Loan Growth Despite Rising Rates

John R. Buran, President and CEO Commentary

UNIONDALE, N.Y., Oct. 25, 2022 (GLOBE NEWSWIRE) -- The Company reported third quarter 2022 GAAP EPS of $0.76, down 6.2% YoY, with a ROAA of 1.11%, and ROAE of 13.91%. Core 3Q22 EPS was $0.62, a decrease of 29.5% YoY, with a ROAA of 0.90% and the ROAE of 11.24%.  

“We supported customers by achieving loan growth of 3.1% QoQ, excluding the impact of PPP loans, while increasing the origination yield by 68 bps for the quarter, as the quarter was dominated by Fed rate increases. Credit quality, a hallmark of the Company, remained solid with only 2 bps of net charge-offs this quarter. The Company opportunistically raised $65 million of subordinated debt capital to lock in funding at an attractive rate. The Fed rate movements resulted in the NIM compressing 28 bps during the third quarter given the rapid rise in rates. Despite the NIM pressure in the short term, loans are expected to reprice higher over time. Approximately $1.0 billion or 15% of loans reprice within 90 days of index changes and $1.9 billion or 27% of loans are expected to contractually reprice higher by 200 bps through the end of 2024. There are over $500 million of funding swaps that have attractive rates now and will reprice lower by approximately 70 bps through 2023. Our community focus continued to shine this quarter as we supported several events, including the Flushing and Port Jefferson Dragon Boat festivals and our Harvest Moon Reception.” - John R. Buran, President and CEO

Loan Closings up 90.1% YoY; NIM Declined QoQ. Period end net loans, excluding PPP, increased 3.1% QoQ, with balanced growth between real estate and commercial business and other loans. Loan closings, excluding PPP, were up 90.1% YoY, while repayment speeds declined both YoY and QoQ. Despite the loan closings increasing, net interest income of $61.2 million decreased 3.4% YoY and 5.4% QoQ, primarily due to the increased funding costs. NIM FTE was 3.07% in 3Q22 compared to 3.35% in 2Q22 and 3.34% a year ago. Core NIM FTE decreased by 24 bps to 3.03% YoY and 30 bps QoQ. The Company hired 46 people, including 20 revenue producers, since March 31, 2021 from institutions involved with bank mergers.

Returned 40% of Earnings in 3Q22; Tangible Book Value Per Share Increased 3% YoY. The Company repurchased 131,174 shares of common stock at an average price of $20.47 during the quarter. Book value and tangible book value per share were $22.47 and $21.81, respectively, while TCE/TA¹ was 7.62% at September 30, 2022 compared to 7.82% at June 30, 2022.

Key Financial Metrics2

		3Q22				2Q22				1Q22			4Q21			3Q21
GAAP:
EPS		$0.76				$0.81				$0.58			$0.58			$0.81
ROAA (%)			1.11				1.22				0.91			0.89			1.26
ROAE (%)			13.91				15.00				10.83			10.77			15.42
NIM FTE3 (%)			3.07				3.35				3.36			3.29			3.34
Core:
EPS		$0.62				$0.70				$0.61			$0.67			$0.88
ROAA (%)			0.90				1.05				0.94			1.04			1.38
ROAE (%)			11.24				12.90				11.27			12.49			16.88
Core NIM FTE (%)			3.03				3.33				3.31			3.21			3.27
Credit Quality:
NPAs/Loans&REO (%)			0.72				0.72				0.21			0.23			0.31
ACLs/Loans (%)			0.59				0.58				0.57			0.56			0.55
ACLs/NPLs (%)			142.29				141.06				266.12			248.66			179.86
NCOs/Avg Loans (%)			0.02				(0.03	)			0.06			-			(0.04	)
Balance Sheet:
Avg Loans ($B)		$6.9				$6.6				$6.6			$6.6			$6.6
Avg Dep ($B)		$6.3				$6.4				$6.4			$6.5			$6.4
Book Value/Share		$22.47				$22.38				$22.26			$22.26			$21.78
Tangible BV/Share		$21.81				$21.71				$21.61			$21.61			$21.13
TCE/TA (%)			7.62				7.82				8.05			8.22			8.04

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

3Q22 Highlights

• Period end net loans, excluding PPP, increased 3.1% QoQ and 6.8% YoY; loan closings were $463.7 million at 4.60% in 3Q22, down 8.0% from record levels QoQ, but up 90.1% YoY while the yield increased 68 bps QoQ and 96 bps YoY
• Loan pipeline decreased 41.8% YoY to $309.1 million as we become more selective in terms of rate and collateral type and borrowers adjusted to higher rates
• Issued $65 million of subordinated notes at 6.00% during the 3Q22
• NPAs increased to $50.0 million from $48.9 million at 2Q22 and from $20.2 million at 3Q21
• Provision for credit losses was $2.1 million in 3Q22 compared to a benefit for credit losses of $6.9 million in 3Q21; net charge-offs were $0.3 million in 3Q22 compared to net recoveries of $0.6 million in 3Q21
• Net interest income decreased 5.4% QoQ and 3.4% YoY to $61.2 million; Core net interest income declined 6.2% QoQ and 2.7% YoY to $60.4 million
• Net interest margin FTE decreased 28 bps QoQ and 27 bps YoY to 3.07%; Core net interest margin FTE decreased 30 bps QoQ and 24 bps YoY to 3.03%; The decline in GAAP and Core NIM QoQ was primarily driven by our liability sensitive balance sheet resulting in liabilities repricing faster than assets over the near term but reversing as loans reprice over the next couple of years
• Average deposits, including mortgage escrow, decreased 2.6% QoQ and 2.1% YoY to $6.3 billion, with core deposits comprising 83.1% of total average deposits
• Signed a lease to open a new branch in Brooklyn expanding our Asian banking footprint
• Tangible Common Equity to Tangible Assets was 7.62% down from 7.82% at 2Q22; the change in accumulated other comprehensive loss, net of taxes (primarily from rising rates) impacted this ratio by 18 bps in 3Q22 compared to 2Q22
• Repurchased 131,174 shares at an average price of $20.47; dividends and share repurchases were 40% of net income in 3Q22
  
  

