UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 23, 2019
FLUSHING FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
001-33013 |
(Commission File Number) |
Delaware |
(State or other jurisdiction of incorporation)
|
11-3209278 |
(IRS Employer Identification No.)
|
220 RXR Plaza, Uniondale, New York , 11556 |
(Address of principal executive offices) |
(718) 961-5400
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | ||
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value | FFIC | The Nasdaq Stock Market LLC |
Item 2.02. Results of Operations and Financial Condition.
On July 23, 2019, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FLUSHING FINANCIAL CORPORATION | ||
|
||
Date: July 23, 2019 | By: | /s/ Susan K. Cullen |
Susan K. Cullen | ||
Title: | Senior Executive Vice President and Chief Financial Officer | |
EXHIBIT 99.1
Flushing Financial Corporation Reports Record Quarterly C&I Loan Closings, Loan Pipeline Increased to $424 Million at Quarter End
SECOND QUARTER 2019
1
HIGHLIGHTS
UNIONDALE, N.Y., July 23, 2019 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq-GS: FFIC), the parent holding company for Flushing Bank (the “Bank”), today announced its financial results for the second quarter ended June 30, 2019.
John R. Buran, President and Chief Executive Officer, stated, “We are pleased to report quarterly earnings growth as diluted earnings per share rose 48% from 1Q19, while core earnings rose 27%. Both results were down from 2Q18, as net interest margin pressure returned, driven by the inversion of the yield curve, coupled with increased competitive pressure on our deposit business.”
“During the quarter, we experienced more robust loan growth as closings increased 50% from 1Q19. Total loan closings for the quarter amounted to $296 million. In addition, the loan pipeline increased over 50% to $424 million during the same period, our largest pipeline since the first quarter of 2016. The mortgage pipeline has an average yield of 4.63%, which is 21bps greater than the 2Q19 core yield of total loans. Due to the size of the pipeline and our strong track record of closing loans in the pipeline, we anticipate loan growth will accelerate in the second half of 2019, resulting in full year loan growth in the mid-single digit range.”
“We continued to diversify the loan portfolio during the quarter, as we produced record C&I closings of $158 million, representing 53% of 2Q19 loan closings. These loans are generally floating rate loans and represented 18% of total loans at June 30, 2019, compared to 15% at June 30, 2018. We also recognized improved closing levels for our mortgage loans as they increased $71 million QoQ.”
“The net interest margin compressed 12bps QoQ, with both sides of the balance sheet contributing to the compression. We continue to experience pricing pressure due to the inverted yield curve at the pricing point for our loan tenor. In the past, we have articulated our strategy of focusing on rate over volume. During 2Q19, we modified our position and rates due to market conditions. The increase in the cost of funds was primarily driven by pricing pressure on our retail and municipal deposits, as competition from traditional bank and non-bank competitors remains very strong. Although the rates paid on retail and municipal deposits have increased, they remain less expensive than alternative funding sources, including wholesale funding. Given an inverted yield curve, we continue to proactively mitigate the NIM compression through the closing of C&I floating rate loans and our swap strategy. In June 2019, we entered into an additional $100 million of swaps on borrowings bringing total swaps on borrowings to $542 million at the end of 2Q19. Our long-term goal is to move towards being more interest rate neutral which allows us to perform better in all interest rate environments.”
Mr. Buran continued, “We remain focused on preserving strong risk management practices, including conservative underwriting standards and improving yields to achieve improved risk-adjusted returns. We continue to focus on increasing the amount of direct loan business, as approximately 63% of 2Q19 loan closings were non-brokered loans.”
Mr. Buran concluded, “Overall, we remain well capitalized and well positioned to deliver profitable growth and long-term value to our shareholders as we continue to execute our strategic objectives.”
Summary of Strategic Objectives
Earnings Summary:
Net Interest Income
Net interest income for 2Q19 was $40.0 million, a decrease of $2.6 million, or 6.1% YoY (2Q19 compared to 2Q18) and $1.8 million, or 4.3% QoQ (2Q19 compared to 1Q19).
Provision for loan losses
The Company recorded a provision of $1.5 million compared to $1.0 million in 1Q19 and none in 2Q18.
Non-interest Income
Non-interest income for 2Q19 was $2.5 million, a decrease of $0.7 million YoY, but an increase of $1.5 million QoQ
Non-interest Expense
Non-interest expense for 2Q19 was $27.2 million, a decrease of $0.2 million, or 0.9% YoY, and $5.3 million, or 16.2% QoQ.
Provision for Income Taxes
The provision for income taxes in 2Q19 was $3.3 million, a decrease of $1.2 million, or 27.1% YoY but an increase of $1.0 million, or 43.1% QoQ.
Financial Condition Summary:
Loans:
The following table shows the weighted average rate received from loan closings for the periods indicated:
For the three months ended | |||||
June 30, | March 31, | June 30, | |||
Loan type | 2019 | 2019 | 2018 | ||
Mortgage loans | 4.75% | 5.14% | 4.40% | ||
Non-mortgage loans | 5.01% | 4.96% | 4.90% | ||
Total loans | 4.89% | 5.02% | 4.57% | ||
Credit Quality:
Capital Management:
Conference Call Information:
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.
“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, 2018 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.
1 See the tables entitled “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Income and Net Interest Margin to Core Net Interest Income and Net Interest Margin.”
