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) April 25, 2017
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On April 25, 2017, 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 April 25, 2017
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: April 25, 2017 | By: | /s/ Susan K. Cullen |
Susan K. Cullen | ||
Title: | Senior Executive Vice President and Chief Financial Officer | |
EXHIBIT 99.1
Flushing Financial Corporation Reports First Quarter Results GAAP Diluted EPS of $0.42, Up 27.3% YOY Driven by 11.5% Annualized Loan Growth and Record Net Interest Income
FIRST QUARTER 20171
UNIONDALE, N.Y., April 25, 2017 (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 first quarter ended March 31, 2017.
John R. Buran, President and Chief Executive Officer, remarked, “The positive momentum we saw at the end of last year carried over to a strong start in 2017. Loan growth of 3% coupled with an uptick on the yield of loan originations and purchases during the first quarter resulted in record net interest income. Credit quality remains a Company strength as we recorded minimal net charge offs and the percentage of non-performing assets to total assets improved from December 31, 2016. We continue to be well positioned for the future, as our loan pipeline totals over $300 million at an average rate of 4.15% as of March 31, 2017.”
“We moved further ahead with our strategy of enhancing operational scalability and efficiency by converting our fifth branch to the Universal Banker model, which provides our customers with cutting-edge technology and a higher-quality experience, while allowing us to operate our branches with reduced facilities and staffing costs. We sustained deposit growth, as total deposits increased 4% for the quarter and 9% from March 31, 2016, while our core deposits increased 4% from both the linked quarter and March 31, 2016.”
The Company retains its focus on maintaining strong risk management practices, including conservative underwriting standards and improving yields to achieve desired risk-adjusted returns.
___________________________________________
1 Core diluted earnings per common share (“core diluted EPS”), core ROAE and core ROAA are not Generally Accepted Accounting Principle (“GAAP”) measures.
For a GAAP to non-GAAP reconciliation of core diluted EPS, core ROAE and core ROAA, refer to the table entitled “Reconciliation of Non-GAAP Financial Measures.”
As in prior years, the first quarter results include seasonal non-interest expenses related to annual restricted stock awards for employees and directors along with increased payroll taxes. The seasonal items increased non-interest expense by approximately $3 million, or $0.06 per diluted common share. The restricted stock awards also affected the Company’s tax rate by reducing the tax rate to approximately 30%. We anticipate an annual tax rate of approximately 35% for 2017.
Mr. Buran concluded, “Overall, we remain well capitalized and positioned to deliver profitable growth and long-term value to our shareholders as we continue to execute on our strategic objectives.”
Summary of Strategic Objectives
Earnings Summary:
Quarter ended March 31, 2017 (1Q17) compared to the quarters ended March 31, 2016 (1Q16) and December 31, 2016 (4Q16).
March 31, 2017 compared to December 31, 2016 (“QoQ”) March 31, 2017 compared to March 31, 2016 (“YoY”).
Net Interest Income
Net interest income for 1Q17 improved to $43.4 million, an increase of 5.5% YoY and 2.5% QoQ.
Non-interest Income
Non-interest income for 1Q17 was $3.7 million, an increase of $1.1 million, or 45.2% YoY, but a decrease of $11.7 million, or 76.1% QoQ, largely driven by a decrease of $14.2 million from the net gain on sale of buildings in 4Q16.
Non-interest Expense
Non-interest expense for 1Q17 was $29.6 million, an increase of $1.1 million, or 3.7% YoY, and a decrease of $5.8 million, or 16.4% QoQ, largely driven by a decrease of $8.3 million relating to a non-recurring prepayment penalty in 4Q16.
Provision for Income Taxes
The provision for income taxes for 1Q17 was $5.3 million, a decrease of $0.4 million YoY and $2.9 million QoQ.