Income Statement Highlights

																					YoY				QoQ
($000s, except EPS)			3Q22				2Q22			1Q22			4Q21				3Q21				Change				Change
Net Interest Income			$61,206				$64,730			$63,479			$62,674				$63,364				(3.4	)	%		(5.4	)	%
Provision (Benefit) for Credit Losses				2,145				1,590			1,358			761				(6,927	)		(131.0	)			34.9
Noninterest Income (Loss)				8,995				7,353			1,313			(280	)			866			938.7				22.3
Noninterest Expense				35,634				35,522			38,794			38,807				36,345			(2.0	)			0.3
Income Before Income Taxes				32,422				34,971			24,640			22,826				34,812			(6.9	)			(7.3	)
Provision for Income Taxes				8,980				9,936			6,421			4,743				9,399			(4.5	)			(9.6	)
Net Income			$23,442				$25,035			$18,219			$18,083				$25,413				(7.8	)			(6.4	)
Diluted EPS			$0.76				$0.81			$0.58			$0.58				$0.81				(6.2	)			(6.2	)
Avg. Diluted Shares (000s)				30,695				30,937			31,254			31,353				31,567			(2.8	)			(0.8	)
Core Net Income1			$18,953				$21,518			$18,969			$20,968				$27,829				(31.9	)			(11.9	)
Core EPS1			$0.62				$0.70			$0.61			$0.67				$0.88				(29.5	)			(11.4	)

¹ See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $61.2 million in 3Q22 compared to $64.7 million in 2Q22, $63.5 million in 1Q22, $62.7 million in 4Q21, and $63.4 million in 3Q21.

• Net interest margin, FTE (“NIM”) of 3.07% decreased 27 bps YoY and 28 bps QoQ
• 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 $2.2 million (11 bps to the NIM) in 3Q22 compared to $2.6 million (13 bps) in 2Q22, $2.6 million (14 bps) in 1Q22, $3.1 million (16 bps) in 4Q21, and $3.4 million (19 bps) in 3Q21
• Excluding the items in the previous bullet, net interest margin was 2.96% in 3Q22, 3.22% in 2Q22 and in 1Q22, 3.13% in 4Q21, and 3.15% in 3Q21
  

The Company recorded a provision for credit losses of $2.1 million in 3Q22, $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.

• 3Q22 provision for credit losses of $2.1 million was primarily due to increased reserves on two previously identified credits and loan growth
• Net charge-offs (recoveries) were $0.3 million in 3Q22 (2 bps of average loans), $(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), and $(0.6) million in 3Q21 ((4) bps of average loans)

Noninterest income (loss) was $9.0 million in 3Q22, $7.4 million in 2Q22, $1.3 million in 1Q22, $(0.3) million in 4Q21, and $0.9 million in 3Q21.

• Noninterest income included net gains (losses) from fair value adjustments of $5.6 million in 3Q22 or $0.13 per share, net of tax, $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, and $(2.3) million in 3Q21 or $(0.05) per share, net of tax
• 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 $3.4 million in 3Q22, up 6.4% YoY, and 2.6% QoQ
• 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 $35.6 million in 3Q22 (a decrease of 2.0% YoY, but an increase of 0.3% QoQ) compared to $35.5 million in 2Q22, $38.8 million in 1Q22, $38.8 million in 4Q21, and $36.3 million in 3Q21.

• Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22
• 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 and $2.1 million of pre-tax merger charges ($0.05 per share, net of tax) in 3Q21
• Excluding the effects of the merger and other immaterial adjustments, core operating expenses were $35.5 million in 3Q22, up 4.1% YoY and 0.3% QoQ
• GAAP noninterest expense to average assets was 1.69% in 3Q22, 1.73% in 2Q22, 1.93% in 1Q22, 1.92%in 4Q21, and 1.80% in 3Q21
  

The provision for income taxes was $9.0 million in 3Q22 compared to $9.9 million in 2Q22, $6.4 million in 1Q22, $4.7 million in 4Q21, and $9.4 million in 3Q21.

• The effective tax rate was 27.7% in 3Q22, 28.4% in 2Q22, 26.1% in 1Q22, 20.8% in 4Q21, and 27.0% in 3Q21
• The 2Q22 effective tax rate includes a loss of a certain state and city tax deductions and a resolution of certain examinations by taxing authorities
• The 4Q21 effective tax rate declined due to lower levels of taxable state income and higher percentage of permanent differences
  
  

Balance Sheet, Credit Quality, and Capital Highlights

																		YoY				QoQ
		3Q22				2Q22			1Q22			4Q21			3Q21			Change				Change
Average Loans And Deposits ($MM)
Loans		$6,861				$6,640			$6,579			$6,558			$6,633			3.4		%		3.3		%
Deposits			6,277				6,441			6,410			6,459			6,408		(2.1	)			(2.6	)
Credit Quality ($000s)
Nonperforming Loans		$29,003				$27,948			$14,066			$14,934			$20,217			43.5		%		3.8		%
Nonperforming Assets			49,984				48,929			14,066			14,934			20,217		147.2				2.2
Criticized and Classified Loans			61,684				57,145			59,548			57,650			68,913		(10.5	)			7.9
Criticized and Classified Assets			82,665				78,125			80,527			78,628			89,889		(8.0	)			5.8
Troubled Debt Restructured Loans			14,757				14,758			15,124			12,714			13,097		12.7				(0.0	)
Allowance for Credit Losses/Loans (%)			0.59				0.58			0.57			0.56			0.55		4		bps		1		bp
Capital
Book Value/Share		$22.47				$22.38			$22.26			$22.26			$21.78			3.2		%		0.4		%
Tangible Book Value/Share			21.81				21.71			21.61			21.61			21.13		3.2				0.5
Tang. Common Equity/Tang. Assets (%)			7.62				7.82			8.05			8.22			8.04		(42	)	bps		(20	)	bps
Leverage Ratio (%)			8.74				8.91			9.05			8.98			8.83		(9	)			(17	)

Average loans were $6.9 billion, an increase of 3.4% YoY and 3.3% QoQ.

• Period end net loans, excluding PPP loans, totaled $6.9 billion, up 6.8% YoY and 3.1% QoQ
• Total loan closings were $463.7 million in 3Q22, $503.8 million in 2Q22, $329.3 million in 1Q22, $362.7 million in 4Q21, and $243.9 million in 3Q21
• The loan pipeline was $309.1 million at September 30, 2022, down 41.8% YoY and 46.9% QoQ
  

Average Deposits totaled $6.3 billion, decreasing 2.1% YoY and 2.6% QoQ.

• Average core deposits (non-CD deposits) were 83.1% of total average deposits (including escrow deposits) in 3Q22, compared to 83.8% a year ago
• Average noninterest bearing deposits increased 12.5% YoY and 0.5% QoQ and comprised 16.7% of total average deposits (including escrow deposits) in 3Q22 compared to 14.6% a year ago

Credit Quality: Nonperforming loans held at the end of each quarter totaled $29.0 million at 3Q22, $27.9 million at 2Q22, $14.1 million at 1Q22, $14.9 million at 4Q21, and $20.2 million at 3Q21.

