Flushing Financial Corporation Reports 4Q20 GAAP EPS of $0.11 and 2020 GAAP EPS of $1.18 4Q20 Core EPS of $0.58 and 2020 Core EPS of $1.70 Third Consecutive Quarter of Record Net Interest Income

Thursday, 28. January 2021 23:30

FOURTH QUARTER 2020 HIGHLIGHTS1

  • GAAP diluted EPS of $0.11, compared to $0.50 in 3Q20 and $0.45 in 4Q19
  • Core diluted EPS of $0.58 compared to $0.56 in 3Q20 and $0.41 in 4Q19
  • GAAP ROAA and ROAE were 0.18% and 2.27% in 4Q20 compared to 0.73% and 9.11% in 4Q19, respectively
  • Core ROAA and ROAE were 0.92% and 11.67% in 4Q20 compared to 0.67% and 8.36% in 4Q19, respectively
  • Record net interest income of $55.7 million, up 11.6% QoQ and 35.3% YoY, while core net interest income was $54.7, up 10.1% QoQ and 36.3% YoY
  • Net interest margin of 3.08%, up 8 bps QoQ and 60 bps YoY and core net interest margin of 2.97%, up 8 bps QoQ and 64 bps YoY
  • Average loans were $6.4 billion, up 8.0% QoQ and 11.3% YoY while average deposits of $4.7 billion improved 8.2% QoQ and 4.0% YoY
  • Loan pipeline remained strong at $354.6 million, up 9.3% from $324.5 million a year ago
  • Provision for credit losses (excluding Day 1 impact from Empire Bancorp transaction) of $2.0 million exceed net charge-offs of $0.6 million in 4Q20
  • NPAs of $21.1 million were down 15.0% from $24.8 million in 3Q20
  • Loans in forbearance declined 56.9% in 4Q20 and were 5.4% of total loans and only 3.2% of loans excluding interest only forbearance loans

UNIONDALE, N.Y., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (NASDAQ-GS: FFIC) the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the fourth quarter and full year ended December 31, 2020.

John R. Buran, President and Chief Executive Officer stated, “While 2020 was an unprecedented year in many ways, I am proud of how our employees continued to serve customers and help communities throughout the COVID-19 pandemic. It is through their efforts that our Company was able to persevere and post strong results. We achieved three consecutive quarters of record net interest income. We reduced loans in forbearance by 76% from their peak. We closed the Empire acquisition this quarter and within three weeks completed the conversion of all customers onto our systems. As we enter 2021 we are a stronger more resilient Company with greater scale, a better margin and improved mobile and lending capabilities through enhanced fintech relationships.”

Mr. Buran continued, “Our core NIM improvement of 8 bps during the quarter was driven by reducing cost of funds by 12 bps with a minimal decrease in the yield on interest-earning assets. While we see additional opportunities to reduce our cost of deposits with $342 million of CDs maturing in 1Q21 with a weighted average rate of 1.23% compared to a current one year CD rate of 0.55%, pricing on new loans has shifted lower. Loan growth rebounded this quarter, rising 4% year over year and 5% (annualized) from third quarter, excluding the Empire transaction. We reported fourth quarter GAAP EPS of $0.11, which included various charges from the Empire transaction, our previously announced balance sheet restructuring, and other adjustments totaling $0.47 per share. Adjusting for these items, core fourth quarter EPS was $0.58, up 42% year over year. The Empire integration is proceeding consistent with our expectations and we are on track to achieve our 20% earnings accretion target for 2021.”

“We continue to actively monitor our credit portfolio and work with our customers during these difficult times. We remain comfortable with our credit exposure given the loan to value of 38% on our real estate dependent loans and the fact that 41% of our loans on forbearance have already begun to pay interest and escrow. Loans in forbearance fell 57% to $364 million in the fourth quarter from $846 million in 3Q20 and the loans that exited forbearance are performing in line with expectations. Criticized and classified assets rose $29 million as the Empire acquisition added $15 million. We continue to actively monitor our portfolio and work with customers during these difficult times. Flushing Bank has a history of superior credit quality through many cycles and losses have never been more than 64 bps. We do not see a reason why this would change in this economic cycle.”

“We are an active participant in the second offering of the PPP program through our continued partnership with a fintech company. From January 19th through January 22, 2021, we processed 434 applications totaling $115 million. We remain committed to helping our customers in this difficult period.”

Mr. Buran concluded, “While 2020 was a challenging year for our customers, communities and employees, it also was a significant period for the Company as we upgraded our mobile banking capabilities in March, closed the Empire transaction on October 31st, and completed the systems conversion while adopting to a new work environment. I am pleased with how we performed on our strategic objectives and look forward to 2021.”

Summary of Strategic Objectives

  • Manage cost of funds and continue to improve funding mix
  • Resume historical loan growth while achieving appropriate risk adjusted returns
  • Enhance core earnings power by improving scalability and efficiency
  • Manage credit risk
  • Remain well capitalized

Earnings Summary:

Net Interest Income

Net interest income for 4Q20 was $55.7 million, an increase 35.3% YoY and 11.6% QoQ (Empire contributed $4.2 million to growth).

  • Net interest margin of 3.08%, increased 60 bps YoY and 8 bps QoQ
    • Net purchase accounting accretion was not meaningful in 4Q20 and is expected to add less than $1 million to net interest income in 1Q21
  • Yield on average interest-earning assets of 3.82%, decreased 39 bps YoY, and 2 bps QoQ
  • Cost of average interest-bearing liabilities of 0.86%, decreased 110 bps YoY and 12 bps QoQ, driven primarily by the decline in the costs of deposits to 0.47% in 4Q20, down 124 bps YoY and 10 bps QoQ
  • Average interest-earning assets of $7.2 billion, increased 8.5% in both YoY and QoQ largely from Empire
  • Prepayment penalty income from loans and securities, net recoveries of interest from non-accrual loans, net gains (losses) from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $2.1 million (11 bps) in 4Q20, $1.7 million (11 bps) in 3Q20 and $2.4 million (15 bps) in 4Q19. Excluding these items, the net interest margin was 2.97% in 4Q20, an increase of 64 bps YoY and 8 bps QoQ

Provision for Credit Losses

The Company recorded a provision for credit losses of $3.9 million in 4Q20, compared to $2.5 million in 3Q20 and $(0.3) million in 4Q19.