Financial Condition Summary:
Loans:
The following table shows the average rate received from loan originations and purchases for the periods indicated:
For the three months ended | |||||||||
March 31, | December 31, | March 31, | |||||||
Loan type | 2017 | 2016 | 2016 | ||||||
Mortgage loans | 3.78 | % | 3.70 | % | 3.78 | % | |||
Non-mortgage loans | 4.02 | % | 4.05 | % | 3.73 | % | |||
Total loans | 3.85 | % | 3.81 | % | 3.77 | % |
Credit Quality
Capital Management
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, 2016 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 | |||||||||||||
March 31, | December 31, | March 31, | |||||||||||
2017 | 2016 | 2016 | |||||||||||
Interest and Dividend Income | |||||||||||||
Interest and fees on loans | $ | 50,885 | $ | 49,973 | $ | 47,558 | |||||||
Interest and dividends on securities: | |||||||||||||
Interest | 6,095 | 5,866 | 6,592 | ||||||||||
Dividends | 121 | 121 | 119 | ||||||||||
Other interest income | 153 | 59 | 94 | ||||||||||
Total interest and dividend income | 57,254 | 56,019 | 54,363 | ||||||||||
Interest Expense | |||||||||||||
Deposits | 8,980 | 8,760 | 7,973 | ||||||||||
Other interest expense | 4,885 | 4,908 | 5,257 | ||||||||||
Total interest expense | 13,865 | 13,668 | 13,230 | ||||||||||
Net Interest Income | 43,389 | 42,351 | 41,133 | ||||||||||
Provision for loan losses | - | - | - | ||||||||||
Net Interest Income After Provision for Loan Losses | 43,389 | 42,351 | 41,133 | ||||||||||
Non-interest Income | |||||||||||||
Banking services fee income | 874 | 983 | 976 | ||||||||||
Net loss on sale of securities | - | (839 | ) | - | |||||||||
Net gain on sale of loans | 210 | - | 341 | ||||||||||
Net gain on sale of buildings | - | 14,204 | - | ||||||||||
Net loss from fair value adjustments | (378 | ) | (509 | ) | (987 | ) | |||||||
Federal Home Loan Bank of New York stock dividends | 823 | 794 | 623 | ||||||||||
Gains from life insurance proceeds | 1,161 | 2 | 411 | ||||||||||
Bank owned life insurance | 795 | 701 | 695 | ||||||||||
Other income | 204 | 90 | 481 | ||||||||||
Total non-interest income | 3,689 | 15,426 | 2,540 | ||||||||||
Non-interest Expense | |||||||||||||
Salaries and employee benefits | 17,104 | 15,801 | 16,261 | ||||||||||
Occupancy and equipment | 2,496 | 2,550 | 2,370 | ||||||||||
Professional services | 1,996 | 1,813 | 2,150 | ||||||||||
FDIC deposit insurance | 326 | 613 | 904 | ||||||||||
Data processing | 1,203 | 1,135 | 1,091 | ||||||||||
Depreciation and amortization | 1,165 | 1,187 | 1,032 | ||||||||||
Other real estate owned/foreclosure expense | 351 | 476 | 153 | ||||||||||
Prepayment penalty on borrowings | - | 8,274 | - | ||||||||||
Other operating expenses | 4,923 | 3,526 | 4,536 | ||||||||||
Total non-interest expense | 29,564 | 35,375 | 28,497 | ||||||||||
Income Before Income Taxes | 17,514 | 22,402 | 15,176 | ||||||||||
Provision for Income Taxes | |||||||||||||
Federal | 4,749 | 8,062 | 4,747 | ||||||||||
State and local | 505 | 54 | 868 | ||||||||||
Total taxes | 5,254 | 8,116 | 5,615 | ||||||||||
Net Income | $ | 12,260 | $ | 14,286 | $ | 9,561 | |||||||
Basic earnings per common share | $ | 0.42 | $ | 0.50 | $ | 0.33 | |||||||
Diluted earnings per common share | $ | 0.42 | $ | 0.50 | $ | 0.33 | |||||||
Dividends per common share | $ | 0.18 | $ | 0.17 | $ | 0.17 | |||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | ||||||||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||
(Unaudited) | ||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||
2017 | 2016 | 2016 | ||||||||||||
ASSETS | ||||||||||||||
Cash and due from banks | $ | 51,215 | $ | 35,857 | $ | 51,417 | ||||||||
Securities held-to-maturity: | ||||||||||||||
Other securities | 36,406 | 37,735 | 7,885 | |||||||||||
Securities available for sale: | ||||||||||||||
Mortgage-backed securities | 537,905 | 516,476 | 668,412 | |||||||||||
Other securities | 346,238 | 344,905 | 372,851 | |||||||||||
Loans: | ||||||||||||||
Multi-family residential | 2,261,946 | 2,178,504 | 2,039,794 | |||||||||||
Commercial real estate | 1,268,770 | 1,246,132 | 1,058,028 | |||||||||||
One-to-four family ― mixed-use property | 561,355 | 558,502 | 571,846 | |||||||||||
One-to-four family ― residential | 184,201 | 185,767 | 191,158 | |||||||||||
Co-operative apartments | 7,216 | 7,418 | 8,182 | |||||||||||
Construction | 12,413 | 11,495 | 7,472 | |||||||||||
Small Business Administration | 10,519 | 15,198 | 14,701 | |||||||||||
Taxi medallion | 18,832 | 18,996 | 20,757 | |||||||||||
Commercial business and other | 632,503 | 597,122 | 531,322 | |||||||||||
Net unamortized premiums and unearned loan fees | 16,836 | 16,559 | 15,281 | |||||||||||
