8-K

UNITED STATES
SECURITIES and EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of report (Date of earliest event reported)               October 17, 2006
FLUSHING FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
000-24272
(Commission File Number)
DELAWARE
(State or other jurisdiction of incorporation)
11-3209278
(I.R.S. Employer Identification Number)
1979 MARCUS AVENUE, SUITE E140, LAKE SUCCESS, NEW YORK 11042
(Address of principal executive offices)
(718) 961-5400
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

( )       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

( )       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

( )       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
            (17 CFR 240.14d-2(b))

( )       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
            (17 CFR 240.13e-4(c))

Item 2.02    Results of Operations and Financial Condition.

      Flushing Financial Corporation (Nasdaq: FFIC), the parent holding company for Flushing Savings Bank, FSB, announced its financial results for the three and nine months ended September 30, 2006. Attached as Exhibit 99.1 is the Company's press release dated October 17, 2006.

Item 9.01(c).    Exhibits

99.1.     Press release of Flushing Financial Corporation, dated October 17, 2006.

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		FLUSHING FINANCIAL CORPORATION
Date:   October 18, 2006	By:	/s/ David W. Fry
		David W. Fry
	Title:	Senior Vice President, Treasurer
		and Chief Financial Officer

INDEX TO EXHIBITS

Exhibit
99.1	Press release of Flushing Financial Corporation,
	dated October 17, 2006

EX-99

CONTACT:

David W. Fry	Van Negris / Lexi Terrero
Senior Vice President, Treasurer	Van Negris & Company, Inc.
and Chief Financial Officer	(212) 759-0290

Flushing Financial Corporation

(718) 961-5400

FOR IMMEDIATE RELEASE

FLUSHING FINANCIAL CORPORATION REPORTS

2006 THIRD QUARTER AND NINE MONTHS ENDED RESULTS

LAKE SUCCESS, NY – October 17, 2006 - Flushing Financial Corporation (the “Company”) (NASDAQ: FFIC), the parent holding company for Flushing Savings Bank, FSB (the “Bank”), today announced its financial results for the three and nine months ended September 30, 2006.

Net income for the third quarter ended September 30, 2006 was $5.3 million, a decrease of $0.7 million, or 11.1%, from the $6.0 million earned in the third quarter ended September 30, 2005. Diluted earnings per share for the third quarter was $0.27, a decrease of $0.06, or 18.2%, from the $0.33 earned in the comparable quarter a year ago.

Net income for the nine months ended September 30, 2006 was $16.6 million, a decrease of $1.2 million, or 6.8%, from the $17.8 million earned in the comparable 2005 period. Diluted earnings per share for the nine month period was $0.89, a decrease of $0.10, or 10.1% from the $0.99 earned in the comparable 2005 period.

John R. Buran, President and Chief Executive Officer, stated: “The challenging interest rate environment we experienced for the past year continued during the third quarter of 2006. The Federal Reserve’s Federal Open Market Committee (FOMC) maintained the overnight interest rate at 5.25% during the quarter, after raising the rate seventeen consecutive times at its prior meetings. While short-term interest rates remained level during the quarter, longer-term interest rates further decreased, which resulted in a more inverted yield curve during the third quarter. As a result, competition for deposits in our market was extremely strong during the quarter, resulting in our having to pay higher rates to obtain deposits.

“Expenses grew during the quarter due to several planned initiatives coming on line.Operating expenses related to our acquisition of Atlantic Liberty Savings F.A. were recorded for the first full quarter, accounting for $0.7 million of the $1.7 million increase compared to the third quarter of last year. These expenses included $0.1 million associated with non-compete agreements that will expire in 2008. The remaining expense increases are associated with several initiatives that will provide future revenue streams.

“This quarter we began to incur additional expense as part of our continuing evolution to a more ‘commercial-like’ institution. The hiring of experienced commercial lenders, and experienced operational staff, begun last quarter, has already shown palpable results as our business loan pipeline increased over 300% to $53 million, and business banking deposits have started to come in.

“The quarter also saw additional costs associated with the start up of our separately branded internet banking division. It is our expectation that the internet banking division, which will begin operating in the fourth quarter of 2006, will help lessen our long-standing dependency on wholesale borrowings, while giving us an excellent platform to establish a solid competitive presence in this new and important market.

