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 25, 2016

Flushing Financial Corporation
(Exact name of registrant as specified in its charter)

001-33013

(Commission File Number)

Delaware

(State or other jurisdiction of incorporation)

11-3209278

(IRS Employer Identification No.)

220 RXR Plaza, Uniondale, New York , 11556

(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 (see General Instruction A.2. below):
	[ ]	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.

On October 25, 2016, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1. Press release dated October 25, 2016

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 25, 2016	By:	/s/ Susan K. Cullen
		Susan K. Cullen
	Title:	Senior Executive Vice President and Chief Financial Officer

EX-99.1

EXHIBIT 99.1

Flushing Financial Corporation Reports Third Quarter GAAP Diluted EPS of $0.37 and Core Diluted EPS of $0.39

Reports 3.9% Annualized Loan Growth While Credit Quality Remains Strong

THIRD QUARTER 2016

• GAAP diluted EPS was $0.37, down 64.8% QoQ
  
• Core diluted EPS was $0.39, flat QoQ
• Net interest income was $41.7 million, up 6.1% YoY
• Net interest margin was 2.94%, compared to 2.99% for the second quarter of 2016
• Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, the net interest margin was 2.81%, a decrease of six basis points QoQ
• GAAP ROAE was 8.4%, compared with 9.5% for the third quarter of 2015
• Core ROAE was 8.9%, compared with 10.0% for the third quarter of 2015
• GAAP ROAA was 0.7%, compared with 0.8% for the third quarter of 2015
• Core ROAA was 0.8%, compared with 0.9% for the third quarter of 2015

UNIONDALE, N.Y., Oct. 25, 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 nine months ended September 30, 2016.

John R. Buran, President and Chief Executive Officer, stated: “We are pleased to report core earnings per diluted common share of $0.39 for the third quarter of 2016.

“Our main focus continues to be growing multi-family, commercial real estate, and commercial business loans while maintaining our conservative underwriting standards. During the quarter ended September 30, 2016, loan originations for multi-family, commercial real estate and commercial business loans totaled 26%, 30% and 36%, respectively, of total loan production. We produced solid earnings this quarter through continued strong credit quality, a small uptick in the coupon rates on loan originations, and by reducing our expenses. We have begun to successfully execute on the strategy change to increase net interest income through increasing rates as opposed to increasing volume. The interest rates on our mortgage loan pipeline increased 11 basis points to 4.05% from 3.94% at June 30, 2016. This strategy shift positions the Company to reap the benefits of an increase in rates. Conversely, the cost of funds increased four basis points to 1.03% on a linked quarter basis, as rates on certain government deposits were raised.”

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 September 30, 2016 (3Q16) compared to the quarters ended September 30, 2015 (3Q15) and June 30, 2016 (2Q16).

Net Interest Income

Net interest income for 3Q16 was $41.7 million, an increase of 6.1% YoY but a decrease of 0.4% QoQ.

• Average balance of total interest-earning assets of $5,684.4 million, increased $533.4 million, or 10.4% YoY and $71.5 million, or 1.3% QoQ
• Yield on interest-earning assets of 3.91% decreased 12 basis points YoY and 2 basis points QoQ
• Cost of interest-bearing liabilities of 1.09% remained unchanged YoY but increased 4 basis points QoQ
• Net interest spread and net interest margin of 2.82% and 2.94%, respectively, decreased 12 basis points and 11 basis points, respectively YoY and decreased 6 basis points and 5 basis points, respectively QoQ
• Includes prepayment penalty income from loans and securities of $1.5 million, compared with $2.2 million in 3Q15 and $1.4 million in 2Q16, and recovered interest from nonaccrual loans of $0.3 million, compared with $0.4 million in 3Q15 and $0.2 million in 2Q16
• Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, the yield on interest-earning assets, would be 3.78%, compared with 3.83% in 3Q15 and 3.81% in 2Q16, and the net interest margin would be 2.81%, compared with 2.85% in 3Q15 and 2.87% in 2Q16
• Cost of total deposits of 0.92% increased 4 basis points YoY and 8 basis points QoQ
• Cost of borrowed funds of 1.58% decreased 16 basis points YoY and 12 basis points QoQ, primarily due to an increase in the average balance of lower-costing short-term borrowings

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)
	3Q16 vs.
	2Q16			3Q15
Savings		1			2
NOW		8			10
Money market		10			23
Certificate of deposit		1			(6	)
Borrowings		(12	)		(16	)
Total interest-bearing liabilities		4			-

Non-interest Income

Non-interest income (excluding: net gains on sale of buildings and securities) for 3Q16 was $1.9 million, an increase of $0.3 million YoY and QoQ.

