Flushing Financial Corporation Reports 3Q21 GAAP EPS of $0.81 and Record Core EPS of $0.88
10/26/2021 - 05:30 PM
Record Net Interest Income, Loan Pipeline, and Core EPS
John R. Buran, President and CEO Commentary
UNIONDALE, N.Y., Oct. 26, 2021 (GLOBE NEWSWIRE) -- The Company reported third quarter 2021 GAAP EPS of $0.81, up 62.0% YoY, ROAA of 1.26% and ROAE of 15.42% . For the period, Core EPS of $0.88 increased 57.1% YoY with ROAA of 1.38% and ROAE of 16.88% . The strong results were from the successful implementation of our business strategy resulting in the sixth consecutive quarter of record net interest income, a record loan pipeline, and the second consecutive quarter of record core earnings.
“Loans, excluding SBA Payment Protection Program (“PPP”), were flat QoQ but increased 12% YoY. The Company’s loan pipeline increased 35% YoY and 23% QoQ to record levels as the metro New York City economy continues to normalize. Additionally, there have been eight announced or recently closed bank mergers in the Long Island market. The market has $328 billion of deposits and 18% or $60 billion involve a merger participant. As a leading community bank in this market, Flushing Bank is poised to benefit from merger disruption. The combination of an improving economy, broad based and record loan pipelines, and merger disruption should lead to positive loan growth into 2022.”John R. Buran, President and CEO
Sixth Consecutive Quarter of Record Net Interest Income; Favorable Outlook. Net interest income of $63.4 million increased 27% YoY and 4% QoQ. NIM expanded 20 bps to 3.34% from 3.14% in 2Q21, while Core NIM increased by 13 bps to 3.27% during the same period. NIM expansion was the result of cost of funds declining 4 bps, while asset yields increased 15 bps, with 8 bps due to the change in hedge fair values, increased purchase accounting accretion, and net prepayment penalty income. The funding mix improved with core deposits totaling 84% of average deposits and average borrowings declined 37% YoY. Weighted average rate on loan closings (ex PPP) rose 13 bps QoQ and the steeper yield curve should have a positive impact on net interest income over time. Capital Target Achieved; Share Repurchase Activity Resumes. Following the closing of the Empire acquisition approximately one year ago, the Company announced the goal of a TCE ratio of 8% or better by the end of 2021. This target was achieved during 3Q21 even as the Company repurchased 285,643 shares of common stock at an average price of $22.42 per share. Our capital priorities remain to 1) profitabily grow the balance sheet, 2) return dividends to shareholders, and 3) opportunistically repurchase shares.
Key Financial Metrics 1 3Q21 2Q21 1Q21 4Q20 3Q20 GAAP: EPS $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 ROAA (%) 1.26 0.93 0.93 0.18 0.81 ROAE (%) 15.42 11.95 12.29 2.27 9.94 NIM FTE (%) 3.34 3.14 3.18 3.08 3.00 Core: EPS $ 0.88 $ 0.73 $ 0.54 $ 0.58 $ 0.56 ROAA (%) 1.38 1.11 0.83 0.92 0.91 ROAE (%) 16.88 14.27 10.96 11.67 11.22 Core NIM FTE (%) 3.27 3.14 3.06 3.03 2.98 Efficiency Ratio (%) 52.3 53.4 58.6 57.6 55.4 Credit Quality: NPAs/Loans&REO (%) 0.31 0.26 0.31 0.31 0.42 LLRs/Loans (%) 0.55 0.64 0.67 0.67 0.65 LLRs/NPLs (%) 179.86 242.55 212.87 214.27 154.66 NCOs/Avg Loans (%) (0.04 ) 0.05 0.17 0.04 0.06 Balance Sheet: Avg Loans ($B) $ 6.6 $ 6.7 $ 6.7 $ 6.4 $ 5.9 Avg Dep ($B) $ 6.4 $ 6.5 $ 6.3 $ 5.5 $ 5.0 Book Value/Share $ 21.78 $ 21.16 $ 20.65 $ 20.11 $ 20.78 Tangible BV/Share $ 21.13 $ 20.51 $ 19.99 $ 19.45 $ 20.22 TCE/TA (%) 8.04 7.80 7.60 7.52 8.10
1 See “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Margin to Core and Base Net Interest Income and Net Interest Margin.”
Record net interest income up 3.8% QoQ and 26.9% YoY to $63.4 million , due to a decrease in funding costs and an increase in asset yields from an increase in hedge fair values, purchase accounting accretion, and net prepayment penalty income; core net interest income was up 1.5% QoQ and 24.9% YoY to $62.1 million Net interest margin FTE increased 20 bps QoQ and 34 bps YoY to 3.34% , and core net interest margin FTE was up 13 bps QoQ and 29 bps YoY to 3.27% ; Core NIM expansion QoQ primarily was due to an improvement in funding costs and a change in balance sheet mix Period end loans, excluding PPP, were flat QoQ but increased 11.6% YoY; loan closings were $243.9 million in 3Q21, down 24.8% QoQ but up 56.8% YoY Average deposits declined 1.6% QoQ, but increased 28.2% YoY to $6.4 billion , with core deposits 84% of total average deposits Loan pipeline increased 34.7% YoY to a record $530.7 million Benefit for credit losses was $6.9 million due to a better economic outlook, strong LTVs, and improving credit metrics; net recoveries were $0.6 million or 4 bps of average loans in 3Q21 NPAs increased 14.9% QoQ to $20.2 million , but down 18.6% YoY; criticized and classified assets were down 0.4% QoQ to $68.9 million (representing 1.04% of loans) Tangible Common Equity to Tangible Assets improved to 8.04% from 7.80% in 2Q21 Repurchased 285,643 shares at an average price of $22.42; dividends and share repurchases were 51.2% of net income in 3Q21 Income Statement Highlights Y/Y Q/Q ($000s, except EPS) 3Q21 2Q21 1Q21 4Q20 3Q20 Change Change Net Interest Income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 26.9 % 3.8 % (Benefit) Provision for Credit Losses (6,927 ) (1,598 ) 2,820 3,862 2,470 (380.4 ) 333.5 Non-interest Income (Loss) 866 (3,210 ) 6,311 (1,181 ) 1,351 (35.9 ) (127.0 ) Non-interest Expense 36,345 34,011 38,159 46,811 29,985 21.2 6.9 Income Before Income Taxes 34,812 25,416 26,224 3,878 18,820 85.0 37.0 Provision for Income Taxes 9,399 6,158 7,185 417 4,489 109.4 52.6 Net Income $ 25,413 $ 19,258 $ 19,039 $ 3,461 $ 14,331 77.3 32.0 Diluted EPS $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 62.0 32.8 Avg. Diluted Shares (000s) 31,567 31,677 31,604 30,603 28,874 9.3 (0.3 ) Core Net Income1 $ 27,829 $ 22,994 $ 16,973 $ 17,784 $ 16,168 72.1 21.0 Core EPS1 $ 0.88 $ 0.73 $ 0.54 $ 0.58 $ 0.56 57.1 20.5
1 See Reconciliation of GAAP Earnings and Core Earnings
Net interest income totaled $63.4 million in 3Q21 (an increase of 26.9% YoY and 3.8% QoQ), $61.0 million in 2Q21, $60.9 million in 1Q21, $55.7 million in 4Q20, and $49.9 million in 3Q20.
