Flushing Financial Corporation Reports 3Q20 GAAP Earnings of $0.50 and Record Core Earnings Up 56% Driven by Record Net Interest Income

THIRD QUARTER 2020 HIGHLIGHTS ¹

• GAAP diluted EPS of $0.50, compared to $0.63 in 2Q20 and $0.37 in 3Q19

• Record Core diluted EPS of $0.56 compared to $0.36 in 2Q20 and $0.48 in 3Q19

• Net interest margin of 3.00%, up 13bps QoQ and 63bps YoY

• Core net interest margin of 2.89%, up 4bps QoQ and 56bps YoY

• Record GAAP net interest income of $49.9 million, up 2.5% QoQ and 28.2% YoY

• Record Core net interest income of $49.7 million, up 1.2% QoQ and 23.6% YoY

• GAAP and core ROAE were 9.9% and 11.2%, respectively, compared with 13.1% and 7.4%, respectively in 2Q20

• GAAP and core ROAA were 0.8% and 0.9%, respectively, compared with 1.0% and 0.6%, respectively in 2Q20

• Loan pipeline remains strong at $394.1 million

• Provision for credit losses of $2.5 million, $0.07 after-tax per diluted common share, compared to $9.6 million in 2Q20 and $0.7 million in 3Q19

• Net charge-offs were $0.8 million, compared to $1.0 million in 2Q20

UNIONDALE, N.Y., Oct. 27, 2020 (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 third quarter ended September 30, 2020.

John R. Buran, President and Chief Executive Officer stated, I want to thank our employees for their tireless work in assisting our customers and communities as we continue to navigate these unprecedented times due to the COVID-19 pandemic.

Mr. Buran continued, We are pleased to announce our third quarter earnings totaled $14.3 million, or $0.50 per diluted common share, driven by strong execution of our strategic objectives. We continued to proactively manage credit risk and made good progress improving our funding mix with an emphasis on non-interest bearing demand accounts, which increased 4% (not annualized), during the quarter. For the second consecutive quarter we achieved record net interest income, as the Company capitalized on the low interest rate environment. The cost of funds decreased 10 basis points while the yield on interest earning assets increased three basis points. The net interest margin expanded 13 basis points from the linked quarter. Given the current rate environment, we expect to sustain a strong margin and anticipate that our cost of funds will further decline during the fourth quarter as $315 million of retail certificates of deposits are scheduled to mature at an average rate of 1.10% compared to a current one year CD rate of 0.60%.

The principal balance of loans granted forbearance has decreased from a peak of $1.5 billion to $846 million with approximately 80% of loans scheduled to return to full payment have already done so. We generally granted additional forbearances at new terms more advantageous to the Company for the majority of customers that have not yet returned to full payment status. We expect further reduction in active forbearances during the fourth quarter as most will reach their expiration prior to year-end. Our loan portfolio is primarily real estate based with 88% collateralized by real estate with an average loan to value of less than 40%. Our forbearances share similar credit quality characteristics with the overall loan portfolio. We have a conservative, resilient seasoned loan portfolio built upon our long history and foundation of disciplined underwriting and excellent credit quality.

Our enhanced technology platform, which went live in March 2020 offering mobile banking capabilities, has effectively extended our branch footprint.  Importantly, 23% of all account openings in the third quarter were completed using our technology platform as customers continue to shift to digital banking.  Additionally, our online banking enrollment has increased 4% quarter over quarter.

Finally, we are excited to report that earlier today Empire Bancorp, Inc. (Empire) shareholders approved the merger, which is scheduled to close on or about October 31, 2020. The credit quality of Empire remains strong with no loans greater than 90 days past due and less than $1.0 million in loans greater than 30 days past due. As of September 30, 2020, Empire has $120 million in active forbearance agreements outstanding.

Mr. Buran concluded, We are pleased with the execution against our strategic objectives resulting in record net interest income of $49.9 million and record core earnings for the quarter which totaled $16.2 million, or $0.56 per diluted common share. Credit continued to be strong as non-performing assets at the end of the quarter totaled only 35 basis points. In addtition, loan forbearances declined consistent with our expectations. We look forward to welcoming Empire employees to the Flushing Bank family to together build upon their success and provide continued exceptional service as a leading banking franchise on Long Island.

Summary of Strategic Objectives

• Manage cost of funds and continue to improve funding mix

• Increase interest income by leveraging loan pricing opportunities and portfolio mix

• Enhance core earnings power by improving scalability and efficiency

• Manage credit risk

• Remain well capitalized under all stress test scenarios

Earnings Summary:

Net Interest Income

Net interest income for 3Q20 was $49.9 million, an increase of $11.0 million, or 28.2% YoY and $1.2 million, or 2.5% QoQ.

• Net interest margin of 3.00%, increased 63bps YoY and 13bps QoQ

• Net interest spread of 2.86%, increased 71bps YoY and 14bps QoQ

• Yield on average interest-earning assets of 3.84%, decreased 38bps YoY, but increased 3bps QoQ

• Cost of average interest-bearing liabilities of 0.98%, decreased 109bps YoY and 11bps QoQ

• Cost of funds of 0.89%, decreased 105bps YoY and 10bps QoQ

• Average balance of total interest-earning assets of $6,675.9 million, increased $86.4 million, or 1.3%, YoY, but decreased $133.9 million, or 2.0%, QoQ

• Net interest income includes prepayment penalty income from loans and securities totaling $1.4 million in 3Q20, $0.7 million in 2Q20 and $1.7 million in 3Q19; recovered interest from delinquent loans of $0.1 million in 3Q20 and 2Q20, and $0.3 million in 3Q19; net gains (losses) from fair value adjustments on qualifying hedges totaling $0.2 million in 3Q20, ($0.4) million in 2Q20, and ($1.3) million in 3Q19

• Absent all above items noted in the preceding bullet, the net interest margin was 2.89% in 3Q20, an increase of 56bps YoY and 4bps QoQ

Provision for Credit Losses

The Company recorded a provision for credit losses of $2.5 million in 3Q20, a decrease of $7.1 million or 74.3% QoQ, but an increase of $1.8 million YoY.