• Increase in fair value adjustments of $0.3 million compared to 3Q15 and 2Q16

Non-interest Expense

Non-interest expense for 3Q16 was $26.3 million, an increase of $2.6 million, or 10.8% YoY but a decrease of $2.2 million, or 7.7% QoQ.

• 2Q16 includes a non-recurring penalty of $2.1 million on the prepayment of $38.0 million in repurchase agreements
• Salaries and benefits increased YoY by $2.1 million primarily due to annual salary increases and additions in staffing and increased $0.8 million QoQ due to increased staffing and stock-based compensation costs as a result of the recent increase in the Company’s stock price
• 3Q16 and 2Q16 both include a write-down of $0.8 million on one OREO property
• Non-interest expense (excluding: salaries and benefits expense, prepayment penalty on borrowings and net gain/losses on sale of OREO) totaled $10.7 million, a decrease of $0.4 million, or 3.7% YoY and $0.8 million, or 7.1% QoQ
• The efficiency ratio increased to 57.4% in 3Q16 from 56.2% in 3Q15 and 57.1% in 2Q16

Provision for Income Taxes

The provision for income taxes for 3Q16 was $6.7 million, essentially unchanged YoY but was a decrease of $14.1 million QoQ.

• Income before income taxes decreased by $33.9 million QoQ, primarily due to the net gain from the Building Sale, which also reduced impact of preferential tax items in 2Q16
• Effective tax rates of 38.5% in 3Q16, 40.5% in 2Q16 and 37.7% in 3Q15.

Loans:

• Net loans were $4,719.5 million reflecting an increase of 1.0% QoQ (not annualized) and 8.1% 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
• Loan originations and purchases of multi-family, commercial real estate and commercial business loans totaled $777.5 million year-to-date, or 91.4% of loan production during the period
• Total loan originations and purchases were $850.3 million year-to-date, an increase of $12.5 million YoY
• Loan purchases, which are underwritten to the same standards as organic originations, were $138.0 million year-to-date, a decrease of $78.3 million YoY
• Loan pipeline totaled $289.3 million at September 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 41.9% and an average debt coverage ratio of 204%

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

	For the three months ended
	September 30,			June 30,			September 30,
Loan type		2016			2016			2015
Mortgage loans		3.52	%		3.53	%		3.58	%
Non-mortgage loans		4.12	%		4.29	%		3.43	%
Total loans		3.74	%		3.71	%		3.56	%

Credit Quality:

• Non-performing loans totaled $23.5 million, a decrease of $2.5 million, or 9.7%, from $26.1 million at December 31, 2015
• Classified assets totaled $48.7 million, an increase of $4.8 million, or 10.9%, from $43.9 million at December 31, 2015, primarily due to an increase in substandard taxi medallion loans
• Loans classified as troubled debt restructured totaled $8.2 million, a decrease of $1.3 million, or 13.7%, 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 40.3% 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 $1.6 million recorded in the comparable prior year period
• 3Q16 included a charge-off of $0.4 million on one SBA loan
• Net recoveries totaled $0.3 million year-to-date, amid continued improvement in credit conditions
• 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 September 30, 2016, both were well-capitalized under all regulatory requirements
• Year-to-date, stockholders’ equity increased $39.6 million, or 8.4% to $512.6 million due to net income of $50.6 million and an improvement in other comprehensive income of $5.8 million, mainly due to an increase in the fair value of the securities portfolio
• Increases noted above were partially offset by the declaration and payment of dividends on the Company’s common stock of $0.51 per common share totaling $14.8 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 September 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 $17.90 at September 30, 2016, compared with $16.41 at December 31, 2015
• Tangible book value per common share, a non-GAAP measure, was $17.35, 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 nine months ended
	September 30,			June 30,			September 30,			September 30,
		2016			2016			2015			2016			2015
Interest and Dividend Income
Interest and fees on loans	$	49,181		$	48,413		$	45,243		$	145,152		$	132,861
Interest and dividends on securities:
Interest		6,173			6,510			6,508			19,275			18,366
Dividends		121			120			119			360			355
Other interest income		49			48			43			191			96
Total interest and dividend income		55,524			55,091			51,913			164,978			151,678
Interest Expense
Deposits		8,520			8,097			7,701			24,590			22,596
Other interest expense		5,291			5,105			4,902			15,653			14,078
Total interest expense		13,811			13,202			12,603			40,243			36,674
Net Interest Income		41,713			41,889			39,310			124,735			115,004
Benefit for loan losses		-			-			(370	)		-			(1,620	)
Net Interest Income After Benefit for Loan Losses		41,713			41,889			39,680			124,735			116,624
Non-interest Income
Banking services fee income		826			973			778			2,775			2,560
Net gain on sale of securities		-			2,363			103			2,363			167
Net gain on sale of loans		240			3			306			584			355
Net gain on sale of buildings		-			33,814			-			33,814			6,537
Net loss from fair value adjustments		(823	)		(1,115	)		(1,094	)		(2,925	)		(921	)
Federal Home Loan Bank of New York stock dividends		665			582			480			1,870			1,455
Gains from life insurance proceeds		47			-			-			458			-
Bank owned life insurance		707			694			725			2,096			2,157
Other income		191			403			399			1,075			1,264
Total non-interest income		1,853			37,717			1,697			42,110			13,574
Non-interest Expense
Salaries and employee benefits		14,795			13,968			12,648			45,024			40,471
Occupancy and equipment		2,576			2,352			2,443			7,298			7,791
Professional services		1,730			2,027			1,907			5,907			5,036
FDIC deposit insurance		536			940			817			2,380			2,377
Data processing		939			1,199			1,178			3,229			3,425
Depreciation and amortization		1,169			1,062			993			3,263			2,528
Other real estate owned/foreclosure expense		273			405			110			831			717
Prepayment penalty on borrowings		-			2,082			-			2,082			-
Other operating expenses		4,259			4,419			3,612			13,214			11,550
Total non-interest expense		26,277			28,454			23,708			83,228			73,895
Income Before Income Taxes		17,289			51,152			17,669			83,617			56,303
Provision for Income Taxes
Federal		5,568			15,203			5,375			25,518			16,782
State and local		1,087			5,514			1,286			7,469			4,946
Total taxes		6,655			20,717			6,661			32,987			21,728
Net Income	$	10,634		$	30,435		$	11,008		$	50,630		$	34,575
Basic earnings per common share	$	0.37		$	1.05		$	0.38		$	1.75		$	1.18
Diluted earnings per common share	$	0.37		$	1.05		$	0.38		$	1.75		$	1.18
Dividends per common share	$	0.17		$	0.17		$	0.16		$	0.51		$	0.48

