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Flushing Financial Corporation Strategic Focus on Rate Over Volume Helps to Stabilize Net Interest Margin in 1Q19, Core NIM Increases 3bps

FIRST QUARTER 20191 HIGHLIGHTS

  • Net interest margin was 2.57%, unchanged QoQ and down 24bps YoY
  • Core net interest margin was 2.52%, up 3bps QoQ and down 22bps YoY
  • GAAP diluted EPS was $0.25, down 43.2% QoQ and 35.9% YoY
  • Core diluted EPS was $0.33, down 38.9% QoQ and 10.8% YoY
  • GAAP net interest income of $41.8 million, up 2.9% QoQ and down 1.9% YoY
  • Core net interest income of $42.4 million, up 4.4% QoQ and down 0.4% YoY
  • GAAP and core ROAE were 5.1% and 6.8%, respectively, compared with 9.2% and 11.4%, respectively in 4Q18
  • GAAP and core ROAA were 0.4% and 0.6%, respectively, compared with 0.7% and 0.9%, respectively in 4Q18
  • Provision for loan losses of $1.0 million, or $0.02 after-tax per diluted common share, driven mainly by a charge-off on one commercial loan
  • Increased quarterly dividend by 5% to $0.21 per share
  • Exceeded growth goal for Win Flushing Program
  • The first quarter of each year includes the impact of annual grants of employee and director restricted stock unit awards; restricted stock expense totaled $3.9 million in 1Q19, $1.0 million in 4Q18 and $3.5 million in 1Q18

UNIONDALE, N.Y., April 30, 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 first quarter ended March 31, 2019.

John R. Buran, President and Chief Executive Officer, stated, “While quarterly results were impacted by seasonal expense increases, fair market value adjustments, and provision expense, we were pleased to see several positive trends including net interest margin stabilization, loan yield improvement, loan pipeline growth, continued growth in the C&I portfolio and deposit growth, particularly in the Flushing market.”

“The most significant of these trends was the stabilization of the net interest margin. The net interest margin was flat in 1Q19 compared to 4Q18 while core net interest margin increased three basis points during the same period.  Importantly, the pace of the increase in the cost of funds has slowed from the 26 bps increase in the cost of interest bearing liabilities between 2Q18 and 3Q18 to three basis points between 1Q19 and 4Q18. The yield on interest earning assets has increased more gradually over the same periods as a result of our strategic focus on rate over volume, resulting in easing of net interest margin pressure.”

“Another component of the net interest margin stabilization is the $2 billion of loans scheduled to upwardly reprice through 2021 an average of 96bps. We may not reprice to the full contractual rate but we will reprice somewhere between the market and the contract price as loans begin to refinance.”

“Additionally, the swap strategy remains an important component in stabilizing the net interest margin.  For 1Q19, the forward swaps totaling $442 million provided a benefit of four basis points while the loan swaps totaling $284 million provided two basis points of benefit. Our strategic focus on yield over volume in loan pricing continues to aid in stabilizing the net interest margin as the yield on loan closings increased 12bps during 1Q19 and 75bps from 1Q18. Finally, the loan pipeline improved significantly in 1Q19, growing 40% to $275 million from $197 million at December 31, 2018. The loan pipeline has an average yield of 4.80% providing for additional yield growth in the portfolio with 53% of our pipeline from adjustable rate loans at March 31, 2019.”

“Our strategy on loan growth is to move our balance sheet toward more floating rate C&I business while simultaneously focusing on yield over volume on our mortgage business. During 1Q19, our C&I loan closings totaled over $130 million, representing over 65% of our total loan closings. This performance was part of a trend that has been seen over the past four quarters. During that time period C&I loans, which are primarily adjustable rate, represented 43% of new loan closings. On the mortgage side the yield on loan closings increased 35bps in 1Q19 from 4Q18 and 99bps from 1Q18. Mortgage loan closings were down in 1Q19, primarily due to the pipeline at December 31, 2018 being lower than historical norms, particularly in commercial real estate.”

