John R. Buran, President and CEO Commentary
“We delivered sequential EPS and GAAP NIM expansion through the continued execution of our action plan to drive long-term profitability while advancing our near-term areas of focus amid persisting challenges in the operating environment. In 3Q23, we made significant progress on delivering against all pillars of our action plan, including: 1) reduced interest rate risk and moved closer to our goal of interest rate neutrality, including the addition of $100 million of interest rate hedges; 2) increased yields on new loans 288 bps YoY and 34 bps QoQ, with an emphasis on floating rate loans and back-to-back swaps; 3) increased noninterest bearing deposits $46.6 million QoQ; 4) saw strength in debt service coverage for our multifamily and investor commercial real estate portfolios repricing through 2025, with our stress testing (200 bps increase in rates and 10% rise in operating expenses) indicating a resilient borrower base; Manhattan office buildings are minimal at 0.6% of net loans; 5) maintained stability in available liquidity and capital ratios; and 6) emphasized noninterest expenses. We’re confident that our ability to execute will guide us through the near-term challenges and enable the Bank to emerge as a strong and more profitable institution.” |
- John R. Buran, President and CEO |
UNIONDALE, N.Y., Oct. 31, 2023 (GLOBE NEWSWIRE) -- QoQ, EPS Increases; GAAP NIM Expands; Minimal Core NIM Compression. The Company reported third quarter 2023 GAAP EPS of $0.32, up 10.3% QoQ, but down 57.9% YoY. Core EPS totaled $0.31, an increase of 19.2% QoQ, but a decrease of 50.0% YoY. The improvement in core EPS QoQ was primarily driven by lower credit costs, higher noninterest income, and lower operating expenses, partially offset by slight NIM compression. GAAP NIM of 2.22% increased 4 bps QoQ but declined 85 bps YoY; while Core NIM of 2.14% compressed 3 bps QoQ and 89 bps YoY. Our actions to reduce interest rate risk, including adding interest rate hedges and floating rate loans, assisted in reducing the NIM compression and are beneficial in a “higher-for-longer” rate environment.
Strong Credit Quality; Stable Capital. Nonperforming assets decreased 23.2% YoY and 3.1% QoQ while net recoveries were $42,000 in 3Q23. Capital continues to be sound with TCE/TA1 of 7.59% at September 30, 2023, compared to 7.71% at June 30, 2023.
Key Financial Metrics2 |
3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | 9M23 | 9M22 | ||||||||||||||||||
GAAP: | ||||||||||||||||||||||||
EPS | $ | 0.32 | $ | 0.29 | $ | 0.17 | $ | 0.34 | $ | 0.76 | $ | 0.77 | $ | 2.15 | ||||||||||
ROAA (%) | 0.44 | 0.41 | 0.24 | 0.48 | 1.11 | 0.36 | 1.08 | |||||||||||||||||
ROAE (%) | 5.57 | 5.12 | 3.02 | 6.06 | 13.91 | 4.56 | 13.24 | |||||||||||||||||
NIM FTE3 (%) | 2.22 | 2.18 | 2.27 | 2.70 | 3.07 | 2.22 | 3.26 | |||||||||||||||||
Core: | ||||||||||||||||||||||||
EPS | $ | 0.31 | $ | 0.26 | $ | 0.10 | $ | 0.57 | $ | 0.62 | $ | 0.67 | $ | 1.92 | ||||||||||
ROAA (%) | 0.43 | 0.37 | 0.14 | 0.82 | 0.90 | 0.31 | 0.96 | |||||||||||||||||
ROAE (%) | 5.41 | 4.66 | 1.76 | 10.29 | 11.24 | 3.93 | 11.80 | |||||||||||||||||
Core NIM FTE (%) | 2.14 | 2.17 | 2.25 | 2.63 | 3.03 | 2.18 | 3.22 | |||||||||||||||||
Credit Quality: | ||||||||||||||||||||||||
NPAs/Loans & OREO (%) | 0.56 | 0.58 | 0.61 | 0.77 | 0.72 | 0.56 | 0.72 | |||||||||||||||||
ACLs/Loans (%) | 0.57 | 0.57 | 0.56 | 0.58 | 0.59 | 0.57 | 0.59 | |||||||||||||||||
ACLs/NPLs (%) | 225.38 | 207.08 | 182.89 | 124.89 | 142.29 | 225.38 | 142.29 | |||||||||||||||||
NCOs/Avg Loans (%) | - | 0.09 | 0.54 | 0.05 | 0.02 | 0.21 | 0.01 | |||||||||||||||||
Balance Sheet: | ||||||||||||||||||||||||
Avg Loans ($B) | $ | 6.8 | $ | 6.8 | $ | 6.9 | $ | 6.9 | $ | 6.9 | $ | 6.8 | $ | 6.7 | ||||||||||
Avg Dep ($B) | $ | 6.8 | $ | 6.9 | $ | 6.8 | $ | 6.7 | $ | 6.3 | $ | 6.8 | $ | 6.4 | ||||||||||
Book Value/Share | $ | 23.15 | $ | 23.18 | $ | 22.84 | $ | 22.97 | $ | 22.47 | $ | 23.15 | $ | 22.47 | ||||||||||
Tangible BV/Share | $ | 22.48 | $ | 22.51 | $ | 22.18 | $ | 22.31 | $ | 21.81 | $ | 22.48 | $ | 21.81 | ||||||||||
TCE/TA (%) | 7.59 | 7.71 | 7.73 | 7.82 | 7.62 | 7.59 | 7.62 | |||||||||||||||||
1 Tangible Common Equity (“TCE”)/Total Assets (“TA”) 2 See “Reconciliation of GAAP Earnings and Core Earnings”, “Reconciliation of GAAP Revenue and Pre-Provision Pre-Tax Net Revenue”, and “Reconciliation of GAAP Net Interest Margin to Core Net Interest Income and Net Interest Margin.” 3 Net Interest Margin (“NIM”) Fully Taxable Equivalent (“FTE”)
3Q23 Highlights |
- Net interest margin FTE increased 4 bps QoQ, but decreased 85 bps YoY to 2.22%; Core net interest margin FTE decreased 3 bps QoQ and 89 bps YoY to 2.14%; Both GAAP and Core NIMs benefited from $100 million of new interest rate hedges added during the quarter and the closing of $120.5 million of back-to-back swap loans that generate noninterest income immediately and interest income over the life of the loan while adding floating rate assets to provide additional interest rate risk neutralization
- Average total deposits increased 8.6% YoY, but declined 1.2% QoQ to $6.8 billion; Noninterest bearing deposits increased $46.6 million QoQ despite new checking account openings declining 5% YoY in 3Q23; average CDs totaled $2.3 billion, up 116.6% YoY and 11.9% QoQ; growth in CDs generally lengthens the duration of customer deposits and helps reduce rate sensitivity
- Bensonhurst branch opened on September 29, 2023, which expands our Asian market presence
- Period end net loans decreased 0.8% YoY, but increased 0.9% QoQ; loan closings were $241.5 million down 47.9% YoY, but up 52.1% QoQ; the yield on closings increased 288 bps YoY and 34 bps QoQ to 7.48%
- Loan pipeline increased 17.5% YoY, but decreased 12.6% QoQ to $363.3 million; approximately 60% of the loan pipeline consists of floating rate loans including back-to-back swap loans
- NPAs declined to $38.4 million from $50.0 million a year ago and $39.6 million in the prior quarter
- Provision for credit losses was $0.6 million in 3Q23 compared to $2.1 million in 3Q22 and $1.4 million in 2Q23; net recoveries were $42,000 in 3Q23 compared to net charge-offs of $0.3 million in 3Q22 and $1.6 million in 2Q23
- Tangible Common Equity to Tangible Assets declined to 7.59% at 3Q23 compared to 7.71% at 2Q23
- Repurchased 59,352 shares at an average price of $15.88 or a 29.4% discount to September 30, 2023, tangible book value of $22.48
Areas of Focus | |
Interest Rate Risk |
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Credit Quality |
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Liquidity |
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Customer Experience |
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Income Statement Highlights |
YoY | QoQ | |||||||||||||||||||||||
($000s, except EPS) | 3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | Change | Change | |||||||||||||||||
Net Interest Income | $ | 44,427 | $ | 43,378 | $ | 45,262 | $ | 54,201 | $ | 61,206 | (27.4 | )% | 2.4 | % | ||||||||||
Provision (Benefit) for Credit Losses | 596 | 1,416 | 7,508 | (12 | ) | 2,145 | (72.2 | ) | (57.9 | ) | ||||||||||||||
Noninterest Income (Loss) | 3,476 | 5,122 | 6,908 | (7,652 | ) | 8,995 | (61.4 | ) | (32.1 | ) | ||||||||||||||
Noninterest Expense | 34,415 | 35,279 | 37,703 | 33,742 | 35,634 | (3.4 | ) | (2.4 | ) | |||||||||||||||
Income Before Income Taxes | 12,892 | 11,805 | 6,959 | 12,819 | 32,422 | (60.2 | ) | 9.2 | ||||||||||||||||
Provision for Income Taxes | 3,493 | 3,177 | 1,801 | 2,570 | 8,980 | (61.1 | ) | 9.9 | ||||||||||||||||
Net Income | $ | 9,399 | $ | 8,628 | $ | 5,158 | $ | 10,249 | $ | 23,442 | (59.9 | ) | 8.9 | |||||||||||
Diluted EPS | $ | 0.32 | $ | 0.29 | $ | 0.17 | $ | 0.34 | $ | 0.76 | (57.9 | ) | 10.3 | |||||||||||
Avg. Diluted Shares (000s) | 29,703 | 30,090 | 30,265 | 30,420 | 30,695 | (3.2 | ) | (1.3 | ) | |||||||||||||||
Core Net Income1 | $ | 9,135 | $ | 7,854 | $ | 3,003 | $ | 17,399 | $ | 18,953 | (51.8 | ) | 16.3 | |||||||||||
Core EPS1 | $ | 0.31 | $ | 0.26 | $ | 0.10 | $ | 0.57 | $ | 0.62 | (50.0 | ) | 19.2 |
1 See Reconciliation of GAAP Earnings and Core Earnings
Net interest income decreased YoY but increased QoQ.