“Our plans to open two new branches in early 2007 required some early expenses this quarter, as we have leased the buildings and began the hiring process. Our Roosevelt Avenue branch will become the focal point of an expanded initiative to capture more Asian business in Flushing. Our branch in Forest Hills will give us a strategic location in one of the more affluent areas of the Queens marketplace.

“As we look to control expenses, we froze the defined benefit employee pension plan as of September 30, 2006, replacing it with a defined contribution pension plan. This change in the pension plan is anticipated to reduce annual operating expenses by $0.4 million beginning in 2007.

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Flushing Financial Corporation

October 17, 2006

Page Two

“While we continue to deal with increasing funding costs, the company did achieve some high-water marks during the quarter:

• Loan originations exceeded the prior year’s comparable quarter for the first time this year. 

• Our loan pipeline is the highest ever. 

• Yields on newly originated loans are the highest since the quarter ended September 30, 2002.

• The loan portfolio yield is the highest since the quarter ended September 30, 2004.

“Assets grew 16.3% to $2,736.9 million during the year, and we plan continued growth through our strategy of appealing to the multi-ethnic marketplace of businesses and consumers that characterizes our trading areas. We remain committed to building long term shareholder value. To that end, we continue to be alert to opportunities to repurchase shares, and have bought back 317,000 since the beginning of the year, at an average price of $16.53, a price which was below our common stock trading price of $17.50 at the end of the quarter. Our capital position remains strong and affords us the opportunity to continue to grow and repurchase more common shares as opportunities dictate.

“We will continue to focus on the origination of higher-yielding mortgage loans, the enhanced integration of our deposit-gathering and lending efforts, and the expansion of our relationships with business banking customers in the multicultural communities we serve.”

Earnings Summary - Three Months Ended September 30, 2006

Net interest income for the three months ended September 30, 2006 was $17.2 million, an increase of $0.1 million, or 0.5% from $17.1 million for the three months ended September 30, 2005. An increase in the average balance of interest-earning assets of $371.6 million, to $2,532.4 million, was partially offset by a decrease in the net interest spread of 48 basis points to 2.48% for the quarter ended September 30, 2006 from 2.96% for the comparable period in 2005. The yield on interest-earning assets increased 24 basis points to 6.55% for the three months ended September 30, 2006 from 6.31% in the three months ended September 30, 2005. However, this was more than offset by an increase in the cost of funds of 72 basis points to 4.07% for the three months ended September 30, 2006 from 3.35% for the comparable prior year period.

The increase in the yield of interest-earning assets is primarily due to an increase of $389.9 million in the average balance of the higher-yielding loan portfolio to $2,165.6 million, combined with a $30.2 million decrease in the average balance of the lower-yielding securities portfolios. The yield on the mortgage loan portfolio increased 7 basis points to 6.85% for the three months ended September 30, 2006 from 6.78% for the three months ended September 30, 2005. This increase is due to the average rate on new mortgage loans originated during the nine months ended September 30, 2006 being above the average rate on both the loan portfolio and loans which were paid-in-full during the period. The average note rate on mortgage loans originated in the current quarter was 7.46%. In an effort to increase the yield on interest-earning assets, we continued to fund a portion of the growth in the higher-yielding mortgage loan portfolio through repayments received on the lower-yielding securities portfolio. The yield on the mortgage loan portfolio, excluding prepayment penalty income, increased 9 basis points for the three months ended September 30, 2006 compared to the three months ended June 30, 2006.

The increase in the cost of interest-bearing liabilities is primarily attributed to the Federal Reserve having raised the overnight interest rate at seventeen consecutive meetings through June 30, 2006. This resulted in an increase in our cost of funds. Certificate of deposits, savings accounts and money market accounts increased 83 basis points, 46 basis points and 158 basis points, respectively, for the three months ended September 30, 2006 compared to the three months ended September 30, 2005, resulting in an increase in the cost of due to depositors of 97 basis points for the three months ended September 30, 2006 compared to the three months ended September 30, 2005. In addition, the cost of borrowed funds increased 47 basis points to 4.86% for the three months ended September 30, 2006 compared to 4.39% for the three months ended September 30, 2005.

The net interest margin decreased 45 basis points to 2.72% for the three months ended September 30, 2006 from 3.17% for the three months ended September 30, 2005. Excluding prepayment penalty income, the net interest margin would have been 2.58% and 2.95% for the three month periods ended September 30, 2006 and 2005, respectively.

