Record Loan Closings; Loan Growth with Stable NIM QoQ
John R. Buran, President and CEO Commentary
UNIONDALE, N.Y., July 26, 2022 (GLOBE NEWSWIRE) -- The Company reported second quarter 2022 GAAP EPS of $0.81, up 32.8% YoY, with a ROAA of 1.22%, and ROAE of 15.0%. Core 2Q22 EPS was $0.70, a decrease of 4.1% YoY, with a ROAA of 1.05% and the ROAE of 12.90%.
| “Record loan closings of $504 million drove a 3.4% YoY increase in net loans, excluding PPP. Core loan yields increased 11 bps QoQ compared to only 7 bps for core deposit costs. 2Q22 was the first quarter since 2020 where yields on loan closings exceeded yields on satisfactions excluding PPP. Despite our liability sensitive balance sheet, the NIM was stable QoQ, however, the pace and magnitude of rate increases this cycle are stronger than anticipated and will likely pressure the NIM going forward. A partial offset to this pressure is $986 million of loans that reprice within the quarter and an additional $1.3 billion of loans that are scheduled to reprice or mature through the end of 2023. The Bank continues to grow noninterest bearing deposits, which are now over 16% of average deposits, up from 14.2% a year ago. We opened our 25th branch this quarter in Elmhurst further expanding our footprint in the Asian community. Given the low risk nature of our loan portfolio (>87% real estate based, average LTVs of <38%, and strong debt coverage ratios), the Company is well positioned to handle any potential economic downturn affecting credit markets.” |
| - John R. Buran, President and CEO |
NIM Stable QoQ; Loan Pipeline Remains Strong. Record net interest income of $64.7 million increased 6.0% YoY and 2.0% QoQ. NIM FTE was 3.35% in 2Q22 compared to 3.36% in 1Q22 and 3.14% a year ago. Core NIM FTE increased by 19 bps to 3.33% YoY and 2 bps QoQ. Period end net loans, excluding PPP, increased 2.6% QoQ, with commercial business and other loans growing 3.2%. Record loan closings, excluding PPP, were up 63% YoY and repayment speeds remained elevated. The Company continued to benefit from the merger disruption in our markets as we have hired 42 people, including 18 revenue producers since March 31, 2021 from institutions involved with mergers.
Returned 61% of Earnings in 2Q22; Tangible Book Value Per Share Increased 6% YoY. The Company repurchased 387,689 shares of common stock at an average price of $22.01 during the quarter. Book value and tangible book value per share were $22.38 and $21.71, respectively, while TCE/TA1 was 7.82% at June 30, 2022 compared to 8.05% at March 31, 2022.
| Key Financial Metrics2 |
| 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | ||||||||||||||
| GAAP: | ||||||||||||||||||
| EPS | $ | 0.81 | $ | 0.58 | $ | 0.58 | $ | 0.81 | $ | 0.61 | ||||||||
| ROAA (%) | 1.22 | 0.91 | 0.89 | 1.26 | 0.93 | |||||||||||||
| ROAE (%) | 15.00 | 10.83 | 10.77 | 15.42 | 11.95 | |||||||||||||
| NIM FTE3 (%) | 3.35 | 3.36 | 3.29 | 3.34 | 3.14 | |||||||||||||
| Core: | ||||||||||||||||||
| EPS | $ | 0.70 | $ | 0.61 | $ | 0.67 | $ | 0.88 | $ | 0.73 | ||||||||
| ROAA (%) | 1.05 | 0.94 | 1.04 | 1.38 | 1.11 | |||||||||||||
| ROAE (%) | 12.90 | 11.27 | 12.49 | 16.88 | 14.27 | |||||||||||||
| Core NIM FTE (%) | 3.33 | 3.31 | 3.21 | 3.27 | 3.14 | |||||||||||||
| Efficiency Ratio (%) | 52.3 | 58.9 | 58.7 | 52.3 | 53.4 | |||||||||||||
| Credit Quality: | ||||||||||||||||||
| NPAs/Loans&REO (%) | 0.72 | 0.21 | 0.23 | 0.31 | 0.26 | |||||||||||||
| ACLs/Loans (%) | 0.58 | 0.57 | 0.56 | 0.55 | 0.64 | |||||||||||||
| ACLs/NPLs (%) | 141.06 | 266.12 | 248.66 | 179.86 | 242.55 | |||||||||||||
| NCOs/Avg Loans (%) | (0.03 | ) | 0.06 | - | (0.04 | ) | 0.05 | |||||||||||
| Balance Sheet: | ||||||||||||||||||
| Avg Loans ($B) | $ | 6.6 | $ | 6.6 | $ | 6.6 | $ | 6.6 | $ | 6.7 | ||||||||
| Avg Dep ($B) | $ | 6.4 | $ | 6.4 | $ | 6.5 | $ | 6.4 | $ | 6.5 | ||||||||
| Book Value/Share | $ | 22.38 | $ | 22.26 | $ | 22.26 | $ | 21.78 | $ | 21.16 | ||||||||
| Tangible BV/Share | $ | 21.71 | $ | 21.61 | $ | 21.61 | $ | 21.13 | $ | 20.51 | ||||||||
| TCE/TA (%) | 7.82 | 8.05 | 8.22 | 8.04 | 7.80 | |||||||||||||
1 Tangible Common Equity (“TCE”)/Total Assets (“TA”) 2 See “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Margin to Core and Base Net Interest Income and Net Interest Margin.” 3 Net Interest Margin (“NIM”) Fully Taxable Equivalent (“FTE”)
| 2Q22 Highlights |
- Net interest income increased 2.0% QoQ (as average earning assets increased 2.2% QoQ), and 6.0% YoY to a record $64.7 million; Core net interest income grew 3.0% QoQ and 5.4% YoY to a record $64.4 million
- Net interest margin FTE decreased 1 bps QoQ but increased 21 bps YoY to 3.35%; Core net interest margin FTE increased 2 bps QoQ and 19 bps YoY to 3.33%; Core NIM expansion QoQ was primarily driven by loan yields increasing greater than deposit costs
- Excluding PPP, period end net loans increased 2.6% QoQ and 3.4% YoY; loan closings were a record $503.8 million in 2Q22, up 53.0% QoQ and 63.0% YoY
- Average deposits, including mortgage escrow, increased 0.5% QoQ, but decreased 1.1% YoY to $6.4 billion, with core deposits comprising 87.3% of total average deposits; record average noninterest bearing deposits were up 13.1% YoY
- Loan pipeline increased 34.7% YoY to $582.6 million
- Provision for credit losses was $1.6 million in 2Q22 compared to a benefit for credit losses of $1.6 million in 2Q21; net recoveries were $0.5 million in 2Q22 compared to net charge-offs of $0.9 million in 2Q21
- NPAs increased to $48.9 million, up from $14.1 million at 1Q22 and $17.6 million at 2Q21. The increase in NPAs primarily relates to a previously identified $24.1 million criticized investment security and related loan (combined LTV of 63%) and two commercial relationships (one was resolved after quarter end)
- Tangible Common Equity to Tangible Assets was 7.82% down from 8.05% at 1Q22; the change in AOCI (primarily from rising rates) impacted this ratio by an additional 19 bps in 2Q22 compared to 1Q22
- Repurchased 387,689 shares at an average price of $22.01; dividends and share repurchases were 61% of net income in 2Q22
| Income Statement Highlights |
| YoY | QoQ | |||||||||||||||||||||||||||
| ($000s, except EPS) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | Change | Change | |||||||||||||||||||||
| Net Interest Income | $ | 64,730 | $ | 63,479 | $ | 62,674 | $ | 63,364 | $ | 61,039 | 6.0 | % | 2.0 | % | ||||||||||||||
| Provision (Benefit) for Credit Losses | 1,590 | 1,358 | 761 | (6,927 | ) | (1,598 | ) | (199.5 | ) | 17.1 | ||||||||||||||||||
| Noninterest Income (Loss) | 7,353 | 1,313 | (280 | ) | 866 | (3,210 | ) | (329.1 | ) | 460.0 | ||||||||||||||||||
| Noninterest Expense | 35,522 | 38,794 | 38,807 | 36,345 | 34,011 | 4.4 | (8.4 | ) | ||||||||||||||||||||
| Income Before Income Taxes | 34,971 | 24,640 | 22,826 | 34,812 | 25,416 | 37.6 | 41.9 | |||||||||||||||||||||
| Provision for Income Taxes | 9,936 | 6,421 | 4,743 | 9,399 | 6,158 | 61.4 | 54.7 | |||||||||||||||||||||
| Net Income | $ | 25,035 | $ | 18,219 | $ | 18,083 | $ | 25,413 | $ | 19,258 | 30.0 | 37.4 | ||||||||||||||||
| Diluted EPS | $ | 0.81 | $ | 0.58 | $ | 0.58 | $ | 0.81 | $ | 0.61 | 32.8 | 39.7 | ||||||||||||||||
| Avg. Diluted Shares (000s) | 30,937 | 31,254 | 31,353 | 31,567 | 31,677 | (2.3 | ) | (1.0 | ) | |||||||||||||||||||
| Core Net Income1 | $ | 21,518 | $ | 18,969 | $ | 20,968 | $ | 27,829 | $ | 22,994 | (6.4 | ) | 13.4 | |||||||||||||||
| Core EPS1 | $ | 0.70 | $ | 0.61 | $ | 0.67 | $ | 0.88 | $ | 0.73 | (4.1 | ) | 14.8 | |||||||||||||||
1 See Reconciliation of GAAP Earnings and Core Earnings
Net interest income totaled $64.7 million in 2Q22 (an increase of 6.0% YoY, and 2.0% QoQ), compared to $63.5 million in 1Q22, $62.7 million in 4Q21, $63.4 million in 3Q21, and $61.0 million in 2Q21.