• Criticized and classified were 89 bps of loans at 3Q22 compared to 85 bps at 2Q22, 90 bps at 1Q22, 87 bps at 4Q21, and 104 bps at 3Q21
• 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 3Q22, 2Q22, 1Q22, 4Q21, and 3Q21
• Over 88% of gross loans are collateralized by real estate with an average loan-to-value ratio of <37% as of September 30, 2022
• Allowance for credit losses were 142.3% of nonperforming loans at 3Q22 compared to 141.1% at 2Q22 and 179.9% a year ago

Capital: Book value per common share was $22.47 at 3Q22, up 0.4% QoQ and 3.2% YoY; tangible book value per common share, a non-GAAP measure, was $21.81 at 3Q22, up 0.5% QoQ and 3.2% YoY.

• The Company paid a dividend of $0.22 per share and repurchased 131,174 shares at an average price of $20.47 in 3Q22
• At the end of 3Q22, 969,324 shares remain subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
• Tangible common equity to tangible assets was 7.62% at 3Q22 compared to 7.82% at 2Q22 and 8.04% at 3Q21
• The Company and the Bank remain well capitalized under all applicable regulatory requirements
• The leverage ratio was 8.74% at 3Q22 compared to 8.91% at 2Q22 and 8.83% at 3Q21
  
  

Conference Call Information And Fourth 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 and Treasurer, will host a conference call on Wednesday, October 26, 2022, at 9:30 AM (ET) to discuss the Company’s third quarter 2022 results and strategy.
• Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
• Webcast: https://services.choruscall.com/mediaframe/webcast.html?webcastid=xiCFFixk
• Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
• Replay Access Code: 8005279
• The conference call will be simultaneously webcast and archived

Fourth Quarter 2022 Earnings Release Date:

The Company plans to release Fourth Quarter and full year 2022 financial results after the market close on January 24, 2023; followed by a conference call at 9:30 AM (ET) on January 25, 2023.

A detailed announcement will be issued prior to the fourth 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 www.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 nine months ended
		September 30,					June 30,					March 31,					December 31,					September 30,						September 30,					September 30,
(Dollars in thousands, except per share data)		2022					2022					2022					2021					2021						2022					2021
Performance Ratios (1)
Return on average assets			1.11		%			1.22		%			0.91		%			0.89		%			1.26		%				1.08		%			1.04		%
Return on average equity			13.91					15.00					10.83					10.77					15.42						13.24					13.24
Yield on average interest-earning assets (2)			4.10					3.85					3.77					3.77					3.84						3.91					3.77
Cost of average interest-bearing liabilities			1.25					0.60					0.50					0.58					0.61						0.79					0.65
Cost of funds			1.08					0.52					0.43					0.50					0.53						0.68					0.57
Net interest rate spread during period (2)			2.85					3.25					3.27					3.19					3.23						3.12					3.12
Net interest margin (2)			3.07					3.35					3.36					3.29					3.34						3.26					3.22
Noninterest expense to average assets			1.69					1.73					1.93					1.92					1.80						1.78					1.77
Efficiency ratio (3)			55.68					52.27					58.87					58.66					52.28						55.57					54.72
Average interest-earning assets to average interest-bearing liabilities			1.22		X			1.22		X			1.22		X			1.22		X			1.21		X				1.22		X			1.19		X
Average Balances
Total loans, net		$	6,861,463				$	6,640,331				$	6,578,680				$	6,558,285				$	6,633,301					$	6,694,528				$	6,673,309
Total interest-earning assets			7,979,070					7,740,683					7,570,373					7,627,256					7,608,317						7,764,873					7,688,354
Total assets			8,442,657					8,211,763					8,049,470					8,090,701					8,072,918						8,236,070					8,161,121
Total due to depositors			5,157,715					5,298,855					5,336,983					5,397,802					5,406,423						5,263,861					5,422,158
Total interest-bearing liabilities			6,553,087					6,337,374					6,220,510					6,276,221					6,310,859						6,371,542					6,439,928
Stockholders' equity			674,282					667,456					673,012					671,474					659,288						671,588					641,354
Per Share Data
Book value per common share (4)		$	22.47				$	22.38				$	22.26				$	22.26				$	21.78					$	22.47				$	27.78
Tangible book value per common share (5)		$	21.81				$	21.71				$	21.61				$	21.61				$	21.13					$	21.81				$	21.13
Stockholders' Equity
Stockholders' equity		$	670,719				$	670,812				$	675,813				$	679,628				$	668,096					$	670,719				$	668,096
Tangible stockholders' equity			650,936					650,894					656,085					659,758					648,039						650,936					648,039
Consolidated Regulatory Capital Ratios
Tier 1 capital		$	749,526				$	739,776				$	731,536				$	726,174				$	711,276					$	749,526				$	711,276
Common equity Tier 1 capital			701,532					686,258					675,434					671,494					661,340						701,532					661,340
Total risk-based capital			979,021					903,047					892,861					885,469					832,255						979,021					832,255
Risk Weighted Assets			6,689,284					6,522,710					6,232,020					6,182,095					6,194,207						6,689,284					6,194,207
Tier 1 leverage capital (well capitalized = 5%)			8.74		%			8.91		%			9.05		%			8.98		%			8.83		%				8.74		%			8.83		%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			10.49					10.52					10.84					10.86					10.68						10.49					10.68
Tier 1 risk-based capital (well capitalized = 8.0%)			11.20					11.34					11.74					11.75					11.48						11.20					11.48
Total risk-based capital (well capitalized = 10.0%)			14.64					13.84					14.33					14.32					13.44						14.64					13.44
Capital Ratios
Average equity to average assets			7.99		%			8.13		%			8.36		%			8.30		%			8.17		%				8.15		%			7.86		%
Equity to total assets			7.84					8.04					8.27					8.45					8.27						7.84					8.27
Tangible common equity to tangible assets (6)			7.62					7.82					8.05					8.22					8.04						7.62					8.04
Asset Quality
Nonaccrual loans (7)		$	27,003				$	27,848				$	14,066				$	14,933				$	18,292					$	27,003				$	18,292
Nonperforming loans			29,003					27,948					14,066					14,933					20,217						29,003					20,217
Nonperforming assets			49,984					48,929					14,066					14,933					20,217						49,984					20,217
Net charge-offs (recoveries)			290					(501	)				935					(29	)				(619	)					724					3,148
Asset Quality Ratios
Nonperforming loans to gross loans			0.42		%			0.41		%			0.21		%			0.23		%			0.31		%				0.42		%			0.31		%
Nonperforming assets to total assets			0.58					0.59					0.17					0.19					0.25						0.58					0.25
Allowance for credit losses to gross loans			0.59					0.58					0.57					0.56					0.55						0.59					0.55
Allowance for credit losses to nonperforming assets			82.56					80.57					266.12					248.66					179.86						82.56					179.86
Allowance for credit losses to nonperforming loans			142.29					141.06					266.12					248.66					179.86						142.29					179.86
Net charge-offs (recoveries) to average loans			0.02					(0.03	)				0.06					—					(0.04	)					0.01					0.06
Full-service customer facilities			25					25					24					24					24						25					24