• 3Q20 and 2Q20 provision for credit losses were primarily driven by the negative economic forecast; the reduction in provision for credit losses from 2Q20 was due to the consistency in the qualitative factors used in the calculation QoQ

• Net charge-offs of $0.8 million in 3Q20, $1.0 million in 2Q20 and $0.2 million in 3Q19

Non-interest Income

Non-interest income for 3Q20 was $1.4 million, an increase of $0.3 million or 30.0% YoY, but a decrease of $12.4 million or 90.2% QoQ.

• Non-interest income included net losses from fair value adjustments of $2.2 million and $2.1 million in 3Q20 and 3Q19, respectively; net gains from fair value adjustments of $10.2 million in 2Q20

• Additionally, non-interest income included life insurance proceeds totaling $0.7 million in 2Q20

• Absent all above items, non-interest income was $3.6 million in 3Q20, an increase of $0.4 million, or 13.1% YoY, and $0.7 million, or 24.5% QoQ

Non-interest Expense

Non-interest expense for 3Q20 was $30.0 million, an increase of $3.9 million or 15.1% YoY, and $1.2 million, or 4.3 % QoQ.

• Non-interest expense increased QoQ primarily due to 2Q20 including $1.4 million of benefit for deferred compensation costs from originations of PPP loans compared to $0.2 million in 3Q20, and increased YoY primarily due to Company growth

• 3Q19 Non-interest expense included FDIC assessment credit

• Non-interest expense included merger expenses totaling $0.4 million in 3Q20, $0.2 million in 2Q20 and $0.5 million in 3Q19

• The ratio of non-interest expense to average assets was 1.69% in 3Q20 compared to 1.60% in 2Q20 and 1.49% in 3Q19

• The efficiency ratio was 55.4% in 3Q20 compared to 54.9% in 2Q20 and 58.9% in 3Q19

Provision for Income Taxes

The provision for income taxes in 3Q20 was $4.5 million, an increase of $2.0 million, or 77.0% YoY, but a decrease of $1.3 million, or 22.7 % QoQ.

• Pre-tax income increased by $5.6 million YoY, but decreased by $5.3 million QoQ

• The effective tax rates were 23.9% in 3Q20, 24.1% in 2Q20 and 19.1% in 3Q19

Financial Condition Summary:

Loans:

• Net loans held for investment were $5,903.1 million reflecting an increase of 2.7% from December 31, 2019, as we continue to focus on the origination of full banking relationship loans through C&I loans, multi-family loans and commercial real estate

• SBA Paycheck Protection Program (PPP) closings totaled $18.4 million in 3Q20, which ended in August 2020

• Loan closings of commercial business loans, multi-family loans and commercial real estate totaled $126.9 million for 3Q20, or 91.5% of loan production, excluding PPP closings

• Loan pipeline was $394.1 million at September 30, 2020, compared to $324.5 million at December 31, 2019

The following table shows the weighted average rate received from loan closings for the periods indicated:

		For the three months ended
		September 30,		June 30,		September 30,
Loan type		2020		2020		2019
Mortgage loans		3.56	%	3.79	%	4.40	%
Non-mortgage loans		2.81	%	1.99	%	4.38	%
Total loans		3.16	%	2.62	%	4.39	%
Excluding PPP loans		3.45	%	3.71	%	4.39	%

Credit Quality:

• Non-performing loans totaled $24.8 million, an increase of $11.5 million, or 87.0%, from $13.3 million at December 31, 2019

• Non-performing assets totaled $24.8 million, an increase of $11.3 million, or 83.5%, from $13.5 million at December 31, 2019

• Classified assets totaled $30.4 million, an increase of $5.9 million, or 23.8%, from $24.6 million at December 31, 2019

• Loans classified as troubled debt restructured (TDR) totaled $5.1 million, a decrease of $1.4 million, or 20.9%, from $6.5 million at December 31, 2019

• Active COVID-19 forbearances at September 30 ^th totaled 509 loans with a principal balance of $846.2 million at the time of modification decreased from a peak of $1.5 billion; total deferment of $28.4 million in principal, interest and escrow

• Over 88% of gross loans are collateralized by real estate

• The loan-to-value ratio on portfolio of real estate dependent loans as of September 30, 2020 totaled 37.8%

• Net charge-offs totaled $3.0 million for the nine months ended September 30, 2020.

Capital Management:

• The Company and Bank, at September 30, 2020, were both well capitalized under all applicable regulatory requirements

• Through 3Q20, stockholders equity increased $6.7 million, or 1.2%, from December 31, 2019, to $586.4 million primarily due to net income of $31.2 million, partially offset by payment of dividends on the Companys common stock and unrealized losses in the fair value of interest rate swaps.

