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Flushing Financial Corporation Reports 3Q21 GAAP EPS of $0.81 and Record Core EPS of $0.88


10/26/2021 5:31:44 PM

(MENAFN- GlobeNewsWire - Nasdaq) John R. Buran, President and CEO Commentary

UNIONDALE, N.Y., Oct. 26, 2021 (GLOBE NEWSWIRE) -- The Company reported third quarter 2021 GAAP EPS of $0.81, up 62.0% YoY, ROAA of 1.26% and ROAE of 15.42%. For the period, Core EPS of $0.88 increased 57.1% YoY with ROAA of 1.38% and ROAE of 16.88%. The strong results were from the successful implementation of our business strategy resulting in the sixth consecutive quarter of record net interest income, a record loan pipeline, and the second consecutive quarter of record core earnings.

“Loans, excluding SBA Payment Protection Program (“PPP”), were flat QoQ but increased 12% YoY. The Company's loan pipeline increased 35% YoY and 23% QoQ to record levels as the metro New York City economy continues to normalize. Additionally, there have been eight announced or recently closed bank mergers in the Long Island market. The market has $328 billion of deposits and 18% or $60 billion involve a merger participant. As a leading community bank in this market, Flushing Bank is poised to benefit from merger disruption. The combination of an improving economy, broad based and record loan pipelines, and merger disruption should lead to positive loan growth into 2022.”
- John R. Buran, President and CEO

Sixth Consecutive Quarter of Record Net Interest Income; Favorable Outlook. Net interest income of $63.4 million increased 27% YoY and 4% QoQ. NIM expanded 20 bps to 3.34% from 3.14% in 2Q21, while Core NIM increased by 13 bps to 3.27% during the same period. NIM expansion was the result of cost of funds declining 4 bps, while asset yields increased 15 bps, with 8 bps due to the change in hedge fair values, increased purchase accounting accretion, and net prepayment penalty income. The funding mix improved with core deposits totaling 84% of average deposits and average borrowings declined 37% YoY. Weighted average rate on loan closings (ex PPP) rose 13 bps QoQ and the steeper yield curve should have a positive impact on net interest income over time.
Capital Target Achieved; Share Repurchase Activity Resumes. Following the closing of the Empire acquisition approximately one year ago, the Company announced the goal of a TCE ratio of 8% or better by the end of 2021. This target was achieved during 3Q21 even as the Company repurchased 285,643 shares of common stock at an average price of $22.42 per share. Our capital priorities remain to 1) profitabily grow the balance sheet, 2) return dividends to shareholders, and 3) opportunistically repurchase shares.

Key Financial Metrics 1
3Q21 2Q21 1Q21 4Q20 3Q20
GAAP:
EPS $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50
ROAA (%) 1.26 0.93 0.93 0.18 0.81
ROAE (%) 15.42 11.95 12.29 2.27 9.94
NIM FTE (%) 3.34 3.14 3.18 3.08 3.00
Core:
EPS $ 0.88 $ 0.73 $ 0.54 $ 0.58 $ 0.56
ROAA (%) 1.38 1.11 0.83 0.92 0.91
ROAE (%) 16.88 14.27 10.96 11.67 11.22
Core NIM FTE (%) 3.27 3.14 3.06 3.03 2.98
Efficiency Ratio (%) 52.3 53.4 58.6 57.6 55.4
Credit Quality:
NPAs/Loans & REO (%) 0.31 0.26 0.31 0.31 0.42
LLRs/Loans (%) 0.55 0.64 0.67 0.67 0.65
LLRs/NPLs (%) 179.86 242.55 212.87 214.27 154.66
NCOs/Avg Loans (%) (0.04 ) 0.05 0.17 0.04 0.06
Balance Sheet:
Avg Loans ($B) $ 6.6 $ 6.7 $ 6.7 $ 6.4 $ 5.9
Avg Dep ($B) $ 6.4 $ 6.5 $ 6.3 $ 5.5 $ 5.0
Book Value/Share $ 21.78 $ 21.16 $ 20.65 $ 20.11 $ 20.78
Tangible BV/Share $ 21.13 $ 20.51 $ 19.99 $ 19.45 $ 20.22
TCE/TA (%) 8.04 7.80 7.60 7.52 8.10

1 See“Reconciliation of GAAP Earnings and Core Earnings” and“Reconciliation of GAAP Net Interest Margin to Core and Base Net Interest Income and Net Interest Margin.”

3Q21 Highlights
  • Record net interest income up 3.8% QoQ and 26.9% YoY to $63.4 million, due to a decrease in funding costs and an increase in asset yields from an increase in hedge fair values, purchase accounting accretion, and net prepayment penalty income; core net interest income was up 1.5% QoQ and 24.9% YoY to $62.1 million
  • Net interest margin FTE increased 20 bps QoQ and 34 bps YoY to 3.34%, and core net interest margin FTE was up 13 bps QoQ and 29 bps YoY to 3.27%; Core NIM expansion QoQ primarily was due to an improvement in funding costs and a change in balance sheet mix
  • Period end loans, excluding PPP, were flat QoQ but increased 11.6% YoY; loan closings were $243.9 million in 3Q21, down 24.8% QoQ but up 56.8% YoY
  • Average deposits declined 1.6% QoQ, but increased 28.2% YoY to $6.4 billion, with core deposits 84% of total average deposits
  • Loan pipeline increased 34.7% YoY to a record $530.7 million
  • Benefit for credit losses was $6.9 million due to a better economic outlook, strong LTVs, and improving credit metrics; net recoveries were $0.6 million or 4 bps of average loans in 3Q21
  • NPAs increased 14.9% QoQ to $20.2 million, but down 18.6% YoY; criticized and classified assets were down 0.4% QoQ to $68.9 million (representing 1.04% of loans)
  • Tangible Common Equity to Tangible Assets improved to 8.04% from 7.80% in 2Q21
  • Repurchased 285,643 shares at an average price of $22.42; dividends and share repurchases were 51.2% of net income in 3Q21
Income Statement Highlights
Y/Y Q/Q
($000s, except EPS) 3Q21 2Q21 1Q21 4Q20 3Q20 Change Change
Net Interest Income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 26.9 % 3.8 %
(Benefit) Provision for Credit Losses (6,927 ) (1,598 ) 2,820 3,862 2,470 (380.4 ) 333.5
Non-interest Income (Loss) 866 (3,210 ) 6,311 (1,181 ) 1,351 (35.9 ) (127.0 )
Non-interest Expense 36,345 34,011 38,159 46,811 29,985 21.2 6.9
Income Before Income Taxes 34,812 25,416 26,224 3,878 18,820 85.0 37.0
Provision for Income Taxes 9,399 6,158 7,185 417 4,489 109.4 52.6
Net Income $ 25,413 $ 19,258 $ 19,039 $ 3,461 $ 14,331 77.3 32.0
Diluted EPS $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 62.0 32.8
Avg. Diluted Shares (000s) 31,567 31,677 31,604 30,603 28,874 9.3 (0.3 )
Core Net Income1 $ 27,829 $ 22,994 $ 16,973 $ 17,784 $ 16,168 72.1 21.0
Core EPS1 $ 0.88 $ 0.73 $ 0.54 $ 0.58 $ 0.56 57.1 20.5

1 See Reconciliation of GAAP Earnings and Core Earnings

Net interest income totaled $63.4 million in 3Q21 (an increase of 26.9% YoY and 3.8% QoQ), $61.0 million in 2Q21, $60.9 million in 1Q21, $55.7 million in 4Q20, and $49.9 million in 3Q20.

