John R. Buran, President and CEO Commentary  

“Flushing Financial delivered sequential GAAP and Core NIM expansion in 4Q23 of 7 and 18 basis points, respectively, as our team continued to successfully execute against the previously announced action plan amid this challenging environment. Importantly, during the quarter, total average deposits increased 3.1% YoY and 0.9% QoQ, while average noninterest bearing deposits increased $21.6 million, or 2.5% QoQ. Our loan portfolio remains resilient through the credit cycle with 89% secured by real estate, strong debt service coverage ratios, low average loan to values, and controllable repricing risk. Credit quality continues to be a strength for the Company with less than one basis point of net charge-offs in 4Q23 although there was a slight uptick in NPAs.

Given our progress to date, we are expanding our areas of focus to include: 1) increasing NIM and reducing volatility; 2) maintaining credit discipline; 3) preserving strong liquidity and capital; and 4) bending the expense curve. Continuing to advance these priorities will enable us to navigate the current environment while positioning the Company for long-term profitable growth.”
- John R. Buran, President and CEO

UNIONDALE, N.Y., Jan. 25, 2024 (GLOBE NEWSWIRE) -- GAAP and Core NIM Expand QoQ; Average Total Deposits Increase. The Company reported fourth quarter and full year 2023 GAAP EPS of $0.27 and $0.96, respectively. Core EPS for the fourth quarter and full year of 2023 totaled $0.25 and $0.83, respectively. 4Q23 GAAP NIM was 2.29% while Core NIM amounted to 2.31%. The actions undertaken in 2023 to reduce interest rate risk, including adding interest rate hedges and floating rate loans, assisted in reducing the NIM compression. Absent episodic items, the NIM was 2.14%, an increase of 5 basis points quarter over quarter. Average total deposits increased 3.1% YoY and 0.9% QoQ while importantly, noninterest bearing deposits increased $21.6 million, or 2.5% QoQ.

Strong Credit Quality; Stable Capital. Nonperforming assets to total assets increased to 54 bps compared to 45 bps in 3Q23, while criticized and classified loans to loans was 1.11% in 4Q23, compared to 1.08% in 3Q23. Net charge-offs were only $60 thousand in 4Q23. Capital continues to be sound with TCE/TA1 of 7.64% at December 31, 2023, compared to 7.56% at September 30, 2023. The Company repurchased 38,815 shares at an average cost $15.08 (33% discount to tangible book value) during 4Q23.

 
Key Financial Metrics2


                  
  4Q23  3Q23 2Q23 1Q23 4Q22  2023  2022
GAAP:                 
EPS $0.27  $0.26 $0.29 $0.13 $0.34  $0.96  $2.50
ROAA (%)  0.38   0.37  0.41  0.19  0.48   0.34   0.93
ROAE (%)  4.84   4.64  5.16  2.37  6.06   4.25   11.44
NIM FTE3(%)  2.29   2.22  2.18  2.27  2.70   2.24   3.11
Core:                 
EPS $0.25  $0.25 $0.26 $0.06 $0.57  $0.83  $2.49
ROAA (%)  0.35   0.36  0.37  0.09  0.82   0.29   0.92
ROAE (%)  4.51   4.49  4.70  1.11  10.29   3.69   11.42
Core NIM FTE (%)  2.31   2.13  2.17  2.25  2.63   2.21   3.07
Credit Quality:                 
NPAs/Loans & OREO (%)  0.67   0.56  0.58  0.61  0.77   0.67   0.77
ACLs/Loans (%)  0.58   0.57  0.57  0.56  0.58   0.58   0.58
ACLs/NPLs (%)  159.55   225.38  207.08  182.89  124.89   159.55   124.89
NCOs/Avg Loans (%)  -   -  0.09  0.54  0.05   0.16   0.02
Balance Sheet:                 
Avg Loans ($B) $6.9  $6.8 $6.8 $6.9 $6.9  $6.8  $6.7
Avg Dep ($B) $6.9  $6.8 $6.9 $6.8 $6.7  $6.9  $6.5
Book Value/Share $23.21  $23.06 $23.14 $22.80 $22.97  $23.21  $22.97
Tangible BV/Share $22.54  $22.39 $22.47 $22.14 $22.31  $22.54  $22.31
TCE/TA (%)  7.64   7.56  7.70  7.72  7.82   7.64   7.82

Note: In certain circumstances, reclassifications have been made to prior periods to conform to the current presentation.
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”).

  
4Q23 Highlights
  • Net interest margin FTE decreased 41 bps YoY, but increased 7 bps QoQ to 2.29%; Core net interest margin FTE decreased 32 bps YoY but improved 18 bps QoQ to 2.31%; Both GAAP and Core NIM benefited from prepayment penalty income, net reversals and recovered interest from nonaccrual loans, and customer swap termination fees, which totaled $3.4 million or 17 bps in 4Q23
  • Average total deposits increased 3.1% YoY and 0.9% QoQ to $6.9 billion; Average noninterest bearing deposits increased $21.6 million QoQ, totaling 12.7% of average total deposits compared to 14.7% in 4Q22 and 12.5% in 3Q23. Average CDs were $2.3 billion, up 73.3% YoY and 2.2% QoQ
  • Period end net loans decreased 0.4% YoY, but increased 0.1% QoQ; Loan closings were $244.3 million up 8.5% YoY and 1.2% QoQ; The yields on closings increased 159 bps YoY and 21 bps QoQ to 7.69%; Back-to-back swap loan originations were $121.6 million compared to $120.5 million in 3Q23 and generated $1.5 million and $1.6 million of noninterest income, respectively; Loan pipeline decreased 35.3% YoY and 55.1% QoQ to $163.1 million; Approximately 29% of the loan pipeline consists of back-to-back swap loans
  • NPAs decreased to $46.2 million from $53.4 million a year ago but increased from $38.4 million in the prior quarter
  • As separately disclosed, we have not recognized and have restated for employee retention credits formerly recognized during periods of 2023, and have fully reserved for approximately $7.0 million ($0.17/share, after tax) of refunds
  • 4Q23 noninterest expense was impacted by increasing DDA balances and strong loan production
  • Provision for credit losses was $1.0 million in 4Q23 compared to negligible amount in 4Q22 and $0.6 million in 3Q23; Net charge-offs (recoveries) were $60,000 in 4Q23 compared to $0.8 million in 4Q22 and $(42,000) in 3Q23
  • Tangible Common Equity to Tangible Assets increased to 7.64% at 4Q23 compared to 7.56% at 3Q23; Repurchased 38,815 shares at an average price of $15.08 or a 33% discount to December 31, 2023, tangible book value of $22.54
Areas of Focus
Increase NIM and Reduce Volatility
  • GAAP and Core NIM improved 7 bps and 18 bps QoQ, respectively, in 4Q23
  • NIM improved 5 bps QoQ to 2.14%, absent episodic items1
  • Largely achieved the goal of becoming interest rate neutral to a 100 bps change in rates
  • Approximately 25% of the loan portfolio consists of floating rate loans (including interest rate hedges)
  • Average noninterest bearing increased 2.5% QoQ and accounted for 12.7% of average total deposits
Maintain Credit Discipline
  • Approximately 89% of the loan portfolio is collateralized by real estate with an average loan to value of less than 36%
  • Weighted average debt service coverage ratio is approximately 1.8x for multifamily and investor commercial real estate loans
  • NPAs are a low 54 bps of assets and criticized and classified loans are 1.11% of loans
  • Manhattan office buildings exposure is minimal at 0.6% of net loans
Preserve Strong Liquidity and Capital
  • Maintaining ample liquidity with $4.1 billion of undrawn lines and resources
  • Uninsured and uncollateralized deposits were 17% of total deposits, while uninsured deposits were 30% of total deposits
  • Total average deposits increased 3.1% YoY and 0.9% QoQ
  • Checking account openings declined 6.6% YoY in 4Q23, but were up 5.7% in 2023
  • Tangible Common Equity to Tangible Assets improved to 7.64% QoQ
  • Leverage ratio remains stable at 8.47%
Bend the Expense Curve
  • GAAP noninterest expense to average assets was 1.90% in 4Q23 compared to 1.58% in 4Q22 and 1.71% in 3Q23
  • 4Q23 noninterest expense was impacted by increasing DDA balances and strong loan production
  • 1Q24 seasonal expenses are expected to be less than half of the $4.1 million recorded in 1Q23