• During 3Q20, the Company did not repurchase any shares; as of September 30, 2020, up to 284,806 shares remained subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit

• Book value per common share was $20.78 at September 30, 2020, compared to $20.59 at December 31, 2019

• Tangible book value per common share, a non-GAAP measure, was $20.22 at September 30, 2020, compared to $20.02 at December 31, 2019

Conference Call Information:

• John R. Buran, President and Chief Executive Officer, and Susan K. Cullen, Senior Executive Vice President and Chief Financial Officer, will host a conference call on Wednesday, October 28, 2020 at 9:30 AM (ET) to discuss the Companys strategy and results for the third quarter

• Dial-in for Live Call: 1-877-509-5836

• Webcast:  https://services.choruscall.com/links/ffic201021.html

• Dial-in for Replay: 1-877-344-7529

• Replay Access Code: 10138502

• The conference call will be simultaneously webcast and archived through October 28, 2021

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 Banks 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 Companys 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 Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in other documents filed by the Company with the Securities and Exchange Commission from time to time, as well as the possibility that the expected benefits of the proposed Empire merger may not materialize in the timeframe expected or at all, or may be more costly to achieve; that the proposed transaction may not be timely completed, if at all; that prior to the completion of the proposed merger or thereafter, Flushings and Empires respective businesses may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies related to the proposed transaction; that customary closing conditions are not satisfied in a timely manner or at all; reputational risks and the reaction of the companies shareholders, customers, employees and other constituents to the proposed transaction; and diversion of management time on merger-related matters. These risks, as well as other risks associated with the proposed transaction, are more fully discussed in the proxy statement/prospectus that is included in the registration statement on Form S-4 filed with the SEC in connection with the proposed transaction, as amended and supplemented 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.

-  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 nine months ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2020				2020				2019				2020				2019
Interest and Dividend Income
Interest and fees on loans		$	60,367			$	60,557			$	62,825			$	182,033			$	187,428
Interest and dividends on securities:
Interest			3,525				4,182				6,287				12,963				20,007
Dividends			9				11				18				35				56
Other interest income			13				22				259				325				1,286
Total interest and dividend income			63,914				64,772				69,389				195,356				208,777
Interest Expense
Deposits			7,093				9,971				22,244				35,842				66,540
Other interest expense			6,897				6,084				8,196				20,047				21,476
Total interest expense			13,990				16,055				30,440				55,889				88,016
Net Interest Income			49,924				48,717				38,949				139,467				120,761
Provision for credit losses			2,470				9,619				683				19,267				3,129
Net Interest Income After Provision for Credit Losses			47,454				39,098				38,266				120,200				117,632
Non-interest Income
Banking services fee income			1,316				944				847				3,058				2,879
Net loss on sale of securities							(54	)							(91	)			(15	)
Net gain on sale of loans											204				42				381
Net gain on sale of assets																			770
Net gain (loss) from fair value adjustments			(2,225	)			10,205				(2,124	)			1,987				(6,160	)
Federal Home Loan Bank of New York stock dividends			874				881				834				2,719				2,563
Life insurance proceeds							659								659				43
Bank owned life insurance			923				932				1,000				2,798				2,550
Other income			463				170				278				1,052				1,422
Total non-interest income			1,351				13,737				1,039				12,224				4,433
Non-interest Expense
Salaries and employee benefits			17,335				16,184				15,461				52,139				50,295
Occupancy and equipment			3,021				2,827				2,847				8,688				8,378
Professional services			2,064				1,985				2,167				6,911				6,238
FDIC deposit insurance			727				737				(589	)			2,114				563
Data processing			1,668				1,813				1,490				5,175				4,402
Depreciation and amortization			1,542				1,555				1,439				4,633				4,454
Other real estate owned/foreclosure expense			240				45				48				121				145
Net loss from sales of real estate owned			5												36
Other operating expenses			3,383				3,609				3,182				11,303				11,147
Total non-interest expense			29,985				28,755				26,045				91,120				85,622
Income Before Income Taxes			18,820				24,080				13,260				41,304				36,443
Provision for Income Taxes
Federal			3,359				4,307				2,457				8,655				7,381
State and local			1,130				1,501				79				1,436				714
Total taxes			4,489				5,808				2,536				10,091				8,095
Net Income		$	14,331			$	18,272			$	10,724			$	31,213			$	28,348
Basic earnings per common share		$	0.50			$	0.63			$	0.37			$	1.08			$	0.99
Diluted earnings per common share		$	0.50			$	0.63			$	0.37			$	1.08			$	0.99
Dividends per common share		$	0.21			$	0.21			$	0.21			$	0.63			$	0.63

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)

		September 30,				June 30,				December 31,
		2020				2020				2019
ASSETS
Cash and due from banks		$	75,560			$	84,754			$	49,787
Securities held-to-maturity:
Mortgage-backed securities			7,919				7,924				7,934
Other securities			50,252				50,078				50,954
Securities available for sale:
Mortgage-backed securities			386,235				442,507				523,849
Other securities			234,721				232,803				248,651
Loans:
Multi-family residential			2,252,757				2,285,555				2,238,591
Commercial real estate			1,636,659				1,646,085				1,582,008
One-to-four family mixed-use property			585,159				591,347				592,471
One-to-four family residential			191,011				184,741				188,216
Co-operative apartments			8,132				8,423				8,663
Construction			63,567				69,433				67,754
Small Business Administration			124,649				106,813				14,445
Taxi medallion			2,317				3,269				3,309
Commercial business and other			1,063,429				1,073,623				1,061,478
Net unamortized premiums and unearned loan fees			13,718				13,986				15,271
Allowance for loan losses			(38,343	)			(36,710	)			(21,751	)
Net loans			5,903,055				5,946,565				5,750,455
Interest and dividends receivable			36,068				30,219				25,722
Bank premises and equipment, net			25,766				27,018				28,676
Federal Home Loan Bank of New York stock			57,119				56,400				56,921
Bank owned life insurance			158,701				157,779				157,713
Goodwill			16,127				16,127				16,127
Other real estate owned, net							208				239
Right of use asset			42,326				38,303				41,254
Other assets			69,207				71,974				59,494
Total assets		$	7,063,056			$	7,162,659			$	7,017,776
LIABILITIES
Due to depositors:
Non-interest bearing		$	607,954			$	581,881			$	435,072
Certificate of deposit accounts			1,051,644				1,135,977				1,437,890
Savings accounts			160,294				184,895				191,485
Money market accounts			1,381,552				1,474,880				1,592,011
NOW accounts			1,704,915				1,672,241				1,365,591
Total deposits			4,906,359				5,049,874				5,022,049
Mortgagors' escrow deposits			57,136				48,525				44,375
Borrowed funds			1,323,975				1,305,187				1,237,231
Operating lease liability			49,737				45,897				49,367
Other liabilities			139,443				141,255				85,082
Total liabilities			6,476,650				6,590,738				6,438,104
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 September 30, 2020, June 30, 2020 and December 31, 2019; 28,218,427 shares, 28,217,434 shares and 28,157,206 shares outstanding at September 30, 2020, June 30, 2020 and December 31, 2019, respectively)			315				315				315
Additional paid-in capital			227,877				226,901				226,691
Treasury stock (3,312,168 shares, 3,313,161 shares and 3,373,389 shares at September 30, 2020, June 30, 2020 and December 31, 2019, respectively)			(69,409	)			(69,436	)			(71,487	)
Retained earnings			445,931				437,663				433,960
Accumulated other comprehensive loss, net of taxes			(18,308	)			(23,522	)			(9,807	)
Total stockholders' equity			586,406				571,921				579,672

