Record Loan Closings; Loan Growth with Stable NIM QoQ

John R. Buran, President and CEO Commentary

UNIONDALE, N.Y., July 26, 2022 (GLOBE NEWSWIRE) -- The Company reported second quarter 2022 GAAP EPS of $0.81, up 32.8% YoY, with a ROAA of 1.22%, and ROAE of 15.0%. Core 2Q22 EPS was $0.70, a decrease of 4.1% YoY, with a ROAA of 1.05% and the ROAE of 12.90%.

“Record loan closings of $504 million drove a 3.4% YoY increase in net loans, excluding PPP. Core loan yields increased 11 bps QoQ compared to only 7 bps for core deposit costs. 2Q22 was the first quarter since 2020 where yields on loan closings exceeded yields on satisfactions excluding PPP. Despite our liability sensitive balance sheet, the NIM was stable QoQ, however, the pace and magnitude of rate increases this cycle are stronger than anticipated and will likely pressure the NIM going forward. A partial offset to this pressure is $986 million of loans that reprice within the quarter and an additional $1.3 billion of loans that are scheduled to reprice or mature through the end of 2023. The Bank continues to grow noninterest bearing deposits, which are now over 16% of average deposits, up from 14.2% a year ago. We opened our 25th branch this quarter in Elmhurst further expanding our footprint in the Asian community. Given the low risk nature of our loan portfolio (>87% real estate based, average LTVs of <38%, and strong debt coverage ratios), the Company is well positioned to handle any potential economic downturn affecting credit markets.”

- John R. Buran, President and CEO

NIM Stable QoQ; Loan Pipeline Remains Strong. Record net interest income of $64.7 million increased 6.0% YoY and 2.0% QoQ. NIM FTE was 3.35% in 2Q22 compared to 3.36% in 1Q22 and 3.14% a year ago. Core NIM FTE increased by 19 bps to 3.33% YoY and 2 bps QoQ. Period end net loans, excluding PPP, increased 2.6% QoQ, with commercial business and other loans growing 3.2%. Record loan closings, excluding PPP, were up 63% YoY and repayment speeds remained elevated. The Company continued to benefit from the merger disruption in our markets as we have hired 42 people, including 18 revenue producers since March 31, 2021 from institutions involved with mergers.

Returned 61% of Earnings in 2Q22; Tangible Book Value Per Share Increased 6% YoY. The Company repurchased 387,689 shares of common stock at an average price of $22.01 during the quarter. Book value and tangible book value per share were $22.38 and $21.71, respectively, while TCE/TA¹ was 7.82% at June 30, 2022 compared to 8.05% at March 31, 2022.

Key Financial Metrics2

		2Q22					1Q22			4Q21			3Q21				2Q21
GAAP:
EPS		$	0.81				$	0.58		$	0.58		$	0.81			$	0.61
ROAA (%)			1.22					0.91			0.89			1.26				0.93
ROAE (%)			15.00					10.83			10.77			15.42				11.95
NIM FTE3 (%)			3.35					3.36			3.29			3.34				3.14
Core:
EPS		$	0.70				$	0.61		$	0.67		$	0.88			$	0.73
ROAA (%)			1.05					0.94			1.04			1.38				1.11
ROAE (%)			12.90					11.27			12.49			16.88				14.27
Core NIM FTE (%)			3.33					3.31			3.21			3.27				3.14
Efficiency Ratio (%)			52.3					58.9			58.7			52.3				53.4
Credit Quality:
NPAs/Loans&REO (%)			0.72					0.21			0.23			0.31				0.26
ACLs/Loans (%)			0.58					0.57			0.56			0.55				0.64
ACLs/NPLs (%)			141.06					266.12			248.66			179.86				242.55
NCOs/Avg Loans (%)			(0.03	)				0.06			-			(0.04	)			0.05
Balance Sheet:
Avg Loans ($B)		$	6.6				$	6.6		$	6.6		$	6.6			$	6.7
Avg Dep ($B)		$	6.4				$	6.4		$	6.5		$	6.4			$	6.5
Book Value/Share		$	22.38				$	22.26		$	22.26		$	21.78			$	21.16
Tangible BV/Share		$	21.71				$	21.61		$	21.61		$	21.13			$	20.51
TCE/TA (%)			7.82					8.05			8.22			8.04				7.80

¹ Tangible Common Equity (“TCE”)/Total Assets (“TA”) ² See “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Margin to Core and Base Net Interest Income and Net Interest Margin.” ³ Net Interest Margin (“NIM”) Fully Taxable Equivalent (“FTE”)

2Q22 Highlights

• Net interest income increased 2.0% QoQ (as average earning assets increased 2.2% QoQ), and 6.0% YoY to a record $64.7 million; Core net interest income grew 3.0% QoQ and 5.4% YoY to a record $64.4 million
• Net interest margin FTE decreased 1 bps QoQ but increased 21 bps YoY to 3.35%; Core net interest margin FTE increased 2 bps QoQ and 19 bps YoY to 3.33%; Core NIM expansion QoQ was primarily driven by loan yields increasing greater than deposit costs
• Excluding PPP, period end net loans increased 2.6% QoQ and 3.4% YoY; loan closings were a record $503.8 million in 2Q22, up 53.0% QoQ and 63.0% YoY
• Average deposits, including mortgage escrow, increased 0.5% QoQ, but decreased 1.1% YoY to $6.4 billion, with core deposits comprising 87.3% of total average deposits; record average noninterest bearing deposits were up 13.1% YoY
• Loan pipeline increased 34.7% YoY to $582.6 million
• Provision for credit losses was $1.6 million in 2Q22 compared to a benefit for credit losses of $1.6 million in 2Q21; net recoveries were $0.5 million in 2Q22 compared to net charge-offs of $0.9 million in 2Q21
• NPAs increased to $48.9 million, up from $14.1 million at 1Q22 and $17.6 million at 2Q21. The increase in NPAs primarily relates to a previously identified $24.1 million criticized investment security and related loan (combined LTV of 63%) and two commercial relationships (one was resolved after quarter end)
• Tangible Common Equity to Tangible Assets was 7.82% down from 8.05% at 1Q22; the change in AOCI (primarily from rising rates) impacted this ratio by an additional 19 bps in 2Q22 compared to 1Q22
• Repurchased 387,689 shares at an average price of $22.01; dividends and share repurchases were 61% of net income in 2Q22

Income Statement Highlights

																						YoY				QoQ
($000s, except EPS)			2Q22				1Q22			4Q21				3Q21				2Q21				Change				Change
Net Interest Income			$	64,730			$	63,479		$	62,674			$	63,364			$	61,039			6.0		%		2.0		%
Provision (Benefit) for Credit Losses				1,590				1,358			761				(6,927	)			(1,598	)		(199.5	)			17.1
Noninterest Income (Loss)				7,353				1,313			(280	)			866				(3,210	)		(329.1	)			460.0
Noninterest Expense				35,522				38,794			38,807				36,345				34,011			4.4				(8.4	)
Income Before Income Taxes				34,971				24,640			22,826				34,812				25,416			37.6				41.9
Provision for Income Taxes				9,936				6,421			4,743				9,399				6,158			61.4				54.7
Net Income			$	25,035			$	18,219		$	18,083			$	25,413			$	19,258			30.0				37.4
Diluted EPS			$	0.81			$	0.58		$	0.58			$	0.81			$	0.61			32.8				39.7
Avg. Diluted Shares (000s)				30,937				31,254			31,353				31,567				31,677			(2.3	)			(1.0	)
Core Net Income1			$	21,518			$	18,969		$	20,968			$	27,829			$	22,994			(6.4	)			13.4
Core EPS1			$	0.70			$	0.61		$	0.67			$	0.88			$	0.73			(4.1	)			14.8

¹ See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $64.7 million in 2Q22 (an increase of 6.0% YoY, and 2.0% QoQ), compared to $63.5 million in 1Q22, $62.7 million in 4Q21, $63.4 million in 3Q21, and $61.0 million in 2Q21.

