LAKE SUCCESS, N.Y., July 22, 2008 (PRIME NEWSWIRE) -- Flushing Financial Corporation (the "Company") (Nasdaq:FFIC), the parent holding company for Flushing Savings Bank, FSB (the "Bank"), today announced its financial results for the three and six months ended June 30, 2008.
Net income for the second quarter ended June 30, 2008 was $6.5 million, an increase of $1.7 million, or 35.9%, from the $4.8 million earned in the second quarter of 2007. Diluted earnings per share for the second quarter was $0.32, an increase of $0.08, or 33.3%, from the $0.24 earned in the comparable quarter a year ago.
Net income for the six months ended June 30, 2008 was $13.7 million, an increase of $3.5 million, or 34.3%, from the $10.2 million earned in the comparable 2007 period. Diluted earnings per share for the six months ended June 30, 2008 was $0.68, an increase of $0.17, or 33.3%, from the $0.51 earned in the comparable 2007 period.
Core earnings, which exclude the effects of SFAS No. 159 and certain non recurring items, was $6.7 million, or $0.33 per diluted share, for the second quarter of 2008 the same as during the first quarter of 2008 and an increase of $1.6 million, or $0.07 per diluted share, from the $5.1 million, or $0.26 per diluted share, for the second quarter of 2007. Core earnings during the six months ended June 30, 2008 was $13.4 million, or $0.67 per diluted share, an increase of $3.3 million, or $0.16 per diluted share, from the $10.1 million, or $0.51 per diluted share, for the six months ended June 30, 2007. For a reconciliation of core earnings and core earnings per share to GAAP net income and GAAP earnings per share, please refer to the tables in the section titled Reconciliation of GAAP and Core Earnings.
John R. Buran, President and Chief Executive Officer, stated: "We are pleased to report strong core earnings for the second quarter and first half of 2008. Core diluted earnings per share for the second quarter of 2008 matched that of the first quarter despite the charge of $0.02 per share recorded due to the annual grant of stock awards in the second quarter of 2008. Our strong operating performance for the second quarter was driven by net interest income that grew to a record level of $22.1 million for the quarter, as the net interest margin increased nine basis points from the prior quarter to 2.67% for the second quarter of 2008. Credit quality remained strong, with non-performing loans at 0.22% of total assets.
"Our cost of funds continued to decline in the second quarter of 2008, primarily due to the Federal Open Market Committee ('FOMC') rate reductions, which lowered the overnight rate 225 basis points during the first half of 2008 to 2.00% as of June 30, 2008. These rate reductions, combined with a decrease in rate-based deposit competition in the New York Market, translated into a reduction in our funding costs, as we took advantage of several funding sources, mixing rate reductions with duration increases. As a result, we were able to reduce our cost of funds to 3.95% for the second quarter of 2008, a decline of 59 basis points from the fourth quarter of 2007. At June 30, 2008, we have $446.4 million of certificates of deposit, at a weighted-average rate of 4.15%, that will mature or reprice before the end of the year.
"We continue to implement the key elements of our strategic plan as we work towards transitioning to a more 'commercial-like' bank. Deposit gathering initiatives by our business bankers have shown success in cross selling deposit products to both new and long-standing customers. Deposits at our internet branch, iGObanking.com, increased to $179.4 million at June 30, 2008, while our government banking initiative brought in $28.1 million of deposits during the first half of 2008. Commercial business and other loans increased $15.7 million during the first half of 2008 to $57.5 million at June 30, 2008.
"As we continue to grow the balance sheet, we are mindful of our capital requirements. The Bank continues to be well-capitalized under regulatory requirements, with tangible and risk-weighted capital ratios of 7.26% and 11.37%, respectively, at June 30, 2008.
"The Company has investments in perpetual preferred stocks issued by Fannie Mae and Freddie Mac. These investments are held in our available-for-sale securities portfolio. At June 30, 2008, these investments had a cost basis of $28.2 million, while the market value was $25.6 million. The continued turbulence in the housing markets, and speculation in the market about the future of Fannie Mae and Freddie Mac, has caused these investments to decline further in market value. Although we believe the recent declines in market value are temporary, we cannot guarantee that we will not need to record impairment charges if market values do not recover in the future.
"In summary, we remain pleased with the direction and pace of change in the organization as we move toward a more 'commercial-like' banking institution. We continue to expand and leverage our strengths in multicultural banking and mixed-use and multi-family lending, as we remain focused on delivering long-term value to our shareholders."