“Total deposits increased $94.2 million, or 1.9% (non-annualized) QoQ. The majority of this increase was transaction deposits, which increased 4.3% (non-annualized) QoQ. The “Win Flushing” program, which focuses on increasing our deposit market share in the Asian Community of Flushing, Queens, was the centerpiece of our retail deposits growth of $72 million QoQ. As of March 31, 2019, we have captured $175 million of deposits, exceeding our target of $160 million in deposit growth by the end of 1Q19. The program was predicated on the conversion of Flushing branches to the Universal Banker model, which allows staff to spend more time with customers, increasing sales opportunities. In the branches that have been converted, we experienced an increase of approximately 100% in transactions processed at ATMs, to almost 55% of all branch transactions, reducing our customer’s reliance on tellers. As a result, branch sales have increased over 30%, as sales per employee increased approximately 50% due to our branch staff focusing more time on sales opportunities. As previously discussed, we expect to have the remaining branches converted to the Universal Banker model by the end of 2019. As of March 31, 2019, we had 15 out of our 19 total branches operating under the Universal Banker model.” 

“Credit quality remained strong, as non-accrual and non-performing loans decreased by 3% in 1Q19. The quarter’s $0.9 million in charge-offs were mainly isolated to one commercial business loan relationship. The loan-to-value on our non-performing real estate loans at March 31, 2019 remained conservative at 33.9%.”

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

  • Multi-family (excluding underlying co-operative mortgages), commercial real estate, and one-to-four family mixed-use property mortgage loans originated during 1Q19 had a yield of 5.01%, an increase of 28bps from 4.73% for 4Q18 and an increase of 104bps from 3.97% for 1Q18. We maintained our asset quality as these loans had an average loan-to-value ratio of 41% and an average debt coverage ratio of 171%.

  • We remain committed to our strategy of focusing on C&I loans, commercial real estate loans and multi-family. In the first quarter, loan closings represented 66%, 7%, and 14%, respectively, of all originations, which were made while maintaining conservative loan-to-value and debt coverage ratios, and increasing yield.

  • Over 75% of 1Q19 loan closings were non-brokered loans.

Mr. Buran concluded, “Overall, we remain well capitalized and committed to the successful execution of our strategic objectives of managing our funding mix, emphasizing loan yields over volume, improving scalability and efficiency of our branch network and continuing to manage credit risk.”

Summary of Strategic Objectives

  • 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 1Q19 was $41.8 million, a decrease of $0.8 million, or 1.9% YoY (1Q19 compared to 1Q18) but an increase of $1.2 million, or 2.9% QoQ (1Q19 compared to 4Q18).

  • Net interest margin of 2.57%, decreased 24bps YoY and unchanged QoQ

  • Net interest spread of 2.36%, decreased 30bps YoY and increased 1bps QoQ

  • Yield on average interest-earning assets of 4.29%, increased 29bps YoY and 4bps QoQ

  • Cost of average interest-bearing liabilities of 1.93%, increased 59bps YoY and 3bps QoQ

  • Cost of funds of 1.80%, increased 55bps YoY and 3bps QoQ, driven by increases in rates paid on deposits and short-term borrowings resulting from increases in the Fed Funds rate 

  • Net interest margin stabilization in 1Q19 due to:

    • Cost of interest-bearing liabilities increasing only 3bps QoQ

    • Interest rate swaps totaling $726 million provided a benefit of 6bps to net interest margin

    • Over $2 billion of loans scheduled to upwardly reprice an average of 96bps through 2021

  • Average balance of total interest-earning assets of $6,521.1 million, increased $422.4 million, or 6.9%, YoY and $156.7 million, or 2.5%, QoQ

  • Net interest income includes prepayment penalty income from loans totaling $0.8 million in 1Q19 compared with $0.9 million, each in 4Q18 and 1Q18, recovered interest from delinquent loans of $0.7 million in 1Q19, compared to $0.3 million in 4Q18 and $0.2 million in 1Q18, and losses from fair value adjustments on qualifying hedges totaling $0.6 million compared to none in 4Q18 and 1Q18

  • Absent all above items, the yield on interest-earning assets was 4.24% in 1Q19, an improvement of 6bps from 4Q18 and 31bps from 1Q18 and the net interest margin was 2.52% in 1Q19, which increased 3bps from 4Q18 but decreased 22bps from 1Q18

Provision for loan losses

The Company recorded a provision of $1.0 million compared to $0.4 million in 4Q18 and $0.2 million in 1Q18.