  • 4Q20 provision for credit losses was driven by $1.8 million of Day 1 impact of the Empire transaction ($0.05 per share, net of tax) in addition to required provision of $2.0 million resulting from the economic environment
  • Net charge-offs of $0.6 million in 4Q20 and $0.8 million in 3Q20 were significantly below quarterly provisions for credit losses

Non-interest Income

Non-interest income for 4Q20 was $(1.2) million compared to $1.4 million in 3Q20 and $5.0 million in 4Q19.

  • Non-interest income included net gains (losses) from fair value adjustments of $(4.1) million ($(0.11) per share, net of tax) in 4Q20, $(2.2) million ($(0.06) per share, net of tax) in 3Q20 and $0.8 million ($0.02 per share, net of tax) in 4Q19, respectively
  • Losses on the sale of investment securities with a par value of $89.5 million were $0.6 million ($0.02 per share, net of tax) in 4Q20
  • Life insurance proceeds were $419,000 ($0.01 per share) in 4Q19
  • Absent all above items, non-interest income was $3.6 million in 4Q20, down 6.7% YoY and flat QoQ

Non-interest Expense

Non-interest expense for 4Q20 was $46.8 million, compared to $30.0 million in 3Q20 and $29.6 million in 4Q19.

  • 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 $0.4 million of merger charges ($0.01 per share, net of tax) while 4Q19 includes $1.1 million of merger charges ($0.03 per share, net of tax)
  • Excluding the above items, core operating expenses were $33.5 million, up 17.4% YoY and 13.4% QoQ; Empire contributed $1.7 million
  • The ratio of core operating expense to average assets was 1.74% in 4Q20, 1.67% in 3Q20 and 1.62% in 4Q19
  • Excluding the notable items in net interest income, non-interest income and non-interest expense, the adjusted efficiency ratio was 57.6% in 4Q20 compared to 55.4% in 3Q20 and 65.0% in 4Q19

Provision for Income Taxes

The provision for income taxes was $0.4 million in 4Q20, versus $4.5 million in 3Q20 and $4.0 million in 4Q19.

  • Pre-tax income declined to $3.9 million in 4Q20 compared to $18.8 million in 3Q20 and $16.9 million in 4Q19
  • The effective tax rates were 10.8% in 4Q20, 23.9% in 3Q20, and 23.4% in 4Q19

Financial Condition Summary:

Loans:

  • Net loans held for investment were $6.7 billion reflecting an increase of 15.8% (3.9% excluding Empire) from December 31, 2019, as we continue to focus on the origination of full banking relationship loans through C&I loans, multi-family loans and commercial real estate
  • SBA Paycheck Protection Program (“PPP”) loans were $151.9 million in 4Q20 compared to $111.6 million in 3Q20, with the increase largely due to Empire
  • Loan closings of commercial business loans, multi-family loans and commercial real estate totaled $290.5 million for 4Q20, or 91.9% of loan production
  • Loan pipeline was $354.6 million at December 31, 2020, compared to $324.5 million a year ago

The following table shows the weighted average rate received from loan closings for the periods indicated:

        
  For the three months ended 
     December 31,     September 30,    December 31,  
Loan type 2020 2020 2019 
Mortgage loans 3.47%  3.56%  3.97%
Non-mortgage loans 3.37%  2.81%  4.68%
Total loans 3.41%  3.16%  4.19%
        
Excluding PPP loans 3.41%  3.45%  4.19%

Credit Quality:

  • Non-performing loans totaled $21.1 million, an increase of $7.8 million ($0.6 million from Empire), or 58.9%, from $13.3 million at December 31, 2019, but down $3.7 million QoQ
  • Non-performing assets totaled $21.1 million, an increase of $7.6 million ($0.6 million from Empire), or 56.0%, from $13.5 million at December 31, 2019, but down $3.7 million QoQ
  • Criticized and classified assets totaled $71.6 million compared to $38.0 million at December 31, 2019; increase in criticized and classified assets was largely due to $14.6 million from Empire and $7.7 million from one CRE relationship
  • Loans classified as troubled debt restructured (TDR) totaled $15.7 million versus $6.5 million at December 31, 2019 primarily driven by one hotel loan
  • Active COVID-19 forbearances at December 31, 2020 totaled 134 loans with a principal balance of $364.4 million at the time of modification, a decrease from the peak of $1.5 billion; total deferment of $23.6 million in principal, interest and escrow; of the total forbearance loans, approximately 40% are making interest payments
  • Over 86% of gross loans are collateralized by real estate
  • The loan-to-value ratio on portfolio of real estate dependent loans as of December 31, 2020 totaled 38.0%
  • Allowance for credit losses were 0.67% of loans in 4Q20 compared to 0.38% a year ago; Empire had a minimal impact on this ratio

Capital Management:

  • Book value per common share was $20.11 at December 31, 2020, compared to $20.59 at December 31, 2019 and tangible book value per common share, a non-GAAP measure, was $19.45 at December 31, 2020, compared to $20.02 at December 31, 2019
  • The Company paid a dividend of $0.21 per share in 4Q20 and did not repurchase any shares in the quarter; up to 284,806 shares remained subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
  • Tangible common equity to tangible assets was 7.52% in 4Q20 compared to 8.05% a year ago
  • The Company and the Bank remain well capitalized under all applicable regulatory requirements
  • The leverage ratio was 8.38% in 4Q20 versus 8.73% in 4Q19

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 Friday, January 29, 2021 at 9:30 AM (ET) to discuss the Company’s strategy and results for the fourth quarter
  • Dial-in for Live Call: 1-877-509-5836
  • Webcast: https://services.choruscall.com/links/ffic210129.html
  • Dial-in for Replay: 1-877-344-7529
  • Replay Access Code: 10150602
  • The conference call will be simultaneously webcast and archived through January 29, 2022

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 http://www.flushingbank.com.

