Fourth Consecutive Quarter of Record Net Interest Income

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1Q21 GAAP EPS of $0.60, Core EPS of $0.54; Reported NIM Up 10 bps, Core NIM Rises 3 bps QoQ

UNIONDALE, N.Y., April 27, 2021 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (NASDAQ-GS: FFIC)

John R. Buran, President and CEO Commentary

“We are optimistic that as more people receive vaccines, local economic activity will improve. Our first quarter 2021 actions largely focused on helping our customers navigate an improving, but still challenging environment. Despite these challenges, we achieved our fourth consecutive quarter of record net interest income. We reduced loans in forbearance by 81% from their peak nearly a year ago, and while our forbearance programs will continue into 2022, borrowers’ fundamentals are improving. The recent steepening of the yield curve is a positive for us and we expect to capitalize on our robust loan pipeline. We continue to make investments in our technology platform and fintech partnerships, both of which are driving digital engagement.”

“First quarter of 2021 marked a continuation of the economic improvement in our local economies and the outlook is brighter than three months ago with continued vaccine rollouts and a steeper yield curve. We continue to assist customers during the pandemic by originating $123 million of PPP loans in the quarter and processing nearly $50 million in forgiveness over the life of the program.”

- John R. Buran, President and CEO


Record Net Interest Income; NIM Expansion.
“Core NIM improved by 3 bps during the quarter as funding costs declined faster than asset yields. The steeper yield curve should mitigate pressure on asset yields while keeping funding costs low. However, we are preparing for an eventual rise in short term rates by extending the duration of our liabilities and utilizing forward swaps, the bulk of which begin in 2022. We focused our efforts on PPP this quarter and that impacted overall loan growth, which rose 2.4% (annualized) from fourth quarter 2020. We reported first quarter GAAP EPS of $0.60, which included improving fair value adjustments, partially offset by merger and other charges totaling $0.06 per share, net of tax. Adjusting for noncore items1, first quarter core EPS was $0.54, up 184% year over year. The Empire integration is complete with 100% of the cost savings in our run rate. We are on track to achieve our 20% earnings accretion target for 2021.”

Strong Credit Quality. “We remain confident with our credit quality given the loan to value of 38% on our real estate dependent loans, improving delinquencies, lower criticized and classified assets, and our conservative underwriting standards.”

1Q21 Key Financial Metrics1

1Q21

4Q20

3Q20

2Q20

1Q20

GAAP:

EPS

$

0.60

$

0.11

$

0.50

$

0.63

$

(0.05

)

ROAA (%)

0.93

0.18

0.81

1.01

(0.08

)

ROAE (%)

12.29

2.27

9.94

13.11

(0.96

)

NIM FTE (%)

3.18

3.08

3.00

2.87

2.44

Core:

EPS

$

0.54

$

0.58

$

0.56

$

0.36

$

0.19

ROAA (%)

0.83

0.92

0.91

0.57

0.31

ROAE (%)

10.96

11.67

11.22

7.39

3.82

Core NIM FTE (%)

3.06

3.03

2.98

2.89

2.56

Efficiency Ratio (%)

58.6

57.6

55.4

54.9

68.2

Credit Quality:

NPAs/Loans&REO (%)

0.31

0.31

0.42

0.34

0.29

LLRs/Loans (%)

0.67

0.67

0.65

0.61

0.47

LLRs/NPLs (%)

212.87

214.27

154.66

181.84

167.73

NCOs/Avg Loans (%)

0.17

0.04

0.06

0.07

0.08

Balance Sheet:

Avg Loans ($B)

$

6.7

$

6.4

$

5.9

$

5.9

$

5.8

Avg Dep ($B)

$

6.3

$

5.5

$

5.0

$

5.0

$

5.1

Book Value/Share

$

20.65

$

20.11

$

20.78

$

20.27

$

19.48

Tangible BV/Share

$

19.99

$

19.45

$

20.22

$

19.71

$

18.92

TCE/TA (%)

7.60

7.52

8.10

7.78

7.38

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

1Q21 Highlights

  • Record net interest income up 9.3% QoQ and 49.2% YoY to $60.9 million, while core net interest income was up 7.0% QoQ and 36.5% YoY to $58.5 million due to Empire transaction and lower funding costs

  • Net interest margin rose 10 bps QoQ and 74 bps YoY to 3.18%, and core net interest margin up 3 bps QoQ and 50 bps YoY to 3.06% primarily due to lower funding costs

  • Average loans up 5.1% QoQ and 15.6% YoY to $6.7 billion, including $123.2 million of PPP originations

  • Average deposits rose 14.0% QoQ and 23.4% YoY to $6.3 billion, with core deposits 83% of total average deposits (including escrow deposits)

  • Loan pipeline rose 15.9% YoY to $375.8 million

  • Provision for credit losses of $2.8 million and net charge-offs of $2.9 million in 1Q21 largely the result of the $2.8 million charge-off for the remaining taxi medallion loans

