First Quarter 2011 Highlights
- Core diluted earnings per common share were $0.29, an increase
of $0.02 from the comparable prior year period, and the same as the
three months ended December 31, 2010.
- GAAP diluted earnings per common share were $0.26, the same as
the comparable prior year period, and a $0.02 decrease from the
three months ended December 31, 2010.
- Net interest income was a record $37.2 million for the first
quarter of 2011.
- The net interest margin increased 23 basis points from the
comparable prior year period to 3.62% from 3.39%, primarily due to
a reduction in the cost of funds.
- The net interest margin increased 21 basis points on a linked
quarter basis to 3.62% from 3.41%, primarily due to a reduction in
the cost of funds.
- Loan applications in process increased $22.5 million during the
first quarter to $164.7 million at March 31, 2011.
- Recorded a $5.0 million provision for loan losses in the first
quarter of 2011.
- Net charge-offs for the three months ended March 31, 2011 were
0.65% of average loans.
- Recorded OTTI charges totaling $0.9 million on a private issue
CMO in the first quarter of 2011.
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 months ended
March 31, 2011.
John R. Buran, President and Chief Executive Officer, stated:
"We are pleased to report another quarter of strong earnings and
margin expansion for the three months ended March 31, 2011. GAAP
net income was $8.0 million, the same as that reported for the
comparable prior year period. Core net income was $8.8 million, an
increase of $0.8 million, or 9.9%, from $8.0 million for the three
months ended March 31, 2010. Our strong operating performance for
the quarter was primarily driven by record net interest income of
$37.2 million, an increase of $3.7 million from the first quarter
of 2010, as the net interest margin for the three months ended
March 31, 2011 improved over the comparable prior year period by 23
basis points to 3.62%.
"The improvement in the net interest margin for the first
quarter of 2011 was generated through a reduction in our funding
costs. During the quarter we continued to focus on growing our core
deposits, which increased $128.3 million compared to the first
quarter of 2010, and reducing our borrowed funds, which decreased
$294.8 million compared to the first quarter of 2010. At the same
time we also looked to extend the maturity of deposits to protect
against future rising interest rates. We therefore increased
certificates of deposit accounts by $273.8 million to $1,577.7
million at March 31, 2011 from $1,304.0 million at March 31, 2010.
As a result of these changes to our funding mix, and a favorable
interest rate environment, we were able to reduce our cost of funds
54 basis points to 2.09% for the three months ended March 31, 2011
from 2.63% for the comparable prior year period.
"The reduction in our cost of funds was partially offset by a 29
basis point decrease in the yield of interest-earning assets to
5.56% for the three months ended March 31, 2011 from 5.85% in the
comparable prior year period. This decline in the yield on
interest-earning assets was primarily caused by a decline in rates
earned on new loans originated during the past twelve months
compared to the yield of the existing portfolio, and an increase in
non-accrual loans for which we do not accrue interest income.
"Our net interest margin for the first quarter of 2011 was
3.62%, an increase of 21 basis points from 3.41% for the fourth
quarter of 2010. The yield on interest earning assets increased
five basis points in the first quarter of 2011 from the fourth
quarter of 2010 primarily due to a reduction of $54.5 million in
the average balance of lower yielding overnight interest-earning
deposits. The cost of funds in the first quarter of 2011
decreased 17 basis points from the fourth quarter of 2010, with the
cost of interest-bearing liabilities declining to 2.09% for the
three months ended March 31, 2011 from 2.26% for the three months
ended December 31, 2010.
"We continue to see some signs of credit stabilization. Although
non-accrual loans, including non-accrual troubled debt restructured
loans, increased $10.9 million in the first quarter of 2011, total
loans delinquent over 30 days decreased $10.9 million in the first
quarter. The extended time period for foreclosures in our market,
which, in some instances, is now approaching three years, has
resulted in our non-accrual and delinquent loans remaining at
elevated levels. When we have obtained properties through
foreclosure we have been able to quickly dispose of the properties
at prices that approximate our carrying value. As a result, the
level of other real estate owned has remained at a low level.
"The increase in non-accrual loans during the first quarter of
2011 was primarily due to seven loans totaling $8.6 million that
were classified as troubled debt restructured ("TDR") due to
the interest rate on the loans being reduced or a portion of the
interest being deferred. These loans have not been current for the
past six months, and were therefore placed on non-accrual status
until they are current for six consecutive months. At March 31,
2011, each of these loans was current according to their
restructured terms. Net charge-offs increased to $5.3 million in
the first quarter of 2011 from $2.3 million in the first quarter of
2010, but remain at a manageable 65 basis points of average loans,
which continues to be below industry averages. However, net
charge-offs for the first quarter of 2011 decreased $0.4 million
from the fourth quarter of 2010. The majority of our non-performing
loans are collateralized by residential income producing properties
located in the New York City metropolitan area that continue to
show low vacancy rates, thereby retaining more of their value. The
current loan-to-value ratio for our non-performing loans
collateralized by real estate was 65.1% at March 31, 2011. We
anticipate that we will continue to see low loss content in this
portfolio that constitutes the majority of our non-performing
loans. The provision for loan losses recorded in the first quarter
of 2011 decreased $1.0 million from that recorded in the fourth
quarter of 2010.