“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, 2019 and in other documents filed by the Company with the Securities and Exchange Commission from time to time, as well as the possibility that the proposed expected benefits of the Empire merger may not materialize in the timeframe expected or at all, or may be more costly to achieve. These proposed risks, as well as other risks associated with the transaction, are more fully discussed in the proxy statement/prospectus that is included in the registration statement on Form S-4 filed with the SEC in connection with the transaction, as amended and supplemented 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.

Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)

                
  For the three months ended For the year ended
     December 31,     September 30,    December 31,     December 31,     December 31, 
  2020 2020 2019 2020 2019
Interest and Dividend Income                    
Interest and fees on loans $66,120  $60,367  $64,316  $248,153  $251,744 
Interest and dividends on securities:                 
Interest  2,813   3,525   5,528   15,776   25,535 
Dividends  8   9   17   43   73 
Other interest income  30   13   318   355   1,604 
Total interest and dividend income  68,971   63,914   70,179   264,327   278,956 
                
Interest Expense                    
Deposits  6,470   7,093   21,517   42,312   88,057 
Other interest expense  6,769   6,897   7,483   26,816   28,959 
Total interest expense  13,239   13,990   29,000   69,128   117,016 
                
Net Interest Income  55,732   49,924   41,179   195,199   161,940 
Provision for credit losses  3,862   2,470   (318)  23,129   2,811 
Net Interest Income After Provision for Credit Losses  51,870   47,454   41,497   172,070   159,129 
                
Non-interest Income                    
Banking services fee income  1,442   1,316   844   4,500   3,723 
Net loss on sale of securities  (610)        (701)  (15)
Net gain on sale of loans  6      489   48   870 
Net gain on sale of assets              770 
Net gain (loss) from fair value adjustments  (4,129)  (2,225)  807   (2,142)  (5,353)
Federal Home Loan Bank of New York stock dividends  734   874   1,026   3,453   3,589 
Life insurance proceeds        419   659   462 
Bank owned life insurance  1,016   923   984   3,814   3,534 
Other income  360   463   469   1,412   1,891 
Total non-interest income (loss)  (1,181)  1,351   5,038   11,043   9,471 
                
Non-interest Expense                    
Salaries and employee benefits  22,089   17,335   17,470   74,228   67,765 
Occupancy and equipment  3,446   3,021   2,950   12,134   11,328 
Professional services  2,463   2,064   2,120   9,374   8,358 
FDIC deposit insurance  562   727   306   2,676   869 
Data processing  3,411   1,668   1,476   8,586   5,878 
Depreciation and amortization  1,579   1,542   1,476   6,212   5,930 
Other real estate owned/foreclosure expense  95   240   59   216   204 
Net loss from sales of real estate owned     5      36    
Prepayment Penalty on Borrowings  7,834         7,834    
Other operating expenses  5,332   3,383   3,790   16,635   14,937 
Total non-interest expense  46,811   29,985   29,647   137,931   115,269 
                
Income Before Income Taxes  3,878   18,820   16,888   45,182   53,331 
                
Provision for Income Taxes                    
Federal  533   3,359   3,058   9,188   10,439 
State and local  (116)  1,130   899   1,320   1,613 
Total taxes  417   4,489   3,957   10,508   12,052 
                
Net Income $3,461  $14,331  $12,931  $34,674  $41,279 
                
                
Basic earnings per common share $0.11  $0.50  $0.45  $1.18  $1.44 
Diluted earnings per common share $0.11  $0.50  $0.45  $1.18  $1.44 
Dividends per common share $0.21  $0.21  $0.21  $0.84  $0.84 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)

          
     December 31,     September 30,    December 31, 
  2020 2020 2019
ASSETS            
Cash and due from banks $157,388  $75,560  $49,787 
Securities held-to-maturity:          
Mortgage-backed securities  7,914   7,919   7,934 
Other securities  49,918   50,252   50,954 
Securities available for sale:         
Mortgage-backed securities  404,460   386,235   523,849 
Other securities  243,514   234,721   248,651 
Loans:         
Multi-family residential  2,533,952   2,252,757   2,238,591 
Commercial real estate  1,754,754   1,636,659   1,582,008 
One-to-four family ― mixed-use property  602,981   585,159   592,471 
One-to-four family ― residential  245,211   191,011   188,216 
Co-operative apartments  8,051   8,132   8,663 
Construction  83,322   63,567   67,754 
Small Business Administration  167,376   124,649   14,445 
Taxi medallion  2,757   2,317   3,309 
Commercial business and other  1,303,225   1,063,429   1,061,478 
Net unamortized premiums and unearned loan fees  3,045   13,718   15,271 
Allowance for loan losses  (45,153)  (38,343)  (21,751)
Net loans  6,659,521   5,903,055   5,750,455 
Interest and dividends receivable  44,041   36,068   25,722 
Bank premises and equipment, net  28,179   25,766   28,676 
Federal Home Loan Bank of New York stock  43,439   57,119   56,921 
Bank owned life insurance  181,710   158,701   157,713 
Goodwill  17,636   16,127   16,127 
Other real estate owned, net        239 
Core deposit intangibles  3,172       
Right of use asset  50,743   42,326   41,254 
Other assets  84,759   69,207   59,494 
Total assets $7,976,394  $7,063,056  $7,017,776 
          