____________
⁽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 nine months ended
	September 30,			June 30,			March 31,				December 31,				September 30,						September 30,			September 30,
(In thousands, except per share data)	2022			2022			2022				2021				2021						2022			2021
Interest and Dividend Income
Interest and fees on loans	$	75,546		$	69,192		$	67,516			$	68,113			$	69,198					$	212,254		$	206,218
Interest and dividends on securities:
Interest		5,676			4,929			3,745				3,536				3,706						14,350			10,463
Dividends		17			11			8				7				7						36			22
Other interest income		506			159			51				74				42						716			129
Total interest and dividend income		81,745			74,291			71,320				71,730				72,953						227,356			216,832
Interest Expense
Deposits		11,965			4,686			3,408				3,975				4,705						20,059			16,349
Other interest expense		8,574			4,875			4,433				5,081				4,884						17,882			15,188
Total interest expense		20,539			9,561			7,841				9,056				9,589						37,941			31,537
Net Interest Income		61,206			64,730			63,479				62,674				63,364						189,415			185,295
Provision (benefit) for credit losses		2,145			1,590			1,358				761				(6,927	)					5,093			(5,705	)
Net Interest Income After Provision (Benefit) for Credit Losses		59,061			63,140			62,121				61,913				70,291						184,322			191,000
Noninterest Income (Loss)
Banking services fee income		1,351			1,166			1,374				1,142				865						3,891			4,823
Net gain (loss) on sale of securities		—			—			—				—				(10	)					—			113
Net gain on sale of loans		—			73			—				46				131						73			289
Net gain on disposition of assets		—			—			—				—				—						—			621
Net gain (loss) from fair value adjustments		5,626			2,533			(1,809	)			(5,140	)			(2,289	)					6,350			(7,855	)
Federal Home Loan Bank of New York stock dividends		538			407			397				417				491						1,342			1,680
Life insurance proceeds		—			1,536			—				—				—						1,536			—
Bank owned life insurance		1,132			1,115			1,114				1,023				1,015						3,361			3,021
Other income		348			523			237				2,232				663						1,108			1,275
Total noninterest income (loss)		8,995			7,353			1,313				(280	)			866						17,661			3,967
Noninterest Expense
Salaries and employee benefits		21,438			21,109			23,649				25,223				20,544						66,196			63,087
Occupancy and equipment		3,541			3,760			3,604				3,579				3,534						10,905			10,423
Professional services		2,570			2,285			2,222				1,152				1,899						7,077			6,287
FDIC deposit insurance		738			615			420				391				618						1,773			2,560
Data processing		1,367			1,383			1,424				1,757				1,759						4,174			5,287
Depreciation and amortization		1,488			1,447			1,460				1,521				1,627						4,395			4,904
Other real estate owned/foreclosure expense		143			32			84				129				182						259			194
Other operating expenses		4,349			4,891			5,931				5,055				6,182						15,171			15,773
Total noninterest expense		35,634			35,522			38,794				38,807				36,345						109,950			108,515
Income Before Provision for Income Taxes		32,422			34,971			24,640				22,826				34,812						92,033			86,452
Provision for Income Taxes		8,980			9,936			6,421				4,743				9,399						25,337			22,742
Net Income	$	23,442		$	25,035		$	18,219			$	18,083			$	25,413					$	66,696		$	63,710
Basic earnings per common share	$	0.76		$	0.81		$	0.58			$	0.58			$	0.81					$	2.15		$	2.02
Diluted earnings per common share	$	0.76		$	0.81		$	0.58			$	0.58			$	0.81					$	2.15		$	2.02
Dividends per common share	$	0.22		$	0.22		$	0.22			$	0.21			$	0.21					$	0.66		$	0.63
Basic average shares		30,695			30,937			31,254				31,353				31,567						30,960			31,616
Diluted average shares		30,695			30,937			31,254				31,353				31,567						30,960			31,616

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

		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2022				2022				2022				2021				2021
ASSETS
Cash and due from banks		$	164,693			$	137,026			$	186,407			$	81,723			$	178,598
Securities held-to-maturity:
Mortgage-backed securities			7,880				7,885				7,890				7,894				7,899
Other securities			66,032				66,230				66,327				49,974				49,989
Securities available for sale:
Mortgage-backed securities			468,366				510,934				553,828				572,184				584,145
Other securities			351,495				346,720				286,041				205,052				212,654
Loans			6,956,674				6,760,393				6,607,264				6,638,105				6,630,354
Allowance for credit losses			(41,268	)			(39,424	)			(37,433	)			(37,135	)			(36,363	)
Net loans			6,915,406				6,720,969				6,569,831				6,600,970				6,593,991
Interest and dividends receivable			42,571				38,811				37,308				38,698				40,912
Bank premises and equipment, net			22,376				22,285				22,752				23,338				24,018
Federal Home Loan Bank of New York stock			62,489				50,017				33,891				35,937				36,158
Bank owned life insurance			212,353				211,220				211,867				210,754				184,730
Goodwill			17,636				17,636				17,636				17,636				17,636
Core deposit intangibles			2,147				2,282				2,420				2,562				2,708
Right of use asset			44,885				46,687				48,475				50,200				50,155
Other assets			179,090				160,885				125,160				148,989				93,741
Total assets		$	8,557,419			$	8,339,587			$	8,169,833			$	8,045,911			$	8,077,334
LIABILITIES
Deposits		$	6,054,761			$	6,350,000			$	6,373,400			$	6,333,532			$	6,421,391
Mortgagors' escrow deposits			70,544				57,577				79,495				51,913				67,207
Borrowed funds			1,572,830				1,089,621				877,122				815,544				752,925
Operating lease liability			48,330				50,346				52,292				54,155				54,239
Other liabilities			140,235				121,231				111,711				111,139				113,476
Total liabilities			7,886,700				7,668,775				7,494,020				7,366,283				7,409,238
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			263,755				262,860				261,837				263,375				262,009
Treasury stock			(90,977	)			(88,342	)			(79,834	)			(75,293	)			(71,738	)
Retained earnings			543,894				527,217				508,973				497,889				486,418
Accumulated other comprehensive loss, net of taxes			(46,294	)			(31,264	)			(15,504	)			(6,684	)			(8,934	)
Total stockholders' equity			670,719				670,812				675,813				679,628				668,096
Total liabilities and stockholders' equity		$	8,557,419			$	8,339,587			$	8,169,833			$	8,045,911			$	8,077,334
(In thousands)
Issued shares			34,088				34,088				34,088				34,088				34,088
Outstanding shares			29,851				29,980				30,367				30,526				30,676
Treasury shares			4,237				4,108				3,721				3,561				3,412