Non-interest income increased $0.3 million, or 14.2%, for the three months ended September 30, 2006 to $2.4 million, as compared to $2.1 million for the quarter ended September 30, 2005. This was attributed to increases of: $0.2 million from loan fees, $0.1 million in dividends received on Federal Home Loan Bank of New York (“FHLB-NY”) stock and $0.2 million in BOLI dividends, which were partially offset by a $0.2 million decrease in the gain on sale of loans.

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Flushing Financial Corporation

October 17, 2006

Page Three

Non-interest expense was $11.2 million for the three months ended September 30, 2006, an increase of $1.7 million, or 18.5%, from $9.4 million for the three months ended September 30, 2005. The increase from the comparable prior year period is primarily attributed to increases of: $0.7 million related to the operations acquired in the Atlantic Liberty merger (including amortization of the core deposit intangible and non-compete contracts), and, excluding Atlantic Liberty, $0.8 million in employee salary and benefit expenses related to additional employees for one new branch, the business banking initiative and the internet banking division, and the expensing of stock options ($0.1 million), $0.4 million in occupancy and equipment costs primarily related to rental expense due to new branch leases (including the new branches scheduled to open in the first quarter of 2007), and $0.1 million in data processing expense due to volume increases. These increases were partially offset by a decrease in professional services of $0.5 million, primarily attributed to the expensing of $0.5 million in the prior year period for expenses incurred in connection with terminated negotiations for an acquisition of another financial institution. Management continues to monitor expenditures resulting in efficiency ratios of 57.0% and 49.1% for three-month periods ended September 30, 2006 and 2005, respectively.

Net income for the three months ended September 30, 2006 was $5.3 million, a decrease of $0.7 million or 11.1%, as compared to $6.0 million for the three months ended September 30, 2005. Diluted earnings per share were $0.27 for the three month period ended September 30, 2006 and $0.33 for the comparable 2005 period.

Return on average equity was 10.2% for the three months ended September 30, 2006 compared to 14.2% for the three months ended September 30, 2005. Return on average assets was 0.8% for the three months ended September 30, 2006 compared to 1.1% for the three months ended September 30, 2005.

Earnings Summary - Nine months Ended September 30, 2006

Net interest income for the nine months ended September 30, 2006 was $50.8 million, a decrease of $0.4 million, or 0.7 % from $51.2 million for the nine months ended September 30, 2005. An increase in the average balance of interest-earning assets of $305.6 million to $2,376.7 million was offset by a decrease in the net interest spread of 48 basis points to 2.61% for the nine months ended September 30, 2006 from 3.09% for the comparable period in 2005. The yield on interest-earning assets increased 20 basis points to 6.46% for the nine months ended September 30, 2006 from 6.26% in the nine months ended September 30, 2005. However, this was more than offset by an increase in the cost of funds of 68 basis points to 3.85% for the nine months ended September 30, 2006 from 3.17% for the comparable prior year period.

The increase in the yield of interest-earning assets is primarily due to an increase of $353.9 million in the average balance of the higher-yielding loan portfolio to $2,018.3 million, combined with a $63.9 million decrease in the average balance of the lower-yielding securities portfolios. The yield on the mortgage loan portfolio increased 1 basis point to 6.79% for the nine months ended September 30, 2006 from 6.78% for the nine months ended September 30, 2005. The yield on the mortgage loan portfolio, excluding prepayment penalty income, increased 8 basis points for the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005. This increase is due to the average rate of 7.34% on new mortgage loans originated during the nine months ended September 30, 2006 being above the average rate on both the loan portfolio and loans which were paid-in-full during the period. In an effort to increase the yield on interest-earning assets, we continued to fund a portion of the growth in the higher-yielding mortgage loan portfolio through repayments received on the lower-yielding securities portfolio.

The increase in the cost of interest-bearing liabilities is primarily attributed to the Federal Reserve increasing overnight rates at seventeen consecutive meetings through June 30 2006. This resulted in an increase in our cost of funds. The cost of certificate of deposits, savings accounts and money market accounts increased 70 basis points, 75 basis points and 136 basis points, respectively, for the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005, resulting in an increase in the cost of due to depositors of 89 basis points for the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005. The cost of borrowed funds also increased 41 basis points to 4.67% for the nine months ended September 30, 2006 as compared to the nine months ended September 30, 2005.