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
				September 30,			June 30,			December 31,
					2016			2016			2015
ASSETS
Cash and due from banks				$	47,880		$	50,165		$	42,363
Securities held-to-maturity:
	Other securities				33,274			28,410			6,180
Securities available for sale:
	Mortgage-backed securities				545,067			580,500			668,740
	Other securities				365,812			368,611			324,657
Loans:
	Multi-family residential				2,171,289			2,159,138			2,055,228
	Commercial real estate				1,195,266			1,146,400			1,001,236
	One-to-four family ― mixed-use property				555,691			566,702			573,043
	One-to-four family ― residential				183,993			190,251			187,838
	Co-operative apartments				7,494			7,571			8,285
	Construction				11,250			9,899			7,284
	Small Business Administration				14,339			14,718			12,194
	Taxi medallion				20,536			20,641			20,881
	Commercial business and other				564,972			564,084			506,622
	Net unamortized premiums and unearned loan fees				16,447			16,875			15,368
	Allowance for loan losses				(21,795	)		(22,198	)		(21,535	)
			Net loans		4,719,482			4,674,081			4,366,444
Interest and dividends receivable					19,833			20,390			18,937
Bank premises and equipment, net					26,000			24,470			25,622
Federal Home Loan Bank of New York stock					65,185			67,195			56,066
Bank owned life insurance					115,807			115,100			115,536
Goodwill					16,127			16,127			16,127
Other assets					44,788			41,678			63,962
			Total assets	$	5,999,255		$	5,986,727		$	5,704,634
LIABILITIES
Due to depositors:
	Non-interest bearing			$	320,060		$	317,112		$	269,469
	Interest-bearing:
		Certificate of deposit accounts			1,384,551			1,411,550			1,403,302
		Savings accounts			258,058			260,528			261,748
		Money market accounts			733,361			452,589			472,489
		NOW accounts			1,296,475			1,453,540			1,448,695
			Total interest-bearing deposits		3,672,445			3,578,207			3,586,234
Mortgagors' escrow deposits					49,276			45,905			36,844
Borrowed funds					1,360,515			1,444,751			1,271,676
Other liabilities					84,338			91,869			67,344
			Total liabilities		5,486,634			5,477,844			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 September 30, 2016, June 30, 2016 and December 31, 2015; 28,632,796
	shares, 28,631,243 shares and 28,830,558 shares outstanding at September 30, 2016,
	June 30, 2016 and December 31, 2015, respectively)				315			315			315
Additional paid-in capital					213,488			212,613			210,652
Treasury stock (2,897,799 shares, 2,899,352 shares and 2,700,037 shares at
	September 30, 2016, June 30, 2016 and December 31, 2015, respectively)				(53,373	)		(53,351	)		(48,868	)
Retained earnings					351,942			346,218			316,530
Accumulated other comprehensive income (loss), net of taxes					249			3,088			(5,562	)
			Total stockholders' equity		512,621			508,883			473,067
			Total liabilities and stockholders' equity	$	5,999,255		$	5,986,727		$	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 nine months ended
	September 30,			June 30,			September 30,			September 30,
		2016			2016			2015			2016			2015
Per Share Data
Basic earnings per share	$	0.37		$	1.05		$	0.38		$	1.75		$	1.18
Diluted earnings per share	$	0.37		$	1.05		$	0.38		$	1.75		$	1.18
Average number of shares outstanding for:
Basic earnings per common share computation		28,861,101			29,022,122			28,926,735			28,992,813			29,188,269
Diluted earnings per common share computation		28,874,979			29,034,454			28,946,496			29,006,423			29,209,369
Shares outstanding		28,632,796			28,631,243			28,830,210			28,632,796			28,830,210
Book value per common share (1)	$	17.90		$	17.77		$	16.34		$	17.90		$	16.34
Tangible book value per common share (2)	$	17.35		$	17.22		$	15.80		$	17.35		$	15.80
Stockholders' Equity
Stockholders' equity		512,621			508,883			471,190			512,621			471,190
Tangible stockholders' common equity		496,901			493,163			455,469			496,901			455,469
Average Balances
Total loans, net	$	4,686,593		$	4,567,019		$	4,069,650		$	4,548,154		$	3,967,239
Total interest-earning assets		5,684,413			5,612,935			5,151,015			5,596,342			5,016,512
Total assets		5,976,725			5,897,858			5,427,619			5,883,453			5,291,093
Total due to depositors		3,673,731			3,779,256			3,473,264			3,732,869			3,403,656
Total interest-bearing liabilities		5,059,620			5,046,162			4,643,161			5,021,921			4,526,229
Stockholders' equity		508,974			486,261			464,180			491,617			463,316
Performance Ratios (3)
Return on average assets		0.71	%		2.06	%		0.81	%		1.15	%		0.87	%
Return on average equity		8.36			25.04			9.49			13.73			9.95
Yield on average interest-earning assets		3.91			3.93			4.03			3.93			4.03
Cost of average interest-bearing liabilities		1.09			1.05			1.09			1.07			1.08
Interest rate spread during period		2.82			2.88			2.94			2.86			2.95
Net interest margin		2.94			2.99			3.05			2.97			3.06
Non-interest expense to average assets		1.76			1.93			1.75			1.89			1.86
Efficiency ratio (4)		57.37			57.09			56.18			59.64			59.46
Average interest-earning assets to average
interest-bearing liabilities		1.12	X		1.11	X		1.11	X		1.11	X		1.11	X

(1)   Calculated by dividing stockholders’ equity by shares outstanding.