Net interest margin, FTE (“NIM”) of 3.34% , increased 34 bps YoY and 20 bps QoQ; PPP loans caused a 2 bps positive impact on the NIM in 3Q21, neutral impact in 2Q21, and a drag of 4 bps in 1Q21, 3 bps in 4Q20, and 2 bps in 3Q20 Prepayment penalty income from loans and securities, net reversals and recoveries of interest from non-accrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $3.4 million or 19 bps to the NIM compared to $1.9 million (10 bps) in 2Q21, $3.3 million (17 bps) in 1Q21, $2.1 million (11 bps) in 4Q20, and $1.7 million (11 bps) in 3Q20, respectively Excluding the items in the previous bullet, net interest margin was 3.15% in 3Q21 compared to 3.04% in 2Q21, 3.01% in 1Q21, 2.97% in 4Q20, and 2.89% in 3Q20, or an increase of 26 bps YoY and 11 bps QoQ Net PPP loan fees were $1.3 million in 3Q21, $1.2 million in 2Q21, $0.5 million in 1Q21, $0.4 million in 4Q20, and $0.2 million in 3Q20 The Company recorded a benefit for credit losses of $6.9 million in 3Q21 compared to $1.6 million in 2Q21, and provisions for credit losses of $2.8 million in 1Q21, $3.9 million in 4Q20, and $2.5 million in 3Q20.
3Q21 benefit for credit losses ($0.16 per share, net of tax) was driven by the improving economic outlook supported by the low LTVs in the real estate portfolio and low inherent risk in the total portfolio Net charge-offs (recoveries) were $(0.6) million in 3Q21 ((4) bps of average loans), $0.9 million in 2Q21 (5 bps), $2.9 million in 1Q21 (17 bps), $0.6 million in 4Q20 (4 bps), and $0.8 million in 3Q20 (6 bps) Non-interest income (loss) was $0.9 million in 3Q21, $(3.2) million in 2Q21, $6.3 million in 1Q21, $(1.2) million in 4Q20 and $1.4 million in in 3Q20.
Non-interest income included net gains (losses) from fair value adjustments of $(2.3) million in 3Q21 $(0.05) per share, net of tax, $(6.5) million $(0.15) per share, net of tax in 2Q21, $1.0 million $0.02 per share, net of tax in 1Q21, $(4.1) million $(0.11) per share, net of tax in 4Q20, and $(2.2) million $(0.06) per share, net of tax in 3Q20 Absent all above items and other immaterial adjustments, core non-interest income was $3.2 million in 3Q21, down 11.5% YoY, and 1.6% QoQ Non-interest expense totaled $36.3 million in 3Q21 (an increase of 21.2% YoY and 6.9% QoQ), compared to $34.0 million in 2Q21, $38.2 million in 1Q21, $46.8 million in 4Q20, and $30.0 million in 3Q20.
3Q21 non-interest expense includes $2.1 million of pre-tax merger charges ($0.05 per share, net of tax) 2Q21 non-interest expense includes $0.5 million of pre-tax merger benefits primarily related to a refund received from a data processing vendor ($(0.01) per share, net of tax) 1Q21 non-interest expense includes $1.0 million of pre-tax merger charges ($0.02 per share, net of tax); 1Q21 includes $3.3 million of seasonal compensation expense 4Q20 non-interest expense includes $5.3 million pre-tax merger charges ($0.14 per share, net of tax) and $7.8 million pre-tax debt prepayment penalties ($0.20 per share, net of tax) 3Q20 non-interest expense includes merger charges of $0.4 million ($0.01 per share, net of tax) Excluding the above items and other immaterial adjustments, core operating expenses were $34.1 million in 3Q21, up 15.4% YoY, but down 0.7% QoQ The efficiency ratio was 52.3% in 3Q21, 53.4% in 2Q21, 58.6% in 1Q21, 57.6% in 4Q20, and 55.4% in 3Q20 The provision for income taxes was $9.4 million in 3Q21, compared to $6.2 million in 2Q21, $7.2 million in 1Q21, $0.4 million in 4Q20, and $4.5 million in 3Q20.
The effective tax rate was 27.0% in 3Q21, 24.2% in 2Q21, 27.4% in 1Q21, 10.8% in 4Q20, and 23.9% in 3Q20 The 2Q21 effective tax rate includes $0.8 million benefit from a state tax rate change; absent this benefit the effective tax rate would have been 27.2% Balance Sheet, Credit Quality, and Capital Highlights Y/Y Q/Q ($000s, except per share data) 3Q21 2Q21 1Q21 4Q20 3Q20 Change Change Average Loans And Deposits Loans $ 6,633 $ 6,687 $ 6,700 $ 6,376 $ 5,904 12.3 % (0.8 )% Deposits 6,408 6,511 6,285 5,515 4,999 28.2 (1.6 ) Credit Quality Nonperforming Loans $ 20,217 $ 17,592 $ 21,186 $ 21,073 $ 24,792 (18.5 )% 14.9 % Nonperforming Assets 20,217 17,592 21,221 21,108 24,827 (18.6 ) 14.9 Criticized and Classified Assets 68,913 69,161 63,130 71,691 42,181 63.4 (0.4 ) Allowance for Credit Losses/Loans (%) 0.55 0.64 0.67 0.67 0.65 (10 )bps (9 )bps Capital Book Value/Share $ 21.78 $ 21.16 $ 20.65 $ 20.11 $ 20.78 4.8 % 2.9 % Tangible Book Value/Share 21.13 20.51 19.99 19.45 20.22 4.5 3.0 Tang. Common Equity/Tang. Assets (%) 8.04 7.80 7.60 7.52 8.10 (6 )bps 24 bps Leverage Ratio (%) 8.83 8.50 8.44 8.38 9.03 (20 ) 33
Average loans were $6.6 billion , an increase of 12.4% YoY, but a decline of 0.8% QoQ.
Total loan closings were $243.9 million in 3Q21, $324.4 million in 2Q21, $322.9 million in 1Q21, $316.0 million in 4Q20, and $155.6 million in 3Q20 The loan pipeline increased to a record $530.7 million at September 30, 2021, up 34.7% YoY and 22.7% QoQ PPP loans were $130.8 million at 3Q21, $197.3 million at 2Q21, $251.0 million at 1Q21, $151.9 million at 4Q20, and $111.6 million at 3Q20; forgiven PPP loans were $66.5 million in 3Q21, $69.2 million in 2Q21 and $24.1 million in 1Q21; unamortized net PPP fees were $3.2 million at September 30, 2021 Period end loans, excluding PPP loans, totaled $6.5 billion , up 11.6% YoY and flat QoQ Average Deposits totaled $6.4 billion , increasing 28.2% YoY, but down 1.6% QoQ.
Average core deposits (non-CD deposits) increased to 83.8% of total average deposits (including escrow deposits) in 3Q21, compared to 77.9% a year ago Average non-interest bearing deposits increased 58.3% YoY and 1.1% QoQ and comprised 14.6% of total average deposits (including escrow deposits) in 3Q21 compared to 11.8% a year ago Credit Quality; Non-performing loans totaled $20.2 million in 3Q21, $17.6 million in 2Q21, $21.2 million in 1Q21, $21.1 million in 4Q20 and $24.8 million in 3Q20.