  • Net interest margin, FTE (“NIM”) of 3.34%, increased 34 bps YoY and 20 bps QoQ; PPP loans caused a 2 bps positive impact on the NIM in 3Q21, neutral impact in 2Q21, and a drag of 4 bps in 1Q21, 3 bps in 4Q20, and 2 bps in 3Q20
  • Prepayment penalty income from loans and securities, net reversals and recoveries of interest from non-accrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $3.4 million or 19 bps to the NIM compared to $1.9 million (10 bps) in 2Q21, $3.3 million (17 bps) in 1Q21, $2.1 million (11 bps) in 4Q20, and $1.7 million (11 bps) in 3Q20, respectively
  • Excluding the items in the previous bullet, net interest margin was 3.15% in 3Q21 compared to 3.04% in 2Q21, 3.01% in 1Q21, 2.97% in 4Q20, and 2.89% in 3Q20, or an increase of 26 bps YoY and 11 bps QoQ
  • Net PPP loan fees were $1.3 million in 3Q21, $1.2 million in 2Q21, $0.5 million in 1Q21, $0.4 million in 4Q20, and $0.2 million in 3Q20

The Company recorded a benefit for credit losses of $6.9 million in 3Q21 compared to $1.6 million in 2Q21, and provisions for credit losses of $2.8 million in 1Q21, $3.9 million in 4Q20, and $2.5 million in 3Q20.

  • 3Q21 benefit for credit losses ($0.16 per share, net of tax) was driven by the improving economic outlook supported by the low LTVs in the real estate portfolio and low inherent risk in the total portfolio
  • Net charge-offs (recoveries) were $(0.6) million in 3Q21 ((4) bps of average loans), $0.9 million in 2Q21 (5 bps), $2.9 million in 1Q21 (17 bps), $0.6 million in 4Q20 (4 bps), and $0.8 million in 3Q20 (6 bps)

Non-interest income (loss) was $0.9 million in 3Q21, $(3.2) million in 2Q21, $6.3 million in 1Q21, $(1.2) million in 4Q20 and $1.4 million in in 3Q20.

  • Non-interest income included net gains (losses) from fair value adjustments of $(2.3) million in 3Q21 $(0.05) per share, net of tax, $(6.5) million $(0.15) per share, net of tax in 2Q21, $1.0 million $0.02 per share, net of tax in 1Q21, $(4.1) million $(0.11) per share, net of tax in 4Q20, and $(2.2) million $(0.06) per share, net of tax in 3Q20
  • Absent all above items and other immaterial adjustments, core non-interest income was $3.2 million in 3Q21, down 11.5% YoY, and 1.6% QoQ

Non-interest expense totaled $36.3 million in 3Q21 (an increase of 21.2% YoY and 6.9% QoQ), compared to $34.0 million in 2Q21, $38.2 million in 1Q21, $46.8 million in 4Q20, and $30.0 million in 3Q20.

  • 3Q21 non-interest expense includes $2.1 million of pre-tax merger charges ($0.05 per share, net of tax)
  • 2Q21 non-interest expense includes $0.5 million of pre-tax merger benefits primarily related to a refund received from a data processing vendor ($(0.01) per share, net of tax)
  • 1Q21 non-interest expense includes $1.0 million of pre-tax merger charges ($0.02 per share, net of tax); 1Q21 includes $3.3 million of seasonal compensation expense
  • 4Q20 non-interest expense includes $5.3 million pre-tax merger charges ($0.14 per share, net of tax) and $7.8 million pre-tax debt prepayment penalties ($0.20 per share, net of tax)
  • 3Q20 non-interest expense includes merger charges of $0.4 million ($0.01 per share, net of tax)
  • Excluding the above items and other immaterial adjustments, core operating expenses were $34.1 million in 3Q21, up 15.4% YoY, but down 0.7% QoQ
  • The efficiency ratio was 52.3% in 3Q21, 53.4% in 2Q21, 58.6% in 1Q21, 57.6% in 4Q20, and 55.4% in 3Q20

The provision for income taxes was $9.4 million in 3Q21, compared to $6.2 million in 2Q21, $7.2 million in 1Q21, $0.4 million in 4Q20, and $4.5 million in 3Q20.

  • The effective tax rate was 27.0% in 3Q21, 24.2% in 2Q21, 27.4% in 1Q21, 10.8% in 4Q20, and 23.9% in 3Q20
  • The 2Q21 effective tax rate includes $0.8 million benefit from a state tax rate change; absent this benefit the effective tax rate would have been 27.2%
Balance Sheet, Credit Quality, and Capital Highlights
Y/Y Q/Q
($000s, except per share data) 3Q21 2Q21 1Q21 4Q20 3Q20 Change Change
Average Loans And Deposits
Loans $ 6,633 $ 6,687 $ 6,700 $ 6,376 $ 5,904 12.3 % (0.8 )%
Deposits 6,408 6,511 6,285 5,515 4,999 28.2 (1.6 )
Credit Quality
Nonperforming Loans $ 20,217 $ 17,592 $ 21,186 $ 21,073 $ 24,792 (18.5 )% 14.9 %
Nonperforming Assets 20,217 17,592 21,221 21,108 24,827 (18.6 ) 14.9
Criticized and Classified Assets 68,913 69,161 63,130 71,691 42,181 63.4 (0.4 )
Allowance for Credit Losses/Loans (%) 0.55 0.64 0.67 0.67 0.65 (10 )bps (9 )bps
Capital
Book Value/Share $ 21.78 $ 21.16 $ 20.65 $ 20.11 $ 20.78 4.8 % 2.9 %
Tangible Book Value/Share 21.13 20.51 19.99 19.45 20.22 4.5 3.0
Tang. Common Equity/Tang. Assets (%) 8.04 7.80 7.60 7.52 8.10 (6 )bps 24 bps
Leverage Ratio (%) 8.83 8.50 8.44 8.38 9.03 (20 ) 33

Average loans were $6.6 billion, an increase of 12.4% YoY, but a decline of 0.8% QoQ.

  • Total loan closings were $243.9 million in 3Q21, $324.4 million in 2Q21, $322.9 million in 1Q21, $316.0 million in 4Q20, and $155.6 million in 3Q20
  • The loan pipeline increased to a record $530.7 million at September 30, 2021, up 34.7% YoY and 22.7% QoQ
  • PPP loans were $130.8 million at 3Q21, $197.3 million at 2Q21, $251.0 million at 1Q21, $151.9 million at 4Q20, and $111.6 million at 3Q20; forgiven PPP loans were $66.5 million in 3Q21, $69.2 million in 2Q21 and $24.1 million in 1Q21; unamortized net PPP fees were $3.2 million at September 30, 2021
  • Period end loans, excluding PPP loans, totaled $6.5 billion, up 11.6% YoY and flat QoQ

Average Deposits totaled $6.4 billion, increasing 28.2% YoY, but down 1.6% QoQ.

