Flushing Financial Corporation Reports 4Q21 GAAP EPS of $0.58 and Core EPS of $0.67
Record GAAP and Core EPS for 2021
John R. Buran, President and CEO Commentary
UNIONDALE, N.Y., Jan. 27, 2022 (GLOBE NEWSWIRE) — The Company reported fourth quarter 2021 GAAP EPS of $0.58, up 427% YoY, ROAA of 0.89%, and ROAE of 10.77%. For the fourth quarter, Core EPS of $0.67 increased, 16% YoY with ROAA of 1.04% and ROAE of 12.49%. Record GAAP and Core EPS for 2021 of $2.59 and $2.81, respectively.
| “2021 was a record year for earnings but it was also a challenging year for employees dealing with the pandemic and a new working environment. Our people continued to tirelessly navigate these challenges, as they supported and served customers, and masterfully executed our strategic objectives. Our employees are our competitive advantage. As a reward for our record year of earnings and employee performance through the pandemic, the Company recorded a one-time increase in compensation and benefits of $4.3 million for all employees. We are looking forward to an exciting year in 2022.” |
| – John R. Buran, President and CEO |
Slight NIM Compression QoQ; Loan Growth Returns. Net interest income of $62.7 million increased 12.5% YoY, but declined 1.1% QoQ. NIM expanded 21 bps to 3.29% YoY, but declined 5 bps from 3Q21. Core NIM increased by 18 bps to 3.21% YoY and compressed 6 bps QoQ. The decline in the NIM QoQ was primarily due to an unfavorable shift in balance sheet mix with high levels of interest-earning deposits and federal funds sold, which was fully deployed by the end of the year. Loans, excluding SBA Paycheck Protection Program (“PPP”), increased 3.7% annualized in 4Q21 and loan closings were up 49% QoQ. Our loan pipeline, which grew 21% YoY, declined 19% QoQ from the record 3Q21 level of $530.7 million. With the yield curve steepening and the Federal Reserve expected to increase short-term rates, we expect refinance volumes will slow in 2022. Additionally, we continue to benefit from the merger disruption in our markets as we have hired 24 people (including 9 revenue producers) in 2021 from institutions involved with mergers. We are looking forward to additional expansion opportunities in 2022.
Returned 56% of Earnings in 4Q21; Capital Ratios Increase. The Company repurchased 150,976 shares of common stock at an average price of $23.75. Cash returned to shareholders through dividends and share repurchases was 56% of earnings in 4Q21. TCE/TA1 improved to 8.22% in 4Q21 from 8.04% in 3Q21 and 7.52% in 4Q20. Our capital priorities remain unchanged: 1) profitably grow the balance sheet, 2) return dividends to shareholders, and 3) opportunistically repurchase shares.
| Key Financial Metrics2 | ||||||||||||||||||
| 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | ||||||||||||||
| GAAP: | ||||||||||||||||||
| EPS | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 0.60 | $ | 0.11 | ||||||||
| ROAA (%) | 0.89 | 1.26 | 0.93 | 0.93 | 0.18 | |||||||||||||
| ROAE (%) | 10.77 | 15.42 | 11.95 | 12.29 | 2.27 | |||||||||||||
| NIM FTE3 (%) | 3.29 | 3.34 | 3.14 | 3.18 | 3.08 | |||||||||||||
| Core: | ||||||||||||||||||
| EPS | $ | 0.67 | $ | 0.88 | $ | 0.73 | $ | 0.54 | $ | 0.58 | ||||||||
| ROAA (%) | 1.04 | 1.38 | 1.11 | 0.83 | 0.92 | |||||||||||||
| ROAE (%) | 12.49 | 16.88 | 14.27 | 10.96 | 11.67 | |||||||||||||
| Core NIM FTE (%) | 3.21 | 3.27 | 3.14 | 3.06 | 3.03 | |||||||||||||
| Efficiency Ratio (%) | 58.7 | 52.3 | 53.4 | 58.6 | 57.6 | |||||||||||||
| Credit Quality: | ||||||||||||||||||
| NPAs/Loans&REO (%) | 0.23 | 0.31 | 0.26 | 0.31 | 0.31 | |||||||||||||
| LLRs/Loans (%) | 0.56 | 0.55 | 0.64 | 0.67 | 0.67 | |||||||||||||
| LLRs/NPLs (%) | 248.66 | 179.86 | 242.55 | 212.87 | 214.27 | |||||||||||||
| NCOs/Avg Loans (%) | (0.00 | ) | (0.04 | ) | 0.05 | 0.17 | 0.04 | |||||||||||
| Balance Sheet: | ||||||||||||||||||
| Avg Loans ($B) | $ | 6.6 | $ | 6.6 | $ | 6.7 | $ | 6.7 | $ | 6.4 | ||||||||
| Avg Dep ($B) | $ | 6.5 | $ | 6.4 | $ | 6.5 | $ | 6.3 | $ | 5.5 | ||||||||
| Book Value/Share | $ | 22.26 | $ | 21.78 | $ | 21.16 | $ | 20.65 | $ | 20.11 | ||||||||
| Tangible BV/Share | $ | 21.61 | $ | 21.13 | $ | 20.51 | $ | 19.99 | $ | 19.45 | ||||||||
| TCE/TA (%) | 8.22 | 8.04 | 7.80 | 7.60 | 7.52 | |||||||||||||
1 Tangible Common Equity (“TCE”)/Total Assets (“TA”) 2See “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”)
| 4Q21 Highlights |
- Net interest income declined 1.1% QoQ (as asset yields decreased greater than funding costs), but increased 12.5% YoY to $62.7 million; core net interest income fell 1.6% QoQ and increased 11.7% YoY to $61.1 million
- Net interest margin FTE decreased 5 bps QoQ but increased 21 bps YoY to 3.29%, and core net interest margin FTE declined 6 bps QoQ, but expanded 18 bps YoY to 3.21%; Core NIM compression QoQ was primarily from lower loan yields and a less favorable earning asset mix, partially offset by lower funding costs
- Period end net loans excluding PPP, were up 0.9% QoQ and 0.2% YoY; loan closings were $362.7 million in 4Q21, up 48.7% QoQ and 14.8% YoY
- Average deposits increased 0.8% QoQ and 17.1% YoY to $6.5 billion, with core deposits 85.3% of total average deposits
- Loan pipeline increased 21.1% YoY to $429.3 million
- Provision for credit losses was $0.8 million due to current period loan originations and the increased risk from the COVID-19 Omicron variant
- NPAs decreased 26.1% QoQ and 29.3% YoY to $14.9 million; criticized and classified loans were down 16.3% QoQ to $57.7 million, representing 0.87% of loans
- Tangible Common Equity to Tangible Assets improved 18 bps to 8.22% from 8.04% in 3Q21
- Repurchased 150,976 shares at an average price of $23.75; dividends and share repurchases were 56% of net income in 4Q21
| Income Statement Highlights | |||||||||||||||||||||||||||||
| YoY | QoQ | ||||||||||||||||||||||||||||
| ($000s, except EPS) | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | Change | Change | ||||||||||||||||||||||
| Net Interest Income | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 60,892 | $ | 55,732 | 12.5 | % | (1.1 | ) | % | ||||||||||||||
| Provision (Benefit) for Credit Losses | 761 | (6,927 | ) | (1,598 | ) | 2,820 | 3,862 | (80.3 | ) | (111.0 | ) | ||||||||||||||||||
| Non-interest Income (Loss) | (280 | ) | 866 | (3,210 | ) | 6,311 | (1,181 | ) | (76.3 | ) | (132.3 | ) | |||||||||||||||||
| Non-interest Expense | 38,807 | 36,345 | 34,011 | 38,159 | 46,811 | (17.1 | ) | 6.8 | |||||||||||||||||||||
| Income Before Income Taxes | 22,826 | 34,812 | 25,416 | 26,224 | 3,878 | 488.6 | (34.4 | ) | |||||||||||||||||||||
| Provision for Income Taxes | 4,743 | 9,399 | 6,158 | 7,185 | 417 | 1,037.4 | (49.5 | ) | |||||||||||||||||||||
| Net Income | $ | 18,083 | $ | 25,413 | $ | 19,258 | $ | 19,039 | $ | 3,461 | 422.5 | (28.8 | ) | ||||||||||||||||
| Diluted EPS | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 0.60 | $ | 0.11 | 427.3 | (28.4 | ) | ||||||||||||||||
| Avg. Diluted Shares (000s) | 31,353 | 31,567 | 31,677 | 31,604 | 30,603 | 2.5 | (0.7 | ) | |||||||||||||||||||||
| Core Net Income1 | $ | 20,968 | $ | 27,829 | $ | 22,994 | $ | 16,973 | $ | 17,784 | 17.9 | (24.7 | ) | ||||||||||||||||
| Core EPS1 | $ | 0.67 | $ | 0.88 | $ | 0.73 | $ | 0.54 | $ | 0.58 | 15.5 | (23.9 | ) | ||||||||||||||||
1 See Reconciliation of GAAP Earnings and Core Earnings
Net interest income totaled $62.7 million in 4Q21 (an increase of 12.5% YoY, but a decrease of 1.1% QoQ), compared to $63.4 million in 3Q21, $61.0 million in 2Q21, $60.9 million in 1Q21, and $55.7 million in 4Q20.
- Net interest margin, FTE (“NIM”) of 3.29% increased 21 bps YoY, but declined 5 bps QoQ; PPP loans caused a 3 bps and 2 bps positive impact on the NIM in 4Q21 and 3Q21, respectively, neutral impact in 2Q21, and a drag of 4 bps in 1Q21 and 3 bps in 4Q20
- 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 $3.1 million (16 bps to the NIM) in 4Q21 compared to $3.4 million (19 bps) in 3Q21, $1.9 million (10 bps) in 2Q21, $3.3 million (17 bps) in 1Q21, and $2.1 million (11 bps) in 4Q20
- Excluding the items in the previous bullet, net interest margin was 3.13% in 4Q21 compared to 3.15% in 3Q21, 3.04% in 2Q21, 3.01% in 1Q21, and 2.97% in 4Q20, or an increase of 16 bps YoY, but a decrease of 2 bps QoQ
- Net PPP loan fees were $1.2 million in 4Q21, $1.3 million in 3Q21, $1.2 million in 2Q21, $0.5 million in 1Q21, and $0.4 million in 4Q20
The Company recorded a provision for credit losses of $0.8 million in 4Q21, $2.8 million in 1Q21, and $3.9 million in 4Q20 compared to a benefit for credit losses of $6.9 million in 3Q21 and $1.6 million in 2Q21.
