Fourth Consecutive Quarter of Record Net Interest Income

Source: Nasdaq GlobeNewswire / 27 Apr 2021 16:30:01 America/Chicago

UNIONDALE, N.Y., April 27, 2021 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (NASDAQ-GS: FFIC)

John R. Buran, President and CEO Commentary

“We are optimistic that as more people receive vaccines, local economic activity will improve. Our first quarter 2021 actions largely focused on helping our customers navigate an improving, but still challenging environment. Despite these challenges, we achieved our fourth consecutive quarter of record net interest income. We reduced loans in forbearance by 81% from their peak nearly a year ago, and while our forbearance programs will continue into 2022, borrowers’ fundamentals are improving. The recent steepening of the yield curve is a positive for us and we expect to capitalize on our robust loan pipeline. We continue to make investments in our technology platform and fintech partnerships, both of which are driving digital engagement.”

“First quarter of 2021 marked a continuation of the economic improvement in our local economies and the outlook is brighter than three months ago with continued vaccine rollouts and a steeper yield curve. We continue to assist customers during the pandemic by originating $123 million of PPP loans in the quarter and processing nearly $50 million in forgiveness over the life of the program.”

- John R. Buran, President and CEO

Record Net Interest Income; NIM Expansion. “Core NIM improved by 3 bps during the quarter as funding costs declined faster than asset yields. The steeper yield curve should mitigate pressure on asset yields while keeping funding costs low. However, we are preparing for an eventual rise in short term rates by extending the duration of our liabilities and utilizing forward swaps, the bulk of which begin in 2022. We focused our efforts on PPP this quarter and that impacted overall loan growth, which rose 2.4% (annualized) from fourth quarter 2020. We reported first quarter GAAP EPS of $0.60, which included improving fair value adjustments, partially offset by merger and other charges totaling $0.06 per share, net of tax. Adjusting for noncore items¹, first quarter core EPS was $0.54, up 184% year over year. The Empire integration is complete with 100% of the cost savings in our run rate. We are on track to achieve our 20% earnings accretion target for 2021.”

Strong Credit Quality. “We remain confident with our credit quality given the loan to value of 38% on our real estate dependent loans, improving delinquencies, lower criticized and classified assets, and our conservative underwriting standards.”

1Q21 Key Financial Metrics¹

	1Q21		4Q20		3Q20		2Q20		1Q20
GAAP:
EPS	$	0.60	$	0.11	$	0.50	$	0.63	$	(0.05	)
ROAA (%)		0.93		0.18		0.81		1.01		(0.08	)
ROAE (%)		12.29		2.27		9.94		13.11		(0.96	)
NIM FTE (%)		3.18		3.08		3.00		2.87		2.44
Core:
EPS	$	0.54	$	0.58	$	0.56	$	0.36	$	0.19
ROAA (%)		0.83		0.92		0.91		0.57		0.31
ROAE (%)		10.96		11.67		11.22		7.39		3.82
Core NIM FTE (%)		3.06		3.03		2.98		2.89		2.56
Efficiency Ratio (%)		58.6		57.6		55.4		54.9		68.2
Credit Quality:
NPAs/Loans&REO (%)		0.31		0.31		0.42		0.34		0.29
LLRs/Loans (%)		0.67		0.67		0.65		0.61		0.47
LLRs/NPLs (%)		212.87		214.27		154.66		181.84		167.73
NCOs/Avg Loans (%)		0.17		0.04		0.06		0.07		0.08
Balance Sheet:
Avg Loans ($B)	$	6.7	$	6.4	$	5.9	$	5.9	$	5.8
Avg Dep ($B)	$	6.3	$	5.5	$	5.0	$	5.0	$	5.1
Book Value/Share	$	20.65	$	20.11	$	20.78	$	20.27	$	19.48
Tangible BV/Share	$	19.99	$	19.45	$	20.22	$	19.71	$	18.92
TCE/TA (%)		7.60		7.52		8.10		7.78		7.38

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.”

1Q21 Highlights

Record net interest income up 9.3% QoQ and 49.2% YoY to $60.9 million, while core net interest income was up 7.0% QoQ and 36.5% YoY to $58.5 million due to Empire transaction and lower funding costs

Net interest margin rose 10 bps QoQ and 74 bps YoY to 3.18%, and core net interest margin up 3 bps QoQ and 50 bps YoY to 3.06% primarily due to lower funding costs

Average loans up 5.1% QoQ and 15.6% YoY to $6.7 billion, including $123.2 million of PPP originations

Average deposits rose 14.0% QoQ and 23.4% YoY to $6.3 billion, with core deposits 83% of total average deposits (including escrow deposits)

Loan pipeline rose 15.9% YoY to $375.8 million

Provision for credit losses of $2.8 million and net charge-offs of $2.9 million in 1Q21 largely the result of the $2.8 million charge-off for the remaining taxi medallion loans

NPAs were flat QoQ at $21.2 million; criticized and classified assets fell 11.9% to $63.1 million

Loans in forbearance were 4.4% of total loans and only 1.7% of loans excluding loans making interest only payments

Income Statement Highlights

													Y/Y		Q/Q
($000s, except EPS)	1Q21		4Q20			3Q20		2Q20		1Q20			Change		Change

Net Interest Income	$	60,892	$	55,732		$	49,924	$	48,717	$	40,826		49.2	%	9.3	%
Provision for Credit Losses		2,820		3,862			2,470		9,619		7,178		(60.7	)	(27.0	)
Non-interest Income (Loss)		6,311		(1,181	)		1,351		13,737		(2,864	)	NM		NM
Non-interest Expense		38,159		46,811			29,985		28,755		32,380		17.8		(18.5	)
Income (Loss) Before Income Taxes		26,224		3,878			18,820		24,080		(1,596	)	NM		NM
Provision (Benefit) for Income Taxes		7,185		417			4,489		5,808		(206	)	NM		NM
Net Income (Loss)	$	19,039	$	3,461		$	14,331	$	18,272	$	(1,390	)	NM		NM
Diluted EPS	$	0.60	$	0.11		$	0.50	$	0.63	$	(0.05	)	NM		NM
Avg. Diluted Shares (000s)		31,604		30,603			28,874		28,867		28,853		9.5		3.3

Core Net Income¹	$	16,973	$	17,784		$	16,168	$	10,297	$	5,500		208.6		(4.6	)
Core EPS¹	$	0.54	$	0.58		$	0.56	$	0.36	$	0.19		184.2		(6.9	)

¹ See Reconciliation of GAAP Earnings and Core Earnings

Net interest income for 1Q21 was $60.9 million, an increase of 49.2% YoY and 9.3% QoQ (Empire contributed $6.1 million in 1Q21 and $4.2 million in 4Q20).