- Net interest margin, FTE (“NIM”) of 3.35% increased 21 bps YoY, but decreased 1 bp QoQ; PPP loans caused a 2 bps, 3 bps, 3 bps, and 2 bps positive impact on the NIM in 2Q22, 1Q22, 4Q21, and 3Q21, respectively, and were neutral in 2Q21
- Prepayment penalty income from loans and securities, net reversals and recoveries of interest from nonaccrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $2.6 million (13 bps to the NIM) in 2Q22 compared to $2.6 million (14 bps) in 1Q22, $3.1 million (16 bps) in 4Q21, $3.4 million (19 bps) in 3Q21, and $1.9 million (10 bps) in 2Q21
- Excluding the items in the previous bullet, net interest margin was 3.22% in 2Q22 and in 1Q22, 3.13% in 4Q21, 3.15% in 3Q21, and 3.04% in 2Q21, or an increase of 17 bps YoY and stable QoQ
- Net PPP loan fees were $0.5 million in 2Q22, $0.9 million in 1Q22, $1.2 million in 4Q21, $1.3 million in 3Q21, and $1.2 million in 2Q21
The Company recorded a provision for credit losses of $1.6 million in 2Q22, $1.4 million in 1Q22, and $0.8 million in 4Q21 compared to a benefit for credit losses of $6.9 million in 3Q21 and $1.6 million in 2Q21.
- 2Q22 provision for credit losses of $1.6 million was primarily due to loan growth
- Net charge-offs (recoveries) were $(0.5) million in 2Q22 ((3) bps of average loans), $0.9 million in 1Q22 (6 bps of average loans), $(29) thousand in 4Q21 (negligible as compared to average loans), $(0.6) million in 3Q21 ((4) bps of average loans), and $0.9 million in 2Q21 (5 bps of average loans)
Noninterest income (loss) was $7.4 million in 2Q22, $1.3 million in 1Q22, $(0.3) million in 4Q21, $0.9 million in 3Q21, and $(3.2) million in 2Q21.
- Noninterest income included net gains (losses) from fair value adjustments of $2.5 million in 2Q22 or $0.06 per share, net of tax, $(1.8) million in 1Q22 or $(0.04) per share, net of tax, $(5.1) million in 4Q21 or $(0.13) per share, net of tax, $(2.3) million in 3Q21 or $(0.05) per share, net of tax, and $(6.5) million or $(0.15) per share, net of tax in 2Q21
- Life insurance proceeds were $1.5 million ($0.05 per share) in 2Q22
- Absent all above items and other immaterial adjustments, core noninterest income was $3.3 million in 2Q22, up 2.1% YoY, and 5.2% QoQ
- After a pilot program, the Company made the decision to suspend its agreement with NYDIG to offer bitcoin services; all pilot program customers have been notified and all accounts have been closed; the financial impact was immaterial
- Included in 4Q21 core noninterest income was a one-time $2.0 million ($0.05 per share, net of tax) dividend received on retirement plan investments
Noninterest expense totaled $35.5 million in 2Q22 (an increase of 4.4% YoY, but a decrease of 8.4% QoQ) compared to $38.8 million in 1Q22, $38.8 million in 4Q21, $36.3 million in 3Q21, and $34.0 million in 2Q21.
- Included in 1Q22 noninterest expense was $4.3 million of seasonal compensation expense; 4Q21 noninterest expense included a one-time $4.3 million ($0.11 per share, net of tax) of increased compensation and benefits for all employees due to a record year of earnings in 2021 and employee performance through the pandemic
- Noninterest expense included $17 thousand pre-tax merger benefit (<$0.01 per share, net of tax) in 4Q21, $2.1 million of pre-tax merger charges ($0.05 per share, net of tax) in 3Q21, and $0.5 million of pre-tax merger benefits ($(0.01) per share, net of tax) in 2Q21
- Excluding the effects of the merger and other immaterial adjustments, core operating expenses were $35.4 million in 2Q22, up 3.0% YoY, but down 8.5% QoQ
- The efficiency ratio was 52.3% in 2Q22, 58.9% in 1Q22, 58.7% in 4Q21, 52.3% in 3Q21, and 53.4% in 2Q21
The provision for income taxes was $9.9 million in 2Q22 compared to $6.4 million in 1Q22, $4.7 million in 4Q21, $9.4 million in 3Q21, and $6.2 million in 2Q21.
- The effective tax rate was 28.4% in 2Q22, 26.1% in 1Q22, 20.8% in 4Q21, 27.0% in 3Q21, and 24.2% in 2Q21
- The 2Q22 effective tax rate includes a loss of a certain state and city tax deductions and a resolution of certain examinations
- The 4Q21 effective tax rate declined due to lower levels of taxable state income and higher percentage of permanent differences
- The 2Q21 effective tax rate includes $0.8 million benefit from a state tax rate change; absent this benefit the effective tax rate would have been 27.2%
| Balance Sheet, Credit Quality, and Capital Highlights |
| YoY | QoQ | |||||||||||||||||||||||
| 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | Change | Change | ||||||||||||||||||
| Average Loans And Deposits ($MM) | ||||||||||||||||||||||||
| Loans | $ | 6,640 | $ | 6,579 | $ | 6,558 | $ | 6,633 | $ | 6,687 | (0.7 | ) | % | 0.9 | % | |||||||||
| Deposits | 6,441 | 6,410 | 6,459 | 6,408 | 6,511 | (1.1 | ) | 0.5 | ||||||||||||||||
| Credit Quality ($000s) | ||||||||||||||||||||||||
| Nonperforming Loans | $ | 27,948 | $ | 14,066 | $ | 14,934 | $ | 20,217 | $ | 17,592 | 58.9 | % | 98.7 | % | ||||||||||
| Nonperforming Assets | 48,929 | 14,066 | 14,934 | 20,217 | 17,592 | 178.1 | 247.9 | |||||||||||||||||
| Criticized and Classified Loans | 57,145 | 59,548 | 57,650 | 68,913 | 69,161 | (17.4 | ) | (4.0 | ) | |||||||||||||||
| Criticized and Classified Assets | 78,125 | 80,527 | 78,628 | 89,889 | 90,135 | (13.3 | ) | (3.0 | ) | |||||||||||||||
| Allowance for Credit Losses/Loans (%) | 0.58 | 0.57 | 0.56 | 0.55 | 0.64 | (6 | ) | bps | 1 | bp | ||||||||||||||
| Capital | ||||||||||||||||||||||||
| Book Value/Share | $ | 22.38 | $ | 22.26 | $ | 22.26 | $ | 21.78 | $ | 21.16 | 5.8 | % | 0.5 | % | ||||||||||
| Tangible Book Value/Share | 21.71 | 21.61 | 21.61 | 21.13 | 20.51 | 5.9 | 0.5 | |||||||||||||||||
| Tang. Common Equity/Tang. Assets (%) | 7.82 | 8.05 | 8.22 | 8.04 | 7.80 | 2 | bps | (23 | ) | bps | ||||||||||||||
| Leverage Ratio (%) | 8.91 | 9.05 | 8.98 | 8.83 | 8.50 | 41 | (14 | ) | ||||||||||||||||
Average loans were $6.6 billion, a decrease of 0.7% YoY, but up 0.9% QoQ.
- Period end net loans, excluding PPP loans, totaled $6.7 billion, up 3.4% YoY and 2.6% QoQ
- Total loan closings were a record $503.8 million in 2Q22, $329.3 million in 1Q22, $362.7 million in 4Q21, $243.9 million in 3Q21, and $324.4 million ($309.0 million excluding PPP) in 2Q21
- The loan pipeline was $582.6 million at June 30, 2022, up 34.7% YoY, but down 12.2% from record levels QoQ
- PPP loans held at the end of each quarter totaled $22.2 million at 2Q22, $43.2 million at 1Q22, $77.4 million at 4Q21, $130.8 million at 3Q21, and $197.3 million at 2Q21; forgiven PPP loans were $21.0 million in 2Q22, $34.1 million in 1Q22, $53.4 million in 4Q21, $66.5 million in 3Q21, and $69.2 million in 2Q21
Average Deposits totaled $6.4 billion, decreasing 1.1% YoY, but up 0.5% QoQ.
- Average core deposits (non-CD deposits) increased to 87.3% of total average deposits (including escrow deposits) in 2Q22, compared to 84.0% a year ago
- Average noninterest bearing deposits increased 13.1% YoY and 4.3% QoQ and comprised 16.2% of total average deposits (including escrow deposits) in 2Q22 compared to 14.2% a year ago
Credit Quality: Nonperforming loans held at the end of each quarter totaled $27.9 million at 2Q22, $14.1 million at 1Q22, $14.9 million at 4Q21, $20.2 million at 3Q21, and $17.6 million at 2Q21.
- The $13.8 million QoQ increase in NPLs was primarily driven by three previously identified as criticized and classified commercial business credits (one resolved subsequent to quarter end)
- Nonperforming assets totaled $48.9 million, up from $14.1 million at 1Q22 and $17.6 million at 2Q21; the increase in nonperforming assets primarily relates to a previously disclosed criticized investment security and loan totaling $24.1 million that has a combined LTV of 63%
- Criticized and classified loans totaled $57.1 million at 2Q22 (85 bps of loans), $59.5 million at 1Q22 (90 bps of loans), $57.7 million at 4Q21 (87 bps of loans), $68.9 million at 3Q21 (104 bps of loans), and $69.2 million at 2Q21 (103 bps of loans)
- Criticized and classified assets are composed of criticized and classified loans, as detailed above, plus one criticized investment security totaling $21.0 million in each quarter of 2Q22, 1Q22, 4Q21, and 3Q21
- Loans classified as troubled debt restructured (TDR) totaled $14.8 million at 2Q22 compared to $15.1 million at 1Q22 and $15.5 million a year ago
- Over 87% of gross loans are collateralized by real estate with an average loan-to-value ratio of <38% as of June 30, 2022
- Allowance for credit losses were 0.58% of loans at 2Q22 compared to 0.57% at 1Q22 and 0.64% a year ago
- Allowance for credit losses were 141.1% of nonperforming loans at 2Q22 compared to 266.1% at 1Q22 and 242.6% a year ago
Capital: Book value per common share was $22.38 at 2Q22, up 0.5% QoQ and 5.8% YoY; tangible book value per common share, a non-GAAP measure, was $21.71 at 2Q22, up 0.5% QoQ and 5.9% YoY.