"TDR that are on an accrual basis increased $16.1 million during
the first quarter of 2011 primarily due to two construction loans
that are current in their payments that were classified as
restructured. These loans were classified as TDR due to the
extended time period of the projects, which resulted in the loans
being extended, and a reduction that was granted in the interest
rate on these loans. These loans have been current for the past six
months, and therefore remain on accrual status. Each of these loans
is for residential properties and is currently in the selling
phase, as construction has been completed.
"The Bank continues to be well-capitalized under regulatory
requirements, with tangible and risk-based capital ratios of 9.27%
and 14.09%, respectively, at March 31, 2011."
Net income for the three months ended March 31, 2011 was $8.0
million, or $0.26 per diluted common share, the same as that
reported for the comparable prior year period.
Core earnings, which exclude the effects of net gains and losses
from fair value adjustments, other-than-temporary impairment
("OTTI") charges, net gains losses from the sale of securities, and
certain non-recurring items, was $8.8 million for the three months
ended March 31, 2011, an increase of $0.8 million, or 9.9%, from
$8.0 million for the comparable prior year period. Core
diluted earnings per common share were $0.29 for the three months
ended March 31, 2011, an increase of $0.02 per common share, or
7.4%, from $0.27 per common share in the comparable prior year
period.
For a reconciliation of core earnings and core diluted earnings
per common share to accounting principles generally accepted in the
United States ("GAAP") net income and GAAP diluted earnings per
common share, please refer to the tables in the section titled
"Reconciliation of GAAP and Core Earnings."
Earnings Summary - Three Months Ended March 31,
2011
Net income for the three months ended March 31, 2011 was $8.0
million, or $0.26 per diluted common share, the same as that
reported for the comparable prior year period.
Return on average equity was 8.2% for the three months ended
March 31, 2011 compared to 8.8% for the three months ended March
31, 2010. Return on average assets was 0.7% for the three months
ended March 31, 2011 compared to 0.8% for the three months ended
March 31, 2010.
For the three months ended March 31, 2011, net interest income
was $37.2 million, an increase of $3.7 million, or 10.9%, from
$33.5 million for the three months ended March 31, 2010. The
increase in net interest income is attributed to an increase in the
average balance of interest-earning assets of $154.0 million, to
$4,106.0 million for the three months ended March 31, 2011,
combined with an increase in the net interest spread of 25 basis
points to 3.47% for the three months ended March 31, 2011 from
3.22% for the three months ended March 31, 2010. The yield on
interest-earning assets decreased 29 basis points to 5.56% for the
three months ended March 31, 2011 from 5.85% for the three months
ended March 31, 2010. However, this was more than offset by a
decline in the cost of funds of 54 basis points to 2.09% for the
three months ended March 31, 2011 from 2.63% for the comparable
prior year period. The net interest margin improved 23 basis points
to 3.62% for the three months ended March 31, 2011 from 3.39% for
the three months ended March 31, 2010. Excluding prepayment penalty
income, the net interest margin would have increased 22 basis
points to 3.57% for the three months ended March 31, 2011 from
3.35% for the three months ended March 31, 2010.
The 29 basis point decline in the yield of interest-earning
assets was primarily due to a 20 basis point reduction in the yield
of the loan portfolio to 6.00% for the three months ended March 31,
2011 from 6.20% for the three months ended March 31, 2010, combined
with a 39 basis point decline in the yield on total securities to
4.16% for the three months ended March 31, 2011 from 4.55% for the
comparable prior year period. In addition, the yield of
interest-earning assets was negatively impacted by a $110.6 million
increase in the combined average balances of the lower yielding
securities portfolio and interest-earning deposits for the three
months ended March 31, 2011, both of which have a lower yield than
the yield of total interest-earning assets. The 20 basis point
decrease in the loan portfolio was primarily due to the decline in
the rates earned on new loan originations combined with an increase
in non-accrual loans for which we do not accrue interest income.
The 39 basis point decrease in the securities portfolio was
primarily due to new securities being purchased at lower yields
than the existing portfolio. The yield on the mortgage loan
portfolio declined 17 basis points to 6.10% for the three months
ended March 31, 2011 from 6.27% for the three months ended March
31, 2010. The yield on the mortgage loan portfolio, excluding
prepayment penalty income, declined 18 basis points to 6.03% for
the three months ended March 31, 2011 from 6.21% for the three
months ended March 31, 2010. The decline in the yield of
interest-earning assets was partially offset by an increase of
$43.3 million in the average balance of the loan portfolio to
$3,248.7 million for the three months ended March 31, 2011.
The 54 basis point decrease in the cost of interest-bearing
liabilities is primarily attributable to the Bank reducing the
rates it pays on its deposit products and the Bank's focus on
increasing lower costing core deposits and reducing borrowed funds.
The cost of certificates of deposit, money market accounts, savings
accounts and NOW accounts decreased 59 basis points, 47 basis
points, 26 basis points and 41 basis points, respectively, for the
three months ended March 31, 2011 compared to the comparable prior
year period. This resulted in a decrease in the cost of due to
depositors of 43 basis points to 1.60% for the three months ended
March 31, 2011 from 2.03% for the three months ended March 31,
2010. The cost of borrowed funds increased nine basis points to
4.41% for the three months ended March 31, 2011 from 4.32% for the
three months ended March 31, 2010. The combined average balances of
lower-costing core deposits increased a total of $172.1 million for
the three months ended March 31, 2011 compared to the comparable
prior year period, while the combined average balances of
higher-costing certificates of deposits and borrowed funds
decreased $64.5 million for the three months ended March 31, 2011
from the comparable prior year period.