Net interest margin of 3.18%, increased 74 bps YoY and 10 bps QoQ; net purchase accounting accretion was $0.9 million in 1Q21 and not meaningful in 4Q20
Prepayment penalty income from loans and securities, net reversals and recoveries of interest from non-accrual loans, net gains (losses) from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $3.3 million (17 bps) in 1Q21, $2.1 million (11 bps) in 4Q20, $1.7 million (11 bps) in 3Q20, $0.4 million (2 bps) in 2Q20, and $(0.9) million ((5) bps) in 1Q20
Excluding these items, net interest margin was 3.01% in 1Q21, 2.97% in 4Q20, 2.89% in 3Q20, 2.85% in 2Q20, and 2.49% in 1Q20, or an increase of 52 bps YoY and 4 bps QoQ

The Company recorded a provision for credit losses of $2.8 million in 1Q21, compared to $3.9 million in 4Q20, $2.5 million in 3Q20, $9.6 million in 2Q20, and $7.2 million in 1Q20.

1Q21 provision for credit losses was driven by the charge-off of the total remaining taxi medallion portfolio of $2.8 million; excluding the taxi medallion portfolio, net charge-offs were only $0.1 million
Net charge-offs were $2.9 million in 1Q21, $0.6 million in 4Q20, $0.8 million in 3Q20, $1.0 million in 2Q20, and $1.1 million in 1Q20

Non-interest income (loss) for 1Q21 was $6.3 million versus $(1.2) million in 4Q20, $1.4 million in 3Q20, $13.7 million in 2Q20, and $(2.9) million in 1Q20.

Non-interest income (loss) included net gains (losses) from fair value adjustments of $1.0 million ($0.02 per share, net of tax) in 1Q21, $(4.1) million ($(0.11) per share, net of tax) in 4Q20, $(2.2) million ($(0.06) per share, net of tax) in 3Q20, $10.2 million ($0.27 per share, net of tax) in 2Q20, and $(6.0) million ($(0.15) per share, net of tax) in 1Q20
The net gain on the disposition of assets was $0.6 million in 1Q21 ($0.01 per share, net of tax); losses on the sale of investment securities were $0.6 million ($0.02 per share, net of tax) in 4Q20 and less than $0.1 million (less than $0.01 per share, net of tax) in both 2Q20 and 1Q20;
Absent all above items, non-interest income was $4.7 million in 1Q21, up 48.7% YoY and 32.3% QoQ and was primarily driven by strong customer swap activity

Non-interest expense was $38.2 million in 1Q21 compared to $46.8 million in 4Q20, $30.0 million in 3Q20, $28.8 million in 2Q20, and $32.4 million in 1Q20.

1Q21 non-interest expense includes $1.0 million of pre-tax merger charges ($0.02 per share, net of tax) and $0.1 million of core deposit intangible amortization and other purchase accounting adjustments (less than $0.01 per share net of tax)
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, 2Q20, and 1Q20 non-interest expense includes $0.4 million of merger charges ($0.01 per share, net of tax), $0.2 million ($0.01 per share, net of tax), and $0.9 million ($0.02 per share, net of tax), respectively
Excluding the above items, core operating expenses were $37.1 million in 1Q21, up 17.8% YoY and 10.5% QoQ; Empire contributed $1.9 million in 1Q21 and $1.7 million in 4Q20
There were $3.3 million of seasonal compensation expenses in 1Q21 (compared to $3.0 million a year ago) that are not expected to repeat in 2Q21
The ratio of core operating expense to average assets was 1.82% in 1Q21, 1.74% in 4Q20, 1.67% in 3Q20, 1.59% in 2Q20, and 1.77% in 1Q20
The efficiency ratio was 58.6% in 1Q21, 57.6% in 4Q20, 55.4% in 3Q20, 54.9% in 2Q20, and 68.2% in 1Q20

The provision (benefit) for income taxes was $7.2 million in 1Q21 versus $0.4 million in 4Q20, $4.5 million in 3Q20, $5.8 million in 2Q20, and $(0.2) million in 1Q20.

Pre-tax income (loss) was $26.2 million in 1Q21, compared to $3.9 million in 4Q20, $18.8 million in 3Q20, $24.1 million in 2Q20, and $(1.6) million in 1Q20
The effective tax rate was 27.4% in 1Q21, 10.8% in 4Q20, 23.9% in 3Q20, 24.1% in 2Q20, and 12.9% in 1Q20
New York State passed a law increasing the state tax rate to 7.25% from 6.5% on April 19, 2021; with this change, we now expect the effective tax rate to approximate 27% in 2021

Balance Sheet, Credit Quality, and Capital Highlights

											Y/Y		Q/Q
($000s, except per share data)	1Q21		4Q20		3Q20		2Q20		1Q20		Change		Change
Loans And Deposits
Period End Loans, net	$	6,700	$	6,660	$	5,903	$	5,947	$	5,904	13.5	%	0.6	%
Average Deposits		6,285		5,515		4,999		5,043		5,094	23.4		14.0

Credit Quality
Nonperforming Loans	$	21,186	$	21,073	$	24,792	$	20,188	$	16,752	26.5	%	0.5	%
Nonperforming Assets		21,221		21,108		24,827		20,431		16,995	24.9		0.5
Criticized and Classified Assets		63,130		71,691		42,181		48,712		34,199	84.6		(11.9	)
Allowance for Credit Losses/Loans (%)		0.67		0.67		0.65		0.61		0.47	20	bps	-	bps

Capital
Book Value/Share	$	20.65	$	20.11	$	20.78	$	20.27	$	19.48	6.0	%	2.7	%
Tangible Book Value/Share		19.99		19.45		20.22		19.71		18.92	5.7		2.8
Tang. Common Equity/Tang. Assets (%)		7.60		7.52		8.10		7.78		7.38	22	bps	8	bps
Leverage Ratio (%)		8.44		8.38		9.03		8.64		8.59	(15	)	6

Net loans held for investment were $6.7 billion, an increase of 13.5% YoY and 0.6% QoQ.