1 Episodic items include prepayment penalty income, customer swap termination fees, net reversals and recovered interest from nonaccrual loans, net gain/loss from fair value on qualifying hedges, and purchase accounting adjustments

 
Income Statement Highlights


                   
              YoY QoQ
($000s, except EPS)  4Q23  3Q23 2Q23 1Q23 4Q22 Change Change
                   
Net Interest Income  $46,085  $44,427 $43,378 $45,262 $54,201  (15.0)% 3.7 %
Provision (Benefit) for Credit Losses   998   596  1,416  7,508  (12) (8,416.7)  67.4  
Noninterest Income (Loss)   7,402   3,309  5,020  6,857  (7,652) (196.7)  123.7  
Noninterest Expense   40,735   36,388  35,110  39,156  33,742  20.7   11.9  
Income Before Income Taxes   11,754   10,752  11,872  5,455  12,819  (8.3)  9.3  
Provision for Income Taxes   3,655   2,917  3,186  1,411  2,570  42.2   25.3  
Net Income  $8,099  $7,835 $8,686 $4,044 $10,249  (21.0)  3.4  
Diluted EPS  $0.27  $0.26 $0.29 $0.13 $0.34  (20.6)  3.8  
Avg. Diluted Shares (000s)   29,650   29,703  30,090  30,265  30,420  (2.5)  (0.2) 
                   
Core Net Income1  $7,546  $7,571 $7,912 $1,889 $17,399  (56.6)  (0.3) 
Core EPS1  $0.25  $0.25 $0.26 $0.06 $0.57  (56.1)  -  

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income decreased YoY but increased QoQ.

  • Net Interest Margin FTE of 2.29% decreased 41 bps YoY, but increased 7 bps QoQ
  • Prepayment penalty income, customer swap termination fees, 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 $3.0 million (15 bps to the NIM) compared to $2.6 million (13 bps to the NIM) in 3Q23, $0.5 million (3 bps) in 2Q23, $1.1 million (6 bps) in 1Q23, and $2.4 million (12 bps) in 4Q22
  • Excluding the items in the previous bullet, net interest margin was 2.14% in 4Q23, 2.09% in 3Q23, 2.15% in 2Q23, 2.21% in 1Q23, and 2.58% in 4Q22

The provision for credit losses increased YoY and QoQ.

  • Net charge-offs (recoveries) were $60,000 in 4Q23 (less than 1 bp of average loans) compared to $(42,000) in 3Q23 (less than (1) bp of average loans), $1.6 million in 2Q23 (9 bps of average loans), $9.2 million in 1Q23 (54 bps of average loans), and $0.8 million in 4Q22 (5 bps of average loans)
  • 1Q23 net charge-offs were primarily related to a commercial business relationship that was placed on nonaccrual in 2Q22

Noninterest income (loss) increased YoY and QoQ.

  • Back-to-back swap loan closings of $121.6 million in 4Q23 (compared to $120.5 million in 3Q23 and $11.5 million in 2Q23) contributed to the YoY growth in core noninterest income; the Company earns fee income on back-to-back swap loan closings
  • Net gains (losses) from fair value adjustments were $0.9 million in 4Q23 ($0.02 per share, net of tax), $(1.2) million in 3Q23 ($(0.03) per share, net of tax), $0.3 million in 2Q23 ($0.01 per share, net of tax), $2.6 million in 1Q23 ($0.06 per share, net of tax), and $(0.6) million in 4Q22 ($(0.02) per share, net of tax)
  • Life insurance proceeds were $0.7 million in 4Q23 ($0.02 per share), $23,000 in 3Q23 (less than $0.01 per share), $0.6 million ($0.02 per share) in 2Q23, and $0.3 million ($0.01 per share) in 4Q22
  • Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds were primarily reinvested in 1Q23 into floating rate securities that had a yield at that time approximating 6.40%
  • Absent the items in the previous three bullets and other immaterial adjustments, core noninterest income was $5.8 million in 4Q23, up 64.4% YoY and 28.0% QoQ
  • 4Q23 other fee income includes net realized gains on the sale of assets and other dividends from nonqualified plans that are expected to normalize in future periods

Noninterest expense increased YoY and QoQ.

  • 4Q23 noninterest expense was impacted by increasing DDA balances and strong loan production
  • Seasonal compensation expense was $4.1 million in 1Q23; seasonal expenses are expected to be less than half in 1Q24
  • Excluding the effects of immaterial adjustments, core operating expenses were $40.1 million in 4Q23, up 19.3% YoY, and 10.5% QoQ
  • GAAP noninterest expense to average assets was 1.90% in 4Q23, 1.71% in 3Q23, 1.66% in 2Q23, 1.85% in 1Q23, and 1.58% in 4Q22

Provision for income taxes increased YoY and QoQ.