The net interest margin for the three months ended March 31,
2011 increased 21 basis points to 3.62% from 3.41% for the three
months ended December 31, 2010. The yield on interest-earning
assets increased five basis points during the quarter while the
cost of interest-bearing liabilities decreased 17 basis points.
Excluding prepayment penalty income, the net interest margin would
have been 3.57% for the three months ended March 31, 2011, an
increase of 20 basis points from 3.37% for the three months ended
December 31, 2010. The increase in the yield on interest-earning
assets was primarily due to the average balance of lower yielding
interest-earning deposits decreasing $54.5 million for the three
months ended March 31, 2011 from that for the three months ended
December 31, 2010. These assets had a lower yield at 0.19% than the
yield of total interest-earning assets.
A provision for loan losses of $5.0 million was recorded for the
three months ended March 31, 2011, which was the same as that
recorded in the three months ended March 31, 2010, and a decrease
of $1.0 million from that recorded for the three months ended
December 31, 2010. During the three months ended March 31, 2011,
non-performing loans increased $4.1 million to $116.2 million from
$112.1 million at December 31, 2010. Net charge-offs for the three
months ended March 31, 2011 totaled $5.3 million. Non-performing
loans primarily consists of mortgage loans collateralized by
residential income producing properties located in the New York
City metropolitan market that continue to show low vacancy rates,
thereby retaining more of their value. The current loan-to-value
ratio for our non-performing loans collateralized by real estate
was 65.1% at March 31, 2011. We anticipate that we will continue to
see low loss content in this segment of the loan portfolio that
constitutes the majority of our non-performing loans. The Bank
continues to maintain conservative underwriting standards. However,
given the increase in non-performing loans, the current economic
uncertainties, and the charge-offs recorded in the first quarter of
2011, management, as a result of the regular quarterly analysis of
the allowance for loans losses, deemed it necessary to record a
$5.0 million provision for possible loan losses in the first
quarter of 2011.
Non-interest income for the three months ended March 31, 2011
was $0.9 million, a decrease of $1.7 million from $2.6 million for
the three months ended March 31, 2010. The decrease in
non-interest income was primarily due to a $0.9 million OTTI charge
on a private issue CMO recorded during the three months ended March
31, 2011 compared to no OTTI charges in the three months ended
March 31, 2010, and a $0.7 million net loss recorded for changes in
assets and liabilities carried at fair value in the three months
ended March 31, 2011 compared to a $0.1 million net loss recorded
in the three months ended March 31, 2010.
Non-interest expense was $20.0 million for the three months
ended March 31, 2011, an increase of $2.1 million, or 11.6%, from
$17.9 million for the three months ended March 31, 2010. The
increase was primarily due to the growth of the Bank over the past
year, which included the opening of a new branch in January 2011,
an increase in stock based compensation expense, and an increase in
foreclosure and other real estate owned expense. Salaries and
benefits increased $1.2 million due to a new branch, employee
salary increases as of January 1, and increases in stock based
compensation, payroll taxes, and employee medical and retirement
costs. Other expense increased $0.7 million primarily due to an
increase in foreclosure and other real estate owned expense. The
efficiency ratio was 50.4% for the three months ended March 31,
2011 compared to 49.8% for the three months ended March 31,
2010.
Balance Sheet Summary – At March 31, 2011
Total assets at March 31, 2011 were $4,316.9 million, a decrease
of $7.8 million, or 0.2%, from $4,324.7 million at December 31,
2010. Total loans, net decreased $2.2 million, or 0.1%, during the
three months ended March 31, 2011 to $3,246.5 million from $3,248.6
million at December 31, 2010. Loan originations and purchases were
$99.1 million for the three months ended March 31, 2011, an
increase of $4.1 million from $95.0 million for the three months
ended March 31, 2010. Loan demand has remained at reduced levels
due to the current economic environment. At March 31, 2011, loan
applications in process totaled $164.7 million, compared to $142.2
million at December 31, 2010 and $151.8 million at March 31,
2010.
The following table shows loan originations and purchases for
the periods indicated. The table includes loan purchases of $12.6
million and $1.8 million for the three months ended March 31, 2011
and 2010, respectively.
|
For the three months
ended March 31, |
(In thousands) |
2011 |
2010 |
Multi-family residential |
$ 46,019 |
$ 38,405 |
Commercial real estate |
1,419 |
4,600 |
One-to-four family – mixed-use
property |
4,819 |
12,712 |
One-to-four family – residential |
3,353 |
6,675 |
Co-operative apartments |
-- |
216 |
Construction |
1,006 |
832 |
Small Business Administration |
2,329 |
289 |
Taxi Medallion |
23,824 |
16,454 |
Commercial business and other |
16,291 |
14,801 |
Total |
$ 99,060 |
$ 94,984 |
The Bank continues to maintain conservative underwriting
standards that include, among other things, a loan to value ratio
of 75% or less and a debt coverage ratio of at least 125%. However,
non-accrual loans and charge-offs for impaired loans have
increased, primarily due to the current economic environment. In
response, the Bank has increased staffing to handle delinquent
loans by hiring people experienced in loan workouts. The Bank
reviews its delinquencies on a loan by loan basis and continually
explores ways to help borrowers meet their obligations and return
them back to current status. The Bank takes a proactive approach to
managing delinquent loans, including conducting site examinations
and encouraging borrowers to meet with a Bank representative. The
Bank has been developing short-term payment plans that enable
certain borrowers to bring their loans current. In addition, the
Bank has restructured certain problem loans by either: reducing the
interest rate until the next reset date, extending the amortization
period thereby lowering the monthly payments, deferring a portion
of the interest payment, or changing the loan to interest only
payments for a limited time period. At times, certain problem loans
have been restructured by combining more than one of these options.