The net interest margin decreased 44 basis points to 2.85% for the nine months ended September 30, 2006 from 3.29% for the nine months ended September 30, 2005. Excluding prepayment penalty income, the net interest margin would have been 2.69% and 3.10% for the nine month periods ended September 30, 2006 and 2005, respectively.

Non-interest income increased $1.7 million, or 31.3%, for the nine months ended September 30, 2006 to $7.2 million, as compared to $5.5 million for the nine months ended September 30, 2005. This was attributed to increases of: $0.5 million in loan fees, $0.4 million in dividends received on Federal Home Loan Bank of New York (“FHLB-NY”) stock, $0.3 million in BOLI dividends and $0.4 million in other income.

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Flushing Financial Corporation

October 17, 2006

Page Four

Non-interest expense was $31.0 million for the nine months ended September 30, 2006, an increase of $3.6 million, or 13.1%, from $27.4 million for the nine months ended September 30, 2005. The increase from the comparable prior year period is primarily attributed to increases of: $0.7 million related to the operations acquired in the Atlantic Liberty merger (including amortization of the core deposit intangible and non-compete contracts), and, excluding Atlantic Liberty, $1.7 million in employee salary and benefit expenses related to additional employees for one new branch, the business banking initiative, and the internet banking division, and the expensing of stock options ($0.3 million), $0.8 million in occupancy and equipment costs primarily related to rental expense due to new branch leases (including the new branches scheduled to open in the first quarter of 2007), and $0.3 million in data processing expense due to volume increases. These increases were partially offset by a decrease in professional services of $0.3 million, primarily attributed to the expensing of $0.5 million in the prior year period for expenses incurred in connection with terminated negotiations for an acquisition of another financial institution. Management continues to monitor expenditures resulting in efficiency ratios of 53.5% and 48.4% for nine-month periods ended September 30, 2006 and 2005, respectively.

Net income for the nine months ended September 30, 2006 was $16.6 million, a decrease of $1.2 million or 6.8%, as compared to $17.8 million for the nine months ended September 30, 2005. Diluted earnings per share were $0.89 for the nine month period ended September 30, 2006 and $0.99 for the comparable 2005 period.

Return on average equity was 11.8% for the nine months ended September 30, 2006 compared to 14.6% for the nine months ended September 30, 2005. Return on average assets was 0.9% for the nine months ended September 30, 2006 compared to 1.1% for the nine months ended September 30, 2005.

Balance Sheet Summary

At September 30, 2006, total assets were $2,736.9 million, an increase of $383.7 million, or 16.3%, from $2,353.2 million at December 31, 2005, with $170.9 million of the increase attributed to the Atlantic Liberty acquisition. Total loans, net increased $347.5 million, or 18.5%, during the nine months ended September 30, 2006 to $2,229.3 million from $1,881.9 million at December 31, 2005, with the acquisition of Atlantic Liberty adding $116.2 million. At September 30, 2006, loans in process totaled $274.7 million, compared to $189.5 million at September 30, 2005 and $179.4 million at December 31, 2005.

The following table shows loan originations and purchases for the periods indicated.

		For the three months				For the nine months
		ended September 30,				ended September 30,
(In thousands)		2006		2005		2006		2005
Multi-family residential	$	38,160	$	49,183	$	102,819	$	186,027
Commercial real estate		39,042		24,246		113,369		80,743
One-to-four family – mixed-use property		48,293		56,569		114,611		150,367
One-to-four family – residential		2,350		3,309		8,866		10,733
Construction		28,374		18,997		59,701		35,351
Commercial business and other loans		18,343		7,744		55,521		20,460
Total	$	174,562	$	160,048	$	454,887	$	483,681

The above table includes loan purchases of $3.1 million and $5.1 million for the three- and nine-month periods ended September 30, 2006, respectively. There were no loans purchased for the three- and nine-month periods ended September 30, 2005.