(2)   Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure by shares outstanding. Tangible stockholders’ common equity is 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 nine				At or for the year			At or for the nine
	months ended				ended			months ended
	September 30, 2016				December 31, 2015			September 30, 2015
Selected Financial Ratios and Other Data
Regulatory capital ratios (for Flushing Financial Corporation):
Tier 1 capital	$	523,428			$	490,919		$	482,684
Common equity Tier 1 capital		496,605				462,883			455,153
Total risk-based capital		545,223				512,454			505,657
Tier 1 leverage capital (well capitalized = 5%)		8.80		%		8.84	%		8.93	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)		11.72				11.83			12.01
Tier 1 risk-based capital (well capitalized = 8.0%)		12.35				12.55			12.74
Total risk-based capital (well capitalized = 10.0%)		12.87				13.10			13.34
Regulatory capital ratios (for Flushing Bank only):
Tier 1 capital	$	528,168			$	494,690		$	488,327
Common equity Tier 1 capital		528,168				494,690			488,327
Total risk-based capital		549,963				516,226			511,300
Tier 1 leverage capital (well capitalized = 5%)		8.88		%		8.89	%		9.02	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)		12.44				12.62			12.86
Tier 1 risk-based capital (well capitalized = 8.0%)		12.44				12.62			12.86
Total risk-based capital (well capitalized = 10.0%)		12.96				13.17			13.47
Capital ratios:
Average equity to average assets		8.36		%		8.68	%		8.76	%
Equity to total assets		8.54				8.29			8.56
Tangible stockholders' common equity to tangible assets (1)		8.30				8.04			8.30
Asset quality:
Non-accrual loans (2)	$	21,882			$	22,817		$	26,303
Non-performing loans		23,535				26,077			28,600
Non-performing assets		26,374				31,009			33,455
Net charge-offs/ (recoveries)		(260	)			2,605			503
Asset quality ratios:
Non-performing loans to gross loans		0.50		%		0.60	%		0.68	%
Non-performing assets to total assets		0.44				0.54			0.61
Allowance for loan losses to gross loans		0.46				0.49			0.55
Allowance for loan losses to non-performing assets		82.64				69.45			68.67
Allowance for loan losses to non-performing loans		92.61				82.58			80.32
Full-service customer facilities		19				19			19

