Flushing Financial Corporation Reports 2006 Second Quarter and First Half Results

Flushing Financial Corporation (the "Company") (NASDAQ: FFIC), the parent holding company for Flushing Savings Bank, FSB (the "Bank"), today announced its financial results for the three and six months ended June 30, 2006.

For the second quarter ended June 30, 2006, diluted earnings per share were $0.30, a decrease of $0.03, or 9.1%, from the $0.33 earned in the comparable quarter a year ago. Net income for the second quarter ended June 30, 2006 was $5.4 million, a decrease of $0.5 million, or 8.3%, from the $5.9 million earned in the second quarter ended June 30, 2005.

For the first half of 2006, diluted earnings per share were $0.63, a decrease of $0.03, or 4.5% from the $0.66 earned in the first half of 2005. Net income for the first half of 2006 was $11.3 million, a decrease of $0.5 million, or 4.6%, from the $11.9 million earned in the first half of 2005.

John R. Buran, President and Chief Executive Officer, stated: "The challenging interest rate environment we have faced for the past year continued during the second quarter of 2006. The Federal Reserve raised the overnight interest rate twice during the quarter to 5.25%, making it seventeen consecutive meetings at which they have raised this key rate. Longer-term rates have not increased at the same pace, causing a flat to inverted yield curve during the quarter.

"Given the uncertainty of the continued duration of the Fed's tightening of interest rates, we have focused on originating loans with yields that we believe will be beneficial to the long term profitability of the Company. We have slowed deposit growth as the premium for leveraging the balance sheet is limited in this environment. We have continued to fund loans through the reduction of our lower yielding securities portfolio. This has resulted in slower balance sheet growth. However, we believe this will help us limit the decline in our interest rate margin.

"The acquisition of Atlantic Liberty Financial Corporation was completed on June 30, 2006 through the issuance of 1.6 million shares of common stock and payment of $14.7 million in cash to Atlantic Liberty's stockholders. This acquisition increased our assets by $170.8 million and added two branches in Brooklyn in very attractive commercial markets. We believe our larger size and greater breadth of product offerings will enable us to provide an enhanced level of service to these markets.

"We originated $140.5 million in loans for the quarter, lowering our participation in product types where we view yields to be low given the uncertainties in the intermediate term interest rate environment. We originated of $64.1 million of multi-family residential and one-to-four family mixed-use property mortgage loans during the quarter. We also realized continued growth in our commercial real estate mortgage loan portfolio, originating $32.1 million of these loans during the quarter. As a result, loan growth, excluding the acquisition of Atlantic Liberty, was $57.4 million. At the end of the quarter, excluding the loans obtained in the Atlantic Liberty acquisition, our loan portfolio exceeded $2.0 billion. In addition, the yield on our loan portfolio, excluding prepayment penalty income, increased 4 basis points in the second quarter of 2006 from the first quarter of 2006.

"As we continue to evolve into a more 'commercial-like' banking institution, business development efforts have focused on developing deposit relationships with our commercial loan customers. We have accelerated our initiative in business banking with the hiring of several commercial bankers, including our new chief operating officer and a senior vice president of business banking.

"Total assets increased $287.0 million during the year, or 12.2%, to $2,640.2 million at June 30, 2006. This growth includes $170.8 million in assets obtained in the Atlantic Liberty merger, with the balance of the increase in the loan portfolio, which was funded with deposit growth and reductions in the lower-yielding securities portfolios. As we have grown the loan portfolio, we have continued to maintain strong asset quality.

"We have continued to grow our asset size while maintaining a strong capital position and focusing on shareholder value initiatives. This allowed us to maintain our quarterly dividend at $0.11 per common share in the second quarter of 2006, up 10% from the comparable quarter in 2005.