The Bank believes that restructuring these loans in this manner
will allow certain borrowers to become and remain current on their
loans. These restructured loans are classified as TDR. Loans which
have been current for six consecutive months at the time they are
restructured as TDR remain on accrual status. Loans which were
delinquent at the time they are restructured as a TDR are placed on
non-accrual status until they have made timely payments for six
consecutive months. Loans that are restructured as TDR but are not
performing in accordance with the restructured terms are excluded
from the TDR table below, as they are placed on non-accrual status
and reported as non-performing loans.
The following table shows loans classified as TDR that are
performing according to their restructured terms at the periods
indicated:
(In thousands) |
March 31, 2011 |
December 31, 2010 |
Accrual Status: |
|
|
Multi-family residential |
$ 1,077 |
$ 11,242 |
Commercial real estate |
2,439 |
2,448 |
One-to-four family - mixed-use property |
268 |
206 |
Construction |
24,216 |
-- |
Commercial business and other |
2,000 |
-- |
Total |
30,000 |
13,896 |
|
|
|
Non-accrual status: |
|
|
Multi-family residential |
8,646 |
-- |
One-to-four family - mixed-use property |
381 |
-- |
One-to-four family - residential |
572 |
-- |
Total |
9,599 |
-- |
|
|
|
Total performing troubled debt
restructured |
$ 39,599 |
$ 13,896 |
Interest income on loans is recognized on the accrual basis. The
accrual of income on loans is discontinued when certain factors,
such as contractual delinquency of 90 days or more, indicate
reasonable doubt as to the timely collectability of such income.
Additionally, uncollected interest previously recognized on
non-accrual loans is reversed from interest income at the time the
loan is placed on non-accrual status. Loans in default 90 days or
more, as to their maturity date but not their payments, continue to
accrue interest as long as the borrower continues to remit monthly
payments.
The following table shows non-performing assets at the periods
indicated:
(In thousands) |
March 31, 2011 |
December 31, 2010 |
Loans 90 days or more past due and
still accruing: |
|
|
Multi-family residential |
$ -- |
$ 103 |
Commercial real estate |
955 |
3,328 |
Construction |
5,245 |
-- |
Commercial business and other |
6 |
6 |
Total |
6,206 |
3,437 |
|
|
|
Non-accrual loans: |
|
|
Multi-family residential |
34,979 |
35,633 |
Commercial real estate |
22,152 |
22,806 |
One-to-four family - mixed-use property |
29,211 |
30,478 |
One-to-four family - residential |
9,455 |
10,695 |
Construction |
5,165 |
4,465 |
Small business administration |
2,052 |
1,159 |
Commercial business and other |
6,991 |
3,419 |
Total |
110,005 |
108,655 |
|
|
|
Total non-performing
loans |
116,211 |
112,092 |
|
|
|
Other non-performing
assets: |
|
|
Real estate acquired through foreclosure |
2,182 |
1,588 |
Investment securities |
4,348 |
5,134 |
Total |
6,530 |
6,722 |
|
|
|
Total non-performing
assets |
$ 122,741 |
$ 118,814 |
Loans classified as TDR which are not performing in accordance
with their restructured terms are included in non-accrual loans,
and totaled $5.5 million and $2.3 million at March 31, 2011 and
December 31, 2010, respectively.
The Bank's non-performing assets totaled $122.7 million at March
31, 2011, an increase of $3.9 million from $118.8 million at
December 31, 2010. Total non-performing assets as a percentage of
total assets were 2.84% at March 31, 2011 as compared to 2.75% at
December 31, 2010. The ratio of allowance for loan losses to total
non-performing loans was 24% at March 31, 2011 as compared to 25%
at December 31, 2010.
Non-performing investment securities at March 31, 2011, include
two pooled trust preferred securities totaling $4.3 million for
which we currently are not receiving payments.
Performing loans delinquent 60 to 89 days were $21.9 million at
March 31, 2011, an increase of $2.1 million from $19.8 million at
December 31, 2010. Performing loans delinquent 30 to 59
days were $65.2 million at March 31, 2011, a decrease of $8.3
million from $73.5 million at December 31, 2010.
