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Flushing Financial Corporation Reports Full Year 2018 GAAP EPS up 36% and Record Full Year Core EPS up 24%; Quarterly Yields on Loan Closings Increased 75bps from 4Q17

FOURTH QUARTER 20181 HIGHLIGHTS

  • GAAP diluted EPS was $0.44, up 109.5% from 4Q17 and down 27.9% QoQ
  • Core diluted EPS was $0.54, up 63.6% from 4Q17 and unchanged QoQ
  • Net interest income of $40.6 million, down 2.1% QoQ, and 5.6% from 4Q17
  • Net interest margin was 2.55%, down 16bps QoQ and 35bps from 4Q17
  • Non-interest expense decreased 5.4% QoQ and 0.5% from 4Q17
  • GAAP and core ROAE were 9.2% and 11.4%, compared with 12.9% and 11.4%, respectively in 3Q18
  • GAAP and core ROAA were 0.7% and 0.9%, respectively, compared with 1.1% and 1.0% , respectively in 3Q18
  • Sold $120.3 million in lower yielding investment securities, resulting in a loss on sale of $1.9 million and purchased $113.4 million in higher yielding investment securities; transaction expected to aid 2019 EPS and NIM
  • Tax benefit of $0.06 per diluted share due to release of previously accrued tax liability

FULL YEAR 20181 HIGHLIGHTS

  • GAAP diluted EPS was $1.92, up 36.2% YoY
  • Record core diluted EPS of $1.94, up 23.6% YoY
  • Record loan closings of $1,250.8 million, up 20.3% YoY  
  • GAAP ROAE was 10.3%, compared with 7.8% and core ROAE was 10.4%, compared with 8.6% for 2017
  • GAAP ROAA was 0.9%, compared with 0.7% and core ROAA was 0.9%, compared with 0.7% for 2017
  • Net interest income was $167.4 million, down 3.3%, and net interest margin was 2.70%, down 23bps YoY
  • Non-interest expense increased 3.9% YoY
  • Tax benefit of $0.12 per diluted share due to release of previously accrued tax liability

UNIONDALE, N.Y., Jan. 31, 2019 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the fourth quarter and fiscal year ended December 31, 2018.

John R. Buran, President and Chief Executive Officer, stated, “We are pleased to report another quarter of strong loan closings totaling $345 million, our highest quarterly production in 2018, bringing total annual loan closings to a record level of $1.3 billion, resulting in net loan growth of 3.2% (non-annualized) QoQ and 7.3% for the full year. These milestones were achieved while continuing to adhere to our strategy of emphasizing rate over volume, resulting in a 75bps increase in average loan yields on loan closings in 4Q18 compared to those booked in 4Q17. The increase in new loan volume and yields combined with repricings of adjustable rate loans resulted in a 9bps increase in the yield of total loans to 4.38% in 4Q18 from 4.29% in 3Q18, excluding prepayment penalty income and recovered interest from nonaccrual loans.”

“We continued to experience margin pressure during 4Q18 driven by higher cost of funds. The cost of funds increased 12bps QoQ and 58bps YoY, as the Federal Reserve increased benchmark rates by 100bps since the fourth quarter of 2017. We expect continued competition for deposits and additional compression on the NIM through 2019.”

“Overall our net interest margin decreased 16bps from 3Q18 to 2.55% for 4Q18. The decline in the net interest margin was primarily driven by a decrease of approximately $2 million in prepayment penalties and recovered interest from non-accrual loans in 4Q18 from 3Q18. The decrease in our net interest margin shrinks to 3bps QoQ using core NIM which excludes the adjustments noted above for prepayment penalties and recovered interest from non-accrual loans.”

“Our strategy of focusing on our net interest margin spurred our decision to sell lower yielding investment securities, from which we recognized a loss on sale totaling $1.9 million, and reinvested the proceeds into higher yielding investment securities. We anticipate this transaction to aid our future net interest margin and earnings per share and to break even in approximately two years.”