- Net interest margin, FTE of 2.22% decreased 85 bps YoY, but increased 4 bps QoQ
- Prepayment penalty income from loans and securities, net reversals and recoveries of interest from nonaccrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $2.6 million (13 bps to the NIM) compared to $0.5 million (3 bps) in 2Q23, $1.1 million (6 bps) in 1Q23, $2.4 million (12 bps) in 4Q22, and $2.2 million (11 bps) in 3Q22
- Excluding the items in the previous bullet, net interest margin was 2.09% in 3Q23, 2.15% in 2Q23, 2.21% in 1Q23, 2.58% in 4Q22, and 2.96% in 3Q22
The provision for credit losses declined YoY and QoQ.
- Net charge-offs (recoveries) were $(42,000) in 3Q23 (less than (1) bp of average loans) compared to $1.6 million in 2Q23 (9 bps), $9.2 million in 1Q23 (54 bps of average loans), $0.8 million in 4Q22 (5 bps of average loans), and $0.3 million in 3Q22 (2 bps of average loans)
- 1Q23 net charge-offs were primarily related to a commercial business relationship that was placed on nonaccrual in 2Q22
Noninterest income (loss) declined YoY and QoQ.
- Noninterest income included net gains (losses) from fair value adjustments of $(1.2) million in 3Q23 ($(0.03) per share, net of tax), $0.3 million in 2Q23 ($0.01 per share, net of tax), $2.6 million in 1Q23 ($0.06 per share, net of tax), $(0.6) million in 4Q22 ($(0.02) per share, net of tax), and $5.6 million in 3Q22 ($0.13 per share, net of tax)
- Loss on the sale of securities was $10.9 million ($0.27 per share, net of tax) in 4Q22 as the Company sold $84.2 million of mortgage-based securities with an approximate yield of 1.17%; proceeds were primarily reinvested in 1Q23 into floating rate securities that had a yield at that time that approximated 6.40%
- Life insurance proceeds were $23,000 in 3Q23 (less than $0.01 per share), $0.6 million ($0.02 per share) in 2Q23, and $0.3 million ($0.01 per share) in 4Q22
- Absent all above items and other immaterial adjustments, core noninterest income was $4.7 million in 3Q23, up 39.5% YoY and 10.1% QoQ
- Back-to-back swap loan closings of $120.5 million in 3Q23 (compared to $11.5 million in 2Q23) contributed to the growth in core noninterest income; the Company earns fee income on back-to-back swap loan closings
Noninterest expense decreased YoY and QoQ.
- Other operating expenses include $0.6 million reduction in reserves for unfunded commitments in 3Q22; Seasonal compensation expense was $4.1 million in 1Q23
- Excluding the effects of other immaterial adjustments, core operating expenses were $34.3 million in 3Q23, down 3.4% YoY, and 2.4% QoQ
- GAAP noninterest expense to average assets was 1.62% in 3Q23, 1.67% in 2Q23, 1.78% in 1Q23, 1.58% in 4Q22, and 1.69% in 3Q22
- Noninterest expense largely includes $3.3 million benefit from Employee Retention Tax Credit refunds in 3Q23 and $7.0 million year to date; these refunds are not expected to be repeated in 2024
Provision for income taxes declined YoY and increased QoQ.
- The effective tax rate was 27.1% in 3Q23, 26.9% in 2Q23, 25.9% in 1Q23, 20.0% in 4Q22, and 27.7% in 3Q22
- The 4Q22 effective tax rate declined due to preferential tax items having a larger impact due to lower levels of pre-tax income
Balance Sheet, Credit Quality, and Capital Highlights |
YoY | QoQ | |||||||||||||||||||||
3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | Change | Change | ||||||||||||||||
Averages ($MM) | ||||||||||||||||||||||
Loans | $ | 6,813 | $ | 6,830 | $ | 6,871 | $ | 6,881 | $ | 6,861 | (0.7 | )% | (0.2 | )% | ||||||||
Total Deposits | 6,819 | 6,900 | 6,810 | 6,678 | 6,277 | 8.6 | (1.2 | ) | ||||||||||||||
Credit Quality ($000s) | ||||||||||||||||||||||
Nonperforming Loans | $ | 17,405 | $ | 18,637 | $ | 21,176 | $ | 32,382 | $ | 29,003 | (40.0 | )% | (6.6 | )% | ||||||||
Nonperforming Assets | 38,386 | 39,618 | 42,157 | 53,363 | 49,984 | (23.2 | ) | (3.1 | ) | |||||||||||||
Criticized and Classified Loans | 74,169 | 48,675 | 58,130 | 68,093 | 61,684 | 20.2 | 52.4 | |||||||||||||||
Criticized and Classified Assets | 95,150 | 69,656 | 79,111 | 89,073 | 82,665 | 15.1 | 36.6 | |||||||||||||||
Allowance for Credit Losses/Loans (%) | 0.57 | 0.57 | 0.56 | 0.58 | 0.59 | (2 | ) bps | - | bps | |||||||||||||
Capital | ||||||||||||||||||||||
Book Value/Share | $ | 23.15 | $ | 23.18 | $ | 22.84 | $ | 22.97 | $ | 22.47 | 3.0 | % | (0.1 | )% | ||||||||
Tangible Book Value/Share | 22.48 | 22.51 | 22.18 | 22.31 | 21.81 | 3.1 | (0.1 | ) | ||||||||||||||
Tang. Common Equity/Tang. Assets (%) | 7.59 | 7.71 | 7.73 | 7.82 | 7.62 | (3 | ) bps | (12 | ) bps | |||||||||||||
Leverage Ratio (%) | 8.54 | 8.56 | 8.58 | 8.61 | 8.74 | (20 | ) | (2 | ) | |||||||||||||
Average loans decreased YoY and QoQ.
- Period end net loans totaled $6.9 billion, down 0.8% YoY, but up 0.9% QoQ
- Total loan closings were $241.5 million in 3Q23, $158.8 million in 2Q23, $173.5 million in 1Q23, $225.2 million in 4Q22, and $463.7 million in 3Q22; the loan pipeline was $363.3 million at September 30, 2023, up 17.5% YoY, but down 12.6% QoQ
- The diversified loan portfolio is over 88% collateralized by real estate with an average loan-to-value ratio of less than 36%
- Manhattan office buildings are approximately 0.6% of net loans
Average total deposits increased YoY but declined QoQ.