SBA Paycheck Protection Program (“PPP”) loans were $251.0 million at 1Q21, compared to $151.9 million at 4Q20, $111.6 million at 3Q20, and $93.2 million at 2Q20, as we supported our customers with the second round of PPP originations and forgiveness, with originations totaling $123.2 million in 1Q21
Total loan closings were $322.9 million (including $123.2 million from PPP) in 1Q21 versus $316.0 million in 4Q20, $155.6 million in 3Q20, $233.8 million in 2Q20, and $298.7 million in 1Q20
The loan pipeline was $375.8 million at March 31, 2021, compared to $324.4 million a year ago

Average Deposits totaled $6.3 billion, rising 23.4% YoY and 14.0% QoQ, partially due to customer growth, the Empire transaction, and unused PPP funds.

Core deposits (non-CD deposits) were 82.5% of total average deposits (including escrow deposits) in 1Q21, compared to 75.1% a year ago
With the steepening of the yield curve, we have extended the duration of our funding liabilities to prepare for rising short term rates

Credit Quality; Non-performing loans totaled $21.2 million compared to $21.1 million in 4Q20 and $16.8 million in 1Q20.

Non-performing assets totaled $21.2 million, flat QoQ, but up 24.9% YoY
Criticized and classified assets totaled $63.1 million in 1Q21, compared to $71.7 million in 4Q20, and $34.2 million in 1Q20; the QoQ decline was primarily due to improved borrowers’ fundamentals, while the YoY rise related to the impacts of the pandemic
Loans classified as troubled debt restructured (TDR) totaled $15.2 million, versus $15.7 million in 4Q20, and $6.3 million a year ago
Active COVID-19 forbearances totaled 116 loans with a principal balance of $295.5 million at March 31 2021, with 61% making interest payments; approximately 25% of these loans are scheduled to exit forbearance in 2Q21, 15% in 3Q21, and 43% in 4Q21
Over 85% of gross loans are collateralized by real estate and these loans have a loan-to-value ratio of 38% as of March 31, 2021
Allowance for credit losses were 0.67% of loans in 1Q21 compared to 0.67% in 4Q20 and 0.47% a year ago

Capital; Book value per common share increased to $20.65 in 1Q21, compared to $20.11 in 4Q20 and $19.48 in 1Q20; tangible book value per common share, a non-GAAP measure, improved to $19.99 in 1Q21, versus $19.45 in 4Q20, and $18.92 in 1Q20.

The Company paid a dividend of $0.21 per share in 1Q21 and did not repurchase any shares in the quarter; up to 284,806 shares remained subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
Tangible common equity to tangible assets was 7.60% in 1Q21 compared to 7.38% a year ago
The Company and the Bank remain well capitalized under all applicable regulatory requirements
The leverage ratio was 8.44% in 1Q21 versus 8.59% in 1Q20

Conference Call Information And Future Earnings Release Dates

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 tomorrow, Wednesday, April 28, 2021 at 9:30 AM (ET) to discuss the Company’s first quarter 2021 results and strategy.
Dial-in for Live Call: 1-877-509-5836
Webcast: https://services.choruscall.com/links/ffic210428.html
Dial-in for Replay: 1-877-344-7529
Replay Access Code: 10151631
The conference call will be simultaneously webcast and archived through April 28, 2022.

Future Earnings Release Dates:

The Company plans to release quarterly financial results on the following dates:

Second Quarter 2021 after the market close on July 27, 2021; conference call at 9:30 AM (ET) on July 28, 2021.

Third Quarter 2021 after the market close on October 26, 2021; conference call at 9:30 AM (ET) on October 27, 2021.

A detailed announcement will be issued prior to each quarter’s close confirming the date and time of the earnings release and conference call for that quarter.

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: 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.

Investor Contact: Susan K. Cullen, SEVP, Treasurer and CFO, 718-961-5400

- Statistical Tables Follow -

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)


	At or for the three months ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands, except per share data)	2021			2020			2020			2020			2020
Performance Ratios ⁽¹⁾
Return on average assets		0.93	%		0.18	%		0.81	%		1.01	%		(0.08	)%
Return on average equity		12.29			2.27			9.94			13.11			(0.96	)
Yield on average interest-earning assets ⁽²⁾		3.77			3.82			3.84			3.81			3.98
Cost of average interest-bearing liabilities		0.69			0.86			0.98			1.09			1.74
Cost of funds		0.61			0.77			0.89			0.99			1.61
Net interest rate spread during period⁽²⁾		3.08			2.96			2.86			2.72			2.24
Net interest margin ⁽²⁾		3.18			3.08			3.00			2.87			2.44
Non-interest expense to average assets		1.87			2.43			1.69			1.60			1.82
Efficiency ratio ⁽³⁾		58.58			57.56			55.37			54.92			68.21
Average interest-earning assets to average interest-bearing liabilities		1.18	X		1.17	X		1.16	X		1.15	X		1.13	X

Average Balances
Total loans, net	$	6,700,476		$	6,375,516		$	5,904,051		$	5,946,412		$	5,794,866
Total interest-earning assets		7,667,217			7,243,472			6,675,896			6,809,835			6,719,857
Total assets		8,147,714			7,705,407			7,083,028			7,206,059			7,106,998
Total due to depositors		5,361,619			4,708,760			4,353,560			4,395,228			4,578,793
Total interest-bearing liabilities		6,475,843			6,169,574			5,731,899			5,912,774			5,951,925
Stockholders' equity		619,647			609,463			576,512			557,414			576,597

Per Share Data
Book value per common share ⁽⁴⁾	$	20.65		$	20.11		$	20.78		$	20.27		$	19.48
Tangible book value per common share ⁽⁵⁾	$	19.99		$	19.45		$	20.22		$	19.71		$	18.92

Stockholders' Equity
Stockholders' equity	$	639,201		$	618,997		$	586,406		$	571,921		$	549,683
Tangible stockholders' equity		618,839			598,476			570,571			556,086			533,848

Consolidated Regulatory Capital Ratios
Tier 1 capital	$	679,343		$	662,987		$	630,380		$	617,620		$	610,898
Common equity Tier 1 capital		636,071			621,247			593,344			583,238			567,306
Total risk-based capital		806,922			794,034			740,499			726,291			712,761
Risk Weighted Assets		6,281,136			6,287,598			5,381,938			5,406,104			5,418,219

Tier 1 leverage capital (well capitalized = 5%)		8.44	%		8.38	%		9.03	%		8.64	%		8.59	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)		10.13			9.88			11.02			10.79			10.47
Tier 1 risk-based capital (well capitalized = 8.0%)		10.82			10.54			11.71			11.42			11.28
Total risk-based capital (well capitalized = 10.0%)		12.85			12.63			13.76			13.43			13.16