- The Company paid a dividend of $0.22 per share and repurchased 387,689 shares at an average price of $22.01 in 2Q22
- During the quarter, the Board of Directors authorized an increase of 1 million shares to the current share repurchase program; as of the end of 2Q22, 1,100,498 shares remain subject to repurchase under the authorized stock repurchase programs, which has no expiration or maximum dollar limit
- Tangible common equity to tangible assets was 7.82% at 2Q22 compared to 8.05% at 1Q22 and 7.80% at 2Q21
- The Company and the Bank remain well capitalized under all applicable regulatory requirements
- The leverage ratio was 8.91% at 2Q22 compared to 9.05% at 1Q22 and 8.50% at 2Q21
| Conference Call Information And Third Quarter Earnings Release Date |
Conference Call Information:
- John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer, will host a conference call on Wednesday, July 27, 2022, at 9:30 AM (ET) to discuss the Company’s second quarter 2022 results and strategy.
- Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
- Webcast: https://services.choruscall.com/links/ffic220727.html
- Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
- Replay Access Code: 3593053
- The conference call will be simultaneously webcast and archived
Third Quarter 2022 Earnings Release Date:
The Company plans to release Third Quarter 2022 financial results after the market close on October 25, 2022; followed by a conference call at 9:30 AM (ET) on October 26, 2022.
A detailed announcement will be issued prior to the third quarter’s close confirming the date and time of the earnings release.
About Flushing Financial Corporation
Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, an FDIC insured, New York State—chartered commercial bank that operates banking offices in Queens, Brooklyn, Manhattan, and on Long Island. The Bank has been building relationships with families, business owners, and communities since 1929. Today, it offers the products, services, and conveniences associated with large commercial banks, including a full complement of deposit, loan, equipment finance, and cash management services. Rewarding customers with personalized attention and bankers that can communicate in the languages prevalent within these multicultural markets is what makes the Bank uniquely different. As an Equal Housing Lender and leader in real estate lending, the Bank’s experienced lending teams create mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. The Bank also fosters relationships with consumers nationwide through its online banking division with the iGObanking® and BankPurely® brands.
Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at FlushingBank.com. Flushing Financial Corporation’s earnings release and presentation slides will be available prior to the conference call at FlushingBank.com under Investor Relations.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “goals”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.
Investor Contact: Susan K. Cullen, SEVP, CFO and Treasurer, 718-961-5400
#FF
- Statistical Tables Follow -
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
| At or for the three months ended | At or for the six months ended | ||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||
| Performance Ratios (1) | |||||||||||||||||||||||||||||||
| Return on average assets | 1.22 | % | 0.91 | % | 0.89 | % | 1.26 | % | 0.93 | % | 1.06 | % | 0.93 | % | |||||||||||||||||
| Return on average equity | 15.00 | 10.83 | 10.77 | 15.42 | 11.95 | 12.91 | 12.11 | ||||||||||||||||||||||||
| Yield on average interest-earning assets (2) | 3.85 | 3.77 | 3.77 | 3.84 | 3.69 | 3.81 | 3.73 | ||||||||||||||||||||||||
| Cost of average interest-bearing liabilities | 0.60 | 0.50 | 0.58 | 0.61 | 0.66 | 0.55 | 0.67 | ||||||||||||||||||||||||
| Cost of funds | 0.52 | 0.43 | 0.50 | 0.53 | 0.57 | 0.48 | 0.59 | ||||||||||||||||||||||||
| Net interest rate spread during period (2) | 3.25 | 3.27 | 3.19 | 3.23 | 3.03 | 3.26 | 3.06 | ||||||||||||||||||||||||
| Net interest margin (2) | 3.35 | 3.36 | 3.29 | 3.34 | 3.14 | 3.36 | 3.16 | ||||||||||||||||||||||||
| Noninterest expense to average assets | 1.73 | 1.93 | 1.92 | 1.80 | 1.65 | 1.83 | 1.76 | ||||||||||||||||||||||||
| Efficiency ratio (3) | 52.27 | 58.87 | 58.66 | 52.28 | 53.38 | 55.52 | 55.96 | ||||||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 1.22 | X | 1.22 | X | 1.22 | X | 1.21 | X | 1.19 | X | 1.22 | X | 1.19 | X | |||||||||||||||||
| Average Balances | |||||||||||||||||||||||||||||||
| Total loans, net | $ | 6,640,331 | $ | 6,578,680 | $ | 6,558,285 | $ | 6,633,301 | $ | 6,686,888 | $ | 6,609,676 | $ | 6,693,644 | |||||||||||||||||
| Total interest-earning assets | 7,740,683 | 7,570,373 | 7,627,256 | 7,608,317 | 7,790,174 | 7,655,999 | 7,729,035 | ||||||||||||||||||||||||
| Total assets | 8,211,763 | 8,049,470 | 8,090,701 | 8,072,918 | 8,263,553 | 8,131,065 | 8,205,954 | ||||||||||||||||||||||||
| Total due to depositors | 5,298,855 | 5,336,983 | 5,397,802 | 5,406,423 | 5,495,936 | 5,317,814 | 5,430,158 | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 6,337,374 | 6,220,510 | 6,276,221 | 6,310,859 | 6,532,891 | 6,279,265 | 6,505,534 | ||||||||||||||||||||||||
| Stockholders' equity | 667,456 | 673,012 | 671,474 | 659,288 | 644,690 | 670,219 | 632,238 | ||||||||||||||||||||||||
| Per Share Data | |||||||||||||||||||||||||||||||
| Book value per common share (4) | $ | 22.38 | $ | 22.26 | $ | 22.26 | $ | 21.78 | $ | 21.16 | $ | 22.38 | $ | 21.16 | |||||||||||||||||
| Tangible book value per common share (5) | $ | 21.71 | $ | 21.61 | $ | 21.61 | $ | 21.13 | $ | 20.51 | $ | 21.71 | $ | 20.51 | |||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||||||||||||||
| Stockholders' equity | $ | 670,812 | $ | 675,813 | $ | 679,628 | $ | 668,096 | $ | 655,167 | $ | 670,812 | $ | 655,167 | |||||||||||||||||
| Tangible stockholders' equity | 650,894 | 656,085 | 659,758 | 648,039 | 634,959 | 650,894 | 634,959 | ||||||||||||||||||||||||
| Consolidated Regulatory Capital Ratios | |||||||||||||||||||||||||||||||
| Tier 1 capital | $ | 739,776 | $ | 731,536 | $ | 726,174 | $ | 711,276 | $ | 697,591 | $ | 739,776 | $ | 697,591 | |||||||||||||||||
| Common equity Tier 1 capital | 686,258 | 675,434 | 671,494 | 661,340 | 649,367 | 686,258 | 649,367 | ||||||||||||||||||||||||
| Total risk-based capital | 903,047 | 892,861 | 885,469 | 832,255 | 823,494 | 903,047 | 823,494 | ||||||||||||||||||||||||
| Risk Weighted Assets | 6,522,710 | 6,232,020 | 6,182,095 | 6,194,207 | 6,344,076 | 6,522,710 | 6,344,076 | ||||||||||||||||||||||||
| Tier 1 leverage capital (well capitalized = 5%) | 8.91 | % | 9.05 | % | 8.98 | % | 8.83 | % | 8.50 | % | 8.91 | % | 8.50 | % | |||||||||||||||||
| Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 10.52 | 10.84 | 10.86 | 10.68 | 10.24 | 10.52 | 10.24 | ||||||||||||||||||||||||
| Tier 1 risk-based capital (well capitalized = 8.0%) | 11.34 | 11.74 | 11.75 | 11.48 | 11.00 | 11.34 | 11.00 | ||||||||||||||||||||||||
| Total risk-based capital (well capitalized = 10.0%) | 13.84 | 14.33 | 14.32 | 13.44 | 12.98 | 13.84 | 12.98 | ||||||||||||||||||||||||
| Capital Ratios | |||||||||||||||||||||||||||||||
| Average equity to average assets | 8.13 | % | 8.36 | % | 8.30 | % | 8.17 | % | 7.80 | % | 8.24 | % | 7.70 | % | |||||||||||||||||
| Equity to total assets | 8.04 | 8.27 | 8.45 | 8.27 | 8.03 | 8.04 | 8.03 | ||||||||||||||||||||||||
| Tangible common equity to tangible assets (6) | 7.82 | 8.05 | 8.22 | 8.04 | 7.80 | 7.82 | 7.80 | ||||||||||||||||||||||||
| Asset Quality | |||||||||||||||||||||||||||||||
| Nonaccrual loans (7) | $ | 27,848 | $ | 14,066 | $ | 14,933 | $ | 18,292 | $ | 17,391 | $ | 27,848 | $ | 17,391 | |||||||||||||||||
| Nonperforming loans | 27,948 | 14,066 | 14,933 | 20,217 | 17,592 | 27,948 | 17,592 | ||||||||||||||||||||||||
| Nonperforming assets | 48,929 | 14,066 | 14,933 | 20,217 | 17,592 | 48,929 | 17,592 | ||||||||||||||||||||||||
| Net charge-offs (recoveries) | (501 | ) | 935 | (29 | ) | (619 | ) | 902 | 434 | 3,767 | |||||||||||||||||||||
| Asset Quality Ratios | |||||||||||||||||||||||||||||||
| Nonperforming loans to gross loans | 0.41 | % | 0.21 | % | 0.23 | % | 0.31 | % | 0.26 | % | 0.41 | % | 0.26 | % | |||||||||||||||||
| Nonperforming assets to total assets | 0.59 | 0.17 | 0.19 | 0.25 | 0.22 | 0.59 | 0.22 | ||||||||||||||||||||||||
| Allowance for credit losses to gross loans | 0.58 | 0.57 | 0.56 | 0.55 | 0.64 | 0.58 | 0.64 | ||||||||||||||||||||||||
| Allowance for credit losses to nonperforming assets | 80.57 | 266.12 | 248.66 | 179.86 | 242.55 | 80.57 | 242.55 | ||||||||||||||||||||||||
| Allowance for credit losses to nonperforming loans | 141.06 | 266.12 | 248.66 | 179.86 | 242.55 | 141.06 | 242.55 | ||||||||||||||||||||||||
| Net charge-offs (recoveries) to average loans | (0.03 | ) | 0.06 | — | (0.04 | ) | 0.05 | 0.01 | 0.11 | ||||||||||||||||||||||
| Full-service customer facilities | 25 | 24 | 24 | 24 | 25 | 25 | 25 | ||||||||||||||||||||||||
(See footnotes on next page)
(1) Ratios are presented on an annualized basis, where appropriate.