Earnings Summary - Three Months Ended June 30, 2008
For the three months ended June 30, 2008, net interest income was $22.1 million, an increase of $4.0 million, or 22.3%, from $18.1 million for the three months ended June 30, 2007. The increase in net interest income is attributed to an increase in the average balance of interest-earning assets of $504.3 million to $3,314.7 million for the quarter ended June 30, 2008, combined with an increase in the net interest spread of 14 basis points to 2.49% for the quarter ended June 30, 2008 from 2.35% for the comparable period in 2007. The yield on interest-earning assets decreased 30 basis points to 6.44% for the three months ended June 30, 2008 from 6.74% in the three months ended June 30, 2007. However, this was more than offset by a decline in the cost of funds of 44 basis points to 3.95% for the three months ended June 30, 2008 from 4.39% for the comparable prior year period. The net interest margin improved 10 basis points to 2.67% for the three months ended June 30, 2008 from 2.57% for the three months ended June 30, 2007. Excluding prepayment penalty income, the net interest margin would have been 2.57% and 2.38% for the three month periods ended June 30, 2008 and 2007, respectively.
The decline in the yield of interest-earning assets was primarily due to a 30 basis point reduction in the yield of the loan portfolio to 6.68% for the three months ended June 30, 2008 from 6.98% for the three months ended June 30, 2007. This decrease was primarily the result of adjustable rate loans adjusting down, as the rates declined throughout the first half of 2008, combined with a reduction in prepayment penalty income received during the three months ended June 30, 2008 as compared to the three months ended June 30, 2007. The yield on mortgage loans was positively impacted by the average rate on mortgage loans originated during the past twelve months being higher than the average rate of both the existing loan portfolio and mortgage loans which were paid-in-full during the period. The yield on the mortgage loan portfolio declined 26 basis points to 6.69% for the three months ended June 30, 2008 from 6.95% for the three months ended June 30, 2007. The yield on the mortgage loan portfolio, excluding prepayment penalty income, declined 15 basis points to 6.57% for the three months ended June 30, 2008 from 6.72% for the three months ended June 30, 2007. The decline in the yield of interest-earning assets was partially offset by an increase of $340.0 million in the average balance of the loan portfolio to $2,825.3 million for the three months ended June 30, 2008.
The decrease in the cost of interest-bearing liabilities is primarily attributed to the FOMC lowering the overnight interest rate to 2.00% as of June 30, 2008. Certificates of deposit, money market accounts and saving accounts decreased 46 basis points, 119 basis points and 26 basis points, respectively, for the three months ended June 30, 2008 compared to the three months ended June 30, 2007. NOW accounts increased 104 basis points for the three months ended June 30, 2008 compared to the three months ended June 30, 2007. This increase in the average cost of NOW accounts is due to the introduction and promotion of new products, which, although carrying a higher rate than other products in these types of accounts, had a lower rate during the quarter ended June 30, 2008 than the average cost of deposits. This resulted in a decrease in the cost of due to depositors of 57 basis points to 3.64% for the three months ended June 30, 2008 compared to the three months ended June 30, 2007. The cost of borrowed funds also declined 32 basis points to 4.65% for the three months ended June 30, 2008 compared to the three months ended June 30, 2007. The average balance of the higher-costing certificates of deposit and borrowed funds increased $68.3 million and $273.0 million, respectively, for the quarter ended June 30, 2008 compared to the prior year period. In addition, the combined average balances of lower-costing savings, money market and NOW accounts increased a total of $154.8 million for the quarter ended June 30, 2008 compared to the prior year period.
The net interest margin for the three months ended June 30, 2008 increased nine basis points to 2.67% from 2.58% for the quarter ended March 31, 2008. The yield on interest-earning assets decreased 22 basis points during the quarter, while the cost of interest-bearing liabilities decreased 30 basis points. Excluding prepayment penalty income, the net interest margin would have been 2.57% for the quarter ended June 30, 2008, an increase of 13 basis points from 2.44% for the quarter ended March 31, 2008.
A provision for loan losses of $0.3 million was provided for the three months ended June 30, 2008, the same as that provided in the first quarter of 2008. Prior to providing these provisions in 2008, the Company had not provided a provision for loan losses since 1999. The regular quarterly review of the allowance for loan losses resulted in management's conclusion that this provision is necessary to maintain the allowance for loan losses at a level that provides for losses inherent in the loan portfolio.
Non-interest income for the three months ended June 30, 2008 was $2.7 million, the same as during the comparable period in 2007. Increases of $0.2 million in dividends received on Federal Home Loan Bank of New York ("FHLB-NY") stock, $0.1 million in income from Bank Owned Life Insurance ("BOLI") and a $0.3 million reduction in the loss attributed to changes in fair value of financial assets and financial liabilities carried at fair value under SFAS No. 159 were offset by decreases of $0.4 million in loan fee income and a reduction of $0.2 million in the gain on sale of loans.