Capital Ratios
Average equity to average assets		7.61	%		7.91	%		8.14	%		7.74	%		8.11	%
Equity to total assets		7.83			7.76			8.30			7.98			7.59
Tangible common equity to tangible assets ⁽⁶⁾		7.60			7.52			8.10			7.78			7.38

Asset Quality
Non-accrual loans ⁽⁷⁾	$	18,604		$	18,325		$	24,792		$	20,038		$	16,752
Non-performing loans		21,186			21,073			24,792			20,188			16,752
Non-performing assets		21,221			21,108			24,827			20,431			16,995
Net charge-offs		2,865			646			837			1,007			1,149

Asset Quality Ratios
Non-performing loans to gross loans		0.31	%		0.31	%		0.42	%		0.34	%		0.28	%
Non-performing assets to total assets		0.26			0.26			0.35			0.29			0.23
Allowance for loan losses to gross loans		0.67			0.67			0.65			0.61			0.47
Allowance for loan losses to non-performing assets		212.52			213.91			154.44			179.68			165.32
Allowance for loan losses to non-performing loans		212.87			214.27			154.66			181.85			167.73
Net charge-offs to average loans		0.17			0.04			0.06			0.07			0.08

Full-service customer facilities		25			25			20			20			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
(Unaudited)


	For the three months ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(In thousands, except per share data)	2021			2020			2020			2020			2020
Interest and Dividend Income
Interest and fees on loans	$	69,021		$	66,120		$	60,367		$	60,557		$	61,109
Interest and dividends on securities:
Interest		3,072			2,813			3,525			4,182			5,256
Dividends		8			8			9			11			15
Other interest income		36			30			13			22			290
Total interest and dividend income		72,137			68,971			63,914			64,772			66,670

Interest Expense
Deposits		6,105			6,470			7,093			9,971			18,778
Other interest expense		5,140			6,769			6,897			6,084			7,066
Total interest expense		11,245			13,239			13,990			16,055			25,844

Net Interest Income		60,892			55,732			49,924			48,717			40,826
Provision for credit losses		2,820			3,862			2,470			9,619			7,178
Net Interest Income After Provision for Credit Losses		58,072			51,870			47,454			39,098			33,648

Non-interest Income
Banking services fee income		2,725			1,442			1,316			944			798
Net loss on sale of securities		—			(610	)		—			(54	)		(37	)
Net gain on sale of loans		31			6			—			—			42
Net gain on disposition of assets		621			—			—			—			—
Net gain (loss) from fair value adjustments		982			(4,129	)		(2,225	)		10,205			(5,993	)
Federal Home Loan Bank of New York stock dividends		689			734			874			881			964
Life insurance proceeds		—			—			—			659			—
Bank owned life insurance		997			1,016			923			932			943
Other income		266			360			463			170			419
Total non-interest income (loss)		6,311			(1,181	)		1,351			13,737			(2,864	)

Non-interest Expense
Salaries and employee benefits		22,664			22,089			17,335			16,184			18,620
Occupancy and equipment		3,367			3,446			3,021			2,827			2,840
Professional services		2,400			2,463			2,064			1,985			2,862
FDIC deposit insurance		1,213			562			727			737			650
Data processing		2,109			3,411			1,668			1,813			1,694
Depreciation and amortization		1,639			1,579			1,542			1,555			1,536
Other real estate owned/foreclosure (recoveries) expense		(10	)		95			240			45			(164	)
Net loss from sales of real estate owned		—			—			5			—			31
Prepayment penalty on borrowings		—			7,834			—			—			—
Other operating expenses		4,777			5,332			3,383			3,609			4,311
Total non-interest expense		38,159			46,811			29,985			28,755			32,380

Income (loss) Before Income Taxes		26,224			3,878			18,820			24,080			(1,596	)

Provision (benefit) for Income Taxes
Federal		5,071			533			3,359			4,307			989
State and local		2,114			(116	)		1,130			1,501			(1,195	)
Total taxes		7,185			417			4,489			5,808			(206	)

Net Income (loss)	$	19,039		$	3,461		$	14,331		$	18,272		$	(1,390	)

Basic earnings (loss) per common share	$	0.60		$	0.11		$	0.50		$	0.63		$	(0.05	)
Diluted earnings (loss) per common share	$	0.60		$	0.11		$	0.50		$	0.63		$	(0.05	)
Dividends per common share	$	0.21		$	0.21		$	0.21		$	0.21		$	0.21

Basic average shares		31,604			30,603			28,874			28,867			28,853
Diluted average shares		31,604			30,603			28,874			28,867			28,853

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)


	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2021			2020			2020			2020			2020
ASSETS
Cash and due from banks	$	174,420		$	157,388		$	75,560		$	84,754		$	157,184
Securities held-to-maturity:
Mortgage-backed securities		7,909			7,914			7,919			7,924			7,929
Other securities		49,912			49,918			50,252			50,078			50,225
Securities available for sale:
Mortgage-backed securities		518,781			404,460			386,235			442,507			489,556
Other securities		242,440			243,514			234,721			232,803			225,856
Loans		6,745,316			6,704,674			5,941,398			5,983,275			5,932,088
Allowance for loan losses		(45,099	)		(45,153	)		(38,343	)		(36,710	)		(28,098	)
Net loans		6,700,217			6,659,521			5,903,055			5,946,565			5,903,990
Interest and dividends receivable		44,941			44,041			36,068			30,219			25,526
Bank premises and equipment, net		27,498			28,179			25,766			27,018			27,899
Federal Home Loan Bank of New York stock		41,498			43,439			57,119			56,400			74,000
Bank owned life insurance		182,707			181,710			158,701			157,779			158,655
Goodwill		17,636			17,636			16,127			16,127			16,127
Other real estate owned, net		—			—			—			208			208
Core deposit intangibles		3,013			3,172			—			—			—
Right of use asset		53,802			50,743			42,326			38,303			39,729
Other assets		94,410			84,759			69,207			71,974			68,526
Total assets	$	8,159,184		$	7,976,394		$	7,063,056		$	7,162,659		$	7,245,410

LIABILITIES
Deposits	$	6,326,577		$	6,090,733		$	4,906,359		$	5,049,874		$	4,828,435
Mortgagors' escrow deposits		74,348			45,622			57,136			48,525			73,051
Borrowed funds		948,920			1,020,895			1,323,975			1,305,187			1,617,582
Operating lease liability		58,080			59,100			49,737			45,897			47,726
Other liabilities		112,058			141,047			139,443			141,255			128,933
Total liabilities		7,519,983			7,357,397			6,476,650			6,590,738			6,695,727