(2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(3) Efficiency ratio, a non-GAAP measure, was calculated by dividing noninterest expense (excluding merger expense, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization of purchase accounting adjustments) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges and net amortization of purchase accounting adjustments) and noninterest income (excluding life insurance proceeds, net gains and losses from the sale or disposition of securities, assets and fair value adjustments).
(4) Calculated by dividing stockholders’ equity by shares outstanding.
(5) Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure, by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7) Excludes performing nonaccrual TDR loans.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the three months ended | For the six months ended | ||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||
| (In thousands, except per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Interest and Dividend Income | |||||||||||||||||||||||||||
| Interest and fees on loans | $ | 69,192 | $ | 67,516 | $ | 68,113 | $ | 69,198 | $ | 67,999 | $ | 136,708 | $ | 137,020 | |||||||||||||
| Interest and dividends on securities: | |||||||||||||||||||||||||||
| Interest | 4,929 | 3,745 | 3,536 | 3,706 | 3,685 | 8,674 | 6,757 | ||||||||||||||||||||
| Dividends | 11 | 8 | 7 | 7 | 7 | 19 | 15 | ||||||||||||||||||||
| Other interest income | 159 | 51 | 74 | 42 | 51 | 210 | 87 | ||||||||||||||||||||
| Total interest and dividend income | 74,291 | 71,320 | 71,730 | 72,953 | 71,742 | 145,611 | 143,879 | ||||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||||||
| Deposits | 4,686 | 3,408 | 3,975 | 4,705 | 5,539 | 8,094 | 11,644 | ||||||||||||||||||||
| Other interest expense | 4,875 | 4,433 | 5,081 | 4,884 | 5,164 | 9,308 | 10,304 | ||||||||||||||||||||
| Total interest expense | 9,561 | 7,841 | 9,056 | 9,589 | 10,703 | 17,402 | 21,948 | ||||||||||||||||||||
| Net Interest Income | 64,730 | 63,479 | 62,674 | 63,364 | 61,039 | 128,209 | 121,931 | ||||||||||||||||||||
| Provision (benefit) for credit losses | 1,590 | 1,358 | 761 | (6,927 | ) | (1,598 | ) | 2,948 | 1,222 | ||||||||||||||||||
| Net Interest Income After Provision (Benefit) for Credit Losses | 63,140 | 62,121 | 61,913 | 70,291 | 62,637 | 125,261 | 120,709 | ||||||||||||||||||||
| Noninterest Income (Loss) | |||||||||||||||||||||||||||
| Banking services fee income | 1,166 | 1,374 | 1,142 | 865 | 1,233 | 2,540 | 3,958 | ||||||||||||||||||||
| Net gain (loss) on sale of securities | — | — | — | (10 | ) | 123 | — | 123 | |||||||||||||||||||
| Net gain on sale of loans | 73 | — | 46 | 131 | 127 | 73 | 158 | ||||||||||||||||||||
| Net gain on disposition of assets | — | — | — | — | — | — | 621 | ||||||||||||||||||||
| Net gain (loss) from fair value adjustments | 2,533 | (1,809 | ) | (5,140 | ) | (2,289 | ) | (6,548 | ) | 724 | (5,566 | ) | |||||||||||||||
| Federal Home Loan Bank of New York stock dividends | 407 | 397 | 417 | 491 | 500 | 804 | 1,189 | ||||||||||||||||||||
| Life insurance proceeds | 1,536 | — | — | — | — | 1,536 | — | ||||||||||||||||||||
| Bank owned life insurance | 1,115 | 1,114 | 1,023 | 1,015 | 1,009 | 2,229 | 2,006 | ||||||||||||||||||||
| Other income | 523 | 237 | 2,232 | 663 | 346 | 760 | 612 | ||||||||||||||||||||
| Total noninterest income (loss) | 7,353 | 1,313 | (280 | ) | 866 | (3,210 | ) | 8,666 | 3,101 | ||||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||||||
| Salaries and employee benefits | 21,109 | 23,649 | 25,223 | 20,544 | 19,879 | 44,758 | 42,543 | ||||||||||||||||||||
| Occupancy and equipment | 3,760 | 3,604 | 3,579 | 3,534 | 3,522 | 7,364 | 6,889 | ||||||||||||||||||||
| Professional services | 2,285 | 2,222 | 1,152 | 1,899 | 1,988 | 4,507 | 4,388 | ||||||||||||||||||||
| FDIC deposit insurance | 615 | 420 | 391 | 618 | 729 | 1,035 | 1,942 | ||||||||||||||||||||
| Data processing | 1,383 | 1,424 | 1,757 | 1,759 | 1,419 | 2,807 | 3,528 | ||||||||||||||||||||
| Depreciation and amortization | 1,447 | 1,460 | 1,521 | 1,627 | 1,638 | 2,907 | 3,277 | ||||||||||||||||||||
| Other real estate owned/foreclosure expense | 32 | 84 | 129 | 182 | 22 | 116 | 12 | ||||||||||||||||||||
| Other operating expenses | 4,891 | 5,931 | 5,055 | 6,182 | 4,814 | 10,822 | 9,591 | ||||||||||||||||||||
| Total noninterest expense | 35,522 | 38,794 | 38,807 | 36,345 | 34,011 | 74,316 | 72,170 | ||||||||||||||||||||
| Income Before Provision for Income Taxes | 34,971 | 24,640 | 22,826 | 34,812 | 25,416 | 59,611 | 51,640 | ||||||||||||||||||||
| Provision for Income Taxes | 9,936 | 6,421 | 4,743 | 9,399 | 6,158 | 16,357 | 13,343 | ||||||||||||||||||||
| Net Income | $ | 25,035 | $ | 18,219 | $ | 18,083 | $ | 25,413 | $ | 19,258 | $ | 43,254 | $ | 38,297 | |||||||||||||
| Basic earnings per common share | $ | 0.81 | $ | 0.58 | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 1.39 | $ | 1.21 | |||||||||||||
| Diluted earnings per common share | $ | 0.81 | $ | 0.58 | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 1.39 | $ | 1.21 | |||||||||||||
| Dividends per common share | $ | 0.22 | $ | 0.22 | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.44 | $ | 0.42 | |||||||||||||
| Basic average shares | 30,937 | 31,254 | 31,353 | 31,567 | 31,677 | 31,095 | 31,641 | ||||||||||||||||||||
| Diluted average shares | 30,937 | 31,254 | 31,353 | 31,567 | 31,677 | 31,095 | 31,641 | ||||||||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 137,026 | $ | 186,407 | $ | 81,723 | $ | 178,598 | $ | 145,971 | ||||||||||
| Securities held-to-maturity: | ||||||||||||||||||||
| Mortgage-backed securities | 7,885 | 7,890 | 7,894 | 7,899 | 7,904 | |||||||||||||||
| Other securities | 66,230 | 66,327 | 49,974 | 49,989 | 49,986 | |||||||||||||||
| Securities available for sale: | ||||||||||||||||||||
| Mortgage-backed securities | 510,934 | 553,828 | 572,184 | 584,145 | 596,661 | |||||||||||||||
| Other securities | 346,720 | 286,041 | 205,052 | 212,654 | 224,784 | |||||||||||||||
| Loans | 6,760,393 | 6,607,264 | 6,638,105 | 6,630,354 | 6,718,806 | |||||||||||||||
| Allowance for credit losses | (39,424 | ) | (37,433 | ) | (37,135 | ) | (36,363 | ) | (42,670 | ) | ||||||||||
| Net loans | 6,720,969 | 6,569,831 | 6,600,970 | 6,593,991 | 6,676,136 | |||||||||||||||
| Interest and dividends receivable | 38,811 | 37,308 | 38,698 | 40,912 | 43,803 | |||||||||||||||
| Bank premises and equipment, net | 22,285 | 22,752 | 23,338 | 24,018 | 26,438 | |||||||||||||||
| Federal Home Loan Bank of New York stock | 50,017 | 33,891 | 35,937 | 36,158 | 41,630 | |||||||||||||||
| Bank owned life insurance | 211,220 | 211,867 | 210,754 | 184,730 | 183,715 | |||||||||||||||
| Goodwill | 17,636 | 17,636 | 17,636 | 17,636 | 17,636 | |||||||||||||||
| Core deposit intangibles | 2,282 | 2,420 | 2,562 | 2,708 | 2,859 | |||||||||||||||
| Right of use asset | 46,687 | 48,475 | 50,200 | 50,155 | 51,972 | |||||||||||||||
| Other assets | 160,885 | 125,160 | 148,989 | 93,741 | 89,850 | |||||||||||||||
| Total assets | $ | 8,339,587 | $ | 8,169,833 | $ | 8,045,911 | $ | 8,077,334 | $ | 8,159,345 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Deposits | $ | 6,350,000 | $ | 6,373,400 | $ | 6,333,532 | $ | 6,421,391 | $ | 6,298,790 | ||||||||||
| Mortgagors' escrow deposits | 57,577 | 79,495 | 51,913 | 67,207 | 58,230 | |||||||||||||||
| Borrowed funds | 1,089,621 | 877,122 | 815,544 | 752,925 | 971,827 | |||||||||||||||
| Operating lease liability | 50,346 | 52,292 | 54,155 | 54,239 | 56,151 | |||||||||||||||
| Other liabilities | 121,231 | 111,711 | 111,139 | 113,476 | 119,180 | |||||||||||||||
| Total liabilities | 7,668,775 | 7,494,020 | 7,366,283 | 7,409,238 | 7,504,178 | |||||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||||||
| Preferred stock (5,000,000 shares authorized; none issued) | — | — | — | — | — | |||||||||||||||
