EX-99.1 2 exh_991.htm PRESS RELEASE EdgarFiling

EXHIBIT 99.1

Flushing Financial Corporation Reports Record Second Quarter GAAP Diluted EPS of $1.05 Driven by the Sale of a Building; Core Diluted EPS of $0.39, Up 8.3% YoY Driven by 21.6% Annualized Loan Growth

Second Quarter 2016

  • GAAP diluted EPS was $1.05, up 105.9% YoY, materially impacted by the sale of one of the Bank’s branch buildings for a pre-tax gain of $33.8 million
  • Notable items in GAAP include net gains on sale of buildings and securities, net loss from fair value adjustments and prepayment penalties from the extinguishment of debt that, combined, increased diluted EPS by $0.66
  • Core diluted EPS was $0.39, up 8.3% YoY
  • Net interest margin was 2.99%, compared to 3.03% for the second quarter of 2015
  • Excluding prepayment penalty income from loans and recovered interest from nonaccrual loans, the net interest margin improved to 2.87%, an increase of four basis points QoQ
  • GAAP ROAE was 25.0%, compared with 12.7% for the second quarter of 2015
  • Core ROAE was 9.3%, compared with 9.1% for the second quarter of 2015
  • GAAP ROAA was 2.1%, compared with 1.1% for the second quarter of 2015
  • Core ROAA was 0.8%, the same as the second quarter of 2015
  • Net interest income was a record totaling $41.9 million, up 9.8% YoY

UNIONDALE, N.Y., July 26, 2016 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq:FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the three and six months ended June 30, 2016.

John R. Buran, President and Chief Executive Officer, stated: “We are pleased to report record earnings per diluted common share of $1.05 for the second quarter of 2016. The quarter’s earnings were driven by the gain recognized on the sale of one of our properties in Flushing, Queens. The planned sale is part of our greater strategy of reducing non-interest-earning assets and redeploying those assets into our growing markets.

“The current quarter’s earnings were aided by continuing the strategy of originating and purchasing multi-family, commercial real estate, and commercial business loans. Loan originations and purchases for these loans totaled $368.8 million, or 95.1%, of the total second quarter loan production of $387.9 million. This level of loan production resulted in net loans increasing a record $237.5 million, or a 21.6% annualized growth rate, while maintaining our underwriting standards. Loan originations for these loan products, excluding underlying co-operative mortgages, had an average loan-to-value of 52.7% and an average debt coverage ratio of 184%. The loan pipeline remains strong totaling $329.8 million at June 30, 2016.”

Core earnings, a non-GAAP measure, exclude the effects of net gains/losses from the sale of buildings and securities, net gains/losses from fair value adjustments, prepayment penalties from the extinguishment of debt, and the gain from life insurance proceeds.

For a reconciliation of core earnings and core diluted earnings per common share to accounting principles generally accepted in the United States (“GAAP”) net income and GAAP diluted earnings per common share, please refer to the table titled “Reconciliation of GAAP Earnings and Core Earnings."

Earnings Summary:

Quarter ended June 30, 2016 (2Q16) compared to the quarters ended June 30, 2015 (2Q15) and March 31, 2016 (1Q16)

Net Interest Income

Net interest income for 2Q16 was $41.9 million, an increase of 9.8% YoY and 1.8% QoQ.

  • Average balance of total interest-earning assets of $5,612.9 million, increased $579.2 million, or 11.5% YoY and increased $122.2 million, or 2.2% QoQ
  • Yield on interest-earning assets of 3.93% decreased 6 basis points YoY and 3 basis points QoQ
  • Cost of interest-bearing liabilities of 1.05% decreased 1 basis point YoY and 2 basis points QoQ
  • Net interest spread and net interest margin of 2.88% and 2.99%, respectively, decreased 5 basis points and 4 basis points, respectively YoY and decreased 1 basis point each QoQ
  • Includes prepayment penalty income from loans of $1.4 million, compared with $1.5 million in 2Q15 and $2.2 million in 1Q16, and recovered interest from nonaccrual loans of $0.2 million, compared with $0.1 million in 2Q15 and 1Q16
  • Excluding prepayment penalty income and recovered interest from nonaccrual loans, the yield on total loans, net, would be 4.10%, compared with 4.27% in 2Q15 and 4.13% in 1Q16, and the net interest margin would be 2.87%, compared with 2.90% in 2Q15 and 2.83% in 1Q16
  • Cost of total deposits of 0.84% decreased 2 basis points YoY but was flat QoQ
  • Cost of borrowed funds of 1.70% decreased 5 basis points YoY and 11 basis points QoQ, primarily due to the extinguishment of debt at an average cost of 4.16%

The following table shows the basis points increase (decrease) in the cost of interest-bearing liabilities:

Change in the Cost of Interest-Bearing Liabilities (bps)
 2Q16 vs.
  1Q16  2Q15 
Savings 1  3 
NOW 2  4 
Money market 3  19 
Certificate of deposit (1) (9)
Borrowings (11) (5)
Total interest-bearing liabilities (2) (1)
   

Non-interest Income

Non-interest income for 2Q16 was $37.7 million, an increase of $27.8 million YoY and $35.2 million QoQ.