"We remain committed to structured and orderly growth, the continued expansion of the financial services we offer to our customers, and building a strong banking franchise in the multicultural communities we serve. Towards this end, we opened a new branch office along a busy retail strip in Bayside, Queens, in May 2006 and plan to open two branches in the first quarter of 2007. In the second half of 2006, we are planning the introduction of an internet banking division to capitalize on the growing use of the internet. We anticipate that this initiative will allow us to further reduce our reliance on wholesale borrowings. We will continue to focus on the origination of higher-yielding one-to-four family mixed-use property mortgage loans, multi-family residential mortgage loans, and commercial real estate loans, the enhanced integration of our deposit-gathering and lending efforts, and the expansion of our relationships with business banking customers."

Earnings Summary - Three Months Ended June 30, 2006

Net interest income for the three months ended June 30, 2006 was $16.7 million, a decrease of $0.5 million, or 2.9% from $17.2 million for the three months ended June 30, 2005. An increase in the average balance of interest-earning assets of $250.4 million, to $2,326.9 million, was offset by a decrease in the net interest spread of 48 basis points to 2.62% for the quarter ended June 30, 2006 from 3.10% for the comparable period in 2005. The yield on interest-earning assets increased 19 basis points to 6.45% for the three months ended June 30, 2006 from 6.26% in the three months ended June 30, 2005. However, this was more than offset by an increase in the cost of funds of 67 basis points to 3.83% for the three months ended June 30, 2006 from 3.16% for the comparable prior year period.

The increase in the yield of interest-earning assets is primarily due to an increase of $304.3 million in the average balance of the higher-yielding loan portfolio to $1,974.2 million, combined with a $74.8 million decrease in the average balance of the lower-yielding securities portfolios. The yield on the mortgage loan portfolio increased 2 basis points to 6.79% for the three months ended June 30, 2006 from 6.77% for the three months ended June 30, 2005. This increase is due to the average rate on new loans originated during the first half of 2006 being above the average rate on both the loan portfolio and loans which were paid-in-full during the period. In an effort to increase the yield on interest-earning assets, we continued to fund a portion of the growth in the higher-yielding mortgage loan portfolio through repayments received on the lower-yielding securities portfolio. The yield on the mortgage loan portfolio, excluding prepayment penalty income, increased 4 basis points for the three months ended June 30, 2006 compared to the three months ended March 31, 2006.

The increase in the cost of interest-bearing liabilities is primarily attributed to the Federal Reserve increasing overnight rates for seventeen consecutive meetings, which has resulted in an increase in our cost of funds. Certificate of deposits, savings accounts and money market accounts increased 72 basis points, 88 basis points and 134 basis points, respectively, for the three months ended June 30, 2006 compared to the three months ended June 30, 2005, resulting in an increase in the cost of customer deposits of 94 basis points for the three months ended June 30, 2006 compared to the three months ended June 30, 2005. The cost of borrowed funds also increased 35 basis points to 4.62% for the three months ended June 30, 2006 compared to 4.27% for the three months ended June 30, 2005.

The net interest margin decreased 45 basis points to 2.86% for the three months ended June 30, 2006 from 3.31% for the three months ended June 30, 2005. Excluding prepayment penalty income, the net interest margin would have been 2.69% and 3.11% for the three month periods ended June 30, 2006 and 2005, respectively.

The net interest margin for the three months ended June 30, 2006 declined 12 basis points to 2.86%, from 2.98% for the three months ended March 31, 2006. The yield on interest-earning assets increased 6 basis points during the quarter, which was more than offset by the cost of interest-bearing liabilities increasing 20 basis points. Excluding prepayment penalty income, the net interest margin declined 13 basis points to 2.69% for the quarter ended June 30, 2006 from 2.82% for the quarter ended March 31, 2006.

Non-interest income increased $0.7 million, or 39.0%, for the three months ended June 30, 2006 to $2.6 million, as compared to $1.9 million for the quarter ended June 30, 2005. This was attributed to increases of: $0.3 million from loan fees, $0.2 million on the gain on sale of loans, $0.1 million in dividends received on Federal Home Loan Bank of New York ("FHLB-NY") stock and $0.1 in BOLI dividends.

