Flushing Financial Corporation
11/05/2025 | Press release | Distributed by Public on 11/05/2025 14:44
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report should be read in conjunction with the more detailed and comprehensive disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition, please read this section in conjunction with our Consolidated Financial Statements and Notes to Consolidated Financial Statements contained herein.
As used in this Quarterly Report, the words "we," "us," "our" and the "Company" are used to refer to Flushing Financial Corporation and its direct and indirect wholly owned subsidiaries, Flushing Bank (the "Bank"), Flushing Service Corporation, and FSB Properties Inc.
Statements contained in this Quarterly Report relating to plans, strategies, objectives, 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 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, factors discussed elsewhere in this Quarterly Report and in other documents filed by us with the Securities and Exchange Commission from time to time, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2024. 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. We have no obligation to update these forward-looking statements.
Executive Summary
We are a Delaware corporation organized in May 1994. The Bank was organized in 1929 as a New York State-chartered mutual savings bank. Today the Bank operates as a full-service New York State-chartered commercial bank. The Bank's primary regulator is the New York State Department of Financial Services, and its primary federal regulator is the Federal Deposit Insurance Corporation ("FDIC"). Deposits are insured to the maximum allowable amount by the FDIC. Additionally, the Bank is a member of the Federal Home Loan Bank system. The primary business of Flushing Financial Corporation has been the operation of the Bank. At September 30, 2025, the Bank owns two subsidiaries: Flushing Service Corporation and FSB Properties Inc. The Bank also operates an internet branch, which operates under the brands of iGObanking.com® and BankPurely® (the "Internet Branch"). The activities of Flushing Financial Corporation are primarily funded by dividends, if any, received from the Bank, issuances of subordinated debt, junior subordinated debt, and issuances of equity securities. Flushing Financial Corporation's common stock is traded on the NASDAQ Global Select Market under the symbol "FFIC."
Our principal business is attracting retail deposits from the general public and investing those deposits together with funds generated from ongoing operations and borrowings, primarily in (1) originations and purchases of multi-family residential loans, commercial business loans, commercial real estate mortgage loans and, to a lesser extent, one-to-four family loans (focusing on mixed-use properties, which are properties that contain both residential dwelling units and commercial units); (2) Small Business Administration ("SBA") loans and other small business loans; (3) construction loans; (4) mortgage loan surrogates such as mortgage-backed securities; and (5) U.S. government securities, corporate fixed-income securities and other marketable securities. We also originate certain other consumer loans including overdraft lines of credit. Our results of operations depend primarily on net interest income, which is the difference between the income earned on our interest-earning assets and the cost of our interest-bearing liabilities. Net interest income is the result of our net interest rate margin, which is the difference between the average yield earned on interest-earning assets and the average cost of
-46-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
interest-bearing liabilities, adjusted for the difference in the average balance of interest-earning assets as compared to the average balance of interest-bearing liabilities. We also generate non-interest income primarily from loan fees, service charges on deposit accounts, and other fees, income earned on Bank Owned Life Insurance ("BOLI"), dividends on Federal Home Loan Bank of New York ("FHLB-NY") stock and net gains and losses on sales of securities and loans. Our operating expenses consist principally of employee compensation and benefits, occupancy and equipment costs, other general and administrative expenses and income tax expense. Our results of operations can also be significantly affected by changes in the fair value of financial assets and financial liabilities for which changes in value are recorded through earnings and our periodic provision for credit losses.
Our investment policy, which is approved by the Board of Directors, is designed primarily to manage the interest rate sensitivity of our overall assets and liabilities, to generate a favorable return without incurring undue interest rate risk and credit risk, to complement our lending activities and to provide and maintain liquidity. In establishing our investment strategies, we consider our business and growth strategies, the economic environment, our interest rate risk exposure, our interest rate sensitivity "gap" position, the types of securities to be held and other factors. We classify our investment securities as available for sale or held-to-maturity.
We carry a portion of our financial assets and financial liabilities under the fair value option and record changes in their fair value through earnings in non-interest income on our Consolidated Statements of Operations and Comprehensive Income. A description of the financial assets and financial liabilities that are carried at fair value through earnings can be found in Note 10 ("Fair Value of Financial Instruments") of the Notes to the Consolidated Financial Statements.
For the three months ended September 30, 2025, we reported net income of $10.4 million, or $0.30 per diluted common share, an increase of $1.5 million, or 17.3% from net income of $8.9 million, or $0.30 per diluted common share earned in the three months ended September 30, 2024.
During the three months ended September 30, 2025, the net interest margin increased 54 basis points to 2.64% from 2.10% in the three months endedSeptember 30, 2024. Excluding prepayment penalty income from loans, net recoveries/reversals of interest from non-accrual and delinquent loans, net gains (losses) from fair value adjustments on hedges, and purchase accounting adjustments, the net interest margin increased 56 basis points to 2.55% for the three months ended September 30, 2025, from 1.99% for the three months ended September 30, 2024.
Approximately 91% of our loan portfolio is collateralized by real estate with an average loan to value of less than 35%, based on appraisal at origination. We have a long history and foundation built upon disciplined underwriting, strong credit quality, and a resilient seasoned loan portfolio with solid asset protection. At September 30, 2025, our allowance for credit losses ("ACL") to gross loans stood at 0.63% and our ACL to non-performing loans was 93.3%. Non-performing assets at the end of the quarter were 0.70% of total assets.
The Bank and Company remain well-capitalized under current capital regulations of the FDIC and the Federal Reserve Board, respectively, and are subject to similar regulatory capital requirements. See Note 13 ("Regulatory Capital") of the Notes to the Consolidated Financial Statements.
-47-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following table presents operating data highlights for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
||||
|
|
2025 |
2024 |
||||
|
|
|
(In thousands, except per share data) |
||||
|
Operating data: |
|
|
||||
|
Interest and dividend income |
|
$ |
116,469 |
|
$ |
122,593 |
|
Interest expense |
|
62,641 |
|
76,990 |
||
|
Net interest income (loss) |
|
53,828 |
|
45,603 |
||
|
Provision (benefit) for credit losses |
|
1,531 |
|
1,727 |
||
|
Non-interest income (loss) |
|
4,746 |
|
6,277 |
||
|
Non-interest expense |
|
43,365 |
|
38,696 |
||
|
Income (loss) before income taxes |
|
13,678 |
|
11,457 |
||
|
Provision (benefit) for income taxes |
|
|
3,231 |
|
|
2,551 |
|
Net income (loss) |
|
$ |
10,447 |
|
$ |
8,906 |
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common share |
|
$ |
0.30 |
|
$ |
0.30 |
|
Diluted earnings (loss) per common share |
|
|
0.30 |
|
|
0.30 |
|
Dividends per common share |
|
$ |
0.22 |
|
$ |
0.22 |
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
General. Net income for the three months ended September 30, 2025 was $10.4 million, an increase of $1.5 million, or 17.30%, from $8.9 million for the three months ended September 30, 2024. Diluted earnings per common share was $0.30 for both the three months ended September 30, 2025, and 2024. Return on average equity was 5.86% for the three months ended September 30, 2025 compared to 5.30% for the three months ended September 30, 2024. Return on average assets was 0.48% for the three months ended September 30, 2025 compared to 0.39% for the three months ended September 30, 2024.