Allowance for loan losses | (22,211 | ) | (22,229 | ) | (21,993 | ) | ||||||||
Net loans | 4,952,380 | 4,813,464 | 4,436,548 | |||||||||||
Interest and dividends receivable | 20,602 | 20,228 | 19,369 | |||||||||||
Bank premises and equipment, net | 26,026 | 26,561 | 25,130 | |||||||||||
Federal Home Loan Bank of New York stock | 57,384 | 59,173 | 53,368 | |||||||||||
Bank owned life insurance | 129,824 | 132,508 | 114,405 | |||||||||||
Goodwill | 16,127 | 16,127 | 16,127 | |||||||||||
Other assets | 57,378 | 55,453 | 47,555 | |||||||||||
Total assets | $ | 6,231,485 | $ | 6,058,487 | $ | 5,813,067 | ||||||||
LIABILITIES | ||||||||||||||
Due to depositors: | ||||||||||||||
Non-interest bearing | $ | 344,028 | $ | 333,163 | $ | 280,450 | ||||||||
Interest-bearing: | ||||||||||||||
Certificate of deposit accounts | 1,411,819 | 1,372,115 | 1,362,062 | |||||||||||
Savings accounts | 254,822 | 254,283 | 268,057 | |||||||||||
Money market accounts | 851,129 | 843,370 | 485,774 | |||||||||||
NOW accounts | 1,487,120 | 1,362,484 | 1,610,932 | |||||||||||
Total interest-bearing deposits | 4,004,890 | 3,832,252 | 3,726,825 | |||||||||||
Mortgagors' escrow deposits | 61,828 | 40,216 | 56,612 | |||||||||||
Borrowed funds | 1,227,852 | 1,266,563 | 1,190,789 | |||||||||||
Other liabilities | 67,485 | 72,440 | 70,612 | |||||||||||
Total liabilities | 5,706,083 | 5,544,634 | 5,325,288 | |||||||||||
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 March 31, 2017, December 31, 2016 and March 31, 2016; 28,811,160 | ||||||||||||||
shares, 28,632,904 shares and 28,986,566 shares outstanding at March 31, 2017, | ||||||||||||||
December 31, 2016 and March 31, 2016, respectively) | 315 | 315 | 315 | |||||||||||
Additional paid-in capital | 215,501 | 214,462 | 211,735 | |||||||||||
Treasury stock (2,719,435 shares, 2,897,691 shares and 2,544,029 shares at | ||||||||||||||
March 31, 2017, December 31, 2016 and March 31, 2016, respectively) | (51,224 | ) | (53,754 | ) | (46,307 | ) | ||||||||
Retained earnings | 367,944 | 361,192 | 320,725 | |||||||||||
Accumulated other comprehensive income (loss), net of taxes | (7,134 | ) | (8,362 | ) | 1,311 | |||||||||
Total stockholders' equity | 525,402 | 513,853 | 487,779 | |||||||||||
Total liabilities and stockholders' equity | $ | 6,231,485 | $ | 6,058,487 | $ | 5,813,067 | ||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | ||||||||||
SELECTED CONSOLIDATED FINANCIAL DATA | ||||||||||
(Dollars in thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
At or for the three months ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
2017 | 2016 | 2016 | ||||||||
Per Share Data | ||||||||||
Basic earnings per share | $ | 0.42 | $ | 0.50 | $ | 0.33 | ||||
Diluted earnings per share | $ | 0.42 | $ | 0.50 | $ | 0.33 | ||||
Average number of shares outstanding for: | ||||||||||
Basic earnings per common share computation | 29,019,070 | 28,849,783 | 29,096,663 | |||||||
Diluted earnings per common share computation | 29,022,745 | 28,859,665 | 29,111,172 | |||||||
Shares outstanding | 28,811,160 | 28,632,904 | 28,986,566 | |||||||
Book value per common share (1) | $ | 18.24 | $ | 17.95 | $ | 16.83 | ||||
Tangible book value per common share (2) | $ | 17.69 | $ | 17.40 | $ | 16.29 | ||||
Stockholders' Equity | ||||||||||
Stockholders' equity | $ | 525,402 | $ | 513,853 | $ | 487,779 | ||||
Tangible stockholders' common equity | 509,666 | 498,115 | 472,059 | |||||||
Average Balances | ||||||||||
Total loans, net | $ | 4,868,048 | $ | 4,757,124 | $ | 4,389,331 | ||||
Total interest-earning assets | 5,873,799 | 5,717,298 | 5,490,714 | |||||||
Total assets | 6,168,848 | 6,003,125 | 5,774,750 | |||||||
Total due to depositors | 4,088,031 | 3,796,337 | 3,746,268 | |||||||
Total interest-bearing liabilities | 5,254,640 | 5,077,893 | 4,959,563 | |||||||
Stockholders' equity | 517,800 | 512,317 | 479,424 | |||||||
Performance Ratios (3) | ||||||||||
Return on average assets | 0.79 | % | 0.95 | % | 0.66 | % | ||||
Return on average equity | 9.47 | 11.15 | 7.98 | |||||||
Yield on average interest-earning assets | 3.90 | 3.92 | 3.96 | |||||||
Cost of average interest-bearing liabilities | 1.06 | 1.08 | 1.07 | |||||||
Interest rate spread during period | 2.84 | 2.84 | 2.89 | |||||||
Net interest margin | 2.95 | 2.96 | 3.00 | |||||||
Non-interest expense to average assets | 1.92 | 2.36 | 1.97 | |||||||
Efficiency ratio (4) | 63.98 | 59.63 | 64.50 | |||||||
Average interest-earning assets to average | ||||||||||
interest-bearing liabilities | 1.12 | X | 1.13 | 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 “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(3) Ratios are presented on an annualized basis, where appropriate.