  • Average core deposits (non-CD deposits) increased to 83.8% of total average deposits (including escrow deposits) in 3Q21, compared to 77.9% a year ago
  • Average non-interest bearing deposits increased 58.3% YoY and 1.1% QoQ and comprised 14.6% of total average deposits (including escrow deposits) in 3Q21 compared to 11.8% a year ago

Credit Quality; Non-performing loans totaled $20.2 million in 3Q21, $17.6 million in 2Q21, $21.2 million in 1Q21, $21.1 million in 4Q20 and $24.8 million in 3Q20.

  • Non-performing assets totaled $20.2 million, down 18.6% YoY, but up 14.9% QoQ
  • Criticized and classified assets totaled $68.9 million in 3Q21 (104 bps of loans), $69.2 million at 2Q21 (103 bps), $63.1 million at 1Q21 (94 bps), $71.7 million at 4Q20 (107 bps), and $42.2 million at 3Q20 (71 bps)
  • Loans classified as troubled debt restructured (TDR) totaled $13.1 million compared to $15.5 million in 2Q21 and $5.1 million a year ago
  • Active COVID-19 forbearances totaled 38 loans with a principal balance of $162.0 million at September 30, 2021, with $121.8 million making interest payments and only $40.2 million (0.6% of loans) with full payment deferrals; over 57% of the forbearances are scheduled to exit forbearance by year end 2021
  • Over 87% of gross loans are collateralized by real estate and these loans have an average loan-to-value ratio of Conference Call Information:

    • John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer, will host a conference call on Wednesday, October 27, 2021, at 9:30 AM (ET) to discuss the Company's third quarter 2021 results and strategy.
    • Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
    • Webcast: 
    • Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
    • Replay Access Code: 10151674
    • The conference call will be simultaneously webcast and archived through October 27, 2022

    Fourth Quarter 2021 Earnings Release Date:

    The Company plans to release Fourth Quarter 2021 and full year 2021 financial results after the market close on January 27, 2022; followed by a conference call at 9:30 AM (ET) on January 28, 2022.

    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®, a New York State-chartered commercial bank insured by the Federal Deposit Insurance Corporation. The Bank serves consumers, businesses, professionals, corporate clients, and public entities by offering a full complement of deposit, loan, equipment finance, and cash management services through its banking offices located in Queens, Brooklyn, Manhattan, and on Long Island. As a leader in real estate lending, the Bank's experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. Flushing Bank is an Equal Housing Lender. The Bank also operates an online banking division consisting of iGObanking.com®, which offers competitively priced deposit products to consumers nationwide, and BankPurely®, an eco-friendly, healthier lifestyle community brand.

    Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company's website at  . Flushing Financial Corporation's earnings release and presentation slides will be available prior to the conference call at 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, 2020 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

    Tag: 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) 2021 2021 2021 2020 2020 2021 2020
    Performance Ratios (1)
    Return on average assets 1.26 % 0.93 % 0.93 % 0.18 % 0.81 % 1.04 % 0.58 %
    Return on average equity 15.42 11.95 12.29 2.27 9.94 13.24 7.30
    Yield on average interest-earning assets (2) 3.84 3.69 3.77 3.82 3.84 3.77 3.88
    Cost of average interest-bearing liabilities 0.61 0.66 0.69 0.86 0.98 0.65 1.27
    Cost of funds 0.53 0.57 0.61 0.77 0.89 0.57 1.16
    Net interest rate spread during period (2) 3.23 3.03 3.08 2.96 2.86 3.12 2.61
    Net interest margin (2) 3.34 3.14 3.18 3.08 3.00 3.22 2.77
    Non-interest expense to average assets 1.80 1.65 1.87 2.43 1.69 1.77 1.70
    Efficiency ratio (3) 52.28 53.38 58.58 57.56 55.37 54.72 59.12
    Average interest-earning assets to average interest-bearing liabilities 1.21 X 1.19 X 1.18 X 1.17 X 1.16 X 1.19 X 1.15 X
    Average Balances
    Total loans, net $ 6,633,301 $ 6,686,888 $ 6,700,476 $ 6,375,516 $ 5,904,051 $ 6,673,309 $ 5,881,858
    Total interest-earning assets 7,608,317 7,790,174 7,667,217 7,243,472 6,675,896 7,688,354 6,734,979
    Total assets 8,072,918 8,263,553 8,147,714 7,705,407 7,083,028 8,161,121 7,131,850
    Total due to depositors 5,406,423 5,495,936 5,363,647 4,708,760 4,353,560 5,422,158 4,442,202
    Total interest-bearing liabilities 6,310,859 6,532,891 6,477,871 6,169,574 5,731,899 6,439,928 5,865,045
    Stockholders' equity 659,288 644,690 619,647 609,463 576,512 641,354 570,198
    Per Share Data
    Book value per common share (4) $ 21.78 $ 21.16 $ 20.65 $ 20.11 $ 20.78 $ 21.78 $ 20.78
    Tangible book value per common share (5) $ 21.13 $ 20.51 $ 19.99 $ 19.45 $ 20.22 $ 21.13 $ 20.22
    Stockholders' Equity
    Stockholders' equity $ 668,096 $ 655,167 $ 639,201 $ 618,997 $ 586,406 $ 668,096 $ 586,406
    Tangible stockholders' equity 648,039 634,959 618,839 598,476 570,571 648,039 570,571
    Consolidated Regulatory Capital Ratios
    Tier 1 capital $ 711,276 $ 697,591 $ 679,343 $ 662,987 $ 630,380 $ 711,276 $ 630,380
    Common equity Tier 1 capital 661,340 649,367 636,071 621,247 593,344 661,340 593,344
    Total risk-based capital 832,255 823,494 806,922 794,034 740,499 832,255 740,499
    Risk Weighted Assets 6,194,207 6,344,076 6,281,136 6,287,598 5,381,938 6,194,207 5,381,938
    Tier 1 leverage capital
    (well capitalized = 5%)     		8.83 % 8.50 % 8.44 % 8.38 % 9.03 % 8.83 % 9.03 %
    Common equity Tier 1 risk-based capital (well capitalized = 6.5%) 10.68 10.24 10.13 9.88 11.02 10.68 11.02
    Tier 1 risk-based capital
    (well capitalized = 8.0%)     		11.48 11.00 10.82 10.54 11.71 11.48 11.71
    Total risk-based capital
    (well capitalized = 10.0%)     		13.44 12.98 12.85 12.63 13.76 13.44 13.76
    Capital Ratios
    Average equity to average assets 8.17 % 7.80 % 7.61 % 7.91 % 8.14 % 7.86 % 8.00 %
    Equity to total assets 8.27 8.03 7.83 7.76 8.30 8.27 8.30
    Tangible common equity to tangible assets (6) 8.04 7.80 7.60 7.52 8.10 8.04 8.10
    Asset Quality
    Non-accrual loans (7) $ 18,292 $ 17,391 $ 18,604 $ 18,325 $ 24,792 $ 18,292 $ 24,792
    Non-performing loans 20,217 17,592 21,186 21,073 24,792 20,217 24,792
    Non-performing assets 20,217 17,592 21,221 21,108 24,827 20,217 24,827
    Net charge-offs (recoveries) (619 ) 902 2,865 646 837 3,148 2,993
    Asset Quality Ratios
    Non-performing loans to gross loans 0.31 % 0.26 % 0.31 % 0.31 % 0.42 % 0.31 % 0.42 %
    Non-performing assets to total assets 0.25 0.22 0.26 0.26 0.35 0.25 0.35
    Allowance for loan losses to gross loans 0.55 0.64 0.67 0.67 0.65 0.55 0.65
    Allowance for loan losses to
    non-performing assets     		179.86 242.55 212.52 213.91 154.44 179.86 154.44
    Allowance for loan losses to
    non-performing loans     		179.86 242.55 212.87 214.27 154.66 179.86 154.66
    Net charge-offs (recoveries) to average loans (0.04 ) 0.05 0.17 0.04 0.06 0.06 0.07
    Full-service customer facilities 24 25 25 25 20 24 20