The Bank recorded net charge-offs for impaired loans of $5.3
million and $2.3 million during the three months ended March 31,
2011 and 2010, respectively. The following table shows net loan
charge-offs (recoveries) for the periods indicated:
|
Three Months Ended |
(In thousands) |
March 31, 2011 |
March 31, 2010 |
December 31, 2010 |
Multi-family residential |
$ 917 |
$ 1,092 |
$ 1,731 |
Commercial real estate |
1,950 |
140 |
1,496 |
One-to-four family – mixed-use
property |
173 |
360 |
882 |
One-to-four family – residential |
1,474 |
69 |
121 |
Construction |
-- |
862 |
1,017 |
Small Business Administration |
323 |
290 |
407 |
Commercial business and other |
432 |
(521) |
49 |
Total net loan charge-offs |
$ 5,269 |
$ 2,292 |
$ 5,703 |
The Bank considers a loan impaired when, based upon current
information, we believe it is probable that we will be unable to
collect all amounts due, both principal and interest, according to
the original contractual terms of the loan. All non-accrual
loans are considered impaired. Impaired loans are measured
based on the present value of the expected future cash flows
discounted at the loan's effective interest rate or at the loan's
observable market price or the fair value of the collateral if the
loan is collateral dependent. The property value of impaired
mortgage loans are internally reviewed on a quarterly basis using
multiple valuation approaches in evaluating the underlying
collateral. These include obtaining a third party appraisal, an
income approach or a sales approach. When obtained, third party
appraisals are given the most weight. The income approach is used
for income producing properties, and uses current revenues less
operating expenses to determine the net cash flow of the property.
Once the net cash flow is determined, the value of the property is
calculated using an appropriate capitalization rate for the
property. The sales approach uses comparable sales prices in the
market. In the absence of a third party appraisal, greater reliance
is placed on the income approach to value the collateral. The loan
balance of impaired mortgage loans is then compared to the
property's updated fair value. The balance which exceeds fair value
is charged-off against the allowance for loan losses.
During the three months ended March 31, 2011, mortgage-backed
securities decreased $23.6 million, or 3.1%, to $730.5 million from
$754.1 million at December 31, 2010. The decrease in
mortgage-backed securities during the three months ended March 31,
2011 was primarily due to principal repayments of $38.0 million
combined with a reduction in the fair value of $5.6 million,
partially offset by purchases of $21.5 million. During the three
months ended March 31, 2011, other securities increased $12.1
million, or 24.2%, to $62.2 million from $50.1 million at December
31, 2010. Other securities primarily consists of securities issued
by government agencies and mutual or bond funds that invest in
government and government agency securities. During the three
months ended March 31, 2011, there were $13.1 million in purchases
partially offset by a reduction in the fair value of $0.8
million.
Total liabilities were $3,922.9 million at March 31, 2011, a
decrease of $11.8 million, or 0.3%, from $3,934.7 million December
31, 2010. During the three months ended March 31, 2011, due to
depositors increased $28.3 million, or 0.9%, to $3,191.6 million,
as a result of an increase of $57.2 million in certificates of
deposit, partially offset by a decrease of $28.8 million in core
deposits. Borrowed funds decreased $47.8 million during the three
months ended March 31, 2011 as the increase in deposits allowed us
to reduce our borrowed funds.
Total stockholders' equity increased $4.0 million, or 1.0%, to
$394.1 million at March 31, 2011 from $390.0 million at December
31, 2010. The increase was primarily due to net income of $8.0
million for the three months ended March 31, 2011, the net issuance
of 94,793 common shares during the quarter upon vesting of
restricted stock awards and the exercise of stock options, and the
annual funding of certain employee retirement plans through the
release of common shares from the Employee Benefit Trust. These
increases were partially offset by the declaration and payment of
dividends on the Company's common stock of $4.0 million and a
decrease in other comprehensive income of $2.9 million. Book
value per common share was $12.57 at March 31, 2011 compared to
$12.48 at December 31, 2010. Tangible book value per common share
was $12.05 at March 31, 2011 compared to $11.95 at December 31,
2010.
The Company did not repurchase any shares during the three
months ended March 31, 2011 under its current stock repurchase
program. At March 31, 2011, 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 do not
carry financial assets and financial liabilities at fair value.
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, net
of tax, the net gain or loss recorded on financial assets and
financial liabilities carried at fair value, OTTI charges, net
gains/losses on the sale of securities, and the income or expense
of certain non-recurring items listed below.
|
Three Months Ended |
|
March 31, 2011 |
March 31, 2010 |
December 31, 2010 |
|
(In thousands, except per share
data) |
|
|
|
|
GAAP income before income taxes |
$ 13,011 |
$ 13,146 |
$ 13,928 |
|
|
|
|
Net (gain) loss from fair value
adjustments |
655 |
103 |
(201) |
Other-than-temporary impairment charges |
926 |
-- |
507 |
Net loss on sale of securities |
-- |
-- |
72 |
Bank Owned Life Insurance exchange fee |
-- |
-- |
87 |
|
|
|
|
Core income before taxes |
14,592 |
13,249 |
14,393 |
|
|
|
|
Provision for income taxes for core
income |
5,755 |
5,207 |
5,540 |
|
|
|
|
Core net income |
$ 8,837 |
$ 8,042 |
$ 8,853 |
|
|
|
|
GAAP diluted earnings per common share |
$ 0.26 |
$ 0.26 |
$ 0.28 |
|
|
|
|
Net (gain) loss from fair value
adjustments |
0.01 |
-- |
-- |
Other-than-temporary impairment charges |
0.02 |
-- |
0.01 |
Net (gain) loss on sale of securities |
-- |
-- |
-- |
Bank Owned Life Insurance exchange fee |
-- |
-- |
-- |
|
|
|
|
Core diluted earnings per common
share* |
$ 0.29 |
$ 0.27 |
$ 0.29 |
|
|
|
|
* Core diluted earnings per
common share may not foot due to rounding. |
Reconciliation of GAAP and Core Earnings before
Provision for Loan Losses and Income Taxes
Although core earnings before the provision for loan losses and
income taxes are not a measure of performance calculated in
accordance with GAAP, the Company believes this measure of earnings
is an important indication of earnings through ongoing operations
that are available to cover possible loan losses and OTTI charges.