-
Statistical Tables Follow
-
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
For the three months ended | For the six months ended | |||||||||||||||||||
June 30, | March 31 | June 30, | June 30, | June 30, | ||||||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
Interest and Dividend Income | ||||||||||||||||||||
Interest and fees on loans | $ | 62,273 | $ | 62,330 | $ | 57,322 | $ | 124,603 | $ | 112,339 | ||||||||||
Interest and dividends on securities: | ||||||||||||||||||||
Interest | 6,811 | 6,909 | 5,616 | 13,720 | 11,084 | |||||||||||||||
Dividends | 19 | 19 | 17 | 38 | 31 | |||||||||||||||
Other interest income | 472 | 555 | 338 | 1,027 | 625 | |||||||||||||||
Total interest and dividend income | 69,575 | 69,813 | 63,293 | 139,388 | 124,079 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Deposits | 22,827 | 21,469 | 14,788 | 44,296 | 26,898 | |||||||||||||||
Other interest expense | 6,739 | 6,541 | 5,865 | 13,280 | 11,932 | |||||||||||||||
Total interest expense | 29,566 | 28,010 | 20,653 | 57,576 | 38,830 | |||||||||||||||
Net Interest Income | 40,009 | 41,803 | 42,640 | 81,812 | 85,249 | |||||||||||||||
Provision for loan losses | 1,474 | 972 | - | 2,446 | 153 | |||||||||||||||
Net Interest Income After Provision for Loan Losses | 38,535 | 40,831 | 42,640 | 79,366 | 85,096 | |||||||||||||||
Non-interest Income | ||||||||||||||||||||
Banking services fee income | 1,059 | 973 | 1,000 | 2,032 | 1,948 | |||||||||||||||
Net loss on sale of securities | (15 | ) | - | - | (15 | ) | - | |||||||||||||
Net gain on sale of loans | 114 | 63 | 421 | 177 | 158 | |||||||||||||||
Net gain on sale of assets | 770 | - | - | 770 | - | |||||||||||||||
Net loss from fair value adjustments | (1,956 | ) | (2,080 | ) | (267 | ) | (4,036 | ) | (367 | ) | ||||||||||
Federal Home Loan Bank of New York stock dividends | 826 | 903 | 881 | 1,729 | 1,757 | |||||||||||||||
Life insurance proceeds | - | 43 | - | 43 | 776 | |||||||||||||||
Bank owned life insurance | 810 | 740 | 776 | 1,550 | 1,538 | |||||||||||||||
Other income | 843 | 301 | 357 | 1,144 | 558 | |||||||||||||||
Total non-interest income | 2,451 | 943 | 3,168 | 3,394 | 6,368 | |||||||||||||||
Non-interest Expense | ||||||||||||||||||||
Salaries and employee benefits | 15,668 | 19,166 | 15,291 | 34,834 | 33,746 | |||||||||||||||
Occupancy and equipment | 2,742 | 2,789 | 2,476 | 5,531 | 5,053 | |||||||||||||||
Professional services | 1,806 | 2,265 | 2,439 | 4,071 | 4,624 | |||||||||||||||
FDIC deposit insurance | 667 | 485 | 547 | 1,152 | 1,047 | |||||||||||||||
Data processing | 1,420 | 1,492 | 1,426 | 2,912 | 2,827 | |||||||||||||||
Depreciation and amortization | 1,497 | 1,518 | 1,455 | 3,015 | 2,844 | |||||||||||||||
Other real estate owned/foreclosure expense | 20 | 77 | 40 | 97 | 136 | |||||||||||||||
Net gain from sales of real estate owned | - | - | (27 | ) | - | (27 | ) | |||||||||||||
Other operating expenses | 3,338 | 4,627 | 3,749 | 7,965 | 8,440 | |||||||||||||||
Total non-interest expense | 27,158 | 32,419 | 27,396 | 59,577 | 58,690 | |||||||||||||||
Income Before Income Taxes | 13,828 | 9,355 | 18,412 | 23,183 | 32,774 | |||||||||||||||
Provision for Income Taxes | ||||||||||||||||||||
Federal | 2,981 | 1,943 | 3,311 | 4,924 | 5,918 | |||||||||||||||
State and local | 291 | 344 | 1,178 | 635 | 1,521 | |||||||||||||||
Total taxes | 3,272 | 2,287 | 4,489 | 5,559 | 7,439 | |||||||||||||||
Net Income | $ | 10,556 | $ | 7,068 | $ | 13,923 | $ | 17,624 | $ | 25,335 | ||||||||||
Basic earnings per common share | $ | 0.37 | $ | 0.25 | $ | 0.48 | $ | 0.61 | $ | 0.88 | ||||||||||
Diluted earnings per common share | $ | 0.37 | $ | 0.25 | $ | 0.48 | $ | 0.61 | $ | 0.88 | ||||||||||
Dividends per common share | $ | 0.21 | $ | 0.21 | $ | 0.20 | $ | 0.42 | $ | 0.40 | ||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
June 30, | March 31, | December 31, | ||||||||||||
2019 | 2019 | 2018 | ||||||||||||
ASSETS | ||||||||||||||
Cash and due from banks | $ | 56,484 | $ | 58,677 | $ | 118,561 | ||||||||
Securities held-to-maturity: | ||||||||||||||
Mortgage-backed securities | 7,944 | 7,949 | 7,953 | |||||||||||
Other securities | 52,242 | 22,532 | 24,065 | |||||||||||
Securities available for sale: | ||||||||||||||
Mortgage-backed securities | 554,481 | 579,185 | 557,953 | |||||||||||
Other securities | 254,172 | 266,839 | 264,702 | |||||||||||
Loans: | ||||||||||||||
Multi-family residential | 2,263,875 | 2,256,447 | 2,269,048 | |||||||||||
Commercial real estate | 1,524,693 | 1,529,001 | 1,542,547 | |||||||||||
One-to-four family ― mixed-use property | 582,264 | 582,049 | 577,741 | |||||||||||
One-to-four family ― residential | 184,024 | 188,615 | 190,350 | |||||||||||
Co-operative apartments | 8,137 | 7,903 | 8,498 | |||||||||||
Construction | 58,503 | 54,933 | 50,600 | |||||||||||
Small Business Administration | 14,511 | 15,188 | 15,210 | |||||||||||
Taxi medallion | 3,555 | 3,891 | 4,539 | |||||||||||
Commercial business and other | 983,573 | 935,297 | 877,763 | |||||||||||
