UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2022

Commission file number 001-33013

FLUSHING FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

11-3209278

(I.R.S. Employer Identification No.)

220 RXR Plaza, Uniondale, New York11556

(Address of principal executive offices)

(718)961-5400

(~~Registrant's~~Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FFIC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. XYes ~~__ No~~__No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). XYes ~~__ No~~__No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer” ,“smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer __ ~~Non-accelerated filer~~ __ ~~Emerging growth company__~~	Accelerated filer X
Non-accelerated filer __	Smaller reporting company __
Emerging growth company __

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange ~~act.__~~act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ~~__Yes~~ __ Yes XNo

The number of shares of the registrant’s Common Stock outstanding as of ~~October 31, 2017~~July 29, 2022 was ~~28,819,891.~~29,982,205.

Table of Contents

TABLE OF CONTENTS

	PAGE
PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements - (Unaudited)

Consolidated Statements of Financial Condition	1

Consolidated Statements of Income	2

Consolidated Statements of Comprehensive Income	3

Consolidated Statements of Cash Flows	4

Consolidated Statements of Changes in Stockholders’ Equity	5 6

Notes to Consolidated Financial Statements	6 7

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	48 47

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	63

ITEM 4. Controls and Procedures	63
PART II — OTHER INFORMATION
~~PART II—OTHER INFORMATION~~

ITEM 1. Legal Proceedings	64

ITEM 1A. Risk Factors	64

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	64 66

ITEM 3. Defaults Upon Senior Securities	64 66

ITEM 4. Mine Safety Disclosures	64 66

ITEM 5. Other Information	64 66

ITEM 6. Exhibits	65 67
SIGNATURES
~~SIGNATURES~~	66 69

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Consolidated Statements of Financial Condition

~~(Unaudited)~~

Item 1. Financial Statements

(Dollars in thousands, except share data) September 30,
2017 December 31,
2016
ASSETS
Cash and due from banks $ 60,161 $ 35,857
Securities held-to-maturity:
Mortgage-backed securities (none pledged) (fair value of $7,839 at September 30, 2017) 7,978 -
Other securities (none pledged) (fair value of $21,542 and $35,408 at September 30, 2017 and December 31, 2016, respectively) 22,952 37,735
Securities available for sale:
Mortgage-backed securities (including assets pledged of $94,414 and $145,860 at September 30, 2017 and December 31, 2016, respectively; $1,696 and $2,016 at fair value pursuant to the fair value option at September 30, 2017 and December 31, 2016, respectively) 519,861 516,476
Other securities (including assets pledged of $45,921 and $82,064 at September 30, 2017 and December 31, 2016, respectively; $19,712 and $28,429 at fair value pursuant to the fair value option at September 30, 2017 and December 31, 2016, respectively) 276,698 344,905
Loans:
Multi-family residential 2,236,173 2,178,504
Commercial real estate 1,352,775 1,246,132
One-to-four family ― mixed-use property 556,723 558,502
One-to-four family ― residential 177,578 185,767
Co-operative apartments 7,035 7,418
Construction 15,811 11,495
Small Business Administration 14,485 15,198
Taxi medallion 18,165 18,996
Commercial business and other 674,706 597,122
Net unamortized premiums and unearned loan fees 16,925 16,559
Allowance for loan losses (25,269 ) (22,229 )
Net loans 5,045,107 4,813,464
Interest and dividends receivable 21,076 20,228
Bank premises and equipment, net 28,389 26,561
Federal Home Loan Bank of New York stock 55,228 59,173
Bank owned life insurance 131,047 132,508
Goodwill 16,127 16,127
Other assets 76,758 55,453
Total assets $ 6,261,382 $ 6,058,487

LIABILITIES
Due to depositors:
Non-interest bearing $ 362,509 $ 333,163
Interest-bearing:
Certificate of deposit accounts 1,404,555 1,372,115
Savings accounts 323,186 254,283
Money market accounts 991,706 843,370
NOW accounts 1,308,821 1,362,484
Total interest-bearing deposits 4,028,268 3,832,252
Mortgagors' escrow deposits 53,671 40,216
Borrowed funds
Federal Home Loan Bank advances 1,090,989 1,159,190
Subordinated debentures 73,622 73,414
Junior subordinated debentures, at fair value 36,071 33,959
Total borrowed funds 1,200,682 1,266,563
Other liabilities 76,643 72,440
Total liabilities 5,721,773 5,544,634

STOCKHOLDERS' EQUITY
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued) - -
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares issued at September 30, 2017 and December 31, 2016; 28,819,891 shares and 28,632,904 shares outstanding at September 30, 2017 and December 31, 2016, respectively) 315 315
Additional paid-in capital 216,929 214,462
Treasury stock, at average cost (2,710,704 shares and 2,897,691 shares at September 30, 2017 and December 31, 2016, respectively) (51,287 ) (53,754 )
Retained earnings 380,316 361,192
Accumulated other comprehensive loss, net of taxes (6,664 ) (8,362 )
Total stockholders' equity 539,609 513,853

Total liabilities and stockholders' equity $ 6,261,382 $ 6,058,487


	June 30,		December 31,
	2022		2021
	(Unaudited)
	(Dollars in thousands, except per share data)
Assets
Cash and due from banks	$	137,026	$	81,723
Securities held-to-maturity:
Mortgage-backed securities (include assets pledged of $4,880 and $5,643 at June 30, 2022 and December 31, 2021, respectively; fair value of $7,496 and $8,667 at June 30, 2022 and December 31, 2021, respectively)		7,885		7,894
Other securities, net of allowance of $1,085 and $862 at June 30, 2022 and December 31, 2021 respectively; (NaN pledged; fair value of $57,064 and $53,362 at June 30, 2022 and December 31, 2021, respectively)		66,230		49,974
Securities available for sale, at fair value:
Mortgage-backed securities (including assets pledged of $278,332 and $212,388 at June 30, 2022 and December 31, 2021, respectively; $339 and $388 at fair value pursuant to the fair value option at June 30, 2022 and December 31, 2021, respectively)		510,934		572,184
Other securities (including NaN pledged; $13,235 and $14,180 at fair value pursuant to the fair value option at June 30, 2022 and December 31, 2021, respectively)		346,720		205,052
Loans:
Multi-family residential		2,531,858		2,517,026
Commercial real estate		1,864,507		1,775,629
One-to-four family --- mixed used property		561,100		571,795
One-to-four family --- residential		250,859		276,571
Construction		72,148		59,761
Small Business Administration		40,572		93,811
Commercial business and other		1,431,417		1,339,273
Net unamortized premiums and unearned loan fees		7,932		4,239
Less: Allowance for credit losses		(39,424)		(37,135)
Net loans		6,720,969		6,600,970
Interest and dividends receivable		38,811		38,698
Bank premises and equipment, net		22,285		23,338
Federal Home Loan Bank of New York stock, at cost		50,017		35,937
Bank owned life insurance		211,220		210,754
Goodwill		17,636		17,636
Core deposit intangibles		2,282		2,562
Right of use asset		46,687		50,200
Other assets		160,885		148,989
Total assets	$	8,339,587	$	8,045,911

Liabilities
Due to depositors:
Non-interest bearing	$	1,081,208	$	967,621
Interest-bearing		5,268,792		5,365,911
Total Due to depositors		6,350,000		6,333,532
Mortgagors' escrow deposits		57,577		51,913
Borrowed funds:
Federal Home Loan Bank advances and other borrowings		911,186		636,187
Subordinated debentures		123,083		122,885
Junior subordinated debentures, at fair value		55,352		56,472
Total borrowed funds		1,089,621		815,544
Operating lease liability		50,346		54,155
Other liabilities		121,231		111,139
Total liabilities		7,668,775		7,366,283

Stockholders' Equity
Preferred stock ($0.01 par value; 5,000,000 shares authorized; NaN issued)		—		—
Common stock ($0.01 par value; 100,000,000 shares authorized; 34,087,623 shares issued at both June 30, 2022 and December 31, 2021; 29,980,104 shares and 30,526,353 shares outstanding at June 30, 2022 and December 31, 2021, respectively)		341		341
Additional paid-in capital		262,860		263,375
Treasury stock, at average cost (4,107,519 shares and 3,561,270 shares at June 30, 2022 and December 31, 2021, respectively)		(88,342)		(75,293)
Retained earnings		527,217		497,889
Accumulated other comprehensive loss, net of taxes		(31,264)		(6,684)
Total stockholders' equity		670,812		679,628

Total liabilities and stockholders' equity	$	8,339,587	$	8,045,911

~~The accompanying notes are an integral part of these consolidated financial statements~~.

~~- 1 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Consolidated Statements of Income~~

~~(Unaudited)~~

For the three months For the nine months
ended September 30, ended September 30,
(Dollars in thousands, except per share data) 2017 2016 2017 2016

Interest and dividend income
Interest and fees on loans $ 53,318 $ 49,181 $ 155,834 $ 145,152
Interest and dividends on securities:
Interest 5,850 6,173 18,377 19,275
Dividends 30 121 274 360
Other interest income 121 49 403 191
Total interest and dividend income 59,319 55,524 174,888 164,978

Interest expense
Deposits 10,655 8,520 29,145 24,590
Other interest expense 5,623 5,291 15,696 15,653
Total interest expense 16,278 13,811 44,841 40,243

Net interest income 43,041 41,713 130,047 124,735
Provision for loan losses 3,266 - 3,266 -
Net interest income after provision for loan losses 39,775 41,713 126,781 124,735

Non-interest income
Banking services fee income 885 826 2,773 2,775
Net (loss) gain on sale of securities (186 ) - (186 ) 2,363
Net gain on sale of loans 152 240 396 584
Net gain on sale of buildings - - - 33,814
Net loss from fair value adjustments (1,297 ) (823 ) (2,834 ) (2,925 )
Federal Home Loan Bank of New York stock dividends 740 665 2,206 1,870
Gain from life insurance proceeds 238 47 1,405 458
Bank owned life insurance 816 707 2,418 2,096
Other income 313 191 1,120 1,075
Total non-interest income 1,661 1,853 7,298 42,110

Non-interest expense
Salaries and employee benefits 15,310 14,795 47,838 45,024
Occupancy and equipment 2,502 2,576 7,652 7,298
Professional services 1,763 1,730 5,678 5,907
FDIC deposit insurance 499 536 1,328 2,380
Data processing 1,349 939 3,873 3,229
Depreciation and amortization 1,173 1,169 3,493 3,263
Other real estate owned/foreclosure expense 121 273 376 831
Prepayment penalty on borrowings - - - 2,082
Other operating expenses 3,249 4,259 11,357 13,214
Total non-interest expense 25,966 26,277 81,595 83,228

Income before income taxes 15,470 17,289 52,484 83,617

Provision for income taxes
Federal 4,680 5,568 15,005 25,518
State and local 611 1,087 2,315 7,469
Total taxes 5,291 6,655 17,320 32,987

Net income $ 10,179 $ 10,634 $ 35,164 $ 50,630

Basic earnings per common share $ 0.35 $ 0.37 $ 1.21 $ 1.75
Diluted earnings per common share $ 0.35 $ 0.37 $ 1.21 $ 1.75
Dividends per common share $ 0.18 $ 0.17 $ 0.54 $ 0.51

The accompanying notes are an integral part of these consolidated financial statements.

~~- 2 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Consolidated Statements of ~~Comprehensive~~ Income

~~(Unaudited)~~

For the three months ended For the nine months ended
September 30, September 30,
(In thousands) 2017 2016 2017 2016

Net income $ 10,179 $ 10,634 $ 35,164 $ 50,630

Other comprehensive income (loss), net of tax:
Amortization of actuarial losses, net of taxes of ($64) and ($82) for the three months ended September 30, 2017 and 2016, respectively and of ($192) and ($247) for the nine months ended September 30, 2017 and 2016, respectively. 88 110 262 329
Amortization of prior service credits, net of taxes of $5 and $4 for the three months ended September 30, 2017 and 2016, respectively and $14 for each of the nine months ended September 30, 2017 and 2016. (7 ) (7 ) (20 ) (20 )
Reclassification adjustment for net gains included in income, net of taxes of ($78) for the three and nine months ended September 30, 2017 and $1,013 for the nine months ended September 30, 2016. 108 - 108 (1,350 )
Net unrealized (losses) gains on securities, net of taxes of $241 and $2,177 for the three months ended September 30, 2017 and 2016, respectively and of ($1,006) and ($5,103) for the nine months ended September 30, 2017 and 2016, respectively. (333 ) (2,942 ) 1,416 6,852
Net unrealized gain (loss) on cash flow hedges, net of taxes of ($41) and $49 for the three and nine months ended September 30, 2017, respectively. 56 - (68 ) -

Total other comprehensive income (loss), net of tax (88 ) (2,839 ) 1,698 5,811

Comprehensive income $ 10,091 $ 7,795 $ 36,862 $ 56,441

~~The accompanying notes are an integral part of these consolidated financial statements~~.

~~- 3 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Consolidated Statements of Cash Flows~~

(Unaudited)


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021

		(In thousands, except per share data)
Interest and dividend income
Interest and fees on loans	$	69,192	$	67,999	$	136,708	$	137,020
Interest and dividends on securities:
Interest		4,929		3,685		8,674		6,757
Dividends		11		7		19		15
Other interest income		159		51		210		87
Total interest and dividend income		74,291		71,742		145,611		143,879
Interest expense
Deposits		4,686		5,539		8,094		11,644
Other interest expense		4,875		5,164		9,308		10,304
Total interest expense		9,561		10,703		17,402		21,948
Net interest income		64,730		61,039		128,209		121,931
Provision (benefit) for credit losses		1,590		(1,598)		2,948		1,222
Net interest income after provision (benefit) for credit losses		63,140		62,637		125,261		120,709
Non-interest income (loss)
Banking services fee income		1,166		1,233		2,540		3,958
Net gain on sale of loans		73		127		73		158
Net gain on disposition of assets		—		—		—		621
Net gain on sale of securities		—		123		—		123
Net gain (loss) from fair value adjustments		2,533		(6,548)		724		(5,566)
Federal Home Loan Bank of New York stock dividends		407		500		804		1,189
Life insurance proceeds		1,536		—		1,536		—
Bank owned life insurance		1,115		1,009		2,229		2,006
Other income		523		346		760		612
Total non-interest income (loss)		7,353		(3,210)		8,666		3,101
Non-interest expense
Salaries and employee benefits		21,109		19,879		44,758		42,543
Occupancy and equipment		3,760		3,522		7,364		6,889
Professional services		2,285		1,988		4,507		4,388
FDIC deposit insurance		615		729		1,035		1,942
Data processing		1,383		1,419		2,807		3,528
Depreciation and amortization of bank premises and equipment		1,447		1,638		2,907		3,277
Other real estate owned / foreclosure expense		32		22		116		12
Other operating expenses		4,891		4,814		10,822		9,591
Total non-interest expense		35,522		34,011		74,316		72,170
Income before income taxes		34,971		25,416		59,611		51,640
Provision for income taxes
Federal		5,609		4,857		10,259		9,928
State and local		4,327		1,301		6,098		3,415
Total provision for income taxes		9,936		6,158		16,357		13,343
Net income	$	25,035	$	19,258	$	43,254	$	38,297

Basic earnings per common share	$	0.81	$	0.61	$	1.39	$	1.21
Diluted earnings per common share	$	0.81	$	0.61	$	1.39	$	1.21
Dividends per common share	$	0.22	$	0.21	$	0.44	$	0.42

For the nine months ended
September 30,
(In thousands) 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 35,164 $ 50,630
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 3,266 -
Depreciation and amortization of bank premises and equipment 3,493 3,263
Amortization of premium, net of accretion of discount 5,716 6,344
Net loss from fair value adjustments 2,834 2,925
Net gain from sale of loans (396 ) (584 )
Net loss (gain) from sale of securities 186 (2,363 )
Net gain from sale of buildings - �� (33,814 )
Net (gain) loss from sale of OREO (50 ) 1,726
Income from bank owned life insurance (2,418 ) (2,096 )
Gain from life insurance proceeds (1,405 ) (458 )
Stock-based compensation expense 5,092 4,169
Deferred compensation (3,322 ) (3,140 )
Excess tax benefit from stock-based payment arrangements - (470 )
Deferred income tax benefit (1,806 ) (1,228 )
Increase in other liabilities 6,810 7,680
(Increase) decrease in other assets (68 ) 4,823
Net cash provided by operating activities 53,096 37,407

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of bank premises and equipment (5,321 ) (4,159 )
Net redemptions (purchases) of Federal Home Loan Bank of New York shares 3,945 (9,119 )
Purchases of securities held-to-maturity (8,030 ) (35,705 )
Proceeds from maturities of securities held-to-maturity 14,830 8,475
Purchases of securities available for sale (152,121 ) (59,678 )
Proceeds from sales and calls of securities available for sale 155,999 66,996
Proceeds from maturities and prepayments of securities available for sale 60,573 85,829
Proceeds from bank owned life insurance 4,646 2,236
Proceeds from sale of buildings - 34,332
Net originations of loans (234,227 ) (210,506 )
Purchases of loans (75,832 ) (137,994 )
Proceeds from sale of real estate owned 583 853
Proceeds from sale of loans 54,990 11,499
Net cash used in investing activities (179,965 ) (246,941 )

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in non-interest bearing deposits 29,346 50,591
Net increase in interest-bearing deposits 195,552 85,616
Net increase in mortgagors' escrow deposits 13,455 12,432
Net (repayments) proceeds from short-term borrowed funds (43,500 ) 150,000
Proceeds from long-term borrowings 180,000 200,000
Repayment of long-term borrowings (205,049 ) (260,301 )
Purchases of treasury stock (2,902 ) (9,102 )
Excess tax benefit from stock-based payment arrangements - 470
Proceeds from issuance of common stock upon exercise of stock options - 132
Cash dividends paid (15,729 ) (14,787 )
Net cash provided by financing activities 151,173 215,051

Net increase in cash and cash equivalents 24,304 5,517
Cash and cash equivalents, beginning of period 35,857 42,363
Cash and cash equivalents, end of period $ 60,161 $ 47,880

SUPPLEMENTAL CASHFLOW DISCLOSURE
Interest paid $ 42,543 $ 39,792
Income taxes paid 16,906 28,610
Taxes paid if excess tax benefits were not tax deductible 16,906 29,080
Non-cash activities:
Securities purchased not yet settled - 2,000
Loans transferred to Other Real Estate Owned - 486
Loans held for investment transferred to loans available for sale 30,565 -

The accompanying notes are an integral part of these consolidated financial statements.

~~- 4 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Consolidated Statements of ~~Changes in Stockholders’ Equity~~Comprehensive Income

~~For the nine months ended September 30, 2017 and 2016~~

(Unaudited)


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021

					(In thousands)

Net income	$	25,035	$	19,258	$	43,254	$	38,297
Other comprehensive income (loss), net of tax:
Amortization of actuarial (gains) losses, net of taxes of ($5) and ($41) for the three months ended June 30, 2022 and 2021, respectively, and of ($3) and ($77) for the six months ended June 30, 2022 and 2021, respectively.		(11)		92		(15)		173
Amortization of prior service credits, net of taxes of ($4) and $6 for the three months ended June 30, 2022 and 2021, respectively, and of ($2) and $13 for the six months ended June 30, 2022 and 2021, respectively.		(11)		(15)		(16)		(30)
Net unrealized (losses) gains on securities, net of taxes of $8,767 and ($664) for the three months ended June 30, 2022 and 2021, respectively, and of $19,659 and $322 for the six months ended June 30, 2022 and 2021, respectively.		(20,434)		1,497		(43,861)		(720)
Reclassification adjustment for net losses included in income, net of taxes of $38 for the three and six months ended June 30, 2021, respectively.		—		(85)		—		(85)
Net unrealized gains on cash flow hedges, net of taxes of ($2,018) and ($120) for the three months ended June 30, 2022 and 2021 respectively, and of ($8,876) and ($3,574) for the six months ended June 30, 2022 and 2021 respectively.		4,915		521		19,666		8,319
Change in fair value of liabilities related to instrument-specific credit risk, net of taxes of $142 and ($147) for the three months ended June 30, 2022 and 2021, respectively, and of $205 and ($112) for the six months ended June 30, 2022 and 2021, respectively.		(219)		276		(354)		192

Total other comprehensive income (loss), net of tax		(15,760)		2,286		(24,580)		7,849

Comprehensive net income	$	9,275	$	21,544	$	18,674	$	46,146

(Dollars in thousand, except per share data) Total Common
Stock Additional
Paid-in
Capital Retained
Earnings Treasury
Stock Accumulated
Other
Comprehensive
Income (Loss)

Balance at December 31, 2016 $ 513,853 $ 315 $ 214,462 $ 361,192 $ (53,754 ) $ (8,362 )
Net Income 35,164 - - 35,164 - -
Award of common shares released from Employee Benefit Trust (114,754 shares) 2,433 - 2,433 - - -
Vesting of restricted stock unit awards (284,595 shares) - - (5,052 ) (271 ) 5,323 -
Exercise of stock options (4,400 shares) - - (6 ) (40 ) 46 -
Stock-based compensation expense 5,092 - 5,092 - - -
Purchase of treasury shares (10,000 shares) (278 ) - - - (278 ) -
Repurchase of shares to satisfy tax obligation (90,779 shares) (2,624 ) - - - (2,624 ) -
Dividends on common stock ($0.54 per share) (15,729 ) - - (15,729 ) - -
Other comprehensive income 1,698 - - - - 1,698
Balance at September 30, 2017 $ 539,609 $ 315 $ 216,929 $ 380,316 $ (51,287 ) $ (6,664 )

Balance at December 31, 2015 $ 473,067 $ 315 $ 210,652 $ 316,530 $ (48,868 ) $ (5,562 )
Net Income 50,630 - - 50,630 - -
Award of common shares released from Employee Benefit Trust (138,519 shares) 1,984 - 1,984 - - -
Vesting of restricted stock unit awards (245,311 shares) - - (4,049 ) (397 ) 4,446 -
Exercise of stock options (41,670 shares) 132 - 15 (34 ) 151 -
Stock-based compensation expense 4,416 - 4,416 - - -
Stock-based income tax benefit 470 - 470 - - -
Purchase of treasury shares (378,695 shares) (7,492 ) - - - (7,492 ) -
Repurchase of shares to satisfy tax obligation (77,994 shares) (1,610 ) - - - (1,610 ) -
Dividends on common stock ($0.51 per share) (14,787 ) - - (14,787 ) - -
Other comprehensive income 5,811 - - - - 5,811
Balance at September 30, 2016 $ 512,621 $ 315 $ 213,488 $ 351,942 $ (53,373 ) $ 249

The accompanying notes are an integral part of these consolidated financial ~~statements~~.statements.

~~- 5 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)


	For the six months ended June 30,
	2022		2021

	(In thousands)
Operating Activities
Net income	$	43,254	$	38,297
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		2,948		1,222
Depreciation and amortization of premises and equipment		2,907		3,277
Net gain on sales of loans		(73)		(158)
Net amortization of premiums and (accretion) of discounts		568		(190)
Net gain from disposition of assets		0		(621)
Net gain from sale of securities		0		(123)
Deferred income tax provision (benefit)		3,191		(762)
Gain from life insurance proceeds		(1,536)		0
Net loss (gain) from fair value adjustments of qualifying hedges		129		(763)
Net (gain) loss from fair value adjustments		(724)		5,566
Income from bank owned life insurance		(2,229)		(2,006)
Stock-based compensation expense		5,255		4,539
Deferred compensation		(3,627)		(2,057)
Amortization of core deposit intangibles		280		313
Decrease (increase) in other assets		9,303		(5,175)
Decrease in other liabilities		(15,004)		(5,384)
Net cash provided by operating activities		44,642		35,975
Investing Activities
Purchases of premises and equipment		(1,854)		(1,536)
Net (purchases) redemptions of Federal Home Loan Bank-NY shares		(14,080)		1,809
Purchases of securities held-to-maturity		(16,476)		0
Proceeds from life insurance		2,727		0
Purchases of securities available for sale		(210,261)		(478,155)
Proceeds from sales and calls of securities available for sale		0		38,623
Change in cash collateral		34,365		0
Proceeds from maturities and prepayments of securities available for sale		64,227		263,640
Net (originations) and repayments of loans		(69,676)		89,937
Purchases of loans		(111,028)		(130,706)
Proceeds from sale of loans		18,565		18,584
Net cash used in investing activities		(303,491)		(197,804)

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Consolidated Statements of Cash Flows (Contd.)

(Unaudited)



	For the six months ended June 30,
		2022		2021

	(In thousands)
Financing Activities
Net increase in non-interest bearing deposits	$	113,587	$	166,819
Net increase (decrease) in interest-bearing deposits		(47,067)		41,312
Net increase in mortgagors' escrow deposits		5,664		12,608
Net proceeds from short-term borrowed funds		325,000		150,000
Repayment of long-term borrowings		(50,000)		(205,647)
Purchases of treasury stock		(19,396)		(1,375)
Cash dividends paid		(13,636)		(13,305)
Net cash provided by financing activities		314,152		150,412
Net increase in cash and cash equivalents		55,303		(11,417)
Cash and cash equivalents, beginning of period		81,723		157,388
Cash and cash equivalents, end of period	$	137,026	$	145,971
Supplemental Cash Flow Disclosure
Interest paid	$	16,612	$	22,217
Income taxes paid		16,215		10,207
Taxes paid if excess tax benefits on stock-based compensation were not tax deductible		16,385		9,877

The accompanying notes are an integral part of these consolidated financial statements.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Consolidated Statement of Changes in Stockholders’ Equity

(Unaudited)


					Additional						Accumulated Other
			Common		Paid-in		Retained		Treasury		Comprehensive
(Dollars in thousands, except per share data)	Total		Stock		Capital		Earnings		Stock		Income (Loss)


Balance at December 31, 2021	$	679,628	$	341	$	263,375	$	497,889	$	(75,293)	$	(6,684)

Net income		18,219		—		—		18,219		—		—
Award of common shares released from Employee Benefit Trust (17,964 shares)		287		—		287		—		—		—
Vesting of restricted stock unit awards (297,626 shares)		—		—		(6,019)		(285)		6,304		—
Purchase of treasury shares (360,000 shares)		(8,469)		—		—		—		(8,469)		—
Stock-based compensation expense		4,194		—		4,194		—		—		—
Repurchase of shares to satisfy tax obligation (97,435 shares)		(2,376)		—		—		—		(2,376)		—
Dividends on common stock ($0.22 per share)		(6,850)		—		—		(6,850)		—		—
Other comprehensive loss		(8,820)		—		—		—		—		(8,820)
Balance at March 31, 2022	$	675,813	$	341	$	261,837	$	508,973	$	(79,834)	$	(15,504)
Net income		25,035		—		—		25,035		—		—
Purchase of treasury shares (387,689 shares)		(8,534)		—		—		—		(8,534)		—
Vesting of restricted stock unit awards (2,015 shares)		—		—		(38)		(5)		43		—
Stock-based compensation expense		1,061		—		1,061		—		—		—
Repurchase of shares to satisfy tax obligation (766 shares)		(17)		—		—		—		(17)		—
Dividends on common stock ($0.22 per share)		(6,786)		—		—		(6,786)		—		—
Other comprehensive loss		(15,760)										(15,760)
Balance at June 30, 2022	$	670,812	$	341	$	262,860	$	527,217	$	(88,342)	$	(31,264)


					Additional						Accumulated Other
			Common		Paid-in		Retained		Treasury		Comprehensive
(Dollars in thousands, except per share data)	Total		Stock		Capital		Earnings		Stock		Income (Loss)
Balance at December 31, 2020	$	618,997	$	341	$	261,533	$	442,789	$	(69,400)	$	(16,266)

Net Income		19,039		—		—		19,039		—		—
Award of common shares released from Employee Benefit Trust (5,682 shares)		74		—		74		—		—		—
Vesting of restricted stock unit awards (248,896 shares)		—		—		(5,058)		(153)		5,211		—
Stock-based compensation expense		3,470		—		3,470		—		—		—
Repurchase of shares to satisfy tax obligation (70,292 shares)		(1,290)		—		—		—		(1,290)		—
Dividends on common stock ($0.21 per share)		(6,652)		—		—		(6,652)		—		—
Other comprehensive income		5,563		—		—		—		—		5,563
Balance at March 31, 2021	$	639,201	$	341	$	260,019	$	455,023	$	(65,479)	$	(10,703)
Net Income		19,258		—		—		19,258		—		—
Award of common shares released from Employee Benefit Trust (6,445 shares)		91		—		91		—				—
Vesting of restricted stock unit awards (10,932 shares)		—		—		(221)		(8)		229		—
Stock-based compensation expense		1,069		—		1,069		—		—		—
Repurchase of shares to satisfy tax obligation (3,886 shares)		(85)		—		—		—		(85)		—
Dividends on common stock ($0.21 per share)		(6,653)		—		—		(6,653)		—		—
Other comprehensive income		2,286		—		—		—		—		2,286
Balance at June 30, 2021	$	655,167	$	341	$	260,958	$	467,620	$	(65,335)	$	(8,417)

The accompanying notes are an integral part of these consolidated financial statements.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1.	1. Basis of Presentation

The primary business of Flushing Financial Corporation (the “Holding Company”), a Delaware corporation, is the operation of its wholly owned subsidiary, Flushing Bank (the “Bank”).

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q (“Quarterly Report”) include the collective results of the Holding Company and its direct and indirect wholly-owned subsidiaries, including the Bank, Flushing Service Corporation, FSB Properties Inc., and Flushing Preferred Funding Corporation, ~~Flushing Service Corporation, and FSB Properties Inc.,~~which was dissolved as of June 30, 2021, which are collectively herein referred to as “we,” “us,” “our” and the “Company.”

The Holding Company also owns Flushing Financial Capital Trust II, Flushing Financial Capital Trust III, and Flushing Financial Capital Trust IV (the “Trusts”), which are special purpose business trusts. The Trusts are not included in the Company’s consolidated financial statements, as the Company would not absorb the losses of the Trusts if any losses were to occur.

The accompanying unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for such presented periods of the Company. Such adjustments are of a normal recurring nature, unless otherwise disclosed in this Quarterly Report. All inter-company balances and transactions have been eliminated in consolidation. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for the full year.

The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions to Quarterly Report on Form 10-Q and Article 10, Rule 10-01 of Regulation S-X for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated interim financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021.

When necessary, certain reclassifications were made to prior-year amounts to conform to the current-year presentation.

Such reclassifications had no effect on prior period net income or shareholders’ equity and were insignificant amounts.

2. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowance for ~~loan~~credit losses, ~~(“ALLL”),~~ the evaluation of goodwill for impairment, the review of the need for a valuation allowance of the Company’s deferred tax assets and the fair value of financial ~~instruments~~instruments.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and ~~the evaluation of other-than-temporary impairment (“OTTI”) on securities. Actual results could differ from these estimates.~~SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

3.	3. Earnings Per Share

Earnings per common share have been computed based on the following:


	For the three months ended						For the six months ended
	June 30,						June 30,
	2022			2021			2022			2021

	(Dollars in thousands, except per share data)
Net income, as reported	$	25,035		$	19,258		$	43,254		$	38,297
Divided by:
Total weighted average common shares outstanding and common stock equivalents ⁽¹⁾		30,937			31,677			31,095			31,641
Basic earnings per common share	$	0.81		$	0.61		$	1.39		$	1.21
Diluted earnings per common share	$	0.81		$	0.61		$	1.39		$	1.21
Dividend Payout ratio		27.2	%		34.4	%		31.7	%		34.7	%

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
(In thousands, except per share data)
Net income, as reported $ 10,179 $ 10,634 $ 35,164 $ 50,630
Divided by:
Weighted average common shares outstanding 29,120 28,861 29,092 28,993
Weighted average common stock equivalents 1 14 2 13
Total weighted average common shares outstanding and common stock equivalents 29,121 28,875 29,094 29,006

Basic earnings per common share $ 0.35 $ 0.37 $ 1.21 $ 1.75
Diluted earnings per common share ⁽¹⁾ $ 0.35 $ 0.37 $ 1.21 $ 1.75
Dividend payout ratio 51.4 % 45.9 % 44.6 % 29.1 %

(1)

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, there were no0 common stock ~~options that were anti-dilutive.~~

equivalents.

~~- 6 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Debt and Equity Securities~~

4. Securities

The Company did ~~not~~0t hold any trading securities at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016.~~2021. Securities available for sale are recorded at fair value. Securities held-to-maturity (“HTM”) are recorded at amortized cost.