  • Gain of $33.8 million recorded from the planned sale of one of our properties in Flushing, Queens (the “Building Sale”)
  • Net gain of $2.4 million recorded from the sale of $64.6 million in securities in connection with the extinguishment of debt
  • Decrease in fair value adjustments of $1.9 million compared to 2Q15 and $0.1 compared to 1Q16, which also included net gains of $0.4 million from life insurance proceeds and $0.3 million from the sale of loans

Non-interest Expense

Non-interest expense for 2Q16 was $28.5 million, an increase of $4.2 million, or 17.3%, YoY and essentially unchanged QoQ.

  • The 2Q16 includes a non-recurring penalty of $2.1 million on the prepayment of $38.0 million in repurchase agreements and a write-down of $0.8 million on one OREO property. Absent these two items, non-interest expense decreased $3.0 million, or 10.4% QoQ
  • Salaries and benefits increased YoY by $0.8 million primarily due to annual salary increases and additions in staffing but declined $2.3 million QoQ due to 1Q16 including seasonal expenses from annual restricted stock unit awards for employees and higher payroll taxes
  • Professional services increased $0.7 million YoY due to increased legal and consulting expenses but declined $0.1 QoQ
  • The efficiency ratio improved to 57.1% from 57.5% in 2Q15 and 64.5% in 1Q16

Provision for Income Taxes

The provision for income taxes in 2Q16 was $20.7 million, an increase of $11.2 million YoY and $15.1 million QoQ.

  • Increase in income before income taxes of $26.8 million YoY and $36.0 million QoQ, primarily due to the net gain from the Building Sale
  • Higher effective tax rate of 40.5% from 39.1% in 2Q15 and 37.0% in 1Q16 mainly reflects the reduced impact of preferential tax items as a result of the Building Sale

Loans:

  • Net loans were $4,674.1 million reflecting an increase of 5.4% QoQ (not annualized) and 7.0% year-to-date as we continue to focus on the origination of multi-family, commercial real estate and commercial business loans with a full relationship
  • Total loan originations and purchases were $617.1 million year-to-date, an increase of $113.7 million YoY
  • Loan purchases, which are underwritten to the same standards as organic originations, were $138.0 million year-to-date, an increase of $11.9 million YoY
  • Loan pipeline remains strong, totaling $329.8 million at June 30, 2016 compared with $330.5 million at December 31, 2015
  • Multi-family (excluding underlying co-operative mortgages), commercial real estate and one-to-four family mixed-use property mortgage loans originated during the quarter had an average loan-to-value ratio of 53.7% and an average debt coverage ratio of 184%

The following table shows the average rate received from loan originations and purchases for the periods indicated:

  For the three months ended
  June 30, March 31, June 30,
Loan type 2016 2016 2015
Mortgage loans 3.53% 3.78% 3.74%
Non-mortgage loans 4.29% 3.73% 3.87%
Total loans 3.71% 3.76% 3.79%
       

Credit Quality:

  • Credit quality continues to improve with non-performing loans totaling $21.9 million, a decrease of $4.2 million, or 15.9%, from $26.1 million at December 31, 2015
  • Classified assets totaled $44.8 million, an increase of $0.9 million, or 2.0%, from $43.9 million at December 31, 2015
  • Loans classified as troubled debt restructured totaled $8.3 million, a decrease of $1.2 million, or 12.7%, from $9.5 million at December 31, 2015
  • Strong underwriting standards coupled with our practice of obtaining updated appraisals and recording charge-offs, when necessary, has resulted in a 41.8% average loan-to-value for non-performing loans collateralized by real estate
  • Year-to-date, no provision for loan losses was recorded compared with a benefit of $1.3 million recorded in the comparable prior year period
  • Net recoveries totaled $0.7 million year-to-date, amid continued improvement in credit conditions
  • Properties obtained through foreclosure have been sold at amounts that approximate book value
  • The Bank takes a proactive approach to managing delinquent loans, including conducting site examinations and encouraging borrowers to meet with a Bank representative
  • We anticipate continued low loss content in the loan portfolio

Capital Management:

  • The Bank and Company are subject to the same regulatory capital requirements and at June 30, 2016, both were well-capitalized under all regulatory requirements
  • Year-to-date, stockholders’ equity increased $35.8 million, or 7.6% to $508.9 million due to net income of $40.0 million and an improvement in other comprehensive income of $8.7 million, mainly due to an increase in the fair value of the securities portfolio and the net impact of $4.5 million from the vesting and exercising of shares of employee and director stock plans
  • Increases above were partially offset by the declaration and payment of dividends on the Company’s common stock of $0.34 per common share totaling $9.9 million and the purchase of 378,695 treasury shares, at an average price of $19.78 per share, for a total cost of $7.5 million
  • As of June 30, 2016, 520,905 shares may still be repurchased under the currently authorized stock repurchase program, which has no expiration or maximum dollar amount
  • Book value per common share was $17.77 at June 30, 2016, compared with $16.41 at December 31, 2015
  • Tangible book value per common share, a non-GAAP measure, was $17.22, compared with $15.86 at December 31, 2015

About Flushing Financial Corporation

Flushing Financial Corporation 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, and public entities by offering a full complement of deposit, loan, and cash management services through its 19 banking offices located in Queens, Brooklyn, Manhattan, and Nassau County. The Bank also operates an online banking division, iGObanking.com®, which offers competitively priced deposit products to consumers nationwide.

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

 “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, 2015 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.

- Statistical Tables Follow -


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
      
   For the three months ended For the six months ended
   June 30, March 31, June 30, June 30,
   2016
 2016
 2015
 2016
 2015
          
Interest and Dividend Income          
Interest and fees on loans $48,413  $47,558  $44,084  $95,971  $87,618 
Interest and dividends on securities:          
Interest  6,510   6,592   5,988   13,102   11,858 
Dividends  120   119   118   239   236 
Other interest income  48   94   32   142   53 
Total interest and dividend income  55,091   54,363   50,222   109,454   99,765 
            
Interest Expense          
Deposits  8,097   7,973   7,437   16,070   14,895 
Other interest expense  5,105   5,257   4,645   10,362   9,176 
Total interest expense  13,202   13,230   12,082   26,432   24,071 
            
Net Interest Income  41,889   41,133   38,140   83,022   75,694 
Benefit for loan losses  -   -   (516)  -   (1,250)
Net Interest Income After Benefit for Loan Losses  41,889   41,133   38,656   83,022   76,944 
            
Non-interest Income          
Banking services fee income  973   976   898   1,949   1,782 
Net gain on sale of securities  2,363   -   64   2,363   64 
Net gain on sale of loans  3   341   47   344   49 
Net gain on sale of buildings  33,814   -   6,537   33,814   6,537 
Net (loss) gain from fair value adjustments  (1,115)  (987)  768   (2,102)  173 
Federal Home Loan Bank of New York stock dividends  582   623   457   1,205   975 
Gains from life insurance proceeds  -   411   -   411   - 
Bank owned life insurance  694   695   715   1,389   1,432 
Other income  403   481   461   884   865 
Total non-interest income  37,717   2,540   9,947   40,257   11,877 
            
Non-interest Expense          
Salaries and employee benefits  13,968   16,261   13,157   30,229   27,823 
Occupancy and equipment  2,352   2,370   2,635   4,722   5,348 
Professional services  2,027   2,150   1,350   4,177   3,129 
FDIC deposit insurance  940   904   811   1,844   1,560 
Data processing  1,199   1,091   1,172   2,290   2,247 
Depreciation and amortization  1,062   1,032   867   2,094   1,535 
Other real estate owned/foreclosure expense  405   153   87   558   607 
Prepayment penalty on borrowings  2,082   -   -   2,082   - 
Other operating expenses  4,419   4,536   4,169   8,955   7,938 
Total non-interest expense  28,454   28,497   24,248   56,951   50,187 
            
Income Before Income Taxes  51,152   15,176   24,355   66,328   38,634 
            
Provision for Income Taxes          
Federal  15,203   4,747   7,155   19,950   11,407 
State and local  5,514   868   2,366   6,382   3,660 
Total taxes  20,717   5,615   9,521   26,332   15,067 
            
Net Income $30,435  $9,561  $14,834  $39,996  $23,567 
            
            
Basic earnings per common share $1.05  $0.33  $0.51  $1.38  $0.80 
Diluted earnings per common share $1.05  $0.33  $0.51  $1.38  $0.80 
Dividends per common share $0.17  $0.17  $0.16  $0.34  $0.32 
            


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
         
    June 30, March 31, December 31,
    2016 2016 2015
ASSETS      
Cash and due from banks$50,165  $51,417  $42,363 
Securities held-to-maturity:     
 Other securities 28,410   7,885   6,180 
Securities available for sale:     
 Mortgage-backed securities 580,500   668,412   668,740 
 Other securities 368,611   372,851   324,657 
Loans:      
 Multi-family residential 2,159,138   2,039,794   2,055,228 
 Commercial real estate 1,146,400   1,058,028   1,001,236 
 One-to-four family ― mixed-use property 566,702   571,846   573,043 
 One-to-four family ― residential 190,251   191,158   187,838 
 Co-operative apartments 7,571   8,182   8,285 
 Construction 9,899   7,472   7,284 
 Small Business Administration 14,718   14,701   12,194 
 Taxi medallion 20,641   20,757   20,881 
 Commercial business and other 564,084   531,322   506,622 
 Net unamortized premiums and unearned loan fees 16,875   15,281   15,368 
 Allowance for loan losses (22,198)  (21,993)  (21,535)
   Net loans 4,674,081   4,436,548   4,366,444 
Interest and dividends receivable 20,390   19,369   18,937 
Bank premises and equipment, net 24,470   25,130   25,622 
Federal Home Loan Bank of New York stock 67,195   53,368   56,066 
Bank owned life insurance 115,100   114,405   115,536 
Goodwill  16,127   16,127   16,127 
Other assets 41,678   47,555   63,962 
   Total assets$5,986,727  $5,813,067  $5,704,634 
         