Non-performing assets totaled $20.2 million , down 18.6% YoY, but up 14.9% QoQ Criticized and classified assets totaled $68.9 million in 3Q21 (104 bps of loans), $69.2 million at 2Q21 (103 bps), $63.1 million at 1Q21 (94 bps), $71.7 million at 4Q20 (107 bps), and $42.2 million at 3Q20 (71 bps) Loans classified as troubled debt restructured (TDR) totaled $13.1 million compared to $15.5 million in 2Q21 and $5.1 million a year ago Active COVID-19 forbearances totaled 38 loans with a principal balance of $162.0 million at September 30, 2021, with $121.8 million making interest payments and only $40.2 million (0.6% of loans) with full payment deferrals; over 57% of the forbearances are scheduled to exit forbearance by year end 2021 Over 87% of gross loans are collateralized by real estate and these loans have an average loan-to-value ratio of <38% as of September 30, 2021 Allowance for credit losses were 0.55% of loans at 3Q21 compared to 0.64% at 2Q21 and 0.65% a year ago Allowance for credit losses were 179.9% of nonperforming loans at 3Q21 compared to 154.7% a year ago Capital; Book value per common share increased to $21.78 at 3Q21 compared to $21.16 at 2Q21, $20.65 at 1Q21, $20.11 at 4Q20, and $20.78 at 3Q20; tangible book value per common share, a non-GAAP measure, was $21.13 at 3Q21, $20.51 at 2Q21, $19.99 at 1Q21, $19.45 in 4Q20, and $20.22 in 3Q20.
The Company paid a dividend of $0.21 per share in 3Q21 285,643 shares were repurchased at an average price of $22.42 in 3Q21 As of the end of 3Q21, 999,163 shares remain subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit Tangible common equity to tangible assets was 8.04% at 3Q21 compared to 8.10% a year ago The Company and the Bank remain well capitalized under all applicable regulatory requirements The leverage ratio was 8.83% in 3Q21 versus 9.03% in 3Q20 Conference Call Information And Fourth 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, October 27, 2021, at 9:30 AM (ET) to discuss the Company’s third quarter 2021 results and strategy. Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657 Webcast: https://services.choruscall.com/links/ffic211027.html Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658 Replay Access Code: 10151674 The conference call will be simultaneously webcast and archived through October 27, 2022 Fourth Quarter 2021 Earnings Release Date:
The Company plans to release Fourth Quarter 2021 and full year 2021 financial results after the market close on January 27, 2022; followed by a conference call at 9:30 AM (ET) on January 28, 2022.
A detailed announcement will be issued prior to the fourth quarter’s close confirming the date and time of the earnings release.
About Flushing Financial Corporation
Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, a New York State-chartered commercial bank insured by the Federal Deposit Insurance Corporation. The Bank serves consumers, businesses, professionals, corporate clients, and public entities by offering a full complement of deposit, loan, equipment finance, and cash management services through its banking offices located in Queens, Brooklyn, Manhattan, and on Long Island. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. Flushing Bank is an Equal Housing Lender. The Bank also operates an online banking division consisting of iGObanking.com®, which offers competitively priced deposit products to consumers nationwide, and BankPurely®, an eco-friendly, healthier lifestyle community brand.
Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at http://www.flushingbank.com . Flushing Financial Corporation’s earnings release and presentation slides will be available prior to the conference call at www.flushingbank.com under Investor Relations.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
Investor Contact: Susan K. Cullen, SEVP, CFO and Treasurer, 718-961-5400
Tag: FF
- Statistical Tables Follow
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES FINANCIAL HIGHLIGHTS
At or for the three months ended At or for the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (Dollars in thousands, except per share data) 2021 2021 2021 2020 2020 2021 2020 Performance Ratios (1) Return on average assets 1.26 % 0.93 % 0.93 % 0.18 % 0.81 % 1.04 % 0.58 % Return on average equity 15.42 11.95 12.29 2.27 9.94 13.24 7.30 Yield on average interest-earning assets (2) 3.84 3.69 3.77 3.82 3.84 3.77 3.88 Cost of average interest-bearing liabilities 0.61 0.66 0.69 0.86 0.98 0.65 1.27 Cost of funds 0.53 0.57 0.61 0.77 0.89 0.57 1.16 Net interest rate spread during period (2) 3.23 3.03 3.08 2.96 2.86 3.12 2.61 Net interest margin (2) 3.34 3.14 3.18 3.08 3.00 3.22 2.77 Non-interest expense to average assets 1.80 1.65 1.87 2.43 1.69 1.77 1.70 Efficiency ratio (3) 52.28 53.38 58.58 57.56 55.37 54.72 59.12 Average interest-earning assets to average interest-bearing liabilities 1.21 X 1.19 X 1.18 X 1.17 X 1.16 X 1.19 X 1.15 X Average Balances Total loans, net $ 6,633,301 $ 6,686,888 $ 6,700,476 $ 6,375,516 $ 5,904,051 $ 6,673,309 $ 5,881,858 Total interest-earning assets 7,608,317 7,790,174 7,667,217 7,243,472 6,675,896 7,688,354 6,734,979 Total assets 8,072,918 8,263,553 8,147,714 7,705,407 7,083,028 8,161,121 7,131,850 Total due to depositors 5,406,423 5,495,936 5,363,647 4,708,760 4,353,560 5,422,158 4,442,202 Total interest-bearing liabilities 6,310,859 6,532,891 6,477,871 6,169,574 5,731,899 6,439,928 5,865,045 Stockholders' equity 659,288 644,690 619,647 609,463 576,512 641,354 570,198 Per Share Data Book value per common share (4) $ 21.78 $ 21.16 $ 20.65 $ 20.11 $ 20.78 $ 21.78 $ 20.78 Tangible book value per common share (5) $ 21.13 $ 20.51 $ 19.99 $ 19.45 $ 20.22 $ 21.13 $ 20.22 Stockholders' Equity Stockholders' equity $ 668,096 $ 655,167 $ 639,201 $ 618,997 $ 586,406 $ 668,096 $ 586,406 Tangible stockholders' equity 648,039 634,959 618,839 598,476 570,571 648,039 570,571 Consolidated Regulatory Capital Ratios Tier 1 capital $ 711,276 $ 697,591 $ 679,343 $ 662,987 $ 630,380 $ 711,276 $ 630,380 Common equity Tier 1 capital 661,340 649,367 636,071 621,247 593,344 661,340 593,344 Total risk-based capital 832,255 823,494 806,922 794,034 740,499 832,255 740,499 Risk Weighted Assets 6,194,207 6,344,076 6,281,136 6,287,598 5,381,938 6,194,207 5,381,938 Tier 1 leverage capital 5% ) 8.83 % 8.50 % 8.44 % 8.38 % 9.03 % 8.83 % 9.03 % Common equity Tier 1 risk-based capital (well capitalized = 6.5% ) 10.68 10.24 10.13 9.88 11.02 10.68 11.02 Tier 1 risk-based capital 8.0% ) 11.48 11.00 10.82 10.54 11.71 11.48 11.71 Total risk-based capital 10.0% ) 13.44 12.98 12.85 12.63 13.76 13.44 13.76 Capital Ratios Average equity to average assets 8.17 % 7.80 % 7.61 % 7.91 % 8.14 % 7.86 % 8.00 % Equity to total assets 8.27 8.03 7.83 7.76 8.30 8.27 8.30 Tangible common equity to tangible assets (6) 8.04 7.80 7.60 7.52 8.10 8.04 8.10 Asset Quality Non-accrual loans (7) $ 18,292 $ 17,391 $ 18,604 $ 18,325 $ 24,792 $ 18,292 $ 24,792 Non-performing loans 20,217 17,592 21,186 21,073 24,792 20,217 24,792 Non-performing assets 20,217 17,592 21,221 21,108 24,827 20,217 24,827 Net charge-offs (recoveries) (619 ) 902 2,865 646 837 3,148 2,993 Asset Quality Ratios Non-performing loans to gross loans 0.31 % 0.26 % 0.31 % 0.31 % 0.42 % 0.31 % 0.42 % Non-performing assets to total assets 0.25 0.22 0.26 0.26 0.35 0.25 0.35 Allowance for loan losses to gross loans 0.55 0.64 0.67 0.67 0.65 0.55 0.65 Allowance for loan losses to 179.86 242.55 212.52 213.91 154.44 179.86 154.44 Allowance for loan losses to 179.86 242.55 212.87 214.27 154.66 179.86 154.66 Net charge-offs (recoveries) to average loans (0.04 ) 0.05 0.17 0.04 0.06 0.06 0.07 Full-service customer facilities 24 25 25 25 20 24 20
(See footnotes on next page)
(1) Ratios are presented on an annualized basis, where appropriate.(2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.(3) Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding merger expense, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization of purchase accounting adjustments) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges and net amortization of purchase accounting adjustments) and non-interest income (excluding life insurance proceeds, net gains and losses from the sale or disposition of securities, assets and fair value adjustments).