- 4Q21 provision for credit losses was driven by the current period originations and the increased risk from the COVID-19 Omicron variant
- Net charge-offs (recoveries) were $(29) thousand in 4Q21 (negligible as compared to average loans), $(0.6) million in 3Q21 ((4) bps), $0.9 million in 2Q21 (5 bps), $2.9 million in 1Q21 (17 bps), and $0.6 million in 4Q20 (4 bps)
Non-interest income (loss) was $(0.3) million in 4Q21, $0.9 million in 3Q21, $(3.2) million in 2Q21, $6.3 million in 1Q21, and $(1.2) million in 4Q20.
- Non-interest income included net gains (losses) from fair value adjustments of $(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, $(6.5) million or $(0.15) per share, net of tax in 2Q21, $1.0 million or $0.02 per share, net of tax in 1Q21, and $(4.1) million or $(0.11) per share, net of tax in 4Q20
- Absent all above items and other immaterial adjustments, core non-interest income was $4.9 million in 4Q21, up 36.6% YoY, and 53.6% QoQ
- Included in 4Q21 core non-interest income was a one-time $2.0 million ($0.05 per share, net of tax) dividend received on retirement plan investments
Non-interest expense totaled $38.8 million in 4Q21 (a decrease of 17.1% YoY, but an increase of 6.8% QoQ), compared to $36.3 million in 3Q21, $34.0 million in 2Q21, $38.2 million in 1Q21, and $46.8 million in 4Q20.
- 4Q21 non-interest expense includes pre-tax merger benefits of $17 thousand (<$0.01 per share, net of tax)
- 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)
- Excluding the above items and other immaterial adjustments, core operating expenses were $38.7 million in 4Q21, up 15.4% YoY and 13.4% QoQ
- Included in 4Q21 non-interest expense was a one-time $4.3 million ($0.11 per share, net of tax) of increased compensation and benefits for all employees due to record year of earnings in 2021 and employee performance through the pandemic.
- The efficiency ratio was 58.7% in 4Q21, 52.3% in 3Q21, 53.4% in 2Q21, 58.6% in 1Q21, and 57.6% in 4Q20
The provision for income taxes was $4.7 million in 4Q21, compared to $9.4 million in 3Q21, $6.2 million in 2Q21, $7.2 million in 1Q21, and $0.4 million in 4Q20.
- The effective tax rate was 20.8% in 4Q21, 27.0% in 3Q21, 24.2% in 2Q21, 27.4% in 1Q21, and 10.8% in 4Q20
- 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 $0.8 million benefit from a state tax rate change; absent this benefit the effective tax rate would have been 27.2%
| Balance Sheet, Credit Quality, and Capital Highlights | ||||||||||||||||||||||||
| YoY | QoQ | |||||||||||||||||||||||
| 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | Change | Change | ||||||||||||||||||
| Average Loans And Deposits ($MM) | ||||||||||||||||||||||||
| Loans | $ | 6,558 | $ | 6,633 | $ | 6,687 | $ | 6,700 | $ | 6,376 | 2.9 | % | (1.1 | ) | % | |||||||||
| Deposits | 6,459 | 6,408 | 6,511 | 6,285 | 5,515 | 17.1 | 0.8 | |||||||||||||||||
| Credit Quality ($000s) | ||||||||||||||||||||||||
| Nonperforming Loans | $ | 14,934 | $ | 20,217 | $ | 17,592 | $ | 21,186 | $ | 21,073 | (29.1 | ) | % | (26.1 | ) | % | ||||||||
| Nonperforming Assets | 14,934 | 20,217 | 17,592 | 21,221 | 21,108 | (29.2 | ) | (26.1 | ) | |||||||||||||||
| Criticized and Classified Loans | 57,650 | 68,913 | 69,161 | 63,095 | 71,656 | (19.5 | ) | (16.3 | ) | |||||||||||||||
| Criticized and Classified Assets | 78,628 | 89,889 | 90,135 | 63,130 | 71,691 | 9.7 | (12.5 | ) | ||||||||||||||||
| Allowance for Credit Losses/Loans (%) | 0.56 | 0.55 | 0.64 | 0.67 | 0.67 | (11 | ) | bps | 1 | bps | ||||||||||||||
| Capital | ||||||||||||||||||||||||
| Book Value/Share | $ | 22.26 | $ | 21.78 | $ | 21.16 | $ | 20.65 | $ | 20.11 | 10.7 | % | 2.2 | % | ||||||||||
| Tangible Book Value/Share | 21.61 | 21.13 | 20.51 | 19.99 | 19.45 | 11.1 | 2.3 | |||||||||||||||||
| Tang. Common Equity/Tang. Assets (%) | 8.22 | 8.04 | 7.80 | 7.60 | 7.52 | 70 | bps | 18 | bps | |||||||||||||||
| Leverage Ratio (%) | 8.98 | 8.83 | 8.50 | 8.44 | 8.38 | 60 | 15 | |||||||||||||||||
Average loans were $6.6 billion, an increase of 2.9% YoY, but a decline of 1.1% QoQ.
- Total loan closings were $362.7 million in 4Q21, $243.9 million in 3Q21, $324.4 million in 2Q21, $322.9 million in 1Q21, and $316.0 million in 4Q20
- The loan pipeline of $429.3 million at December 31, 2021 was up 21.1% YoY, but down 19.1% QoQ as the third quarter 2021 pipeline was at record levels
- PPP loans were $77.4 million at 4Q21, $130.8 million at 3Q21, $197.3 million at 2Q21, $251.0 million at 1Q21, and $151.9 million at 4Q20; forgiven PPP loans were $53.4 million in 4Q21, $66.5 million in 3Q21, $69.2 million in 2Q21, $24.1 million in 1Q21, and $19.7 million in 4Q20; remaining unamortized net PPP fees were $1.9 million at December 31, 2021
- Period end net loans, excluding PPP loans, totaled $6.5 billion, up 0.2% YoY and 0.9% QoQ
Average Deposits totaled $6.5 billion, increasing 17.1% YoY and 0.8% QoQ.
- Average core deposits (non-CD deposits) increased to 85.3% of total average deposits (including escrow deposits) in 4Q21, compared to 79.8% a year ago
- Average non-interest bearing deposits increased 33.6% YoY and 4.6% QoQ and comprised 15.1% of total average deposits (including escrow deposits) in 4Q21 compared to 13.3% a year ago
Credit Quality: Non-performing loans totaled $14.9 million in 4Q21, $20.2 million in 3Q21, $17.6 million in 2Q21, $21.2 million in 1Q21, and $21.1 million in 4Q20.
- Non-performing assets were down 29.3% YoY and 26.1% QoQ
- Criticized and classified loans totaled $57.7 million in 4Q21 (87 bps of loans), $68.9 million in 3Q21 (104 bps of loans), $69.2 million at 2Q21 (103 bps), $63.1 million at 1Q21 (94 bps), and $71.7 million at 4Q20 (107 bps)
- Criticized and classified assets are composed of criticized and classified loans, as detailed above, plus one criticized investment security totaling $21.0 million in both 4Q21 and 3Q21, which is currently under a principal payment forbearance agreement (interest payments are received)
- Loans classified as troubled debt restructured (TDR) totaled $12.7 million in 4Q21 compared to $13.1 million in 3Q21 and $15.7 million a year ago
- Over 87% of gross loans are collateralized by real estate with an average loan-to-value ratio of <38% as of December 31, 2021
- Allowance for credit losses were 0.56% of loans at 4Q21 compared to 0.55% at 3Q21 and 0.67% a year ago
- Allowance for credit losses were 248.7% of nonperforming loans at 4Q21 compared to 179.9% at 3Q21 and 214.3% a year ago
Capital: Book value per common share increased to $22.26 at 4Q21, compared to $21.78 at 3Q21, $21.16 at 2Q21, $20.65 at 1Q21, and $20.11 at 4Q20; tangible book value per common share, a non-GAAP measure, was $21.61 in 4Q21, $21.13 at 3Q21, $20.51 at 2Q21, $19.99 at 1Q21, and $19.45 in 4Q20.
- The Company paid a dividend of $0.21 per share and repurchased 150,976 shares at an average price of $23.75 in 4Q21
- As of the end of 4Q21, 848,187 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 8.22% at 4Q21 compared to 8.04% at 3Q21 and 7.52% a year ago
- The Company and the Bank remain well capitalized under all applicable regulatory requirements
- The leverage ratio was 8.98% in 4Q21 versus 8.83% in 3Q21 and 8.38% in 4Q20
| Conference Call Information And First 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 Friday, January 28, 2022, at 11:00 AM (ET) to discuss the Company’s fourth quarter 2021 results and strategy.
- Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
- Webcast: https://services.choruscall.com/links/ffic220128.html
- Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
- Replay Access Code: 4089423
- The conference call will be simultaneously webcast and archived
First Quarter 2022 Earnings Release Date:
The Company plans to release First Quarter 2022 financial results after the market close on April 26, 2022; followed by a conference call at 9:30 AM (ET) on April 27, 2022.
A detailed announcement will be issued prior to the first quarter’s close confirming the date and time of the earnings release.
About Flushing Financial Corporation
Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, an FDIC insured, New York State—chartered commercial bank that operates banking offices in Queens, Brooklyn, Manhattan, and on Long Island. The Bank has been building relationships with families, business owners, and communities since 1929. Today, it offers the products, services, and conveniences associated with large commercial banks, including a full complement of deposit, loan, equipment finance, and cash management services. Rewarding customers with personalized attention and bankers that can communicate in the languages prevalent within these multicultural markets is what makes the Bank uniquely different. As an Equal Housing Lender and leader in real estate lending, the Bank’s experienced lending teams create mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. The Bank also fosters relationships with consumers nationwide through its online banking division with the iGObanking® and BankPurely® brands.
Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at FlushingBank.com. Flushing Financial Corporation’s earnings release and presentation slides will be available prior to the conference call at www.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, 2020 and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “goals”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.
#FF
– Statistical Tables Follow –
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
| At or for the three months ended | At or for the year ended | ||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||
| (Dollars in thousands, except per share data) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Performance Ratios (1) | |||||||||||||||||||||||||||||
| Return on average assets | 0.89 | % | 1.26 | % | 0.93 | % | 0.93 | % | 0.18 | % | 1.00 | % | 0.48 | % | |||||||||||||||
| Return on average equity | 10.77 | 15.42 | 11.95 | 12.29 | 2.27 | 12.60 | 5.98 | ||||||||||||||||||||||
| Yield on average interest-earning assets (2) | 3.77 | 3.84 | 3.69 | 3.77 | 3.82 | 3.77 | 3.86 | ||||||||||||||||||||||
| Cost of average interest-bearing liabilities | 0.58 | 0.61 | 0.66 | 0.69 | 0.86 | 0.63 | 1.16 | ||||||||||||||||||||||
| Cost of funds | 0.50 | 0.53 | 0.57 | 0.61 | 0.77 | 0.55 | 1.06 | ||||||||||||||||||||||
| Net interest rate spread during period (2) | 3.19 | 3.23 | 3.03 | 3.08 | 2.96 | 3.14 | 2.70 | ||||||||||||||||||||||
| Net interest margin (2) | 3.29 | 3.34 | 3.14 | 3.18 | 3.08 | 3.24 | 2.85 | ||||||||||||||||||||||
| Non-interest expense to average assets | 1.92 | 1.80 | 1.65 | 1.87 | 2.43 | 1.81 | 1.90 | ||||||||||||||||||||||
| Efficiency ratio (3) | 58.66 | 52.28 | 53.38 | 58.58 | 57.56 | 55.72 | 58.69 | ||||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities |
1.22 | X | 1.21 | X | 1.19 | X | 1.18 | X | 1.17 | X | 1.20 | X | 1.16 | X | |||||||||||||||
| Average Balances | |||||||||||||||||||||||||||||
| Total loans, net | $ | 6,558,285 | $ | 6,633,301 | $ | 6,686,888 | $ | 6,700,476 | $ | 6,375,516 | $ | 6,644,317 | $ | 6,005,947 | |||||||||||||||
| Total interest-earning assets | 7,627,256 | 7,608,317 | 7,790,174 | 7,667,217 | 7,243,472 | 7,672,954 | 6,862,798 | ||||||||||||||||||||||
| Total assets | 8,090,701 | 8,072,918 | 8,263,553 | 8,147,714 | 7,705,407 | 8,143,372 | 7,276,022 | ||||||||||||||||||||||
| Total due to depositors | 5,397,802 | 5,406,423 | 5,495,936 | 5,363,647 | 4,708,760 | 5,416,020 | 4,509,206 | ||||||||||||||||||||||
| Total interest-bearing liabilities | 6,276,221 | 6,310,859 | 6,532,891 | 6,477,871 | 6,169,574 | 6,398,666 | 5,941,594 | ||||||||||||||||||||||
| Stockholders’ equity | 671,474 | 659,288 | 644,690 | 619,647 | 609,463 | 648,946 | 580,067 | ||||||||||||||||||||||
| Per Share Data | |||||||||||||||||||||||||||||
| Book value per common share (4) | $ | 22.26 | $ | 21.78 | $ | 21.16 | $ | 20.65 | $ | 20.11 | $ | 22.26 | $ | 20.11 | |||||||||||||||
| Tangible book value per common share (5) | $ | 21.61 | $ | 21.13 | $ | 20.51 | $ | 19.99 | $ | 19.45 | $ | 21.61 | $ | 19.45 | |||||||||||||||
| Stockholders’ Equity | |||||||||||||||||||||||||||||
| Stockholders’ equity | $ | 679,628 | $ | 668,096 | $ | 655,167 | $ | 639,201 | $ | 618,997 | $ | 679,628 | $ | 618,997 | |||||||||||||||
| Tangible stockholders’ equity | 659,758 | 648,039 | 634,959 | 618,839 | 598,476 | 659,758 | 598,476 | ||||||||||||||||||||||
| Consolidated Regulatory Capital Ratios | |||||||||||||||||||||||||||||
| Tier 1 capital | $ | 726,174 | $ | 711,276 | $ | 697,591 | $ | 679,343 | $ | 662,987 | $ | 726,174 | $ | 662,987 | |||||||||||||||
| Common equity Tier 1 capital | 671,494 | 661,340 | 649,367 | 636,071 | 621,247 | 671,494 | 621,247 | ||||||||||||||||||||||
| Total risk-based capital | 885,469 | 832,255 | 823,494 | 806,922 | 794,034 | 885,469 | 794,034 | ||||||||||||||||||||||
| Risk Weighted Assets | 6,182,095 | 6,194,207 | 6,344,076 | 6,281,136 | 6,287,598 | 6,182,095 | 6,287,598 | ||||||||||||||||||||||
| Tier 1 leverage capital (well capitalized = 5%) |
8.98 | % | 8.83 | % | 8.50 | % | 8.44 | % | 8.38 | % | 8.98 | % | 8.38 | % | |||||||||||||||
| Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 10.86 | 10.68 | 10.24 | 10.13 | 9.88 | 10.86 | 9.88 | ||||||||||||||||||||||
| Tier 1 risk-based capital (well capitalized = 8.0%) |
11.75 | 11.48 | 11.00 | 10.82 | 10.54 | 11.75 | 10.54 | ||||||||||||||||||||||
| Total risk-based capital (well capitalized = 10.0%) |
14.32 | 13.44 | 12.98 | 12.85 | 12.63 | 14.32 | 12.63 | ||||||||||||||||||||||
| Capital Ratios | |||||||||||||||||||||||||||||
| Average equity to average assets | 8.30 | % | 8.17 | % | 7.80 | % | 7.61 | % | 7.91 | % | 7.97 | % | 7.97 | % | |||||||||||||||
| Equity to total assets | 8.45 | 8.27 | 8.03 | 7.83 | 7.76 | 8.45 | 7.76 | ||||||||||||||||||||||
| Tangible common equity to tangible assets (6) | 8.22 | 8.04 | 7.80 | 7.60 | 7.52 | 8.22 | 7.52 | ||||||||||||||||||||||
| Asset Quality | |||||||||||||||||||||||||||||
| Non-accrual loans (7) | $ | 14,933 | $ | 18,292 | $ | 17,391 | $ | 18,604 | $ | 18,325 | $ | 14,933 | $ | 18,325 | |||||||||||||||
| Non-performing loans | 14,933 | 20,217 | 17,592 | 21,186 | 21,073 | 14,933 | 21,073 | ||||||||||||||||||||||
| Non-performing assets | 14,933 | 20,217 | 17,592 | 21,221 | 21,108 | 14,933 | 21,108 | ||||||||||||||||||||||
| Net charge-offs (recoveries) | (29 | ) | (619 | ) | 902 | 2,865 | 646 | 3,119 | 3,639 | ||||||||||||||||||||
| Asset Quality Ratios | |||||||||||||||||||||||||||||
| Non-performing loans to gross loans | 0.23 | % | 0.31 | % | 0.26 | % | 0.31 | % | 0.31 | % | 0.23 | % | 0.31 | % | |||||||||||||||
| Non-performing assets to total assets | 0.19 | 0.25 | 0.22 | 0.26 | 0.26 | 0.19 | 0.26 | ||||||||||||||||||||||
| Allowance for loan losses to gross loans | 0.56 | 0.55 | 0.64 | 0.67 | 0.67 | 0.56 | 0.67 | ||||||||||||||||||||||
| Allowance for loan losses to non-performing assets |
248.66 | 179.86 | 242.55 | 212.52 | 213.91 | 248.66 | 213.91 | ||||||||||||||||||||||
| Allowance for loan losses to non-performing loans |
248.66 | 179.86 | 242.55 | 212.87 | 214.27 | 248.66 | 214.27 | ||||||||||||||||||||||
| Net charge-offs (recoveries) to average loans | (0.00 | ) | (0.04 | ) | 0.05 | 0.17 | 0.04 | 0.05 | 0.06 | ||||||||||||||||||||
| Full-service customer facilities | 24 | 24 | 25 | 25 | 25 | 24 | 25 | ||||||||||||||||||||||
_____________________
(1) Ratios are presented on an annualized basis, where appropriate.
(2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(3) Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding merger expense, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization of purchase accounting adjustments) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges and net amortization of purchase accounting adjustments) and non-interest income (excluding life insurance proceeds, net gains and losses from the sale or disposition of securities, assets and fair value adjustments).
(4) Calculated by dividing stockholders’ equity by shares outstanding.
