costs, the absence of seasonal expenses, and the benefit derived from the interest rate hedge strategy. The interest rate hedges slowed the NIM compression, which was only 9 bps QoQ to 2.18%. The interest rate hedges, and other balance sheet actions, have reduced the liability sensitive position significantly over the past year and are beneficial in a “higher-for-longer” rate environment.

Credit Quality Improved; Strong Capital. QoQ, nonperforming assets and criticized and classified assets decreased 6% and 12%, respectively, while net charge offs were 9 basis points. Capital continues to be sound with a TCE¹ of 7.71%, stable QoQ.

Key Financial Metrics2

		2Q23				1Q23			4Q22			3Q22			2Q22					1H23				1H22
GAAP:
EPS		$0.29				$0.17			$0.34			$0.76			$0.81					$0.46				$1.39
ROAA (%)			0.41				0.24			0.48			1.11			1.22					0.33				1.06
ROAE (%)			5.12				3.02			6.06			13.91			15.00					4.06				12.91
NIM FTE3 (%)			2.18				2.27			2.70			3.07			3.35					2.22				3.36
Core:
EPS		$0.26				$0.10			$0.57			$0.62			$0.70					$0.36				$1.30
ROAA (%)			0.37				0.14			0.82			0.90			1.05					0.26				1.00
ROAE (%)			4.66				1.76			10.29			11.24			12.90					3.20				12.08
Core NIM FTE (%)			2.17				2.25			2.63			3.03			3.33					2.21				3.32
Credit Quality:
NPAs/Loans & OREO (%)			0.58				0.61			0.77			0.72			0.72					0.58				0.72
ACLs/Loans (%)			0.57				0.56			0.58			0.59			0.58					0.57				0.58
ACLs/NPLs (%)			207.08				182.89			124.89			142.29			141.06					207.08				141.06
NCOs/Avg Loans (%)			0.09				0.54			0.05			0.02			(0.03	)				0.32				0.01
Balance Sheet:
Avg Loans ($B)		$6.8				$6.9			$6.9			$6.9			$6.6					$6.9				$6.6
Avg Dep ($B)		$6.9				$6.8			$6.7			$6.3			$6.4					$6.9				$6.4
Book Value/Share		$23.18				$22.84			$22.97			$22.47			$22.38					$23.18				$22.38
Tangible BV/Share		$22.51				$22.18			$22.31			$21.81			$21.71					$22.51				$21.71
TCE/TA (%)			7.71				7.73			7.82			7.62			7.82					7.71				7.82

¹ Tangible Common Equity (“TCE”)/Total Assets (“TA”) ² See “Reconciliation of GAAP Earnings and Core Earnings”, “Reconciliation of GAAP Revenue and Pre-Provision Pre-Tax Net Revenue”, and “Reconciliation of GAAP Net Interest Margin to Core Net Interest Income and Net Interest Margin.” ³ Net Interest Margin (“NIM”) Fully Taxable Equivalent (“FTE”)

2Q23 Highlights

• Net interest margin FTE decreased 117 bps YoY and 9 bps QoQ to 2.18%; Core net interest margin FTE decreased 116 bps YoY and 8 bps QoQ to 2.17%; Both GAAP and Core NIMs benefited from the $450 million of new hedges added in late 1Q23, an additional $400 million in 2Q23, and $250 million of forward hedges that became effective in 2Q23; Overall liability sensitivity has been reduced by 64% over the past year.

• Average total deposits increased 7.1% YoY and 1.3% QoQ to $6.9 billion; average CDs totaled $2.0 billion, up 149.5% YoY and 21.9% QoQ; growth in CDs generally lengthens the duration of customer deposits and helps reduce rate sensitivity

• Period end net loans increased 1.1% YoY, but decreased 1.0% QoQ; loan closings were $158.8 million down 68.5% YoY and 8.5% QoQ; the yield on closings increased 322 bps YoY and 13 bps QoQ to 7.14%

• Loan pipeline decreased 28.7% YoY, but increased 56.1% QoQ to $415.5 million; nearly 35% of the loan pipeline consists of back-to-back loan swaps

• NPAs declined to $39.6 million from $48.9 million a year ago and $42.2 million in the prior quarter

• Provision for credit losses was $1.4 million in 2Q23 compared to $1.6 million in 2Q22 and $7.5 million in 1Q23; net charge-offs were $1.6 million in 2Q23 compared to net recoveries of $0.5 million in 2Q22 and net charge-offs of 9.2 million in 1Q23

• Tangible Common Equity to Tangible Assets was stable at 7.71% at 2Q23 compared to 7.73% at 1Q23

• Repurchased 528,815 shares at an average price of $12.94 or at a 42.5% discount to June 30, 2023 tangible book value of $22.51

Areas of Focus
Interest Rate Risk	Continued to take significant actions to position the Company’s balance sheet more towards interest rate risk neutral During 2Q23, the Company added $400 million of interest rate hedges and an additional $250 million of forward hedges that became effective Rate sensitivity to a +100 bps shock has been reduced by 64% over the past year.
Credit Quality	Manhattan office buildings are approximately 0.6% of net loans Over 88% of the loan portfolio is collateralized by real estate with an average loan to value less than 36% Debt service coverage ratio of 1.8x for multifamily and investor commercial real estate loans that reprice through 2025
Liquidity	The Company maintains ample liquidity with $3.7 billion of undrawn lines and resources Total deposits increased 4.9% YoY and 2Q23 balances were higher than normal seasonal declines Checking account openings were up 9.6% YoY in 2Q23
Customer Experience	Additional opportunities emerging as competitors leave the market Approximately 33% of our branches are in Asian communities Bensonhurst, our 27th branch, is expected to open in the second half of 2023, and will enhance our Asian community branch presence Digital banking usage continues to increase with double digit growth in monthly mobile deposit active users and digital banking enrollment in June 2023 versus a year ago

Income Statement Highlights

																				YoY				QoQ
($000s, except EPS)			2Q23				1Q23			4Q22				3Q22			2Q22			Change				Change
Net Interest Income			$43,378				$45,262			$54,201				$61,206			$64,730			(33.0	)	%		(4.2	)	%
Provision (Benefit) for Credit Losses				1,416				7,508			(12	)			2,145			1,590		(10.9	)			NM
Noninterest Income (Loss)				5,122				6,908			(7,652	)			8,995			7,353		(30.3	)			(25.9	)
Noninterest Expense				35,279				37,703			33,742				35,634			35,522		(0.7	)			(6.4	)
Income Before Income Taxes				11,805				6,959			12,819				32,422			34,971		(66.2	)			69.6
Provision for Income Taxes				3,177				1,801			2,570				8,980			9,936		(68.0	)			76.4
Net Income			$8,628				$5,158			$10,249				$23,442			$25,035			(65.5	)			67.3
Diluted EPS			$0.29				$0.17			$0.34				$0.76			$0.81			(64.2	)			70.6
Avg. Diluted Shares (000s)				30,090				30,265			30,420				30,695			30,937		(2.7	)			(0.6	)
Core Net Income1			$7,854				$3,003			$17,399				$18,953			$21,518			(63.5	)			161.5
Core EPS1			$0.26				$0.10			$0.57				$0.62			$0.70			(62.9	)			160.0

¹ See Reconciliation of GAAP Earnings and Core Earnings

Net interest income decreased YoY and QoQ.