Non-interest expense was $10.4 million for the three months ended June 30, 2006, an increase of $1.0 million, or 11.0%, from $9.4 million for the three months ended June 30, 2005. The increase from the comparable prior year period is primarily attributed to increases of: $0.4 million in employee salary and benefit expenses related to additional employees for product development and stock option expense, $0.3 million in occupancy and equipment costs primarily related to rental expense due to new branch leases, and $0.1 million in data processing expense due to volume increases. Management continues to monitor expenditures resulting in efficiency ratios of 54.0% and 49.2% for three-month periods ended June 30, 2006 and 2005, respectively.

Net income for the three months ended June 30, 2006 was $5.4 million, a decrease of $0.5 million or 8.3%, as compared to $5.9 million for the three months ended June 30, 2005. Diluted earnings per share were $0.30 for the three month period ended June 30, 2006 and $0.33 for the comparable 2005 period.

Return on average equity was 12.18% for the three months ended June 30, 2006 compared to 14.5% for the three months ended June 30, 2005. Return on average assets was 0.9% for the three months ended June 30, 2006 compared to 1.1% for the three months ended June 30, 2005.

Earnings Summary - Six Months Ended June 30, 2006

Net interest income for the six months ended June 30, 2006 was $33.6 million, a decrease of $0.5 million, or 1.3 % from $34.0 million for the six months ended June 30, 2005. An increase in the average balance of interest-earning assets of $272.1 million to $2,297.5 million, was offset by a decrease in the net interest spread of 47 basis points to 2.69% for the six months ended June 30, 2006 from 3.16% for the comparable period in 2005. The yield on interest-earning assets increased 18 basis points to 6.42% for the six months ended June 30, 2006 from 6.24% in the six months ended June 30, 2005. However, this was more than offset by an increase in the cost of funds of 65 basis points to 3.73% for the six months ended June 30, 2006 from 3.08% for the comparable prior year period.

The increase in the yield of interest-earning assets is primarily due to an increase of $335.5 million in the average balance of the higher-yielding loan portfolio to $1,943.4 million, combined with an $81.0 million decrease in the average balance of the lower-yielding securities portfolios. The yield on the mortgage loan portfolio decreased 2 basis points to 6.77% for the six months ended June 30, 2006 from 6.79% for the six months ended June 30, 2005. However, the yield on the mortgage loan portfolio, excluding prepayment penalty income, increased 2 basis points for the six months ended June 30, 2006 compared to the six months ended June 30, 2005. While prepayment penalty income was the same for the six months ended June 30, 2006 and the comparable period in 2005, the growth in the mortgage loan portfolio reduced the effect of this income on the yield. In an effort to increase the yield on interest-earning assets, we continued to fund a portion of the growth in the higher-yielding mortgage loan portfolio through repayments received on the lower-yielding securities portfolio.

The increase in the cost of interest-bearing liabilities is primarily attributed to the Federal Reserve increasing overnight rates for seventeen consecutive meetings, which has resulted in an increase in our cost of funds. The cost of certificate of deposits, savings accounts and money market accounts increased 63 basis points, 91 basis points and 118 basis points, respectively, for the six months ended June 30, 2006 compared to the six months ended June 30, 2005, resulting in an increase in the cost of deposits of 84 basis points for the six months ended June 30, 2006 compared to the six months ended June 30, 2005. The cost of borrowed funds also increased 38 basis points to 4.57% for the six months ended June 30, 2006 compared to the six months ended June 30, 2005.

The net interest margin decreased 44 basis points to 2.92% for the six months ended June 30, 2006 from 3.36% for the six months ended June 30, 2005. Excluding prepayment penalty income, the net interest margin would have been 2.76% and 3.17% for the six month periods ended June 30, 2006 and 2005, respectively.