(4) Calculated by dividing stockholders’ equity by shares outstanding.(5) Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure, by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.(7) Excludes performing non-accrual TDR loans.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
For the three months ended For the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (In thousands, except per share data) 2021 2021 2021 2020 2020 2021 2020 Interest and Dividend Income Interest and fees on loans $ 69,198 $ 67,999 $ 69,021 $ 66,120 $ 60,367 $ 206,218 $ 182,033 Interest and dividends on securities: Interest 3,706 3,685 3,072 2,813 3,525 10,463 12,963 Dividends 7 7 8 8 9 22 35 Other interest income 42 51 36 30 13 129 325 Total interest and dividend income 72,953 71,742 72,137 68,971 63,914 216,832 195,356 Interest Expense Deposits 4,705 5,539 6,105 6,470 7,093 16,349 35,842 Other interest expense 4,884 5,164 5,140 6,769 6,897 15,188 20,047 Total interest expense 9,589 10,703 11,245 13,239 13,990 31,537 55,889 Net Interest Income 63,364 61,039 60,892 55,732 49,924 185,295 139,467 (Benefit) provision for credit losses (6,927 ) (1,598 ) 2,820 3,862 2,470 (5,705 ) 19,267 Net Interest Income After (Benefit) Provision for Credit Losses 70,291 62,637 58,072 51,870 47,454 191,000 120,200 Non-interest Income (Loss) Banking services fee income 865 1,233 2,725 1,442 1,316 4,823 3,058 Net gain (loss) on sale of securities (10 ) 123 — (610 ) — 113 (91 ) Net gain on sale of loans 131 127 31 6 — 289 42 Net gain on disposition of assets — — 621 — — 621 — Net gain (loss) from fair value adjustments (2,289 ) (6,548 ) 982 (4,129 ) (2,225 ) (7,855 ) 1,987 Federal Home Loan Bank 491 500 689 734 874 1,680 2,719 Life insurance proceeds — — — — — — 659 Bank owned life insurance 1,015 1,009 997 1,016 923 3,021 2,798 Other income 663 346 266 360 463 1,275 1,052 Total non-interest income (loss) 866 (3,210 ) 6,311 (1,181 ) 1,351 3,967 12,224 Non-interest Expense Salaries and employee benefits 20,544 19,879 22,664 22,089 17,335 63,087 52,139 Occupancy and equipment 3,534 3,522 3,367 3,446 3,021 10,423 8,688 Professional services 1,899 1,988 2,400 2,463 2,064 6,287 6,911 FDIC deposit insurance 618 729 1,213 562 727 2,560 2,114 Data processing 1,759 1,419 2,109 3,411 1,668 5,287 5,175 Depreciation and amortization 1,627 1,638 1,639 1,579 1,542 4,904 4,633 Other real estate owned/foreclosure 182 22 (10 ) 95 240 194 121 Prepayment penalty on borrowings — — — 7,834 — — — Other operating expenses 6,182 4,814 4,777 5,332 3,388 15,773 11,339 Total non-interest expense 36,345 34,011 38,159 46,811 29,985 108,515 91,120 Income Before Income Taxes 34,812 25,416 26,224 3,878 18,820 86,452 41,304 Provision (benefit) for Income Taxes Federal 6,410 4,857 5,071 533 3,359 16,338 8,655 State and local 2,989 1,301 2,114 (116 ) 1,130 6,404 1,436 Total taxes 9,399 6,158 7,185 417 4,489 22,742 10,091 Net Income $ 25,413 $ 19,258 $ 19,039 $ 3,461 $ 14,331 $ 63,710 $ 31,213 Basic earnings per common share $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 $ 2.02 $ 1.08 Diluted earnings per common share $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 $ 2.02 $ 1.08 Dividends per common share $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.63 $ 0.63 Basic average shares 31,567 31,677 31,604 30,603 28,874 31,616 28,865 Diluted average shares 31,567 31,677 31,604 30,603 28,874 31,616 28,865
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, June 30, March 31, December 31, September 30, (Dollars in thousands) 2021 2021 2021 2020 2020 ASSETS Cash and due from banks $ 178,598 $ 145,971 $ 174,420 $ 157,388 $ 75,560 Securities held-to-maturity: Mortgage-backed securities 7,899 7,904 7,909 7,914 7,919 Other securities 49,989 49,986 49,912 49,918 50,252 Securities available for sale: Mortgage-backed securities 584,145 596,661 518,781 404,460 386,235 Other securities 212,654 224,784 242,440 243,514 234,721 Loans 6,630,354 6,718,806 6,745,316 6,704,674 5,941,398 Allowance for loan losses (36,363 ) (42,670 ) (45,099 ) (45,153 ) (38,343 ) Net loans 6,593,991 6,676,136 6,700,217 6,659,521 5,903,055 Interest and dividends receivable 40,912 43,803 44,941 44,041 36,068 Bank premises and equipment, net 24,018 26,438 27,498 28,179 25,766 Federal Home Loan Bank of New York stock 36,158 41,630 41,498 43,439 57,119 Bank owned life insurance 184,730 183,715 182,707 181,710 158,701 Goodwill 17,636 17,636 17,636 17,636 16,127 Core deposit intangibles 2,708 2,859 3,013 3,172 — Right of use asset 50,155 51,972 53,802 50,743 42,326 Other assets 93,741 89,850 94,410 84,759 69,207 Total assets $ 8,077,334 $ 8,159,345 $ 8,159,184 $ 7,976,394 $ 7,063,056 LIABILITIES Deposits $ 6,421,391 $ 6,298,790 $ 6,326,577 $ 6,090,733 $ 4,906,359 Mortgagors' escrow deposits 67,207 58,230 74,348 45,622 57,136 Borrowed funds 752,925 971,827 948,920 1,020,895 1,323,975 Operating lease liability 54,239 56,151 58,080 59,100 49,737 Other liabilities 113,476 119,180 112,058 141,047 139,443 Total liabilities 7,409,238 7,504,178 7,519,983 7,357,397 6,476,650 STOCKHOLDERS' EQUITY Preferred stock (5,000,000 shares authorized; none issued) — — — — — Common stock ($0.01 par value; 100,000,000 shares authorized) 341 341 341 341 315 Additional paid-in capital 262,009 260,958 260,019 261,533 227,877 Treasury stock (71,738 ) (65,335 ) (65,479 ) (69,400 ) (69,409 ) Retained earnings 486,418 467,620 455,023 442,789 445,931 Accumulated other comprehensive loss, net of taxes (8,934 ) (8,417 ) (10,703 ) (16,266 ) (18,308 ) Total stockholders' equity 668,096 655,167 639,201 618,997 586,406 Total liabilities and stockholders' equity $ 8,077,334 $ 8,159,345 $ 8,159,184 $ 7,976,394 $ 7,063,056 (In thousands) Issued shares 34,088 34,088 34,088 34,088 31,531 Outstanding shares 30,676 30,962 30,954 30,776 28,218 Treasury shares 3,412 3,126 3,133 3,312 3,312