Total liabilities and stockholders' equity $ 7,063,056 $ 7,162,659 $ 7,017,776

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 nine months ended
		September 30,			June 30,			September 30,			September 30,			September 30,
		2020			2020			2019			2020			2019
Per Share Data
Basic earnings per share		$	0.50		$	0.63		$	0.37		$	1.08		$	0.99
Diluted earnings per share		$	0.50		$	0.63		$	0.37		$	1.08		$	0.99
Average number of shares outstanding for:
Basic earnings per common share computation			28,873,606			28,866,984			28,730,161			28,864,503			28,704,398
Diluted earnings per common share computation			28,873,606			28,866,984			28,730,161			28,864,503			28,704,402
Shares outstanding			28,218,427			28,217,434			28,157,206			28,218,427			28,157,206
Book value per common share (1)		$	20.78		$	20.27		$	20.19		$	20.78		$	20.19
Tangible book value per common share (2)		$	20.22		$	19.71		$	19.62		$	20.22		$	19.62
Stockholders' Equity
Stockholders' equity		$	586,406		$	571,921		$	568,392		$	586,406		$	568,392
Tangible stockholders' equity			570,571			556,086			552,551			570,571			552,551
Average Balances
Total loans, net		$	5,904,051		$	5,946,412		$	5,645,503		$	5,881,858		$	5,585,445
Total interest-earning assets			6,675,896			6,809,835			6,589,498			6,734,979			6,550,509
Total assets			7,083,028			7,206,059			6,972,403			7,131,850			6,911,077
Total due to depositors			4,353,560			4,395,228			4,422,050			4,442,202			4,537,869
Total interest-bearing liabilities			5,731,899			5,912,774			5,877,740			5,865,045			5,838,307
Stockholders' equity			576,512			557,414			564,255			570,198			559,209
Performance Ratios (3)
Return on average assets			0.81	%		1.01	%		0.62	%		0.58	%		0.55	%
Return on average equity			9.94			13.11			7.60			7.30			6.76
Yield on average interest-earning assets (4)			3.84			3.81			4.22			3.88			4.26
Cost of average interest-bearing liabilities			0.98			1.09			2.07			1.27			2.01
Cost of funds			0.89			0.99			1.94			1.16			1.88
Net interest rate spread during period (4)			2.86			2.72			2.15			2.61			2.25
Net interest margin (4)			3.00			2.87			2.37			2.77			2.47
Non-interest expense to average assets			1.69			1.60			1.49			1.70			1.65
Efficiency ratio (5)			55.37			54.92			58.87			59.12			63.52
Average interest-earning assets to average interest-bearing liabilities			1.16	X		1.15	X		1.12	X		1.15	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 officer’s death, merger expense, OREO expense and the net gain/loss from the sale of OREO) by the total of net interest income (excluding net gains and losses from fair value adjustments on qualifying hedges) and non-interest income (excluding life insurance proceeds, net gains and losses from the sale of securities and fair value adjustments).

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
(Unaudited)

		At or for the nine			At or for the year			At or for the nine
		months ended			ended			months ended
		September 30, 2020			December 31, 2019			September 30, 2019
Selected Financial Ratios and Other Data
Regulatory capital ratios (for Flushing Financial Corporation):
Tier 1 capital		$	630,380		$	615,500		$	606,844
Common equity Tier 1 capital			593,344			572,651			564,466
Total risk-based capital			740,499			712,251			703,879
Tier 1 leverage capital (well capitalized = 5%)			9.03	%		8.73	%		8.71	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			11.02			10.95			10.73
Tier 1 risk-based capital (well capitalized = 8.0%)			11.71			11.77			11.53
Total risk-based capital (well capitalized = 10.0%)			13.76			13.62			13.37
Regulatory capital ratios (for Flushing Bank only):
Tier 1 capital		$	694,041		$	680,749		$	673,084
Common equity Tier 1 capital			694,041			680,749			673,084
Total risk-based capital			729,160			702,500			695,120
Tier 1 leverage capital (well capitalized = 5%)			9.93	%		9.65	%		9.66	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			12.88			13.02			12.79
Tier 1 risk-based capital (well capitalized = 8.0%)			12.88			13.02			12.79
Total risk-based capital (well capitalized = 10.0%)			13.54			13.43			13.21
Capital ratios:
Average equity to average assets			8.00	%		8.08	%		8.09	%
Equity to total assets			8.30			8.26			7.99
Tangible common equity to tangible assets (1)			8.10			8.05			7.79
Asset quality:
Non-accrual loans (2)		$	24,792		$	12,813		$	14,260
Non-performing loans			24,792			13,258			14,705
Non-performing assets			24,827			13,532			14,979
Net charge-offs			2,993			2,005			2,039
Asset quality ratios:
Non-performing loans to gross loans			0.42	%		0.23	%		0.26	%
Non-performing assets to total assets			0.35			0.19			0.21
Allowance for loan losses to gross loans			0.65			0.38			0.38
Allowance for loan losses to non-performing assets			154.44			160.73			147.11
Allowance for loan losses to non-performing loans			154.66			164.05			149.85
Full-service customer facilities			20			20			19