(5) Calculated by dividing tangible stockholders’ common equity, a non-GAAP measure, by shares outstanding. Tangible stockholders’ common equity is stockholders’ equity less intangible assets (goodwill, net of deferred taxes). See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7) Excludes performing non-accrual TDR loans.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the three months ended | For the year ended | |||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
| (In thousands, except per share data) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||
| Interest and Dividend Income | ||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 68,113 | $ | 69,198 | $ | 67,999 | $ | 69,021 | $ | 66,120 | $ | 274,331 | $ | 248,153 | ||||||||||||||
| Interest and dividends on securities: | ||||||||||||||||||||||||||||
| Interest | 3,536 | 3,706 | 3,685 | 3,072 | 2,813 | 13,999 | 15,776 | |||||||||||||||||||||
| Dividends | 7 | 7 | 7 | 8 | 8 | 29 | 43 | |||||||||||||||||||||
| Other interest income | 74 | 42 | 51 | 36 | 30 | 203 | 355 | |||||||||||||||||||||
| Total interest and dividend income | 71,730 | 72,953 | 71,742 | 72,137 | 68,971 | 288,562 | 264,327 | |||||||||||||||||||||
| Interest Expense | ||||||||||||||||||||||||||||
| Deposits | 3,975 | 4,705 | 5,539 | 6,105 | 6,470 | 20,324 | 42,312 | |||||||||||||||||||||
| Other interest expense | 5,081 | 4,884 | 5,164 | 5,140 | 6,769 | 20,269 | 26,816 | |||||||||||||||||||||
| Total interest expense | 9,056 | 9,589 | 10,703 | 11,245 | 13,239 | 40,593 | 69,128 | |||||||||||||||||||||
| Net Interest Income | 62,674 | 63,364 | 61,039 | 60,892 | 55,732 | 247,969 | 195,199 | |||||||||||||||||||||
| Provision (benefit) for credit losses | 761 | (6,927 | ) | (1,598 | ) | 2,820 | 3,862 | (4,944 | ) | 23,129 | ||||||||||||||||||
| Net Interest Income After Provision (Benefit) for Credit Losses | 61,913 | 70,291 | 62,637 | 58,072 | 51,870 | 252,913 | 172,070 | |||||||||||||||||||||
| Non-interest Income (Loss) | ||||||||||||||||||||||||||||
| Banking services fee income | 1,142 | 865 | 1,233 | 2,725 | 1,442 | 5,965 | 4,500 | |||||||||||||||||||||
| Net gain (loss) on sale of securities | — | (10 | ) | 123 | — | (610 | ) | 113 | (701 | ) | ||||||||||||||||||
| Net gain on sale of loans | 46 | 131 | 127 | 31 | 6 | 335 | 48 | |||||||||||||||||||||
| Net gain on disposition of assets | — | — | — | 621 | — | 621 | — | |||||||||||||||||||||
| Net gain (loss) from fair value adjustments | (5,140 | ) | (2,289 | ) | (6,548 | ) | 982 | (4,129 | ) | (12,995 | ) | (2,142 | ) | |||||||||||||||
| Federal Home Loan Bank of New York stock dividends |
417 | 491 | 500 | 689 | 734 | 2,097 | 3,453 | |||||||||||||||||||||
| Life insurance proceeds | — | — | — | — | — | — | 659 | |||||||||||||||||||||
| Bank owned life insurance | 1,023 | 1,015 | 1,009 | 997 | 1,016 | 4,044 | 3,814 | |||||||||||||||||||||
| Other income | 2,232 | 663 | 346 | 266 | 360 | 3,507 | 1,412 | |||||||||||||||||||||
| Total non-interest income (loss) | (280 | ) | 866 | (3,210 | ) | 6,311 | (1,181 | ) | 3,687 | 11,043 | ||||||||||||||||||
| Non-interest Expense | ||||||||||||||||||||||||||||
| Salaries and employee benefits | 25,223 | 20,544 | 19,879 | 22,664 | 22,089 | 88,310 | 74,228 | |||||||||||||||||||||
| Occupancy and equipment | 3,579 | 3,534 | 3,522 | 3,367 | 3,446 | 14,002 | 12,134 | |||||||||||||||||||||
| Professional services | 1,152 | 1,899 | 1,988 | 2,400 | 2,463 | 7,439 | 9,374 | |||||||||||||||||||||
| FDIC deposit insurance | 391 | 618 | 729 | 1,213 | 562 | 2,951 | 2,676 | |||||||||||||||||||||
| Data processing | 1,757 | 1,759 | 1,419 | 2,109 | 3,411 | 7,044 | 8,586 | |||||||||||||||||||||
| Depreciation and amortization | 1,521 | 1,627 | 1,638 | 1,639 | 1,579 | 6,425 | 6,212 | |||||||||||||||||||||
| Other real estate owned/foreclosure (recoveries) expense | 129 | 182 | 22 | (10 | ) | 95 | 323 | 216 | ||||||||||||||||||||
| Prepayment penalty on borrowings | — | — | — | — | 7,834 | — | 7,834 | |||||||||||||||||||||
| Other operating expenses | 5,055 | 6,182 | 4,814 | 4,777 | 5,332 | 20,828 | 16,671 | |||||||||||||||||||||
| Total non-interest expense | 38,807 | 36,345 | 34,011 | 38,159 | 46,811 | 147,322 | 137,931 | |||||||||||||||||||||
| Income Before Provision for Income Taxes | 22,826 | 34,812 | 25,416 | 26,224 | 3,878 | 109,278 | 45,182 | |||||||||||||||||||||
| Provision for Income Taxes | 4,743 | 9,399 | 6,158 | 7,185 | 417 | 27,485 | 10,508 | |||||||||||||||||||||
| Net Income | $ | 18,083 | $ | 25,413 | $ | 19,258 | $ | 19,039 | $ | 3,461 | $ | 81,793 | $ | 34,674 | ||||||||||||||
| Basic earnings per common share | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 0.60 | $ | 0.11 | $ | 2.59 | $ | 1.18 | ||||||||||||||
| Diluted earnings per common share | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 0.60 | $ | 0.11 | $ | 2.59 | $ | 1.18 | ||||||||||||||
| Dividends per common share | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.21 | $ | 0.84 | $ | 0.84 | ||||||||||||||
| Basic average shares | 31,353 | 31,567 | 31,677 | 31,604 | 30,603 | 31,550 | 29,301 | |||||||||||||||||||||
| Diluted average shares | 31,353 | 31,567 | 31,677 | 31,604 | 30,603 | 31,550 | 29,301 | |||||||||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 81,723 | $ | 178,598 | $ | 145,971 | $ | 174,420 | $ | 157,388 | |||||||||
| Securities held-to-maturity: | |||||||||||||||||||
| Mortgage-backed securities | 7,894 | 7,899 | 7,904 | 7,909 | 7,914 | ||||||||||||||
| Other securities | 49,974 | 49,989 | 49,986 | 49,912 | 49,918 | ||||||||||||||
| Securities available for sale: | |||||||||||||||||||
| Mortgage-backed securities | 572,184 | 584,145 | 596,661 | 518,781 | 404,460 | ||||||||||||||
| Other securities | 205,052 | 212,654 | 224,784 | 242,440 | 243,514 | ||||||||||||||
| Loans | 6,638,105 | 6,630,354 | 6,718,806 | 6,745,316 | 6,704,674 | ||||||||||||||
| Allowance for loan losses | (37,135 | ) | (36,363 | ) | (42,670 | ) | (45,099 | ) | (45,153 | ) | |||||||||
| Net loans | 6,600,970 | 6,593,991 | 6,676,136 | 6,700,217 | 6,659,521 | ||||||||||||||
| Interest and dividends receivable | 38,698 | 40,912 | 43,803 | 44,941 | 44,041 | ||||||||||||||
| Bank premises and equipment, net | 23,338 | 24,018 | 26,438 | 27,498 | 28,179 | ||||||||||||||
| Federal Home Loan Bank of New York stock | 35,937 | 36,158 | 41,630 | 41,498 | 43,439 | ||||||||||||||
| Bank owned life insurance | 210,754 | 184,730 | 183,715 | 182,707 | 181,710 | ||||||||||||||
| Goodwill | 17,636 | 17,636 | 17,636 | 17,636 | 17,636 | ||||||||||||||
| Core deposit intangibles | 2,562 | 2,708 | 2,859 | 3,013 | 3,172 | ||||||||||||||
| Right of use asset | 50,200 | 50,155 | 51,972 | 53,802 | 50,743 | ||||||||||||||
| Other assets | 148,989 | 93,741 | 89,850 | 94,410 | 84,759 | ||||||||||||||
| Total assets | $ | 8,045,911 | $ | 8,077,334 | $ | 8,159,345 | $ | 8,159,184 | $ | 7,976,394 | |||||||||
| LIABILITIES | |||||||||||||||||||
| Deposits | $ | 6,333,532 | $ | 6,421,391 | $ | 6,298,790 | $ | 6,326,577 | $ | 6,090,733 | |||||||||
| Mortgagors’ escrow deposits | 51,913 | 67,207 | 58,230 | 74,348 | 45,622 | ||||||||||||||
| Borrowed funds | 815,544 | 752,925 | 971,827 | 948,920 | 1,020,895 | ||||||||||||||
| Operating lease liability | 54,155 | 54,239 | 56,151 | 58,080 | 59,100 | ||||||||||||||
| Other liabilities | 111,139 | 113,476 | 119,180 | 112,058 | 141,047 | ||||||||||||||
| Total liabilities | 7,366,283 | 7,409,238 | 7,504,178 | 7,519,983 | 7,357,397 | ||||||||||||||
| 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 | 263,375 | 262,009 | 260,958 | 260,019 | 261,533 | ||||||||||||||
| Treasury stock | (75,293 | ) | (71,738 | ) | (65,335 | ) | (65,479 | ) | (69,400 | ) | |||||||||