LIABILITIES            
Due to depositors:            
Non-interest bearing $778,672  $607,954  $435,072 
Certificate of deposit accounts  1,138,361   1,051,644   1,437,890 
Savings accounts  168,183   160,294   191,485 
Money market accounts  1,682,345   1,381,552   1,592,011 
NOW accounts  2,323,172   1,704,915   1,365,591 
Total deposits  6,090,733   4,906,359   5,022,049 
Mortgagors' escrow deposits  45,622   57,136   44,375 
Borrowed funds  1,020,895   1,323,975   1,237,231 
Operating lease liability  59,100   49,737   49,367 
Other liabilities  141,047   139,443   85,082 
Total liabilities  7,357,397   6,476,650   6,438,104 
          
STOCKHOLDERS' EQUITY            
Preferred stock (5,000,000 shares authorized; none issued)         
Common stock ($0.01 par value; 100,000,000 shares authorized; 34,087,623 shares issued at December 31, 2020, and 31,530,595 shares issued each at September 30, 2020 and December 31, 2019; 30,775,854 shares, 28,218,427 shares and 28,157,206 shares outstanding at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)  341   315   315 
Additional paid-in capital  261,533   227,877   226,691 
Treasury stock (3,311,769 shares, 3,312,168 shares and 3,373,389 shares at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)  (69,400)  (69,409)  (71,487)
Retained earnings  442,789   445,931   433,960 
Accumulated other comprehensive loss, net of taxes  (16,266)  (18,308)  (9,807)
Total stockholders' equity  618,997   586,406   579,672 
          
Total liabilities and stockholders' equity $7,976,394  $7,063,056  $7,017,776 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)

                 
  At or for the three months ended At or for the year ended 
  December 31,  September 30, December 31,  December 31,  December 31,  
     2020 2020    2019    2020    2019    
Per Share Data                     
Basic earnings per share $0.11 $0.50 $0.45 $1.18 $1.44 
Diluted earnings per share $0.11 $0.50 $0.45 $1.18 $1.44 
Average number of shares outstanding for:                  
Basic earnings per common share computation  30,602,974  28,873,606  28,723,077  29,301,495  28,709,106 
Diluted earnings per common share computation  30,602,974  28,873,606  28,723,077  29,301,495  28,709,109 
Shares outstanding  30,775,854  28,218,427  28,157,206  30,775,854  28,157,206 
Book value per common share (1) $20.11 $20.78 $20.59 $20.11 $20.59 
Tangible book value per common share (2) $19.45 $20.22 $20.02 $19.45 $20.02 
                 
Stockholders' Equity                    
Stockholders' equity $618,997 $586,406 $579,672 $618,997 $579,672 
Tangible stockholders' equity  598,476  570,571  563,837  598,476  563,837 
                 
Average Balances                 
Total loans, net $6,375,516 $5,904,051 $5,726,635 $6,005,947 $5,621,033 
Total interest-earning assets  7,243,472  6,675,896  6,677,325  6,862,798  6,582,473 
Total assets  7,705,407  7,083,028  7,057,094  7,276,022  6,947,881 
Total due to depositors  4,708,760  4,353,560  4,527,645  4,509,206  4,535,292 
Total interest-bearing liabilities  6,169,574  5,731,899  5,912,284  5,941,594  5,856,953 
Stockholders' equity  609,463  576,512  567,461  580,067  561,289 
                 
Performance Ratios (3)                 
Return on average assets  0.18%   0.81%   0.73%   0.48%   0.59%
Return on average equity  2.27  9.94  9.11  5.98  7.35 
Yield on average interest-earning assets (4)  3.82  3.84  4.21  3.86  4.25 
Cost of average interest-bearing liabilities  0.86  0.98  1.96  1.16  2.00 
Cost of funds  0.77  0.89  1.83  1.06  1.87 
Net interest rate spread during period (4)  2.96  2.86  2.25  2.70  2.25 
Net interest margin (4)  3.08  3.00  2.48  2.85  2.47 
Non-interest expense to average assets  2.43  1.69  1.68  1.90  1.66 
Efficiency ratio (5)  57.56  55.37  65.00  58.69  63.89 
Average interest-earning assets to average interest-bearing liabilities  1.17X 1.16X 1.12X 1.16X 1.13X



(1) Calculated by dividing stockholders’ equity by shares outstanding.
(2) 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”.
(3) Ratios are presented on an annualized basis, where appropriate.
(4) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(5) Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding accelerated employee benefits upon officer’s death, merger expense, OREO expense, prepayment penalty on borrowings and the net gain/loss from the sale of OREO) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges) and non-interest income (excluding life insurance proceeds, net gains and losses from the sale of securities and fair value adjustments). Additionally, it excludes purchase accounting adjustments.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)

        
  At or for the year At or for the year 
  ended ended 
  December 31, 2020    December 31, 2019    
        
Selected Financial Ratios and Other Data         
        
Regulatory capital ratios (for Flushing Financial Corporation):         
Tier 1 capital $662,987 $615,500 
Common equity Tier 1 capital  621,247  572,651 
Total risk-based capital  794,034  712,251 
        
Tier 1 leverage capital (well capitalized = 5%)  8.38%   8.73%  
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  9.87  10.95 
Tier 1 risk-based capital (well capitalized = 8.0%)  10.54  11.77 
Total risk-based capital (well capitalized = 10.0%)  12.62  13.62 
        
Regulatory capital ratios (for Flushing Bank only):         
Tier 1 capital $733,010 $680,749 
Common equity Tier 1 capital  733,010  680,749 
Total risk-based capital  773,807  702,500 
        
Tier 1 leverage capital (well capitalized = 5%)  9.27%   9.65%  
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)  11.64  13.02 
Tier 1 risk-based capital (well capitalized = 8.0%)  11.64  13.02 
Total risk-based capital (well capitalized = 10.0%)  12.29  13.43 
        
Capital ratios:         
Average equity to average assets  7.97%   8.08%  
Equity to total assets  7.76  8.26 
Tangible common equity to tangible assets (1)  7.52  8.05 
        