(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
	September 30, 2016						June 30, 2016						September 30, 2015
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost		Balance		Interest		Cost
Interest-earning Assets:
Mortgage loans, net	$	4,093,240	$	43,777	4.28	%	$	3,983,615	$	42,969	4.31	%	$	3,561,262	$	40,754	4.58	%
Other loans, net		593,353		5,402	3.64			583,404		5,444	3.73			508,388		4,489	3.53
Total loans, net (1)		4,686,593		49,179	4.20			4,567,019		48,413	4.24			4,069,650		45,243	4.45
Taxable securities:
Mortgage-backed
securities		554,515		3,350	2.42			599,247		3,707	2.47			692,777		4,307	2.49
Other securities		245,477		2,162	3.52			249,956		2,133	3.41			176,072		1,290	2.93
Total taxable securities		799,992		5,512	2.76			849,203		5,840	2.75			868,849		5,597	2.58
Tax-exempt securities: (2) (3)
Other securities		148,004		784	2.12			147,230		790	2.15			136,043		1,030	3.03
Total tax-exempt securities		148,004		784	2.12			147,230		790	2.15			136,043		1,030	3.03
Interest-earning deposits
and federal funds sold		49,824		49	0.39			49,483		48	0.39			76,473		43	0.22
Total interest-earning
assets		5,684,413		55,524	3.91			5,612,935		55,091	3.93			5,151,015		51,913	4.03
Other assets		292,312						284,923						276,604
Total assets	$	5,976,725					$	5,897,858					$	5,427,619
Interest-bearing Liabilities:
Deposits:
Savings accounts	$	258,884		306	0.47		$	265,856		306	0.46		$	262,535		297	0.45
NOW accounts		1,384,368		1,979	0.57			1,612,704		1,962	0.49			1,398,358		1,646	0.47
Money market accounts		601,709		990	0.66			483,317		681	0.56			420,860		455	0.43
Certificate of deposit
accounts		1,428,770		5,213	1.46			1,417,379		5,121	1.45			1,391,511		5,276	1.52
Total due to depositors		3,673,731		8,488	0.92			3,779,256		8,070	0.85			3,473,264		7,674	0.88
Mortgagors' escrow
accounts		48,840		32	0.26			67,728		27	0.16			44,606		27	0.24
Total interest-bearing
deposits		3,722,571		8,520	0.92			3,846,984		8,097	0.84			3,517,870		7,701	0.88
Borrowings		1,337,049		5,291	1.58			1,199,178		5,105	1.70			1,125,291		4,902	1.74
Total interest-bearing
liabilities		5,059,620		13,811	1.09			5,046,162		13,202	1.05			4,643,161		12,603	1.09
Non interest-bearing
demand deposits		318,188						296,597						254,435
Other liabilities		89,943						68,838						65,843
Total liabilities		5,467,751						5,411,597						4,963,439
Equity		508,974						486,261						464,180
Total liabilities and
equity	$	5,976,725					$	5,897,858					$	5,427,619
Net interest income /
net interest rate spread			$	41,713	2.82	%			$	41,889	2.88	%			$	39,310	2.94	%
Net interest-earning assets /
net interest margin	$	624,793			2.94	%	$	566,773			2.99	%	$	507,854			3.05	%
Ratio of interest-earning
assets to interest-bearing
liabilities					1.12	X					1.11	X					1.11	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 , $1.0 million and $1.4 million for the three months ended September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
(3) Includes prepayment penalty income of approximately $26,000 and $0.2 million for the three months ended September 30, 2016 and 2015. There was no prepayment penalty income during the three months ended June 30, 2016.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
	For the nine months ended
	September 30, 2016						September 30, 2015
	Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost
Interest-earning Assets:
Mortgage loans, net	$	3,972,502	$	129,200	4.34	%	$	3,466,085	$	119,931	4.61	%
Other loans, net		575,652		15,950	3.69			501,154		12,930	3.44
Total loans, net (1)		4,548,154		145,150	4.26			3,967,239		132,861	4.47
Taxable securities:
Mortgage-backed
securities		603,994		11,231	2.48			700,563		13,028	2.48
Other securities		241,821		6,040	3.33			151,589		2,897	2.55
Total taxable securities		845,815		17,271	2.72			852,152		15,925	2.49
Tax-exempt securities: (2) (3)
Other securities		140,889		2,366	2.24			137,093		2,796	2.72
Total tax-exempt securities		140,889		2,366	2.24			137,093		2,796	2.72
Interest-earning deposits
and federal funds sold		61,484		191	0.41			60,028		96	0.21
Total interest-earning
assets		5,596,342		164,978	3.93			5,016,512		151,678	4.03
Other assets		287,111						274,581
Total assets	$	5,883,453					$	5,291,093
Interest-bearing Liabilities:
Deposits:
Savings accounts	$	262,382		910	0.46		$	265,831		852	0.43
NOW accounts		1,539,050		5,863	0.51			1,441,598		4,847	0.45
Money market accounts		514,626		2,277	0.59			352,639		1,015	0.38
Certificate of deposit
accounts		1,416,811		15,455	1.45			1,343,588		15,809	1.57
Total due to depositors		3,732,869		24,505	0.88			3,403,656		22,523	0.88
Mortgagors' escrow
accounts		55,481		85	0.20			51,772		73	0.19
Total interest-bearing
deposits		3,788,350		24,590	0.87			3,455,428		22,596	0.87
Borrowings		1,233,571		15,653	1.69			1,070,801		14,078	1.75
Total interest-bearing
liabilities		5,021,921		40,243	1.07			4,526,229		36,674	1.08
Non interest-bearing
demand deposits		296,321						243,693
Other liabilities		73,594						57,855
Total liabilities		5,391,836						4,827,777
Equity		491,617						463,316
Total liabilities and
equity	$	5,883,453					$	5,291,093
Net interest income /
net interest rate spread			$	124,735	2.86	%			$	115,004	2.95	%
Net interest-earning assets /
net interest margin	$	574,421			2.97	%	$	490,283			3.06	%
Ratio of interest-earning
assets to interest-bearing
liabilities					1.11	X					1.11	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 $3.4 million and $3.2 million for the nine months ended September 30, 2016 and 2015, respectively.
(2) Interest income on tax-exempt securities does not include the tax benefit of the tax-exempt securities.
(3) Includes prepayment penalty income of approximately $26,000 and $0.2 million for the nine months ended September 30, 2016 and 2015.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
												September 2016 vs.					September 2016 vs.
				September 30,		June 30,		March 31,		December 31,		December 2015			September 30,		September 2015
(Dollars in thousands)					2016		2016		2016		2015	% Change				2015	% Change
Deposits
Non-interest bearing				$	320,060	$	317,112	$	280,450	$	269,469		18.8	%	$	257,196		24.4	%
Interest bearing:
	Certificate of deposit
		accounts			1,384,551		1,411,550		1,362,062		1,403,302		(1.3	%)		1,386,945		(0.2	%)
	Savings accounts				258,058		260,528		268,057		261,748		(1.4	%)		261,400		(1.3	%)
	Money market accounts				733,361		452,589		485,774		472,489		55.2	%		438,457		67.3	%
	NOW accounts				1,296,475		1,453,540		1,610,932		1,448,695		(10.5	%)		1,338,715		(3.2	%)
		Total interest-bearing
			deposits		3,672,445		3,578,207		3,726,825		3,586,234		2.4	%		3,425,517		7.2	%
			Total deposits	$	3,992,505	$	3,895,319	$	4,007,275	$	3,855,703		3.5	%	$	3,682,713		8.4	%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
Loan Origination and Purchases
	For the three months						For the nine months ended
	September 30,		June 30,		September 30,		September 30,
(In thousands)		2016		2016		2015		2016		2015
Multi-family residential	$	61,378	$	162,364	$	91,306	$	293,385	$	268,481
Commercial real estate		68,970		114,007		151,358		245,114		295,084
One-to-four family – mixed-use property		12,618		11,630		20,008		42,493		44,905
One-to-four family – residential		3,362		4,195		12,618		17,050		34,696
Co-operative apartments		-		470		1,915		470		2,365
Construction		1,920		2,427		1,999		6,034		3,386
Small Business Administration		470		314		2,232		6,785		8,713
Taxi Medallion		-		-		-		-		-
Commercial business and other		84,525		92,456		53,028		239,015		180,239
Total	$	233,243	$	387,863	$	334,464	$	850,346	$	837,869