| Retained earnings | 497,889 | 486,418 | 467,620 | 455,023 | 442,789 | ||||||||||||||
| Accumulated other comprehensive loss, net of taxes | (6,684 | ) | (8,934 | ) | (8,417 | ) | (10,703 | ) | (16,266 | ) | |||||||||
| Total stockholders’ equity | 679,628 | 668,096 | 655,167 | 639,201 | 618,997 | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | 8,045,911 | $ | 8,077,334 | $ | 8,159,345 | $ | 8,159,184 | $ | 7,976,394 | |||||||||
| (In thousands) | |||||||||||||||||||
| Issued shares | 34,088 | 34,088 | 34,088 | 34,088 | 34,088 | ||||||||||||||
| Outstanding shares | 30,526 | 30,676 | 30,962 | 30,954 | 30,776 | ||||||||||||||
| Treasury shares | 3,561 | 3,412 | 3,126 | 3,133 | 3,312 | ||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)
| For the three months ended | For the year ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||
| (In thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Interest-earning Assets: | |||||||||||||||||||||
| Mortgage loans, net | $ | 5,140,233 | $ | 5,158,213 | $ | 5,130,400 | $ | 5,155,975 | $ | 5,010,097 | $ | 5,146,195 | $ | 4,798,232 | |||||||
| Other loans, net | 1,418,052 | 1,475,088 | 1,556,488 | 1,544,501 | 1,365,419 | 1,498,122 | 1,207,715 | ||||||||||||||
| Total loans, net | 6,558,285 | 6,633,301 | 6,686,888 | 6,700,476 | 6,375,516 | 6,644,317 | 6,005,947 | ||||||||||||||
| Taxable securities: | |||||||||||||||||||||
| Mortgage-backed securities | 595,538 | 590,732 | 578,134 | 433,917 | 413,875 | 550,136 | 450,065 | ||||||||||||||
| Other securities | 207,482 | 217,763 | 232,020 | 300,828 | 266,663 | 239,208 | 249,533 | ||||||||||||||
| Total taxable securities | 803,020 | 808,495 | 810,154 | 734,745 | 680,538 | 789,344 | 699,598 | ||||||||||||||
| Tax-exempt securities: | |||||||||||||||||||||
| Other securities | 50,834 | 50,832 | 50,830 | 50,828 | 50,768 | 50,831 | 56,530 | ||||||||||||||
| Total tax-exempt securities | 50,834 | 50,832 | 50,830 | 50,828 | 50,768 | 50,831 | 56,530 | ||||||||||||||
| Interest-earning deposits and federal funds sold | 215,117 | 115,689 | 242,302 | 181,168 | 136,650 | 188,462 | 100,723 | ||||||||||||||
| Total interest-earning assets | 7,627,256 | 7,608,317 | 7,790,174 | 7,667,217 | 7,243,472 | 7,672,954 | 6,862,798 | ||||||||||||||
| Other assets | 463,445 | 464,601 | 473,379 | 480,497 | 461,935 | 470,418 | 413,224 | ||||||||||||||
| Total assets | $ | 8,090,701 | $ | 8,072,918 | $ | 8,263,553 | $ | 8,147,714 | $ | 7,705,407 | $ | 8,143,372 | $ | 7,276,022 | |||||||
| Interest-bearing Liabilities: | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Savings accounts | $ | 154,471 | $ | 153,120 | $ | 153,113 | $ | 170,079 | $ | 163,382 | $ | 157,640 | $ | 176,443 | |||||||
| NOW accounts | 2,115,619 | 2,107,866 | 2,255,581 | 2,185,384 | 1,924,840 | 2,165,762 | 1,603,402 | ||||||||||||||
| Money market accounts | 2,177,928 | 2,107,473 | 2,043,257 | 1,905,543 | 1,507,245 | 2,059,431 | 1,561,496 | ||||||||||||||
| Certificate of deposit accounts | 949,784 | 1,037,964 | 1,043,985 | 1,102,641 | 1,113,293 | 1,033,187 | 1,167,865 | ||||||||||||||
| Total due to depositors | 5,397,802 | 5,406,423 | 5,495,936 | 5,363,647 | 4,708,760 | 5,416,020 | 4,509,206 | ||||||||||||||
| Mortgagors’ escrow accounts | 84,617 | 68,562 | 91,545 | 65,372 | 75,005 | 77,552 | 70,829 | ||||||||||||||
| Total interest-bearing deposits | 5,482,419 | 5,474,985 | 5,587,481 | 5,429,019 | 4,783,765 | 5,493,572 | 4,580,035 | ||||||||||||||
| Borrowings | 793,802 | 835,874 | 945,410 | 1,048,852 | 1,385,809 | 905,094 | 1,361,559 | ||||||||||||||
| Total interest-bearing liabilities | 6,276,221 | 6,310,859 | 6,532,891 | 6,477,871 | 6,169,574 | 6,398,666 | 5,941,594 | ||||||||||||||
| Non interest-bearing demand deposits | 976,803 | 933,443 | 923,220 | 856,052 | 731,170 | 922,741 | 583,235 | ||||||||||||||
| Other liabilities | 166,203 | 169,328 | 162,752 | 194,144 | 195,200 | 173,019 | 171,126 | ||||||||||||||
| Total liabilities | 7,419,227 | 7,413,630 | 7,618,863 | 7,528,067 | 7,095,944 | 7,494,426 | 6,695,955 | ||||||||||||||
| Equity | 671,474 | 659,288 | 644,690 | 619,647 | 609,463 | 648,946 | 580,067 | ||||||||||||||
| Total liabilities and equity | $ | 8,090,701 | $ | 8,072,918 | $ | 8,263,553 | $ | 8,147,714 | $ | 7,705,407 | $ | 8,143,372 | $ | 7,276,022 | |||||||
| Net interest-earning assets | $ | 1,351,035 | $ | 1,297,458 | $ | 1,257,283 | $ | 1,189,346 | $ | 1,073,898 | $ | 1,274,288 | $ | 921,204 | |||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)
| For the three months ended | For the year ended | |||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Interest Income: | ||||||||||||||||||||||||||||||
| Mortgage loans, net | $ | 54,260 | $ | 55,114 | $ | 52,987 | $ | 55,219 | $ | 53,777 | $ | 217,580 | $ | 202,722 | ||||||||||||||||
| Other loans, net | 13,853 | 14,084 | 15,012 | 13,802 | 12,343 | 56,751 | 45,431 | |||||||||||||||||||||||
| Total loans, net | 68,113 | 69,198 | 67,999 | 69,021 | 66,120 | 274,331 | 248,153 | |||||||||||||||||||||||
| Taxable securities: | ||||||||||||||||||||||||||||||
| Mortgage-backed securities | 2,125 | 2,279 | 2,233 | 1,698 | 1,435 | 8,335 | 8,730 | |||||||||||||||||||||||
| Other securities | 993 | 1,008 | 1,037 | 963 | 957 | 4,001 | 5,178 | |||||||||||||||||||||||
| Total taxable securities | 3,118 | 3,287 | 3,270 | 2,661 | 2,392 | 12,336 | 13,908 | |||||||||||||||||||||||
| Tax-exempt securities: | ||||||||||||||||||||||||||||||
| Other securities | 538 | 539 | 535 | 530 | 543 | 2,142 | 2,419 | |||||||||||||||||||||||
| Total tax-exempt securities | 538 | 539 | 535 | 530 | 543 | 2,142 | 2,419 | |||||||||||||||||||||||
| Interest-earning deposits and federal funds sold | 74 | 42 | 51 | 36 | 30 | 203 | 355 | |||||||||||||||||||||||
| Total interest-earning assets | 71,843 | 73,066 | 71,855 | 72,248 | 69,085 | 289,012 | 264,835 | |||||||||||||||||||||||
| Interest Expense: | ||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||
| Savings accounts | $ | 53 | $ | 61 | $ | 66 | $ | 75 | $ | 75 | $ | 255 | $ | 495 | ||||||||||||||||
| NOW accounts | 1,021 | 1,227 | 1,499 | 1,706 | 1,320 | 5,453 | 9,309 | |||||||||||||||||||||||
| Money market accounts | 1,428 | 1,683 | 2,060 | 2,100 | 2,010 | 7,271 | 14,368 | |||||||||||||||||||||||
| Certificate of deposit accounts | 1,471 | 1,734 | 1,913 | 2,222 | 3,065 | 7,340 | 18,096 | |||||||||||||||||||||||
| Total due to depositors | 3,973 | 4,705 | 5,538 | 6,103 | 6,470 | 20,319 | 42,268 | |||||||||||||||||||||||
| Mortgagors’ escrow accounts | 2 | — | 1 | 2 | — | 5 | 44 | |||||||||||||||||||||||
| Total interest-bearing deposits | 3,975 | 4,705 | 5,539 | 6,105 | 6,470 | 20,324 | 42,312 | |||||||||||||||||||||||
| Borrowings | 5,081 | 4,884 | 5,164 | 5,140 | 6,769 | 20,269 | 26,816 | |||||||||||||||||||||||
| Total interest-bearing liabilities | 9,056 | 9,589 | 10,703 | 11,245 | 13,239 | 40,593 | 69,128 | |||||||||||||||||||||||
| Net interest income- tax equivalent | $ | 62,787 | $ | 63,477 | $ | 61,152 | $ | 61,003 | $ | 55,846 | $ | 248,419 | $ | 195,707 | ||||||||||||||||
| Included in net interest income above: | ||||||||||||||||||||||||||||||
| Prepayment penalties received on loans and securities and net of reversals and recovered interest from non-accrual loans | $ | 1,497 | $ | 2,136 | $ | 2,046 | $ | 948 | $ | 1,093 | $ | 6,627 | $ | 4,576 | ||||||||||||||||
| Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income | 1,122 | 194 | (664 | ) | 1,427 | 1,023 | 2,079 | (1,185 | ) | |||||||||||||||||||||
| Purchase accounting adjustments | 462 | 1,100 | 565 | 922 | 11 | 3,049 | 11 | |||||||||||||||||||||||
| Interest-earning Assets Yields: | ||||||||||||||||||||||||||||||
| Mortgage loans, net | 4.22 | % | 4.27 | % | 4.13 | % | 4.28 | % | 4.29 | % | 4.23 | % | 4.22 | % | ||||||||||||||||