Interest Income. Interest and dividend income decreased $6.1 million, or 5.0%, to $116.5 million for the three months ended September 30, 2025, from $122.6 million for the three months ended September 30, 2024. The decline in interest income was primarily attributable to a decrease of $528.1 million in the average balance of interest-earning assets to $8,181.6 million for the three months ended September 30, 2025, from $8,709.7 million for the comparable prior year period, partially offset by a 7 basis point increase in the yield on interest-earning assets to 5.70% for the three months ended September 30, 2025, compared to 5.63% for the three months ended September 30, 2024. The decline in interest-earning assets was primarily driven by our decision to maintain pricing and credit discipline. Excluding prepayment penalty income from loans, net recoveries/reversals of interest from non-accrual and delinquent loans, net gains (losses) from fair value adjustments on hedges, and purchase accounting adjustments, the yield on total interest-earning assets increased 8 basis points to 5.61% for the three months ended September 30, 2025, from 5.53% for the three months ended September 30, 2024.
Interest Expense. Interest expense decreased $14.3 million, or 18.6%, to $62.6 million for the three months ended September 30, 2025, from $77.0 million for the three months ended September 30, 2024. The decline in interest expense was primarily due to the average cost of interest-bearing liabilities decreasing 48 basis points to 3.62% for the three months ended September 30, 2025, from 4.10% for the three months ended September 30, 2024, coupled with the average balance of interest-bearing liabilities decreasing $580.9 million to $6,923.6 million for the three months ended September 30, 2025, from $7,504.5 million for the comparable prior year period.
Net Interest Income. Net interest income for the three months ended September 30, 2025, was $53.8 million, an increase of $8.2 million, or 18.0%, from $45.6 million for the three months ended September 30, 2024. The increase in net interest
-48-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
income was driven by an increase in the net interest margin of 54 basis points to 2.64% for the three months ended September 30, 2025, from 2.10% for the three months ended September 30, 2024. The net interest margin, excluding the items noted above in Interest Income, was 2.55% for the three months ended September 30, 2025, an increase of 56 basis points from 1.99% for the three months ending September 30, 2024.
Provision for Credit Losses. During the three months ended September 30, 2025, the provision for credit losses was $1.5 million compared to $1.7 million for the three months ended September 30, 2024. The provision recorded during the three months ended September 30, 2025 was primarily driven by net charge offs and an increase in reserves applied to one Business Banking loan. The current average loan-to-value ratio for our non-performing assets collateralized by real estate was 61.5% at September 30, 2025. The Bank continues to maintain conservative underwriting standards.
Non-Interest Income. Non-interest income for the three months ended September 30, 2025, was $4.7 million, a decrease of $1.5 million, or 24.4% from $6.3 million in the prior year comparable period. The decrease was primarily due to net losses from fair value adjustments recorded during the three months ended September 30, 2025, compared to net gains recorded during the three months ended September 30, 2024. This was partially offset by higher BOLI income and net gains on sale of securities during the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The improvement in BOLI income resulted from the exchange of lower yielding policies for higher yielding policies.
Non-Interest Expense. Non-interest expense for the three months ended September 30, 2025, was $43.4 million, an increase of $4.7 million, or 12.1%, from $38.7 million for the three months ended September 30, 2024. The increase was primarily due to higher costs in multiple expense categories.
Income before Income Taxes. Income before income taxes for the three months ended September 30, 2025, was $13.7 million, an increase of $2.2 million, or 19.4%, from $11.5 million for the three months ended September 30, 2024 for the reasons discussed above.
Provision for Income Taxes. The provision for income taxes was $3.2 million for the three months ended September 30, 2025, an increase of $0.7 million, or 26.7%, from $2.6 million for the three months ended September 30, 2024. The effective tax rate for the three months ended September 30, 2025 was 23.6% compared to 22.3% for the three months ended September 30, 2024.
The following table presents operating data highlights for the periods indicated:
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
|||||
|
|
2025 |
2024 |
||||
|
|
|
(In thousands except per share data) |
||||
|
Operating data: |
|
|
||||
|
Interest and dividend income |
|
$ |
350,407 |
|
$ |
345,322 |
|
Interest expense |
|
190,381 |
|
214,546 |
||
|
Net interest income (loss) |
|
160,026 |
|
130,776 |
||
|
Provision (benefit) for credit losses |
|
10,043 |
|
3,128 |
||
|
Non-interest income (loss) |
|
20,097 |
|
13,577 |
||
|
Non-interest expense |
|
143,397 |
|
117,635 |
||
|
Income (loss) before income taxes |
|
26,683 |
|
23,590 |
||
|
Provision (benefit) for income taxes |
|
11,829 |
|
5,678 |
||
|
Net income (loss) |
|
$ |
14,854 |
|
$ |
17,912 |
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common share |
|
$ |
0.43 |
|
$ |
0.60 |
|
Diluted earnings (loss) per common share |
|
|
0.43 |
|
|
0.60 |
|
Dividends per common share |
|
$ |
0.66 |
|
$ |
0.66 |
-49-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
General. Net income for the nine months ended September 30, 2025 was $14.9 million, a decrease of $3.1 million, or 17.1%, from $17.9 million for the nine months ended September 30, 2024. Diluted earnings per common share were $0.43 for the nine months ended September 30, 2025, a decrease of $0.17, or 28.3%, from $0.60 for the nine months ended September 30, 2024. Return on average equity was 2.76% for the nine months ended September 30, 2025 compared to 3.57% for the nine months ended September 30, 2024. Return on average assets was 0.22% for the nine months ended September 30, 2025 compared to 0.27% for the nine months ended September 30, 2024.
The primary reason for the decrease in net income, diluted earnings per share, return on average assets and return on average equity was due to the Company recording a non-cash, non-tax deductible impairment charge on its entire goodwill balance totaling $17.6 million during the nine months ended September 30, 2025.
Interest Income. Interest and dividend income increased $5.1 million, or 1.5%, to $350.4 million for the nine months ended September 30, 2025 from $345.3 million for the nine months ended September 30, 2024. The increase in interest income was primarily attributable to a 14 basis point increase in the yield on interest-earning assets to 5.60% for the nine months ended September 30, 2025 compared to 5.46% for the nine months ended September 30, 2024, partially offset by the average balance of total interest-earning assets which decreased $84.3 million from the comparable prior year period. Excluding prepayment penalty income from loans, net recoveries/reversals of interest from non-accrual loans, net gains (losses) from fair value adjustments on hedges, and purchase accounting adjustments, the yield on total interest-earning assets increased 14 basis points to 5.54% for the nine months ended September 30, 2025 from 5.40% for the nine months ended September 30, 2024.
Interest Expense. Interest expense decreased $24.2 million, or 11.3%, to $190.4 million for the nine months ended September 30, 2025 from $214.5 million for the nine months ended September 30, 2024. The decrease in interest expense was primarily due to a decrease of 39 basis points in the average cost of interest-bearing liabilities to 3.57% for the nine months ended September 30, 2025 from 3.96% for the nine months ended September 30, 2024. In addition, there was a decrease of $101.7 million in the average balance of interest-bearing liabilities to $7,119.1 million for the nine months ended September 30, 2025 from $7,220.9 million for the comparable prior year period.