“Similar to the prior quarter, we allowed $15 million of participations with another financial institution to repay, as the rates offered during the refinancing process did not meet our rate criteria. Year-to-date, we have allowed approximately $154 million of participations to repay rather than refinance at a rate below our criteria. We continue to focus on the origination and purchase of adjustable rate loans, as approximately 78% of our new loans and 46% of our new investment securities were adjustable rate products allowing us to manage future compression on net interest margin as spreads are fixed. Additionally, approximately $450 million of forward swaps entered into in late 2017 provided a benefit of a basis point to the quarter’s net interest margin. We expect these swaps to continue to benefit our net interest margin as interest rates rise.”  

“Over the past year, C&I loans represented 38% of new loan closings, which are primarily adjustable rate loans.  For the first time business loan closings exceeded multi-family closings for the year. We have over $2 billion of loans repricing through 2021. During the fourth quarter $152 million of mortgage loans have repriced up an average of 57bps. In addition, the pipeline totals $197 million with an average yield of 5.12% compared to $355 million at 4.68% in the linked quarter.”  

“Total deposits increased $258 million, or 5.5% (non-annualized) QoQ. The majority of this increase was transaction deposits which increased 8.3% (non-annualized) QoQ. Retail deposits increased $105 million QoQ. A prominent feature in the growth of retail deposits is the “Win Flushing” program, which focuses on increasing our deposit market share in the Asian Community of Flushing, Queens. Through the fourth quarter of 2018, we substantially achieved our goal, as we captured over $143 million of the $160 million in deposit growth targeted to be obtained by the end of 1Q19. Central to the “Win Flushing” program was the conversion of Flushing branches to the Universal Banker model, permitting staff to spend more time with customers. As of year-end we had 15 branches operating under the Universal Banker model. In the branches that have been converted we experienced an increase of over 120% in transactions processed at ATMs, to almost 60% of all branch transactions, reducing our customer’s reliance on tellers, resulting in an increase of over 30% in total branch sales, 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.”   

Mr. Buran continued, “We continue to see strong improvements in our delinquency trends, as non-performing assets decreased by 10% and, total delinquencies decreased 20% since December 31, 2017. The loan-to-value ratio on our non-performing real estate loans at December 31, 2018 remained conservative at 35%. The net recoveries of $214,000 for the quarter reflect the Company’s conservative underwriting and diligence in the collection process.”

The Company retains its focus on preserving strong risk management practices, including conservative underwriting standards and improving yields to achieve improved risk-adjusted returns.

  • Multi-family (excluding underlying co-operative mortgages), commercial real estate, and one-to-four family mixed-use property mortgage loans originated during 4Q18 had a yield of 4.73%, an increase of 35bps from 4.38% for 3Q18 and an increase of 82bps from 3.91% for 4Q17. We maintained our asset quality as these loans had an average loan-to-value ratio of 46% and an average debt coverage ratio of 164%.
  • We remain committed to our strategy of focusing on C&I loans, commercial real estate loans and multi-family. In the fourth quarter, loan closings represented 34%, 28%, and 25%, respectively, of all originations, which were made while maintaining conservative loan-to-value and debt coverage ratios, and increasing yield.

Mr. Buran concluded, “Overall, we remain well capitalized and positioned to deliver profitable growth and long-term value to our shareholders as we continue to execute on our strategic objectives.”

Summary of Strategic Objectives

  • Manage cost of funds and continue to improve funding mix
  • Increase interest income by leveraging loan pricing opportunities and portfolio mix
  • Enhance core earnings power by improving scalability and efficiency
  • Manage credit risk
  • Maintain well capitalized levels under all stress test scenarios

Earnings Summary:

Net Interest Income

Net interest income for 4Q18 was $40.6 million, a decrease of $2.4 million, or 5.6% YoY (4Q18 compared to 4Q17) and $0.9 million, or 2.1% QoQ (4Q18 compared to 3Q18).