Non-interest expense was $14.3 million for the three months ended June 30, 2008, an increase of $1.0 million, or 7.9%, from $13.3 million for the three months ended June 30, 2007. The increase from the comparable prior year period is primarily attributed to increases of: $0.6 million in employee salary and benefit expenses, $0.2 million in professional services, and $0.2 million in other operating expenses, each of which is primarily attributed to the growth of the Bank over the past twelve months. The efficiency ratio was 57.6% and 61.9% for the three month periods ended June 30, 2008 and 2007, respectively.
Net income for the three months ended June 30, 2008 was $6.5 million, an increase of $1.7 million or 35.9%, as compared to $4.8 million for the three months ended June 30, 2007. Diluted earnings per share was $0.32 for the three months ended June 30, 2008, an increase of $0.08, or 33.3%, from $0.24 for the three months ended June 30, 2007.
Return on average equity was 11.1% for the three months ended June 30, 2008 compared to 8.8% for the three months ended June 30, 2007. Return on average assets was 0.7% for the three months ended June 30, 2008 compared to 0.6% for the three months ended June 30, 2007.
Earnings Summary - Six Months Ended June 30, 2008
For the six months ended June 30, 2008, net interest income was $42.8 million, an increase of $7.4 million, or 21.0%, from $35.4 million for the six months ended June 30, 2007. The increase in net interest income is attributed to an increase in the average balance of interest-earning assets of $502.1 million to $3,262.0 million for the six months ended June 30, 2008, combined with an increase in the net interest spread of 10 basis points to 2.45% for the six months ended June 30, 2008 from 2.35% for the comparable period in 2007. The yield on interest-earning assets decreased 13 basis points to 6.55% for the six months ended June 30, 2008 from 6.68% for the six months ended June 30, 2007. However, this was more than offset by a decline in the cost of funds of 23 basis points to 4.10% for the six months ended June 30, 2008 from 4.33% for the comparable prior year period. The net interest margin improved six basis points to 2.62% for the six months ended June 30, 2008 from 2.56% for the six months ended June 30, 2007. Excluding prepayment penalty income, the net interest margin would have been 2.50% and 2.42% for the six month periods ended June 30, 2008 and 2007, respectively.
The decline in the yield of interest-earning assets was primarily due to a 12 basis point reduction in the yield of the loan portfolio to 6.80% for the six months ended June 30, 2008 from 6.92% for the six months ended June 30, 2007. This decrease was primarily the result of adjustable rate loans adjusting down, as rates declined throughout the first half of 2008. The yield was positively impacted by the average rate on mortgage loans originated during the past twelve months being higher than the average rate of both the existing loan portfolio and mortgage loans which were paid-in-full during the period. The yield on the mortgage loan portfolio declined nine basis points to 6.80% for the six months ended June 30, 2008 from 6.89% for the six months ended June 30, 2007. The yield on the mortgage loan portfolio, excluding prepayment penalty income, declined seven basis points to 6.65% for the six months ended June 30, 2008 from 6.72% for the six months ended June 30, 2007. The decline in the yield of interest-earning assets was partially offset by an increase of $349.8 million in the average balance of the loan portfolio to $2,779.0 million for the six months ended June 30, 2008.
The decrease in the cost of interest-bearing liabilities is primarily attributed to the FOMC lowering the overnight interest rate to 2.00% as of June 30, 2008. Certificates of deposit and money market accounts decreased 24 basis points and 67 basis points, respectively, for the six months ended June 30, 2008 compared to the six months ended June 30, 2007. Savings accounts and NOW accounts increased 12 basis points and 124 basis points, respectively, for the six months ended June 30, 2008 compared to the six months ended June 30, 2007. This increase in the average cost of Savings and NOW accounts is due to the introduction and promotion of new products, which, although carrying a higher rate than other products in these types of accounts, had a lower rate during the six months ended June 30, 2008 than the average cost of deposits. This resulted in a decrease in the cost of due to depositors of 30 basis points to 3.84% for the six months ended June 30, 2008 compared to 4.14% for the six months ended June 30, 2007. The cost of borrowed funds also decreased 22 basis points to 4.69% for the six months ended June 30, 2008 compared to 4.91% for the six months ended June 30, 2007. The average balance of higher-costing certificates of deposit and borrowed funds increased $58.9 million and $273.8 million, respectively, for the six months ended June 30, 2008 compared to the prior year period. In addition, the combined average balances of lower-costing savings, money market and NOW accounts increased a total of $165.9 million for the six months ended June 30, 2008 compared to the prior year period.
A provision for loan losses of $0.6 million was provided for the six months ended June 30, 2008. There was no provision provided for the six months ended June 30, 2007. The regular quarterly review of the allowance for loan losses resulted in management's conclusion that this provision is necessary to maintain the allowance for loan losses at a level that provides for losses inherent in the loan portfolio.