    (See footnotes on next page)

    (1) Ratios are presented on an annualized basis, where appropriate.
    (2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
    (3) Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest 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 non-interest 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 non-accrual 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) 2021 2021 2021 2020 2020 2021 2020
    Interest and Dividend Income
    Interest and fees on loans $ 69,198 $ 67,999 $ 69,021 $ 66,120 $ 60,367 $ 206,218 $ 182,033
    Interest and dividends on securities:
    Interest 3,706 3,685 3,072 2,813 3,525 10,463 12,963
    Dividends 7 7 8 8 9 22 35
    Other interest income 42 51 36 30 13 129 325
    Total interest and dividend income 72,953 71,742 72,137 68,971 63,914 216,832 195,356
    Interest Expense
    Deposits 4,705 5,539 6,105 6,470 7,093 16,349 35,842
    Other interest expense 4,884 5,164 5,140 6,769 6,897 15,188 20,047
    Total interest expense 9,589 10,703 11,245 13,239 13,990 31,537 55,889
    Net Interest Income 63,364 61,039 60,892 55,732 49,924 185,295 139,467
    (Benefit) provision for credit losses (6,927 ) (1,598 ) 2,820 3,862 2,470 (5,705 ) 19,267
    Net Interest Income After
    (Benefit) Provision for Credit Losses     		70,291 62,637 58,072 51,870 47,454 191,000 120,200
    Non-interest Income (Loss)
    Banking services fee income 865 1,233 2,725 1,442 1,316 4,823 3,058
    Net gain (loss) on sale of securities (10 ) 123 — (610 ) — 113 (91 )
    Net gain on sale of loans 131 127 31 6 — 289 42
    Net gain on disposition of assets — — 621 — — 621 —
    Net gain (loss) from fair value adjustments (2,289 ) (6,548 ) 982 (4,129 ) (2,225 ) (7,855 ) 1,987
    Federal Home Loan Bank
    of New York stock dividends     		491 500 689 734 874 1,680 2,719
    Life insurance proceeds — — — — — — 659
    Bank owned life insurance 1,015 1,009 997 1,016 923 3,021 2,798
    Other income 663 346 266 360 463 1,275 1,052
    Total non-interest income (loss) 866 (3,210 ) 6,311 (1,181 ) 1,351 3,967 12,224
    Non-interest Expense
    Salaries and employee benefits 20,544 19,879 22,664 22,089 17,335 63,087 52,139
    Occupancy and equipment 3,534 3,522 3,367 3,446 3,021 10,423 8,688
    Professional services 1,899 1,988 2,400 2,463 2,064 6,287 6,911
    FDIC deposit insurance 618 729 1,213 562 727 2,560 2,114
    Data processing 1,759 1,419 2,109 3,411 1,668 5,287 5,175
    Depreciation and amortization 1,627 1,638 1,639 1,579 1,542 4,904 4,633
    Other real estate owned/foreclosure
    (recoveries) expense     		182 22 (10 ) 95 240 194 121
    Prepayment penalty on borrowings — — — 7,834 — — —
    Other operating expenses 6,182 4,814 4,777 5,332 3,388 15,773 11,339
    Total non-interest expense 36,345 34,011 38,159 46,811 29,985 108,515 91,120
    Income Before Income Taxes 34,812 25,416 26,224 3,878 18,820 86,452 41,304
    Provision (benefit) for Income Taxes
    Federal 6,410 4,857 5,071 533 3,359 16,338 8,655
    State and local 2,989 1,301 2,114 (116 ) 1,130 6,404 1,436
    Total taxes 9,399 6,158 7,185 417 4,489 22,742 10,091
    Net Income $ 25,413 $ 19,258 $ 19,039 $ 3,461 $ 14,331 $ 63,710 $ 31,213
    Basic earnings per common share $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 $ 2.02 $ 1.08
    Diluted earnings per common share $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 $ 2.02 $ 1.08
    Dividends per common share $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.63 $ 0.63
    Basic average shares 31,567 31,677 31,604 30,603 28,874 31,616 28,865
    Diluted average shares 31,567 31,677 31,604 30,603 28,874 31,616 28,865


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

    September 30, June 30, March 31, December 31, September 30,
    (Dollars in thousands) 2021 2021 2021 2020 2020
    ASSETS
    Cash and due from banks $ 178,598 $ 145,971 $ 174,420 $ 157,388 $ 75,560
    Securities held-to-maturity:
    Mortgage-backed securities 7,899 7,904 7,909 7,914 7,919
    Other securities 49,989 49,986 49,912 49,918 50,252
    Securities available for sale:
    Mortgage-backed securities 584,145 596,661 518,781 404,460 386,235
    Other securities 212,654 224,784 242,440 243,514 234,721
    Loans 6,630,354 6,718,806 6,745,316 6,704,674 5,941,398
    Allowance for loan losses (36,363 ) (42,670 ) (45,099 ) (45,153 ) (38,343 )
    Net loans 6,593,991 6,676,136 6,700,217 6,659,521 5,903,055
    Interest and dividends receivable 40,912 43,803 44,941 44,041 36,068
    Bank premises and equipment, net 24,018 26,438 27,498 28,179 25,766
    Federal Home Loan Bank of New York stock 36,158 41,630 41,498 43,439 57,119
    Bank owned life insurance 184,730 183,715 182,707 181,710 158,701
    Goodwill 17,636 17,636 17,636 17,636 16,127
    Core deposit intangibles 2,708 2,859 3,013 3,172 —
    Right of use asset 50,155 51,972 53,802 50,743 42,326
    Other assets 93,741 89,850 94,410 84,759 69,207
    Total assets $ 8,077,334 $ 8,159,345 $ 8,159,184 $ 7,976,394 $ 7,063,056
    LIABILITIES
    Deposits $ 6,421,391 $ 6,298,790 $ 6,326,577 $ 6,090,733 $ 4,906,359
    Mortgagors' escrow deposits 67,207 58,230 74,348 45,622 57,136
    Borrowed funds 752,925 971,827 948,920 1,020,895 1,323,975
    Operating lease liability 54,239 56,151 58,080 59,100 49,737
    Other liabilities 113,476 119,180 112,058 141,047 139,443
    Total liabilities 7,409,238 7,504,178 7,519,983 7,357,397 6,476,650
    STOCKHOLDERS' EQUITY
    Preferred stock (5,000,000 shares authorized; none issued) — — — — —
    Common stock ($0.01 par value; 100,000,000 shares authorized) 341 341 341 341 315
    Additional paid-in capital 262,009 260,958 260,019 261,533 227,877
    Treasury stock (71,738 ) (65,335 ) (65,479 ) (69,400 ) (69,409 )
    Retained earnings 486,418 467,620 455,023 442,789 445,931
    Accumulated other comprehensive loss, net of taxes (8,934 ) (8,417 ) (10,703 ) (16,266 ) (18,308 )
    Total stockholders' equity 668,096 655,167 639,201 618,997 586,406
    Total liabilities and stockholders' equity $ 8,077,334 $ 8,159,345 $ 8,159,184 $ 7,976,394 $ 7,063,056
    (In thousands)
    Issued shares 34,088 34,088 34,088 34,088 31,531
    Outstanding shares 30,676 30,962 30,954 30,776 28,218
    Treasury shares 3,412 3,126 3,133 3,312 3,312