- Average CDs totaled $2.3 billion, up 116.6% YoY and 11.9% QoQ; CDs generally lengthen the duration of customer deposits and reduce sensitivity to rising rates
- Average noninterest bearing deposits decreased 18.9% YoY, but increased 0.2% QoQ in 3Q23 and comprised 12.5% of average total deposits in 3Q23 compared to 16.7% a year ago
- Period end noninterest bearing deposits decreased 11.9% YoY, but increased 5.6% QoQ
Credit Quality: Nonperforming loans declined YoY and QoQ.
- Criticized and classified loans were 108 bps of gross loans at 3Q23 compared to 71 bps at 2Q23, 84 bps at 1Q23, 98 bps at 4Q22, and 89 bps at 3Q22
- Allowance for credit losses were 225.4% of nonperforming loans at 3Q23 compared to 207.1 % at 2Q23, and 142.3% at 3Q22
Capital: Book value per common share and tangible book value per common share, a non-GAAP measure, increased YoY but declined slightly QoQ to $23.15 and $22.48, respectively.
- The Company paid a dividend of $0.22 per share in 3Q23 and has ample available liquidity to meet its obligations
- The Company repurchased 59,352 shares in 3Q23 at an average price of $15.88, representing a 29.4% discount to tangible book value, with 846,779 shares remaining subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
- Tangible common equity to tangible assets was 7.59% at 3Q23 compared to 7.71% at 2Q23 and 7.62% at 3Q22
Conference Call Information and Fourth Quarter Earnings Release Date |
Conference Call Information:
- John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer and Treasurer, will host a conference call on Wednesday, November 1, 2023, at 9:30 AM (ET) to discuss the Company’s third quarter results and strategy.
- Dial-in for Live Call: 1-877-509-5836; Canada 855-669-9657
- Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=trpzpC32
- Dial-in for Replay: 1-877-344-7529; Canada 855-669-9658
- Replay Access Code: 2779651
- The conference call will be simultaneously webcast and archived
Fourth Quarter 2023 Earnings Release Date:
The Company plans to release Fourth Quarter 2023 financial results after the market close on January 25, 2024; followed by a conference call at 11:00 AM (ET) on January 26, 2024.
A detailed announcement will be issued prior to the third quarter’s close confirming the date and time of the earnings release.
About Flushing Financial Corporation
Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank®, an FDIC insured, New York State—chartered commercial bank that operates banking offices in Queens, Brooklyn, Manhattan, and on Long Island. The Bank has been building relationships with families, business owners, and communities since 1929. Today, it offers the products, services, and conveniences associated with large commercial banks, including a full complement of deposit, loan, equipment finance, and cash management services. Rewarding customers with personalized attention and bankers that can communicate in the languages prevalent within these multicultural markets is what makes the Bank uniquely different. As an Equal Housing Lender and leader in real estate lending, the Bank’s experienced lending teams create mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. The Bank also fosters relationships with consumers nationwide through its online banking division with the iGObanking® and BankPurely® brands.
Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at FlushingBank.com. Flushing Financial Corporation’s earnings release and presentation slides will be available prior to the conference call at 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, 2022 and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should��, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “goals”, “potential” or “continue” or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. The Company has no obligation to update these forward-looking statements.
Investor Contact: Susan K. Cullen, SEVP, CFO and Treasurer, 718-961-5400
#FF
- Statistical Tables Follow -
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
At or for the three months ended | At or for the nine months ended | ||||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||||||
(Dollars in thousands, except per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Performance Ratios (1) | |||||||||||||||||||||||||||||
Return on average assets | 0.44 | % | 0.41 | % | 0.24 | % | 0.48 | % | 1.11 | % | 0.36 | % | 1.08 | % | |||||||||||||||
Return on average equity | 5.57 | 5.12 | 3.02 | 6.06 | 13.91 | 4.56 | 13.24 | ||||||||||||||||||||||
Yield on average interest-earning assets (2) | 5.20 | 4.84 | 4.61 | 4.44 | 4.10 | 4.88 | 3.91 | ||||||||||||||||||||||
Cost of average interest-bearing liabilities | 3.52 | 3.15 | 2.80 | 2.11 | 1.25 | 3.16 | 0.79 | ||||||||||||||||||||||
Cost of funds | 3.13 | 2.80 | 2.47 | 1.84 | 1.08 | 2.80 | 0.68 | ||||||||||||||||||||||
Net interest rate spread during period (2) | 1.68 | 1.69 | 1.81 | 2.33 | 2.85 | 1.72 | 3.12 | ||||||||||||||||||||||
Net interest margin (2) | 2.22 | 2.18 | 2.27 | 2.70 | 3.07 | 2.22 | 3.26 | ||||||||||||||||||||||
Noninterest expense to average assets | 1.62 | 1.67 | 1.78 | 1.58 | 1.69 | 1.69 | 1.78 | ||||||||||||||||||||||
Efficiency ratio (3) | 72.33 | 74.02 | 76.48 | 59.55 | 55.68 | 74.30 | 55.57 | ||||||||||||||||||||||
Average interest-earning assets to average interest bearing liabilities | 1.18 | X | 1.18 | X | 1.19 | X | 1.21 | X | 1.22 | X | 1.19 | X | 1.22 | X | |||||||||||||||
Average Balances | |||||||||||||||||||||||||||||
Total loans, net | $ | 6,813,019 | $ | 6,829,648 | $ | 6,871,192 | $ | 6,881,245 | $ | 6,861,463 | $ | 6,837,740 | $ | 6,694,528 | |||||||||||||||
Total interest-earning assets | 8,017,460 | 7,986,020 | 7,996,677 | 8,045,691 | 7,979,070 | 8,000,129 | 7,764,873 | ||||||||||||||||||||||
Total assets | 8,504,364 | 8,461,827 | 8,468,311 | 8,518,019 | 8,442,657 | 8,478,299 | 8,236,070 | ||||||||||||||||||||||
Total deposits | 6,819,397 | 6,899,617 | 6,810,485 | 6,678,383 | 6,276,613 | 6,843,200 | 6,375,372 | ||||||||||||||||||||||
Total interest-bearing liabilities | 6,771,860 | 6,756,859 | 6,703,558 | 6,662,209 | 6,553,087 | 6,744,342 | 6,371,542 | ||||||||||||||||||||||
Stockholders' equity | 675,513 | 673,943 | 683,071 | 676,165 | 674,282 | 677,481 | 671,588 | ||||||||||||||||||||||
Per Share Data | |||||||||||||||||||||||||||||
Book value per common share (4) | $ | 23.15 | $ | 23.18 | $ | 22.84 | $ | 22.97 | $ | 22.47 | $ | 23.15 | $ | 22.47 | |||||||||||||||
Tangible book value per common share (5) | $ | 22.48 | $ | 22.51 | $ | 22.18 | $ | 22.31 | $ | 21.81 | $ | 22.48 | $ | 21.81 | |||||||||||||||