Non-interest income increased $0.3 million, or 5.0%, for the six months ended June 30, 2008 to $6.7 million, as compared to $6.4 million for the six months ended June 30, 2007. Increases of $0.5 million in dividends received from FHLB-NY stock and $0.3 million in income on BOLI due to the purchase of additional BOLI were partially offset by a $0.3 million decrease in gain on sale of loans and a $0.4 million decline in loan fee income. The six months ended June 30, 2008 includes income of $2.4 million, representing a partial recovery of a loss sustained in 2002 on a WorldCom, Inc. senior note. This amount was received as a result of a class action litigation settlement. The changes in fair value of financial assets and financial liabilities carried at fair value under SFAS No. 159 was a loss of $1.9 million for the six months ended June 30, 2008, a decrease of $2.1 million from the $0.2 million gain recorded for the six months ended June 30, 2007.
Non-interest expense was $27.5 million for the six months ended June 30, 2008, an increase of $1.7 million, or 6.7%, from $25.8 million for the six months ended June 30, 2007. The increase from the comparable prior year period is primarily attributed to increases of: $0.9 million in employee salary and benefits, $0.4 million in professional services, $0.3 million in data processing expense, and $0.2 million in other operating expense, each of which is primarily attributed to the growth of the Bank over the past twelve months. The efficiency ratio was 56.9% and 62.1% for the six month periods ended June 30, 2008 and 2007, respectively.
Net income for the six months ended June 30, 2008 was $13.7 million, an increase of $3.5 million or 34.3%, as compared to $10.2 million for the six months ended June 30, 2007. Diluted earnings per share was $0.68 for the six months ended June 30, 2008, an increase of $0.17, or 33.3%, from $0.51 in the six months ended June 30, 2007.
Return on average equity was 11.7% for the six months ended June 30, 2008 compared to 9.4% for the six months ended June 30, 2007. Return on average assets was 0.8% for the six months ended June 30, 2008 compared to 0.7% for the six months ended June 30, 2007.
Balance Sheet Summary
At June 30, 2008, total assets were $3,573.2 million, an increase of $218.7 million, or 6.5%, from $3,354.5 million at December 31, 2007. Total loans, net, increased $148.5 million, or 5.5%, during the six months ended June 30, 2008 to $2,850.7 million from $2,702.1 million at December 31, 2007. At June 30, 2008, loan applications in process totaled $320.6 million, compared to $281.4 million at June 30, 2007 and $201.0 million at December 31, 2007.
The following table shows loan originations and purchases for the periods indicated.
For the three For the six
months ended months ended
June 30, June 30,
------------------ ------------------
(In thousands) 2008 2007 2008 2007
---------------------------------------------------------------------
Multi-family residential $ 28,487 $ 55,941 $ 75,969 $113,599
Commercial real estate 49,978 62,032 92,911 100,706
One-to-four family -
mixed-use property 37,284 48,180 71,902 91,734
One-to-four family -
residential 25,824 10,293 93,845 17,538
Construction 8,606 14,276 18,108 25,376
Commercial business
and other loans 14,810 22,811 34,354 48,293
-------- -------- -------- --------
Total $164,989 $213,533 $387,089 $397,246
======== ======== ======== ========
Loan purchases included in the table above totaled $65.3 million and $9.1 million for the six months ended June 30, 2008 and 2007, respectively, and $12.4 million for the three months ended June 30, 2008. There were no loan purchases in the three month period ended June 30, 2007.
As the Bank continues to increase its loan portfolio, management continues to adhere to the Bank's conservative underwriting standards. As a result, the Bank has been able to minimize charge-offs of losses from impaired loans and maintain asset quality. Non-performing assets were $7.9 million at June 30, 2008 compared to $5.9 million at December 31, 2007 and $6.5 million at June 30, 2007. Included in non-performing assets at June 30, 2008 is a construction loan for $1.0 million that is 90 days or more past due but still accruing interest. The Company anticipates the construction loan, based on current facts and circumstances, will pay-in-full during the third quarter, with the Bank receiving all amounts, principal and interest, due under the terms of the loan. Total non-performing assets as a percentage of total assets was 0.22% at June 30, 2008 compared to 0.18% at December 31, 2007 and 0.21% as of June 30, 2007. The ratio of allowance for loan losses to total non-performing loans was 88% at June 30, 2008, compared to 113% at December 31, 2007 and 105% at June 30, 2007.
During the six months ended June 30, 2008, mortgage-backed securities increased $31.7 million to $394.4 million, while other securities decreased $1.9 million to $75.5 million. During the six months ended June 30, 2008, there were purchases of $67.7 million of mortgage-backed securities. Other securities primarily consists of securities issued by government agencies and mutual or bond funds that invest in government and government agency securities.