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES AVERAGE BALANCE SHEETS
For the three months ended For the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (In thousands) 2021 2021 2021 2020 2020 2021 2020 Interest-earning Assets: Mortgage loans, net $ 5,158,213 $ 5,130,400 $ 5,155,975 $ 5,010,097 $ 4,721,742 $ 5,148,204 $ 4,727,094 Other loans, net 1,475,088 1,556,488 1,544,501 1,365,419 1,182,309 1,525,105 1,154,764 Total loans, net 6,633,301 6,686,888 6,700,476 6,375,516 5,904,051 6,673,309 5,881,858 Taxable securities: Mortgage-backed securities 590,732 578,134 433,917 413,875 413,902 534,836 462,216 Other securities 217,763 232,020 300,828 266,663 243,754 249,899 243,782 Total taxable securities 808,495 810,154 734,745 680,538 657,656 784,735 705,998 Tax-exempt securities: Other securities 50,832 50,830 50,828 50,768 51,652 50,830 58,464 Total tax-exempt securities 50,832 50,830 50,828 50,768 51,652 50,830 58,464 Interest-earning deposits and federal funds sold 115,689 242,302 181,168 136,650 62,537 179,480 88,659 Total interest-earning assets 7,608,317 7,790,174 7,667,217 7,243,472 6,675,896 7,688,354 6,734,979 Other assets 464,601 473,379 480,497 461,935 407,132 472,767 396,871 Total assets $ 8,072,918 $ 8,263,553 $ 8,147,714 $ 7,705,407 $ 7,083,028 $ 8,161,121 $ 7,131,850 Interest-bearing Liabilities: Deposits: Savings accounts $ 153,120 $ 153,113 $ 170,079 $ 163,382 $ 160,100 $ 158,708 $ 180,829 NOW accounts 2,107,866 2,255,581 2,185,384 1,924,840 1,625,109 2,182,660 1,495,473 Money market accounts 2,107,473 2,043,257 1,905,543 1,507,245 1,461,996 2,019,497 1,579,712 Certificate of deposit accounts 1,037,964 1,043,985 1,102,641 1,113,293 1,106,355 1,061,293 1,186,188 Total due to depositors 5,406,423 5,495,936 5,363,647 4,708,760 4,353,560 5,422,158 4,442,202 Mortgagors' escrow accounts 68,562 91,545 65,372 75,005 55,868 75,171 69,427 Total interest-bearing deposits 5,474,985 5,587,481 5,429,019 4,783,765 4,409,428 5,497,329 4,511,629 Borrowings 835,874 945,410 1,048,852 1,385,809 1,322,471 942,599 1,353,416 Total interest-bearing liabilities 6,310,859 6,532,891 6,477,871 6,169,574 5,731,899 6,439,928 5,865,045 Non interest-bearing demand deposits 933,443 923,220 856,052 731,170 589,674 904,522 533,563 Other liabilities 169,328 162,752 194,144 195,200 184,943 175,317 163,044 Total liabilities 7,413,630 7,618,863 7,528,067 7,095,944 6,506,516 7,519,767 6,561,652 Equity 659,288 644,690 619,647 609,463 576,512 641,354 570,198 Total liabilities and equity $ 8,072,918 $ 8,263,553 $ 8,147,714 $ 7,705,407 $ 7,083,028 $ 8,161,121 $ 7,131,850 Net interest-earning assets $ 1,297,458 $ 1,257,283 $ 1,189,346 $ 1,073,898 $ 943,997 $ 1,248,426 $ 869,934
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES NET INTEREST INCOME AND NET INTEREST MARGIN
For the three months ended For the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (Dollars in thousands) 2021 2021 2021 2020 2020 2021 2020 Interest Income: Mortgage loans, net $ 55,114 $ 52,987 $ 55,219 $ 53,777 $ 49,814 $ 163,320 $ 148,945 Other loans, net 14,084 15,012 13,802 12,343 10,553 42,898 33,088 Total loans, net 69,198 67,999 69,021 66,120 60,367 206,218 182,033 Taxable securities: Mortgage-backed securities 2,279 2,233 1,698 1,435 1,928 6,210 7,295 Other securities 1,008 1,037 963 957 1,166 3,008 4,221 Total taxable securities 3,287 3,270 2,661 2,392 3,094 9,218 11,516 Tax-exempt securities: Other securities 539 535 530 543 557 1,604 1,876 Total tax-exempt securities 539 535 530 543 557 1,604 1,876 Interest-earning deposits and federal funds sold 42 51 36 30 13 129 325 Total interest-earning assets 73,066 71,855 72,248 69,085 64,031 217,169 195,750 Interest Expense: Deposits: Savings accounts $ 61 $ 66 $ 75 $ 75 $ 65 $ 202 $ 420 NOW accounts 1,227 1,499 1,706 1,320 1,242 4,432 7,989 Money market accounts 1,683 2,060 2,100 2,010 2,108 5,843 12,358 Certificate of deposit accounts 1,734 1,913 2,222 3,065 3,700 5,869 15,031 Total due to depositors 4,705 5,538 6,103 6,470 7,115 16,346 35,798 Mortgagors' escrow accounts — 1 2 — (22 ) 3 44 Total interest-bearing deposits 4,705 5,539 6,105 6,470 7,093 16,349 35,842 Borrowings 4,884 5,164 5,140 6,769 6,897 15,188 20,047 Total interest-bearing liabilities 9,589 10,703 11,245 13,239 13,990 31,537 55,889 Net interest income- tax equivalent $ 63,477 $ 61,152 $ 61,003 $ 55,846 $ 50,041 $ 185,632 $ 139,861 Included in net interest income above: Prepayment penalties received on loans and securities and net of reversals and recovered interest from non-accrual loans $ 2,136 $ 2,046 $ 948 $ 1,093 $ 1,518 $ 5,130 $ 3,483 Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income 194 (664 ) 1,427 1,023 230 957 (2,208 ) Purchase accounting adjustments 1,100 565 922 11 — 2,587 — Interest-earning Assets Yields: Mortgage loans, net 4.27 % 4.13 % 4.28 % 4.29 % 4.22 % 4.23 % 4.20 % Other loans, net 3.82 3.86 3.57 3.62 3.57 3.75 3.82 Total loans, net 4.17 4.07 4.12 4.15 4.09 4.12 4.13 Taxable securities: Mortgage-backed securities 1.54 1.54 1.57 1.39 1.86 1.55 2.10 Other securities 1.85 1.79 1.28 1.44 1.91 1.60 2.31 Total taxable securities 1.63 1.61 1.45 1.41 1.88 1.57 2.17 Tax-exempt securities: (1) Other securities 4.24 4.21 4.17 4.28 4.31 4.21 4.28 Total tax-exempt securities 4.24 4.21 4.17 4.28 4.31 4.21 4.28 Interest-earning deposits and federal funds sold 0.15 0.08 0.08 0.09 0.08 0.10 0.49 Total interest-earning assets 3.84 % 3.69 % 3.77 % 3.82 % 3.84 % 3.77 % 3.88 % Interest-bearing Liabilities Yields: Deposits: Savings accounts 0.16 % 0.17 % 0.18 % 0.18 % 0.16 % 0.17 % 0.31 % NOW accounts 0.23 0.27 0.31 0.27 0.31 0.27 0.71 Money market accounts 0.32 0.40 0.44 0.53 0.58 0.39 1.04 Certificate of deposit accounts 0.67 0.73 0.81 1.10 1.34 0.74 1.69 Total due to depositors 0.35 0.40 0.46 0.55 0.65 0.40 1.07 Mortgagors' escrow accounts — — 0.01 — (0.16 ) 0.01 0.08 Total interest-bearing deposits 0.34 0.40 0.45 0.54 0.64 0.40 1.06 Borrowings 2.34 2.18 1.96 1.95 2.09 2.15 1.97 Total interest-bearing liabilities 0.61 % 0.66 % 0.69 % 0.86 % 0.98 % 0.65 % 1.27 % Net interest rate spread (tax equivalent) 3.23 % 3.03 % 3.08 % 2.96 % 2.86 % 3.12 % 2.61 % Net interest margin (tax equivalent) 3.34 % 3.14 % 3.18 % 3.08 % 3.00 % 3.22 % 2.77 % Ratio of interest-earning assets to interest-bearing liabilities 1.21 X 1.19 X 1.18 X 1.17 X 1.16 X 1.19 X 1.15 X
(1) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES DEPOSIT and LOAN COMPOSITION
Deposit Composition
September 2021 vs. September 2021 vs. September 30, June 30, March 31, December 31, September 30, June 2021 September 2020 (Dollars in thousands) 2021 2021 2021 2020 2020 % Change % Change Non-interest bearing $ 941,259 $ 945,491 $ 917,189 $ 778,672 $ 607,954 (0.4 )% 54.8 % Interest bearing: Certificate of deposit accounts 1,040,098 1,020,615 1,070,595 1,138,361 1,051,644 1.9 (1.1 ) Savings accounts 152,306 152,931 170,272 168,183 160,294 (0.4 ) (5.0 ) Money market accounts 2,152,085 2,057,188 1,990,656 1,682,345 1,381,552 4.6 55.8 NOW accounts 2,135,643 2,122,565 2,177,865 2,323,172 1,704,915 0.6 25.3 Total interest-bearing deposits 5,480,132 5,353,299 5,409,388 5,312,061 4,298,405 2.4 27.5 Total deposits $ 6,421,391 $ 6,298,790 $ 6,326,577 $ 6,090,733 $ 4,906,359 1.9 % 30.9 %
September 2021 vs. September 2021 vs. September 30, June 30, March 31, December 31, September 30, June 2021 September 2020 (Dollars in thousands) 2021 2021 2021 2020 2020 % Change % Change Multifamily residential $ 2,498,980 $ 2,542,010 $ 2,525,967 $ 2,533,952 $ 2,252,757 (1.7 )% 10.9 % Commercial real estate 1,745,855 1,726,895 1,721,702 1,754,754 1,636,659 1.1 6.7 One-to-four family ― mixed-use property 579,100 582,211 595,431 602,981 585,159 (0.5 ) (1.0 ) One-to-four family ― residential 280,343 288,652 239,391 245,211 191,011 (2.9 ) 46.8 Co-operative apartments 7,804 7,883 7,965 8,051 8,132 (1.0 ) (4.0 ) Construction 71,464 62,802 61,528 83,322 63,567 13.8 12.4 Mortgage Loans 5,183,546 5,210,453 5,151,984 5,228,271 4,737,285 (0.5 ) 9.4 Small Business Administration (1) 148,855 215,158 267,120 167,376 124,649 (30.8 ) 19.4 Taxi medallion — — — 2,757 2,317 — (100.0 ) Commercial business and other 1,294,688 1,291,526 1,326,657 1,303,225 1,063,429 0.2 21.7 Non-mortgage loans 1,443,543 1,506,684 1,593,777 1,473,358 1,190,395 (4.2 ) 21.3 Net unamortized premiums and unearned loan fees (2) 3,265 1,669 (445 ) 3,045 13,718 95.6 (76.2 ) Allowance for loan losses (36,363 ) (42,670 ) (45,099 ) (45,153 ) (38,343 ) (14.8 ) (5.2 ) Net loans $ 6,593,991 $ 6,676,136 $ 6,700,217 $ 6,659,521 $ 5,903,055 (1.2 )% 11.7 %
(1) Includes $130.8 million , $197.3 million , $251.0 million , $151.9 million and $111.6 million of PPP loans at September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020, and September 30, 2020, respectively.
(2) Includes $8.6 million , $9.7 million , $10.5 million , and $11.3 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES LOAN CLOSINGS and RATES
Loan Closings
For the three months ended For the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (In thousands) 2021 2021 2021 2020 2020 2021 2020 Multifamily residential $ 41,850 $ 66,913 $ 58,553 $ 52,024 $ 33,733 $ 167,316 $ 160,705 Commercial real estate 48,447 37,963 17,156 57,634 26,644 103,566 134,218 One-to-four family – mixed-use property 12,823 7,135 8,712 9,692 3,867 28,670 25,439 One-to-four family – residential 2,761 59,494 3,131 8,422 2,296 65,386 13,383 Co-operative apartments — — — — — — 704 Construction 8,687 5,281 7,123 6,869 5,420 21,091 14,990 Mortgage Loans 114,568 176,786 94,675 134,641 71,960 386,029 349,439 Small Business Administration (1) 415 17,585 125,093 598 18,456 143,093 111,754 Commercial business and other 128,946 130,036 103,118 180,787 65,160 362,100 226,895 Non-mortgage Loans 129,361 147,621 228,211 181,385 83,616 505,193 338,649 Total Closings $ 243,929 $ 324,407 $ 322,886 $ 316,026 $ 155,576 $ 891,222 $ 688,088
(1) Includes $15.5 million , $123.2 million and $18.4 million of PPP closings for the three months ended June 30, 2021, March 31, 2021, and September 30, 2020, respectively.