Asset quality:         
Non-accrual loans (2) $18,325 $12,813 
Non-performing loans  21,073  13,258 
Non-performing assets  21,108  13,532 
Net charge-offs  3,639  2,005 
        
Asset quality ratios:         
Non-performing loans to gross loans  0.31%   0.23%  
Non-performing assets to total assets  0.26  0.19 
Allowance for loan losses to gross loans  0.67  0.38 
Allowance for loan losses to non-performing assets  213.91  160.73 
Allowance for loan losses to non-performing loans  214.27  164.05 
        
Full-service customer facilities  25  20 



(1) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(2) Excludes performing non-accrual TDR loans.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)

                          
  For the three months ended 
  December 31, 2020 September 30, 2020 December 31, 2019 
  Average    Yield/ Average    Yield/ Average    Yield/ 
     Balance    Interest    Cost    Balance    Interest    Cost    Balance    Interest    Cost 
                          
    
Interest-earning Assets:                                  
Mortgage loans, net $5,010,097 $53,777 4.29%  $4,721,742 $49,814  4.22 %  $4,628,854 $51,927 4.49%
Other loans, net  1,365,419  12,343 3.62  1,182,309  10,553  3.57   1,097,781  12,389 4.51 
Total loans, net (1) (2)  6,375,516  66,120 4.15  5,904,051  60,367  4.09   5,726,635  64,316 4.49 
Taxable securities:                                  
Mortgage-backed securities  413,875  1,435 1.39  413,902  1,928  1.86   555,023  3,230 2.33 
Other securities  266,663  957 1.44  243,754  1,166  1.91   244,075  1,774 2.91 
Total taxable securities  680,538  2,392 1.41  657,656  3,094  1.88   799,098  5,004 2.50 
Tax-exempt securities: (3)                                  
Other securities  50,768  543 4.28  51,652  557  4.31   63,825  685 4.29 
Total tax-exempt securities  50,768  543 4.28  51,652  557  4.31   63,825  685 4.29 
Interest-earning deposits and federal funds sold  136,650  30 0.09  62,537  13  0.08   87,767  318 1.45 
Total interest-earning assets  7,243,472  69,085 3.82  6,675,896  64,031  3.84   6,677,325  70,323 4.21 
Other assets  461,935         407,132         379,769        
Total assets $7,705,407        $7,083,028        $7,057,094        
                          
                          
Interest-bearing Liabilities:                                  
Deposits:                                  
Savings accounts $163,382  75 0.18 $160,100  65  0.16  $192,818  325 0.67 
NOW accounts  1,924,840  1,320 0.27  1,625,109  1,242  0.31   1,362,151  5,227 1.53 
Money market accounts  1,507,245  2,010 0.53  1,461,996  2,108  0.58   1,456,676  7,165 1.97 
Certificate of deposit accounts  1,113,293  3,065 1.10  1,106,355  3,700  1.34   1,516,000  8,752 2.31 
Total due to depositors  4,708,760  6,470 0.55  4,353,560  7,115  0.65   4,527,645  21,469 1.90 
Mortgagors' escrow accounts  75,005     55,868  (22) (0.16)  74,751  48 0.26 
Total interest-bearing deposits  4,783,765  6,470 0.54  4,409,428  7,093  0.64   4,602,396  21,517 1.87 
Borrowings  1,385,809  6,769 1.95  1,322,471  6,897  2.09   1,309,888  7,483 2.29 
Total interest-bearing liabilities  6,169,574  13,239 0.86  5,731,899  13,990  0.98   5,912,284  29,000 1.96 
Non interest-bearing demand deposits  731,170         589,674         435,241        
Other liabilities  195,200         184,943         142,108        
Total liabilities  7,095,944         6,506,516         6,489,633        
Equity  609,463         576,512         567,461        
Total liabilities and equity $7,705,407        $7,083,028        $7,057,094        
                          
Net interest income / net interest rate spread (tax equivalent) (3)     $55,846 2.96%      $50,041  2.86 %      $41,323 2.25%  
                          
Net interest-earning assets / net interest margin (tax equivalent) $1,073,898     3.08%  $943,997     3.00 %  $765,041     2.48%  
                          
Ratio of interest-earning assets to interest-bearing liabilities         1.17X        1.16 X        1.13X



(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.9 million, $0.8 million and $0.3 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.
(2) Loan interest income includes net gains from fair value adjustments on qualifying hedges of $1.0 million, $0.2 million and $1.0 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.
(3) Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented totaling $0.1 million in each period. Additionally, net interest income includes purchase accounting adjustments from Empire transaction for the three months ended December 31, 2020.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)

                   
  For the year ended 
  December 31, 2020 December 31, 2019 
  Average   Yield/ Average   Yield/ 
     Balance    Interest    Cost    Balance    Interest    Cost 
Interest-earning Assets:                        
Mortgage loans, net $4,798,232 $202,722  4.22%  $4,609,439 $203,440 4.41%
Other loans, net  1,207,715  45,431  3.76  1,011,594  48,304 4.78 
Total loans, net (1) (2)  6,005,947  248,153  4.13  5,621,033  251,744 4.48 
Taxable securities:                       
Mortgage-backed securities  450,065  8,730  1.94  572,223  15,468 2.70 
Other securities  249,533  5,178  2.08  243,324  8,102 3.33 
Total taxable securities  699,598  13,908  1.99  815,547  23,570 2.89 
Tax-exempt securities: (3)                       
Other securities  56,530  2,419  4.28  60,971  2,580 4.23 
Total tax-exempt securities  56,530  2,419  4.28  60,971  2,580 4.23 
Interest-earning deposits and federal funds sold  100,723  355  0.35  84,922  1,604 1.89 
Total interest-earning assets  6,862,798  264,835  3.86  6,582,473  279,498 4.25 
Other assets  413,224        365,408        
Total assets $7,276,022       $6,947,881        
                   