  • 1Q19 includes charge-offs totaling $1.1 million from one commercial business relationship, after charge-off the remaining book balance for this relationship was $0.9 million

  • Recorded net charge-offs (recoveries) of $0.9 million in 1Q19, ($0.2) million in 4Q18 and ($38,000) in 1Q18

Non-interest Income

Non-interest income for 1Q19 was $0.9 million, a decrease of $2.3 million YoY, but an increase of $1.9 million QoQ.

  • Non-interest income included net losses from fair value adjustments of $2.1 million in 1Q19, $3.6 million in 4Q18,  and $0.1 million in 1Q18, losses from the sale of securities of $1.9 million in 4Q18, gains from sale of assets of $1.1 million in 4Q18 and life insurance proceeds of $43,000 in 1Q19 and $0.8 million in 1Q18

  • Absent all above items, non-interest income was $3.0 million, an increase of $0.5 million, or 18.1% YoY, but a decrease of $0.4 million, 11.8% QoQ

Non-interest Expense

Non-interest expense for 1Q19 was $32.4 million, an increase of $1.1 million, or 3.6% YoY, and $6.7 million, or 25.9% QoQ.

  • 1Q19 includes seasonal expenses totaling $3.0 million and a one-time expense of $0.5 million from the acceleration of employee benefits upon an officer’s death

  • Salaries and benefits increased $0.7 million YoY primarily due to annual salary increases and $4.1 million QoQ

  • Non-interest expense (excluding:salaries and benefits expense and director restricted stock unit expense) totaled $12.2 million in 1Q19, an increase of $0.6 million, or 5.3% YoY and $1.6 million, or 15.6% QoQ

  • The ratio of non-interest expense to average assets was 1.89% in 1Q19 compared to 1.54% in 4Q18 and 1.95% in 1Q18

  • The efficiency ratio was 70.4% in 1Q19 compared to 58.5% in 4Q18 and 69.3% in 1Q18

Provision for Income Taxes

The provision for income taxes in 1Q19 was $2.3 million, a decrease of $0.7 million, or 22.5% YoY but an increase of $1.2 million, or 118.6% QoQ.

  • Pre-tax income decreased by $5.0 million, or 34.9% YoY and by $4.1 million, or 30.5% QoQ

  • The effective tax rates were 24.5% in 1Q19, 7.8% in 4Q18 and 20.5% in 1Q18

  • Both 1Q19 and 1Q18 reflects the vesting of restricted stock awards, which are treated as discrete items for tax purposes. Additionally, 4Q18 reflects the release of a previously accrued tax liability of $1.8 million

  • Absent the above items, the effective tax rates were 23.8% in 1Q19, 20.9% in 4Q18 and 24.6% in 1Q18

Financial Condition Summary:

Loans:

  • Net loans held for investment were $5,567.7 million reflecting an increase of 0.7% QoQ (not annualized) and 5.2% from March 31, 2018, 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 $171.5 million for 1Q19, or 86.6% of loan production

  • Loan pipeline was $274.8 million at March 31, 2019, compared to $196.6 million at December 31, 2018 and $325.6 million at March 31, 2018

  • The loan-to-value ratio on our portfolio of real estate dependent loans as of March 31, 2019 totaled 38.7%

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

    For the three months ended  
    March 31,   December 31,   March 31,  
Loan type   2019   2018   2018  
Mortgage loans   5.14 %   4.79 %   4.15 %  
Non-mortgage loans   4.96 %   5.11 %   4.43 %  
Total loans   5.02 %   4.90 %   4.27 %  
               