  • NPAs were flat QoQ at $21.2 million; criticized and classified assets fell 11.9% to $63.1 million

  • Loans in forbearance were 4.4% of total loans and only 1.7% of loans excluding loans making interest only payments

Income Statement Highlights

Y/Y

Q/Q

($000s, except EPS)

1Q21

4Q20

3Q20

2Q20

1Q20

Change

Change

Net Interest Income

$

60,892

$

55,732

$

49,924

$

48,717

$

40,826

49.2

%

9.3

%

Provision for Credit Losses

2,820

3,862

2,470

9,619

7,178

(60.7

)

(27.0

)

Non-interest Income (Loss)

6,311

(1,181

)

1,351

13,737

(2,864

)

NM

NM

Non-interest Expense

38,159

46,811

29,985

28,755

32,380

17.8

(18.5

)

Income (Loss) Before Income Taxes

26,224

3,878

18,820

24,080

(1,596

)

NM

NM

Provision (Benefit) for Income Taxes

7,185

417

4,489

5,808

(206

)

NM

NM

Net Income (Loss)

$

19,039

$

3,461

$

14,331

$

18,272

$

(1,390

)

NM

NM

Diluted EPS

$

0.60

$

0.11

$

0.50

$

0.63

$

(0.05

)

NM

NM

Avg. Diluted Shares (000s)

31,604

30,603

28,874

28,867

28,853

9.5

3.3

Core Net Income1

$

16,973

$

17,784

$

16,168

$

10,297

$

5,500

208.6

(4.6

)

Core EPS1

$

0.54

$

0.58

$

0.56

$

0.36

$

0.19

184.2

(6.9

)

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income for 1Q21 was $60.9 million, an increase of 49.2% YoY and 9.3% QoQ (Empire contributed $6.1 million in 1Q21 and $4.2 million in 4Q20).

  • Net interest margin of 3.18%, increased 74 bps YoY and 10 bps QoQ; net purchase accounting accretion was $0.9 million in 1Q21 and not meaningful in 4Q20

  • Prepayment penalty income from loans and securities, net reversals and recoveries of interest from non-accrual loans, net gains (losses) from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $3.3 million (17 bps) in 1Q21, $2.1 million (11 bps) in 4Q20, $1.7 million (11 bps) in 3Q20, $0.4 million (2 bps) in 2Q20, and $(0.9) million ((5) bps) in 1Q20

  • Excluding these items, net interest margin was 3.01% in 1Q21, 2.97% in 4Q20, 2.89% in 3Q20, 2.85% in 2Q20, and 2.49% in 1Q20, or an increase of 52 bps YoY and 4 bps QoQ

The Company recorded a provision for credit losses of $2.8 million in 1Q21, compared to $3.9 million in 4Q20, $2.5 million in 3Q20, $9.6 million in 2Q20, and $7.2 million in 1Q20.

  • 1Q21 provision for credit losses was driven by the charge-off of the total remaining taxi medallion portfolio of $2.8 million; excluding the taxi medallion portfolio, net charge-offs were only $0.1 million

  • Net charge-offs were $2.9 million in 1Q21, $0.6 million in 4Q20, $0.8 million in 3Q20, $1.0 million in 2Q20, and $1.1 million in 1Q20

Non-interest income (loss) for 1Q21 was $6.3 million versus $(1.2) million in 4Q20, $1.4 million in 3Q20, $13.7 million in 2Q20, and $(2.9) million in 1Q20.

  • Non-interest income (loss) included net gains (losses) from fair value adjustments of $1.0 million ($0.02 per share, net of tax) in 1Q21, $(4.1) million ($(0.11) per share, net of tax) in 4Q20, $(2.2) million ($(0.06) per share, net of tax) in 3Q20, $10.2 million ($0.27 per share, net of tax) in 2Q20, and $(6.0) million ($(0.15) per share, net of tax) in 1Q20

  • The net gain on the disposition of assets was $0.6 million in 1Q21 ($0.01 per share, net of tax); losses on the sale of investment securities were $0.6 million ($0.02 per share, net of tax) in 4Q20 and less than $0.1 million (less than $0.01 per share, net of tax) in both 2Q20 and 1Q20;

  • Absent all above items, non-interest income was $4.7 million in 1Q21, up 48.7% YoY and 32.3% QoQ and was primarily driven by strong customer swap activity

Non-interest expense was $38.2 million in 1Q21 compared to $46.8 million in 4Q20, $30.0 million in 3Q20, $28.8 million in 2Q20, and $32.4 million in 1Q20.