  

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)

		For the three months ended																	For the nine months ended
		September 30,			June 30,			March 31,			December 31,			September 30,					September 30,			September 30,
(In thousands)		2022			2022			2022			2021			2021					2022			2021
Interest-earning Assets:
Mortgage loans, net		$	5,340,694		$	5,178,029		$	5,152,070		$	5,140,233		$	5,158,213				$	5,224,289		$	5,148,204
Other loans, net			1,520,769			1,462,302			1,426,610			1,418,052			1,475,088					1,470,239			1,525,105
Total loans, net			6,861,463			6,640,331			6,578,680			6,558,285			6,633,301					6,694,528			6,673,309
Taxable securities:
Mortgage-backed securities			568,854			594,923			580,670			595,538			590,732					581,439			534,836
Other securities			362,629			333,158			226,744			207,482			217,763					308,008			249,899
Total taxable securities			931,483			928,081			807,414			803,020			808,495					889,447			784,735
Tax-exempt securities:
Other securities			67,211			67,315			57,611			50,834			50,832					64,081			50,830
Total tax-exempt securities			67,211			67,315			57,611			50,834			50,832					64,081			50,830
Interest-earning deposits and federal funds sold			118,913			104,956			126,668			215,117			115,689					116,817			179,480
Total interest-earning assets			7,979,070			7,740,683			7,570,373			7,627,256			7,608,317					7,764,873			7,688,354
Other assets			463,587			471,080			479,097			463,445			464,601					471,197			472,767
Total assets		$	8,442,657		$	8,211,763		$	8,049,470		$	8,090,701		$	8,072,918				$	8,236,070		$	8,161,121
Interest-bearing Liabilities:
Deposits:
Savings accounts		$	154,545		$	156,785		$	156,592		$	154,471		$	153,120				$	155,966		$	158,708
NOW accounts			1,808,608			2,089,851			2,036,914			2,115,619			2,107,866					1,977,621			2,182,660
Money market accounts			2,136,829			2,231,743			2,253,630			2,177,928			2,107,473					2,206,973			2,019,497
Certificate of deposit accounts			1,057,733			820,476			889,847			949,784			1,037,964					923,301			1,061,293
Total due to depositors			5,157,715			5,298,855			5,336,983			5,397,802			5,406,423					5,263,861			5,422,158
Mortgagors' escrow accounts			68,602			97,496			71,509			84,617			68,562					79,192			75,171
Total interest-bearing deposits			5,226,317			5,396,351			5,408,492			5,482,419			5,474,985					5,343,053			5,497,329
Borrowings			1,326,770			941,023			812,018			793,802			835,874					1,028,489			942,599
Total interest-bearing liabilities			6,553,087			6,337,374			6,220,510			6,276,221			6,310,859					6,371,542			6,439,928
Noninterest-bearing demand deposits			1,050,296			1,044,553			1,001,571			976,803			933,443					1,032,319			904,522
Other liabilities			164,992			162,380			154,377			166,203			169,328					160,621			175,317
Total liabilities			7,768,375			7,544,307			7,376,458			7,419,227			7,413,630					7,564,482			7,519,767
Equity			674,282			667,456			673,012			671,474			659,288					671,588			641,354
Total liabilities and equity		$	8,442,657		$	8,211,763		$	8,049,470		$	8,090,701		$	8,072,918				$	8,236,070		$	8,161,121
Net interest-earning assets		$	1,425,983		$	1,403,309		$	1,349,863		$	1,351,035		$	1,297,458				$	1,393,331		$	1,248,426