Total liabilities were $3,333.7 million at June 30, 2008, an increase of $212.8 million, or 6.8%, from December 31, 2007. During the six months ended June 30, 2008, due to depositors increased $153.0 million to $2,156.0 million, as a result of increases of $98.3 million in certificates of deposit and core deposits of $54.7 million. The increase in certificates of deposit is attributed to an increase in brokered deposits of $121.9 million, partially offset by a decrease in retail certificates of deposit of $23.6 million. Borrowed funds increased $36.0 million to partially fund loan growth. In addition, mortgagors' escrow deposits increased $5.2 million during the six months ended June 30, 2008.
Total stockholders' equity increased $5.9 million, or 2.5%, to $239.6 million at June 30, 2008 from $233.7 million at December 31, 2007. Net income of $13.7 million for the six months ended June 30, 2008 was partially offset by a net after-tax decrease of $7.0 million on the market value of securities available for sale, $5.2 million of cash dividends declared and paid during the six months ended June 30, 2008, and a $0.6 million after-tax charge as a result of the adoption of EITF Issue No. 06-4, which requires the accrual of the post-retirement cost of endorsement split-dollar life insurance arrangements with employees. The exercise of stock options increased stockholders' equity by $2.6 million, including the income tax benefit realized by the Company upon the exercise of the options. Book value per share was $11.10 at June 30, 2008, compared to $10.96 per share at December 31, 2007 and $10.54 per share at June 30, 2007.
The Company did not repurchase any shares during the quarter ended June 30, 2008 under its current stock repurchase program. At June 30, 2008, 362,050 shares remain to be repurchased under the current stock repurchase program.
Reconciliation of GAAP and Core Earnings
Although core earnings are not a measure of performance calculated in accordance with GAAP, the Company believes that its core earnings are an important indication of performance through ongoing operations. The Company believes that core earnings are useful to management and investors in evaluating its ongoing operating performance and in comparing its performance with other companies in the banking industry, particularly those that have not adopted SFAS No. 159. Core earnings should not be considered in isolation or as a substitute for GAAP earnings. During the periods presented, the Company calculated core earnings by adding back or subtracting the fair value gain or loss recorded under SFAS No.159 and the income or expense of certain non-recurring items listed below.
Three Months Ended Six Months Ended
============================= =================
June 30, June 30, March 31, June 30, June 30,
2008 2007 2008 2008 2007
============================= =================
(In thousands, except for per share data)
GAAP net income $ 6,499 $ 4,781 $ 7,151 $ 13,650 $ 10,167
Net (gain) loss
under SFAS
No. 159, net
of tax 189 354 895 1,085 (95)
Partial recovery
of WorldCom, Inc.
loss, net of tax -- -- (1,352) (1,352) --
----------------------------- -----------------
Core net income $ 6,688 $ 5,135 $ 6,694 $ 13,383 $ 10,072
============================= =================
GAAP diluted
earnings per
share $ 0.32 $ 0.24 $ 0.36 $ 0.68 $ 0.51
Net (gain) loss
under SFAS No.
159, net of tax 0.01 0.02 0.04 0.06 --
Partial recovery
of WorldCom, Inc.
loss, net of tax -- -- (0.07) (0.07) --
----------------------------- -----------------
Core diluted earnings
per share $ 0.33 $ 0.26 $ 0.33 $ 0.67 $ 0.51
============================ =================
About Flushing Financial Corporation
Flushing Financial Corporation is the parent holding company for Flushing Savings Bank, FSB, a federally chartered stock savings bank insured by the FDIC. The Bank serves consumers and businesses by offering a full complement of deposit, loan, and cash management services through its fourteen banking offices located in Queens, Brooklyn, Manhattan, and Nassau County. The Bank also operates an online banking division, iGObanking.com(r), which enables the Bank to expand outside of its current geographic footprint. In 2007, the Bank established Flushing Commercial Bank, a wholly-owned subsidiary, to provide banking services to public entities including counties, towns, villages, school districts, libraries, fire districts and the various courts throughout the metropolitan area.