  • 1Q21 non-interest expense includes $1.0 million of pre-tax merger charges ($0.02 per share, net of tax) and $0.1 million of core deposit intangible amortization and other purchase accounting adjustments (less than $0.01 per share net of tax)

  • 4Q20 non-interest expense includes $5.3 million pre-tax merger charges ($0.14 per share, net of tax) and $7.8 million pre-tax debt prepayment penalties ($0.20 per share, net of tax)

  • 3Q20, 2Q20, and 1Q20 non-interest expense includes $0.4 million of merger charges ($0.01 per share, net of tax), $0.2 million ($0.01 per share, net of tax), and $0.9 million ($0.02 per share, net of tax), respectively

  • Excluding the above items, core operating expenses were $37.1 million in 1Q21, up 17.8% YoY and 10.5% QoQ; Empire contributed $1.9 million in 1Q21 and $1.7 million in 4Q20

  • There were $3.3 million of seasonal compensation expenses in 1Q21 (compared to $3.0 million a year ago) that are not expected to repeat in 2Q21

  • The ratio of core operating expense to average assets was 1.82% in 1Q21, 1.74% in 4Q20, 1.67% in 3Q20, 1.59% in 2Q20, and 1.77% in 1Q20

  • The efficiency ratio was 58.6% in 1Q21, 57.6% in 4Q20, 55.4% in 3Q20, 54.9% in 2Q20, and 68.2% in 1Q20

The provision (benefit) for income taxes was $7.2 million in 1Q21 versus $0.4 million in 4Q20, $4.5 million in 3Q20, $5.8 million in 2Q20, and $(0.2) million in 1Q20.

  • Pre-tax income (loss) was $26.2 million in 1Q21, compared to $3.9 million in 4Q20, $18.8 million in 3Q20, $24.1 million in 2Q20, and $(1.6) million in 1Q20

  • The effective tax rate was 27.4% in 1Q21, 10.8% in 4Q20, 23.9% in 3Q20, 24.1% in 2Q20, and 12.9% in 1Q20

  • New York State passed a law increasing the state tax rate to 7.25% from 6.5% on April 19, 2021; with this change, we now expect the effective tax rate to approximate 27% in 2021

Balance Sheet, Credit Quality, and Capital Highlights

Y/Y

Q/Q

($000s, except per share data)

1Q21

4Q20

3Q20

2Q20

1Q20

Change

Change

Loans And Deposits

Period End Loans, net

$

6,700

$

6,660

$

5,903

$

5,947

$

5,904

13.5

%

0.6

%

Average Deposits

6,285

5,515

4,999

5,043

5,094

23.4

14.0

Credit Quality

Nonperforming Loans

$

21,186

$

21,073

$

24,792

$

20,188

$

16,752

26.5

%

0.5

%

Nonperforming Assets

21,221

21,108

24,827

20,431

16,995

24.9

0.5

Criticized and Classified Assets

63,130

71,691

42,181

48,712

34,199

84.6

(11.9

)

Allowance for Credit Losses/Loans (%)

0.67

0.67

0.65

0.61

0.47

20

bps

-

bps

Capital

Book Value/Share

$

20.65

$

20.11

$

20.78

$

20.27

$

19.48

6.0

%

2.7

%

Tangible Book Value/Share

19.99

19.45

20.22

19.71

18.92

5.7

2.8

Tang. Common Equity/Tang. Assets (%)

7.60

7.52

8.10

7.78

7.38

22

bps

8

bps

Leverage Ratio (%)

8.44

8.38

9.03

8.64

8.59

(15

)

6

Net loans held for investment were $6.7 billion, an increase of 13.5% YoY and 0.6% QoQ.

  • SBA Paycheck Protection Program (“PPP”) loans were $251.0 million at 1Q21, compared to $151.9 million at 4Q20, $111.6 million at 3Q20, and $93.2 million at 2Q20, as we supported our customers with the second round of PPP originations and forgiveness, with originations totaling $123.2 million in 1Q21

  • Total loan closings were $322.9 million (including $123.2 million from PPP) in 1Q21 versus $316.0 million in 4Q20, $155.6 million in 3Q20, $233.8 million in 2Q20, and $298.7 million in 1Q20

  • The loan pipeline was $375.8 million at March 31, 2021, compared to $324.4 million a year ago

Average Deposits totaled $6.3 billion, rising 23.4% YoY and 14.0% QoQ, partially due to customer growth, the Empire transaction, and unused PPP funds.

  • Core deposits (non-CD deposits) were 82.5% of total average deposits (including escrow deposits) in 1Q21, compared to 75.1% a year ago

  • With the steepening of the yield curve, we have extended the duration of our funding liabilities to prepare for rising short term rates

Credit Quality; Non-performing loans totaled $21.2 million compared to $21.1 million in 4Q20 and $16.8 million in 1Q20.