• Net interest margin, FTE (“NIM”) of 3.35% increased 21 bps YoY, but decreased 1 bp QoQ; PPP loans caused a 2 bps, 3 bps, 3 bps, and 2 bps positive impact on the NIM in 2Q22, 1Q22, 4Q21, and 3Q21, respectively, and were neutral in 2Q21
• Prepayment penalty income from loans and securities, net reversals and recoveries of interest from nonaccrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $2.6 million (13 bps to the NIM) in 2Q22 compared to $2.6 million (14 bps) in 1Q22, $3.1 million (16 bps) in 4Q21, $3.4 million (19 bps) in 3Q21, and $1.9 million (10 bps) in 2Q21
• Excluding the items in the previous bullet, net interest margin was 3.22% in 2Q22 and in 1Q22, 3.13% in 4Q21, 3.15% in 3Q21, and 3.04% in 2Q21, or an increase of 17 bps YoY and stable QoQ
• Net PPP loan fees were $0.5 million in 2Q22, $0.9 million in 1Q22, $1.2 million in 4Q21, $1.3 million in 3Q21, and $1.2 million in 2Q21

The Company recorded a provision for credit losses of $1.6 million in 2Q22, $1.4 million in 1Q22, and $0.8 million in 4Q21 compared to a benefit for credit losses of $6.9 million in 3Q21 and $1.6 million in 2Q21.

• 2Q22 provision for credit losses of $1.6 million was primarily due to loan growth
• Net charge-offs (recoveries) were $(0.5) million in 2Q22 ((3) bps of average loans), $0.9 million in 1Q22 (6 bps of average loans), $(29) thousand in 4Q21 (negligible as compared to average loans), $(0.6) million in 3Q21 ((4) bps of average loans), and $0.9 million in 2Q21 (5 bps of average loans)

Noninterest income (loss) was $7.4 million in 2Q22, $1.3 million in 1Q22, $(0.3) million in 4Q21, $0.9 million in 3Q21, and $(3.2) million in 2Q21.

• Noninterest income included net gains (losses) from fair value adjustments of $2.5 million in 2Q22 or $0.06 per share, net of tax, $(1.8) million in 1Q22 or $(0.04) per share, net of tax, $(5.1) million in 4Q21 or $(0.13) per share, net of tax, $(2.3) million in 3Q21 or $(0.05) per share, net of tax, and $(6.5) million or $(0.15) per share, net of tax in 2Q21
• Life insurance proceeds were $1.5 million ($0.05 per share) in 2Q22
• Absent all above items and other immaterial adjustments, core noninterest income was $3.3 million in 2Q22, up 2.1% YoY, and 5.2% QoQ
• After a pilot program, the Company made the decision to suspend its agreement with NYDIG to offer bitcoin services; all pilot program customers have been notified and all accounts have been closed; the financial impact was immaterial
• Included in 4Q21 core noninterest income was a one-time $2.0 million ($0.05 per share, net of tax) dividend received on retirement plan investments
  

Noninterest expense totaled $35.5 million in 2Q22 (an increase of 4.4% YoY, but a decrease of 8.4% QoQ) compared to $38.8 million in 1Q22, $38.8 million in 4Q21, $36.3 million in 3Q21, and $34.0 million in 2Q21.

• Included in 1Q22 noninterest expense was $4.3 million of seasonal compensation expense; 4Q21 noninterest expense included a one-time $4.3 million ($0.11 per share, net of tax) of increased compensation and benefits for all employees due to a record year of earnings in 2021 and employee performance through the pandemic
• Noninterest expense included $17 thousand pre-tax merger benefit (<$0.01 per share, net of tax) in 4Q21, $2.1 million of pre-tax merger charges ($0.05 per share, net of tax) in 3Q21, and $0.5 million of pre-tax merger benefits ($(0.01) per share, net of tax) in 2Q21
• Excluding the effects of the merger and other immaterial adjustments, core operating expenses were $35.4 million in 2Q22, up 3.0% YoY, but down 8.5% QoQ
• The efficiency ratio was 52.3% in 2Q22, 58.9% in 1Q22, 58.7% in 4Q21, 52.3% in 3Q21, and 53.4% in 2Q21

The provision for income taxes was $9.9 million in 2Q22 compared to $6.4 million in 1Q22, $4.7 million in 4Q21, $9.4 million in 3Q21, and $6.2 million in 2Q21.

• The effective tax rate was 28.4% in 2Q22, 26.1% in 1Q22, 20.8% in 4Q21, 27.0% in 3Q21, and 24.2% in 2Q21
• The 2Q22 effective tax rate includes a loss of a certain state and city tax deductions and a resolution of certain examinations
• The 4Q21 effective tax rate declined due to lower levels of taxable state income and higher percentage of permanent differences
• The 2Q21 effective tax rate includes $0.8 million benefit from a state tax rate change; absent this benefit the effective tax rate would have been 27.2%

Balance Sheet, Credit Quality, and Capital Highlights

																		YoY				QoQ
		2Q22				1Q22			4Q21			3Q21			2Q21			Change				Change
Average Loans And Deposits ($MM)
Loans		$	6,640			$	6,579		$	6,558		$	6,633		$	6,687		(0.7	)	%		0.9		%
Deposits			6,441				6,410			6,459			6,408			6,511		(1.1	)			0.5
Credit Quality ($000s)
Nonperforming Loans		$	27,948			$	14,066		$	14,934		$	20,217		$	17,592		58.9		%		98.7		%
Nonperforming Assets			48,929				14,066			14,934			20,217			17,592		178.1				247.9
Criticized and Classified Loans			57,145				59,548			57,650			68,913			69,161		(17.4	)			(4.0	)
Criticized and Classified Assets			78,125				80,527			78,628			89,889			90,135		(13.3	)			(3.0	)
Allowance for Credit Losses/Loans (%)			0.58				0.57			0.56			0.55			0.64		(6	)	bps		1		bp
Capital
Book Value/Share		$	22.38			$	22.26		$	22.26		$	21.78		$	21.16		5.8		%		0.5		%
Tangible Book Value/Share			21.71				21.61			21.61			21.13			20.51		5.9				0.5
Tang. Common Equity/Tang. Assets (%)			7.82				8.05			8.22			8.04			7.80		2		bps		(23	)	bps
Leverage Ratio (%)			8.91				9.05			8.98			8.83			8.50		41				(14	)

Average loans were $6.6 billion, a decrease of 0.7% YoY, but up 0.9% QoQ.

• Period end net loans, excluding PPP loans, totaled $6.7 billion, up 3.4% YoY and 2.6% QoQ
• Total loan closings were a record $503.8 million in 2Q22, $329.3 million in 1Q22, $362.7 million in 4Q21, $243.9 million in 3Q21, and $324.4 million ($309.0 million excluding PPP) in 2Q21
• The loan pipeline was $582.6 million at June 30, 2022, up 34.7% YoY, but down 12.2% from record levels QoQ
• PPP loans held at the end of each quarter totaled $22.2 million at 2Q22, $43.2 million at 1Q22, $77.4 million at 4Q21, $130.8 million at 3Q21, and $197.3 million at 2Q21; forgiven PPP loans were $21.0 million in 2Q22, $34.1 million in 1Q22, $53.4 million in 4Q21, $66.5 million in 3Q21, and $69.2 million in 2Q21

Average Deposits totaled $6.4 billion, decreasing 1.1% YoY, but up 0.5% QoQ.