Net unamortized premiums and unearned loan fees | 15,278 | 15,422 | 15,188 | |||||||||||
Allowance for loan losses | (21,510 | ) | (21,015 | ) | (20,945 | ) | ||||||||
Net loans | 5,616,903 | 5,567,731 | 5,530,539 | |||||||||||
Interest and dividends receivable | 26,552 | 27,226 | 25,485 | |||||||||||
Bank premises and equipment, net | 28,623 | 29,798 | 30,418 | |||||||||||
Federal Home Loan Bank of New York stock | 63,029 | 51,182 | 57,282 | |||||||||||
Bank owned life insurance | 157,604 | 131,794 | 131,788 | |||||||||||
Goodwill | 16,127 | 16,127 | 16,127 | |||||||||||
Other real estate owned, net | 239 | - | - | |||||||||||
Right of Use Asset | 42,557 | 44,033 | - | |||||||||||
Other assets | 68,677 | 64,377 | 69,303 | |||||||||||
Total assets | $ | 6,945,634 | $ | 6,867,450 | $ | 6,834,176 | ||||||||
LIABILITIES | ||||||||||||||
Due to depositors: | ||||||||||||||
Non-interest bearing | $ | 413,813 | $ | 401,064 | $ | 413,747 | ||||||||
Certificate of deposit accounts | 1,544,117 | 1,511,770 | 1,563,310 | |||||||||||
Savings accounts | 196,820 | 201,811 | 210,022 | |||||||||||
Money market accounts | 1,302,153 | 1,352,843 | 1,427,992 | |||||||||||
NOW accounts | 1,368,813 | 1,542,606 | 1,300,852 | |||||||||||
Total deposits | 4,825,716 | 5,010,094 | 4,915,923 | |||||||||||
Mortgagors' escrow deposits | 52,201 | 70,115 | 44,861 | |||||||||||
Borrowed funds | 1,371,890 | 1,116,416 | 1,250,843 | |||||||||||
Operating Lease Liability | 50,898 | 52,510 | - | |||||||||||
Other liabilities | 79,539 | 58,756 | 73,085 | |||||||||||
Total liabilities | 6,380,244 | 6,307,891 | 6,284,712 | |||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||
Preferred stock (5,000,000 shares authorized; none issued) | - | - | - | |||||||||||
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares | ||||||||||||||
issued at June 30, 2019, March 31, 2019 and December 31, 2018; 28,187,922 | ||||||||||||||
shares, 28,187,184 shares and 27,983,637 shares outstanding at June 30, 2019, | ||||||||||||||
March 31, 2019 and December 31, 2018, respectively) | 315 | 315 | 315 | |||||||||||
Additional paid-in capital | 224,231 | 222,859 | 222,720 | |||||||||||
Treasury stock (3,342,673 shares, 3,343,411 shares and 3,546,958 shares at | ||||||||||||||
June 30, 2019, March 31, 2019 and December 31, 2018, respectively) | (70,913 | ) | (70,929 | ) | (75,146 | ) | ||||||||
Retained earnings | 422,373 | 417,856 | 414,327 | |||||||||||
Accumulated other comprehensive loss, net of taxes | (10,616 | ) | (10,542 | ) | (12,752 | ) | ||||||||
Total stockholders' equity | 565,390 | 559,559 | 549,464 | |||||||||||
Total liabilities and stockholders' equity | $ | 6,945,634 | $ | 6,867,450 | $ | 6,834,176 | ||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
(Unaudited)
At or for the three months ended | At or for the six months ended | ||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||
Per Share Data | |||||||||||||||
Basic earnings per share | $ | 0.37 | $ | 0.25 | $ | 0.48 | $ | 0.61 | $ | 0.88 | |||||
Diluted earnings per share | $ | 0.37 | $ | 0.25 | $ | 0.48 | $ | 0.61 | $ | 0.88 | |||||
Average number of shares outstanding for: | |||||||||||||||
Basic earnings per common share computation | 28,760,816 | 28,621,018 | 28,844,829 | 28,691,303 | 28,909,135 | ||||||||||
Diluted earnings per common share computation | 28,760,816 | 28,621,030 | 28,845,611 | 28,691,309 | 28,910,034 | ||||||||||
Shares outstanding | 28,187,922 | 28,187,184 | 28,319,213 | 28,187,922 | 28,319,213 | ||||||||||
Book value per common share (1) | $ | 20.06 | $ | 19.85 | $ | 19.00 | $ | 20.06 | $ | 19.00 | |||||
Tangible book value per common share (2) | $ | 19.50 | $ | 19.29 | $ | 18.44 | $ | 19.50 | $ | 18.44 | |||||
Stockholders' Equity | |||||||||||||||
Stockholders' equity | $ | 565,390 | $ | 559,559 | $ | 538,044 | $ | 565,390 | $ | 538,044 | |||||
Tangible stockholders' equity | 549,549 | 543,722 | 522,208 | 549,549 | 522,208 | ||||||||||
Average Balances | |||||||||||||||
Total loans, net | $ | 5,565,057 | $ | 5,544,667 | $ | 5,316,033 | $ | 5,554,919 | $ | 5,273,939 | |||||
Total interest-earning assets | 6,540,134 | 6,521,142 | 6,181,186 | 6,530,692 | 6,140,173 | ||||||||||
Total assets | 6,891,541 | 6,868,140 | 6,484,882 | 6,879,905 | 6,444,364 | ||||||||||
Total due to depositors | 4,595,189 | 4,598,305 | 4,310,461 | 4,596,738 | 4,243,844 | ||||||||||
Total interest-bearing liabilities | 5,825,187 | 5,811,263 | 5,515,580 | 5,818,263 | 5,479,268 | ||||||||||
Stockholders' equity | 560,624 | 552,621 | 532,027 | 556,645 | 530,662 | ||||||||||
Performance Ratios (3) | |||||||||||||||
Return on average assets | 0.61 | % | 0.41 | % | 0.86 | % | 0.51 | % | 0.79 | % | |||||
Return on average equity | 7.53 | 5.12 | 10.47 | 6.33 | 9.55 | ||||||||||
Yield on average interest-earning assets (4) | 4.26 | 4.29 | 4.11 | 4.28 | 4.06 | ||||||||||
Cost of average interest-bearing liabilities | 2.03 | 1.93 | 1.50 | 1.98 | 1.42 | ||||||||||
Cost of funds | 1.90 | 1.80 | 1.40 | 1.85 | 1.33 | ||||||||||