Stockholders' Equity | |||||||||||||||||||||||||||||
Stockholders' equity | $ | 669,141 | $ | 671,303 | $ | 673,459 | $ | 677,157 | $ | 670,719 | $ | 669,141 | $ | 670,719 | |||||||||||||||
Tangible stockholders' equity | 649,854 | 651,898 | 653,932 | 657,504 | 650,936 | 649,854 | 650,936 | ||||||||||||||||||||||
Consolidated Regulatory Capital Ratios | |||||||||||||||||||||||||||||
Tier 1 capital | $ | 739,364 | $ | 735,810 | $ | 737,138 | $ | 746,880 | $ | 749,526 | $ | 739,364 | $ | 749,526 | |||||||||||||||
Common equity Tier 1 capital | 692,914 | 689,876 | 690,846 | 698,258 | 701,532 | 692,914 | 701,532 | ||||||||||||||||||||||
Total risk-based capital | 968,152 | 963,840 | 965,384 | 975,709 | 979,021 | 968,152 | 979,021 | ||||||||||||||||||||||
Risk Weighted Assets | 6,802,385 | 6,649,252 | 6,659,532 | 6,640,542 | 6,689,284 | 6,802,385 | 6,689,284 | ||||||||||||||||||||||
Tier 1 leverage capital (well capitalized = 5%) | 8.54 | % | 8.56 | % | 8.58 | % | 8.61 | % | 8.74 | % | 8.54 | % | 8.74 | % | |||||||||||||||
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 10.19 | 10.38 | 10.37 | 10.52 | 10.49 | 10.19 | 10.49 | ||||||||||||||||||||||
Tier 1 risk-based capital (well capitalized = 8.0%) | 10.87 | 11.07 | 11.07 | 11.25 | 11.20 | 10.87 | 11.20 | ||||||||||||||||||||||
Total risk-based capital (well capitalized = 10.0%) | 14.23 | 14.50 | 14.50 | 14.69 | 14.64 | 14.23 | 14.64 | ||||||||||||||||||||||
Capital Ratios | |||||||||||||||||||||||||||||
Average equity to average assets | 7.94 | % | 7.96 | % | 8.07 | % | 7.94 | % | 7.99 | % | 7.99 | % | 8.15 | % | |||||||||||||||
Equity to total assets | 7.80 | 7.92 | 7.94 | 8.04 | 7.84 | 7.80 | 7.84 | ||||||||||||||||||||||
Tangible common equity to tangible assets (6) | 7.59 | 7.71 | 7.73 | 7.82 | 7.62 | 7.59 | 7.62 | ||||||||||||||||||||||
Asset Quality | |||||||||||||||||||||||||||||
Nonaccrual loans (7) | $ | 17,405 | $ | 18,637 | $ | 21,176 | $ | 29,782 | $ | 27,003 | $ | 17,405 | $ | 27,003 | |||||||||||||||
Nonperforming loans | 17,405 | 18,637 | 21,176 | 32,382 | 29,003 | 17,405 | 29,003 | ||||||||||||||||||||||
Nonperforming assets | 38,386 | 39,618 | 42,157 | 53,363 | 49,984 | 38,386 | 49,984 | ||||||||||||||||||||||
Net charge-offs (recoveries) | (42 | ) | 1,560 | 9,234 | 811 | 290 | 10,752 | 724 | |||||||||||||||||||||
Asset Quality Ratios | |||||||||||||||||||||||||||||
Nonperforming loans to gross loans | 0.25 | % | 0.27 | % | 0.31 | % | 0.47 | % | 0.42 | % | 0.25 | % | 0.42 | % | |||||||||||||||
Nonperforming assets to total assets | 0.45 | 0.47 | 0.50 | 0.63 | 0.58 | 0.45 | 0.58 | ||||||||||||||||||||||
Allowance for credit losses to gross loans | 0.57 | 0.57 | 0.56 | 0.58 | 0.59 | 0.57 | 0.59 | ||||||||||||||||||||||
Allowance for credit losses to nonperforming assets | 102.19 | 97.41 | 91.87 | 75.79 | 82.56 | 102.19 | 82.56 | ||||||||||||||||||||||
Allowance for credit losses to nonperforming loans | 225.38 | 207.08 | 182.89 | 124.89 | 142.29 | 225.38 | 142.29 | ||||||||||||||||||||||
Net charge-offs (recoveries) to average loans | — | 0.09 | 0.54 | 0.05 | 0.02 | 0.21 | 0.01 | ||||||||||||||||||||||
Full-service customer facilities | 27 | 26 | 26 | 25 | 25 | 27 | 25 | ||||||||||||||||||||||
(See footnotes on next page)
_______________
(1) Ratios are presented on an annualized basis, where appropriate.
(2) Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented.
(3) Efficiency ratio, a non-GAAP measure, was calculated by dividing core noninterest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of core net interest income and core noninterest income.
(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. See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(6) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”.
(7) Excludes performing nonaccrual TDR loans in periods prior to 1Q23.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months ended | For the nine months ended | |||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
(In thousands, except per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | |||||||||||||||||||||
Interest and Dividend Income | ||||||||||||||||||||||||||||
Interest and fees on loans | $ | 91,466 | $ | 85,377 | $ | 82,889 | $ | 81,033 | $ | 75,546 | $ | 259,732 | $ | 212,254 | ||||||||||||||
Interest and dividends on securities: | ||||||||||||||||||||||||||||
Interest | 10,383 | 9,172 | 7,240 | 6,511 | 5,676 | 26,795 | 14,350 | |||||||||||||||||||||
Dividends | 33 | 30 | 29 | 24 | 17 | 92 | 36 | |||||||||||||||||||||
Other interest income | 2,154 | 1,982 | 1,959 | 1,702 | 506 | 6,095 | 716 | |||||||||||||||||||||
Total interest and dividend income | 104,036 | 96,561 | 92,117 | 89,270 | 81,745 | 292,714 | 227,356 | |||||||||||||||||||||
Interest Expense | ||||||||||||||||||||||||||||
Deposits | 50,066 | 46,249 | 39,056 | 27,226 | 11,965 | 135,371 | 20,059 | |||||||||||||||||||||
Other interest expense | 9,543 | 6,934 | 7,799 | 7,843 | 8,574 | 24,276 | 17,882 | |||||||||||||||||||||
Total interest expense | 59,609 | 53,183 | 46,855 | 35,069 | 20,539 | 159,647 | 37,941 | |||||||||||||||||||||
Net Interest Income | 44,427 | 43,378 | 45,262 | 54,201 | 61,206 | 133,067 | 189,415 | |||||||||||||||||||||
Provision (benefit) for credit losses | 596 | 1,416 | 7,508 | (12 | ) | 2,145 | 9,520 | 5,093 | ||||||||||||||||||||
Net Interest Income After Provision (Benefit) for Credit Losses | 43,831 | 41,962 | 37,754 | 54,213 | 59,061 | 123,547 | 184,322 | |||||||||||||||||||||
Noninterest Income (Loss) | ||||||||||||||||||||||||||||
Banking services fee income | 2,636 | 1,780 | 1,411 | 1,231 | 1,351 | 5,827 | 3,891 | |||||||||||||||||||||
Net loss on sale of securities | — | — | — | (10,948 | ) | — | — | — | ||||||||||||||||||||
Net gain on sale of loans | — | 54 | 54 | 46 | — | 108 | 73 | |||||||||||||||||||||
Net gain on disposition of assets | — | — | — | 104 | — | — | — | |||||||||||||||||||||
Net gain (loss) from fair value adjustments | (1,246 | ) | 294 | 2,619 | (622 | ) | 5,626 | 1,667 | 6,350 | |||||||||||||||||||
Federal Home Loan Bank of New York stock dividends | 624 | 534 | 697 | 658 | 538 | 1,855 | 1,342 | |||||||||||||||||||||
Life insurance proceeds | 23 | 561 | — | 286 | — | 584 | 1,536 | |||||||||||||||||||||
Bank owned life insurance | 1,157 | 1,134 | 1,109 | 1,126 | 1,132 | 3,400 | 3,361 | |||||||||||||||||||||
Other income | 282 | 765 | 1,018 | 467 | 348 | 2,065 | 1,108 | |||||||||||||||||||||
Total noninterest income (loss) | 3,476 | 5,122 | 6,908 | (7,652 | ) | 8,995 | 15,506 | 17,661 | ||||||||||||||||||||
Noninterest Expense | ||||||||||||||||||||||||||||