(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).
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | ||||||||||||||
SELECTED CONSOLIDATED FINANCIAL DATA | ||||||||||||||
(Dollars in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
At or for the three | At or for the | At or for the three | ||||||||||||
months ended | year ended | months ended | ||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||
Selected Financial Ratios and Other Data | ||||||||||||||
Regulatory capital ratios (for Flushing Financial Corporation): | ||||||||||||||
Tier 1 capital | $ | 550,055 | $ | 539,228 | $ | 497,698 | ||||||||
Common equity Tier 1 capital | 516,706 | 506,432 | 470,685 | |||||||||||
Total risk-based capital | 647,266 | 636,457 | 519,691 | |||||||||||
Tier 1 leverage capital (well capitalized = 5%) | 8.92 | % | 9.00 | % | 8.65 | % | ||||||||
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 11.59 | 11.79 | 11.84 | |||||||||||
Tier 1 risk-based capital (well capitalized = 8.0%) | 12.34 | 12.56 | 12.52 | |||||||||||
Total risk-based capital (well capitalized = 10.0%) | 14.52 | 14.82 | 13.07 | |||||||||||
Regulatory capital ratios (for Flushing Bank only): | ||||||||||||||
Tier 1 capital | $ | 616,017 | $ | 607,033 | $ | 498,308 | ||||||||
Common equity Tier 1 capital | 616,017 | 607,033 | 498,308 | |||||||||||
Total risk-based capital | 638,228 | 629,262 | 520,300 | |||||||||||
Tier 1 leverage capital (well capitalized = 5%) | 9.98 | % | 10.12 | % | 8.65 | % | ||||||||
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 13.80 | 14.12 | 12.51 | |||||||||||
Tier 1 risk-based capital (well capitalized = 8.0%) | 13.80 | 14.12 | 12.51 | |||||||||||
Total risk-based capital (well capitalized = 10.0%) | 14.30 | 14.64 | 13.06 | |||||||||||
Capital ratios: | ||||||||||||||
Average equity to average assets | 8.39 | % | 8.40 | % | 8.30 | % | ||||||||
Equity to total assets | 8.43 | 8.48 | 8.39 | |||||||||||
Tangible stockholders' common equity to tangible assets (1) | 8.20 | 8.24 | 8.14 | |||||||||||
Asset quality: | ||||||||||||||
Non-accrual loans (2) | $ | 17,858 | $ | 21,030 | $ | 22,101 | ||||||||
Non-performing loans | 18,535 | 21,416 | 25,302 | |||||||||||
Non-performing assets | 18,535 | 21,949 | 29,904 | |||||||||||
Net charge-offs/ (recoveries) | 18 | (694 | ) | (458 | ) | |||||||||
Asset quality ratios: | ||||||||||||||
Non-performing loans to gross loans | 0.37 | % | 0.44 | % | 0.57 | % | ||||||||
Non-performing assets to total assets | 0.30 | 0.36 | 0.51 | |||||||||||
Allowance for loan losses to gross loans | 0.45 | 0.46 | 0.49 | |||||||||||
Allowance for loan losses to non-performing assets | 119.84 | 101.28 | 73.54 | |||||||||||
Allowance for loan losses to non-performing loans | 119.84 | 103.80 | 86.92 | |||||||||||
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 | ||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||
Balance | Interest | Cost | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||
Interest-earning Assets: | ||||||||||||||||||
Mortgage loans, net | $ | 4,213,482 | $ | 44,429 | 4.22 | % | $ | 4,140,511 | $ | 44,219 | 4.27 | % | $ | 3,839,325 | $ | 42,454 | 4.42 | % |
Other loans, net | 654,566 | 6,456 | 3.95 | 616,613 | 5,754 | 3.73 | 550,006 | 5,104 | 3.71 | |||||||||
Total loans, net (1) | 4,868,048 | 50,885 | 4.18 | 4,757,124 | 49,973 | 4.20 | 4,389,331 | 47,558 | 4.33 | |||||||||
Taxable securities: | ||||||||||||||||||