  • The effective tax rate was 31.1% in 4Q23, 27.1% in 3Q23, 26.8% in 2Q23, 25.9% in 1Q23, and 20.0% in 4Q22
  • The 4Q23 effective tax rate increased as a result of preferential tax items having a smaller impact due to higher pre-tax income than estimated in 3Q23 and 2Q23; the 4Q22 effective tax rate had preferential tax items that had a larger impact as a result of lower levels of pre-tax income
 
Balance Sheet, Credit Quality, and Capital Highlights


                  
             YoY QoQ
  4Q23  3Q23 2Q23 1Q23 4Q22 Change Change
Averages ($MM)                 
Loans $6,868  $6,813 $6,830 $6,871 $6,881 (0.2)% 0.8 %
Total Deposits  6,884   6,819  6,900  6,810  6,678 3.1   1.0  
                  
Credit Quality ($000s)                 
Nonperforming Loans $25,172  $17,405 $18,637 $21,176 $32,382 (22.3)% 44.6 %
Nonperforming Assets  46,153   38,386  39,618  42,157  53,363 (13.5)  20.2  
Criticized and Classified Loans  76,719   74,169  48,675  58,130  68,093 12.7   3.4  
Criticized and Classified Assets  97,700   95,150  69,656  79,111  89,073 9.7   2.7  
Allowance for Credit Losses/Loans (%)  0.58   0.57  0.57  0.56  0.58 - bps 1 bp
                  
Capital                 
Book Value/Share $23.21  $23.06 $23.14 $22.80 $22.97 1.0 % 0.7 %
Tangible Book Value/Share  22.54   22.39  22.47  22.14  22.31 1.0   0.7  
Tang. Common Equity/Tang. Assets (%)  7.64   7.56  7.70  7.72  7.82 (18)bps 8 bps
Leverage Ratio (%)  8.47   8.51  8.54  8.56  8.61 (14)  (4) 

Average loans decreased YoY but increased QoQ.

  • Period end net loans totaled $6.9 billion, down 0.4% YoY, but up 0.1% QoQ
  • Total loan closings were $244.3 million in 4Q23, $241.5 million in 3Q23, $158.8 million in 2Q23, $173.5 million in 1Q23, and $225.2 million in 4Q22; the loan pipeline was $163.1 million at December 31, 2023, down 35.3% YoY and 55.1% QoQ
  • The diversified loan portfolio is approximately 89% collateralized by real estate with an average loan-to-value ratio of less than 36%
  • Manhattan office buildings exposure is minimal at 0.6% of net loans

Average total deposits increased YoY and QoQ.

  • Average noninterest bearing deposits decreased 10.9% YoY, but increased 2.5% QoQ and comprised 12.7% of average total deposits in 4Q23 compared to 14.7% a year ago
  • Average CDs totaled $2.3 billion, up 73.3% YoY and 2.2% QoQ; approximately $408.6 million of non-swapped CDs are due to mature at a rate of 3.20% in 1Q24

Credit Quality: Nonperforming loans declined YoY but increased QoQ.

  • Criticized and classified loans were 111 bps of gross loans at 4Q23 compared to 108 bps at 3Q23, 71 bps at 2Q23, 84 bps at 1Q23, and 98 bps at 4Q22
  • Allowance for credit losses were 159.5% of nonperforming loans at 4Q23 compared to 124.9% at 4Q22 and 225.4% at 3Q23

Capital: Book value per common share and tangible book value per common share, a non-GAAP measure, both increased 1.0% YoY and 0.7% QoQ to $23.21 and $22.54, respectively.

  • The Company paid a dividend of $0.22 per share in 4Q23; repurchased 38,815 shares in 4Q23 at an average price of $15.08, representing a 33% discount to tangible book value; 807,964 shares remaining subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.64% at December 31, 2023, compared to 7.82% at December 31, 2022, and 7.56% at September 30, 2023
Conference Call Information and First Quarter Earnings Release Date

Conference Call Information:

  • John R. Buran, President and Chief Executive Officer, Tom Buonaiuto, Senior Executive Vice President, Chief of Staff, and Deposit Channel Executive, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer and Treasurer, will host a conference call on Friday, January 26, 2024, at 11:00 AM (ET) to discuss the Company’s fourth quarter and full year results and strategy.
  • Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
  • Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=VQZ8mq4o
  • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
  • Replay Access Code: 6289639
  • The conference call will be simultaneously webcast and archived

First Quarter 2024 Earnings Release Date:

The Company plans to release First Quarter 2024 financial results after the market close on April 23, 2024; followed by a conference call at 9:30 AM (ET) on April 24, 2024.

A detailed announcement will be issued prior to the first 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, 2022 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.

#FF                                                                                                        - Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
                            
 At or for the three months ended  At or for the year ended 
(Dollars in thousands, exceptDecember 31,  September 30, June 30, March 31, December 31,   December 31,  December 31,  
per share data)2023 2023 2023 2023 2022  2023    2022    
Performance Ratios (1)                            
Return on average assets 0.38%    0.37%   0.41%    0.19%    0.48%     0.34%   0.93%
Return on average equity 4.84   4.64    5.16   2.37   6.06    4.25  11.44 
Yield on average interest-earning assets (2) 5.39   5.19    4.84   4.61   4.44    5.01  4.05 
Cost of average interest-bearing liabilities 3.68   3.52    3.15   2.80   2.11    3.29  1.13 
Cost of funds 3.26   3.13    2.80   2.47   1.84    2.91  0.98 
Net interest rate spread during period (2) 1.71   1.67    1.69   1.81   2.33    1.72  2.92 
Net interest margin (2) 2.29   2.22    2.18   2.27   2.70    2.24  3.11 
Noninterest expense to average assets 1.90   1.71    1.66   1.85   1.58    1.78  1.73 
Efficiency ratio (3) 76.69   76.76    73.82   79.52   59.55    76.72  56.46 
Average interest-earning assets to average interest-bearing liabilities 1.19X  1.18X   1.18X  1.19X  1.21X   1.19X 1.22X
                            
Average Balances                           
Total loans, net$6,867,927  $6,813,019   $6,829,648  $6,871,192  $6,881,245   $6,845,349 $6,741,590 
Total interest-earning assets 8,076,991   8,023,237    7,991,756   8,002,376   8,045,691    8,023,793  7,835,654 
Total assets 8,569,002   8,505,346    8,462,442   8,468,317   8,518,019    8,501,564  8,307,137 
Total deposits 6,884,037   6,819,397    6,899,617   6,810,485   6,678,383    6,853,494  6,451,746 
Total interest-bearing liabilities 6,813,909   6,771,860    6,756,859   6,703,558   6,662,209    6,761,877  6,444,805 
Stockholders' equity 669,819   675,041    672,835   683,058   676,165    675,151  672,742 
                            
Per Share Data                                
Book value per common share (4)$23.21  $23.06   $23.14  $22.80  $22.97   $23.21 $22.97 
Tangible book value per common share (5)$22.54  $22.39   $22.47  $22.14  $22.31   $22.54 $22.31 
                            
Stockholders' Equity                                 
Stockholders' equity$669,837  $666,521   $670,247  $672,345  $677,157   $669,837 $677,157 
Tangible stockholders' equity 650,664   647,234    650,842   652,818   657,504    650,664  657,504 
                            
Consolidated Regulatory Capital Ratios                                 
Tier 1 capital$737,732  $736,744   $734,754  $736,024  $746,880   $737,732 $746,880 
Common equity Tier 1 capital 691,754   690,294    688,820   689,732   698,258    691,754  698,258 
Total risk-based capital 967,627   965,532    962,784   964,270   975,709    967,627  975,709 
Risk Weighted Assets 6,750,301   6,804,478    6,650,222   6,660,145   6,640,542    6,750,301  6,640,542 
                            