| Common stock ($0.01 par value; 100,000,000 shares authorized) | 341 | 341 | 341 | 341 | 341 | |||||||||||||||
| Additional paid-in capital | 262,860 | 261,837 | 263,375 | 262,009 | 260,958 | |||||||||||||||
| Treasury stock | (88,342 | ) | (79,834 | ) | (75,293 | ) | (71,738 | ) | (65,335 | ) | ||||||||||
| Retained earnings | 527,217 | 508,973 | 497,889 | 486,418 | 467,620 | |||||||||||||||
| Accumulated other comprehensive loss, net of taxes | (31,264 | ) | (15,504 | ) | (6,684 | ) | (8,934 | ) | (8,417 | ) | ||||||||||
| Total stockholders' equity | 670,812 | 675,813 | 679,628 | 668,096 | 655,167 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 8,339,587 | $ | 8,169,833 | $ | 8,045,911 | $ | 8,077,334 | $ | 8,159,345 | ||||||||||
| (In thousands) | ||||||||||||||||||||
| Issued shares | 34,088 | 34,088 | 34,088 | 34,088 | 34,088 | |||||||||||||||
| Outstanding shares | 29,980 | 30,367 | 30,526 | 30,676 | 30,962 | |||||||||||||||
| Treasury shares | 4,108 | 3,721 | 3,561 | 3,412 | 3,126 | |||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)
| For the three months ended | For the six months ended | ||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||
| (In thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||
| Interest-earning Assets: | |||||||||||||||||||||||
| Mortgage loans, net | $ | 5,178,029 | $ | 5,152,070 | $ | 5,140,233 | $ | 5,158,213 | $ | 5,130,400 | $ | 5,165,121 | $ | 5,143,117 | |||||||||
| Other loans, net | 1,462,302 | 1,426,610 | 1,418,052 | 1,475,088 | 1,556,488 | 1,444,555 | 1,550,527 | ||||||||||||||||
| Total loans, net | 6,640,331 | 6,578,680 | 6,558,285 | 6,633,301 | 6,686,888 | 6,609,676 | 6,693,644 | ||||||||||||||||
| Taxable securities: | |||||||||||||||||||||||
| Mortgage-backed securities | 594,923 | 580,670 | 595,538 | 590,732 | 578,134 | 587,836 | 506,424 | ||||||||||||||||
| Other securities | 333,158 | 226,744 | 207,482 | 217,763 | 232,020 | 280,245 | 266,234 | ||||||||||||||||
| Total taxable securities | 928,081 | 807,414 | 803,020 | 808,495 | 810,154 | 868,081 | 772,658 | ||||||||||||||||
| Tax-exempt securities: | |||||||||||||||||||||||
| Other securities | 67,315 | 57,611 | 50,834 | 50,832 | 50,830 | 62,490 | 50,829 | ||||||||||||||||
| Total tax-exempt securities | 67,315 | 57,611 | 50,834 | 50,832 | 50,830 | 62,490 | 50,829 | ||||||||||||||||
| Interest-earning deposits and federal funds sold | 104,956 | 126,668 | 215,117 | 115,689 | 242,302 | 115,752 | 211,904 | ||||||||||||||||
| Total interest-earning assets | 7,740,683 | 7,570,373 | 7,627,256 | 7,608,317 | 7,790,174 | 7,655,999 | 7,729,035 | ||||||||||||||||
| Other assets | 471,080 | 479,097 | 463,445 | 464,601 | 473,379 | 475,066 | 476,919 | ||||||||||||||||
| Total assets | $ | 8,211,763 | $ | 8,049,470 | $ | 8,090,701 | $ | 8,072,918 | $ | 8,263,553 | $ | 8,131,065 | $ | 8,205,954 | |||||||||
| Interest-bearing Liabilities: | |||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||
| Savings accounts | $ | 156,785 | $ | 156,592 | $ | 154,471 | $ | 153,120 | $ | 153,113 | $ | 156,689 | $ | 161,549 | |||||||||
| NOW accounts | 2,089,851 | 2,036,914 | 2,115,619 | 2,107,866 | 2,255,581 | 2,063,529 | 2,220,677 | ||||||||||||||||
| Money market accounts | 2,231,743 | 2,253,630 | 2,177,928 | 2,107,473 | 2,043,257 | 2,242,626 | 1,974,781 | ||||||||||||||||
| Certificate of deposit accounts | 820,476 | 889,847 | 949,784 | 1,037,964 | 1,043,985 | 854,970 | 1,073,151 | ||||||||||||||||
| Total due to depositors | 5,298,855 | 5,336,983 | 5,397,802 | 5,406,423 | 5,495,936 | 5,317,814 | 5,430,158 | ||||||||||||||||
| Mortgagors' escrow accounts | 97,496 | 71,509 | 84,617 | 68,562 | 91,545 | 84,574 | 78,531 | ||||||||||||||||
| Total interest-bearing deposits | 5,396,351 | 5,408,492 | 5,482,419 | 5,474,985 | 5,587,481 | 5,402,388 | 5,508,689 | ||||||||||||||||
| Borrowings | 941,023 | 812,018 | 793,802 | 835,874 | 945,410 | 876,877 | 996,845 | ||||||||||||||||
| Total interest-bearing liabilities | 6,337,374 | 6,220,510 | 6,276,221 | 6,310,859 | 6,532,891 | 6,279,265 | 6,505,534 | ||||||||||||||||
| Noninterest-bearing demand deposits | 1,044,553 | 1,001,571 | 976,803 | 933,443 | 923,220 | 1,023,181 | 889,821 | ||||||||||||||||
| Other liabilities | 162,380 | 154,377 | 166,203 | 169,328 | 162,752 | 158,400 | 178,361 | ||||||||||||||||
| Total liabilities | 7,544,307 | 7,376,458 | 7,419,227 | 7,413,630 | 7,618,863 | 7,460,846 | 7,573,716 | ||||||||||||||||
| Equity | 667,456 | 673,012 | 671,474 | 659,288 | 644,690 | 670,219 | 632,238 | ||||||||||||||||
| Total liabilities and equity | $ | 8,211,763 | $ | 8,049,470 | $ | 8,090,701 | $ | 8,072,918 | $ | 8,263,553 | $ | 8,131,065 | $ | 8,205,954 | |||||||||
| Net interest-earning assets | $ | 1,403,309 | $ | 1,349,863 | $ | 1,351,035 | $ | 1,297,458 | $ | 1,257,283 | $ | 1,376,734 | $ | 1,223,501 | |||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)
| For the three months ended | For the six months ended | ||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
| Interest Income: | |||||||||||||||||||||||||||||||||
| Mortgage loans, net | $ | 54,775 | $ | 53,970 | $ | 54,260 | $ | 55,114 | $ | 52,987 | $ | 108,745 | $ | 108,206 | |||||||||||||||||||
| Other loans, net | 14,417 | 13,546 | 13,853 | 14,084 | 15,012 | 27,963 | 28,814 | ||||||||||||||||||||||||||
| Total loans, net | 69,192 | 67,516 | 68,113 | 69,198 | 67,999 | 136,708 | 137,020 | ||||||||||||||||||||||||||
| Taxable securities: | |||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 2,356 | 2,167 | 2,125 | 2,279 | 2,233 | 4,523 | 3,931 | ||||||||||||||||||||||||||
| Other securities | 2,090 | 1,119 | 993 | 1,008 | 1,037 | 3,209 | 2,000 | ||||||||||||||||||||||||||
| Total taxable securities | 4,446 | 3,286 | 3,118 | 3,287 | 3,270 | 7,732 | 5,931 | ||||||||||||||||||||||||||
| Tax-exempt securities: | |||||||||||||||||||||||||||||||||
| Other securities | 625 | 591 | 538 | 539 | 535 | 1,216 | 1,065 | ||||||||||||||||||||||||||
| Total tax-exempt securities | 625 | 591 | 538 | 539 | 535 | 1,216 | 1,065 | ||||||||||||||||||||||||||
| Interest-earning deposits and federal funds sold | 159 | 51 | 74 | 42 | 51 | 210 | 87 | ||||||||||||||||||||||||||
| Total interest-earning assets | 74,422 | 71,444 | 71,843 | 73,066 | 71,855 | 145,866 | 144,103 | ||||||||||||||||||||||||||
| Interest Expense: | |||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||
| Savings accounts | $ | 50 | $ | 49 | $ | 53 | $ | 61 | $ | 66 | $ | 99 | $ | 141 | |||||||||||||||||||
| NOW accounts | 1,405 | 793 | 1,021 | 1,227 | 1,499 | 2,198 | 3,205 | ||||||||||||||||||||||||||
| Money market accounts | 1,952 | 1,275 | 1,428 | 1,683 | 2,060 | 3,227 | 4,160 | ||||||||||||||||||||||||||
| Certificate of deposit accounts | 1,273 | 1,289 | 1,471 | 1,734 | 1,913 | 2,562 | 4,135 | ||||||||||||||||||||||||||
| Total due to depositors | 4,680 | 3,406 | 3,973 | 4,705 | 5,538 | 8,086 | 11,641 | ||||||||||||||||||||||||||
| Mortgagors' escrow accounts | 6 | 2 | 2 | — | 1 | 8 | 3 | ||||||||||||||||||||||||||
| Total interest-bearing deposits | 4,686 | 3,408 | 3,975 | 4,705 | 5,539 | 8,094 | 11,644 | ||||||||||||||||||||||||||
| Borrowings | 4,875 | 4,433 | 5,081 | 4,884 | 5,164 | 9,308 | 10,304 | ||||||||||||||||||||||||||
| Total interest-bearing liabilities | 9,561 | 7,841 | 9,056 | 9,589 | 10,703 | 17,402 | 21,948 | ||||||||||||||||||||||||||
| Net interest income- tax equivalent | $ | 64,861 | $ | 63,603 | $ | 62,787 | $ | 63,477 | $ | 61,152 | $ | 128,464 | $ | 122,155 | |||||||||||||||||||
| Included in net interest income above: | |||||||||||||||||||||||||||||||||
| Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans | $ | 2,281 | $ | 1,716 | $ | 1,497 | $ | 2,136 | $ | 2,046 | $ | 3,997 | $ | 2,993 | |||||||||||||||||||
| Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income | (60 | ) | (129 | ) | 1,122 | 194 | (664 | ) | (189 | ) | 763 | ||||||||||||||||||||||
| Purchase accounting adjustments | 367 | 1,058 | 462 | 1,100 | 565 | 1,425 | 1,487 | ||||||||||||||||||||||||||
| Interest-earning Assets Yields: | |||||||||||||||||||||||||||||||||
| Mortgage loans, net | 4.23 | % | 4.19 | % | 4.22 | % | 4.27 | % | 4.13 | % | 4.21 | % | 4.21 | % | |||||||||||||||||||
| Other loans, net | 3.94 | 3.80 | 3.91 | 3.82 | 3.86 | 3.87 | 3.72 | ||||||||||||||||||||||||||
| Total loans, net | 4.17 | 4.11 | 4.15 | 4.17 | 4.07 | 4.14 | 4.09 | ||||||||||||||||||||||||||
| Taxable securities: | |||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 1.58 | 1.49 | 1.43 | 1.54 | 1.54 | 1.54 | 1.55 | ||||||||||||||||||||||||||
| Other securities | 2.51 | 1.97 | 1.91 | 1.85 | 1.79 | 2.29 | 1.50 | ||||||||||||||||||||||||||
| Total taxable securities | 1.92 | 1.63 | 1.55 | 1.63 | 1.61 | 1.78 | 1.54 | ||||||||||||||||||||||||||
| Tax-exempt securities: (1) | |||||||||||||||||||||||||||||||||
| Other securities | 3.71 | 4.10 | 4.23 | 4.24 | 4.21 | 3.89 | 4.19 | ||||||||||||||||||||||||||
| Total tax-exempt securities | 3.71 | 4.10 | 4.23 | 4.24 | 4.21 | 3.89 | 4.19 | ||||||||||||||||||||||||||
| Interest-earning deposits and federal funds sold | 0.61 | 0.16 | 0.14 | 0.15 | 0.08 | 0.36 | 0.08 | ||||||||||||||||||||||||||
| Total interest-earning assets | 3.85 | % | 3.77 | % | 3.77 | % | 3.84 | % | 3.69 | % | 3.81 | % | 3.73 | % | |||||||||||||||||||
| Interest-bearing Liabilities Yields: | |||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||
| Savings accounts | 0.13 | % | 0.13 | % | 0.14 | % | 0.16 | % | 0.17 | % | 0.13 | % | 0.17 | % | |||||||||||||||||||
| NOW accounts | 0.27 | 0.16 | 0.19 | 0.23 | 0.27 | 0.21 | 0.29 | ||||||||||||||||||||||||||
| Money market accounts | 0.35 | 0.23 | 0.26 | 0.32 | 0.40 | 0.29 | 0.42 | ||||||||||||||||||||||||||
| Certificate of deposit accounts | 0.62 | 0.58 | 0.62 | 0.67 | 0.73 | 0.60 | 0.77 | ||||||||||||||||||||||||||
| Total due to depositors | 0.35 | 0.26 | 0.29 | 0.35 | 0.40 | 0.30 | 0.43 | ||||||||||||||||||||||||||
| Mortgagors' escrow accounts | 0.02 | 0.01 | 0.01 | — | — | 0.02 | 0.01 | ||||||||||||||||||||||||||
| Total interest-bearing deposits | 0.35 | 0.25 | 0.29 | 0.34 | 0.40 | 0.30 | 0.42 | ||||||||||||||||||||||||||
| Borrowings | 2.07 | 2.18 | 2.56 | 2.34 | 2.18 | 2.12 | 2.07 | ||||||||||||||||||||||||||
| Total interest-bearing liabilities | 0.60 | % | 0.50 | % | 0.58 | % | 0.61 | % | 0.66 | % | 0.55 | % | 0.67 | % | |||||||||||||||||||
| Net interest rate spread (tax equivalent) | 3.25 | % | 3.27 | % | 3.19 | % | 3.23 | % | 3.03 | % | 3.26 | % | 3.06 | % | |||||||||||||||||||
| Net interest margin (tax equivalent) | 3.35 | % | 3.36 | % | 3.29 | % | 3.34 | % | 3.14 | % | 3.36 | % | 3.16 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.22 | X | 1.22 | X | 1.22 | X | 1.21 | X | 1.19 | X | 1.22 | X | 1.19 | X | |||||||||||||||||||
(1) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT and LOAN COMPOSITION
(Unaudited)
Deposit Composition
| June 2022 vs. | June 2022 vs. | ||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | March 2022 | June 2021 | |||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | % Change | % Change | ||||||||||||||||
| Noninterest bearing | $ | 1,081,208 | $ | 1,041,027 | $ | 967,621 | $ | 941,259 | $ | 945,491 | 3.9 | % | 14.4 | % | |||||||||
| Interest bearing: | |||||||||||||||||||||||
| Certificate of deposit accounts | 906,943 | 886,317 | 946,575 | 1,040,098 | 1,020,615 | 2.3 | (11.1 | ) | |||||||||||||||
| Savings accounts | 154,670 | 158,542 | 156,554 | 152,306 | 152,931 | (2.4 | ) | 1.1 | |||||||||||||||
| Money market accounts | 2,229,993 | 2,362,390 | 2,342,003 | 2,152,085 | 2,057,188 | (5.6 | ) | 8.4 | |||||||||||||||
| NOW accounts | 1,977,186 | 1,925,124 | 1,920,779 | 2,135,643 | 2,122,565 | 2.7 | (6.8 | ) | |||||||||||||||
| Total interest-bearing deposits | 5,268,792 | 5,332,373 | 5,365,911 | 5,480,132 | 5,353,299 | (1.2 | ) | (1.6 | ) | ||||||||||||||
| Total deposits | $ | 6,350,000 | $ | 6,373,400 | $ | 6,333,532 | $ | 6,421,391 | $ | 6,298,790 | (0.4 | ) | % | 0.8 | % | ||||||||
Loan Composition
| June 2022 vs. | June 2022 vs. | |||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | March 2022 | June 2021 | ||||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | % Change | % Change | |||||||||||||||||||||
| Multifamily residential | $ | 2,531,858 | $ | 2,500,570 | $ | 2,517,026 | $ | 2,498,980 | $ | 2,542,010 | 1.3 | % | (0.4 | ) | % | |||||||||||||
| Commercial real estate | 1,864,507 | 1,764,927 | 1,775,629 | 1,745,855 | 1,726,895 | 5.6 | 8.0 | |||||||||||||||||||||
| One-to-four family ― mixed-use property | 561,100 | 563,679 | 571,795 | 579,100 | 582,211 | (0.5 | ) | (3.6 | ) | |||||||||||||||||||
| One-to-four family ― residential | 242,729 | 248,226 | 268,255 | 280,343 | 288,652 | (2.2 | ) | (15.9 | ) | |||||||||||||||||||
| Co-operative apartments | 8,130 | 8,248 | 8,316 | 7,804 | 7,883 | (1.4 | ) | 3.1 | ||||||||||||||||||||
| Construction | 72,148 | 68,488 | 59,761 | 71,464 | 62,802 | 5.3 | 14.9 | |||||||||||||||||||||
| Mortgage Loans | 5,280,472 | 5,154,138 | 5,200,782 | 5,183,546 | 5,210,453 | 2.5 | 1.3 | |||||||||||||||||||||
| Small Business Administration (1) | 40,572 | 59,331 | 93,811 | 148,855 | 215,158 | (31.6 | ) | (81.1 | ) | |||||||||||||||||||
| Commercial business and other | 1,431,417 | 1,387,155 | 1,339,273 | 1,294,688 | 1,291,526 | 3.2 | 10.8 | |||||||||||||||||||||
| Nonmortgage loans | 1,471,989 | 1,446,486 | 1,433,084 | 1,443,543 | 1,506,684 | 1.8 | (2.3 | ) | ||||||||||||||||||||
| Net unamortized premiums and unearned loan fees (2) | 7,932 | 6,640 | 4,239 | 3,265 | 1,669 | 19.5 | 375.3 | |||||||||||||||||||||
| Allowance for credit losses | (39,424 | ) | (37,433 | ) | (37,135 | ) | (36,363 | ) | (42,670 | ) | 5.3 | (7.6 | ) | |||||||||||||||
| Net loans | $ | 6,720,969 | $ | 6,569,831 | $ | 6,600,970 | $ | 6,593,991 | $ | 6,676,136 | 2.3 | % | 0.7 | % | ||||||||||||||
(1) Includes $22.2 million, $43.2 million, $77.4 million, $130.8 million, and $197.3 million of PPP loans at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.
(2) Includes $6.6 million, $6.9 million, $8.0 million, $8.6 million, and $9.7 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS and RATES
(Unaudited)
Loan Closings
| For the three months ended | For the six months ended | |||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | ||||||||||||||||
| (In thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||
| Multifamily residential | $ | 136,902 | $ | 98,180 | $ | 79,648 | $ | 41,850 | $ | 66,913 | $ | 235,082 | $ | 125,466 | ||||||||
| Commercial real estate | 164,826 | 45,102 | 64,916 | 48,447 | 37,963 | 209,928 | 55,119 | |||||||||||||||
| One-to-four family – mixed-use property | 12,228 | 8,498 | 12,440 | 12,823 | 7,135 | 20,726 | 15,847 | |||||||||||||||
| One-to-four family – residential | 4,211 | 9,237 | 5,162 | 2,761 | 59,494 | 13,448 | 62,625 | |||||||||||||||
| Co-operative apartments | — | 24 | 413 | — | — | 24 | — | |||||||||||||||
| Construction | 8,319 | 8,802 | 17,033 | 8,687 | 5,281 | 17,121 | 12,404 | |||||||||||||||
| Mortgage Loans | 326,486 | 169,843 | 179,612 | 114,568 | 176,786 | 496,329 | 271,461 | |||||||||||||||
| Small Business Administration (1) | 2,750 | — | 270 | 415 | 17,585 | 2,750 | 142,678 | |||||||||||||||
| Commercial business and other | 174,551 | 159,476 | 182,858 | 128,946 | 130,036 | 334,027 | 233,154 | |||||||||||||||
| Nonmortgage Loans | 177,301 | 159,476 | 183,128 | 129,361 | 147,621 | 336,777 | 375,832 | |||||||||||||||
| Total Closings | $ | 503,787 | $ | 329,319 | $ | 362,740 | $ | 243,929 | $ | 324,407 | $ | 833,106 | $ | 647,293 | ||||||||
(1) Includes $15.5 million and $138.7 million of PPP closings for the three and six months ended June 30, 2021, respectively.