Mortgage-backed | ||||||||||||||||||
securities | 529,942 | 3,367 | 2.54 | 514,527 | 3,002 | 2.33 | 658,764 | 4,174 | 2.53 | |||||||||
Other securities | 239,345 | 2,072 | 3.46 | 248,765 | 2,203 | 3.54 | 229,991 | 1,745 | 3.03 | |||||||||
Total taxable securities | 769,287 | 5,439 | 2.83 | 763,292 | 5,205 | 2.73 | 888,755 | 5,919 | 2.66 | |||||||||
Tax-exempt securities: (2) | ||||||||||||||||||
Other securities | 146,502 | 777 | 2.12 | 147,184 | 782 | 2.13 | 127,355 | 792 | 2.49 | |||||||||
Total tax-exempt securities | 146,502 | 777 | 2.12 | 147,184 | 782 | 2.13 | 127,355 | 792 | 2.49 | |||||||||
Interest-earning deposits | ||||||||||||||||||
and federal funds sold | 89,962 | 153 | 0.68 | 49,698 | 59 | 0.47 | 85,273 | 94 | 0.44 | |||||||||
Total interest-earning | ||||||||||||||||||
assets | 5,873,799 | 57,254 | 3.90 | 5,717,298 | 56,019 | 3.92 | 5,490,714 | 54,363 | 3.96 | |||||||||
Other assets | 295,049 | 285,827 | 284,036 | |||||||||||||||
Total assets | $ | 6,168,848 | $ | 6,003,125 | $ | 5,774,750 | ||||||||||||
Interest-bearing Liabilities: | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Savings accounts | $ | 254,255 | $ | 307 | 0.48 | $ | 256,677 | $ | 309 | 0.48 | $ | 262,443 | $ | 298 | 0.45 | |||
NOW accounts | 1,568,267 | 2,207 | 0.56 | 1,370,618 | 2,028 | 0.59 | 1,621,779 | 1,922 | 0.47 | |||||||||
Money market accounts | 860,779 | 1,499 | 0.70 | 780,233 | 1,315 | 0.67 | 457,895 | 606 | 0.53 | |||||||||
Certificate of deposit | ||||||||||||||||||
accounts | 1,404,730 | 4,940 | 1.41 | 1,388,809 | 5,081 | 1.46 | 1,404,151 | 5,121 | 1.46 | |||||||||
Total due to depositors | 4,088,031 | 8,953 | 0.88 | 3,796,337 | 8,733 | 0.92 | 3,746,268 | 7,947 | 0.85 | |||||||||
Mortgagors' escrow | ||||||||||||||||||
accounts | 54,616 | 27 | 0.20 | 58,151 | 27 | 0.19 | 49,947 | 26 | 0.21 | |||||||||
Total interest-bearing | ||||||||||||||||||
deposits | 4,142,647 | 8,980 | 0.87 | 3,854,488 | 8,760 | 0.91 | 3,796,215 | 7,973 | 0.84 | |||||||||
Borrowings | 1,111,993 | 4,885 | 1.76 | 1,223,405 | 4,908 | 1.60 | 1,163,348 | 5,257 | 1.81 | |||||||||
Total interest-bearing | ||||||||||||||||||
liabilities | 5,254,640 | 13,865 | 1.06 | 5,077,893 | 13,668 | 1.08 | 4,959,563 | 13,230 | 1.07 | |||||||||
Non interest-bearing | ||||||||||||||||||
demand deposits | 330,215 | 331,232 | 273,937 | |||||||||||||||
Other liabilities | 66,193 | 81,683 | 61,826 | |||||||||||||||
Total liabilities | 5,651,048 | 5,490,808 | 5,295,326 | |||||||||||||||
Equity | 517,800 | 512,317 | 479,424 | |||||||||||||||
Total liabilities and | ||||||||||||||||||
equity | $ | 6,168,848 | $ | 6,003,125 | $ | 5,774,750 | ||||||||||||
Net interest income / | ||||||||||||||||||
net interest rate spread | $ | 43,389 | 2.84 | % | $ | 42,351 | 2.84 | % | $ | 41,133 | 2.89 | % | ||||||
Net interest-earning assets / | ||||||||||||||||||
net interest margin | $ | 619,159 | 2.95 | % | $ | 639,405 | 2.96 | % | $ | 531,151 | 3.00 | % | ||||||
Ratio of interest-earning | ||||||||||||||||||
assets to interest-bearing | ||||||||||||||||||
liabilities | 1.12 | X | 1.13 | 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 $0.6 million, $0.9 million and $1.5 million for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016, 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 | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