Net Interest Income. Net interest income for the nine months ended September 30, 2025 was $160.0 million, an increase of $29.3 million, or 22.4%, from $130.8 million for the nine months ended September 30, 2024. The increase in net interest income was driven by the net interest margin increasing 49 basis points to 2.56% for the nine months ended September 30, 2025 from 2.07% for the nine months ended September 30, 2024. The net interest margin, excluding the items noted above in Interest Income, was 2.50% for the nine months ended September 30, 2025, an increase of 49 basis points from 2.01% for the nine months ending September 30, 2024.
Provision for Credit Losses. During the nine months ended September 30, 2025, the provision for credit losses was $10.0 million compared to $3.1 million for the nine months ended September 30, 2024. The provision recorded during the nine months ended September 30, 2025, was primarily due to reserves on one commercial real estate loan which lost its primary tenant, increased reserves applied to three Business Banking loans, one Multi-Family loan and one Commercial Real Estate loan, coupled with net charges-offs. The current average loan-to-value ratio for our non-performing assets collateralized by real estate was 61.5% at September 30, 2025. The Bank continues to maintain conservative underwriting standards.
Non-Interest Income. Non-interest income for the nine months ended September 30, 2025 was $20.1 million, an increase of $6.5 million, or 48.0% from $13.6 million in the prior year comparable period. The increase was primarily due to increases in net gain on sale of loans and BOLI income during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in net gain on sale of loans was driven by the reversal of a
-50-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
previously recorded valuation allowance upon the reclassification of loans held for sale to loans held for investment during the nine months ended September 30, 2025, as Management decided not to sell the performing loans. The improvement in BOLI income resulted from the exchange of lower yielding policies for higher yielding policies.
Non-Interest Expense. Non-interest expense for the nine months ended September 30, 2025 was $143.4 million, an increase of $25.8 million, or 21.9%, from $117.6 million for the nine months ended September 30, 2024. The increase was primarily due to the recording of a non-cash non-tax deductible goodwill impairment charge of all goodwill outstanding totaling $17.6 million during the nine months ended September 30, 2025. The remainder of the growth in non-interest expense was primarily due to higher costs in multiple expense categories.
Income before Income Taxes. Income before income taxes for the nine months ended September 30, 2025 was $26.7 million, an increase of $3.1 million, or 13.1%, from $23.6 million for the nine months ended September 30, 2024 for the reasons discussed above.
Provision for Income Taxes. The provision for income taxes was $11.8 million for the nine months ended September 30, 2025, an increase of $6.2 million, or 108.3%, from $5.7 million for the nine months ended September 30, 2024. The effective tax rate for the nine months ended September 30, 2025 was 44.3% compared to 24.1% for the nine months ended September 30, 2024. The higher effective tax rate for the nine months ended September 30, 2025 was primarily related to the non-tax deductible goodwill impairment and the settlement of income tax audits.
-51-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITION
Assets. Total assets at September 30, 2025, were $8,872.0 million, a decrease of $167.0 million, or 1.8%, from $9,039.0 million at December 31, 2024. The decrease in total assets was mainly due to total net loans held for investment decreasing $77.2 million, or 1.2%, during the nine months ended September 30, 2025, to $6,628.5 million from $6,705.7 million at December 31, 2024, coupled with a decrease during the same period in loans held for sale totaling $70.1 million. The decrease in loans was primarily due to the Company maintaining pricing and credit discipline. Loan originations and purchases were $586.0 million for the nine months ended September 30, 2025, an increase of $113.0 million, or 23.9%, from $473.0 million for the nine months ended September 30, 2024. The loan pipeline was $345.6 million at September 30, 2025, compared to $198.9 million at December 31, 2024.
The following table shows loan originations and purchases for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
For the nine months ended |
||||||||||
|
|
September 30, |
|
September 30, |
|||||||||
|
(In thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||
|
Multi-family residential |
|
$ |
17,674 |
|
$ |
50,528 |
$ |
47,403 |
|
$ |
90,299 |
|
|
Commercial real estate |
|
40,199 |
|
56,713 |
|
120,648 |
|
|
87,326 |
|||
|
One-to-four family - mixed-use property |
|
3,580 |
|
5,709 |
|
8,461 |
|
|
10,439 |
|||
|
One-to-four family - residential (1) |
|
86,589 |
|
1,705 |
|
122,206 |
|
|
54,933 |
|||
|
Construction |
|
4,839 |
|
5,063 |
|
10,583 |
|
|
11,552 |
|||
|
Small Business Administration |
|
528 |
|
5,930 |
|
4,235 |
|
|
5,930 |
|||
|
Commercial business and other (2) |
|
99,351 |
|
91,447 |
|
272,476 |
|
212,564 |
||||
|
Total |
|
$ |
252,760 |
|
$ |
217,095 |
|
$ |
586,012 |
|
$ |
473,043 |
(1) Includes purchases of $86.4 million for the three months ended September 30, 2025. Includes purchases of $121.5 million and $52.3 million for the nine months ended September 30, 2025 and 2024, respectively.
(2) Includes purchases of $49.8 million and $33.6 million for the three months ended September 30, 2025 and 2024, respectively. Includes purchases of $92.1 million and $78.0 million for the nine months ended September 30, 2025 and 2024, respectively.
The Bank maintains its conservative underwriting standards that include, among other things, a loan-to-value ratio of 75% or less and a debt coverage ratio of at least 125%. Multi-family residential (excluding underlying co-operative mortgages), commercial real estate and one-to-four family mixed-use property mortgage loans originated and purchased during the three months ended September 30, 2025 had an average loan-to-value ratio of 43.0% and an average debt coverage ratio of 172.0%.
Non-performing assets totaled $62.1 million at September 30, 2025, an increase of $10.8 million, or 21.1% from December 31, 2024. Total non-performing assets as a percentage of total assets were 0.70% at September 30, 2025 compared to 0.57% at December 31, 2024. The ratio of ACL - loans to total non-performing loans was 93.3% at September 30, 2025 compared to 120.5% at December 31, 2024.
During the nine months ended September 30, 2025, mortgage-backed securities decreased $5.4 million, or 0.6%, to $914.1 million from $919.5 million at December 31, 2024. The decrease during the nine months ended September 30, 2025 was primarily due to principal repayments totaling $123.6 million, coupled with sales totaling $80.7 million at an average yield of 5.29%, partially offset by purchases of securities totaling $192.0 million at an average yield of 5.27% and an improvement in the securities fair value totaling $7.0 million.
During the nine months ended September 30, 2025, other securities increased $47.9 million, or 7.6%, to $677.8 million from $629.9 million at December 31, 2024. The increase in other securities during the nine months ended September 30, 2025, was primarily due to purchases totaling $193.4 million, at an average yield of 6.08%, partially offset by calls totaling
-52-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
$132.1 million and principal repayments totaling $16.0 million. At September 30, 2025, other securities primarily consisted of securities issued by mutual or bond funds, government agency securities, municipal bonds, corporate bonds, and CLOs.