---

⁽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
		September 30, 2020										June 30, 2020								September 30, 2019
		Average							Yield/			Average						Yield/		Average						Yield/
		Balance			Interest				Cost			Balance			Interest			Cost		Balance			Interest			Cost
Interest-earning Assets:
Mortgage loans, net		$	4,721,742		$	49,814			4.22		%	$	4,762,068		$	49,719		4.18	%	$	4,598,898		$	50,462		4.39	%
Other loans, net			1,182,309			10,553			3.57				1,184,344			10,838		3.66			1,046,605			12,363		4.72
Total loans, net (1) (2)			5,904,051			60,367			4.09				5,946,412			60,557		4.07			5,645,503			62,825		4.45
Taxable securities:
Mortgage-backed securities			413,902			1,928			1.86				465,365			2,327		2.00			574,756			3,765		2.62
Other securities			243,754			1,166			1.91				243,867			1,358		2.23			244,757			1,982		3.24
Total taxable securities			657,656			3,094			1.88				709,232			3,685		2.08			819,513			5,747		2.81
Tax-exempt securities: (3)
Other securities			51,652			557			4.31				60,280			643		4.27			65,709			706		4.30
Total tax-exempt securities			51,652			557			4.31				60,280			643		4.27			65,709			706		4.30
Interest-earning deposits and federal funds sold			62,537			13			0.08				93,911			22		0.09			58,773			259		1.76
Total interest-earning assets			6,675,896			64,031			3.84				6,809,835			64,907		3.81			6,589,498			69,537		4.22
Other assets			407,132										396,224								382,905
Total assets		$	7,083,028									$	7,206,059							$	6,972,403
Interest-bearing Liabilities:
Deposits:
Savings accounts		$	160,100			65			0.16			$	188,587			74		0.16		$	194,736			344		0.71
NOW accounts			1,625,109			1,242			0.31				1,440,147			2,099		0.58			1,347,145			5,654		1.68
Money market accounts			1,461,996			2,108			0.58				1,580,652			3,208		0.81			1,306,634			6,859		2.10
Certificate of deposit accounts			1,106,355			3,700			1.34				1,185,842			4,564		1.54			1,573,535			9,321		2.37
Total due to depositors			4,353,560			7,115			0.65				4,395,228			9,945		0.91			4,422,050			22,178		2.01
Mortgagors' escrow accounts			55,868			(22	)		(0.16	)			87,058			26		0.12			60,084			66		0.44
Total interest-bearing deposits			4,409,428			7,093			0.64				4,482,286			9,971		0.89			4,482,134			22,244		1.99
Borrowings			1,322,471			6,897			2.09				1,430,488			6,084		1.70			1,395,606			8,196		2.35
Total interest-bearing liabilities			5,731,899			13,990			0.98				5,912,774			16,055		1.09			5,877,740			30,440		2.07
Non interest-bearing demand deposits			589,674										560,637								400,762
Other liabilities			184,943										175,234								129,646
Total liabilities			6,506,516										6,648,645								6,408,148
Equity			576,512										557,414								564,255
Total liabilities and equity		$	7,083,028									$	7,206,059							$	6,972,403
Net interest income / net interest rate spread (tax equivalent) (3)					$	50,041			2.86		%				$	48,852		2.72	%				$	39,097		2.15	%
Net interest-earning assets / net interest margin (tax equivalent)		$	943,997						3.00		%	$	897,061					2.87	%	$	711,758					2.37	%
Ratio of interest-earning assets to interest-bearing liabilities									1.16		X							1.15	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 $0.8 million, $0.3 million and $0.9 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
⁽²⁾ Loan interest income includes net gains (losses) from fair value adjustments on qualifying hedges of $0.2 million, ($0.4) million and ($1.3) million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
⁽³⁾ Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented totaling $0.1 million in each period.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NET INTEREST MARGIN
(Dollars in thousands)
(Unaudited)

