Flushing Financial Corporation Reports 4Q20 GAAP EPS of $0.11 and 2020 GAAP EPS of $1.18 4Q20 Core EPS of $0.58 and 2020 Core EPS of $1.70 Third Consecutive Quarter of Record Net Interest Income

FOURTH QUARTER 2020 HIGHLIGHTS¹

• GAAP diluted EPS of $0.11, compared to $0.50 in 3Q20 and $0.45 in 4Q19
• Core diluted EPS of $0.58 compared to $0.56 in 3Q20 and $0.41 in 4Q19
• GAAP ROAA and ROAE were 0.18% and 2.27% in 4Q20 compared to 0.73% and 9.11% in 4Q19, respectively
• Core ROAA and ROAE were 0.92% and 11.67% in 4Q20 compared to 0.67% and 8.36% in 4Q19, respectively
• Record net interest income of $55.7 million, up 11.6% QoQ and 35.3% YoY, while core net interest income was $54.7, up 10.1% QoQ and 36.3% YoY
• Net interest margin of 3.08%, up 8 bps QoQ and 60 bps YoY and core net interest margin of 2.97%, up 8 bps QoQ and 64 bps YoY
• Average loans were $6.4 billion, up 8.0% QoQ and 11.3% YoY while average deposits of $4.7 billion improved 8.2% QoQ and 4.0% YoY
• Loan pipeline remained strong at $354.6 million, up 9.3% from $324.5 million a year ago
• Provision for credit losses (excluding Day 1 impact from Empire Bancorp transaction) of $2.0 million exceed net charge-offs of $0.6 million in 4Q20
• NPAs of $21.1 million were down 15.0% from $24.8 million in 3Q20
• Loans in forbearance declined 56.9% in 4Q20 and were 5.4% of total loans and only 3.2% of loans excluding interest only forbearance loans
  

UNIONDALE, N.Y., Jan. 28, 2021 (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 fourth quarter and full year ended December 31, 2020.

John R. Buran, President and Chief Executive Officer stated, “While 2020 was an unprecedented year in many ways, I am proud of how our employees continued to serve customers and help communities throughout the COVID-19 pandemic. It is through their efforts that our Company was able to persevere and post strong results. We achieved three consecutive quarters of record net interest income. We reduced loans in forbearance by 76% from their peak. We closed the Empire acquisition this quarter and within three weeks completed the conversion of all customers onto our systems. As we enter 2021 we are a stronger more resilient Company with greater scale, a better margin and improved mobile and lending capabilities through enhanced fintech relationships.”

Mr. Buran continued, “Our core NIM improvement of 8 bps during the quarter was driven by reducing cost of funds by 12 bps with a minimal decrease in the yield on interest-earning assets. While we see additional opportunities to reduce our cost of deposits with $342 million of CDs maturing in 1Q21 with a weighted average rate of 1.23% compared to a current one year CD rate of 0.55%, pricing on new loans has shifted lower. Loan growth rebounded this quarter, rising 4% year over year and 5% (annualized) from third quarter, excluding the Empire transaction. We reported fourth quarter GAAP EPS of $0.11, which included various charges from the Empire transaction, our previously announced balance sheet restructuring, and other adjustments totaling $0.47 per share. Adjusting for these items, core fourth quarter EPS was $0.58, up 42% year over year. The Empire integration is proceeding consistent with our expectations and we are on track to achieve our 20% earnings accretion target for 2021.”

“We continue to actively monitor our credit portfolio and work with our customers during these difficult times. We remain comfortable with our credit exposure given the loan to value of 38% on our real estate dependent loans and the fact that 41% of our loans on forbearance have already begun to pay interest and escrow. Loans in forbearance fell 57% to $364 million in the fourth quarter from $846 million in 3Q20 and the loans that exited forbearance are performing in line with expectations. Criticized and classified assets rose $29 million as the Empire acquisition added $15 million. We continue to actively monitor our portfolio and work with customers during these difficult times. Flushing Bank has a history of superior credit quality through many cycles and losses have never been more than 64 bps. We do not see a reason why this would change in this economic cycle.”

“We are an active participant in the second offering of the PPP program through our continued partnership with a fintech company. From January 19th through January 22, 2021, we processed 434 applications totaling $115 million. We remain committed to helping our customers in this difficult period.”

Mr. Buran concluded, “While 2020 was a challenging year for our customers, communities and employees, it also was a significant period for the Company as we upgraded our mobile banking capabilities in March, closed the Empire transaction on October 31st, and completed the systems conversion while adopting to a new work environment. I am pleased with how we performed on our strategic objectives and look forward to 2021.”

Summary of Strategic Objectives

• Manage cost of funds and continue to improve funding mix
• Resume historical loan growth while achieving appropriate risk adjusted returns
• Enhance core earnings power by improving scalability and efficiency
• Manage credit risk
• Remain well capitalized
  

Earnings Summary:

Net Interest Income

Net interest income for 4Q20 was $55.7 million, an increase 35.3% YoY and 11.6% QoQ (Empire contributed $4.2 million to growth).

• Net interest margin of 3.08%, increased 60 bps YoY and 8 bps QoQ
  • Net purchase accounting accretion was not meaningful in 4Q20 and is expected to add less than $1 million to net interest income in 1Q21
• Yield on average interest-earning assets of 3.82%, decreased 39 bps YoY, and 2 bps QoQ
• Cost of average interest-bearing liabilities of 0.86%, decreased 110 bps YoY and 12 bps QoQ, driven primarily by the decline in the costs of deposits to 0.47% in 4Q20, down 124 bps YoY and 10 bps QoQ
• Average interest-earning assets of $7.2 billion, increased 8.5% in both YoY and QoQ largely from Empire
• Prepayment penalty income from loans and securities, net recoveries of interest from non-accrual loans, net gains (losses) from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $2.1 million (11 bps) in 4Q20, $1.7 million (11 bps) in 3Q20 and $2.4 million (15 bps) in 4Q19. Excluding these items, the net interest margin was 2.97% in 4Q20, an increase of 64 bps YoY and 8 bps QoQ

Provision for Credit Losses

The Company recorded a provision for credit losses of $3.9 million in 4Q20, compared to $2.5 million in 3Q20 and $(0.3) million in 4Q19.