Liabilities. Total liabilities were $8,160.8 million at September 30, 2025, a decrease of $153.7 million, or 1.8%, from $8,314.4 million at December 31, 2024. During the nine months ended September 30, 2025, Due to Depositors increased $207.0 million, or 2.9%, to $7,332.8 million primarily due to increases in NOW and money market accounts totaling $317.8 million, or 9.0% and non-interest bearing accounts of $128.2 million, or 15.3%. These increases were partially offset by a decrease in certificates of deposit accounts totaling $231.1 million, or 8.7%. At September 30, 2025, the Company had uninsured deposits totaling $2.6 billion, or 34.6% of deposits of which $1.3 billion was fully collateralized by some other method leaving uninsured and uncollateralized deposits totaling $1.3 billion, or 17.0% of deposits. Uninsured deposits are greatly influenced by our government deposit portfolio. These deposits fluctuate at times that affect both the uninsured deposit levels and other sources of liquidity used. Borrowed funds decreased $423.6 million, or 46.2%, during the nine months ended September 30, 2025, as funds were not needed due to increases in deposits and decreases in loans.
Total deposits at the periods shown and the weighted average rate on deposits at September 30, 2025 and December 31, 2024, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average |
|
||||
|
|
|
September 30, |
|
December 31, |
|
Nominal Rate |
|
||
|
|
2025 |
2024 |
2025 (1) |
|
|||||
|
|
|
(In thousands) |
|||||||
|
Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
Certificates of deposit accounts |
|
$ |
2,419,039 |
|
$ |
2,650,164 |
|
4.05 |
% |
|
Savings accounts |
|
91,089 |
|
98,964 |
|
0.41 |
|
||
|
Money market accounts |
|
1,714,184 |
|
1,686,109 |
|
3.57 |
|
||
|
NOW accounts |
|
2,143,752 |
|
1,854,069 |
|
3.35 |
|
||
|
Total interest-bearing deposits |
|
6,368,064 |
|
6,289,306 |
|
|
|||
|
Non-interest bearing demand deposits |
|
964,767 |
|
836,545 |
|
|
|||
|
Total due to depositors |
|
7,332,831 |
|
7,125,851 |
|
|
|||
|
Mortgagors' escrow deposits |
|
82,697 |
|
53,082 |
|
0.28 |
|
||
|
Total deposits |
|
$ |
7,415,528 |
|
$ |
7,178,933 |
|
|
|
(1) The weighted average rate does not reflect the effect of interest rate swaps.
Included in deposits were brokered deposits totaling $1,180.4 million, a decrease of $138.6 million, or 10.5% from $1,319.0 million at December 31, 2024. We utilize brokered deposits as an additional funding source, to assist in the management of our interest rate risk and as an underlying funding source for a portion of our interest rate swaps. We obtain brokered certificates of deposit as a wholesale funding source when the interest rate on these deposits are below other wholesale options, or to extend the maturities of our deposits. Brokered deposits generally have a higher beta than our retail deposits as the interest rates are typically more sensitive to changes in the federal funds rates. A portion of our brokered certificates of deposit are hedged against rising interest rates using interest rate swaps. At September 30, 2025 and December 31, 2024, $725.8 million and $875.8 million, respectively, of brokered certificates of deposits were hedged using interest rate swaps. See Note 11 ("Derivative Financial Instruments") of the Notes to the Consolidated Financial Statements. Brokered deposits obtained by the Bank are generally fully FDIC insured. At September 30, 2025, and December 31, 2024, the Bank did not hold any uninsured brokered deposits.
-53-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following table shows the composition of brokered deposits at the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
||
|
(In thousands) |
|
2025 |
|
2024 |
||
|
NOW accounts |
|
$ |
299,937 |
|
$ |
151,387 |
|
Money market accounts |
|
- |
|
73,622 |
||
|
Certificates of deposit |
|
|
880,441 |
|
|
1,093,996 |
|
Total brokered deposits |
|
$ |
1,180,378 |
|
$ |
1,319,005 |
Interest expense on brokered deposits is summarized as follows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
||||
|
(In thousands) |
2025 |
2024 |
||||
|
NOW accounts |
|
$ |
2,968 |
|
$ |
694 |
|
Money market accounts |
|
- |
|
214 |
||
|
Certificates of deposit |
|
|
7,198 |
|
|
12,027 |
|
Total interest expense on brokered deposits |
|
$ |
10,166 |
|
$ |
12,935 |
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
||||
|
(In thousands) |
|
2025 |
|
2024 |
||
|
NOW accounts |
|
$ |
7,386 |
|
$ |
908 |
|
Money market accounts |
|
551 |
|
1,099 |
||
|
Certificates of deposit |
|
|
21,342 |
|
|
22,916 |
|
Total brokered deposits |
|
$ |
29,279 |
|
$ |
24,923 |
Equity.Total stockholders' equity was $711.2 million at September 30, 2025, a decrease of $13.3 million, or 1.8%, from $724.5 million at December 31, 2024. Stockholders' equity decreased primarily due to the declaration and payment of dividends on the Company's common stock of $0.66 per common share totaling $22.7 million, and a decrease of $7.1 million in other comprehensive income (loss), partially offset by net income totaling $14.9 million. Book value per common share was $21.06 at September 30, 2025, compared to $21.53 at December 31, 2024.
Liquidity.Liquidity is the ability to economically meet current and future financial obligations. The Company's primary objectives in terms of managing liquidity are to maintain the ability to originate and purchase loans and securities, repay borrowings as they mature, satisfy financial obligations that arise in the normal course of business and meet our customer's deposit withdrawal needs. Our primary sources of funds are deposits, borrowings, principal and interest payments on loans, mortgage-backed and other securities, and proceeds from sales of securities and loans. Deposit flows and mortgage prepayments, however, are greatly influenced by the level of interest rates, economic conditions, and competition. The Company has other sources of liquidity, including unsecured overnight lines of credit, brokered deposits and other types of borrowings. At September 30, 2025 and December 31, 2024, the Company had $3.9 billion and $3.6 billion, respectively, in combined available liquidity through cash lines with the FHLB-NY, Federal Reserve and other commercial banks, as well as unencumbered securities.
-54-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following tables present the Company's available liquidity by source at the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2025 |
|||||||
|
|
|
Total |
|
Amount |
|
Net |
|||
|
|
Available |
Used |
Availability |
||||||
|
|
|
(In millions) |
|||||||
|
Internal Sources: |
|
|
|
||||||
|
Unencumbered Securities |
|
$ |
914.6 |
|
$ |
- |
|
$ |
914.6 |
|
Interest Earnings Deposits |
|
65.4 |
|
- |
|
65.4 |
|||
|
External Sources: |
|
|
|
|
|
|
|||
|
Federal Home Loan Bank |
|
2,633.0 |
|
1,704.8 |
|
928.2 |
|||
|
Federal Reserve Bank |
|
1,496.4 |
|
- |
|
1,496.4 |
|||
|
Other Banks |
|
527.0 |
|
70.0 |
|
457.0 |
|||
|
Total Liquidity |
|
$ |
5,636.4 |
|
$ |
1,774.8 |
|
$ |
3,861.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2024 |
|||||||
|
|
|
Total |
|
Amount |
|
Net |
|||
|
|
Available |
Used |
Availability |
||||||
|
|
|
(In millions) |
|||||||
|
Internal Sources: |
|
|
|
||||||
|
Unencumbered Securities |
|
$ |
954.3 |
|
$ |
- |
|
$ |
954.3 |
|
Interest Earnings Deposits |
|
57.4 |
|
- |
|
57.4 |
|||
|
External Sources: |
|
|
|
|
|
|
|||
|
Federal Home Loan Bank |
|
2,730.3 |
|
2,034.7 |
|
695.6 |
|||
|
Federal Reserve Bank |
|
1,528.9 |
|
- |
|
1,528.9 |
|||
|
Other Banks |
|
379.0 |
|
50.0 |
|
329.0 |
|||
|
Total Liquidity |
|
$ |
5,649.9 |
|
$ |
2,084.7 |
|
$ |
3,565.2 |
Liquidity management is both a short and long-term function of business management. During 2025, funds were provided by the Company's operating and investing activities to fund financing activities. The largest uses of funds during the nine months ended September 30, 2025 were the repayment of $425.0 million in short-term borrowed funds, the purchase of $340.3 million of securities available for sale and the purchase of $213.6 million of loans. These uses were primarily funded by sales, calls and repayments of securities totaling $352.5 million, net repayments of loans totaling $291.4 million and an increase in deposits totaling $235.9 million. Our most liquid assets are cash and cash equivalents, which include cash and due from banks, overnight interest-earning deposits and federal funds sold with original maturities of 90 days or less. The level of these assets is dependent on our operating, financing, lending, and investing activities during any given period. At September 30, 2025, cash and cash equivalents totaled $142.9 million, a decrease of $9.6 million, or 6.3% from $152.6 million, at December 31, 2024. A portion of our cash and cash equivalents is restricted cash held as collateral for interest rate swaps. At September 30, 2025, and December 31, 2024, restricted cash totaled $17.3 million and $43.2 million, respectively.