Interest rate spread during period (4) | 2.23 | 2.36 | 2.61 | 2.30 | 2.64 | ||||||||||
Net interest margin (4) | 2.45 | 2.57 | 2.77 | 2.51 | 2.79 | ||||||||||
Non-interest expense to average assets | 1.58 | 1.89 | 1.69 | 1.73 | 1.82 | ||||||||||
Efficiency ratio (5) | 61.06 | 70.37 | 59.58 | 67.36 | 64.41 | ||||||||||
Average interest-earning assets to average | |||||||||||||||
interest-bearing liabilities | 1.12 | X | 1.12 | X | 1.12 | X | 1.12 | X | 1.12 | X |
(1) | Calculated by dividing stockholders’ equity by shares outstanding. |
(2) | 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”. |
(3) | Ratios are presented on an annualized basis, where appropriate. |
(4) | Yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented. |
(5) | Efficiency ratio, a non-GAAP measure, was calculated by dividing non-interest expense (excluding accelerated employee benefits upon officers death, OREO expense and the net gain/loss from the sale of OREO) by the total of net interest income (excluding net losses from fair value adjustments on qualifying hedges) and non-interest income (excluding net gains and losses from the sale of securities, assets and fair value adjustments and life insurance proceeds). |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
At or for the six | At or for the year | At or for the six | ||||||||||
ended | ended | months ended | ||||||||||
June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||
Selected Financial Ratios and Other Data | ||||||||||||
Regulatory capital ratios (for Flushing Financial Corporation): | ||||||||||||
Tier 1 capital | $ | 600,730 | $ | 586,582 | $ | 572,189 | ||||||
Common equity Tier 1 capital | 558,848 | 546,230 | 534,036 | |||||||||
Total risk-based capital | 697,240 | 682,527 | 667,409 | |||||||||
Tier 1 leverage capital (well capitalized = 5%) | 8.72 | % | 8.74 | % | 8.79 | % | ||||||
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 10.60 | 10.98 | 11.07 | |||||||||
Tier 1 risk-based capital (well capitalized = 8.0%) | 11.39 | 11.79 | 11.87 | |||||||||
Total risk-based capital (well capitalized = 10.0%) | 13.22 | 13.72 | 13.84 | |||||||||
Regulatory capital ratios (for Flushing Bank only): | ||||||||||||
Tier 1 capital | $ | 667,882 | $ | 660,782 | $ | 644,880 | ||||||
Common equity Tier 1 capital | 667,882 | 660,782 | 644,880 | |||||||||
Total risk-based capital | 689,392 | 681,727 | 665,100 | |||||||||
Tier 1 leverage capital (well capitalized = 5%) | 9.69 | % | 9.85 | % | 9.90 | % | ||||||
Common equity Tier 1 risk-based capital (well capitalized = 6.5%) | 12.66 | 13.28 | 13.37 | |||||||||
Tier 1 risk-based capital (well capitalized = 8.0%) | 12.66 | 13.28 | 13.37 | |||||||||
Total risk-based capital (well capitalized = 10.0%) | 13.07 | 13.70 | 13.79 | |||||||||
Capital ratios: | ||||||||||||
Average equity to average assets | 8.09 | % | 8.22 | % | 8.23 | % | ||||||
Equity to total assets | 8.14 | 8.04 | 8.32 | |||||||||
Tangible common equity to tangible assets (1) | 7.93 | 7.83 | 8.09 | |||||||||
Asset quality: | ||||||||||||
Non-accrual loans (2) | $ | 15,702 | $ | 16,253 | $ | 14,059 | ||||||
Non-performing loans | 15,702 | 16,253 | 14,789 | |||||||||
Non-performing assets | 15,976 | 16,288 | 14,824 | |||||||||
Net charge-offs/ (recoveries) | 1,881 | (19 | ) | 284 | ||||||||
Asset quality ratios: | ||||||||||||
Non-performing loans to gross loans | 0.28 | % | 0.29 | % | 0.28 | % | ||||||
Non-performing assets to total assets | 0.23 | 0.24 | 0.23 | |||||||||
Allowance for loan losses to gross loans | 0.38 | 0.38 | 0.38 | |||||||||
Allowance for loan losses to non-performing assets | 134.64 | 128.60 | 136.40 | |||||||||
Allowance for loan losses to non-performing loans | 136.99 | 128.87 | 136.72 | |||||||||
Full-service customer facilities | 19 | 19 | 18 | |||||||||
(1) See “Calculation of Tangible Stockholders’ Common Equity to Tangible Assets”. | ||||||||||||
(2) Excludes performing non-accrual TDR loans. | ||||||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
For the three months ended | ||||||||||||||||||
June 30, 2019 | March 31, 2019 | June 30, 2018 | ||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||
Balance | Interest | Cost | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||
(Dollars in thousands) | ||||||||||||||||||
Interest-earning Assets: | ||||||||||||||||||
Mortgage loans, net | $ | 4,590,429 | $ | 50,206 | 4.37 | % | $ | 4,619,587 | $ | 50,845 | 4.40 | % | $ | 4,509,778 | $ | 47,673 | 4.23 | % |
Other loans, net | 974,628 | 12,067 | 4.95 | 925,080 | 11,485 | 4.97 | 806,255 | 9,649 | 4.79 | |||||||||
Total loans, net (1) (2) | 5,565,057 | 62,273 | 4.48 | 5,544,667 | 62,330 | 4.50 | 5,316,033 | 57,322 | 4.31 | |||||||||
Taxable securities: | ||||||||||||||||||
Mortgage-backed | ||||||||||||||||||
securities | 585,892 | 4,225 | 2.88 | 573,397 | 4,248 | 2.96 | 533,088 | 3,754 | 2.82 | |||||||||
Other securities | 242,560 | 2,135 | 3.52 | 241,863 | 2,211 | 3.66 | 122,601 | 1,023 | 3.34 | |||||||||
Total taxable securities | 828,452 | 6,360 | 3.07 | 815,260 | 6,459 | 3.17 | 655,689 | 4,777 | 2.91 | |||||||||