Credit Quality:

  • Non-performing assets and loans totaled $15.7 million, a decrease of $0.5 million, or 3.2%, from $16.3 million at December 31, 2018

  • Classified assets totaled $39.1 million, a decrease of $7.4 million, or 15.8%, from $46.5 million at December 31, 2018, primarily due to two commercial business loan relationships totaling $6.6 million; one relationship made substantial payments and upgraded while the other relationship was written-down by $1.1 million to a remaining book value of $0.9 million

  • Loans classified as troubled debt restructured (TDR) totaled $6.6 million, a decrease of $1.7 million, or 20.6%, from $8.4 million at December 31, 2018

  • 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 33.9% average loan-to-value for non-performing loans collateralized by real estate

  • Net charge-offs totaled $0.9 million

Capital Management:

  • The Company and Bank, at March 31, 2019, were both well capitalized under all applicable regulatory requirements

  • During 1Q19, stockholders’ equity increased $10.1 million, or 1.8%, to $559.6 million due to net income of $7.1 million and an improvement in the fair value of the securities portfolio, partially offset by the declaration and payment of dividends on the Company’s common stock

  • During 1Q19, the Company did not repurchase any shares; as of March 31, 2019, 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 $19.85 at March 31, 2019, from $19.64 at December 31, 2018 and tangible book value per common share, a non-GAAP measure, increased to $19.29 at March 31, 2019, from $19.07 at December 31, 2018

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 Wednesday, May 1, 2019 at 9:30 AM (ET) to discuss the Company’s strategy and results for the first quarter

  • Dial-in for Live Call: 1-877-509-5836

  • Webcast: https://services.choruscall.com/links/ffic190501.html

  • Dial-in for Replay: 1-877-344-7529

  • Replay Access Code: 10129183

  • The conference call will be simultaneously webcast and archived through 5:00 PM (ET) on May 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 on Long Island. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. Flushing Bank is an Equal Housing Lender. The Bank also operates an online banking division consisting of iGObanking.com®, which offers competitively priced deposit products to consumers nationwide, and BankPurely®, an eco-friendly, healthier lifestyle community brand.

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

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “goals”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements. 

1 See the tables entitled “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Income and Net Interest Margin to Core Net Interest Income and Net Interest Margin.”

- Statistical Tables Follow -

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

      For the three months ended
      March 31   December 31,   March 31
        2019       2018       2018  
               
Interest and Dividend Income            
Interest and fees on loans   $   62,330     $   60,722     $   55,017  
Interest and dividends on securities:            
  Interest       6,909         6,376         5,468  
  Dividends       19         18         14  
Other interest income       555         317         287  
    Total interest and dividend income       69,813         67,433         60,786  
               
Interest Expense            
Deposits       21,469         20,174         12,110  
Other interest expense       6,541         6,623         6,067  
    Total interest expense       28,010         26,797         18,177  
               
Net Interest Income       41,803         40,636         42,609  
Provision for loan losses       972         422         153  
Net Interest Income After Provision for Loan Losses       40,831         40,214         42,456  
               
Non-interest Income            
Banking services fee income       973         1,065         948  
Net loss on sale of securities       -          (1,920 )       -   
Net gain (loss) on sale of loans        63         -          (263 )
Net gain on sale of assets        -          1,141         -   
Net loss from fair value adjustments       (2,080 )       (3,585 )       (100 )
Federal Home Loan Bank of New York stock dividends       903         946         876  
Life insurance proceeds       43         -          776  
Bank owned life insurance       740         779         762  
Other income       301         588         201  
    Total non-interest income (loss)       943         (986 )       3,200  
               
Non-interest Expense            
Salaries and employee benefits       19,166         15,094         18,455  
Occupancy and equipment       2,789         2,551         2,577  
Professional services       2,265         1,821         2,185  
FDIC deposit insurance       485         472         500  
Data processing       1,492         1,409         1,401  
Depreciation and amortization       1,518         1,464         1,389  
Other real estate owned/foreclosure expense (benefit)       77         (128 )       96  
Other operating expenses       4,627         3,077         4,691  
    Total non-interest expense       32,419         25,760         31,294  
               