		For the nine months ended
		September 30, 2020									September 30, 2019
		Average						Yield/			Average						Yield/
		Balance			Interest			Cost			Balance			Interest			Cost
Interest-earning Assets:
Mortgage loans, net		$	4,727,094		$	148,945			4.20	%	$	4,602,896		$	151,513		4.39	%
Other loans, net			1,154,764			33,088			3.82			982,549			35,915		4.87
Total loans, net (1) (2)			5,881,858			182,033			4.13			5,585,445			187,428		4.47
Taxable securities:
Mortgage-backed securities			462,216			7,295			2.10			578,020			12,238		2.82
Other securities			243,782			4,221			2.31			243,071			6,328		3.47
Total taxable securities			705,998			11,516			2.17			821,091			18,566		3.01
Tax-exempt securities: (3)
Other securities			58,464			1,876			4.28			60,010			1,895		4.21
Total tax-exempt securities			58,464			1,876			4.28			60,010			1,895		4.21
Interest-earning deposits and federal funds sold			88,659			325			0.49			83,963			1,286		2.04
Total interest-earning assets			6,734,979			195,750			3.88			6,550,509			209,175		4.26
Other assets			396,871									360,568
Total assets		$	7,131,850								$	6,911,077
Interest-bearing Liabilities:
Deposits:
Savings accounts		$	180,829			420			0.31		$	200,246			1,053		0.70
NOW accounts			1,495,473			7,989			0.71			1,458,801			18,326		1.67
Money market accounts			1,579,712			12,358			1.04			1,340,841			20,654		2.05
Certificate of deposit accounts			1,186,188			15,031			1.69			1,537,981			26,326		2.28
Total due to depositors			4,442,202			35,798			1.07			4,537,869			66,359		1.95
Mortgagors' escrow accounts			69,427			44			0.08			68,678			181		0.35
Total interest-bearing deposits			4,511,629			35,842			1.06			4,606,547			66,540		1.93
Borrowings			1,353,416			20,047			1.97			1,231,760			21,476		2.32
Total interest-bearing liabilities			5,865,045			55,889			1.27			5,838,307			88,016		2.01
Non interest-bearing demand deposits			533,563									398,085
Other liabilities			163,044									115,476
Total liabilities			6,561,652									6,351,868
Equity			570,198									559,209
Total liabilities and equity		$	7,131,850								$	6,911,077
Net interest income / net interest rate spread (tax equivalent) (3)					$	139,861			2.61	%				$	121,159		2.25	%
Net interest-earning assets / net interest margin (tax equivalent)		$	869,934						2.77	%	$	712,202					2.47	%
Ratio of interest-earning assets to interest-bearing liabilities									1.15	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 $1.3 million and $1.7 million for the nine months ended September 30, 2020 and 2019, respectively.
⁽²⁾ Loan interest income includes net losses from fair value adjustments on qualifying hedges of $2.2 million and $2.7 million for the nine months ended September 30, 2020 and 2019, respectively.
⁽³⁾ Interest and yields are calculated on the tax equivalent basis using the statutory federal income tax rate of 21% for the periods presented totaling $0.4 million for each of the nine month periods ended September 30, 2020 and 2019.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)

														September 2020 vs.							September 2020 vs.
		September 30,			June 30,			March 31,			December 31,			December 2019				September 30,			September 2019
(Dollars in thousands)		2020			2020			2020			2019			% Change				2019			% Change
Deposits
Non-interest bearing		$	607,954		$	581,881		$	489,198		$	435,072		39.7		%		$	421,786		44.1		%
Interest bearing:
Certificate of deposit accounts			1,051,644			1,135,977			1,172,381			1,437,890		(26.9	)	%			1,506,376		(30.2	)	%
Savings accounts			160,294			184,895			192,192			191,485		(16.3	)	%			193,497		(17.2	)	%
Money market accounts			1,381,552			1,474,880			1,597,109			1,592,011		(13.2	)	%			1,329,156		3.9		%
NOW accounts			1,704,915			1,672,241			1,377,555			1,365,591		24.8		%			1,461,694		16.6		%
Total interest-bearing deposits			4,298,405			4,467,993			4,339,237			4,586,977		(6.3	)	%			4,490,723		(4.3	)	%
Total deposits		$	4,906,359		$	5,049,874		$	4,828,435		$	5,022,049		(2.3	)	%		$	4,912,509		(0.1	)	%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)

Loan Closings

		For the three months ended									For the nine months ended
			September 30,		June 30,				September 30,			September 30,		September 30,
(In thousands)		2020			2020			2019			2020			2019
Multi-family residential		$	33,733		$	59,654		$	60,454		$	160,705		$	143,297
Commercial real estate			26,644			8,003			66,648			134,218			123,289
One-to-four family – mixed-use property			3,867			8,117			18,167			25,439			47,475
One-to-four family – residential			2,296			2,674			7,421			13,383			19,191
Co-operative apartments			—			—			1,817			704			2,117
Construction			5,420			2,821			5,761			14,990			30,377
Small Business Administration (1)			18,456			93,241			121			111,754			2,705
Commercial business and other			65,160			59,287			237,754			226,895			524,113
Total		$	155,576		$	233,797		$	398,143		$	688,088		$	892,564

⁽¹⁾ Includes $18.4 million and $93.2 million of PPP closings for the three months ended September 30, 2020 and June 30, 2020, respectively. Includes $111.6 million of PPP closings for the nine months ended September 30, 2020.

Loan Composition

																		September 2020 vs.								September 2020 vs.
		September 30,				June 30,				March 31,				December 31,				December 2019					September 30,			September 2019
(Dollars in thousands)		2020				2020				2020				2019				% Change				2019				% Change
Loans held for investment:
Multi-family residential		$	2,252,757			$	2,285,555			$	2,272,343			$	2,238,591			0.6		%		$	2,232,305			0.9		%
Commercial real estate			1,636,659				1,646,085				1,664,934				1,582,008			3.5		%			1,559,581			4.9		%
One-to-four family ― mixed-use property			585,159				591,347				592,109				592,471			(1.2	)	%			587,100			(0.3	)	%
One-to-four family ― residential			191,011				184,741				189,774				188,216			1.5		%			184,432			3.6		%
Co-operative apartments			8,132				8,423				8,493				8,663			(6.1	)	%			9,089			(10.5	)	%
Construction			63,567				69,433				66,727				67,754			(6.2	)	%			64,234			(1.0	)	%
Small Business Administration (1)			124,649				106,813				14,076				14,445			762.9		%			13,982			791.5		%
Taxi medallion			2,317				3,269				3,281				3,309			(30.0	)	%			3,513			(34.0	)	%
Commercial business and other			1,063,429				1,073,623				1,104,967				1,061,478			0.2		%			1,096,164			(3.0	)	%
Net unamortized premiums and unearned loan fees			13,718				13,986				15,384				15,271			(10.2	)	%			15,363			(10.7	)	%
Allowance for loan losses			(38,343	)			(36,710	)			(28,098	)			(21,751	)		76.3		%			(22,035	)		74.0		%
Net loans		$	5,903,055			$	5,946,565			$	5,903,990			$	5,750,455			2.7		%		$	5,743,728			2.8		%

⁽¹⁾ Includes $111.6 million and $93.2 million of PPP loans at September 30, 2020 and June 30, 2020, respectively.

