EX-99 2 exh_991.htm PRESS RELEASE EdgarFiling

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

  • GAAP diluted EPS was $0.42, up 27.3% YoY but down 16.0% QoQ, largely due to net gain on sale of buildings in 4Q16, and core diluted EPS was $0.40, up 21.2% YoY and unchanged QoQ
  • Record net interest income of $43.4 million, an improvement of 2.5% QoQ
  • Net interest margin was 2.95%, down 1bp QoQ
    • Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, net interest margin improved to 2.85%, up 4bps QoQ
  • GAAP and core ROAE improved to 9.5% and 9.1%, compared with 8.0% and 8.1% for 1Q16
  • GAAP and core ROAA both improved to 0.8%, compared with 0.7% for 1Q16
  • Increased quarterly dividend by 6% to $0.18 per share

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.”

  • In the first quarter, $238.9 million of multi-family, commercial real estate, and commercial business loans were originated and purchased, representing 89.6% of all originations while maintaining conservative loan-to-values, debt coverage ratios, and increasing yield. 
  • The average interest rate obtained for first quarter originations and purchases improved to 3.85% compared to 3.81% for the linked quarter and 3.77% for 1Q16.
  • The average rate of mortgage loan applications in the pipeline totaled 4.15% at March 31, 2017 as compared to 4.20% at December 31, 2016, and 4.03% at March 31, 2016.
  • Multi-family (excluding underlying co-operative mortgages), commercial real estate, and one-to-four family mixed-use property mortgage loans originated during the first quarter of 2017 had a low average loan-to-value ratio of 49.7% and an average debt coverage ratio of 176%
  • Monitor and enhance due diligence to realize strategically favorable multi-family and commercial real estate concentration levels.

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

  • Increase core deposits and continue to improve funding mix
  • Increase net interest income by leveraging loan pricing opportunities
  • Enhance core earnings power by managing net interest margin and improving scalability and efficiency
  • Manage credit risk
  • Maintain well capitalized levels under all stress test scenarios

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.

  • Net interest margin of 2.95%, decreased 5bpsYoY and decreased 1bp QoQ
  • Net interest spread of 2.84%, decreased 5bps YoY but remains unchanged QoQ
  • Net interest income includes prepayment penalty income from loans and securities of $1.1 million in 1Q17 compared with $2.2 million in 1Q16 and $1.6 million in 4Q16, and recovered interest from nonaccrual loans of $0.5 million in 1Q17, compared with $0.1 million in 1Q16 and $0.6 million in 4Q16
  • Excluding prepayment penalty income from loans and securities and recovered interest from nonaccrual loans, the yield on interest-earning assets would have been 3.80% in both 1Q17 and 1Q16 and 3.77% in 4Q16, and the net interest margin would have improved to 2.85% in 1Q17, compared with 2.83% in 1Q16 and 2.81% in 4Q16
  • Average balance of total interest-earning assets of $5,873.8 million increased $383.1 million, or 7.0% YoY and $156.5 million, or 2.7% QoQ
  • Yield on interest-earning assets of 3.90% decreased 6bps YoY and decreased 2bps QoQ
  • Cost of interest-bearing liabilities of 1.06% decreased 1bp YoY and decreased 2bps QoQ, driven by an improvement in our funding mix
  • Cost of funds of 1.01% a decrease of 1bp YoY but remains unchanged 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.

  • The 1Q17 includes a gain from life insurance proceeds of $1.2 million compared to proceeds of $0.4 million in 1Q16 and $2,000 in 4Q16.
  • Losses from fair value adjustments decreased in 1Q17 to $0.4 million which was a reduction of $0.6 million from 1Q16 and $0.1 million from 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.

  • Salaries and benefits increased $0.8 million YoY primarily due to annual salary increases and additions in staffing and increased $1.3 million QoQ due to annual salary increases, annual restricted stock unit awards to employees and increased payroll taxes partially offset by a decline in other stock-based compensation costs because of a decrease in the Company’s stock price
  • The first quarter of each year includes the impact of annual grants of employee and director restricted stock unit awards; restricted stock expense totaled $3.3 million in 1Q17 compared to $3.0 million in 1Q16 and $0.7 million in 4Q16   
  • Non-interest expense (excluding: salaries and benefits expense, director restricted stock unit awards, prepayment penalty on borrowings and net gain/losses on sale of OREO) totaled $11.3 million in 1Q17 and 1Q16 but was an increase of $0.3 million, or 3.1% QoQ
  • The efficiency ratio improved to 64.0% in 1Q17 from 64.5% in 1Q16 but increased from 59.6% in 4Q16, primarily driven by annual grants of restricted stock awards

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.