Income Before Income Taxes       9,355         13,468         14,362  
               
Provision for Income Taxes            
Federal       1,943         349         2,607  
State and local       344         697         343  
    Total taxes       2,287         1,046         2,950  
               
Net Income   $   7,068     $   12,422     $   11,412  
               
               
Basic earnings per common share   $   0.25     $   0.44     $   0.39  
Diluted earnings per common share   $   0.25     $   0.44     $   0.39  
Dividends per common share   $   0.21     $   0.20     $   0.20  
               

 

 

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

        March 31,   December 31,   March 31,
          2019       2018       2018  
ASSETS            
Cash and due from banks $   58,677     $   118,561     $   91,959  
Securities held-to-maturity:          
  Mortgage-backed securities     7,949         7,953         7,968  
  Other securities     22,532         24,065         23,267  
Securities available for sale:          
  Mortgage-backed securities     579,185         557,953         512,781  
  Other securities     266,839         264,702         216,480  
Loans:            
  Multi-family residential     2,256,447         2,269,048         2,286,803  
  Commercial real estate     1,529,001         1,542,547         1,426,847  
  One-to-four family ― mixed-use property     582,049         577,741         566,930  
  One-to-four family ― residential     188,615         190,350         190,115  
  Co-operative apartments     7,903         8,498         6,826  
  Construction     54,933         50,600         23,887  
  Small Business Administration     15,188         15,210         20,004  
  Taxi medallion     3,891         4,539         6,617  
  Commercial business and other     935,297         877,763         768,440  
  Net unamortized premiums and unearned loan fees     15,422         15,188         16,395  
  Allowance for loan losses     (21,015 )       (20,945 )       (20,542 )
      Net loans     5,567,731         5,530,539         5,292,322  
Interest and dividends receivable     27,226         25,485         22,578  
Bank premises and equipment, net     29,798         30,418         31,314  
Federal Home Loan Bank of New York stock     51,182         57,282         54,045  
Bank owned life insurance     131,794         131,788         130,653  
Goodwill       16,127         16,127         16,127  
Right of Use Asset     44,033         -         -  
Other assets     64,377         69,303         83,277  
      Total assets $   6,867,450     $   6,834,176     $   6,482,771  
                 
LIABILITIES          
Due to depositors:          
    Non-interest bearing $   401,064     $   413,747     $   377,861  
    Certificate of deposit accounts     1,511,770         1,563,310         1,499,326  
    Savings accounts     201,811         210,022         246,888  
    Money market accounts     1,352,843         1,427,992         1,032,409  
    NOW accounts     1,542,606         1,300,852         1,479,319  
      Total  deposits     5,010,094         4,915,923         4,635,803  
Mortgagors' escrow deposits     70,115         44,861         65,979  
Borrowed funds      1,116,416         1,250,843         1,177,101  
Operating Lease Liability     52,510         -         -  
Other liabilities     58,756         73,085         68,581  
      Total liabilities     6,307,891         6,284,712         5,947,464  
                 
STOCKHOLDERS' EQUITY          
Preferred stock (5,000,000 shares authorized; none issued)     -         -         -  
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares          
  issued at March 31, 2019, December 31, 2018 and March 31, 2018; 28,187,184          
  shares, 27,983,637 shares and 28,546,443 shares outstanding at March 31, 2019,           
  December 31, 2018 and March 31, 2018, respectively)     315         315         315  
Additional paid-in capital     222,859         222,720         219,115  
Treasury stock (3,343,411 shares, 3,546,958 shares and 2,984,152 shares at          
  March 31, 2019, December  31, 2018 and March 31, 2018, respectively)     (70,929 )       (75,146 )       (60,737 )
Retained earnings     417,856         414,327         388,568  
Accumulated other comprehensive loss, net of taxes     (10,542 )       (12,752 )       (11,954 )
      Total stockholders' equity     559,559         549,464         535,307  
                 