STOCKHOLDERS' EQUITY
Preferred stock (5,000,000 shares authorized; none issued)		—			—			—			—			—
Common stock ($0.01 par value; 100,000,000 shares authorized)		341			341			315			315			315
Additional paid-in capital		260,019			261,533			227,877			226,901			225,893
Treasury stock		(65,479	)		(69,400	)		(69,409	)		(69,436	)		(69,540	)
Retained earnings		455,023			442,789			445,931			437,663			425,455
Accumulated other comprehensive loss, net of taxes		(10,703	)		(16,266	)		(18,308	)		(23,522	)		(32,440	)
Total stockholders' equity		639,201			618,997			586,406			571,921			549,683

Total liabilities and stockholders' equity	$	8,159,184		$	7,976,394		$	7,063,056		$	7,162,659		$	7,245,410

(In thousands)
Issued shares		34,088			34,088			31,531			31,531			31,531
Outstanding shares		30,954			30,776			28,218			28,217			28,214
Treasury shares		3,133			3,312			3,312			3,313			3,317

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)


	For the three months ended
	March 31,		December 31,		September 30,		June 30,		March 31,
(In thousands)	2021		2020		2020		2020		2020
Interest-earning Assets:
Mortgage loans, net	$	5,155,975	$	5,010,097	$	4,721,742	$	4,762,068	$	4,697,531
Other loans, net		1,544,501		1,365,419		1,182,309		1,184,344		1,097,335
Total loans, net		6,700,476		6,375,516		5,904,051		5,946,412		5,794,866
Taxable securities:
Mortgage-backed securities		433,917		413,875		413,902		465,365		507,912
Other securities		300,828		266,663		243,754		243,867		243,726
Total taxable securities		734,745		680,538		657,656		709,232		751,638
Tax-exempt securities:
Other securities		50,828		50,768		51,652		60,280		63,535
Total tax-exempt securities		50,828		50,768		51,652		60,280		63,535
Interest-earning deposits and federal funds sold		181,168		136,650		62,537		93,911		109,818
Total interest-earning assets		7,667,217		7,243,472		6,675,896		6,809,835		6,719,857
Other assets		480,497		461,935		407,132		396,224		387,141
Total assets	$	8,147,714	$	7,705,407	$	7,083,028	$	7,206,059	$	7,106,998

Interest-bearing Liabilities:
Deposits:
Savings accounts	$	170,079	$	163,382	$	160,100	$	188,587	$	194,026
NOW accounts		2,183,356		1,924,840		1,625,109		1,440,147		1,419,739
Money market accounts		1,905,543		1,507,245		1,461,996		1,580,652		1,697,783
Certificate of deposit accounts		1,102,641		1,113,293		1,106,355		1,185,842		1,267,245
Total due to depositors		5,361,619		4,708,760		4,353,560		4,395,228		4,578,793
Mortgagors' escrow accounts		65,372		75,005		55,868		87,058		65,503
Total interest-bearing deposits		5,426,991		4,783,765		4,409,428		4,482,286		4,644,296
Borrowings		1,048,852		1,385,809		1,322,471		1,430,488		1,307,629
Total interest-bearing liabilities		6,475,843		6,169,574		5,731,899		5,912,774		5,951,925
Non interest-bearing demand deposits		858,080		731,170		589,674		560,637		449,761
Other liabilities		194,144		195,200		184,943		175,234		128,715
Total liabilities		7,528,067		7,095,944		6,506,516		6,648,645		6,530,401
Equity		619,647		609,463		576,512		557,414		576,597
Total liabilities and equity	$	8,147,714	$	7,705,407	$	7,083,028	$	7,206,059	$	7,106,998

Net interest-earning assets	$	1,191,374	$	1,073,898	$	943,997	$	897,061	$	767,932

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)


	For the three months ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2021			2020			2020			2020			2020
Interest Income:
Mortgage loans, net	$	55,219		$	53,777		$	49,814		$	49,719		$	49,412
Other loans, net		13,802			12,343			10,553			10,838			11,697
Total loans, net		69,021			66,120			60,367			60,557			61,109
Taxable securities:
Mortgage-backed securities		1,698			1,435			1,928			2,327			3,040
Other securities		963			957			1,166			1,358			1,697
Total taxable securities		2,661			2,392			3,094			3,685			4,737
Tax-exempt securities:
Other securities		530			543			557			643			676
Total tax-exempt securities		530			543			557			643			676
Interest-earning deposits and federal funds sold		36			30			13			22			290
Total interest-earning assets		72,248			69,085			64,031			64,907			66,812
Interest Expense:
Deposits:
Savings accounts	$	75		$	75		$	65		$	74		$	281
NOW accounts		1,706			1,320			1,242			2,099			4,648
Money market accounts		2,100			2,010			2,108			3,208			7,042
Certificate of deposit accounts		2,222			3,065			3,700			4,564			6,767
Total due to depositors		6,103			6,470			7,115			9,945			18,738
Mortgagors' escrow accounts		2			—			(22	)		26			40
Total interest-bearing deposits		6,105			6,470			7,093			9,971			18,778
Borrowings		5,140			6,769			6,897			6,084			7,066
Total interest-bearing liabilities		11,245			13,239			13,990			16,055			25,844
Net interest income- tax equivalent	$	61,003		$	55,846		$	50,041		$	48,852		$	40,968
Included in net interest income above:
Prepayment penalties received on loans and securities and net of reversals and recovered interest from non-accrual loans	$	947		$	1,093		$	1,518		$	776		$	1,189
Net gains/(losses) from fair value adjustments on qualifying hedges included in loan interest income		1,427			1,023			230			(365	)		(2,073	)
Purchase accounting adjustments		922			11			—			—			—
Interest-earning Assets Yields:
Mortgage loans, net		4.28	%		4.29	%		4.22	%		4.18	%		4.21	%
Other loans, net		3.57			3.62			3.57			3.66			4.26
Total loans, net		4.12			4.15			4.09			4.07			4.22
Taxable securities:
Mortgage-backed securities		1.57			1.39			1.86			2.00			2.39
Other securities		1.28			1.44			1.91			2.23			2.79
Total taxable securities		1.45			1.41			1.88			2.08			2.52
Tax-exempt securities: ⁽¹⁾
Other securities		4.17			4.28			4.31			4.27			4.26
Total tax-exempt securities		4.17			4.28			4.31			4.27			4.26
Interest-earning deposits and federal funds sold		0.08			0.09			0.08			0.09			1.06
Total interest-earning assets		3.77	%		3.82	%		3.84	%		3.81	%		3.98	%
Interest-bearing Liabilities Yields:
Deposits:
Savings accounts		0.18	%		0.18	%		0.16	%		0.16	%		0.58	%
NOW accounts		0.31			0.27			0.31			0.58			1.31
Money market accounts		0.44			0.53			0.58			0.81			1.66
Certificate of deposit accounts		0.81			1.10			1.34			1.54			2.14
Total due to depositors		0.46			0.55			0.65			0.91			1.64
Mortgagors' escrow accounts		0.01			—			(0.16	)		0.12			0.24
Total interest-bearing deposits		0.45			0.54			0.64			0.89			1.62
Borrowings		1.96			1.95			2.09			1.70			2.16
Total interest-bearing liabilities		0.69	%		0.86	%		0.98	%		1.09	%		1.74	%