LIABILITIES     
Due to depositors:     
 Non-interest bearing$317,112  $280,450  $269,469 
 Interest-bearing:     
  Certificate of deposit accounts 1,411,550   1,362,062   1,403,302 
  Savings accounts 260,528   268,057   261,748 
  Money market accounts 452,589   485,774   472,489 
  NOW accounts 1,453,540   1,610,932   1,448,695 
   Total interest-bearing deposits 3,578,207   3,726,825   3,586,234 
Mortgagors' escrow deposits 45,905   56,612   36,844 
Borrowed funds 1,444,751   1,190,789   1,271,676 
Other liabilities 91,869   70,612   67,344 
   Total liabilities 5,477,844   5,325,288   5,231,567 
         
STOCKHOLDERS' EQUITY     
Preferred stock (5,000,000 shares authorized; none issued) -   -   - 
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares     
 issued at June 30, 2016, March 31, 2016 and December 31, 2015; 28,631,243     
 shares, 28,986,566 shares and 28,830,558 shares outstanding at June 30, 2016,     
 March 31, 2016 and December 31, 2015, respectively) 315   315   315 
Additional paid-in capital 212,613   211,735   210,652 
Treasury stock (2,899,352 shares, 2,544,029 shares and 2,700,037 shares at     
 June 30, 2016, March 31, 2016 and December 31, 2015, respectively) (53,351)  (46,307)  (48,868)
Retained earnings 346,218   320,725   316,530 
Accumulated other comprehensive income (loss), net of taxes 3,088   1,311   (5,562)
   Total stockholders' equity 508,883   487,779   473,067 
         
   Total liabilities and stockholders' equity$5,986,727  $5,813,067  $5,704,634 
         


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)
      
  At or for the three months ended At or for the six months ended 
  June 30, March 31, June 30, June 30, 
  2016
 2016
 2015
 2016
 2015
 
Per Share Data           
Basic earnings per share $1.05  $0.33  $0.51  $1.38  $0.80  
Diluted earnings per share $1.05  $0.33  $0.51  $1.38  $0.80  
Average number of shares outstanding for:           
Basic earnings per common share computation  29,022,122   29,096,663   29,245,792   29,059,393   29,321,203  
Diluted earnings per common share computation  29,034,454   29,111,172   29,268,138   29,072,813   29,342,940  
Shares outstanding  28,631,243   28,986,566   28,923,000   28,631,243   28,923,000  
Book value per common share (1) $17.77  $16.83  $15.98  $17.77  $15.98  
Tangible book value per common share (2) $17.22  $16.29  $15.43  $17.22  $15.43  
            
Stockholders' Equity           
Stockholders' equity  508,883   487,779   462,136   508,883   462,136  
Tangible stockholders' equity  493,163   472,059   446,410   493,163   446,410  
            
Average Balances           
Total loans, net $4,567,019  $4,389,331  $3,981,908  $4,478,175  $3,915,185  
Total interest-earning assets  5,612,935   5,490,714   5,033,694   5,551,825   4,948,144  
Total assets  5,897,858   5,774,750   5,309,463   5,836,304   5,221,699  
Total due to depositors  3,779,256   3,746,268   3,415,938   3,762,762   3,368,274  
Total interest-bearing liabilities  5,046,162   4,959,563   4,542,899   5,002,863   4,466,793  
Stockholders' equity  486,261   479,424   465,618   482,843   462,877  
            
Performance Ratios (3)           
Return on average assets  2.06 % 0.66 % 1.12 % 1.37 % 0.90 %
Return on average equity  25.04   7.98   12.74   16.57   10.18  
Yield on average interest-earning assets  3.93   3.96   3.99   3.94   4.03  
Cost of average interest-bearing liabilities  1.05   1.07   1.06   1.06   1.08  
Interest rate spread during period  2.88   2.89   2.93   2.88   2.95  
Net interest margin  2.99   3.00   3.03   2.99   3.06  
Non-interest expense to average assets  1.93   1.97   1.83   1.95   1.92  
Efficiency ratio (4)  57.09   64.50   57.54   60.78   61.17  
Average interest-earning assets to average           
interest-bearing liabilities  1.11 X 1.11 X 1.11 X 1.11 X 1.11 X
            