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

		For the three months ended																							For the nine months ended
		September 30,				June 30,					March 31,					December 31,				September 30,					September 30,					September 30,
(Dollars in thousands)		2022				2022					2022					2021				2021					2022					2021
Interest Income:
Mortgage loans, net		$	58,374			$	54,775				$	53,970				$	54,260			$	55,114				$	167,119				$	163,320
Other loans, net			17,172				14,417					13,546					13,853				14,084					45,135					42,898
Total loans, net			75,546				69,192					67,516					68,113				69,198					212,254					206,218
Taxable securities:
Mortgage-backed securities			2,466				2,356					2,167					2,125				2,279					6,989					6,210
Other securities			2,839				2,090					1,119					993				1,008					6,048					3,008
Total taxable securities			5,305				4,446					3,286					3,118				3,287					13,037					9,218
Tax-exempt securities:
Other securities			492				625					591					538				539					1,708					1,604
Total tax-exempt securities			492				625					591					538				539					1,708					1,604
Interest-earning deposits and federal funds sold			506				159					51					74				42					716					129
Total interest-earning assets			81,849				74,422					71,444					71,843				73,066					227,715					217,169
Interest Expense:
Deposits:
Savings accounts		$	53			$	50				$	49				$	53			$	61				$	152				$	202
NOW accounts			3,640				1,405					793					1,021				1,227					5,838					4,432
Money market accounts			5,280				1,952					1,275					1,428				1,683					8,507					5,843
Certificate of deposit accounts			2,948				1,273					1,289					1,471				1,734					5,510					5,869
Total due to depositors			11,921				4,680					3,406					3,973				4,705					20,007					16,346
Mortgagors' escrow accounts			44				6					2					2				—					52					3
Total interest-bearing deposits			11,965				4,686					3,408					3,975				4,705					20,059					16,349
Borrowings			8,574				4,875					4,433					5,081				4,884					17,882					15,188
Total interest-bearing liabilities			20,539				9,561					7,841					9,056				9,589					37,941					31,537
Net interest income- tax equivalent		$	61,310			$	64,861				$	63,603				$	62,787			$	63,477				$	189,774				$	185,632
Included in net interest income above:
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans		$	1,368			$	2,281				$	1,716				$	1,497			$	2,136				$	5,365				$	5,130
Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income			28				(60	)				(129	)				1,122				194					(161	)				957
Purchase accounting adjustments			775				367					1,058					462				1,100					2,200					2,587
Interest-earning Assets Yields:
Mortgage loans, net			4.37	%			4.23		%			4.19		%			4.22	%			4.27	%				4.27		%			4.23	%
Other loans, net			4.52				3.94					3.80					3.91				3.82					4.09					3.75
Total loans, net			4.40				4.17					4.11					4.15				4.17					4.23					4.12
Taxable securities:
Mortgage-backed securities			1.73				1.58					1.49					1.43				1.54					1.60					1.55
Other securities			3.13				2.51					1.97					1.91				1.85					2.62					1.60
Total taxable securities			2.28				1.92					1.63					1.55				1.63					1.95					1.57
Tax-exempt securities: (1)
Other securities			2.93				3.71					4.10					4.23				4.24					3.55					4.21
Total tax-exempt securities			2.93				3.71					4.10					4.23				4.24					3.55					4.21
Interest-earning deposits and federal funds sold			1.70				0.61					0.16					0.14				0.15					0.82					0.10
Total interest-earning assets			4.10	%			3.85		%			3.77		%			3.77	%			3.84	%				3.91		%			3.77	%
Interest-bearing Liabilities Yields:
Deposits:
Savings accounts			0.14	%			0.13		%			0.13		%			0.14	%			0.16	%				0.13		%			0.17	%
NOW accounts			0.81				0.27					0.16					0.19				0.23					0.39					0.27
Money market accounts			0.99				0.35					0.23					0.26				0.32					0.51					0.39
Certificate of deposit accounts			1.11				0.62					0.58					0.62				0.67					0.80					0.74
Total due to depositors			0.92				0.35					0.26					0.29				0.35					0.51					0.40
Mortgagors' escrow accounts			0.26				0.02					0.01					0.01				—					0.09					0.01
Total interest-bearing deposits			0.92				0.35					0.25					0.29				0.34					0.50					0.40
Borrowings			2.58				2.07					2.18					2.56				2.34					2.32					2.15
Total interest-bearing liabilities			1.25	%			0.60		%			0.50		%			0.58	%			0.61	%				0.79		%			0.65	%
Net interest rate spread (tax equivalent)			2.85	%			3.25		%			3.27		%			3.19	%			3.23	%				3.12		%			3.12	%
Net interest margin (tax equivalent)			3.07	%			3.35		%			3.36		%			3.29	%			3.34	%				3.26		%			3.22	%
Ratio of interest-earning assets to interest-bearing liabilities			1.22	X			1.22		X			1.22		X			1.22	X			1.21	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

																	September 2022 vs.				September 2022 vs.
		September 30,			June 30,			March 31,			December 31,			September 30,			June 2022				September 2021
(Dollars in thousands)		2022			2022			2022			2021			2021			% Change				% Change
Noninterest bearing		$	992,378		$	1,081,208		$	1,041,027		$	967,621		$	941,259		(8.2	)	%		5.4		%
Interest bearing:
Certificate of deposit accounts			1,036,107			906,943			886,317			946,575			1,040,098		14.2				(0.4	)
Savings accounts			150,552			154,670			158,542			156,554			152,306		(2.7	)			(1.2	)
Money market accounts			2,113,256			2,229,993			2,362,390			2,342,003			2,152,085		(5.2	)			(1.8	)
NOW accounts			1,762,468			1,977,186			1,925,124			1,920,779			2,135,643		(10.9	)			(17.5	)
Total interest-bearing deposits			5,062,383			5,268,792			5,332,373			5,365,911			5,480,132		(3.9	)			(7.6	)
Total deposits		$	6,054,761		$	6,350,000		$	6,373,400		$	6,333,532		$	6,421,391		(4.6	)	%		(5.7	)	%

Loan Composition

																						September 2022 vs.				September 2022 vs.
		September 30,				June 30,				March 31,				December 31,				September 30,				June 2022				September 2021
(Dollars in thousands)		2022				2022				2022				2021				2021				% Change				% Change
Multifamily residential		$	2,608,192			$	2,531,858			$	2,500,570			$	2,517,026			$	2,498,980			3.0		%		4.4		%
Commercial real estate			1,914,326				1,864,507				1,764,927				1,775,629				1,745,855			2.7				9.6
One-to-four family ― mixed-use property			560,885				561,100				563,679				571,795				579,100			—				(3.1	)
One-to-four family ― residential			233,469				242,729				248,226				268,255				280,343			(3.8	)			(16.7	)
Co-operative apartments			7,015				8,130				8,248				8,316				7,804			(13.7	)			(10.1	)
Construction			63,651				72,148				68,488				59,761				71,464			(11.8	)			(10.9	)
Mortgage Loans			5,387,538				5,280,472				5,154,138				5,200,782				5,183,546			2.0				3.9
Small Business Administration (1)			27,712				40,572				59,331				93,811				148,855			(31.7	)			(81.4	)
Commercial business and other			1,532,497				1,431,417				1,387,155				1,339,273				1,294,688			7.1				18.4
Nonmortgage loans			1,560,209				1,471,989				1,446,486				1,433,084				1,443,543			6.0				8.1
Net unamortized premiums and unearned loan fees (2)			8,927				7,932				6,640				4,239				3,265			12.5				173.4
Allowance for credit losses			(41,268	)			(39,424	)			(37,433	)			(37,135	)			(36,363	)		4.7				13.5
Net loans		$	6,915,406			$	6,720,969			$	6,569,831			$	6,600,970			$	6,593,991			2.9		%		4.9		%

____________
⁽¹⁾ Includes $9.6 million, $22.2 million, $43.2 million, $77.4 million, and $130.8 million of PPP loans at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, respectively.
⁽²⁾ Includes $5.8 million, $6.6 million, $6.9 million, $8.0 million, and $8.6 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, respectively.