  • Net interest margin of 2.55%, decreased 35bps YoY and 16bps QoQ
  • Net interest spread of 2.34%, decreased 41bps YoY and 17bps QoQ
  • Yield on average interest-earning assets of 4.24%, increased 22bps YoY but decrease 3bps QoQ
  • Cost of average interest-bearing liabilities of 1.90%, increased 63bps YoY and 14bps QoQ
  • Cost of funds of 1.75%, increased 58bps YoY and 12bps QoQ, driven by increases in rates paid on deposits and short-term borrowings resulting from increases in the Fed Funds rate 
  • Average balance of total interest-earning assets of $6,364.5 million, increased $430.0 million, or 7.2%, YoY and $234.0 million, or 3.8%, QoQ
  • Net interest income includes prepayment penalty income from loans totaling $0.9 million in 4Q18 compared with $1.4 million in 4Q17 and $1.9 million in 3Q18, accretion of discount upon call of CLO securities of none in 4Q18 and 3Q18 and $0.4 million in 4Q17 and recovered interest from delinquent loans of $0.3 million in 4Q18, compared to $0.1 million in 4Q17 and $1.1 million in 3Q18
  • Absent all above items, the yield on interest-earning assets was 4.16% in 4Q18, an improvement of 26bps from 4Q17 and 8bps from 3Q18 and the net interest margin was 2.48% in 4Q18, which decreased 29bps from 4Q17 and 3bps from 3Q18

Provision for loan losses

As a result of the quarterly review of the allowance for loan losses, the Company recorded a provision of $0.4 million compared to $6.6 million in 4Q17 and none in 3Q18.

  • Recorded net charge-offs (recoveries) of ($0.2) million in 4Q18, $11.5 million in 4Q17 and ($89,000) in 3Q18

Non-interest Income (Loss)

Non-interest income (loss) for 4Q18 was a loss $1.0 million, a decrease of $4.1 million YoY, and $5.9 million QoQ.

  • During 4Q18 securities totaling $120.3 million at an average yield of 2.41% were sold, recording a loss on sale of $1.9 million, and the proceeds were used to purchase $113.4 million in securities at an average yield of 3.70%  
  • Additionally, non-interest income included net losses from fair value adjustments of $3.6 million in 4Q18, $0.6 million in 4Q17 and $0.2 million in 3Q18, gains from sale of assets of $1.1 million in 4Q18 and gains from life insurance of $2.2 million in 3Q18
  • Absent all above items, non-interest income was $3.4 million, a decrease of $0.3 million, or 8.6% YoY, but an increase of $0.5 million, 16.4% QoQ

Non-interest Expense

Non-interest expense for 4Q18 was $25.8 million, a decrease of $0.1 million, or 0.5% YoY, and $1.5 million, or 5.4% QoQ.

  • During 4Q18 BOLI split dollar insurance expense was reduced due to an increase in the discount rate used to calculate the cumulative split dollar liability; BOLI split dollar expense (income) was ($0.6) million in 4Q18, $0.6 million in 4Q17 and $0.1 million in 3Q18
  • Absent the above items, non-interest expense was $26.4 million, an increase of $1.1 million, or 4.4% YoY, but a decrease of $0.7 million, or 2.5% QoQ
  • The efficiency ratio was 58.5% in 4Q18 compared to 55.4% in 4Q17 and 61.3% in 3Q18

Provision for Income Taxes

The provision for income taxes in 4Q18 was $1.0 million, a decrease of $6.6 million, or 86.4% YoY and a decrease of $0.9 million, or 45.2% QoQ.

  • Pre-tax income decreased by $0.2 million, or 1.3% YoY and by $5.8 million, or 30.0% QoQ
  • The effective tax rates were 7.8% in 4Q18, 56.4% in 4Q17 and 9.9% in 3Q18
  • 4Q18 and 3Q18 each reflect the release of a previously accrued tax liability of $1.8 million; 4Q17 reflects additional tax expense totaling $3.8 million from 2017 tax reform
  • Absent the above items, the effective tax rates were 20.9% in 4Q18, 28.7% in 4Q17 and 19.1% in 3Q18

Financial Condition Summary:

Loans:

  • Net loans held for investment were $5,530.5 million reflecting an increase of 3.2% QoQ (not annualized) and 7.3% from December 31, 2017, as we continue to focus on the origination of multi-family, commercial real estate and commercial business loans with a full relationship while emphasizing rate over volume
  • Loan closings of multi-family, commercial real estate and commercial business loans totaled $297.2 million for 4Q18, or 86.6% of loan production
  • Loan pipeline was $196.6 million at December 31, 2018, compared to $359.8 million at December 31, 2017 and $355.2 million at September 30, 2018
  • The loan-to-value ratio on our portfolio of real estate dependent loans as of December 31, 2018 totaled 38.8%

The following table shows the weighted average rate received from loan closings for the periods indicated:

    For the three months ended  
    December 31,   September 30,   December 31,  
Loan type   2018   2018   2017  
Mortgage loans   4.79 %   4.48 %   3.92 %  
Non-mortgage loans   5.11 %   4.50 %   4.52 %  
Total loans   4.90 %   4.49 %   4.15 %  
               

Credit Quality:

  • Non-performing loans totaled $16.3 million, a decrease of $1.9 million, or 10.4%, from $18.1 million at December 31, 2017
  • Non-performing assets totaled $16.3 million, a decrease of $1.8 million, or 10.2%, from $18.1 million at December 31, 2017
  • Classified assets totaled $46.5 million, an increase of $12.5 million, or 36.8%, from $34.0 million at December 31, 2017, primarily due to seven business loan relationships totaling $24.6 million being downgraded as they did not meet certain loan covenants; five of the relationships totaling $21.1 million are still accruing and continue to remit payments on time
  • Loans classified as troubled debt restructured (TDR) totaled $8.4 million, a decrease of $4.8 million, or 36.6%, from $13.2 million at December 31, 2017, primarily due to the repayment of four taxi medallion TDRs, resulting in a recovery of $0.1 million and the sale of one commercial TDR
  • We anticipate continued low loss content in the portfolio, as our strong underwriting standards coupled with our practice of obtaining updated appraisals and recording charge-offs early in the delinquency process has resulted in a 34.9% average loan-to-value for non-performing loans collateralized by real estate at December 31, 2018
  • Net recoveries totaled $19,000 during the twelve months ended December 31, 2018

Capital Management:

  • The Company and Bank, at December 31, 2018, were both well capitalized under all applicable regulatory requirements
  • During 4Q18, stockholders’ equity increased $7.7 million, or 1.4%, to $549.5 million due to net income of $12.4 million, partially offset by the declaration and payment of dividends on the Company’s common stock and repurchases of the Company’s common stock
  • During 4Q18, the Company repurchased 42,116 treasury shares at an average cost of $22.27 per share; as of December 31, 2018, up to 467,211 shares remained subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Book value per common share increased to $19.64 at December 31, 2018, from $18.63 at December 31, 2017 and tangible book value per common share, a non-GAAP measure, increased to $19.07 at December 31, 2018, from $18.08 at December 31, 2017

Conference Call Information:

  • John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer, will host a conference call on Friday, February 1, 2019 at 9:30 AM (ET) to discuss the Company’s strategy and results for the fourth quarter and full year of 2018
  • Dial-in for Live Call: 1-877-509-5836
  • Webcast: https://services.choruscall.com/links/ffic190201.html
  • Dial-in for Replay: 1-877-344-7529
  • Replay Access Code: 10123652
  • The conference call will be simultaneously webcast and archived through 5:00 PM (ET) on February 1, 2020

About Flushing Financial Corporation

Flushing Financial Corporation (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 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®, our 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, 2017 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.

- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)

      For the three months ended   For the twelve months ended
      December 31,   September 30,   December 31,   December 31,   December 31,
      2018   2018   2017   2018   2017
                       
Interest and Dividend Income                    
Interest and fees on loans   $   60,722     $   59,658     $   53,449     $   232,719     $   209,283  
Interest and dividends on securities:                    
Interest       6,376         5,562         6,112         23,022         24,489  
Dividends       18         18         13         67         287  
Other interest income       317         248         123         1,190         526  
Total interest and dividend income       67,433         65,486         59,697         256,998         234,585  
                       
Interest Expense                    
Deposits       20,174         17,425         11,174         64,497         40,319  
Other interest expense       6,623         6,540         5,463         25,095         21,159  
Total interest expense       26,797         23,965         16,637         89,592         61,478  
                       
Net Interest Income       40,636         41,521         43,060         167,406         173,107  
Provision for loan losses       422         -          6,595         575         9,861  
Net Interest Income After Provision for Loan Losses       40,214         41,521         36,465         166,831         163,246  
                       