Weighted Average Rate on Loan Closings
For the three months ended September 30, June 30, March 31, December 31, September 30, Loan type 2021 2021 2021 2020 2020 Mortgage loans 3.80 % 3.53 % 3.47 % 3.47 % 3.56 % Non-mortgage loans 3.49 3.23 2.26 3.37 2.81 Total loans 3.64 % 3.39 % 2.62 % 3.41 % 3.16 % Excluding PPP loans 3.64 % 3.51 % 3.62 % 3.41 % 3.45 %
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES ASSET QUALITY
Allowance for Loan Losses
For the three months ended For the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (Dollars in thousands) 2021 2021 2021 2020 2020 2021 2020 Allowance for loan losses Beginning balances $ 42,670 $ 45,099 $ 45,153 $ 38,343 $ 36,710 45,153 21,751 Adoption of Current Expected Credit Losses — — — — — — 379 Net loan charge-off (recoveries): Multifamily residential — — 33 (11 ) (14 ) $ 33 $ (27 ) Commercial real estate — — 64 — — 64 — One-to-four family – mixed-use property (123 ) 3 19 — (60 ) (101 ) (135 ) One-to-four family – residential (147 ) (2 ) (5 ) (2 ) (2 ) (154 ) (10 ) Small Business Administration (8 ) (9 ) (10 ) (3 ) (47 ) (27 ) 111 Taxi medallion (1,235 ) (222 ) 2,758 124 951 1,301 951 Commercial business and other 894 1,132 6 538 9 2,032 2,103 Total (619 ) 902 2,865 646 837 3,148 2,993 (Benefit) provision for loan losses (6,926 ) (1,527 ) 2,811 3,357 2,470 (5,642 ) 19,206 Allowance recorded at the time of Acquisition — — — 4,099 — — — Ending balance $ 36,363 $ 42,670 $ 45,099 $ 45,153 $ 38,343 $ 36,363 $ 38,343 Gross charge-offs $ 1,019 $ 1,186 $ 2,922 $ 752 $ 964 $ 5,127 $ 3,253 Gross recoveries 1,638 284 57 106 127 1,979 260 Allowance for loan losses to gross loans 0.55 % 0.64 % 0.67 % 0.67 % 0.65 % 0.55 % 0.65 % Net loan charge-offs (recoveries) to average loans (0.04 ) 0.05 0.17 0.04 0.06 0.06 0.07
September 30, June 30, March 31, December 31, September 30, (Dollars in thousands) 2021 2021 2021 2020 2020 Loans 90 Days Or More Past Due and Still Accruing: Multifamily residential $ — $ 201 $ 201 $ 201 $ — Commercial real estate — — — 2,547 — Construction 873 — 2,381 — — Commercial business and other 1,052 — — — — Total 1,925 201 2,582 2,748 — Non-accrual Loans: Multifamily residential 4,192 4,669 4,338 2,524 2,661 Commercial real estate 613 8 8 1,683 2,657 One-to-four family - mixed-use property (1) 2,204 2,309 2,355 1,366 1,366 One-to-four family - residential 7,807 6,940 7,335 5,854 6,454 Small Business Administration 976 976 1,151 1,151 1,151 Taxi medallion(1) — — — 2,317 2,218 Commercial business and other(1) 2,500 2,489 3,417 3,430 8,285 Total 18,292 17,391 18,604 18,325 24,792 Total Non-performing Loans (NPLs) 20,217 17,592 21,186 21,073 24,792 Other Non-performing Assets: Other asset acquired through foreclosure — — 35 35 35 Total — — 35 35 35 Total Non-performing Assets $ 20,217 $ 17,592 $ 21,221 $ 21,108 $ 24,827 Non-performing Assets to Total Assets 0.25 % 0.22 % 0.26 % 0.26 % 0.35 % Allowance For Loan Losses to NPLs 179.9 % 242.6 % 212.9 % 214.3 % 154.7 %
(1) Not included in the above analysis are non-accrual performing TDR one-to-four family mixed use property loans totaling $0.3 million each in 3Q21, 2Q21, 1Q21, 4Q20, and 3Q20; non-accrual performing TDR taxi medallion loans totaling $0.4 million in 4Q20 and $0.1 million in 3Q20, and non-accrual performing TDR commercial business loans totaling $2.2 million each in 2Q21, 1Q21, and 4Q20, and $1.0 million in 3Q20.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
Non-cash Fair Value Adjustments to GAAP Earnings
The variance in GAAP and core earnings is partly driven by the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to swaps designated to protect against rising rates and borrowing carried at fair value under the fair value option. As the swaps get closer to maturity, the volatility in fair value adjustments will dissipate. In a declining interest rate environment, the movement in the curve exaggerates our mark-to-market loss position. In a rising interest rate environment or a steepening of the yield curve, the loss position would experience an improvement.
Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Base Net Interest Income FTE, Base Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Base Interest Income and Yield on Total Loans, Core Non-interest Income, Core Non-interest Expense and Tangible Book Value per common share are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and non-interest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.
These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
For the three months ended For the nine months ended (Dollars in thousands, September 30, June 30, March 31, December 31, September 30, September 30, September 30, except per share data) 2021 2021 2021 2020 2020 2021 2020 GAAP income before income taxes $ 34,812 $ 25,416 $ 26,224 $ 3,878 $ 18,820 $ 86,452 $ 41,304 Day 1, Provision for Credit Losses - Empire transaction (Provision for credit losses) — — — 1,818 — — — Net (gain) loss from fair value adjustments (Non-interest income (loss)) 2,289 6,548 (982 ) 4,129 2,225 7,855 (1,987 ) Net (gain) loss on sale of securities 10 (123 ) — 610 — (113 ) 91 Life insurance proceeds — — — — — — (659 ) Net gain on disposition of assets — — (621 ) — — (621 ) — Net (gain) loss from fair value adjustments on qualifying hedges (194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208 Prepayment penalty on borrowings — — — 7,834 — — — Net amortization of purchase accounting adjustments (Various) (958 ) (418 ) (789 ) 80 — (2,165 ) — Merger (benefit) expense (Various) 2,096 (490 ) 973 5,349 422 2,579 1,545 Core income before taxes 38,055 31,597 23,378 22,675 21,237 93,030 42,502 Provision for income taxes for core income 10,226 8,603 6,405 4,891 5,069 25,234 10,537 Core net income $ 27,829 $ 22,994 $ 16,973 $ 17,784 $ 16,168 $ 67,796 $ 31,965 GAAP diluted earnings per common share $ 0.81 $ 0.61 $ 0.60 $ 0.11 $ 0.50 $ 2.02 $ 1.08 Day 1, Provision for Credit Losses - Empire transaction, net of tax — — — 0.05 — — — Net (gain) loss from fair value adjustments, net of tax 0.05 0.15 (0.02 ) 0.11 0.06 0.18 (0.05 ) Net loss on sale of securities, net of tax — — — 0.02 — — — Life insurance proceeds — — — — — — (0.02 ) Net gain on disposition of assets, net of tax — — (0.01 ) — — (0.01 ) — Net (gain) loss from fair value adjustments on qualifying hedges, net of tax — 0.02 (0.03 ) (0.03 ) (0.01 ) (0.02 ) 0.06 Prepayment penalty on borrowings, net of tax — — — 0.20 — — — Net amortization of purchase accounting adjustments, net of tax (0.02 ) (0.01 ) (0.02 ) — — (0.05 ) — Merger (benefit) expense, net of tax 0.05 (0.01 ) 0.02 0.14 0.01 0.06 0.04 NYS tax change — (0.02 ) — — — (0.02 ) — Core diluted earnings per common share(1) $ 0.88 $ 0.73 $ 0.54 $ 0.58 $ 0.56 $ 2.14 $ 1.11 Core net income, as calculated above $ 27,829 $ 22,994 $ 16,973 $ 17,784 $ 16,168 $ 67,796 $ 31,965 Average assets 8,072,918 8,263,553 8,147,714 7,705,407 7,083,028 8,161,121 7,131,850 Average equity 659,288 644,690 619,647 609,463 576,512 641,354 570,198 Core return on average assets(2) 1.38 % 1.11 % 0.83 % 0.92 % 0.91 % 1.11 % 0.60 % Core return on average equity(2) 16.88 % 14.27 % 10.96 % 11.67 % 11.22 % 14.09 % 7.47 %