Net interest rate spread (tax equivalent)		3.08	%		2.96	%		2.86	%		2.72	%		2.24	%
Net interest margin (tax equivalent)		3.18	%		3.08	%		3.00	%		2.87	%		2.44	%
Ratio of interest-earning assets to interest-bearing liabilities		1.18	X		1.17	X		1.16	X		1.15	X		1.13	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


											March 2021 vs.		March 2021 vs.
	March 31,		December 31,		September 30,		June 30,		March 31,		December 2020		March 2020
(Dollars in thousands)	2021		2020		2020		2020		2020		% Change		% Change
Deposits
Non-interest bearing	$	917,189	$	778,672	$	607,954	$	581,881	$	489,198	17.8	%	87.5	%
Interest bearing:
Certificate of deposit accounts		1,070,595		1,138,361		1,051,644		1,135,977		1,172,381	(6.0	)	(8.7	)
Savings accounts		170,272		168,183		160,294		184,895		192,192	1.2		(11.4	)
Money market accounts		1,990,656		1,682,345		1,381,552		1,474,880		1,597,109	18.3		24.6
NOW accounts		2,177,865		2,323,172		1,704,915		1,672,241		1,377,555	(6.3	)	58.1
Total interest-bearing deposits		5,409,388		5,312,061		4,298,405		4,467,993		4,339,237	1.8		24.7

Total deposits	$	6,326,577	$	6,090,733	$	4,906,359	$	5,049,874	$	4,828,435	3.9	%	31.0	%

Loan Composition


																March 2021 vs.		March 2021 vs.
	March 31,			December 31,			September 30,			June 30,			March 31,			December 2020		March 2020
(Dollars in thousands)	2021			2020			2020			2020			2020			% Change		% Change
Loans held for investment:
Multi-family residential	$	2,525,967		$	2,533,952		$	2,252,757		$	2,285,555		$	2,272,343		(0.3	)%	11.2	%
Commercial real estate		1,721,702			1,754,754			1,636,659			1,646,085			1,664,934		(1.9	)	3.4
One-to-four family ― mixed-use property		595,431			602,981			585,159			591,347			592,109		(1.3	)	0.6
One-to-four family ― residential		239,391			245,211			191,011			184,741			189,774		(2.4	)	26.1
Co-operative apartments		7,965			8,051			8,132			8,423			8,493		(1.1	)	(6.2	)
Construction		61,528			83,322			63,567			69,433			66,727		(26.2	)	(7.8	)
Mortgage Loans		5,151,984			5,228,271			4,737,285			4,785,584			4,794,380		(1.5	)	7.5

Small Business Administration⁽¹⁾		267,120			167,376			124,649			106,813			14,076		59.6		1,797.7
Taxi medallion		—			2,757			2,317			3,269			3,281		(100.0	)	(100.0	)
Commercial business and other		1,326,657			1,303,225			1,063,429			1,073,623			1,104,967		1.8		20.1
Non-mortgage loans		1,593,777			1,473,358			1,190,395			1,183,705			1,122,324		8.2		42.0

Net unamortized premiums and unearned loan fees ⁽²⁾		(445	)		3,045			13,718			13,986			15,384		(114.6	)	(102.9	)
Allowance for loan losses		(45,099	)		(45,153	)		(38,343	)		(36,710	)		(28,098	)	(0.1	)	60.5
Net loans	$	6,700,217		$	6,659,521		$	5,903,055		$	5,946,565		$	5,903,990		0.6	%	13.5	%

⁽¹⁾ Includes $251.0 million, $151.9 million, $111.6 million and $93.2 million of PPP loans at March, 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.
⁽²⁾ Includes $10.5 million and $11.3 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at March 31, 2021 and December 31, 2020, respectively.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS, RATES, and FORBEARANCE DETAIL
(Unaudited)

Loan Closings


	For the three months ended
	March 31,		December 31,		September 30,		June 30,		March 31,
(In thousands)	2021		2020		2020		2020		2020
Multi-family residential	$	58,553	$	52,024	$	33,733	$	59,654	$	67,318
Commercial real estate		17,156		57,634		26,644		8,003		99,571
One-to-four family – mixed-use property		8,712		9,692		3,867		8,117		13,455
One-to-four family – residential		3,131		8,422		2,296		2,674		8,413
Co-operative apartments		—		—		—		—		704
Construction		7,123		6,869		5,420		2,821		6,749
Mortgage Loans		94,675		134,641		71,960		81,269		196,210

Small Business Administration⁽¹⁾		125,093		598		18,456		93,241		57
Commercial business and other		103,118		180,787		65,160		59,287		102,448
Non-mortgage Loans		228,211		181,385		83,616		152,528		102,505

Total	$	322,886	$	316,026	$	155,576	$	233,797	$	298,715

⁽¹⁾ Includes $123.2 million, $18.4 million and $93.2 million of PPP closings for the three months ended March 31, 2021, September 30, 2020 and June 30, 2020, respectively.

