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FLUSHING SAVINGS BANK, FSB
FINANCIAL STATEMENTS
As of December 31, 2003 and 2002 and
401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
for the year ended December 31, 2003
and Supplemental Schedules
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Index
Page(s) | |||
---|---|---|---|
Report of Independent Registered Public Accounting Firm | 2 | ||
Financial statements: | |||
Statements of net assets available for plan benefits | |||
as of December 31, 2003 and 2002 | 3 | ||
Statement of changes in net assets available for plan benefits | |||
for the year ended December 31, 2003 | 4 | ||
Notes to financial statements | 5-9 | ||
Supplemental schedules*: | |||
Schedule H, line 4i - Schedule of Assets (Held at End of Year) | 10 | ||
Schedule H, line 4j - Schedule of Reportable Transactions for the | |||
year ended December 31, 2003 | 11 |
* Other schedules required by 29 CFR 2520.103-9 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 ("ERISA") have been omitted because they are not applicable.
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
To the Participants and Administrator of
Flushing Savings Bank, FSB 401(k) Savings Plan in RSI Retirement Trust
In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Flushing Savings Bank, FSB 401(k) Savings Plan in RSI Retirement Trust (the "Plan") at December 31, 2003 and 2002, and the changes in net assets available for benefits for the year ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) and the Schedule of Reportable Transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/S/ PricewaterhouseCoopers LLP
New York, New York
June 24, 2004
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Statements of Net Assets Available for Plan Benefits
As of December 31, 2003 and 2002
December 31, | December 31, | ||||
---|---|---|---|---|---|
2003 |
2002 | ||||
Assets: | |||||
Investments at Fair Value (Note 3) | $6,905,314 | $4,962,614 | |||
Participant Loans | 134,055 | 115,832 | |||
7,039,369 | 5,078,446 | ||||
Receivables: | |||||
Employer Contributions Receivable | -- | 4,953 | |||
Other Receivable | 37 | 93 | |||
Total Receivables | 37 | 5,046 | |||
Cash | 4,684 | 15,975 | |||
Total Assets | 7,044,090 | 5,099,467 | |||
Liability: | |||||
Other Liabilities | 432 | -- | |||
Net Assets Available | |||||
for Plan Benefits | $7,043,658 | $5,099,467 | |||
The accompanying notes are an integral part of these financial statements
3
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 2003
Additions to net assets attributed to: | |||
Investment income: | |||
Dividends and interest | $ 62,130 | ||
Contributions: | |||
Employer, net of forfeitures | 173,595 | ||
Participants | 413,565 | ||
Total contributions | 587,160 | ||
Net appreciation in fair value of investments | 1,928,232 | ||
Total additions | 2,577,522 | ||
Deductions from net assets attributed to: | |||
Benefits paid to participants | 633,331 | ||
Total deductions | 633,331 | ||
Net increase | 1,944,191 | ||
Net Assets Available for Plan Benefits - December 31, 2002 | 5,099,467 | ||
Net Assets Available for Plan Benefits - December 31, 2003 | $7,043,658 | ||
The accompanying notes are an integral part of these financial statements
4
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements
1. Description of Plan:
The following description of Flushing Savings Bank, FSB 401(k) Savings Plan in RSI Retirement Trust (the "Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions.
a. General:
The Plan is a tax-deferred savings plan which began on September 1, 1987, and covers all salaried employees of Flushing
Savings Bank, FSB (the "Bank") who have completed one year of service and are twenty-one years of age or older. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
b. Contributions:
Participant contributions can be no less than 2% nor greater than 10% of their base compensation for each plan year and
cannot exceed $12,000 annually for the plan year ended December 31, 2003, adjusted as prescribed under the Internal
Revenue Code. The Bank will match 50% of each participant's basic contributions up to a maximum of 3% of the
participant's base compensation. Of the 50% match, one half of the match will be invested into the Flushing Financial
Corporation Common Stock Fund. The remaining half of the match will be invested into corresponding participant directed
investment accounts. Currently, contributions to the Plan are not subject to Federal, state, or local income taxes until
withdrawn from the Plan. Participant forfeitures serve to reduce the contribution due from the Bank. Participants may
also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans.
c. Participant accounts:
Each participant's account is credited with the participant's contributions and the Bank's matching contributions. The
plan assets are segregated into eight investment accounts: Core Equity Fund, Emerging Growth Equity Fund, Value Equity
Fund, Intermediate-Term Bond Fund, Actively Managed Bond Fund, Short-Term Investment Fund, Retirement System Group
Common Stock and Flushing Financial Corporation Common Stock Fund. The assets of the Flushing Financial Corporation
Common Stock Fund are held by HSBC Bank USA. The other plan assets are held by the RSI Retirement Trust.