    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) 2021 2021 2021 2020 2020 2021 2020
    Interest-earning Assets:
    Mortgage loans, net $ 5,158,213 $ 5,130,400 $ 5,155,975 $ 5,010,097 $ 4,721,742 $ 5,148,204 $ 4,727,094
    Other loans, net 1,475,088 1,556,488 1,544,501 1,365,419 1,182,309 1,525,105 1,154,764
    Total loans, net 6,633,301 6,686,888 6,700,476 6,375,516 5,904,051 6,673,309 5,881,858
    Taxable securities:
    Mortgage-backed securities 590,732 578,134 433,917 413,875 413,902 534,836 462,216
    Other securities 217,763 232,020 300,828 266,663 243,754 249,899 243,782
    Total taxable securities 808,495 810,154 734,745 680,538 657,656 784,735 705,998
    Tax-exempt securities:
    Other securities 50,832 50,830 50,828 50,768 51,652 50,830 58,464
    Total tax-exempt securities 50,832 50,830 50,828 50,768 51,652 50,830 58,464
    Interest-earning deposits and federal funds sold 115,689 242,302 181,168 136,650 62,537 179,480 88,659
    Total interest-earning assets 7,608,317 7,790,174 7,667,217 7,243,472 6,675,896 7,688,354 6,734,979
    Other assets 464,601 473,379 480,497 461,935 407,132 472,767 396,871
    Total assets $ 8,072,918 $ 8,263,553 $ 8,147,714 $ 7,705,407 $ 7,083,028 $ 8,161,121 $ 7,131,850
    Interest-bearing Liabilities:
    Deposits:
    Savings accounts $ 153,120 $ 153,113 $ 170,079 $ 163,382 $ 160,100 $ 158,708 $ 180,829
    NOW accounts 2,107,866 2,255,581 2,185,384 1,924,840 1,625,109 2,182,660 1,495,473
    Money market accounts 2,107,473 2,043,257 1,905,543 1,507,245 1,461,996 2,019,497 1,579,712
    Certificate of deposit accounts 1,037,964 1,043,985 1,102,641 1,113,293 1,106,355 1,061,293 1,186,188
    Total due to depositors 5,406,423 5,495,936 5,363,647 4,708,760 4,353,560 5,422,158 4,442,202
    Mortgagors' escrow accounts 68,562 91,545 65,372 75,005 55,868 75,171 69,427
    Total interest-bearing deposits 5,474,985 5,587,481 5,429,019 4,783,765 4,409,428 5,497,329 4,511,629
    Borrowings 835,874 945,410 1,048,852 1,385,809 1,322,471 942,599 1,353,416
    Total interest-bearing liabilities 6,310,859 6,532,891 6,477,871 6,169,574 5,731,899 6,439,928 5,865,045
    Non interest-bearing demand deposits 933,443 923,220 856,052 731,170 589,674 904,522 533,563
    Other liabilities 169,328 162,752 194,144 195,200 184,943 175,317 163,044
    Total liabilities 7,413,630 7,618,863 7,528,067 7,095,944 6,506,516 7,519,767 6,561,652
    Equity 659,288 644,690 619,647 609,463 576,512 641,354 570,198
    Total liabilities and equity $ 8,072,918 $ 8,263,553 $ 8,147,714 $ 7,705,407 $ 7,083,028 $ 8,161,121 $ 7,131,850
    Net interest-earning assets $ 1,297,458 $ 1,257,283 $ 1,189,346 $ 1,073,898 $ 943,997 $ 1,248,426 $ 869,934


