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Note 13 - Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

13. 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)		2015				2014				2015				2014
Federal:
Current		$	6,195			$	5,381			$	20,262			$	13,793
Deferred			(820	)			(141	)			(3,480	)			1,718
Total federal tax provision			5,375				5,240				16,782				15,511
State and Local:
Current			1,635				1,869				6,490				5,237
Deferred			(349	)			(49	)			(1,544	)			837
Total state and local tax provision			1,286				1,820				4,946				6,074

Total income tax provision		$	6,661			$	7,060			$	21,728			$	21,585

The effective tax rate was 37.7% and 38.7% for the three months ended September 30, 2015 and 2014, respectively, and 38.6% and 39.4% for the nine months ended September 30, 2015 and 2014, respectively. The decrease in the effective tax rate was primarily due to the prior year being affected by changes in New York State tax code passed on March 31, 2014, which resulted in a reduction in the Company’s deferred tax assets and a corresponding increase in tax expense during the three and nine months ended September 30, 2014. Additionally, the decrease in the effective tax rate reflects the greater impact that preferential tax items had on the Company’s tax liability during the three months ended September 30, 2015 compared to the three months ended September 30, 2014.

On April 13, 2015, the Governor of New York signed the New York State 2015 budget, which included changes to the New York City tax code. The approved budget changes the manner in which the Bank’s tax liability is calculated for New York City. Based on our review of the changes to the New York City tax code, we do not anticipate a significant change to the Company’s tax expense.

The effective rates differ from the statutory federal income tax rate as follows:

		For the three months ended September 30,																For the nine months ended September 30,
(dollars in thousands)		2015								2014								2015								2014
Taxes at federal statutory rate		$	6,184				35.0	%		$	6,392				35.0	%		$	19,706				35.0	%		$	19,169				35.0	%
Increase (reduction) in taxes resulting from:
State and local income tax, net of Federal income tax benefit			836				4.7				1,183				6.5				3,215				5.7				3,948				7.2
Other			(359	)			(2.0	)			(515	)			(2.8	)			(1,193	)			(2.1	)			(1,532	)			(2.8	)
Taxes at effective rate		$	6,661				37.7	%		$	7,060				38.7	%		$	21,728				38.6	%		$	21,585				39.4	%

The Company has recorded a deferred tax asset of $32.6 million at September 30, 2015, which is included in “Other assets” in the Consolidated Statements of Financial Condition. This represents the anticipated net federal, state and local tax benefits expected to be realized in future years upon the utilization of the underlying tax attributes comprising this balance. The Company has reported taxable income for federal, state, and local tax purposes in each of the past three fiscal years. In management’s opinion, in view of the Company’s previous, current and projected future earnings trend, the probability that some of the Company’s $9.8 million deferred tax liability can be used to offset a portion of the deferred tax asset, as well as certain tax planning strategies, it is more likely than not that the deferred tax asset will be fully realized. Accordingly, no valuation allowance was deemed necessary for the deferred tax asset at September 30, 2015.