Tier 1 leverage capital (well capitalized = 5%) 8.47%    8.51%   8.54%    8.56%    8.61%     8.47%   8.61%  
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) 10.25   10.14    10.36   10.36   10.52    10.25  10.52 
Tier 1 risk-based capital (well capitalized = 8.0%) 10.93   10.83    11.05   11.05   11.25    10.93  11.25 
Total risk-based capital (well capitalized = 10.0%) 14.33   14.19    14.48   14.48   14.69    14.33  14.69 
                            
Capital Ratios                                 
Average equity to average assets 7.82%    7.94%    7.95%    8.07%    7.94%     7.94%   8.10%  
Equity to total assets 7.85   7.77    7.91   7.93   8.04    7.85  8.04 
Tangible common equity to tangible assets (6) 7.64   7.56    7.70   7.72   7.82    7.64  7.82 
                            
Asset Quality                                 
Nonaccrual loans (7)$23,709  $17,405   $18,637  $21,176  $29,782   $23,709 $29,782 
Nonperforming loans 25,172   17,405    18,637   21,176   32,382    25,172  32,382 
Nonperforming assets 46,153   38,386    39,618   42,157   53,363    46,153  53,363 
Net charge-offs (recoveries) 60   (42)   1,560   9,234   811    10,812  1,535 
                            
Asset Quality Ratios                                 
Nonperforming loans to gross loans 0.36%    0.25%   0.27%    0.31%    0.47%     0.36%   0.47%  
Nonperforming assets to total assets 0.54   0.45    0.47   0.50   0.63    0.54  0.63 
Allowance for credit losses to gross loans 0.58   0.57    0.57   0.56   0.58    0.58  0.58 
Allowance for credit losses to nonperforming assets 87.02   102.19    97.41   91.87   75.79    87.02  75.79 
Allowance for credit losses to nonperforming loans 159.55   225.38    207.08   182.89   124.89    159.55  124.89 
Net charge-offs (recoveries) to average loans —   —    0.09   0.54   0.05    0.16  0.02 
                            
Full-service customer facilities 27   27    26   26   25    27  25 


(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 core noninterest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of core net interest income and core noninterest income.
(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. 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 in periods prior to 1Q23.

 

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                       
 For the three months ended   For the year ended
 December 31,  September 30, June 30, March 31, December 31,    December 31,  December 31, 
(In thousands, except per share data)2023 2023
 2023 2023 2022
   2023 2022
Interest and Dividend Income                      
Interest and fees on loans$95,616 $91,466  $85,377 $82,889 $81,033    $355,348 $293,287 
Interest and dividends on securities:                      
Interest 10,803  10,383   9,172  7,240  6,511     37,598  20,861 
Dividends 34  33   30  29  24     126  60 
Other interest income 2,310  2,154   1,982  1,959  1,702     8,405  2,418 
Total interest and dividend income 108,763  104,036   96,561  92,117  89,270     401,477  316,626 
                       
Interest Expense                      
Deposits 53,284  50,066   46,249  39,056  27,226     188,655  47,285 
Other interest expense 9,394  9,543   6,934  7,799  7,843     33,670  25,725 
Total interest expense 62,678  59,609   53,183  46,855  35,069     222,325  73,010 
                       
Net Interest Income 46,085  44,427   43,378  45,262  54,201     179,152  243,616 
Provision (benefit) for credit losses 998  596   1,416  7,508  (12)    10,518  5,081 
NetInterest Income After Provision (Benefit) for Credit Losses 45,087  43,831   41,962  37,754  54,213     168,634  238,535 
                       
Noninterest Income (Loss)                      
Banking services fee income 2,824  2,636   1,780  1,411  1,231     8,651  5,122 
Net loss on sale of securities —  —   —  —  (10,948)    —  (10,948)
Net gain on sale of loans —  —   54  54  46     108  119 
Net gain on disposition of assets —  —   —  —  104     —  104 
Net gain (loss) from fair value adjustments 906  (1,246)  294  2,619  (622)    2,573  5,728 
Federal Home Loan Bank of New York stock dividends 658  624   534  697  658     2,513  2,000 
Life insurance proceeds 697  23   561  —  286     1,281  1,822 
Bank owned life insurance 1,173  1,157   1,134  1,109  1,126     4,573  4,487 
Other income 1,144  115   663  967  467     2,889  1,575 
Total noninterest income (loss) 7,402  3,309   5,020  6,857  (7,652)    22,588  10,009 
                       
Noninterest Expense                      
Salaries and employee benefits 23,359  20,346   19,690  22,562  18,178     85,957  84,374 
Occupancy and equipment 3,698  3,371   3,534  3,793  3,701     14,396  14,606 
Professional services 2,523  2,494   2,291  2,261  2,130     9,569  9,207 
FDIC deposit insurance 1,162  912   943  977  485     3,994  2,258 
Data processing 1,646  1,422   1,473  1,435  1,421     5,976  5,595 
Depreciation and amortization 1,491  1,482   1,482  1,510  1,535     5,965  5,930 
Other real estate owned/foreclosure expense 105  185   150  165  35     605  294 
Other operating expenses 6,751  6,176   5,547  6,453  6,257     24,927  21,428 
Total noninterest expense 40,735  36,388   35,110  39,156  33,742     151,389  143,692 
                       
Income Before Provision for Income Taxes 11,754  10,752   11,872  5,455  12,819     39,833  104,852 
                       
Provision for Income Taxes 3,655  2,917   3,186  1,411  2,570     11,169  27,907 
                       
Net Income$8,099 $7,835  $8,686 $4,044 $10,249    $28,664 $76,945 
                       
Basic earnings per common share$0.27 $0.26  $0.29 $0.13 $0.34    $0.96 $2.50 
Diluted earnings per common share$0.27 $0.26  $0.29 $0.13 $0.34    $0.96 $2.50 
Dividends per common share$0.22 $0.22  $0.22 $0.22 $0.22    $0.88 $0.88 
                       
Basic average shares 29,650  29,703   30,090  30,265  30,420     29,925  30,823 
Diluted average shares 29,650  29,703   30,090  30,265  30,420     29,925  30,823 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
               