Non-interest Income                    
Banking services fee income       1,065         1,017         1,383         4,030         4,156  
Net loss on sale of securities       (1,920 )       -          -          (1,920 )       (186 )
Net gain on sale of loans        -          10         207         168         603  
Net gain on sale of assets        1,141         -          -          1,141         -   
Net loss from fair value adjustments       (3,585 )       (170 )       (631 )       (4,122 )       (3,465 )
Federal Home Loan Bank of New York stock dividends       946         873         875         3,576         3,081  
Gains from life insurance proceeds       -          2,222         -          2,998         1,405  
Bank owned life insurance       779         782         809         3,099         3,227  
Other income       588         221         421         1,367         1,541  
Total non-interest income (loss)       (986 )       4,955         3,064         10,337         10,362  
                       
Non-interest Expense                    
Salaries and employee benefits       15,094         15,720         14,249         64,560         62,087  
Occupancy and equipment       2,551         2,475         2,757         10,079         10,409  
Professional services       1,821         1,915         1,822         8,360         7,500  
FDIC deposit insurance       472         596         487         2,115         1,815  
Data processing       1,409         1,427         1,365         5,663         5,238  
Depreciation and amortization       1,464         1,484         1,339         5,792         4,832  
Other real estate owned/foreclosure expense (benefit)       (128 )       (102 )       28         (94 )       404  
Net gain from sales of real estate owned       -          -          -          (27 )       (50 )
Other operating expenses       3,077         3,718         3,832         15,235         15,239  
Total non-interest expense       25,760         27,233         25,879         111,683         107,474  
                       
Income Before Income Taxes       13,468         19,243         13,650         65,485         66,134  
                       
Provision (Benefit) for Income Taxes                    
Federal       349         2,307         7,838         8,574         22,844  
State and local       697         (397 )       (145 )       1,821         2,169  
Total taxes       1,046         1,910         7,693         10,395         25,013  
                       
Net Income   $   12,422     $   17,333     $   5,957     $   55,090     $   41,121  
                       
                       
Basic earnings per common share   $   0.44     $   0.61     $   0.21     $   1.92     $   1.41  
Diluted earnings per common share   $   0.44     $   0.61     $   0.21     $   1.92     $   1.41  
Dividends per common share   $   0.20     $   0.20     $   0.18     $   0.80     $   0.72  
                       


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited) 

        December 31,   September 30,   December 31,
        2018   2018   2017
ASSETS            
Cash and due from banks $   118,561     $   45,094     $   51,546  
Securities held-to-maturity:          
  Mortgage-backed securities     7,953         7,958         7,973  
  Other securities     24,065         23,207         22,913  
Securities available for sale:          
  Mortgage-backed securities     557,953         528,119         509,650  
  Other securities     264,702         232,913         228,704  
Loans:            
  Multi-family residential     2,269,048         2,235,370         2,273,595  
  Commercial real estate     1,542,547         1,460,555         1,368,112  
  One-to-four family ― mixed-use property     577,741         565,302         564,206  
  One-to-four family ― residential     190,350         188,975         180,663  
  Co-operative apartments     8,498         7,771         6,895  
  Construction     50,600         40,239         8,479  
  Small Business Administration     15,210         14,322         18,479  
  Taxi medallion     4,539         6,078         6,834  
  Commercial business and other     877,763         846,224         732,973  
  Net unamortized premiums and unearned loan fees     15,188         15,226         16,763  
  Allowance for loan losses     (20,945 )       (20,309 )       (20,351 )
      Net loans     5,530,539         5,359,753         5,156,648  
Interest and dividends receivable     25,485         24,673         21,405  
Bank premises and equipment, net     30,418         29,929         30,836  
Federal Home Loan Bank of New York stock     57,282         54,942         60,089  
Bank owned life insurance     131,788         131,009         131,856  
Goodwill       16,127         16,127         16,127  
Other assets     69,303         85,819         61,527  
      Total assets $   6,834,176     $   6,539,543     $   6,299,274  
                 
LIABILITIES          
Due to depositors:          
  Non-interest bearing $   413,747     $   398,606     $   385,269  
  Interest-bearing:          
    Certificate of deposit accounts     1,563,310         1,562,962         1,351,933  
    Savings accounts     210,022         216,976         290,280  
    Money market accounts     1,427,992         1,223,640         979,958  
    NOW accounts     1,300,852         1,255,464         1,333,232  
      Total interest-bearing deposits     4,502,176         4,259,042         3,955,403  
Mortgagors' escrow deposits     44,861         58,667         42,606  
Borrowed funds      1,250,843         1,197,101         1,309,653  
Other liabilities     73,085         84,371         73,735  
      Total liabilities     6,284,712         5,997,787         5,766,666  
                 