• 4Q20 provision for credit losses was driven by $1.8 million of Day 1 impact of the Empire transaction ($0.05 per share, net of tax) in addition to required provision of $2.0 million resulting from the economic environment
• Net charge-offs of $0.6 million in 4Q20 and $0.8 million in 3Q20 were significantly below quarterly provisions for credit losses

Non-interest Income

Non-interest income for 4Q20 was $(1.2) million compared to $1.4 million in 3Q20 and $5.0 million in 4Q19.

• Non-interest income included net gains (losses) from fair value adjustments of $(4.1) million ($(0.11) per share, net of tax) in 4Q20, $(2.2) million ($(0.06) per share, net of tax) in 3Q20 and $0.8 million ($0.02 per share, net of tax) in 4Q19, respectively
• Losses on the sale of investment securities with a par value of $89.5 million were $0.6 million ($0.02 per share, net of tax) in 4Q20
• Life insurance proceeds were $419,000 ($0.01 per share) in 4Q19
• Absent all above items, non-interest income was $3.6 million in 4Q20, down 6.7% YoY and flat QoQ

Non-interest Expense

Non-interest expense for 4Q20 was $46.8 million, compared to $30.0 million in 3Q20 and $29.6 million in 4Q19.

• 4Q20 non-interest expense includes $5.3 million pre-tax merger charges ($0.14 per share, net of tax) and $7.8 million pre-tax debt prepayment penalties ($0.20 per share, net of tax). 3Q20 non-interest expense includes $0.4 million of merger charges ($0.01 per share, net of tax) while 4Q19 includes $1.1 million of merger charges ($0.03 per share, net of tax)
• Excluding the above items, core operating expenses were $33.5 million, up 17.4% YoY and 13.4% QoQ; Empire contributed $1.7 million
• The ratio of core operating expense to average assets was 1.74% in 4Q20, 1.67% in 3Q20 and 1.62% in 4Q19
• Excluding the notable items in net interest income, non-interest income and non-interest expense, the adjusted efficiency ratio was 57.6% in 4Q20 compared to 55.4% in 3Q20 and 65.0% in 4Q19

Provision for Income Taxes

The provision for income taxes was $0.4 million in 4Q20, versus $4.5 million in 3Q20 and $4.0 million in 4Q19.

• Pre-tax income declined to $3.9 million in 4Q20 compared to $18.8 million in 3Q20 and $16.9 million in 4Q19
• The effective tax rates were 10.8% in 4Q20, 23.9% in 3Q20, and 23.4% in 4Q19

Financial Condition Summary:

Loans:

• Net loans held for investment were $6.7 billion reflecting an increase of 15.8% (3.9% excluding Empire) 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”) loans were $151.9 million in 4Q20 compared to $111.6 million in 3Q20, with the increase largely due to Empire
• Loan closings of commercial business loans, multi-family loans and commercial real estate totaled $290.5 million for 4Q20, or 91.9% of loan production
• Loan pipeline was $354.6 million at December 31, 2020, compared to $324.5 million a year ago

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

		For the three months ended
		December 31,		September 30,		December 31,
Loan type		2020		2020		2019
Mortgage loans		3.47	%	3.56	%	3.97	%
Non-mortgage loans		3.37	%	2.81	%	4.68	%
Total loans		3.41	%	3.16	%	4.19	%
Excluding PPP loans		3.41	%	3.45	%	4.19	%

Credit Quality:

• Non-performing loans totaled $21.1 million, an increase of $7.8 million ($0.6 million from Empire), or 58.9%, from $13.3 million at December 31, 2019, but down $3.7 million QoQ
• Non-performing assets totaled $21.1 million, an increase of $7.6 million ($0.6 million from Empire), or 56.0%, from $13.5 million at December 31, 2019, but down $3.7 million QoQ
• Criticized and classified assets totaled $71.6 million compared to $38.0 million at December 31, 2019; increase in criticized and classified assets was largely due to $14.6 million from Empire and $7.7 million from one CRE relationship
• Loans classified as troubled debt restructured (TDR) totaled $15.7 million versus $6.5 million at December 31, 2019 primarily driven by one hotel loan
• Active COVID-19 forbearances at December 31, 2020 totaled 134 loans with a principal balance of $364.4 million at the time of modification, a decrease from the peak of $1.5 billion; total deferment of $23.6 million in principal, interest and escrow; of the total forbearance loans, approximately 40% are making interest payments
• Over 86% of gross loans are collateralized by real estate
• The loan-to-value ratio on portfolio of real estate dependent loans as of December 31, 2020 totaled 38.0%
• Allowance for credit losses were 0.67% of loans in 4Q20 compared to 0.38% a year ago; Empire had a minimal impact on this ratio

Capital Management:

• Book value per common share was $20.11 at December 31, 2020, compared to $20.59 at December 31, 2019 and tangible book value per common share, a non-GAAP measure, was $19.45 at December 31, 2020, compared to $20.02 at December 31, 2019
• The Company paid a dividend of $0.21 per share in 4Q20 and did not repurchase any shares in the quarter; up to 284,806 shares remained subject to repurchase under the authorized stock repurchase program, which has no expiration or maximum dollar limit
• Tangible common equity to tangible assets was 7.52% in 4Q20 compared to 8.05% a year ago
• The Company and the Bank remain well capitalized under all applicable regulatory requirements
• The leverage ratio was 8.38% in 4Q20 versus 8.73% in 4Q19
  

