Flushing Financial Corp. (FFIC) filed Quarterly Report for the period ended 2009-09-30.
FLUSHING FINANCIAL CORP. is a unitary savings and loan holding company, which, under existing laws, is generally not restricted as to types of business activities in which it may engage, provided that the subsidiary, continues to be a qualified thrift lender. Under the regulations of the Office of Thrift Supervision, the subsidiary is a qualified thrift lender if its ratio of qualified thrift investments to portfolio assets is 65% or more, on a monthly average basis in nine of every 12 months. Flushing Financial Corp. has a market cap of $324.9 million; its shares were traded at around $10.79 with a P/E ratio of 10.8 and P/S ratio of 1.5. The dividend yield of Flushing Financial Corp. stocks is 4.8%. Flushing Financial Corp. had an annual average earning growth of 3.2% over the past 5 years.
Highlight of Business Operations:
At September 30, 2009, total assets were $4,176.8 million, an increase of $227.3 million, or 5.8%, from $3,949.5 million at December 31, 2008. Total loans, net increased $198.9 million, or 6.7%, during the nine months ended September 30, 2009 to $3,159.6 million from $2,960.7 million at December 31, 2008. Loan originations and purchases were $388.9 million for the nine months ended September 30, 2009, a decrease of $140.1 million from $529.0 million for the nine months ended September 30, 2008, as loan demand has declined due to the current economic environment. At September 30, 2009, loan applications in process totaled $183.6 million, compared to $274.1 million at September 30, 2008 and $185.4 million at December 31, 2008. During the nine months ended September 30, 2009, cash and due from banks increased $94.2 million to $124.6 million from $30.4 million at December 31, 2008. The increase is primarily due to $90.5 million received from the issuance of 8.3 million shares of Flushing Financial Corporation common stock through a public offering completed in September.
Interest Income. Total interest and dividend income increased $11.6 million, or 7.2%, to $172.6 million for the nine months ended September 30, 2009 from $161.0 million for the nine months ended September 30, 2008. The increase in interest income is attributed to the growth in the average balance of interest-earning assets, which increased $555.7 million to $3,867.2 million, partially offset by a 53 basis point decline in the yield of interest-earning assets to 5.95% for the nine months ended September 30, 2009 from 6.48% for the nine months ended September 30, 2008. The decline in the yield of interest-earning assets was primarily due to a 42 basis point reduction in the yield of the loan portfolio combined with a $315.5 million increase in the combined average balances of the lower yielding securities portfolio and interest-earning deposits, with each having a lower yield than the average yield of total interest-earning assets. The 42 basis point reduction in the yield of the loan portfolio to 6.32% for the nine months ended September 30, 2009 from 6.74% for the nine months ended September 30, 2008 was primarily due to a decline in prepayment penalty income, adjustable rate loans adjusting down as rates have continued to decline, and an increase in non-accrual loans for which we do not accrue interest income. The yield on the mortgage loan portfolio declined 36 basis points to 6.38% for the nine months ended September 30, 2009 from 6.74% for the nine months ended September 30, 2008. The yield on the mortgage loan portfolio, excluding prepayment penalty income, declined 26 basis points to 6.34% for the nine months ended September 30, 2009 from 6.60% for the nine months ended September 30, 2008. The decline in the yield of interest-earning assets was partially offset by an increase of $240.1 million in the average balance of the loan portfolio to $3,053.2 million for the nine months ended September 30, 2009.