• Net interest margin, FTE of 2.18% decreased 117 bps YoY and 9 bps QoQ

• Prepayment penalty income from loans and securities, net reversals and recoveries of interest from nonaccrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $0.5 million (3 bps to the NIM) in 2Q23 compared to $1.1 million (6 bps) in 1Q23, $2.4 million (12 bps) in 4Q22, $2.2 million (11 bps) in 3Q22, and $2.6 million (13 bps) in 2Q22; Prepayment penalty income declined primarily due to the higher rate environment

• Excluding the items in the previous bullet, net interest margin was 2.15% in 2Q23, 2.21% in 1Q23, 2.58% in 4Q22, 2.96% in 3Q22, and 3.22% in 2Q22

• Quarterly NIM compression of 9 bps was the slowest decline in the past four quarters primarily due to the balance sheet actions taken in 1Q23 and 2Q23 that reduced liability sensitivity

The provision for credit losses declined YoY and QoQ.

• Net charge-offs (recoveries) were $1.6 million in 2Q23 (9 bps of average loans), $9.2 million in 1Q23 (54 bps of average loans), $0.8 million in 4Q22 (5 bps of average loans), $0.3 million in 3Q22 (2 bps of average loans), and $(0.5) million in 2Q22 ((3) bps of average loans)

• 1Q23 net charge-offs were primarily related to a commercial business relationship that was placed on nonaccrual in 2Q22

Noninterest income (loss) declined YoY and QoQ.

• Noninterest income included net gains (losses) from fair value adjustments of $0.3 million in 2Q23 ($0.01 per share, net of tax), $2.6 million in 1Q23 ($0.06 per share, net of tax), $(0.6) million in 4Q22 ($(0.02) per share, net of tax), $5.6 million in 3Q22 ($0.13 per share, net of tax), and $2.5 million in 2Q22 ($0.06 per share, net of tax)

• Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds were primarily reinvested in 1Q23 into floating rate securities that had a yield at that time that approximated 6.40%

• Life insurance proceeds were $0.6 million ($0.02 per share) in 2Q23, $0.3 million ($0.01 per share) in 4Q22 and $1.5 million ($0.05 per share) in 2Q22

• Absent all above items and other immaterial adjustments, core noninterest income was $4.3 million in 2Q23, up 29.9% YoY but down 0.5% QoQ

Noninterest expense decreased YoY and QoQ.

• Given the challenging rate environment, management continues to actively review all noninterest expenses

• Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22

• Seasonal compensation expense was $4.1 million in 1Q23

• Excluding the effects of other immaterial adjustments, core operating expenses were $35.2 million in 2Q23, down 0.6% YoY, and 6.4% QoQ

• GAAP noninterest expense to average assets was 1.67% in 2Q23, 1.78% in 1Q23, 1.58% in 4Q22, 1.69% in 3Q22, and 1.73% in 2Q22
  

Provision for income taxes declined YoY and increased QoQ.

• The effective tax rate was 26.9% in 2Q23, 25.9% in 1Q23, 20.0% in 4Q22, 27.7% in 3Q22, and 28.4% in 2Q22

• The 4Q22 effective tax rate declined due to preferential tax items having a larger impact due to lower levels of pre-tax income

• The 2Q22 effective tax rate includes a loss of certain state and city tax deductions and a resolution of certain examinations by taxing authorities
  
  

Balance Sheet, Credit Quality, and Capital Highlights

																		YoY				QoQ
		2Q23				1Q23			4Q22			3Q22			2Q22			Change				Change
Averages ($MM)
Loans		$6,830				$6,871			$6,881			$6,861			$6,640			2.9		%		(0.6	)	%
Total Deposits			6,900				6,810			6,678			6,277			6,441		7.1				1.3
Credit Quality ($000s)
Nonperforming Loans		$18,637				$21,176			$32,382			$29,003			$27,948			(33.3	)	%		(12.0	)	%
Nonperforming Assets			39,618				42,157			53,363			49,984			48,929		(19.0	)			(6.0	)
Criticized and Classified Loans			48,675				58,130			68,093			61,684			57,145		(14.8	)			(16.3	)
Criticized and Classified Assets			69,656				79,111			89,073			82,665			78,125		(10.8	)			(12.0	)
Allowance for Credit Losses/Loans (%)			0.57				0.56			0.58			0.59			0.58		(1	)	bp		1		bps
Capital
Book Value/Share		$23.18				$22.84			$22.97			$22.47			$22.38			3.6		%		1.5		%
Tangible Book Value/Share			22.51				22.18			22.31			21.81			21.71		3.7				1.5
Tang. Common Equity/Tang. Assets (%)			7.71				7.73			7.82			7.62			7.82		(11	)	bps		(2	)	bps
Leverage Ratio (%)			8.56				8.58			8.61			8.74			8.91		(35	)			(2	)

Average loans increased YoY but declined QoQ.

• Maintain the credit strategy of loans secured by real estate with a greater emphasis on back-to-back swap originations

• Period end net loans totaled $6.8 billion, up 1.1% YoY, but down 1.0% QoQ

• Total loan closings were $158.8 million in 2Q23, $173.5 million in 1Q23, $225.2 million in 4Q22, $463.7 million in 3Q22, and $503.8 million in 2Q22; the loan pipeline was $415.5 million at June 30, 2023, down 28.7% YoY, but up 56.1% QoQ; closings were impacted by customers adjusting to the higher rate environment

• The diversified loan portfolio is over 88% collateralized by real estate with an average loan-to-value ratio of <36%

• Manhattan office buildings are approximately 0.6% of net loans
  

Average total deposits increased YoY and QoQ.

• Average CDs totaled $2.0 billion, up 149.5% YoY and 21.9% QoQ; CDs generally lengthen the duration of customer deposits and reduce sensitivity to rising rates

• Average noninterest bearing deposits decreased 18.7% YoY and 5.2% QoQ in 2Q23 and comprised 12.3% of average total deposits in 2Q23 compared to 16.2% a year ago

Credit Quality: Nonperforming loans declined YoY and QoQ.

• Criticized and classified loans were 71 bps of gross loans at 2Q23 compared to 84 bps at 1Q23, 98 bps at 4Q22, 89 bps at 3Q22, and 85 bps at 2Q22

• Allowance for credit losses were 207.1% of nonperforming loans at 2Q23 compared to 182.9% at 1Q23, and 141.1% at 2Q22

Capital: Book value per common share and tangible book value per common share, a non-GAAP measure, both increased YoY and QoQ.