| Other loans, net | 3.91 | 3.82 | 3.86 | 3.57 | 3.62 | 3.79 | 3.76 | |||||||||||||||||||||||
| Total loans, net | 4.15 | 4.17 | 4.07 | 4.12 | 4.15 | 4.13 | 4.13 | |||||||||||||||||||||||
| Taxable securities: | ||||||||||||||||||||||||||||||
| Mortgage-backed securities | 1.43 | 1.54 | 1.54 | 1.57 | 1.39 | 1.52 | 1.94 | |||||||||||||||||||||||
| Other securities | 1.91 | 1.85 | 1.79 | 1.28 | 1.44 | 1.67 | 2.08 | |||||||||||||||||||||||
| Total taxable securities | 1.55 | 1.63 | 1.61 | 1.45 | 1.41 | 1.56 | 1.99 | |||||||||||||||||||||||
| Tax-exempt securities: (1) | ||||||||||||||||||||||||||||||
| Other securities | 4.23 | 4.24 | 4.21 | 4.17 | 4.28 | 4.21 | 4.28 | |||||||||||||||||||||||
| Total tax-exempt securities | 4.23 | 4.24 | 4.21 | 4.17 | 4.28 | 4.21 | 4.28 | |||||||||||||||||||||||
| Interest-earning deposits and federal funds sold | 0.14 | 0.15 | 0.08 | 0.08 | 0.09 | 0.11 | 0.35 | |||||||||||||||||||||||
| Total interest-earning assets | 3.77 | % | 3.84 | % | 3.69 | % | 3.77 | % | 3.82 | % | 3.77 | % | 3.86 | % | ||||||||||||||||
| Interest-bearing Liabilities Yields: | ||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||
| Savings accounts | 0.14 | % | 0.16 | % | 0.17 | % | 0.18 | % | 0.18 | % | 0.16 | % | 0.28 | % | ||||||||||||||||
| NOW accounts | 0.19 | 0.23 | 0.27 | 0.31 | 0.27 | 0.25 | 0.58 | |||||||||||||||||||||||
| Money market accounts | 0.26 | 0.32 | 0.40 | 0.44 | 0.53 | 0.35 | 0.92 | |||||||||||||||||||||||
| Certificate of deposit accounts | 0.62 | 0.67 | 0.73 | 0.81 | 1.10 | 0.71 | 1.55 | |||||||||||||||||||||||
| Total due to depositors | 0.29 | 0.35 | 0.40 | 0.46 | 0.55 | 0.38 | 0.94 | |||||||||||||||||||||||
| Mortgagors’ escrow accounts | 0.01 | — | — | 0.01 | — | 0.01 | 0.06 | |||||||||||||||||||||||
| Total interest-bearing deposits | 0.29 | 0.34 | 0.40 | 0.45 | 0.54 | 0.37 | 0.92 | |||||||||||||||||||||||
| Borrowings | 2.56 | 2.34 | 2.18 | 1.96 | 1.95 | 2.24 | 1.97 | |||||||||||||||||||||||
| Total interest-bearing liabilities | 0.58 | % | 0.61 | % | 0.66 | % | 0.69 | % | 0.86 | % | 0.63 | % | 1.16 | % | ||||||||||||||||
| Net interest rate spread (tax equivalent) | 3.19 | % | 3.23 | % | 3.03 | % | 3.08 | % | 2.96 | % | 3.14 | % | 2.70 | % | ||||||||||||||||
| Net interest margin (tax equivalent) | 3.29 | % | 3.34 | % | 3.14 | % | 3.18 | % | 3.08 | % | 3.24 | % | 2.85 | % | ||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.22 | X | 1.21 | X | 1.19 | X | 1.18 | X | 1.17 | X | 1.20 | X | 1.16 | X | ||||||||||||||||
_____________________
(1) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT and LOAN COMPOSITION
(Unaudited)
Deposit Composition
| December 2021 vs. | December 2021 vs. | ||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | September 2021 | December 2020 | |||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | % Change | % Change | ||||||||||||||||
| Non-interest bearing | $ | 967,621 | $ | 941,259 | $ | 945,491 | $ | 917,189 | $ | 778,672 | 2.8 | % | 24.3 | % | |||||||||
| Interest bearing: | |||||||||||||||||||||||
| Certificate of deposit accounts | 946,575 | 1,040,098 | 1,020,615 | 1,070,595 | 1,138,361 | (9.0 | ) | (16.8 | ) | ||||||||||||||
| Savings accounts | 156,554 | 152,306 | 152,931 | 170,272 | 168,183 | 2.8 | (6.9 | ) | |||||||||||||||
| Money market accounts | 2,342,003 | 2,152,085 | 2,057,188 | 1,990,656 | 1,682,345 | 8.8 | 39.2 | ||||||||||||||||
| NOW accounts | 1,920,779 | 2,135,643 | 2,122,565 | 2,177,865 | 2,323,172 | (10.1 | ) | (17.3 | ) | ||||||||||||||
| Total interest-bearing deposits | 5,365,911 | 5,480,132 | 5,353,299 | 5,409,388 | 5,312,061 | (2.1 | ) | 1.0 | |||||||||||||||
| Total deposits | $ | 6,333,532 | $ | 6,421,391 | $ | 6,298,790 | $ | 6,326,577 | $ | 6,090,733 | (1.4 | ) | % | 4.0 | % | ||||||||
Loan Composition
| December 2021 vs. | December 2021 vs. | |||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | September 2021 | December 2020 | ||||||||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | % Change | % Change | |||||||||||||||||||||
| Multifamily residential | $ | 2,517,026 | $ | 2,498,980 | $ | 2,542,010 | $ | 2,525,967 | $ | 2,533,952 | 0.7 | % | (0.7 | ) | % | |||||||||||||
| Commercial real estate | 1,775,629 | 1,745,855 | 1,726,895 | 1,721,702 | 1,754,754 | 1.7 | 1.2 | |||||||||||||||||||||
| One-to-four family ― mixed-use property | 571,795 | 579,100 | 582,211 | 595,431 | 602,981 | (1.3 | ) | (5.2 | ) | |||||||||||||||||||
| One-to-four family ― residential | 268,255 | 280,343 | 288,652 | 239,391 | 245,211 | (4.3 | ) | 9.4 | ||||||||||||||||||||
| Co-operative apartments | 8,316 | 7,804 | 7,883 | 7,965 | 8,051 | 6.6 | 3.3 | |||||||||||||||||||||
| Construction | 59,761 | 71,464 | 62,802 | 61,528 | 83,322 | (16.4 | ) | (28.3 | ) | |||||||||||||||||||
| Mortgage Loans | 5,200,782 | 5,183,546 | 5,210,453 | 5,151,984 | 5,228,271 | 0.3 | (0.5 | ) | ||||||||||||||||||||
| Small Business Administration (1) | 93,811 | 148,855 | 215,158 | 267,120 | 167,376 | (37.0 | ) | (44.0 | ) | |||||||||||||||||||
| Taxi medallion | — | — | — | — | 2,757 | — | (100.0 | ) | ||||||||||||||||||||
| Commercial business and other | 1,339,273 | 1,294,688 | 1,291,526 | 1,326,657 | 1,303,225 | 3.4 | 2.8 | |||||||||||||||||||||
| Non-mortgage loans | 1,433,084 | 1,443,543 | 1,506,684 | 1,593,777 | 1,473,358 | (0.7 | ) | (2.7 | ) | |||||||||||||||||||
| Net unamortized premiums and unearned loan fees (2) | 4,239 | 3,265 | 1,669 | (445 | ) | 3,045 | 29.8 | 39.2 | ||||||||||||||||||||
| Allowance for loan losses | (37,135 | ) | (36,363 | ) | (42,670 | ) | (45,099 | ) | (45,153 | ) | 2.1 | (17.8 | ) | |||||||||||||||
| Net loans | $ | 6,600,970 | $ | 6,593,991 | $ | 6,676,136 | $ | 6,700,217 | $ | 6,659,521 | 0.1 | % | (0.9 | ) | % | |||||||||||||
_____________________
(1) Includes $77.4 million, $130.8 million, $197.3 million, $251.0 million, and $151.9 million of PPP loans at December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively.
(2) Includes $8.0 million, $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 December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS and RATES
(Unaudited)
Loan Closings
| For the three months ended | For the year ended | |||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||
| (In thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Multifamily residential | $ | 79,648 | $ | 41,850 | $ | 66,913 | $ | 58,553 | $ | 52,024 | $ | 246,964 | $ | 212,729 | ||||||||
| Commercial real estate | 64,916 | 48,447 | 37,963 | 17,156 | 57,634 | 168,482 | 191,852 | |||||||||||||||
| One-to-four family – mixed-use property | 12,440 | 12,823 | 7,135 | 8,712 | 9,692 | 41,110 | 35,131 | |||||||||||||||
| One-to-four family – residential | 5,162 | 2,761 | 59,494 | 3,131 | 8,422 | 70,548 | 21,805 | |||||||||||||||
| Co-operative apartments | 413 | — | — | — | — | 413 | 704 | |||||||||||||||
| Construction | 17,033 | 8,687 | 5,281 | 7,123 | 6,869 | 38,124 | 21,859 | |||||||||||||||
| Mortgage Loans | 179,612 | 114,568 | 176,786 | 94,675 | 134,641 | 565,641 | 484,080 | |||||||||||||||
| Small Business Administration (1) | 270 | 415 | 17,585 | 125,093 | 598 | 143,363 | 112,352 | |||||||||||||||
| Commercial business and other | 182,858 | 128,946 | 130,036 | 103,118 | 180,787 | 544,958 | 407,725 | |||||||||||||||
| Non-mortgage Loans | 183,128 | 129,361 | 147,621 | 228,211 | 181,385 | 688,321 | 520,077 | |||||||||||||||
| Total Closings | $ | 362,740 | $ | 243,929 | $ | 324,407 | $ | 322,886 | $ | 316,026 | $ | 1,253,962 | $ | 1,004,157 | ||||||||
_____________________
(1) Includes $15.5 million and $123.2 million of PPP closings for the three months ended June 30, 2021 and March 31, 2021, respectively and $138.7 million and $111.6 million for the years ended December 31 2021 and 2020, respectively.