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

Loan Closings

		For the three months ended																For the nine months ended
		September 30,			June 30,			March 31,			December 31,			September 30,					September 30,		September 30,
(In thousands)		2022			2022			2022			2021			2021				2022			2021
Multifamily residential		$	173,980		$	136,902		$	98,180		$	79,648		$	41,850			$	409,062		$	167,316
Commercial real estate			77,777			164,826			45,102			64,916			48,447				287,705			103,566
One-to-four family – mixed-use property			12,383			12,228			8,498			12,440			12,823				33,109			28,670
One-to-four family – residential			4,102			4,211			9,237			5,162			2,761				17,550			65,386
Co-operative apartments			—			—			24			413			—				24			—
Construction			7,170			8,319			8,802			17,033			8,687				24,291			21,091
Mortgage Loans			275,412			326,486			169,843			179,612			114,568				771,741			386,029
Small Business Administration (1)			46			2,750			—			270			415				2,796			143,093
Commercial business and other			188,202			174,551			159,476			182,858			128,946				522,229			362,100
Nonmortgage Loans			188,248			177,301			159,476			183,128			129,361				525,025			505,193
Total Closings		$	463,660		$	503,787		$	329,319		$	362,740		$	243,929			$	1,296,766		$	891,222

____________
⁽¹⁾ Includes $138.7 million of PPP closings for the nine months ended September 30, 2021.

Weighted Average Rate on Loan Closings

		For the three months ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Loan type		2022			2022			2022			2021			2021
Mortgage loans		4.37	%		3.76	%		3.61	%		3.77	%		3.80	%
Nonmortgage loans		4.93			4.21			3.27			3.24			3.49
Total loans		4.60	%		3.92	%		3.44	%		3.51	%		3.64	%

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

		For the three months ended																										For the nine months ended
		September 30,					June 30,					March 31,					December 31,					September 30,						September 30,						September 30,
(Dollars in thousands)		2022					2022					2022					2021					2021						2022						2021
Allowance for credit losses
Beginning balances		$	39,424				$	37,433				$	37,135				$	36,363				$	42,670						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	)					—						(101	)
One-to-four family – residential			2					(2	)				(2	)				(3	)				(147	)					(2	)					(154	)
Small Business Administration			(12	)				13					1,015					(7	)				(8	)					1,016						(27	)
Taxi medallion			—					(435	)				(12	)				—					(1,235	)					(447	)					1,301
Commercial business and other			300					(76	)				(66	)				(20	)				894						158						2,032
Total			290					(501	)				935					(29	)				(619	)					724						3,148
Provision (benefit) for loan losses			2,134					1,490					1,233					743					(6,926	)					4,857						(5,642	)
Ending balance		$	41,268				$	39,424				$	37,433				$	37,135				$	36,363					$	41,268					$	36,363
Gross charge-offs		$	324				$	50				$	1,036				$	7				$	1,019					$	1,410					$	5,127
Gross recoveries			34					551					101					36					1,638						686						1,979
Allowance for credit losses to gross loans			0.59		%			0.58		%			0.57		%			0.56		%			0.55		%				0.59		%				0.55		%
Net loan charge-offs (recoveries) to average loans			0.02					(0.03	)				0.06					—					(0.04	)					0.01						0.06

Nonperforming Assets

		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2022				2022				2022				2021				2021
Loans 90 Days Or More Past Due and Still Accruing:
Commercial real estate		$	2,000			$	—			$	—			$	—			$	—
Construction			—				—				—				—				873
Commercial business and other			—				100				—				—				1,052
Total			2,000				100				—				—				1,925
Nonaccrual Loans:
Multifamily residential			3,414				3,414				3,414				2,431				4,192
Commercial real estate			1,851				242				5				613				613
One-to-four family - mixed-use property (1)			790				790				790				1,309				2,204
One-to-four family - residential			4,655				5,055				7,387				7,725				7,807
Construction			—				856				—				—				—
Small Business Administration			937				937				937				937				976
Commercial business and other(1)			15,356				16,554				1,533				1,918				2,500
Total			27,003				27,848				14,066				14,933				18,292
Total Nonperforming Loans (NPLs)			29,003				27,948				14,066				14,933				20,217
Total Nonaccrual HTM Securities			20,981				20,981				—				—				—
Total Nonperforming Assets		$	49,984			$	48,929			$	14,066			$	14,933			$	20,217
Nonperforming Assets to Total Assets			0.58	%			0.59	%			0.17	%			0.19	%			0.25	%
Allowance for Credit Losses to NPLs			142.3	%			141.1	%			266.1	%			248.7	%			179.9	%

____________
⁽¹⁾ Not included in the above analysis are nonaccrual performing TDR one-to-four family - mixed use property loans totaling $0.2 million in 3Q22 and $0.3 million each in 2Q22, 1Q22, 4Q21, and 3Q21; nonaccrual performing TDR commercial business loans totaling $2.9 million in 3Q22, $2.8 million in 2Q22 and 1Q22, less than $0.1 million each in 4Q21 and 3Q21.

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 borrowings carried at fair value under the fair value option and swaps designated to protect against rising rates. As the swaps get closer to maturity, the volatility in fair value adjustments will dissipate. In a rising interest rate environment or a steepening of the yield curve, the loss position would experience an improvement. In a declining interest rate environment, the movement in the curve exaggerates our mark-to-market loss position.

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, Core 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 nine months ended
(Dollars in thousands,		September 30,					June 30,					March 31,					December 31,					September 30,							September 30,					September 30,
except per share data)		2022					2022					2022					2021					2021							2022					2021
GAAP income before income taxes		$	32,422				$	34,971				$	24,640				$	22,826				$	34,812						$	92,033				$	86,452
Net (gain) loss from fair value adjustments (Noninterest income (loss))			(5,626	)				(2,533	)				1,809					5,140					2,289							(6,350	)				7,855
Net (gain) loss on sale of securities (Noninterest income (loss))			—					—					—					—					10							—					(113	)
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)			(28	)				60					129					(1,122	)				(194	)						161					(957	)
Net amortization of purchase accounting adjustments (Various)			(650	)				(237	)				(924	)				(324	)				(958	)						(1,811	)				(2,165	)
Merger (benefit) expense (Various)			—					—					—					(17	)				2,096							—					2,579
Core income before taxes			26,118					30,725					25,654					26,503					38,055							82,497					93,030
Provision for income taxes for core income			7,165					9,207					6,685					5,535					10,226							23,057					25,234
Core net income		$	18,953				$	21,518				$	18,969				$	20,968				$	27,829						$	59,440				$	67,796
GAAP diluted earnings per common share		$	0.76				$	0.81				$	0.58				$	0.58				$	0.81						$	2.15				$	2.02
Net (gain) loss from fair value adjustments, net of tax			(0.13	)				(0.06	)				0.04					0.13					0.05							(0.15	)				0.18
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	)
Net amortization of purchase accounting adjustments, net of tax			(0.02	)				(0.01	)				(0.02	)				(0.01	)				(0.02	)						(0.04	)				(0.05	)
Merger (benefit) expense, net of tax			—					—					—					—					0.05							—					0.06
NYS tax change			—					—					—					—					—							—					(0.02	)
Core diluted earnings per common share(1)		$	0.62				$	0.70				$	0.61				$	0.67				$	0.88						$	1.92				$	2.14
Core net income, as calculated above		$	18,953				$	21,518				$	18,969				$	20,968				$	27,829						$	59,440				$	67,796
Average assets			8,442,657					8,211,763					8,049,470					8,090,701					8,072,918							8,236,070					8,161,121
Average equity			674,282					667,456					673,012					671,474					659,288							671,588					641,354
Core return on average assets(2)			0.90		%			1.05		%			0.94		%			1.04		%			1.38		%					0.96		%			1.11		%
Core return on average equity(2)			11.24		%			12.90		%			11.27		%			12.49		%			16.88		%					11.80		%			14.09		%