Weighted Average Rate on Loan Closings
| For the three months ended | |||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| Loan type | 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
| Mortgage loans | 3.76 | % | 3.61 | % | 3.77 | % | 3.80 | % | 3.53 | % | |||||
| Nonmortgage loans | 4.21 | 3.27 | 3.24 | 3.49 | 3.23 | ||||||||||
| Total loans | 3.92 | % | 3.44 | % | 3.51 | % | 3.64 | % | 3.39 | % | |||||
| Excluding PPP loans | 3.92 | % | 3.44 | % | 3.51 | % | 3.64 | % | 3.51 | % | |||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)
Allowance for Credit Losses
| For the three months ended | For the six months ended | ||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||
| Allowance for credit losses | |||||||||||||||||||||||||||||||||||||
| Beginning balances | $ | 37,433 | $ | 37,135 | $ | 36,363 | $ | 42,670 | $ | 45,099 | 37,135 | 45,153 | |||||||||||||||||||||||||
| Net loan charge-off (recoveries): | |||||||||||||||||||||||||||||||||||||
| Multifamily residential | (1 | ) | — | — | — | — | $ | (1 | ) | $ | 33 | ||||||||||||||||||||||||||
| Commercial real estate | — | — | — | — | — | — | 64 | ||||||||||||||||||||||||||||||
| One-to-four family – mixed-use property | — | — | 1 | (123 | ) | 3 | — | 22 | |||||||||||||||||||||||||||||
| One-to-four family – residential | (2 | ) | (2 | ) | (3 | ) | (147 | ) | (2 | ) | (4 | ) | (7 | ) | |||||||||||||||||||||||
| Small Business Administration | 13 | 1,015 | (7 | ) | (8 | ) | (9 | ) | 1,028 | (19 | ) | ||||||||||||||||||||||||||
| Taxi medallion | (435 | ) | (12 | ) | — | (1,235 | ) | (222 | ) | (447 | ) | 2,536 | |||||||||||||||||||||||||
| Commercial business and other | (76 | ) | (66 | ) | (20 | ) | 894 | 1,132 | (142 | ) | 1,138 | ||||||||||||||||||||||||||
| Total | (501 | ) | 935 | (29 | ) | (619 | ) | 902 | 434 | 3,767 | |||||||||||||||||||||||||||
| Provision (benefit) for loan losses | 1,490 | 1,233 | 743 | (6,926 | ) | (1,527 | ) | 2,723 | 1,284 | ||||||||||||||||||||||||||||
| Ending balance | $ | 39,424 | $ | 37,433 | $ | 37,135 | $ | 36,363 | $ | 42,670 | $ | 39,424 | $ | 42,670 | |||||||||||||||||||||||
| Gross charge-offs | $ | 50 | $ | 1,036 | $ | 7 | $ | 1,019 | $ | 1,186 | $ | 1,086 | $ | 4,108 | |||||||||||||||||||||||
| Gross recoveries | 551 | 101 | 36 | 1,638 | 284 | 652 | 341 | ||||||||||||||||||||||||||||||
| Allowance for credit losses to gross loans | 0.58 | % | 0.57 | % | 0.56 | % | 0.55 | % | 0.64 | % | 0.58 | % | 0.64 | % | |||||||||||||||||||||||
| Net loan charge-offs (recoveries) to average loans | (0.03 | ) | 0.06 | — | (0.04 | ) | 0.05 | 0.01 | 0.11 | ||||||||||||||||||||||||||||
Nonperforming Assets
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Loans 90 Days Or More Past Due and Still Accruing: | ||||||||||||||||||||
| Multifamily residential | $ | — | $ | — | $ | — | $ | — | $ | 201 | ||||||||||
| Construction | — | — | — | 873 | — | |||||||||||||||
| Commercial business and other | 100 | — | — | 1,052 | — | |||||||||||||||
| Total | 100 | — | — | 1,925 | 201 | |||||||||||||||
| Nonaccrual Loans: | ||||||||||||||||||||
| Multifamily residential | 3,414 | 3,414 | 2,431 | 4,192 | 4,669 | |||||||||||||||
| Commercial real estate | 242 | 5 | 613 | 613 | 8 | |||||||||||||||
| One-to-four family - mixed-use property (1) | 790 | 790 | 1,309 | 2,204 | 2,309 | |||||||||||||||
| One-to-four family - residential | 5,055 | 7,387 | 7,725 | 7,807 | 6,940 | |||||||||||||||
| Construction | 856 | — | — | — | — | |||||||||||||||
| Small Business Administration | 937 | 937 | 937 | 976 | 976 | |||||||||||||||
| Commercial business and other(1) | 16,554 | 1,533 | 1,918 | 2,500 | 2,489 | |||||||||||||||
| Total | 27,848 | 14,066 | 14,933 | 18,292 | 17,391 | |||||||||||||||
| Total Nonperforming Loans (NPLs) | 27,948 | 14,066 | 14,933 | 20,217 | 17,592 | |||||||||||||||
| Total Nonaccrual HTM Securities | 20,981 | — | — | — | — | |||||||||||||||
| Total Nonperforming Assets | $ | 48,929 | $ | 14,066 | $ | 14,933 | $ | 20,217 | $ | 17,592 | ||||||||||
| Nonperforming Assets to Total Assets | 0.59 | % | 0.17 | % | 0.19 | % | 0.25 | % | 0.22 | % | ||||||||||
| Allowance for Credit Losses to NPLs | 141.1 | % | 266.1 | % | 248.7 | % | 179.9 | % | 242.6 | % | ||||||||||
(1) Not included in the above analysis are nonaccrual performing TDR one-to-four family - mixed use property loans totaling $0.3 million each in 2Q22, 1Q22, 4Q21, 3Q21, and 2Q21; nonaccrual performing TDR commercial business loans totaling $2.8 million in 2Q22 and 1Q22, less than $0.1 million in 4Q21 and 3Q21, and $2.2 million in 2Q21.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
Non-cash Fair Value Adjustments to GAAP Earnings
The variance in GAAP and core earnings is partly driven by the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to swaps designated to protect against rising rates and borrowing carried at fair value under the fair value option. As the swaps get closer to maturity, the volatility in fair value adjustments will dissipate. In a declining interest rate environment, the movement in the curve exaggerates our mark-to-market loss position. In a rising interest rate environment or a steepening of the yield curve, the loss position would experience an improvement.
Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Base Net Interest Income FTE, Base Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Base Interest Income and Yield on Total Loans, Core Noninterest Income, Core Noninterest Expense and Tangible Book Value per common share are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and noninterest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.
These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Unaudited)
| For the three months ended | For the six months ended | ||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, | June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
| except per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||
| GAAP income before income taxes | $ | 34,971 | $ | 24,640 | $ | 22,826 | $ | 34,812 | $ | 25,416 | $ | 59,611 | $ | 51,640 | |||||||||||||||||||||||
| Net (gain) loss from fair value adjustments (Noninterest income (loss)) | (2,533 | ) | 1,809 | 5,140 | 2,289 | 6,548 | (724 | ) | 5,566 | ||||||||||||||||||||||||||||
| Net (gain) loss on sale of securities (Noninterest income (loss)) | — | — | — | 10 | (123 | ) | — | (123 | ) | ||||||||||||||||||||||||||||
| Life insurance proceeds (Noninterest income (loss)) | (1,536 | ) | — | — | — | — | (1,536 | ) | — | ||||||||||||||||||||||||||||
| Net gain on disposition of assets (Noninterest income (loss)) | — | — | — | — | — | — | (621 | ) | |||||||||||||||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges (Interest and fees on loans) | 60 | 129 | (1,122 | ) | (194 | ) | 664 | 189 | (763 | ) | |||||||||||||||||||||||||||
| Net amortization of purchase accounting adjustments (Various) | (237 | ) | (924 | ) | (324 | ) | (958 | ) | (418 | ) | (1,161 | ) | (1,207 | ) | |||||||||||||||||||||||
| Merger (benefit) expense (Various) | — | — | (17 | ) | 2,096 | (490 | ) | — | 483 | ||||||||||||||||||||||||||||
| Core income before taxes | 30,725 | 25,654 | 26,503 | 38,055 | 31,597 | 56,379 | 54,975 | ||||||||||||||||||||||||||||||
| Provision for income taxes for core income | 9,207 | 6,685 | 5,535 | 10,226 | 8,603 | 15,892 | 15,008 | ||||||||||||||||||||||||||||||
| Core net income | $ | 21,518 | $ | 18,969 | $ | 20,968 | $ | 27,829 | $ | 22,994 | $ | 40,487 | $ | 39,967 | |||||||||||||||||||||||
| GAAP diluted earnings per common share | $ | 0.81 | $ | 0.58 | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 1.39 | $ | 1.21 | |||||||||||||||||||||||
| Net (gain) loss from fair value adjustments, net of tax | (0.06 | ) | 0.04 | 0.13 | 0.05 | 0.15 | (0.02 | ) | 0.13 | ||||||||||||||||||||||||||||
| Net loss on sale of securities, net of tax | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Life insurance proceeds | (0.05 | ) | — | — | — | — | (0.05 | ) | — | ||||||||||||||||||||||||||||
| Net gain on disposition of assets, net of tax | — | — | — | — | — | — | (0.01 | ) | |||||||||||||||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges, net of tax | — | — | (0.03 | ) | — | 0.02 | — | (0.02 | ) | ||||||||||||||||||||||||||||
| Net amortization of purchase accounting adjustments, net of tax | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.03 | ) | (0.03 | ) | |||||||||||||||||||||||
| Merger (benefit) expense, net of tax | — | — | — | 0.05 | (0.01 | ) | — | 0.01 | |||||||||||||||||||||||||||||
| NYS tax change | — | — | — | — | (0.02 | ) | — | (0.02 | ) | ||||||||||||||||||||||||||||
| Core diluted earnings per common share(1) | $ | 0.70 | $ | 0.61 | $ | 0.67 | $ | 0.88 | $ | 0.73 | $ | 1.30 | $ | 1.26 | |||||||||||||||||||||||
| Core net income, as calculated above | $ | 21,518 | $ | 18,969 | $ | 20,968 | $ | 27,829 | $ | 22,994 | $ | 40,487 | $ | 39,967 | |||||||||||||||||||||||
| Average assets | 8,211,763 | 8,049,470 | 8,090,701 | 8,072,918 | 8,263,553 | 8,131,065 | 8,205,954 | ||||||||||||||||||||||||||||||
| Average equity | 667,456 | 673,012 | 671,474 | 659,288 | 644,690 | 670,219 | 632,238 | ||||||||||||||||||||||||||||||
| Core return on average assets(2) | 1.05 | % | 0.94 | % | 1.04 | % | 1.38 | % | 1.11 | % | 1.00 | % | 0.97 | % | |||||||||||||||||||||||
| Core return on average equity(2) | 12.90 | % | 11.27 | % | 12.49 | % | 16.88 | % | 14.27 | % | 12.08 | % | 12.64 | % | |||||||||||||||||||||||
(1) Core diluted earnings per common share may not foot due to rounding.