Non-interest income increased $1.4 million, or 42.0%, for the six months ended June 30, 2006 to $4.8 million, as compared to $3.4 million for the six months ended June 30, 2005. This was attributed to increases of: $0.4 million in miscellaneous loan fees, $0.3 million in dividends received on Federal Home Loan Bank of New York ("FHLB-NY") stock, $0.2 million on the gain on sale of loans held for sale and $0.3 million in other income.

Non-interest expense was $19.8 million for the six months ended June 30, 2006, an increase of $1.9 million, or 10.3%, from $18.0 million for the six months ended June 30, 2005. The increase from the comparable prior year period is primarily attributed to increases of: $0.9 million in employee salary and benefit expenses related to additional employees for product development, of which $0.2 million relates to the expensing of stock options, $0.4 million in occupancy and equipment costs primarily related to increased rental expense due to new branch leases, and $0.2 million in data processing expense due to volume increases. Management continues to monitor expenditures resulting in efficiency ratios of 51.8% and 48.0% for three-month periods ended June 30, 2006 and 2005, respectively.

Net income for the six months ended June 30, 2006 was $11.3 million, a decrease of $0.5 million or 4.6%, as compared to $11.9 million for the six months ended June 30, 2005. Diluted earnings per share were $0.63 for the six month period ended June 30, 2006 and $0.66 for the comparable 2005 period.

Return on average equity was 12.8% for the six months ended June 30, 2006 compared to 14.8% for the six months ended June 30, 2005. Return on average assets was 0.9% for the six months ended June 30, 2006 compared to 1.1% for the six months ended June 30, 2005.

Balance Sheet Summary

At June 30, 2006, total assets were $2,640.2 million, an increase of $287.0 million, or 12.2%, from $2,353.2 million at December 31, 2005, with $170.8 million of the increase attributed to the Atlantic Liberty acquisition. Total loans, net increased $243.3 million, or 12.9%, during the six months ended June 30, 2006 to $2,125 million from $1,881.9 million at December 31, 2005, with the acquisition of Atlantic Liberty adding $116.2 million. At June 30, 2006, loans in process totaled $185.3 million, compared to $222.5 million at June 30, 2005 and $179.4 million at December 31, 2005.

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)                 2006       2005       2006       2005
----------------------------------------------------------------------
Multi-family residential   $  30,629  $  62,921  $  64,659  $ 136,844
Commercial real estate        32,070     32,171     74,327     56,497
One-to-four family -
 mixed-use property           33,516     56,133     66,318     93,798
One-to-four family -
 residential                   2,357      5,302      6,516      7,424
Construction                  16,723      9,369     31,327     16,354
Commercial business and
 other loans                  25,184      8,810     37,178     12,716
                            ---------  ---------  ---------  ---------
    Total                  $ 140,479  $ 174,706  $ 280,325  $ 323,633
                            =========  =========  =========  =========

Loans acquired on June 30, 2006 in the purchase of Atlantic Liberty are excluded from the table above. Loan purchases of $2.0 million are included in the above table for the six months ended June 30, 2006. There were no loan purchases for the three month period ended June 30, 2006 and the six month and three month periods ended June 30, 2005.

As the Bank continues to increase its loan portfolio, management continues to adhere to the Bank's strict underwriting standards. As a result, the Bank has been able to minimize charge-offs of losses from impaired loans and maintain asset quality. Non-performing assets were $2.4 million at June 30, 2006 compared to $2.5 million at December 31, 2005 and $1.6 million at June 30, 2005. Total non-performing assets as a percentage of total assets was 0.09% at June 30, 2006 as compared to 0.10% at December 31, 2005 and 0.07% at June 30, 2005. The ratio of allowance for loan losses to total non-performing loans was 301% at June 30, 2006, compared to 260% at December 31, 2005 and 414% at June 30, 2005.