INTEREST RATE RISK
Interest rate risk is the impact on earnings and capital from changes in interest rates. Interest rate risk exists because our interest-earning assets and interest-bearing liabilities may mature or reprice at different times or by different amounts. We assess interest rate risk by comparing the results of several income and capital simulations scenarios to the base case compared to scenarios with changes in interest rates, degree of change over time, speed of change, and changes in the shape of the yield curve. These scenarios have assumptions including loan originations, investment securities purchases and sales, prepayment rates on loans and investment securities, deposit flows, and mix and pricing decisions.
Asset/Liability Management. Asset/liability management involves assessing, monitoring and managing interest rate risk. The asset liability committee ("ALCO") and the Investment Committee of the Board of Directors ("Board ALCO") have primary oversight responsibility of interest rate risk. The actions and activities of the Board ALCO are dictated by the
-55-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
"ALCO and Investment Committee Charter" of the Company Board of Directors (the "Charter"). The Board ALCO has established policy limits for changes of net interest income and the economic value of equity under various scenarios and liquidity risk limits to ensure the Company has sufficient liquid assets to meet its short-term obligations, even during periods of financial stress and is reviewed no less frequently than quarterly. The ALCO policy and oversight is interconnected to the Company's capital plan.
The Board ALCO reviews simulations of various interest rate scenarios to assess the potential impact on the Company's balance sheet and income statement. The model employed by the Company uses a statistic balance sheet as of the date the modeling is being generated. The limitation to this model is that unexpected events may not be captured in the output. The model is validated no less frequently than annually with the variables in the model subjected to annual stress tests. In addition, the interest rate risk model is back-tested no less frequently than annually to ensure the model remains consistent with actual results. The information from the interest rate risk modeling allows the Board ALCO to assess the potential impact of interest rate changes on the Company's profitability and future earnings.
The interest rate risk scenarios affect the position the Company may take with the pricing of assets and liabilities.
Models are inherently imperfect and subject to assumptions and limitations. The model output is affected by the data quality and the assumptions used. The Company uses both internal and external inputs into the model. The market interest rates are obtained from the Federal Reserve World Interest Rate Probabilities ("WIRP") curve and may be adjusted by the management level ALCO committee ("Management ALCO"); the change in deposit betas is based upon deposit studies completed by an independent third party; loan prepayment assumptions are based upon internal analysis; loan origination data is Company generated; and additions to assets and liabilities is derived from the budget or forecast or internally generated projected cash flows.
There was no material change in the source of the data used in our interest rate risk modeling in the current period. Current economic factors such as interest rate forecasts as changed from period over period may affect the modeling. Key assumptions include deposit betas and loan origination yields. Deposit betas vary by product and direction of interest rates. In an upward shock, weighted average deposit betas (based on period end balances) were 70% at September 30, 2025 and 71% at September 30, 2024. In a downward shock, weighted average deposit betas (based on period end balances) were 61% at September 30, 2025 and 63% at September 30, 2024. Loan origination yields vary by product and the weighted average yield (based on period end loan balances) was 6.54% at September 30, 2025 compared to 7.08% at September 30, 2024.
Management ALCO, which consists of representatives from treasury, finance, business units, and senior management, oversees the interest rate risk, liquidity risk and capital risk while providing regular reports to the Board ALCO. These reports quantify the potential changes in net interest income and economic value of equity through various rate scenarios. The Management ALCO also provides the results of the liquidity stress test prepared by the Chief Risk Officer, the sensitivity analyses of the interest rate risk model variables, and the capital position of the Company and the Bank.
Economic Value of Equity Analysis. The Consolidated Statements of Financial Condition have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"), which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in fair value of certain investments due to changes in interest rates. Generally, the fair value of financial investments such as loans and securities fluctuate inversely with changes in interest rates. As a result, increases in interest rates could result in decreases in the fair value of the Company's interest-earning assets which could adversely affect the Company's results of operations if such assets were sold, or, in the case of securities classified as available for sale, decreases in the Company's stockholders' equity, if such securities were retained.
-56-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Company quantifies the net portfolio value should interest rates immediately go up or down 100 or 200 basis points, assuming the yield curves of the rate shocks will be parallel to each other. Net portfolio value is defined as the market value of assets less the market value of liabilities. The market value of assets and liabilities is determined using a discounted cash flow calculation. The net portfolio value ratio is the ratio of the net portfolio value to the market value of assets. The changes in value are measured as percentage changes from the net portfolio value at the base interest rate scenario. The base interest rate scenario assumes interest rates at September 30, 2025. Various estimates regarding prepayment assumptions are made at each level of rate shock. At September 30, 2025, the Company was within the guidelines set forth by the Board of Directors for each interest rate level.
The following table presents the change in the Company's net portfolio value and the net portfolio ratio for the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected Percentage Change In |
|
|
|
|
|
|
|||||
|
|
Net Portfolio Value (NPV) |
|
Net Portfolio Value Ratio |
|||||||||
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
Change in Interest Rate |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
-200 Basis points |
|
6.7 |
% |
|
(3.3) |
% |
|
9.0 |
% |
|
5.4 |
% |
|
-100 Basis points |
|
2.9 |
|
|
(2.6) |
|
|
8.9 |
|
|
5.5 |
|
|
Base interest rate |
|
- |
|
|
- |
|
|
8.8 |
|
5.8 |
||
|
+100 Basis points |
|
(5.4) |
|
|
(4.9) |
|
|
8.4 |
|
5.6 |
||
|
+200 Basis points |
|
(11.9) |
|
|
(9.0) |
|
|
8.0 |
|
5.4 |
||
Income Simulation Analysis.The Company manages the mix of interest-earning assets and interest-bearing liabilities on a continuous basis to maximize return and adjust its exposure to interest rate risk. The starting point for the net interest income simulation is an estimate of the next twelve months' net interest income, assuming that both interest rates and the Company's interest-sensitive assets and liabilities remain at period-end levels. The report quantifies the potential changes in net interest income should interest rates go up or down 100 or 200 basis points (shocked), assuming the yield curves of the rate shocks will be parallel to each other. All changes in income are measured as percentage changes from the projected net interest income at the base interest rate scenario. The base interest rate scenario assumes interest rates at September 30, 2025 and 2024. Prepayment penalty income is excluded from this analysis. Actual results could differ significantly from these estimates. At September 30, 2025, the Company was within the guidelines set forth by the Board of Directors for each interest rate level.