The following table summarizes the Company’s portfolio of securities held-to-maturity at ~~September~~June 30, ~~2017:~~2022:


					Gross		Gross
	Amortized				Unrecognized		Unrecognized
	Cost		Fair Value		Gains		Losses

	(In thousands)
Securities held-to-maturity:
Municipals	$	67,315	$	57,064	$	—	$	10,251
Total municipals		67,315		57,064		—		10,251

FNMA		7,885		7,496		—		389
Total mortgage-backed securities		7,885		7,496		—		389

Allowance for Credit Losses		(1,085)		—		—		—
Total	$	74,115	$	64,560	$	—	$	10,640

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Amortized
Cost Fair Value Gross
Unrealized
Gains Gross
Unrealized
Losses
(In thousands)
Securities held-to-maturity:
Municipals $ 22,952 $ 21,542 $ - $ 1,410

Total other securities 22,952 21,542 - 1,410

FNMA 7,978 7,839 - 139

Total mortgage-backed securities 7,978 7,839 - 139
Total $ 30,930 $ 29,381 $ - $ 1,549

The following table summarizes the Company’s portfolio of securities held-to-maturity at December 31, ~~2016:~~2021:


					Gross		Gross
	Amortized				Unrecognized		Unrecognized
	Cost		Fair Value		Gains		Losses

	(In thousands)
Securities held-to-maturity:
Municipals	$	50,836	$	53,362	$	2,526	$	—
Total municipals		50,836		53,362		2,526		—

FNMA		7,894		8,667		773		—
Total mortgage-backed securities		7,894		8,667		773		—

Allowance for Credit Losses		(862)		—		—		—
Total	$	57,868	$	62,029	$	3,299	$	—

Amortized
Cost Fair Value Gross
Unrealized
Gains Gross
Unrealized
Losses
(In thousands)
Securities held-to-maturity:
Municipals $ 37,735 $ 35,408 $ - $ 2,327

Total $ 37,735 $ 35,408 $ - $ 2,327

~~- 7 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following table summarizes the Company’s portfolio of securities available for sale at ~~September~~June 30, ~~2017:~~2022:


					Gross		Gross
	Amortized				Unrealized		Unrealized
	Cost		Fair Value		Gains		Losses

	(In thousands)
U.S. government agencies	$	84,463	$	83,039	$	10	$	1,434
Corporate		133,927		124,468		72		9,531
Mutual funds		11,573		11,573		0		0
Collateralized loan obligations		131,094		125,978		0		5,116
Other		1,662		1,662		0		0
Total other securities		362,719		346,720		82		16,081
REMIC and CMO		187,243		169,144		6		18,105
GNMA		9,638		8,257		12		1,393
FNMA		209,747		189,975		5		19,777
FHLMC		161,015		143,558		21		17,478
Total mortgage-backed securities		567,643		510,934		44		56,753
Total securities available for sale	$	930,362	$	857,654	$	126	$	72,834

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Table of Contents

Amortized
Cost Fair Value Gross
Unrealized
Gains Gross
Unrealized
Losses
(In thousands)
Corporate $ 110,000 $ 103,126 $ - $ 6,874
Municipals 102,226 104,979 2,753 -
Mutual funds 18,629 18,629 - -
Collateralized loan obligations 48,398 48,881 483 -
Other 1,083 1,083 - -
Total other securities 280,336 276,698 3,236 6,874
REMIC and CMO 330,593 330,459 1,953 2,087
GNMA 1,096 1,184 88 -
FNMA 138,995 138,781 547 761
FHLMC 49,557 49,437 23 143
Total mortgage-backed securities 520,241 519,861 2,611 2,991
Total securities available for sale $ 800,577 $ 796,559 $ 5,847 $ 9,865

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following table summarizes the Company’s portfolio of securities available for sale at December 31, ~~2016:~~2021:


					Gross		Gross
	Amortized				Unrealized		Unrealized
	Cost		Fair Value		Gains		Losses

	(In thousands)
U.S. government agencies	$	5,599	$	5,590	$	0	$	9
Corporate		107,423		104,370		136		3,189
Mutual funds		12,485		12,485		0		0
Collateralized loan obligations		81,166		80,912		1		255
Other		1,695		1,695		0		0
Total other securities		208,368		205,052		137		3,453
REMIC and CMO		210,948		208,509		1,217		3,656
GNMA		10,572		10,286		30		316
FNMA		203,777		202,938		1,321		2,160
FHLMC		152,760		150,451		326		2,635
Total mortgage-backed securities		578,057		572,184		2,894		8,767
Total securities available for sale	$	786,425	$	777,236	$	3,031	$	12,220

Amortized
Cost Fair Value Gross
Unrealized
Gains Gross
Unrealized
Losses
(In thousands)
Corporate $ 110,000 $ 102,910 $ - $ 7,090
Municipals 124,984 126,903 1,983 64
Mutual funds 21,366 21,366 - -
Collateralized loan obligations 85,470 86,365 895 -
Other 7,363 7,361 - 2
Total other securities 349,183 344,905 2,878 7,156
REMIC and CMO 402,636 401,370 1,607 2,873
GNMA 1,319 1,427 108 -
FNMA 109,493 108,351 463 1,605
FHLMC 5,378 5,328 35 85
Total mortgage-backed securities 518,826 516,476 2,213 4,563
Total securities available for sale $ 868,009 $ 861,381 $ 5,091 $ 11,719

Mortgage-backed securities shown in the table above include one private issue collateralized mortgage obligation (“CMO”) that is collateralized by commercial real estate mortgages with an amortized cost and market value of $0.1 million and $0.2 million at September 30, 2017 and December 31, 2016.

The corporate securities held by the Company at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 are issued by U.S. banking institutions. The CMOs held by the Company at June 30, 2022 and December 31, 2021 are either fully guaranteed or issued by a government sponsored enterprise.

~~- 8 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following tables detail the amortized cost and fair value of the Company’s securities classified as held-to-maturity and available for sale at ~~September~~June 30, ~~2017,~~2022, by contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized
Securities held-to-maturity:	Cost		Fair Value

	(In thousands)
Due after ten years	$	67,315	$	57,064
Total other securities		67,315		57,064
Mortgage-backed securities		7,885		7,496
		75,200		64,560

Allowance for credit losses		(1,085)		-
Total securities held-to-maturity	$	74,115	$	64,560


					Amortized
Securities available for sale:					Cost		Fair Value
	Amortized
Securities held-to-maturity:	Cost		Fair Value
	(In thousands)

					(In thousands)
Due in one year or less	$	1,085	$	1,085	$	10,026	$	9,920
Due after one year through five years						99,429		96,645
Due after five years through ten years						205,672		193,191
Due after ten years		21,867		20,457		36,019		35,391

Total other securities		22,952		21,542		351,146		335,147
Mutual funds						11,573		11,573
Mortgage-backed securities		7,978		7,839		567,643		510,934

Total	$	30,930	$	29,381
Total securities available for sale					$	930,362	$	857,654

Securities available for sale: Amortized
Cost Fair Value
(In thousands)

Due in one year or less $ - $ -
Due after one year through five years 4,335 4,443
Due after five years through ten years 159,666 153,369
Due after ten years 97,706 100,257
Mutual funds 18,629 18,629

Total other securities 280,336 276,698
Mortgage-backed securities 520,241 519,861

Total $ 800,577 $ 796,559

~~- 9 -~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables show the Company’s securities with gross unrealized losses and their fair value, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, at the dates indicated:


	At June 30, 2022
		Total				Less than 12 months				12 months or more
				Unrealized				Unrealized				Unrealized
	Count	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(Dollars in thousands)
Held-to-maturity securities

Municipals	3	$	57,064	$	10,251	$	57,064	$	10,251	$	0	$	0
Total other securities	3		57,064		10,251		57,064		10,251		0		0

FNMA	1		7,496		389		7,496		389		0		0
Total mortgage-backed securities	1		7,496		389		7,496		389		0		0

Total	4	$	64,560	$	10,640	$	64,560	$	10,640	$	0	$	0

Available for sale securities
U.S. government agencies	7	$	79,004	$	1,434	$	79,004	$	1,434	$	0	$	0
Corporate	18		115,395		9,531		85,515		6,917		29,880		2,614
CLO	19		125,978		5,116		105,745		4,082		20,233		1,034
Total other securities	44		320,377		16,081		270,264		12,433		50,113		3,648

REMIC and CMO	45		167,535		18,105		112,167		9,561		55,368		8,544
GNMA	4		7,964		1,393		276		15		7,688		1,378
FNMA	48		189,798		19,777		146,971		13,508		42,827		6,269
FHLMC	25		141,019		17,478		77,799		6,218		63,220		11,260
Total mortgage-backed securities	122		506,316		56,753		337,213		29,302		169,103		27,451
Total	166	$	826,693	$	72,834	$	607,477	$	41,735	$	219,216	$	31,099


															At December 31, 2021
																Total				Less than 12 months				12 months or more
																		Unrealized				Unrealized				Unrealized
															Count	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	At September 30, 2017
			Total				Less than 12 months				12 months or more
					Unrealized				Unrealized				Unrealized
	Count		Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
			(Dollars in thousands)

Held-to-maturity securities
Municipals		1	$	20,457	$	1,410	$	20,457	$	1,410	$	-	$	-
															(Dollars in thousands)
Available for sale securities
U.S. government agencies															2	$	5,577	$	9	$	1,130	$	5	$	4,447	$	4
Corporate															13		94,234		3,189		65,453		1,970		28,781		1,219
CLO															4		31,012		255		10,000		1		21,012		254
Total other securities		1		20,457		1,410		20,457		1,410		-		-	19		130,823		3,453		76,583		1,976		54,240		1,477

FNMA		1		7,839		139		7,839		139		-		-
Total mortgage-backed securities		1		7,839		139		7,839		139		-		-
Total		2	$	28,296	$	1,549	$	28,296	$	1,549	$	-	$	-


Available for sale securities
Corporate		14	$	103,126	$	6,874	$	19,154	$	846	$	83,972	$	6,028
Total other securities		14		103,126		6,874		19,154		846		83,972		6,028


REMIC and CMO		23		149,238		2,087		133,091		1,449		16,147		638	15		124,131		3,656		105,959		2,800		18,172		856
GNMA															4		9,924		316		1,138		16		8,786		300
FNMA		11		90,337		761		81,621		595		8,716		166	25		171,109		2,160		153,657		1,587		17,452		573
FHLMC		2		48,400		143		48,400		143		-		-	18		129,115		2,635		98,297		1,448		30,818		1,187
Total mortgage-backed securities		36		287,975		2,991		263,112		2,187		24,863		804	62		434,279		8,767		359,051		5,851		75,228		2,916
Total		50	$	391,101	$	9,865	$	282,266	$	3,033	$	108,835	$	6,832	81	$	565,102	$	12,220	$	435,634	$	7,827	$	129,468	$	4,393

At December 31, 2016
Total Less than 12 months 12 months or more
Unrealized Unrealized Unrealized
Count Fair Value Losses Fair Value Losses Fair Value Losses
(Dollars in thousands)
Held-to-maturity securities

Municipals 1 $ 19,538 $ 2,327 $ 19,538 $ 2,327 $ - $ -
Total 1 $ 19,538 $ 2,327 $ 19,538 $ 2,327 $ - $ -

Available for sale securities
Corporate 14 $ 102,910 $ 7,090 $ 28,476 $ 1,524 $ 74,434 $ 5,566
Collateralized loan obligations 4 16,047 64 16,047 64 - -
Other 1 298 2 - - 298 2
Total 19 119,255 7,156 44,523 1,588 74,732 5,568

REMIC and CMO 35 222,807 2,873 208,827 2,268 13,980 605
FNMA 18 80,924 1,605 74,972 1,250 5,952 355
FHLMC 1 3,993 85 3,993 85 - -
Total mortgage-backed securities 54 307,724 4,563 287,792 3,603 19,932 960
Total 73 $ 426,979 $ 11,719 $ 332,315 $ 5,191 $ 94,664 $ 6,528

OTTI losses on impaired securities must be fully recognized in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost. However, even if an investor does not expect to sell a debt security in an unrealized loss position, the investor must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event that a credit loss has occurred, only the amount of impairment associated with the credit loss is recognized in earnings in the Consolidated Statements of Income. Amounts relating to factors other than credit losses are recorded in accumulated other comprehensive loss (“AOCL”) within Stockholders’ Equity. Unrealized losses on available for sale securities, that are deemed to be temporary, are recorded in AOCL, net of tax.

~~- 10 -~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The Company reviewed each ~~investment~~available for sale security that had an unrealized loss at ~~September~~June 30, ~~2017~~2022 and December 31, 2016. The unrealized losses in municipal securities held-to-maturity at September 30, 2017 and December 31, 2016 were caused by illiquidity in the market and movements in interest rates. The unrealized losses in FNMA securities held-to-maturity at September 30, 2017 were caused by movements in interest rates. The unrealized losses in securities available for sale at September 30, 2017 and December 31, 2016 were caused by movements in interest rates.

It is not anticipated that these securities would be settled at a price that is less than the amortized cost of the Company’s investment. Each of these securities is performing according to its terms and, in the opinion of management, will continue to perform according to its terms.2021. The Company does not have the intent to sell these securities, and it is more likely than not the Company will not be required to sell the securities before recovery of the securities’ amortized cost basis. ~~This conclusion~~If the Company evaluates any decline in the fair value due to credit loss factors and this evaluation indicates that a credit loss exists, then the present value of cash flows that is ~~based upon considering~~expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. All of these securities are rated investment grade or above and have a long history of no credit losses. It is not anticipated that these securities would be settled at a price that is less than the amortized cost of the Company’s ~~cash and working capital requirements and contractual and regulatory obligations, none~~investment.

In determining the risk of ~~which~~loss for available for sale securities, the Company ~~believes would cause~~considered that mortgage-backed securities are either fully guaranteed or issued by a government sponsored enterprise, which has a credit rating and perceived credit risk comparable to U.S. government, the ~~sale~~tranche of the ~~securities. Therefore,~~purchased collateralized loan obligations (“CLO”) and the issuer of Corporate securities are global systematically important banks. Each of these securities is performing according to its terms and, in the opinion of management, will continue to perform according to its terms. Based on this review, management believes that the unrealized losses have resulted from other factors not deemed credit-related and 0 allowance for credit loss was recorded.

The Company ~~did not consider these investments to be other-than-temporarily impaired~~reviewed each held-to-maturity security that had an unrealized loss at ~~September~~June 30, ~~2017~~2022 as part of its quarterly Current Expected Credit Loss (“CECL”) process, with an allowance for credit losses of $1.1 million and $0.9 million at June 30, 2022 and December 31, ~~2016.~~2021, respectively.

Accrued interest receivable on held-to-maturity securities totaled $0.1 million each at June 30, 2022 and December 31, 2021, and is excluded from estimates of credit losses. Accrued interest receivable on available for sale debt securities totaled $2.5 million and $1.5 million at June 30, 2022 and December 31, 2021, respectively, and is excluded from the estimate of credit losses.

The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity.


	Other Securities
	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021

	(In thousands)
Beginning balance	$	986	$	915	$	862	$	907
Provision (benefit)		99		(71)		223		(63)
Allowance for credit losses	$	1,085	$	844	$	1,085	$	844

Realized gains and losses on the sales of securities are determined using the specific identification method. The Company ~~sold available for sale securities totaling $112.4 million during the three months ended September 30, 2017. The Company~~ did ~~not~~0t sell any ~~available for sale~~ securities during the three and six months ended ~~September~~June 30, ~~2016.~~2022. The Company sold ~~available for sale~~$25.0 million in corporate securities ~~totaling $112.4 million and $64.6 million~~ during the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2021.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and ~~2016, respectively.~~SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following table represents the gross gains and gross losses realized from the sale of ~~securities~~ available for sale securities for the periods indicated:


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021

Gross gains from the sale of securities	$	—	$	123	$	—	$	123
Gross losses from the sale of securities		—		—		—		—
Net gains from the sale of securities	$	—	$	123	$	—	$	123

For the three months ended
September 30,
For the nine months ended
September 30,
2017 2016 2017 2016
(In thousands)
Gross gains from the sale of securities $ 401 $ - $ 401 $ 2,370
Gross losses from the sale of securities (587 ) - (587 ) (7 )

Net (losses) gains from the sale of securities $ (186 ) $ - $ (186 ) $ 2,363

5. Loans

Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, deferred loan fees and costs on originated loans and unamortized premiums or discounts on purchased loans. Loan fees and certain loan origination costs are deferred. Net loan origination costs and premiums or discounts on loans purchased are amortized into interest income over the contractual life of the loans using the level-yield method. Prepayment penalties received on loans which pay in full prior to their scheduled maturity are included in interest income in the period they are collected.

Interest on loans is recognized on the accrual basis. Accrued interest receivable totaled $33.5 million and $35.8 million at June 30, 2022 and December 31, 2021, respectively, and was reported in “Interest and dividends receivable” on the Consolidated Statements of Financial Condition. The accrual of income on loans is generally discontinued when certain factors, such as contractual delinquency of 90 days or more, indicate reasonable doubt as to the timely collectability of such income. Uncollected interest previously recognized on non-accrual loans is reversed from interest income at the time the loan is placed on non-accrual status. A non-accrual loan can be returned to accrual status when contractual delinquency returns to less than 90 days delinquent. Payments received on non-accrual loans that do not bring the loan to less than 90 days delinquent are recorded on a cash basis. Payments can also be applied first as a reduction of principal until all principal is recovered and then subsequently to interest, if in management’s opinion, it is evident that recovery of all principal due is likely to occur.

At June 30, 2022, we had 5 active forbearances which were granted under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) for loans with an aggregate outstanding loan balance of approximately $26.7 million resulting in total deferment of $1.6 million in principal, interest and escrow, down from 20 active forbearances for loans with an aggregate outstanding loan balance of $71.9 million at December 31, 2021. These loans are considered current and continue to accrue interest at their original contractual terms until the completion of the applicable deferral periods, following which the borrowers will resume making payments and normal delinquency-based non-accrual policies will apply. The Company actively participated in the Paycheck Protection Program (“PPP”), under the CARES Act, closing $310.3 million of these loans since the beginning of the program, with $288.1 million forgiven by the SBA as of June 30, 2022, of which $21.0 million were forgiven during the recent quarter.

~~- 11 -~~ Allowance for credit losses

The allowance for credit losses (“ACL”) is an estimate that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial assets. Loans are charged off against that ACL when management believes that a loan balance is uncollectable based on quarterly analysis of credit risk.

The amount of the ACL is based upon a loss rate model that considers multiple factors which reflects management’s assessment of the credit quality of the loan portfolio. Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The factors are both quantitative and qualitative in nature including, but not limited to, historical losses,

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

economic conditions, trends in delinquencies, value and adequacy of underlying collateral, volume and portfolio mix, and internal loan processes.

~~The Company recognizes a loan as non-performing when~~During the borrower has demonstrated the inability to bring the loan current, or due to other circumstances which, in management’s opinion, indicate the borrower will be unable to bring the loan current within a reasonable time. All loans classified as non-performing, which includes all loans past due 90 days or more, are classified as non-accrual unless there is, in our opinion, compelling evidence the borrower will bring the loan current in the immediate future. Prior to a loan becoming 90 days delinquent, an updated appraisal is ordered and/or an internal evaluation is prepared.

~~A loan is considered impaired when, based upon current information,~~three months ended June 30, 2022, the Company believes it is probable that it will be unable to collect all amounts due, both principal and interest, in accordance with the original terms of the loan. Impaired loans are measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or at the loan’s observable market price or, as a practical expedient, the fair value of the collateral if the loan is collateral dependent. All non-accrual loans are considered impaired.

The Company maintains an allowance for loan losses at an amount, which, in management’s judgment, is adequate to absorb probable estimated losses inherent in the loan portfolio. Management’s judgment in determining the adequacy of the allowance is based on evaluations of the collectability of loans. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information becomes available. An unallocated component may at times be maintained to cover uncertainties that could affect management's estimate of probable losses. When necessary an unallocated component of the allowance will reflect the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. The allowance is established through charges to earnings in the form ofrecorded a provision for credit losses on loans totaling $1.5 million, compared to a benefit for credit losses on loans totaling $1.5 million for the three months ended June 30, 2021. The Company recorded a provision for credit losses on loans totaling $2.7 million and $1.3 million for the six months ended June 30, 2022 and 2021, respectively. The provision recorded during the six months ended June 30, 2022 was driven by loan growth coupled with the ongoing environmental uncertainty resulting from high and rising inflation and increasing interest rates. The Company made no changes to the reasonable and supportable forecast period and decreased the reversion period from six quarters to four quarters at June 30, 2022, in order to revert back to our historical losses ~~based on management’s evaluation of~~sooner as the ~~risk inherent~~economic forecast in the ~~various components of the loan portfolio and other factors, including historical loan loss experience (which~~model is updated quarterly), current economic conditions, delinquency and non-accrual trends, classified loan levels, risk in the portfolio and volumes and trends in loan types, recent trends in charge-offs, changes in underwriting standards, experience, ability and depth of the Company’s lenders, collection policies and experience, internal loan review function and other external factors. Increases and decreases in the allowance othermore favorable than charge-offs and recoveries are included in the provision for loan losses. When a loan or a portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance, and subsequent recoveries, if any, are credited to the allowance.

The determination of the amount of the allowance for loan losses includes estimates that are susceptible to significant changes due to changes in appraisal values of collateral, national and local economic conditions and other factors. We review our loan portfolio by separate categories with similar risk and collateral characteristics. Impaired loans are segregated and reviewed separately.

The Company reviews each impaired loan on an individual basis to determine if either a charge-off or a valuation allowance needs to be allocated to the loan. The Company does not charge-off or allocate a valuation allowance to loans for which management has concluded the current ~~value of the underlying collateral will allow for recovery of the loan balance either through the sale of the loan or by foreclosure and sale of the property.~~

conditions. The ~~loan balances of collateral dependent impaired~~ACL - loans ~~are~~totaled $39.4 million at June 30, 2022 compared to the property’s updated fair value. The Company considers fair value of collateral dependent loans to be 85% of the appraised or internally estimated value of the property. The balance which exceeds fair value is generally charged-off, except for taxi medallion loans. The 85% is based on the actual net proceeds the Bank has received from the sale of other real estate owned (“OREO”) as a percentage of OREO’s appraised value. Taxi medallion loans with a loan-to-value greater than 100% are allocated a portion of the allowance for loan losses in the amount of the excess of the loan-to-value over the loan’s principal balance. The fair value of the underlying collateral of taxi medallion loans is the value of the underlying medallion based upon the most recently reported arm’s length transaction. When there is no recent sale activity, the fair value is calculated using capitalization rates. All taxi medallion loans are classified as impaired and allocated a portion of the allowance in the amount of the excess of the loan-to-value over the loan’s principal balance.

~~The Company segregated its loans into two portfolios based on year of origination. One portfolio was reviewed for loans originated after~~$37.1 million at December 31, ~~2009 and a second portfolio for~~2021. At June 30, 2022, the ACL - loans ~~originated prior to January 1, 2010. Our decision to segregate the portfolio based upon origination dates was based on changes made in our underwriting standards during 2009. By the end~~represented 0.58% of 2009, all loans were being underwritten based on revised and tightened underwriting standards. Loans originated prior to 2010 have a higher delinquency rate and loss history. Each of the years in the portfolio for loans originated prior to 2010 has a similar delinquency rate. The Company’s Board of Directors reviews and approves management’s evaluation of the adequacy of the allowance for loan losses on a quarterly basis.

~~- 12 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The Company evaluates the underlying collateral through a third party appraisal, or when a third party appraisal is not available, the Company will use an internal evaluation. The internal evaluations are prepared using an income approach or a sales approach. The income approach is used for income producing properties and uses current revenues less operating expenses to determine the net cash flow of the property. Once the net cash flow is determined, the value of the property is calculated using an appropriate capitalization rate for the property. The sales approach uses comparable sales prices in the market. When an internal evaluation is used, we place greater reliance on the income approach to value the collateral.

In preparing internal evaluations of property values, the Company seeks to obtain current data on the subject property from various sources, including: (1) the borrower; (2) copies of existing leases; (3) local real estate brokers and appraisers; (4) public records (such as for real estate taxes and water and sewer charges); (5) comparable sales and rental data in the market; (6) an inspection of the property and (7) interviews with tenants. These internal evaluations primarily focus on the income approach and comparable sales data to value the property.

~~As of September 30, 2017, we utilized recent third party appraisals of the collateral to measure impairment for $39.2 million, or 82.9%, of collateral dependent impaired~~gross loans and ~~used internal evaluations~~141.1% of non-performing loans. At December 31, 2021, the ~~property’s value for $8.1 million, or 17.1%,~~ACL - loans represented 0.56% of ~~collateral dependent impaired~~gross loans and 248.7% of non-performing loans.

The Company may restructure ~~a loan~~loans to enable a borrower experiencing financial difficulties to continue making payments when it is deemed to be in the Company’s best long-term interest. This restructure may include reducing the interest rate or amount of the monthly payment for a specified period of time, after which the interest rate and repayment terms revert to the original terms of the loan. We classify these loans as Troubled Debt Restructured (“TDR”).

~~These restructurings have not included a reduction of principal balance.~~ The Company believes that restructuring these loans in this manner will allow certain borrowers to become and remain current on their loans. All loans classified as TDR are ~~considered impaired,~~individually evaluated, however TDR loans which have been current for six consecutive months at the time they are restructured as TDR remain on accrual status and are not included as part of non-performing loans. Loans which were delinquent at the time they are restructured as a TDR are placed on non-accrual status and reported as non-accrual performing TDR loans until they have made timely payments for six consecutive months.

These restructurings have not included a reduction of principal balance.

The allocation of a portion of the ~~allowance for loan losses~~ACL for a performing TDR loan is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate, or for a non-performing TDR loan which is collateral dependent, the fair value of the collateral. At ~~September~~June 30, ~~2017,~~2022, there were no0 commitments to lend additional funds to borrowers whose loans were modified to a TDR. The modification of loans to a TDR did not have a significant effect on our operating results, nor did it require a significant allocation of the ~~allowance for loan losses.~~ACL.

During the three and six months ended June 30, 2022, 2 commercial business and other loans classified as TDRs totaling $2.5 million defaulted within 12 months of its modification date. During the three and six months ended June 30, 2021, there were 0 TDRs that defaulted within 12 months of its modification date.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following ~~tables~~table shows loans modified ~~and classified~~ as TDR during the ~~periods~~period indicated:

	For the three months ended September 30, 2017

						For the three months ended
						June 30, 2022
(Dollars in thousands)	Number		Balance		Modification description	Number	Balance		Modification description


Taxi medallion		4	$	1,306	Loan amortization extension

Commercial business and other						2	$	2,453	Two loans had loan extensions
Total		4	$	1,306		2	$	2,453


	For the three months ended
	June 30, 2021
(Dollars in thousands)	Number	Balance		Modification description
Commercial real estate	2	$	674	Two loans had loan extensions
Total	2	$	674



	For the six months ended
	June 30, 2022
(Dollars in thousands)	Number	Balance		Modification description
Small Business Administration	1	$	271	Loan amortization extension
Commercial business and other	4		5,222	One loan received a below market interest rate and three loans had an amortization extension
Total	5	$	5,493


	For the six months ended
	June 30, 2021
(Dollars in thousands)	Number	Balance		Modification description
Commercial real estate	2	$	674	Two loans had loan extensions
Total	2	$	674

~~- 13 -~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

For the nine months ended
September 30, 2017 September 30, 2016
(Dollars in thousands) Number Balance Modification description Number Balance Modification description

One-to-four family - residential - $ - 2 $ 263 Received below market interest rates and the amortizations were extended
Commercial business and other - - 2 739 One received an amortization extension and one received a below market interest rate and an amortization extension
Taxi medallion 9 5,595 All loans amortizations were extended, with three loans also receiving a below market interest rate - -
Total 9 $ 5,595 4 $ 1,002

~~The Company did not modify and classify any loans as TDR during the three months ended September 30, 2016.~~

~~The recorded investment of the loans modified and classified as TDR presented in the tables above, were unchanged as there was no principal forgiven in these modifications.~~

The following table shows ~~our recorded investment for~~ loans classified as TDR at amortized cost that are performing according to their restructured terms at the periods indicated:



	June 30, 2022			December 31, 2021
	Number	Amortized		Number	Amortized
(Dollars in thousands)	of contracts	Cost		of contracts	Cost
Multi-family residential	6	$	1,656	6	$	1,690
Commercial real estate	1		7,572	1		7,572
One-to-four family - mixed-use property ⁽¹⁾	4		1,254	5		1,636
One-to-four family - residential	1		260	3		483
Small Business Administration	1		269	—		—
Commercial business and other ⁽¹⁾	7		3,771	5		1,381
Total performing	20	$	14,782	20	$	12,762

(1)

These loans continue to pay as agreed, however the Company records interest received on a cash basis.

September 30, 2017 December 31, 2016

(Dollars in thousands)
Number
of contracts
Recorded
investment
Number
of contracts
Recorded
investment

Multi-family residential 9 $ 2,533 9 $ 2,572
Commercial real estate 2 2,031 2 2,062
One-to-four family - mixed-use property 5 1,765 5 1,800
One-to-four family - residential 3 577 3 591
Taxi medallion 21 15,074 12 9,735
Commercial business and other 2 517 2 675
Total performing troubled debt restructured 42 $ 22,497 33 $ 17,435

~~- 14 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following table shows ~~our recorded investment for~~ loans classified as TDR at amortized cost that ~~are~~were not performing according to their restructured terms at the periods indicated:

September 30, 2017 December 31, 2016
(Dollars in thousands) Number
of contracts Recorded
investment Number
of contracts Recorded
investment

Multi-family residential 1 $ 377 1 $ 396

Total troubled debt restructurings that subsequently defaulted 1 $ 377 1 $ 396

There were 0 loans classified as TDR that were not performing according to their modified agreement as of December 31, 2021.

~~During~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following table shows our non-accrual loans at amortized cost with no related allowance and interest income recognized for loans ninety days or more past due and still accruing for the ~~three and nine months ended September 30, 2017 and 2016 there were no TDR loans transferred to non-performing status.~~period shown below:


	At or for the six months ended June 30, 2022
(In thousands)		Non-accrual amortized cost beginning of the reporting period		Non-accrual amortized cost end of the reporting period		Non-accrual with no related allowance		Interest income recognized		Loans ninety days or more past due and still accruing
Multi-family residential	$	2,652	$	3,707	$	3,707	$	—	$	—
Commercial real estate		640		273		273		—		—
One-to-four family - mixed-use property ⁽¹⁾		1,582		1,049		1,049		—		—
One-to-four family - residential		7,482		4,708		4,708		—		—
Small Business Administration		952		951		951		—		—
Construction		—		856		856		—		—
Commercial business and other ⁽¹⁾		1,945		19,373		3,330		139		100
Total	$	15,253	$	30,917	$	14,874	$	139	$	100

(1)

Included in the above analysis are non-accrual performing TDR one-to-four family – mixed-use property totaling $0.3 million. Commercial business and other contains a non-accrual performing TDR totaling $2.8 million.

The following table shows our ~~non-performing~~non-accrual loans at amortized cost with no related allowance and interest income recognized for loans ninety days or more past due and still accruing for the ~~periods indicated:~~period shown below:


	At or for the year ended December 31, 2021
(In thousands)		Non-accrual amortized cost beginning of the reporting period		Non-accrual amortized cost end of the reporting period		Non-accrual with no related allowance		Interest income recognized		Loans ninety days or more past due and still accruing
Multi-family residential	$	2,576	$	2,652	$	2,652	$	19	$	—
Commercial real estate		1,766		640		640		—		—
One-to-four family - mixed-use property ⁽¹⁾		1,706		1,582		1,582		6		—
One-to-four family - residential		5,313		7,482		7,482		1		—
Small Business Administration		1,168		952		952		—		—
Taxi medallion⁽²⁾		2,758		—		—		—		—
Commercial business and other⁽¹⁾		5,660		1,945		305		78		—
Total	$	20,947	$	15,253	$	13,613	$	104	$	—

(In thousands) September 30,
2017 December 31,
2016

Loans ninety days or more past due and still accruing:
Multi-family residential $ 415 $ -
Commercial real estate 38 -
One-to-four family - mixed-use property 129 386
Taxi medallion 1,147 -
Total 1,729 386

Non-accrual mortgage loans:
Multi-family residential 1,309 1,837
Commercial real estate 1,147 1,148
One-to-four family - mixed-use property 2,217 4,025
One-to-four family - residential 7,434 8,241
Total 12,107 15,251

Non-accrual non-mortgage loans:
Small Business Administration 50 1,886
Taxi medallion - 3,825
Commercial business and other 4 68
Total 54 5,779

Total non-accrual loans 12,161 21,030

Total non-performing loans $ 13,890 $ 21,416

(1)

(2)

Taxi medallions were completely charged-off during the year ended December 31, 2021.

~~- 15 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

During the three and nine months ended September 30, 2017, we did not foreclose on any consumer mortgages through in-substance repossession. We did not hold any foreclosed residential real estate properties at September 30, 2017. At December 31, 2016, we held one foreclosed residential real estate property for $0.5 million. Included within net loans as of September 30, 2017 and December 31, 2016 was a recorded investment of $8.7 million and $11.4 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.