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 Friday, January 29, 2021 at 9:30 AM (ET) to discuss the Company’s strategy and results for the fourth quarter
• Dial-in for Live Call: 1-877-509-5836
• Webcast: https://services.choruscall.com/links/ffic210129.html
• Dial-in for Replay: 1-877-344-7529
• Replay Access Code: 10150602
• The conference call will be simultaneously webcast and archived through January 29, 2022

About Flushing Financial Corporation

Flushing Financial Corporation (Nasdaq: FFIC) is the holding company for Flushing Bank, a New York State-chartered commercial bank insured by the Federal Deposit Insurance Corporation. The Bank serves consumers, businesses, professionals, corporate clients, and public entities by offering a full complement of deposit, loan, equipment finance, and cash management services through its banking offices located in Queens, Brooklyn, Manhattan, and on Long Island. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. Flushing Bank is an Equal Housing Lender. The Bank also operates an online banking division consisting of iGObanking.com, which offers competitively priced deposit products to consumers nationwide, and BankPurely, an eco-friendly, healthier lifestyle community brand.

Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at http://www.flushingbank.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 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 proposed expected benefits of the Empire merger may not materialize in the timeframe expected or at all, or may be more costly to achieve. These proposed risks, as well as other risks associated with the 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 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 year ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2020				2020				2019				2020				2019
Interest and Dividend Income
Interest and fees on loans		$	66,120			$	60,367			$	64,316			$	248,153			$	251,744
Interest and dividends on securities:
Interest			2,813				3,525				5,528				15,776				25,535
Dividends			8				9				17				43				73
Other interest income			30				13				318				355				1,604
Total interest and dividend income			68,971				63,914				70,179				264,327				278,956
Interest Expense
Deposits			6,470				7,093				21,517				42,312				88,057
Other interest expense			6,769				6,897				7,483				26,816				28,959
Total interest expense			13,239				13,990				29,000				69,128				117,016
Net Interest Income			55,732				49,924				41,179				195,199				161,940
Provision for credit losses			3,862				2,470				(318	)			23,129				2,811
Net Interest Income After Provision for Credit Losses			51,870				47,454				41,497				172,070				159,129
Non-interest Income
Banking services fee income			1,442				1,316				844				4,500				3,723
Net loss on sale of securities			(610	)			—				—				(701	)			(15	)
Net gain on sale of loans			6				—				489				48				870
Net gain on sale of assets			—				—				—				—				770
Net gain (loss) from fair value adjustments			(4,129	)			(2,225	)			807				(2,142	)			(5,353	)
Federal Home Loan Bank of New York stock dividends			734				874				1,026				3,453				3,589
Life insurance proceeds			—				—				419				659				462
Bank owned life insurance			1,016				923				984				3,814				3,534
Other income			360				463				469				1,412				1,891
Total non-interest income (loss)			(1,181	)			1,351				5,038				11,043				9,471
Non-interest Expense
Salaries and employee benefits			22,089				17,335				17,470				74,228				67,765
Occupancy and equipment			3,446				3,021				2,950				12,134				11,328
Professional services			2,463				2,064				2,120				9,374				8,358
FDIC deposit insurance			562				727				306				2,676				869
Data processing			3,411				1,668				1,476				8,586				5,878
Depreciation and amortization			1,579				1,542				1,476				6,212				5,930
Other real estate owned/foreclosure expense			95				240				59				216				204
Net loss from sales of real estate owned			—				5				—				36				—
Prepayment Penalty on Borrowings			7,834				—				—				7,834				—
Other operating expenses			5,332				3,383				3,790				16,635				14,937
Total non-interest expense			46,811				29,985				29,647				137,931				115,269
Income Before Income Taxes			3,878				18,820				16,888				45,182				53,331
Provision for Income Taxes
Federal			533				3,359				3,058				9,188				10,439
State and local			(116	)			1,130				899				1,320				1,613
Total taxes			417				4,489				3,957				10,508				12,052
Net Income		$	3,461			$	14,331			$	12,931			$	34,674			$	41,279
Basic earnings per common share		$	0.11			$	0.50			$	0.45			$	1.18			$	1.44
Diluted earnings per common share		$	0.11			$	0.50			$	0.45			$	1.18			$	1.44
Dividends per common share		$	0.21			$	0.21			$	0.21			$	0.84			$	0.84