March 2017 vs. | March 2017 vs. | ||||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | December, 2016 | March 31, | March 2016 | |||||||||||||||||
2017 | 2016 | 2016 | 2016 | % Change | 2016 | % Change | |||||||||||||||||
Deposits | |||||||||||||||||||||||
Non-interest bearing | $ | 344,028 | $ | 333,163 | $ | 320,060 | $ | 317,112 | 3.3 | % | $ | 280,450 | 22.7 | % | |||||||||
Interest bearing: | |||||||||||||||||||||||
Certificate of deposit | |||||||||||||||||||||||
accounts | 1,411,819 | 1,372,115 | 1,384,551 | 1,411,550 | 2.9 | % | 1,362,062 | 3.7 | % | ||||||||||||||
Savings accounts | 254,822 | 254,283 | 258,058 | 260,528 | 0.2 | % | 268,057 | (4.9 | %) | ||||||||||||||
Money market accounts | 851,129 | 843,370 | 733,361 | 452,589 | 0.9 | % | 485,774 | 75.2 | % | ||||||||||||||
NOW accounts | 1,487,120 | 1,362,484 | 1,296,475 | 1,453,540 | 9.1 | % | 1,610,932 | (7.7 | %) | ||||||||||||||
Total interest-bearing | |||||||||||||||||||||||
deposits | 4,004,890 | 3,832,252 | 3,672,445 | 3,578,207 | 4.5 | % | 3,726,825 | 7.5 | % | ||||||||||||||
Total deposits | $ | 4,348,918 | $ | 4,165,415 | $ | 3,992,505 | $ | 3,895,319 | 4.4 | % | $ | 4,007,275 | 8.5 | % | |||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | |||||||||
LOANS | |||||||||
(Dollars in thousands) | |||||||||
(Unaudited) | |||||||||
Loan Origination and Purchases | |||||||||
For the three months | |||||||||
March 31, | December 31, | March 31, | |||||||
2017 | 2016 | 2016 | |||||||
Multi-family residential | $ | 126,708 | $ | 77,812 | $ | 69,643 | |||
Commercial real estate | 35,732 | 77,607 | 62,137 | ||||||
One-to-four family – mixed-use property | 18,542 | 20,242 | 18,245 | ||||||
One-to-four family – residential | 5,920 | 7,770 | 9,493 | ||||||
Construction | 2,544 | 9,738 | 1,687 | ||||||
Small Business Administration | 641 | 1,662 | 6,001 | ||||||
Commercial business and other | 76,484 | 87,761 | 62,034 | ||||||
Total | $ | 266,571 | $ | 282,592 | $ | 229,240 | |||
Loan Composition | ||||||||||||||||||||||||||||||
March 2017 vs. | March 2017 vs. | |||||||||||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | December 2016 | March 31, | March 2016 | ||||||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | % Change | 2016 | % Change | ||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||
Multi-family residential | $ | 2,261,946 | $ | 2,178,504 | $ | 2,171,289 | $ | 2,159,138 | 3.8 | % | $ | 2,039,794 | 10.9 | % | ||||||||||||||||
Commercial real estate | 1,268,770 | 1,246,132 | 1,195,266 | 1,146,400 | 1.8 | % | 1,058,028 | 19.9 | % | |||||||||||||||||||||
One-to-four family ― | ||||||||||||||||||||||||||||||
mixed-use property | 561,355 | 558,502 | 555,691 | 566,702 | 0.5 | % | 571,846 | (1.8 | %) | |||||||||||||||||||||
One-to-four family ― residential | 184,201 | 185,767 | 183,993 | 190,251 | (0.8 | %) | 191,158 | (3.6 | %) | |||||||||||||||||||||
Co-operative apartments | 7,216 | 7,418 | 7,494 | 7,571 | (2.7 | %) | 8,182 | (11.8 | %) | |||||||||||||||||||||
Construction | 12,413 | 11,495 | 11,250 | 9,899 | 8.0 | % | 7,472 | 66.1 | % | |||||||||||||||||||||
Small Business Administration | 10,519 | 15,198 | 14,339 | 14,718 | (30.8 | %) | 14,701 | (28.4 | %) | |||||||||||||||||||||
Taxi medallion | 18,832 | 18,996 | 20,536 | 20,641 | (0.9 | %) | 20,757 | (9.3 | %) | |||||||||||||||||||||
Commercial business and other | 632,503 | 597,122 | 564,972 | 564,084 | 5.9 | % | 531,322 | 19.0 | % | |||||||||||||||||||||