            
(1)  Calculated by dividing common stockholders’ equity by shares outstanding.
(2)  Calculated by dividing tangible common stockholders’ equity, a non-GAAP measure by shares outstanding. Tangible common stockholders’ equity is total stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Reconciliation of GAAP Earnings and Core Earnings”.
(3)  Ratios are presented on an annualized basis.
(4)  Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding OREO expense, prepayment penalties from the extinguishment of debt and the net gain/loss from the sale of OREO) by the total of net interest income and non-interest income (excluding net gains and losses from fair value adjustments, net gain and losses from the sale of securities, life insurance proceeds, and sale of buildings). See “Reconciliation of GAAP Earnings and Core Earnings”.
  


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
          
  At or for the six  At or for the year  At or for the six 
  months ended  ended  months ended 
  June 30, 2016  December 31, 2015  June 30, 2015 
          
Selected Financial Ratios and Other Data         
          
Regulatory capital ratios (for Flushing Financial Corporation):         
Tier 1 capital $516,551   $490,919   $478,658  
Common equity Tier 1 capital  490,015    462,883    450,169  
Total risk-based capital  538,749    512,454    501,742  
          
Tier 1 leverage capital (well capitalized = 5%)  8.80 %  8.84 %  9.06 %
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  11.45    11.83    12.20  
Tier 1 risk-based capital (well capitalized = 8.0%)  12.07    12.55    12.97  
Total risk-based capital (well capitalized = 10.0%)  12.59    13.10    13.59  
          
Regulatory capital ratios (for Flushing Bank only):         
Tier 1 capital $522,961   $494,690   $483,407  
Common equity Tier 1 capital  522,961    494,690    483,407  
Total risk-based capital  545,159    516,226    506,491  
          
Tier 1 leverage capital (well capitalized = 5%)  8.89 %  8.89 %  9.13 %
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  12.20    12.62    13.07  
Tier 1 risk-based capital (well capitalized = 8.0%)  12.20    12.62    13.07  
Total risk-based capital (well capitalized = 10.0%)  12.72    13.17    13.70  
          
Capital ratios:         
Average equity to average assets  8.27 %  8.68 %  8.86 %
Equity to total assets  8.50    8.29    8.62  
Tangible common equity to tangible assets (1)  8.26    8.04    8.35  
          
Asset quality:         
Non-accrual loans (2) $20,381   $22,817   $27,462  
Non-performing loans  21,923    26,077    28,559  
Non-performing assets  25,591    31,009    32,814  
Net charge-offs/ (recoveries)  (663)   2,605    762  
          
Asset quality ratios:         
Non-performing loans to gross loans  0.47 %  0.60 %  0.71 %
Non-performing assets to total assets  0.43    0.54    0.61  
Allowance for loan losses to gross loans  0.47    0.49    0.57  
Allowance for loan losses to non-performing assets  86.74    69.45    70.35  
Allowance for loan losses to non-performing loans  101.25    82.58    80.83  
          
Full-service customer facilities  19    19    18  
          
(1) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(2) Excludes performing non-accrual TDR loans.
 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
   
 For the three months ended 
 June 30, 2016 March 31, 2016 June 30, 2015 
 Average Yield/ Average Yield/ Average Yield/ 
 BalanceInterestCost BalanceInterestCost BalanceInterestCost 
Interest-earning Assets:            
Mortgage loans, net$3,983,615 $42,969 4.31%$3,839,325 $42,454 4.42%$3,476,163 $39,737 4.57%
Other loans, net 583,404  5,444 3.73  550,006  5,104 3.71  505,745  4,347 3.44 
Total loans, net (1) 4,567,019  48,413 4.24  4,389,331  47,558 4.33  3,981,908  44,084 4.43 
Taxable securities:            
Mortgage-backed            
securities 599,247  3,707 2.47  658,764  4,174 2.53  706,510  4,340 2.46 
Other securities 249,956  2,133 3.41  229,991  1,745 3.03  148,244  887 2.39 
Total taxable securities 849,203  5,840 2.75  888,755  5,919 2.66  854,754  5,227 2.45 
Tax-exempt securities: (2)            
Other securities 147,230  790 2.15  127,355  792 2.49  137,270  879 2.56 
Total tax-exempt securities 147,230  790 2.15  127,355  792 2.49  137,270  879 2.56 
Interest-earning deposits            
and federal funds sold 49,483  48 0.39  85,273  94 0.44  59,762  32 0.21 
Total interest-earning            
assets 5,612,935  55,091 3.93  5,490,714  54,363 3.96  5,033,694  50,222 3.99 
Other assets 284,923     284,036     275,769    
Total assets$5,897,858    $5,774,750    $5,309,463    
             