The following is a summary of interest foregone on non-accrual loans and loans classified as TDR for the periods indicated:


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021
(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	588	$	453	$	960	$	915
Less: Interest income included in the results of operations		282		163		437		323
Total foregone interest	$	306	$	290	$	523	$	592

For the three months ended
September 30, For the nine months ended
September 30,
2017 2016 2017 2016
(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms $ 401 $ 468 $ 1,249 $ 1,405
Less: Interest income included in the results of operations 166 99 434 391
Total foregone interest $ 235 $ 369 $ 815 $ 1,014

The following tables show ~~an age analysis~~the aging of ~~our recorded investment~~the amortized cost basis in past-due loans ~~including loans past maturity,~~ at the ~~periods indicated:~~period indicated by class of loans:


	June 30, 2022
					Greater
	30 - 59 Days		60 - 89 Days		than		Total Past
(In thousands)	Past Due		Past Due		90 Days		Due		Current		Total Loans
Multi-family residential	$	2,413	$	0	$	3,707	$	6,120	$	2,529,067	$	2,535,187
Commercial real estate		337		0		273		610		1,865,773		1,866,383
One-to-four family - mixed-use property		3,937		0		795		4,732		559,401		564,133
One-to-four family - residential		1,196		77		4,708		5,981		246,128		252,109
Construction		0		0		856		856		71,105		71,961
Small Business Administration		40		1,991		951		2,982		37,029		40,011
Commercial business and other		93		3		3,580		3,676		1,426,933		1,430,609
Total	$	8,016	$	2,071	$	14,870	$	24,957	$	6,735,436	$	6,760,393

	September 30, 2017

													December 31, 2021
																	Greater
													30 - 59 Days		60 - 89 Days		than		Total Past
(In thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Past Due		Past Due		90 Days		Due		Current		Total Loans

Multi-family residential	$	6,115	$	155	$	1,724	$	7,994	$	2,228,179	$	2,236,173	$	3,652	$	4,193	$	2,652	$	10,497	$	2,508,730	$	2,519,227
Commercial real estate		3,455		481		1,185		5,121		1,347,654		1,352,775		5,743		0		640		6,383		1,770,992		1,777,375
One-to-four family - mixed-use property		3,577		112		2,346		6,035		550,688		556,723		2,319		0		1,321		3,640		571,296		574,936
One-to-four family - residential		3,646		43		7,246		10,935		166,643		177,578		163		224		7,482		7,870		269,942		277,812
Co-operative apartments		-		-		-		-		7,035		7,035
Construction loans		-		-		-		-		15,811		15,811
Construction														0		0		0		0		59,473		59,473
Small Business Administration		-		245		-		245		14,240		14,485		0		0		952		952		90,884		91,836
Taxi medallion		-		-		1,147		1,147		17,018		18,165
Commercial business and other		-		-		4		4		674,702		674,706		101		40		1,386		1,527		1,335,919		1,337,446
Total	$	16,793	$	1,036	$	13,652	$	31,481	$	5,021,970	$	5,053,451	$	11,978	$	4,457	$	14,433	$	30,869	$	6,607,236	$	6,638,105

December 31, 2016
(In thousands)
30 - 59 Days
Past Due

60 - 89 Days
Past Due

Greater than
90 Days

Total
Past Due
Current Total Loans

Multi-family residential $ 2,575 $ 287 $ 1,837 $ 4,699 $ 2,173,805 $ 2,178,504
Commercial real estate 3,363 22 1,148 4,533 1,241,599 1,246,132
One-to-four family - mixed-use property 4,671 762 4,411 9,844 548,658 558,502
One-to-four family - residential 3,831 194 8,047 12,072 173,695 185,767
Co-operative apartments - - - - 7,418 7,418
Construction loans - - - - 11,495 11,495
Small Business Administration 13 - 1,814 1,827 13,371 15,198
Taxi medallion - - 3,825 3,825 15,171 18,996
Commercial business and other 22 1 - 23 597,099 597,122
Total $ 14,475 $ 1,266 $ 21,082 $ 36,823 $ 4,782,311 $ 4,819,134

~~- 16 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables show the activity in the ~~allowance for loan losses~~ACL on loans for the three month periods indicated:


	June 30, 2022
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	8,561	$	7,716	$	1,864	$	766	$	268	$	1,837	$	—	$	16,421	$	37,433
Charge-offs		—		—		—		—		—		(26)		—		(24)		(50)
Recoveries		1		—		—		2		—		14		435		99		551
Provision (benefit)		843		727		95		98		32		293		(435)		(163)		1,490
Ending balance	$	9,405	$	8,443	$	1,959	$	866	$	300	$	2,118	$	—	$	16,333	$	39,424


	June 30, 2021
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	7,144	$	8,356	$	1,873	$	710	$	750	$	2,127	$	—	$	24,139	$	45,099
Charge-offs		—		—		(3)		—		—		—		—		(1,183)		(1,186)
Recoveries		—		—		—		2		—		9		222		51		284
Provision (benefit)		(585)		(2,488)		(378)		4		(565)		166		(222)		2,541		(1,527)
Ending balance	$	6,559	$	5,868	$	1,492	$	716	$	185	$	2,302	$	—	$	25,548	$	42,670

September 30, 2017
(In thousands) Multi-family residential Commercial real estate One-to-four family - mixed-use property One-to-four family - residential Construction loans Small Business Administration Taxi medallion Commercial business and other Unallocated Total

Allowance for credit losses:
Beginning balance $ 5,917 $ 4,688 $ 2,568 $ 990 $ 130 $ 306 $ 2,330 $ 4,668 $ 560 $ 22,157
Charge-off's (290 ) - (1 ) - - - - (33 ) - (324 )
Recoveries 66 25 - 58 - 17 - 4 - 170
Provision (Benefit) 43 (86 ) (49 ) (90 ) (13 ) 70 3,661 290 (560 ) 3,266
Ending balance $ 5,736 $ 4,627 $ 2,518 $ 958 $ 117 $ 393 $ 5,991 $ 4,929 $ - $ 25,269

September 30, 2016
(In thousands) Multi-family residential Commercial real estate One-to-four family - mixed-use property One-to-four family - residential Construction loans Small Business Administration Taxi medallion Commercial business and other Unallocated Total

Allowance for credit losses:
Beginning balance $ 6,177 $ 4,445 $ 3,326 $ 1,044 $ 75 $ 574 $ 1,042 $ 4,669 $ 846 $ 22,198
Charge-off's (90 ) - (71 ) - - (361 ) - (19 ) - (541 )
Recoveries 11 11 47 - - 44 - 25 - 138
Provision (Benefit) (103 ) 60 (234 ) (27 ) 15 151 1,290 (477 ) (675 ) -
Ending balance $ 5,995 $ 4,516 $ 3,068 $ 1,017 $ 90 $ 408 $ 2,332 $ 4,198 $ 171 $ 21,795

~~- 17 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables show the activity in the ~~allowance for loan losses~~ACL on loans for the ~~nine~~six month periods indicated:

September 30, 2017
(In thousands) Multi-family residential Commercial real estate One-to-four family - mixed-use property One-to-four family - residential Construction loans Small Business Administration Taxi medallion Commercial business and other Unallocated Total

Allowance for credit losses:
Beginning balance $ 5,923 $ 4,487 $ 2,903 $ 1,015 $ 92 $ 481 $ 2,243 $ 4,492 $ 593 $ 22,229
Charge-off's (452 ) (4 ) (36 ) (170 ) - (89 ) (54 ) (48 ) - (853 )
Recoveries 297 93 68 58 - 66 - 45 - 627 ��
Provision (Benefit) (32 ) 51 (417 ) 55 25 (65 ) 3,802 440 (593 ) 3,266
Ending balance $ 5,736 $ 4,627 $ 2,518 $ 958 $ 117 $ 393 $ 5,991 $ 4,929 $ - $ 25,269

September 30, 2016
(In thousands) Multi-family residential Commercial real estate One-to-four family - mixed-use property One-to-four family - residential Construction loans Small Business Administration Taxi medallion Commercial business and other Unallocated Total

Allowance for credit losses:
Beginning balance $ 6,718 $ 4,239 $ 4,227 $ 1,227 $ 50 $ 262 $ 343 $ 4,469 $ - $ 21,535
Charge-off's (155 ) - (139 ) (74 ) - (362 ) - (59 ) - (789 )
Recoveries 230 11 252 366 - 118 - 72 - 1,049
Provision (Benefit) (798 ) 266 (1,272 ) (502 ) 40 390 1,989 (284 ) 171 -
Ending balance $ 5,995 $ 4,516 $ 3,068 $ 1,017 $ 90 $ 408 $ 2,332 $ 4,198 $ 171 $ 21,795

~~- 18 -~~


	June 30, 2022
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	8,185	$	7,158	$	1,755	$	784	$	186	$	1,209	$	—	$	17,858	$	37,135
Charge-offs		—		—		—		—		—		(1,054)		—		(32)		(1,086)
Recoveries		1		—		—		4		—		27		447		173		652
Provision (benefit)		1,219		1,285		204		78		114		1,936		(447)		(1,666)		2,723
Ending balance	$	9,405	$	8,443	$	1,959	$	866	$	300	$	2,118	$	—	$	16,333	$	39,424


	June 30, 2021
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	6,557	$	8,327	$	1,986	$	869	$	497	$	2,251	$	—	$	24,666	$	45,153
Charge-offs		(43)		(64)		(32)		—		—		—		(2,758)		(1,211)		(4,108)
Recoveries		10		—		10		7		—		19		222		73		341
Provision (Benefit)		35		(2,395)		(472)		(160)		(312)		32		2,536		2,020		1,284
Ending balance	$	6,559	$	5,868	$	1,492	$	716	$	185	$	2,302	$	—	$	25,548	$	42,670

-20-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

~~The following tables show the manner in which loans were evaluated for impairment at the periods indicated:~~

September 30, 2017
(In thousands) Multi-family residential Commercial real estate One-to-four family - mixed-use property One-to-four family- residential Co-operative apartments Construction loans Small Business Administration Taxi medallion Commercial business and other Total

Financing Receivables:
Ending Balance $ 2,236,173 $ 1,352,775 $ 556,723 $ 177,578 $ 7,035 $ 15,811 $ 14,485 $ 18,165 $ 674,706 $ 5,053,451
Ending balance: individually evaluated for impairment $ 4,721 $ 6,798 $ 6,317 $ 10,079 $ - $ 1,178 $ 370 $ 18,165 $ 748 $ 48,376
Ending balance: collectively evaluated for impairment $ 2,231,452 $ 1,345,977 $ 550,406 $ 167,499 $ 7,035 $ 14,633 $ 14,115 $ - $ 673,958 $ 5,005,075

Allowance for credit losses:
Ending balance: individually evaluated for impairment $ 217 $ 154 $ 206 $ 56 $ - $ - $ - $ 5,991 $ 8 $ 6,632
Ending balance: collectively evaluated for impairment $ 5,519 $ 4,473 $ 2,312 $ 902 $ - $ 117 $ 393 $ - $ 4,921 $ 18,637

December 31, 2016
(In thousands) Multi-family residential Commercial real estate One-to-four family - mixed-use property One-to-four family- residential Co-operative apartments Construction loans Small Business Administration Taxi medallion Commercial business and other Unallocated Total

Financing Receivables:
Ending Balance $ 2,178,504 $ 1,246,132 $ 558,502 $ 185,767 $ 7,418 $ 11,495 $ 15,198 $ 18,996 $ 597,122 $ - $ 4,819,134
Ending balance: individually evaluated for impairment $ 5,923 $ 6,551 $ 8,809 $ 9,989 $ - $ - $ 1,937 $ 16,282 $ 2,492 $ - $ 51,983
Ending balance: collectively evaluated for impairment $ 2,172,581 $ 1,239,581 $ 549,693 $ 175,778 $ 7,418 $ 11,495 $ 13,261 $ 2,714 $ 594,630 $ - $ 4,767,151

Allowance for credit losses:
Ending balance: individually evaluated for impairment $ 232 $ 179 $ 417 $ 60 $ - $ - $ 90 $ 2,236 $ 12 $ - $ 3,226
Ending balance: collectively evaluated for impairment $ 5,691 $ 4,308 $ 2,486 $ 955 $ - $ 92 $ 391 $ 7 $ 4,480 $ 593 $ 19,003

~~- 19 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~The following table shows our recorded investment, unpaid principal balance and allocated allowance for loan losses for impaired loans at the periods indicated:~~

September 30, 2017 December 31, 2016
Recorded
Investment Unpaid
Principal
Balance Related
Allowance Recorded
Investment Unpaid
Principal
Balance Related
Allowance
(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential $ 2,489 $ 2,935 $ - $ 3,660 $ 3,796 $ -
Commercial real estate 4,767 4,767 - 4,489 4,516 -
One-to-four family mixed-use property 5,079 5,454 - 6,435 6,872 -
One-to-four family residential 9,661 10,696 - 9,560 11,117 -
Co-operative apartments - - - - - -
Construction 1,178 1,178 - - - -
Non-mortgage loans:
Small Business Administration 370 386 - 416 509 -
Taxi medallion 2,608 2,608 - 2,334 2,476 -
Commercial business and other 380 749 - 2,072 2,443 -

Total loans with no related allowance recorded 26,532 28,773 - 28,966 31,729 -

With an allowance recorded:
Mortgage loans:
Multi-family residential 2,232 2,232 217 2,263 2,263 232
Commercial real estate 2,031 2,031 154 2,062 2,062 179
One-to-four family mixed-use property 1,238 1,238 206 2,374 2,376 417
One-to-four family residential 418 418 56 429 429 60
Co-operative apartments - - - - - -
Construction - - - - - -
Non-mortgage loans:
Small Business Administration - - - 1,521 1,909 90
Taxi medallion 15,557 15,557 5,991 13,948 13,948 2,236
Commercial business and other 368 368 8 420 420 12

Total loans with an allowance recorded 21,844 21,844 6,632 23,017 23,407 3,226

Total Impaired Loans:
Total mortgage loans $ 29,093 $ 30,949 $ 633 $ 31,272 $ 33,431 $ 888

Total non-mortgage loans $ 19,283 $ 19,668 $ 5,999 $ 20,711 $ 21,705 $ 2,338

~~- 20 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~The following table shows our average recorded investment and interest income recognized for impaired loans for the three months ended September 30, 2017 and 2016:~~

September 30, 2017 September 30, 2016

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized
(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential $ 2,451 $ 12 $ 4,639 $ 23
Commercial real estate 5,142 60 4,661 55
One-to-four family mixed-use property 5,269 45 8,234 37
One-to-four family residential 10,023 29 10,204 19
Co-operative apartments - - - -
Construction 890 15 285 -
Non-mortgage loans:
Small Business Administration 260 5 404 13
Taxi medallion 3,177 19 5,053 52
Commercial business and other 1,254 6 2,211 45

Total loans with no related allowance recorded 28,466 191 35,691 244

With an allowance recorded:
Mortgage loans:
Multi-family residential 2,242 28 2,279 29
Commercial real estate 2,040 24 2,080 24
One-to-four family mixed-use property 1,445 16 2,567 35
One-to-four family residential 422 4 435 4
Co-operative apartments - - - -
Construction - - - -
Non-mortgage loans:
Small Business Administration - - 397 1
Taxi medallion 14,716 73 6,459 17
Commercial business and other 385 5 448 7

Total loans with an allowance recorded 21,250 150 14,665 117

Total Impaired Loans:
Total mortgage loans $ 29,924 $ 233 $ 35,384 $ 226

Total non-mortgage loans $ 19,792 $ 108 $ 14,972 $ 135

~~- 21 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~The following table shows our average recorded investment and interest income recognized for impaired loans for the nine months ended September 30, 2017 and 2016:~~

September 30, 2017 September 30, 2016

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized
(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential $ 2,650 $ 57 $ 5,129 $ 69
Commercial real estate 5,881 214 4,841 162
One-to-four family mixed-use property 5,399 123 8,407 119
One-to-four family residential 10,062 85 10,457 69
Co-operative apartments - - - -
Construction 794 22 380 -
Non-mortgage loans:
Small Business Administration 230 9 353 38
Taxi medallion 3,771 74 3,369 155
Commercial business and other 1,584 93 2,265 136

Total loans with no related allowance recorded 30,371 677 35,201 748

With an allowance recorded:
Mortgage loans:
Multi-family residential 2,391 107 2,284 87
Commercial real estate 2,039 72 2,173 73
One-to-four family mixed-use property 1,379 50 2,622 107
One-to-four family residential 422 12 403 10
Co-operative apartments - - - -
Construction - - - -
Non-mortgage loans:
Small Business Administration - - 315 4
Taxi medallion 14,663 166 5,009 91
Commercial business and other 383 17 962 20

Total loans with an allowance recorded 21,277 424 13,768 392

Total Impaired Loans:
Total mortgage loans $ 31,017 $ 742 $ 36,696 $ 696

Total non-mortgage loans $ 20,631 $ 359 $ 12,273 $ 444

~~- 22 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

In accordance with our policy and the current regulatory guidelines, we designate loans as “Special Mention,” which are considered “Criticized Loans,” and “Substandard,” “Doubtful,” or “Loss,” which are considered “Classified Loans”. If a loan does not fall within one of the ~~previous~~previously mentioned categories and management believes weakness is evident then we designate the loan as “Watch”; all other loans would be considered “Pass.” Loans that are non-accrual are designated as Substandard, Doubtful or Loss. These loan designations are updated quarterly. We designate a loan as Substandard when a well-defined weakness is identified that ~~jeopardizes~~may jeopardize the orderly liquidation of the debt. We designate a loan as Doubtful when it displays the inherent weakness of a Substandard loan with the added provision that collection of the debt in full, on the basis of existing facts, is highly improbable. We designate a loan as Loss if it is deemed the debtor is incapable of repayment. The Company does not hold any loans designated as Loss, as loans that are designated as Loss are charged to the Allowance for ~~Loan~~Credit Losses. We designate a loan as Special Mention if the asset does not warrant classification within one of the other classifications but does contain a potential weakness that deserves closer attention.

-21-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following table ~~sets forth~~summarizes the ~~recorded investment~~risk category of mortgage and non-mortgage loans by loan portfolio segments and class of loans by year of origination at June 30, 2022:



														Revolving Loans		Revolving Loans
														Amortized Cost		converted to
(In thousands)		2022		2021		2020		2019		2018		Prior		Basis		term loans		Total
1-4 Family Residential
Pass	$	10,310	$	8,806	$	19,533	$	43,660	$	29,373	$	108,148	$	10,578	$	13,345	$	243,753
Watch		—		293		—		730		—		933		120		1,354		3,430
Special Mention		—		—		—		—		—		—		—		30		30
Substandard		—		—		—		—		—		4,450		—		446		4,896
Total 1-4 Family Residential	$	10,310	$	9,099	$	19,533	$	44,390	$	29,373	$	113,531	$	10,698	$	15,175	$	252,109
1-4 Family Mixed-Use
Pass	$	26,273	$	45,047	$	33,924	$	66,003	$	67,908	$	313,365	$	—	$	—	$	552,520
Watch		—		—		892		744		—		7,950		—		—		9,586
Special Mention		—		—		—		—		—		786		—		—		786
Substandard		—		—		—		—		—		1,241		—		—		1,241
Total 1-4 Family Mixed Use	$	26,273	$	45,047	$	34,816	$	66,747	$	67,908	$	323,342	$	—	$	—	$	564,133
Commercial Real Estate
Pass	$	211,255	$	185,731	$	158,206	$	234,777	$	248,456	$	751,222	$	—	$	—	$	1,789,647
Watch		—		1,645		—		10,605		6,826		57,379		—		—		76,455
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		281		—		—		281
Total Commercial Real Estate	$	211,255	$	187,376	$	158,206	$	245,382	$	255,282	$	808,882	$	—	$	—	$	1,866,383
Construction
Pass	$	1,984	$	14,741	$	13,142	$	14,802		—	$	—	$	17,559	$	—	$	62,228
Watch		—		—		—		—		6,279		—		—		—		6,279
Special Mention		—		—		—		—		—		2,598		—		—		2,598
Substandard		—		—		—		—		856		—		—		—		856
Total Construction	$	1,984	$	14,741	$	13,142	$	14,802	$	7,135	$	2,598	$	17,559	$	—	$	71,961
Multi-family
Pass	$	251,810	$	292,720	$	231,194	$	323,125	$	402,032	$	998,034	$	5,933	$	—	$	2,504,848
Watch		—		1,117		1,467		—		12,050		10,666		—		—		25,300
Special Mention		—		—		—		—		—		567		—		—		567
Substandard		—		—		—		—		2,889		1,583		—		—		4,472
Total Multi-family	$	251,810	$	293,837	$	232,661	$	323,125	$	416,971	$	1,010,850	$	5,933	$	—	$	2,535,187
Commercial Business - Secured by RE
Pass	$	127,888	$	145,394	$	90,463	$	34,613	$	56,739	$	99,065	$	—	$	—	$	554,162
Watch		—		—		21,757		48,439		18,661		57,978		—		—		146,835
Special Mention		—		—		—		576		—		—		—		—		576
Substandard		—		—		—		1,847		—		3,554		—		—		5,401
Total Commercial Business - Secured by RE	$	127,888	$	145,394	$	112,220	$	85,475	$	75,400	$	160,597	$	—	$	—	$	706,974
Commercial Business
Pass	$	88,248	$	115,221	$	46,969	$	43,504	$	48,621	$	62,638	$	217,817	$	—	$	623,018
Watch		—		2,476		523		22,487		16,196		18,834		5,960		—		66,476
Special Mention		—		1,483		6,074		39		2,063		545		846		—		11,050
Substandard		—		—		87		31		5,265		3,781		12,711		—		21,875
Doubtful		—		—		—		—		—		—		996		—		996
Total Commercial Business	$	88,248	$	119,180	$	53,653	$	66,061	$	72,145	$	85,798	$	238,330	$	—	$	723,415
Small Business Administration
Pass	$	2,728	$	21,712	$	4,839	$	720	$	1,319	$	2,259	$	—	$	—	$	33,577
Watch		—		—		—		54		2,539		2,575		—		—		5,168
Special Mention		—		—		—		—		—		46		—		—		46
Substandard		—		—		—		—		—		1,220		—		—		1,220
Total Small Business Administration	$	2,728	$	21,712	$	4,839	$	774	$	3,858	$	6,100	$	—	$	—	$	40,011
Other
Pass	$	—	$	—	$	—	$	—	$	—	$	140	$	80	$	—	$	220
Total Other	$	—	$	—	$	—	$	—	$	—	$	140	$	80	$	—	$	220
Total by Loan Type
Total Pass	$	720,496	$	829,372	$	598,270	$	761,204	$	854,448	$	2,334,871	$	251,967	$	13,345	$	6,363,973
Total Watch		—		5,531		24,639		83,059		62,551		156,315		6,080		1,354		339,529
Total Special Mention		—		1,483		6,074		615		2,063		4,542		846		30		15,653
Total Substandard		—		—		87		1,878		9,010		16,110		12,711		446		40,242
Total Doubtful		—		—		—		—		—		—		996		—		996
Total Loans	$	720,496	$	836,386	$	629,070	$	846,756	$	928,072	$	2,511,838	$	272,600	$	15,175	$	6,760,393

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Included within net loans as of June 30, 2022 and December 31, 2021 were $5.4 million and $8.7 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.

A loan is considered collateral dependent when the borrower is experiencing financial difficulties and repayment is expected to be substantially provided by the operation or sale of the collateral. The following table presents types of collateral-dependent loans ~~designated~~by class of loans as ~~Criticized or Classified at~~of the periods indicated:



	Collateral Type
	June 30, 2022				December 31, 2021
(In thousands)		Real Estate		Business Assets		Real Estate		Business Assets
Multi-family residential	$	3,707	$	—	$	2,652	$	—
Commercial real estate		775		—		1,158		—
One-to-four family - mixed-use property		1,049		—		1,582		—
One-to-four family - residential		4,708		—		7,482		—
Construction		856		—		—		—
Small Business Administration		—		951		—		952
Commercial business and other		—		18,871		—		1,427
Total	$	11,095	$	19,822	$	12,874	$	2,379

September 30, 2017
(In thousands) Special Mention Substandard Doubtful Loss Total

Multi-family residential $ 9,333 $ 2,188 $ - $ - $ 11,521
Commercial real estate 1,015 4,767 - - 5,782
One-to-four family - mixed-use property 1,700 4,551 - - 6,251
One-to-four family - residential 915 9,503 - - 10,418
Co-operative apartments - - - - -
Construction loans - 1,178 - - 1,178
Small Business Administration 585 215 - - 800
Taxi medallion - 18,165 - - 18,165
Commercial business and other 17,694 748 - - 18,442
Total loans $ 31,242 $ 41,315 $ - $ - $ 72,557

Off-Balance Sheet Credit Losses

December 31, 2016
(In thousands) Special Mention Substandard Doubtful Loss Total

Multi-family residential $ 7,133 $ 3,351 $ - $ - $ 10,484
Commercial real estate 2,941 4,489 - - 7,430
One-to-four family - mixed-use property 4,197 7,009 - - 11,206
One-to-four family - residential 1,205 9,399 - - 10,604
Co-operative apartments - - - - -
Construction loans - - - - -
Small Business Administration 540 436 - - 976
Taxi medallion 2,715 16,228 54 - 18,997
Commercial business and other 9,924 2,493 - - 12,417
Total loans $ 28,655 $ 43,405 $ 54 $ - $ 72,114

Also included within scope of the CECL standard are off-balance sheet loan commitments, which includes the unfunded portion of committed lines of credit and commitments “in-process”. Commitments “in‐process” reflect loans not in the Company’s books but rather negotiated loan / line of credit terms and rates that the Company has offered to customers and is committed to honoring. In reference to “in‐process” credits, the Company defines an unfunded commitment as a credit that has been offered to and accepted by a borrower, which has not closed and by which the obligation is not unconditionally cancellable.

Commitments to extend credit (principally real estate mortgage loans) and lines of credit (principally home equity lines of credit and business lines of credit) ~~amounted to $94.7~~totaled $542.6 million and ~~$229.0~~$472.9 million ~~respectively,~~ at ~~September~~June 30, ~~2017.~~

2022 and December 31, 2021, respectively.

The following table presents the activity in the allowance for off balance sheet credit losses for the three and six months ended June 30, 2022 and 2021.


	For the three months ended				For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021

	(In thousands)
Balance at beginning of period	$	1,589	$	1,304	$	1,209	$	1,815
Off-Balance Sheet- Provision (Benefit)		(145)		266		235		(245)
Allowance for Off-Balance Sheet - Credit losses ⁽¹⁾	$	1,444	$	1,570	$	1,444	$	1,570

(1)

Included in “Other liabilities” on the Consolidated Statements of Financial Condition.

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Notes to Consolidated Financial Statements

(Unaudited)

6. Loans held for sale

Loans held for sale are carried at the lower of cost or estimated fair value. At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the Bank did not have any loans held for sale.

The Company has implemented a strategy of selling certain delinquent and non-performing loans. Once the Company has decided to sell a loan, the sale usually closes in a short period of time, generally within the same quarter. Loans designated held for sale are reclassified from loans held for investment to loans held for sale. Terms of sale include cash due upon the closing of the sale, no contingencies or recourse to the Company and servicing is released to the buyer. Additionally, at times the Company may sell participating interests in performing loans.

The following table shows loans sold during the ~~period~~periods indicated:


	For the three and six months ended June 30, 2022
(Dollars in thousands)	Loans sold	Proceeds		Net charge-offs		Net gain
Performing loans
Multi-family residential	4	$	10,136	$	—	$	—
Commercial	1		4,312		—		—
Total	5	$	14,448	$	—	$	—

Delinquent and non-performing loans
Commercial	1		3,687		—		73
One-to-four family - mixed-use property	1		430		—		—
Total	2	$	4,117	$	—	$	73


	For the three months ended June 30, 2021
				Net
(Dollars in thousands)	Loans sold	Proceeds		charge-offs		Net gain
Delinquent and non-performing loans
Multi-family residential	3	$	7,846	$	—	$	58
One-to-four family - mixed-use property	4		2,488		—		69
Total	7	$	10,334	$	—	$	127


	For the six months ended June 30, 2021
(Dollars in thousands)	Loans sold	Proceeds		Net charge-offs		Net gain
Delinquent and non-performing loans
Multi-family residential	8	$	10,752	$	(43)	$	63
Commercial	3		3,036		(64)		17
One-to-four family - mixed-use property	10		4,796		(14)		78
Total	21	$	18,584	$	(121)	$	158

For the three months ended
September 30, 2017

(Dollars in thousands) Loans sold Proceeds Net gain (loss)
Delinquent and non-performing loans
Multi-family residential 2 $ 707 $ 30
Commercial real estate 3 1,118 34
One-to-four family - mixed-use property 3 913 115
Total 8 $ 2,738 $ 179

Performing loans
Multi-family residential 10 $ 12,704 $ (22 )
Commercial real estate 2 17,832 (7 )
Small Business Administration 1 142 2
Total 13 $ 30,678 $ (27 )

For the three months ended
September 30, 2016

(Dollars in thousands) Loans sold Proceeds Net gain
Delinquent and non-performing loans
Multi-family residential 3 $ 632 $ 1
One-to-four family - mixed-use property 8 2,507 239
Total 11 $ 3,139 $ 240

For the nine months ended
September 30, 2017

(Dollars in thousands) Loans sold Proceeds Net charge-offs Net gain (loss)
Delinquent and non-performing loans
Multi-family residential 2 $ 707 $ - $ 30
Commercial real estate 4 1,453 (4 ) 35
One-to-four family - mixed-use property 8 2,703 (33 ) 143
Total 14 $ 4,863 $ (37 ) $ 208

Performing loans
Multi-family residential 12 $ 18,784 $ - $ (36 )
Commercial real estate 7 26,283 - (28 )
Small Business Administration 8 5,061 - 252
Total 27 $ 50,128 $ - $ 188

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

7. Leases

The Company has 28 operating leases for branches (including headquarters) and office spaces, 10 operating leases for vehicles, and 1 operating lease for equipment. Our leases have remaining lease terms ranging from six months to approximately 14 years, none of which has a renewal option reasonably certain of exercise, which has been reflected in the Company’s calculation of lease term.

For the nine months ended
September 30, 2016

(Dollars in thousands) Loans sold Proceeds Net charge-offs Net gain
Delinquent and non-performing loans
Multi-family residential 9 $ 2,680 $ (8 ) $ 3
Commercial real estate 2 192 - -
One-to-four family - mixed use 15 5,093 - 262
Total 26 $ 7,965 $ (8 ) $ 265

Performing loans
Small Business Administration 6 3,534 - 319
Total 6 $ 3,534 $ - $ 319

The Company has elected the short-term lease recognition exemption such that the Company will not recognize Right of Use (“ROU”) assets or lease liabilities for leases with a term of less than 12 months from the commencement date. The Company has two agreements in 2022 and one agreement in 2021 that qualified as short-term leases. Certain leases have escalation clauses for operating expenses and real estate taxes. The Company’s non-cancelable operating lease agreements expire through 2036.

Supplemental balance sheet information related to leases was as follows:


(Dollars in thousands)	June 30, 2022			December 31, 2021

Operating lease ROU asset	$	46,687		$	50,200

Operating lease liability	$	50,346		$	54,155

Weighted-average remaining lease term-operating leases		7.0 years			7.4 years
Weighted average discount rate-operating leases		3.1	%		3.1	%

The components of lease expense and cash flow information related to leases were as follows:


		For the three months ended
(Dollars in thousands)	Line Item Presented	June 30, 2022		June 30, 2021

Lease Cost
Operating lease cost	Occupancy and equipment	$	2,099	$	2,224
Operating lease cost	Other operating expenses		26		20
Short-term lease cost	Professional Services and Other operating expenses		36		60
Variable lease cost	Occupancy and equipment		238		298
Total lease cost		$	2,399	$	2,602

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$	2,343	$	4,769

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Notes to Consolidated Financial Statements

(Unaudited)


		For the six months ended
(Dollars in thousands)	Line Item Presented	June 30, 2022		June 30, 2021

Lease Cost
Operating lease cost	Occupancy and equipment	$	4,198	$	4,306
Operating lease cost	Other operating expenses		48		42
Short-term lease cost	Professional Services and Other operating expenses		97		95
Variable lease cost	Occupancy and equipment		438		596
Total lease cost		$	4,781	$	5,039

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$	4,769	$	8,048
Right-of-use assets obtained in exchange for new operating lease liabilities		$	47	$	—

The Company’s minimum annual rental payments for Bank facilities due under non-cancelable leases are as follows as of June 30, 2022:


	Minimum Rental
	(In thousands)
Years ended December 31:
2022	$	4,485
2023		9,502
2024		9,336
2025		8,662
2026		7,769
Thereafter		16,277
Total minimum payments required		56,031
Less: implied interest		5,685
Total lease obligations	$	50,346

8. Stock-Based Compensation

The Company has a long-term incentive compensation program for certain Company executive officers that includes grants of performance-based restricted stock units (“PRSUs”) in addition to time-based restricted stock units (“RSU”). Under the terms of the PRSU Agreement, the number of PRSUs that may be earned depends on the extent to which performance goals for the award are achieved over a three-year performance period, as determined by the Compensation Committee of the Board. As of June 30, 2022, PRSUs granted in 2022 and 2020 are being accrued at target and PRSUs granted in 2021 are being accrued above target. The different levels of accrual are commensurate with the projected performance of the respective grant.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

On May 18, 2021, stockholders approved an amendment to the 2014 Omnibus Plan (the “Amendment”) authorizing an additional 1,100,000 shares available for future issuance. Including the additional shares authorized from the Amendment, 966,785 shares were available for future issuance under the 2014 Omnibus Plan at June 30, 2022.

For the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, the Company’s net income, as reported, ~~includes~~included $0.9 million and $1.1 million, respectively, of stock-based compensation costs, including the benefit or expense of phantom stock awards, and ~~$0.4~~$0.3 million of income tax ~~benefits~~benefit for each period, related to the stock-based compensation ~~plans in each of the periods.~~plans. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, the Company’s net income, as reported, ~~includes $5.2~~included $4.9 million and ~~$4.7~~$5.2 million, respectively, of stock-based compensation costs, including the benefit or expense of phantom stock awards, and ~~$1.7~~$1.3 million and ~~$1.8~~$1.4 million ~~respectively,~~ of income tax ~~benefits~~benefit, respectively, related to the stock-based compensation plans. ~~The Company did not issue any restricted stock units during~~

During the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~ 2021, the Company did 0t grant any RSU or PRSUs. During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, the Company granted ~~276,900~~212,811 and ~~337,175 restricted stock units,~~238,985 RSU awards and 63,250 and 62,790 PRSU awards, respectively. ~~The Company has not granted stock options since 2009. At September 30, 2017, the Company had 1,200 stock options, all 100% vested, outstanding.~~

The Company uses the fair value of the common stock on the date of award to measure compensation cost for restricted stock unit awards. Compensation cost is recognized over the vesting period of the award using the straight-line method.

The 2014 Omnibus Incentive Plan (“2014 Omnibus Plan”) became effective on May 20, 2014 after adoption by the Board of Directors and approval by the stockholders. The 2014 Omnibus Plan authorizes the Compensation Committee of the Company’s Board of Directors to grant a variety of equity compensation awards as well as long-term and annual cash incentive awards, all of which can, but need not, be structured so as to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended. On May 31, 2017, stockholders approved an amendment to the 2014 Omnibus Plan (the “Amendment”) authorizing an additional 672,000 shares available for future issuance. In addition, to increasing the number of shares for future grants, the Amendment eliminates, Forfeitures are recorded in the case of stock options and SARs, the ability to recycle shares used to satisfy the exercise price or taxes for such awards. No other amendments to the 2014 Omnibus Plan were made. Including the additional shares authorized from the Amendment, 953,268 shares are available for future issuance under the 2014 Omnibus Plan at September 30, 2017.

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~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

period they occur.

The following table summarizes the Company’s ~~restricted stock unit (“RSU”)~~RSU and PRSU awards at or for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2022:


	RSU Awards			PRSU Awards
		Weighted-Average			Weighted-Average
		Grant-Date			Grant-Date
	Shares	Fair Value		Shares	Fair Value

Non-vested at December 31, 2021	310,430	$	21.49	102,920	$	20.02
Granted	212,811		24.83	63,250		25.11
Vested	(219,835)		23.62	(71,390)		23.48
Forfeited	(1,695)		23.87	—		—
Non-vested at June 30, 2022	301,711	$	22.28	94,780	$	20.81
Vested but unissued at June 30, 2022	231,008	$	22.38	118,245	$	20.76

Shares Weighted-Average
Grant-Date
Fair Value

Non-vested at December 31, 2016 488,779 $ 18.99
Granted 276,900 28.21
Vested (244,762 ) 21.93
Forfeited (22,860 ) 23.61
Non-vested at September 30, 2017 498,057 $ 22.46

Vested but unissued at September 30, 2017 244,077 $ 22.67

As of ~~September~~June 30, ~~2017,~~2022, there was ~~$8.7~~$6.2 million of total unrecognized compensation cost related to RSU and PRSU awards granted. That cost is expected to be recognized over a weighted-average period of ~~3.1~~2.6 years. The total fair value of awards vested for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 was ~~$14,000~~$0.5 million and ~~$4,000,~~$0.2 million, respectively. The total fair value of awards vested for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 was ~~$7.0~~$7.1 million and ~~$4.8~~$5.0 million, respectively. The vested but unissued RSU and PRSU awards consist of awards made to employees and directors who are eligible for retirement. According to the terms of these awards, which provide for vesting upon retirement, these employees and directors have no risk of forfeiture. These shares will be issued at the original contractual vesting and settlement dates.

Cash proceeds, fair value received, tax benefits, and intrinsic value related to stock options exercised, and the weighted average grant date fair value for options granted, during the three and nine months ended September 30, 2017 and 2016 are provided in the following table:

For the three months ended
September 30,
For the nine months ended
September 30,
(In thousands) 2017 2016 2017 2016
Proceeds from stock options exercised $ - $ 5 $ - $ 132
Fair value of shares received upon exercise of stock options - 262 37 612
Tax benefit (expense) related to stock options exercised - (10 ) 39 (12 )
Intrinsic value of stock options exercised - 44 96 156

Phantom Stock Plan: The Company maintains a non-qualified phantom stock plan as a supplement to its ~~profit sharing~~profit-sharing plan for officers who have achieved the designated level and completed one year of service. The Company adjusts its liability under this plan to the fair value of the shares at the end of each period.