As the Bank continues to increase its loan portfolio, management continues to adhere to the Bank’s strict underwriting standards. As a result, the Bank has been able to minimize charge-offs of losses from impaired loans and maintain asset quality. Non-performing assets were $3.3 million at September 30, 2006 compared to $2.5 million at December 31, 2005 and $2.0 million at September 30, 2005. Total non-performing assets as a percentage of total assets was 0.12% at September 30, 2006 as compared to 0.10% at December 31, 2005 and 0.09% at September 30, 2005. The ratio of allowance for loan losses to total non-performing loans was 216% at September 30, 2006, compared to 260% at December 31, 2005 and 318% at September 30, 2005.

During the nine months ended September 30, 2006, mortgage-backed securities decreased $0.6 million to $300.6 million. In the third quarter, mortgage-backed securities of $30.8 million acquired in the Atlantic Liberty acquisition were sold, and new investments were purchased, which better matched our investment objectives. Other securities decreased $0.1 million to $36.5 million and primarily consists of securities issued by government agencies and mutual or bond funds that invest in government and government agency securities.

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Flushing Financial Corporation

October 17, 2006

Page Five

During 2006, the Bank purchased an additional $10.0 million of Bank Owned Life Insurance (“BOLI”). The Bank also acquired $2.4 million of BOLI through the merger. The Bank utilizes BOLI to fund a substantial portion of its employee benefit costs. The tax advantages of BOLI allow a return that is comparable to, or better than, other investments.

Total liabilities were $2,521.7 million at September 30, 2006, an increase of $344.9 million, or 15.9%, from December 31, 2005, with $144.3 million of the increase attributed to the Atlantic Liberty acquisition. During the nine months ended September 30, 2006, due to depositors increased $262.9 million to $1,710.8 million, with $105.3 million attributed to Atlantic Liberty. The deposit growth is primarily a result of an increase of $156.1 million in certificates of deposit, of which $64.2 million are brokered deposits, while core deposits increased $106.9 million. Borrowed funds increased $70.1 million. In addition, mortgagors’ escrow deposits increased $9.0 million during the nine months ended September 30, 2006.

Total stockholders’ equity increased $38.8 million, or 22.0%, to $215.3 million at September 30, 2006 from $176.5 million at December 31, 2005. This is primarily due to $26.6 million for the issuance of stock for the acquisition of Atlantic Liberty, net income of $16.6 million for the nine months ended September 30, 2006 and a $1.4 million cumulative adjustment related to the adoption of SFAS No. 123R, Share-Based Compensation, which were partially offset by $5.2 million in treasury shares purchased through the Company’s stock repurchase program, and $6.0 million of cash dividends declared and paid during the nine months ended September 30, 2006. The exercise of stock options increased stockholders’ equity by $3.3 million, including the income tax benefit realized by the Company upon the exercise of the options. Book value per share was $10.19 at September 30, 2006, compared to $9.07 per share at December 31, 2005 and $8.87 per share at September 30, 2005.

Under its current stock repurchase program, the Company repurchased 317,000 shares during the nine months ended September 30, 2006, at a total cost of $5.2 million, or an average of $16.53 per share. At September 30, 2006, 457,650 shares remain to be repurchased under the current stock repurchase program. Through September 30, 2006, the Company had repurchased approximately 48% of the common shares issued in connection with the Company’s initial public offering at a cost of $117.0 million.

“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 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”, “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.

Flushing Financial Corporation is the holding company for Flushing Savings Bank, FSB, a federally chartered stock savings bank insured by the Federal Deposit Insurance Corporation (FDIC). The Bank conducts its business through twelve banking offices located in Queens, Brooklyn, Manhattan and Nassau County.

Additional information on Flushing Financial Corporation may be obtained by visiting the Company’s web site at http://www.flushingsavings.com.

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Flushing Financial Corporation October 17, 2006 – Page Six

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands Except Per Share Data)

(Unaudited)