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

		December 31,				September 30,				December 31,
		2020				2020				2019
ASSETS
Cash and due from banks		$	157,388			$	75,560			$	49,787
Securities held-to-maturity:
Mortgage-backed securities			7,914				7,919				7,934
Other securities			49,918				50,252				50,954
Securities available for sale:
Mortgage-backed securities			404,460				386,235				523,849
Other securities			243,514				234,721				248,651
Loans:
Multi-family residential			2,533,952				2,252,757				2,238,591
Commercial real estate			1,754,754				1,636,659				1,582,008
One-to-four family ― mixed-use property			602,981				585,159				592,471
One-to-four family ― residential			245,211				191,011				188,216
Co-operative apartments			8,051				8,132				8,663
Construction			83,322				63,567				67,754
Small Business Administration			167,376				124,649				14,445
Taxi medallion			2,757				2,317				3,309
Commercial business and other			1,303,225				1,063,429				1,061,478
Net unamortized premiums and unearned loan fees			3,045				13,718				15,271
Allowance for loan losses			(45,153	)			(38,343	)			(21,751	)
Net loans			6,659,521				5,903,055				5,750,455
Interest and dividends receivable			44,041				36,068				25,722
Bank premises and equipment, net			28,179				25,766				28,676
Federal Home Loan Bank of New York stock			43,439				57,119				56,921
Bank owned life insurance			181,710				158,701				157,713
Goodwill			17,636				16,127				16,127
Other real estate owned, net			—				—				239
Core deposit intangibles			3,172				—				—
Right of use asset			50,743				42,326				41,254
Other assets			84,759				69,207				59,494
Total assets		$	7,976,394			$	7,063,056			$	7,017,776
LIABILITIES
Due to depositors:
Non-interest bearing		$	778,672			$	607,954			$	435,072
Certificate of deposit accounts			1,138,361				1,051,644				1,437,890
Savings accounts			168,183				160,294				191,485
Money market accounts			1,682,345				1,381,552				1,592,011
NOW accounts			2,323,172				1,704,915				1,365,591
Total deposits			6,090,733				4,906,359				5,022,049
Mortgagors' escrow deposits			45,622				57,136				44,375
Borrowed funds			1,020,895				1,323,975				1,237,231
Operating lease liability			59,100				49,737				49,367
Other liabilities			141,047				139,443				85,082
Total liabilities			7,357,397				6,476,650				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; 34,087,623 shares issued at December 31, 2020, and 31,530,595 shares issued each at September 30, 2020 and December 31, 2019; 30,775,854 shares, 28,218,427 shares and 28,157,206 shares outstanding at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)			341				315				315
Additional paid-in capital			261,533				227,877				226,691
Treasury stock (3,311,769 shares, 3,312,168 shares and 3,373,389 shares at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)			(69,400	)			(69,409	)			(71,487	)
Retained earnings			442,789				445,931				433,960
Accumulated other comprehensive loss, net of taxes			(16,266	)			(18,308	)			(9,807	)
Total stockholders' equity			618,997				586,406				579,672
Total liabilities and stockholders' equity		$	7,976,394			$	7,063,056			$	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 year ended
		December 31,			September 30,			December 31,			December 31,			December 31,
		2020			2020			2019			2020			2019
Per Share Data
Basic earnings per share		$	0.11		$	0.50		$	0.45		$	1.18		$	1.44
Diluted earnings per share		$	0.11		$	0.50		$	0.45		$	1.18		$	1.44
Average number of shares outstanding for:
Basic earnings per common share computation			30,602,974			28,873,606			28,723,077			29,301,495			28,709,106
Diluted earnings per common share computation			30,602,974			28,873,606			28,723,077			29,301,495			28,709,109
Shares outstanding			30,775,854			28,218,427			28,157,206			30,775,854			28,157,206
Book value per common share (1)		$	20.11		$	20.78		$	20.59		$	20.11		$	20.59
Tangible book value per common share (2)		$	19.45		$	20.22		$	20.02		$	19.45		$	20.02
Stockholders' Equity
Stockholders' equity		$	618,997		$	586,406		$	579,672		$	618,997		$	579,672
Tangible stockholders' equity			598,476			570,571			563,837			598,476			563,837
Average Balances
Total loans, net		$	6,375,516		$	5,904,051		$	5,726,635		$	6,005,947		$	5,621,033
Total interest-earning assets			7,243,472			6,675,896			6,677,325			6,862,798			6,582,473
Total assets			7,705,407			7,083,028			7,057,094			7,276,022			6,947,881
Total due to depositors			4,708,760			4,353,560			4,527,645			4,509,206			4,535,292
Total interest-bearing liabilities			6,169,574			5,731,899			5,912,284			5,941,594			5,856,953
Stockholders' equity			609,463			576,512			567,461			580,067			561,289
Performance Ratios (3)
Return on average assets			0.18	%		0.81	%		0.73	%		0.48	%		0.59	%
Return on average equity			2.27			9.94			9.11			5.98			7.35
Yield on average interest-earning assets (4)			3.82			3.84			4.21			3.86			4.25
Cost of average interest-bearing liabilities			0.86			0.98			1.96			1.16			2.00
Cost of funds			0.77			0.89			1.83			1.06			1.87
Net interest rate spread during period (4)			2.96			2.86			2.25			2.70			2.25
Net interest margin (4)			3.08			3.00			2.48			2.85			2.47
Non-interest expense to average assets			2.43			1.69			1.68			1.90			1.66
Efficiency ratio (5)			57.56			55.37			65.00			58.69			63.89
Average interest-earning assets to average interest-bearing liabilities			1.17	X		1.16	X		1.12	X		1.16	X		1.13	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, prepayment penalty on borrowings 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). Additionally, it excludes purchase accounting adjustments.

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

		At or for the year			At or for the year
		ended			ended
		December 31, 2020			December 31, 2019
Selected Financial Ratios and Other Data
Regulatory capital ratios (for Flushing Financial Corporation):
Tier 1 capital		$	662,987		$	615,500
Common equity Tier 1 capital			621,247			572,651
Total risk-based capital			794,034			712,251
Tier 1 leverage capital (well capitalized = 5%)			8.38	%		8.73	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			9.87			10.95
Tier 1 risk-based capital (well capitalized = 8.0%)			10.54			11.77
Total risk-based capital (well capitalized = 10.0%)			12.62			13.62
Regulatory capital ratios (for Flushing Bank only):
Tier 1 capital		$	733,010		$	680,749
Common equity Tier 1 capital			733,010			680,749
Total risk-based capital			773,807			702,500
Tier 1 leverage capital (well capitalized = 5%)			9.27	%		9.65	%
Common equity Tier 1 risk-based capital (well capitalized = 6.5%)			11.64			13.02
Tier 1 risk-based capital (well capitalized = 8.0%)			11.64			13.02
Total risk-based capital (well capitalized = 10.0%)			12.29			13.43
Capital ratios:
Average equity to average assets			7.97	%		8.08	%
Equity to total assets			7.76			8.26
Tangible common equity to tangible assets (1)			7.52			8.05
Asset quality:
Non-accrual loans (2)		$	18,325		$	12,813
Non-performing loans			21,073			13,258
Non-performing assets			21,108			13,532
Net charge-offs			3,639			2,005
Asset quality ratios:
Non-performing loans to gross loans			0.31	%		0.23	%
Non-performing assets to total assets			0.26			0.19
Allowance for loan losses to gross loans			0.67			0.38
Allowance for loan losses to non-performing assets			213.91			160.73
Allowance for loan losses to non-performing loans			214.27			164.05
Full-service customer facilities			25			20