Net Loans Activity

		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands)		2020				2020				2020				2019				2019
Loans originated and purchased		$	155,576			$	233,797			$	298,715			$	269,736			$	398,143
Principal reductions			(196,221	)			(180,182	)			(137,189	)			(255,977	)			(266,894	)
Loans sold			—				—				(498	)			(7,129	)			(3,553	)
Loan charge-offs			(964	)			(1,030	)			(1,259	)			(95	)			(431	)
Foreclosures			—				—				—				—				—
Net change in deferred fees and costs			(268	)			(1,398	)			113				(92	)			85
Net change in the allowance for loan losses			(1,633	)			(8,612	)			(6,347	)			284				(525	)
Total loan activity		$	(43,510	)		$	42,575			$	153,535			$	6,727			$	126,825

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
NON-PERFORMING ASSETS and NET CHARGE-OFFS
(Unaudited)

Non-Performing Assets

		September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)		2020			2020			2020			2019			2019
Loans 90 Days Or More Past Due and Still Accruing:
Multi-family residential		$	—		$	—		$	—		$	445		$	445
Commercial business and other			—			150			—			—			—
Total			—			150			—			445			445
Non-accrual Loans:
Multi-family residential			2,661			3,688			2,741			2,296			3,132
Commercial real estate			2,657			2,671			8			367			872
One-to-four family - mixed-use property (1)			1,366			2,511			607			274			683
One-to-four family - residential			6,454			6,412			5,158			5,139			5,050
Small Business Administration			1,151			1,321			1,518			1,151			1,151
Taxi medallion(1)			2,218			1,757			1,761			1,641			1,352
Commercial business and other(1)			8,285			1,678			4,959			1,945			2,020
Total			24,792			20,038			16,752			12,813			14,260
Total Non-performing Loans			24,792			20,188			16,752			13,258			14,705
Other Non-performing Assets:
Real estate acquired through foreclosure			—			208			208			239			239
Other asset acquired through foreclosure			35			35			35			35			35
Total			35			243			243			274			274
Total Non-performing Assets		$	24,827		$	20,431		$	16,995		$	13,532		$	14,979
Non-performing Assets to Total Assets			0.35	%		0.29	%		0.23	%		0.19	%		0.21	%
Allowance For Loan Losses to Non-performing Loans			154.7	%		181.8	%		167.7	%		164.1	%		149.8	%

---

⁽¹⁾ Not included in the above analysis are non-accrual performing one-to-four family mixed use property loans totaling $0.3 million; non-accrual performing TDR taxi medallion loans totaling $0.1 million in 3Q20, $1.5 million in 2Q20, $1.5 million in 1Q20, $1.7 million in 4Q19 and $2.2 million in 3Q19, and non-accrual performing TDR commercial business loans totaling $1.0 million in 3Q20, 2Q20, 1Q20 and 3Q19 respectively, and $0.9 million in 4Q19.

Net Charge-Offs (Recoveries)

		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands)		2020				2020				2020				2019				2019
Multi-family residential		$	(14	)		$	(7	)		$	(6	)		$	(14	)		$	183
Commercial real estate			—				—				—				(30	)			—
One-to-four family – mixed-use property			(60	)			3				(78	)			119				(140	)
One-to-four family – residential			(2	)			(3	)			(5	)			(3	)			(3	)
Small Business Administration			(47	)			165				(7	)			(8	)			(32	)
Taxi medallion			951				—				—				—				—
Commercial business and other			9				849				1,245				(98	)			150
Total net loan charge-offs (recoveries)		$	837			$	1,007			$	1,149			$	(34	)		$	158

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
FORBEARANCES DETAIL
(Dollars in thousands)
(Unaudited)

		Forbearances (1)						Backed by Mortgages (1)
		Balance			% of Sector			Balance			% of Forbearances		LTV
Higher Risk Segments
Restaurants and Catering Halls		$	22,228		29.2	%		$	22,228		100.0	%	37.7	%
Hotels			105,942		60.0				105,942		100.0		61.9
Travel and Leisure			37,670		20.8				33,918		90.0		36.4
Retail Services (2)			299		0.3				—		—		—
CRE - Shopping Center			74,746		29.6				74,746		100.0		39.8
CRE - Single Tenant			14,366		10.9				14,366		100.0		38.0
CRE - Strip Mall			85,921		31.0				85,921		100.0		51.1
Transportation (2)			4,621		3.9				1,802		39.0		40.5
Contractors (2)			4,935		2.2				3,598		72.9		33.7
Schools and Child Care			14,200		27.4				8,701		61.3		42.6
Subtotal		$	364,928		23.0	%		$	351,222		96.2	%	46.7	%
Lower Risk Segments		$	481,296		11.1	%		$	472,629		98.2	%	44.6	%
Total		$	846,224		14.3	%		$	823,851		97.4	%	45.5	%

---

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

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS and CORE EARNINGS

Non-cash Fair Value Adjustments to GAAP Earnings

The variance in GAAP and core earnings is primarily due to the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to swaps designated to protect against rising rates and borrowing carried at fair value under the fair value option. As the swaps get closer to maturity, the volatility in fair value adjustments will dissipate. In a declining interest rate environment, the movement in the curve exaggerates our mark-to-market loss position. In a rising interest rate environment or a steepening of the yield curve, the loss position would experience an improvement.