Loan Composition
															September 30, 2016 vs.						September 2016 vs.
			September 30,			June 30,			March 31,			December 31,			December 2015			September 30,			September 2015
(Dollars in thousands)				2016			2016			2016			2015		% Change				2015		% Change
Loans:
Multi-family residential			$	2,171,289		$	2,159,138		$	2,039,794		$	2,055,228			5.6	%	$	2,043,740			6.2	%
Commercial real estate				1,195,266			1,146,400			1,058,028			1,001,236			19.4	%		857,806			39.3	%
One-to-four family ―
	mixed-use property			555,691			566,702			571,846			573,043			(3.0	%)		568,401			(2.2	%)
One-to-four family ― residential				183,993			190,251			191,158			187,838			(2.0	%)		191,430			(3.9	%)
Co-operative apartments				7,494			7,571			8,182			8,285			(9.5	%)		9,122			(17.8	%)
Construction				11,250			9,899			7,472			7,284			54.4	%		5,671			98.4	%
Small Business Administration				14,339			14,718			14,701			12,194			17.6	%		10,540			36.0	%
Taxi medallion				20,536			20,641			20,757			20,881			(1.7	%)		21,025			(2.3	%)
Commercial business and other				564,972			564,084			531,322			506,622			11.5	%		479,085			17.9	%
Net unamortized premiums
	and unearned loan fees			16,447			16,875			15,281			15,368			7.0	%		14,129			16.4	%
Allowance for loan losses				(21,795	)		(22,198	)		(21,993	)		(21,535	)		1.2	%		(22,973	)		(5.1	%)
		Net loans	$	4,719,482		$	4,674,081		$	4,436,548		$	4,366,444			8.1	%	$	4,177,976			13.0	%

Loan Activity
		Three Months Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
(In thousands)			2016			2015			2016			2015			2015
Loans originated and purchased		$	233,243		$	387,863		$	229,240		$	395,592		$	334,464
Principal reductions			(183,583	)		(149,307	)		(152,521	)		(206,125	)		(155,794	)
Loans transferred to held-for-sale			-			-			-			-			-
Loans sold			(3,693	)		(2,310	)		(5,515	)		(1,164	)		(8,800	)
Loan charged-offs			(541	)		(102	)		(147	)		(2,478	)		(168	)
Foreclosures			-			-			(408	)		(34	)		(773	)
Net change in deferred (fees) and costs			(428	)		1,594			(87	)		1,239			878
Net change in the allowance for loan losses			403			(205	)		(458	)		1,438			111
	Total loan activity	$	45,401		$	237,533		$	70,104		$	188,468		$	169,918