• The Company paid a dividend of $0.22 per share in 2Q23 and has ample available liquidity to meet its obligations

• The Company repurchased 528,815 shares in 2Q23 at an average price of $12.94, representing a 42.5% discount to tangible book value, with 906,131 shares remaining subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit

• Tangible common equity to tangible assets was 7.71% at 2Q23 compared to 7.73% at 1Q23 and 7.82% at 2Q22

• The Company and the Bank remain well capitalized under all applicable regulatory requirements
  
  

Conference Call Information and Third Quarter Earnings Release Date

Conference Call Information:

• John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer and Treasurer, will host a conference call on Wednesday, July 26, 2023, at 9:30 AM (ET) to discuss the Company’s first quarter results and strategy.

• Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657

• Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Nb7q4ytY

• Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658

• Replay Access Code: 7017400

• The conference call will be simultaneously webcast and archived

Third Quarter 2023 Earnings Release Date:

The Company plans to release Third Quarter 2023 financial results after the market close on October 31, 2023; followed by a conference call at 9:30 AM (ET) on November 1, 2023.

A detailed announcement will be issued prior to the third quarter’s close confirming the date and time of the earnings release.

About Flushing Financial Corporation

Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, an FDIC insured, New York State—chartered commercial bank that operates banking offices in Queens, Brooklyn, Manhattan, and on Long Island. The Bank has been building relationships with families, business owners, and communities since 1929. Today, it offers the products, services, and conveniences associated with large commercial banks, including a full complement of deposit, loan, equipment finance, and cash management services. Rewarding customers with personalized attention and bankers that can communicate in the languages prevalent within these multicultural markets is what makes the Bank uniquely different. As an Equal Housing Lender and leader in real estate lending, the Bank’s experienced lending teams create mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. The Bank also fosters relationships with consumers nationwide through its online banking division with the iGObanking® and BankPurely® brands.

Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at FlushingBank.com. Flushing Financial Corporation’s earnings release and presentation slides will be available prior to the conference call at www.FlushingBank.com under Investor Relations.

“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, 2022 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.

#FF

- Statistical Tables Follow - FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited)
		At or for the three months ended																						At or for the six months ended
(Dollars in thousands, except per share data)		June 30,				March 31,				December 31,				September 30,				June 30,						June 30,			June 30,
		2023				2023				2022				2022				2022						2023			2022
Performance Ratios (1)
Return on average assets			0.41	%			0.24	%			0.48	%			1.11	%			1.22		%				0.33	%		1.06	%
Return on average equity			5.12				3.02				6.06				13.91				15.00						4.06			12.91
Yield on average interest-earning assets (2)			4.84				4.61				4.44				4.10				3.85						4.73			3.81
Cost of average interest-bearing liabilities			3.15				2.80				2.11				1.25				0.60						2.97			0.55
Cost of funds			2.80				2.47				1.84				1.08				0.52						2.63			0.48
Net interest rate spread during period (2)			1.69				1.81				2.33				2.85				3.25						1.76			3.26
Net interest margin (2)			2.18				2.27				2.70				3.07				3.35						2.22			3.36
Noninterest expense to average assets			1.67				1.78				1.58				1.69				1.73						1.72			1.83
Efficiency ratio (3)			74.02				76.48				59.55				55.68				52.27						75.27			55.52
Average interest-earning assets to average interest-bearing liabilities			1.18	X			1.19	X			1.21	X			1.22	X			1.22		X				1.19	X		1.22	X
Average Balances
Total loans, net		$	6,829,648			$	6,871,192			$	6,881,245			$	6,861,463			$	6,640,331					$	6,850,305		$	6,609,676
Total interest-earning assets			7,986,020				7,996,677				8,045,691				7,979,070				7,740,683						7,991,320			7,655,999
Total assets			8,461,827				8,468,311				8,518,019				8,442,657				8,211,763						8,465,051			8,131,065
Total deposits			6,899,617				6,810,485				6,678,383				6,276,613				6,440,904						6,855,299			6,425,569
Total interest-bearing liabilities			6,756,859				6,703,558				6,662,209				6,553,087				6,337,374						6,730,357			6,279,265
Stockholders' equity			673,943				683,071				676,165				674,282				667,456						678,481			670,219
Per Share Data
Book value per common share (4)		$	23.18			$	22.84			$	22.97			$	22.47			$	22.38					$	23.18		$	22.38
Tangible book value per common share (5)		$	22.51			$	22.18			$	22.31			$	21.81			$	21.71					$	22.51		$	21.71
Stockholders' Equity
Stockholders' equity		$	671,303			$	673,459			$	677,157			$	670,719			$	670,812					$	671,303		$	670,812
Tangible stockholders' equity			651,898				653,932				657,504				650,936				650,894						651,898			650,894
Consolidated Regulatory Capital Ratios
Tier 1 capital		$	735,810			$	737,138			$	746,880			$	749,526			$	739,776					$	735,810		$	739,776
Common equity Tier 1 capital			689,876				690,846				698,258				701,532				686,258						689,876			686,258
Total risk-based capital			963,840				965,384				975,709				979,021				903,047						963,840			903,047
Risk Weighted Assets			6,649,252				6,659,532				6,640,542				6,689,284				6,522,710						6,649,252			6,522,710
Tier 1 leverage capital (well capitalized = 5%)			8.56	%			8.58	%			8.61	%			8.74	%			8.91		%				8.56	%		8.91	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			10.38				10.37				10.52				10.49				10.52						10.38			10.52
Tier 1 risk-based capital (well capitalized = 8.0%)			11.07				11.07				11.25				11.20				11.34						11.07			11.34
Total risk-based capital (well capitalized = 10.0%)			14.50				14.50				14.69				14.64				13.84						14.50			13.84
Capital Ratios
Average equity to average assets			7.96	%			8.07	%			7.94	%			7.99	%			8.13		%				8.02	%		8.24	%
Equity to total assets			7.92				7.94				8.04				7.84				8.04						7.92			8.04
Tangible common equity to tangible assets (6)			7.71				7.73				7.82				7.62				7.82						7.71			7.82
Asset Quality
Nonaccrual loans (7)		$	18,637			$	21,176			$	29,782			$	27,003			$	27,848					$	18,637		$	27,848
Nonperforming loans			18,637				21,176				32,382				29,003				27,948						18,637			27,948
Nonperforming assets			39,618				42,157				53,363				49,984				48,929						39,618			48,929
Net charge-offs (recoveries)			1,560				9,234				811				290				(501	)					10,794			434
Asset Quality Ratios
Nonperforming loans to gross loans			0.27	%			0.31	%			0.47	%			0.42	%			0.41		%				0.27	%		0.41	%
Nonperforming assets to total assets			0.47				0.50				0.63				0.58				0.59						0.47			0.59
Allowance for credit losses to gross loans			0.57				0.56				0.58				0.59				0.58						0.57			0.58
Allowance for credit losses to nonperforming assets			97.41				91.87				75.79				82.56				80.57						97.41			80.57
Allowance for credit losses to nonperforming loans			207.08				182.89				124.89				142.29				141.06						207.08			141.06
Net charge-offs (recoveries) to average loans			0.09				0.54				0.05				0.02				(0.03	)					0.32			0.01
Full-service customer facilities			26				26				25				25				25						26			25

________________
(1)	Ratios are presented on an annualized basis, where appropriate.
(2)	Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(3)	Efficiency ratio, a non-GAAP measure, was calculated by dividing core noninterest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of core net interest income and core noninterest income.
(4)	Calculated by dividing stockholders’ equity by shares outstanding.
(5)	Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure, by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets. See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6)	See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7)	Excludes performing nonaccrual TDR loans in periods prior to 1Q23.

