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Business Combination | 12 Months Ended
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Dec. 31, 2020
Business Combination |
Business Combination | 3. Business Combination On October 30, 2020, the Company completed its acquisition of 100% of the outstanding voting and non-voting shares of Empire Bancorp, Inc. (“Empire”). In connection with the transaction, Empire National Bank (“Empire Bank”), a wholly-owned subsidiary of Empire, merged with and into Flushing Bank, with Flushing Bank as the surviving entity. The shareholders of Empire received total consideration of $87.5 million which consisted of $54.8 million in cash and 2,557,028 shares of Flushing Financial Corporation common stock. The merger was accounted for under the acquisition method of accounting, in which the assets and liabilities are acquired at preliminary estimated fair values at the merger date. The excess of the fair value of the consideration paid over the preliminary net fair value of Empire’s assets and liabilities resulted in recognition of goodwill totaling $1.5 million, none of which is deductible for tax purposes. Upon closing of the merger, the Company’s assets increased by $982.7 million and four new branch locations were added, which expanded our presence on Long Island with having entrance to Suffolk County. The assets acquired and liabilities assumed in the merger were recorded at their estimated fair values based on management’s best estimates, using the information available at the date of merger, including the use of third party valuation specialists. The fair values are subject to adjustment for up to one year after the closing date of the transaction. The following table summarizes the consideration paid: ​
​ | ​ | ​ | ​
(Dollars in thousands) | ​ | Amount
Consideration Paid : | ​ | ​ | ​
Company stock issued ( 2,557,028 shares ) | ​ | $ | 32,705
Cash payment | ​ |  | 54,836
Total consideration paid | ​ | $ | 87,541
​ The following table summarizes the estimated fair value of the acquired assets and liabilities assumed at October 30, 2020: ​
​ | ​ | ​ | ​
(Dollars in thousands) | ​ | Amount
Assets acquired: | ​ | ​ | ​
Cash and Cash Equivalents | ​ | $ | 86,340
Securities available for sale | ​ | ​ | 159,369
Net loans | ​ | ​ | 669,682
Interest and dividends receivable | ​ | ​ | 5,394
Bank premises and equipment, net | ​ | ​ | 3,203
Federal Home Loan Bank of New York stock, at cost | ​ | ​ | 1,135
Bank owned life insurance | ​ | ​ | 21,992
Core deposit Intangibles | ​ | ​ | 3,280
Right of Use Asset | ​ | ​ | 9,993
Other assets | ​ | ​ | 22,300
​ | ​ | $ | 982,688
Liabilities assumed: | ​ | ​ | ​
Due to depositors: | ​ | ​ | ​
Non-interest bearing | ​ | ​ | 169,496
Interest-bearing | ​ | ​ | 685,393
Mortgagors' escrow deposits | ​ | ​ | 6,406
Borrowed funds | ​ | ​ | 21,215
Operating lease liability | ​ | ​ | 11,039
Other liabilities | ​ | ​ | 3,108
​ | ​ | $ | 896,657
​ | ​ | ​ | ​
Goodwill recorded | ​ | $ | 1,509
​ ASC 805-10 provides guidance for business combinations, it requires the acquirer to consider all pertinent factors which could result in adjustments to the preliminary provisional amounts and subsequently measure and account for assets acquired, liabilities assumed and equity instruments. Fair value estimates related to acquired assets and liabilities are subject to adjustment up to one year after the closing date of the acquisition as additional information becomes available. Investments were measured upon quoted market prices, where available. If a quoted market price was not available, fair value was estimated using quoted market prices for similar securities and adjusted for differences between the quoted instrument and the instrument being valued. Loans acquired were recorded at fair value and subsequently accounted for in accordance with ASC Topic 310. The fair values of the loans were estimated utilizing the cash flow projections based on the remaining maturities and repricing terms. Cash flows were adjusted for estimated future credit losses and estimated prepayments. Projected cash flows were then discounted to present value, utilizing the Company’s CECL model. The Company recorded Day 1 ACL of $4.1 million resulting from PCD loans and non credit discount of $7.6 million. Core deposit intangibles (“CDI”) were recorded at fair value estimated based on discounted cash flow methodology that gave appropriate consideration to expected client attrition rates, cost of deposit base, reserve requirements, net maintenance cost attributable to client deposits and an estimate of the cost associated with alternative funding sources. The discount rates used for CDI assets are based on market rates. The CDI is being amortized over 10 years based upon the estimated economic benefit received using sum of months digit method. Deposits were recorded at fair value calculated based on discounted cash flow calculation using the current interest rate being offered to the contractual interest rates on such deposits. Long-term debt was recorded at fair value based on current incremental borrowing rates for similar type of instruments. Supplemental Pro Forma Financial Information The following table presents unaudited financial information regarding the former Empire operations included in Company’s Consolidated Statements of Income from the date of the acquisition (October 30, 2020) through December 31, 2020, under the column “Actual from Acquisition Date to December 31, 2020”. In addition, the table presents unaudited condensed pro forma financial information assuming that the acquisition had been completed as of beginning of the full twelve month periods presented. In the table, merger related expenses totaling $6.9 million were excluded. The table has been prepared for comparative purposes only and does not reflect cost savings. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Actual from Acquisition Date to December 31, 2020 (1) | ​ | ​ | Unaudited Proforma for the twelve months ended December 31, 2020 | ​ | Unaudited Proforma for the twelve months ended December 31, 2019
​ | ​ | (Dollars in thousands)
Net interest Income | $ | 4,159 | ​ | $ | 220,153 | $ | 186,894
Non-Interest Income (loss) | ​ | (96) | ​ | ​ | 12,142 | ​ | 10,570
Non-Interest Expense | ​ | 1,657 | ​ |  | 140,979 |  | 125,211
Income Taxes | ​ | 706 | ​ | ​ | 16,084 | ​ | 16,025
Net Income | $ | 2,256 | ​ | $ | 52,659 | $ | 53,973
​
| (1) | Non-interest income (loss) includes $0.3 million from loss on sale of securities.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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