• Average core deposits (non-CD deposits) increased to 87.3% of total average deposits (including escrow deposits) in 2Q22, compared to 84.0% a year ago
• Average noninterest bearing deposits increased 13.1% YoY and 4.3% QoQ and comprised 16.2% of total average deposits (including escrow deposits) in 2Q22 compared to 14.2% a year ago

Credit Quality: Nonperforming loans held at the end of each quarter totaled $27.9 million at 2Q22, $14.1 million at 1Q22, $14.9 million at 4Q21, $20.2 million at 3Q21, and $17.6 million at 2Q21.

• The $13.8 million QoQ increase in NPLs was primarily driven by three previously identified as criticized and classified commercial business credits (one resolved subsequent to quarter end)
• Nonperforming assets totaled $48.9 million, up from $14.1 million at 1Q22 and $17.6 million at 2Q21; the increase in nonperforming assets primarily relates to a previously disclosed criticized investment security and loan totaling $24.1 million that has a combined LTV of 63%
• Criticized and classified loans totaled $57.1 million at 2Q22 (85 bps of loans), $59.5 million at 1Q22 (90 bps of loans), $57.7 million at 4Q21 (87 bps of loans), $68.9 million at 3Q21 (104 bps of loans), and $69.2 million at 2Q21 (103 bps of loans)
• Criticized and classified assets are composed of criticized and classified loans, as detailed above, plus one criticized investment security totaling $21.0 million in each quarter of 2Q22, 1Q22, 4Q21, and 3Q21
• Loans classified as troubled debt restructured (TDR) totaled $14.8 million at 2Q22 compared to $15.1 million at 1Q22 and $15.5 million a year ago
• Over 87% of gross loans are collateralized by real estate with an average loan-to-value ratio of <38% as of June 30, 2022
• Allowance for credit losses were 0.58% of loans at 2Q22 compared to 0.57% at 1Q22 and 0.64% a year ago
• Allowance for credit losses were 141.1% of nonperforming loans at 2Q22 compared to 266.1% at 1Q22 and 242.6% a year ago

Capital: Book value per common share was $22.38 at 2Q22, up 0.5% QoQ and 5.8% YoY; tangible book value per common share, a non-GAAP measure, was $21.71 at 2Q22, up 0.5% QoQ and 5.9% YoY.

• The Company paid a dividend of $0.22 per share and repurchased 387,689 shares at an average price of $22.01 in 2Q22
• During the quarter, the Board of Directors authorized an increase of 1 million shares to the current share repurchase program; as of the end of 2Q22, 1,100,498 shares remain subject to repurchase under the authorized stock repurchase programs, which has no expiration or maximum dollar limit
• Tangible common equity to tangible assets was 7.82% at 2Q22 compared to 8.05% at 1Q22 and 7.80% at 2Q21
• The Company and the Bank remain well capitalized under all applicable regulatory requirements
• The leverage ratio was 8.91% at 2Q22 compared to 9.05% at 1Q22 and 8.50% at 2Q21
  

Conference Call Information And Third Quarter Earnings Release Date

Conference Call Information:

• John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer, will host a conference call on Wednesday, July 27, 2022, at 9:30 AM (ET) to discuss the Company’s second quarter 2022 results and strategy.
• Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
• Webcast: https://services.choruscall.com/links/ffic220727.html
• Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
• Replay Access Code: 3593053
• The conference call will be simultaneously webcast and archived

Third Quarter 2022 Earnings Release Date:

The Company plans to release Third Quarter 2022 financial results after the market close on October 25, 2022; followed by a conference call at 9:30 AM (ET) on October 26, 2022.

A detailed announcement will be issued prior to the third quarter’s close confirming the date and time of the earnings release.

About Flushing Financial Corporation

Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, an FDIC insured, New York State—chartered commercial bank that operates banking offices in Queens, Brooklyn, Manhattan, and on Long Island. The Bank has been building relationships with families, business owners, and communities since 1929. Today, it offers the products, services, and conveniences associated with large commercial banks, including a full complement of deposit, loan, equipment finance, and cash management services. Rewarding customers with personalized attention and bankers that can communicate in the languages prevalent within these multicultural markets is what makes the Bank uniquely different. As an Equal Housing Lender and leader in real estate lending, the Bank’s experienced lending teams create mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. The Bank also fosters relationships with consumers nationwide through its online banking division with the iGObanking® and BankPurely® brands.

Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at FlushingBank.com. Flushing Financial Corporation’s earnings release and presentation slides will be available prior to the conference call at FlushingBank.com under Investor Relations.

“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, 2021 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”, “goals”, “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.

Investor Contact: Susan K. Cullen, SEVP, CFO and Treasurer, 718-961-5400

#FF

- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)

		At or for the three months ended																								At or for the six months ended
		June 30,					March 31,				December 31,					September 30,					June 30,					June 30,			June 30,
(Dollars in thousands, except per share data)		2022					2022				2021					2021					2021					2022			2021
Performance Ratios (1)
Return on average assets			1.22		%			0.91	%			0.89		%			1.26		%			0.93	%				1.06	%		0.93	%
Return on average equity			15.00					10.83				10.77					15.42					11.95					12.91			12.11
Yield on average interest-earning assets (2)			3.85					3.77				3.77					3.84					3.69					3.81			3.73
Cost of average interest-bearing liabilities			0.60					0.50				0.58					0.61					0.66					0.55			0.67
Cost of funds			0.52					0.43				0.50					0.53					0.57					0.48			0.59
Net interest rate spread during period (2)			3.25					3.27				3.19					3.23					3.03					3.26			3.06
Net interest margin (2)			3.35					3.36				3.29					3.34					3.14					3.36			3.16
Noninterest expense to average assets			1.73					1.93				1.92					1.80					1.65					1.83			1.76
Efficiency ratio (3)			52.27					58.87				58.66					52.28					53.38					55.52			55.96
Average interest-earning assets to average interest-bearing liabilities			1.22		X			1.22	X			1.22		X			1.21		X			1.19	X				1.22	X		1.19	X
Average Balances
Total loans, net		$	6,640,331				$	6,578,680			$	6,558,285				$	6,633,301				$	6,686,888				$	6,609,676		$	6,693,644
Total interest-earning assets			7,740,683					7,570,373				7,627,256					7,608,317					7,790,174					7,655,999			7,729,035
Total assets			8,211,763					8,049,470				8,090,701					8,072,918					8,263,553					8,131,065			8,205,954
Total due to depositors			5,298,855					5,336,983				5,397,802					5,406,423					5,495,936					5,317,814			5,430,158
Total interest-bearing liabilities			6,337,374					6,220,510				6,276,221					6,310,859					6,532,891					6,279,265			6,505,534
Stockholders' equity			667,456					673,012				671,474					659,288					644,690					670,219			632,238
Per Share Data
Book value per common share (4)		$	22.38				$	22.26			$	22.26				$	21.78				$	21.16				$	22.38		$	21.16
Tangible book value per common share (5)		$	21.71				$	21.61			$	21.61				$	21.13				$	20.51				$	21.71		$	20.51
Stockholders' Equity
Stockholders' equity		$	670,812				$	675,813			$	679,628				$	668,096				$	655,167				$	670,812		$	655,167
Tangible stockholders' equity			650,894					656,085				659,758					648,039					634,959					650,894			634,959
Consolidated Regulatory Capital Ratios
Tier 1 capital		$	739,776				$	731,536			$	726,174				$	711,276				$	697,591				$	739,776		$	697,591
Common equity Tier 1 capital			686,258					675,434				671,494					661,340					649,367					686,258			649,367
Total risk-based capital			903,047					892,861				885,469					832,255					823,494					903,047			823,494
Risk Weighted Assets			6,522,710					6,232,020				6,182,095					6,194,207					6,344,076					6,522,710			6,344,076
Tier 1 leverage capital (well capitalized = 5%)			8.91		%			9.05	%			8.98		%			8.83		%			8.50	%				8.91	%		8.50	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			10.52					10.84				10.86					10.68					10.24					10.52			10.24
Tier 1 risk-based capital (well capitalized = 8.0%)			11.34					11.74				11.75					11.48					11.00					11.34			11.00
Total risk-based capital (well capitalized = 10.0%)			13.84					14.33				14.32					13.44					12.98					13.84			12.98
Capital Ratios
Average equity to average assets			8.13		%			8.36	%			8.30		%			8.17		%			7.80	%				8.24	%		7.70	%
Equity to total assets			8.04					8.27				8.45					8.27					8.03					8.04			8.03
Tangible common equity to tangible assets (6)			7.82					8.05				8.22					8.04					7.80					7.82			7.80
Asset Quality
Nonaccrual loans (7)		$	27,848				$	14,066			$	14,933				$	18,292				$	17,391				$	27,848		$	17,391
Nonperforming loans			27,948					14,066				14,933					20,217					17,592					27,948			17,592
Nonperforming assets			48,929					14,066				14,933					20,217					17,592					48,929			17,592
Net charge-offs (recoveries)			(501	)				935				(29	)				(619	)				902					434			3,767
Asset Quality Ratios
Nonperforming loans to gross loans			0.41		%			0.21	%			0.23		%			0.31		%			0.26	%				0.41	%		0.26	%
Nonperforming assets to total assets			0.59					0.17				0.19					0.25					0.22					0.59			0.22
Allowance for credit losses to gross loans			0.58					0.57				0.56					0.55					0.64					0.58			0.64
Allowance for credit losses to nonperforming assets			80.57					266.12				248.66					179.86					242.55					80.57			242.55
Allowance for credit losses to nonperforming loans			141.06					266.12				248.66					179.86					242.55					141.06			242.55
Net charge-offs (recoveries) to average loans			(0.03	)				0.06				—					(0.04	)				0.05					0.01			0.11
Full-service customer facilities			25					24				24					24					25					25			25