(2) Ratios are calculated on an annualized basis.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Unaudited)
| For the three months ended | For the six months ended | ||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||
| GAAP Net interest income | $ | 64,730 | $ | 63,479 | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 128,209 | $ | 121,931 | |||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges | 60 | 129 | (1,122 | ) | (194 | ) | 664 | 189 | (763 | ) | |||||||||||||||||||||
| Net amortization of purchase accounting adjustments | (367 | ) | (1,058 | ) | (462 | ) | (1,100 | ) | (565 | ) | (1,425 | ) | (1,487 | ) | |||||||||||||||||
| Core Net interest income | $ | 64,423 | $ | 62,550 | $ | 61,090 | $ | 62,070 | $ | 61,138 | $ | 126,973 | $ | 119,681 | |||||||||||||||||
| GAAP Noninterest income (loss) | $ | 7,353 | $ | 1,313 | $ | (280 | ) | $ | 866 | $ | (3,210 | ) | $ | 8,666 | $ | 3,101 | |||||||||||||||
| Net (gain) loss from fair value adjustments | (2,533 | ) | 1,809 | 5,140 | 2,289 | 6,548 | (724 | ) | 5,566 | ||||||||||||||||||||||
| Net gain (loss) on sale of securities | — | — | — | 10 | (123 | ) | — | (123 | ) | ||||||||||||||||||||||
| Life insurance proceeds | (1,536 | ) | — | — | — | — | (1,536 | ) | — | ||||||||||||||||||||||
| Net gain on sale of assets | — | — | — | — | — | — | (621 | ) | |||||||||||||||||||||||
| Core Noninterest income | $ | 3,284 | $ | 3,122 | $ | 4,860 | $ | 3,165 | $ | 3,215 | $ | 6,406 | $ | 7,923 | |||||||||||||||||
| GAAP Noninterest expense | $ | 35,522 | $ | 38,794 | $ | 38,807 | $ | 36,345 | $ | 34,011 | $ | 74,316 | $ | 72,170 | |||||||||||||||||
| Net amortization of purchase accounting adjustments | (130 | ) | (134 | ) | (138 | ) | (142 | ) | (147 | ) | (264 | ) | (280 | ) | |||||||||||||||||
| Merger expense (benefit) | — | — | 17 | (2,096 | ) | 490 | — | (483 | ) | ||||||||||||||||||||||
| Core Noninterest expense | $ | 35,392 | $ | 38,660 | $ | 38,686 | $ | 34,107 | $ | 34,354 | $ | 74,052 | $ | 71,407 | |||||||||||||||||
| Net interest income | $ | 64,730 | $ | 63,479 | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 128,209 | $ | 121,931 | |||||||||||||||||
| Noninterest income (loss) | 7,353 | 1,313 | (280 | ) | 866 | (3,210 | ) | 8,666 | 3,101 | ||||||||||||||||||||||
| Noninterest expense | (35,522 | ) | (38,794 | ) | (38,807 | ) | (36,345 | ) | (34,011 | ) | (74,316 | ) | (72,170 | ) | |||||||||||||||||
| Pre-provision pre-tax net revenue | $ | 36,561 | $ | 25,998 | $ | 23,587 | $ | 27,885 | $ | 23,818 | $ | 62,559 | $ | 52,862 | |||||||||||||||||
| Core: | |||||||||||||||||||||||||||||||
| Net interest income | $ | 64,423 | $ | 62,550 | $ | 61,090 | $ | 62,070 | $ | 61,138 | $ | 126,973 | $ | 119,681 | |||||||||||||||||
| Noninterest income | 3,284 | 3,122 | 4,860 | 3,165 | 3,215 | 6,406 | 7,923 | ||||||||||||||||||||||||
| Noninterest expense | (35,392 | ) | (38,660 | ) | (38,686 | ) | (34,107 | ) | (34,354 | ) | (74,052 | ) | (71,407 | ) | |||||||||||||||||
| Pre-provision pre-tax net revenue | $ | 32,315 | $ | 27,012 | $ | 27,264 | $ | 31,128 | $ | 29,999 | $ | 59,327 | $ | 56,197 | |||||||||||||||||
| Efficiency Ratio | 52.3 | % | 58.9 | % | 58.7 | % | 52.3 | % | 53.4 | % | 55.5 | % | 56.0 | % | |||||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
to CORE and BASE NET INTEREST INCOME
(Unaudited)
| For the three months ended | For the six months ended | ||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||
| GAAP net interest income | $ | 64,730 | $ | 63,479 | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 128,209 | $ | 121,931 | |||||||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges | 60 | 129 | (1,122 | ) | (194 | ) | 664 | 189 | (763 | ) | |||||||||||||||||||||||||
| Net amortization of purchase accounting adjustments | (367 | ) | (1,058 | ) | (462 | ) | (1,100 | ) | (565 | ) | (1,425 | ) | (1,487 | ) | |||||||||||||||||||||
| Tax equivalent adjustment | 131 | 124 | 113 | 113 | 113 | 255 | 224 | ||||||||||||||||||||||||||||
| Core net interest income FTE | $ | 64,554 | $ | 62,674 | $ | 61,203 | $ | 62,183 | $ | 61,251 | $ | 127,228 | $ | 119,905 | |||||||||||||||||||||
| Prepayment penalties received on loans and securities, net of reversals and recoveries of interest from nonaccrual loans | (2,281 | ) | (1,716 | ) | (1,497 | ) | (2,136 | ) | (2,046 | ) | (3,997 | ) | (2,993 | ) | |||||||||||||||||||||
| Base net interest income FTE | $ | 62,273 | $ | 60,958 | $ | 59,706 | $ | 60,047 | $ | 59,205 | $ | 123,231 | $ | 116,912 | |||||||||||||||||||||
| Total average interest-earning assets (1) | $ | 7,746,640 | $ | 7,577,053 | $ | 7,634,601 | $ | 7,616,332 | $ | 7,799,176 | $ | 7,662,315 | $ | 7,738,344 | |||||||||||||||||||||
| Core net interest margin FTE | 3.33 | % | 3.31 | % | 3.21 | % | 3.27 | % | 3.14 | % | 3.32 | % | 3.10 | % | |||||||||||||||||||||
| Base net interest margin FTE | 3.22 | % | 3.22 | % | 3.13 | % | 3.15 | % | 3.04 | % | 3.22 | % | 3.02 | % | |||||||||||||||||||||
| GAAP interest income on total loans, net | $ | 69,192 | $ | 67,516 | $ | 68,113 | $ | 69,198 | $ | 67,999 | $ | 136,708 | $ | 137,020 | |||||||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges | 60 | 129 | (1,122 | ) | (194 | ) | 664 | 189 | (763 | ) | |||||||||||||||||||||||||
| Net amortization of purchase accounting adjustments | (357 | ) | (1,117 | ) | (535 | ) | (1,126 | ) | (624 | ) | (1,474 | ) | (1,352 | ) | |||||||||||||||||||||
| Core interest income on total loans, net | $ | 68,895 | $ | 66,528 | $ | 66,456 | $ | 67,878 | $ | 68,039 | $ | 135,423 | $ | 134,905 | |||||||||||||||||||||
| Prepayment penalties received on loans, net of reversals and recoveries of interest from nonaccrual loans | (2,333 | ) | (1,716 | ) | (1,497 | ) | (2,135 | ) | (2,046 | ) | (4,049 | ) | (2,993 | ) | |||||||||||||||||||||
| Base interest income on total loans, net | $ | 66,562 | $ | 64,812 | $ | 64,959 | $ | 65,743 | $ | 65,993 | $ | 131,374 | $ | 131,912 | |||||||||||||||||||||
| Average total loans, net (1) | $ | 6,647,131 | $ | 6,586,253 | $ | 6,566,654 | $ | 6,642,434 | $ | 6,697,103 | $ | 6,616,860 | $ | 6,704,237 | |||||||||||||||||||||
| Core yield on total loans | 4.15 | % | 4.04 | % | 4.05 | % | 4.09 | % | 4.06 | % | 4.09 | % | 4.02 | % | |||||||||||||||||||||
| Base yield on total loans | 4.01 | % | 3.94 | % | 3.96 | % | 3.96 | % | 3.94 | % | 3.97 | % | 3.94 | % | |||||||||||||||||||||
(1) Excludes purchase accounting average balances for all periods presented.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||||||
| Total Equity | $ | 670,812 | $ | 675,813 | $ | 679,628 | $ | 668,096 | $ | 655,167 | |||||||||||||||
| Less: | |||||||||||||||||||||||||
| Goodwill | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | |||||||||||||||
| Core deposit Intangibles | (2,282 | ) | (2,420 | ) | (2,562 | ) | (2,708 | ) | (2,859 | ) | |||||||||||||||
| Intangible deferred tax liabilities | — | 328 | 328 | 287 | 287 | ||||||||||||||||||||
| Tangible Stockholders' Common Equity | $ | 650,894 | $ | 656,085 | $ | 659,758 | $ | 648,039 | $ | 634,959 | |||||||||||||||
| Total Assets | $ | 8,339,587 | $ | 8,169,833 | $ | 8,045,911 | $ | 8,077,334 | $ | 8,159,345 | |||||||||||||||
| Less: | |||||||||||||||||||||||||
| Goodwill | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | |||||||||||||||
| Core deposit Intangibles | (2,282 | ) | (2,420 | ) | (2,562 | ) | (2,708 | ) | (2,859 | ) | |||||||||||||||
| Intangible deferred tax liabilities | — | 328 | 328 | 287 | 287 | ||||||||||||||||||||
| Tangible Assets | $ | 8,319,669 | $ | 8,150,105 | $ | 8,026,041 | $ | 8,057,277 | $ | 8,139,137 | |||||||||||||||
| Tangible Stockholders' Common Equity to Tangible Assets | 7.82 | % | 8.05 | % | 8.22 | % | 8.04 | % | 7.80 | % | |||||||||||||||