Core Diluted EPS, Core ROAE, Core ROAA, Pre-provision Pre-tax Net Revenue, 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											Nine Months Ended
		September 30,				June 30,				September 30,			September 30,				September 30,
		2020				2020				2019			2020				2019
GAAP income before income taxes		$	18,820			$	24,080			$	13,260		$	41,304			$	36,443
Net (gain) loss from fair value adjustments			2,225				(10,205	)			2,124			(1,987	)			6,160
Net loss on sale of securities			—				54				—			91				15
Life insurance proceeds			—				(659	)			—			(659	)			(43	)
Net gain on sale of assets			—				—				—			—				(770	)
Net (gain) loss from fair value adjustments on qualifying hedges			(230	)			365				1,262			2,208				2,717
Accelerated employee benefits upon Officer's death			—				—				—			—				455
Merger expense			422				194				510			1,545				510
Core income before taxes			21,237				13,829				17,156			42,502				45,487
Provision for income taxes for core income			5,069				3,532				3,312			10,537				10,116
Core net income		$	16,168			$	10,297			$	13,844		$	31,965			$	35,371
GAAP diluted earnings per common share		$	0.50			$	0.63			$	0.37		$	1.08			$	0.99
Net (gain) loss from fair value adjustments, net of tax			0.06				(0.27	)			0.06			(0.05	)			0.17
Net loss on sale of securities, net of tax			—				—				—			—				—
Life insurance proceeds			—				(0.02	)			—			(0.02	)			—
Net gain on sale of assets, net of tax			—				—				—			—				(0.02	)
Net (gain) loss from fair value adjustments on qualifying hedges, net of tax			(0.01	)			0.01				0.04			0.06				0.07
Accelerated employee benefits upon Officer's death, net of tax			—				—				—			—				0.01
Merger expense, net of tax			0.01				0.01				0.01			0.04				0.01
Core diluted earnings per common share(1)		$	0.56			$	0.36			$	0.48		$	1.11			$	1.23
Core net income, as calculated above		$	16,168			$	10,297			$	13,844		$	31,965			$	35,371
Average assets			7,083,028				7,206,059				6,972,403			7,131,850				6,911,077
Average equity			576,512				557,414				564,255			570,198				559,209
Core return on average assets(2)			0.91		%		0.57		%		0.79	%		0.60		%		0.68		%
Core return on average equity(2)			11.22		%		7.39		%		9.81	%		7.47		%		8.43		%

---

⁽¹⁾ Core diluted earnings per common share may not foot due to rounding.
⁽²⁾ Ratios are calculated on an annualized basis.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE and PRE-PROVISION
PRE-TAX NET REVENUE
(Dollars in thousands)
(Unaudited)

		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2020				2020				2019				2020				2019
Net interest income		$	49,924			$	48,717			$	38,949			$	139,467			$	120,761
Non-interest income			1,351				13,737				1,039				12,224				4,433
Non-interest expense			(29,985	)			(28,755	)			(26,045	)			(91,120	)			(85,622	)
Pre-provision pre-tax net revenue (1)		$	21,290			$	33,699			$	13,943			$	60,571			$	39,572

⁽¹⁾ Includes non-cash net gains (losses) from fair value adjustments totaling ($2.0) million, $9.8 million and ($3.4) million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively and ($0.2) million and ($8.9) million for the nine months ended September 30, 2020 and 2019, respectively.

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												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2020				2020				2019				2020				2019
GAAP net interest income		$	49,924			$	48,717			$	38,949			$	139,467			$	120,761
Net (gain) loss from fair value adjustments on qualifying hedges			(230	)			365				1,262				2,208				2,717
Core net interest income		$	49,694			$	49,082			$	40,211			$	141,675			$	123,478
GAAP interest income on total loans, net		$	60,367			$	60,557			$	62,825			$	182,033			$	187,428
Net (gain) loss from fair value adjustments on qualifying hedges			(230	)			365				1,262				2,208				2,717
Prepayment penalties received on loans			(1,357	)			(702	)			(1,697	)			(2,812	)			(3,622	)
Net recoveries of interest from non-accrual loans			(86	)			(74	)			(292	)			(596	)			(1,525	)
Core interest income on total loans, net		$	58,694			$	60,146			$	62,098			$	180,833			$	184,998
Average total loans, net		$	5,904,051			$	5,946,412			$	5,645,503			$	5,881,858			$	5,585,445
Core yield on total loans			3.98		%		4.05		%		4.40		%		4.10		%		4.42		%
Net interest income tax equivalent		$	50,041			$	48,852			$	39,097			$	139,861			$	121,159
Net (gain) loss from fair value adjustments on qualifying hedges			(230	)			365				1,262				2,208				2,717
Prepayment penalties received on loans and securities			(1,432	)			(702	)			(1,697	)			(2,887	)			(3,622	)
Net recoveries of interest from non-accrual loans			(86	)			(74	)			(292	)			(596	)			(1,525	)
Net interest income used in calculation of Core net interest margin		$	48,293			$	48,441			$	38,370			$	138,586			$	118,729
Total average interest-earning assets		$	6,675,896			$	6,809,835			$	6,589,498			$	6,734,979			$	6,550,509
Core net interest margin			2.89		%		2.85		%		2.33		%		2.74		%		2.42		%

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

		September 30,				December 31,				September 30,
(Dollars in thousands)		2020				2019				2019
Total Equity		$	586,406			$	579,672			$	568,392
Less:
Goodwill			(16,127	)			(16,127	)			(16,127	)
Intangible deferred tax liabilities			292				292				286
Tangible Stockholders' Common Equity		$	570,571			$	563,837			$	552,551
Total Assets		$	7,063,056			$	7,017,776			$	7,110,895
Less:
Goodwill			(16,127	)			(16,127	)			(16,127	)
Intangible deferred tax liabilities			292				292				286
Tangible Assets		$	7,047,221			$	7,001,941			$	7,095,054
Tangible Stockholders' Common Equity to Tangible Assets			8.10		%		8.05		%		7.79		%

__________________________________

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.”

Susan K. Cullen
Senior Executive Vice President, Treasurer and Chief Financial Officer
Flushing Financial Corporation
(718) 961-5400