STOCKHOLDERS' EQUITY          
Preferred stock (5,000,000 shares authorized; none issued)     -         -         -  
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares          
  issued at December 31, 2018, September  30, 2018 and December 31, 2017; 27,983,637        
  shares, 28,025,081 shares and 28,588,266 shares outstanding at December 31, 2018,           
  September  30, 2018 and December 31, 2017, respectively)     315         315         315  
Additional paid-in capital     222,720         221,622         217,906  
Treasury stock (3,546,958 shares, 3,505,514 shares and 2,942,329 shares at          
  December 31, 2018, September  30, 2018 and December 31, 2017, respectively)     (75,146 )       (74,222 )       (57,675 )
Retained earnings     414,327         407,590         381,048  
Accumulated other comprehensive loss, net of taxes     (12,752 )       (13,549 )       (8,986 )
      Total stockholders' equity     549,464         541,756         532,608  
                 
      Total liabilities and stockholders' equity $   6,834,176     $   6,539,543     $   6,299,274  
                 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)

    At or for the three months ended   At or for the twelve months ended  
    December 31,   September 30,   December 31,   December 31,   December 31,  
    2018   2018   2017   2018   2017  
Per Share Data                      
Basic earnings per share   $   0.44   $   0.61   $   0.21   $   1.92   $   1.41  
Diluted earnings per share   $   0.44   $   0.61   $   0.21   $   1.92   $   1.41  
Average number of shares outstanding for:                      
Basic earnings per common share computation       28,422,215       28,603,543       29,045,491       28,709,378       29,080,095  
Diluted earnings per common share computation       28,422,517       28,603,948       29,046,111       28,709,833       29,081,723  
Shares outstanding       27,983,637       28,025,081       28,588,266       27,983,637       28,588,266  
Book value per common share (1)   $   19.64   $   19.33   $   18.63   $   19.64   $   18.63  
Tangible book value per common share (2)   $   19.07   $   18.77   $   18.08   $   19.07   $   18.08  
                       
Stockholders' Equity                      
Stockholders' equity   $   549,464   $   541,756   $   532,608   $   549,464   $   532,608  
Tangible stockholders' equity       533,627       525,920       516,772       533,627       516,772  
                       
Average Balances                      
Total loans, net   $   5,438,418   $   5,280,172   $   5,087,102   $   5,316,968   $   4,988,613  
Total interest-earning assets       6,364,456       6,130,422       5,934,493       6,194,248       5,916,073  
Total assets       6,681,161       6,446,540       6,243,686       6,504,598       6,217,746  
Total due to depositors       4,453,200       4,213,118       4,020,334       4,288,868       4,036,347  
Total interest-bearing liabilities       5,654,560       5,455,867       5,254,030       5,517,552       5,268,100  
Stockholders' equity       541,067       536,416       573,201       534,735       530,300  
                       
Performance Ratios (3)                      
Return on average assets       0.74 %     1.08 %     0.38 %     0.85 %     0.66 %
Return on average equity       9.18       12.93       4.44       10.30       7.75  
Yield on average interest-earning assets       4.24       4.27       4.02       4.15       3.97  
Cost of average interest-bearing liabilities       1.90       1.76       1.27       1.62       1.17  
Cost of funds       1.75       1.63       1.17       1.52       1.09  
Interest rate spread during period       2.34       2.51       2.75       2.53       2.80  
Net interest margin       2.55       2.71       2.90       2.70       2.93  
Non-interest expense to average assets       1.54       1.69       1.66       1.72       1.73  
Efficiency ratio (4)       58.53       61.30       55.35       62.20       57.90  
Average interest-earning assets to average                      
interest-bearing liabilities       1.13 X     1.12 X     1.13 X     1.12 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)   Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of net interest income and non-interest income (excluding net gains and losses from the sale of securities, fair value adjustments and life insurance proceeds).