The following table presents the Company's interest rate shock as of September 30:
|
|
|
|
|
|
|
|
|
|
|
Projected Percentage Change in Net Interest Income |
|
|||
|
Change in Interest Rate |
|
2025 |
|
2024 |
||
|
-200 Basis points |
|
1.2 |
% |
|
(1.8) |
% |
|
-100 Basis points |
|
0.2 |
|
|
(0.4) |
|
|
Base interest rate |
|
- |
|
|
- |
|
|
+100 Basis points |
|
(4.3) |
|
|
(3.5) |
|
|
+200 Basis points |
|
(9.5) |
|
|
(7.7) |
|
Another net interest income simulation assumes that changes in interest rates change gradually in equal increments over the twelve-month period. Prepayment penalty income is excluded from this analysis. Based on these assumptions, net interest income would be reduced by 4.6% from a 200 basis point increase in rates over the next twelve months and a 0.4% increase from a 200 basis point decrease in rate over the same period. Actual results could differ significantly from these estimates.
At September 30, 2025, the Company had a derivative portfolio with a notional value totaling $2.8 billion. This portfolio is designed to provide protection against rising interest rates. See Note 11 ("Derivative Financial Instruments") of the Notes to the Consolidated Financial Statements.
-57-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
AVERAGE BALANCES
Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the relative amount of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them. The following table sets forth certain information relating to the Company's Consolidated Statements of Financial Condition and Consolidated Statements of Operations for the three months ended September 30, 2025 and 2024, and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from average daily balances. The yields include amortization of fees and costs, which are considered adjustments to yields.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
|||||||||||||||
|
|
|
2025 |
|
2024 |
|
||||||||||||
|
|
|
Average |
|
|
|
|
Yield/ |
|
Average |
|
|
|
|
Yield/ |
|
||
|
|
Balance |
Interest |
Cost |
Balance |
Interest |
Cost |
|||||||||||
|
|
|
(Dollars in thousands) |
|||||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|||||||||||||
|
Mortgage loans, net |
|
$ |
5,193,430 |
|
$ |
74,149 |
5.71 |
% |
$ |
5,337,170 |
|
$ |
74,645 |
5.59 |
% |
||
|
Other loans, net |
|
1,401,607 |
|
20,821 |
5.94 |
|
1,400,091 |
|
21,135 |
6.04 |
|
||||||
|
Total loans, net (1) (2) |
|
6,595,037 |
|
94,970 |
5.76 |
|
6,737,261 |
|
95,780 |
5.69 |
|
||||||
|
Taxable securities: |
|
|
|
|
|
||||||||||||
|
Mortgage-backed securities |
|
832,514 |
|
11,513 |
5.53 |
|
984,383 |
|
12,443 |
5.06 |
|
||||||
|
Other securities |
|
536,314 |
|
7,939 |
5.92 |
|
714,161 |
|
11,431 |
6.40 |
|
||||||
|
Total taxable securities |
|
1,368,828 |
|
19,452 |
5.68 |
|
1,698,544 |
|
23,874 |
5.62 |
|
||||||
|
Tax-exempt securities: (3) |
|
|
|
|
|
||||||||||||
|
Other securities |
|
43,168 |
|
458 |
4.24 |
|
65,070 |
|
474 |
2.91 |
|
||||||
|
Total tax-exempt securities |
|
43,168 |
|
458 |
4.24 |
|
65,070 |
|
474 |
2.91 |
|
||||||
|
Interest-earning deposits and federal funds sold |
|
174,549 |
|
1,685 |
3.86 |
|
208,796 |
|
2,565 |
4.91 |
|
||||||
|
Total interest-earning assets |
|
8,181,582 |
|
116,565 |
5.70 |
|
8,709,671 |
|
122,693 |
5.63 |
|
||||||
|
Other assets |
|
520,645 |
|
|
|
|
494,213 |
|
|
|
|
||||||
|
Total assets |
|
$ |
8,702,227 |
|
|
|
|
|
|
$ |
9,203,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
||||||||||
|
Deposits: |
|
|
|
|
|
|
|
||||||||||
|
Savings accounts |
|
$ |
92,068 |
|
94 |
|
0.41 |
|
$ |
102,196 |
|
122 |
|
0.48 |
|
||
|
NOW accounts |
|
2,154,978 |
|
18,808 |
|
3.49 |
|
1,886,387 |
|
18,795 |
|
3.99 |
|
||||
|
Money market accounts |
|
1,677,996 |
|
15,390 |
|
3.67 |
|
1,673,499 |
|
17,485 |
|
4.18 |
|
||||
|
Certificates of deposit accounts |
|
2,445,173 |
|
22,766 |
|
3.72 |
|
2,884,280 |
|
29,676 |
|
4.12 |
|
||||
|
Total due to depositors |
|
6,370,215 |
|
57,058 |
|
3.58 |
|
6,546,362 |
|
66,078 |
|
4.04 |
|
||||
|
Mortgagors' escrow accounts |
|
81,501 |
|
79 |
|
0.39 |
|
71,965 |
|
72 |
|
0.40 |
|
||||
|
Total interest-bearing deposits |
|
6,451,716 |
|
57,137 |
|
3.54 |
|
6,618,327 |
|
66,150 |
|
4.00 |
|
||||
|
Borrowings |
|
471,924 |
|
5,504 |
|
4.67 |
|
886,190 |
|
10,840 |
|
4.89 |
|
||||
|
Total interest-bearing liabilities |
|
6,923,640 |
|
62,641 |
|
3.62 |
|
7,504,517 |
|
76,990 |
|
4.10 |
|
||||
|
Non interest-bearing demand deposits |
|
893,831 |
|
|
|
|
|
845,456 |
|
|
|
|
|
||||
|
Other liabilities |
|
172,156 |
|
|
|
|
|
181,149 |
|
|
|
|
|
||||
|
Total liabilities |
|
7,989,627 |
|
|
|
|
|
8,531,122 |
|
|
|
|
|
||||
|
Equity |
|
712,600 |
|
|
|
|
|
672,762 |
|
|
|
|
|
||||
|
Total liabilities and equity |
|
$ |
8,702,227 |
|
|
|
|
|
|
$ |
9,203,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income / net interest rate spread |
|
|
|
|
$ |
53,924 |
|
2.08 |
% |
|
|
|
$ |
45,703 |
|
1.53 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets / net interest margin |
|
$ |
1,257,942 |
|
|
|
2.64 |
% |
$ |
1,205,154 |
|
|
|
2.10 |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning assets to interest-bearing liabilities |
|
|
|
1.18 |
X |
|
|
|
|
1.16 |
X |
||||||
(1) Loan interest income includes loan fee income (expense) (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $0.6 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively.
(2) Loan interest income includes net gains (losses) from fair value adjustments on hedges of $0.1 million and $0.4 million for three months ended September 30, 2025 and 2024, 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 each for the three months ended September 30, 2025 and 2024.