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Notes to Consolidated Financial Statements

(Unaudited)

The following table summarizes the Phantom Stock Plan at or for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2022:


Phantom Stock Plan	Shares	Fair Value
Outstanding at December 31, 2021	128,881	$	24.30
Granted	27,001		24.24
Distributions	(723)		24.31
Outstanding at June 30, 2022	155,159	$	21.26
Vested at June 30, 2022	154,823	$	21.26

Phantom Stock Plan Shares Fair Value

Outstanding at December 31, 2016 89,339 $ 29.39
Granted 7,889 27.42
Forfeited (10 ) 28.95
Distributions (8,471 ) 28.69
Outstanding at September 30, 2017 88,747 $ 29.72
Vested at September 30, 2017 88,431 $ 29.72

The Company recorded stock-based compensation expense (benefit) for the Phantom Stock Plan of ~~$0.2~~($0.1) million and ~~$0.4~~$0.1 million for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively. The total fair value of the distributions from the Phantom Stock Plan was ~~$0.2 million~~$2,000 for each of the three months ended ~~September~~June 30, ~~2017. There were no distributions for the three months ended September 30, 2016.~~2022 and 2021.

~~For the nine months ended September 30, 2017 and 2016, the~~The Company recorded stock-based compensation (benefit) expense for the Phantom Stock Plan of ~~$0.1~~($0.4) million and ~~$0.2~~$0.6 million for the six months ended June 30, 2022 and 2021, respectively. The total fair value of the distributions from the Phantom Stock Plan ~~during~~was $18,000 and $25,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, and ~~2016 was $0.2 million and $28,000,~~2021, respectively.

8.9. Pension and Other Postretirement Benefit Plans

The following table sets forth information regarding the components of net expense for the pension and other postretirement benefit plans.


	Three months ended				Six months ended
	June 30,				June 30,
(In thousands)	2022		2021		2022		2021

Employee Pension Plan:
Interest cost	$	138	$	128	$	276	$	256
Amortization of unrecognized loss		1		122		2		244
Expected return on plan assets		(258)		(274)		(515)		(548)
Net employee pension benefit	$	(119)	$	(24)	$	(237)	$	(48)

Outside Director Pension Plan:
Service cost	$	3	$	4	$	6	$	8
Interest cost		12		12		23		24
Amortization of unrecognized gain		(7)		(5)		(14)		(10)
Net outside director pension expense	$	8	$	11	$	15	$	22

Other Postretirement Benefit Plans:
Service cost	$	67	$	73	$	134	$	146
Interest cost		69		58		139		116
Amortization of actuarial gain		—		16		—		16
Amortization of past service credit		(7)		(21)		(14)		(43)
Net other postretirement expense	$	129	$	126	$	259	$	235

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Three months ended
September 30,
Nine months ended
September 30,
(In thousands) 2017 2016 2017 2016

Employee Pension Plan:
Interest cost $ 216 $ 226 $ 648 $ 678
Amortization of unrecognized loss 174 201 523 604
Expected return on plan assets (348 ) (348 ) (1,044 ) (1,044 )
Net employee pension expense $ 42 $ 79 $ 127 $ 238

Outside Director Pension Plan:
Service cost $ 10 $ 11 $ 30 $ 33
Interest cost 23 24 69 72
Amortization of unrecognized gain (23 ) (21 ) (69 ) (65 )
Amortization of past service liability 10 9 30 30
Net outside director pension expense $ 20 $ 23 $ 60 $ 70

Other Postretirement Benefit Plans:
Service cost $ 79 $ 90 $ 237 $ 270
Interest cost 76 80 228 240
Amortization of unrecognized loss - 12 - 36
Amortization of past service credit (21 ) (22 ) (64 ) (64 )
Net other postretirement expense $ 134 $ 160 $ 401 $ 482

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The Company previously disclosed in its Consolidated Financial Statements for the year ended December 31, ~~2016~~2021 that it expects to contribute $0.3 million ~~and $0.2 million~~ to each of the Outside Director Pension Plan (the “Outside Director Pension Plan”) and the other postretirement benefit plans (the “Other Postretirement Benefit Plans”), ~~respectively,~~ during the year ending December 31, ~~2017.~~2022. The Company does ~~not~~0t expect to make a contribution to the Employee Pension Plan (the “Employee Pension Plan”). As of ~~September~~June 30, ~~2017,~~2022, the Company ~~has~~had contributed ~~$108,000~~$72,000 to the Outside Director Pension Plan and ~~$60,000 in contributions were made to~~$21,000 tto the Other Postretirement Benefit Plans. As of ~~September~~June 30, ~~2017,~~2022, the Company has not revised its expected contributions for the year ending December 31, ~~2017.~~

2022.

~~- 27 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

9.10. Fair Value of Financial Instruments

The Company carries certain financial assets and financial liabilities at fair value in accordance with GAAP which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement ~~date, establishes a framework for measuring fair value and expands disclosures about fair value measurements.~~date. GAAP permits entities to choose to measure many financial instruments and certain other items at fair value. At ~~September~~June 30, ~~2017,~~2022, the Company carried financial assets and financial liabilities under the fair value option with fair values of ~~$21.4~~$13.6 million and ~~$36.1~~$55.4 million, respectively. At December 31, ~~2016,~~2021, the Company carried financial assets and financial liabilities under the fair value option with fair values of ~~$30.4~~$14.6 million and ~~$34.0~~$56.5 million, respectively. The Company did not elect to carry any additional financial assets or financial liabilities under the fair value option during the ~~nine~~three and six months ended ~~September~~June 30, ~~2017.~~

2022 and 2021.

The following table presents the financial assets and financial liabilities reported at fair value under the fair value option, and the changes in fair value included in the Consolidated Statement of Income – Net gain (loss) from fair value adjustments, at or for the periods ended as indicated:


	Fair Value		Fair Value		Changes in Fair Values For Items Measured at Fair Value
	Measurements		Measurements		Pursuant to Election of the Fair Value Option
	at June 30,		at December 31,		Three Months Ended				Six Months Ended
Description	2022		2021		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
(In thousands)
Mortgage-backed securities	$	339	$	388	$	(8)	$	(1)	$	(12)	$	(2)
Other securities		13,235		14,180		(484)		176		(1,020)		1
Borrowed funds		55,352		56,472		3,025		(5,528)		1,756		(6,988)
Net gain (loss) from fair value adjustments ⁽¹⁾					$	2,533	$	(5,353)	$	724	$	(6,989)

Fair Value Fair Value Changes in Fair Values For Items Measured at Fair Value
Measurements Measurements Pursuant to Election of the Fair Value Option
at September 30, at December 31, Three Months Ended Nine Months Ended
(Dollars in thousands) 2017 2016 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016

Mortgage-backed securities $ 1,696 $ 2,016 $ (5 ) $ (6 ) $ (15 ) $ (4 )
Other securities 19,712 28,429 40 (30 ) 184 156
Borrowed funds 36,071 33,959 (925 ) (296 ) (2,090 ) 1,250
Net gain (loss) from fair value adjustments ^{(1) (2)} $ (890 ) $ (332 ) $ (1,921 ) $ 1,402

(1)

The net gain (loss) from fair value adjustments presented in the above table does not include net ~~losses~~gains (losses) of ~~$0.4 million and $0.5~~($1.2) million for the three months ended ~~September~~June 30, ~~2017~~2021 and ~~2016, respectively,~~$1.4 million for the six months ended June 30, 2021, from the change in the fair value of interest rate swaps.

~~(2)~~

The net gain (loss) from fair value adjustments presented in the above table does not include net losses of $0.9 million and $4.3 million for the nine months ended September 30, 2017 and 2016, respectively, from the change in the fair value of interest rate swaps.

Included in the fair value of the financial assets and financial liabilities selected for the fair value option is the accrued interest receivable or payable for the related instrument. The Company reports as interest income or interest expense in the Consolidated Statement of Income, the interest receivable or payable on the financial instruments selected for the fair value option at their respective contractual rates.

The borrowed funds had a contractual principal amount of $61.9 million at both ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016.~~2021. The fair value of borrowed funds includes accrued interest payable of $0.2 million and $0.1 million at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively.

The Company generally holds its earning assets ~~other than securities available for sale,~~ to maturity and settles its liabilities at maturity. However, fair value estimates are made at a specific point in time and are based on relevant market information. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Accordingly, as assumptions change, such as interest rates and prepayments, fair value estimates change, and these amounts may not necessarily be realized in an immediate sale.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Disclosure of fair value does not require fair value information for items that do not meet the definition of a financial instrument or certain other financial instruments specifically excluded from its requirements. These items include core deposit intangibles and other customer relationships, premises and equipment, leases, income taxes and equity.

~~- 28 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Further, fair value disclosure does not attempt to value future income or business. These items may be material and accordingly, the fair value information presented does not purport to represent, nor should it be construed to represent, the underlying “market” or franchise value of the Company.

Financial assets and financial liabilities reported at fair value are required to be measured based on either: (1) quoted prices in active markets for identical financial instruments (Level 1); (2) significant other observable inputs (Level 2); or (3) significant unobservable inputs (Level 3).

A description of the methods and significant assumptions utilized in estimating the fair value of the Company’s financial assets and liabilities that are carried at fair value on a recurring basis are as follows:

Level 1 – ~~where~~when quoted market prices are available in an active market. At ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, Level 1 included one mutual fund. ~~At December 31, 2016, the Company did not value any of its assets or liabilities that are carried at fair value on a recurring basis as Level 1.~~

Level 2 – when quoted market prices are not available, fair value is estimated using quoted market prices for similar financial instruments and adjusted for differences between the quoted instrument and the instrument being valued. Fair value can also be estimated by using pricing models, or discounted cash flows. Pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices and credit spreads. In addition to observable market information, models also incorporate maturity and cash flow assumptions. At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, Level 2 included ~~mortgage related~~mortgage-backed securities, CLOs, corporate debt, municipals, and interest rate swaps.

Level 3 – when there is limited activity or less transparency around inputs to the valuation, financial instruments are classified as Level 3. At ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, Level 3 included trust preferred securities owned, and junior subordinated debentures issued by the Company. ~~At December 31, 2016, Level 3 included trust preferred securities owned and junior subordinated debentures issued by the Company and a single issuer trust preferred security.~~

The methods described above may produce fair values that may not be indicative of net realizable value or reflective of future fair values. While the Company believes its valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies, assumptions, and models to determine fair value of certain financial instruments could produce different estimates of fair value at the reporting date.

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following table sets forth the Company’s assets and liabilities that are carried at fair value on a recurring basis, including those reported at fair value under the fair value option, and the ~~method~~level that was used to determine their fair value, at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:


	Quoted Prices
	in Active Markets				Significant Other				Significant Other
	for Identical Assets				Observable Inputs				Unobservable Inputs				Total carried at fair value
	(Level 1)				(Level 2)				(Level 3)				on a recurring basis
	2022		2021		2022		2021		2022		2021		2022		2021

	(In thousands)
Assets:
Securities available for sale
Mortgage-backed
Securities	$	—	$	—	$	510,934	$	572,184	$	—	$	—	$	510,934	$	572,184
Other securities		11,573		12,485		333,485		190,872		1,662		1,695		346,720		205,052
Interest rate swaps		—		—		53,985		10,683		—		—		53,985		10,683

Total assets	$	11,573	$	12,485	$	898,404	$	773,739	$	1,662	$	1,695	$	911,639	$	787,919


Liabilities:
Borrowings	$	—	$	—	$	—	$	—	$	55,352	$	56,472	$	55,352	$	56,472
Interest rate swaps		—		—		13,258		25,071		—		—		13,258		25,071

Total liabilities	$	—	$	—	$	13,258	$	25,071	$	55,352	$	56,472	$	68,610	$	81,543

Quoted Prices
in Active Markets Significant Other Significant Other
for Identical Assets Observable Inputs Unobservable Inputs Total carried at fair value
(Level 1) (Level 2) (Level 3) on a recurring basis
2017 2016 2017 2016 2017 2016 2017 2016
(In thousands)

Assets:
Mortgage-backed Securities $ - $ - $ 519,861 $ 516,476 $ - $ - $ 519,861 $ 516,476
Other securities 11,589 - 264,026 337,544 1,083 7,361 276,698 344,905
Interest rate swaps - - 5,410 6,350 - - 5,410 6,350

Total assets $ 11,589 $ - $ 789,297 $ 860,370 $ 1,083 $ 7,361 $ 801,969 $ 867,731

Liabilities:
Borrowings $ - $ - $ - $ - $ 36,071 $ 33,959 $ 36,071 $ 33,959
Interest rate swaps - - 4,645 3,386 - - 4,645 3,386

Total liabilities $ - $ - $ 4,645 $ 3,386 $ 36,071 $ 33,959 $ 40,716 $ 37,345

~~- 29 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following table sets forth the ~~Company's~~Company’s assets and liabilities that are carried at fair value on a recurring basis, classified within Level 3 of the valuation hierarchy for the ~~period~~periods indicated:


	For the three months ended
	June 30, 2022				June 30, 2021
	Trust preferred		Junior subordinated		Trust preferred		Junior subordinated
	securities		debentures		securities		debentures

	(In thousands)
Beginning balance	$	1,740	$	57,955	$	1,342	$	44,712
Net (loss) gain from fair value adjustment of financial assets⁽¹⁾		(80)		—		153		—
Net (gain) loss from fair value adjustment of financial liabilities⁽¹⁾		—		(3,025)		—		5,528
Increase (Decrease) in accrued interest		2		61		—		(3)
Change in unrealized (gains) losses included in other comprehensive loss		—		361		—		(423)
Ending balance	$	1,662	$	55,352	$	1,495	$	49,814
Changes in unrealized gains held at period end	$	—	$	2,775	$	—	$	2,973

For the three months ended
September 30, 2017 September 30, 2016

Trust preferred
securities
Junior subordinated
debentures
Trust preferred
securities
Junior subordinated
debentures
(In thousands)

Beginning balance $ 7,444 $ 35,137 $ 7,167 $ 27,485
Security call (6,300 ) - - -
Net gain from fair value adjustment of financial assets ⁽¹⁾ 28 - 23 -
Net loss from fair value adjustment of financial liabilities ⁽¹⁾ - 925 - 296
Decrease in accrued interest receivable (89 ) - - -
Increase in accrued interest payable - 9 - 10
Change in unrealized gains included in other comprehensive income - - 1 -
Ending balance $ 1,083 $ 36,071 $ 7,191 $ 27,791

Changes in unrealized gains held at period end $ - $ - $ 1 $ -

(1)

Totals in the ~~table~~tables above are presented in the Consolidated ~~Statement~~Statements of Income under net ~~gains (losses)~~gain (loss) from fair value adjustments.

~~The following table sets forth the Company's assets and liabilities that are carried at fair value on a recurring basis, classified within Level 3 of the valuation hierarchy for the period indicated:~~

For the nine months ended
September 30, 2017 September 30, 2016

Trust preferred
securities
Junior subordinated
debentures
Trust preferred
securities
Junior subordinated
debentures
(In thousands)

Beginning balance $ 7,361 $ 33,959 $ 7,212 $ 29,018
Security call (6,300 ) - - -
Net gain (loss) from fair value adjustment of financial assets ⁽¹⁾ 108 - (23 ) -
Net loss (gain) from fair value adjustment of financial liabilities ⁽¹⁾ - 2,090 - (1,250 )
Decrease in accrued interest receivable (88 ) - - -
Increase in accrued interest payable - 22 1 23
Change in unrealized gains included in other comprehensive income 2 - 1 -
Ending balance $ 1,083 $ 36,071 $ 7,191 $ 27,791

Changes in unrealized gains held at period end $ - $ - $ 1 $ -

~~(1)~~

~~Totals in the table above are presented in the Consolidated Statement of Income under net gains (losses) from fair value adjustments.~~

During the three and nine months ended September 30, 2017, one mutual fund security for $11.6 million was transferred from Level 2 into Level 1. There were no transfers between Levels 1, 2 and 3 during the three and nine months ended September 30, 2016.

~~- 30 -~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)


	For the six months ended
	June 30, 2022				June 30, 2021
	Trust preferred		Junior subordinated		Trust preferred		Junior subordinated
	securities		debentures		securities		debentures

	(In thousands)
Beginning balance	$	1,695	$	56,472	$	1,295	$	43,136
Net (loss) gain from fair value adjustment of financial assets⁽¹⁾		(35)		—		200		—
Net (gain) loss from fair value adjustment of financial liabilities⁽¹⁾		—		(1,757)		—		6,987
Decrease in accrued interest		2		78		—		(6)
Change in unrealized (gains) losses included in other comprehensive loss		—		559		—		(303)
Ending balance	$	1,662	$	55,352	$	1,495	$	49,814
Changes in unrealized gains held at period end	$	—	$	2,775	$	—	$	2,973

The following tables present the quantitative information about recurring Level 3 fair value of financial instruments and the fair value measurements at the periods indicated:

June 30, 2022

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

(Dollars in thousands)

Assets:

Trust preferred securities

1,662

Discounted cash flows

Discount rate

n/a

2.5

Liabilities:

Junior subordinated debentures

55,352

Discounted cash flows

Discount rate

n/a

2.5

December 31, 2021

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

September 30, 2017

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

(Dollars in thousands)

(Dollars in thousands)

Assets:

Trust preferred securities

1,083

Discounted cash flows

Discount rate

n/a

5.9

1,695

Discounted cash flows

Discount rate

n/a

2.2

Liabilities:

Junior subordinated debentures

36,071

Discounted cash flows

Discount rate

n/a

5.9

56,472

Discounted cash flows

Discount rate

n/a

2.2

December 31, 2016

Fair Value Valuation Technique Unobservable Input Range Weighted Average
(Dollars in thousands)
Assets:

Trust preferred securities $ 7,191 Discounted cash flows Discount rate 6.3% - 7.1% 7.0 %

Liabilities:

Junior subordinated debentures $ 33,959 Discounted cash flows Discount rate n/a 6.3 %

The significant unobservable inputs used in the fair value measurement of the Company’s trust preferred securities and junior subordinated debentures valued under Level 3 at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, are the effective yields used in the cash flow models. Significant increases or decreases in the effective yield in isolation would result in a significantly lower or higher fair value measurement.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following table sets forth the Company’s assets and liabilities that are carried at fair value on a non-recurring basis and the ~~method~~level that was used to determine their fair value at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:


	Quoted Prices
	in Active Markets				Significant Other				Significant Other
	for Identical Assets				Observable Inputs				Unobservable Inputs				Total carried at fair value
	(Level 1)				(Level 2)				(Level 3)				on a non-recurring basis
	2022		2021		2022		2021		2022		2021		2022		2021

	(In thousands)
Assets:
Non-accrual loans	$	—	$	—	$	—	$	—	$	22,502	$	11,026	$	22,502	$	11,026

Total assets	$	—	$	—	$	—	$	—	$	22,502	$	11,026	$	22,502	$	11,026

~~- 31 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following tables present the qualitative information about non-recurring Level 3 fair value of financial instruments and the fair value measurements at the periods indicated:


	At June 30, 2022
	Fair Value		Valuation Technique	Unobservable Input	Range		Weighted Average

	(Dollars in thousands)
Assets:

Non-accrual loans	$	22,140	Sales approach	Reduction for planned expedited disposal	8.0% to 15.0	%	12.0	%


Non-accrual loans	$	362	Discounted Cashflow	Discount Rate	4.3	%	4.3	%
				Probability of Default	35.0	%	35.0	%


	At December 31, 2021
	Fair Value		Valuation Technique	Unobservable Input	Range		Weighted Average

	(Dollars in thousands)
Assets:

Non-accrual loans	$	10,579	Sales approach	Reduction for planned expedited disposal	8.0% to 15.0	%	11.9	%


Non-accrual loans	$	447	Discounted Cashflow	Discount Rate	4.3	%	4.3	%
				Probability of Default	35.0	%	35.0	%

September 30, 2017

Fair Value Valuation Technique Unobservable Input Range Weighted Average
(Dollars in thousands)
Assets:

Impaired loans $ 1,566 Income approach Capitalization rate 6.5% to 7.5% 7.0 %

Reduction for planned expedited disposal 15.0% 15.0 %

Impaired loans $ 13,852 Sales approach Adjustment to sales comparison value to reconcile differences between comparable sales -50.0% to 16.2% -0.6 %

Reduction for planned expedited disposal 0.0% to 15.0% 3.7 %

Impaired loans $ 4,741 Blended income and sales approach Adjustment to sales comparison value to reconcile differences between comparable sales -30.0% to 25.0% -0.8 %

Capitalization rate 5.0% to 9.8% 7.5 %

Reduction for planned expedited disposal 14.5% to 15.0% 15.0 %

December 31, 2016

Fair Value Valuation Technique Unobservable Input Range Weighted Average
(Dollars in thousands)
Assets:

Impaired loans $ 2,007 Income approach Capitalization rate 6.0% to 7.5% 7.0 %

Reduction planned for expedited disposal 15.0% 15.0 %

Impaired loans $ 8,703 Sales approach Adjustment to sales comparison value to reconcile differences between comparable sales -40.0% to 16.2% -1.5 %

Reduction planned for expedited disposal 0% to 15.0% 7.7 %

Impaired loans $ 4,258 Blended income and sales approach Adjustment to sales comparison value to reconcile differences between comparable sales -50.0% to 25.0% -0.6 %

Capitalization rate 5.3% to 9.5% 7.2 %

Reduction planned for expedited disposal 15.0% 15.0 %

Other real estate owned $ 533 Sales approach Adjustment to sales comparison value to reconcile differences between comparable sales 3.3% to 18.6% 11.0 %

The Company did ~~not~~0t have any liabilities that were carried at fair value on a non-recurring basis at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016.~~2021.

~~- 32 -~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The methods and assumptions used to estimate fair value at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 are as follows:

~~Cash and Due from Banks, Overnight Interest-Earning Deposits and Federal Funds Sold:~~

~~The fair values of financial instruments that are short-term or reprice frequently and have little or no risk are considered to have a fair value that approximates carrying value.~~

~~FHLB-NY stock:~~

~~The fair value is based upon the par value of the stock, which equals its carrying value.~~

Securities:

The fair values of securities are contained in Note 4 (“Securities”) of the Notes to Consolidated Financial Statements. Fair value is based upon quoted market prices, where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities and adjusted for differences between the quoted instrument and the instrument being valued. When there is limited activity or less transparency around inputs to the valuation, securities are valued using discounted cash flows.

~~Loans held for sale:~~

~~The fair value of non-performing loans held for sale is estimated through a negotiated sales price.~~

Non-accrual Loans:

The fair value of loans is estimated by discounting the expected future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities.

For non-accruing loans, fair value is generally estimated by discounting management’s estimate of future cash flows with a discount rate commensurate with the risk associated with such assets or, for collateral dependent loans, 85% of the appraised or internally estimated value of the ~~property, except for taxi medallion loans. The fair value~~property. See Note 5 (“Loans”) of the ~~underlying collateral of taxi medallion loans is the most recent reported arm’s length transaction. When there is no recent sale activity, the fair value is calculated using capitalization rates.~~

~~Other Real Estate Owned:~~

OREO are carried at fair value less selling costs. The fair value is based on appraised value through a current appraisal, or sometimes through an internal review, additionally adjusted by the estimated costs to sell the property.

~~Accrued Interest Receivable:~~

~~The carrying amount is a reasonable estimate of fair value due to its short-term nature and is valued at the input level for its underlying financial asset.~~

~~Due to Depositors:~~

~~The fair values of demand, passbook savings, NOW, money market deposits and escrow deposits are, by definition, equal~~Notes to the amount payable on demand at the reporting dates (i.e. their carrying value). The fair value of certificates of deposits are estimated by discounting the expected future cash flows using the rates currently offered for deposits of similar remaining maturities.Consolidated Financial Statements.

Junior Subordinated Debentures:

~~Borrowings:~~

The fair value of borrowings is estimated by discounting the contractual cash flows using interest rates in effect for borrowings with similar maturities and collateral requirements or using a market-standard model. The fair value of the junior subordinated debentures was developed using a credit spread based on ~~the~~stated spreads for recently issued subordinated debt ~~issued by~~instruments for issuers of similar asset size and credit quality of the Company and with similar durations adjusting for differences in the junior subordinated debt’s credit rating, liquidity, and time to maturity.

~~- 33 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes~~ The unrealized net gain/loss attributable to ~~Consolidated Financial Statements~~

~~(Unaudited)~~

~~Accrued Interest Payable:~~

~~The carrying amount is a reasonable estimate of~~changes in our own credit risk was determined by adjusting the fair value ~~due to its short-term nature~~as determined in the proceeding sentence by the average rate of default on debt instruments with a similar debt rating as our junior subordinated debentures, with the difference from the original calculation and ~~is valued at~~this calculation resulting in the ~~input level for its underlying financial liability.~~

instrument-specific unrealized gain/loss.

Interest Rate Swaps:

The fair value of interest rate swaps is based upon broker quotes.

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Table of Contents

~~Other~~PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial ~~Instruments:~~Statements

(Unaudited)

The fair values of commitments to sell, lend or borrow are estimated using the fees currently charged or paid to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties or on the estimated cost to terminate them or otherwise settle with the counterparties at the reporting date. For fixed-rate loan commitments to sell, lend or borrow, fair values also consider the difference between current levels of interest rates and committed rates (where applicable). At September 30, 2017 and December 31, 2016, the fair values of the above financial instruments approximate the recorded amounts of the related fees and were not considered to be material.

The following tables set forth the carrying amounts and estimated fair values of selected financial instruments based on the assumptions described above used by the Company in estimating fair value at the periods indicated:


	June 30, 2022
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3

	(In thousands)
Assets:

Cash and due from banks	$	137,026	$	137,026	$	137,026	$	—	$	—
Securities held-to-maturity
Mortgage-backed securities		7,885		7,496		—		7,496		—
Other securities		67,315		57,064		—		—		57,064
Securities available for sale
Mortgage-backed securities		510,934		510,934		—		510,934		—
Other securities		346,720		346,720		11,573		333,485		1,662
Loans		6,760,393		6,720,653		—		—		6,720,653
FHLB-NY stock		50,017		50,017		—		50,017		—
Accrued interest receivable		38,811		38,811		37		2,532		36,242
Interest rate swaps		53,985		53,985		—		53,985		—

Liabilities:

Deposits	$	6,407,577	$	6,392,190	$	5,500,634	$	891,556	$	—
Borrowed Funds		1,089,621		1,075,154		—		1,019,802		55,352
Accrued interest payable		5,637		5,637		—		5,637		—
Interest rate swaps		13,258		13,258		—		13,258		—


	December 31, 2021
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3

	(In thousands)
Assets:

Cash and due from banks	$	81,723	$	81,723	$	81,723	$	—	$	—
Securities held-to-maturity
Mortgage-backed securities		7,894		8,667		—		8,667		—
Other securities		49,974		53,362		—		—		53,362
Securities available for sale
Mortgage-backed securities		572,184		572,184		—		572,184		—
Other securities		205,052		205,052		12,485		190,872		1,695
Loans		6,638,105		6,687,125		—		—		6,687,125
FHLB-NY stock		35,937		35,937		—		35,937		—
Accrued interest receivable		38,698		38,698		—		1,574		37,124
Interest rate swaps		10,683		10,683		—		10,683		—

Liabilities:

Deposits	$	6,385,445	$	6,385,276	$	5,438,870	$	946,406	$	—
Borrowed Funds		815,544		816,012		—		759,540		56,472
Accrued interest payable		4,777		4,777		—		4,777		—
Interest rate swaps		25,071		25,071		—		25,071		—

September 30, 2017
Carrying Fair
Amount Value Level 1 Level 2 Level 3
(In thousands)
Assets:

Cash and due from banks $ 60,161 $ 60,161 $ 60,161 $ - $ -
Securities held-to-maturity
Mortgage-backed securities 7,978 7,839 - 7,839 -
Other securities 22,952 21,542 - - 21,542
Securities available for sale
Mortgage-backed securities 519,861 519,861 - 519,861 -
Other securities 276,698 276,698 11,589 264,026 1,083
Loans 5,070,376 5,058,558 - - 5,058,558
FHLB-NY stock 55,228 55,228 - 55,228 -
Accrued interest receivable 21,076 21,076 - 21,076 -
Interest rate swaps 5,410 5,410 - 5,410 -

Total assets $ 6,039,740 $ 6,026,373 $ 71,750 $ 873,440 $ 5,081,183

Liabilities:
Deposits $ 4,444,448 $ 4,445,811 $ 3,039,893 $ 1,405,918 $ -
Borrowings 1,200,682 1,196,962 - 1,160,891 36,071
Accrued interest payable 3,512 3,512 - 3,512 -
Interest rate swaps 4,645 4,645 - 4,645 -

Total liabilities $ 5,653,287 $ 5,650,930 $ 3,039,893 $ 2,574,966 $ 36,071

~~- 34 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

December 31, 2016
Carrying Fair
Amount Value Level 1 Level 2 Level 3
(In thousands)
Assets:

Cash and due from banks $ 35,857 $ 35,857 $ 35,857 $ - $ -
Securities held-to-maturity
Other securities 37,735 35,408 - - 35,408
Securities available for sale
Mortgage-backed securities 516,476 516,476 - 516,476 -
Other securities 344,905 344,905 - 337,544 7,361
Loans 4,835,693 4,814,840 - - 4,814,840
FHLB-NY stock 59,173 59,173 - 59,173 -
Interest rate swaps 6,350 6,350 - 6,350 -

Total assets $ 5,836,189 $ 5,813,009 $ 35,857 $ 919,543 $ 4,857,609

Liabilities:
Deposits $ 4,205,631 $ 4,213,714 $ 2,833,516 $ 1,380,198 $ -
Borrowings 1,266,563 1,255,283 - 1,221,324 33,959
Interest rate swaps 3,386 3,386 - 3,386 -

Total liabilities $ 5,475,580 $ 5,472,383 $ 2,833,516 $ 2,604,908 $ 33,959

~~10.~~11. Derivative Financial Instruments

At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the Company’s derivative financial instruments ~~consist~~consisted of interest rate swaps. The Company’s interest rate swaps are used for three purposes: 1) to mitigate the Company’s exposure to rising interest rates on a portion ($18.0 million) of its floating rate junior subordinated debentures that have a contractual value of $61.9 million, at September 30, 2017 and December 31, 2016; 2) mitigate the Company’s exposure to rising interest rates on certain fixed rate loans totaling ~~$279.5~~$289.2 million and ~~$235.4~~$299.6 million at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively; 2) to facilitate risk management strategies for our loan customers with $224.6 million of swaps outstanding,

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

which include $112.3 million with customers and $112.3 million with bank counterparties at June 30, 2022 and $228.0 million of swaps outstanding, which include $114.0 million with customers and $114.0 million with bank counterparties at December 31, 2021; and 3) to mitigate exposure to rising interest rates on certain short-term advances and brokered deposits totaling ~~$50.0~~$871.5 million at ~~September~~June 30, ~~2017.~~

2022, and $996.5 at December 31, 2021.

At ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, we held derivatives designated as cash flow hedges, fair value hedges and certain derivatives not designated as hedges. ~~At December 31, 2016, we held fair value hedges and certain derivatives not designated as hedges.~~

The Company’s derivative instruments are carried at fair value in the Company’s financial statements as part of Other Assets for derivatives with positive fair values and Other Liabilities for derivatives with negative fair values. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies and has been designated as a hedge for accounting purposes, and further, by the type of hedging relationship.

At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, derivatives with a combined notional amount of ~~$36.3~~$224.6 million and $228.0 million, respectively, were not designated as hedges. At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, derivatives with a combined notional amount of ~~$261.2~~$289.2 million and ~~$217.1~~$299.6 million, respectively, were designated as fair value hedges. At ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, derivatives with a combined notional amount of ~~$50.0~~$871.5 million and $996.5 million, respectively, were designated as cash flow hedges. ~~At December 31, 2016, the Company did not have any cash flow hedges.~~

For cash flow hedges, the ~~effective portion of~~ changes in the fair value of the derivative isare reported in ~~AOCL,~~accumulated other comprehensive income (loss), net of ~~tax, but the ineffective portion of changes~~tax. Amounts in accumulated other comprehensive loss are reclassified into earnings in the ~~fair value~~same period during which the hedged forecasted transaction effects earnings. During the three months ended June 30, 2022 and 2021, $2.4 million and $2.6 million, respectively, was reclassified from accumulated other comprehensive loss to interest expense. The estimated amount to be reclassified in the next 12 months out of ~~the derivative~~accumulated other comprehensive loss is ~~recognized directly in earnings.~~ $5.7 million.

Changes in the fair value of interest rate swaps not designated as hedges are reflected in “Net ~~gain/loss~~gain (loss) from fair value adjustments” in the Consolidated Statements of Income.

~~- 35 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following table sets forth information regarding the Company’s derivative financial instruments at the periods indicated:


	June 30, 2022				December 31, 2021
	Notional				Notional
	Amount		Fair Value ⁽¹⁾		Amount		Fair Value ⁽¹⁾

	(In thousands)
Interest rate swaps (cash flow hedge)	$	871,500	$	26,483	$	355,000	$	7,328
Interest rate swaps (fair value hedge)		279,615		14,274		—		—
Interest rate swaps (non-hedge)		112,293		13,228		113,988		3,355

Interest rate swaps (fair value hedge)		9,585		(30)		299,555		(12,329)
Interest rate swaps (cash flow hedge)		—		—		641,500		(9,387)
Interest rate swaps (non-hedge)		112,293		(13,228)		113,988		(3,355)
Total derivatives	$	1,385,286	$	40,727	$	1,524,031	$	(14,388)

(1)Derivatives in a positive position are recorded as “Other assets” and derivatives in a negative position are recorded as “Other liabilities” in the Consolidated Statements of Financial Condition.

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September 30, 2017 December 31, 2016
Notional Net Carrying Notional Net Carrying
Amount Value ⁽¹⁾ Amount Value ⁽¹⁾

Interest rate swaps (fair value hedge) $ 176,408 $ 5,410 $ 182,177 $ 6,350
Interest rate swaps (fair value hedge) 84,774 (1,482 ) 34,916 (658 )
Interest rate swaps (non-hedge) 36,321 (3,045 ) 36,321 (2,728 )
Interest rate swaps (cash flow hedge) 50,000 (118 ) - -
Total derivatives $ 347,503 $ 765 $ 253,414 $ 2,964

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

~~(1)~~

Derivatives in a net positive position are recorded as “Other assets” and derivatives in a net negative position are recorded as “Other liabilities” in the Consolidated Statements of Financial Condition.