(See footnotes on next page)

⁽¹⁾ Ratios are presented on an annualized basis, where appropriate.
⁽²⁾ Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
⁽³⁾ Efficiency ratio, a non-GAAP measure, was calculated by dividing noninterest expense (excluding merger expense, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization of purchase accounting adjustments) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges and net amortization of purchase accounting adjustments) and noninterest income (excluding life insurance proceeds, net gains and losses from the sale or disposition of securities, assets and fair value adjustments).

⁽⁴⁾ Calculated by dividing stockholders’ equity by shares outstanding.
⁽⁵⁾ 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”.
⁽⁶⁾ See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
⁽⁷⁾ Excludes performing nonaccrual TDR loans.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	For the three months ended																					For the six months ended
	June 30,			March 31,				December 31,				September 30,				June 30,						June 30,			June 30,
(In thousands, except per share data)	2022			2022				2021				2021				2021						2022			2021
Interest and Dividend Income
Interest and fees on loans	$	69,192		$	67,516			$	68,113			$	69,198			$	67,999					$	136,708		$	137,020
Interest and dividends on securities:
Interest		4,929			3,745				3,536				3,706				3,685						8,674			6,757
Dividends		11			8				7				7				7						19			15
Other interest income		159			51				74				42				51						210			87
Total interest and dividend income		74,291			71,320				71,730				72,953				71,742						145,611			143,879
Interest Expense
Deposits		4,686			3,408				3,975				4,705				5,539						8,094			11,644
Other interest expense		4,875			4,433				5,081				4,884				5,164						9,308			10,304
Total interest expense		9,561			7,841				9,056				9,589				10,703						17,402			21,948
Net Interest Income		64,730			63,479				62,674				63,364				61,039						128,209			121,931
Provision (benefit) for credit losses		1,590			1,358				761				(6,927	)			(1,598	)					2,948			1,222
Net Interest Income After Provision (Benefit) for Credit Losses		63,140			62,121				61,913				70,291				62,637						125,261			120,709
Noninterest Income (Loss)
Banking services fee income		1,166			1,374				1,142				865				1,233						2,540			3,958
Net gain (loss) on sale of securities		—			—				—				(10	)			123						—			123
Net gain on sale of loans		73			—				46				131				127						73			158
Net gain on disposition of assets		—			—				—				—				—						—			621
Net gain (loss) from fair value adjustments		2,533			(1,809	)			(5,140	)			(2,289	)			(6,548	)					724			(5,566	)
Federal Home Loan Bank of New York stock dividends		407			397				417				491				500						804			1,189
Life insurance proceeds		1,536			—				—				—				—						1,536			—
Bank owned life insurance		1,115			1,114				1,023				1,015				1,009						2,229			2,006
Other income		523			237				2,232				663				346						760			612
Total noninterest income (loss)		7,353			1,313				(280	)			866				(3,210	)					8,666			3,101
Noninterest Expense
Salaries and employee benefits		21,109			23,649				25,223				20,544				19,879						44,758			42,543
Occupancy and equipment		3,760			3,604				3,579				3,534				3,522						7,364			6,889
Professional services		2,285			2,222				1,152				1,899				1,988						4,507			4,388
FDIC deposit insurance		615			420				391				618				729						1,035			1,942
Data processing		1,383			1,424				1,757				1,759				1,419						2,807			3,528
Depreciation and amortization		1,447			1,460				1,521				1,627				1,638						2,907			3,277
Other real estate owned/foreclosure expense		32			84				129				182				22						116			12
Other operating expenses		4,891			5,931				5,055				6,182				4,814						10,822			9,591
Total noninterest expense		35,522			38,794				38,807				36,345				34,011						74,316			72,170
Income Before Provision for Income Taxes		34,971			24,640				22,826				34,812				25,416						59,611			51,640
Provision for Income Taxes		9,936			6,421				4,743				9,399				6,158						16,357			13,343
Net Income	$	25,035		$	18,219			$	18,083			$	25,413			$	19,258					$	43,254		$	38,297
Basic earnings per common share	$	0.81		$	0.58			$	0.58			$	0.81			$	0.61					$	1.39		$	1.21
Diluted earnings per common share	$	0.81		$	0.58			$	0.58			$	0.81			$	0.61					$	1.39		$	1.21
Dividends per common share	$	0.22		$	0.22			$	0.21			$	0.21			$	0.21					$	0.44		$	0.42
Basic average shares		30,937			31,254				31,353				31,567				31,677						31,095			31,641
Diluted average shares		30,937			31,254				31,353				31,567				31,677						31,095			31,641