During the six months ended June 30, 2006, mortgage-backed securities increased $3.3 million to $304.5 million, with $30.8 million attributable to Atlantic Liberty's portfolio and purchases of $9.9 million. Offsetting the increases during this period were sales of $6.4 million and principal repayments of $25.0 million on the securities portfolio, which have primarily been reinvested in higher yielding loans. Other securities increased $3.2 million to $39.7 million and primarily consists of securities issued by government agencies and mutual or bond funds that invest in government and government agency securities.

During 2006, the Bank purchased an additional $10.0 million of Bank Owned Life Insurance ("BOLI"). The Bank also acquired $2.4 million of BOLI through the merger. The Bank utilizes BOLI to fund a substantial portion of its employee benefit costs. The tax advantages of BOLI allow a return that is comparable to, or better than, other investments.

Total liabilities were $2,432.3 million at June 30, 2006, an increase of $255.5 million, or 11.7%, from December 31, 2005, with $144.3 million of the increase attributed to the Atlantic Liberty acquisition. During the six months ended June 30, 2006, due to depositors increased $216.9 million to $1,664.8 million, with $105.3 million attributed to Atlantic Liberty. The increases are primarily a result of an increase of $119.4 million in certificates of deposit, of which $29.4 million are brokered deposits, while core deposits increased $97.6 million. Borrowed funds increased $27.5 million. In addition, mortgagors' escrow deposits increased $4.9 million during the six months ended June 30, 2006.

Total stockholders' equity increased $31.5 million, or 17.9%, to $208.0 million at June 30, 2006 from $176.5 million at December 31, 2005. This is primarily due to $26.6 million for the issuance of stock for the acquisition of Atlantic Liberty, net income of $11.3 million for the six months ended June 30, 2006 and a $1.4 million cumulative adjustment related to the adoption of SFAS No. 123R, Share-Based Compensation, which were partially offset by $4.2 million in treasury shares purchased through the Company's stock repurchase program, a net after tax decrease of $3.5 million on the market value of securities available for sale, and $3.9 million of cash dividends declared and paid during the six months ended June 30, 2006. The exercise of stock options increased stockholders' equity by $2.4 million, including the income tax benefit realized by the Company upon the exercise of the options. Book value per share was $9.86 at June 30, 2006, compared to $9.07 per share at December 31, 2005 and $8.75 per share at June 30, 2005.

Under its current stock repurchase program, the Company repurchased 257,000 shares during the six months ended June 30, 2006, at a total cost of $4.2 million, or an average of $16.49 per share. At June 30, 2006, 517,650 shares remain to be repurchased under the current stock repurchase program. Through June 30, 2006, the Company had repurchased approximately 48% of the common shares issued in connection with the Company's initial public offering at a cost of $116.0 million.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company's Annual Report on Form 10-K and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as "may", "will", "should", "could", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "forecasts", "potential" or "continue" or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.

Flushing Financial Corporation is the holding company for Flushing Savings Bank, FSB, a federally chartered stock savings bank insured by the Federal Deposit Insurance Corporation (FDIC). The Bank conducts its business through twelve banking offices located in Queens, Brooklyn, Manhattan and Nassau County.

Additional information on Flushing Financial Corporation may be obtained by visiting the Company's web site at http://www.flushingsavings.com.

            FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
             (Dollars in Thousands Except Per Share Data)
                              (Unaudited)