Notes to Consolidated Financial Statements

(Unaudited)

The following table presents information regarding the Company’s fair value hedged items for the periods indicated:


						Cumulative Amount
						of the Fair Hedging Adjustment
Line Item in the Consolidated Statement		Carrying Amount of the				Included in the Carrying Amount of
of Financial Condition in Which		Hedged				the Hedged
the Hedged Item Is Included		Assets/(Liabilities)				Assets/(Liabilities)
(In thousands)		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Loans
Multi-family residential	$	98,970	$	113,730	$	(5,819)	$	7,608
Commercial real estate		176,894		192,694		(9,749)		3,477
Commercial business and other		—		6,298		—		122
Total	$	275,864	$	312,722	$	(15,568)	$	11,207

The following table sets forth the effect of derivative instruments on the Consolidated Statements of Income for the periods indicated:


		For the three months ended				For the six months ended
		June 30,				June 30,
(In thousands)	Affected Line Item in the Statements Where Net Income is Presented	2022		2021		2022		2021
Financial Derivatives:
	Other interest expense	$	—	$	(138)	$	—	$	(272)
	Net gain (loss) from fair value adjustments		—		(1,195)		—		1,423
Interest rate swaps (non-hedge)			—		(1,333)		—		1,151

Interest rate swaps (fair value hedge)	Interest and fees on loans		(886)		(2,062)		(2,321)		(2,025)

	Other interest expense		(1,489)		(2,619)		(3,954)		(5,205)
	Deposit		104		—		49		—
Interest rate swaps (cash flow hedge)			(1,385)		(2,619)		(3,905)		(5,205)

Net loss		$	(2,271)	$	(6,014)	$	(6,226)	$	(6,079)

For the three months ended For the nine months ended
September 30, September 30,
(In thousands) 2017 2016 2017 2016

Financial Derivatives:
Interest rate swaps (non-hedge) $ (56 ) $ (111 ) $ (316 ) $ (3,532 )
Interest rate swaps (fair value hedge) (351 ) (380 ) (597 ) (795 )
Net loss ⁽¹⁾ $ (407 ) $ (491 ) $ (913 ) $ (4,327 )

~~(1)~~

~~Net gains and losses are recorded as part of “Net gain/loss from fair value adjustments” in the Consolidated Statements of Income.~~

~~During the three months and nine months ended September 30, 2017 and 2016, the Company did not record any hedge ineffectiveness.~~

The Company’s interest rate swaps are subject to master netting arrangements between the Company and its ~~two~~three designated counterparties. The Company has not made a policy election to offset its derivative positions.

~~- 36 -~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables present the effect of the master netting arrangements on the presentation of the derivative assets and liabilities in the Consolidated Statements of Financial Condition as of the dates indicated:

June 30, 2022

Gross Amounts Not Offset in the

Consolidated Statements of

Gross Amount Offset in

Net Amount of Assets

Financial Condition

Gross Amount of

the Statements

Presented in the

Financial

Cash Collateral

(In thousands)

Recognized Assets

of Condition

Statements of Condition

Instruments

Received

Net Amount

Interest rate swaps

53,985

38,972

15,013

Gross Amounts Not Offset in the

Consolidated Statements of

Gross Amount of

Gross Amount Offset in

Net Amount of Liabilities

Financial Condition

Recognized

the Statements

Presented in the

Financial

Cash Collateral

(In thousands)

Liabilities

of Condition

Statements of Condition

Instruments

Pledged

Net Amount

Interest rate swaps

13,258

December 31, 2021

Gross Amounts Not Offset in the

Consolidated Statements of

Gross Amount Offset in

Net Amount of Assets

Financial Condition

Gross Amount of

the Statements

Presented in the

Financial

Cash Collateral

(In thousands)

Recognized Assets

of Condition

Statements of Condition

Instruments

Received

Net Amount

Interest rate swaps

10,683

—

10,683

Gross Amounts Not Offset in the

Consolidated Statements of

Gross Amount of

Gross Amount Offset in

Net Amount of Liabilities

Financial Condition

Recognized

the Statements

Presented in the

Financial

Cash Collateral

(In thousands)

Liabilities

of Condition

Statements of Condition

Instruments

Pledged

Net Amount

Interest rate swaps

25,071

21,527

3,544

September 30, 2017
Gross Amounts Not Offset in the Consolidated Statement of Condition
(In thousands) Gross Amount of Recognized Assets Gross Amount Offset in the Statement of Condition Net Amount of Assets Presented in the Statement of Condition Financial Instruments Cash Collateral Received Net Amount

Interest rate swaps $ 5,410 $ - $ 5,410 $ - $ 670 $ 4,740

Gross Amounts Not Offset in the Consolidated Statement of Condition
(In thousands) Gross Amount of Recognized Liabilities Gross Amount Offset in the Statement of Condition Net Amount of Liabilities Presented in the Statement of Condition Financial Instruments Cash Collateral Pledged Net Amount

Interest rate swaps $ 4,645 $ - $ 4,645 $ 1,105 $ - $ 3,540

December 31, 2016
Gross Amounts Not Offset in the Consolidated Statement of Condition
(In thousands) Gross Amount of Recognized Assets Gross Amount Offset in the Statement of Condition Net Amount of Assets Presented in the Statement of Condition Financial Instruments Cash Collateral Received Net Amount

Interest rate swaps $ 6,350 $ - $ 6,350 $ - $ 2,964 $ 3,386

~~- 37 -~~

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

~~11. Income Taxes~~

Flushing Financial Corporation files consolidated Federal and combined New York State and New York City income tax returns with its subsidiaries, with the exception of the Company’s trusts, which file separate Federal income tax returns as trusts, and Flushing Preferred Funding Corporation, which files a separate Federal income tax return as a real estate investment trust. Additionally, the Bank files New Jersey State tax returns.

~~Income tax provisions are summarized as follows:~~

For the three months
ended September 30,
For the nine months
ended September 30,
(In thousands) 2017 2016 2017 2016
Federal:
Current $ 6,703 $ 6,474 $ 16,308 $ 26,362
Deferred (2,023 ) (906 ) (1,303 ) (844 )
Total federal tax provision 4,680 5,568 15,005 25,518
State and Local:
Current 1,398 1,492 2,817 7,853
Deferred (787 ) (405 ) (502 ) (384 )
Total state and local tax provision 611 1,087 2,315 7,469

Total income tax provision $ 5,291 $ 6,655 $ 17,320 $ 32,987

~~- 38 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

12. Accumulated Other Comprehensive Income (Loss):

The following ~~table sets forth the changes in accumulated other comprehensive loss by component for the three months ended September 30, 2017:~~

Unrealized Gains
(Losses) on
Available for Sale
Securities Unrealized Gains
(Losses) on
Cash flow
Hedges Defined Benefit
Pension Items Total
(In thousands)

Beginning balance, net of tax $ (2,110 ) $ (124 ) $ (4,342 ) $ (6,576 )
Other comprehensive income before reclassifications, net of tax (333 ) 56 - (277 )

Amounts reclassified from accumulated other comprehensive income, net of tax 108 - 81 189

Net current period other comprehensive income, net of tax (225 ) 56 81 (88 )

Ending balance, net of tax $ (2,335 ) $ (68 ) $ (4,261 ) $ (6,664 )

~~The following table sets forth the changes in accumulated other comprehensive loss by component for the three months ended September 30, 2016:~~

Unrealized Gains
(Losses) on
Available for Sale
Securities Defined Benefit
Pension Items Total
(In thousands)

Beginning balance, net of tax $ 7,923 $ (4,835 ) $ 3,088
Other comprehensive income before reclassifications, net of tax (2,942 ) - (2,942 )

Amounts reclassified from accumulated other comprehensive income, net of tax - 103 103

Net current period other comprehensive income, net of tax (2,942 ) 103 (2,839 )

Ending balance, net of tax $ 4,981 $ (4,732 ) $ 249

~~- 39 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~The following table sets forth the changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2017:~~

Unrealized Gains
(Losses) on
Available for Sale
Securities Unrealized Gains
(Losses) on
Cash flow
Hedges Defined Benefit
Pension Items Total
(In thousands)

Beginning balance, net of tax $ (3,859 ) $ - $ (4,503 ) $ (8,362 )
Other comprehensive income before reclassifications, net of tax 1,416 (68 ) - 1,348

Amounts reclassified from accumulated other comprehensive income, net of tax 108 - 242 350

Net current period other comprehensive income, net of tax 1,524 (68 ) 242 1,698

Ending balance, net of tax $ (2,335 ) $ (68 ) $ (4,261 ) $ (6,664 )

~~The following table sets~~tables set forth the changes in accumulated other comprehensive income (loss) by component for the ~~nine months ended September 30, 2016:~~periods indicated:

Unrealized Gains
(Losses) on
Available for Sale
Securities Defined Benefit
Pension Items Total
(In thousands)

Beginning balance, net of tax $ (521 ) $ (5,041 ) $ (5,562 )
Other comprehensive income before reclassifications, net of tax 6,852 - 6,852

Amounts reclassified from accumulated other comprehensive income, net of tax (1,350 ) 309 (1,041 )

Net current period other comprehensive income, net of tax 5,502 309 5,811

Ending balance, net of tax $ 4,981 $ (4,732 ) $ 249

~~- 40 -~~


	For the three months ended June 30, 2022
	Unrealized Gains		Unrealized Gains
	(Losses) on		(Losses) on				Fair Value
	Available for Sale		Cash flow		Defined Benefit		Option Elected
	Securities		Hedges		Pension Items		on Liabilities		Total

	(In thousands)

Beginning balance, net of tax	$	(29,699)	$	13,345	$	(1,291)	$	2,141	$	(15,504)

Other comprehensive income before reclassifications, net of tax		(20,434)		3,285		0		(219)		(17,368)

Amounts reclassified from accumulated other comprehensive income, net of tax		0		1,630		(22)		0		1,608

Net current period other comprehensive income, net of tax		(20,434)		4,915		(22)		(219)		(15,760)

Ending balance, net of tax	$	(50,133)	$	18,260	$	(1,313)	$	1,922	$	(31,264)

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)


	For the three months ended June 30, 2021
	Unrealized Gains		Unrealized Gains
	(Losses) on		(Losses) on				Fair Value
	Available for Sale		Cash flow		Defined Benefit		Option Elected
	Securities		Hedges		Pension Items		on Liabilities		Total

	(In thousands)

Beginning balance, net of tax	$	(927)	$	(9,723)	$	(1,818)	$	1,765	$	(10,703)

Other comprehensive income before reclassifications, net of tax		1,497		(1,267)		0		276		506

Amounts reclassified from accumulated other comprehensive income, net of tax		(85)		1,788		77		0		1,780

Net current period other comprehensive income (loss), net of tax		1,412		521		77		276		2,286

Ending balance, net of tax	$	485	$	(9,202)	$	(1,741)	$	2,041	$	(8,417)


	For the six months ended June 30, 2022
	Unrealized Gains		Unrealized Gains
	(Losses) on		(Losses) on				Fair Value
	Available for Sale		Cash flow		Defined Benefit		Option Elected
	Securities		Hedges		Pension Items		on Liabilities		Total

	(In thousands)

Beginning balance, net of tax	$	(6,272)	$	(1,406)	$	(1,282)	$	2,276	$	(6,684)

Other comprehensive income before reclassifications, net of tax		(43,861)		16,177		—		(354)		(28,038)

Amounts reclassified from accumulated other comprehensive income, net of tax		—		3,489		(31)		—		3,458

Net current period other comprehensive income (loss), net of tax		(43,861)		19,666		(31)		(354)		(24,580)

Ending balance, net of tax	$	(50,133)	$	18,260	$	(1,313)	$	1,922	$	(31,264)

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)


	For the six months ended June 30, 2021
	Unrealized Gains		Unrealized Gains
	(Losses) on		(Losses) on				Fair Value
	Available for Sale		Cash flow		Defined Benefit		Option Elected
	Securities		Hedges		Pension Items		on Liabilities		Total

	(In thousands)

Beginning balance, net of tax	$	1,290	$	(17,521)	$	(1,884)	$	1,849	$	(16,266)

Other comprehensive income before reclassifications, net of tax		(720)		4,706		—		192		4,178

Amounts reclassified from accumulated other comprehensive income, net of tax		(85)		3,613		143		—		3,671

Net current period other comprehensive income (loss), net of tax		(805)		8,319		143		192		7,849

Ending balance, net of tax	$	485	$	(9,202)	$	(1,741)	$	2,041	$	(8,417)

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables set forth significant amounts reclassified from accumulated other comprehensive ~~loss~~income (loss) by component for the periods indicated:


For the three months ended June 30, 2022
	Amounts Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Statement
Comprehensive Loss Components	Comprehensive Loss			Where Net Income is Presented
(In thousands)
Cash flow hedges:
Interest rate swaps	$	(2,364)		Interest expense
		734		Provision for income taxes
	$	(1,630)		Net of tax
Amortization of defined benefit pension items:
Actuarial losses	$	6	⁽¹⁾	Other expense
Prior service credits		7	⁽¹⁾	Other expense
		13		Total before tax
		9		Provision for income taxes
	$	22		Net of tax

For the three months ended September 30, 2017

Amounts Reclassified from
Details about Accumulated Other Accumulated Other Affected Line Item in the Statement
Comprehensive Loss Components Comprehensive Loss Where Net Income is Presented
(In thousands)
Unrealized losses on available for sale securities: $ (186 ) Net loss on sale of securities
78 Tax benefit
$ (108 ) Net of tax

Amortization of defined benefit pension items:
Actuarial losses $ (152 ) (1) Other operating expense
Prior service credits 12 (1) Other operating expense
(140 ) Total before tax
59 Tax benefit
$ (81 ) Net of tax

For the three months ended September 30, 2016

Amounts Reclassified from
Details about Accumulated Other Accumulated Other Affected Line Item in the Statement
Comprehensive Loss Components Comprehensive Loss Where Net Income is Presented
(In thousands)

Amortization of defined benefit pension items:
Actuarial losses $ (192 ) (1) Other operating expense
Prior service credits 11 (1) Other operating expense
(181 ) Total before tax
78 Tax benefit
$ (103 ) Net of tax

~~- 41 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

For the nine months ended September 30, 2017

Amounts Reclassified from
Details about Accumulated Other Accumulated Other Affected Line Item in the Statement
Comprehensive Loss Components Comprehensive Loss Where Net Income is Presented
(In thousands)
Unrealized losses on available for sale securities: $ (186 ) Net loss on sale of securities
78 Tax benefit
$ (108 ) Net of tax

Amortization of defined benefit pension items:
Actuarial losses $ (454 ) (1) Other operating expense
Prior service credits 34 (1) Other operating expense
(420 ) Total before tax
178 Tax benefit
$ (242 ) Net of tax

For the nine months ended September 30, 2016
Amounts Reclassified from
Details about Accumulated Other Accumulated Other Affected Line Item in the Statement
Comprehensive Loss Components Comprehensive Loss Where Net Income is Presented
(In thousands)

Unrealized gains on available for sale securities: $ 2,363 Net gain on sale of securities
(1,013 ) Tax expense
$ 1,350 Net of tax

Amortization of defined benefit pension items:
Actuarial losses $ (575 ) (1) Other operating expense
Prior service credits 33 (1) Other operating expense
(542 ) Total before tax
233 Tax benefit
$ (309 ) Net of tax

(1)

These accumulated other comprehensive ~~income~~loss components are included in the computation of net periodic pension ~~cost (See~~cost. See Note ~~8 of the Notes to Consolidated Financial Statements “Pension~~9 (“Pension and Other Postretirement Benefit Plans”.) for additional information


For the three months ended June 30, 2021
	Amounts Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Statement
Comprehensive Loss Components	Comprehensive Loss			Where Net Income is Presented
(In thousands)

Unrealized losses on available for sale securities	$	123		Net loss on sale of securities
		(38)		Provision for income taxes
	$	85		Net of tax

Cash flow hedges:
Interest rate swaps	$	(2,605)		Interest expense
		817		Provision for income taxes
	$	(1,788)		Net of tax

Amortization of defined benefit pension items:
Actuarial losses	$	(133)	⁽¹⁾	Other operating expenses
Prior service credits		21	⁽¹⁾	Other operating expenses
		(112)		Total before tax
		35		Provision for income taxes
	$	(77)		Net of tax

(1)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 (“Pension and Other Postretirement Benefit Plans”) for additional information

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)


For the six months ended June 30, 2022
	Amounts Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Statement
Comprehensive Loss Components	Comprehensive Loss			Where Net Income is Presented
(In thousands)
Cash flow hedges:
Interest rate swaps	$	(5,087)		Interest expense
		1,598		Provision for income taxes
	$	(3,489)		Net of tax
Amortization of defined benefit pension items:
Actuarial losses	$	12	⁽¹⁾	Other expense
Prior service credits		14	⁽¹⁾	Other expense
		26		Total before tax
		5		Provision for income taxes
	$	31		Net of tax

(1)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 (“Pension and Other Postretirement Benefit Plans”) for additional information


For the six months ended June 30, 2021
	Amounts Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Statement
Comprehensive Loss Components	Comprehensive Loss			Where Net Income is Presented
(In thousands)

Unrealized losses on available for sale securities	$	123		Net loss on sale of securities
		(38)		Provision for income taxes
	$	85		Net of tax

Cash flow hedges:
Interest rate swaps	$	(5,242)		Interest expense
		1,629		Provision for income taxes
	$	(3,613)		Net of tax

Amortization of defined benefit pension items:
Actuarial losses	$	(250)	⁽¹⁾	Other operating expenses
Prior service credits		43	⁽¹⁾	Other operating expenses
		(207)		Total before tax
		64		Provision for income taxes
	$	(143)		Net of tax

(1)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 (“Pension and Other Postretirement Benefit Plans”) for additional information

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

13.Regulatory Capital

Under current capital regulations, the Bank is required to comply with four separate capital adequacy ~~standards.~~standards and a Capital Conservation Buffer (“CCB”). As of ~~September~~June 30, ~~2017,~~2022, the Bank continues to be categorized as “well-capitalized” under the prompt corrective action regulations and continues to exceed all regulatory capital requirements. In 2016, a Capital Conservation Buffer (“CCB”) requirement became effective for banks. The CCB is designed to establish a capital range above minimum capital requirements and impose constraints on dividends, share buybacks and discretionary bonus payments when capital levels fall below prescribed levels. The minimum CCB in 2017 is 1.25% and increases 0.625% annually through 2019 to 2.5%. The CCB for the Bank was 5.67% and 6.13% at ~~September~~June 30, ~~2017 was 6.60%.~~

2022 and December 31, 2021, respectively.

Set forth below is a summary of the Bank’s compliance with banking regulatory capital standards.


	June 30, 2022				December 31, 2021
			Percent of				Percent of
	Amount		Assets		Amount		Assets

	(Dollars in thousands)
Tier I (leverage) capital:
Capital level	$	853,721	10.28	%	$	840,105	10.39	%
Requirement to be well-capitalized		415,167	5.00			404,366	5.00
Excess		438,554	5.28			435,739	5.39

Common Equity Tier I risk-based capital:
Capital level	$	853,721	13.09	%	$	840,105	13.58	%
Requirement to be well-capitalized		423,985	6.50			402,100	6.50
Excess		429,736	6.59			438,005	7.08

Tier I risk-based capital:
Capital level	$	853,721	13.09	%	$	840,105	13.58	%
Requirement to be well-capitalized		521,828	8.00			494,892	8.00
Excess		331,893	5.09			345,213	5.58

Total risk-based capital:
Capital level	$	891,992	13.67	%	$	874,400	14.13	%
Requirement to be well-capitalized		652,285	10.00			618,615	10.00
Excess		239,707	3.67			255,785	4.13

~~- 42 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

September 30, 2017 December 31, 2016
Percent of Percent of
Amount Assets Amount Assets
(Dollars in thousands)

Tier I (leverage) capital:
Capital level $ 629,748 10.10 % $ 607,033 10.12 %
Requirement to be well capitalized 311,625 5.00 299,848 5.00
Excess 318,123 5.10 307,185 5.12

Common Equity Tier I risk-based capital:
Capital level $ 629,748 14.04 % $ 607,033 14.12 %
Requirement to be well capitalized 291,614 6.50 279,443 6.50
Excess 338,134 7.54 327,590 7.62

Tier 1 risk-based capital:
Capital level $ 629,748 14.04 % $ 607,033 14.12 %
Requirement to be well capitalized 358,910 8.00 343,930 8.00
Excess 270,838 6.04 263,103 6.12

Total risk-based capital:
Capital level $ 655,017 14.60 % $ 629,262 14.64 %
Requirement to be well capitalized 448,637 10.00 429,913 10.00
Excess 206,380 4.60 199,349 4.64

~~- 43 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The Holding Company is subject to the same regulatory capital requirements as the Bank. As of ~~September~~June 30, ~~2017,~~2022, the Holding Company continues to be categorized as “well-capitalized” under the prompt corrective action regulations and continues to exceed all regulatory capital requirements. The CCB for the Holding Company at ~~September~~June 30, ~~2017~~2022 and December 31, 2021 was ~~6.61%.~~5.34% and 5.75%, respectively.

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Set forth below is a summary of the Holding Company’s compliance with banking regulatory capital standards.


	June 30, 2022				December 31, 2021
			Percent of				Percent of
	Amount		Assets		Amount		Assets

	(Dollars in thousands)
Tier I (leverage) capital:
Capital level	$	739,776	8.91	%	$	726,174	8.98	%
Requirement to be well-capitalized		415,221	5.00			404,422	5.00
Excess		324,555	3.91			321,752	3.98

Common Equity Tier I risk-based capital:
Capital level	$	686,258	10.52	%	$	671,494	10.86	%
Requirement to be well-capitalized		423,976	6.50			401,836	6.50
Excess		262,282	4.02			269,658	4.36

Tier I risk-based capital:
Capital level	$	739,776	11.34	%	$	726,174	11.75	%
Requirement to be well-capitalized		521,817	8.00			494,568	8.00
Excess		217,959	3.34			231,606	3.75

Total risk-based capital:
Capital level	$	903,047	13.84	%	$	885,469	14.32	%
Requirement to be well-capitalized		652,271	10.00			618,210	10.00
Excess		250,776	3.84			267,259	4.32

September 30, 2017 December 31, 2016
Percent of Percent of
Amount Assets Amount Assets
(Dollars in thousands)

Tier I (leverage) capital:
Capital level $ 565,265 9.07 % $ 539,228 9.00 %
Requirement to be well capitalized 311,475 5.00 299,654 5.00
Excess 253,790 4.07 239,574 4.00

Common Equity Tier I risk-based capital:
Capital level $ 530,442 11.84 % $ 506,432 11.79 %
Requirement to be well capitalized 291,325 6.50 279,121 6.50
Excess 239,117 5.34 227,311 5.29

Tier 1 risk-based capital:
Capital level $ 565,265 12.61 % $ 539,228 12.56 %
Requirement to be well capitalized 358,554 8.00 343,534 8.00
Excess 206,711 4.61 195,694 4.56

Total risk-based capital:
Capital level $ 665,534 14.85 % $ 636,457 14.82 %
Requirement to be well capitalized 448,193 10.00 429,417 10.00
Excess 217,341 4.85 207,040 4.82

~~- 44 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

14. New Authoritative Accounting Pronouncements

Accounting Standards Pending Adoption:

In ~~August 2017,~~March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2017-12, “Derivatives and Hedging (Topic 815)”~~providing targeted improvements to the accounting for hedging activities, which is effective January 1, 2019, with early adoption permitted in any interim period or fiscal year before the effective date. The guidance introduces a number of amendments, several of which are optional, that are designed to simplify the application of hedge accounting, improve financial statement transparency and more closely align hedge accounting with an entity’s risk management strategies. ~~We are currently evaluating the impact of adopting this new guidance on our consolidated results of operations, financial~~ ~~condition and cash flows.~~

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-08, “Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for premiums on purchased callable debt securities to the earliest call date, rather than amortizing over the full contractual term. The ASU does not change the accounting for securities held at a discount. The amendments in this ASU require companies to reset the effective yield using the payment terms of the debt security if the call option is not exercised on the earliest call date. If the security has additional future call dates, any excess of the amortized cost basis over the amount repayable by the issuer at the next call date should be amortized to the next call date. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance is not expected to have an impact on the Company's financial positions, results of operations or disclosures as we currently amortize our callable debt securities to the first call date.

In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”, which requires that an employer disaggregate the service cost component from the other components of net benefit cost, as follows:

Service cost must be presented in the same line item(s) as other employee compensation costs. These costs are generally included within income from continuing operations, but in some cases may be eligible for capitalization, if certain criteria are met.

All other components of net benefit cost must be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. These generally include interest cost, actual return on plan assets, amortization of prior service cost included in accumulated other comprehensive income, and gains or losses from changes in the value of the projected benefit obligation or plan assets. If a separate line item is used to present the other components of net benefit cost, it must be appropriately described. If a separate line item is not used, an entity must disclose the line item(s) in the income statement that includes the other components of net benefit cost. The ASU clarifies that these costs are not eligible for capitalization.

The amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted as of the beginning of an annual period. The guidance is not expected to have a significant impact on the Company's financial positions, results of operations or disclosures.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. The Company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The guidance is not expected to have a significant impact on the Company's financial positions, results of operations or disclosures.

In August 2016, the FASB issued ASU No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments”, to clarify how certain cash receipts and cash payments are presented and classified in the statements of cash flows. The amendments are intended to reduce diversity in practice by clarifying whether the following items should be categorized as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of zero-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies, (vi) distributions from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) receipts and payments with aspects of more than one class of cash flows. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company does not expect adoption of this ASU will have a material effect on its consolidated financial statements.

~~- 45 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~In June 2016, the FASB issued ASU No. 2016-13,~~2022-02, “Financial Instruments – Credit ~~Losses”~~Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (Topic 326), which sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the recognition and measurement guidance related to TDRs for creditors that have adopted ASC Topic 326 (commonly referred to as “CECL”) with the recognition and measurement guidance contained in ASC 310-20 to determine whether a modification results in a new loan or a continuation of an existing ~~incurred loss model and will apply to the measurement of credit losses on financial assets measured at amortized cost and to some off-balance sheet credit exposures.~~loan. This ASU ~~will be effective~~also enhances disclosures about loan modifications for ~~fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.~~borrowers who are experiencing financial difficulty. The ~~Company has begun collecting and evaluating data and system requirements~~guidance also requires public business entities to ~~implement this standard. The adoption~~present gross write-offs by year of this update could have a material impact on the Company’s consolidated results of operations and financial condition. The extent of the impact is still unknown and will depend on many factors, such as the composition of the Company’s loan portfolio and expected loss history at adoption. Management has developed committees to evaluate and implement CECL.

~~In February 2016, the FASB issued~~origination in their vintage disclosures. ASU No. 2016-02, “Leases”. From the lessee's perspective, the new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a lessee. From the lessor's perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards or control, an operating lease results. The new standard2022-02 is effective for fiscal years beginning after December 15, ~~2018,~~2022, including interim periods within those fiscal years. AThe amendments in this ASU should be applied on a prospective basis; however, institutions have the option to apply a modified retrospective transition ~~approach is required~~method as it relates to the recognition and measurement of TDRs, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. We are evaluating the impact of this ASU and have not yet determined whether this will have material effect on our business operations and consolidated financial statements.

In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform” (Topic 848), which clarifies that certain optional expedients and exceptions in ASC 848 for ~~lessees for capital~~contract modifications and ~~operating leases existing at, or entered into after,~~hedge accounting apply to derivatives that are affected by the ~~beginning~~discounting transition. ASU 2021-01 also amends the expedients and exceptions in ASC 848 to capture the incremental consequences of the ~~earliest comparative period presented in~~scope clarification and to tailor the ~~financial statements, with certain practical~~existing guidance to derivative instruments affected by discounting transition. ASU 2021-01 was effective upon issuance and generally can be applied through December 31, 2022.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform” (Topic 848), which provides optional expedients ~~available. A modified retrospective transition approach is required~~and exceptions for lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has not adopted a new accounting policy as of the filing date. Management is continuingapplying GAAP to evaluate the standard, but the effects of recognizing most operating leases on the Consolidated Statements of Financial Condition is expected to be material. The Company expects to recognize right-of-use assetsloan and lease ~~liabilities for substantially all of its operating lease commitments based on~~agreements, derivative contracts, and other transactions affected by the ~~present value of unpaid lease payments as of the date of adoption.~~

~~- 46 -~~ anticipated transition away from LIBOR toward new interest rate benchmarks. For transactions

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Inthat are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or re-measurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for derivative accounting. ASU 2020-04 is effective March 12, 2020 through December 31, 2022. An entity could elect to apply ASU 2020-04 for contract modifications as of January ~~2016, FASB issued ASU No. 2016-01 “Financial Instruments” which requires~~1, 2020, or prospectively from a date within an ~~entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income~~interim period that includes or is subsequent to March 12, 2020, up to the ~~changes in instrument-specific credit risk~~date that the financial statements are available to be issued. Once elected for ~~financial liabilities measured using~~a Topic or an Industry Subtopic within the ~~fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate~~Codification, the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available for sale debt securities in combination with other deferred tax assets. The ASU provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The ASU also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The amendments ~~are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. We do not believe the adoption of this standard will have a material impact on the Company’s consolidated results of operations, financial condition or cash flows~~.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”. This ASU establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance such as real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. The guidance in this ASU must be applied prospectively for ~~public companies is effective~~all eligible contract modifications for that Topic or Industry Subtopic. We anticipate this ASU will simplify any modifications we execute between the ~~annual periods beginning after~~selected start date (yet to be determined) and December ~~15, 2016, including interim periods therein.~~31, 2022 that are directly related to LIBOR transition by allowing prospective recognition of the continuation of the contract, rather than extinguishment of the old contract resulting in writing off unamortized fees/costs. We are evaluating the impacts of this ASU ~~2014-09 does~~and have not yet determined whether LIBOR transition and this ASU will have material effects on our business operations and consolidated financial statements. The amendments in this update apply to contract modifications that replace a reference rate reform and contemporaneous modifications of other terms related to the ~~majority of our revenue streams. In August 2015, the FASB approved a one-year delay~~replacement of the effective date of this standard. The deferral would require public entities to apply the standard for annual reporting periods beginning after December 15, 2017. Public companies would be permitted to elect to early adopt for annual reporting periods beginning after December 15, 2016. The Company has completed a review of its income streams determining that a significant portion of its income is derived from sources scoped out of this guidance, therefore, we do not believe the adoption of this standard will have a material impact on the Company’s consolidated results of operations, financial condition or cash flows.

reference rate.

~~- 47 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

ITEM 2. 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, ~~2016.~~2021. 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, FSB Properties Inc., and Flushing Preferred Funding Corporation, ~~Flushing Service Corporation, and FSB Properties Inc.~~which was dissolved as of June 30, 2021.

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, ~~2016.~~2021. 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.

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s Discussions and Analysis of

Financial Condition and Results of Operations

Executive Summary

We are a Delaware corporation organized in May 1994. The Bank was organized in 1929 ~~and became~~as a ~~federally chartered stock~~New York State-chartered mutual savings ~~bank on November 21, 1995, at which time Flushing Financial Corporation acquired all of~~bank. Today the ~~stock of the Bank. In 2013, the Bank’s charter was changed to~~Bank operates as a full-service New York ~~State chartered~~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. ~~The~~At June 30, 2022, the Bank owns ~~three~~two subsidiaries: ~~Flushing Preferred Funding Corporation,~~ Flushing Service Corporation, and FSB Properties Inc. The Bank also operates an internet branch, which operates under the brands of ~~iGObanking.com~~^®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, primarily for residential properties;~~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 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, mortgage servicing fees, 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 also can 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 ~~loan losses and specific provision for losses on real estate owned.~~

~~- 48 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~Our strategy is to continue our focus on being an institution serving consumers, businesses, and governmental units in our local markets. In furtherance of this objective, we intend to:~~

~~increase core deposits and continue to improve funding mix to manage funding costs;~~

~~increase net interest income by leveraging loan pricing opportunities and portfolio mix;~~

~~enhance earnings by improving scalability and efficiency;~~

~~manage credit risk;~~

~~maintain well capitalized levels under all stress test scenarios;~~

~~increase our commitment to the multi-cultural marketplace, with a particular focus on the Asian community in Queens; and~~

~~manage enterprise-wide risk.~~

~~There can be no assurance that we will be able to effectively implement this strategy. Our strategy is subject to change by the Board of Directors.~~

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.

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s Discussions and Analysis of

Financial Condition and Results of Operations

We carry a portion of our financial assets and financial liabilities atunder the fair value option and record changes in their fair value through earnings in non-interest income on our Consolidated Statements of Income 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 910 (“Fair Value of Financial Instruments”) of the Notes to the Consolidated Financial Statements.

For the three months ended June 30, 2022 we reported net income of $25.0 million, or $0.81 per diluted common share, and reported record net interest income totaling $64.7 million. The record net interest income was driven by a $170.3 million increase in average earning assets during the quarter as the net interest margin declined one basis point compared to the three months ended March 31, 2022.

During the ~~third quarter of 2017, we continued our strategy of focusing our origination efforts on higher yielding loans. Loan originations and purchases for the nine~~three months ended ~~September~~June 30, ~~2017 totaled $710.7 million, with multi-family real estate, commercial real estate and commercial business loans accounting for 89.3%~~2022, the yield on interest-earning assets increased eight basis points, while the cost of ~~originations and purchases. Our total loan portfolio grew 5% during~~interest-bearing liabilities increased 10 basis points from the ~~nine~~three months ended ~~September 30, 2017 while holding our strong underwriting standards. Loan applications~~March 31, 2022, which resulted in ~~process strengthened~~a decrease of one basis point in net interest margin to ~~$417.0 million at September 30, 2017, compared to $279.1 million at June 30, 2017 and $289.3 million at September 30, 2016.~~

~~The yield on loan production increased 21 basis points to 4.25%~~3.35% from 3.36% for the three months ended ~~September 30, 2017,~~March 31, 2022. Excluding net gains (losses) from ~~4.04%~~qualifying hedges and purchase accounting adjustments, the net interest margin increased two basis points to 3.33% for the three months ended June 30, ~~2017 and 51 basis points~~2022 from 3.74% for the comparable quarter of 2016. This marks the first quarter since the quarter ended December 31, 2008 that our yield from new loan originations and purchases exceeded the yield of our total loan portfolio, after excluding prepayment penalty income and recovered interest from delinquent loans.