The Company believes this earnings measure is useful to management
and investors in evaluating its ongoing operating performance.
During the periods presented the Company calculated this earnings
measure by adjusting GAAP income before income taxes by adding back
the provision for loan losses and adding back or subtracting the
net gain or loss recorded on financial assets and financial
liabilities carried at fair value, OTTI charges, net gains/losses
on the sale of securities, and the income or expense of certain
non-recurring items listed below.
|
Three Months Ended |
|
March 31, 2011 |
March 31, 2010 |
December 31, 2010 |
|
(In thousands) |
|
|
|
|
GAAP income before income taxes |
$ 13,011 |
$ 13,146 |
$ 13,928 |
|
|
|
|
Provision for loan losses |
5,000 |
5,000 |
6,000 |
Net (gain) loss from fair value
adjustments |
655 |
103 |
(201) |
Other-than-temporary impairment charges |
926 |
-- |
507 |
Net (gain) loss on sale of securities |
-- |
-- |
72 |
Bank Owned Life Insurance exchange fee |
-- |
-- |
87 |
|
|
|
|
Core net income before the provision for loan
losses and income taxes |
$ 19,592 |
$ 18,249 |
$ 20,393 |
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. Flushing Bank is a trade name of Flushing
Savings Bank, FSB. The Bank serves consumers and businesses by
offering a full complement of deposit, loan, and cash management
services through its sixteen banking offices located in Queens,
Brooklyn, Manhattan, and Nassau County. The Bank also operates an
online banking division, iGObanking.com®, 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.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, 2010 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.
- Statistical Tables
Follow -
FLUSHING FINANCIAL
CORPORATION and SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION |
(Dollars in thousands, except
per share data) |
(Unaudited) |
|
|
|
|
March 31, 2011 |
December 31, 2010 |
ASSETS |
|
|
Cash and due from banks |
$ 50,689 |
$ 47,789 |
Securities available for sale: |
|
|
Mortgage-backed securities |
730,505 |
754,077 |
Other securities |
62,235 |
50,112 |
Loans: |
|
|
Multi-family residential |
1,281,011 |
1,252,176 |
Commercial real estate |
645,738 |
662,794 |
One-to-four family ― mixed-use
property |
721,242 |
728,810 |
One-to-four family ― residential |
229,831 |
241,376 |
Co-operative apartments |
6,151 |
6,215 |
Construction |
69,192 |
75,519 |
Small Business Administration |
18,902 |
17,511 |
Taxi medallion |
88,459 |
88,264 |
Commercial business and other |
197,307 |
187,161 |
Net unamortized premiums and unearned
loan fees |
16,053 |
16,503 |
Allowance for loan losses |
(27,430) |
(27,699) |
Net loans |
3,246,456 |
3,248,630 |
Interest and dividends receivable |
19,302 |
19,475 |
Bank premises and equipment, net |
23,029 |
23,041 |
Federal Home Loan Bank of New York stock |
29,923 |
31,606 |
Bank owned life insurance |
76,796 |
76,129 |
Goodwill |
16,127 |
16,127 |
Core deposit intangible |
1,288 |
1,405 |
Other assets |
60,595 |
56,354 |
Total assets |
$ 4,316,945 |
$ 4,324,745 |
|
|
|
LIABILITIES |
|
|
Due to depositors: |
|
|
Non-interest bearing |
$ 104,572 |
$ 96,198 |
Interest-bearing: |
|
|
Certificate of deposit accounts |
1,577,728 |
1,520,572 |
Savings accounts |
374,144 |
388,512 |
Money market accounts |
322,919 |
371,998 |
NOW accounts |
812,240 |
786,015 |
Total interest-bearing deposits |
3,087,031 |
3,067,097 |
Mortgagors' escrow deposits |
39,827 |
27,315 |
Borrowed funds |
660,845 |
708,683 |
Other liabilities |
30,613 |
35,407 |
Total liabilities |
3,922,888 |
3,934,700 |
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
Preferred stock ($0.01 par value; 5,000,000
shares authorized; none issued) |
-- |
-- |
Common stock ($0.01 par value; 100,000,000
shares authorized; 31,350,727 shares and 31,255,934 shares issued
and outstanding at March 31, 2011 and December 31, 2010,
respectively) |
314 |
313 |
Additional paid-in capital |
192,334 |
189,348 |
Treasury stock (none at March 31, 2011 and
December 31, 2010) |
-- |
-- |
Retained earnings |
208,054 |
204,128 |
Accumulated other comprehensive loss, net of
taxes |
(6,645) |
(3,744) |
Total stockholders' equity |
394,057 |
390,045 |
|
|
|
Total liabilities and stockholders'
equity |
$ 4,316,945 |
$ 4,324,745 |
|
|
|
|
|
FLUSHING FINANCIAL
CORPORATION and SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF INCOME |