     

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	For the three months ended																		For the six months ended
(In thousands, except per share data)	June 30,			March 31,			December 31,				September 30,			June 30,					June 30,			June 30,
	2023			2023			2022				2022			2022					2023			2022
Interest and Dividend Income
Interest and fees on loans	$	85,377		$	82,889		$	81,033			$	75,546		$	69,192				$	168,266		$	136,708
Interest and dividends on securities:
Interest		9,172			7,240			6,511				5,676			4,929					16,412			8,674
Dividends		30			29			24				17			11					59			19
Other interest income		1,982			1,959			1,702				506			159					3,941			210
Total interest and dividend income		96,561			92,117			89,270				81,745			74,291					188,678			145,611
																	...
Interest Expense
Deposits		46,249			39,056			27,226				11,965			4,686					85,305			8,094
Other interest expense		6,934			7,799			7,843				8,574			4,875					14,733			9,308
Total interest expense		53,183			46,855			35,069				20,539			9,561					100,038			17,402
Net Interest Income		43,378			45,262			54,201				61,206			64,730					88,640			128,209
Provision (benefit) for credit losses		1,416			7,508			(12	)			2,145			1,590					8,924			2,948
Net Interest Income After Provision (Benefit) for Credit Losses		41,962			37,754			54,213				59,061			63,140					79,716			125,261
Noninterest Income (Loss)
Banking services fee income		1,780			1,411			1,231				1,351			1,166					3,191			2,540
Net loss on sale of securities		—			—			(10,948	)			—			—					—			—
Net gain on sale of loans		54			54			46				—			73					108			73
Net gain on disposition of assets		—			—			104				—			—					—			—
Net gain (loss) from fair value adjustments		294			2,619			(622	)			5,626			2,533					2,913			724
Federal Home Loan Bank of New York stock dividends		534			697			658				538			407					1,231			804
Life insurance proceeds		561			—			286				—			1,536					561			1,536
Bank owned life insurance		1,134			1,109			1,126				1,132			1,115					2,243			2,229
Other income		765			1,018			467				348			523					1,783			760
Total noninterest income (loss)		5,122			6,908			(7,652	)			8,995			7,353					12,030			8,666
Noninterest Expense
Salaries and employee benefits		19,493			20,887			18,178				21,438			21,109					40,380			44,758
Occupancy and equipment		3,534			3,793			3,701				3,541			3,760					7,327			7,364
Professional services		2,657			2,483			2,130				2,570			2,285					5,140			4,507
FDIC deposit insurance		943			977			485				738			615					1,920			1,035
Data processing		1,473			1,435			1,421				1,367			1,383					2,908			2,807
Depreciation and amortization		1,482			1,510			1,535				1,488			1,447					2,992			2,907
Other real estate owned/foreclosure expense		150			165			35				143			32					315			116
Other operating expenses		5,547			6,453			6,257				4,349			4,891					12,000			10,822
Total noninterest expense		35,279			37,703			33,742				35,634			35,522					72,982			74,316
Income Before Provision for Income Taxes		11,805			6,959			12,819				32,422			34,971					18,764			59,611
Provision for Income Taxes		3,177			1,801			2,570				8,980			9,936					4,978			16,357
Net Income	$	8,628		$	5,158		$	10,249			$	23,442		$	25,035				$	13,786		$	43,254
Basic earnings per common share	$	0.29		$	0.17		$	0.34			$	0.76		$	0.81				$	0.46		$	1.39
Diluted earnings per common share	$	0.29		$	0.17		$	0.34			$	0.76		$	0.81				$	0.46		$	1.39
Dividends per common share	$	0.22		$	0.22		$	0.22			$	0.22		$	0.22				$	0.44		$	0.44
Basic average shares		30,090			30,265			30,420				30,695			30,937					30,177			31,095
Diluted average shares		30,090			30,265			30,420				30,695			30,937					30,177			31,095

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2023				2023				2022				2022				2022
ASSETS
Cash and due from banks		$	160,053			$	176,747			$	151,754			$	164,693			$	137,026
Securities held-to-maturity:
Mortgage-backed securities			7,865				7,870				7,875				7,880				7,885
Other securities, net			65,469				65,653				65,836				66,032				66,230
Securities available for sale:
Mortgage-backed securities			365,911				380,110				384,283				468,366				510,934
Other securities			503,645				431,818				351,074				351,495				346,720
Loans			6,832,425				6,904,176				6,934,769				6,956,674				6,760,393
Allowance for credit losses			(38,593	)			(38,729	)			(40,442	)			(41,268	)			(39,424	)
Net loans			6,793,832				6,865,447				6,894,327				6,915,406				6,720,969
Interest and dividends receivable			52,911				46,836				45,048				42,571				38,811
Bank premises and equipment, net			22,182				21,567				21,750				22,376				22,285
Federal Home Loan Bank of New York stock			36,168				38,779				45,842				62,489				50,017
Bank owned life insurance			213,164				214,240				213,131				212,353				211,220
Goodwill			17,636				17,636				17,636				17,636				17,636
Core deposit intangibles			1,769				1,891				2,017				2,147				2,282
Right of use asset			41,526				42,268				43,289				44,885				46,687
Other assets			191,752				168,259				179,084				179,090				160,885
Total assets		$	8,473,883			$	8,479,121			$	8,422,946			$	8,557,419			$	8,339,587
LIABILITIES
Total deposits		$	6,723,690			$	6,734,090			$	6,485,342			$	6,125,305			$	6,407,577
Borrowed funds			857,400				887,509				1,052,973				1,572,830				1,089,621
Operating lease liability			44,402				45,353				46,125				48,330				50,346
Other liabilities			177,088				138,710				161,349				140,235				121,231
Total liabilities			7,802,580				7,805,662				7,745,789				7,886,700				7,668,775
STOCKHOLDERS' EQUITY
Preferred stock (5,000,000 shares authorized; none issued)			—				—				—				—				—
Common stock ($0.01 par value; 100,000,000 shares authorized)			341				341				341				341				341
Additional paid-in capital			263,744				262,876				264,332				263,755				262,860
Treasury stock			(104,574	)			(97,760	)			(98,535	)			(90,977	)			(88,342	)
Retained earnings			547,811				545,786				547,507				543,894				527,217
Accumulated other comprehensive loss, net of taxes			(36,019	)			(37,784	)			(36,488	)			(46,294	)			(31,264	)
Total stockholders' equity			671,303				673,459				677,157				670,719				670,812
Total liabilities and stockholders' equity		$	8,473,883			$	8,479,121			$	8,422,946			$	8,557,419			$	8,339,587
(In thousands)
Issued shares			34,088				34,088				34,088				34,088				34,088
Outstanding shares			28,961				29,488				29,476				29,851				29,980
Treasury shares			5,127				4,600				4,612				4,237				4,108