				September 30,	December 31,
				2006	2005
ASSETS
Cash and due from banks				$                18,600	$                26,754
Securities available for sale:
	Mortgage-backed securities			300,563	301,194
	Other securities			36,484	36,567
Loans:
	Multi-family residential			829,933	788,071
	Commercial real estate			503,690	399,081
	One-to-four family — mixed-use property			561,585	477,775
	One-to-four family — residential			167,107	134,641
	Co-operative apartments			8,432	2,161
	Construction			99,618	49,522
	Small Business Administration			14,094	9,239
	Commercial business and other			42,542	19,362
	Net unamortized premiums and unearned loan fees			9,480	8,409
	Allowance for loan losses			(7,134)	(6,385)
			Net loans	2,229,347	1,881,876
Interest and dividends receivable				12,631	10,554
Bank premises and equipment, net				19,781	7,238
Federal Home Loan Bank of New York stock				32,223	29,622
Bank owned life insurance				40,075	26,526
Goodwill				14,167	3,905
Core Deposit Intangible				3,396	-
Other assets				29,666	28,972
			Total assets	$           2,736,933	$           2,353,208
LIABILITIES
Due to depositors:
	Non-interest bearing			$                67,331	$                58,678
	Interest-bearing:
		Certificate of deposit accounts		1,054,234	898,157
		Savings accounts		271,104	273,753
		Money market accounts		270,042	175,247
		NOW accounts		48,095	42,029
			Total interest-bearing deposits	1,643,475	1,389,186
Mortgagors' escrow deposits				28,425	19,423
Borrowed funds				520,915	510,810
Securities sold under agreements to repurchase				238,900	178,900
Other liabilities				22,636	19,744
			Total liabilities	2,521,682	2,176,741
STOCKHOLDERS' EQUITY
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued)				-	-
Common stock ($0.01 par value; 40,000,000 shares authorized; 21,165,011
	shares and 19,466,894 shares issued at September 30, 2006 and December 31,
	2005, respectively; 21,115,105 shares and 19,465,844 shares outstanding at
	September 30, 2006 and December 31, 2005, respectively)			212	195
Additional paid-in capital				69,871	39,635
Treasury stock (49,906 shares and 1,050 shares at September 30, 2006
	and December 31, 2005, respectively)			(830)	(12)
Unearned compensation				(3,084)	(4,159)
Retained earnings				154,356	146,068
Accumulated other comprehensive loss, net of taxes				(5,274)	(5,260)
			Total stockholders' equity	215,251	176,467
			Total liabilities and stockholders' equity	$           2,736,933	$           2,353,208

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Flushing Financial Corporation October 17, 2006 – Page Seven

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except Per Share Data)

(Unaudited)

		For the three months				For the nine months
		ended September 30,				ended September 30,
		2006		2005		2006		2005
Interest and dividend income
Interest and fees on loans	$	37,188	$	30,102	$	103,037	$	84,603
Interest and dividends on securities:
Interest		4,013		3,888		11,341		12,410
Dividends		84		82		237		244
Other interest income		188		26		616		43
Total interest and dividend income		41,473		34,098		115,231		97,300
Interest expense
Deposits		15,225		8,873		39,959		24,644
Other interest expense		9,024		8,086		24,472		21,482
Total interest expense		24,249		16,959		64,431		46,126
Net interest income		17,224		17,139		50,800		51,174
Provision for loan losses		-		-		-		-
Net interest income after provision for loan losses		17,224		17,139		50,800		51,174
Non-interest income
Loan fee income		636		484		2,145		1,621
Banking services fee income		386		350		1,096		1,086
Net gain on sale of loans held for sale		158		400		518		542
Net gain on sale of loans		-		-		100		19
Net gain on sale of securities		-		-		81		-
Federal Home Loan Bank of New York stock dividends		435		336		1,194		768
Bank owned life insurance		441		288		1,112		852
Other income		329		231		932		577
Total non-interest income		2,385		2,089		7,178		5,465
Non-interest expense
Salaries and employee benefits		5,318		4,384		14,885		13,075
Occupancy and equipment		1,580		996		3,950		2,970
Professional services		965		1,441		2,899		3,220
Data processing		681		563		1,975		1,632
Depreciation and amortization		439		379		1,170		1,180
Other operating expenses		2,195		1,670		6,116		5,319
Total non-interest expense		11,178		9,433		30,995		27,396
Income before income taxes		8,431		9,795		26,983		29,243
Provision for income taxes
Federal		2,574		3,020		8,378		9,005
State and local		545		800		1,976		2,400
Total taxes		3,119		3,820		10,354		11,405
Net income	$	5,312	$	5,975	$	16,629	$	17,838
Basic earnings per share	$	0.27	$	0.34	$	0.91	$	1.02
Diluted earnings per share	$	0.27	$	0.33	$	0.89	$	0.99
Dividends per share	$	0.11	$	0.10	$	0.33	$	0.30