-58-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
|
|||||||||||||||
|
|
2025 |
2024 |
|
||||||||||||||
|
|
Average |
|
|
|
Yield/ |
Average |
|
|
Yield/ |
|
|||||||
|
|
Balance |
Interest |
Cost |
Balance |
Interest |
Cost |
|
||||||||||
|
Assets |
(Dollars in thousands) |
|
|||||||||||||||
|
Interest-earning assets: |
|
|
|
|
|
|
|
||||||||||
|
Loans held for sale |
|
$ |
29,363 |
|
$ |
911 |
4.14 |
% |
$ |
- |
|
$ |
- |
- |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans, net |
|
|
5,238,185 |
|
|
220,780 |
5.62 |
|
|
5,343,108 |
|
|
218,185 |
5.44 |
|
||
|
Other loans, net |
|
1,410,017 |
|
61,316 |
5.80 |
|
1,419,970 |
|
63,282 |
5.94 |
|
||||||
|
Total loans, net (1) (2) |
|
6,648,202 |
|
|
282,096 |
|
5.66 |
|
6,763,078 |
|
|
281,467 |
|
5.55 |
|
||
|
Taxable securities: |
|
|
|
|
|
|
|
||||||||||
|
Mortgage-backed securities |
|
863,499 |
|
35,750 |
5.52 |
|
714,030 |
|
23,601 |
4.41 |
|
||||||
|
Other securities |
|
564,908 |
|
24,635 |
5.81 |
|
656,325 |
|
30,343 |
6.16 |
|
||||||
|
Total taxable securities |
|
1,428,407 |
|
|
60,385 |
|
5.64 |
|
1,370,355 |
|
|
53,944 |
|
5.25 |
|
||
|
Tax-exempt securities: (3) |
|
|
|
|
|
|
|
||||||||||
|
Other securities |
|
43,487 |
|
1,372 |
4.21 |
|
65,485 |
|
1,418 |
2.89 |
|
||||||
|
Total tax-exempt securities |
|
43,487 |
|
|
1,372 |
|
4.21 |
|
65,485 |
|
|
1,418 |
|
2.89 |
|
||
|
Interest-earning deposits and federal funds sold |
|
200,512 |
|
5,931 |
3.94 |
|
235,365 |
|
8,791 |
4.98 |
|
||||||
|
Total interest-earning assets (3) |
|
8,349,971 |
|
|
350,695 |
|
5.60 |
|
8,434,283 |
|
|
345,620 |
|
5.46 |
|
||
|
Other assets |
|
527,607 |
|
|
|
|
480,793 |
|
|
|
|
||||||
|
Total assets |
|
$ |
8,877,578 |
|
|
|
|
$ |
8,915,076 |
|
|
|
|
||||
|
Liabilities and Equity |
|
|
|
|
|
|
|
||||||||||
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
||||||||||
|
Deposits: |
|
|
|
|
|
|
|
||||||||||
|
Savings accounts |
|
$ |
95,036 |
|
|
302 |
|
0.42 |
|
$ |
103,908 |
|
359 |
0.46 |
|
||
|
NOW accounts |
|
2,252,851 |
|
|
58,834 |
|
3.48 |
|
1,946,022 |
|
57,293 |
3.93 |
|
||||
|
Money market accounts |
|
1,686,519 |
|
|
46,085 |
|
3.64 |
|
1,704,320 |
|
52,083 |
4.07 |
|
||||
|
Certificate of deposit accounts |
|
2,505,979 |
|
|
67,919 |
|
3.61 |
|
2,578,988 |
|
74,977 |
3.88 |
|
||||
|
Total due to depositors |
|
6,540,385 |
|
|
173,140 |
|
3.53 |
|
6,333,238 |
|
|
184,712 |
|
3.89 |
|
||
|
Mortgagors' escrow accounts |
|
88,316 |
|
208 |
0.31 |
|
80,408 |
|
196 |
0.33 |
|
||||||
|
Total deposits |
|
6,628,701 |
|
|
173,348 |
|
3.49 |
|
6,413,646 |
|
|
184,908 |
|
3.84 |
|
||
|
Borrowed funds |
|
490,442 |
|
17,033 |
4.63 |
|
807,230 |
|
29,638 |
4.90 |
|
||||||
|
Total interest-bearing liabilities |
|
7,119,143 |
|
|
190,381 |
|
3.57 |
|
7,220,876 |
|
|
214,546 |
|
3.96 |
|
||
|
Non-interest-bearing deposits |
|
875,037 |
|
|
|
834,217 |
|
|
|
||||||||
|
Other liabilities |
|
165,457 |
|
|
|
190,138 |
|
|
|
||||||||
|
Total liabilities |
|
8,159,637 |
|
|
|
8,245,231 |
|
|
|
||||||||
|
Equity |
|
717,941 |
|
|
|
669,845 |
|
|
|
||||||||
|
Total liabilities and equity |
|
$ |
8,877,578 |
|
|
|
$ |
8,915,076 |
|
|
|
||||||
|
Net interest income / net interest rate spread (tax equivalent) (3) |
|
|
$ |
160,314 |
2.03 |
% |
|
$ |
131,074 |
1.50 |
% |
||||||
|
Net interest-earning assets / net interest margin (tax equivalent) (3) |
|
$ |
1,230,828 |
|
2.56 |
% |
$ |
1,213,407 |
|
2.07 |
% |
||||||
|
Ratio of interest-earning assets to interest-bearing liabilities |
|
|
1.17 |
X |
|
1.17 |
X |
||||||||||
(1) Loan interest income includes loan fee income (expense) (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately $2.2 million and $0.6 million for the nine months ended September 30, 2025 and 2024, respectively.
(2) Loan interest income includes net gains (losses) from fair value adjustments and termination on hedges of $0.2 million and $0.4 million for the nine months ended September 30, 2025 and 2024, 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 $0.3 million each for the nine months ended September 30, 2025 and 2024.