---

⁽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
		December 31, 2020								September 30, 2020										December 31, 2019
		Average						Yield/		Average							Yield/			Average						Yield/
		Balance			Interest			Cost		Balance			Interest				Cost			Balance			Interest			Cost
Interest-earning Assets:
Mortgage loans, net		$	5,010,097		$	53,777		4.29	%	$	4,721,742		$	49,814			4.22		%	$	4,628,854		$	51,927		4.49	%
Other loans, net			1,365,419			12,343		3.62			1,182,309			10,553			3.57				1,097,781			12,389		4.51
Total loans, net (1) (2)			6,375,516			66,120		4.15			5,904,051			60,367			4.09				5,726,635			64,316		4.49
Taxable securities:
Mortgage-backed securities			413,875			1,435		1.39			413,902			1,928			1.86				555,023			3,230		2.33
Other securities			266,663			957		1.44			243,754			1,166			1.91				244,075			1,774		2.91
Total taxable securities			680,538			2,392		1.41			657,656			3,094			1.88				799,098			5,004		2.50
Tax-exempt securities: (3)
Other securities			50,768			543		4.28			51,652			557			4.31				63,825			685		4.29
Total tax-exempt securities			50,768			543		4.28			51,652			557			4.31				63,825			685		4.29
Interest-earning deposits and federal funds sold			136,650			30		0.09			62,537			13			0.08				87,767			318		1.45
Total interest-earning assets			7,243,472			69,085		3.82			6,675,896			64,031			3.84				6,677,325			70,323		4.21
Other assets			461,935								407,132										379,769
Total assets		$	7,705,407							$	7,083,028									$	7,057,094
Interest-bearing Liabilities:
Deposits:
Savings accounts		$	163,382			75		0.18		$	160,100			65			0.16			$	192,818			325		0.67
NOW accounts			1,924,840			1,320		0.27			1,625,109			1,242			0.31				1,362,151			5,227		1.53
Money market accounts			1,507,245			2,010		0.53			1,461,996			2,108			0.58				1,456,676			7,165		1.97
Certificate of deposit accounts			1,113,293			3,065		1.10			1,106,355			3,700			1.34				1,516,000			8,752		2.31
Total due to depositors			4,708,760			6,470		0.55			4,353,560			7,115			0.65				4,527,645			21,469		1.90
Mortgagors' escrow accounts			75,005			—		—			55,868			(22	)		(0.16	)			74,751			48		0.26
Total interest-bearing deposits			4,783,765			6,470		0.54			4,409,428			7,093			0.64				4,602,396			21,517		1.87
Borrowings			1,385,809			6,769		1.95			1,322,471			6,897			2.09				1,309,888			7,483		2.29
Total interest-bearing liabilities			6,169,574			13,239		0.86			5,731,899			13,990			0.98				5,912,284			29,000		1.96
Non interest-bearing demand deposits			731,170								589,674										435,241
Other liabilities			195,200								184,943										142,108
Total liabilities			7,095,944								6,506,516										6,489,633
Equity			609,463								576,512										567,461
Total liabilities and equity		$	7,705,407							$	7,083,028									$	7,057,094
Net interest income / net interest rate spread (tax equivalent) (3)					$	55,846		2.96	%				$	50,041			2.86		%				$	41,323		2.25	%
Net interest-earning assets / net interest margin (tax equivalent)		$	1,073,898					3.08	%	$	943,997						3.00		%	$	765,041					2.48	%
Ratio of interest-earning assets to interest-bearing liabilities								1.17	X								1.16		X							1.13	X

---

⁽¹⁾ Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.9 million, $0.8 million and $0.3 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.
⁽²⁾ Loan interest income includes net gains from fair value adjustments on qualifying hedges of $1.0 million, $0.2 million and $1.0 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 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. Additionally, net interest income includes purchase accounting adjustments from Empire transaction for the three months ended December 31, 2020.