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Flushing Financial Corporation October 17, 2006 – Page Eight

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands Except Share Data)

(Unaudited)

	At or For the Three Months				At or For the Nine Months
	Ended September 30,				Ended September 30,
	2006		2005		2006		2005
Per Share Data
Basic earnings per share	$0.27		$0.34		$0.91		$1.02
Diluted earnings per share	$0.27		$0.33		$0.89		$0.99
Average number of shares outstanding for:
Basic earnings per share computation	19,451,788		17,580,898		18,349,236		17,515,780
Diluted earnings per share computation	19,751,863		18,033,743		18,644,743		17,991,306
Book value per share (based on 21,115,105
and 19,336,708 shares outstanding at
September 30, 2006 and 2005, respectively)	$10.19		$8.87		$10.19		$8.87
Average Balances
Total loans, net	$2,165,583		$1,775,638		$2,018,291		$1,664,413
Total interest-earning assets	2,532,407		2,160,803		2,376,687		2,071,063
Total assets	2,674,937		2,262,929		2,494,905		2,171,367
Total due to depositors	1,612,938		1,263,798		1,503,121		1,239,645
Total interest-bearing liabilities	2,381,900		2,026,155		2,230,597		1,938,143
Stockholders' equity	208,140		168,010		187,517		163,294
Performance Ratios (1)
Return on average assets	0.79	%	1.06	%	0.89	%	1.10	%
Return on average equity	10.21		14.23		11.82		14.57
Yield on average interest-earning assets	6.55		6.31		6.46		6.26
Cost of average interest-bearing liabilities	4.07		3.35		3.85		3.17
Interest rate spread during period	2.48		2.96		2.61		3.09
Net interest margin	2.72		3.17		2.85		3.29
Non-interest expense to average assets	1.67		1.67		1.66		1.68
Efficiency ratio	57.00		49.06		53.53		48.37
Average interest-earning assets to average
interest-bearing liabilities	1.06	X	1.07	X	1.07	X	1.07	X

(1) Ratios for the quarters and nine months ended September 30, 2006 and 2005 are presented on an annualized basis.

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Flushing Financial Corporation October 17, 2006 – Page Nine

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands)

(Unaudited)

	At or for the nine		At or for the year
	months ended		ended
	September 30, 2006		December 31, 2005
Selected Financial Ratios and Other Data
Regulatory capital ratios (for Flushing Savings Bank only):
Tangible capital (minimum requirement = 1.5%)	6.95	%	7.14	%
Leverage and core capital (minimum requirement = 3%)	6.95		7.14
Total risk-based capital (minimum requirement = 8%)	11.09		12.12
Capital ratios:
Average equity to average assets	7.52	%	7.47	%
Equity to total assets	7.86		7.50
Asset quality:
Non-performing loans	$3,300		$2,452
Non-performing assets	3,300		2,452
Net charge-offs	4		148
Asset quality ratios:
Non-performing loans to gross loans	0.15	%	0.13	%
Non-performing assets to total assets	0.12		0.10
Allowance for loan losses to gross loans	0.32		0.34
Allowance for loan losses to non-performing assets	216.19		260.39
Allowance for loan losses to non-performing loans	216.19		260.39
Full-service customer facilities	12		9

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Flushing Financial Corporation October 17, 2006– Page Ten

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

NET INTEREST MARGIN

(Dollars in Thousands)

(Unaudited)

