Flushing Financial Corporation Reports 2Q22 GAAP EPS of $0.81 and Core EPS of $0.70

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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
- 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 (
  • 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
  • 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(R), 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(R) and BankPurely(R) 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 1.22X 1.22 X 1.21 X 1.19X 1.22X 1.19X
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 1.22X 1.21X 1.19 X 1.22 X 1.19X



(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 %



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