      Total liabilities and stockholders' equity $   6,867,450     $   6,834,176     $   6,482,771  
                 

 

 

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

    At or for the three months ended  
    March 31,   December 31,   March 31,  
    2019   2018   2018  
Per Share Data              
Basic earnings per share   $   0.25   $   0.44   $   0.39  
Diluted earnings per share   $   0.25   $   0.44   $   0.39  
Average number of shares outstanding for:              
  Basic earnings per common share computation       28,621,018       28,422,215       28,974,156  
  Diluted earnings per common share computation       28,621,030       28,422,517       28,974,757  
Shares outstanding       28,187,184       27,983,637       28,546,443  
Book value per common share (1)   $   19.85   $   19.64   $   18.75  
Tangible book value per common share (2)   $   19.29   $   19.07   $   18.20  
               
Stockholders' Equity              
Stockholders' equity   $   559,559   $   549,464   $   535,307  
Tangible stockholders' equity       543,722       533,627       519,471  
               
Average Balances              
Total loans, net   $   5,544,667   $   5,438,418   $   5,231,377  
Total interest-earning assets       6,521,142       6,364,456       6,098,706  
Total assets       6,868,140       6,681,161       6,403,396  
Total due to depositors       4,598,305       4,453,200       4,176,457  
Total interest-bearing liabilities       5,811,263       5,654,560       5,442,554  
Stockholders' equity       552,621       541,067       529,281  
               
Performance Ratios (3)              
Return on average assets       0.41 %     0.74 %     0.71 %
Return on average equity       5.12       9.18       8.62  
Yield on average interest-earning assets (4)       4.29       4.25       4.00  
Cost of average interest-bearing liabilities       1.93       1.90       1.34  
Cost of funds       1.80       1.77       1.25  
Interest rate spread during period (4)       2.36       2.35       2.66  
Net interest margin (4)       2.57       2.57       2.81  
Non-interest expense to average assets       1.89       1.54       1.95  
Efficiency ratio (5)       70.37       58.53       69.34  
Average interest-earning assets to average              
  interest-bearing liabilities       1.12  X     1.13  X     1.12  X
               


(1)     Calculated by dividing stockholders’ equity by shares outstanding.
(2)     Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(3)     Ratios are presented on an annualized basis, where appropriate.
(4)     Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(5)     Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding accelerated employee benefits upon officers death, OREO expense and the net gain/loss from the sale of OREO) by the total of net interest income (excluding net losses from fair value adjustments on qualifying hedges) and non-interest income (excluding net gains and losses from the sale of securities, assets and fair value adjustments and life insurance proceeds).

    

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

    At or for the three     At or for the year     At or for the three  
    ended     ended     months ended  
    March 31, 2019     December 31, 2018     March 31, 2018  
                   
Selected Financial Ratios and Other Data                  
                   
Regulatory capital ratios (for Flushing Financial Corporation):                  
  Tier 1 capital   $   594,196     $   586,582     $   568,635  
  Common equity Tier 1 capital       552,793         546,230         531,305  
  Total risk-based capital       690,211         682,527         664,177  
                   
  Tier 1 leverage capital (well capitalized = 5%)       8.63  %       8.74  %       8.86  %
  Common equity Tier 1 risk-based capital (well capitalized = 6.5%)       10.90         10.98         11.17  
  Tier 1 risk-based capital (well capitalized = 8.0%)       11.72         11.79         11.95  
  Total risk-based capital (well capitalized = 10.0%)       13.61         13.72         13.96  
                   
Regulatory capital ratios (for Flushing Bank only):                  
  Tier 1 capital   $   663,467     $   660,782     $   637,091  
  Common equity Tier 1 capital       663,467         660,782         637,091  
  Total risk-based capital       684,482         681,727         657,633  
                   