Weighted Average Rate on Loan Closings


	For the three months ended
	March 31,		December 31,		September 30,		June 30,		March 31,
Loan type	2021		2020		2020		2020		2020
Mortgage loans	3.47	%	3.47	%	3.56	%	3.79	%	3.93	%
Non-mortgage loans	2.26		3.37		2.81		1.99		4.23
Total loans	2.62	%	3.41	%	3.16	%	2.62	%	4.03	%

Excluding PPP loans	3.62	%	3.41	%	3.45	%	3.71	%	4.03	%

Forbearance Detail
• Loans paying interest only comprise 61% of forbearance loans; excluding this forbearance loans were only 1.7% of loans




(Dollars in thousands)	Forbearances ⁽¹⁾				Backed by Mortgages ⁽¹⁾
	Balance		% of Sector		Balance		% of Forbearances		LTV
Higher Risk Segments
Restaurants and Catering Halls	$	15,578	17.0	%	$	15,578	100.0	%	31.6	%
Hotels		107,867	56.6			107,867	100.0		50.3
Travel and Leisure		37,670	21.0			37,670	100.0		36.9
Retail Services ⁽²⁾		12,046	6.5			3,169	26.3		36.9
CRE - Single Tenant		275	0.2			275	100.0		51.9
CRE - Strip Mall		9,785	3.4			9,785	100.0		47.3
Transportation⁽²⁾		7,463	4.9			—	—		—
Contractors ⁽²⁾		2,131	0.6			723	33.9		58.3
Schools and Child Care		10,260	14.4			10,260	100.0		55.5
Subtotal	$	203,075	10.5	%	$	185,327	91.3	%	44.6	%

Lower Risk Segments	$	92,452	1.9	%	$	90,404	97.8	%	33.8	%

Total	$	295,527	4.4	%	$	275,731	93.3	%	40.4	%

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

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)

Allowance for Loan Losses


	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2021			2020			2020			2020			2020
Allowance for loan losses
Beginning balances	$	45,153		$	38,343		$	36,710		$	28,098		$	21,751
Adoption of Current Expected Credit Losses		—			—			—			—			379

Multi-family residential		33			(11	)		(14	)		(7	)		(6	)
Commercial real estate		64			—			—			—			—
One-to-four family – mixed-use property		19			—			(60	)		3			(78	)
One-to-four family – residential		(5	)		(2	)		(2	)		(3	)		(5	)
Small Business Administration		(10	)		(3	)		(47	)		165			(7	)
Taxi medallion		2,758			124			951			—			—
Commercial business and other		6			538			9			849			1,245
Total net loan charge-offs		2,865			646			837			1,007			1,149

Provision for loan losses		2,811			3,357			2,470			9,619			7,117
Allowance recorded at the time of Acquisition		—			4,099			—			—			—

Ending balance	$	45,099		$	45,153		$	38,343		$	36,710		$	28,098

Gross charge-offs	$	2,922		$	752		$	964		$	1,030		$	1,259
Gross recoveries		57			106			127			23			110

Allowance for loan losses to gross loans		0.67	%		0.67	%		0.65	%		0.61	%		0.47	%
Net loan charge-offs to average loans		0.17			0.04			0.06			0.07			0.08

Non-Performing Assets


	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2021			2020			2020			2020			2020
Loans 90 Days Or More Past Due and Still Accruing:
Multi-family residential	$	201		$	201		$	—		$	—		$	—
Commercial real estate		—			2,547			—			—			—
Construction		2,381			—			—			—			—
Commercial business and other		—			—			—			150			—
Total		2,582			2,748			—			150			—

Non-accrual Loans:
Multi-family residential		4,338			2,524			2,661			3,688			2,741
Commercial real estate		8			1,683			2,657			2,671			8
One-to-four family - mixed-use property ⁽¹⁾		2,355			1,366			1,366			2,511			607
One-to-four family - residential		7,335			5,854			6,454			6,412			5,158
Small Business Administration		1,151			1,151			1,151			1,321			1,518
Taxi medallion⁽¹⁾		—			2,317			2,218			1,757			1,761
Commercial business and other⁽¹⁾		3,417			3,430			8,285			1,678			4,959
Total		18,604			18,325			24,792			20,038			16,752

Total Non-performing Loans		21,186			21,073			24,792			20,188			16,752

Other Non-performing Assets:
Real estate acquired through foreclosure		—			—			—			208			208
Other asset acquired through foreclosure		35			35			35			35			35
Total		35			35			35			243			243

Total Non-performing Assets	$	21,221		$	21,108		$	24,827		$	20,431		$	16,995

Non-performing Assets to Total Assets		0.26	%		0.26	%		0.35	%		0.29	%		0.23	%
Allowance For Loan Losses to Non-performing Loans		212.9	%		214.3	%		154.7	%		181.8	%		167.7	%

⁽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 1Q21, 4Q20 and 3Q20; non-accrual performing TDR taxi medallion loans totaling $0.4 million in 4Q20, $0.1 million in 3Q20, $1.5 million in 2Q20, and $1.5 million in 1Q20, and non-accrual performing TDR commercial business loans totaling $2.2 million each in 1Q21 and 4Q20, respectively; $1.0 million each in 3Q20, 2Q20, 1Q20, respectively.

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)


	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars In thousands, except per share data)	2021			2020			2020			2020			2020

GAAP income (loss) before income taxes	$	26,224		$	3,878		$	18,820		$	24,080		$	(1,596	)

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))		(982	)		4,129			2,225			(10,205	)		5,993
Net loss on sale of securities (Non-interest income (loss))		—			610			—			54			37
Life insurance proceeds (Non-interest income (loss))		—			—			—			(659	)		—
Net gain on disposition of assets (Non-interest income (loss))		(621	)		—			—			—			—
Net (gain) loss from fair value adjustments on qualifying hedges (Interest and fees on loans)		(1,427	)		(1,023	)		(230	)		365			2,073
Prepayment penalty on borrowings (Non-interest expense)		—			7,834			—			—			—
Net amortization of purchase accounting adjustments (Various)		(789	)		80			—			—			—
Merger expense (Various)		973			5,349			422			194			929

Core income before taxes		23,378			22,675			21,237			13,829			7,436

Provision for income taxes for core income		6,405			4,891			5,069			3,532			1,936

Core net income	$	16,973		$	17,784		$	16,168		$	10,297		$	5,500

GAAP diluted earnings (loss) per common share	$	0.60		$	0.11		$	0.50		$	0.63		$	(0.05	)

Day 1, Provision for Credit Losses - Empire transaction, net of tax		—			0.05			—			—			—
Net (gain) loss from fair value adjustments, net of tax		(0.02	)		0.11			0.06			(0.27	)		0.15
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	)		—			—			—			—
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax		(0.03	)		(0.03	)		(0.01	)		0.01			0.05
Prepayment penalty on borrowings, net of tax		—			0.20			—			—			—
Net amortization of purchase accounting adjustments, net of tax		(0.02	)		—			—			—			—
Merger expense, net of tax		0.02			0.14			0.01			0.01			0.02