  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES AVERAGE BALANCE SHEETS (Unaudited)
		For the three months ended																	For the six months ended
		June 30,			March 31,			December 31,			September 30,			June 30,					June 30,			June 30,
(In thousands)		2023			2023			2022			2022			2022					2023			2022
Interest-earning Assets:
Mortgage loans, net		$	5,308,567		$	5,333,274		$	5,338,612		$	5,340,694		$	5,178,029				$	5,320,852		$	5,165,121
Other loans, net			1,521,081			1,537,918			1,542,633			1,520,769			1,462,302					1,529,453			1,444,555
Total loans, net			6,829,648			6,871,192			6,881,245			6,861,463			6,640,331					6,850,305			6,609,676
Taxable securities:
Mortgage-backed securities			448,620			457,911			549,204			568,854			594,923					453,240			587,836
Other securities			471,600			411,723			371,897			362,629			333,158					441,827			280,245
Total taxable securities			920,220			869,634			921,101			931,483			928,081					895,067			868,081
Tax-exempt securities:
Other securities			66,632			66,828			67,022			67,211			67,315					66,730			62,490
Total tax-exempt securities			66,632			66,828			67,022			67,211			67,315					66,730			62,490
Interest-earning deposits and federal funds sold			169,520			189,023			176,323			118,913			104,956					179,218			115,752
Total interest-earning assets			7,986,020			7,996,677			8,045,691			7,979,070			7,740,683					7,991,320			7,655,999
Other assets			475,807			471,634			472,328			463,587			471,080					473,731			475,066
Total assets		$	8,461,827		$	8,468,311		$	8,518,019		$	8,442,657		$	8,211,763				$	8,465,051		$	8,131,065
Interest-bearing Liabilities:
Deposits:
Savings accounts		$	124,041		$	134,945		$	146,598		$	154,545		$	156,785				$	129,463		$	156,689
NOW accounts			2,026,950			1,970,555			1,972,134			1,808,608			2,089,851					1,998,909			2,063,529
Money market accounts			1,754,574			2,058,523			2,146,649			2,136,829			2,231,743					1,905,709			2,242,626
Certificate of deposit accounts			2,046,960			1,679,517			1,350,683			1,057,733			820,476					1,864,254			854,970
Total due to depositors			5,952,525			5,843,540			5,616,064			5,157,715			5,298,855					5,898,335			5,317,814
Mortgagors' escrow accounts			97,410			70,483			82,483			68,602			97,496					84,021			84,574
Total interest-bearing deposits			6,049,935			5,914,023			5,698,547			5,226,317			5,396,351					5,982,356			5,402,388
Borrowings			706,924			789,535			963,662			1,326,770			941,023					748,001			876,877
Total interest-bearing liabilities			6,756,859			6,703,558			6,662,209			6,553,087			6,337,374					6,730,357			6,279,265
Noninterest-bearing demand deposits			849,682			896,462			979,836			1,050,296			1,044,553					872,943			1,023,181
Other liabilities			181,343			185,220			199,809			164,992			162,380					183,270			158,400
Total liabilities			7,787,884			7,785,240			7,841,854			7,768,375			7,544,307					7,786,570			7,460,846
Equity			673,943			683,071			676,165			674,282			667,456					678,481			670,219
Total liabilities and equity		$	8,461,827		$	8,468,311		$	8,518,019		$	8,442,657		$	8,211,763				$	8,465,051		$	8,131,065
Net interest-earning assets		$	1,229,161		$	1,293,119		$	1,383,482		$	1,425,983		$	1,403,309				$	1,260,963		$	1,376,734

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES NET INTEREST INCOME AND NET INTEREST MARGIN (Unaudited)
		For the three months ended																							For the six months ended
		June 30,					March 31,				December 31,				September 30,				June 30,						June 30,					June 30,
(Dollars in thousands)		2023					2023				2022				2022				2022						2023					2022
Interest Income:
Mortgage loans, net		$	63,688				$	62,054			$	60,946			$	58,374			$	54,775					$	125,742				$	108,745
Other loans, net			21,689					20,835				20,087				17,172				14,417						42,524					27,963
Total loans, net			85,377					82,889				81,033				75,546				69,192						168,266					136,708
Taxable securities:
Mortgage-backed securities			2,976					2,281				2,425				2,466				2,356						5,257					4,523
Other securities			5,847					4,611				3,723				2,839				2,090						10,458					3,209
Total taxable securities			8,823					6,892				6,148				5,305				4,446						15,715					7,732
Tax-exempt securities:
Other securities			480					477				489				492				625						957					1,216
Total tax-exempt securities			480					477				489				492				625						957					1,216
Interest-earning deposits and federal funds sold			1,982					1,959				1,702				506				159						3,941					210
Total interest-earning assets			96,662					92,217				89,372				81,849				74,422						188,879					145,866
Interest Expense:
Deposits:
Savings accounts		$	140				$	126			$	59			$	53			$	50					$	266				$	99
NOW accounts			16,152					13,785				9,515				3,640				1,405						29,937					2,198
Money market accounts			14,625					14,102				10,532				5,280				1,952						28,727					3,227
Certificate of deposit accounts			15,281					11,007				7,037				2,948				1,273						26,288					2,562
Total due to depositors			46,198					39,020				27,143				11,921				4,680						85,218					8,086
Mortgagors' escrow accounts			51					36				83				44				6						87					8
Total interest-bearing deposits			46,249					39,056				27,226				11,965				4,686						85,305					8,094
Borrowings			6,934					7,799				7,843				8,574				4,875						14,733					9,308
Total interest-bearing liabilities			53,183					46,855				35,069				20,539				9,561						100,038					17,402
Net interest income- tax equivalent		$	43,479				$	45,362			$	54,303			$	61,310			$	64,861					$	88,841				$	128,464
Included in net interest income above:
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans		$	315				$	680			$	1,080			$	1,368			$	2,281					$	995				$	3,997
Net gains/(losses) from fair value adjustments on qualifying hedges included in net interest income			(205	)				100				936				28				(60	)					(105	)				(189	)
Purchase accounting adjustments			340					306				342				775				367						646					1,425
Interest-earning Assets Yields:
Mortgage loans, net			4.80		%			4.65	%			4.57	%			4.37	%			4.23		%				4.73		%			4.21		%
Other loans, net			5.70					5.42				5.21				4.52				3.94						5.56					3.87
Total loans, net			5.00					4.83				4.71				4.40				4.17						4.91					4.14
Taxable securities:
Mortgage-backed securities			2.65					1.99				1.77				1.73				1.58						2.32					1.54
Other securities			4.96					4.48				4.00				3.13				2.51						4.73					2.29
Total taxable securities			3.84					3.17				2.67				2.28				1.92						3.51					1.78
Tax-exempt securities: (1)
Other securities			2.88					2.86				2.92				2.93				3.71						2.87					3.89
Total tax-exempt securities			2.88					2.86				2.92				2.93				3.71						2.87					3.89
Interest-earning deposits and federal funds sold			4.68					4.15				3.86				1.70				0.61						4.40					0.36
Total interest-earning assets (1)			4.84		%			4.61	%			4.44	%			4.10	%			3.85		%				4.73		%			3.81		%
Interest-bearing Liabilities Yields:
Deposits:
Savings accounts			0.45		%			0.37	%			0.16	%			0.14	%			0.13		%				0.41		%			0.13		%
NOW accounts			3.19					2.80				1.93				0.81				0.27						3.00					0.21
Money market accounts			3.33					2.74				1.96				0.99				0.35						3.01					0.29
Certificate of deposit accounts			2.99					2.62				2.08				1.11				0.62						2.82					0.60
Total due to depositors			3.10					2.67				1.93				0.92				0.35						2.89					0.30
Mortgagors' escrow accounts			0.21					0.20				0.40				0.26				0.02						0.21					0.02
Total interest-bearing deposits			3.06					2.64				1.91				0.92				0.35						2.85					0.30
Borrowings			3.92					3.95				3.26				2.58				2.07						3.94					2.12
Total interest-bearing liabilities			3.15		%			2.80	%			2.11	%			1.25	%			0.60		%				2.97		%			0.55		%
Net interest rate spread (tax equivalent) (1)			1.69		%			1.81	%			2.33	%			2.85	%			3.25		%				1.76		%			3.26		%
Net interest margin (tax equivalent) (1)			2.18		%			2.27	%			2.70	%			3.07	%			3.35		%				2.22		%			3.36		%
Ratio of interest-earning assets to interest-bearing liabilities			1.18		X			1.19	X			1.21	X			1.22	X			1.22		X				1.19		X			1.22		X