(Dollars in thousands, except
per share data) |
(Unaudited) |
|
|
|
|
For the three months
ended March 31, |
|
2011 |
2010 |
|
|
Interest and dividend
income |
|
|
Interest and fees on loans |
$ 48,690 |
$ 49,684 |
Interest and dividends on securities: |
|
|
Interest |
8,107 |
7,911 |
Dividends |
202 |
200 |
Other interest income |
27 |
13 |
Total interest and dividend income |
57,026 |
57,808 |
|
|
|
Interest expense |
|
|
Deposits |
12,334 |
13,517 |
Other interest expense |
7,537 |
10,786 |
Total interest expense |
19,871 |
24,303 |
|
|
|
Net interest income |
37,155 |
33,505 |
Provision for loan losses |
5,000 |
5,000 |
Net interest income after provision
for loan losses |
32,155 |
28,505 |
|
|
|
Non-interest income
(loss) |
|
|
Other-than-temporary impairment ("OTTI")
charge |
(3,616) |
-- |
Less: Non-credit portion of OTTI charge
recorded in Other Comprehensive Income, before taxes |
2,690 |
-- |
Net OTTI charge recognized in earnings |
(926) |
-- |
Loan fee income |
434 |
367 |
Banking services fee income |
461 |
482 |
Net gain on sale of loans |
-- |
5 |
Net loss from fair value adjustments |
(655) |
(103) |
Federal Home Loan Bank of New York stock
dividends |
500 |
611 |
Bank owned life insurance |
667 |
645 |
Other income |
390 |
570 |
Total non-interest income (loss) |
871 |
2,577 |
|
|
|
Non-interest
expense |
|
|
Salaries and employee benefits |
10,027 |
8,796 |
Occupancy and equipment |
1,867 |
1,749 |
Professional services |
1,599 |
1,764 |
FDIC deposit insurance |
1,428 |
1,274 |
Data processing |
1,005 |
1,078 |
Depreciation and amortization |
766 |
679 |
Other operating expenses |
3,323 |
2,596 |
Total non-interest expense |
20,015 |
17,936 |
|
|
|
Income before income
taxes |
13,011 |
13,146 |
|
|
|
Provision for income
taxes |
|
|
Federal |
3,912 |
3,949 |
State and local |
1,146 |
1,212 |
Total taxes |
5,058 |
5,161 |
|
|
|
Net income |
$ 7,953 |
$ 7,985 |
|
|
|
|
|
|
Basic earnings per common share |
$ 0.26 |
$ 0.26 |
Diluted earnings per common share |
$ 0.26 |
$ 0.26 |
Dividends per common share |
$ 0.13 |
$ 0.13 |
|
|
FLUSHING FINANCIAL
CORPORATION and SUBSIDIARIES |
SELECTED CONSOLIDATED
FINANCIAL DATA |
(Dollars in thousands, except
share data) |
(Unaudited) |
|
|
|
|
At or for the three
months ended March 31, |
|
2011 |
2010 |
Per Share Data |
|
|
Basic earnings per share |
$ 0.26 |
$ 0.26 |
Diluted earnings per share |
$ 0.26 |
$ 0.26 |
Average number of shares outstanding
for: |
|
|
Basic earnings per common share
computation |
30,620,483 |
30,257,069 |
Diluted earnings per common share
computation |
30,686,066 |
30,286,511 |
Book value per common share (1) |
$12.57 |
$11.84 |
Tangible book value per common share (2) |
$12.05 |
$11.31 |
|
|
|
Average Balances |
|
|
Total loans, net |
$ 3,248,664 |
$ 3,205,347 |
Total interest-earning assets |
4,106,043 |
3,952,086 |
Total assets |
4,320,974 |
4,170,870 |
Total due to depositors |
3,085,868 |
2,663,112 |
Total interest-bearing liabilities |
3,805,864 |
3,697,523 |
Stockholders' equity |
389,453 |
362,515 |
Common stockholders' equity |
389,453 |
362,515 |
Performance Ratios
(3) |
|
|
Return on average assets |
0.74 % |
0.77 % |
Return on average equity |
8.17 |
8.81 |
Yield on average interest-earning assets |
5.56 |
5.85 |
Cost of average interest-bearing
liabilities |
2.09 |
2.63 |
Interest rate spread during period |
3.47 |
3.22 |
Net interest margin |
3.62 |
3.39 |
Non-interest expense to average assets |
1.85 |
1.72 |
Efficiency ratio (4) |
50.45 |
49.78 |
Average interest-earning assets to average
interest-bearing liabilities |
1.08 X |
1.07 X |
|
|
|
|
(1) Calculated by dividing common
stockholders' equity of $394.1 million and $368.9 million at March
31, 2011 and 2010, respectively, by 31,350,727 and 31,152,004
shares outstanding at March 31, 2011 and 2010, respectively. Common
stockholders' equity is total stockholders' equity less the
liquidation preference value of any preferred shares
outstanding. |
(2) Calculated by dividing
tangible common stockholders' equity of $377.6 million and $352.2
million at March 31, 2011 and 2010, respectively, by 31,350,727 and
31,152,004 shares outstanding at March 31, 2011 and 2010,
respectively. Tangible common stockholders' equity is total
stockholders' equity less the liquidation preference value of any
preferred shares outstanding and intangible assets (goodwill and
core deposit intangible, net of deferred taxes). |