~~Our net interest margin~~3.31% for the three months ended ~~September~~March 31, 2022.

Our loan portfolio is greater than 87% collateralized by real estate with an average loan to value of less than 38%. We have a long history and foundation built upon disciplined underwriting, good credit quality, and a resilient seasoned loan portfolio with strong asset protection. At June 30, ~~2017 was 2.90%, a decrease of five~~2022, our allowance for credit losses (“ACL”) - loans stood at 58 basis points ~~from the trailing quarter~~of gross loans and ~~four basis points from the comparable prior year period. At~~141.1% of non-performing loans. Non-performing assets at the end of the ~~second~~ quarter ~~of 2017, in order to remain competitive in our market, we increased the rates paid on our government deposits by a weighted average of 33~~were 59 basis points. At the same time, we expanded BankPurely®, our eco-friendly, socially conscious, healthier lifestyle community internet brand, by offering a premium savings account. The full impact of these initiatives was experienced in the most recent quarter, as the costpoints of total deposits increased 14 basis points from the second quarter of 2017. Additionally, this quarter’s net-interest margin was negatively impacted by seasonal government deposit outflows, which were replaced with short-term borrowings costing an additional 30 basis points to 65 basis points.

We continued our discipline regarding non-interest expense and credit quality continued to improve, as our non-performing assets have decreased by 37% since the end of 2016 and net charge-offs remain minimal. However, during the recent quarter, we recorded a provision for loan losses for the first time since the fourth quarter of 2015, of $3.3 million. The provision was the result of a reduction in the estimated fair value of the collateral underlying our performing taxi medallion portfolio. At September 30, 2017, we have allocated $6.0 million of our allowance for taxi medallion loans which equals 33.0% of the outstanding principal.

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~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

assets.

The Bank and Company remain well-capitalized under current capital regulations and are subject to the same regulatory capital requirements. See Note 13 (“Regulatory Capital”) of the Notes to the Consolidated Financial ~~Statements “Regulatory Capital”.~~

Statements.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2022 AND ~~2016~~2021

General.Net income for the three months ended ~~September~~June 30, ~~2017~~2022 was ~~$10.2~~$25.0 million, ~~a decrease~~an increase of ~~$0.5~~$5.8 million, or ~~4.3%~~30.0%, ~~compared to $10.6~~from $19.3 million for the three months ended ~~September~~June 30, ~~2016.~~2021. Diluted earnings per common share were ~~$0.35~~$0.81 for the three months ended ~~September~~June 30, ~~2017, a decrease~~2022, an increase of ~~$0.02,~~$0.20, or ~~5.4%~~32.8%, from ~~$0.37~~$0.61 for the three months ended ~~September~~June 30, ~~2016.~~

2021.

Return on average equity ~~decreased to 7.6%~~was 15.00% for the three months ended ~~September~~June 30, ~~2017 from 8.4%~~2022 compared to 11.95% for the three months ended ~~September~~June 30, ~~2016.~~2021. Return on average assets was ~~0.7%~~1.22% for the three months ended ~~September~~June 30, ~~2017 and 2016.~~2022 compared to 0.93% for the three months ended June 30, 2021.

Interest Income.Interest and dividend income increased ~~$3.8~~$2.5 million, or ~~6.8%~~3.6%, to ~~$59.3~~$74.3 million for the three months ended ~~September~~June 30, ~~2017~~2022 from ~~$55.5~~$71.7 million for the three months ended ~~September~~June 30, ~~2016.~~2021. The increase in interest income was primarily attributable to ~~an increase of $251.7 million in~~ the average balance of interest-earning assets to $5,936.1 million for the three months ended September 30, 2017 from $5,684.4 million for the comparable prior year period, combined with an increase of nine16 basis ~~points in the yield of interest-earning assets to 4.00% for the three months ended September 30, 2017 from 3.91% in the comparable prior year period. The~~point increase in the yield on interest-earning assets ~~of nine basis points was primarily due~~ to an increase of $347.1 million in the average balance of total loans, net, which have a higher yield than the yield of total interest-earning assets, combined with a decrease of $94.3 million in the average balance of total securities, which have a lower yield than the yield of total interest-earning assets. The yield of interest-earning assets also improved due to increases of four basis points and 12 basis points, respectively, in the yields of total loans, net and taxable securities3.85% for the three months ended ~~September~~June 30, ~~2017 from~~2022 compared to 3.69% for the comparable prior year period. Additionally, the yield of interest-earning deposits and federal funds sold increased 60 basis points for the three months ended September 30, 2017 from the comparable prior year period due to increases in the Federal Funds rate. The increases of four basis points in the yield on the total loans, net and 12 basis points in the yield of taxable securities were primarily due to the loans being originated and loans and securities being purchased at higher yields than the existing portfolio yield. Excluding prepayment penalty income ~~and recovered~~from loans, net recoveries/reversals of interest from non-accrual loans, net gains (losses) from fair value adjustments on qualifying hedges, and purchase accounting adjustments, the yield on total loans, net, ~~would have~~ increased ~~four~~seven basis points to ~~4.09%~~4.01% for the three months ended ~~September~~June 30, ~~2017~~2022 from ~~4.05%~~3.94% for the three months ended ~~September~~June 30, ~~2016.~~2021.

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s Discussions and Analysis of

Financial Condition and Results of Operations

Interest Expense.Interest expense ~~increased $2.5~~decreased $1.1 million, or ~~17.9%~~10.7%, to ~~$16.3~~$9.6 million for the three months ended ~~September~~June 30, ~~2017~~2022 from ~~$13.8~~$10.7 million for the three months ended ~~September~~June 30, ~~2016.~~2021. The ~~increase~~decrease in interest expense was primarily due to ~~an increase~~a decline of 14six basis points in the average cost of interest-bearing liabilities to ~~1.23%~~0.60% for the three months ended ~~September~~June 30, ~~2017~~2022 from ~~1.09%~~0.66% for the three months ended ~~September~~June 30, ~~2016, combined with an increase~~2021 and the decrease of ~~$216.3~~$195.5 million in the average balance of interest-bearing liabilities to ~~$5,275.9~~$6,337.4 million for the three months ended ~~September~~June 30, ~~2017,~~2022 from $5,059.6 million for the comparable prior year period. The 14 basis point increase in the cost of interest-bearing liabilities was primarily due to the Bank raising the rates we pay on some of our deposit products to stay competitive within our market. This increase in rates was partially offset by an improvement in our funding mix, as the combined average balance of lower costing savings, NOW and money market deposits increased $352.7 million to $2,597.6 million for the three months ended September 30, 2017 from $2,245.0 million for the comparable prior year period, while the combined average balance of higher costing certificates of deposit and borrowed funds decreased $141.7 million to $2,624.1 million for the three months ended September 30, 2017 from $2,765.8$6,532.9 million for the comparable prior year period.

Net Interest Income. ~~For~~Net interest income for the three months ended ~~September~~June 30, ~~2017, net interest income~~2022 was ~~$43.0~~$64.7 million, an increase of ~~$1.3~~$3.7 million, or ~~3.2%~~6.0%, from ~~$41.7~~$61.0 million for the three months ended ~~September~~June 30, ~~2016.~~2021. The increase in net interest income was primarily due to net interest-earning assets growing $146.0 million year over year to $1,403.3 million for the quarter ended June 30, 2022, and an increase of 21 basis points in the net interest margin to 3.35% during the same period. Included in net interest income was prepayment penalty income, net of reversals and recovered interest from non-accrual loans totaling $2.3 million and $2.0 million for the three months ended June 30, 2022 and 2021, respectively, net losses from fair value adjustments on qualifying hedges totaling $60,000 and $0.7 million for the three months ended June 30, 2022 and 2021, respectively, and purchase accounting income adjustments of $0.4 million and $0.6 million for the three months ended June 30, 2022 and 2021, respectively. Excluding all of these items, the net interest margin for the three months ended June 30, 2022 was 3.22%, an increase of 18 basis points, from 3.04% for the three months ended June 30, 2021.

Provision (Benefit) for Credit Losses. During the three months ended June 30, 2022, the provision for credit losses was $1.6 million compared to a benefit for credit losses of $1.6 million for the three months ended June 30, 2021. During the three months ended June 30, 2022, non-performing assets increased $34.8 million to $48.9 million, at June 30, 2022. The increase in non-performing assets primarily resulted from the addition of one non-accrual investment security which was collateralized by real estate and three non-accrual commercial business loans. The current average loan-to-value ratio for our non-performing assets collateralized by real estate was 50.7% at June 30, 2022. The Bank continues to maintain conservative underwriting standards.

Non-Interest Income (Loss). Non-interest income for the three months ended June 30, 2022 was $7.4 million, an increase of $10.6 million from a loss of $3.2 million in the prior year comparable period. The increase was primarily due to the prior year period including net losses from fair value adjustments totaling $6.5 million compared to net gains totaling $2.5 million recorded during the three months ended June 30, 2022. Additionally, non-interest income for the three months ended June 30, 2022 included life insurance proceeds totaling $1.5 million compared to none recorded in the prior year comparable period.

Non-Interest Expense. Non-interest expense for the three months ended June 30, 2022 was $35.5 million, an increase of $1.5 million, or 4.4%, from $34.0 million for the three months ended June 30, 2021. The increase in non-interest expense was primarily due to the growth of the Company.

Income before Income Taxes. Income before income taxes for the three months ended June 30, 2022 was $35.0 million, an increase of $9.6 million, or 37.6%, from $25.4 million for the three months ended June 30, 2021 for the previously discussed reasons.

Provision for Income Taxes. The provision for income taxes was $9.9 million for the three months ended June 30, 2022, an increase of $3.8 million, or 61.4%, from $6.2 million for the three months ended June 30, 2021. The increase was primarily due to growth in income before income taxes and an increase in the effective tax rate. The effective tax rate for three months ended June 30, 2022 was 28.4% compared to 24.2% for the three months ended June 30, 2021. The increase in the effective tax rate was primarily due to the loss of certain New York State and City tax deductions in 2022.

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s Discussions and Analysis of

Financial Condition and Results of Operations

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

General. Net income for the six months ended June 30, 2022 was $43.3 million, an increase of $5.0 million, or 12.9%, from $38.3 million for the six months ended June 30, 2021. Diluted earnings per common share were $1.39 for the six months ended June 30, 2022, an increase of $0.18, or 14.9%, from $1.21 for the six months ended June 30, 2021.

Return on average equity was 12.91% for the six months ended June 30, 2022 compared to 12.11% for the six months ended June 30, 2021. Return on average assets was 1.06% for the six months ended June 30, 2022 compared to 0.93% for the six months ended June 30, 2021.

Interest Income. Interest and dividend income increased $1.7 million, or 1.2%, to $145.6 million for the six months ended June 30, 2022 from $143.9 million for the six months ended June 30, 2021. The increase in interest income was primarily attributable to the 8 basis points increase in the yield on interest-earning assets to 3.81%, for the six months ended June 30, 2022, compared to 3.73% for 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 qualifying hedges, and purchase accounting adjustments, the yield on total loans, net, increased three basis points to 3.97% for the six months ended June 30, 2022 from 3.94% for the six months ended June 30, 2021.

Interest Expense. Interest expense decreased $4.5 million, or 20.7%, to $17.4 million for the six months ended June 30, 2022 from $21.9 million for the six months ended June 30, 2021. The decrease in interest expense was primarily due to a decline of 12 basis points in the average cost of interest-bearing liabilities to 0.55% for the six months ended June 30, 2022 from 0.67% for the six months ended June 30, 2021 and the decrease of $226.3 million in the average balance of interest-bearing liabilities to $6,279.3 million for the six months ended June 30, 2022 from $6,505.5 million for the comparable prior year period.

Net Interest Income. Net interest income for the six months ended June 30, 2022 was $128.2 million, an increase of $6.3 million, or 5.1%, from $121.9 million for the six months ended June 30, 2021. The increase in net interest income was primarily due to an increase of ~~$251.7 million~~20 basis points in the ~~average balance of~~net interest margin to 3.36% during the six months ended June 30, 2022 and an increase in net interest-earning assets of $153.2 million to ~~$5,936.1~~$1.376.7 million for the ~~three months ended September 30, 2017 from $5,684.4 million for the comparable prior year~~same period. The yield earned on interest-earning assets increased nine basis points to 4.00% for the three months ended September 30, 2017 from 3.91% for the comparable prior year period. The cost of interest-bearing liabilities increased 14 basis points to 1.23% for the three months ended September 30, 2017 as compared to 1.09% for the three months ended September 30, 2016. The effects of the above on both the net interest spread and net interest margin were decreases of five basis points to 2.77% and four basis points to 2.90%, respectively, for the quarter ended September 30, 2017, compared to the quarter ended September 30, 2016. Included in net interest income was prepayment penalty income, ~~from loans for the three months ended September 30, 2017 and 2016 totaling $1.6 million and $1.5 million, respectively,~~net of reversals and recovered interest from non-accrual loans totaling ~~$0.3~~$4.0 million and $3.0 million for ~~each of~~ the ~~three~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016. Without~~2021, respectively, net (losses) gains from fair value adjustments on qualifying hedges totaling $(0.2) million and $0.8 million for the ~~prepayment penalty~~six months ended June 30, 2022 and 2021, respectively, and purchase accounting income adjustments of $1.4 million and ~~recovered interest,~~$1.5 million for the six months ended June 30, 2022 and 2021, respectively. Excluding all of these items, the net interest margin for the ~~three~~six months ended ~~September~~June 30, ~~2017 would have been 2.77%~~2022 was 3.22%, ~~a decrease~~an increase of ~~four~~20 basis points, ~~as compared to 2.81%~~from 3.02% for the ~~three~~six months ended ~~September~~June 30, ~~2016.~~2021.

~~- 50 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

Provision for ~~Loan~~Credit Losses.During the ~~three~~six months ended ~~September~~June 30, ~~2017, a~~2022, the provision for ~~loan~~credit losses was ~~recorded for $3.3~~$2.9 million, compared to ~~none~~$1.2 million for the ~~comparable prior year period.~~six months ended June 30, 2021. The provision recorded during the six months ended June 30, 2022 was ~~the result~~greater than net charge-offs of ~~a reduction in the estimated fair value of the collateral underlying our performing taxi medallion portfolio.~~$0.4 million. During the ~~three~~six months ended ~~September~~June 30, ~~2017, the Bank recorded net charge-offs totaling $0.2 million and non-accrual loans decreased $2.0~~2022, nonperforming assets increased $34.0 million to ~~$12.2~~$48.9 million from ~~$14.1~~$14.9 million at ~~June 30, 2017.~~December 31, 2021. The increase in non-performing assets primarily resulted from the addition of one non-accrual investment security which was collateralized by real estate and three non-accrual commercial business loans. The current average loan-to-value ratio for our non-performing ~~loans~~assets collateralized by real estate was ~~34.9%~~50.7% at ~~September~~June 30, ~~2017.~~2022. The Bank continues to maintain conservative underwriting standards. ~~We anticipate that we will continue to see low loss content in our loan portfolio. See Note 5 of the Notes to the Consolidated Financial Statements “Loans” and “ALLOWANCE FOR LOAN LOSSES.”~~

Non-Interest Income.Non-interest income for the ~~three~~six months ended ~~September~~June 30, ~~2017~~2022 was ~~$1.7~~$8.7 million, ~~a decrease of $0.2 million, or 10.4%, from $1.9 million for the three months ended September 30, 2016. The decrease in non-interest income was primarily due to~~ an increase of ~~$0.5~~$5.6 million ~~in net losses~~ from ~~fair value adjustments, partially offset by an increase of $0.3~~$3.1 million in ~~income from bank owned life insurance as compared to~~ the prior year comparable period.

~~Non-Interest Expense.~~ ~~Non-interest expense was $26.0 million for the three months ended September 30, 2017, a decrease of $0.3 million, or 1.2%, from $26.3 million for the three months ended September 30, 2016.~~ The ~~decrease in non-interest expense~~increase was primarily due to the prior year period including ~~a write-down of $0.8~~net losses from fair value adjustments totaling $5.6 million ~~on one OREO~~compared to net gains totaling $0.7 million recorded during the six months ended June 30, 2022. Additionally, non-interest income for the six months ended June 30, 2022 included life insurance proceeds totaling $1.5 million compared to none recorded in the prior year comparable period. These increases were partially offset by ~~an increase~~a decline in ~~salaries and benefits expense, primarily~~loan swap income during the six months ended June 30, 2022 compared to the six month ended June 30, 2021, due to ~~annual salary increases and additions~~lower activity in ~~staffing to support the growth of the Bank.~~

~~Income before Income Taxes.~~ Income before the provision for income taxes decreased $1.8 million, or 10.5%, to $15.5 million for the three months ended September 30, 2017 from $17.3 million for the three months ended September 30, 2016 for the reasons discussed above.

~~Provision for Income Taxes.~~ The provision for income taxes was $5.3 million for the three months ended September 30, 2017, a decrease of $1.4 million, or 20.5%, from $6.7 million for the three months ended September 30, 2016. The effective tax rate decreased to 34.2% for the three months ended September 30, 2017 from 38.5% in the comparable prior year period due to the impact of preferential tax items.

~~COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016~~

~~General.~~ Net income for the nine months ended September 30, 2017 was $35.2 million, a decrease of $15.5 million, or 30.5%, compared to $50.6 million for the nine months ended September 30, 2016. Diluted earnings per common share were $1.21 for the nine months ended September 30, 2017, a decrease of $0.54, or 30.9%, from $1.75 for the nine months ended September 30, 2016.

The nine months ended September 30, 2016, included a net after-tax gain on the sale of buildings of $19.6 million, or $0.67 per diluted common share. The nine months ended September 30, 2017 did not include any net gains on sale of buildings.

Return on average equity decreased to 8.9% for the nine months ended September 30, 2017 from 13.7% for the nine months ended September 30, 2016. Return on average assets decreased to 0.8% for the nine months ended September 30, 2017 from 1.2% for the nine months ended September 30, 2016.

~~- 51 -~~ 2022.

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

~~Interest Income.~~ ~~Total interest and dividend income increased $9.9 million, or 6.0%, to $174.9 million~~Non-Interest Expense. Non-interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $165.0 million for the nine months ended September 30, 2016. The increase in interest income~~2022 was primarily attributable to an increase of $313.5 million in the average balance of interest-earning assets to $5,909.9 million for the nine months ended September 30, 2017 from $5,596.3 million for the comparable prior year period. The yield on interest-earning assets increased two basis points to 3.95% for the nine months ended September 30, 2017 from 3.93% in the comparable prior year period. The increase in the yield on interest-earning assets of two basis points was primarily due to the yield on interest-earning assets being positively impacted by an increase of $407.3 million in the average balance of higher yielding total loans, net to $4,955.4 million for the nine months ended September 30, 2017 from $4,548.2 million for the comparable prior year period. Additionally, the yield on the securities portfolio increased 15 basis points to 2.80% for nine months ended September 30, 2017, from 2.65% for the comparable prior year period and the yield on interest-earning deposits increased 40 basis points to 0.81% for the nine months ended September 30, 2017 from 0.41% for the nine months ended September 30, 2016. The seven basis point decrease in the yield on total loans, net was primarily due to the decline in the rates earned on new loan originations and purchases, as compared to the existing portfolio, loans modifying to lower rates, and higher yielding loans prepaying. Excluding prepayment penalty income and recovered interest from loans, the yield on total loans, net, would have decreased two basis points to 4.07% for the nine months ended September 30, 2017 from 4.09% for the nine months ended September 30, 2016. The 15 basis point increase in the yield on the securities portfolio was primarily due to the net impact in the current year from $160.0 million in purchases at an average yield on 2.94% with $112.4 million in sales at an average yield of 2.21%.

~~Interest Expense.~~ Interest expense increased $4.6 million, or 11.4%, to $44.8 million for the nine months ended September 30, 2017 from $40.2 million for the nine months ended September 30, 2016. The increase in interest expense was primarily due to an increase of $250.9 million in the average balance of interest-bearing liabilities to $5,272.8 million for the nine months ended September 30, 2017, from $5,021.9 million for the comparable prior year period. Additionally, the increase was due to an increase of six basis points in the cost of total interest-bearing liabilities to 1.13% for the nine months ended September 30, 2017 from 1.07% for the comparable prior year period. The six basis point increase in the cost of interest-bearing liabilities was primarily due to the Bank raising the rates we pay on some of our deposit products to stay competitive within our market. This increase in rates was partially offset by an improvement in our funding mix, as the combined average balance of lower costing savings, NOW and money market deposits increased $329.1 million to $2,645.2 million for the nine months ended September 30, 2017 from $2,316.1 million for the comparable prior year period, while the combined average balance of higher costing certificates of deposit and borrowed funds decreased $83.6 million to $2,566.8 million for the nine months ended September 30, 2017 from $2,650.4 million for the comparable prior year period.

~~Net Interest Income.~~ ~~For the nine months ended September 30, 2017, net interest income was $130.0~~$74.3 million, an increase of ~~$5.3~~$2.1 million, or ~~4.3%~~3.0%, from ~~$124.7~~$72.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2021. The increase in net interest income was primarily due to an increase of $313.5 million in the average balance of interest-earning assets to $5,909.9 million for the nine months ended September 30, 2017 from the comparable prior year period. The yield earned on interest-earning assets increased two basis points to 3.95% for the nine months ended September 30, 2017. The cost of interest-bearing liabilities increased six basis points to 1.13% for the nine months ended September 30, 2017 as compared to 1.07% for the nine months ended September 30, 2016. The effects of the above on both the net interest spread and net interest margin were decreases of four basis points to 2.82% and 2.93%, respectively, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. Included in net interest income was prepayment penalty income from loans for the nine months ended September 30, 2017 and 2016 totaling $3.6 million and $5.0 million, respectively, recovered interest from non-accrual loans totaling $1.1 million and $0.5 million, respectively, and accelerated accretion of discount upon the call of CLO securities totaling $0.4 million and $26,000, respectively. Without the prepayment penalty income, recovered interest and accelerated discount upon call, the net interest margin for the nine months ended September 30, 2017 would have been 2.82%, a decrease of two basis points, as compared to 2.84% for the nine months ended September 30, 2016.

~~Provision for Loan Losses.~~ During the nine months ended September 30, 2017, a provision for loan losses was recorded for $3.3 million, compared to none for the comparable prior year period. The provision was the result of a reduction in the estimated fair value of the collateral underlying our performing taxi medallion portfolio. During the nine months ended September 30, 2017, the Bank recorded net charge-offs totaling $0.2 million and non-accrual loans decreased $8.9 million to $12.2 million from $21.0 million at December 31, 2016. The current average loan-to-value ratio for our non-performing loans collateralized by real estate was 34.9% at September 30, 2017. The Bank continues to maintain conservative underwriting standards. We anticipate that we will continue to see low loss content in our loan portfolio. See Note 5 of the Notes to the Consolidated Financial Statements “Loans” and “ALLOWANCE FOR LOAN LOSSES.”

~~- 52 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~Non-Interest Income.~~ Non-interest income for the nine months ended September 30, 2017 was $7.3 million, a decrease of $34.8 million, or 82.7%, from $42.1 million for the nine months ended September 30, 2016. The decrease in non-interest income was primarily due to the prior year period including $33.8 million in net gains on sale of buildings and $2.4 million in net gains on sale of securities compared to no building sales and a net loss of $0.2 million in sales of securities recorded during the nine months ended September 30, 2017. These decreases were partially offset by an increase in the gain from life insurance proceeds of $0.9 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.

~~Non-Interest Expense.~~ ~~Non-interest expense was $81.6 million for the nine months ended September 30, 2017, a decrease of $1.6 million, or 2.0%, from $83.2 million for the nine months ended September 30, 2016. The decrease~~ in non-interest expense was primarily due to the nine months ended September 30, 2016 including a penalty of $2.1 million on the prepayment of $38.0 million in repurchase agreements and $1.7 million in net losses from the sale of OREO compared to no prepayment penalties on borrowings and a net gain on the sale of OREO totaling $50,000 recorded during the nine months ended September 30, 2017. In addition, the nine months ended September 30, 2017 had decreases of $1.1 million in FDIC insurance expense due to lower assessment rates and $0.4 million in foreclosure expense due to improved credit conditions. These reductions in non-interest expense were partially offset by an increase of $2.8 million in salaries and benefits primarily due to annual salary increases and additions in staffing to support the growth of the ~~Bank.~~Company.

Income before Income Taxes. Income before ~~the provision for~~ income taxes ~~decreased $31.1~~for the six months ended June 30, 2022 was $59.6 million, an increase of $8.0 million, or ~~37.2%~~15.4%, ~~to $52.5~~from $51.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $83.6 million~~2021 for the ~~nine months ended September 30, 2016 for the reasons~~previously discussed ~~above.~~reasons.

Provision for Income Taxes.The provision for income taxes ~~for the nine months ended September 30, 2017~~ was ~~$17.3 million, a decrease of $15.7 million, or 47.5%, from $33.0~~$16.4 million for the ~~comparable prior year period.~~six months ended June 30, 2022, an increase of $3.0 million, or 22.6%, from $13.3 million for the six months ended June 30, 2021. The ~~decrease~~increase was primarily due to ~~a decrease of $31.1 million~~the growth in income before income taxes, and ~~a decrease~~an increase in the effective tax rate. The effective tax rate for six months ended June 30, 2022 was 27.4% compared to 25.8% for the six months ended June 30, 2021. The increase in the effective tax rate was primarily due to ~~33.0% for~~ the ~~nine months ended September 30, 2017 from 39.5%~~loss of certain New York State and City tax deductions in the comparable prior year period. The decrease in the effective tax rate reflects the impact of a change in the accounting treatment of deductible stock compensation expense from prior years. Additionally, the nine months ended September 30, 2016, effective tax rate reflected the impact of preferential tax items because of that period including the gain on sale buildings.2022.

FINANCIAL CONDITION

Assets.Total assets at ~~September~~June 30, ~~2017~~2022 were ~~$6,261.4~~$8,339.6 million, an increase of ~~$202.9~~$293.7 million, or ~~3.3%~~3.7%, from ~~$6,058.5~~$8,045.9 million at December 31, ~~2016.~~2021. Total loans net increased ~~$231.6~~$120.0 million, or ~~4.8%~~1.8%, during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, to ~~$5,045.1~~$6,721.0 million from ~~$4,813.5~~$6,601.0 million at December 31, ~~2016.~~2021. The increase was primarily due to loan originations which exceeded satisfactions. Loan originations and purchases were ~~$710.7~~$833.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017, a decrease~~2022, an increase of ~~$139.7~~$185.8 million, or ~~16.4%~~28.7%, from ~~$850.3~~$647.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. During the nine months ended September 30, 2017, we continued~~2021. We continue to focus on the origination of multi-family residential, commercial real estate and commercial business loans with a full banking relationship. The loan pipeline ~~totaled $417.0~~was $582.6 million at ~~September~~June 30, ~~2017~~2022, compared to ~~$310.9~~$429.3 million at December 31, ~~2016.~~

2021.

The following table shows loan originations and purchases for the periods indicated:


	For the three months				For the six months
	ended June 30,				ended June 30,
(In thousands)	2022		2021		2022		2021
Multi-family residential	$	136,902	$	66,913	$	235,082	$	125,466
Commercial real estate		164,826		37,963		209,928		55,119
One-to-four family – mixed-use property		12,228		7,135		20,726		15,847
One-to-four family – residential		4,211		59,494		13,472		62,625
Construction ⁽¹⁾		8,319		5,281		17,121		12,404
Small Business Administration⁽²⁾		2,750		17,585		2,750		142,678
Commercial business and other ⁽³⁾		174,551		130,036		334,027		233,154
Total	$	503,787	$	324,407	$	833,106	$	647,293

For the three months
ended September 30,
For the nine months
ended September 30,
(In thousands) 2017 2016 2017 2016
Multi-family residential ⁽¹⁾ $ 64,551 $ 61,378 $ 254,728 $ 293,385
Commercial real estate ⁽²⁾ 25,385 68,970 184,676 245,114
One-to-four family – mixed-use property 13,136 12,618 45,334 42,493
One-to-four family – residential 5,843 3,362 16,623 17,050
Co-operative apartments 232 - 232 470
Construction 148 1,920 7,121 6,034
Small Business Administration 4,276 470 6,787 6,785
Commercial business and other ⁽³⁾ 69,354 84,525 195,150 239,015
Total $ 182,925 $ 233,243 $ 710,651 $ 850,346

(1)

Includes purchases of ~~$31.0~~$0.9 million and ~~$98.4~~$3.6 million for ~~the nine months ended September 30, 2017 and 2016, respectively. There were purchases of $8.4 million during~~ the three months ended ~~September~~June 30, ~~2017. There were no~~2022 and 2021, respectively. Includes purchases ~~during~~of $1.6 million and $6.9 million for the six months ended June 30, 2022 and 2021, respectively.

(2)	Includes $15.5 million and $138.7 million of SBA PPP loans for the three and six months ended June 30, 2021, respectively.

(3)	Includes purchases of $55.8 million and $43.2 million for the three months ended ~~September~~June 30, ~~2016.~~

~~(2)~~

2022 and 2021, respectively. Includes purchases of ~~$25.9~~$109.4 million and ~~$25.9~~$65.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively. ~~There were no purchases during the three months ended September 30, 2017. There were no purchases during the three months ended September 30, 2016.~~

~~(3)~~

Includes purchases of $18.9 million and $13.7 million for the nine months ended September 30, 2017 and 2016, respectively. There were purchases of $9.0 million during the three months ended September 30, 2017. There were no purchases during the three months ended September 30, 2016.

~~- 53 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

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 ~~third quarter of 2017~~six months ended June 30, 2022 had an average loan-to-value ratio of ~~41.2%~~56.6% and an average debt coverage ratio of ~~187%~~170%.

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s Discussions and Analysis of

Financial Condition and Results of Operations

The Bank’s non-performing assets totaled ~~$13.9~~$48.9 million at ~~September~~June 30, ~~2017, a decrease~~2022, an increase of ~~$8.1~~$34.0 million, or ~~36.7%~~227.7%, from ~~$21.9 million at~~ December 31, ~~2016.~~2021. Total non-performing assets as a percentage of total assets were ~~0.22%~~0.59% at ~~September~~June 30, ~~2017 compared to 0.36%~~2022 and 0.19% at December 31, ~~2016.~~2021. The ratio of ~~allowance for loan losses~~ACL - loans to total non-performing loans was ~~181.9%~~141.1% at ~~September~~June 30, ~~2017~~2022 and ~~103.8%~~248.7% at December 31, ~~2016.~~

2021.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, mortgage-backed securities ~~including held-to-maturity increased $11.4~~decreased $61.3 million, or ~~2.2%~~10.6%, to ~~$527.8~~$518.8 million from ~~$516.5~~$580.1 million at December 31, ~~2016.~~2021. The ~~increase~~decrease in mortgage-backed securities during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was primarily due to the principal repayment of securities totaling $63.7 million and the decrease in the fair value of the securities totaling $50.8 million partially offset by the purchase of securities totaling $54.5 million at an average rate of 2.67%.

During the six months ended June 30, 2022, other securities increased $157.9 million, or 61.9%, to $413.0 million from $255.0 million at December 31, 2021. The increase in other securities during the six months ended June 30, 2022, was primarily due to purchases of ~~$149.9~~$172.3 million at an average ~~yield~~rate of ~~2.88%, partially offset by sales of $78.7 million at an average yield on 2.09% and principal repayments of $60.6 million.~~

During the nine months ended September 30, 2017, other securities including held-to-maturity, decreased $83.0 million, or 21.7%, to $299.7 million from $382.6 million at December 31, 2016. The decrease in other securities during the nine months ended September 30, 2017 was primarily due to $43.1 million in calls of CLO securities and one private issue trust preferred security, sales totaling $33.7 million at an average yield of 2.49% and $14.8 million in maturities of municipal securities,2.98% partially offset by a ~~purchase~~decrease in the fair value of ~~$10.0~~other securities totaling $13.6 million, ~~corporate bond at an average yield on 3.86%. Other~~and maturities, sales and calls totaling $0.9 million. At June 30, 2022, other securities primarily ~~consist~~consisted of securities issued by mutual or bond funds that invest in government and government agency securities, municipal bonds, ~~collateralized loan obligations~~corporate bonds, and ~~corporate bonds.~~CLOs.

Liabilities. Total liabilities were ~~$5,721.8~~$7,668.8 million at ~~September~~June 30, ~~2017,~~2022, an increase of ~~$177.1~~$302.5 million, or ~~3.2%~~4.1%, from ~~$5,544.6~~$7,366.3 million at December 31, ~~2016.~~2021. During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, due to depositors increased ~~$225.4~~$16.5 million, or ~~5.4%~~0.3%, to ~~$4,390.8~~$6,350.0 million due to ~~increases~~an increase of ~~$192.9~~$113.6 million in ~~core~~non-interest bearing deposits, and $32.4 million in certificates of deposit. The increase in core deposits was due to increases of $148.3 million, $68.9 million and $29.3 million in money market, savings and demand accounts, respectively, partially offset by a decrease of ~~$53.7~~$97.1 million in NOW, ~~accounts. Borrowed funds decreased $65.9 million during the nine months ended September 30, 2017.~~money market accounts and certificates of deposit. The decrease in ~~borrowed funds~~NOW, money market accounts and certificates of deposit was ~~primarily~~ due to ~~a decrease~~management’s decision to allow these deposits to mature and replace with lower cost funding. Included in ~~FHLB short-term borrowings as funding needs~~deposits were ~~provided by increased deposits.~~

~~Equity.~~ ~~Total stockholders’ equity increased $25.8~~brokered deposits totaling $1,028.4 million, ~~or 5.0%, to $539.6~~an increase of $402.1 million ~~at September 30, 2017~~ from ~~$513.9~~$626.3 million at December 31, ~~2016.~~2021. Borrowed funds increased $274.1 million during the six months ended June 30, 2022.

Equity. Total stockholders’ equity decreased $8.8 million, or 1.3%, to $670.8 million at June 30, 2022, from $679.6 million at December 31, 2021. Stockholders’ equity ~~increased primarily~~decreased due to ~~net income of $35.2 million, the net impact totaling $4.9 million from the vesting and exercising of shares of employee and director stock plans and~~a decline in accumulated other comprehensive income ~~totaling $1.7~~of $24.6 million, ~~primarily due to an increase in the fair value of the securities portfolio. These increases were partially offset by~~ the declaration and payment of dividends on the Company’s common stock of ~~$0.54~~$0.44 per common share totaling ~~$15.7~~$13.6 million and ~~the purchase~~747,689 shares repurchased totaling $17.0 million. These decreases were partially offset by net income of ~~10,000 treasury shares, at an average cost of $27.80 per share, totaling $0.3~~$43.3 million. Book value per common share ~~was $18.72~~increased to $22.38 at ~~September~~June 30, ~~2017~~2022 compared to ~~$17.95~~$22.26 at December 31, ~~2016.~~2021.