    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) 2021 2021 2021 2020 2020 2021 2020
    Interest Income:
    Mortgage loans, net $ 55,114 $ 52,987 $ 55,219 $ 53,777 $ 49,814 $ 163,320 $ 148,945
    Other loans, net 14,084 15,012 13,802 12,343 10,553 42,898 33,088
    Total loans, net 69,198 67,999 69,021 66,120 60,367 206,218 182,033
    Taxable securities:
    Mortgage-backed securities 2,279 2,233 1,698 1,435 1,928 6,210 7,295
    Other securities 1,008 1,037 963 957 1,166 3,008 4,221
    Total taxable securities 3,287 3,270 2,661 2,392 3,094 9,218 11,516
    Tax-exempt securities:
    Other securities 539 535 530 543 557 1,604 1,876
    Total tax-exempt securities 539 535 530 543 557 1,604 1,876
    Interest-earning deposits and federal funds sold 42 51 36 30 13 129 325
    Total interest-earning assets 73,066 71,855 72,248 69,085 64,031 217,169 195,750
    Interest Expense:
    Deposits:
    Savings accounts $ 61 $ 66 $ 75 $ 75 $ 65 $ 202 $ 420
    NOW accounts 1,227 1,499 1,706 1,320 1,242 4,432 7,989
    Money market accounts 1,683 2,060 2,100 2,010 2,108 5,843 12,358
    Certificate of deposit accounts 1,734 1,913 2,222 3,065 3,700 5,869 15,031
    Total due to depositors 4,705 5,538 6,103 6,470 7,115 16,346 35,798
    Mortgagors' escrow accounts — 1 2 — (22 ) 3 44
    Total interest-bearing deposits 4,705 5,539 6,105 6,470 7,093 16,349 35,842
    Borrowings 4,884 5,164 5,140 6,769 6,897 15,188 20,047
    Total interest-bearing liabilities 9,589 10,703 11,245 13,239 13,990 31,537 55,889
    Net interest income- tax equivalent $ 63,477 $ 61,152 $ 61,003 $ 55,846 $ 50,041 $ 185,632 $ 139,861
    Included in net interest income above:
    Prepayment penalties received on loans and securities and net of reversals and recovered interest from non-accrual loans $ 2,136 $ 2,046 $ 948 $ 1,093 $ 1,518 $ 5,130 $ 3,483
    Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income 194 (664 ) 1,427 1,023 230 957 (2,208 )
    Purchase accounting adjustments 1,100 565 922 11 — 2,587 —
    Interest-earning Assets Yields:
    Mortgage loans, net 4.27 % 4.13 % 4.28 % 4.29 % 4.22 % 4.23 % 4.20 %
    Other loans, net 3.82 3.86 3.57 3.62 3.57 3.75 3.82
    Total loans, net 4.17 4.07 4.12 4.15 4.09 4.12 4.13
    Taxable securities:
    Mortgage-backed securities 1.54 1.54 1.57 1.39 1.86 1.55 2.10
    Other securities 1.85 1.79 1.28 1.44 1.91 1.60 2.31
    Total taxable securities 1.63 1.61 1.45 1.41 1.88 1.57 2.17
    Tax-exempt securities: (1)
    Other securities 4.24 4.21 4.17 4.28 4.31 4.21 4.28
    Total tax-exempt securities 4.24 4.21 4.17 4.28 4.31 4.21 4.28
    Interest-earning deposits and federal funds sold 0.15 0.08 0.08 0.09 0.08 0.10 0.49
    Total interest-earning assets 3.84 % 3.69 % 3.77 % 3.82 % 3.84 % 3.77 % 3.88 %
    Interest-bearing Liabilities Yields:
    Deposits:
    Savings accounts 0.16 % 0.17 % 0.18 % 0.18 % 0.16 % 0.17 % 0.31 %
    NOW accounts 0.23 0.27 0.31 0.27 0.31 0.27 0.71
    Money market accounts 0.32 0.40 0.44 0.53 0.58 0.39 1.04
    Certificate of deposit accounts 0.67 0.73 0.81 1.10 1.34 0.74 1.69
    Total due to depositors 0.35 0.40 0.46 0.55 0.65 0.40 1.07
    Mortgagors' escrow accounts — — 0.01 — (0.16 ) 0.01 0.08
    Total interest-bearing deposits 0.34 0.40 0.45 0.54 0.64 0.40 1.06
    Borrowings 2.34 2.18 1.96 1.95 2.09 2.15 1.97
    Total interest-bearing liabilities 0.61 % 0.66 % 0.69 % 0.86 % 0.98 % 0.65 % 1.27 %
    Net interest rate spread (tax equivalent) 3.23 % 3.03 % 3.08 % 2.96 % 2.86 % 3.12 % 2.61 %
    Net interest margin (tax equivalent) 3.34 % 3.14 % 3.18 % 3.08 % 3.00 % 3.22 % 2.77 %
    Ratio of interest-earning assets to interest-bearing liabilities 1.21 X 1.19 X 1.18 X 1.17 X 1.16 X 1.19 X 1.15 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 2021 vs. September 2021 vs.
    September 30, June 30, March 31, December 31, September 30, June 2021 September 2020
    (Dollars in thousands) 2021 2021 2021 2020 2020 % Change % Change
    Non-interest bearing $ 941,259 $ 945,491 $ 917,189 $ 778,672 $ 607,954 (0.4 )% 54.8 %
    Interest bearing:
    Certificate of deposit accounts 1,040,098 1,020,615 1,070,595 1,138,361 1,051,644 1.9 (1.1 )
    Savings accounts 152,306 152,931 170,272 168,183 160,294 (0.4 ) (5.0 )
    Money market accounts 2,152,085 2,057,188 1,990,656 1,682,345 1,381,552 4.6 55.8
    NOW accounts 2,135,643 2,122,565 2,177,865 2,323,172 1,704,915 0.6 25.3
    Total interest-bearing deposits 5,480,132 5,353,299 5,409,388 5,312,061 4,298,405 2.4 27.5
    Total deposits $ 6,421,391 $ 6,298,790 $ 6,326,577 $ 6,090,733 $ 4,906,359 1.9 % 30.9 %


    Loan Composition

    September 2021 vs. September 2021 vs.
    September 30, June 30, March 31, December 31, September 30, June 2021 September 2020
    (Dollars in thousands) 2021
    		 2021
    		 2021
    		 2020
    		 2020
    		 % Change % Change
    Multifamily residential $ 2,498,980 $ 2,542,010 $ 2,525,967 $ 2,533,952 $ 2,252,757 (1.7 )% 10.9 %
    Commercial real estate 1,745,855 1,726,895 1,721,702 1,754,754 1,636,659 1.1 6.7
    One-to-four family ― mixed-use property 579,100 582,211 595,431 602,981 585,159 (0.5 ) (1.0 )
    One-to-four family ― residential 280,343 288,652 239,391 245,211 191,011 (2.9 ) 46.8
    Co-operative apartments 7,804 7,883 7,965 8,051 8,132 (1.0 ) (4.0 )
    Construction 71,464 62,802 61,528 83,322 63,567 13.8 12.4
    Mortgage Loans 5,183,546 5,210,453 5,151,984 5,228,271 4,737,285 (0.5 ) 9.4
    Small Business Administration (1) 148,855 215,158 267,120 167,376 124,649 (30.8 ) 19.4
    Taxi medallion — — — 2,757 2,317 — (100.0 )
    Commercial business and other 1,294,688 1,291,526 1,326,657 1,303,225 1,063,429 0.2 21.7
    Non-mortgage loans 1,443,543 1,506,684 1,593,777 1,473,358 1,190,395 (4.2 ) 21.3
    Net unamortized premiums and unearned loan fees (2) 3,265 1,669 (445 ) 3,045 13,718 95.6 (76.2 )
    Allowance for loan losses (36,363 ) (42,670 ) (45,099 ) (45,153 ) (38,343 ) (14.8 ) (5.2 )
    Net loans $ 6,593,991 $ 6,676,136 $ 6,700,217 $ 6,659,521 $ 5,903,055 (1.2 )% 11.7 %

    (1) Includes $130.8 million, $197.3 million, $251.0 million, $151.9 million and $111.6 million of PPP loans at September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020, and September 30, 2020, respectively.

    (2) Includes $8.6 million, $9.7 million, $10.5 million, and $11.3 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, 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) 2021 2021 2021 2020 2020 2021 2020
    Multifamily residential $ 41,850 $ 66,913 $ 58,553 $ 52,024 $ 33,733 $ 167,316 $ 160,705
    Commercial real estate 48,447 37,963 17,156 57,634 26,644 103,566 134,218
    One-to-four family – mixed-use property 12,823 7,135 8,712 9,692 3,867 28,670 25,439
    One-to-four family – residential 2,761 59,494 3,131 8,422 2,296 65,386 13,383
    Co-operative apartments — — — — — — 704
    Construction 8,687 5,281 7,123 6,869 5,420 21,091 14,990
    Mortgage Loans 114,568 176,786 94,675 134,641 71,960 386,029 349,439
    Small Business Administration (1) 415 17,585 125,093 598 18,456 143,093 111,754
    Commercial business and other 128,946 130,036 103,118 180,787 65,160 362,100 226,895
    Non-mortgage Loans 129,361 147,621 228,211 181,385 83,616 505,193 338,649
    Total Closings $ 243,929 $ 324,407 $ 322,886 $ 316,026 $ 155,576 $ 891,222 $ 688,088

    (1) Includes $15.5 million, $123.2 million and $18.4 million of PPP closings for the three months ended June 30, 2021, March 31, 2021, and September 30, 2020, respectively.