                                               June 30,   December 31,
                                                 2006         2005
                                             ------------ ------------
ASSETS
-------
Cash and due from banks                      $    18,925  $    26,754
Securities available for sale:
  Mortgage-backed securities                     304,454      301,194
  Other securities                                39,736       36,567
Loans:
  Multi-family residential                       815,318      788,071
  Commercial real estate                         476,351      399,081
  One-to-four family - mixed-use property        527,706      477,775
  One-to-four family - residential               171,554      134,641
  Co-operative apartments                          9,778        2,161
  Construction                                    79,523       49,522
  Small Business Administration                   12,757        9,239
  Commercial business and other                   30,494       19,362
  Net unamortized premiums and unearned
   loan fees                                       8,877        8,409
  Allowance for loan losses                       (7,148)      (6,385)
                                             ------------ ------------
       Net loans                               2,125,210    1,881,876
Interest and dividends receivable                 11,915       10,554
Bank premises and equipment, net                  17,644        7,238
Federal Home Loan Bank of New York stock          31,663       29,622
Bank owned life insurance                         39,634       26,526
Goodwill                                          12,857        3,905
Core Deposit Intangible                            3,513            -
Other assets                                      34,691       28,972
                                             ------------ ------------
       Total assets                          $ 2,640,242  $ 2,353,208
                                             ============ ============

LIABILITIES
-----------
Due to depositors:
  Non-interest bearing                       $    70,806  $    58,678
  Interest-bearing:
    Certificate of deposit accounts            1,017,509      898,157
    Savings accounts                             274,601      273,753
    Money market accounts                        254,761      175,247
    NOW accounts                                  47,100       42,029
                                             ------------ ------------
       Total interest-bearing deposits         1,593,971    1,389,186
Mortgagors' escrow deposits                       24,295       19,423
Borrowed funds                                   717,244      689,710
Other liabilities                                 25,937       19,744
                                             ------------ ------------
       Total liabilities                       2,432,253    2,176,741
                                             ------------ ------------

STOCKHOLDERS' EQUITY
--------------------
Preferred stock ($0.01 par value; 5,000,000
 shares authorized; none issued)                       -            -
Common stock ($0.01 par value; 40,000,000
 shares authorized; 21,165,011 shares and
 19,466,894 shares issued at June 30, 2006
 and December 31, 2005, respectively;
 21,102,652 shares and 19,465,844 shares
 outstanding at June 30, 2006 and December
 31, 2005, respectively)                             211          195
Additional paid-in capital                        69,221       39,635
Treasury stock (62,359 shares and 1,050
 shares at June 30, 2006 and December 31,
 2005, respectively)                              (1,046)         (12)
Unearned compensation                             (3,270)      (4,159)
Retained earnings                                151,676      146,068
Accumulated other comprehensive loss,
 net of taxes                                     (8,803)      (5,260)
                                             ------------ ------------
       Total stockholders' equity                207,989      176,467
                                             ------------ ------------

       Total liabilities and stockholders'
        equity                               $ 2,640,242  $ 2,353,208
                                             ============ ============
            FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME
             (Dollars in Thousands Except Per Share Data)
                              (Unaudited)


                                     For the             For the
                                   three months         six months
                                  ended June 30,      ended June 30,
                                ------------------  ------------------
                                  2006      2005      2006      2005
----------------------------------------------------------------------

Interest and dividend income
----------------------------
Interest and fees on loans     $ 33,584  $ 28,236  $ 65,849  $ 54,501
Interest and dividends on
 securities:
   Interest                       3,628     4,160     7,328     8,522
   Dividends                         76        81       153       162
Other interest income               258         9       428        17
                               --------- --------- --------- ---------
      Total interest and
       dividend income           37,546    32,486    73,758    63,202
                               --------- --------- --------- ---------

Interest expense
----------------
Deposits                         13,224     8,088    24,734    15,771
Other interest expense            7,661     7,236    15,448    13,396
                               --------- --------- --------- ---------
      Total interest expense     20,885    15,324    40,182    29,167
                               --------- --------- --------- ---------

Net interest income              16,661    17,162    33,576    34,035
Provision for loan losses             -         -         -         -
                               --------- --------- --------- ---------
Net interest income after
 provision for loan losses       16,661    17,162    33,576    34,035
                               --------- --------- --------- ---------

