Basis of Presentation

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Basis of Presentation

1.     Basis of Presentation

The primary business of Flushing Financial Corporation (the “Company”), a Delaware corporation, is the operation of its wholly owned subsidiary, Flushing Bank (the “Bank”).

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q/A (“Quarterly Report”) include the collective results of the Company and its direct and indirect wholly owned subsidiaries, including the Bank, Flushing Service Corporation and FSB Properties Inc., which are collectively herein referred to as “we,” “us,” “our” and the “Company.”

The Company also owns Flushing Financial Capital Trust II, Flushing Financial Capital Trust III, and Flushing Financial Capital Trust IV (the “Trusts”), which are special purpose business trusts. The Trusts are not included in the Company’s consolidated financial statements, as the Company would not absorb the losses of the Trusts if any losses were to occur.

The accompanying unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for such presented periods of the Company. Such adjustments are of a normal recurring nature, unless otherwise disclosed in this Quarterly Report. All inter-company balances and transactions have been eliminated in consolidation. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for the full year.

The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions to Quarterly Report on Form 10-Q and Article 10, Rule 10-01 of Regulation S-X for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated interim financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

When necessary, certain reclassifications were made to prior-year amounts to conform to the current-year presentation. Such reclassifications had no effect on the prior period net income or shareholders’ equity and were insignificant amounts.

This Quarterly Report amends and restates in its entirety the Quarterly Report on Form 10-Q for the three months ended March 31, 2023, filed the SEC on May 10, 2023.

As disclosed in the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2024, management and the Audit Committee of the Board of Directors of the Company determined that the Company’s consolidated financial statements for the three month period ended March 31, 2023, required restatement to correct the accounting  treatment of employee retention credits (the “ERCs”) and disclosures, which ERCs were incorrectly recognized as income during such period. The change impacted net income by a decrease of $1.1 million for the three-month period ended March 31, 2023.

In the course of preparing the Company’s consolidated financial statements for the fiscal year ended December 31, 2023, the Company determined that, notwithstanding reliance on its independent tax credit advisors, it is not able to treat the ultimate realization of the ERCs as “probable” under U.S. generally accepted accounting practices, therefore, requiring the restatement of the Company’s previously issued consolidated financial statements for the referenced periods and amendments to the Company’s related previously filed quarterly reports on Form 10-Q during such year.

Although the Company had engaged an independent national tax credit advisory firm that had advised the Company that it qualified for the ERCs as previously reported, the Company determined that it could no longer rely on such advice.

The following tables summarize the effects of the restatements on select consolidated financial statements as reported as of and for the periods stated and are unaudited:

Consolidated Statements of Financial Condition:

	As of March 31, 2023
(In thousands)	As Reported		Adjustments		As Restated
Other assets	$	168,259	$	613	$	168,872
Total assets		8,479,121		613		8,479,734
Other liabilities		138,710		1,727		140,437
Total liabilities		7,805,662		1,727		7,807,389
Retained earnings		545,786		(1,114)		544,672
Total stockholders’ equity		673,459		(1,114)		672,345
Total liabilities and stockholders’ equity		8,479,121		613		8,479,734

Consolidated Statements of Income:

	For the three months ended March 31, 2023
(In thousands, except per share data)	As Reported		Adjustments		As Restated
Other income	$	1,018	$	(51)	$	967
Total non-interest income		6,908		(51)		6,857
Salaries and employee benefits		20,887		1,675		22,562
Professional services		2,483		(222)		2,261
Total non-interest expense		37,703		1,453		39,156
Income before income taxes		6,959		(1,504)		5,455
Federal income tax		1,367		(296)		1,071
State and local income tax		434		(94)		340
Total provision for income tax		1,801		(390)		1,411
Net income		5,158		(1,114)		4,044
Basic earnings per common share		0.17		(0.04)		0.13
Diluted earnings per common share		0.17		(0.04)		0.13

Consolidated Statements of Comprehensive Income:

	For the three months ended March 31, 2023
(In thousands)	As Reported		Adjustments		As Restated
Net income	$	5,158	$	(1,114)	$	4,044
Comprehensive net income		3,862		(1,114)		2,748

Consolidated Statements of Cash Flows:

Operating Activities:

	For the three months March 31, 2023
(In thousands)	As Reported		Adjustments		As Restated
Net income	$	5,158	$	(1,114)	$	4,044
(Increase) decrease in other assets		(8,420)		(613)		(9,033)
(Decrease) increase in other liabilities		(16,889)		1,727		(15,162)

In addition, the following footnotes have been updated to reflect the restated amounts:

Note 3 – Earnings Per Share

Note 13 – Regulatory Capital