(1) Core diluted earnings per common share may not foot due to rounding.(2) Ratios are calculated on an annualized basis.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES RECONCILIATION OF GAAP REVENUE and PRE-PROVISION PRE-TAX NET REVENUE
For the three months ended For the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (Dollars in thousands) 2021 2021 2021 2020 2020 2021 2020 GAAP Net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467 Net (gain) loss from fair value adjustments on qualifying hedges (194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208 Net amortization of purchase accounting adjustments (1,100 ) (565 ) (922 ) (11 ) — (2,587 ) — Core Net interest income $ 62,070 $ 61,138 $ 58,543 $ 54,698 $ 49,694 $ 181,751 $ 141,675 GAAP Non-interest income (loss) $ 866 $ (3,210 ) $ 6,311 $ (1,181 ) $ 1,351 $ 3,967 $ 12,224 Net (gain) loss from fair value adjustments 2,289 6,548 (982 ) 4,129 2,225 7,855 (1,987 ) Net loss on sale of securities 10 (123 ) — 610 — (113 ) 91 Life insurance proceeds — — — — — — (659 ) Net gain on sale of assets — — (621 ) — — (621 ) — Core Non-interest income $ 3,165 $ 3,215 $ 4,708 $ 3,558 $ 3,576 $ 11,088 $ 9,669 GAAP Non-interest expense $ 36,345 $ 34,011 $ 38,159 $ 46,811 $ 29,985 $ 108,515 $ 91,120 Prepayment penalty on borrowings — — — (7,834 ) — — — Net amortization of purchase accounting adjustments (142 ) (147 ) (133 ) (91 ) — (422 ) — Merger (benefit) expense (2,096 ) 490 (973 ) (5,349 ) (422 ) (2,579 ) (1,545 ) Core Non-interest expense $ 34,107 $ 34,354 $ 37,053 $ 33,537 $ 29,563 $ 105,514 $ 89,575 Net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467 Non-interest income (loss) 866 (3,210 ) 6,311 (1,181 ) 1,351 3,967 12,224 Non-interest expense (36,345 ) (34,011 ) (38,159 ) (46,811 ) (29,985 ) (108,515 ) (91,120 ) Pre-provision pre-tax net revenue $ 27,885 $ 23,818 $ 29,044 $ 7,740 $ 21,290 $ 80,747 $ 60,571 Core: Net interest income $ 62,070 $ 61,138 $ 58,543 $ 54,698 $ 49,694 $ 181,751 $ 141,675 Non-interest income 3,165 3,215 4,708 3,558 3,576 11,088 9,669 Non-interest expense (34,107 ) (34,354 ) (37,053 ) (33,537 ) (29,563 ) (105,514 ) (89,575 ) Pre-provision pre-tax net revenue $ 31,128 $ 29,999 $ 26,198 $ 24,719 $ 23,707 $ 87,325 $ 61,769 Efficiency Ratio 52.3 % 53.4 % 58.6 % 57.6 % 55.4 % 54.7 % 59.1 %
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN to CORE and BASE NET INTEREST INCOME
For the three months ended For the nine months ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, (Dollars in thousands) 2021 2021 2021 2020 2020 2021 2020 GAAP net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467 Net (gain) loss from fair value adjustments on qualifying hedges (194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208 Net amortization of purchase accounting adjustments (1,100 ) (565 ) (922 ) (11 ) — (2,587 ) — Tax equivalent adjustment 113 113 111 114 117 337 394 Core net interest income FTE $ 62,183 $ 61,251 $ 58,654 $ 54,812 $ 49,811 $ 182,088 $ 142,069 Prepayment penalties received on loans and securities, net of reversals and recoveries of interest from non-accrual loans (2,136 ) (2,046 ) (948 ) (1,093 ) (1,518 ) (5,130 ) (3,483 ) Base net interest income FTE $ 60,047 $ 59,205 $ 57,706 $ 53,719 $ 48,293 $ 176,958 $ 138,586 Total average interest-earning assets (1) $ 7,616,332 $ 7,799,176 $ 7,676,833 $ 7,245,147 $ 6,675,896 $ 7,697,229 $ 6,734,979 Core net interest margin FTE 3.27 % 3.14 % 3.06 % 3.03 % 2.98 % 3.15 % 2.81 % Base net interest margin FTE 3.15 % 3.04 % 3.01 % 2.97 % 2.89 % 3.07 % 2.74 % GAAP interest income on total loans, net $ 69,198 $ 67,999 $ 69,021 $ 66,120 $ 60,367 $ 206,218 $ 182,033 Net (gain) loss from fair value adjustments on qualifying hedges (194 ) 664 (1,427 ) (1,023 ) (230 ) (957 ) 2,208 Net amortization of purchase accounting adjustments (1,126 ) (624 ) (728 ) (356 ) — (2,478 ) — Core interest income on total loans, net $ 67,878 $ 68,039 $ 66,866 $ 64,741 $ 60,137 $ 202,783 $ 184,241 Prepayment penalties received on loans, net of reversals and recoveries of interest from non-accrual loans (2,135 ) (2,046 ) (947 ) (1,093 ) (1,443 ) (5,128 ) (3,408 ) Base interest income on total loans, net $ 65,743 $ 65,993 $ 65,919 $ 63,648 $ 58,694 $ 197,655 $ 180,833 Average total loans, net (1) $ 6,642,434 $ 6,697,103 $ 6,711,446 $ 6,379,429 $ 5,904,051 $ 6,683,412 $ 5,881,858 Core yield on total loans 4.09 % 4.06 % 3.99 % 4.06 % 4.07 % 4.05 % 4.18 % Base yield on total loans 3.96 % 3.94 % 3.93 % 3.99 % 3.98 % 3.94 % 4.10 %
(1) Excludes purchase accounting average balances for three months ended September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES CALCULATION OF TANGIBLE STOCKHOLDERS’ COMMON EQUITY to TANGIBLE ASSETS
September 30, June 30, March 31, December 31, September 30, (Dollars in thousands) 2021 2021 2021 2020 2020 Total Equity $ 668,096 $ 655,167 $ 639,201 $ 618,997 $ 586,406 Less: Goodwill (17,636 ) (17,636 ) (17,636 ) (17,636 ) (16,127 ) Core deposit Intangibles (2,708 ) (2,859 ) (3,013 ) (3,172 ) — Intangible deferred tax liabilities 287 287 287 287 292 Tangible Stockholders' Common Equity $ 648,039 $ 634,959 $ 618,839 $ 598,476 $ 570,571 Total Assets $ 8,077,334 $ 8,159,345 $ 8,159,184 $ 7,976,394 $ 7,063,056 Less: Goodwill (17,636 ) (17,636 ) (17,636 ) (17,636 ) (16,127 ) Core deposit Intangibles (2,708 ) (2,859 ) (3,013 ) (3,172 ) — Intangible deferred tax liabilities 287 287 287 287 292 Tangible Assets $ 8,057,277 $ 8,139,137 $ 8,138,822 $ 7,955,873 $ 7,047,221 Tangible Stockholders' Common Equity to Tangible Assets 8.04 % 7.80 % 7.60 % 7.52 % 8.10 %