Non-interest income
-------------------
Loan fee income                     879       607     1,509     1,137
Banking services fee income         339       353       710       736
Net gain on sale of loans held
 for sale                           237       142       360       142
Net gain on sale of loans            73         -       100        19
Net gain on sale of securities        -         -        81         -
Federal Home Loan Bank of New
 York stock dividends               380       268       759       432
Bank owned life insurance           401       285       671       564
Other income                        277       206       603       346
                               --------- --------- --------- ---------
      Total non-interest income   2,586     1,861     4,793     3,376
                               --------- --------- --------- ---------

Non-interest expense
--------------------
Salaries and employee benefits    4,813     4,413     9,567     8,691
Occupancy and equipment           1,261     1,011     2,370     1,974
Professional services               967       839     1,934     1,779
Data processing                     656       534     1,294     1,069
Depreciation and amortization       364       398       731       801
Other operating expenses          2,324     2,165     3,921     3,649
                               --------- --------- --------- ---------
      Total non-interest
       expense                   10,385     9,360    19,817    17,963
                               --------- --------- --------- ---------

Income before income taxes        8,862     9,663    18,552    19,448
                               --------- --------- --------- ---------

Provision for income taxes
--------------------------
Federal                           2,863     2,991     5,804     5,985
State and local                     593       778     1,431     1,600
                               --------- --------- --------- ---------
      Total taxes                 3,456     3,769     7,235     7,585
                               --------- --------- --------- ---------

Net income                     $  5,406  $  5,894  $ 11,317  $ 11,863
                               ========= ========= ========= =========

Basic earnings per share       $   0.30  $   0.34  $   0.64  $   0.68
Diluted earnings per share     $   0.30  $   0.33  $   0.63  $   0.66
Dividends per share            $   0.11  $   0.10  $   0.22  $   0.20
            FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
                 SELECTED CONSOLIDATED FINANCIAL DATA
               (Dollars in Thousands Except Share Data)
                              (Unaudited)


                        At or for                   At or for
                     the three months             the six months
                      Ended June 30,              Ended June 30,
                -------------------------   -------------------------
                    2006          2005          2006          2005
                -----------   -----------   -----------   -----------
Per Share Data
---------------
Basic earnings
 per share           $0.30         $0.34         $0.64         $0.68
Diluted
 earnings per
 share               $0.30         $0.33         $0.63         $0.66
Average number
 of shares
 outstanding
 for:
  Basic
   earnings
   per share
   computation  17,811,046    17,487,183    17,788,822    17,482,682
  Diluted
   earnings
   per share
   computation  18,079,904    17,937,463    18,078,845    17,969,690
Book value per
 share (based
 on 21,102,652
 and 19,275,807
 shares
 outstanding at
 June 30, 2006
 and 2005,
 respectively)       $9.86         $8.75         $9.86         $8.75

Average
 Balances
---------
Total loans,
 net           $ 1,974,209   $ 1,669,923   $ 1,943,425   $ 1,607,880
Total interest-
 earning assets  2,326,946     2,076,587     2,297,538     2,025,450
Total assets     2,437,221     2,178,294     2,403,397     2,124,827
Total due to
 depositors      1,486,338     1,232,722     1,447,301     1,227,368
Total interest-
 bearing
 liabilities     2,183,079     1,942,541     2,153,691     1,893,408
Stockholders'
 equity            177,466       162,092       177,034       160,897

Performance
 Ratios (1)
-----------
Return on
 average assets       0.89 %        1.08 %        0.94 %        1.12 %
Return on
 average equity      12.18         14.54         12.79         14.75
Yield on
 average
 interest-
 earning assets       6.45          6.26          6.42          6.24
Cost of average
 interest-
 bearing
 liabilities          3.83          3.16          3.73          3.08
Interest rate
 spread during
 period               2.62          3.10          2.69          3.16
Net interest
 margin               2.86          3.31          2.92          3.36
Non-interest
 expense to
 average assets       1.70          1.72          1.65          1.69
Efficiency
 ratio               53.96         49.20         51.76         48.02
Average
 interest-
 earning assets
 to average
 interest-
 bearing
 liabilities          1.07 X        1.07 X        1.07 X        1.07 X