  • Non-performing assets totaled $21.2 million, flat QoQ, but up 24.9% YoY

  • Criticized and classified assets totaled $63.1 million in 1Q21, compared to $71.7 million in 4Q20, and $34.2 million in 1Q20; the QoQ decline was primarily due to improved borrowers’ fundamentals, while the YoY rise related to the impacts of the pandemic

  • Loans classified as troubled debt restructured (TDR) totaled $15.2 million, versus $15.7 million in 4Q20, and $6.3 million a year ago

  • Active COVID-19 forbearances totaled 116 loans with a principal balance of $295.5 million at March 31 2021, with 61% making interest payments; approximately 25% of these loans are scheduled to exit forbearance in 2Q21, 15% in 3Q21, and 43% in 4Q21

  • Over 85% of gross loans are collateralized by real estate and these loans have a loan-to-value ratio of 38% as of March 31, 2021

  • Allowance for credit losses were 0.67% of loans in 1Q21 compared to 0.67% in 4Q20 and 0.47% a year ago

Capital; Book value per common share increased to $20.65 in 1Q21, compared to $20.11 in 4Q20 and $19.48 in 1Q20; tangible book value per common share, a non-GAAP measure, improved to $19.99 in 1Q21, versus $19.45 in 4Q20, and $18.92 in 1Q20.

  • The Company paid a dividend of $0.21 per share in 1Q21 and did not repurchase any shares in the quarter; up to 284,806 shares remained subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit

  • Tangible common equity to tangible assets was 7.60% in 1Q21 compared to 7.38% a year ago

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

  • The leverage ratio was 8.44% in 1Q21 versus 8.59% in 1Q20

Conference Call Information And Future Earnings Release Dates

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 tomorrow, Wednesday, April 28, 2021 at 9:30 AM (ET) to discuss the Company’s first quarter 2021 results and strategy.

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

  • Webcast: https://services.choruscall.com/links/ffic210428.html

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

  • Replay Access Code: 10151631

  • The conference call will be simultaneously webcast and archived through April 28, 2022.

Future Earnings Release Dates:

The Company plans to release quarterly financial results on the following dates:

Second Quarter 2021 after the market close on July 27, 2021; conference call at 9:30 AM (ET) on July 28, 2021.

Third Quarter 2021 after the market close on October 26, 2021; conference call at 9:30 AM (ET) on October 27, 2021.

A detailed announcement will be issued prior to each quarter’s close confirming the date and time of the earnings release and conference call for that quarter.

About Flushing Financial Corporation

Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, a New York State-chartered commercial bank insured by the Federal Deposit Insurance Corporation. The Bank serves consumers, businesses, professionals, corporate clients, and public entities by offering a full complement of deposit, loan, equipment finance, and cash management services through its banking offices located in Queens, Brooklyn, Manhattan, and on Long Island. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. Flushing Bank is an Equal Housing Lender. The Bank also operates an online banking division consisting of iGObanking.com®, which offers competitively priced deposit products to consumers nationwide, and BankPurely®, an eco-friendly, healthier lifestyle community brand.

Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at http://www.flushingbank.com. 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, 2020 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.

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


- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)

At or for the three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

(Dollars in thousands, except per share data)

2021

2020

2020

2020

2020

Performance Ratios (1)

Return on average assets

0.93

%

0.18

%

0.81

%

1.01

%

(0.08

)%

Return on average equity

12.29

2.27

9.94

13.11

(0.96

)

Yield on average interest-earning assets (2)

3.77

3.82

3.84

3.81

3.98

Cost of average interest-bearing liabilities

0.69

0.86

0.98

1.09

1.74

Cost of funds

0.61

0.77

0.89

0.99

1.61

Net interest rate spread during period (2)

3.08

2.96

2.86

2.72

2.24

Net interest margin (2)

3.18

3.08

3.00

2.87

2.44

Non-interest expense to average assets

1.87

2.43

1.69

1.60

1.82

Efficiency ratio (3)

58.58

57.56

55.37

54.92

68.21

Average interest-earning assets to average interest-bearing liabilities

1.18

X

1.17

X

1.16

X

1.15

X

1.13

X

Average Balances

Total loans, net

$

6,700,476

$

6,375,516

$

5,904,051

$

5,946,412

$

5,794,866

Total interest-earning assets

7,667,217

7,243,472

6,675,896

6,809,835

6,719,857

Total assets

8,147,714

7,705,407

7,083,028

7,206,059

7,106,998

Total due to depositors

5,361,619

4,708,760

4,353,560

4,395,228

4,578,793

Total interest-bearing liabilities

6,475,843

6,169,574

5,731,899

5,912,774

5,951,925

Stockholders' equity

619,647

609,463

576,512

557,414

576,597

Per Share Data

Book value per common share (4)

$

20.65

$

20.11

$

20.78

$

20.27

$

19.48

Tangible book value per common share (5)

$

19.99

$

19.45

$

20.22

$

19.71

$

18.92

Stockholders' Equity

Stockholders' equity

$

639,201

$

618,997

$

586,406

$

571,921

$

549,683

Tangible stockholders' equity

618,839

598,476

570,571

556,086

533,848

Consolidated Regulatory Capital Ratios

Tier 1 capital

$

679,343

$

662,987

$

630,380

$

617,620

$

610,898

Common equity Tier 1 capital

636,071

621,247

593,344

583,238

567,306

Total risk-based capital

806,922

794,034

740,499

726,291

712,761

Risk Weighted Assets

6,281,136

6,287,598

5,381,938

5,406,104

5,418,219

Tier 1 leverage capital (well capitalized = 5%)