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

		For the year ended
		December 31, 2020									December 31, 2019
		Average						Yield/			Average						Yield/
		Balance			Interest			Cost			Balance			Interest			Cost
Interest-earning Assets:
Mortgage loans, net		$	4,798,232		$	202,722			4.22	%	$	4,609,439		$	203,440		4.41	%
Other loans, net			1,207,715			45,431			3.76			1,011,594			48,304		4.78
Total loans, net (1) (2)			6,005,947			248,153			4.13			5,621,033			251,744		4.48
Taxable securities:
Mortgage-backed securities			450,065			8,730			1.94			572,223			15,468		2.70
Other securities			249,533			5,178			2.08			243,324			8,102		3.33
Total taxable securities			699,598			13,908			1.99			815,547			23,570		2.89
Tax-exempt securities: (3)
Other securities			56,530			2,419			4.28			60,971			2,580		4.23
Total tax-exempt securities			56,530			2,419			4.28			60,971			2,580		4.23
Interest-earning deposits and federal funds sold			100,723			355			0.35			84,922			1,604		1.89
Total interest-earning assets			6,862,798			264,835			3.86			6,582,473			279,498		4.25
Other assets			413,224									365,408
Total assets		$	7,276,022								$	6,947,881
Interest-bearing Liabilities:
Deposits:
Savings accounts		$	176,443			495			0.28		$	198,374			1,378		0.69
NOW accounts			1,603,402			9,309			0.58			1,434,440			23,553		1.64
Money market accounts			1,561,496			14,368			0.92			1,370,038			27,819		2.03
Certificate of deposit accounts			1,167,865			18,096			1.55			1,532,440			35,078		2.29
Total due to depositors			4,509,206			42,268			0.94			4,535,292			87,828		1.94
Mortgagors' escrow accounts			70,829			44			0.06			70,209			229		0.33
Total interest-bearing deposits			4,580,035			42,312			0.92			4,605,501			88,057		1.91
Borrowings			1,361,559			26,816			1.97			1,251,452			28,959		2.31
Total interest-bearing liabilities			5,941,594			69,128			1.16			5,856,953			117,016		2.00
Non interest-bearing demand deposits			583,235									407,450
Other liabilities			171,126									122,189
Total liabilities			6,695,955									6,386,592
Equity			580,067									561,289
Total liabilities and equity		$	7,276,022								$	6,947,881
Net interest income / net interest rate spread (tax equivalent) (3)					$	195,707			2.70	%				$	162,482		2.25	%
Net interest-earning assets / net interest margin (tax equivalent)		$	921,204						2.85	%	$	725,520					2.47	%
Ratio of interest-earning assets to interest-bearing liabilities									1.16	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 $2.3 million and $2.0 million for the year ended December 31, 2020 and 2019, respectively.
⁽²⁾ Loan interest income includes net losses from fair value adjustments on qualifying hedges of $1.2 million and $1.7 million for the year ended December 31, 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 $0.5 million for each of the year ended December 31, 2020 and 2019. Additionally, net interest income includes purchase accounting adjustments from Empire transaction for the year ended December 31, 2020.

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
DEPOSIT COMPOSITION
(Unaudited)

														December 2020 vs.						December 2020 vs.
		December 31,			September 30,			June 30,			March 31,			September 2020			December 31,			December 2019
(Dollars in thousands)		2020			2020			2020			2020			% Change			2019			% Change
Deposits
Non-interest bearing		$	778,672		$	607,954		$	581,881		$	489,198		28.1	%		$	435,072		79.0		%
Interest bearing:
Certificate of deposit accounts			1,138,361			1,051,644			1,135,977			1,172,381		8.2	%			1,437,890		(20.8	)	%
Savings accounts			168,183			160,294			184,895			192,192		4.9	%			191,485		(12.2	)	%
Money market accounts			1,682,345			1,381,552			1,474,880			1,597,109		21.8	%			1,592,011		5.7		%
NOW accounts			2,323,172			1,704,915			1,672,241			1,377,555		36.3	%			1,365,591		70.1		%
Total interest-bearing deposits			5,312,061			4,298,405			4,467,993			4,339,237		23.6	%			4,586,977		15.8		%
Total deposits		$	6,090,733		$	4,906,359		$	5,049,874		$	4,828,435		24.1	%		$	5,022,049		21.3		%

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
LOANS
(Unaudited)

Loan Closings

		For the three months ended									For the year ended
		December 31,			September 30,			December 31,			December 31,			December 31,
(In thousands)		2020			2020			2019			2020			2019
Multi-family residential		$	52,024		$	33,733		$	104,310		$	212,729		$	247,607
Commercial real estate			57,634			26,644			55,047			191,852			178,336
One-to-four family – mixed-use property			9,692			3,867			18,653			35,131			66,128
One-to-four family – residential			8,422			2,296			5,833			21,805			25,024
Co-operative apartments			—			—			—			704			2,117
Construction			6,869			5,420			3,542			21,859			33,919
Small Business Administration (1)			598			18,456			721			112,352			3,426
Commercial business and other			180,830			65,160			81,630			407,725			605,743
Total		$	316,069		$	155,576		$	269,736		$	1,004,157		$	1,162,300

⁽¹⁾ Includes $18.4 million of PPP closings for the three months ended September 30, 2020. Includes $111.6 million of PPP closings for the year ended December 31, 2020.

Loan Composition

																		December 2020 vs.								December 2020 vs.
		December 31,				September 30,				June 30,				March 31,				September 2020					December 31,			December 2019
(Dollars in thousands)		2020				2020				2020				2020				% Change				2019				% Change
Loans held for investment:
Multi-family residential		$	2,533,952			$	2,252,757			$	2,285,555			$	2,272,343			12.5		%		$	2,238,591			13.2		%
Commercial real estate			1,754,754				1,636,659				1,646,085				1,664,934			7.2		%			1,582,008			10.9		%
One-to-four family ― mixed-use property			602,981				585,159				591,347				592,109			3.0		%			592,471			1.8		%
One-to-four family ― residential			245,211				191,011				184,741				189,774			28.4		%			188,216			30.3		%
Co-operative apartments			8,051				8,132				8,423				8,493			(1.0	)	%			8,663			(7.1	)	%
Construction			83,322				63,567				69,433				66,727			31.1		%			67,754			23.0		%
Small Business Administration (1)			167,376				124,649				106,813				14,076			34.3		%			14,445			1,058.7		%
Taxi medallion			2,757				2,317				3,269				3,281			19.0		%			3,309			(16.7	)	%
Commercial business and other			1,303,225				1,063,429				1,073,623				1,104,967			22.5		%			1,061,478			22.8		%
Net unamortized premiums and unearned loan fees (2)			3,045				13,718				13,986				15,384			(77.8	)	%			15,271			(80.1	)	%
Allowance for loan losses			(45,153	)			(38,343	)			(36,710	)			(28,098	)		17.8		%			(21,751	)		107.6		%
Net loans		$	6,659,521			$	5,903,055			$	5,946,565			$	5,903,990			12.8		%		$	5,750,455			15.8		%

⁽¹⁾ Includes $151.9 million, $111.6 million and $93.2 million of PPP loans at December 31, 2020 September 30, 2020 and June 30, 2020, respectively.
⁽²⁾ Includes $11.3 million of purchase accounting unamortized discount resulting from the acquisition of Empire Bancorp.