(1) Ratios for the quarters and six months ended June 30, 2006 and
    2005 are presented on an annualized basis.
            FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
                 SELECTED CONSOLIDATED FINANCIAL DATA
                        (Dollars in Thousands)
                              (Unaudited)


                                 At or for the        At or for the
                                six months ended       year ended
                                 June 30, 2006      December 31, 2005
                               ------------------- -------------------

Selected Financial Ratios and
 Other Data
------------------------------

Regulatory capital ratios (for
 Flushing Savings Bank only):
   Tangible capital (minimum
    requirement = 1.5%)                     7.80 %              7.14 %
   Leverage and core capital
    (minimum requirement = 3%)              7.80                7.14
   Total risk-based capital
    (minimum requirement = 8%)             12.58               12.12

Capital ratios:
   Average equity to average
    assets                                  7.37 %              7.47 %
   Equity to total assets                   7.88                7.50

Asset quality:
   Non-performing loans                   $2,373              $2,452
   Non-performing assets                   2,373               2,452
   Net (recoveries) charge-offs              (10)                148

Asset quality ratios:
   Non-performing loans to
    gross loans                             0.11 %              0.13 %
   Non-performing assets to
    total assets                            0.09                0.10
   Allowance for loan losses
    to gross loans                          0.34                0.34
   Allowance for loan losses
    to non-performing assets              301.16              260.39
   Allowance for loan losses
    to non-performing loans               301.16              260.39

Full-service customer facilities              12                   9
            FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
                          NET INTEREST MARGIN
                        (Dollars in Thousands)
                              (Unaudited)


                                  For the three months ended June 30,
                                 -------------------------------------
                                                 2006
                                 -------------------------------------
                                   Average      Interest      Yield/
                                  Balance (2)      (2)         Cost
                                 -------------------------------------
Assets
Interest-earning assets:
  Mortgage loans, net (1)        $ 1,927,902  $    32,745       6.79 %
  Other loans, net (1)                46,307          839       7.25
                                 -------------------------------------
      Total loans, net             1,974,209       33,584       6.80
                                 -------------------------------------
  Mortgage-backed securities         290,519        3,255       4.48
  Other securities                    39,758          449       4.52
                                 -------------------------------------
      Total securities               330,277        3,704       4.49
                                 -------------------------------------
  Interest-earning deposits and
    federal funds sold                22,460          258       4.59
                                 -------------------------------------
Total interest-earning assets      2,326,946       37,546       6.45
                                              ------------------------
Other assets                         110,275
                                 ------------
      Total assets               $ 2,437,221
                                 ============

Liabilities and Equity
Interest-bearing liabilities:
  D
            FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
                          NET INTEREST MARGIN
                        (Dollars in Thousands)
                              (Unaudited)


                                   For the six months ended June 30,
                                 -------------------------------------
                                                 2006
                                 -------------------------------------
                                    Average     Interest      Yield/
                                  Balance (2)      (2)         Cost
                                 -------------------------------------
Assets
Interest-earning assets:
  Mortgage loans, net (1)        $ 1,905,284  $    64,465       6.77 %
  Other loans, net (1)                38,141        1,384       7.26
                                 -------------------------------------
      Total loans, net             1,943,425       65,849       6.78
                                 -------------------------------------
  Mortgage-backed securities         296,426        6,647       4.48
  Other securities                    38,589          834       4.32
                                 -------------------------------------
      Total securities               335,015        7,481       4.47
                                 -------------------------------------
  Interest-earning deposits and
    federal funds sold                19,098          428       4.48
                                 -------------------------------------
Total interest-earning assets      2,297,538       73,758       6.42
                                              ------------------------
Other assets                         105,859
                                 ------------
      Total assets               $ 2,403,397
                                 ============

Liabilities and Equity
Interest-bearing liabilities:
  D

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