Basis of Presentation

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2023, filed with the SEC on August 9, 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- and six-month periods ended June 30, 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 periods. The change impacted net income by an increase of $0.1 million and a decrease of $1.1 million, respectively, for the three- and six-month periods ended June 30, 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 June 30, 2023
(In thousands)	As Reported		Adjustments		As Restated
Other assets	$	191,752	$	969	$	192,721
Total assets		8,473,883		969		8,474,852
Other liabilities		177,088		2,025		179,113
Total liabilities		7,802,580		2,025		7,804,605
Retained earnings		547,811		(1,056)		546,755
Total stockholders’ equity		671,303		(1,056)		670,247
Total liabilities and stockholders’ equity		8,473,883		969		8,474,852

Consolidated Statements of Income:

	For the three months ended June 30, 2023
(In thousands, except per share data)	As Reported		Adjustments		As Restated
Other income	$	765	$	(102)	$	663
Total non-interest income		5,122		(102)		5,020
Salaries and employee benefits		19,493		197		19,690
Professional services		2,657		(366)		2,291
Total non-interest expense		35,279		(169)		35,110
Income before income taxes		11,805		67		11,872
Federal income tax		2,194		24		2,218
State and local income tax		983		(15)		968
Total provision for income tax		3,177		9		3,186
Net income		8,628		58		8,686
Basic earnings per common share		0.29		—		0.29
Diluted earnings per common share		0.29		—		0.29

Consolidated Statements of Comprehensive Income:

	For the three months ended June 30, 2023
(In thousands)	As Reported		Adjustments		As Restated
Net income	$	8,628	$	58	$	8,686
Comprehensive net income		10,393		58		10,451

Consolidated Statements of Income:

	For the six months ended June 30, 2023
(In thousands, except per share data)	As Reported		Adjustments		As Restated
Other income	$	1,783	$	(153)	$	1,630
Total non-interest income		12,030		(153)		11,877
Salaries and employee benefits		40,380		1,872		42,252
Professional services		5,140		(588)		4,552
Total non-interest expense		72,982		1,284		74,266
Income before income taxes		18,764		(1,437)		17,327
Federal income tax		3,561		(272)		3,289
State and local income tax		1,417		(109)		1,308
Total provision for income tax		4,978		(381)		4,597
Net income		13,786		(1,056)		12,730
Basic earnings per common share		0.46		(0.04)		0.42
Diluted earnings per common share		0.46		(0.04)		0.42

Consolidated Statements of Comprehensive Income:

	For the six months ended June 30, 2023
(In thousands)	As Reported		Adjustments		As Restated
Net income	$	13,786	$	(1,056)	$	12,730
Comprehensive net income		14,255		(1,056)		13,199

Consolidated Statements of Cash Flows:

Operating Activities:	For the six months ended June 30, 2023
(In thousands)	As Reported		Adjustments		As Restated
Net income	$	13,786	$	(1,056)	$	12,730
(Increase) decrease in other assets		(15,971)		(969)		(16,940)
(Decrease) increase in other liabilities		(10,730)		2,025		(8,705)

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

Note 3 – Earnings Per Share

Note 13 – Regulatory Capital