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)
		September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)			2016			2016			2016			2015			2015
Loans 90 Days Or More Past Due
	and Still Accruing:
Multi-family residential		$	-		$	574		$	792		$	233		$	516
Commercial real estate			1,183			320			1,083			1,183			253
One-to-four family - mixed-use property			470			635			743			611			1,293
One-to-four family - residential			-			13			13			13			13
Construction			-			-			570			1,000			-
Commercial business and other			-			-			-			220			222
	Total		1,653			1,542			3,201			3,260			2,297
Non-accrual Loans:
Multi-family residential			1,649			3,162			3,518			3,561			4,686
Commercial real estate			1,157			2,299			3,295			2,398			2,407
One-to-four family - mixed-use property			4,534			6,005			5,519			5,952			5,446
One-to-four family - residential			8,340			8,406			8,861			10,120			10,441
Small business administration			2,132			185			201			218			234
Taxi Medallion			3,971			196			196			-			-
Commercial business and other			99			128			511			568			3,089
	Total		21,882			20,381			22,101			22,817			26,303
	Total Non-performing Loans		23,535			21,923			25,302			26,077			28,600
Other Non-performing Assets:
Real estate acquired through foreclosure			2,839			3,668			4,602			4,932			4,855
	Total		2,839			3,668			4,602			4,932			4,855
	Total Non-performing Assets	$	26,374		$	25,591		$	29,904		$	31,009		$	33,455
Non-performing Assets to Total Assets			0.44	%		0.43	%		0.51	%		0.54	%		0.61	%
Allowance For Loan Losses to Non-performing Loans			92.6	%		101.3	%		86.9	%		82.6	%		80.3	%

Net Charge-Offs (Recoveries)
	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(In thousands)		2016			2016			2016			2015			2015
Multi-family residential	$	79		$	(183	)	$	29		$	(35	)	$	54
Commercial real estate		(11	)		-			-			-			(100	)
One-to-four family – mixed-use property		24			36			(173	)		18			73
One-to-four family – residential		-			7			(299	)		97			(300	)
Co-operative apartments		-			-			-			-			-
Small Business Administration		317			(42	)		(31	)		17			4
Commercial business and other		(6	)		(23	)		16			2,005			10
Total net loan charge-offs (recoveries)	$	403		$	(205	)	$	(458	)	$	2,102		$	(259	)

Core Diluted EPS, Core ROAE, Core ROAA, tangible book value per common 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									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2016			2016			2015			2016			2015
GAAP income before income taxes	$	17,289		$	51,152		$	17,669		$	83,617		$	56,303
Net (gain) loss from fair value adjustments		823			1,115			1,094			2,925			921
Net gain on sale of securities		-			(2,363	)		(103	)		(2,363	)		(167	)
Gain from life insurance proceeds		(47	)		-			-			(458	)		-
Net gain on sale of buildings		-			(33,814	)		-			(33,814	)		(6,537	)
Prepayment penalty on borrowings		-			2,082			-			2,082			-
Core income before taxes		18,065			18,172			18,660			51,989			50,520
Provision for income taxes for core income		6,736			6,851			7,087			19,628			19,247
Core net income	$	11,329		$	11,321		$	11,573		$	32,361		$	31,273
GAAP diluted earnings per common share	$	0.37		$	1.05		$	0.38		$	1.75		$	1.18
Net loss from fair value adjustments, net of tax		0.03			0.02			0.02			0.06			0.02
Net gain on sale of securities, net of tax		-			(0.05	)		-			(0.05	)		-
Gain from life insurance proceeds		-			-			-			(0.02	)		-
Net gain on sale of buildings, net of tax		-			(0.67	)		-			(0.67	)		(0.13	)
Prepayment penalty on borrowings		-			0.04			-			0.04			-
Core diluted earnings per common share*	$	0.39		$	0.39		$	0.40		$	1.12		$	1.07
Core net income, as calculated above	$	11,329		$	11,321		$	11,573		$	32,361		$	31,273
Average assets		5,976,725			5,897,858			5,427,619			5,883,453			5,291,093
Average equity		508,974			486,261			464,180			491,617			463,316
Core return on average assets**		0.76	%		0.77	%		0.85	%		0.73	%		0.79	%
Core return on average equity**		8.90	%		9.31	%		9.97	%		8.78	%		9.00	%
* 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)
			September 30,			December 31,
(Dollars in thousands)				2016			2015
Total Equity			$	512,621		$	473,067
Less:
	Goodwill			(16,127	)		(16,127	)
	Intangible deferred tax liabilities			407			406
		Tangible Stockholders' Common Equity	$	496,901		$	457,346
Total Assets			$	5,999,255		$	5,704,634
Less:
	Goodwill			(16,127	)		(16,127	)
	Intangible deferred tax liabilities			407			406
		Tangible Assets	$	5,983,535		$	5,688,913
Tangible Stockholders' Common Equity to Tangible Assets				8.30	%		8.04	%

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