		For the three months ended September 30,
		2006						2005
		Average			Yield/			Average			Yield/
		Balance		Interest	Cost			Balance		Interest	Cost
Assets		(Dollars in thousands)
Interest-earning assets:
Mortgage loans, net (1)	$	2,115,274	$	36,212	6.85	%	$	1,751,355	$	29,701	6.78	%
Other loans, net (1)		50,309		976	7.76			24,283		401	6.61
Total loans, net		2,165,583		37,188	6.87			1,775,638		30,102	6.78
Mortgage-backed securities		314,101		3,641	4.64			342,765		3,595	4.20
Other securities		37,504		456	4.86			38,990		375	3.85
Total securities		351,605		4,097	4.66			381,755		3,970	4.16
Interest-earning deposits and
federal funds sold		15,219		188	4.94			3,410		26	3.05
Total interest-earning assets		2,532,407		41,473	6.55			2,160,803		34,098	6.31
Other assets		142,530						102,126
Total assets	$	2,674,937					$	2,262,929
Liabilities and Equity
Interest-bearing liabilities:
Deposits:
Passbook accounts	$	271,591		1,036	1.53		$	252,874		677	1.07
NOW accounts		46,696		53	0.45			41,713		53	0.51
Money market accounts		272,213		2,756	4.05			224,860		1,387	2.47
Certificate of deposit accounts		1,022,438		11,364	4.45			744,351		6,741	3.62
Total due to depositors		1,612,938		15,209	3.77			1,263,798		8,858	2.80
Mortgagors' escrow accounts		26,795		16	0.24			25,410		15	0.24
Total deposits		1,639,733		15,225	3.71			1,289,208		8,873	2.75
Borrowed funds		742,167		9,024	4.86			736,947		8,086	4.39
Total interest-bearing liabilities		2,381,900		24,249	4.07			2,026,155		16,959	3.35
Non interest-bearing deposits		64,642						52,499
Other liabilities		20,255						16,265
Total liabilities		2,466,797						2,094,919
Equity		208,140						168,010
Total liabilities and equity	$	2,674,937					$	2,262,929
Net interest income /
net interest rate spread			$	17,224	2.48	%			$	17,139	2.96	%
Net interest-earning assets /
net interest margin	$	150,507			2.72	%	$	134,648			3.17	%
Ratio of interest-earning assets to
interest-bearing liabilities					1.06	X					1.07	X

(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.9 million and $1.2 million for the three-month periods ended September 30, 2006 and 2005, respectively.

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Flushing Financial Corporation October 17, 2006– Page Eleven

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

NET INTEREST MARGIN

(Dollars in Thousands)

(Unaudited)

		For the nine months ended September 30,
		2006						2005
		Average			Yield/			Average			Yield/
		Balance		Interest	Cost			Balance		Interest	Cost
Assets		(Dollars in thousands)
Interest-earning assets:
Mortgage loans, net (1)	$	1,976,021	$	100,677	6.79	%	$	1,642,390	$	83,555	6.78	%
Other loans, net (1)		42,270		2,360	7.44			22,023		1,048	6.34
Total loans, net		2,018,291		103,037	6.81			1,664,413		84,603	6.78
Mortgage-backed securities		302,382		10,288	4.54			365,121		11,563	4.22
Other securities		38,223		1,290	4.50			39,337		1,091	3.70
Total securities		340,605		11,578	4.53			404,458		12,654	4.17
Interest-earning deposits and
federal funds sold		17,791		616	4.62			2,192		43	2.62
Total interest-earning assets		2,376,687		115,231	6.46			2,071,063		97,300	6.26
Other assets		118,218						100,304
Total assets	$	2,494,905					$	2,171,367
Liabilities and Equity
Interest-bearing liabilities:
Deposits:
Passbook accounts	$	265,901		2,964	1.49		$	230,889		1,287	0.74
NOW accounts		42,211		151	0.48			44,230		165	0.50
Money market accounts		225,015		6,048	3.58			241,780		4,021	2.22
Certificate of deposit accounts		969,994		30,751	4.23			722,746		19,129	3.53
Total due to depositors		1,503,121		39,914	3.54			1,239,645		24,602	2.65
Mortgagors' escrow accounts		28,813		45	0.21			26,617		42	0.21
Total deposits		1,531,934		39,959	3.48			1,266,262		24,644	2.59
Borrowed funds		698,663		24,472	4.67			671,881		21,482	4.26
Total interest-bearing liabilities		2,230,597		64,431	3.85			1,938,143		46,126	3.17
Non interest-bearing deposits		59,466						51,574
Other liabilities		17,325						18,356
Total liabilities		2,307,388						2,008,073
Equity		187,517						163,294
Total liabilities and equity	$	2,494,905					$	2,171,367
Net interest income /
net interest rate spread			$	50,800	2.61	%			$	51,174	3.09	%
Net interest-earning assets /
net interest margin	$	146,090			2.85	%	$	132,920			3.29	%
Ratio of interest-earning assets to
interest-bearing liabilities					1.07	X					1.07	X

(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $2.9 million and $3.1 million for the nine-month periods ended September 30, 2006 and 2005, respectively.

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