                   
Interest-bearing Liabilities:                       
Deposits:                       
Savings accounts $176,443  495  0.28 $198,374  1,378 0.69 
NOW accounts  1,603,402  9,309  0.58  1,434,440  23,553 1.64 
Money market accounts  1,561,496  14,368  0.92  1,370,038  27,819 2.03 
Certificate of deposit accounts  1,167,865  18,096  1.55  1,532,440  35,078 2.29 
Total due to depositors  4,509,206  42,268  0.94  4,535,292  87,828 1.94 
Mortgagors' escrow accounts  70,829  44  0.06  70,209  229 0.33 
Total interest-bearing deposits  4,580,035  42,312  0.92  4,605,501  88,057 1.91 
Borrowings  1,361,559  26,816  1.97  1,251,452  28,959 2.31 
Total interest-bearing liabilities  5,941,594  69,128  1.16  5,856,953  117,016 2.00 
Non interest-bearing demand deposits  583,235         407,450        
Other liabilities  171,126         122,189        
Total liabilities  6,695,955         6,386,592        
Equity  580,067         561,289        
Total liabilities and equity $7,276,022        $6,947,881        
                   
Net interest income / net interest rate spread
(tax equivalent) (3)
    $195,707  2.70%     $162,482 2.25%
Net interest-earning assets / net interest margin (tax equivalent) $921,204     2.85%  $725,520     2.47%
Ratio of interest-earning assets to interest-bearing liabilities        1.16X       1.12X

(1) Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $2.3 million and $2.0 million for the year ended December 31, 2020 and 2019, respectively.
(2) Loan interest income includes net losses from fair value adjustments on qualifying hedges of $1.2 million and $1.7 million for the year ended December 31, 2020 and 2019, respectively.
(3) Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented totaling $0.5 million for each of the year ended December 31, 2020 and 2019. Additionally, net interest income includes purchase accounting adjustments from Empire transaction for the year ended December 31, 2020.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)

                      
              December 2020 vs.     December 2020 vs. 
  December 31,  September 30, June 30, March 31, September 2020  December 31,  December 2019 
(Dollars in thousands)    2020    2020    2020    2020    % Change        2019    % Change 
Deposits                            
Non-interest bearing $778,672 $607,954 $581,881 $489,198 28.1% $435,072 79.0 %
Interest bearing:                            
Certificate of deposit accounts  1,138,361  1,051,644  1,135,977  1,172,381 8.2  1,437,890 (20.8)%
Savings accounts  168,183  160,294  184,895  192,192 4.9  191,485 (12.2)%
Money market accounts  1,682,345  1,381,552  1,474,880  1,597,109 21.8  1,592,011 5.7 %
NOW accounts  2,323,172  1,704,915  1,672,241  1,377,555 36.3  1,365,591 70.1 %
Total interest-bearing deposits  5,312,061  4,298,405  4,467,993  4,339,237 23.6  4,586,977 15.8 %
                      
Total deposits $6,090,733 $4,906,359 $5,049,874 $4,828,435 24.1%   $5,022,049 21.3 %


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)

Loan Closings

                
  For the three months ended For the year ended
   December 31,  September 30,  December 31,   December 31,  December 31, 
(In thousands)    2020    2020    2019    2020    2019
Multi-family residential $52,024 $33,733 $104,310 $212,729 $247,607
Commercial real estate  57,634  26,644  55,047  191,852  178,336
One-to-four family – mixed-use property  9,692  3,867  18,653  35,131  66,128
One-to-four family – residential  8,422  2,296  5,833  21,805  25,024
Co-operative apartments        704  2,117
Construction  6,869  5,420  3,542  21,859  33,919
Small Business Administration (1)  598  18,456  721  112,352  3,426
Commercial business and other  180,830  65,160  81,630  407,725  605,743
Total $316,069 $155,576 $269,736 $1,004,157 $1,162,300

(1) Includes $18.4 million of PPP closings for the three months ended September 30, 2020. Includes $111.6 million of PPP closings for the year ended December 31, 2020.

Loan Composition

                      
              December 2020 vs.     December 2020 vs. 
  December 31,  September 30, June 30, March 31, September 2020   December 31,  December 2019 
(Dollars in thousands)    2020    2020    2020    2020    % Change        2019    % Change 
Loans held for investment:                            
Multi-family residential $2,533,952  $2,252,757  $2,285,555  $2,272,343  12.5 %   $2,238,591  13.2 %
Commercial real estate  1,754,754   1,636,659   1,646,085   1,664,934  7.2 %    1,582,008  10.9 %
One-to-four family ― mixed-use property  602,981   585,159   591,347   592,109  3.0 %    592,471  1.8 %
One-to-four family ― residential  245,211   191,011   184,741   189,774  28.4 %    188,216  30.3 %
Co-operative apartments  8,051   8,132   8,423   8,493  (1.0)%    8,663  (7.1)%
Construction  83,322   63,567   69,433   66,727  31.1 %    67,754  23.0 %
Small Business Administration (1)  167,376   124,649   106,813   14,076  34.3 %    14,445  1,058.7 %
Taxi medallion  2,757   2,317   3,269   3,281  19.0 %    3,309  (16.7)%
Commercial business and other  1,303,225   1,063,429   1,073,623   1,104,967  22.5 %    1,061,478  22.8 %
Net unamortized premiums and unearned loan fees (2)  3,045   13,718   13,986   15,384  (77.8)%    15,271  (80.1)%
Allowance for loan losses  (45,153)  (38,343)  (36,710)  (28,098) 17.8 %    (21,751) 107.6 %
Net loans $6,659,521  $5,903,055  $5,946,565  $5,903,990  12.8 %   $5,750,455  15.8 %

(1) Includes $151.9 million, $111.6 million and $93.2 million of PPP loans at December 31, 2020 September 30, 2020 and June 30, 2020, respectively.
(2) Includes $11.3 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp.