Liquidity. Liquidity is the ability to economically meet current and future financial obligations. The Company’s primary objectives in terms of managing liquidity is to maintain the ability to originate and purchase loans, 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 general 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.

~~Cash flow.~~Liquidity management is both a short and long-term function of business management. During ~~the nine months ended September 30, 2017,~~2021, funds were provided by the ~~Company's~~Company’s operating activities, ~~amounted to $53.1 million. These funds, combined with $151.2 million provided from financing activities,~~which were ~~utilized~~used to fund ~~net~~our investing and financing activities. 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 June 30, 2022, cash and cash equivalents totaled $137.0 million, an increase of $180.0 million. The Company's primary business objective is the origination and purchase of multi-family residential loans, commercial business loans and commercial real estate mortgage loans and to a lesser extent one-to-four family (including mixed-use properties) and SBA loans. During the nine months ended September 30, 2017, the net total of loan originations and purchases less loan repayments and sales was $255.1 million. During the nine months ended September 30, 2017, the Company$55.3 million from December 31, 2021. We also ~~funded $152.1 million in purchases of~~held unencumbered securities available for sale ~~and $8.0~~totaling $546.4 million ~~of securities held-to-maturity. During the nine months ended September~~at June 30, 2017, funds were provided by long-term borrowed funds totaling $180.0 million and a net increase in total deposits of $238.4 million. Additionally, $216.6 million in proceeds from maturities, sales, calls and prepayments of securities available for sale and $14.8 million in maturities of securities held-to-maturity provided funds. In addition to funding loan growth, these funds were used to repay $205.0 million in long-term borrowings and $43.5 million in net short-term borrowings. The Company also used funds of $15.7 million and $2.9 million for dividend payments and purchases of treasury stock, respectively, during the nine months ended September 30, 2017.

~~- 54 -~~ 2022.

-53-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

At June 30, 2022, the Bank was able to borrow up to $3,675.0 million from the FHLB-NY in Federal Home Loan Bank advances and letters of credit. As of June 30, 2022, the Bank had $1,655.4 million outstanding in combined balances of FHLB-NY advances and letters of credit. At June 30, 2022, the Bank also had unsecured lines of credit with other commercial banks totaling $695.0 million, with no outstanding amount. In addition, at June 30, 2022, the Holding Company had subordinated debentures with a principal balance totaling $125.0 million and junior subordinated debentures with a face amount of $61.9 million and a carrying amount of $55.4 million. Management believes its available sources of funds are sufficient to fund current operations.

INTEREST RATE RISK

Economic Value of Equity Analysis. The Consolidated Statements of Financial Position 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 ~~fluctuates~~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.

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. On a quarterly basis, management prepares the “Earnings and Economic Exposure to Changes in Interest Rate” report for review by the Asset Liability Committee of the Board of Directors, as summarized below. This report quantifies the ~~potential changes in net interest income and~~ net portfolio value should interest rates immediately go up 100 or 200 basis points or down ~~(shocked) 200~~100 basis points, assuming the yield curves of the rate shocks will be parallel to each other. ~~The Company’s regulators currently place focus on the net portfolio value, focusing on a rate shock up or down of 200 basis points.~~ Net portfolio value is defined as the market value of assets net of 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. ~~All~~The changes in ~~income and~~ value are measured as percentage changes from the ~~projected net interest income and~~ net portfolio value at the base interest rate scenario. The base interest rate scenario assumes interest rates at ~~September~~June 30, ~~2017.~~2022. Various estimates regarding prepayment assumptions are made at each level of rate shock. ~~However, prepayment penalty income is excluded from this analysis. Actual results could differ significantly from these estimates.~~ At ~~September~~June 30, ~~2017,~~2022, 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~~June 30, ~~2017:~~2022:



Change in Interest Rate	Net Portfolio Value		Net Portfolio Value Ratio
-100 Basis points	3.1	%	15.4	%
Base interest rate	—		15.3
+100 Basis points	(5.7)		14.7
+200 Basis points	(11.5)		14.1

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. On a quarterly basis, management provides a report for review by the ALCO Investment Committee of the Board of Directors. This report quantifies the potential changes in net interest income and net portfolio value through various interest rate scenarios.

Projected Percentage Change In
Net Interest Net Portfolio Net Portfolio
Change in Interest Rate Income Value Value Ratio
-200 Basis points 5.03% 11.57% 12.52%
-100 Basis points 4.63 3.84 12.04
Base interest rate 0.00 0.00 11.89
+100 Basis points -6.05 -8.76 11.18
+200 Basis points -12.18 -15.24 10.66

~~- 55 -~~ The starting point for the net interest income simulation is an estimate of the next twelve month’s net interest income assuming that both interest rates and the Company’s interest-sensitive assets and liabilities remain at period-end levels. The 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 3.9% from a 100 basis point increase in rates over the next twelve months. Actual results could differ significantly from these estimates.

-54-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

At June 30 2022, the Company had a derivative portfolio with a notional value totaling $1.4 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.

A portion of this portfolio is comprised of interest rate swaps on certain short-term advances and brokered deposits totaling $871.5 million. At June 30, 2022, $591.5 million of the interest rate swaps are effective swaps at a weighted average rate of approximately 1.74% that largely mature by early 2024 and $280.0 million of the interest rate swaps are forward swaps effective at different points through 2024, at an average rate of 0.72%.

The net interest income simulation incorporates the next twelve months (through June 30, 2023) and only a portion of the effective swap maturities and the forward starting swaps are included in this period. Assuming another equal increment ramp of 100 basis points increase in rates in the second year (through June 30, 2024), for a total of 200 basis points over two years, the total derivative portfolio has a 1.6% benefit to net interest income (versus the base case) in the first year and a cumulative benefit of 4.2% by the second year.

-55-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s Discussions 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 rate earned or paid on them. The following ~~table~~tables sets forth certain information relating to the Company’s Consolidated Statements of Financial Condition and Consolidated Statements of Income for the three and six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, 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 which are considered adjustments to yields.

For the three months ended September 30,
2017 2016
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
Assets (Dollars in thousands)
Interest-earning assets:
Mortgage loans, net $ 4,350,338 $ 46,121 4.24 % $ 4,093,240 $ 43,777 4.28 %
Other loans, net 683,328 7,197 4.21 593,353 5,404 3.64
Total loans, net ⁽¹⁾ 5,033,666 53,318 4.24 4,686,593 49,181 4.20
Taxable securities: ��
Mortgage-backed securities 520,889 3,335 2.56 554,515 3,350 2.42
Other securities 189,957 1,787 3.76 245,477 2,160 3.52
Total taxable securities 710,846 5,122 2.88 799,992 5,510 2.76
Tax-exempt securities: ⁽²⁾
Other securities 142,899 758 2.12 148,004 784 2.12
Total tax-exempt securities 142,899 758 2.12 148,004 784 2.12
Interest-earning deposits and federal funds sold 48,718 121 0.99 49,824 49 0.39
Total interest-earning assets 5,936,129 59,319 4.00 5,684,413 55,524 3.91
Other assets 303,192 292,312
Total assets $ 6,239,321 $ 5,976,725

Liabilities and Equity
Interest-bearing liabilities:
Deposits:
Savings accounts $ 330,316 583 0.71 $ 258,884 306 0.47
NOW accounts 1,340,228 2,468 0.74 1,384,368 1,979 0.57
Money market accounts 927,067 2,337 1.01 601,709 990 0.66
Certificate of deposit accounts 1,375,052 5,218 1.52 1,428,770 5,213 1.46
Total due to depositors 3,972,663 10,606 1.07 3,673,731 8,488 0.92
Mortgagors' escrow accounts 54,236 49 0.36 48,840 32 0.26
Total deposits 4,026,899 10,655 1.06 3,722,571 8,520 0.92
Borrowed funds 1,249,038 5,623 1.80 1,337,049 5,291 1.58
Total interest-bearing liabilities 5,275,937 16,278 1.23 5,059,620 13,811 1.09
Non interest-bearing deposits 354,149 318,188
Other liabilities 72,767 89,943
Total liabilities 5,702,853 5,467,751
Equity 536,468 508,974
Total liabilities and equity $ 6,239,321 $ 5,976,725

Net interest income / net interest rate spread $ 43,041 2.77 % $ 41,713 2.82 %

Net interest-earning assets / net interest margin $ 660,192 2.90 % $ 624,793 2.94 %

Ratio of interest-earning assets to interest-bearing liabilities 1.13 X 1.12 X


	For the three months ended June 30,
	2022						2021
	Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost

Assets	(Dollars in thousands)
Interest-earning assets:
Mortgage loans, net	$	5,178,029	$	54,775	4.23	%	$	5,130,400	$	52,987	4.13	%
Other loans, net		1,462,302		14,417	3.94			1,556,488		15,012	3.86
Total loans, net^{(1) (2)}		6,640,331		69,192	4.17			6,686,888		67,999	4.07
Taxable securities:
Mortgage-backed securities		594,923		2,356	1.58			578,134		2,233	1.54
Other securities		333,158		2,090	2.51			232,020		1,037	1.79
Total taxable securities		928,081		4,446	1.92			810,154		3,270	1.61
Tax-exempt securities: ⁽³⁾
Other securities		67,315		625	3.71			50,830		535	4.21
Total tax-exempt securities		67,315		625	3.71			50,830		535	4.21
Interest-earning deposits and federal funds sold		104,956		159	0.61			242,302		51	0.08
Total interest-earning assets		7,740,683		74,422	3.85			7,790,174		71,855	3.69
Other assets		471,080						473,379
Total assets	$	8,211,763					$	8,263,553
Liabilities and Equity
Interest-bearing liabilities
Deposits:
Savings accounts	$	156,785		50	0.13		$	153,113		66	0.17
NOW accounts		2,089,851		1,405	0.27			2,255,581		1,499	0.27
Money market accounts		2,231,743		1,952	0.35			2,043,257		2,060	0.40
Certificate of deposit accounts		820,476		1,273	0.62			1,043,985		1,913	0.73
Total due to depositors		5,298,855		4,680	0.35			5,495,936		5,538	0.40
Mortgagors' escrow accounts		97,496		6	0.02			91,545		1	—
Total deposits		5,396,351		4,686	0.35			5,587,481		5,539	0.40
Borrowed funds		941,023		4,875	2.07			945,410		5,164	2.18
Total interest-bearing liabilities		6,337,374		9,561	0.60			6,532,891		10,703	0.66
Non-interest-bearing deposits		1,044,553						923,220
Other liabilities		162,380						162,752
Total liabilities		7,544,307						7,618,863
Equity		667,456						644,690
Total liabilities and equity	$	8,211,763					$	8,263,553
Net interest income / net interest rate spread (tax equivalent) ⁽³⁾			$	64,861	3.25	%			$	61,152	3.03	%
Net interest-earning assets / net interest margin(tax equivalent)	$	1,403,309			3.35	%	$	1,257,283			3.14	%
Ratio of interest-earning assets to interest-bearing liabilities					1.22	X					1.19	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~~$2.2 million and ~~$0.9~~$3.2 million for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

(2)

Loan interest income includes net (losses) gains from fair value adjustments on qualifying hedges of $(0.1) million and $0.7 million for three month periods ended June 30, 2022 and 2021.

(3)

Interest ~~income~~and yields are calculated on ~~tax-exempt securities does not include~~ the tax ~~benefit~~equivalent basis using the statutory federal income tax rate of 21% for the ~~tax-exempt securities.~~periods presented totaling $0.1 million each for the three months ended June 30 2022 and 2021.

~~- 56 -~~

-56-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

The following table sets forth certain information relating to the Company’s Consolidated Statements of Financial Condition and Consolidated Statements of Income for the nine months ended September 30, 2017 and 2016, 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 which are considered adjustments to yields.

For the nine months ended September 30,
2017 2016
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
Assets (Dollars in thousands)
Interest-earning assets:
Mortgage loans, net $ 4,287,674 $ 135,429 4.21 % $ 3,972,502 $ 129,200 4.34 %
Other loans, net 667,749 20,405 4.07 575,652 15,952 3.69
Total loans, net ⁽¹⁾ 4,955,423 155,834 4.19 4,548,154 145,152 4.26
Taxable securities:
Mortgage-backed securities 527,890 10,122 2.56 603,994 11,231 2.48
Other securities 215,453 6,220 3.85 241,821 6,038 3.33
Total taxable securities 743,343 16,342 2.93 845,815 17,269 2.72
Tax-exempt securities: ⁽²⁾
Other securities 145,058 2,309 2.12 140,889 2,366 2.24
Total tax-exempt securities 145,058 2,309 2.12 140,889 2,366 2.24
Interest-earning deposits and federal funds sold 66,042 403 0.81 61,484 191 0.41
Total interest-earning assets 5,909,866 174,888 3.95 5,596,342 164,978 3.93
Other assets 299,139 287,111
Total assets $ 6,209,005 $ 5,883,453

Liabilities and Equity
Interest-bearing liabilities:
Deposits:
Savings accounts $ 288,376 1,289 0.60 $ 262,382 910 0.46
NOW accounts 1,474,572 7,006 0.63 1,539,050 5,863 0.51
Money market accounts 882,213 5,487 0.83 514,626 2,277 0.59
Certificate of deposit accounts 1,396,583 15,257 1.46 1,416,811 15,455 1.45
Total due to depositors 4,041,744 29,039 0.96 3,732,869 24,505 0.88
Mortgagors' escrow accounts 60,895 106 0.23 55,481 85 0.20
Total deposits 4,102,639 29,145 0.95 3,788,350 24,590 0.87
Borrowed funds 1,170,203 15,696 1.79 1,233,571 15,653 1.69
Total interest-bearing liabilities 5,272,842 44,841 1.13 5,021,921 40,243 1.07
Non interest-bearing deposits 340,221 296,321
Other liabilities 67,967 73,594
Total liabilities 5,681,030 5,391,836
Equity 527,975 491,617
Total liabilities and equity $ 6,209,005 $ 5,883,453

Net interest income / net interest rate spread $ 130,047 2.82 % $ 124,735 2.86 %

Net interest-earning assets / net interest margin $ 637,024 2.93 % �� $ 574,421 2.97 %

Ratio of interest-earning assets to interest-bearing liabilities 1.12 X 1.11 X


	For the six months ended June 30,
	2022						2021
	Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost

Assets	(Dollars in thousands)
Interest-earning assets:
Mortgage loans, net	$	5,165,121	$	108,745	4.21	%	$	5,143,117	$	108,206	4.21	%
Other loans, net		1,444,555		27,963	3.87			1,550,527		28,814	3.72
Total loans, net^{(1) (2)}		6,609,676		136,708	4.14			6,693,644		137,020	4.09
Taxable securities:
Mortgage-backed securities		587,836		4,523	1.54			506,424		3,931	1.55
Other securities		280,245		3,209	2.29			266,234		2,000	1.50
Total taxable securities		868,081		7,732	1.78			772,658		5,931	1.54
Tax-exempt securities: ⁽³⁾
Other securities		62,490		1,216	3.89			50,829		1,065	4.19
Total tax-exempt securities		62,490		1,216	3.89			50,829		1,065	4.19
Interest-earning deposits and federal funds sold		115,752		210	0.36			211,904		87	0.08
Total interest-earning assets		7,655,999		145,866	3.81			7,729,035		144,103	3.73
Other assets		475,066						476,919
Total assets	$	8,131,065					$	8,205,954
Liabilities and Equity
Interest-bearing liabilities
Deposits:
Savings accounts	$	156,689		99	0.13		$	161,549		141	0.17
NOW accounts		2,063,529		2,198	0.21			2,220,677		3,205	0.29
Money market accounts		2,242,626		3,227	0.29			1,974,781		4,160	0.42
Certificate of deposit accounts		854,970		2,562	0.60			1,073,151		4,135	0.77
Total due to depositors		5,317,814		8,086	0.30			5,430,158		11,641	0.43
Mortgagors' escrow accounts		84,574		8	0.02			78,531		3	0.01
Total deposits		5,402,388		8,094	0.30			5,508,689		11,644	0.42
Borrowed funds		876,877		9,308	2.12			996,845		10,304	2.07
Total interest-bearing liabilities		6,279,265		17,402	0.55			6,505,534		21,948	0.67
Non-interest-bearing deposits		1,023,181						889,821
Other liabilities		158,400						178,361
Total liabilities		7,460,846						7,573,716
Equity		670,219						632,238
Total liabilities and equity	$	8,131,065					$	8,205,954
Net interest income / net interest rate spread (tax equivalent) ⁽³⁾			$	128,464	3.26	%			$	122,155	3.06	%
Net interest-earning assets / net interest margin(tax equivalent)	$	1,376,734			3.36	%	$	1,223,501			3.16	%
Ratio of interest-earning assets to interest-bearing liabilities					1.22	X					1.19	X

(1)

Loan interest income includes loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties) of approximately ~~$1.9~~$5.1 million and ~~$3.4~~4.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

(2)

Loan interest income includes net gains (losses) from fair value adjustments on qualifying hedges of ($0.2) million and $0.8 million for the six months ended June 30, 2022 and 2021, respectively.

(3)

Interest ~~income~~and yields are calculated on ~~tax-exempt securities does not include~~ the tax ~~benefit~~equivalent basis using the statutory federal income tax rate of 21% for the ~~tax-exempt securities.~~periods presented totaling $0.3 million and $0.2 million for the six months ended June 30, 2022 and 2021.

~~- 57 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

LOANS

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, including purchases, sales and principal reductions for the periods indicated.


	For the six months ended June 30,
(In thousands)	2022		2021

Mortgage Loans
At beginning of period	$	5,200,782	$	5,228,271
Mortgage loans originated:
Multi-family residential		235,082		125,466
Commercial real estate		209,928		55,119
One-to-four family mixed-use property		20,726		15,847
One-to-four family residential		13,472		4,673
Construction		15,498		5,468
Total mortgage loans originated		494,706		206,573

Mortgage loans purchased:
One-to-four family residential		—		57,952
Construction		1,623		6,936
Total mortgage loans purchased		1,623		64,888

Less:
Principal reductions		398,074		271,294
Mortgage loan sales		18,342		17,846
Charge-offs		—		139
At end of period	$	5,280,695	$	5,210,453

Non-mortgage loans
At beginning of period	$	1,433,084	$	1,473,358
Loans originated:
Small Business Administration ⁽¹⁾		2,750		142,678
Commercial business		222,281		164,166
Other		2,341		3,170
Total other loans originated		227,372		310,014

Non-mortgage loans purchased:
Commercial business		109,405		65,818
Total non-mortgage loans purchased		109,405		65,818

Less:
Principal reductions ⁽²⁾		297,813		338,537
Charge-offs ⁽³⁾		59		3,969
At end of period	$	1,471,989	$	1,506,684

(1)	Includes SBA PPP originations totaling $138.7 million for the six months ended June 30, 2021.

(2)	Includes SBA PPP reductions totaling $55.2 million and $93.2 million for the six months ended June 30, 2022 and 2021, respectively.

(3)	Does not include charge-offs totaling $1.0 million on the guaranteed portion of SBA receivables deemed uncollectible during the six months ended June 30, 2022.

For the nine months ended September 30,
(In thousands) 2017 2016

Mortgage Loans

At beginning of period $ 4,187,818 $ 3,832,914

Mortgage loans originated:
Multi-family residential 223,766 195,028
Commercial real estate 158,749 219,183
One-to-four family – mixed-use property 45,334 42,493
One-to-four family – residential 16,623 17,050
Co-operative apartments 232 470
Construction 7,121 6,034
Total mortgage loans originated 451,825 480,258

Mortgage loans purchased:
Multi-family residential 30,962 98,357
Commercial real estate 25,927 25,931
Total mortgage loans purchased 56,889 124,288

Less:
Principal and other reductions 300,897 305,218
Loans transferred to Available for Sale 30,565 -
Sales 18,975 7,259

At end of period $ 4,346,095 $ 4,124,983

Non-Mortgage Loans

At beginning of period $ 631,316 $ 539,697

Other loans originated:
Small Business Administration 6,787 6,785
Commercial business 174,541 223,938
Other 1,666 1,371
Total other loans originated 182,994 232,094

Other loans purchased:
Commercial business 18,943 13,706
Total other loans purchased 18,943 13,706

Less:
Principal and other reductions 119,519 182,439
Sales 4,842 3,211
Other 1,536
At end of period $ 707,356 $ 599,847

~~- 58 -~~

-58-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

TROUBLED DEBT ~~RESTRUCUTURED~~RESTRUCTURED (“TDR”) AND NON-PERFORMING ASSETS

Management continues to adhere to the Company’s conservative underwriting standards. At times, the Company may restructure a loan to enable a borrower to continue making payments when it is deemed to be in the best long-term interest of the Company. See Note 5 of the Notes to the Consolidated Financial Statements “Loans”.

The following table shows loans classified as TDR at amortized cost that are performing according to their restructured terms at the periods indicated:


	June 30,		December 31,
(In thousands)	2022		2021
Accrual Status:
Multi-family residential	$	1,656	$	1,690
Commercial real estate		7,572		7,572
One-to-four family - mixed-use property		1,000		1,375
One-to-four family - residential		260		483
Commercial business and other		1,190		1,340
Total		11,678		12,460

Non-Accrual Status:
One-to-four family - mixed-use property		254		261
Commercial business and other		2,850		41
Total		3,104		302

Total performing troubled debt restructured	$	14,782	$	12,762

(In thousands)
September 30,
2017
June 30,
2017
December 31,
2016
Accrual Status:
Multi-family residential $ 2,531 $ 2,546 $ 2,572
Commercial real estate 2,031 2,037 2,062
One-to-four family - mixed-use property 1,765 1,778 1,800
One-to-four family - residential 577 581 591
Taxi medallion 10,965 10,486 9,735
Commercial business and other 368 381 420
Total 18,237 17,809 17,180

Non-Accrual Status:
Taxi medallion 4,109 3,384 -
Commercial business and other 150 185 255
Total 4,259 3,569 255

Total performing troubled debt restructured $ 22,496 $ 21,378 $ 17,435

~~- 59 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions and Analysis of

Financial Condition and Results of Operations

The following table shows our non-performing assets at the ~~periods~~period indicated:



	June 30,			December 31,
(In thousands)	2022			2021

Loans 90 days or more past due and still accruing:
Commercial Business and other	$	100		$	—
Total		100			—
Non-accrual loans:
Multi-family residential		3,414			2,431
Commercial real estate		242			613
One-to-four family - mixed-use property ⁽¹⁾		790			1,309
One-to-four family - residential		5,055			7,725
Construction		856			—
Small business administration		937			937
Commercial Business and other ⁽¹⁾		16,554			1,918
Total		27,848			14,933
Total non-performing loans		27,948			14,933
Other non-performing assets:
Held-to-maturity securities		20,981			—
Total		20,981			—

Total non-performing assets	$	48,929		$	14,933

Non-performing assets to total assets		0.59	%		0.19	%
ACL - loans to non-accrual loans		141.57	%		248.66	%
ACL - loans to non-performing loans		141.06	%		248.66	%

(In thousands)
September 30,
2017
June 30,
2017
December 31,
2016
Loans 90 days or more past due and still accruing:
Multi-family residential $ 415 $ - $ -
Commercial real estate 38 - -
One-to-four family - mixed-use property 129 - 386
Construction - 602 -
Taxi medallion 1,147 727 -
Total 1,729 1,329 386

Non-accrual loans:
Multi-family residential 1,309 1,537 1,837
Commercial real estate 1,147 1,948 1,148
One-to-four family - mixed-use property 2,217 2,971 4,025
One-to-four family - residential 7,434 7,616 8,241
Small business administration 50 53 1,886
Taxi medallion - - 3,825
Commercial business and other 4 5 68
Total 12,161 14,130 21,030

Total non-performing loans 13,890 15,459 21,416

Other non-performing assets:
Real estate acquired through foreclosure - - 533
Total - - 533

Total non-performing assets $ 13,890 $ 15,459 $ 21,949

Non-performing assets to total assets 0.22 % 0.25 % 0.36 %
Allowance for loan losses to non-performing loans 181.92 % 143.33 % 103.80 %

~~Included~~(1)Not included in ~~loans over 90 days past due and still accruing were four~~the above analysis are the following non-accrual TDRs that are performing according to their restructured terms: one-to-four family mixed-use property loans totaling ~~$1.7 million, four loans totaling $1.3 million and two loans totaling $0.4~~$0.3 million at ~~September 30, 2017,~~both June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively, ~~which are past their respective maturity dates~~ and ~~are still remitting payments. The Bank is actively working with these borrowers to extend the~~commercial business loans ~~maturity or repay these loans.~~

~~Included in non-performing loans was one loan~~ totaling ~~$0.4~~$2.8 million and less than $0.1 million at ~~September 30, 2017,~~ June 30, ~~2017~~2022 and December 31, ~~2016 which was restructured as TDR and not performing in accordance with its restructured terms.~~2021, respectively.

~~- 60 -~~

~~PART I – FINANCIAL INFORMATION~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

CRITICIZED AND CLASSIFIED ASSETS

Our policy is to review our assets, focusing primarily on the loan portfolio, ~~OREO~~other real estate owned, and the investment portfolios, to ensure that ~~the~~ credit quality is maintained at the highest levels. See Note 5 (“Loans”) of the Notes to the Consolidated Financial Statements ~~“Loans”~~ for a description of how loans are determined to be criticized or classified and a table displaying criticized and classified loans at ~~September~~June 30, ~~2017~~2022 and December 31, 2016. The Company had no criticized or classified OREO at September 30, 2017 and had $0.5 million classified OREO at December 31, 2016. The Company did not hold any criticized or classified investment securities at September 30, 2017 and December 31, 2016.2021. Our total Criticized and Classified assets were ~~$72.6~~$78.1 million at ~~September~~June 30, ~~2017,~~2022, a decrease ~~$0.1~~of $0.5 million from ~~December 31, 2016.~~

On a quarterly basis, all collateral dependent loans that are classified as Substandard or Doubtful are internally reviewed for impairment, based on updated cash flows for income producing properties, or updated independent appraisals. The loan balances of collateral dependent loans reviewed for impairment are then compared to the loans updated fair value. We consider fair value of collateral dependent loans to be 85% of the appraised or internally estimated value of the property, except for taxi medallion loans. The balance which exceeds fair value is generally charged-off, except for taxi medallion loans. The fair value of the underlying collateral of taxi medallion loans is the value of the underlying medallion based upon the most recently reported arm’s length transaction. When there is no recent sale activity, the fair value is calculated using capitalization rates. All taxi medallion loans are classified impaired. Taxi medallion loans with a loan-to-value greater than 100% are allocated a portion of the allowance for loan losses (“ALL”) in the amount of the excess of the loan-to-value over the loan’s principal balance. At September 30, 2017, the current average loan-to-value ratio on our collateral dependent loans reviewed for impairment was 52.9%.

~~ALLOWANCE FOR LOAN LOSSES~~

The ALL represents the expense charged to earnings based upon management’s quarterly analysis of credit risk. The amount of the ALL is based upon multiple factors that reflect management’s assessment of the credit quality of the loan portfolio. The factors are both quantitative and qualitative in nature including, but not limited to, historical losses, economic conditions, trends in delinquencies, value and adequacy of underlying collateral, volume and portfolio mix, and internal loan processes.

Management has developed a comprehensive analytical process to monitor the adequacy of the ALL. The process and guidelines were developed using, among other factors, the guidance from federal banking regulatory agencies and GAAP. The results of this process, along with the conclusions of our independent loan review officer, support management’s assessment as to the adequacy of the ALL at each balance sheet date. See Note 5 of the Notes to the Consolidated Financial Statements “Loans” for a detailed explanation of management’s methodology and policy.

During the nine months ended September 30, 2107, the portion of the ALL related to the loss history declined. Charge-offs recorded in the past twelve quarters were minimal, as credit conditions remained stable. The percentage of loans originated prior to 2009, compared to the total loan portfolio, decreased as scheduled amortization and repayments occurred. As disclosed in Note 5 of the Notes to the Consolidated Financial Statements “Loans”, the loans originated prior to 2009 have a higher delinquency and loss rate. These reductions in the ALL were more than offset by an additional allocation to our taxi medallion portfolio due to a reduction in the estimated fair value of the collateral underlying our performing taxi medallion portfolio. At September 30, 2017, we have allocated $6.0$78.6 million of the allowance to the taxi medallion portfolio which equals 33.0% of the outstanding principal. The impact from the above and the minimal charge-offs recorded during the nine months ended September 30, 2017 resulted in the ALL totaling $25.3 million, an increase of $3.0 million, or 13.7% from December 31, 2016. Based upon management consistently applying the ALL methodology and review of the loan portfolio, management concluded a charge to earnings to increase the ALL was warranted. The ALL at September 30, 2017, represented 0.50% of gross loans outstanding as compared to 0.46% of gross loans outstanding at December 31, ~~2016.~~2021. The ~~ALL represented 181.9%~~Company had one investment security with an amortized cost of ~~non-performing loans~~$21.0 million classified as substandard at ~~September~~June 30, ~~2017 compared to 103.8%~~2022. This same security was reported as special mention at December 31, ~~2016.~~2021.

~~As a component~~Included within net loans as of June 30, 2022 and December 31, 2021 were $5.4 million and $8.7 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 credit risk assessment, the Bank has established an Asset Classification Committee which carefully evaluates loans which are past due 90 days and/or are classified. The Asset Classification Committee thoroughly assesses the condition and circumstances surrounding each loan meeting the criteria. The Bank also has a Delinquency Committee that evaluates loans meeting specific criteria. The Bank’s loan policy requires loans to be placed into non-accrual status once the loan becomes 90 days delinquent unless there is, in our opinion, compelling evidence the borrower will bring the loan current in the immediate future.applicable jurisdiction.

~~- 61 -~~

-60-

Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s ~~Discussion~~Discussions 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:

~~Management recommends to the Board~~


	For the six months ended June 30,
(In thousands)		2022		2021

Balance at beginning of period	$	37,135	$	45,153
Loans- Charge-off		(1,086)		(4,108)
Loans- Recovery		652		341
Loans- Provision		2,723		1,284
Allowance for Credit Losses - Loans	$	39,424	$	42,670


Balance at beginning of period	$	862	$	907
HTM Securities- Provision (Benefit)		223		(63)
Allowance for HTM Securities losses	$	1,085	$	844


Balance at beginning of period	$	1,209	$	1,815
Off-Balance Sheet- (Benefit) Provision		235		(245)
Allowance for Off-Balance Sheet losses	$	1,444	$	1,570

Allowance for Credit Losses	$	41,953	$	45,084

-61-

Table of ~~Directors the amount~~Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Management’s Discussions and Analysis of ~~the ALL quarterly. The Board~~

Financial Condition and Results of ~~Directors approves the ALL.~~Operations

The following table sets forth the activity in the ~~Company's allowance for loan losses~~Company’s ACL - loans for the periods indicated:


	For the six months ended June 30,
(Dollars in thousands)	2022			2021

Balance at beginning of year	$	37,135		$	45,153
Provision for credit losses		2,723			1,284

Loans charged-off:
Multi-family residential		—			(43)
Commercial real estate		—			(64)
One-to-four family mixed-use property		—			(32)
SBA		(1,054)			—
Taxi medallion		—			(2,758)
Commercial business and other loans		(32)			(1,211)
Total loans charged-off		(1,086)			(4,108)

Recoveries:
Multi-family residential		1			10
One-to-four family - mixed-use property		—			10
One-to-four family - residential		4			7
Small Business Administration		26			19
Taxi medallion		447			222
Commercial business and other		174			73
Total recoveries		652			341

Net charge-offs		(434)			(3,767)
Balance at end of year	$	39,424		$	42,670

Ratio of net charge-offs to average loans outstanding during the period		0.01	%		0.11	%
Ratio of ACL - loans to gross loans at end of period		0.58	%		0.64	%
Ratio of ACL - loans to non-performing loans at end of period		141.06	%		242.55	%

For the nine months ended September 30,
(Dollars in thousands) 2017 2016

Balance at beginning of period $ 22,229 $ 21,535

Provision for loan losses 3,266 -

Loans charged-off:
Multi-family residential (452 ) (155 )
Commercial real estate (4 ) -
One-to-four family – mixed-use property (36 ) (139 )
One-to-four family – residential (170 ) (74 )
Small Business Administration (89 ) (362 )
Taxi medallion (54 ) -
Commercial business and other (48 ) (59 )
Total loans charged-off (853 ) (789 )

Recoveries:
Multi-family residential 297 230
Commercial real estate 93 11
One-to-four family – mixed-use property 68 252
One-to-four family – residential 58 366
Small Business Administration 66 118
Commercial business and other 45 72
Total recoveries 627 1,049

Net (charge-offs) recoveries (226 ) 260

Balance at end of period $ 25,269 $ 21,795

Ratio of net charge-offs (recoveries) during the period to average loans outstanding during the period 0.01 % (0.01 )%
Ratio of allowance for loan losses to gross loans at end of period 0.50 % 0.46 %
Ratio of allowance for loan losses to non-performing assets at end of period 181.92 % 82.64 %
Ratio of allowance for loan losses to non-performing loans at end of period 181.92 % 92.61 %

The increase in non-performing assets is due to three relationships. One of the loans increasing non-performing assets was resolved subsequent to June 30, 2022.The second loan relationship is collateralized by non-real estate collateral, including credit insurance. The non-performing investment security and attendant loan are collateralized by a commercial condominium located in Manhattan with a combined LTV of approximately 63%.

~~- 62 -~~

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Table of Contents

PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the qualitative and quantitative disclosures about market risk, see the information under the caption ~~"Management's~~"Management’s Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Risk."

ITEM 4. CONTROLS AND PROCEDURES

The Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September~~June 30, ~~2017,~~2022, the design and operation of these disclosure controls and procedures were effective. During the period covered by this Quarterly Report, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~- 63 -~~

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PART II – OTHER ~~INFORMATIOMTION~~INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ITEM 1. LEGAL PROCEEDINGS

The Company is a defendant in various lawsuits. Management of the Company, after consultation with outside legal counsel, believes that the resolution of these various matters will not result in any material adverse effect on the ~~Company's~~Company’s consolidated financial condition, results of operations and cash flows.

ITEM 1A. RISK FACTORS

~~There~~Except as set forth below there have been no material changes from the risk factors disclosed in the Company’s ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2016.~~2021.