Salaries and employee benefits | 17,825 | 19,493 | 20,887 | 18,178 | 21,438 | 58,205 | 66,196 | |||||||||||||||||||||
Occupancy and equipment | 3,371 | 3,534 | 3,793 | 3,701 | 3,541 | 10,698 | 10,905 | |||||||||||||||||||||
Professional services | 3,042 | 2,657 | 2,483 | 2,130 | 2,570 | 8,182 | 7,077 | |||||||||||||||||||||
FDIC deposit insurance | 912 | 943 | 977 | 485 | 738 | 2,832 | 1,773 | |||||||||||||||||||||
Data processing | 1,422 | 1,473 | 1,435 | 1,421 | 1,367 | 4,330 | 4,174 | |||||||||||||||||||||
Depreciation and amortization | 1,482 | 1,482 | 1,510 | 1,535 | 1,488 | 4,474 | 4,395 | |||||||||||||||||||||
Other real estate owned/foreclosure expense | 185 | 150 | 165 | 35 | 143 | 500 | 259 | |||||||||||||||||||||
Other operating expenses | 6,176 | 5,547 | 6,453 | 6,257 | 4,349 | 18,176 | 15,171 | |||||||||||||||||||||
Total noninterest expense | 34,415 | 35,279 | 37,703 | 33,742 | 35,634 | 107,397 | 109,950 | |||||||||||||||||||||
Income Before Provision for Income Taxes | 12,892 | 11,805 | 6,959 | 12,819 | 32,422 | 31,656 | 92,033 | |||||||||||||||||||||
Provision for Income Taxes | 3,493 | 3,177 | 1,801 | 2,570 | 8,980 | 8,471 | 25,337 | |||||||||||||||||||||
Net Income | $ | 9,399 | $ | 8,628 | $ | 5,158 | $ | 10,249 | $ | 23,442 | $ | 23,185 | $ | 66,696 | ||||||||||||||
Basic earnings per common share | $ | 0.32 | $ | 0.29 | $ | 0.17 | $ | 0.34 | $ | 0.76 | $ | 0.77 | $ | 2.15 | ||||||||||||||
Diluted earnings per common share | $ | 0.32 | $ | 0.29 | $ | 0.17 | $ | 0.34 | $ | 0.76 | $ | 0.77 | $ | 2.15 | ||||||||||||||
Dividends per common share | $ | 0.22 | $ | 0.22 | $ | 0.22 | $ | 0.22 | $ | 0.22 | $ | 0.66 | $ | 0.66 | ||||||||||||||
Basic average shares | 29,703 | 30,090 | 30,265 | 30,420 | 30,695 | 30,017 | 30,960 | |||||||||||||||||||||
Diluted average shares | 29,703 | 30,090 | 30,265 | 30,420 | 30,695 | 30,017 | 30,960 | |||||||||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | |||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | $ | 200,926 | $ | 160,053 | $ | 176,747 | $ | 151,754 | $ | 164,693 | ||||||||||
Securities held-to-maturity: | ||||||||||||||||||||
Mortgage-backed securities | 7,860 | 7,865 | 7,870 | 7,875 | 7,880 | |||||||||||||||
Other securities, net | 65,271 | 65,469 | 65,653 | 65,836 | 66,032 | |||||||||||||||
Securities available for sale: | ||||||||||||||||||||
Mortgage-backed securities | 337,879 | 365,911 | 380,110 | 384,283 | 468,366 | |||||||||||||||
Other securities | 505,784 | 503,645 | 431,818 | 351,074 | 351,495 | |||||||||||||||
Loans | 6,896,074 | 6,832,425 | 6,904,176 | 6,934,769 | 6,956,674 | |||||||||||||||
Allowance for credit losses | (39,228 | ) | (38,593 | ) | (38,729 | ) | (40,442 | ) | (41,268 | ) | ||||||||||
Net loans | 6,856,846 | 6,793,832 | 6,865,447 | 6,894,327 | 6,915,406 | |||||||||||||||
Interest and dividends receivable | 55,660 | 52,911 | 46,836 | 45,048 | 42,571 | |||||||||||||||
Bank premises and equipment, net | 21,302 | 22,182 | 21,567 | 21,750 | 22,376 | |||||||||||||||
Federal Home Loan Bank of New York stock | 43,821 | 36,168 | 38,779 | 45,842 | 62,489 | |||||||||||||||
Bank owned life insurance | 214,321 | 213,164 | 214,240 | 213,131 | 212,353 | |||||||||||||||
Goodwill | 17,636 | 17,636 | 17,636 | 17,636 | 17,636 | |||||||||||||||
Core deposit intangibles | 1,651 | 1,769 | 1,891 | 2,017 | 2,147 | |||||||||||||||
Right of use asset | 41,404 | 41,526 | 42,268 | 43,289 | 44,885 | |||||||||||||||
Other assets | 206,922 | 191,752 | 168,259 | 179,084 | 179,090 | |||||||||||||||
Total assets | $ | 8,577,283 | $ | 8,473,883 | $ | 8,479,121 | $ | 8,422,946 | $ | 8,557,419 | ||||||||||
LIABILITIES | ||||||||||||||||||||
Total deposits | $ | 6,681,509 | $ | 6,723,690 | $ | 6,734,090 | $ | 6,485,342 | $ | 6,125,305 | ||||||||||
Borrowed funds | 1,001,010 | 857,400 | 887,509 | 1,052,973 | 1,572,830 | |||||||||||||||
Operating lease liability | 43,067 | 44,402 | 45,353 | 46,125 | 48,330 | |||||||||||||||
Other liabilities | 182,556 | 177,088 | 138,710 | 161,349 | 140,235 | |||||||||||||||
Total liabilities | 7,908,142 | 7,802,580 | 7,805,662 | 7,745,789 | 7,886,700 | |||||||||||||||
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 | 264,486 | 263,744 | 262,876 | 264,332 | 263,755 | |||||||||||||||
Treasury stock | (105,433 | ) | (104,574 | ) | (97,760 | ) | (98,535 | ) | (90,977 | ) | ||||||||||
Retained earnings | 550,678 | 547,811 | 545,786 | 547,507 | 543,894 | |||||||||||||||
Accumulated other comprehensive loss, net of taxes | (40,931 | ) | (36,019 | ) | (37,784 | ) | (36,488 | ) | (46,294 | ) | ||||||||||
Total stockholders' equity | 669,141 | 671,303 | 673,459 | 677,157 | 670,719 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 8,577,283 | $ | 8,473,883 | $ | 8,479,121 | $ | 8,422,946 | $ | 8,557,419 | ||||||||||
(In thousands) | ||||||||||||||||||||
Issued shares | 34,088 | 34,088 | 34,088 | 34,088 | 34,088 | |||||||||||||||
Outstanding shares | 28,905 | 28,961 | 29,488 | 29,476 | 29,851 | |||||||||||||||
Treasury shares | 5,183 | 5,127 | 4,600 | 4,612 | 4,237 | |||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)
For the three months ended | For the nine months ended | ||||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||||||
(In thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Interest-earning Assets: | |||||||||||||||||||||||||||||
Mortgage loans, net | $ | 5,314,215 | $ | 5,308,567 | $ | 5,333,274 | $ | 5,338,612 | $ | 5,340,694 | $ | 5,318,616 | $ | 5,224,289 | |||||||||||||||
Other loans, net | 1,498,804 | 1,521,081 | 1,537,918 | 1,542,633 | 1,520,769 | 1,519,124 | 1,470,239 | ||||||||||||||||||||||
Total loans, net | 6,813,019 | 6,829,648 | 6,871,192 | 6,881,245 | 6,861,463 | 6,837,740 | 6,694,528 | ||||||||||||||||||||||
Taxable securities: | |||||||||||||||||||||||||||||
Mortgage-backed securities | 436,181 | 448,620 | 457,911 | 549,204 | 568,854 | 447,491 | 581,439 | ||||||||||||||||||||||
Other securities, net | 528,091 | 471,600 | 411,723 | 371,897 | 362,629 | 470,898 | 308,008 | ||||||||||||||||||||||
Total taxable securities | 964,272 | 920,220 | 869,634 | 921,101 | 931,483 | 918,389 | 889,447 | ||||||||||||||||||||||
Tax-exempt securities: | |||||||||||||||||||||||||||||
Other securities | 66,438 | 66,632 | 66,828 | 67,022 | 67,211 | 66,631 | 64,081 | ||||||||||||||||||||||
Total tax-exempt securities | 66,438 | 66,632 | 66,828 | 67,022 | 67,211 | 66,631 | 64,081 | ||||||||||||||||||||||
Interest-earning deposits and federal funds sold | 173,731 | 169,520 | 189,023 | 176,323 | 118,913 | 177,369 | 116,817 | ||||||||||||||||||||||