Tax-exempt securities: (3) | ||||||||||||||||||
Other securities | 56,064 | 595 | 4.25 | 58,173 | 594 | 4.08 | 124,058 | 1,084 | 3.50 | |||||||||
Total tax-exempt securities | 56,064 | 595 | 4.25 | 58,173 | 594 | 4.08 | 124,058 | 1,084 | 3.50 | |||||||||
Interest-earning deposits | ||||||||||||||||||
and federal funds sold | 90,561 | 472 | 2.08 | 103,042 | 555 | 2.15 | 85,406 | 338 | 1.58 | |||||||||
Total interest-earning | ||||||||||||||||||
assets | 6,540,134 | 69,700 | 4.26 | 6,521,142 | 69,938 | 4.29 | 6,181,186 | 63,521 | 4.11 | |||||||||
Other assets | 351,407 | 346,998 | 303,696 | |||||||||||||||
Total assets | $ | 6,891,541 | $ | 6,868,140 | $ | 6,484,882 | ||||||||||||
Interest-bearing Liabilities: | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Savings accounts | $ | 200,349 | 348 | 0.69 | $ | 205,775 | 361 | 0.70 | $ | 235,564 | 285 | 0.48 | ||||||
NOW accounts | 1,541,956 | 6,641 | 1.72 | 1,488,859 | 6,031 | 1.62 | 1,444,889 | 3,364 | 0.93 | |||||||||
Money market accounts | 1,336,526 | 6,974 | 2.09 | 1,380,172 | 6,821 | 1.98 | 1,110,690 | 3,983 | 1.43 | |||||||||
Certificate of deposit | ||||||||||||||||||
accounts | 1,516,358 | 8,802 | 2.32 | 1,523,499 | 8,203 | 2.15 | 1,519,348 | 7,118 | 1.87 | |||||||||
Total due to depositors | 4,595,189 | 22,765 | 1.98 | 4,598,305 | 21,416 | 1.86 | 4,310,491 | 14,750 | 1.37 | |||||||||
Mortgagors' escrow | ||||||||||||||||||
accounts | 83,799 | 62 | 0.30 | 62,174 | 53 | 0.34 | 77,343 | 38 | 0.20 | |||||||||
Total interest-bearing | ||||||||||||||||||
deposits | 4,678,988 | 22,827 | 1.95 | 4,660,479 | 21,469 | 1.84 | 4,387,834 | 14,788 | 1.35 | |||||||||
Borrowings | 1,146,199 | 6,739 | 2.35 | 1,150,784 | 6,541 | 2.27 | 1,127,746 | 5,865 | 2.08 | |||||||||
Total interest-bearing | ||||||||||||||||||
liabilities | 5,825,187 | 29,566 | 2.03 | 5,811,263 | 28,010 | 1.93 | 5,515,580 | 20,653 | 1.50 | |||||||||
Non interest-bearing | ||||||||||||||||||
demand deposits | 394,642 | 398,829 | 370,790 | |||||||||||||||
Other liabilities | 111,088 | 105,427 | 66,485 | |||||||||||||||
Total liabilities | 6,330,917 | 6,315,519 | 5,952,855 | |||||||||||||||
Equity | 560,624 | 552,621 | 532,027 | |||||||||||||||
Total liabilities and | ||||||||||||||||||
equity | $ | 6,891,541 | $ | 6,868,140 | $ | 6,484,882 | ||||||||||||
Net interest income / | ||||||||||||||||||
net interest rate spread (tax equivalent) (3) | $ | 40,134 | 2.23 | % | $ | 41,928 | 2.36 | % | $ | 42,868 | 2.61 | % | ||||||
Net interest-earning assets / | ||||||||||||||||||
net interest margin (tax equivalent) | $ | 714,947 | 2.45 | % | $ | 709,879 | 2.57 | % | $ | 665,606 | 2.77 | % | ||||||
Ratio of interest-earning | ||||||||||||||||||
assets to interest-bearing | ||||||||||||||||||
liabilities | 1.12 | X | 1.12 | X | 1.12 | X |
(1) | Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.4 million, $0.5 million and $0.3 million for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively. |
(2) | Loan interest income includes net losses from fair value adjustments on qualifying hedges of $0.8 million, $0.6 million and none for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively. |
(3) | Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 totaling $125,000, $125,000 and $228,000, respectively. |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
For the six months ended | |||||||||||||
June 30, 2019 | June 30, 2018 | ||||||||||||
Average | Yield/ | Average | Yield/ | ||||||||||
Balance | Interest | Cost | Balance | Interest | Cost | ||||||||
Interest-earning Assets: | |||||||||||||
Mortgage loans, net | $ | 4,604,928 | $ | 101,051 | 4.39 | % | $ | 4,476,509 | $ | 93,785 | 4.19 | % | |
Other loans, net | 949,991 | 23,552 | 4.96 | 797,430 | 18,554 | 4.65 | |||||||
Total loans, net (1) (2) | 5,554,919 | 124,603 | 4.49 | 5,273,939 | 112,339 | 4.26 | |||||||
Taxable securities: | |||||||||||||
Mortgage-backed | |||||||||||||
securities | 579,679 | 8,473 | 2.92 | 528,922 | 7,261 | 2.75 | |||||||
Other securities | 242,214 | 4,346 | 3.59 | 126,816 | 2,144 | 3.38 | |||||||
Total taxable securities | 821,893 | 12,819 | 3.12 | 655,738 | 9,405 | 2.87 | |||||||
Tax-exempt securities: (3) | |||||||||||||
Other securities | 57,113 | 1,189 | 4.16 | 124,091 | 2,165 | 3.49 | |||||||
Total tax-exempt securities | 57,113 | 1,189 | 4.16 | 124,091 | 2,165 | 3.49 | |||||||
Interest-earning deposits | |||||||||||||
and federal funds sold | 96,767 | 1,027 | 2.12 | 86,405 | 625 | 1.45 | |||||||
Total interest-earning | |||||||||||||
assets | 6,530,692 | 139,638 | 4.28 | 6,140,173 | 124,534 | 4.06 | |||||||
Other assets | 349,213 | 304,191 | |||||||||||
Total assets | $ | 6,879,905 | $ | 6,444,364 | |||||||||
Interest-bearing Liabilities: | |||||||||||||
Deposits: | |||||||||||||
Savings accounts | $ | 203,047 | 709 | 0.70 | $ | 250,646 | 674 | 0.54 | |||||
NOW accounts | 1,515,554 | 12,672 | 1.67 | 1,492,413 | 6,512 | 0.87 | |||||||
Money market accounts | 1,358,228 | 13,795 | 2.03 | 1,068,443 | 7,058 | 1.32 | |||||||