             
Interest-bearing Liabilities:            
Deposits:            
Savings accounts$265,856  306 0.46 $262,443  298 0.45 $268,791  291 0.43 
NOW accounts 1,612,704  1,962 0.49  1,621,779  1,922 0.47  1,475,574  1,651 0.45 
Money market accounts 483,317  681 0.56  457,895  606 0.53  331,117  307 0.37 
Certificate of deposit            
accounts 1,417,379  5,121 1.45  1,404,151  5,121 1.46  1,340,456  5,165 1.54 
Total due to depositors 3,779,256  8,070 0.85  3,746,268  7,947 0.85  3,415,938  7,414 0.87 
Mortgagors' escrow            
accounts 67,728  27 0.16  49,947  26 0.21  62,906  23 0.15 
Total interest-bearing            
deposits 3,846,984  8,097 0.84  3,796,215  7,973 0.84  3,478,844  7,437 0.86 
Borrowings 1,199,178  5,105 1.70  1,163,348  5,257 1.81  1,064,055  4,645 1.75 
Total interest-bearing            
liabilities 5,046,162  13,202 1.05  4,959,563  13,230 1.07  4,542,899  12,082 1.06 
Non interest-bearing            
demand deposits 296,597     273,937     242,732    
Other liabilities 68,838     61,826     58,214    
Total liabilities 5,411,597     5,295,326     4,843,845    
Equity 486,261     479,424     465,618    
Total liabilities and            
equity$5,897,858    $5,774,750    $5,309,463    
             
Net interest income /            
net interest rate spread $41,889 2.88% $41,133 2.89% $38,140 2.93%
             
Net interest-earning assets /            
net interest margin$566,773  2.99%$531,151  3.00%$490,795  3.03%
             
Ratio of interest-earning            
assets to interest-bearing            
liabilities  1.11X  1.11X  1.11X
             
(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $1.0 million, $1.5 million and $1.0 million for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
   
 For the six months ended 
 June 30, 2016  June 30, 2015 
 Average Yield/  Average Yield/ 
 BalanceInterestCost  BalanceInterestCost 
Interest-earning Assets:         
Mortgage loans, net$3,911,470 $85,423 4.37% $3,417,708 $79,177 4.63%
Other loans, net 566,705  10,548 3.72   497,477  8,441 3.39 
Total loans, net (1) 4,478,175  95,971 4.29   3,915,185  87,618 4.48 
Taxable securities:         
Mortgage-backed         
securities 629,006  7,881 2.51   704,520  8,721 2.48 
Other securities 239,973  3,878 3.23   139,143  1,607 2.31 
Total taxable securities 868,979  11,759 2.71   843,663  10,328 2.45 
Tax-exempt securities: (2)         
Other securities 137,293  1,582 2.30   137,627  1,766 2.57 
Total tax-exempt securities 137,293  1,582 2.30   137,627  1,766 2.57 
Interest-earning deposits         
and federal funds sold 67,378  142 0.42   51,669  53 0.21 
Total interest-earning         
assets 5,551,825  109,454 3.94   4,948,144  99,765 4.03 
Other assets 284,479      273,555    
Total assets$5,836,304     $5,221,699    
          
          
Interest-bearing Liabilities:         
Deposits:         
Savings accounts$264,150  604 0.46  $267,507  555 0.41 
NOW accounts 1,617,241  3,884 0.48   1,463,576  3,201 0.44 
Money market accounts 470,606  1,287 0.55   317,962  560 0.35 
Certificate of deposit         
accounts 1,410,765  10,242 1.45   1,319,229  10,533 1.60 
Total due to depositors 3,762,762  16,017 0.85   3,368,274  14,849 0.88 
Mortgagors' escrow         
accounts 58,838  53 0.18   55,415  46 0.17 
Total interest-bearing         
deposits 3,821,600  16,070 0.84   3,423,689  14,895 0.87 
Borrowings 1,181,263  10,362 1.75   1,043,104  9,176 1.76 
Total interest-bearing         
liabilities 5,002,863  26,432 1.06   4,466,793  24,071 1.08 
Non interest-bearing         
demand deposits 285,267      238,234    
Other liabilities 65,331      53,795    
Total liabilities 5,353,461      4,758,822    
Equity 482,843      462,877    
Total liabilities and         
equity$5,836,304     $5,221,699    
          
Net interest income /         
net interest rate spread $83,022 2.88%  $75,694 2.95%
          
Net interest-earning assets /         
net interest margin$548,962  2.99% $481,351  3.06%
          
Ratio of interest-earning         
assets to interest-bearing         
liabilities  1.11X   1.11X
          
(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $2.5 million and $1.7 million for the six months ended June 30, 2016 and 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
                 