  Tier 1 leverage capital (well capitalized = 5%)       9.64  %       9.85  %       9.92  %
  Common equity Tier 1 risk-based capital (well capitalized = 6.5%)       13.08         13.28         13.39  
  Tier 1 risk-based capital (well capitalized = 8.0%)       13.08         13.28         13.39  
  Total risk-based capital (well capitalized = 10.0%)       13.49         13.70         13.82  
                   
Capital ratios:                  
  Average equity to average assets       8.05  %       8.22  %       8.27  %
  Equity to total assets       8.15         8.04         8.26  
  Tangible common equity to tangible assets (1)       7.94         7.83         8.03  
                   
Asset quality:                  
  Non-accrual loans (2)   $   15,735     $   16,253     $   14,972  
  Non-performing loans       15,735         16,253         16,640  
  Non-performing assets       15,770         16,288         17,384  
  Net charge-offs/ (recoveries)       902         (19 )       (38 )
                   
Asset quality ratios:                  
  Non-performing loans to gross loans       0.28  %       0.29  %       0.31  %
  Non-performing assets to total assets       0.23         0.24         0.27  
  Allowance for loan losses to gross loans       0.38         0.38         0.39  
  Allowance for loan losses to non-performing assets       133.26         128.60         118.17  
  Allowance for loan losses to non-performing loans       133.55         128.87         123.45  
                   
Full-service customer facilities       19         19         18  
                   

 

(1)     See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(2)     Excludes performing non-accrual TDR loans.

 

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)

...
  For the three months ended    
  March 31, 2019   December 31, 2018   March 31, 2018    
  Average   Yield/   Average   Yield/   Average   Yield/    
  Balance Interest Cost   Balance Interest Cost   Balance Interest Cost    
  (Dollars in thousands)    
Interest-earning Assets:                          
  Mortgage loans, net  $   4,619,587 $   50,845   4.40 % $   4,555,895 $   49,789   4.37 % $   4,442,870 $   46,112   4.15 %  
  Other loans, net      925,080     11,485   4.97       882,523     10,933   4.96       788,507     8,905   4.52    
    Total loans, net (1) (2)     5,544,667     62,330   4.50       5,438,418     60,722   4.47       5,231,377     55,017   4.21    
 Taxable securities:                          
  Mortgage-backed                          
  securities     573,397     4,248   2.96       558,693     4,004   2.87       524,710     3,507   2.67    
  Other securities     241,863     2,211   3.66       184,592     1,586   3.44       131,078     1,121   3.42    
    Total taxable securities     815,260     6,459   3.17       743,285     5,590   3.01       655,788     4,628   2.82    
 Tax-exempt securities: (3)                          
  Other securities     58,173     594   4.08       114,079     1,018   3.57       124,125     1,081   3.48    
    Total tax-exempt securities     58,173     594   4.08       114,079     1,018   3.57       124,125     1,081   3.48    
  Interest-earning deposits                          
  and federal funds sold     103,042     555   2.15       68,674     317   1.85       87,416     287   1.31    
Total interest-earning                           
  assets     6,521,142     69,938   4.29       6,364,456     67,647   4.25       6,098,706     61,013   4.00    
Other assets     346,998           316,705           304,690        
      Total assets $   6,868,140       $   6,681,161       $   6,403,396        
                           
                           
Interest-bearing Liabilities:                          
  Deposits:                          
   Savings accounts $   205,775     361   0.70   $   213,091     392   0.74   $   265,895     389   0.59    
   NOW accounts     1,488,859     6,031   1.62       1,312,834     4,968   1.51       1,540,465     3,148   0.82    
   Money market accounts     1,380,172     6,821   1.98       1,348,873     6,523   1.93       1,025,727     3,075   1.20    
   Certificate of deposit                          
    accounts     1,523,499     8,203   2.15       1,578,402     8,276   2.10       1,344,370     5,463   1.63    
   Total due to depositors     4,598,305     21,416   1.86       4,453,200     20,159   1.81       4,176,457     12,075   1.16    
   Mortgagors' escrow                          
    accounts     62,174     53   0.34       71,108