-59-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
LOANS HELD FOR INVESTMENT
The following table sets forth the Company's loan originations (including the net effect of refinancing) and the changes in the Company's portfolio of loans held for investment, including purchases, sales and principal reductions for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
||||
|
(In thousands) |
2025 |
2024 |
||||
|
Mortgage Loans |
|
|
||||
|
At beginning of period |
|
$ |
5,316,249 |
|
$ |
5,425,586 |
|
Mortgage loans originated: |
|
|
||||
|
Multi-family residential |
|
47,403 |
|
90,299 |
||
|
Commercial real estate |
|
120,648 |
|
87,326 |
||
|
One-to-four family mixed-use property |
|
8,461 |
|
10,439 |
||
|
One-to-four family residential |
|
701 |
|
2,619 |
||
|
Construction |
|
10,583 |
|
11,552 |
||
|
Total mortgage loans originated |
|
187,796 |
|
202,235 |
||
|
|
|
|
|
|
|
|
|
Mortgage loans purchased: |
|
|
||||
|
One-to-four family residential |
|
121,505 |
|
52,314 |
||
|
Total mortgage loans purchased |
|
121,505 |
|
52,314 |
||
|
|
|
|
|
|
|
|
|
Less: |
|
|
||||
|
Principal reductions |
|
361,104 |
|
262,210 |
||
|
Loans transferred to (from) loans held for sale |
|
(34,714) |
|
- |
||
|
Mortgage loan sales |
|
22,960 |
|
18,148 |
||
|
Charge-Offs |
|
3,473 |
|
14 |
||
|
Loans transferred to OREO |
|
|
- |
|
|
329 |
|
At end of period |
|
$ |
5,272,727 |
|
$ |
5,399,434 |
|
|
|
|
|
|
|
|
|
Commercial business loans |
|
|
||||
|
At beginning of period |
|
$ |
1,421,527 |
|
$ |
1,472,723 |
|
Loans originated: |
|
|
||||
|
Small Business Administration |
|
4,235 |
|
5,930 |
||
|
Commercial business |
|
|
176,833 |
|
|
130,032 |
|
Other |
|
3,590 |
|
4,514 |
||
|
Total commercial business and other loans originated |
|
184,658 |
|
140,476 |
||
|
|
|
|
|
|
|
|
|
Commercial business loans purchased: |
|
|
||||
|
Commercial business |
|
92,053 |
|
78,018 |
||
|
Total commercial business loans purchased |
|
92,053 |
|
78,018 |
||
|
|
|
|
|
|
|
|
|
Less: |
|
|
||||
|
Small Business Administration sales |
|
|
7,973 |
|
|
- |
|
Principal reductions |
|
300,350 |
|
280,721 |
||
|
Charge-offs |
|
5,878 |
|
3,163 |
||
|
At end of period |
|
$ |
1,384,037 |
|
$ |
1,407,333 |
-60-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
NON-PERFORMING ASSETS
The following table shows the principal balance of our non-performing assets at the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, |
|
At December 31, |
|
||
|
(Dollars in thousands) |
2025 |
2024 |
|||||
|
|
|
|
|
|
|
|
|
|
Non-accrual mortgage loans: |
|
|
|
||||
|
Multi-family residential |
|
$ |
12,970 |
|
$ |
11,031 |
|
|
Commercial real estate |
|
21,786 |
|
6,283 |
|
||
|
One-to-four family mixed-use property |
|
- |
|
116 |
|
||
|
One-to-four family residential |
|
1,351 |
|
1,428 |
|
||
|
Total |
|
36,107 |
|
18,858 |
|
||
|
Non-accrual commercial business loans: |
|
|
|
||||
|
Small Business Administration |
|
554 |
|
2,445 |
|
||
|
Commercial business and other |
|
8,190 |
|
12,015 |
|
||
|
Total |
|
8,744 |
|
14,460 |
|
||
|
Total non-accrual loans |
|
44,851 |
|
33,318 |
|
||
|
|
|
|
|
|
|
|
|
|
Total non-performing loans |
|
44,851 |
|
33,318 |
|
||
|
Other non-performing assets: |
|
|
|
||||
|
Available for sale securities |
|
17,278 |
|
18,000 |
|
||
|
Total |
|
17,278 |
|
18,000 |
|
||
|
|
|
|
|
|
|
|
|
|
Total non-performing assets |
|
$ |
62,129 |
|
$ |
51,318 |
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans to gross loans |
|
0.67 |
% |
0.49 |
% |
||
|
Non-performing assets to total assets |
|
0.70 |
% |
0.57 |
% |
||
CRITICIZED AND CLASSIFIED ASSETS
Our policy is to review our assets, focusing primarily on the loan portfolio, other real estate owned, and the investment portfolio, to ensure that credit quality is maintained at the highest levels. See Note 5 ("Loans") of the Notes to the Consolidated Financial Statements for a description of how loans are determined to be criticized or classified and a table displaying criticized and classified loans at September 30, 2025. The amortized cost of Criticized and Classified assets was $94.8 million at September 30, 2025, an increase of $0.2 million from $94.6 million at December 31, 2024.
Included within net loans at September 30, 2025 and December 31, 2024, were $1.3 million and $2.7 million, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.
-61-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
ALLOWANCE FOR CREDIT LOSSES
The following table shows allowance for credit losses at the period indicated:
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
||||
|
(In thousands) |
|
|
2025 |
|
|
2024 |
|
Balance at beginning of period |
|
$ |
40,152 |
|
$ |
40,161 |
|
Loans- charge-off |
|
|
(9,352) |
|
|
(3,179) |
|
Loans- recovery |
|
|
1,286 |
|
|
231 |
|
Loans- provision (benefit) |
|
|
9,751 |
|
|
3,129 |
|
Allowance for credit losses - loans |
|
|
41,837 |
|
|
40,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
353 |
|
|
1,087 |
|
HTM securities (benefit) provision |
|
|
(2) |
|
|
(1) |
|
Allowance for credit losses - HTM securities |
|
|
351 |
|
|
1,086 |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
2,627 |
|
|
- |
|
AFS securities (benefit) provision |
|
|
294 |
|
|
- |
|
Allowance for credit losses - AFS securities |
|
|
2,921 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
1,037 |
|
|
1,102 |
|
Off-balance sheet- (benefit) provision |
|
|
- |
|
|
(44) |
|
Allowance for credit losses - off-balance sheet |
|
|
1,037 |
|
|
1,058 |
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
$ |
46,146 |
|
$ |
42,486 |
-62-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following table sets forth the activity in the Company's ACL - loans for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
|
||||
|
(Dollars in thousands) |
2025 |
2024 |
|
||||
|
Balance at beginning of year |
|
$ |
40,152 |
|
$ |
40,161 |
|
|
Provision (benefit) for credit losses |
|
9,751 |
|
3,129 |
|
||
|
|
|
|
|
|
|
|
|
|
Loans charged-off: |
|
|
|
||||
|
Multi-family residential |
|
|
(2,101) |
|
|
- |
|
|
Commercial real estate |
|
|
(1,347) |
|
|
- |
|
|
One-to-four family - mixed-use property |
|
|
(20) |
|
|
- |
|
|
One-to-four family - residential |
|
|
(5) |
|
|
(14) |
|
|
Small Business Administration |
|
(279) |
|
(7) |
|
||
|
Commercial business and other |
|
(5,600) |
|
(3,158) |
|
||
|
Total loans charged-off |
|
(9,352) |
|
(3,179) |
|
||
|
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
||||
|
Multi-family residential |
|
- |
|
1 |
|
||
|
One-to-four family - mixed-use property |
|
|
- |
|
|
2 |
|
|
One-to-four family - residential |
|
|
53 |
|
|
61 |
|
|
Small Business Administration |
|
|
52 |
|
|
104 |
|
|
Commercial business and other |
|
|
1,181 |
|
|
63 |
|
|
Total recoveries |
|
1,286 |
|
231 |
|
||
|
|
|
|
|
|
|
|
|
|
Net (charge-offs) recoveries |
|
(8,066) |
|
(2,948) |
|
||
|
Balance at end of year |
|
$ |
41,837 |
|
$ |
40,342 |
|
|
|
|
|
|
|
|
|
|
|
Ratio of net charge-offs to average loans outstanding during the period |
|
0.16 |
% |
0.06 |
% |
||
|
Ratio of ACL - loans to gross loans at end of period |
|
0.63 |
% |
0.59 |
% |
||
|
Ratio of ACL - loans to non-accrual loans at end of the period |
|
|
93.28 |
% |
117.75 |
% |
|
|
Ratio of ACL - loans to non-performing loans at end of period |
|
93.28 |
% |
117.75 |
% |
||
-63-
PART I - FINANCIAL INFORMATION
FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Flushing Financial Corporation published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 20:44 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]