    Weighted Average Rate on Loan Closings

    For the three months ended
    September 30, June 30, March 31, December 31, September 30,
    Loan type 2021 2021 2021 2020 2020
    Mortgage loans 3.80 % 3.53 % 3.47 % 3.47 % 3.56 %
    Non-mortgage loans 3.49 3.23 2.26 3.37 2.81
    Total loans 3.64 % 3.39 % 2.62 % 3.41 % 3.16 %
    Excluding PPP loans 3.64 % 3.51 % 3.62 % 3.41 % 3.45 %

    FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
    ASSET QUALITY
    (Unaudited)


    Allowance for Loan 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) 2021 2021 2021 2020 2020 2021 2020
    Allowance for loan losses
    Beginning balances $ 42,670 $ 45,099 $ 45,153 $ 38,343 $ 36,710 45,153 21,751
    Adoption of Current Expected Credit Losses — — — — — — 379
    Net loan charge-off (recoveries):
    Multifamily residential — — 33 (11 ) (14 ) $ 33 $ (27 )
    Commercial real estate — — 64 — — 64 —
    One-to-four family – mixed-use property (123 ) 3 19 — (60 ) (101 ) (135 )
    One-to-four family – residential (147 ) (2 ) (5 ) (2 ) (2 ) (154 ) (10 )
    Small Business Administration (8 ) (9 ) (10 ) (3 ) (47 ) (27 ) 111
    Taxi medallion (1,235 ) (222 ) 2,758 124 951 1,301 951
    Commercial business and other 894 1,132 6 538 9 2,032 2,103
    Total (619 ) 902 2,865 646 837 3,148 2,993
    (Benefit) provision for loan losses (6,926 ) (1,527 ) 2,811 3,357 2,470 (5,642 ) 19,206
    Allowance recorded at the time of Acquisition — — — 4,099 — — —
    Ending balance $ 36,363 $ 42,670 $ 45,099 $ 45,153 $ 38,343 $ 36,363 $ 38,343
    Gross charge-offs $ 1,019 $ 1,186 $ 2,922 $ 752 $ 964 $ 5,127 $ 3,253
    Gross recoveries 1,638 284 57 106 127 1,979 260
    Allowance for loan losses to gross loans 0.55 % 0.64 % 0.67 % 0.67 % 0.65 % 0.55 % 0.65 %
    Net loan charge-offs (recoveries) to average loans (0.04 ) 0.05 0.17 0.04 0.06 0.06 0.07


    Non-Performing Assets

    September 30, June 30, March 31, December 31, September 30,
    (Dollars in thousands) 2021 2021 2021 2020 2020
    Loans 90 Days Or More Past Due and Still Accruing:
    Multifamily residential $ — $ 201 $ 201 $ 201 $ —
    Commercial real estate — — — 2,547 —
    Construction 873 — 2,381 — —
    Commercial business and other 1,052 — — — —
    Total 1,925 201 2,582 2,748 —
    Non-accrual Loans:
    Multifamily residential 4,192 4,669 4,338 2,524 2,661
    Commercial real estate 613 8 8 1,683 2,657
    One-to-four family - mixed-use property (1) 2,204 2,309 2,355 1,366 1,366
    One-to-four family - residential 7,807 6,940 7,335 5,854 6,454
    Small Business Administration 976 976 1,151 1,151 1,151
    Taxi medallion(1) — — — 2,317 2,218
    Commercial business and other(1) 2,500 2,489 3,417 3,430 8,285
    Total 18,292 17,391 18,604 18,325 24,792
    Total Non-performing Loans (NPLs) 20,217 17,592 21,186 21,073 24,792
    Other Non-performing Assets:
    Other asset acquired through foreclosure — — 35 35 35
    Total — — 35 35 35
    Total Non-performing Assets $ 20,217 $ 17,592 $ 21,221 $ 21,108 $ 24,827
    Non-performing Assets to Total Assets 0.25 % 0.22 % 0.26 % 0.26 % 0.35 %
    Allowance For Loan Losses to NPLs 179.9 % 242.6 % 212.9 % 214.3 % 154.7 %


    (1) Not included in the above analysis are non-accrual performing TDR one-to-four family mixed use property loans totaling $0.3 million each in 3Q21, 2Q21, 1Q21, 4Q20, and 3Q20; non-accrual performing TDR taxi medallion loans totaling $0.4 million in 4Q20 and $0.1 million in 3Q20, and non-accrual performing TDR commercial business loans totaling $2.2 million each in 2Q21, 1Q21, and 4Q20, and $1.0 million in 3Q20.


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

    Non-cash Fair Value Adjustments to GAAP Earnings

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

    Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Base Net Interest Income FTE, Base Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Base Interest Income and Yield on Total Loans, Core Non-interest Income, Core Non-interest 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 non-interest 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) 2021 2021 2021 2020 2020 2021 2020
    GAAP income before income taxes $ 34,812 $ 25,416 $ 26,224 $ 3,878 $ 18,820 $ 86,452 $ 41,304
    Day 1, Provision for Credit Losses - Empire transaction (Provision for credit losses) — — — 1,818 — — —
    Net (gain) loss from fair value adjustments (Non-interest income (loss)) 2,289 6,548 (982 ) 4,129 2,225 7,855 (1,987 )
    Net (gain) loss on sale of securities
    (Non-interest income (loss))     		10 (123 ) — 610 — (113 ) 91
    Life insurance proceeds
    (Non-interest income (loss))     		— — — — — — (659 )
    Net gain on disposition of assets
    (Non-interest income (loss))     		— — (621 ) — — (621 ) —
    Net (gain) loss from fair value adjustments on qualifying hedges
    (Interest and fees on loans)     		(194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208
    Prepayment penalty on borrowings
    (Non-interest expense)     		— — — 7,834 — — —
    Net amortization of purchase accounting adjustments (Various) (958 ) (418 ) (789 ) 80 — (2,165 ) —
    Merger (benefit) expense (Various) 2,096 (490 ) 973 5,349 422 2,579 1,545
    Core income before taxes 38,055 31,597 23,378 22,675 21,237 93,030 42,502
    Provision for income taxes for core income 10,226 8,603 6,405 4,891 5,069 25,234 10,537
    Core net income $ 27,829 $ 22,994 $ 16,973 $ 17,784 $ 16,168 $ 67,796 $ 31,965
    GAAP diluted earnings per common share $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 $ 2.02 $ 1.08
    Day 1, Provision for Credit Losses - Empire transaction, net of tax — — — 0.05 — — —
    Net (gain) loss from fair value adjustments, net of tax 0.05 0.15 (0.02 ) 0.11 0.06 0.18 (0.05 )
    Net loss on sale of securities, net of tax — — — 0.02 — — —
    Life insurance proceeds — — — — — — (0.02 )
    Net gain on disposition of assets, net of tax — — (0.01 ) — — (0.01 ) —
    Net (gain) loss from fair value adjustments on qualifying hedges, net of tax — 0.02 (0.03 ) (0.03 ) (0.01 ) (0.02 ) 0.06
    Prepayment penalty on borrowings, net of tax — — — 0.20 — — —
    Net amortization of purchase accounting adjustments, net of tax (0.02 ) (0.01 ) (0.02 ) — — (0.05 ) —
    Merger (benefit) expense, net of tax 0.05 (0.01 ) 0.02 0.14 0.01 0.06 0.04
    NYS tax change — (0.02 ) — — — (0.02 ) —
    Core diluted earnings per common share(1) $ 0.88 $ 0.73 $ 0.54 $ 0.58 $ 0.56 $ 2.14 $ 1.11
    Core net income, as calculated above $ 27,829 $ 22,994 $ 16,973 $ 17,784 $ 16,168 $ 67,796 $ 31,965
    Average assets 8,072,918 8,263,553 8,147,714 7,705,407 7,083,028 8,161,121 7,131,850
    Average equity 659,288 644,690 619,647 609,463 576,512 641,354 570,198
    Core return on average assets(2) 1.38 % 1.11 % 0.83 % 0.92 % 0.91 % 1.11 % 0.60 %
    Core return on average equity(2) 16.88 % 14.27 % 10.96 % 11.67 % 11.22 % 14.09 % 7.47 %