8.44

%

8.38

%

9.03

%

8.64

%

8.59

%

Common equity Tier 1 risk-based capital (well capitalized = 6.5%)

10.13

9.88

11.02

10.79

10.47

Tier 1 risk-based capital (well capitalized = 8.0%)

10.82

10.54

11.71

11.42

11.28

Total risk-based capital (well capitalized = 10.0%)

12.85

12.63

13.76

13.43

13.16

Capital Ratios

Average equity to average assets

7.61

%

7.91

%

8.14

%

7.74

%

8.11

%

Equity to total assets

7.83

7.76

8.30

7.98

7.59

Tangible common equity to tangible assets (6)

7.60

7.52

8.10

7.78

7.38

Asset Quality

Non-accrual loans (7)

$

18,604

$

18,325

$

24,792

$

20,038

$

16,752

Non-performing loans

21,186

21,073

24,792

20,188

16,752

Non-performing assets

21,221

21,108

24,827

20,431

16,995

Net charge-offs

2,865

646

837

1,007

1,149

Asset Quality Ratios

Non-performing loans to gross loans

0.31

%

0.31

%

0.42

%

0.34

%

0.28

%

Non-performing assets to total assets

0.26

0.26

0.35

0.29

0.23

Allowance for loan losses to gross loans

0.67

0.67

0.65

0.61

0.47

Allowance for loan losses to non-performing assets

212.52

213.91

154.44

179.68

165.32

Allowance for loan losses to non-performing loans

212.87

214.27

154.66

181.85

167.73

Net charge-offs to average loans

0.17

0.04

0.06

0.07

0.08

Full-service customer facilities

25

25

20

20

20

(see footnotes on next page)

(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 non-interest expense (excluding merger expense, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization of purchase accounting adjustments) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges and net amortization of purchase accounting adjustments) and non-interest income (excluding life insurance proceeds, net gains and losses from the sale or disposition of securities, assets and fair value adjustments).
(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 (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7) Excludes performing non-accrual TDR loans.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

For the three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

(In thousands, except per share data)

2021

2020

2020

2020

2020

Interest and Dividend Income

Interest and fees on loans

$

69,021

$

66,120

$

60,367

$

60,557

$

61,109

Interest and dividends on securities:

Interest

3,072

2,813

3,525

4,182

5,256

Dividends

8

8

9

11

15

Other interest income

36

30

13

22

290

Total interest and dividend income

72,137

68,971

63,914

64,772

66,670

Interest Expense

Deposits

6,105

6,470

7,093

9,971

18,778

Other interest expense

5,140

6,897

6,084

7,066

Total interest expense

11,245

13,239

13,990

16,055

25,844

Net Interest Income

60,892

55,732

49,924

48,717

40,826

Provision for credit losses

2,820

3,862

2,470

9,619

7,178

Net Interest Income After Provision for Credit Losses

58,072

51,870

47,454

39,098

33,648

Non-interest Income

Banking services fee income

2,725

1,442

1,316

944

798

Net loss on sale of securities

(610

)

(54

)

(37

)

Net gain on sale of loans

31

6

42

Net gain on disposition of assets

621

Net gain (loss) from fair value adjustments

982

(4,129

)

(2,225

)

10,205

(5,993

)

Federal Home Loan Bank of New York stock dividends

689

734

874

881

964

Life insurance proceeds

659

Bank owned life insurance

997

1,016

923

932

943

Other income

266

360

463

170

419

Total non-interest income (loss)

6,311

(1,181

)

1,351

13,737

(2,864

)

Non-interest Expense

Salaries and employee benefits

22,664

22,089

17,335

16,184

18,620

Occupancy and equipment

3,367

3,446

3,021

2,827

2,840

Professional services

2,400

2,463

2,064

1,985

2,862

FDIC deposit insurance

1,213

562

727

737

650

Data processing

2,109

3,411

1,668

1,813

1,694

Depreciation and amortization

1,639

1,579

1,542

1,555

1,536

Other real estate owned/foreclosure (recoveries) expense

(10

)

95

240

45

(164

)

Net loss from sales of real estate owned

5

31

Prepayment penalty on borrowings

7,834

Other operating expenses

4,777

5,332

3,383

3,609

4,311

Total non-interest expense

38,159

46,811

29,985

28,755

32,380

Income (loss) Before Income Taxes

26,224

3,878

18,820

24,080

(1,596

)

Provision (benefit) for Income Taxes

Federal

5,071

533

3,359

4,307

989

State and local

2,114

(116

)

1,130

1,501

(1,195

)