____________
⁽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 nine months ended
		September 30,				June 30,				March 31,				December 31,				September 30,						September 30,				September 30,
(Dollars in thousands)		2022				2022				2022				2021				2021						2022				2021
GAAP Net interest income		$	61,206			$	64,730			$	63,479			$	62,674			$	63,364					$	189,415			$	185,295
Net (gain) loss from fair value adjustments on qualifying hedges			(28	)			60				129				(1,122	)			(194	)					161				(957	)
Net amortization of purchase accounting adjustments			(775	)			(367	)			(1,058	)			(462	)			(1,100	)					(2,200	)			(2,587	)
Core Net interest income		$	60,403			$	64,423			$	62,550			$	61,090			$	62,070					$	187,376			$	181,751
GAAP Noninterest income (loss)		$	8,995			$	7,353			$	1,313			$	(280	)		$	866					$	17,661			$	3,967
Net (gain) loss from fair value adjustments			(5,626	)			(2,533	)			1,809				5,140				2,289						(6,350	)			7,855
Net gain (loss) on sale of securities			—				—				—				—				10						—				(113	)
Life insurance proceeds			—				(1,536	)			—				—				—						(1,536	)			—
Net gain on sale of assets			—				—				—				—				—						—				(621	)
Core Noninterest income		$	3,369			$	3,284			$	3,122			$	4,860			$	3,165					$	9,775			$	11,088
GAAP Noninterest expense		$	35,634			$	35,522			$	38,794			$	38,807			$	36,345					$	109,950			$	108,515
Net amortization of purchase accounting adjustments			(125	)			(130	)			(134	)			(138	)			(142	)					(389	)			(422	)
Merger expense (benefit)			—				—				—				17				(2,096	)					—				(2,579	)
Core Noninterest expense		$	35,509			$	35,392			$	38,660			$	38,686			$	34,107					$	109,561			$	105,514
Net interest income		$	61,206			$	64,730			$	63,479			$	62,674			$	63,364					$	189,415			$	185,295
Noninterest income (loss)			8,995				7,353				1,313				(280	)			866						17,661				3,967
Noninterest expense			(35,634	)			(35,522	)			(38,794	)			(38,807	)			(36,345	)					(109,950	)			(108,515	)
Pre-provision pre-tax net revenue		$	34,567			$	36,561			$	25,998			$	23,587			$	27,885					$	97,126			$	80,747
Core:
Net interest income		$	60,403			$	64,423			$	62,550			$	61,090			$	62,070					$	187,376			$	181,751
Noninterest income			3,369				3,284				3,122				4,860				3,165						9,775				11,088
Noninterest expense			(35,509	)			(35,392	)			(38,660	)			(38,686	)			(34,107	)					(109,561	)			(105,514	)
Pre-provision pre-tax net revenue		$	28,263			$	32,315			$	27,012			$	27,264			$	31,128					$	87,590			$	87,325
Efficiency Ratio			55.7		%		52.3		%		58.9		%		58.7		%		52.3		%				55.6		%		54.7		%

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

	For the three months ended																										For the nine months ended
	September 30,					June 30,					March 31,					December 31,					September 30,						September 30,				September 30,
(Dollars in thousands)	2022					2022					2022					2021					2021						2022				2021
GAAP net interest income	$	61,206				$	64,730				$	63,479				$	62,674				$	63,364					$	189,415			$	185,295
Net (gain) loss from fair value adjustments on qualifying hedges		(28	)				60					129					(1,122	)				(194	)					161				(957	)
Net amortization of purchase accounting adjustments		(775	)				(367	)				(1,058	)				(462	)				(1,100	)					(2,200	)			(2,587	)
Tax equivalent adjustment		104					131					124					113					113						359				337
Core net interest income FTE	$	60,507				$	64,554				$	62,674				$	61,203				$	62,183					$	187,735			$	182,088
Total average interest-earning assets (1)	$	7,984,558				$	7,746,640				$	7,577,053				$	7,634,601				$	7,616,332					$	7,770,910			$	7,697,229
Core net interest margin FTE		3.03		%			3.33		%			3.31		%			3.21		%			3.27		%				3.22		%		3.15		%
GAAP interest income on total loans, net	$	75,546				$	69,192				$	67,516				$	68,113				$	69,198					$	212,254			$	206,218
Net (gain) loss from fair value adjustments on qualifying hedges		(28	)				60					129					(1,122	)				(194	)					161				(957	)
Net amortization of purchase accounting adjustments		(783	)				(357	)				(1,117	)				(535	)				(1,126	)					(2,256	)			(2,478	)
Core interest income on total loans, net	$	74,735				$	68,895				$	66,528				$	66,456				$	67,878					$	210,159			$	202,783
Average total loans, net (1)	$	6,867,758				$	6,647,131				$	6,586,253				$	6,566,654				$	6,642,434					$	6,701,413			$	6,683,412
Core yield on total loans		4.35		%			4.15		%			4.04		%			4.05		%			4.09		%				4.18		%		4.05		%

____________
⁽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)

		September 30,					June 30,					March 31,					December 31,					September 30,
(Dollars in thousands)		2022					2022					2022					2021					2021
Total Equity		$	670,719				$	670,812				$	675,813				$	679,628				$	668,096
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit Intangibles			(2,147	)				(2,282	)				(2,420	)				(2,562	)				(2,708	)
Intangible deferred tax liabilities			—					—					328					328					287
Tangible Stockholders' Common Equity		$	650,936				$	650,894				$	656,085				$	659,758				$	648,039
Total Assets		$	8,557,419				$	8,339,587				$	8,169,833				$	8,045,911				$	8,077,334
Less:
Goodwill			(17,636	)				(17,636	)				(17,636	)				(17,636	)				(17,636	)
Core deposit Intangibles			(2,147	)				(2,282	)				(2,420	)				(2,562	)				(2,708	)
Intangible deferred tax liabilities			—					—					328					328					287
Tangible Assets		$	8,537,636				$	8,319,669				$	8,150,105				$	8,026,041				$	8,057,277
Tangible Stockholders' Common Equity to Tangible Assets			7.62		%			7.82		%			8.05		%			8.22		%			8.04		%

Source: Flushing Financial Corporation