Net unamortized premiums | ||||||||||||||||||||||||||||||
and unearned loan fees | 16,836 | 16,559 | 16,447 | 16,875 | 1.7 | % | 15,281 | 10.2 | % | |||||||||||||||||||||
Allowance for loan losses | (22,211 | ) | (22,229 | ) | (21,795 | ) | (22,198 | ) | (0.1 | %) | (21,993 | ) | 1.0 | % | ||||||||||||||||
Net loans | $ | 4,952,380 | $ | 4,813,464 | $ | 4,719,482 | $ | 4,674,081 | 2.9 | % | $ | 4,436,548 | 11.6 | % | ||||||||||||||||
Loan Activity | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||
Loans originated and purchased | $ | 266,571 | $ | 282,592 | $ | 233,243 | $ | 387,863 | $ | 229,240 | ||||||||||
Principal reductions | (122,897 | ) | (187,780 | ) | (183,583 | ) | (149,308 | ) | (152,521 | ) | ||||||||||
Loans sold | (4,874 | ) | - | (3,693 | ) | (2,310 | ) | (5,515 | ) | |||||||||||
Loan charged-offs | (179 | ) | (370 | ) | (541 | ) | (101 | ) | (147 | ) | ||||||||||
Foreclosures | - | (138 | ) | - | - | (408 | ) | |||||||||||||
Net change in deferred (fees) and costs | 277 | 112 | (428 | ) | 1,594 | (87 | ) | |||||||||||||
Net change in the allowance for loan losses | 18 | (434 | ) | 403 | (205 | ) | (458 | ) | ||||||||||||
Total loan activity | $ | 138,916 | $ | 93,982 | $ | 45,401 | $ | 237,533 | $ | 70,104 | ||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES | |||||||||||||||||||||
NON-PERFORMING ASSETS and NET CHARGE-OFFS | |||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||||||||
Loans 90 Days Or More Past Due | |||||||||||||||||||||
and Still Accruing: | |||||||||||||||||||||
Multi-family residential | $ | - | $ | - | $ | - | $ | 574 | $ | 792 | |||||||||||
Commercial real estate | 75 | - | 1,183 | 320 | 1,083 | ||||||||||||||||
One-to-four family - mixed-use property | - | 386 | 470 | 635 | 743 | ||||||||||||||||
One-to-four family - residential | - | - | - | 13 | 13 | ||||||||||||||||
Construction | 602 | - | - | - | 570 | ||||||||||||||||
Total | 677 | 386 | 1,653 | 1,542 | 3,201 | ||||||||||||||||
Non-accrual Loans: | |||||||||||||||||||||
Multi-family residential | 1,354 | 1,837 | 1,649 | 3,162 | 3,518 | ||||||||||||||||
Commercial real estate | 1,462 | 1,148 | 1,157 | 2,299 | 3,295 | ||||||||||||||||
One-to-four family - mixed-use property | 3,328 | 4,025 | 4,534 | 6,005 | 5,519 | ||||||||||||||||
One-to-four family - residential | 7,847 | 8,241 | 8,340 | 8,406 | 8,861 | ||||||||||||||||
Small business administration | 58 | 1,886 | 2,132 | 185 | 201 | ||||||||||||||||
Taxi Medallion | 3,771 | 3,825 | 3,971 | 196 | 196 | ||||||||||||||||
Commercial business and other | 38 | 68 | 99 | 128 | 511 | ||||||||||||||||
Total | 17,858 | 21,030 | 21,882 | 20,381 | 22,101 | ||||||||||||||||
Total Non-performing Loans | 18,535 | 21,416 | 23,535 | 21,923 | 25,302 | ||||||||||||||||
Other Non-performing Assets: | |||||||||||||||||||||
Real estate acquired through foreclosure | - | 533 | 2,839 | 3,668 | 4,602 | ||||||||||||||||
Total | - | 533 | 2,839 | 3,668 | 4,602 | ||||||||||||||||
Total Non-performing Assets | $ | 18,535 | $ | 21,949 | $ | 26,374 | $ | 25,591 | $ | 29,904 | |||||||||||
Non-performing Assets to Total Assets | 0.30 | % | 0.36 | % | 0.44 | % | 0.43 | % | 0.51 | % | |||||||||||
Allowance For Loan Losses to Non-performing Loans | 119.8 | % | 103.8 | % | 92.6 | % | 101.3 | % | 86.9 | % | |||||||||||
Net Charge-Offs (Recoveries) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||||||||
Multi-family residential | $ | (16 | ) | $ | (103 | ) | $ | 79 | $ | (183 | ) | $ | 29 | ||||||||