 December 31,  September 30, June 30, March 31, December 31, 
(Dollars in thousands)2023 2023 2023 2023 2022
ASSETS              
Cash and due from banks$172,157  $200,926  $160,053  $176,747  $151,754 
Securities held-to-maturity:              
Mortgage-backed securities 7,855   7,860   7,865   7,870   7,875 
Other securities, net 65,068   65,271   65,469   65,653   65,836 
Securities available for sale:              
Mortgage-backed securities 354,344   337,879   365,911   380,110   384,283 
Other securities 520,409   505,784   503,645   431,818   351,074 
Loans 6,906,950   6,896,074   6,832,425   6,904,176   6,934,769 
Allowance for credit losses (40,161)  (39,228)  (38,593)  (38,729)  (40,442)
Net loans 6,866,789   6,856,846   6,793,832   6,865,447   6,894,327 
Interest and dividends receivable 59,018   55,660   52,911   46,836   45,048 
Bank premises and equipment, net 21,273   21,302   22,182   21,567   21,750 
Federal Home Loan Bank of New York stock 31,066   43,821   36,168   38,779   45,842 
Bank owned life insurance 213,518   214,321   213,164   214,240   213,131 
Goodwill 17,636   17,636   17,636   17,636   17,636 
Core deposit intangibles 1,537   1,651   1,769   1,891   2,017 
Right of use asset 39,557   41,404   41,526   42,268   43,289 
Other assets 167,009   209,014   192,721   168,872   179,084 
Total assets$8,537,236  $8,579,375  $8,474,852  $8,479,734  $8,422,946 
               
LIABILITIES              
Total deposits$6,815,261  $6,681,509  $6,723,690  $6,734,090  $6,485,342 
Borrowed funds 841,281   1,001,010   857,400   887,509   1,052,973 
Operating lease liability 40,822   43,067   44,402   45,353   46,125 
Other liabilities 170,035   187,268   179,113   140,437   161,349 
Total liabilities 7,867,399   7,912,854   7,804,605   7,807,389   7,745,789 
               
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 264,534   264,486   263,744   262,876   264,332 
Treasury stock (106,070)  (105,433)  (104,574)  (97,760)  (98,535)
Retained earnings 549,683   548,058   546,755   544,672   547,507 
Accumulated other comprehensive loss, net of taxes (38,651)  (40,931)  (36,019)  (37,784)  (36,488)
Total stockholders' equity 669,837   666,521   670,247   672,345   677,157 
               
Total liabilities and stockholders' equity$8,537,236  $8,579,375  $8,474,852  $8,479,734  $8,422,946 
               
(In thousands)              
Issued shares 34,088   34,088   34,088   34,088   34,088 
Outstanding shares 28,866   28,905   28,961   29,488   29,476 
Treasury shares 5,222   5,183   5,127   4,600   4,612 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)
                       
 For the three months ended   For the year ended
 December 31,  September 30, June 30, March 31, December 31, 
  December 31,  December 31, 
(In thousands)2023 2023 2023 2023 2022  2023 2022
Interest-earning Assets:                      
Mortgage loans, net$5,356,112 $5,314,215 $5,308,567 $5,333,274 $5,338,612   $5,328,067 $5,253,104
Commercial Business loans, net 1,511,815  1,498,804  1,521,081  1,537,918  1,542,633    1,517,282  1,488,486
Total loans, net 6,867,927  6,813,019  6,829,648  6,871,192  6,881,245    6,845,349  6,741,590
Taxable securities:                      
Mortgage-backed securities 426,612  436,181  448,620  457,911  549,204    442,228  573,314
Other securities, net 527,316  528,091  471,600  411,723  371,897    485,118  324,112
Total taxable securities 953,928  964,272  920,220  869,634  921,101    927,346  897,426
Tax-exempt securities:                      
Other securities 66,242  66,438  66,632  66,828  67,022    66,533  64,822
Total tax-exempt securities 66,242  66,438  66,632  66,828  67,022    66,533  64,822
Interest-earning deposits and federal funds sold 188,894  179,508  175,256  194,722  176,323    184,565  131,816
Total interest-earning assets 8,076,991  8,023,237  7,991,756  8,002,376  8,045,691    8,023,793  7,835,654
Other assets 492,011  482,109  470,686  465,941  472,328    477,771  471,483
Total assets$8,569,002 $8,505,346 $8,462,442 $8,468,317 $8,518,019   $8,501,564 $8,307,137
                       
Interest-bearing Liabilities:                      
Deposits:                             
Savings accounts$110,316 $115,437 $124,041 $134,945 $146,598   $121,102 $153,605
NOW accounts 1,848,285  1,907,781  2,026,950  1,970,555  1,972,134    1,937,974  1,976,238
Money market accounts 1,625,453  1,584,308  1,754,574  2,058,523  2,146,649    1,754,059  2,191,768
Certificate of deposit accounts 2,340,115  2,290,669  2,046,960  1,679,517  1,350,683    2,091,677  1,031,024
Total due to depositors 5,924,169  5,898,195  5,952,525  5,843,540  5,616,064    5,904,812  5,352,635
Mortgagors' escrow accounts 86,592  69,525  97,410  70,483  82,483    81,015  80,021
Total interest-bearing deposits 6,010,761  5,967,720  6,049,935  5,914,023  5,698,547    5,985,827  5,432,656
Borrowings 803,148  804,140  706,924  789,535  963,662    776,050  1,012,149
Total interest-bearing liabilities 6,813,909  6,771,860  6,756,859  6,703,558  6,662,209    6,761,877  6,444,805
Noninterest-bearing demand deposits 873,276  851,677  849,682  896,462  979,836    867,667  1,019,090
Other liabilities 211,998  206,768  183,066  185,239  199,809    196,869  170,500
Total liabilities 7,899,183  7,830,305  7,789,607  7,785,259  7,841,854    7,826,413  7,634,395
Equity 669,819  675,041  672,835  683,058  676,165    675,151  672,742
Total liabilities and equity$8,569,002 $8,505,346 $8,462,442 $8,468,317 $8,518,019   $8,501,564 $8,307,137
                       
Net interest-earning assets$1,263,082 $1,251,377 $1,234,897 $1,298,818 $1,383,482   $1,261,916 $1,390,849


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)
                             