Total interest-earning assets | 8,017,460 | 7,986,020 | 7,996,677 | 8,045,691 | 7,979,070 | 8,000,129 | 7,764,873 | ||||||||||||||||||||||
Other assets | 486,904 | 475,807 | 471,634 | 472,328 | 463,587 | 478,170 | 471,197 | ||||||||||||||||||||||
Total assets | $ | 8,504,364 | $ | 8,461,827 | $ | 8,468,311 | $ | 8,518,019 | $ | 8,442,657 | $ | 8,478,299 | $ | 8,236,070 | |||||||||||||||
Interest-bearing Liabilities: | |||||||||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||||||||
Savings accounts | $ | 115,437 | $ | 124,041 | $ | 134,945 | $ | 146,598 | $ | 154,545 | $ | 124,736 | $ | 155,966 | |||||||||||||||
NOW accounts | 1,907,781 | 2,026,950 | 1,970,555 | 1,972,134 | 1,808,608 | 1,968,199 | 1,977,621 | ||||||||||||||||||||||
Money market accounts | 1,584,308 | 1,754,574 | 2,058,523 | 2,146,649 | 2,136,829 | 1,797,398 | 2,206,973 | ||||||||||||||||||||||
Certificate of deposit accounts | 2,290,669 | 2,046,960 | 1,679,517 | 1,350,683 | 1,057,733 | 2,007,954 | 923,301 | ||||||||||||||||||||||
Total due to depositors | 5,898,195 | 5,952,525 | 5,843,540 | 5,616,064 | 5,157,715 | 5,898,287 | 5,263,861 | ||||||||||||||||||||||
Mortgagors' escrow accounts | 69,525 | 97,410 | 70,483 | 82,483 | 68,602 | 79,136 | 79,192 | ||||||||||||||||||||||
Total interest-bearing deposits | 5,967,720 | 6,049,935 | 5,914,023 | 5,698,547 | 5,226,317 | 5,977,423 | 5,343,053 | ||||||||||||||||||||||
Borrowings | 804,140 | 706,924 | 789,535 | 963,662 | 1,326,770 | 766,919 | 1,028,489 | ||||||||||||||||||||||
Total interest-bearing liabilities | 6,771,860 | 6,756,859 | 6,703,558 | 6,662,209 | 6,553,087 | 6,744,342 | 6,371,542 | ||||||||||||||||||||||
Noninterest-bearing demand deposits | 851,677 | 849,682 | 896,462 | 979,836 | 1,050,296 | 865,777 | 1,032,319 | ||||||||||||||||||||||
Other liabilities | 205,314 | 181,343 | 185,220 | 199,809 | 164,992 | 190,699 | 160,621 | ||||||||||||||||||||||
Total liabilities | 7,828,851 | 7,787,884 | 7,785,240 | 7,841,854 | 7,768,375 | 7,800,818 | 7,564,482 | ||||||||||||||||||||||
Equity | 675,513 | 673,943 | 683,071 | 676,165 | 674,282 | 677,481 | 671,588 | ||||||||||||||||||||||
Total liabilities and equity | $ | 8,504,364 | $ | 8,461,827 | $ | 8,468,311 | $ | 8,518,019 | $ | 8,442,657 | $ | 8,478,299 | $ | 8,236,070 | |||||||||||||||
Net interest-earning assets | $ | 1,245,600 | $ | 1,229,161 | $ | 1,293,119 | $ | 1,383,482 | $ | 1,425,983 | $ | 1,255,787 | $ | 1,393,331 | |||||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST INCOME AND NET INTEREST MARGIN
(Unaudited)
For the three months ended | For the nine months ended | ||||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Interest Income: | |||||||||||||||||||||||||||||
Mortgage loans, net | $ | 68,931 | $ | 63,688 | $ | 62,054 | $ | 60,946 | $ | 58,374 | $ | 194,673 | $ | 167,119 | |||||||||||||||
Other loans, net | 22,535 | 21,689 | 20,835 | 20,087 | 17,172 | 65,059 | 45,135 | ||||||||||||||||||||||
Total loans, net | 91,466 | 85,377 | 82,889 | 81,033 | 75,546 | 259,732 | 212,254 | ||||||||||||||||||||||
Taxable securities: | |||||||||||||||||||||||||||||
Mortgage-backed securities | 3,031 | 2,976 | 2,281 | 2,425 | 2,466 | 8,288 | 6,989 | ||||||||||||||||||||||
Other securities | 7,003 | 5,847 | 4,611 | 3,723 | 2,839 | 17,461 | 6,048 | ||||||||||||||||||||||
Total taxable securities | 10,034 | 8,823 | 6,892 | 6,148 | 5,305 | 25,749 | 13,037 | ||||||||||||||||||||||
Tax-exempt securities: | |||||||||||||||||||||||||||||
Other securities | 484 | 480 | 477 | 489 | 492 | 1,441 | 1,708 | ||||||||||||||||||||||
Total tax-exempt securities | 484 | 480 | 477 | 489 | 492 | 1,441 | 1,708 | ||||||||||||||||||||||
Interest-earning deposits and federal funds sold | 2,154 | 1,982 | 1,959 | 1,702 | 506 | 6,095 | 716 | ||||||||||||||||||||||
Total interest-earning assets | 104,138 | 96,662 | 92,217 | 89,372 | 81,849 | 293,017 | 227,715 | ||||||||||||||||||||||
Interest Expense: | |||||||||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||||||||
Savings accounts | $ | 130 | $ | 140 | $ | 126 | $ | 59 | $ | 53 | $ | 396 | $ | 152 | |||||||||||||||
NOW accounts | 16,843 | 16,152 | 13,785 | 9,515 | 3,640 | 46,780 | 5,838 | ||||||||||||||||||||||
Money market accounts | 14,386 | 14,625 | 14,102 | 10,532 | 5,280 | 43,113 | 8,507 | ||||||||||||||||||||||
Certificate of deposit accounts | 18,639 | 15,281 | 11,007 | 7,037 | 2,948 | 44,927 | 5,510 | ||||||||||||||||||||||
Total due to depositors | 49,998 | 46,198 | 39,020 | 27,143 | 11,921 | 135,216 | 20,007 | ||||||||||||||||||||||
Mortgagors' escrow accounts | 68 | 51 | 36 | 83 | 44 | 155 | 52 | ||||||||||||||||||||||
Total interest-bearing deposits | 50,066 | 46,249 | 39,056 | 27,226 | 11,965 | 135,371 | 20,059 | ||||||||||||||||||||||
Borrowings | 9,543 | 6,934 | 7,799 | 7,843 | 8,574 | 24,276 | 17,882 | ||||||||||||||||||||||
Total interest-bearing liabilities | 59,609 | 53,183 | 46,855 | 35,069 | 20,539 | 159,647 | 37,941 | ||||||||||||||||||||||
Net interest income- tax equivalent | $ | 44,529 | $ | 43,479 | $ | 45,362 | $ | 54,303 | $ | 61,310 | $ | 133,370 | $ | 189,774 | |||||||||||||||
Included in net interest income above: | |||||||||||||||||||||||||||||
Prepayment penalties received on loans and securities and net of reversals and recovered interest from nonaccrual loans | $ | 857 | $ | 315 | $ | 680 | $ | 1,080 | $ | 1,368 | $ | 1,852 | $ | 5,365 | |||||||||||||||
Net gains/(losses) from fair value adjustments on qualifying hedges included in interest income | 1,348 | (205 | ) | 100 | 936 | 28 | 1,243 | (161 | ) | ||||||||||||||||||||
Purchase accounting adjustments | 347 | 340 | 306 | 342 | 775 | 993 | 2,200 | ||||||||||||||||||||||
Interest-earning Assets Yields: | |||||||||||||||||||||||||||||
Mortgage loans, net | 5.19 | % | 4.80 | % | 4.65 | % | 4.57 | % | 4.37 | % | 4.88 | % | 4.27 | % | |||||||||||||||
Other loans, net | 6.01 | 5.70 | 5.42 | 5.21 | 4.52 | 5.71 | 4.09 | ||||||||||||||||||||||
Total loans, net | 5.37 | 5.00 | 4.83 | 4.71 | 4.40 | 5.06 | 4.23 | ||||||||||||||||||||||
Taxable securities: | |||||||||||||||||||||||||||||
Mortgage-backed securities | 2.78 | 2.65 | 1.99 | 1.77 | 1.73 | 2.47 | 1.60 | ||||||||||||||||||||||
Other securities | 5.30 | 4.96 | 4.48 | 4.00 | 3.13 | 4.94 | 2.62 | ||||||||||||||||||||||
Total taxable securities | 4.16 | 3.84 | 3.17 | 2.67 | 2.28 | 3.74 | 1.95 | ||||||||||||||||||||||
Tax-exempt securities: (1) | |||||||||||||||||||||||||||||
Other securities | 2.91 | 2.88 | 2.86 | 2.92 | 2.93 | 2.88 | 3.55 | ||||||||||||||||||||||
Total tax-exempt securities | 2.91 | 2.88 | 2.86 | 2.92 | 2.93 | 2.88 | 3.55 | ||||||||||||||||||||||