Changes in Interest Rates, Including Recent and Perhaps Future Increases Fueled by Inflation, May Significantly Impact Our Financial Condition and Results of Operations

Our primary source of income is net interest income, which is the difference between the interest income generated by our interest-earning assets (consisting primarily of multi-family residential loans, commercial business loans and commercial real estate mortgage loans) and the interest expense generated by our interest-bearing liabilities (consisting primarily of deposits). The level of net interest income is primarily a function of the average balance of our interest-earning assets, the average balance of our interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by such external factors as the local economy, competition for loans and deposits, the monetary policy of the Federal Open Market Committee of the FRB (the “FOMC”), and market interest rates.

It is currently expected that during the remainder of 2022, and perhaps beyond, the FOMC will increase interest rates to reduce the rate of inflation to the extent necessary to reduce inflation to the rate that the FOMC believes is appropriate. In March 2022, the FOMC commenced increasing the target range for the federal funds rate by implementing a 25-basis point increase to a range of 0.25% to 0.50%. In May 2022, the FOMC implemented a 50-basis point increase to a range of 0.75% to 1.00%. In June 2022, the FOMC implemented a 75-basis point increase to a range of 1.50% to 1.75%. At its most recent meeting, in late July 2022, the FOMC further added a 75-basis point increase to a range of 2.25% to 2.50%. All of these increases were expressly made in response to inflationary pressures, which are currently expected to continue. In its July 2022 “Beige Book”, the FRB noted that economic activity had expanded at a modest pace from mid-May, with higher food and gas prices and diminished household discretionary income. The report also noted that housing demand had weakened, commercial real estate conditions had slowed, and loan demand had been mixed, with some financial institutions reporting increased customer usage of revolving credit lines and others reporting weakened residential loan demand amid higher mortgage interest rates. The report concluded that the outlook for future economic growth is mostly negative, with expectations for further weakening of demand over the next six to twelve months.

There can be no assurances as to any future FOMC conduct. If the FOMC further increases the targeted federal funds rates, overall interest rates likely will rise, which will positively impact our interest income but may further negatively impact the entire national economy, including the housing industry in the markets we serve, by reducing refinancing activity and new home purchases. In addition, deflationary pressures, while possibly lowering our operational costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of collateral securing loans, which could negatively affect our financial performance. A significant portion of our loans have fixed interest rates (or, if adjustable, are initially fixed for periods of five to 10 years) and longer terms than our deposits and borrowings. Our net interest income could be adversely affected if the rates we pay on deposits and borrowings increase more rapidly than the rates we earn on loans. Our interest rate risk is exacerbated in the short term by the fact that approximately 80% of our certificates of deposit accounts and borrowings will reprice or mature during the next year. While the higher payments we would receive on adjustable-rate loans in a rising interest rate environment may increase our interest income, nonetheless (notwithstanding our stress testing) some borrowers ultimately may be unable to afford the higher payment amounts, which could result in a higher rate of default. Rising interest rates also may reduce the demand for loans and the value of fixed-rate investment securities. These effects from interest rate changes or from other sustained economic stress or a recession, among other matters, could have a material adverse effect on our business, financial condition, liquidity, and results of operations.

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Table of Contents

PART II – OTHER INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

As a result of our historical focus on the origination of multi-family residential mortgage loans, commercial business loans and commercial real estate mortgage loans, most of our loans are adjustable rate, however, many adjust at periods of five to 10 years. In addition, a large percentage of our investment securities and mortgage-backed securities have fixed interest rates and are classified as available for sale. As is the case with many financial institutions, our emphasis on increasing the development of core deposits, those with no stated maturity date, has resulted in our interest-bearing liabilities having a shorter duration than our interest-earning assets. This imbalance can create significant earnings volatility because interest rates change over time and are currently at historical low levels. As interest rates increase, including as noted above, our cost of funds will increase more rapidly than the yields on a substantial portion of our interest-earning assets. In addition, the market value of our fixed-rate assets for example, our investment and mortgage-backed securities portfolios, would decline if interest rates increase. In line with the foregoing, we have experienced and may continue to experience an increase in the cost of interest-bearing liabilities primarily due to raising the rates we pay on some of our deposit products to stay competitive within our market and an increase in borrowing costs from increases in the federal funds rate.

Prevailing interest rates also affect the extent to which borrowers repay and refinance loans. In a declining interest rate environment, the number of loan prepayments and loan refinancing may increase, as well as prepayments of mortgage-backed securities. Call provisions associated with our investment in U.S. government agency and corporate securities may also adversely affect yield in a declining interest rate environment. Such prepayments and calls may adversely affect the yield of our loan portfolio and mortgage-backed and other securities as we reinvest the prepaid funds in a lower interest rate environment. However, we typically receive additional loan fees when existing loans are refinanced, which partially offset the reduced yield on our loan portfolio resulting from prepayments. In periods of low interest rates, our level of core deposits also may decline if depositors seek higher-yielding instruments or other investments not offered by us, which in turn may increase our cost of funds and decrease our net interest margin to the extent alternative funding sources are utilized. An increasing interest rate environment would tend to extend the average lives of lower yielding fixed rate mortgages and mortgage-backed securities, which could adversely affect net interest income. Also, in an increasing interest rate environment, mortgage loans and mortgage-backed securities may prepay at slower rates than experienced in the past, which could result in a reduction of prepayment penalty income. In addition, depositors tend to open longer term, higher costing certificate of deposit accounts which could adversely affect our net interest income if rates were to subsequently decline. Additionally, adjustable-rate mortgage loans and mortgage-backed securities generally contain interim and lifetime caps that limit the amount the interest rate can increase or decrease at repricing dates. Significant increases in prevailing interest rates may significantly affect demand for loans and the value of bank collateral. See “— Local Economic Conditions” disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2021.

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Table of Contents

PART II – OTHER INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information regarding the shares of common stock repurchased by the Company during the three months ended ~~September~~June 30, ~~2017:~~2022:

~~Maximum~~

~~Total Number of~~

~~Number of~~

~~Total~~

~~Shares Purchased~~

~~Shares That May~~

~~Number~~

~~as Part of Publicly~~

~~Yet Be Purchased~~

~~of Shares~~

~~Average Price~~

~~Announced Plans~~

~~Under the Plans~~

~~Period~~

~~Purchased~~

~~Paid per Share~~

~~or Programs~~

~~July 1 to July 31, 2017~~

~~485,905~~

~~August 1 to August 31, 2017~~

~~485,905~~

~~September 1 to September 30, 2017~~

~~485,905~~

~~Total~~


					Maximum
				Total Number of	Number of
	Total			Shares Purchased	Shares That May
	Number			as Part of Publicly	Yet Be Purchased
	of Shares	Average Price		Announced Plans	Under the Plans
Period	Purchased	Paid per Share		or Programs	or Programs
April 1 to April 30, 2022	20,000	$	21.67	20,000	468,187
May 1 to May 31, 2022	246,164		21.89	246,164	1,222,023
June 1 to June 30, 2022	121,525		22.31	121,525	1,100,498
Total	387,689	$	22.01	387,689

On May 17, 2022, the Board of Directors approved a new stock repurchase program to purchase up to an additional 1,000,000 shares. During the quarter ended ~~September~~June 30, ~~2017,~~2022, the Company ~~did not repurchase any~~repurchased 387,689 shares of the Company’s common stock. ~~At September~~On June 30, ~~2017, 485,905~~2022, 1,100,498 shares ~~may still~~remained to be repurchased under the currently authorized stock repurchase ~~program.~~programs. Stock will be purchased under the current stock repurchase ~~program~~programs from time to time, in the open market or through private transactions, subject to market conditions. There is no expiration or maximum dollar amount under ~~this authorization.~~these authorizations.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

~~- 64 -~~

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Table of Contents

PART II – OTHER ~~INFORMATIOMTION~~INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ITEM 6. EXHIBITS

~~Exhibit No.~~	~~Description~~
Exhibit No.		Description
	~~3.1~~
3.1 P		Certificate of Incorporation of Flushing Financial Corporation (1)
3.2	~~3.2~~	Certificate of Amendment to Certificate of Incorporation of Flushing Financial Corporation (3)
3.3	~~3.3~~	Certificate of Amendment to Certificate of Incorporation of Flushing Financial Corporation (5)
3.4	~~3.4~~	Certificate of Designations of Series A Junior Participating Preferred Stock of Flushing Financial Corporation (4)
3.5	~~3.5~~	Certificate of Increase of Shares Designated as Series A Junior Participating Preferred Stock of Flushing Financial Corporation (2)
3.6	~~3.6~~	Amended and Restated By-Laws of Flushing Financial Corporation (6)
4.1	~~4.1~~	Indenture dated November 22, 2021, between Flushing Financial Corporation and Wilmington Trust, National Association, as trustee. (8)
4.2		First Supplemental Indenture, dated November 22, 2021, between Flushing Financial Corporation and Wilmington Trust, National Association, as trustee. (8)
4.3		Flushing Financial Corporation has outstanding certain long-term debt. None of such debt exceeds ten percent of Flushing Financial Corporation's total assets; therefore, copies of constituent instruments defining the rights of the holders of such debt are not included as exhibits. Copies of instruments with respect to such long-term debt will be furnished to the Securities and Exchange Commission upon request.
10.1	~~31.1~~	Amended Flushing Financial Corporation 2014 Omnibus Plan (7)
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (filed herewith)
31.2	~~31.2~~	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (filed herewith)
32.1	~~32.1~~	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 by the Chief Executive Officer (furnished herewith)
32.2	~~32.2~~	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 by the Chief Financial Officer (furnished herewith)
101.INS	~~101.INS~~	Inline XBRL Instance Document ~~(filed herewith)~~-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	~~101.SCH~~	Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL	~~101.CAL~~	Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF	~~101.DEF~~	Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB	~~101.LAB~~	Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE	~~101.PRE~~	Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

(1)	Incorporated by reference to Exhibits filed with the Registration Statement on Form S-1 filed ~~September 1, 1995, Registration No. 33-96488.~~

September 1, 1995, Registration No. 33-96488. (P: Indicates a filing submitted in paper)

(2)	Incorporated by reference to Exhibit filed with Form 8-K filed September 27, 2006.

(3)	Incorporated by reference to Exhibits filed with Form S-8 filed May 31, 2002.

(4)	Incorporated by reference to Exhibits filed with Form 10-Q for the quarter ended ~~September 30, 2002.~~

September 30, 2002.

(5)	Incorporated by reference to Exhibit filed with Form 10-K for the year ended December 31, 2011.

(6)	Incorporated by reference to Exhibit filed with Form 10-Q for the quarter ended June 30, 2014.

(7)	Incorporated by reference to Exhibit filed with Form 10-Q for the quarter ended June 30, 2021.

(8)	Incorporated by reference to Exhibits filed with Form 8-K filed November 22, 2021.

~~- 65 -~~

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

~~SIGNATURES~~EXHIBIT INDEX

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.~~

	~~Flushing Financial Corporation~~
Exhibit No.		Description
~~Dated:~~ ~~November 6, 2017~~	~~By:~~ ~~/s/John R. Buran~~
	~~John R. Buran~~
	~~President and Chief Executive Officer~~

~~Dated:~~ ~~November 6, 2017~~	~~By:~~ ~~/s/Susan K. Cullen~~
	~~Susan K. Cullen~~
	~~Senior Executive Vice President, Treasurer and~~
	~~Chief Financial Officer~~

~~- 66 -~~

~~FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES~~

~~EXHIBIT INDEX~~

~~Exhibit No.~~		~~Description~~

	3.1 P		Certificate of Incorporation of Flushing Financial Corporation (1)
3.2	~~3.2~~	Certificate of Amendment to Certificate of Incorporation of Flushing Financial Corporation (3)
3.3	~~3.3~~	Certificate of Amendment to Certificate of Incorporation of Flushing Financial Corporation (5)
3.4	~~3.4~~	Certificate of Designations of Series A Junior Participating Preferred Stock of Flushing Financial Corporation (4)
3.5	~~3.5~~	Certificate of Increase of Shares Designated as Series A Junior Participating Preferred Stock of Flushing Financial Corporation (2)
3.6	~~3.6~~	Amended and Restated By-Laws of Flushing Financial Corporation (6)
4.1	~~4.1~~	Indenture dated November 22, 2021, between Flushing Financial Corporation and Wilmington Trust, National Association, as trustee. (8)
4.2		First Supplemental Indenture, dated November 22, 2021, between Flushing Financial Corporation and Wilmington Trust, National Association, as trustee. (8)
4.3		Flushing Financial Corporation has outstanding certain long-term debt. None of such debt exceeds ten percent of Flushing Financial Corporation's total assets; therefore, copies of constituent instruments defining the rights of the holders of such debt are not included as exhibits. Copies of instruments with respect to such long-term debt will be furnished to the Securities and Exchange Commission upon request.
10.1	~~31.1~~	Amended Flushing Financial Corporation 2014 Omnibus Plan (7)
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (filed herewith)
31.2	~~31.2~~	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (filed herewith)
32.1	~~32.1~~	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 by the Chief Executive Officer (furnished herewith)
32.2	~~32.2~~	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 by the Chief Financial Officer (furnished herewith)
101.INS	~~101.INS~~	Inline XBRL Instance Document ~~(filed herewith)~~-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	~~101.SCH~~	Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL	~~101.CAL~~	Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF	~~101.DEF~~	Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB	~~101.LAB~~	Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE	~~101.PRE~~	Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

(1)	Incorporated by reference to Exhibits filed with the Registration Statement on Form S-1 filed ~~September 1, 1995, Registration No. 33-96488. (P: Indicates a filing submitted in paper)~~

September 1, 1995, Registration No. 33-96488. (P: Indicates a filing submitted in paper)

(2)	Incorporated by reference to Exhibit filed with Form 8-K filed September 27, 2006.

(3)	Incorporated by reference to Exhibits filed with Form S-8 filed May 31, 2002.

(4)	Incorporated by reference to Exhibits filed with Form 10-Q for the quarter ended ~~September 30, 2002.~~

September 30, 2002.

(5)	Incorporated by reference to Exhibit filed with Form 10-K for the year ended December 31, 2011.

(6)	Incorporated by reference to Exhibit filed with Form 10-Q for the quarter ended June 30, 2014.

(7)	Incorporated by reference to Exhibit filed with Form 10-Q for the quarter ended June 30, 2021.

(8)	Incorporated by reference to Exhibits filed with Form 8-K filed November 22, 2021.

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FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

SIGNATURES

~~- 67 -~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Flushing Financial Corporation,



Dated:	August 5, 2022	By:	/s/John R. Buran
			John R. Buran
			President and Chief Executive Officer



Dated:	August 5, 2022	By:	/s/Susan K. Cullen
			Susan K. Cullen
			Senior Executive Vice President, Treasurer and
			Chief Financial Officer

-69-

(Dollars in thousands, except share data)	September 30, 2017			December 31, 2016
ASSETS
Cash and due from banks	$	60,161		$	35,857
Securities held-to-maturity:
Mortgage-backed securities (none pledged) (fair value of $7,839 at September 30, 2017)		7,978			-
Other securities (none pledged) (fair value of $21,542 and $35,408 at September 30, 2017 and December 31, 2016, respectively)		22,952			37,735
Securities available for sale:
Mortgage-backed securities (including assets pledged of $94,414 and $145,860 at September 30, 2017 and December 31, 2016, respectively; $1,696 and $2,016 at fair value pursuant to the fair value option at September 30, 2017 and December 31, 2016, respectively)		519,861			516,476
Other securities (including assets pledged of $45,921 and $82,064 at September 30, 2017 and December 31, 2016, respectively; $19,712 and $28,429 at fair value pursuant to the fair value option at September 30, 2017 and December 31, 2016, respectively)		276,698			344,905
Loans:
Multi-family residential		2,236,173			2,178,504
Commercial real estate		1,352,775			1,246,132
One-to-four family ― mixed-use property		556,723			558,502
One-to-four family ― residential		177,578			185,767
Co-operative apartments		7,035			7,418
Construction		15,811			11,495
Small Business Administration		14,485			15,198
Taxi medallion		18,165			18,996
Commercial business and other		674,706			597,122
Net unamortized premiums and unearned loan fees		16,925			16,559
Allowance for loan losses		(25,269	)		(22,229	)
Net loans		5,045,107			4,813,464
Interest and dividends receivable		21,076			20,228
Bank premises and equipment, net		28,389			26,561
Federal Home Loan Bank of New York stock		55,228			59,173
Bank owned life insurance		131,047			132,508
Goodwill		16,127			16,127
Other assets		76,758			55,453
Total assets	$	6,261,382		$	6,058,487

LIABILITIES
Due to depositors:
Non-interest bearing	$	362,509		$	333,163
Interest-bearing:
Certificate of deposit accounts		1,404,555			1,372,115
Savings accounts		323,186			254,283
Money market accounts		991,706			843,370
NOW accounts		1,308,821			1,362,484
Total interest-bearing deposits		4,028,268			3,832,252
Mortgagors' escrow deposits		53,671			40,216
Borrowed funds
Federal Home Loan Bank advances		1,090,989			1,159,190
Subordinated debentures		73,622			73,414
Junior subordinated debentures, at fair value		36,071			33,959
Total borrowed funds		1,200,682			1,266,563
Other liabilities		76,643			72,440
Total liabilities		5,721,773			5,544,634

STOCKHOLDERS' EQUITY
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued)		-			-
Common stock ($0.01 par value; 100,000,000 shares authorized; 31,530,595 shares issued at September 30, 2017 and December 31, 2016; 28,819,891 shares and 28,632,904 shares outstanding at September 30, 2017 and December 31, 2016, respectively)		315			315
Additional paid-in capital		216,929			214,462
Treasury stock, at average cost (2,710,704 shares and 2,897,691 shares at September 30, 2017 and December 31, 2016, respectively)		(51,287	)		(53,754	)
Retained earnings		380,316			361,192
Accumulated other comprehensive loss, net of taxes		(6,664	)		(8,362	)
Total stockholders' equity		539,609			513,853

Total liabilities and stockholders' equity	$	6,261,382		$	6,058,487

	For the three months						For the nine months
	ended September 30,						ended September 30,
(Dollars in thousands, except per share data)	2017			2016			2017			2016

Interest and dividend income
Interest and fees on loans	$	53,318		$	49,181		$	155,834		$	145,152
Interest and dividends on securities:
Interest		5,850			6,173			18,377			19,275
Dividends		30			121			274			360
Other interest income		121			49			403			191
Total interest and dividend income		59,319			55,524			174,888			164,978

Interest expense
Deposits		10,655			8,520			29,145			24,590
Other interest expense		5,623			5,291			15,696			15,653
Total interest expense		16,278			13,811			44,841			40,243

Net interest income		43,041			41,713			130,047			124,735
Provision for loan losses		3,266			-			3,266			-
Net interest income after provision for loan losses		39,775			41,713			126,781			124,735

Non-interest income
Banking services fee income		885			826			2,773			2,775
Net (loss) gain on sale of securities		(186	)		-			(186	)		2,363
Net gain on sale of loans		152			240			396			584
Net gain on sale of buildings		-			-			-			33,814
Net loss from fair value adjustments		(1,297	)		(823	)		(2,834	)		(2,925	)
Federal Home Loan Bank of New York stock dividends		740			665			2,206			1,870
Gain from life insurance proceeds		238			47			1,405			458
Bank owned life insurance		816			707			2,418			2,096
Other income		313			191			1,120			1,075
Total non-interest income		1,661			1,853			7,298			42,110

Non-interest expense
Salaries and employee benefits		15,310			14,795			47,838			45,024
Occupancy and equipment		2,502			2,576			7,652			7,298
Professional services		1,763			1,730			5,678			5,907
FDIC deposit insurance		499			536			1,328			2,380
Data processing		1,349			939			3,873			3,229
Depreciation and amortization		1,173			1,169			3,493			3,263
Other real estate owned/foreclosure expense		121			273			376			831
Prepayment penalty on borrowings		-			-			-			2,082
Other operating expenses		3,249			4,259			11,357			13,214
Total non-interest expense		25,966			26,277			81,595			83,228

Income before income taxes		15,470			17,289			52,484			83,617

Provision for income taxes
Federal		4,680			5,568			15,005			25,518
State and local		611			1,087			2,315			7,469
Total taxes		5,291			6,655			17,320			32,987

Net income	$	10,179		$	10,634		$	35,164		$	50,630


Basic earnings per common share	$	0.35		$	0.37		$	1.21		$	1.75
Diluted earnings per common share	$	0.35		$	0.37		$	1.21		$	1.75
Dividends per common share	$	0.18		$	0.17		$	0.54		$	0.51

	For the three months ended						For the nine months ended
	September 30,						September 30,
(In thousands)	2017			2016			2017			2016

Net income	$	10,179		$	10,634		$	35,164		$	50,630

Other comprehensive income (loss), net of tax:
Amortization of actuarial losses, net of taxes of ($64) and ($82) for the three months ended September 30, 2017 and 2016, respectively and of ($192) and ($247) for the nine months ended September 30, 2017 and 2016, respectively.		88			110			262			329
Amortization of prior service credits, net of taxes of $5 and $4 for the three months ended September 30, 2017 and 2016, respectively and $14 for each of the nine months ended September 30, 2017 and 2016.		(7	)		(7	)		(20	)		(20	)
Reclassification adjustment for net gains included in income, net of taxes of ($78) for the three and nine months ended September 30, 2017 and $1,013 for the nine months ended September 30, 2016.		108			-			108			(1,350	)
Net unrealized (losses) gains on securities, net of taxes of $241 and $2,177 for the three months ended September 30, 2017 and 2016, respectively and of ($1,006) and ($5,103) for the nine months ended September 30, 2017 and 2016, respectively.		(333	)		(2,942	)		1,416			6,852
Net unrealized gain (loss) on cash flow hedges, net of taxes of ($41) and $49 for the three and nine months ended September 30, 2017, respectively.		56			-			(68	)		-


Total other comprehensive income (loss), net of tax		(88	)		(2,839	)		1,698			5,811

Comprehensive income	$	10,091		$	7,795		$	36,862		$	56,441

(Dollars in thousand, except per share data)	Total			Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2016	$	513,853		$	315	$	214,462		$	361,192		$	(53,754	)	$	(8,362	)
Net Income		35,164			-		-			35,164			-			-
Award of common shares released from Employee Benefit Trust (114,754 shares)		2,433			-		2,433			-			-			-
Vesting of restricted stock unit awards (284,595 shares)		-			-		(5,052	)		(271	)		5,323			-
Exercise of stock options (4,400 shares)		-			-		(6	)		(40	)		46			-
Stock-based compensation expense		5,092			-		5,092			-			-			-
Purchase of treasury shares (10,000 shares)		(278	)		-		-			-			(278	)		-
Repurchase of shares to satisfy tax obligation (90,779 shares)		(2,624	)		-		-			-			(2,624	)		-
Dividends on common stock ($0.54 per share)		(15,729	)		-		-			(15,729	)		-			-
Other comprehensive income		1,698			-		-			-			-			1,698
Balance at September 30, 2017	$	539,609		$	315	$	216,929		$	380,316		$	(51,287	)	$	(6,664	)

Balance at December 31, 2015	$	473,067		$	315	$	210,652		$	316,530		$	(48,868	)	$	(5,562	)
Net Income		50,630			-		-			50,630			-			-
Award of common shares released from Employee Benefit Trust (138,519 shares)		1,984			-		1,984			-			-			-
Vesting of restricted stock unit awards (245,311 shares)		-			-		(4,049	)		(397	)		4,446			-
Exercise of stock options (41,670 shares)		132			-		15			(34	)		151			-
Stock-based compensation expense		4,416			-		4,416			-			-			-
Stock-based income tax benefit		470			-		470			-			-			-
Purchase of treasury shares (378,695 shares)		(7,492	)		-		-			-			(7,492	)		-
Repurchase of shares to satisfy tax obligation (77,994 shares)		(1,610	)		-		-			-			(1,610	)		-
Dividends on common stock ($0.51 per share)		(14,787	)		-		-			(14,787	)		-			-
Other comprehensive income		5,811			-		-			-			-			5,811
Balance at September 30, 2016	$	512,621		$	315	$	213,488		$	351,942		$	(53,373	)	$	249

	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
	(In thousands)
Securities held-to-maturity:
Municipals	$	22,952	$	21,542	$	-	$	1,410

Total other securities		22,952		21,542		-		1,410

FNMA		7,978		7,839		-		139

Total mortgage-backed securities		7,978		7,839		-		139
Total	$	30,930	$	29,381	$	-	$	1,549

	At December 31, 2016
			Total				Less than 12 months				12 months or more
					Unrealized				Unrealized				Unrealized
	Count		Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
			(Dollars in thousands)
Held-to-maturity securities

Municipals		1	$	19,538	$	2,327	$	19,538	$	2,327	$	-	$	-
Total		1	$	19,538	$	2,327	$	19,538	$	2,327	$	-	$	-

Available for sale securities
Corporate		14	$	102,910	$	7,090	$	28,476	$	1,524	$	74,434	$	5,566
Collateralized loan obligations		4		16,047		64		16,047		64		-		-
Other		1		298		2		-		-		298		2
Total		19		119,255		7,156		44,523		1,588		74,732		5,568

REMIC and CMO		35		222,807		2,873		208,827		2,268		13,980		605
FNMA		18		80,924		1,605		74,972		1,250		5,952		355
FHLMC		1		3,993		85		3,993		85		-		-
Total mortgage-backed securities		54		307,724		4,563		287,792		3,603		19,932		960
Total		73	$	426,979	$	11,719	$	332,315	$	5,191	$	94,664	$	6,528

	For the three months ended September 30,					For the nine months ended September 30,
	2017			2016		2017			2016
	(In thousands)
Gross gains from the sale of securities	$	401		$	-	$	401		$	2,370
Gross losses from the sale of securities		(587	)		-		(587	)		(7	)

Net (losses) gains from the sale of securities	$	(186	)	$	-	$	(186	)	$	2,363

	For the nine months ended
	September 30, 2017					September 30, 2016
(Dollars in thousands)	Number		Balance		Modification description	Number		Balance		Modification description

One-to-four family - residential		-	$	-			2	$	263	Received below market interest rates and the amortizations were extended
Commercial business and other		-		-			2		739	One received an amortization extension and one received a below market interest rate and an amortization extension
Taxi medallion		9		5,595	All loans amortizations were extended, with three loans also receiving a below market interest rate		-		-
Total		9	$	5,595			4	$	1,002

	September 30, 2017				December 31, 2016
(Dollars in thousands)	Number of contracts		Recorded investment		Number of contracts		Recorded investment

Multi-family residential		9	$	2,533		9	$	2,572
Commercial real estate		2		2,031		2		2,062
One-to-four family - mixed-use property		5		1,765		5		1,800
One-to-four family - residential		3		577		3		591
Taxi medallion		21		15,074		12		9,735
Commercial business and other		2		517		2		675
Total performing troubled debt restructured		42	$	22,497		33	$	17,435

	September 30, 2017				September 30, 2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential	$	2,451	$	12	$	4,639	$	23
Commercial real estate		5,142		60		4,661		55
One-to-four family mixed-use property		5,269		45		8,234		37
One-to-four family residential		10,023		29		10,204		19
Co-operative apartments		-		-		-		-
Construction		890		15		285		-
Non-mortgage loans:
Small Business Administration		260		5		404		13
Taxi medallion		3,177		19		5,053		52
Commercial business and other		1,254		6		2,211		45

Total loans with no related allowance recorded		28,466		191		35,691		244

With an allowance recorded:
Mortgage loans:
Multi-family residential		2,242		28		2,279		29
Commercial real estate		2,040		24		2,080		24
One-to-four family mixed-use property		1,445		16		2,567		35
One-to-four family residential		422		4		435		4
Co-operative apartments		-		-		-		-
Construction		-		-		-		-
Non-mortgage loans:
Small Business Administration		-		-		397		1
Taxi medallion		14,716		73		6,459		17
Commercial business and other		385		5		448		7

Total loans with an allowance recorded		21,250		150		14,665		117

Total Impaired Loans:
Total mortgage loans	$	29,924	$	233	$	35,384	$	226

Total non-mortgage loans	$	19,792	$	108	$	14,972	$	135

	Shares			Weighted-Average Grant-Date Fair Value

Non-vested at December 31, 2016		488,779		$	18.99
Granted		276,900			28.21
Vested		(244,762	)		21.93
Forfeited		(22,860	)		23.61
Non-vested at September 30, 2017		498,057		$	22.46

Vested but unissued at September 30, 2017		244,077		$	22.67

	Three months ended September 30,						Nine months ended September 30,
(In thousands)	2017			2016			2017			2016

Employee Pension Plan:
Interest cost	$	216		$	226		$	648		$	678
Amortization of unrecognized loss		174			201			523			604
Expected return on plan assets		(348	)		(348	)		(1,044	)		(1,044	)
Net employee pension expense	$	42		$	79		$	127		$	238

Outside Director Pension Plan:
Service cost	$	10		$	11		$	30		$	33
Interest cost		23			24			69			72
Amortization of unrecognized gain		(23	)		(21	)		(69	)		(65	)
Amortization of past service liability		10			9			30			30
Net outside director pension expense	$	20		$	23		$	60		$	70

Other Postretirement Benefit Plans:
Service cost	$	79		$	90		$	237		$	270
Interest cost		76			80			228			240
Amortization of unrecognized loss		-			12			-			36
Amortization of past service credit		(21	)		(22	)		(64	)		(64	)
Net other postretirement expense	$	134		$	160		$	401		$	482

							Gross Amounts Not Offset in the Consolidated Statement of Condition
(In thousands)	Gross Amount of Recognized Liabilities		Gross Amount Offset in the Statement of Condition		Net Amount of Liabilities Presented in the Statement of Condition		Financial Instruments		Cash Collateral Pledged		Net Amount

Interest rate swaps	$	4,645	$	-	$	4,645	$	1,105	$	-	$	3,540

	For the three months ended September 30,						For the nine months ended September 30,
(In thousands)	2017			2016			2017			2016
Federal:
Current	$	6,703		$	6,474		$	16,308		$	26,362
Deferred		(2,023	)		(906	)		(1,303	)		(844	)
Total federal tax provision		4,680			5,568			15,005			25,518
State and Local:
Current		1,398			1,492			2,817			7,853
Deferred		(787	)		(405	)		(502	)		(384	)
Total state and local tax provision		611			1,087			2,315			7,469

Total income tax provision	$	5,291		$	6,655		$	17,320		$	32,987

	Unrealized Gains (Losses) on Available for Sale Securities			Unrealized Gains (Losses) on Cash flow Hedges			Defined Benefit Pension Items			Total
	(In thousands)

Beginning balance, net of tax	$	(2,110	)	$	(124	)	$	(4,342	)	$	(6,576	)
Other comprehensive income before reclassifications, net of tax		(333	)		56			-			(277	)

Amounts reclassified from accumulated other comprehensive income, net of tax		108			-			81			189

Net current period other comprehensive income, net of tax		(225	)		56			81			(88	)

Ending balance, net of tax	$	(2,335	)	$	(68	)	$	(4,261	)	$	(6,664	)

	Projected Percentage Change In
	Net Interest	Net Portfolio	Net Portfolio
Change in Interest Rate	Income	Value	Value Ratio
-200 Basis points	5.03%	11.57%	12.52%
-100 Basis points	4.63	3.84	12.04
Base interest rate	0.00	0.00	11.89
+100 Basis points	-6.05	-8.76	11.18
+200 Basis points	-12.18	-15.24	10.66

	For the nine months ended September 30,
	2017								2016
	Average				Yield/				Average				Yield/
	Balance		Interest		Cost				Balance		Interest		Cost
Assets	(Dollars in thousands)
Interest-earning assets:
Mortgage loans, net	$	4,287,674	$	135,429		4.21	%		$	3,972,502	$	129,200		4.34	%
Other loans, net		667,749		20,405		4.07				575,652		15,952		3.69
Total loans, net ⁽¹⁾		4,955,423		155,834		4.19				4,548,154		145,152		4.26
Taxable securities:
Mortgage-backed securities		527,890		10,122		2.56				603,994		11,231		2.48
Other securities		215,453		6,220		3.85				241,821		6,038		3.33
Total taxable securities		743,343		16,342		2.93				845,815		17,269		2.72
Tax-exempt securities: ⁽²⁾
Other securities		145,058		2,309		2.12				140,889		2,366		2.24
Total tax-exempt securities		145,058		2,309		2.12				140,889		2,366		2.24
Interest-earning deposits and federal funds sold		66,042		403		0.81				61,484		191		0.41
Total interest-earning assets		5,909,866		174,888		3.95				5,596,342		164,978		3.93
Other assets		299,139								287,111
Total assets	$	6,209,005							$	5,883,453

Liabilities and Equity
Interest-bearing liabilities:
Deposits:
Savings accounts	$	288,376		1,289		0.60			$	262,382		910		0.46
NOW accounts		1,474,572		7,006		0.63				1,539,050		5,863		0.51
Money market accounts		882,213		5,487		0.83				514,626		2,277		0.59
Certificate of deposit accounts		1,396,583		15,257		1.46				1,416,811		15,455		1.45
Total due to depositors		4,041,744		29,039		0.96				3,732,869		24,505		0.88
Mortgagors' escrow accounts		60,895		106		0.23				55,481		85		0.20
Total deposits		4,102,639		29,145		0.95				3,788,350		24,590		0.87
Borrowed funds		1,170,203		15,696		1.79				1,233,571		15,653		1.69
Total interest-bearing liabilities		5,272,842		44,841		1.13				5,021,921		40,243		1.07
Non interest-bearing deposits		340,221								296,321
Other liabilities		67,967								73,594
Total liabilities		5,681,030								5,391,836
Equity		527,975								491,617
Total liabilities and equity	$	6,209,005							$	5,883,453

Net interest income / net interest rate spread			$	130,047		2.82	%				$	124,735		2.86	%

Net interest-earning assets / net interest margin	$	637,024				2.93	%	��	$	574,421				2.97	%

Ratio of interest-earning assets to interest-bearing liabilities						1.12	X							1.11	X

(In thousands)	September 30, 2017		June 30, 2017		December 31, 2016
Accrual Status:
Multi-family residential	$	2,531	$	2,546	$	2,572
Commercial real estate		2,031		2,037		2,062
One-to-four family - mixed-use property		1,765		1,778		1,800
One-to-four family - residential		577		581		591
Taxi medallion		10,965		10,486		9,735
Commercial business and other		368		381		420
Total		18,237		17,809		17,180


Non-Accrual Status:
Taxi medallion		4,109		3,384		-
Commercial business and other		150		185		255
Total		4,259		3,569		255

Total performing troubled debt restructured	$	22,496	$	21,378	$	17,435

June 30, 2022

(Dollars in thousands)

of contracts

Commercial business and other

Total non-performing