________________
(1)	Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES DEPOSIT and LOAN COMPOSITION (Unaudited)
Deposit Composition
																	2Q23 vs.				2Q23 vs.
		June 30,			March 31,			December 31,			September 30,			June 30,			1Q23				2Q22
(Dollars in thousands)		2023			2023			2022			2022			2022			% Change				% Change
Noninterest bearing		$	827,820		$	872,254		$	921,238		$	992,378		$	1,081,208		(5.1	)	%		(23.4	)	%
Interest bearing:
Certificate of deposit accounts			2,232,696			1,880,260			1,526,338			1,036,107			906,943		18.7				146.2
Savings accounts			118,886			128,245			143,641			150,552			154,670		(7.3	)			(23.1	)
Money market accounts			1,594,637			1,855,781			2,099,776			2,113,256			2,229,993		(14.1	)			(28.5	)
NOW accounts			1,891,834			1,918,977			1,746,190			1,762,468			1,977,186		(1.4	)			(4.3	)
Total interest-bearing deposits			5,838,053			5,783,263			5,515,945			5,062,383			5,268,792		0.9				10.8
Total due to depositors			6,665,873			6,655,517			6,437,183			6,054,761			6,350,000		0.2				5.0
Mortgagors' escrow deposits			57,817			78,573			48,159			70,544			57,577		(26.4	)			0.4
Total deposits		$	6,723,690		$	6,734,090		$	6,485,342		$	6,125,305		$	6,407,577		(0.2	)	%		4.9		%

Loan Composition
																						2Q23 vs.				2Q23 vs.
		June 30,				March 31,				December 31,				September 30,				June 30,				1Q23				2Q22
(Dollars in thousands)		2023				2023				2022				2022				2022				% Change				% Change
Multifamily residential		$	2,593,955			$	2,601,174			$	2,601,384			$	2,608,192			$	2,531,858			(0.3	)	%		2.5		%
Commercial real estate			1,917,749				1,904,293				1,913,040				1,914,326				1,864,507			0.7				2.9
One-to-four family ― mixed-use property			542,368				549,207				554,314				560,885				561,100			(1.2	)			(3.3	)
One-to-four family ― residential			224,039				232,302				235,067				233,469				242,729			(3.6	)			(7.7	)
Co-operative apartments			6,016				6,115				6,179				7,015				8,130			(1.6	)			(26.0	)
Construction			57,325				60,486				70,951				63,651				72,148			(5.2	)			(20.5	)
Mortgage Loans			5,341,452				5,353,577				5,380,935				5,387,538				5,280,472			(0.2	)			1.2
Small Business Administration (1)			22,404				22,860				23,275				27,712				40,572			(2.0	)			(44.8	)
Commercial business and other			1,466,358				1,518,756				1,521,548				1,532,497				1,431,417			(3.5	)			2.4
Nonmortgage loans			1,488,762				1,541,616				1,544,823				1,560,209				1,471,989			(3.4	)			1.1
Gross loans			6,830,214				6,895,193				6,925,758				6,947,747				6,752,461			(0.9	)			1.2
Net unamortized premiums and unearned loan fees (2)			2,211				8,983				9,011				8,927				7,932			(75.4	)			(72.1	)
Allowance for credit losses			(38,593	)			(38,729	)			(40,442	)			(41,268	)			(39,424	)		(0.4	)			(2.1	)
Net loans		$	6,793,832			$	6,865,447			$	6,894,327			$	6,915,406			$	6,720,969			(1.0	)	%		1.1		%

________________
(1)	Includes $4.0 million, $4.8 million, $5.2 million, $9.6 million, and $22.2 million of PPP loans at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.
(2)	Includes $4.8 million, $5.1 million, $5.4 million, $5.8 million, and $6.6 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES LOAN CLOSINGS and RATES (Unaudited)
Loan Closings
		For the three months ended																For the six months ended
		June 30,			March 31,			December 31,			September 30,			June 30,					June 30,		June 30,
(In thousands)		2023			2023			2022			2022			2022				2023			2022
Multifamily residential		$	31,901		$	42,164		$	65,347		$	173,980		$	136,902			$	74,065		$	235,082
Commercial real estate			38,523			15,570			20,750			77,777			164,826				54,093			209,928
One-to-four family – mixed-use property			5,812			4,938			4,489			12,383			12,228				10,750			20,726
One-to-four family – residential			63			4,296			7,485			4,102			4,211				4,359			13,448
Co-operative apartments			—			—			—			—			—				—			24
Construction			8,811			10,592			7,301			7,170			8,319				19,403			17,121
Mortgage Loans			85,110			77,560			105,372			275,412			326,486				162,670			496,329
Small Business Administration			820			318			665			46			2,750				1,138			2,750
Commercial business and other			72,850			95,668			119,191			188,202			174,551				168,518			334,027
Nonmortgage Loans			73,670			95,986			119,856			188,248			177,301				169,656			336,777
Total Closings		$	158,780		$	173,546		$	225,228		$	463,660		$	503,787			$	332,326		$	833,106