Interest-earning deposits and federal funds sold | 4.96 | 4.68 | 4.15 | 3.86 | 1.70 | 4.58 | 0.82 | ||||||||||||||||||||||
Total interest-earning assets (1) | 5.20 | % | 4.84 | % | 4.61 | % | 4.44 | % | 4.10 | % | 4.88 | % | 3.91 | % | |||||||||||||||
Interest-bearing Liabilities Yields: | |||||||||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||||||||
Savings accounts | 0.45 | % | 0.45 | % | 0.37 | % | 0.16 | % | 0.14 | % | 0.42 | % | 0.13 | % | |||||||||||||||
NOW accounts | 3.53 | 3.19 | 2.80 | 1.93 | 0.81 | 3.17 | 0.39 | ||||||||||||||||||||||
Money market accounts | 3.63 | 3.33 | 2.74 | 1.96 | 0.99 | 3.20 | 0.51 | ||||||||||||||||||||||
Certificate of deposit accounts | 3.25 | 2.99 | 2.62 | 2.08 | 1.11 | 2.98 | 0.80 | ||||||||||||||||||||||
Total due to depositors | 3.39 | 3.10 | 2.67 | 1.93 | 0.92 | 3.06 | 0.51 | ||||||||||||||||||||||
Mortgagors' escrow accounts | 0.39 | 0.21 | 0.20 | 0.40 | 0.26 | 0.26 | 0.09 | ||||||||||||||||||||||
Total interest-bearing deposits | 3.36 | 3.06 | 2.64 | 1.91 | 0.92 | 3.02 | 0.50 | ||||||||||||||||||||||
Borrowings | 4.75 | 3.92 | 3.95 | 3.26 | 2.58 | 4.22 | 2.32 | ||||||||||||||||||||||
Total interest-bearing liabilities | 3.52 | % | 3.15 | % | 2.80 | % | 2.11 | % | 1.25 | % | 3.16 | % | 0.79 | % | |||||||||||||||
Net interest rate spread (tax equivalent) (1) | 1.68 | % | 1.69 | % | 1.81 | % | 2.33 | % | 2.85 | % | 1.72 | % | 3.12 | % | |||||||||||||||
Net interest margin (tax equivalent) (1) | 2.22 | % | 2.18 | % | 2.27 | % | 2.70 | % | 3.07 | % | 2.22 | % | 3.26 | % | |||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities | 1.18 | X | 1.18 | X | 1.19 | X | 1.21 | X | 1.22 | X | 1.19 | X | 1.22 | 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
3Q23 vs. | 3Q23 vs. | |||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | 2Q23 | 3Q22 | ||||||||||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | % Change | % Change | |||||||||||||||||||
Noninterest bearing | $ | 874,420 | $ | 827,820 | $ | 872,254 | $ | 921,238 | $ | 992,378 | 5.6 | % | (11.9 | )% | ||||||||||||
Interest bearing: | ||||||||||||||||||||||||||
Certificate of deposit accounts | 2,321,369 | 2,232,696 | 1,880,260 | 1,526,338 | 1,036,107 | 4.0 | 124.0 | |||||||||||||||||||
Savings accounts | 112,730 | 118,886 | 128,245 | 143,641 | 150,552 | (5.2 | ) | (25.1 | ) | |||||||||||||||||
Money market accounts | 1,551,176 | 1,594,637 | 1,855,781 | 2,099,776 | 2,113,256 | (2.7 | ) | (26.6 | ) | |||||||||||||||||
NOW accounts | 1,749,802 | 1,891,834 | 1,918,977 | 1,746,190 | 1,762,468 | (7.5 | ) | (0.7 | ) | |||||||||||||||||
Total interest-bearing deposits | 5,735,077 | 5,838,053 | 5,783,263 | 5,515,945 | 5,062,383 | (1.8 | ) | 13.3 | ||||||||||||||||||
Total due to depositors | 6,609,497 | 6,665,873 | 6,655,517 | 6,437,183 | 6,054,761 | (0.8 | ) | 9.2 | ||||||||||||||||||
Mortgagors' escrow deposits | 72,012 | 57,817 | 78,573 | 48,159 | 70,544 | 24.6 | 2.1 | |||||||||||||||||||
Total deposits | $ | 6,681,509 | $ | 6,723,690 | $ | 6,734,090 | $ | 6,485,342 | $ | 6,125,305 | (0.6 | )% | 9.1 | % | ||||||||||||
Loan Composition
3Q23 vs. | 3Q23 vs. | |||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | 2Q23 | 3Q22 | ||||||||||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | % Change | % Change | |||||||||||||||||||
Multifamily residential | $ | 2,614,219 | $ | 2,593,955 | $ | 2,601,174 | $ | 2,601,384 | $ | 2,608,192 | 0.8 | % | 0.2 | % | ||||||||||||
Commercial real estate | 1,953,243 | 1,917,749 | 1,904,293 | 1,913,040 | 1,914,326 | 1.9 | 2.0 | |||||||||||||||||||
One-to-four family ― mixed-use property | 537,744 | 542,368 | 549,207 | 554,314 | 560,885 | (0.9 | ) | (4.1 | ) | |||||||||||||||||
One-to-four family ― residential | 222,874 | 230,055 | 238,417 | 241,246 | 240,484 | (3.1 | ) | (7.3 | ) | |||||||||||||||||
Construction | 59,903 | 57,325 | 60,486 | 70,951 | 63,651 | 4.5 | (5.9 | ) | ||||||||||||||||||
Mortgage Loans | 5,387,983 | 5,341,452 | 5,353,577 | 5,380,935 | 5,387,538 | 0.9 | — | |||||||||||||||||||
Small Business Administration | 21,896 | 22,404 | 22,860 | 23,275 | 27,712 | (2.3 | ) | (21.0 | ) | |||||||||||||||||
Commercial business and other | 1,487,775 | 1,466,358 | 1,518,756 | 1,521,548 | 1,532,497 | 1.5 | (2.9 | ) | ||||||||||||||||||
Nonmortgage loans | 1,509,671 | 1,488,762 | 1,541,616 | 1,544,823 | 1,560,209 | 1.4 | (3.2 | ) | ||||||||||||||||||
Gross loans | 6,897,654 | 6,830,214 | 6,895,193 | 6,925,758 | 6,947,747 | 1.0 | (0.7 | ) | ||||||||||||||||||
Net unamortized (premiums) and unearned loan (cost) fees (1) | (1,580 | ) | 2,211 | 8,983 | 9,011 | 8,927 | (171.5 | ) | (117.7 | ) | ||||||||||||||||
Allowance for credit losses | (39,228 | ) | (38,593 | ) | (38,729 | ) | (40,442 | ) | (41,268 | ) | 1.6 | (4.9 | ) | |||||||||||||
Net loans | $ | 6,856,846 | $ | 6,793,832 | $ | 6,865,447 | $ | 6,894,327 | $ | 6,915,406 | 0.9 | % | (0.8 | )% |
_______________
(1) Includes $4.4 million, $4.8 million, $5.1 million, $5.4 million, and $5.8 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOAN CLOSINGS and RATES
(Unaudited)
Loan Closings
For the three months ended | For the nine months ended | ||||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||||||
(In thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Multifamily residential | $ | 75,655 | $ | 31,901 | $ | 42,164 | $ | 65,347 | $ | 173,980 | $ | 149,720 | $ | 409,062 | |||||||||||||||
Commercial real estate | 70,197 | 38,523 | 15,570 | 20,750 | 77,777 | 124,290 | 287,705 | ||||||||||||||||||||||
One-to-four family – mixed-use property | 6,028 | 5,812 | 4,938 | 4,489 | 12,383 | 16,778 | 33,109 | ||||||||||||||||||||||
One-to-four family – residential | 1,070 | 63 | 4,296 | 7,485 | 4,102 | 5,429 | 17,574 | ||||||||||||||||||||||
Construction | 6,971 | 8,811 | 10,592 | 7,301 | 7,170 | 26,374 | 24,291 | ||||||||||||||||||||||
Mortgage Loans | 159,921 | 85,110 | 77,560 | 105,372 | 275,412 | 322,591 | 771,741 | ||||||||||||||||||||||
Small Business Administration | — | 820 | 318 | 665 | 46 | 1,138 | 2,796 | ||||||||||||||||||||||
Commercial business and other | 81,549 | 72,850 | 95,668 | 119,191 | 188,202 | 250,067 | 522,229 | ||||||||||||||||||||||
Nonmortgage Loans | 81,549 | 73,670 | 95,986 | 119,856 | 188,248 | 251,205 | 525,025 | ||||||||||||||||||||||
Total Closings | $ | 241,470 | $ | 158,780 | $ | 173,546 | $ | 225,228 | $ | 463,660 | $ | 573,796 | $ | 1,296,766 | |||||||||||||||
Weighted Average Rate on Loan Closings
For the three months ended | |||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