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2022				2022				2021				2021				2021
ASSETS
Cash and due from banks		$	137,026			$	186,407			$	81,723			$	178,598			$	145,971
Securities held-to-maturity:
Mortgage-backed securities			7,885				7,890				7,894				7,899				7,904
Other securities			66,230				66,327				49,974				49,989				49,986
Securities available for sale:
Mortgage-backed securities			510,934				553,828				572,184				584,145				596,661
Other securities			346,720				286,041				205,052				212,654				224,784
Loans			6,760,393				6,607,264				6,638,105				6,630,354				6,718,806
Allowance for credit losses			(39,424	)			(37,433	)			(37,135	)			(36,363	)			(42,670	)
Net loans			6,720,969				6,569,831				6,600,970				6,593,991				6,676,136
Interest and dividends receivable			38,811				37,308				38,698				40,912				43,803
Bank premises and equipment, net			22,285				22,752				23,338				24,018				26,438
Federal Home Loan Bank of New York stock			50,017				33,891				35,937				36,158				41,630
Bank owned life insurance			211,220				211,867				210,754				184,730				183,715
Goodwill			17,636				17,636				17,636				17,636				17,636
Core deposit intangibles			2,282				2,420				2,562				2,708				2,859
Right of use asset			46,687				48,475				50,200				50,155				51,972
Other assets			160,885				125,160				148,989				93,741				89,850
Total assets		$	8,339,587			$	8,169,833			$	8,045,911			$	8,077,334			$	8,159,345
LIABILITIES
Deposits		$	6,350,000			$	6,373,400			$	6,333,532			$	6,421,391			$	6,298,790
Mortgagors' escrow deposits			57,577				79,495				51,913				67,207				58,230
Borrowed funds			1,089,621				877,122				815,544				752,925				971,827
Operating lease liability			50,346				52,292				54,155				54,239				56,151
Other liabilities			121,231				111,711				111,139				113,476				119,180
Total liabilities			7,668,775				7,494,020				7,366,283				7,409,238				7,504,178
STOCKHOLDERS' EQUITY
Preferred stock (5,000,000 shares authorized; none issued)			—				—				—				—				—
Common stock ($0.01 par value; 100,000,000 shares authorized)			341				341				341				341				341
Additional paid-in capital			262,860				261,837				263,375				262,009				260,958
Treasury stock			(88,342	)			(79,834	)			(75,293	)			(71,738	)			(65,335	)
Retained earnings			527,217				508,973				497,889				486,418				467,620
Accumulated other comprehensive loss, net of taxes			(31,264	)			(15,504	)			(6,684	)			(8,934	)			(8,417	)
Total stockholders' equity			670,812				675,813				679,628				668,096				655,167
Total liabilities and stockholders' equity		$	8,339,587			$	8,169,833			$	8,045,911			$	8,077,334			$	8,159,345
(In thousands)
Issued shares			34,088				34,088				34,088				34,088				34,088
Outstanding shares			29,980				30,367				30,526				30,676				30,962
Treasury shares			4,108				3,721				3,561				3,412				3,126

  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

		For the three months ended																	For the six months ended
		June 30,			March 31,			December 31,			September 30,			June 30,					June 30,			June 30,
(In thousands)		2022			2022			2021			2021			2021					2022			2021
Interest-earning Assets:
Mortgage loans, net		$	5,178,029		$	5,152,070		$	5,140,233		$	5,158,213		$	5,130,400				$	5,165,121		$	5,143,117
Other loans, net			1,462,302			1,426,610			1,418,052			1,475,088			1,556,488					1,444,555			1,550,527
Total loans, net			6,640,331			6,578,680			6,558,285			6,633,301			6,686,888					6,609,676			6,693,644
Taxable securities:
Mortgage-backed securities			594,923			580,670			595,538			590,732			578,134					587,836			506,424
Other securities			333,158			226,744			207,482			217,763			232,020					280,245			266,234
Total taxable securities			928,081			807,414			803,020			808,495			810,154					868,081			772,658
Tax-exempt securities:
Other securities			67,315			57,611			50,834			50,832			50,830					62,490			50,829
Total tax-exempt securities			67,315			57,611			50,834			50,832			50,830					62,490			50,829
Interest-earning deposits and federal funds sold			104,956			126,668			215,117			115,689			242,302					115,752			211,904
Total interest-earning assets			7,740,683			7,570,373			7,627,256			7,608,317			7,790,174					7,655,999			7,729,035
Other assets			471,080			479,097			463,445			464,601			473,379					475,066			476,919
Total assets		$	8,211,763		$	8,049,470		$	8,090,701		$	8,072,918		$	8,263,553				$	8,131,065		$	8,205,954
Interest-bearing Liabilities:
Deposits:
Savings accounts		$	156,785		$	156,592		$	154,471		$	153,120		$	153,113				$	156,689		$	161,549
NOW accounts			2,089,851			2,036,914			2,115,619			2,107,866			2,255,581					2,063,529			2,220,677
Money market accounts			2,231,743			2,253,630			2,177,928			2,107,473			2,043,257					2,242,626			1,974,781
Certificate of deposit accounts			820,476			889,847			949,784			1,037,964			1,043,985					854,970			1,073,151
Total due to depositors			5,298,855			5,336,983			5,397,802			5,406,423			5,495,936					5,317,814			5,430,158
Mortgagors' escrow accounts			97,496			71,509			84,617			68,562			91,545					84,574			78,531
Total interest-bearing deposits			5,396,351			5,408,492			5,482,419			5,474,985			5,587,481					5,402,388			5,508,689
Borrowings			941,023			812,018			793,802			835,874			945,410					876,877			996,845
Total interest-bearing liabilities			6,337,374			6,220,510			6,276,221			6,310,859			6,532,891					6,279,265			6,505,534
Noninterest-bearing demand deposits			1,044,553			1,001,571			976,803			933,443			923,220					1,023,181			889,821
Other liabilities			162,380			154,377			166,203			169,328			162,752					158,400			178,361
Total liabilities			7,544,307			7,376,458			7,419,227			7,413,630			7,618,863					7,460,846			7,573,716
Equity			667,456			673,012			671,474			659,288			644,690					670,219			632,238
Total liabilities and equity		$	8,211,763		$	8,049,470		$	8,090,701		$	8,072,918		$	8,263,553				$	8,131,065		$	8,205,954
Net interest-earning assets		$	1,403,309		$	1,349,863		$	1,351,035		$	1,297,458		$	1,257,283				$	1,376,734		$	1,223,501

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)