  • Pre-tax income increased by $2.3 million, or 15.4% YoY and decreased $4.9 million, or 21.8% QoQ
  • The effective tax rates were 30.0% in 1Q17, 37.0% in 1Q16 and 36.2% in 4Q16
  • The improvement in the Company’s effective tax rate was primarily due to a change in 1Q17 to the accounting treatment of deductible stock compensation expense from prior years; in prior years the tax impact of deductible stock compensation expense flowed through additional paid-in-capital and did not have an impact of the Company’s effective tax rate
  • Deductible stock compensation is required to be treated, for tax purposes, as a discrete tax item in the period the shares vest; our stock awards generally vest in the first quarter, therefore we anticipate the Company’s effective tax rate to increase to approximately 36.0% in the second quarter of 2017 and be approximately 35% for the full year   
  • Exclusive of the deductible stock compensation expense the effective tax rate for 1Q17 would have been approximately 36.0% which would reduce both GAAP and core EPS by $0.03

Financial Condition Summary:

Loans:

  • Net loans were $4,952.4 million reflecting an increase of 2.9% QoQ (not annualized) and 11.6% YoY as we continue to focus on the origination of multi-family, commercial real estate and commercial business loans with a full banking relationship
  • Loan originations and purchases of multi-family, commercial real estate and commercial business loans totaled $238.9 million for the quarter, or 89.6% of loan production
  • Loan pipeline totaled $303.1 million at March 31, 2017, compared to $310.9 million at December 31, 2016 and $436.5 million at March 31, 2016
  • The loan-to-value ratio on our portfolio of real estate dependent loans as of March 31, 2017 totaled 40.3%.

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

  • Non-performing loans totaled $18.5 million, a decrease of $2.9 million, or 13.5%, from $21.4 million at December 31, 2016
  • Classified assets totaled $47.8 million, an increase of $3.8 million, or 8.7%, from $44.0 million at December 31, 2016, primarily due to an increase in substandard taxi medallion loans, partially offset by reductions in non-performing assets
  • Loans classified as troubled debt restructured totaled $17.3 million, a decrease of $0.2 million, or 1.0%, from $17.4 million at December 31, 2016
  • We anticipate continued low loss content in the portfolio, as our strong underwriting standards coupled with our practice of obtaining updated appraisals and recording charge-offs early in the delinquency process has resulted in a 38.3% average loan-to-value for non-performing loans collateralized by real estate at March 31, 2017
  • No provision for loan losses was recorded in the first quarter of 2017 or all of 2016 due to continued strong credit quality

Capital Management

  • The Company and Bank are subject to the same regulatory requirements and at March 31, 2017, both were well capitalized under all regulatory requirements
  • During 1Q17, stockholders’ equity increased $11.5 million, or 2.2%, to $525.4 million due to net income of $12.3 million and an increase in other comprehensive income, partially offset by the declaration and payment of dividends on the Company’s common stock
  • As of March 31, 2017, up to 495,905 shares may be repurchased under the current authorized stock repurchase program, which has no expiration or maximum dollar limit; there were no purchases in 1Q17
  • Book value per common share increased to $18.24 at March 31, 2017, from $17.95 at December 31, 2016 and $16.83 at March 31, 2016
  • Tangible book value per common share, a non-GAAP measure, increased to $17.69 at March 31, 2017, from $17.40 at December 31, 2016 and $16.29 at March 31, 2016

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  1.12X 1.13X 1.11X
        

(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/ 
 BalanceInterestCost BalanceInterestCost BalanceInterestCost 
Interest-earning Assets:            
Mortgage loans, net$4,213,482$44,4294.22%$4,140,511$44,2194.27%$3,839,325$42,4544.42%
Other loans, net 654,566 6,4563.95  616,613 5,7543.73  550,006 5,1043.71 
Total loans, net (1) 4,868,048 50,8854.18  4,757,124 49,9734.20  4,389,331 47,5584.33 
Taxable securities:            
Mortgage-backed            
securities 529,942 3,3672.54  514,527 3,0022.33  658,764 4,1742.53 
Other securities 239,345 2,0723.46  248,765 2,2033.54  229,991 1,7453.03 
Total taxable securities 769,287 5,4392.83  763,292 5,2052.73  888,755 5,9192.66 
Tax-exempt securities: (2)            
Other securities 146,502 7772.12  147,184 7822.13  127,355 7922.49 
Total tax-exempt securities 146,502 7772.12  147,184 7822.13  127,355 7922.49 
Interest-earning deposits            
and federal funds sold 89,962 1530.68  49,698 590.47  85,273 940.44 
Total interest-earning            
assets 5,873,799 57,2543.90  5,717,298 56,0193.92  5,490,714 54,3633.96 
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$3070.48 $256,677$3090.48 $262,443$2980.45 
NOW accounts 1,568,267 2,2070.56  1,370,618 2,0280.59  1,621,779 1,9220.47 
Money market accounts 860,779 1,4990.70  780,233 1,3150.67  457,895 6060.53 
Certificate of deposit            
accounts 1,404,730 4,9401.41  1,388,809 5,0811.46  1,404,151 5,1211.46 
Total due to depositors 4,088,031 8,9530.88  3,796,337 8,7330.92  3,746,268 7,9470.85 
Mortgagors' escrow            
accounts 54,616 270.20  58,151 270.19  49,947 260.21 
Total interest-bearing            
deposits 4,142,647 8,9800.87  3,854,488 8,7600.91  3,796,215 7,9730.84 
Borrowings 1,111,993 4,8851.76  1,223,405 4,9081.60  1,163,348 5,2571.81 
Total interest-bearing            
liabilities 5,254,640 13,8651.06  5,077,893 13,6681.08  4,959,563 13,2301.07 
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 $43,3892.84% $42,3512.84% $41,1332.89%
             
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  1.12X  1.13X  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 $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