Certificate of deposit | |||||||||||||
accounts | 1,519,909 | 17,005 | 2.24 | 1,432,342 | 12,581 | 1.76 | |||||||
Total due to depositors | 4,596,738 | 44,181 | 1.92 | 4,243,844 | 26,825 | 1.26 | |||||||
Mortgagors' escrow | |||||||||||||
accounts | 73,046 | 115 | 0.31 | 68,202 | 73 | 0.21 | |||||||
Total interest-bearing | |||||||||||||
deposits | 4,669,784 | 44,296 | 1.90 | 4,312,046 | 26,898 | 1.25 | |||||||
Borrowings | 1,148,479 | 13,280 | 2.31 | 1,167,222 | 11,932 | 2.04 | |||||||
Total interest-bearing | |||||||||||||
liabilities | 5,818,263 | 57,576 | 1.98 | 5,479,268 | 38,830 | 1.42 | |||||||
Non interest-bearing | |||||||||||||
demand deposits | 396,724 | 367,903 | |||||||||||
Other liabilities | 108,273 | 66,531 | |||||||||||
Total liabilities | 6,323,260 | 5,913,702 | |||||||||||
Equity | 556,645 | 530,662 | |||||||||||
Total liabilities and | |||||||||||||
equity | $ | 6,879,905 | $ | 6,444,364 | |||||||||
Net interest income / | |||||||||||||
net interest rate spread (tax equivalent) (3) | $ | 82,062 | 2.30 | % | $ | 85,704 | 2.64 | % | |||||
Net interest-earning assets / | |||||||||||||
net interest margin (tax equivalent) | $ | 712,429 | 2.51 | % | $ | 660,905 | 2.79 | % | |||||
Ratio of interest-earning | |||||||||||||
assets to interest-bearing | |||||||||||||
liabilities | 1.12 | X | 1.12 | X |
(1) | Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.9 million and $0.4 million for the six months ended June 30, 2019 and 2018, respectively. |
(2) | Loan interest income includes net losses from fair value adjustments on qualifying hedges of $1.5 million and none for the six months ended June 30, 2019 and June 30, 2018, respectively. |
(3) | Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the six months ended June 30, 2019 and June 30, 2018 totaling $250,000 and $455,000, respectively. |
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)
June 2019 vs. | June 2019 vs. | ||||||||||||||||||||
June 30, | March 31, | December 31, | December 2018 | September 30, | June 30, | June 2018 | |||||||||||||||
(Dollars in thousands) | 2019 | 2019 | 2018 | % Change | 2018 | 2018 | % Change | ||||||||||||||
Deposits | |||||||||||||||||||||
Non-interest bearing | $ | 413,813 | $ | 401,064 | $ | 413,747 | 0.0% | $ | 398,606 | $ | 388,467 | 6.5% | |||||||||
Interest bearing: | |||||||||||||||||||||
Certificate of deposit | |||||||||||||||||||||
accounts | 1,544,117 | 1,511,770 | 1,563,310 | -1.2% | 1,562,962 | 1,452,016 | 6.3% | ||||||||||||||
Savings accounts | 196,820 | 201,811 | 210,022 | -6.3% | 216,976 | 225,815 | -12.8% | ||||||||||||||
Money market accounts | 1,302,153 | 1,352,843 | 1,427,992 | -8.8% | 1,223,640 | 1,069,835 | 21.7% | ||||||||||||||
NOW accounts | 1,368,813 | 1,542,606 | 1,300,852 | 5.2% | 1,255,464 | 1,422,745 | -3.8% | ||||||||||||||
Total interest-bearing | |||||||||||||||||||||
deposits | 4,411,903 | 4,609,030 | 4,502,176 | -2.0% | 4,259,042 | 4,170,411 | 5.8% | ||||||||||||||
Total deposits | $ | 4,825,716 | $ | 5,010,094 | $ | 4,915,923 | -1.8% | $ | 4,657,648 | $ | 4,558,878 | 5.9% | |||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)
Loan Closings
For the three months | For the six months ended | |||||||||||||
June 30, | March 31 | June 30, | June 30, | June 30, | ||||||||||
(In thousands) | 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||
Multi-family residential | $ | 55,629 | $ | 27,214 | $ | 70,972 | $ | 82,843 | $ | 152,153 | ||||
Commercial real estate | 42,700 | 13,941 | 64,890 | 56,641 | 136,444 | |||||||||
One-to-four family – mixed-use property | 12,885 | 16,423 | 12,294 | 29,308 | 28,362 | |||||||||
One-to-four family – residential | 7,884 | 3,886 | 6,974 | 11,770 | 23,942 | |||||||||
Co-operative apartments | 300 | - | 1,500 | 300 | 1,500 | |||||||||
Construction | 18,715 | 5,901 | 9,940 | 24,616 | 24,619 | |||||||||
Small Business Administration | 2,255 | 329 | 228 | 2,584 | 2,195 | |||||||||
Commercial business and other | 156,029 | 130,330 | 88,612 | 286,359 | 228,019 | |||||||||
Total | $ | 296,397 | $ | 198,024 | $ | 255,410 | $ | 494,421 | $ | 597,234 | ||||
Loan Composition
June 2019 vs. | June 2019 vs. | |||||||||||||||||||||||||
June 30, | March 31, | December 31, | December 2018 | September 30, | June 30, | June 2018 | ||||||||||||||||||||
(Dollars in thousands) | 2019 | 2019 | 2018 | % Change | 2018 | 2018 | % Change | |||||||||||||||||||
Loans held for investment: | ||||||||||||||||||||||||||
Multi-family residential | $ | 2,263,875 | $ | 2,256,447 | $ | 2,269,048 | -0.2% | $ | 2,235,370 | $ | 2,247,852 | 0.7% | ||||||||||||||
Commercial real estate | 1,524,693 | 1,529,001 | 1,542,547 | -1.2% | 1,460,555 | 1,471,894 | 3.6% | |||||||||||||||||||
One-to-four family ― | ||||||||||||||||||||||||||
mixed-use property | 582,264 | 582,049 | 577,741 | 0.8% | 565,302 | 564,474 | 3.2% | |||||||||||||||||||
One-to-four family ― residential | 184,024 | 188,615 | 190,350 | -3.3% | 188,975 | 187,741 | -2.0% | |||||||||||||||||||
Co-operative apartments | 8,137 | 7,903 | 8,498 | -4.2% | 7,771 | 7,839 | 3.8% | |||||||||||||||||||