		For the three months ended																								For the six months ended
		June 30,					March 31,					December 31,				September 30,				June 30,						June 30,					June 30,
(Dollars in thousands)		2022					2022					2021				2021				2021						2022					2021
Interest Income:
Mortgage loans, net		$	54,775				$	53,970				$	54,260			$	55,114			$	52,987					$	108,745				$	108,206
Other loans, net			14,417					13,546					13,853				14,084				15,012						27,963					28,814
Total loans, net			69,192					67,516					68,113				69,198				67,999						136,708					137,020
Taxable securities:
Mortgage-backed securities			2,356					2,167					2,125				2,279				2,233						4,523					3,931
Other securities			2,090					1,119					993				1,008				1,037						3,209					2,000
Total taxable securities			4,446					3,286					3,118				3,287				3,270						7,732					5,931
Tax-exempt securities:
Other securities			625					591					538				539				535						1,216					1,065
Total tax-exempt securities			625					591					538				539				535						1,216					1,065
Interest-earning deposits and federal funds sold			159					51					74				42				51						210					87
Total interest-earning assets			74,422					71,444					71,843				73,066				71,855						145,866					144,103
Interest Expense:
Deposits:
Savings accounts		$	50				$	49				$	53			$	61			$	66					$	99				$	141
NOW accounts			1,405					793					1,021				1,227				1,499						2,198					3,205
Money market accounts			1,952					1,275					1,428				1,683				2,060						3,227					4,160
Certificate of deposit accounts			1,273					1,289					1,471				1,734				1,913						2,562					4,135
Total due to depositors			4,680					3,406					3,973				4,705				5,538						8,086					11,641
Mortgagors' escrow accounts			6					2					2				—				1						8					3
Total interest-bearing deposits			4,686					3,408					3,975				4,705				5,539						8,094					11,644
Borrowings			4,875					4,433					5,081				4,884				5,164						9,308					10,304
Total interest-bearing liabilities			9,561					7,841					9,056				9,589				10,703						17,402					21,948
Net interest income- tax equivalent		$	64,861				$	63,603				$	62,787			$	63,477			$	61,152					$	128,464				$	122,155
Included in net interest income above:
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans		$	2,281				$	1,716				$	1,497			$	2,136			$	2,046					$	3,997				$	2,993
Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income			(60	)				(129	)				1,122				194				(664	)					(189	)				763
Purchase accounting adjustments			367					1,058					462				1,100				565						1,425					1,487
Interest-earning Assets Yields:
Mortgage loans, net			4.23		%			4.19		%			4.22	%			4.27	%			4.13		%				4.21		%			4.21	%
Other loans, net			3.94					3.80					3.91				3.82				3.86						3.87					3.72
Total loans, net			4.17					4.11					4.15				4.17				4.07						4.14					4.09
Taxable securities:
Mortgage-backed securities			1.58					1.49					1.43				1.54				1.54						1.54					1.55
Other securities			2.51					1.97					1.91				1.85				1.79						2.29					1.50
Total taxable securities			1.92					1.63					1.55				1.63				1.61						1.78					1.54
Tax-exempt securities: (1)
Other securities			3.71					4.10					4.23				4.24				4.21						3.89					4.19
Total tax-exempt securities			3.71					4.10					4.23				4.24				4.21						3.89					4.19
Interest-earning deposits and federal funds sold			0.61					0.16					0.14				0.15				0.08						0.36					0.08
Total interest-earning assets			3.85		%			3.77		%			3.77	%			3.84	%			3.69		%				3.81		%			3.73	%
Interest-bearing Liabilities Yields:
Deposits:
Savings accounts			0.13		%			0.13		%			0.14	%			0.16	%			0.17		%				0.13		%			0.17	%
NOW accounts			0.27					0.16					0.19				0.23				0.27						0.21					0.29
Money market accounts			0.35					0.23					0.26				0.32				0.40						0.29					0.42
Certificate of deposit accounts			0.62					0.58					0.62				0.67				0.73						0.60					0.77
Total due to depositors			0.35					0.26					0.29				0.35				0.40						0.30					0.43
Mortgagors' escrow accounts			0.02					0.01					0.01				—				—						0.02					0.01
Total interest-bearing deposits			0.35					0.25					0.29				0.34				0.40						0.30					0.42
Borrowings			2.07					2.18					2.56				2.34				2.18						2.12					2.07
Total interest-bearing liabilities			0.60		%			0.50		%			0.58	%			0.61	%			0.66		%				0.55		%			0.67	%
Net interest rate spread (tax equivalent)			3.25		%			3.27		%			3.19	%			3.23	%			3.03		%				3.26		%			3.06	%
Net interest margin (tax equivalent)			3.35		%			3.36		%			3.29	%			3.34	%			3.14		%				3.36		%			3.16	%
Ratio of interest-earning assets to interest-bearing liabilities			1.22		X			1.22		X			1.22	X			1.21	X			1.19		X				1.22		X			1.19	X

⁽¹⁾ Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT and LOAN COMPOSITION
(Unaudited)

Deposit Composition

																	June 2022 vs.				June 2022 vs.
		June 30,			March 31,			December 31,			September 30,			June 30,			March 2022				June 2021
(Dollars in thousands)		2022			2022			2021			2021			2021			% Change				% Change
Noninterest bearing		$	1,081,208		$	1,041,027		$	967,621		$	941,259		$	945,491		3.9		%		14.4		%
Interest bearing:
Certificate of deposit accounts			906,943			886,317			946,575			1,040,098			1,020,615		2.3				(11.1	)
Savings accounts			154,670			158,542			156,554			152,306			152,931		(2.4	)			1.1
Money market accounts			2,229,993			2,362,390			2,342,003			2,152,085			2,057,188		(5.6	)			8.4
NOW accounts			1,977,186			1,925,124			1,920,779			2,135,643			2,122,565		2.7				(6.8	)
Total interest-bearing deposits			5,268,792			5,332,373			5,365,911			5,480,132			5,353,299		(1.2	)			(1.6	)
Total deposits		$	6,350,000		$	6,373,400		$	6,333,532		$	6,421,391		$	6,298,790		(0.4	)	%		0.8		%

Loan Composition

																						June 2022 vs.				June 2022 vs.
		June 30,				March 31,				December 31,				September 30,				June 30,				March 2022				June 2021
(Dollars in thousands)		2022				2022				2021				2021				2021				% Change				% Change
Multifamily residential		$	2,531,858			$	2,500,570			$	2,517,026			$	2,498,980			$	2,542,010			1.3		%		(0.4	)	%
Commercial real estate			1,864,507				1,764,927				1,775,629				1,745,855				1,726,895			5.6				8.0
One-to-four family ― mixed-use property			561,100				563,679				571,795				579,100				582,211			(0.5	)			(3.6	)
One-to-four family ― residential			242,729				248,226				268,255				280,343				288,652			(2.2	)			(15.9	)
Co-operative apartments			8,130				8,248				8,316				7,804				7,883			(1.4	)			3.1
Construction			72,148				68,488				59,761				71,464				62,802			5.3				14.9
Mortgage Loans			5,280,472				5,154,138				5,200,782				5,183,546				5,210,453			2.5				1.3
Small Business Administration (1)			40,572				59,331				93,811				148,855				215,158			(31.6	)			(81.1	)
Commercial business and other			1,431,417				1,387,155				1,339,273				1,294,688				1,291,526			3.2				10.8
Nonmortgage loans			1,471,989				1,446,486				1,433,084				1,443,543				1,506,684			1.8				(2.3	)
Net unamortized premiums and unearned loan fees (2)			7,932				6,640				4,239				3,265				1,669			19.5				375.3
Allowance for credit losses			(39,424	)			(37,433	)			(37,135	)			(36,363	)			(42,670	)		5.3				(7.6	)
Net loans		$	6,720,969			$	6,569,831			$	6,600,970			$	6,593,991			$	6,676,136			2.3		%		0.7		%

⁽¹⁾ Includes $22.2 million, $43.2 million, $77.4 million, $130.8 million, and $197.3 million of PPP loans at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.

⁽²⁾ Includes $6.6 million, $6.9 million, $8.0 million, $8.6 million, and $9.7 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS and RATES
(Unaudited)

Loan Closings

		For the three months ended																For the six months ended
		June 30,			March 31,			December 31,			September 30,			June 30,					June 30,		June 30,
(In thousands)		2022			2022			2021			2021			2021				2022			2021
Multifamily residential		$	136,902		$	98,180		$	79,648		$	41,850		$	66,913			$	235,082		$	125,466
Commercial real estate			164,826			45,102			64,916			48,447			37,963				209,928			55,119
One-to-four family – mixed-use property			12,228			8,498			12,440			12,823			7,135				20,726			15,847
One-to-four family – residential			4,211			9,237			5,162			2,761			59,494				13,448			62,625
Co-operative apartments			—			24			413			—			—				24			—
Construction			8,319			8,802			17,033			8,687			5,281				17,121			12,404
Mortgage Loans			326,486			169,843			179,612			114,568			176,786				496,329			271,461
Small Business Administration (1)			2,750			—			270			415			17,585				2,750			142,678
Commercial business and other			174,551			159,476			182,858			128,946			130,036				334,027			233,154
Nonmortgage Loans			177,301			159,476			183,128			129,361			147,621				336,777			375,832
Total Closings		$	503,787		$	329,319		$	362,740		$	243,929		$	324,407			$	833,106		$	647,293

⁽¹⁾ Includes $15.5 million and $138.7 million of PPP closings for the three and six months ended June 30, 2021, respectively.