Weighted Average Rate on Loan Closings
| For the three months ended | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| Loan type | 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||
| Mortgage loans | 3.77 | % | 3.80 | % | 3.53 | % | 3.47 | % | 3.47 | % | |||||
| Non-mortgage loans | 3.24 | 3.49 | 3.23 | 2.26 | 3.37 | ||||||||||
| Total loans | 3.51 | % | 3.64 | % | 3.39 | % | 2.62 | % | 3.41 | % | |||||
| Excluding PPP loans | 3.51 | % | 3.64 | % | 3.51 | % | 3.62 | % | 3.41 | % | |||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)
Allowance for Loan Losses
| For the three months ended | For the year ended | ||||||||||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||
| Allowance for loan losses | |||||||||||||||||||||||||||||||||||||
| Beginning balances | $ | 36,363 | $ | 42,670 | $ | 45,099 | $ | 45,153 | $ | 38,343 | 45,153 | 21,751 | |||||||||||||||||||||||||
| Adoption of Current Expected Credit Losses | — | — | — | — | — | — | 379 | ||||||||||||||||||||||||||||||
| Net loan charge-off (recoveries): | |||||||||||||||||||||||||||||||||||||
| Multifamily residential | — | — | — | 33 | (11 | ) | $ | 33 | $ | (38 | ) | ||||||||||||||||||||||||||
| Commercial real estate | — | — | — | 64 | — | 64 | — | ||||||||||||||||||||||||||||||
| One-to-four family – mixed-use property | 1 | (123 | ) | 3 | 19 | — | (100 | ) | (135 | ) | |||||||||||||||||||||||||||
| One-to-four family – residential | (3 | ) | (147 | ) | (2 | ) | (5 | ) | (2 | ) | (157 | ) | (12 | ) | |||||||||||||||||||||||
| Small Business Administration | (7 | ) | (8 | ) | (9 | ) | (10 | ) | (3 | ) | (34 | ) | 108 | ||||||||||||||||||||||||
| Taxi medallion | — | (1,235 | ) | (222 | ) | 2,758 | 124 | 1,301 | 1,075 | ||||||||||||||||||||||||||||
| Commercial business and other | (20 | ) | 894 | 1,132 | 6 | 538 | 2,012 | 2,641 | |||||||||||||||||||||||||||||
| Total | (29 | ) | (619 | ) | 902 | 2,865 | 646 | 3,119 | 3,639 | ||||||||||||||||||||||||||||
| (Benefit) provision for loan losses | 743 | (6,926 | ) | (1,527 | ) | 2,811 | 3,357 | (4,899 | ) | 22,563 | |||||||||||||||||||||||||||
| Allowance recorded at the time of Acquisition | — | — | — | — | 4,099 | — | 4,099 | ||||||||||||||||||||||||||||||
| Ending balance | $ | 37,135 | $ | 36,363 | $ | 42,670 | $ | 45,099 | $ | 45,153 | $ | 37,135 | $ | 45,153 | |||||||||||||||||||||||
| Gross charge-offs | $ | 7 | $ | 1,019 | $ | 1,186 | $ | 2,922 | $ | 752 | $ | 5,134 | $ | 4,005 | |||||||||||||||||||||||
| Gross recoveries | 36 | 1,638 | 284 | 57 | 106 | 2,015 | 366 | ||||||||||||||||||||||||||||||
| Allowance for loan losses to gross loans | 0.56 | % | 0.55 | % | 0.64 | % | 0.67 | % | 0.67 | % | 0.56 | % | 0.67 | % | |||||||||||||||||||||||
| Net loan charge-offs (recoveries) to average loans | (0.00 | ) | (0.04 | ) | 0.05 | 0.17 | 0.04 | 0.05 | 0.06 | ||||||||||||||||||||||||||||
Non-Performing Assets
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 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 | 2,431 | 4,192 | 4,669 | 4,338 | 2,524 | |||||||||||||||
| Commercial real estate | 613 | 613 | 8 | 8 | 1,683 | |||||||||||||||
| One-to-four family – mixed-use property (1) | 1,309 | 2,204 | 2,309 | 2,355 | 1,366 | |||||||||||||||
| One-to-four family – residential | 7,725 | 7,807 | 6,940 | 7,335 | 5,854 | |||||||||||||||
| Small Business Administration | 937 | 976 | 976 | 1,151 | 1,151 | |||||||||||||||
| Taxi medallion(1) | — | — | — | — | 2,317 | |||||||||||||||
| Commercial business and other(1) | 1,918 | 2,500 | 2,489 | 3,417 | 3,430 | |||||||||||||||
| Total | 14,933 | 18,292 | 17,391 | 18,604 | 18,325 | |||||||||||||||
| Total Non-performing Loans (NPLs) | 14,933 | 20,217 | 17,592 | 21,186 | 21,073 | |||||||||||||||
| Other Non-performing Assets: | ||||||||||||||||||||
| Other asset acquired through foreclosure | — | — | — | 35 | 35 | |||||||||||||||
| Total | — | — | — | 35 | 35 | |||||||||||||||
| Total Non-performing Assets | $ | 14,933 | $ | 20,217 | $ | 17,592 | $ | 21,221 | $ | 21,108 | ||||||||||
| Non-performing Assets to Total Assets | 0.19 | % | 0.25 | % | 0.22 | % | 0.26 | % | 0.26 | % | ||||||||||
| Allowance For Loan Losses to NPLs | 248.7 | % | 179.9 | % | 242.6 | % | 212.9 | % | 214.3 | % | ||||||||||
_____________________
(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 4Q21, 3Q21, 2Q21, 1Q21, and 4Q20; non-accrual performing TDR taxi medallion loans totaling $0.4 million in 4Q20, and non-accrual performing TDR commercial business loans totaling $2.2 million each in 2Q21, 1Q21, and 4Q20.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
Non-cash Fair Value Adjustments to GAAP Earnings
The variance in GAAP and core earnings is partly driven by the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to swaps designated to protect against rising rates and borrowing carried at fair value under the fair value option. As the swaps get closer to maturity, the volatility in fair value adjustments will dissipate. In a declining interest rate environment, the movement in the curve exaggerates our mark-to-market loss position. In a rising interest rate environment or a steepening of the yield curve, the loss position would experience an improvement.
Core Net Income, Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, Core Net Interest Income FTE, Core Net Interest Margin FTE, Base Net Interest Income FTE, Base Net Interest Margin FTE, Core Interest Income and Yield on Total Loans, Base Interest Income and Yield on Total Loans, Core Non-interest Income, Core Non-interest Expense and Tangible Book Value per common share are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and non-interest items and provide an alternative view of the Company’s performance over time and in comparison to the Company’s competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company’s capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders’ equity.
These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS
(Unaudited)
| For the three months ended | For the year ended | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||||||
| except per share data) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
| GAAP income before income taxes | $ | 22,826 | $ | 34,812 | $ | 25,416 | $ | 26,224 | $ | 3,878 | $ | 109,278 | $ | 45,182 | ||||||||||||||||||||||
| Day 1, Provision for Credit Losses – Empire transaction (Provision for credit losses) | — | — | — | — | 1,818 | — | 1,818 | |||||||||||||||||||||||||||||
| Net (gain) loss from fair value adjustments (Non-interest income (loss)) | 5,140 | 2,289 | 6,548 | (982 | ) | 4,129 | 12,995 | 2,142 | ||||||||||||||||||||||||||||
| Net (gain) loss on sale of securities (Non-interest income (loss)) |
— | 10 | (123 | ) | — | 610 | (113 | ) | 701 | |||||||||||||||||||||||||||
| Life insurance proceeds (Non-interest income (loss)) |
— | — | — | — | — | — | (659 | ) | ||||||||||||||||||||||||||||
| Net gain on disposition of assets (Non-interest income (loss)) |
— | — | — | (621 | ) | — | (621 | ) | — | |||||||||||||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges (Interest and fees on loans) |
(1,122 | ) | (194 | ) | 664 | (1,427 | ) | (1,023 | ) | (2,079 | ) | 1,185 | ||||||||||||||||||||||||
| Prepayment penalty on borrowings (Non-interest expense) |
— | — | — | — | 7,834 | — | 7,834 | |||||||||||||||||||||||||||||
| Net amortization of purchase accounting adjustments (Various) | (324 | ) | (958 | ) | (418 | ) | (789 | ) | 80 | (2,489 | ) | 80 | ||||||||||||||||||||||||
| Merger (benefit) expense (Various) | (17 | ) | 2,096 | (490 | ) | 973 | 5,349 | 2,562 | 6,894 | |||||||||||||||||||||||||||
| Core income before taxes | 26,503 | 38,055 | 31,597 | 23,378 | 22,675 | 119,533 | 65,177 | |||||||||||||||||||||||||||||
| Provision for income taxes for core income | 5,535 | 10,226 | 8,603 | 6,405 | 4,891 | 30,769 | 15,428 | |||||||||||||||||||||||||||||
| Core net income | $ | 20,968 | $ | 27,829 | $ | 22,994 | $ | 16,973 | $ | 17,784 | $ | 88,764 | $ | 49,749 | ||||||||||||||||||||||
| GAAP diluted earnings per common share | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 0.60 | $ | 0.11 | $ | 2.59 | $ | 1.18 | ||||||||||||||||||||||
| Day 1, Provision for Credit Losses – Empire transaction, net of tax | — | — | — | — | 0.05 | — | 0.05 | |||||||||||||||||||||||||||||
| Net (gain) loss from fair value adjustments, net of tax | 0.13 | 0.05 | 0.15 | (0.02 | ) | 0.11 | 0.31 | 0.06 | ||||||||||||||||||||||||||||
| Net loss on sale of securities, net of tax | — | — | — | — | 0.02 | — | 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 | (0.03 | ) | — | 0.02 | (0.03 | ) | (0.03 | ) | (0.05 | ) | 0.03 | |||||||||||||||||||||||||
| Prepayment penalty on borrowings, net of tax |
— | — | — | — | 0.20 | — | 0.20 | |||||||||||||||||||||||||||||
| Net amortization of purchase accounting adjustments, net of tax | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.02 | ) | — | (0.06 | ) | — | ||||||||||||||||||||||||