(3) Ratios for the three months
ended March 31, 2011 and 2010 are presented on an annualized
basis. |
(4) Calculated by dividing
non-interest expense (excluding OREO expense) by the total of net
interest income and non-interest income (excluding net gain/loss
from fair value adjustments, OTTI charges, net gains on the sale of
securities and certain non-recurring items). |
|
|
FLUSHING FINANCIAL
CORPORATION and SUBSIDIARIES |
SELECTED CONSOLIDATED
FINANCIAL DATA |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
At or for the three months ended
March 31, 2011 |
At or for the year ended December 31,
2010 |
|
|
|
Selected Financial Ratios and
Other Data |
|
|
|
|
|
Regulatory capital ratios (for Flushing
Savings Bank only): |
|
|
Tangible capital (minimum requirement =
1.5%) |
9.27 % |
9.18 % |
Leverage and core capital (minimum
requirement = 4%) |
9.27 |
9.18 |
Total risk-based capital (minimum
requirement = 8%) |
14.09 |
13.98 |
|
|
|
Capital ratios: |
|
|
Average equity to average assets |
9.01 % |
8.89 % |
Equity to total assets |
9.13 |
9.02 |
Tangible common equity to tangible
assets |
8.78 |
8.67 |
|
|
|
Asset quality: |
|
|
Non-performing loans |
$ 116,211 |
$ 112,092 |
Non-performing assets |
122,741 |
118,814 |
Net charge-offs |
5,269 |
13,625 |
|
|
|
Asset quality ratios: |
|
|
Non-performing loans to gross loans |
3.57 % |
3.44 % |
Non-performing assets to total
assets |
2.84 |
2.75 |
Allowance for loan losses to gross
loans |
0.84 |
0.85 |
Allowance for loan losses to
non-performing assets |
22.35 |
23.31 |
Allowance for loan losses to
non-performing loans |
23.60 |
24.71 |
|
|
|
Full-service customer facilities |
16 |
15 |
|
|
FLUSHING FINANCIAL
CORPORATION and SUBSIDIARIES |
NET INTEREST
MARGIN |
|
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
For the three months
ended March 31, |
|
2011 |
2010 |
|
Average Balance |
Interest |
Yield/ Cost |
Average Balance |
Interest |
Yield/ Cost |
Assets |
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
Mortgage loans, net (1) |
$ 2,947,028 |
44,934 |
6.10 % |
2,943,563 |
$ 46,107 |
6.27 % |
Other loans, net (1) |
301,636 |
3,756 |
4.98 |
261,784 |
3,577 |
5.47 |
Total loans, net |
3,248,664 |
48,690 |
6.00 |
3,205,347 |
49,684 |
6.20 |
Mortgage-backed securities |
743,637 |
7,854 |
4.22 |
653,029 |
7,588 |
4.65 |
Other securities |
55,807 |
455 |
3.26 |
59,915 |
523 |
3.49 |
Total securities |
799,444 |
8,309 |
4.16 |
712,944 |
8,111 |
4.55 |
Interest-earning deposits and federal
funds sold |
57,935 |
27 |
0.19 |
33,795 |
13 |
0.15 |
Total interest-earning assets |
4,106,043 |
57,026 |
5.56 |
3,952,086 |
57,808 |
5.85 |
Other assets |
214,931 |
|
|
218,784 |
|
|
Total assets |
$ 4,320,974 |
|
|
$ 4,170,870 |
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Savings accounts |
$ 376,746 |
575 |
0.61 |
423,013 |
920 |
0.87 |
NOW accounts |
831,028 |
1,774 |
0.85 |
572,227 |
1,804 |
1.26 |
Money market accounts |
363,614 |
459 |
0.50 |
404,023 |
975 |
0.97 |
Certificate of deposit accounts |
1,514,480 |
9,514 |
2.51 |
1,263,849 |
9,804 |
3.10 |
Total due to depositors |
3,085,868 |
12,322 |
1.60 |
2,663,112 |
13,503 |
2.03 |
Mortgagors' escrow accounts |
35,964 |
12 |
0.13 |
35,216 |
14 |
0.16 |
Total deposits |
3,121,832 |
12,334 |
1.58 |
2,698,328 |
13,517 |
2.00 |
Borrowed funds |
684,032 |
7,537 |
4.41 |
999,195 |
10,786 |
4.32 |
Total interest-bearing liabilities |
3,805,864 |
19,871 |
2.09 |
3,697,523 |
24,303 |
2.63 |
Non interest-bearing deposits |
99,112 |
|
|
84,206 |
|
|
Other liabilities |
26,545 |
|
|
26,632 |
|
|
Total liabilities |
3,931,521 |
|
|
3,808,361 |
|
|
Equity |
389,453 |
|
|
362,515 |
|
|
Total liabilities and equity |
$ 4,320,974 |
|
|
$ 4,170,876 |
|
|
|
|
|
|
|
|
|
Net interest income / net interest rate
spread |
|
$ 37,155 |
3.47 % |
|
$ 33,505 |
3.22 % |
|
|
|
|
|
|
|
Net interest-earning assets / net interest
margin |
$ 300,179 |
|
3.62 % |
$ 254,563 |
|
3.39 % |
|
|
|
|
|
|
|
Ratio of interest-earning assets to
interest-bearing liabilities |
|
|
1.08 X |
|
|
1.07 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
$0.3 million for each of the three-month periods ended March 31,
2011 and 2010. |
CONTACT: David W. Fry
Executive Vice President, Treasurer
and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400
Flushing Financial (NASDAQ:FFIC)
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