Weighted Average Rate on Loan Closings

		For the three months ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Loan type		2022			2022			2021			2021			2021
Mortgage loans		3.76	%		3.61	%		3.77	%		3.80	%		3.53	%
Nonmortgage loans		4.21			3.27			3.24			3.49			3.23
Total loans		3.92	%		3.44	%		3.51	%		3.64	%		3.39	%
Excluding PPP loans		3.92	%		3.44	%		3.51	%		3.64	%		3.51	%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)
Allowance for Credit Losses

		For the three months ended																										For the six months ended
		June 30,					March 31,					December 31,					September 30,					June 30,						June 30,						June 30,
(Dollars in thousands)		2022					2022					2021					2021					2021						2022						2021
Allowance for credit losses
Beginning balances		$	37,433				$	37,135				$	36,363				$	42,670				$	45,099						37,135						45,153
Net loan charge-off (recoveries):
Multifamily residential			(1	)				—					—					—					—					$	(1	)				$	33
Commercial real estate			—					—					—					—					—						—						64
One-to-four family – mixed-use property			—					—					1					(123	)				3						—						22
One-to-four family – residential			(2	)				(2	)				(3	)				(147	)				(2	)					(4	)					(7	)
Small Business Administration			13					1,015					(7	)				(8	)				(9	)					1,028						(19	)
Taxi medallion			(435	)				(12	)				—					(1,235	)				(222	)					(447	)					2,536
Commercial business and other			(76	)				(66	)				(20	)				894					1,132						(142	)					1,138
Total			(501	)				935					(29	)				(619	)				902						434						3,767
Provision (benefit) for loan losses			1,490					1,233					743					(6,926	)				(1,527	)					2,723						1,284
Ending balance		$	39,424				$	37,433				$	37,135				$	36,363				$	42,670					$	39,424					$	42,670
Gross charge-offs		$	50				$	1,036				$	7				$	1,019				$	1,186					$	1,086					$	4,108
Gross recoveries			551					101					36					1,638					284						652						341
Allowance for credit losses to gross loans			0.58		%			0.57		%			0.56		%			0.55		%			0.64		%				0.58		%				0.64		%
Net loan charge-offs (recoveries) to average loans			(0.03	)				0.06					—					(0.04	)				0.05						0.01						0.11

Nonperforming Assets

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2022				2022				2021				2021				2021
Loans 90 Days Or More Past Due and Still Accruing:
Multifamily residential		$	—			$	—			$	—			$	—			$	201
Construction			—				—				—				873				—
Commercial business and other			100				—				—				1,052				—
Total			100				—				—				1,925				201
Nonaccrual Loans:
Multifamily residential			3,414				3,414				2,431				4,192				4,669
Commercial real estate			242				5				613				613				8
One-to-four family - mixed-use property (1)			790				790				1,309				2,204				2,309
One-to-four family - residential			5,055				7,387				7,725				7,807				6,940
Construction			856				—				—				—				—
Small Business Administration			937				937				937				976				976
Commercial business and other(1)			16,554				1,533				1,918				2,500				2,489
Total			27,848				14,066				14,933				18,292				17,391
Total Nonperforming Loans (NPLs)			27,948				14,066				14,933				20,217				17,592
Total Nonaccrual HTM Securities			20,981				—				—				—				—
Total Nonperforming Assets		$	48,929			$	14,066			$	14,933			$	20,217			$	17,592
Nonperforming Assets to Total Assets			0.59	%			0.17	%			0.19	%			0.25	%			0.22	%
Allowance for Credit Losses to NPLs			141.1	%			266.1	%			248.7	%			179.9	%			242.6	%

⁽¹⁾ Not included in the above analysis are nonaccrual performing TDR one-to-four family - mixed use property loans totaling $0.3 million each in 2Q22, 1Q22, 4Q21, 3Q21, and 2Q21; nonaccrual performing TDR commercial business loans totaling $2.8 million in 2Q22 and 1Q22, less than $0.1 million in 4Q21 and 3Q21, and $2.2 million in 2Q21.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS

Non-cash Fair Value Adjustments to GAAP Earnings

The variance in GAAP and core earnings is partly driven by the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to swaps designated to protect against rising rates and borrowing carried at fair value under the fair value option. As the swaps get closer to maturity, the volatility in fair value adjustments will dissipate. In a declining interest rate environment, the movement in the curve exaggerates our mark-to-market loss position. In a rising interest rate environment or a steepening of the yield curve, the loss position would experience an improvement.

Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Base Net Interest Income FTE, Base Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Base Interest Income and Yield on Total Loans, Core Noninterest Income, Core Noninterest Expense 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 below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and noninterest 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 GAAP EARNINGS and CORE EARNINGS
(Unaudited)

		For the three months ended																											For the six months ended
(Dollars in thousands,		June 30,					March 31,					December 31,					September 30,					June 30,							June 30,					June 30,
except per share data)		2022					2022					2021					2021					2021							2022					2021
GAAP income before income taxes		$	34,971				$	24,640				$	22,826				$	34,812				$	25,416						$	59,611				$	51,640
Net (gain) loss from fair value adjustments (Noninterest income (loss))			(2,533	)				1,809					5,140					2,289					6,548							(724	)				5,566
Net (gain) loss on sale of securities (Noninterest income (loss))			—					—					—					10					(123	)						—					(123	)
Life insurance proceeds (Noninterest income (loss))			(1,536	)				—					—					—					—							(1,536	)				—
Net gain on disposition of assets (Noninterest income (loss))			—					—					—					—					—							—					(621	)
Net (gain) loss from fair value adjustments on qualifying hedges (Interest and fees on loans)			60					129					(1,122	)				(194	)				664							189					(763	)
Net amortization of purchase accounting adjustments (Various)			(237	)				(924	)				(324	)				(958	)				(418	)						(1,161	)				(1,207	)
Merger (benefit) expense (Various)			—					—					(17	)				2,096					(490	)						—					483
Core income before taxes			30,725					25,654					26,503					38,055					31,597							56,379					54,975
Provision for income taxes for core income			9,207					6,685					5,535					10,226					8,603							15,892					15,008
Core net income		$	21,518				$	18,969				$	20,968				$	27,829				$	22,994						$	40,487				$	39,967
GAAP diluted earnings per common share		$	0.81				$	0.58				$	0.58				$	0.81				$	0.61						$	1.39				$	1.21
Net (gain) loss from fair value adjustments, net of tax			(0.06	)				0.04					0.13					0.05					0.15							(0.02	)				0.13
Net loss on sale of securities, net of tax			—					—					—					—					—							—					—
Life insurance proceeds			(0.05	)				—					—					—					—							(0.05	)				—
Net gain on disposition of assets, net of tax			—					—					—					—					—							—					(0.01	)
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax			—					—					(0.03	)				—					0.02							—					(0.02	)
Net amortization of purchase accounting adjustments, net of tax			(0.01	)				(0.02	)				(0.01	)				(0.02	)				(0.01	)						(0.03	)				(0.03	)
Merger (benefit) expense, net of tax			—					—					—					0.05					(0.01	)						—					0.01
NYS tax change			—					—					—					—					(0.02	)						—					(0.02	)
Core diluted earnings per common share(1)		$	0.70				$	0.61				$	0.67				$	0.88				$	0.73						$	1.30				$	1.26
Core net income, as calculated above		$	21,518				$	18,969				$	20,968				$	27,829				$	22,994						$	40,487				$	39,967
Average assets			8,211,763					8,049,470					8,090,701					8,072,918					8,263,553							8,131,065					8,205,954
Average equity			667,456					673,012					671,474					659,288					644,690							670,219					632,238
Core return on average assets(2)			1.05		%			0.94		%			1.04		%			1.38		%			1.11		%					1.00		%			0.97		%
Core return on average equity(2)			12.90		%			11.27		%			12.49		%			16.88		%			14.27		%					12.08		%			12.64		%