Total taxes

7,185

417

4,489

5,808

(206

)

Net Income (loss)

$

19,039

$

3,461

$

14,331

$

18,272

$

(1,390

)

Basic earnings (loss) per common share

$

0.60

$

0.11

$

0.50

$

0.63

$

(0.05

)

Diluted earnings (loss) per common share

$

0.60

$

0.11

$

0.50

$

0.63

$

(0.05

)

Dividends per common share

$

0.21

$

0.21

$

0.21

$

0.21

$

0.21

Basic average shares

31,604

30,603

28,874

28,867

28,853

Diluted average shares

31,604

30,603

28,874

28,867

28,853


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

(Dollars in thousands)

2021

2020

2020

2020

2020

ASSETS

Cash and due from banks

$

174,420

$

157,388

$

75,560

$

84,754

$

157,184

Securities held-to-maturity:

Mortgage-backed securities

7,909

7,914

7,919

7,924

7,929

Other securities

49,912

49,918

50,252

50,078

50,225

Securities available for sale:

Mortgage-backed securities

518,781

404,460

386,235

442,507

489,556

Other securities

242,440

243,514

234,721

232,803

225,856

Loans

6,745,316

6,704,674

5,941,398

5,983,275

5,932,088

Allowance for loan losses

(45,099

)

(45,153

)

(38,343

)

(36,710

)

(28,098

)

Net loans

6,700,217

6,659,521

5,903,055

5,946,565

5,903,990

Interest and dividends receivable

44,941

44,041

36,068

30,219

25,526

Bank premises and equipment, net

27,498

28,179

25,766

27,018

27,899

Federal Home Loan Bank of New York stock

41,498

43,439

57,119

56,400

74,000

Bank owned life insurance

182,707

181,710

158,701

157,779

158,655

Goodwill

17,636

17,636

16,127

16,127

16,127

Other real estate owned, net

208

208

Core deposit intangibles

3,013

3,172

Right of use asset

53,802

50,743

42,326

38,303

39,729

Other assets

94,410

84,759

69,207

71,974

68,526

Total assets

$

8,159,184

$

7,976,394

$

7,063,056

$

7,162,659

$

7,245,410

LIABILITIES

Deposits

$

6,326,577

$

6,090,733

$

4,906,359

$

5,049,874

$

4,828,435

Mortgagors' escrow deposits

74,348

45,622

57,136

48,525

73,051

Borrowed funds

948,920

1,020,895

1,323,975

1,305,187

1,617,582

Operating lease liability

58,080

59,100

49,737

45,897

47,726

Other liabilities

112,058

141,047

139,443

141,255

128,933

Total liabilities

7,519,983

7,357,397

6,476,650

6,590,738

6,695,727

STOCKHOLDERS' EQUITY

Preferred stock (5,000,000 shares authorized; none issued)

Common stock ($0.01 par value; 100,000,000 shares authorized)

341

341

315

315

315

Additional paid-in capital

260,019

261,533

227,877

226,901

225,893

Treasury stock

(65,479

)

(69,400

)

(69,409

)

(69,436

)

(69,540

)

Retained earnings

455,023

442,789

445,931

437,663

425,455

Accumulated other comprehensive loss, net of taxes

(10,703

)

(16,266

)

(18,308

)

(23,522

)

(32,440

)

Total stockholders' equity

639,201

618,997

586,406

571,921

549,683

Total liabilities and stockholders' equity

$

8,159,184

$

7,976,394

$

7,063,056

$

7,162,659

$

7,245,410

(In thousands)

Issued shares

34,088

34,088

31,531

31,531

31,531

Outstanding shares

30,954

30,776

28,218

28,217

28,214

Treasury shares

3,133

3,312

3,312

3,313

3,317

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

For the three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

(In thousands)

2021

2020

2020

2020

2020

Interest-earning Assets:

Mortgage loans, net

$

5,155,975

$

5,010,097

$

4,721,742

$

4,762,068

$

4,697,531

Other loans, net

1,544,501

1,365,419

1,182,309

1,184,344

1,097,335

Total loans, net

6,700,476

6,375,516

5,904,051

5,946,412

5,794,866

Taxable securities:

Mortgage-backed securities

433,917

413,875

413,902

465,365

507,912

Other securities

300,828

266,663

243,754

243,867

243,726

Total taxable securities

734,745

680,538

657,656

709,232

751,638

Tax-exempt securities:

Other securities

50,828

50,768

51,652

60,280

63,535

Total tax-exempt securities

50,828

50,768

51,652

60,280

63,535

Interest-earning deposits and federal funds sold

181,168

136,650

62,537

93,911

109,818

Total interest-earning assets

7,667,217

7,243,472

6,675,896

6,809,835

6,719,857

Other assets

480,497

461,935

407,132

396,224

387,141

Total assets

$

8,147,714

$

7,705,407

$

7,083,028

$

7,206,059

$

7,106,998

Interest-bearing Liabilities:

Deposits:

Savings accounts

$

170,079

$

163,382

$

160,100

$

188,587

$

194,026

NOW accounts

2,183,356

1,924,840

1,625,109

1,440,147

1,419,739

Money market accounts

1,905,543

1,507,245

1,461,996

1,580,652

1,697,783

Certificate of deposit accounts

1,102,641

1,113,293

1,106,355

1,185,842

1,267,245

Total due to depositors

5,361,619

4,708,760

4,353,560

4,395,228

4,578,793

Mortgagors' escrow accounts

65,372

75,005

55,868

87,058

65,503

Total interest-bearing deposits

5,426,991

4,783,765

4,409,428

4,482,286

4,644,296

Borrowings

1,048,852

1,385,809

1,322,471

1,430,488

1,307,629

Total interest-bearing liabilities

6,475,843

6,169,574

5,731,899

5,912,774

5,951,925

Non interest-bearing demand deposits

858,080

731,170

589,674

560,637

449,761

Other liabilities

194,144

195,200

184,943

175,234

128,715

Total liabilities

7,528,067

7,095,944

6,506,516

6,648,645

6,530,401

Equity

619,647

609,463

576,512

557,414

576,597

Total liabilities and equity

$

8,147,714

$

7,705,407

$

7,083,028

$

7,206,059

$

7,106,998

Net interest-earning assets

$

1,191,374

$

1,073,898

$

943,997

$

897,061

$

767,932


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)

For the three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

(Dollars in thousands)

2021

2020

2020

2020

2020

Interest Income:

Mortgage loans, net

$

55,219

$

53,777

$

49,814

$

49,719

$

49,412

Other loans, net

13,802

12,343

10,553

10,838

11,697

Total loans, net

69,021

66,120

60,367

60,557

61,109

Taxable securities:

Mortgage-backed securities

1,698

1,435

1,928

2,327

3,040

Other securities

963

957

1,166

1,358

1,697

Total taxable securities

2,661

2,392

3,094

3,685

4,737

Tax-exempt securities:

Other securities

530

543

557

643

676

Total tax-exempt securities

530

543

557

643

676

Interest-earning deposits and federal funds sold

36

30

13

22

290

Total interest-earning assets

72,248

69,085

64,031

64,907

66,812

Interest Expense:

Deposits:

Savings accounts

$

75

$

75

$

65

$

74

$

281

NOW accounts

1,706

1,320

1,242

2,099

4,648

Money market accounts

2,100

2,010

2,108

3,208

7,042

Certificate of deposit accounts

2,222

3,065

3,700

4,564

6,767

Total due to depositors

6,103

6,470

7,115

9,945

18,738

Mortgagors' escrow accounts

2

(22

)

26

40

Total interest-bearing deposits

6,105

6,470

7,093

9,971

18,778

Borrowings

5,140

6,769

6,897

6,084

7,066

Total interest-bearing liabilities

11,245

13,239

13,990

16,055

25,844

Net interest income- tax equivalent

$

61,003

$

55,846

$

50,041

$

48,852

$

40,968

Included in net interest income above:

Prepayment penalties received on loans and securities and net of reversals and recovered interest from non-accrual loans

$

947

$

1,093

$

1,518

$

776

$

1,189

Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income

1,427

1,023

230

(365

)

(2,073

)

Purchase accounting adjustments

922

11

Interest-earning Assets Yields:

Mortgage loans, net

4.28

%

4.29

%

4.22

%

4.18

%

4.21

%

Other loans, net

3.57

3.62

3.57

3.66

4.26

Total loans, net

4.12

4.15

4.09

4.07

4.22

Taxable securities:

Mortgage-backed securities

1.57

1.39

1.86

2.00

2.39

Other securities

1.28

1.44

1.91

2.23

2.79

Total taxable securities

1.45

1.41

1.88

2.08

2.52

Tax-exempt securities: (1)

Other securities

4.17

4.28

4.31

4.27

4.26

Total tax-exempt securities

4.17

4.28

4.31

4.27

4.26

Interest-earning deposits and federal funds sold

0.08

0.09

0.08

0.09

1.06

Total interest-earning assets

3.77

%

3.82

%

3.84

%

3.81

%

3.98

%

Interest-bearing Liabilities Yields:

Deposits:

Savings accounts

0.18

%

0.18

%

0.16

%

0.16

%

0.58

%

NOW accounts

0.31

0.27

0.31

0.58

1.31

Money market accounts

0.44

0.53

0.58

0.81

1.66

Certificate of deposit accounts

0.81

1.10

1.34

1.54

2.14

Total due to depositors

0.46

0.55

0.65

0.91

1.64

Mortgagors' escrow accounts

0.01

(0.16

)

0.12

0.24

Total interest-bearing deposits

0.45

0.54

0.64

0.89

1.62

Borrowings

1.96

1.95

2.09

1.70

2.16

Total interest-bearing liabilities

0.69

%

0.86

%

0.98

%

1.09

%

1.74

%

Net interest rate spread (tax equivalent)

3.08

%

2.96

%

2.86

%

2.72

%

2.24

%

Net interest margin (tax equivalent)

3.18

%

3.08

%

3.00

%

2.87

%

2.44

%

Ratio of interest-earning assets to interest-bearing liabilities

1.18

X

1.17

X

1.16

X

1.15

X

1.13

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

March 2021 vs.