Interest Expense. Interest expense decreased $7.5 million, or 7.8%, to $88.5 million for the nine months ended September 30, 2009 from $96.1 million for the nine months ended September 30, 2008. The decrease in interest expense is attributed to an 80 basis point decline in the cost of interest-bearing liabilities to 3.24% for the nine months ended September 30, 2009 from 4.04% for the nine months ended September 30, 2008. The decline in the cost of interest-bearing liabilities was partially offset by a $466.9 million increase in the average balance of interest-bearing liabilities to $3,639.6 million for the nine months ended September 30, 2009 from $3,172.7 million for the nine months ended September 30, 2008. The decrease in the cost of interest-bearing liabilities is primarily attributed to the FOMC lowering the overnight interest rate throughout 2008, and maintaining the targeted Fed Funds rate in a range of 0.00% to 0.25% during the nine months ended September 30, 2009. This has allowed the Bank to reduce the rates it pays on its deposit products. The cost of certificates of deposit, money market accounts, savings accounts and NOW accounts decreased 88 basis points, 159 basis points, 77 basis points and 83 basis points, respectively, for the nine months ended September 30, 2009 compared to the same period in 2008. The cost of due to depositors was also reduced due to the Bank s focus on increasing lower-costing core deposits. The combined average balances of lower-costing savings, money market and NOW accounts increased a total of $299.3 million for the nine months ended September 30, 2009 compared to the same period in 2008, while the average balance of higher-costing certificates of deposits increased $217.7 million for the nine months ended September 30, 2009 compared to the comparable period in 2008. This resulted in a decrease in the cost of due to depositors of 103 basis points to 2.71% for the nine months ended September 30, 2009 from 3.74% for the nine months ended September 30, 2008. The increase in deposits allowed the Bank to reduce its reliance on borrowed funds, as the average balance of borrowed funds declined $51.6 million to $1,057.9 million for the nine months ended September 30, 2009 from $1,109.5 million for the nine months ended September 30, 2008, with the cost of borrowed funds decreasing seven basis points to 4.63% for the nine months ended September 30, 2009 from 4.70% for the nine months ended September 30, 2008.
Non-Interest Income. Non-interest income increased $7.5 million for the nine months ended September 30, 2009 to $11.6 million, as compared to $4.1 million for the nine months ended September 30, 2008. The net gain recorded from financial assets and financial liabilities carried at fair value decreased $14.6 million to a net gain of $4.0 million for the nine months ended September 30, 2009 compared to a net gain of $18.6 million for the nine months ended September 30, 2008. The $14.6 million decline in fair value was more than offset by a $25.2 million decline in other-than-temporary impairment charges recorded in the nine month period ended September 30, 2009, as a $1.1 million other-than-temporary impairment charge was recorded on a collateralized mortgage obligation for the nine months ended September 30, 2009 as compared to a $26.3 million other-than-temporary impairment charge of the Company s investments in Freddie Mac and Fannie Mae preferred stocks recorded in the comparable period in 2008. The nine months ended September 30, 2008 also included income of $2.4 million representing a partial recovery of a loss sustained in 2002 on a WorldCom, Inc. senior note. This amount was received as a result of a class action litigation settlement.
Non-Interest Expense. Non-interest expense was $49.0 million for the nine months ended September 30, 2009, an increase of $7.9 million, or 19.2%, from $41.2 million for the nine months ended September 30, 2008. Employee salary and benefits increased $2.2 million, which is primarily attributed to the growth of the Bank, including one new branch and the expansion of the collections department, and increased costs for postretirement benefits. Occupancy and equipment, professional services, and data processing increased $0.1 million, $0.3 million and $0.3 million, respectively, primarily due to the growth of the Bank. Other operating expense increased $0.4 million primarily due an increase in foreclosure expense as non-performing loans have increased from the prior year period. FDIC insurance increased $4.4 million compared to the comparable prior year period, as the FDIC raised the deposit insurance premiums during 2009, and a $2.0 million special assessment was levied during the three months ended June 30, 2009 by the FDIC to partially replenish the deposit insurance fund. The efficiency ratio was 53.4% and 55.7% for the nine month periods ended September 30, 2009 and 2008, respectively.
Assets. At September 30, 2009, total assets were $4,176.8 million, an increase of $227.3 million, or 5.8%, from $3,949.5 million at December 31, 2008. Total loans, net increased $198.9 million, or 6.7%, during the nine months ended September 30, 2009 to $3,159.6 million from $2,960.7 million at December 31, 2008. Loan originations and purchases were $388.9 million for the nine months ended September 30, 2009, a decrease of $140.1 million from $529.0 million for the nine months ended September 30, 2008, as loan demand has declined due to the current economic environment. At September 30, 2009, loan applications in process totaled $183.6 million, compared to $274.1 million at September 30, 2008 and $185.4 million at December 31, 2008. The following table shows loan originations and purchases for the periods indicated:
FFIC is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Irving Kahn of Kahn Brothers & Company Inc..
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