Certain assets are not allocated to the above investment accounts. Those unallocated amounts represent contributions pending allocation to the designed investment accounts. In accordance with the provisions of the Plan, net assets are to be valued from time to time, but not less often than monthly, and the increase or decrease in such value since the last valuation date is allocated among the participants' accounts so as to preserve each participant's beneficial interest in the Plan.
d. Vesting:
Participants are immediately 100 percent vested in their salary deferral contributions plus earnings thereon. Vesting of
employer contributions on behalf of each participant is based on continuous years of service. A participant is 100
percent vested after six years of credited service.
Continued
5
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements, continued
e. Investment options:
Upon enrollment in the Plan, a participant may direct employee contributions in one percent increments into the eight
investment accounts. Thereafter, a participant may direct investment changes in their accounts not more than once per
calendar quarter. However, participants are not permitted to redirect the Bank's matching contribution that is made to
the Flushing Financial Corporation Common Stock Fund.
f. Payment of benefits:
Upon termination of service, a participant is entitled to receive a lump sum or, in certain circumstances, quarterly,
semi-annual, or annual installments, equal to the value of his or her account to the extent such funds are vested.
g. Voting rights:
With respect to the Flushing Financial Corporation Common Stock Fund, each participant is entitled to exercise voting
rights attributable to the shares allocated to his or her account and is notified by the Trustee prior to the time that
such rights are to be exercised. With respect to shares of stock credited to participant accounts as to which the
Trustee did not receive timely voting instructions and shares of stock not credited to participant's account, the
Trustee shall vote all such shares of stock in the same proportion as were voted shares as to which participants
provided timely instructions. The shares held in the Retirement System Group Common Stock Fund are voted at the
discretion of the Plan Sponsor. For the other stock funds, the shares are voted at the discretion of the Plan Trustee.
h. Loans to participants:
Loans are made available to all participants on a uniform and nondiscriminatory basis. All loans must be adequately
collateralized and amortized over a period not to exceed five years unless the loan is to purchase the principle
residence of a participant, in which case, the term cannot exceed ten years. Loans must bear a reasonable rate of
interest (currently prime rounded to the nearest one quarter of one percent). Loans are limited by the Internal Revenue
Code Section 72(p) and may not exceed the lesser of (i) 50% of the net value of a participant's vested account balance
or (ii) $50,000 reduced by the largest outstanding loan balance in the Plan during the preceding 12 months. At December
31, 2003, outstanding loans bore interest rates in the range of 4.0% to 9.5%.
i. Forfeited accounts:
At December 31, 2003 and 2002, forfeited nonvested accounts totaled $4,684 and $124, respectively, which will be used to
reduce future employer contributions. In 2003, employer contributions were reduced by $4,735 from forfeited nonvested
accounts.
2. Summary of Significant Accounting Policies:
a. Basis of presentation
The accompanying financial statements have been prepared using the accrual method of accounting.
Continued
6
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements, continued
b. Investment Valuation and Income Recognition:
The Plan's investments are stated at fair value, using market quotations where available. Shares of registered investment
companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year-end.
Loans receivable from participants are valued at cost, which approximates fair value.