Additional information on Flushing Financial Corporation may be obtained by visiting the Company's website at http://www.flushingsavings.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, 2007 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", "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.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands Except Per Share Data)
(Unaudited)
June 30, December 31,
2008 2007
-------------- --------------
ASSETS
Cash and due from banks $ 65,031 $ 36,148
Securities available for sale:
Mortgage-backed securities 394,445 362,729
Other securities 75,459 77,371
Loans:
Multi-family residential 973,087 964,455
Commercial real estate 689,520 625,843
One-to-four family -- mixed-use
property 733,400 686,921
One-to-four family -- residential 235,132 161,666
Co-operative apartments 6,516 7,070
Construction 105,580 119,745
Small Business Administration 20,143 18,922
Taxi medallion 20,443 68,250
Commercial business and other 57,486 41,796
Net unamortized premiums and
unearned loan fees 16,283 14,083
Allowance for loan losses (6,934) (6,633)
-------------- --------------
Net loans 2,850,656 2,702,118
Interest and dividends receivable 16,179 15,768
Bank premises and equipment, net 23,353 23,936
Federal Home Loan Bank of
New York stock 45,119 42,669
Bank owned life insurance 53,363 52,260
Goodwill 16,127 16,127
Core deposit intangible 2,576 2,810
Other assets 30,919 22,583
-------------- --------------
Total assets $ 3,573,227 $ 3,354,519
============== ==============
LIABILITIES
Due to depositors:
Non-interest bearing $ 73,983 $ 69,299
Interest-bearing:
Certificate of deposit accounts 1,265,713 1,167,399
Savings accounts 384,447 354,746
Money market accounts 304,147 340,694
NOW accounts 127,690 70,817
-------------- --------------
Total interest-bearing
deposits 2,081,997 1,933,656
Mortgagors' escrow deposits 27,669 22,492
Borrowed funds 1,108,551 1,072,551
Other liabilities 41,466 22,867
-------------- --------------
Total liabilities 3,333,666 3,120,865
-------------- --------------
STOCKHOLDERS' EQUITY
Preferred stock ($0.01 par value;
5,000,000 shares authorized;
none issued) -- --
Common stock ($0.01 par value;
40,000,000 shares authorized;
21,590,197 shares and 21,321,564
shares issued at June 30, 2008
and December 31, 2007, respectively;
21,585,979 shares and 21,321,564
shares outstanding at June 30, 2008
and December 31, 2007, respectively) 216 213
Additional paid-in capital 79,546 74,861
Treasury stock (4,218 and none at
June 30, 2008 and December 31, 2007,
respectively) (80) --
Unearned compensation (1,704) (2,110)
Retained earnings 169,430 161,598
Accumulated other comprehensive loss,
net of taxes (7,847) (908)
-------------- --------------
Total stockholders' equity 239,561 233,654
-------------- --------------
Total liabilities and
stockholders' equity $ 3,573,227 $ 3,354,519
============== ==============
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Data)
(Unaudited)
For the three For the six
months ended months ended
June 30, June 30,
----------------- -----------------
2008 2007 2008 2007
---------------------------------------------------------------------
Interest and dividend income
----------------------------
Interest and fees on loans $ 47,166 $ 43,367 $ 94,477 $ 84,031
Interest and dividends on
securities:
Interest 5,081 3,820 10,036 7,746
Dividends 936 104 1,800 206
Other interest income 179 80 476 179
-------- -------- -------- --------
Total interest and
dividend income 53,362 47,371 106,789 92,162
-------- -------- -------- --------
Interest expense
----------------
Deposits 18,356 18,889 37,988 36,308
Other interest expense 12,913 10,412 25,993 20,479
-------- -------- -------- --------
Total interest expense 31,269 29,301 63,981 56,787
-------- -------- -------- --------
Net interest income 22,093 18,070 42,808 35,375
Provision for loan losses 300 -- 600 --
-------- -------- -------- --------
Net interest income after
provision for loan losses 21,793 18,070 42,208 35,375
-------- -------- -------- --------
Non-interest income
-------------------
Loan fee income 698 1,080 1,396 1,792
Banking services fee income 396 381 838 768
Net gain on sale of loans
held for sale -- 137 31 239
Net gain on sale of loans 47 71 69 137
Net gain (loss) from fair
value adjustments (339) (634) (1,941) 171
Federal Home Loan Bank of
New York stock dividends 854 663 1,735 1,238
Bank owned life insurance 549 424 1,103 853
Other income 536 621 3,482 1,196
-------- -------- -------- --------
Total non-interest income 2,741 2,743 6,713 6,394
-------- -------- -------- --------
Non-interest expense
--------------------
Salaries and employee
benefits 6,827 6,234 13,281 12,381
Occupancy and equipment 1,585 1,608 3,221 3,233
Professional services 1,386 1,195 2,769 2,391
Data processing 928 867 1,973 1,711