 For the three months ended  For the year ended
 December 31, September 30, June 30, March 31, December 31,  December 31, December 31,
(Dollars in thousands)2023 2023 2023 2023 2022  2023 2022
Interest Income:                            
Mortgage loans, net$72,505   $68,931  $63,688   $62,054  $60,946   $267,178  $228,065 
Commercial Business loans, net 23,111    22,535   21,689    20,835   20,087    88,170   65,222 
Total loans, net 95,616    91,466   85,377    82,889   81,033    355,348   293,287 
Taxable securities:                            
Mortgage-backed securities 3,217    3,031   2,976    2,281   2,425    11,505   9,414 
Other securities 7,239    7,003   5,847    4,611   3,723    24,700   9,771 
Total taxable securities 10,456    10,034   8,823    6,892   6,148    36,205   19,185 
Tax-exempt securities:                            
Other securities 482    484   480    477   489    1,923   2,197 
Total tax-exempt securities 482    484   480    477   489    1,923   2,197 
Interest-earning deposits and federal funds sold 2,310    2,154   1,982    1,959   1,702    8,405   2,418 
Total interest-earning assets 108,864    104,138   96,662    92,217   89,372    401,881   317,087 
Interest Expense:                            
Deposits:                            
Savings accounts$124   $130  $140   $126  $59   $520  $211 
NOW accounts 17,411    16,843   16,152    13,785   9,515    64,191   15,353 
Money market accounts 15,785    14,386   14,625    14,102   10,532    58,898   19,039 
Certificate of deposit accounts 19,917    18,639   15,281    11,007   7,037    64,844   12,547 
Total due to depositors 53,237    49,998   46,198    39,020   27,143    188,453   47,150 
Mortgagors' escrow accounts 47    68   51    36   83    202   135 
Total interest-bearing deposits 53,284    50,066   46,249    39,056   27,226    188,655   47,285 
Borrowings 9,394    9,543   6,934    7,799   7,843    33,670   25,725 
Total interest-bearing liabilities 62,678    59,609   53,183    46,855   35,069    222,325   73,010 
Net interest income- tax equivalent$46,186   $44,529  $43,479   $45,362  $54,303   $179,556  $244,077 
Included in net interest income above:                            
Prepayment penalty income, net reversals and recovered interest from nonaccrual loans, and customer swap terminations fees$3,416   $857  $315   $680  $1,080   $5,268  $6,445 
Net gains/(losses) from fair value adjustments on qualifying hedges included in net interest income (872)   1,348   (205)   100   936    371   775 
Purchase accounting adjustments 461    347   340    306   342    1,454   2,542 
Interest-earning Assets Yields:                            
Mortgage loans, net 5.41%   5.19%  4.80%   4.65%  4.57%   5.01%  4.34%
Commercial Business loans, net 6.11    6.01   5.70    5.42   5.21    5.81   4.38 
Total loans, net 5.57    5.37   5.00    4.83   4.71    5.19   4.35 
Taxable securities:                            
Mortgage-backed securities 3.02    2.78   2.65    1.99   1.77    2.60   1.64 
Other securities 5.49    5.30   4.96    4.48   4.00    5.09   3.01 
Total taxable securities 4.38    4.16   3.84    3.17   2.67    3.90   2.14 
Tax-exempt securities:(1)                            
Other securities 2.91    2.91   2.88    2.86   2.92    2.89   3.39 
Total tax-exempt securities 2.91    2.91   2.88    2.86   2.92    2.89   3.39 
Interest-earning deposits and federal funds sold 4.89    4.80   4.52    4.02   3.86    4.55   1.83 
Total interest-earning assets(1) 5.39%   5.19%  4.84%   4.61%  4.44%   5.01%  4.05%
Interest-bearing Liabilities Yields:                            
Deposits:                            
Savings accounts 0.45%   0.45%  0.45%   0.37%  0.16%   0.43%  0.14%
NOW accounts 3.77    3.53   3.19    2.80   1.93    3.31   0.78 
Money market accounts 3.88    3.63   3.33    2.74   1.96    3.36   0.87 
Certificate of deposit accounts 3.40    3.25   2.99    2.62   2.08    3.10   1.22 
Total due to depositors 3.59    3.39   3.10    2.67   1.93    3.19   0.88 
Mortgagors' escrow accounts 0.22    0.39   0.21    0.20   0.40    0.25   0.17 
Total interest-bearing deposits 3.55    3.36   3.06    2.64   1.91    3.15   0.87 
Borrowings 4.68    4.75   3.92    3.95   3.26    4.34   2.54 
Total interest-bearing liabilities 3.68%   3.52%  3.15%   2.80%  2.11%   3.29%  1.13%
                             
Net interest rate spread (tax equivalent)(1) 1.71%   1.67%  1.69%   1.81%  2.33%   1.72%  2.92%
Net interest margin (tax equivalent)(1) 2.29%   2.22%  2.18%   2.27%  2.70%   2.24%  3.11%
Ratio of interest-earning assets to interest-bearing liabilities 1.19X   1.18X  1.18X   1.19X  1.21X   1.19X  1.22X

________________________________

(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
                      
                 4Q23 vs. 4Q23 vs.
  December 31,  September 30, June 30, March 31, December 31,  3Q23 4Q22
(Dollars in thousands) 2023 2023 2023 2023 2022 % Change % Change
Noninterest bearing $847,416 $874,420 $827,820 $872,254 $921,238 (3.1)% (8.0)%
Interest bearing:                     
Certificate of deposit accounts  2,311,290  2,321,369  2,232,696  1,880,260  1,526,338 (0.4)  51.4  
Savings accounts  108,605  112,730  118,886  128,245  143,641 (3.7)  (24.4) 
Money market accounts  1,726,404  1,551,176  1,594,637  1,855,781  2,099,776 11.3   (17.8) 
NOW accounts  1,771,164  1,749,802  1,891,834  1,918,977  1,746,190 1.2   1.4  
Total interest-bearing deposits  5,917,463  5,735,077  5,838,053  5,783,263  5,515,945 3.2   7.3  
Total due to depositors  6,764,879  6,609,497  6,665,873  6,655,517  6,437,183 2.4   5.1  
Mortgagors' escrow deposits  50,382  72,012  57,817  78,573  48,159 (30.0)  4.6  
Total deposits $6,815,261 $6,681,509 $6,723,690 $6,734,090 $6,485,342 2.0 % 5.1 %

Loan Composition

                      
                 4Q23 vs. 4Q23 vs.
  December 31,  September 30, June 30, March 31, December 31,  3Q23 4Q22
(Dollars in thousands) 2023
 2023
 2023
 2023
 2022
 % Change % Change
Multifamily residential $2,658,205  $2,614,219  $2,593,955  $2,601,174  $2,601,384  1.7 % 2.2 %
Commercial real estate  1,958,252   1,953,243   1,917,749   1,904,293   1,913,040  0.3   2.4  
One-to-four family ― mixed use property  530,243   537,744   542,368   549,207   554,314  (1.4)  (4.3) 
One-to-four family ― residential  220,213   222,874   230,055   238,417   241,246  (1.2)  (8.7) 
Construction  58,673   59,903   57,325   60,486   70,951  (2.1)  (17.3) 
Mortgage loans  5,425,586   5,387,983   5,341,452   5,353,577   5,380,935  0.7   0.8  
                      
Small Business Administration  20,205   21,896   22,404   22,860   23,275  (7.7)  (13.2) 
Commercial business and other  1,452,518   1,487,775   1,466,358   1,518,756   1,521,548  (2.4)  (4.5) 
Commercial Business loans  1,472,723   1,509,671   1,488,762   1,541,616   1,544,823  (2.4)  (4.7) 
                      
Gross loans  6,898,309   6,897,654   6,830,214   6,895,193   6,925,758  —   (0.4) 
Net unamortized (premiums) and unearned loan (cost) fees(1)  8,641   (1,580)  2,211   8,983   9,011  (646.9)  (4.1) 
Allowance for credit losses  (40,161)  (39,228)  (38,593)  (38,729)  (40,442) 2.4   (0.7) 
Net loans $6,866,789  $6,856,846  $6,793,832  $6,865,447  $6,894,327  0.1 % (0.4)%

