Note 12 - Income Taxes

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

12. Income Taxes

Flushing Financial Corporation files consolidated Federal and combined New York State and New York City income tax returns with its subsidiaries, with the exception of Flushing Financial Capital Trust II, Flushing Financial Capital Trust III, and Flushing Financial Capital Trust IV, which file separate Federal income tax returns as trusts, and Flushing Preferred Funding Corporation, which files a separate Federal and New York State income tax return as a real estate investment trust.

Income tax provisions are summarized as follows:

	For the three months ended June 30,						For the six months ended June 30,
(In thousands)	2014			2013			2014		2013
Federal:
Current	$	5,675		$	5,187		$	8,412	$	8,021
Deferred		(162	)		(524	)		1,859		103
Total federal tax provision		5,513			4,663			10,271		8,124
State and Local:
Current		2,102			1,724			3,368		2,305
Deferred		(17	)		(232	)		886		45
Total state and local tax provision		2,085			1,492			4,254		2,350
Total income tax provision	$	7,598		$	6,155		$	14,525	$	10,474

The effective tax rate was 39.4% and 39.0% for the three months ended June 30, 2014 and 2013, respectively, and 39.8% and 39.0% for the six months ended June 30, 2014 and 2013, respectively. The increase in the effective tax rate was primarily due to the impact of changes to the New York State tax code passed on March 31, 2014, resulting in a reduction in the Company’s deferred tax assets. We expect to see a small reduction in our effective tax rate beginning in 2015 as a result of the changes in the New York State tax code.

The effective rates differ from the statutory federal income tax rate as follows:

	For the three months ended June 30,										For the six months ended June 30,
(dollars in thousands)	2014					2013					2014					2013
Taxes at federal statutory rate	$	6,749		35.0	%	$	5,524		35.0	%	$	12,777		35.0	%	$	9,400		35.0	%
Increase (reduction) in taxes resulting from:
State and local income tax, net of Federal income tax benefit		1,355		7.0			970		6.1			2,765		7.6			1,528		5.7
Other		(506	)	(2.6	)		(339	)	(2.1	)		(1,017	)	(2.8	)		(454	)	(1.7	)
Taxes at effective rate	$	7,598		39.4	%	$	6,155		39.0	%	$	14,525		39.8	%	$	10,474		39.0	%

The Company has recorded a deferred tax asset of $25.3 million at June 30, 2014, which is included in “Other assets” in the Consolidated Statements of Financial Condition. This represents the anticipated net federal, state and local tax benefits expected to be realized in future years upon the utilization of the underlying tax attributes comprising this balance. The Company has reported taxable income for federal, state, and local tax purposes in each of the past three fiscal years. In management’s opinion, in view of the Company’s previous, current and projected future earnings trend, the probability that some of the Company’s $19.2 million deferred tax liability can be used to offset a portion of the deferred tax asset, as well as certain tax planning strategies, it is more likely than not that the deferred tax asset will be fully realized. Accordingly, no valuation allowance was deemed necessary for the deferred tax asset at June 30, 2014.