          June 2016 vs.     June 2016 vs.
    June 30, March 31, December 31, December 2015 September 30, June 30, June 2015
(Dollars in thousands)2016
 2016
 2015
 % Change 2015
 2015
 % Change
Deposits              
Non-interest bearing$317,112  $280,450  $269,469   17.7% $257,196  $257,575   23.1%
Interest bearing:             
 Certificate of deposit             
  accounts 1,411,550   1,362,062   1,403,302   0.6%  1,386,945   1,375,506   2.6%
 Savings accounts 260,528   268,057   261,748   (0.5%)  261,400   264,718   (1.6%)
 Money market accounts 452,589   485,774   472,489   (4.2%)  438,457   399,191   13.4%
 NOW accounts 1,453,540   1,610,932   1,448,695   0.3%  1,338,715   1,357,412   7.1%
  Total interest-bearing             
   deposits 3,578,207   3,726,825   3,586,234   (0.2%)  3,425,517   3,396,827   5.3%
                 
   Total deposits$3,895,319  $4,007,275  $3,855,703   1.0% $3,682,713  $3,654,402   6.6%
                               


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
Loan Origination and Purchases
     
  For the three months For the six months ended
  June 30, March 31, June 30, June 30,
(In thousands) 2016
 2016
 2015
 2016
 2015
Multi-family residential $162,364  $69,643  $50,429  $232,007  $177,175 
Commercial real estate  114,007   62,137   57,331   176,144   143,726 
One-to-four family – mixed-use property  11,630   18,245   9,916   29,875   24,897 
One-to-four family – residential  4,195   9,493   8,975   13,688   22,078 
Co-operative apartments  470   -   450   470   450 
Construction  2,427   1,687   845   4,114   1,387 
Small Business Administration  314   6,001   5,233   6,315   6,481 
Taxi Medallion  -   -   -   -   - 
Commercial business and other  92,456   62,034   63,704   154,490   127,211 
Total $387,863  $229,240  $196,883  $617,103  $503,405 
           

 

Loan Composition
          June 30, 2016 vs.     June 2016 vs.
    June 30, March 31, December 31, December 2015 September 30, June 30, June 2015
(Dollars in thousands)2016 2016 2015 % Change 2015 2015 % Change
Loans:               
Multi-family residential$2,159,138  $2,039,794  $2,055,228   5.1%  $2,043,740  $2,017,891   7.0%
Commercial real estate 1,146,400   1,058,028   1,001,236   14.5%   857,806   726,136   57.9%
One-to-four family ―              
 mixed-use property 566,702   571,846   573,043   (1.1%)   568,401   567,060   (0.1%)
One-to-four family ― residential 190,251   191,158   187,838   1.3%   191,430   189,573   0.4%
Co-operative apartments 7,571   8,182   8,285   (8.6%)   9,122   7,681   (1.4%)
Construction 9,899   7,472   7,284   35.9%   5,671   3,673   169.5%
Small Business Administration 14,718   14,701   12,194   20.7%   10,540   12,181   20.8%
Taxi medallion 20,641   20,757   20,881   (1.1%)   21,025   21,211   (2.7%)
Commercial business and other 564,084   531,322   506,622   11.3%   479,085   472,485   19.4%
Net unamortized premiums              
 and unearned loan fees 16,875   15,281   15,368   9.8%   14,129   13,251   27.3%
Allowance for loan losses (22,198)  (21,993)  (21,535)  3.1%   (22,973)  (23,084)  (3.8%)
   Net loans$4,674,081  $4,436,548  $4,366,444   7.0%  $4,177,976  $4,008,058   16.6%
                                

 

Loan Activity  
  Three Months Ended
  June 30, December 31, March 31, September 30, June 30,
(In thousands) 2016 2015 2016 2015 2015
Loans originated and purchased$387,863  $395,592  $229,240  $334,464  $196,883 
Principal reductions (149,307)  (206,125)  (152,521)  (155,794)  (158,829)
Loans transferred to held-for-sale -   -   -   -   (300)
Loans sold  (2,310)  (1,164)  (5,515)  (8,800)  (3,601)
Loan charged-offs (102)  (2,478)  (147)  (168)  (803)
Foreclosures  -   (34)  (408)  (773)  (239)
Net change in deferred (fees) and costs 1,594   1,239   (87)  878   (23)
Net change in the allowance for loan losses (205)  1,438   (458)  111   1,007 
 Total loan activity$237,533  $188,468  $70,104  $169,918  $34,095 
                     


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)
            
   June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
Loans 90 Days Or More Past Due          
 and Still Accruing:          
Multi-family residential $574  $792  $233  $516  $- 
Commercial real estate  320   1,083   1,183   253   416 
One-to-four family - mixed-use property  635   743   611   1,293   353 
One-to-four family - residential  13   13   13   13   13 
Construction  -   570   1,000   -   - 
Commercial business and other  -   -   220   222   315 
 Total  1,542   3,201   3,260   2,297   1,097 
            