______________________________

(1) Includes $3.9 million, $4.4 million, $4.8 million, $5.1 million, and $5.4 million, of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS and RATES
(Unaudited)
 
Loan Closings
                       
  For the three months ended  For the year ended
  December 31,  September 30, June 30, March 31, December 31,   December 31,  December 31, 
(In thousands) 2023 2023 2023 2023 2022  2023 2022
Multifamily residential $82,995 $75,655 $31,901 $42,164 $65,347  $232,715 $474,409
Commercial real estate  60,092  70,197  38,523  15,570  20,750   184,382  308,455
One-to-four family – mixed use property  3,319  6,028  5,812  4,938  4,489   20,097  37,598
One-to-four family – residential  1,454  1,070  63  4,296  7,485   6,883  25,059
Construction  8,007  6,971  8,811  10,592  7,301   34,381  31,592
Mortgage loans  155,867  159,921  85,110  77,560  105,372   478,458  877,113
                       
Small Business Administration  1,162  —  820  318  665   2,300  3,461
Commercial business and other  87,255  81,549  72,850  95,668  119,191   337,322  641,420
Commercial Business loans  88,417  81,549  73,670  95,986  119,856   339,622  644,881
                       
Total Closings $244,284 $241,470 $158,780 $173,546 $225,228  $818,080 $1,521,994

Weighted Average Rate on Loan Closings

                
  For the three months ended
  December 31,  September 30, June 30, March 31, December 31, 
Loan type 2023 2023 2023 2023 2022
Mortgage loans 7.55% 7.22% 6.62% 6.30% 5.59%
Commercial Business loans 7.93  8.00  7.76  7.58  6.57 
Total loans 7.69% 7.48% 7.14% 7.01% 6.10%
                


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)
Allowance for Credit Losses
                               
  For the three months ended  For the year ended
  December 31, September 30, June 30, March 31, December 31,  December 31,  December 31,
(Dollars in thousands) 2023 2023 2023 2023 2022  2023  2022
Allowance for credit losses - loans                              
Beginning balances $39,228   $38,593   $38,729   $40,442   $41,268    $40,442    $37,135  
                               
Net loan charge-off (recoveries):                              
Multifamily residential  (1)   —    —    (1)   132     (2)    131  
Commercial real estate  —    —    8    —    —     8     —  
One-to-four family – mixed-use property  (1)   —    —    —    —     (1)    —  
One-to-four family – residential  9    (6)   4    (36)   17     (29)    15  
Small Business Administration  (29)   (48)   (158)   (6)   (9)    (241)    1,007  
Taxi medallion  —    —    —    —    —     —     (447) 
Commercial business and other  82    12    1,706    9,277    671     11,077     829  
Total net loan charge-offs (recoveries)  60    (42)   1,560    9,234    811     10,812     1,535  
                               
Provision (benefit) for loan losses  993    593    1,424    7,521    (15)    10,531     4,842  
                               
Ending balance $40,161   $39,228   $38,593   $38,729   $40,442    $40,161    $40,442  
                               
Gross charge-offs $107   $21   $1,731   $9,298   $1,938    $11,157    $3,348  
Gross recoveries  47    63    171    64    1,127     345     1,813  
                               
Allowance for credit losses - loans to gross loans  0.58 %  0.57 %  0.57 %  0.56 %  0.58 %   0.58 %   0.58 %
Net loan charge-offs (recoveries) to average loans  —    —    0.09    0.54    0.05     0.16     0.02  

Nonperforming Assets

                     
  December 31,  September 30, June 30, March 31, December 31, 
(Dollars in thousands) 2023 2023 2023 2023 2022
Loans 90 Days or More Past Due and Still Accruing:                    
Multifamily residential $1,463  $—  $—  $—  $— 
Construction  —   —   —   —   2,600 
Total Loans 90 Days or more past due and still accruing  1,463   —   —   —   2,600 
                     
Nonaccrual Loans:                    
Multifamily residential  3,206   3,206   3,206   3,628   3,206 
Commercial real estate  —   —   —   —   237 
One-to-four family - mixed-use property(1)  981   1,075   790   790   790 
One-to-four family - residential  5,181   4,161   5,218   4,961   4,425 
Small Business Administration  2,552   1,255   1,119   937   937 
Commercial business and other(1)  11,789   7,708   8,304   10,860   20,187 
Total Nonaccrual loans  23,709   17,405   18,637   21,176   29,782 
                     
Total Nonperforming Loans (NPLs)  25,172   17,405   18,637   21,176   32,382 
                     
Total Nonaccrual HTM Securities  20,981   20,981   20,981   20,981   20,981 
                     
Total Nonperforming Assets $46,153  $38,386  $39,618  $42,157  $53,363 
                     
Nonperforming Assets to Total Assets  0.54%  0.45%  0.47%  0.50%  0.63%
Allowance for Credit Losses to NPLs  159.5%  225.4%  207.1%  182.9%  124.9%

______________________________

(1) Adopted ASU No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023; Not included in the above analysis are nonaccrual performing TDR one-to-four family – mixed use property loans totaling $0.2 million in 4Q22; nonaccrual performing TDR commercial business loans totaling less than $0.1 million in 4Q22.

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.

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 this measure is 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 year ended
(Dollars in thousands, December 31,  September 30, June 30, March 31, December 31,    December 31,  December 31, 
except per share data) 2023 2023 2023 2023 2022   2023 2022
                               
GAAP income before income taxes $11,754   $10,752   $11,872   $5,455   $12,819     $39,833   $104,852  
                               
Net (gain) loss from fair value adjustments (Noninterest income (loss))  (906)   1,246    (294)   (2,619)   622      (2,573)   (5,728) 
Net loss on sale of securities (Noninterest income (loss))  —    —    —    —    10,948      —    10,948  
Life insurance proceeds (Noninterest income (loss))  (697)   (23)   (561)   —    (286)     (1,281)   (1,822) 
Net gain on disposition of assets (Noninterest income (loss))  —    —    —    —    (104)     —    (104) 
Net (gain) loss from fair value adjustments on qualifying hedges (Net interest income)  872    (1,348)   205    (100)   (936)     (371)   (775) 
Net amortization of purchase accounting adjustments and intangibles (Various)  (355)   (237)   (227)   (188)   (219)     (1,007)   (2,030) 
Miscellaneous expense (Professional services)  526    —    —    —    —      526    —  
                               
Core income before taxes  11,194    10,390    10,995    2,548    22,844      35,127    105,341  
                               
Provision for core income taxes  3,648    2,819    3,083    659    5,445      10,209    28,502  
                               
Core net income $7,546   $7,571   $7,912   $1,889   $17,399     $24,918   $76,839  
                               
