Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10. 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 the trusts, which file separate Federal income tax returns as trusts, and FPFC, which files a separate Federal income tax return as a real estate investment trust. Additionally, the Bank files New Jersey State tax returns. The Company remains subject to examination for its Federal, New York State and New York City income tax returns for the years ending on or after December 31, 2011.  The Bank remains subject to examination for its New Jersey income tax returns for the years ending on or after December 31, 2011. During the three years ended December 31, 2014, the Company did not recognize any material amounts of interest or penalties on income taxes.

Income tax provisions are summarized as follows for the years ended December 31:

	2014		2013			2012
	(In thousands)
Federal:
Current	$	18,052	$	17,808		$	17,330
Deferred		2,860		(464	)		(590	)
Total federal tax provision		20,912		17,344			16,740
State and Local:
Current		6,369		5,828			5,321
Deferred		1,292		(216	)		(214	)
Total state and local tax provision		7,661		5,612			5,107
Total income tax provision	$	28,573	$	22,956		$	21,847

The income tax provision in the Consolidated Statements of Income has been provided at effective rates of 39.2%, 37.8% and 38.9% for the years ended December 31, 2014, 2013 and 2012, respectively. The effective rates differ from the statutory federal income tax rate as follows for the years ended December 31:

	2014					2013					2012
	(Dollars in thousands)
Taxes at federal statutory rate	$	25,484		35.0	%	$	21,248		35.0	%	$	19,662		35.0	%
Increase (reduction) in taxes resulting from:
State and local income tax, net of Federal income tax benefit		4,980		6.8			3,648		6.0			3,320		5.9
Other		(1,891	)	(2.6	)		(1,940	)	(3.2	)		(1,135	)	(2.0	)
Taxes at effective rate	$	28,573		39.2	%	$	22,956		37.8	%	$	21,847		38.9	%

The components of the income taxes attributable to income from operations and changes in equity are as follows for the years ended December 31:

	2014			2013			2012
	(In thousands)
Income from operations	$	28,573		$	22,956		$	21,847
Equity:
Change in fair value of securities available for sale		9,200			(21,309	)		5,577
Current year actuarial gains (losses) of postretirement plans		(2,880	)		2,527			(340	)
Amortization of net actuarial losses and prior service credits		(311	)		521			436
Compensation expense for tax purposes in (excess) or less than that recognized for financial reporting purposes		(846	)		(443	)		303
Total income taxes	$	33,736		$	4,252		$	27,823

The components of the net deferred tax assets (liabilities) are as follows at December 31:

	2014		2013
	(In thousands)
Deferred tax asset:
Postretirement benefits	$	5,407	$	4,880
Allowance for loan losses		11,007		13,895
Stock based compensation		2,821		2,322
Depreciation		1,740		1,400
Unrealized loss on securities available for sale		-		6,612
Fair value adjustment on financial assets carried at fair value		-		2,470
Derivative financial instruments		1,025		-
Other-than-temporary impairment charges		-		1,584
Adjustment required to recognize funded status of postretirement pension plans		4,787		2,218
Other		3,023		2,336
Deferred tax asset		29,810		37,717
Deferred tax liability:
Valuation differences resulting from acquired assets and liabilities		2,764		2,805
Fair value adjustment on financial assets carried at fair value		132		-
Fair value adjustment on financial liabilities carried at fair value		14,480		14,910
Unrealized gains on securities available for sale		2,588		-
Other		2,525		1,898
Deferred tax liability		22,489		19,613
Net deferred tax asset included in other assets	$	7,321	$	18,104

The Company has recorded a deferred tax asset of $29.8 million. 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 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 $22.5 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 December 31, 2014 and 2013.

The Company does not have uncertain tax positions that are deemed material. The Company’s policy is to recognize interest and penalties on income taxes in operating expenses. During the three years ended December 31, 2014, the Company did not recognize any material amounts of interest or penalties on income taxes.