| Merger (benefit) expense, net of tax | — | 0.05 | (0.01 | ) | 0.02 | 0.14 | 0.06 | 0.18 | ||||||||||||||||||||||||||||
| NYS tax change | — | — | (0.02 | ) | — | — | (0.02 | ) | — | |||||||||||||||||||||||||||
| Core diluted earnings per common share(1) | $ | 0.67 | $ | 0.88 | $ | 0.73 | $ | 0.54 | $ | 0.58 | $ | 2.81 | $ | 1.70 | ||||||||||||||||||||||
| Core net income, as calculated above | $ | 20,968 | $ | 27,829 | $ | 22,994 | $ | 16,973 | $ | 17,784 | $ | 88,764 | $ | 49,749 | ||||||||||||||||||||||
| Average assets | 8,090,701 | 8,072,918 | 8,263,553 | 8,147,714 | 7,705,407 | 8,143,372 | 7,276,022 | |||||||||||||||||||||||||||||
| Average equity | 671,474 | 659,288 | 644,690 | 619,647 | 609,463 | 648,946 | 580,067 | |||||||||||||||||||||||||||||
| Core return on average assets(2) | 1.04 | % | 1.38 | % | 1.11 | % | 0.83 | % | 0.92 | % | 1.09 | % | 0.68 | % | ||||||||||||||||||||||
| Core return on average equity(2) | 12.49 | % | 16.88 | % | 14.27 | % | 10.96 | % | 11.67 | % | 13.68 | % | 8.58 | % | ||||||||||||||||||||||
_____________________
(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 year ended | ||||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
| GAAP Net interest income | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 60,892 | $ | 55,732 | $ | 247,969 | $ | 195,199 | |||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges | (1,122 | ) | (194 | ) | 664 | (1,427 | ) | (1,023 | ) | (2,079 | ) | 1,185 | |||||||||||||||||||
| Net amortization of purchase accounting adjustments | (462 | ) | (1,100 | ) | (565 | ) | (922 | ) | (11 | ) | (3,049 | ) | (11 | ) | |||||||||||||||||
| Core Net interest income | $ | 61,090 | $ | 62,070 | $ | 61,138 | $ | 58,543 | $ | 54,698 | $ | 242,841 | $ | 196,373 | |||||||||||||||||
| GAAP Non-interest income (loss) | $ | (280 | ) | $ | 866 | $ | (3,210 | ) | $ | 6,311 | $ | (1,181 | ) | $ | 3,687 | $ | 11,043 | ||||||||||||||
| Net (gain) loss from fair value adjustments | 5,140 | 2,289 | 6,548 | (982 | ) | 4,129 | 12,995 | 2,142 | |||||||||||||||||||||||
| Net loss on sale of securities | — | 10 | (123 | ) | — | 610 | (113 | ) | 701 | ||||||||||||||||||||||
| Life insurance proceeds | — | — | — | — | — | — | (659 | ) | |||||||||||||||||||||||
| Net gain on sale of assets | — | — | — | (621 | ) | — | (621 | ) | — | ||||||||||||||||||||||
| Core Non-interest income | $ | 4,860 | $ | 3,165 | $ | 3,215 | $ | 4,708 | $ | 3,558 | $ | 15,948 | $ | 13,227 | |||||||||||||||||
| GAAP Non-interest expense | $ | 38,807 | $ | 36,345 | $ | 34,011 | $ | 38,159 | $ | 46,811 | $ | 147,322 | $ | 137,931 | |||||||||||||||||
| Prepayment penalty on borrowings | — | — | — | — | (7,834 | ) | — | (7,834 | ) | ||||||||||||||||||||||
| Net amortization of purchase accounting adjustments | (138 | ) | (142 | ) | (147 | ) | (133 | ) | (91 | ) | (560 | ) | (91 | ) | |||||||||||||||||
| Merger (benefit) expense | 17 | (2,096 | ) | 490 | (973 | ) | (5,349 | ) | (2,562 | ) | (6,894 | ) | |||||||||||||||||||
| Core Non-interest expense | $ | 38,686 | $ | 34,107 | $ | 34,354 | $ | 37,053 | $ | 33,537 | $ | 144,200 | $ | 123,112 | |||||||||||||||||
| Net interest income | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 60,892 | $ | 55,732 | $ | 247,969 | $ | 195,199 | |||||||||||||||||
| Non-interest income (loss) | (280 | ) | 866 | (3,210 | ) | 6,311 | (1,181 | ) | 3,687 | 11,043 | |||||||||||||||||||||
| Non-interest expense | (38,807 | ) | (36,345 | ) | (34,011 | ) | (38,159 | ) | (46,811 | ) | (147,322 | ) | (137,931 | ) | |||||||||||||||||
| Pre-provision pre-tax net revenue | $ | 23,587 | $ | 27,885 | $ | 23,818 | $ | 29,044 | $ | 7,740 | $ | 104,334 | $ | 68,311 | |||||||||||||||||
| Core: | |||||||||||||||||||||||||||||||
| Net interest income | $ | 61,090 | $ | 62,070 | $ | 61,138 | $ | 58,543 | $ | 54,698 | $ | 242,841 | $ | 196,373 | |||||||||||||||||
| Non-interest income | 4,860 | 3,165 | 3,215 | 4,708 | 3,558 | 15,948 | 13,227 | ||||||||||||||||||||||||
| Non-interest expense | (38,686 | ) | (34,107 | ) | (34,354 | ) | (37,053 | ) | (33,537 | ) | (144,200 | ) | (123,112 | ) | |||||||||||||||||
| Pre-provision pre-tax net revenue | $ | 27,264 | $ | 31,128 | $ | 29,999 | $ | 26,198 | $ | 24,719 | $ | 114,589 | $ | 86,488 | |||||||||||||||||
| Efficiency Ratio | 58.7 | % | 52.3 | % | 53.4 | % | 58.6 | % | 57.6 | % | 55.7 | % | 58.7 | % | |||||||||||||||||
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 year ended | ||||||||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||
| GAAP net interest income | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 60,892 | $ | 55,732 | $ | 247,969 | $ | 195,199 | |||||||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges | (1,122 | ) | (194 | ) | 664 | (1,427 | ) | (1,023 | ) | (2,079 | ) | 1,185 | |||||||||||||||||||||||
| Net amortization of purchase accounting adjustments | (462 | ) | (1,100 | ) | (565 | ) | (922 | ) | (11 | ) | (3,049 | ) | (11 | ) | |||||||||||||||||||||
| Tax equivalent adjustment | 113 | 113 | 113 | 111 | 114 | 450 | 508 | ||||||||||||||||||||||||||||
| Core net interest income FTE | $ | 61,203 | $ | 62,183 | $ | 61,251 | $ | 58,654 | $ | 54,812 | $ | 243,291 | $ | 196,881 | |||||||||||||||||||||
| Prepayment penalties received on loans and securities, net of reversals and recoveries of interest from non-accrual loans | (1,497 | ) | (2,136 | ) | (2,046 | ) | (948 | ) | (1,093 | ) | (6,627 | ) | (4,576 | ) | |||||||||||||||||||||
| Base net interest income FTE | $ | 59,706 | $ | 60,047 | $ | 59,205 | $ | 57,706 | $ | 53,719 | $ | 236,664 | $ | 192,305 | |||||||||||||||||||||
| Total average interest-earning assets (1) | $ | 7,634,601 | $ | 7,616,332 | $ | 7,799,176 | $ | 7,676,833 | $ | 7,245,147 | $ | 7,681,441 | $ | 6,863,219 | |||||||||||||||||||||
| Core net interest margin FTE | 3.21 | % | 3.27 | % | 3.14 | % | 3.06 | % | 3.03 | % | 3.17 | % | 2.87 | % | |||||||||||||||||||||
| Base net interest margin FTE | 3.13 | % | 3.15 | % | 3.04 | % | 3.01 | % | 2.97 | % | 3.08 | % | 2.80 | % | |||||||||||||||||||||
| GAAP interest income on total loans, net | $ | 68,113 | $ | 69,198 | $ | 67,999 | $ | 69,021 | $ | 66,120 | $ | 274,331 | $ | 248,153 | |||||||||||||||||||||
| Net (gain) loss from fair value adjustments on qualifying hedges | (1,122 | ) | (194 | ) | 664 | (1,427 | ) | (1,023 | ) | (2,079 | ) | 1,185 | |||||||||||||||||||||||
| Net amortization of purchase accounting adjustments | (535 | ) | (1,126 | ) | (624 | ) | (728 | ) | (356 | ) | (3,013 | ) | (356 | ) | |||||||||||||||||||||
| Core interest income on total loans, net | $ | 66,456 | $ | 67,878 | $ | 68,039 | $ | 66,866 | $ | 64,741 | $ | 269,239 | $ | 248,982 | |||||||||||||||||||||
| Prepayment penalties received on loans, net of reversals and recoveries of interest from non-accrual loans | (1,497 | ) | (2,135 | ) | (2,046 | ) | (947 | ) | (1,093 | ) | (6,625 | ) | (4,501 | ) | |||||||||||||||||||||
| Base interest income on total loans, net | $ | 64,959 | $ | 65,743 | $ | 65,993 | $ | 65,919 | $ | 63,648 | $ | 262,614 | $ | 244,481 | |||||||||||||||||||||
| Average total loans, net (1) | $ | 6,566,654 | $ | 6,642,434 | $ | 6,697,103 | $ | 6,711,446 | $ | 6,379,429 | $ | 6,653,980 | $ | 6,006,931 | |||||||||||||||||||||
| Core yield on total loans | 4.05 | % | 4.09 | % | 4.06 | % | 3.99 | % | 4.06 | % | 4.05 | % | 4.14 | % | |||||||||||||||||||||
| Base yield on total loans | 3.96 | % | 3.96 | % | 3.94 | % | 3.93 | % | 3.99 | % | 3.95 | % | 4.07 | % | |||||||||||||||||||||
_____________________
(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)
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
| (Dollars in thousands) | 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||||||||||
| Total Equity | $ | 679,628 | $ | 668,096 | $ | 655,167 | $ | 639,201 | $ | 618,997 | |||||||||||||||
| Less: | |||||||||||||||||||||||||
| Goodwill | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | |||||||||||||||
| Core deposit Intangibles | (2,562 | ) | (2,708 | ) | (2,859 | ) | (3,013 | ) | (3,172 | ) | |||||||||||||||
| Intangible deferred tax liabilities | 328 | 287 | 287 | 287 | 287 | ||||||||||||||||||||
| Tangible Stockholders’ Common Equity | $ | 659,758 | $ | 648,039 | $ | 634,959 | $ | 618,839 | $ | 598,476 | |||||||||||||||
| Total Assets | $ | 8,045,911 | $ | 8,077,334 | $ | 8,159,345 | $ | 8,159,184 | $ | 7,976,394 | |||||||||||||||
| Less: | |||||||||||||||||||||||||
| Goodwill | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | (17,636 | ) | |||||||||||||||
| Core deposit Intangibles | (2,562 | ) | (2,708 | ) | (2,859 | ) | (3,013 | ) | (3,172 | ) | |||||||||||||||
| Intangible deferred tax liabilities | 328 | 287 | 287 | 287 | 287 | ||||||||||||||||||||
| Tangible Assets | $ | 8,026,041 | $ | 8,057,277 | $ | 8,139,137 | $ | 8,138,822 | $ | 7,955,873 | |||||||||||||||
| Tangible Stockholders’ Common Equity to Tangible Assets | 8.22 | % | 8.04 | % | 7.80 | % | 7.60 | % | 7.52 | % | |||||||||||||||