GAAP diluted earnings per common share $0.27   $0.26   $0.29   $0.13   $0.34     $0.96   $2.50  
Net (gain) loss from fair value adjustments, net of tax  (0.02)   0.03    (0.01)   (0.06)   0.02      (0.06)   (0.14) 
Net loss on sale of securities, net of tax  —    —    —    —    0.27      —    0.26  
Life insurance proceeds  (0.02)   —    (0.02)   —    (0.01)     (0.04)   (0.06) 
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax  0.02    (0.03)   —    —    (0.02)     (0.01)   (0.02) 
Net amortization of purchase accounting adjustments, net of tax  (0.01)   (0.01)   (0.01)   (0.01)   (0.01)     (0.02)   (0.05) 
Miscellaneous expense, net of tax  0.01    —    —    —    —      0.01    —  
                               
Core diluted earnings per common share(1) $0.25   $0.25   $0.26   $0.06   $0.57     $0.83   $2.49  
                               
Core net income, as calculated above $7,546   $7,571   $7,912   $1,889   $17,399     $24,918   $76,839  
Average assets  8,569,002    8,505,346    8,462,442    8,468,317    8,518,019      8,501,564    8,307,137  
Average equity  669,819    675,041    672,835    683,058    676,165      675,151    672,742  
Core return on average assets(2)  0.35 %  0.36 %  0.37 %  0.09 %  0.82 %    0.29 %  0.92 %
Core return on average equity(2)  4.51 %  4.49 %  4.70 %  1.11 %  10.29 %    3.69 %  11.42 %

________________________________

(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 year ended 
  December 31,  September 30, June 30, March 31, December 31,     December 31,  December 31,  
(Dollars in thousands) 2023 2023 2023 2023 2022    2023 2022 
                          
GAAP Net interest income $46,085  $44,427  $43,378  $45,262  $54,201     $179,152  $243,616  
Net (gain) loss from fair value adjustments on qualifying hedges  872   (1,348)  205   (100)  (936)     (371)  (775) 
Net amortization of purchase accounting adjustments  (461)  (347)  (340)  (306)  (342)     (1,454)  (2,542) 
Core Net interest income $46,496  $42,732  $43,243  $44,856  $52,923     $177,327  $240,299  
                          
GAAP Noninterest income (loss) $7,402  $3,309  $5,020  $6,857  $(7,652)    $22,588  $10,009  
Net (gain) loss from fair value adjustments  (906)  1,246   (294)  (2,619)  622      (2,573)  (5,728) 
Net loss on sale of securities  —   —   —   —   10,948      —   10,948  
Life insurance proceeds  (697)  (23)  (561)  —   (286)     (1,281)  (1,822) 
Net gain on sale of assets  —   —   —   —   (104)     —   (104) 
Core Noninterest income $5,799  $4,532  $4,165  $4,238  $3,528     $18,734  $13,303  
                          
GAAP Noninterest expense $40,735  $36,388  $35,110  $39,156  $33,742     $151,389  $143,692  
Net amortization of purchase accounting adjustments  (106)  (110)  (113)  (118)  (123)     (447)  (512) 
Miscellaneous expense  (526)  —   —   —   —      (526)  —  
Core Noninterest expense $40,103  $36,278  $34,997  $39,038  $33,619     $150,416  $143,180  
                          
Net interest income $46,085  $44,427  $43,378  $45,262  $54,201     $179,152  $243,616  
Noninterest income (loss)  7,402   3,309   5,020   6,857   (7,652)     22,588   10,009  
Noninterest expense  (40,735)  (36,388)  (35,110)  (39,156)  (33,742)     (151,389)  (143,692) 
Pre-provision pre-tax net revenue $12,752  $11,348  $13,288  $12,963  $12,807     $50,351  $109,933  
                          
Core:                         
Net interest income $46,496  $42,732  $43,243  $44,856  $52,923     $177,327  $240,299  
Noninterest income  5,799   4,532   4,165   4,238   3,528      18,734   13,303  
Noninterest expense  (40,103)  (36,278)  (34,997)  (39,038)  (33,619)     (150,416)  (143,180) 
Pre-provision pre-tax net revenue $12,192  $10,986  $12,411  $10,056  $22,832     $45,645  $110,422  
Efficiency Ratio  76.7 % 76.8 % 73.8 % 79.5 % 59.6 %    76.7 % 56.5 %


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 year ended 
 December 31,  September 30, June 30, March 31, December 31,   December 31,  December 31,  
(Dollars in thousands)2023 2023 2023 2023 2022  2023
 2022
 
GAAP net interest income$46,085   $44,427   $43,378   $45,262   $54,201    $179,152  $243,616  
Net (gain) loss from fair value adjustments on qualifying hedges 872    (1,348)   205    (100)   (936)    (371)  (775) 
Net amortization of purchase accounting adjustments (461)   (347)   (340)   (306)   (342)    (1,454)  (2,542) 
Tax equivalent adjustment 101    102    101    100    102     404   461  
Core net interest income FTE$46,597   $42,834   $43,344   $44,956   $53,025    $177,731  $240,760  
                            
Total average interest-earning assets(1)$8,080,550   $8,027,201   $7,996,067   $8,006,970   $8,050,601    $8,027,898  $7,841,407  
Core net interest margin FTE 2.31 %  2.13 %  2.17 %  2.25 %  2.63 %   2.21 % 3.07 %
                            
GAAP interest income on total loans, net$95,616   $91,466   $85,377   $82,889   $81,033    $355,348  $293,287  
Net (gain) loss from fair value adjustments on qualifying hedges - loans 978    (1,379)   157    (101)   (936)    (345)  (775) 
Net amortization of purchase accounting adjustments (484)   (358)   (345)   (316)   (372)    (1,503)  (2,628) 
Core interest income on total loans, net$96,110   $89,729   $85,189   $82,472   $79,725    $353,500  $289,884  
                            
Average total loans, net(1)$6,872,115   $6,817,642   $6,834,644   $6,876,495   $6,886,900    $6,850,124  $6,748,165  
Core yield on total loans 5.59 %  5.26 %  4.99 %  4.80 %  4.63 %   5.16 % 4.30 %

________________________________

(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)
                     
  December 31,  September 30, June 30, March 31, December 31, 
(Dollars in thousands) 2023 2023 2023 2023 2022
Total Equity $669,837   $666,521   $670,247   $672,345   $677,157  
Less:                    
Goodwill  (17,636)   (17,636)   (17,636)   (17,636)   (17,636) 
Core deposit intangibles  (1,537)   (1,651)   (1,769)   (1,891)   (2,017) 
Tangible Stockholders' Common Equity $650,664   $647,234   $650,842   $652,818   $657,504  
                     
Total Assets $8,537,236   $8,579,375   $8,474,852   $8,479,734   $8,422,946  
Less:                    
Goodwill  (17,636)   (17,636)   (17,636)   (17,636)   (17,636) 
Core deposit intangibles  (1,537)   (1,651)   (1,769)   (1,891)   (2,017) 
Tangible Assets $8,518,063   $8,560,088   $8,455,447   $8,460,207   $8,403,293  
                     
Tangible Stockholders' Common Equity to Tangible Assets  7.64 %  7.56 %  7.70 %  7.72 %  7.82 %
                     

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