Core diluted earnings per common share⁽¹⁾	$	0.54		$	0.58		$	0.56		$	0.36		$	0.19


Core net income, as calculated above	$	16,973		$	17,784		$	16,168		$	10,297		$	5,500
Average assets		8,147,714			7,705,407			7,083,028			7,206,059			7,106,998
Average equity		619,647			609,463			576,512			557,414			576,597
Core return on average assets⁽²⁾		0.83	%		0.92	%		0.91	%		0.57	%		0.31	%
Core return on average equity⁽²⁾		10.96	%		11.67	%		11.22	%		7.39	%		3.82	%

⁽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)


	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars In thousands)	2021			2020			2020			2020			2020

GAAP Net interest income	$	60,892		$	55,732		$	49,924		$	48,717		$	40,826
Net (gain) loss from fair value adjustments on qualifying hedges		(1,427	)		(1,023	)		(230	)		365			2,073
Net amortization of purchase accounting adjustments		(922	)		(11	)		—			—			—
Core Net interest income	$	58,543		$	54,698		$	49,694		$	49,082		$	42,899

GAAP Non-interest income (loss)	$	6,311		$	(1,181	)	$	1,351		$	13,737		$	(2,864	)
Net (gain) loss from fair value adjustments		(982	)		4,129			2,225			(10,205	)		5,993
Net loss on sale of securities		—			610			—			54			37
Life insurance proceeds		—			—			—			(659	)		—
Net gain on sale of assets		(621	)		—			—			—			—
Core Non-interest income	$	4,708		$	3,558		$	3,576		$	2,927		$	3,166

GAAP Non-interest expense	$	38,159		$	46,811		$	29,985		$	28,755		$	32,380
Prepayment penalty on borrowings		—			(7,834	)		—			—			—
Net amortization of purchase accounting adjustments		(133	)		(91	)		—			—			—
Merger expense		(973	)		(5,349	)		(422	)		(194	)		(929	)
Core Non-interest expense	$	37,053		$	33,537		$	29,563		$	28,561		$	31,451

GAAP:
Net interest income	$	60,892		$	55,732		$	49,924		$	48,717		$	40,826
Non-interest income (loss)		6,311			(1,181	)		1,351			13,737			(2,864	)
Non-interest expense		(38,159	)		(46,811	)		(29,985	)		(28,755	)		(32,380	)
Pre-provision pre-tax net revenue	$	29,044		$	7,740		$	21,290		$	33,699		$	5,582

Core:
Net interest income	$	58,543		$	54,698		$	49,694		$	49,082		$	42,899
Non-interest income		4,708			3,558			3,576			2,927			3,166
Non-interest expense		(37,053	)		(33,537	)		(29,563	)		(28,561	)		(31,451	)
Pre-provision pre-tax net revenue	$	26,198		$	24,719		$	23,707		$	23,448		$	14,614
Efficiency Ratio		58.6	%		57.6	%		55.4	%		54.9	%		68.2	%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP NET INTEREST INCOME and NET INTEREST MARGIN
to CORE and BASE NET INTEREST INCOME and NET INTEREST MARGIN
(Unaudited)


	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars In thousands)	2021			2020			2020			2020			2020
GAAP net interest income	$	60,892		$	55,732		$	49,924		$	48,717		$	40,826
Net (gain) loss from fair value adjustments on qualifying hedges		(1,427	)		(1,023	)		(230	)		365			2,073
Net amortization of purchase accounting adjustments		(922	)		(11	)		—			—			—
Tax equivalent adjustment		111			114			117			135			142
Core net interest income FTE	$	58,654		$	54,812		$	49,811		$	49,217		$	43,041
Prepayment penalties received on loans, net of reversals and recoveries of interest from non-accrual loans		(947	)		(1,093	)		(1,518	)		(776	)		(1,189	)
Base net interest income FTE	$	57,707		$	53,719		$	48,293		$	48,441		$	41,852

Total average interest-earning assets ⁽¹⁾	$	7,676,833		$	7,245,147		$	6,675,896		$	6,809,835		$	6,719,857
Core net interest margin FTE		3.06	%		3.03	%		2.98	%		2.89	%		2.56	%
Base net interest margin FTE		3.01	%		2.97	%		2.89	%		2.85	%		2.49	%

GAAP interest income on total loans, net	$	69,021		$	66,120		$	60,367		$	60,557		$	61,109
Net (gain) loss from fair value adjustments on qualifying hedges		(1,427	)		(1,023	)		(230	)		365			2,073
Net amortization of purchase accounting adjustments		(728	)		(356	)		—			—			—
Core interest income on total loans, net	$	66,866		$	64,741		$	60,137		$	60,922		$	63,182
Prepayment penalties received on loans, net of reversals and recoveries of interest from non-accrual loans		(947	)		(1,093	)		(1,443	)		(776	)		(1,189	)
Base interest income on total loans, net	$	65,919		$	63,648		$	58,694		$	60,146		$	61,993

Average total loans, net ⁽¹⁾	$	6,711,446		$	6,379,429		$	5,904,051		$	5,946,412		$	5,794,866
Core yield on total loans		3.99	%		4.06	%		4.07	%		4.10	%		4.36	%
Base yield on total loans		3.93	%		3.99	%		3.98	%		4.05	%		4.28	%

⁽¹⁾ Excludes purchase accounting average balances for three months ended March 31, 2021, and December 31, 2020.

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


	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2021			2020			2020			2020			2020
Total Equity	$	639,201		$	618,997		$	586,406		$	571,921		$	549,683
Less:
Goodwill		(17,636	)		(17,636	)		(16,127	)		(16,127	)		(16,127	)
Core deposit Intangibles		(3,013	)		(3,172	)		—			—			—
Intangible deferred tax liabilities		287			287			292			292			292
Tangible Stockholders' Common Equity	$	618,839		$	598,476		$	570,571		$	556,086		$	533,848

Total Assets	$	8,159,184		$	7,976,394		$	7,063,056		$	7,162,659		$	7,245,410
Less:
Goodwill		(17,636	)		(17,636	)		(16,127	)		(16,127	)		(16,127	)
Core deposit Intangibles		(3,013	)		(3,172	)		—			—			—
Intangible deferred tax liabilities		287			287			292			292			292
Tangible Assets	$	8,138,822		$	7,955,873		$	7,047,221		$	7,146,824		$	7,229,575

Tangible Stockholders' Common Equity to Tangible Assets		7.60	%		7.52	%		8.10	%		7.78	%		7.38	%

Fourth Consecutive Quarter of Record Net Interest Income

Set Language