    (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) 2021 2021 2021 2020 2020 2021 2020
    GAAP Net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467
    Net (gain) loss from fair value adjustments on qualifying hedges (194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208
    Net amortization of purchase accounting adjustments (1,100 ) (565 ) (922 ) (11 ) — (2,587 ) —
    Core Net interest income $ 62,070 $ 61,138 $ 58,543 $ 54,698 $ 49,694 $ 181,751 $ 141,675
    GAAP Non-interest income (loss) $ 866 $ (3,210 ) $ 6,311 $ (1,181 ) $ 1,351 $ 3,967 $ 12,224
    Net (gain) loss from fair value adjustments 2,289 6,548 (982 ) 4,129 2,225 7,855 (1,987 )
    Net loss on sale of securities 10 (123 ) — 610 — (113 ) 91
    Life insurance proceeds — — — — — — (659 )
    Net gain on sale of assets — — (621 ) — — (621 ) —
    Core Non-interest income $ 3,165 $ 3,215 $ 4,708 $ 3,558 $ 3,576 $ 11,088 $ 9,669
    GAAP Non-interest expense $ 36,345 $ 34,011 $ 38,159 $ 46,811 $ 29,985 $ 108,515 $ 91,120
    Prepayment penalty on borrowings — — — (7,834 ) — — —
    Net amortization of purchase accounting adjustments (142 ) (147 ) (133 ) (91 ) — (422 ) —
    Merger (benefit) expense (2,096 ) 490 (973 ) (5,349 ) (422 ) (2,579 ) (1,545 )
    Core Non-interest expense $ 34,107 $ 34,354 $ 37,053 $ 33,537 $ 29,563 $ 105,514 $ 89,575
    Net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467
    Non-interest income (loss) 866 (3,210 ) 6,311 (1,181 ) 1,351 3,967 12,224
    Non-interest expense (36,345 ) (34,011 ) (38,159 ) (46,811 ) (29,985 ) (108,515 ) (91,120 )
    Pre-provision pre-tax net revenue $ 27,885 $ 23,818 $ 29,044 $ 7,740 $ 21,290 $ 80,747 $ 60,571
    Core:
    Net interest income $ 62,070 $ 61,138 $ 58,543 $ 54,698 $ 49,694 $ 181,751 $ 141,675
    Non-interest income 3,165 3,215 4,708 3,558 3,576 11,088 9,669
    Non-interest expense (34,107 ) (34,354 ) (37,053 ) (33,537 ) (29,563 ) (105,514 ) (89,575 )
    Pre-provision pre-tax net revenue $ 31,128 $ 29,999 $ 26,198 $ 24,719 $ 23,707 $ 87,325 $ 61,769
    Efficiency Ratio 52.3 % 53.4 % 58.6 % 57.6 % 55.4 % 54.7 % 59.1 %


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

    For the three months ended For the nine months ended
    September 30, June 30, March 31, December 31, September 30, September 30, September 30,
    (Dollars in thousands) 2021 2021 2021 2020 2020 2021 2020
    GAAP net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467
    Net (gain) loss from fair value adjustments on qualifying hedges (194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208
    Net amortization of purchase accounting adjustments (1,100 ) (565 ) (922 ) (11 ) — (2,587 ) —
    Tax equivalent adjustment 113 113 111 114 117 337 394
    Core net interest income FTE $ 62,183 $ 61,251 $ 58,654 $ 54,812 $ 49,811 $ 182,088 $ 142,069
    Prepayment penalties received on loans and securities, net of reversals and recoveries of interest from non-accrual loans (2,136 ) (2,046 ) (948 ) (1,093 ) (1,518 ) (5,130 ) (3,483 )
    Base net interest income FTE $ 60,047 $ 59,205 $ 57,706 $ 53,719 $ 48,293 $ 176,958 $ 138,586
    Total average interest-earning assets (1) $ 7,616,332 $ 7,799,176 $ 7,676,833 $ 7,245,147 $ 6,675,896 $ 7,697,229 $ 6,734,979
    Core net interest margin FTE 3.27 % 3.14 % 3.06 % 3.03 % 2.98 % 3.15 % 2.81 %
    Base net interest margin FTE 3.15 % 3.04 % 3.01 % 2.97 % 2.89 % 3.07 % 2.74 %
    GAAP interest income on total loans, net $ 69,198 $ 67,999 $ 69,021 $ 66,120 $ 60,367 $ 206,218 $ 182,033
    Net (gain) loss from fair value adjustments on qualifying hedges (194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208
    Net amortization of purchase accounting adjustments (1,126 ) (624 ) (728 ) (356 ) — (2,478 ) —
    Core interest income on total loans, net $ 67,878 $ 68,039 $ 66,866 $ 64,741 $ 60,137 $ 202,783 $ 184,241
    Prepayment penalties received on loans, net of reversals and recoveries of interest from non-accrual loans (2,135 ) (2,046 ) (947 ) (1,093 ) (1,443 ) (5,128 ) (3,408 )
    Base interest income on total loans, net $ 65,743 $ 65,993 $ 65,919 $ 63,648 $ 58,694 $ 197,655 $ 180,833
    Average total loans, net (1) $ 6,642,434 $ 6,697,103 $ 6,711,446 $ 6,379,429 $ 5,904,051 $ 6,683,412 $ 5,881,858
    Core yield on total loans 4.09 % 4.06 % 3.99 % 4.06 % 4.07 % 4.05 % 4.18 %
    Base yield on total loans 3.96 % 3.94 % 3.93 % 3.99 % 3.98 % 3.94 % 4.10 %


    (1) Excludes purchase accounting average balances for three months ended September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020.

    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) 2021 2021 2021 2020 2020
    Total Equity $ 668,096 $ 655,167 $ 639,201 $ 618,997 $ 586,406
    Less:
    Goodwill (17,636 ) (17,636 ) (17,636 ) (17,636 ) (16,127 )
    Core deposit Intangibles (2,708 ) (2,859 ) (3,013 ) (3,172 ) —
    Intangible deferred tax liabilities 287 287 287 287 292
    Tangible Stockholders' Common Equity $ 648,039 $ 634,959 $ 618,839 $ 598,476 $ 570,571
    Total Assets $ 8,077,334 $ 8,159,345 $ 8,159,184 $ 7,976,394 $ 7,063,056
    Less:
    Goodwill (17,636 ) (17,636 ) (17,636 ) (17,636 ) (16,127 )
    Core deposit Intangibles (2,708 ) (2,859 ) (3,013 ) (3,172 ) —
    Intangible deferred tax liabilities 287 287 287 287 292
    Tangible Assets $ 8,057,277 $ 8,139,137 $ 8,138,822 $ 7,955,873 $ 7,047,221
    Tangible Stockholders' Common Equity to Tangible Assets 8.04 % 7.80 % 7.60 % 7.52 % 8.10 %



    MENAFN26102021004107003653ID1103051203

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