Commercial real estate | (68 | ) | - | (11 | ) | - | - | ||||||||||||||
One-to-four family – mixed-use property | 34 | (520 | ) | 24 | 36 | (173 | ) | ||||||||||||||
One-to-four family – residential | - | 40 | - | 7 | (299 | ) | |||||||||||||||
Small Business Administration | 26 | 186 | 317 | (42 | ) | (31 | ) | ||||||||||||||
Taxi Medallion | 54 | 142 | - | - | - | ||||||||||||||||
Commercial business and other | (12 | ) | (179 | ) | (6 | ) | (23 | ) | 16 | ||||||||||||
Total net loan charge-offs (recoveries) | $ | 18 | $ | (434 | ) | $ | 403 | $ | (205 | ) | $ | (458 | ) | ||||||||
Core Diluted EPS, Core ROAE, Core ROAA, and tangible book value per common share 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 common share is 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 NON-GAAP FINANCIAL MEASURES | |||||||||||
(Dollars in thousands, except per share data) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
2017 | 2016 | 2016 | |||||||||
GAAP income before income taxes | $ | 17,514 | $ | 22,402 | $ | 15,176 | |||||
Net loss from fair value adjustments | 378 | 509 | 987 | ||||||||
Net loss on sale of securities | - | 839 | - | ||||||||
Gain from life insurance proceeds | (1,161 | ) | (2 | ) | (411 | ) | |||||
Net gain on sale of buildings | - | (14,204 | ) | - | |||||||
Prepayment penalty on borrowings | - | 8,274 | - | ||||||||
Core income before taxes | 16,731 | 17,818 | 15,752 | ||||||||
Provision for income taxes for core income | 5,020 | 6,227 | 6,041 | ||||||||
Core net income | $ | 11,711 | $ | 11,591 | $ | 9,711 | |||||
GAAP diluted earnings per common share | $ | 0.42 | $ | 0.50 | $ | 0.33 | |||||
Net loss from fair value adjustments, net of tax | 0.01 | 0.01 | 0.02 | ||||||||
Net loss on sale of securities, net of tax | - | 0.02 | - | ||||||||
Gain from life insurance proceeds | (0.04 | ) | - | (0.01 | ) | ||||||
Net gain on sale of buildings, net of tax | - | (0.29 | ) | - | |||||||
Prepayment penalty on borrowings, net of tax | - | 0.17 | - | ||||||||
Core diluted earnings per common share* | $ | 0.40 | $ | 0.40 | $ | 0.33 | |||||
Core net income, as calculated above | $ | 11,711 | $ | 11,591 | $ | 9,711 | |||||
Average assets | 6,168,848 | 6,003,125 | 5,774,750 | ||||||||
Average equity | 517,800 | 512,317 | 479,424 | ||||||||
Core return on average assets** | 0.76 | % | 0.77 | % | 0.67 | % | |||||
Core return on average equity** | 9.05 | % | 9.05 | % | 8.10 | % | |||||
*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 | ||||||||||||||
(Dollars in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||
2017 | 2016 | 2016 | ||||||||||||
Total Equity | $ | 525,402 | $ | 513,853 | $ | 487,779 | ||||||||
Less: | ||||||||||||||
Goodwill | (16,127 | ) | (16,127 | ) | (16,127 | ) | ||||||||
Intangible deferred tax liabilities | 391 | 389 | 407 | |||||||||||
Tangible Stockholders' Common Equity | $ | 509,666 | $ | 498,115 | $ | 472,059 | ||||||||
Total Assets | $ | 6,231,485 | $ | 6,058,487 | $ | 5,813,067 | ||||||||
Less: | ||||||||||||||
Goodwill | (16,127 | ) | (16,127 | ) | (16,127 | ) | ||||||||
Intangible deferred tax liabilities | 391 | 389 | 407 | |||||||||||
Tangible Assets | $ | 6,215,749 | $ | 6,042,749 | $ | 5,797,347 | ||||||||
Tangible Stockholders' Common Equity to Tangible Assets | 8.20 | % | 8.24 | % | 8.14 | % | ||||||||
Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400