Non-accrual Loans:          
Multi-family residential  3,162   3,518   3,561   4,686   6,352 
Commercial real estate  2,299   3,295   2,398   2,407   2,694 
One-to-four family - mixed-use property  6,005   5,519   5,952   5,446   6,238 
One-to-four family - residential  8,406   8,861   10,120   10,441   11,329 
Small business administration  185   201   218   234   170 
Taxi Medallion  196   196   -   -   - 
Commercial business and other  128   511   568   3,089   679 
 Total  20,381   22,101   22,817   26,303   27,462 
            
 Total Non-performing Loans  21,923   25,302   26,077   28,600   28,559 
            
Other Non-performing Assets:          
Real estate acquired through foreclosure  3,668   4,602   4,932   4,855   4,255 
 Total  3,668   4,602   4,932   4,855   4,255 
            
 Total Non-performing Assets $25,591  $29,904  $31,009  $33,455  $32,814 
            
Non-performing Assets to Total Assets  0.43%  0.51%  0.54%  0.61%  0.61%
Allowance For Loan Losses to Non-performing Loans  101.3%  86.9%  82.6%  80.3%  80.8%
            


 

Net Charge-Offs (Recoveries)
   Three Months Ended
   June 30, March 31, December 31, September 30, June 30,
(In thousands) 2016
 2016
 2015
 2015
 2015
Multi-family residential $(183) $29  $(35) $54  $112 
Commercial real estate  -   -   -   (100)  18 
One-to-four family – mixed-use property  36   (173)  18   73   350 
One-to-four family – residential  7   (299)  97   (300)  17 
Co-operative apartments  -   -   -   -   - 
Small Business Administration  (42)  (31)  17   4   (7)
Commercial business and other  (23)  16   2,005   10   1 
Total net loan charge-offs (recoveries) $(205) $(458) $2,102  $(259) $491 
            

Core Diluted EPS, Core ROAE, Core ROAA, tangible book value per share and tangible common stockholders’ equity are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears in tabular form at the end of this release. The Company believes that these measures are useful for both investors and management to understand the effects of certain non-interest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per share and tangible common stockholders’ equity are useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.

These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
     
  Three Months Ended Six Months Ended
  June 30,March 31,June 30, June 30,June 30,
   2016  2016  2015   2016  2015 
                  
        
GAAP income before income taxes $  51,152 $  15,176 $  24,355  $  66,328 $  38,634 
        
Net (gain) loss from fair value adjustments    1,115    987    (768)    2,102    (173)
Net gain on sale of securities    (2,363)   -    (64)    (2,363)   (64)
Gain from life insurance proceeds    -    (411)   -     (411)   - 
Net gain on sale of buildings    (33,814)   -    (6,537)    (33,814)   (6,537)
Prepayment penalty on borrowings    2,082    -    -     2,082    - 
        
Core income before taxes    18,172    15,752    16,986     33,924    31,860 
        
Provision for income taxes for core income    6,851    6,041    6,359     12,892    12,160 
        
Core net income $  11,321 $  9,711 $  10,627  $  21,032 $  19,700 
        
GAAP diluted earnings per common share $  1.05 $  0.33 $  0.51  $  1.38 $  0.80 
        
Net (gain) loss from fair value adjustments, net of tax    0.02    0.02    (0.01)    0.04    -  
Net gain on sale of securities, net of tax    (0.05)   -     -      (0.05)   -  
Gain from life insurance proceeds    -     (0.01)   -      (0.01)   -  
Net gain on sale of buildings, net of tax    (0.67)   -     (0.13)    (0.67)   (0.13)
Prepayment penalty on borrowings    0.04    -     -      0.04  -  
        
Core diluted earnings per common share* $  0.39 $  0.33 $  0.36  $  0.72 $  0.67 
        
        
Core net income, as calculated above $  11,321 $  9,711 $  10,627  $  21,032 $  19,700 
Average assets    5,897,858    5,774,750    5,309,463     5,836,304    5,221,699 
Average equity    486,261    479,424    465,618     482,843    462,877 
Core return on average assets**  0.77% 0.67% 0.80%  0.72% 0.75%
Core return on average equity**  9.31% 8.10% 9.13%  8.71% 8.51%
        
        
 *  Core diluted earnings per common share may not foot due to rounding. 
**  Ratios are calculated on an annualized basis. 
        


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)
        
      June 30,December 31,
(Dollars in thousands)  20162015
Total Equity  $508,883 $473,067 
Less:      
 Goodwill   (16,127) (16,127)
 Intangible deferred tax liabilities   407  406 
  Tangible Stockholders' Common Equity$493,163 $457,346 
        
Total Assets  $5,986,727 $5,704,634 
Less:      
 Goodwill   (16,127) (16,127)
 Intangible deferred tax liabilities   407  406 
  Tangible Assets  $5,971,007 $5,688,913 
        
Tangible Stockholders' Common Equity to Tangible Assets 8.26% 8.04%
       

 

Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400