March 2021 vs.

March 31,

December 31,

September 30,

June 30,

March 31,

December 2020

March 2020

(Dollars in thousands)

2021

2020

2020

2020

2020

% Change

% Change

Deposits

Non-interest bearing

$

917,189

$

778,672

$

607,954

$

581,881

$

489,198

17.8

%

87.5

%

Interest bearing:

Certificate of deposit accounts

1,070,595

1,138,361

1,051,644

1,135,977

1,172,381

(6.0

)

(8.7

)

Savings accounts

170,272

168,183

160,294

184,895

192,192

1.2

(11.4

)

Money market accounts

1,990,656

1,682,345

1,381,552

1,474,880

1,597,109

18.3

24.6

NOW accounts

2,177,865

2,323,172

1,704,915

1,672,241

1,377,555

(6.3

)

58.1

Total interest-bearing deposits

5,409,388

5,312,061

4,298,405

4,467,993

4,339,237

1.8

24.7

Total deposits

$

6,326,577

$

6,090,733

$

4,906,359

$

5,049,874

$

4,828,435

3.9

%

31.0

%

Loan Composition

March 2021 vs.

March 2021 vs.

March 31,

December 31,

September 30,

June 30,

March 31,

December 2020

March 2020

(Dollars in thousands)

2021

2020

2020

2020

2020

% Change

% Change

Loans held for investment:

Multi-family residential

$

2,525,967

$

2,533,952

$

2,252,757

$

2,285,555

$

2,272,343

(0.3

)%

11.2

%

Commercial real estate

1,721,702

1,754,754

1,636,659

1,646,085

1,664,934

(1.9

)

3.4

One-to-four family ― mixed-use property

595,431

602,981

585,159

591,347

592,109

(1.3

)

0.6

One-to-four family ― residential

239,391

245,211

191,011

184,741

189,774

(2.4

)

26.1

Co-operative apartments

7,965

8,051

8,132

8,423

8,493

(1.1

)

(6.2

)

Construction

61,528

83,322

63,567

69,433

66,727

(26.2

)

(7.8

)

Mortgage Loans

5,151,984

5,228,271

4,737,285

4,785,584

4,794,380

(1.5

)

7.5

Small Business Administration (1)

267,120

167,376

124,649

106,813

14,076

59.6

1,797.7

Taxi medallion

2,757

2,317

3,269

3,281

(100.0

)

(100.0

)

Commercial business and other

1,326,657

1,303,225

1,063,429

1,073,623

1,104,967

1.8

20.1

Non-mortgage loans

1,593,777

1,473,358

1,190,395

1,183,705

1,122,324

8.2

42.0

Net unamortized premiums and unearned loan fees (2)

(445

)

3,045

13,718

13,986

15,384

(114.6

)

(102.9

)

Allowance for loan losses

(45,099

)

(45,153

)

(38,343

)

(36,710

)

(28,098

)

(0.1

)

60.5

Net loans

$

6,700,217

$

6,659,521

$

5,903,055

$

5,946,565

$

5,903,990

0.6

%

13.5

%


(1) Includes $251.0 million, $151.9 million, $111.6 million and $93.2 million of PPP loans at March, 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.
(2) Includes $10.5 million and $11.3 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at March 31, 2021 and December 31, 2020, respectively.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS, RATES, and FORBEARANCE DETAIL
(Unaudited)

Loan Closings

For the three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

(In thousands)

2021

2020

2020

2020

2020

Multi-family residential

$

58,553

$

52,024

$

33,733

$

59,654

$

67,318

Commercial real estate

17,156

57,634

26,644

8,003

99,571

One-to-four family – mixed-use property

8,712

9,692

3,867

8,117

13,455

One-to-four family – residential

3,131

8,422

2,296

2,674

8,413

Co-operative apartments

704

Construction

7,123

6,869

5,420

2,821

6,749

Mortgage Loans

94,675

134,641

71,960

81,269

196,210

Small Business Administration (1)

125,093

598

18,456

93,241

57

Commercial business and other

103,118

180,787

65,160

59,287

102,448

Non-mortgage Loans

228,211

181,385

83,616

152,528

102,505

Total

$

322,886

$

316,026

$

155,576

$

233,797

$

298,715


(1) Includes $123.2 million, $18.4 million and $93.2 million of PPP closings for the three months ended March 31, 2021, September 30, 2020 and June 30, 2020, respectively.


Weighted Average Rate on Loan Closings