Net Loans Activity

                
  Three Months Ended
  December 31,  September 30, June 30, March 31, December 31, 
(In thousands)     2020    2020    2020    2020    2019
Loans originated and purchased $316,069  $155,576  $233,797  $298,715  $269,736 
Loans Acquired from Empire Merger  685,404             
Principal reductions  (226,772)  (196,221)  (180,182)  (137,189)  (255,977)
Loans sold           (498)  (7,129)
Loan charge-offs  (752)  (964)  (1,030)  (1,259)  (95)
Foreclosures               
Net change in deferred fees and costs  (10,673)  (268)  (1,398)  113   (92)
Net change in the allowance for loan losses  (6,810)  (1,633)  (8,612)  (6,347)  284 
Total loan activity $756,466  $(43,510) $42,575  $153,535  $6,727 


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)

Non-Performing Assets

                 
     December 31,     September 30,    June 30,    March 31,    December 31,  
(Dollars in thousands)    2020    2020    2020    2020    2019 
Loans 90 Days Or More Past Due and Still Accruing:                     
Multi-family residential $201 $ $ $ $445 
Commercial real estate  2,547         
Commercial business and other      150     
Total  2,748    150    445 
                      
Non-accrual Loans:                     
Multi-family residential  2,524  2,661  3,688  2,741  2,296 
Commercial real estate  1,683  2,657  2,671  8  367 
One-to-four family - mixed-use property (1)  1,366  1,366  2,511  607  274 
One-to-four family - residential  5,854  6,454  6,412  5,158  5,139 
Small Business Administration  1,151  1,151  1,321  1,518  1,151 
Taxi medallion(1)  2,317  2,218  1,757  1,761  1,641 
Commercial business and other(1)  3,430  8,285  1,678  4,959  1,945 
Total  18,325  24,792  20,038  16,752  12,813 
                      
Total Non-performing Loans  21,073  24,792  20,188  16,752  13,258 
                      
Other Non-performing Assets:                     
Real estate acquired through foreclosure      208  208  239 
Other asset acquired through foreclosure  35  35  35  35  35 
Total  35  35  243  243  274 
                      
Total Non-performing Assets $21,108 $24,827 $20,431 $16,995 $13,532 
                      
Non-performing Assets to Total Assets  0.26%   0.35%   0.29%   0.23%   0.19%  
Allowance For Loan Losses to Non-performing Loans  214.3%   154.7%   181.8%   167.7%   164.1%  



(1) Not included in the above analysis are non-accrual performing TDR one-to-four family mixed use property loans totaling $0.3 million in 4Q20 and 3Q20; non-accrual performing TDR taxi medallion loans totaling $0.4 million in 4Q20, $0.1 million in 3Q20, $1.5 million in 2Q20, $1.5 million in 1Q20, and $1.7 million in 4Q19, and non-accrual performing TDR commercial business loans totaling $2.2 million in 4Q20 and $1.0 million in 3Q20, 2Q20, 1Q20, respectively, and $0.9 million in 4Q19.

Net Charge-Offs (Recoveries)

                
  Three Months Ended
     December 31,     September 30,    June 30,    March 31,    December 31, 
(In thousands)    2020 2020 2020 2020 2019
Multi-family residential    $(11)    $(14)    $(7)    $(6)    $(14)
Commercial real estate                             (30)
One-to-four family – mixed-use property           (60)     3      (78)     119 
One-to-four family – residential     (2)     (2)     (3)     (5)     (3)
Small Business Administration     (3)     (47)     165      (7)     (8)
Taxi medallion     124      951                   
Commercial business and other     538      9      849      1,245      (98)
Total net loan charge-offs (recoveries)    $646  $837  $1,007  $1,149  $(34)


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FORBEARANCES DETAIL
(Dollars in thousands)
(Unaudited)

                
   Forbearances (1)  Backed by Mortgages (1)   
         Balance    % of Sector        Balance    % of Forbearances    LTV    
Higher Risk Segments               
Restaurants and Catering Halls  $20,300 23.8%   $18,850 92.9%  33.6%  
Hotels   119,794 62.8   119,794 100.0 56.7 
Travel and Leisure   38,104 20.9   33,918 89.0 36.4 
Retail Services (2)   12,046 8.4   3,169 26.3 36.9 
CRE - Shopping Center   7,508 3.0   7,508 100.0 60.5 
CRE - Single Tenant   8,010 5.8   8,010 100.0 37.7 
CRE - Strip Mall   28,390 9.8   28,390 100.0 56.8 
Transportation (2)   8,736 6.0      
Contractors (2)   5,198 1.5   3,353 64.5 54.2 
Schools and Child Care   13,260 20.3   7,760 58.5 41.9 
Subtotal  $261,346 14.2%   $230,752 88.3%  48.3%  
                
Lower Risk Segments  $103,072 2.1%   $99,339 96.4%  37.6%  
                
Total  $364,418 5.4%   $330,091 90.6%  44.5%  
                



   (1)   Represents dollar amount granted at modification
   (2)   Loans not backed by mortgages are collateralized by equipment


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 primarily due to 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 Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income, Core Yield on Total Loans, Core Net Interest Margin 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
(Dollars in thousands, except per share data)
(Unaudited)

                 
  Three Months Ended    Year Ended 
     December 31,     September 30,    December 31,     December 31,     December 31,  
  2020 2020 2019 2020 2019 
                 
GAAP income before income taxes $3,878  $18,820  $16,888  $45,182  $53,331  
                 
Day 1, Provision for Credit Losses - Empire transaction  1,818         1,818     
Net (gain) loss from fair value adjustments  4,129   2,225   (807)  2,142   5,353  
Net loss on sale of securities  610         701   15  
Life insurance proceeds        (419)  (659)  (462) 
Net gain on sale of assets              (770) 
Net (gain) loss from fair value adjustments on qualifying hedges  (1,023)  (230)  (1,039)  1,185   1,678  
Accelerated employee benefits upon Officer's death              455  
Prepayment Penalty on Borrowings  7,834         7,834     
Net amortization of purchase accounting adjustments  80         80     
Merger expense  5,349   422   1,080   6,894   1,590  
                 