Depreciation and amortization 597 604 1,191 1,197
Other operating expenses 3,001 2,771 5,106 4,889
-------- -------- -------- --------
Total non-interest
expense 14,324 13,279 27,541 25,802
-------- -------- -------- --------
Income before income taxes 10,210 7,534 21,380 15,967
-------- -------- -------- --------
Provision for income taxes
--------------------------
Federal 2,931 2,315 6,095 4,962
State and local 780 438 1,635 838
-------- -------- -------- --------
Total taxes 3,711 2,753 7,730 5,800
-------- -------- -------- --------
Net income $ 6,499 $ 4,781 $ 13,650 $ 10,167
======== ======== ======== ========
Basic earnings per share $ 0.33 $ 0.24 $ 0.69 $ 0.52
Diluted earnings per share $ 0.32 $ 0.24 $ 0.68 $ 0.51
Dividends per share $ 0.13 $ 0.12 $ 0.26 $ 0.24
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands Except Share Data)
(Unaudited)
At or for the At or for the
three months six months
ended June 30, ended June 30,
--------------------------------------------
2008 2007 2008 2007
----------- ---------- ---------- ----------
Per Share Data
--------------
Basic earnings per share $0.33 $0.24 $0.69 $0.52
Diluted earnings per
share $0.32 $0.24 $0.68 $0.51
Average number of shares
outstanding for:
Basic earnings per
share computation 19,952,658 19,552,896 19,877,408 19,550,845
Diluted earnings per
share computation 20,198,593 19,790,087 20,077,985 19,798,242
Book value per share
(based on 21,585,979 and
21,253,363 shares
outstanding at June 30,
2008 and 2007,
respectively) $11.10 $10.54 $11.10 $10.54
Average Balances
----------------
Total loans, net $2,825,270 $2,485,258 $2,779,031 $2,429,242
Total interest-earning
assets 3,314,705 2,810,404 3,261,979 2,759,917
Total assets 3,505,137 2,971,938 3,451,608 2,921,588
Total due to depositors 2,015,238 1,792,172 1,978,718 1,753,897
Total interest-bearing
liabilities 3,167,284 2,668,720 3,122,074 2,620,884
Stockholders' equity 235,089 217,757 234,085 216,255
Performance Ratios (1)
-------------------
Return on average assets 0.74% 0.64% 0.79% 0.70%
Return on average equity 11.06 8.78 11.66 9.40
Yield on average
interest-earning assets 6.44 6.74 6.55 6.68
Cost of average interest-
bearing liabilities 3.95 4.39 4.10 4.33
Interest rate spread
during period 2.49 2.35 2.45 2.35
Net interest margin 2.67 2.57 2.62 2.56
Non-interest expense to
average assets 1.63 1.79 1.60 1.77
Efficiency ratio 57.59 61.92 56.85 62.07
Average interest-earning
assets to average
interest-bearing
liabilities 1.05X 1.05X 1.04X 1.05X
(1) Ratios for the quarters and six months ended June 30, 2008 and
2007 are presented on an annualized basis.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
At or for At or for
the six the year
months ended ended
June 30, 2008 December 31, 2007
----------------- -----------------
Selected Financial Ratios and
Other Data
-----------------------------
Regulatory capital ratios
(for Flushing Savings Bank only):
Tangible capital (minimum
requirement = 1.5%) 7.26 % 7.27 %
Leverage and core capital
(minimum requirement = 3%) 7.26 7.27
Total risk-based capital
(minimum requirement = 8%) 11.37 11.20
Capital ratios:
Average equity to average assets 6.78 % 7.19 %
Equity to total assets 6.70 6.97
Asset quality:
Non-accrual loans $6,865 $5,140
Non-performing loans 7,865 5,893
Non-performing assets 7,865 5,893
Net charge-offs 299 424
Asset quality ratios:
Non-performing loans to
gross loans 0.28 % 0.22 %
Non-performing assets to
total assets 0.22 0.18
Allowance for loan losses to
gross loans 0.24 0.25
Allowance for loan losses to
non-performing assets 88.16 112.57
Allowance for loan losses to
non-performing loans 88.16 112.57
Full-service customer facilities 14 14
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in Thousands)
(Unaudited)
For the three months ended June 30,
------------------------------------------------------
2008 2007
-------------------------- --------------------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
-------------------------- --------------------------
Assets
Interest-
earning
assets:
Mortgage
loans,
net (1) $2,711,194 $ 45,342 6.69% $2,397,978 $ 41,667 6.95%
Other loans,
net (1) 114,076 1,824 6.40 87,280 1,700 7.79
-------------------------- --------------------------
Total loans,
net 2,825,270 47,166 6.68 2,485,258 43,367 6.98
-------------------------- --------------------------
Mortgage-
backed
securities 370,665 4,772 5.15 275,818 3,361 4.87
Other
securities 79,770 1,245 6.24 42,631 563 5.28
-------------------------- --------------------------
Total
securities 450,435 6,017 5.34 318,449 3,924 4.93
-------------------------- --------------------------
Interest-
earning
deposits and
federal
funds sold 39,000 179 1.84 6,697 80 4.78
-------------------------- --------------------------
Total
interest-
earning
assets 3,314,705 53,362 6.44 2,810,404 47,371 6.74