Construction | 58,503 | 54,933 | 50,600 | 15.6% | 40,239 | 33,826 | 73.0% | |||||||||||||||||||
Small Business Administration | 14,511 | 15,188 | 15,210 | -4.6% | 14,322 | 14,405 | 0.7% | |||||||||||||||||||
Taxi medallion | 3,555 | 3,891 | 4,539 | -21.7% | 6,078 | 6,225 | -42.9% | |||||||||||||||||||
Commercial business and other | 983,573 | 935,297 | 877,763 | 12.1% | 846,224 | 783,904 | 25.5% | |||||||||||||||||||
Net unamortized premiums | ||||||||||||||||||||||||||
and unearned loan fees | 15,278 | 15,422 | 15,188 | 0.6% | 15,226 | 15,647 | -2.4% | |||||||||||||||||||
Allowance for loan losses | (21,510 | ) | (21,015 | ) | (20,945 | ) | 2.7% | (20,309 | ) | (20,220 | ) | 6.4% | ||||||||||||||
Net loans | $ | 5,616,903 | $ | 5,567,731 | $ | 5,530,539 | 1.6% | $ | 5,359,753 | $ | 5,313,587 | 5.7% | ||||||||||||||
Net Loans Activity
Three Months Ended | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(In thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Loans originated and purchased | $ | 296,397 | $ | 198,024 | $ | 344,732 | $ | 308,825 | $ | 255,410 | |||||||||
Principal reductions | (243,263 | ) | (158,815 | ) | (173,061 | ) | (257,902 | ) | (226,030 | ) | |||||||||
Loans sold | (1,970 | ) | (1,043 | ) | - | (4,027 | ) | (7,273 | ) | ||||||||||
Loan charged-offs | (1,114 | ) | (1,138 | ) | (211 | ) | (220 | ) | (416 | ) | |||||||||
Foreclosures | (239 | ) | - | - | - | - | |||||||||||||
Net change in deferred fees and costs | (144 | ) | 234 | (38 | ) | (421 | ) | (748 | ) | ||||||||||
Net change in the allowance for loan losses | (495 | ) | (70 | ) | (636 | ) | (89 | ) | 322 | ||||||||||
Total loan activity | $ | 49,172 | $ | 37,192 | $ | 170,786 | $ | 46,166 | $ | 21,265 | |||||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
(Dollars in thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||
Loans 90 Days Or More Past Due | ||||||||||||||||||||
and Still Accruing: | ||||||||||||||||||||
Commercial real estate | $ | - | $ | - | $ | - | $ | 111 | $ | - | ||||||||||
Construction | - | - | - | - | 730 | |||||||||||||||
Total | - | - | - | 111 | 730 | |||||||||||||||
Non-accrual Loans: | ||||||||||||||||||||
Multi-family residential | 2,008 | 2,009 | 2,410 | 862 | 2,165 | |||||||||||||||
Commercial real estate | 1,488 | 1,050 | 1,379 | 1,398 | 1,448 | |||||||||||||||
One-to-four family - mixed-use property | 1,752 | 1,305 | 928 | 795 | 2,157 | |||||||||||||||
One-to-four family - residential | 5,411 | 5,708 | 6,144 | 6,610 | 6,969 | |||||||||||||||
Co-operative apartments | - | - | - | - | 575 | |||||||||||||||
Construction | - | 950 | - | - | - | |||||||||||||||
Small Business Administration | 1,224 | 1,227 | 1,267 | 1,395 | - | |||||||||||||||
Taxi medallion (1) | 1,361 | 1,372 | 613 | 712 | 743 | |||||||||||||||
Commercial business and other | 2,458 | 2,114 | 3,512 | 761 | 2 | |||||||||||||||
Total | 15,702 | 15,735 | 16,253 | 12,533 | 14,059 | |||||||||||||||
Total Non-performing Loans | 15,702 | 15,735 | 16,253 | 12,644 | 14,789 | |||||||||||||||
Other Non-performing Assets: | ||||||||||||||||||||
Real estate acquired through foreclosure | 239 | - | - | - | - | |||||||||||||||
Other asset acquired through foreclosure | 35 | 35 | 35 | 35 | 35 | |||||||||||||||
Total | 274 | 35 | 35 | 35 | 35 | |||||||||||||||
Total Non-performing Assets | $ | 15,976 | $ | 15,770 | $ | 16,288 | $ | 12,679 | $ | 14,824 | ||||||||||
Non-performing Assets to Total Assets | 0.23 | % | 0.23 | % | 0.24 | % | 0.19 | % | 0.23 | % | ||||||||||
Allowance For Loan Losses to Non-performing Loans | 137.0 | % | 133.6 | % | 128.9 | % | 160.6 | % | 136.7 | % | ||||||||||
(1) | Not included in the above analysis are non-accrual performing TDR taxi medallion loans totaling $2.2 million in 2Q19, $2.5 million in 1Q19, $3.9 million in 4Q18, $5.4 million in 3Q18 and $5.5 million in 2Q18. | |||||||||||||||||||
Net Charge-Offs (Recoveries)
Three Months Ended | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(In thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Multi-family residential | $ | (10 | ) | $ | (13 | ) | $ | (4 | ) | $ | 18 | $ | 28 | ||||||
Commercial real estate | (7 | ) | - | - | - | - | |||||||||||||
One-to-four family – mixed-use property | (2 | ) | (85 | ) | (18 | ) | (36 | ) | (79 | ) | |||||||||
One-to-four family – residential | 110 | (4 | ) | (199 | ) | (258 | ) | (4 | ) | ||||||||||
Small Business Administration | (16 | ) | (4 | ) | 170 | 134 | 18 | ||||||||||||
Taxi medallion | (50 | ) | (84 | ) | (143 | ) | 40 | 353 | |||||||||||
Commercial business and other | 954 | 1,092 | (20 | ) | 13 | 6 | |||||||||||||
Total net loan charge-offs (recoveries) | $ | 979 | $ | 902 | $ | (214 | ) | $ | (89 | ) | $ | 322 | |||||||
Core Diluted EPS, Core ROAE, Core ROAA, Core Net Interest Income, Core Yield on Total Loans, Core Net Interest Margin 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
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP income before income taxes | $ | 13,828 | $ | 9,355 | $ | 18,412 | $ | 23,183 | $ | 32,774 | ||||||