Core income before taxes  22,675   21,237   15,703   65,177   61,190  
                 
Provision for income taxes for core income  4,891   5,069   3,841   15,428   13,957  
                 
Core net income $17,784  $16,168  $11,862  $49,749  $47,233  
                 
GAAP diluted earnings per common share $0.11  $0.50  $0.45  $1.18  $1.44  
                 
Day 1, Provision for Credit Losses - Empire transaction, net of tax  0.05         0.05     
Net (gain) loss from fair value adjustments, net of tax  0.11   0.06   (0.02)  0.06   0.14  
Net loss on sale of securities, net of tax  0.02         0.02     
Life insurance proceeds        (0.01)  (0.02)  (0.02) 
Net gain on sale of assets, net of tax              (0.02) 
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax  (0.03)  (0.01)  (0.03)  0.03   0.05  
Accelerated employee benefits upon Officer's death, net of tax              0.01  
Prepayment Penalty on Borrowings, net of tax  0.20         0.20     
Net amortization of purchase accounting adjustments, net of tax                
Merger expense, net of tax  0.14   0.01   0.03   0.18   0.04  
                 
Core diluted earnings per common share(1) $0.58  $0.56  $0.41  $1.70  $1.65  
                 
                 
Core net income, as calculated above $17,784  $16,168  $11,862  $49,749  $47,233  
Average assets  7,705,407   7,083,028   7,057,094   7,276,022   6,947,881  
Average equity  609,463   576,512   567,461   580,067   561,289  
Core return on average assets(2)  0.92 %   0.91 %   0.67 %   0.68 %   0.68 %
Core return on average equity(2)  11.67 %   11.22 %   8.36 %   8.58 %   8.42 %



(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
(Dollars in thousands)
(Unaudited)

                 
  Three Months Ended    Year Ended 
     December 31,     September 30,    December 31,     December 31,     December 31,  
  2020 2020 2019 2020 2019 
                 
Net interest income $55,732  $49,924  $41,179  $195,199  $161,940  
                 
Non-interest income  (1,181)  1,351   5,038   11,043   9,471  
Non-interest expense  (46,811)  (29,985)  (29,647)  (137,931)  (115,269) 
                 
                 
Pre-provision pre-tax net revenue (1) $7,740  $21,290  $16,570  $68,311  $56,142  
                 

(1) Includes non-cash net gains (losses) from fair value adjustments totaling ($3.1) million, ($2.0) million and $1.8 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively and ($3.3) million and ($7.0) million for the year ended December 31, 2020 and 2019, respectively.


FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
To CORE NET INTEREST INCOME and NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)

                 
  Three Months Ended Year Ended 
     December 31,     September 30,    December 31,     December 31,     December 31,  
  2020 2020 2019 2020 2019 
GAAP net interest income $55,732  $49,924  $41,179  $195,199  $161,940  
Net (gain) loss from fair value adjustments on qualifying hedges  (1,023)  (230)  (1,039)  1,185   1,678  
Net amortization of purchase accounting adjustments  (11)        (11)    
Core net interest income $54,698  $49,694  $40,140  $196,373  $163,618  
                 
                 
GAAP interest income on total loans, net $66,120  $60,367  $64,316  $248,153  $251,744  
Net (gain) loss from fair value adjustments on qualifying hedges  (1,023)  (230)  (1,039)  1,185   1,678  
Prepayment penalties received on loans  (857)  (1,357)  (926)  (3,669)  (4,548) 
Net recoveries of interest from non-accrual loans  (236)  (86)  (428)  (832)  (1,953) 
Net amortization of purchase accounting adjustments  (356)        (356)    
Core interest income on total loans, net $63,648  $58,694  $61,923  $244,481  $246,921  
Average total loans, net (1) $6,379,429  $5,904,051  $5,726,635  $6,007,857  $5,621,033  
Core yield on total loans  3.99 %   3.98 %   4.33 %   4.07 %   4.39 %
                 
                 
Net interest income tax equivalent $55,846  $50,041  $41,323  $195,707  $162,482  
Net (gain) loss from fair value adjustments on qualifying hedges  (1,023)  (230)  (1,039)  1,185   1,678  
Prepayment penalties received on loans and securities  (857)  (1,432)  (926)  (3,744)  (4,548) 
Net recoveries of interest from non-accrual loans  (236)  (86)  (428)  (832)  (1,953) 
Net amortization of purchase accounting adjustments  (11)        (11)    
Net interest income used in calculation of Core net interest margin $53,719  $48,293  $38,930  $192,305  $157,659  
Total average interest-earning assets (1) $7,245,147  $6,675,896  $6,677,325  $6,864,145  $6,582,473  
Core net interest margin  2.97 %   2.89 %   2.33 %   2.80 %   2.40 %
                 
                 



(1) Excludes purchase accounting average balances for three months and year ended December 31, 2020.


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

           
     December 31,     September 30,     December 31,  
(Dollars in thousands) 2020 2020 2019 
Total Equity $618,997  $586,406  $579,672  
Less:             
Goodwill  (17,636)  (16,127)  (16,127) 
Core deposit Intangibles  (3,172)       
Intangible deferred tax liabilities  287   292   292  
Tangible Stockholders' Common Equity $598,476  $570,571  $563,837  
           
Total Assets $7,976,394  $7,063,056  $7,017,776  
Less:             
Goodwill  (17,636)  (16,127)  (16,127) 
Core deposit Intangibles  (3,172)       
Intangible deferred tax liabilities  287   292   292  
Tangible Assets $7,955,873  $7,047,221  $7,001,941  
           
Tangible Stockholders' Common Equity to Tangible Assets  7.52 %   8.10 %   8.05 %

__________________________________

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

Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400


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