Net Loans Activity

		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(In thousands)		2020				2020				2020				2020				2019
Loans originated and purchased		$	316,069			$	155,576			$	233,797			$	298,715			$	269,736
Loans Acquired from Empire Merger			685,404				—				—				—				—
Principal reductions			(226,772	)			(196,221	)			(180,182	)			(137,189	)			(255,977	)
Loans sold			—				—				—				(498	)			(7,129	)
Loan charge-offs			(752	)			(964	)			(1,030	)			(1,259	)			(95	)
Foreclosures			—				—				—				—				—
Net change in deferred fees and costs			(10,673	)			(268	)			(1,398	)			113				(92	)
Net change in the allowance for loan losses			(6,810	)			(1,633	)			(8,612	)			(6,347	)			284
Total loan activity		$	756,466			$	(43,510	)		$	42,575			$	153,535			$	6,727

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

Non-Performing Assets

		December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in thousands)		2020			2020			2020			2020			2019
Loans 90 Days Or More Past Due and Still Accruing:
Multi-family residential		$	201		$	—		$	—		$	—		$	445
Commercial real estate			2,547			—			—			—			—
Commercial business and other			—			—			150			—			—
Total			2,748			—			150			—			445
Non-accrual Loans:
Multi-family residential			2,524			2,661			3,688			2,741			2,296
Commercial real estate			1,683			2,657			2,671			8			367
One-to-four family - mixed-use property (1)			1,366			1,366			2,511			607			274
One-to-four family - residential			5,854			6,454			6,412			5,158			5,139
Small Business Administration			1,151			1,151			1,321			1,518			1,151
Taxi medallion(1)			2,317			2,218			1,757			1,761			1,641
Commercial business and other(1)			3,430			8,285			1,678			4,959			1,945
Total			18,325			24,792			20,038			16,752			12,813
Total Non-performing Loans			21,073			24,792			20,188			16,752			13,258
Other Non-performing Assets:
Real estate acquired through foreclosure			—			—			208			208			239
Other asset acquired through foreclosure			35			35			35			35			35
Total			35			35			243			243			274
Total Non-performing Assets		$	21,108		$	24,827		$	20,431		$	16,995		$	13,532
Non-performing Assets to Total Assets			0.26	%		0.35	%		0.29	%		0.23	%		0.19	%
Allowance For Loan Losses to Non-performing Loans			214.3	%		154.7	%		181.8	%		167.7	%		164.1	%

---

⁽¹⁾ Not included in the above analysis are non-accrual performing TDR one-to-four family mixed use property loans totaling $0.3 million in 4Q20 and 3Q20; non-accrual performing TDR taxi medallion loans totaling $0.4 million in 4Q20, $0.1 million in 3Q20, $1.5 million in 2Q20, $1.5 million in 1Q20, and $1.7 million in 4Q19, and non-accrual performing TDR commercial business loans totaling $2.2 million in 4Q20 and $1.0 million in 3Q20, 2Q20, 1Q20, respectively, and $0.9 million in 4Q19.

Net Charge-Offs (Recoveries)

		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(In thousands)		2020				2020				2020				2020				2019
Multi-family residential		$	(11	)		$	(14	)		$	(7	)		$	(6	)		$	(14	)
Commercial real estate			—				—				—				—				(30	)
One-to-four family – mixed-use property			—				(60	)			3				(78	)			119
One-to-four family – residential			(2	)			(2	)			(3	)			(5	)			(3	)
Small Business Administration			(3	)			(47	)			165				(7	)			(8	)
Taxi medallion			124				951				—				—				—
Commercial business and other			538				9				849				1,245				(98	)
Total net loan charge-offs (recoveries)		$	646			$	837			$	1,007			$	1,149			$	(34	)

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			$	20,300		23.8	%		$	18,850		92.9	%	33.6	%
Hotels				119,794		62.8				119,794		100.0		56.7
Travel and Leisure				38,104		20.9				33,918		89.0		36.4
Retail Services (2)				12,046		8.4				3,169		26.3		36.9
CRE - Shopping Center				7,508		3.0				7,508		100.0		60.5
CRE - Single Tenant				8,010		5.8				8,010		100.0		37.7
CRE - Strip Mall				28,390		9.8				28,390		100.0		56.8
Transportation (2)				8,736		6.0				—		—		—
Contractors (2)				5,198		1.5				3,353		64.5		54.2
Schools and Child Care				13,260		20.3				7,760		58.5		41.9
Subtotal			$	261,346		14.2	%		$	230,752		88.3	%	48.3	%
Lower Risk Segments			$	103,072		2.1	%		$	99,339		96.4	%	37.6	%
Total			$	364,418		5.4	%		$	330,091		90.6	%	44.5	%