Loan type | 2023 | 2023 | 2023 | 2022 | 2022 | ||||||||||
Mortgage loans | 7.22 | % | 6.62 | % | 6.30 | % | 5.59 | % | 4.37 | % | |||||
Nonmortgage loans | 8.00 | 7.76 | 7.58 | 6.57 | 4.93 | ||||||||||
Total loans | 7.48 | % | 7.14 | % | 7.01 | % | 6.10 | % | 4.60 | % | |||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
ASSET QUALITY
(Unaudited)
Allowance for Credit Losses
For the three months ended | For the nine months ended | ||||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Allowance for credit losses - loans | |||||||||||||||||||||||||||||
Beginning balances | $ | 38,593 | $ | 38,729 | $ | 40,442 | $ | 41,268 | $ | 39,424 | $ | 40,442 | $ | 37,135 | |||||||||||||||
Net loan charge-off (recoveries): | |||||||||||||||||||||||||||||
Multifamily residential | — | — | (1 | ) | 132 | — | (1 | ) | (1 | ) | |||||||||||||||||||
Commercial real estate | — | 8 | — | — | — | 8 | — | ||||||||||||||||||||||
One-to-four family – residential | (6 | ) | 4 | (36 | ) | 17 | 2 | (38 | ) | (2 | ) | ||||||||||||||||||
Small Business Administration | (48 | ) | (158 | ) | (6 | ) | (9 | ) | (12 | ) | (212 | ) | 1,016 | ||||||||||||||||
Taxi medallion | — | — | — | — | — | — | (447 | ) | |||||||||||||||||||||
Commercial business and other | 12 | 1,706 | 9,277 | 671 | 300 | 10,995 | 158 | ||||||||||||||||||||||
Total | (42 | ) | 1,560 | 9,234 | 811 | 290 | 10,752 | 724 | |||||||||||||||||||||
Provision (benefit) for loan losses | 593 | 1,424 | 7,521 | (15 | ) | 2,134 | 9,538 | 4,857 | |||||||||||||||||||||
Ending balance | $ | 39,228 | $ | 38,593 | $ | 38,729 | $ | 40,442 | $ | 41,268 | $ | 39,228 | $ | 41,268 | |||||||||||||||
Gross charge-offs | $ | 21 | $ | 1,731 | $ | 9,298 | $ | 1,938 | $ | 324 | $ | 11,050 | $ | 1,410 | |||||||||||||||
Gross recoveries | 63 | 171 | 64 | 1,127 | 34 | 298 | 686 | ||||||||||||||||||||||
Allowance for credit losses - loans to gross loans | 0.57 | % | 0.57 | % | 0.56 | % | 0.58 | % | 0.59 | % | 0.57 | % | 0.59 | % | |||||||||||||||
Net loan charge-offs (recoveries) to average loans | — | 0.09 | 0.54 | 0.05 | 0.02 | 0.21 | 0.01 | ||||||||||||||||||||||
Nonperforming Assets
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | |||||||||||||||
Loans 90 Days Or More Past Due and Still Accruing: | ||||||||||||||||||||
Commercial real estate | $ | — | $ | — | $ | — | $ | — | $ | 2,000 | ||||||||||
Construction | — | — | — | 2,600 | — | |||||||||||||||
Commercial business and other | — | — | — | — | — | |||||||||||||||
Total | — | — | — | 2,600 | 2,000 | |||||||||||||||
Nonaccrual Loans: | ||||||||||||||||||||
Multifamily residential | 3,206 | 3,206 | 3,628 | 3,206 | 3,414 | |||||||||||||||
Commercial real estate | — | — | — | 237 | 1,851 | |||||||||||||||
One-to-four family - mixed-use property(1) | 1,075 | 790 | 790 | 790 | 790 | |||||||||||||||
One-to-four family - residential | 4,161 | 5,218 | 4,961 | 4,425 | 4,655 | |||||||||||||||
Small Business Administration | 1,255 | 1,119 | 937 | 937 | 937 | |||||||||||||||
Commercial business and other(1) | 7,708 | 8,304 | 10,860 | 20,187 | 15,356 | |||||||||||||||
Total | 17,405 | 18,637 | 21,176 | 29,782 | 27,003 | |||||||||||||||
Total Nonperforming Loans (NPLs) | 17,405 | 18,637 | 21,176 | 32,382 | 29,003 | |||||||||||||||
Total Nonaccrual HTM Securities | 20,981 | 20,981 | 20,981 | 20,981 | 20,981 | |||||||||||||||
Total Nonperforming Assets | $ | 38,386 | $ | 39,618 | $ | 42,157 | $ | 53,363 | $ | 49,984 | ||||||||||
Nonperforming Assets to Total Assets | 0.45 | % | 0.47 | % | 0.50 | % | 0.63 | % | 0.58 | % | ||||||||||
Allowance for Credit Losses to NPLs | 225.4 | % | 207.1 | % | 182.9 | % | 124.9 | % | 142.3 | % |
_______________
(1) Adopted ASU No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023; Not included in the above analysis are nonaccrual performing TDR one-to-four family – mixed use property loans totaling $0.2 million in 4Q22 and in 3Q22; nonaccrual performing TDR commercial business loans totaling less than $0.1 million in 4Q22 and $2.9 million in 3Q22.
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 borrowings carried at fair value under the fair value option.
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, Core Interest Income and Yield on Total Loans, Core Noninterest Income, Core Noninterest Expense and Tangible Book Value per common share are each non-GAAP measures used in this release. A reconciliation to the most directly comparable GAAP financial measures appears below in tabular form. The Company believes that these measures are useful for both investors and management to understand the effects of certain interest and noninterest items and provide an alternative view of the Company’s performance over time and in comparison, to the Company’s competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value per common share is useful for both investors and management as this measure is 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 nine months ended | ||||||||||||||||||||||||||||
(Dollars in thousands, | September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
except per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
GAAP income before income taxes | $ | 12,892 | $ | 11,805 | $ | 6,959 | $ | 12,819 | $ | 32,422 | $ | 31,656 | $ | 92,033 | |||||||||||||||
Net (gain) loss from fair value adjustments (Noninterest income (loss)) | 1,246 | (294 | ) | (2,619 | ) | 622 | (5,626 | ) | (1,667 | ) | (6,350 | ) | |||||||||||||||||
Net loss on sale of securities (Noninterest income (loss)) | — | — | — | 10,948 | — | — | — | ||||||||||||||||||||||
Life insurance proceeds (Noninterest income (loss)) | (23 | ) | (561 | ) | — | (286 | ) | — | (584 | ) | (1,536 | ) | |||||||||||||||||
Net gain on disposition of assets (Noninterest income (loss)) | — | — | — | (104 | ) | — | — | — | |||||||||||||||||||||
Net (gain) loss from fair value adjustments on qualifying hedges (Net interest income) | (1,348 | ) | 205 | (100 | ) | (936 | ) | (28 | ) | (1,243 | ) | 161 | |||||||||||||||||
Net amortization of purchase accounting adjustments and intangibles (Various) | (237 | ) | (227 | ) | (188 | ) | (219 | ) | (650 | ) | (652 | ) | (1,811 | ) | |||||||||||||||
Core income before taxes | 12,530 | 10,928 | 4,052 | 22,844 | 26,118 | 27,510 | 82,497 | ||||||||||||||||||||||
Provision for core income taxes | 3,395 | 3,074 | 1,049 | 5,445 | 7,165 | 7,518 | 23,057 | ||||||||||||||||||||||
Core net income | $ | 9,135 | $ | 7,854 | $ | 3,003 | $ | 17,399 | $ | 18,953 | $ | 19,992 | $ | 59,440 | |||||||||||||||
GAAP diluted earnings per common share | $ | 0.32 | $ | 0.29 | $ | 0.17 | $ | 0.34 | $ | 0.76 | $ |