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Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10. 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 trusts, which file separate Federal income tax returns as trusts, and FPFC, which files a separate Federal income tax return as a real estate investment trust. Additionally, the Bank files New Jersey State tax returns. The Company remains subject to examination for its Federal, New York State and New Jersey income tax returns for the years ending on or after December 31, 2012. The Company is undergoing an examination of its New York City income tax returns for 2011, 2012 and 2013.

Income tax provisions are summarized as follows for the years ended December 31:

		2015				2014				2013
		(In thousands)
Federal:
Current		$	25,319			$	18,052			$	17,808
Deferred			(3,476	)			2,860				(464	)
Total federal tax provision			21,843				20,912				17,344
State and Local:
Current			7,059				6,369				5,828
Deferred			(1,735	)			1,292				(216	)
Total state and local tax provision			5,324				7,661				5,612
Total income tax provision		$	27,167			$	28,573			$	22,956

The income tax provision in the Consolidated Statements of Income has been provided at effective rates of 37.0%, 39.2% and 37.8% for the years ended December 31, 2015, 2014 and 2013, respectively. The effective rates differ from the statutory federal income tax rate as follows for the years ended December 31:

		2015								2014								2013
		(Dollars in thousands)
Taxes at federal statutory rate		$	25,681				35.0	%		$	25,484				35.0	%		$	21,248				35.0	%
Increase (reduction) in taxes resulting from:
State and local income tax, net of Federal income tax benefit			3,461				4.7				4,980				6.8				3,648				6.0
Other			(1,975	)			(2.7	)			(1,891	)			(2.6	)			(1,940	)			(3.2	)
Taxes at effective rate		$	27,167				37.0	%		$	28,573				39.2	%		$	22,956				37.8	%

The components of the net deferred tax assets are as follows at December 31:

		2015				2014
		(In thousands)
Deferred tax asset:
Postretirement benefits		$	6,798			$	5,407
Allowance for loan losses			9,437				11,007
Stock based compensation			3,404				2,821
Depreciation			1,941				1,740
Unrealized loss on securities available for sale			395				-
Derivative financial instruments			1,724				1,025
Adjustment required to recognize funded status of postretirement pension plans			3,833				4,787
Gain on sale of buildings			2,531				-
Other			2,460				3,023
Deferred tax asset			32,523				29,810

Deferred tax liability:
Valuation differences resulting from acquired assets and liabilities			-				2,764
Fair value adjustment on financial assets carried at fair value			187				132
Fair value adjustment on financial liabilities carried at fair value			14,364				14,480
Unrealized gains on securities available for sale			-				2,588
Other			3,411				2,525
Deferred tax liability			17,962				22,489

Net deferred tax asset included in other assets		$	14,561			$	7,321

The Company has recorded a deferred tax asset of $32.5 million. 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 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 $18.0 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 December 31, 2015 and 2014.

The Company does not have uncertain tax positions that are deemed material. The Company’s policy is to recognize interest and penalties on income taxes in operating expenses. During the three years ended December 31, 2015, the Company did not recognize any material amounts of interest or penalties on income taxes.