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)

    At or for the year     At or for the year  
    ended     ended  
    December 31, 2018     December 31, 2017  
             
Selected Financial Ratios and Other Data            
             
Regulatory capital ratios (for Flushing Financial Corporation):            
Tier 1 capital   $ 586,582       $ 563,426  
Common equity Tier 1 capital     546,230         527,727  
Total risk-based capital     682,527         658,777  
             
Tier 1 leverage capital (well capitalized = 5%)     8.74   %     9.02 %
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)     10.98         11.59  
Tier 1 risk-based capital (well capitalized = 8.0%)     11.79         12.38  
Total risk-based capital (well capitalized = 10.0%)     13.72         14.47  
             
Regulatory capital ratios (for Flushing Bank only):            
Tier 1 capital   $ 660,782       $ 631,285  
Common equity Tier 1 capital     660,782         631,285  
Total risk-based capital     681,727         651,636  
             
Tier 1 leverage capital (well capitalized = 5%)     9.85   %     10.11 %
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)     13.28         13.87  
Tier 1 risk-based capital (well capitalized = 8.0%)     13.28         13.87  
Total risk-based capital (well capitalized = 10.0%)     13.70         14.31  
             
Capital ratios:            
Average equity to average assets     8.22   %     8.53 %
Equity to total assets     8.04         8.46  
Tangible common equity to tangible assets (1)     7.83         8.22  
             
Asset quality:            
Non-accrual loans (2)   $ 16,253       $ 15,710  
Non-performing loans     16,253         18,134  
Non-performing assets     16,288         18,134  
Net charge-offs/ (recoveries)     (19 )       11,739  
             
Asset quality ratios:            
Non-performing loans to gross loans     0.29   %     0.35 %
Non-performing assets to total assets     0.24         0.29  
Allowance for loan losses to gross loans     0.38         0.39  
Allowance for loan losses to non-performing assets     128.60         112.23  
Allowance for loan losses to non-performing loans     128.87         112.23  
             
Full-service customer facilities     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  
  December 31, 2018   September 30, 2018   December 31, 2017  
  Average   Yield/   Average   Yield/   Average   Yield/  
  Balance Interest Cost   Balance Interest Cost   Balance Interest Cost  
Interest-earning Assets:                        
Mortgage loans, net $   4,555,895 $   49,789   4.37 % $   4,467,349 $   49,612   4.44 % $   4,355,973 $   45,577   4.19 %
Other loans, net     882,523     10,933   4.96       812,823     10,046   4.94       731,129     7,872   4.31  
Total loans, net (1)     5,438,418     60,722   4.47       5,280,172     59,658   4.52       5,087,102     53,449   4.20  
Taxable securities:                        
Mortgage-backed                        
securities     558,693     4,004   2.87       542,192     3,800   2.80       524,098     3,567   2.72  
Other securities     184,592     1,586   3.44       123,174     928   3.01       151,565     1,696   4.48  
Total taxable securities     743,285     5,590   3.01       665,366     4,728   2.84       675,663     5,263   3.12  
Tax-exempt securities: (2)                        
Other securities     114,079     804   2.82       123,472     852   2.76       123,816     862   2.78  
Total tax-exempt securities     114,079     804   2.82       123,472     852   2.76       123,816     862   2.78  
Interest-earning deposits                        
and federal funds sold     68,674     317   1.85       61,412     248   1.62       47,912     123   1.03  
Total interest-earning                        
assets     6,364,456     67,433   4.24       6,130,422     65,486   4.27       5,934,493     59,697   4.02  
Other assets     316,705           316,118           309,193      
Total assets $   6,681,161       $   6,446,540       $   6,243,686      
                         
                         
Interest-bearing Liabilities:                        
Deposits:                        
Savings accounts $   213,091     392   0.74   $   219,749     304   0.55   $   306,273     519   0.68  
NOW accounts     1,312,834     4,968   1.51       1,336,873     4,416   1.32       1,357,028     2,634   0.78  
Money market accounts     1,348,873     6,523   1.93       1,169,130     5,126   1.75       984,619     2,664   1.08  
Certificate of deposit                        
accounts     1,578,402     8,276   2.10       1,487,366     7,453   2.00       1,372,414     5,322   1.55  
Total due to depositors     4,453,200     20,159   1.81       4,213,118     17,299   1.64       4,020,334     11,139   1.11  
Mortgagors' escrow