Net loss from fair value adjustments | 1,956 | 2,080 | 267 | 4,036 | 367 | |||||||||||
Net loss on sale of securities | 15 | - | - | 15 | - | |||||||||||
Life insurance proceeds | - | (43 | ) | - | (43 | ) | (776 | ) | ||||||||
Net gain on sale of assets | (770 | ) | - | - | (770 | ) | - | |||||||||
Net losses from fair value adjustments on qualifying hedges | 818 | 637 | - | 1,455 | - | |||||||||||
Accelerated employee benefits upon Officer's death | - | 455 | - | 455 | - | |||||||||||
Core income before taxes | 15,847 | 12,484 | 18,679 | 28,331 | 32,365 | |||||||||||
Provision for income taxes for core income | 3,771 | 3,033 | 4,573 | 6,804 | 7,555 | |||||||||||
Core net income | $ | 12,076 | $ | 9,451 | $ | 14,106 | $ | 21,527 | $ | 24,810 | ||||||
GAAP diluted earnings per common share | $ | 0.37 | $ | 0.25 | $ | 0.48 | $ | 0.61 | $ | 0.88 | ||||||
Net loss from fair value adjustments, net of tax | 0.05 | 0.05 | 0.01 | 0.10 | 0.01 | |||||||||||
Net loss on sale of securities, net of tax | - | - | - | - | - | |||||||||||
Life insurance proceeds | - | - | - | - | (0.03 | ) | ||||||||||
Net gain on sale of assets, net of tax | (0.02 | ) | - | - | (0.02 | ) | - | |||||||||
Net losses from fair value adjustments on qualifying hedges, net of tax | 0.02 | 0.02 | - | 0.04 | - | |||||||||||
Accelerated employee benefits upon Officer's death, net of tax | - | 0.01 | - | 0.01 | - | |||||||||||
Core diluted earnings per common share 1 | $ | 0.42 | $ | 0.33 | $ | 0.49 | $ | 0.75 | $ | 0.86 | ||||||
Core net income, as calculated above | $ | 12,076 | $ | 9,451 | $ | 14,106 | $ | 21,527 | $ | 24,810 | ||||||
Average assets | 6,891,541 | 6,868,140 | 6,484,882 | 6,879,905 | 6,444,364 | |||||||||||
Average equity | 560,624 | 552,621 | 532,027 | 556,645 | 530,662 | |||||||||||
Core return on average assets 2 | 0.70 | % | 0.55 | % | 0.87 | % | 0.63 | % | 0.77 | % | ||||||
Core return on average equity 2 | 8.62 | % | 6.84 | % | 10.61 | % | 7.73 | % | 9.35 | % | ||||||
(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 NET INTEREST INCOME and NET INTEREST MARGIN
To CORE NET INTEREST INCOME and NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP net interest income | $ | 40,009 | $ | 41,803 | $ | 42,640 | $ | 81,812 | $ | 85,249 | ||||||
Net losses from fair value adjustments on qualifying hedges | 818 | 637 | - | 1,455 | - | |||||||||||
Core net interest income | $ | 40,827 | $ | 42,440 | $ | 42,640 | $ | 83,267 | $ | 85,249 | ||||||
GAAP interest income on total loans, net | $ | 62,273 | $ | 62,330 | $ | 57,322 | $ | 124,603 | $ | 112,339 | ||||||
Net losses from fair value adjustments on qualifying hedges | 818 | 637 | - | 1,455 | - | |||||||||||
Prepayment penalties received on loans | (1,120 | ) | (805 | ) | (1,451 | ) | (1,925 | ) | (2,364 | ) | ||||||
Net recoveries of interest from non-accrual loans | (519 | ) | (714 | ) | (248 | ) | (1,233 | ) | (414 | ) | ||||||
Core interest income on total loans, net | $ | 61,452 | $ | 61,448 | $ | 55,623 | $ | 122,900 | $ | 109,561 | ||||||
Average total loans, net | $ | 5,565,057 | $ | 5,544,667 | $ | 5,316,033 | $ | 5,554,919 | $ | 5,273,939 | ||||||
Core yield on total loans | 4.42 | % | 4.43 | % | 4.19 | % | 4.42 | % | 4.15 | % | ||||||
Net interest income tax equivalent | $ | 40,134 | $ | 41,928 | $ | 42,868 | $ | 82,062 | $ | 85,704 | ||||||
Net losses from fair value adjustments on qualifying hedges | 818 | 637 | - | 1,455 | - | |||||||||||
Prepayment penalties received on loans and securities | (1,120 | ) | (805 | ) | (1,553 | ) | (1,925 | ) | (2,466 | ) | ||||||
Net recoveries of interest from non-accrual loans | (519 | ) | (714 | ) | (248 | ) | (1,233 | ) | (414 | ) | ||||||
Net interest income used in calculation of Core net interest margin | $ | 39,313 | $ | 41,046 | $ | 41,067 | $ | 80,359 | $ | 82,824 | ||||||
Total average interest-earning assets | $ | 6,540,134 | $ | 6,521,142 | $ | 6,181,186 | $ | 6,530,692 | $ | 6,140,173 | ||||||
Core net interest margin | 2.40 | % | 2.52 | % | 2.66 | % | 2.46 | % | 2.70 | % | ||||||
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CALCULATION OF TANGIBLE STOCKHOLDERS’
COMMON EQUITY to TANGIBLE ASSETS
(Unaudited)
June 30, | December 31, | June 30, | |||||||||
(Dollars in thousands) | 2019 | 2018 | 2018 | ||||||||
Total Equity | $ | 565,390 | $ | 549,464 | $ | 538,044 | |||||
Less: | |||||||||||
Goodwill | (16,127 | ) | (16,127 | ) | (16,127 | ) | |||||
Intangible deferred tax liabilities | 286 | 290 | 291 | ||||||||
Tangible Stockholders' Common Equity | $ | 549,549 | $ | 533,627 | $ | 522,208 | |||||
Total Assets | $ | 6,945,634 | $ | 6,834,176 | $ | 6,467,616 | |||||
Less: | |||||||||||
Goodwill | (16,127 | ) | (16,127 | ) | (16,127 | ) | |||||
Intangible deferred tax liabilities | 286 | 290 | 291 | ||||||||
Tangible Assets | $ | 6,929,793 | $ | 6,818,339 | $ | 6,451,780 | |||||
Tangible Stockholders' Common Equity to Tangible Assets | 7.93 | % | 7.83 | % | 8.09 | % |
Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400