---

   ⁽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												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2020				2020				2019				2020				2019
GAAP income before income taxes		$	3,878			$	18,820			$	16,888			$	45,182			$	53,331
Day 1, Provision for Credit Losses - Empire transaction			1,818				—				—				1,818				—
Net (gain) loss from fair value adjustments			4,129				2,225				(807	)			2,142				5,353
Net loss on sale of securities			610				—				—				701				15
Life insurance proceeds			—				—				(419	)			(659	)			(462	)
Net gain on sale of assets			—				—				—				—				(770	)
Net (gain) loss from fair value adjustments on qualifying hedges			(1,023	)			(230	)			(1,039	)			1,185				1,678
Accelerated employee benefits upon Officer's death			—				—				—				—				455
Prepayment Penalty on Borrowings			7,834				—				—				7,834				—
Net amortization of purchase accounting adjustments			80				—				—				80				—
Merger expense			5,349				422				1,080				6,894				1,590
Core income before taxes			22,675				21,237				15,703				65,177				61,190
Provision for income taxes for core income			4,891				5,069				3,841				15,428				13,957
Core net income		$	17,784			$	16,168			$	11,862			$	49,749			$	47,233
GAAP diluted earnings per common share		$	0.11			$	0.50			$	0.45			$	1.18			$	1.44
Day 1, Provision for Credit Losses - Empire transaction, net of tax			0.05				—				—				0.05				—
Net (gain) loss from fair value adjustments, net of tax			0.11				0.06				(0.02	)			0.06				0.14
Net loss on sale of securities, net of tax			0.02				—				—				0.02				—
Life insurance proceeds			—				—				(0.01	)			(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			(0.03	)			(0.01	)			(0.03	)			0.03				0.05
Accelerated employee benefits upon Officer's death, net of tax			—				—				—				—				0.01
Prepayment Penalty on Borrowings, net of tax			0.20				—				—				0.20				—
Net amortization of purchase accounting adjustments, net of tax			—				—				—				—				—
Merger expense, net of tax			0.14				0.01				0.03				0.18				0.04
Core diluted earnings per common share(1)		$	0.58			$	0.56			$	0.41			$	1.70			$	1.65
Core net income, as calculated above		$	17,784			$	16,168			$	11,862			$	49,749			$	47,233
Average assets			7,705,407				7,083,028				7,057,094				7,276,022				6,947,881
Average equity			609,463				576,512				567,461				580,067				561,289
Core return on average assets(2)			0.92		%		0.91		%		0.67		%		0.68		%		0.68		%
Core return on average equity(2)			11.67		%		11.22		%		8.36		%		8.58		%		8.42		%

---

⁽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												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2020				2020				2019				2020				2019
Net interest income		$	55,732			$	49,924			$	41,179			$	195,199			$	161,940
Non-interest income			(1,181	)			1,351				5,038				11,043				9,471
Non-interest expense			(46,811	)			(29,985	)			(29,647	)			(137,931	)			(115,269	)
Pre-provision pre-tax net revenue (1)		$	7,740			$	21,290			$	16,570			$	68,311			$	56,142

⁽¹⁾ Includes non-cash net gains (losses) from fair value adjustments totaling ($3.1) million, ($2.0) million and $1.8 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively and ($3.3) million and ($7.0) million for the year ended December 31, 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												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2020				2020				2019				2020				2019
GAAP net interest income		$	55,732			$	49,924			$	41,179			$	195,199			$	161,940
Net (gain) loss from fair value adjustments on qualifying hedges			(1,023	)			(230	)			(1,039	)			1,185				1,678
Net amortization of purchase accounting adjustments			(11	)			—				—				(11	)			—
Core net interest income		$	54,698			$	49,694			$	40,140			$	196,373			$	163,618
GAAP interest income on total loans, net		$	66,120			$	60,367			$	64,316			$	248,153			$	251,744
Net (gain) loss from fair value adjustments on qualifying hedges			(1,023	)			(230	)			(1,039	)			1,185				1,678
Prepayment penalties received on loans			(857	)			(1,357	)			(926	)			(3,669	)			(4,548	)
Net recoveries of interest from non-accrual loans			(236	)			(86	)			(428	)			(832	)			(1,953	)
Net amortization of purchase accounting adjustments			(356	)			—				—				(356	)			—
Core interest income on total loans, net		$	63,648			$	58,694			$	61,923			$	244,481			$	246,921
Average total loans, net (1)		$	6,379,429			$	5,904,051			$	5,726,635			$	6,007,857			$	5,621,033
Core yield on total loans			3.99		%		3.98		%		4.33		%		4.07		%		4.39		%
Net interest income tax equivalent		$	55,846			$	50,041			$	41,323			$	195,707			$	162,482
Net (gain) loss from fair value adjustments on qualifying hedges			(1,023	)			(230	)			(1,039	)			1,185				1,678
Prepayment penalties received on loans and securities			(857	)			(1,432	)			(926	)			(3,744	)			(4,548	)
Net recoveries of interest from non-accrual loans			(236	)			(86	)			(428	)			(832	)			(1,953	)
Net amortization of purchase accounting adjustments			(11	)			—				—				(11	)
Net interest income used in calculation of Core net interest margin		$	53,719			$	48,293			$	38,930			$	192,305			$	157,659
Total average interest-earning assets (1)		$	7,245,147			$	6,675,896			$	6,677,325			$	6,864,145			$	6,582,473
Core net interest margin			2.97		%		2.89		%		2.33		%		2.80		%		2.40		%

---

⁽¹⁾ Excludes purchase accounting average balances for three months and year ended December 31, 2020.

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

		December 31,				September 30,				December 31,
(Dollars in thousands)		2020				2020				2019
Total Equity		$	618,997			$	586,406			$	579,672
Less:
Goodwill			(17,636	)			(16,127	)			(16,127	)
Core deposit Intangibles			(3,172	)			—				—
Intangible deferred tax liabilities			287				292				292
Tangible Stockholders' Common Equity		$	598,476			$	570,571			$	563,837
Total Assets		$	7,976,394			$	7,063,056			$	7,017,776
Less:
Goodwill			(17,636	)			(16,127	)			(16,127	)
Core deposit Intangibles			(3,172	)			—				—
Intangible deferred tax liabilities			287				292				292
Tangible Assets		$	7,955,873			$	7,047,221			$	7,001,941
Tangible Stockholders' Common Equity to Tangible Assets			7.52		%		8.10		%		8.05		%

__________________________________

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
[phone]