Weighted Average Rate on Loan Closings
		For the three months ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Loan type		2023			2023			2022			2022			2022
Mortgage loans		6.62	%		6.30	%		5.59	%		4.37	%		3.76	%
Nonmortgage loans		7.76			7.58			6.57			4.93			4.21
Total loans		7.14	%		7.01	%		6.10	%		4.60	%		3.92	%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES ASSET QUALITY (Unaudited)
Allowance for Credit Losses
		For the three months ended																										For the six months ended
		June 30,					March 31,					December 31,					September 30,					June 30,						June 30,						June 30,
(Dollars in thousands)		2023					2023					2022					2022					2022						2023						2022
Allowance for credit losses - loans
Beginning balances		$	38,729				$	40,442				$	41,268				$	39,424				$	37,433					$	40,442					$	37,135
Net loan charge-off (recoveries):
Multifamily residential			—					(1	)				132					—					(1	)					(1	)					(1	)
Commercial real estate			8					—					—					—					—						8						—
One-to-four family – residential			4					(36	)				17					2					(2	)					(32	)					(4	)
Small Business Administration			(158	)				(6	)				(9	)				(12	)				13						(164	)					1,028
Taxi medallion			—					—					—					—					(435	)					—						(447	)
Commercial business and other			1,706					9,277					671					300					(76	)					10,983						(142	)
Total			1,560					9,234					811					290					(501	)					10,794						434
Provision (benefit) for loan losses			1,424					7,521					(15	)				2,134					1,490						8,945						2,723
Ending balance		$	38,593				$	38,729				$	40,442				$	41,268				$	39,424					$	38,593					$	39,424
Gross charge-offs		$	1,731				$	9,298				$	1,938				$	324				$	50					$	11,029					$	1,086
Gross recoveries			171					64					1,127					34					551						235						652
Allowance for credit losses - loans to gross loans			0.57		%			0.56		%			0.58		%			0.59		%			0.58		%				0.57		%				0.58		%
Net loan charge-offs (recoveries) to average loans			0.09					0.54					0.05					0.02					(0.03	)					0.32						0.01

Nonperforming Assets
		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2023				2023				2022				2022				2022
Loans 90 Days Or More Past Due and Still Accruing:
Commercial real estate		$	—			$	—			$	—			$	2,000			$	—
Construction			—				—				2,600				—				—
Commercial business and other			—				—				—				—				100
Total			—				—				2,600				2,000				100
Nonaccrual Loans:
Multifamily residential			3,206				3,628				3,206				3,414				3,414
Commercial real estate			—				—				237				1,851				242
One-to-four family - mixed-use property(1)			790				790				790				790				790
One-to-four family - residential			5,218				4,961				4,425				4,655				5,055
Construction			—				—				—				—				856
Small Business Administration			1,119				937				937				937				937
Commercial business and other(1)			8,304				10,860				20,187				15,356				16,554
Total			18,637				21,176				29,782				27,003				27,848
Total Nonperforming Loans (NPLs)			18,637				21,176				32,382				29,003				27,948
Total Nonaccrual HTM Securities			20,981				20,981				20,981				20,981				20,981
Total Nonperforming Assets		$	39,618			$	42,157			$	53,363			$	49,984			$	48,929
Nonperforming Assets to Total Assets			0.47	%			0.50	%			0.63	%			0.58	%			0.59	%
Allowance for Credit Losses to NPLs			207.1	%			182.9	%			124.9	%			142.3	%			141.1	%

________________
(1)	Adopted ASU No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023; Not included in the above analysis are nonaccrual performing TDR one-to-four family – mixed use property loans totaling $0.2 million in 4Q22 and in 3Q22 and $0.3 million in 2Q22; nonaccrual performing TDR commercial business loans totaling less than $0.1 million in 4Q22, $2.9 million in 3Q22, and $2.8 million in 2Q22.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS

Non-cash Fair Value Adjustments to GAAP Earnings

The variance in GAAP and core earnings is partly driven by the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to borrowings carried at fair value under the fair value option.

Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Core Noninterest Income, Core Noninterest Expense 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 noninterest 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 this measure is 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 (Unaudited)
		For the three months ended																											For the six months ended
(Dollars in thousands,		June 30,					March 31,					December 31,					September 30,					June 30,							June 30,					June 30,
except per share data)		2023					2023					2022					2022					2022							2023					2022
GAAP income before income taxes		$	11,805				$	6,959				$	12,819				$	32,422				$	34,971						$	18,764				$	59,611
Net (gain) loss from fair value adjustments (Noninterest income (loss))			(294	)				(2,619	)				622					(5,626	)				(2,533	)						(2,913	)				(724	)
Net loss on sale of securities (Noninterest income (loss))			—					—					10,948					—					—							—					—
Life insurance proceeds (Noninterest income (loss))			(561	)				—					(286	)				—					(1,536	)						(561	)				(1,536	)
Net gain on disposition of assets (Noninterest income (loss))			—					—					(104	)				—					—							—					—
Net (gain) loss from fair value adjustments on qualifying hedges (Net interest income)			205					(100	)				(936	)				(28	)				60							105					189
Net amortization of purchase accounting adjustments and intangibles (Various)			(227	)				(188	)				(219	)				(650	)				(237	)						(415	)				(1,161	)
Core income before taxes			10,928					4,052					22,844					26,118					30,725							14,980					56,379
Provision for core income taxes			3,074					1,049					5,445					7,165					9,207							4,123					15,892
Core net income		$	7,854				$	3,003				$	17,399				$	18,953				$	21,518						$	10,857				$	40,487
GAAP diluted earnings per common share		$	0.29				$	0.17				$	0.34				$	0.76				$	0.81						$	0.46				$	1.39
Net (gain) loss from fair value adjustments, net of tax			(0.01	)				(0.06	)				0.02					(0.13	)				(0.06	)						(0.07	)				(0.02	)
Net loss on sale of securities, net of tax			—					—					0.27					—					—							—					—
Life insurance proceeds			(0.02	)				—					(0.01	)				—					(0.05	)						(0.02	)				(0.05	)
Net gain on disposition of assets, net of tax			—					—					—					—					—							—					—
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax			—					—					(0.02	)				—					—							—					—
Net amortization of purchase accounting adjustments, net of tax			(0.01	)				(0.01	)				(0.01	)				(0.02	)				(0.01	)						(0.01	)				(0.03	)
Core diluted earnings per common share(1)		$	0.26				$	0.10				$	0.57				$	0.62				$	0.70						$	0.36				$	1.30
Core net income, as calculated above		$	7,854				$	3,003				$	17,399				$	18,953				$	21,518						$	10,857				$	40,487
Average assets			8,461,827					8,468,311					8,518,019					8,442,657					8,211,763							8,465,051					8,131,065
Average equity			673,943					683,071					676,165					674,282					667,456							678,481					670,219
Core return on average assets(2)			0.37		%			0.14		%			0.82		%			0.90		%			1.05		%					0.26		%			1.00		%
Core return on average equity(2)			4.66		%			1.76		%			10.29		%			11.24		%			12.90		%					3.20		%			12.08		%