⁽¹⁾ Core diluted earnings per common share may not foot due to rounding.
⁽²⁾ Ratios are calculated on an annualized basis.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Unaudited)

		For the three months ended																						For the six months ended
		June 30,				March 31,				December 31,				September 30,				June 30,						June 30,				June 30,
(Dollars in thousands)		2022				2022				2021				2021				2021						2022				2021
GAAP Net interest income		$	64,730			$	63,479			$	62,674			$	63,364			$	61,039					$	128,209			$	121,931
Net (gain) loss from fair value adjustments on qualifying hedges			60				129				(1,122	)			(194	)			664						189				(763	)
Net amortization of purchase accounting adjustments			(367	)			(1,058	)			(462	)			(1,100	)			(565	)					(1,425	)			(1,487	)
Core Net interest income		$	64,423			$	62,550			$	61,090			$	62,070			$	61,138					$	126,973			$	119,681
GAAP Noninterest income (loss)		$	7,353			$	1,313			$	(280	)		$	866			$	(3,210	)				$	8,666			$	3,101
Net (gain) loss from fair value adjustments			(2,533	)			1,809				5,140				2,289				6,548						(724	)			5,566
Net gain (loss) on sale of securities			—				—				—				10				(123	)					—				(123	)
Life insurance proceeds			(1,536	)			—				—				—				—						(1,536	)			—
Net gain on sale of assets			—				—				—				—				—						—				(621	)
Core Noninterest income		$	3,284			$	3,122			$	4,860			$	3,165			$	3,215					$	6,406			$	7,923
GAAP Noninterest expense		$	35,522			$	38,794			$	38,807			$	36,345			$	34,011					$	74,316			$	72,170
Net amortization of purchase accounting adjustments			(130	)			(134	)			(138	)			(142	)			(147	)					(264	)			(280	)
Merger expense (benefit)			—				—				17				(2,096	)			490						—				(483	)
Core Noninterest expense		$	35,392			$	38,660			$	38,686			$	34,107			$	34,354					$	74,052			$	71,407
Net interest income		$	64,730			$	63,479			$	62,674			$	63,364			$	61,039					$	128,209			$	121,931
Noninterest income (loss)			7,353				1,313				(280	)			866				(3,210	)					8,666				3,101
Noninterest expense			(35,522	)			(38,794	)			(38,807	)			(36,345	)			(34,011	)					(74,316	)			(72,170	)
Pre-provision pre-tax net revenue		$	36,561			$	25,998			$	23,587			$	27,885			$	23,818					$	62,559			$	52,862
Core:
Net interest income		$	64,423			$	62,550			$	61,090			$	62,070			$	61,138					$	126,973			$	119,681
Noninterest income			3,284				3,122				4,860				3,165				3,215						6,406				7,923
Noninterest expense			(35,392	)			(38,660	)			(38,686	)			(34,107	)			(34,354	)					(74,052	)			(71,407	)
Pre-provision pre-tax net revenue		$	32,315			$	27,012			$	27,264			$	31,128			$	29,999					$	59,327			$	56,197
Efficiency Ratio			52.3		%		58.9		%		58.7		%		52.3		%		53.4		%				55.5		%		56.0		%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
to CORE and BASE NET INTEREST INCOME
(Unaudited)

		For the three months ended																										For the six months ended
		June 30,					March 31,					December 31,					September 30,					June 30,						June 30,				June 30,
(Dollars in thousands)		2022					2022					2021					2021					2021						2022				2021
GAAP net interest income		$	64,730				$	63,479				$	62,674				$	63,364				$	61,039					$	128,209			$	121,931
Net (gain) loss from fair value adjustments on qualifying hedges			60					129					(1,122	)				(194	)				664						189				(763	)
Net amortization of purchase accounting adjustments			(367	)				(1,058	)				(462	)				(1,100	)				(565	)					(1,425	)			(1,487	)
Tax equivalent adjustment			131					124					113					113					113						255				224
Core net interest income FTE		$	64,554				$	62,674				$	61,203				$	62,183				$	61,251					$	127,228			$	119,905
Prepayment penalties received on loans and securities, net of reversals and recoveries of interest from nonaccrual loans			(2,281	)				(1,716	)				(1,497	)				(2,136	)				(2,046	)					(3,997	)			(2,993	)
Base net interest income FTE		$	62,273				$	60,958				$	59,706				$	60,047				$	59,205					$	123,231			$	116,912
Total average interest-earning assets (1)		$	7,746,640				$	7,577,053				$	7,634,601				$	7,616,332				$	7,799,176					$	7,662,315			$	7,738,344
Core net interest margin FTE			3.33		%			3.31		%			3.21		%			3.27		%			3.14		%				3.32		%		3.10		%
Base net interest margin FTE			3.22		%			3.22		%			3.13		%			3.15		%			3.04		%				3.22		%		3.02		%
GAAP interest income on total loans, net		$	69,192				$	67,516				$	68,113				$	69,198				$	67,999					$	136,708			$	137,020
Net (gain) loss from fair value adjustments on qualifying hedges			60					129					(1,122	)				(194	)				664						189				(763	)
Net amortization of purchase accounting adjustments			(357	)				(1,117	)				(535	)				(1,126	)				(624	)					(1,474	)			(1,352	)
Core interest income on total loans, net		$	68,895				$	66,528				$	66,456				$	67,878				$	68,039					$	135,423			$	134,905
Prepayment penalties received on loans, net of reversals and recoveries of interest from nonaccrual loans			(2,333	)				(1,716	)				(1,497	)				(2,135	)				(2,046	)					(4,049	)			(2,993	)
Base interest income on total loans, net		$	66,562				$	64,812				$	64,959				$	65,743				$	65,993					$	131,374			$	131,912
Average total loans, net (1)		$	6,647,131				$	6,586,253				$	6,566,654				$	6,642,434				$	6,697,103					$	6,616,860			$	6,704,237
Core yield on total loans			4.15		%			4.04		%			4.05		%			4.09		%			4.06		%				4.09		%		4.02		%
Base yield on total loans			4.01		%			3.94		%			3.96		%			3.96		%			3.94		%				3.97		%		3.94		%

⁽¹⁾ Excludes purchase accounting average balances for all periods presented.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)

		June 30,					March 31,					December 31,					September 30,					June 30,
(Dollars in thousands)		2022					2022					2021					2021					2021
Total Equity		$	670,812				$	675,813				$	679,628				$	668,096				$	655,167
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit Intangibles			(2,282	)				(2,420	)				(2,562	)				(2,708	)				(2,859	)
Intangible deferred tax liabilities			—					328					328					287					287
Tangible Stockholders' Common Equity		$	650,894				$	656,085				$	659,758				$	648,039				$	634,959
Total Assets		$	8,339,587				$	8,169,833				$	8,045,911				$	8,077,334				$	8,159,345
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit Intangibles			(2,282	)				(2,420	)				(2,562	)				(2,708	)				(2,859	)
Intangible deferred tax liabilities			—					328					328					287					287
Tangible Assets		$	8,319,669				$	8,150,105				$	8,026,041				$	8,057,277				$	8,139,137
Tangible Stockholders' Common Equity to Tangible Assets			7.82		%			8.05		%			8.22		%			8.04		%			7.80		%

 

Source: Flushing Financial Corporation