Flushing Financial (US:FFIC)2021-08-03 16:00PART I — FINANCIAL INFORMATION This section details Flushing Financial Corporation's unaudited consolidated financial statements and management's analysis for the period ended June 30, 2021 Financial Statements This section presents Flushing Financial Corporation's unaudited consolidated financial statements as of June 30, 2021, including balance sheets, income statements, cash flows, and detailed notes Consolidated Statements of Financial Condition Total assets grew to $8.16 billion as of June 30, 2021, up from $7.98 billion at year-end 2020, driven by increases in securities available for sale and net loans Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $8,159,345 | $7,976,394 | | Net Loans | $6,676,136 | $6,659,521 | | Securities (AFS & HTM) | $879,335 | $702,292 | | Total Liabilities | $7,504,178 | $7,357,397 | | Total Deposits | $6,298,790 | $6,090,733 | | Borrowed Funds | $971,827 | $1,020,895 | | Total Stockholders' Equity | $655,167 | $618,997 | Consolidated Statements of Income For the three months ended June 30, 2021, net income was $19.3 million, a slight increase from $18.3 million in the prior-year period Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $61,039 | $48,717 | $121,931 | $89,543 | | (Benefit) Provision for Credit Losses | $(1,598) | $9,619 | $1,222 | $16,797 | | Net Income | $19,258 | $18,272 | $38,297 | $16,882 | | Diluted EPS | $0.61 | $0.63 | $1.21 | $0.58 | Consolidated Statements of Cash Flows For the six months ended June 30, 2021, the company experienced a net cash outflow of $11.4 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $35,975 | $29,893 | | Net Cash used in Investing Activities | $(197,804) | $(87,413) | | Net Cash from Financing Activities | $150,412 | $92,487 | | Net (Decrease) Increase in Cash | $(11,417) | $34,967 | Notes to Consolidated Financial Statements This section provides detailed disclosures on accounting policies, the impact of COVID-19, portfolio breakdowns, credit losses, fair value, derivatives, and regulatory capital - In response to COVID-19, the company had 69 active loan forbearances with an aggregate balance of $245.8 million as of June 30, 2021, a decrease from 134 forbearances with a balance of $364.4 million at December 31, 202030 - The company actively participated in the Paycheck Protection Program (PPP), closing $138.7 million in loans during Q2 2021, with $69.2 million forgiven by the SBA during the same period32 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance for the three and six months ended June 30, 2021, highlighting net interest income, portfolio changes, credit quality, and capital adequacy Comparison of Operating Results For Q2 2021, net income rose to $19.3 million from $18.3 million in Q2 2020, driven by a $12.3 million increase in net interest income - For Q2 2021, net interest income increased by 25.3% YoY to a record $61.0 million, driven by a 27 basis point expansion in net interest margin to 3.14% and a $360.2 million growth in net interest-earning assets207216 - A benefit for credit losses of $1.6 million was recorded in Q2 2021, compared to a provision of $9.6 million in Q2 2020, reflecting improving economic conditions217 - For the six months ended June 30, 2021, net income increased 126.9% YoY to $38.3 million, and diluted EPS grew 108.6% to $1.21222 Financial Condition As of June 30, 2021, total assets reached $8.16 billion, a 2.3% increase from year-end 2020, supported by a $208.1 million increase in deposits - Total assets increased by $183.0 million (2.3%) to $8,159.3 million in the first six months of 2021235 - Loan originations and purchases were $647.3 million for the first six months of 2021, a 21.6% increase from the prior year period235 - Non-performing assets decreased by 16.7% to $17.6 million, representing 0.22% of total assets at June 30, 2021237 - Total deposits increased by $208.1 million (3.4%) during the first six months of 2021, driven by growth in non-maturity deposits, while brokered deposits decreased by $579.4 million242 Allowance for Credit Losses The total Allowance for Credit Losses (ACL) stood at $45.1 million as of June 30, 2021, with the ACL for loans at 0.64% of gross loans Allowance for Credit Losses Activity - Six Months Ended June 30, 2021 (in thousands) | Component | Beginning Balance (Dec 31, 2020) | Provision (Benefit) | Net Charge-offs / Recoveries | Ending Balance (June 30, 2021) | | :--- | :--- | :--- | :--- | :--- | | ACL - Loans | $45,153 | $1,284 | $(3,767) | $42,670 | | ACL - HTM Securities | $907 | $(63) | $0 | $844 | | ACL - Off-Balance Sheet | $1,815 | $(245) | $0 | $1,570 | | Total ACL | $47,875 | $976 | $(3,767) | $45,084 | - The ratio of ACL for loans to gross loans was 0.64% at June 30, 2021, compared to 0.61% at June 30, 2020269 Quantitative and Qualitative Disclosures About Market Risk This section details the company's management of interest rate risk through its Asset Liability Committee, assessing potential impacts on net interest income and net portfolio value Interest Rate Shock Analysis as of June 30, 2021 | Change in Interest Rate | Projected % Change in Net Interest Income | Projected % Change in Net Portfolio Value | | :--- | :--- | :--- | | +200 Basis points | (14.08)% | (7.45)% | | +100 Basis points | (7.02)% | (3.29)% | | -100 Basis points | 2.32% | (14.45)% | Controls and Procedures Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of June 30, 2021 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2021271 PART II — OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and a comprehensive list of exhibits for the reporting period Legal Proceedings The company is involved in various lawsuits in the ordinary course of business, with management expecting no material adverse effect on financial condition - Management believes that the resolution of various ongoing lawsuits will not result in any material adverse effect on the Company's financial condition, results of operations, or cash flows273 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes from the risk factors disclosed in the Company's annual report on Form 10-K for the year ended December 31, 2020 were reported274 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any shares of its common stock during the quarter ended June 30, 2021, with 284,806 shares remaining available for repurchase - The Company did not repurchase any shares of its common stock during the second quarter of 2021275 - As of June 30, 2021, 284,806 shares remained available for repurchase under the company's stock repurchase program275 Exhibits This section provides an index of all exhibits filed as part of the quarterly report, including certifications by the CEO and CFO, and XBRL data files