The Plan presents interest and dividend income and net appreciation (depreciation) in the fair value of its investments in the statement of changes in net assets available for plan benefits. Net appreciation (depreciation) in the fair value of its funds and common stock consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Interest and dividends consist of interest payments received on interest bearing securities such as money market securities and dividends payments received from individual securities such as common and preferred stock. Dividend and interest income on investments held by the funds are reinvested by each fund.
c. Expenses:
The ordinary administrative expenses of the Plan, including compensation of the Trustee and other administrative expenses
of the Trustee, are paid from the Plan unless paid by the Bank at its discretion. For the year ended December 31, 2003 the
Bank elected to pay the expenses of the Plan.
d. Other:
Interest income on loans is recorded as earned on an accrual basis.
e. Payment of benefits:
Benefit payments to participants are recorded upon distribution.
f. Estimates:
The preparation of the Plan's financial statements in conformity with accounting principles generally accepted in the
United States of America requires the Plan Administrator to make estimates and assumptions that affect the reported
amounts of net assets available for benefits at the date of the financial statements, the changes in net assets available
for benefits during the period, and the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
g. Risks and uncertainties:
The Plan invests in six RSI Retirement Trust Funds, one equity fund, which contains an HSBC Bank short-term investment
fund, and one equity security. These investments are exposed to various risks, such as interest rate, market and credit
risk. Due to the level of risk associated with certain investment securities in which these funds may invest, and the
level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that
changes in risks in the near term could materially affect the amounts reported in the Statement of Net Assets Available
for Plan Benefits and the Statement of Changes in Net Assets Available for Plan Benefits.
Continued
7
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements, continued
3. Investments
The following presents investments that represent five percent or more of the Plan's net assets.
December 31, | December 31, | ||||
---|---|---|---|---|---|
2003 |
2002 |
||||
Core Equity Fund, 14,735.053 and 13,936.627 shares, respectively | $1,139,756 | $ 871,039 | |||
Emerging Growth Equity Fund, 6,146.065 and 5,924.838 | |||||
shares, respectively | 437,600 | 300,863 | |||
Value Equity Fund, 8,607.929 and 7,644.794 shares, respectively | 730,125 | 523,439 | |||
Short Term Investment Fund, 29,244.092 and 25,653.011 shares, | |||||
respectively | 777,016 | 678,266 | |||
Actively Managed Bond Fund, 5,339.116 shares | -- | 263,699 | |||
Flushing Financial Corporation Common Stock, 191,014 | |||||
and 129,721 shares, respectively | 3,491,736 | * | 2,124,571 | * | |
* Nonparticipant-directed |
During 2003, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $1,928,232 as follows:
Flushing Financial Corporation Common Stock Fund | $ 1,443,679 | ||
Value Equity Fund | 134,260 | ||
Short-term Investment Fund | 3,359 | ||
Actively Managed Bond Fund | 5,216 | ||
Intermediate-term Bond Fund | 979 | ||
Retirement System Group Inc. Common Stock | (402 | ) | |
Emerging Growth Equity Fund | 124,129 | ||
Core Equity Fund | 217,012 | ||
Net appreciation | $ 1,928,232 | ||
8
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
4. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:
December 31, | December 31, | ||||
2003 | 2002 | ||||
Flushing Financial Corporation common stock | $3,491,736 | $2,124,571 | |||
HSBC Bank USA Collective Trust Short Term Investment | |||||
Fund Directed | 58,412 | 77,763 | |||
Flushing Financial Corporation Common Stock Fund | $3,550,148 | $2,202,334 | |||
Year Ended | |||||
December 31, | |||||
2003 | |||||
Changes in Net Assets: | |||||
Contributions | $ 216,991 | ||||
Dividends and interest | 55,650 | ||||
Net appreciation | 1,443,679 | ||||
Benefits paid to participants | (235,296 | ) | |||
Net transfers to/from participant-directed investments | (133,210 | ) | |||
$1,347,814 | |||||
5. Plan Termination:
Although it has not expressed any intent to do so, the Bank specifically reserves the right, at any time, to terminate the Plan or to amend, in whole or in part, any or all of the provisions of the Plan, subject to the provisions of ERISA and approval of the Directors. In the event of termination or partial termination of the Plan or upon complete discontinuance of contributions under the Plan, the accounts of each affected participant shall become 100% vested and fully distributable, in accordance with the Internal Revenue Code and all income tax regulations promulgated thereunder.
6. Federal Tax Status:
The Internal Revenue Service has determined and informed the Company by a signed letter dated April 12, 2002 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code. The Plan has not been amended since receiving the determination letter.