---------------- ----------------
Other assets 190,432 161,534
---------- ---------
Total assets $3,505,137 $2,971,938
========== ==========
Liabilities and
Equity
Interest-bearing
liabilities:
Deposits:
Savings
accounts $ 374,567 1,912 2.04 $ 299,607 1,721 2.30
NOW accounts 112,657 680 2.41 57,077 195 1.37
Money market
accounts 296,297 2,225 3.00 272,067 2,848 4.19
Certificate
of deposit
accounts 1,231,717 13,521 4.39 1,163,421 14,109 4.85
-------------------------- --------------------------
Total due
to
depositors 2,015,238 18,338 3.64 1,792,172 18,873 4.21
Mortgagors'
escrow
accounts 40,972 18 0.18 38,442 16 0.17
-------------------------- --------------------------
Total
deposits 2,056,210 18,356 3.57 1,830,614 18,889 4.13
Borrowed
funds 1,111,074 12,913 4.65 838,106 10,412 4.97
-------------------------- --------------------------
Total
interest-
bearing
liabil-
ities 3,167,284 31,269 3.95 2,668,720 29,301 4.39
---------------- ----------------
Non interest-
bearing
deposits 81,278 65,958
Other
liabilities 21,486 19,503
---------- ----------
Total
liabil-
ities 3,270,048 2,754,181
Equity 235,089 217,757
---------- ----------
Total
liabil-
ities and
equity $3,505,137 $2,971,938
========== ==========
Net interest
income/net
interest rate
spread $ 22,093 2.49% $ 18,070 2.35%
================ ================
Net interest-
earning assets/
net interest
margin $ 147,421 2.67% $ 141,684 2.57%
========== ======= ========== =======
Ratio of
interest-
earning assets
to interest-
bearing
liabilities 1.05X 1.05X
======= =======
(1) Loan interest income includes loan fee income (which includes net
amortization of deferred fees and costs, late charges, and
prepayment penalties) of approximately $0.8 million and $1.3
million for the three-month periods ended June 30, 2008 and 2007,
respectively.
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in Thousands)
(Unaudited)
For the six months ended June 30,
----------------------------------------------------------
2008 2007
---------------------------- ----------------------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------------------------- ----------------------------
Assets
Interest-
earning
assets:
Mortgage
loans,
net (1) $2,655,935 $ 90,254 6.80% $2,349,576 $ 80,931 6.89%
Other
loans,
net (1) 123,096 4,223 6.86 79,666 3,100 7.78
---------------------------- ----------------------------
Total
loans,
net 2,779,031 94,477 6.80 2,429,242 84,031 6.92
---------------------------- ----------------------------
Mortgage-
backed
securities 365,078 9,400 5.15 280,547 6,834 4.87
Other
securities 78,483 2,436 6.21 42,608 1,118 5.25
---------------------------- ----------------------------
Total
secur-
ities 443,561 11,836 5.34 323,155 7,952 4.92
---------------------------- ----------------------------
Interest-
earning
deposits
and
federal
funds
sold 39,387 476 2.42 7,520 179 4.76
---------------------------- ----------------------------
Total
interest-
earning
assets 3,261,979 106,789 6.55 2,759,917 92,162 6.68
---------------- ----------------
Other
assets 189,629 161,671
---------- ----------
Total
assets $3,451,608 $2,921,588
========== ==========
Liabilities
and Equity
Interest-
bearing
liabil-
ities:
Deposits:
Savings
acc-
ounts $ 367,561 4,086 2.22 $ 287,006 3,012 2.10
NOW
acc-
ounts 93,901 1,100 2.34 52,600 289 1.10
Money
market
accounts 306,649 5,193 3.39 262,617 5,332 4.06
Certificate
of
deposit
accounts 1,210,607 27,575 4.56 1,151,674 27,637 4.80
---------------------------- ----------------------------
Total
due to
depos-
itors 1,978,718 37,954 3.84 1,753,897 36,270 4.14
Mortgagors'
escrow
accounts 35,613 34 0.19 33,084 38 0.23
---------------------------- ----------------------------
Total
dep-
osits 2,014,331 37,988 3.77 1,786,981 36,308 4.06
Borrowed
funds 1,107,743 25,993 4.69 833,903 20,479 4.91
---------------------------- ----------------------------
Total
interest-
bearing
liabil-
ities 3,122,074 63,981 4.10 2,620,884 56,787 4.33
---------------- ----------------
Non interest-
bearing
deposits 75,004 65,632
Other
liabil-
ities 20,445 18,817
---------- ----------
Total
liabil-
ities 3,217,523 2,705,333
Equity 234,085 216,255
---------- ----------
Total
liabil-
ities
and
equity $3,451,608 $2,921,588
========== ==========
Net
interest
income /
net
interest
rate
spread $ 42,808 2.45% $ 35,375 2.35%
================ ================
Net
interest-
earning
assets /
net
interest
margin $ 139,905 2.62% $ 139,033 2.56%
========== ==== ========== ====
Ratio of
interest-
earning
assets to
interest-
bearing
liabil-
ities 1.04X 1.05X
==== ====
(1) Loan interest income includes loan fee income (which includes net
amortization of deferred fees and costs, late charges, and
prepayment penalties) of approximately $2.1 million and $2.0
million for the six-month periods ended June 30, 2008 and 2007,
respectively.