________________
(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 REVENUE and PRE-PROVISION PRE-TAX NET REVENUE (Unaudited)
		For the three months ended																							For the six months ended
		June 30,				March 31,				December 31,				September 30,				June 30,							June 30,				June 30,
(Dollars in thousands)		2023				2023				2022				2022				2022							2023				2022
GAAP Net interest income		$	43,378			$	45,262			$	54,201			$	61,206			$	64,730						$	88,640			$	128,209
Net (gain) loss from fair value adjustments on qualifying hedges			205				(100	)			(936	)			(28	)			60							105				189
Net amortization of purchase accounting adjustments			(340	)			(306	)			(342	)			(775	)			(367	)						(646	)			(1,425	)
Core Net interest income		$	43,243			$	44,856			$	52,923			$	60,403			$	64,423						$	88,099			$	126,973
GAAP Noninterest income (loss)		$	5,122			$	6,908			$	(7,652	)		$	8,995			$	7,353						$	12,030			$	8,666
Net (gain) loss from fair value adjustments			(294	)			(2,619	)			622				(5,626	)			(2,533	)						(2,913	)			(724	)
Net loss on sale of securities			—				—				10,948				—				—							—				—
Life insurance proceeds			(561	)			—				(286	)			—				(1,536	)						(561	)			(1,536	)
Net gain on sale of assets			—				—				(104	)			—				—							—				—
Core Noninterest income		$	4,267			$	4,289			$	3,528			$	3,369			$	3,284						$	8,556			$	6,406
GAAP Noninterest expense		$	35,279			$	37,703			$	33,742			$	35,634			$	35,522						$	72,982			$	74,316
Net amortization of purchase accounting adjustments			(113	)			(118	)			(123	)			(125	)			(130	)						(231	)			(264	)
Core Noninterest expense		$	35,166			$	37,585			$	33,619			$	35,509			$	35,392						$	72,751			$	74,052
Net interest income		$	43,378			$	45,262			$	54,201			$	61,206			$	64,730						$	88,640			$	128,209
Noninterest income (loss)			5,122				6,908				(7,652	)			8,995				7,353							12,030				8,666
Noninterest expense			(35,279	)			(37,703	)			(33,742	)			(35,634	)			(35,522	)						(72,982	)			(74,316	)
Pre-provision pre-tax net revenue		$	13,221			$	14,467			$	12,807			$	34,567			$	36,561						$	27,688			$	62,559
Core:
Net interest income		$	43,243			$	44,856			$	52,923			$	60,403			$	64,423						$	88,099			$	126,973
Noninterest income			4,267				4,289				3,528				3,369				3,284							8,556				6,406
Noninterest expense			(35,166	)			(37,585	)			(33,619	)			(35,509	)			(35,392	)						(72,751	)			(74,052	)
Pre-provision pre-tax net revenue		$	12,344			$	11,560			$	22,832			$	28,263			$	32,315						$	23,904			$	59,327
Efficiency Ratio			74.0		%		76.5		%		59.6		%		55.7		%		52.3		%					75.3		%		55.5		%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN to CORE NET INTEREST INCOME (Unaudited)
	For the three months ended																										For the six months ended
	June 30,					March 31,					December 31,					September 30,					June 30,						June 30,				June 30,
(Dollars in thousands)	2023					2023					2022					2022					2022						2023				2022
GAAP net interest income	$	43,378				$	45,262				$	54,201				$	61,206				$	64,730					$	88,640			$	128,209
Net (gain) loss from fair value adjustments on qualifying hedges		205					(100	)				(936	)				(28	)				60						105				189
Net amortization of purchase accounting adjustments		(340	)				(306	)				(342	)				(775	)				(367	)					(646	)			(1,425	)
Tax equivalent adjustment		101					100					102					104					131						201				255
Core net interest income FTE	$	43,344				$	44,956				$	53,025				$	60,507				$	64,554					$	88,300			$	127,228
Total average interest-earning assets (1)	$	7,990,331				$	8,001,271				$	8,050,601				$	7,984,558				$	7,746,640					$	7,995,772			$	7,662,315
Core net interest margin FTE		2.17		%			2.25		%			2.63		%			3.03		%			3.33		%				2.21		%		3.32		%
GAAP interest income on total loans, net	$	85,377				$	82,889				$	81,033				$	75,546				$	69,192					$	168,266			$	136,708
Net (gain) loss from fair value adjustments on qualifying hedges - loans		157					(101	)				(936	)				(28	)				60						56				189
Net amortization of purchase accounting adjustments		(345	)				(316	)				(372	)				(783	)				(357	)					(661	)			(1,474	)
Core interest income on total loans, net	$	85,189				$	82,472				$	79,725				$	74,735				$	68,895					$	167,661			$	135,423
Average total loans, net (1)	$	6,834,644				$	6,876,495				$	6,886,900				$	6,867,758				$	6,647,131					$	6,855,454			$	6,616,860
Core yield on total loans		4.99		%			4.80		%			4.63		%			4.35		%			4.15		%				4.89		%		4.09		%

________________
(1)	Excludes purchase accounting average balances for all periods presented.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CALCULATION OF TANGIBLE STOCKHOLDERS’ COMMON EQUITY to TANGIBLE ASSETS (Unaudited)
		June 30,					March 31,					December 31,					September 30,					June 30,
(Dollars in thousands)		2023					2023					2022					2022					2022
Total Equity		$	671,303				$	673,459				$	677,157				$	670,719				$	670,812
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit intangibles			(1,769	)				(1,891	)				(2,017	)				(2,147	)				(2,282	)
Tangible Stockholders' Common Equity		$	651,898				$	653,932				$	657,504				$	650,936				$	650,894
Total Assets		$	8,473,883				$	8,479,121				$	8,422,946				$	8,557,419				$	8,339,587
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit intangibles			(1,769	)				(1,891	)				(2,017	)				(2,147	)				(2,282	)
Tangible Assets		$	8,454,478				$	8,459,594				$	8,403,293				$	8,537,636				$	8,319,669
Tangible Stockholders' Common Equity to Tangible Assets			7.71		%			7.73		%			7.82		%			7.62		%			7.82		%

Investor Contact: Susan K. Cullen, SEVP, CFO and Treasurer, 718-961-5400