7. Related-Party Transactions
Plan investments are shares of mutual funds managed by RSI Retirement Trust, which is also the Trustee of the Plan, and the common stock of Flushing Financial Corporation, the parent company of the Bank.
9
FLUSHING SAVINGS BANK, FSB 401(K) SAVINGS PLAN
in RSI RETIREMENT TRUST
Schedule H, line 4i - Schedule of Assets (Held at End of Year)
As of December 31, 2003
(a) | (b) | (c) | (d) | (e) | |||||
---|---|---|---|---|---|---|---|---|---|
Identity of issue, | Description of investment including | ||||||||
borrower, lessor | maturity date, rate of interest, | Current | |||||||
|
or similar party |
collateral, par, or maturity value |
Cost** |
value |
|||||
* | RSI Retirement Trust | Core Equity | $ 798,688 | $1,139,756 | |||||
* | RSI Retirement Trust | Emerging Growth Equity | 456,411 | 437,600 | |||||
* | RSI Retirement Trust | Value Equity | 647,498 | 730,125 | |||||
* | RSI Retirement Trust | Short-Term Investment | 767,298 | 777,016 | |||||
* | RSI Retirement Trust | Actively Managed Bond | 164,643 | 180,964 | |||||
* | RSI Retirement Trust | Intermediate-Term Bond | 84,113 | 88,468 | |||||
* | Retirement System Group | Retirement System Group Stock | 2,108 | 1,237 | |||||
Inc. | |||||||||
Flushing Financial Corp. | Common Stock*** | 1,167,011 | 3,491,736 | ||||||
HSBC Bank USA | Common Collective Trust Short Term | ||||||||
Investment Fund Directed*** | 58,412 | 58,412 | |||||||
* | Participant Loans | Loans to participants**** | 134,055 | 134,055 | |||||
Total | $4,280,237 | $7,039,369 | |||||||
* | Party in interest to the Plan. | ||||||||
** | Represents the Plan's percentage of each fund's historical cost. | ||||||||
*** | Flushing Financial Corporation Common Stock Fund consists of Flushing Financial Corporation Common Stock and HSBC Bank USA Common Collective Trust Short Term Investment Fund Directed. | ||||||||
**** | Loans bear a rate of interest of prime rounded to the nearest one quarter of one percent. Interest rate range of 4.0% to 9.5% for all outstanding loans to participants as of December 31, 2003 |
10
FLUSHING SAVINGS BANK, FSB 401(K) SAVINGS PLAN
in RSI RETIREMENT TRUST
Schedule H, line 4j - Schedule of Reportable Transactions
For the year ended December 31, 2003
(a) Identity of | (b) Description | (c) Purchase | (d) Selling | (e) Lease | (f) Expenses | (g) Cost | (h) Current value | (i) Net |
---|---|---|---|---|---|---|---|---|
party | of asset | Price | Price | rental | incurred | of | of asset on | gain |
involved | (include | with | asset | transaction | ||||
interest rate | transaction | date | ||||||
and maturity | ||||||||
in case of | ||||||||
loan) | ||||||||
HSBC Bank |
Flushing | |||||||
Financial Corp. | $285,635 | $361,654 | $-- | $-- | $-- | $361,654 | $76,019 | |
HSBC Bank | Collective Trust | |||||||
Short Term | ||||||||
Investment Fund | ||||||||
Directed | $1,003,760 | $1,003,760 | $-- | $-- | $-- | $1,003,760 | $-- |
11
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees for the Plan have duly caused this annual report to be signed by the undersigned hereunto duly authorized.
Flushing Savings Bank, FSB 401(k) Savings Plan | |
In RSI Retirement Trust, |
Date: June __, 2004 | By: /s/Anna M. Piacentini |
Anna M. Piacentini | |
Plan Administrator |
FLUSHING SAVINGS BANK, FSB 401(K) SAVINGS PLAN
in RSI RETIREMENT TRUST
Exhibit
23 Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-98202) of Flushing Financial Corporation of our report dated June 24, 2004 relating to the financial statements of Flushing Savings Bank, FSB 401(k) Savings Plan in RSI Retirement Trust, which appears in this Form 11-K.
/s/ PricewaterhouseCoopers, LLP
New York, New York
June 28, 2004