FLUSHING SAVINGS BANK, FSB
401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
FINANCIAL STATEMENTS
As of December 31, 1999 and 1998 and
for the year ended December 31, 1999
and Supplemental Schedules
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Index
Page(s)
Report of Independent Accountants 2
Financial statements:
Statements of net assets available for plan benefits with fund
information as of December 31, 1999 and 1998 3
Statements of changes in net assets available for benefits
for the year ended December 31, 1999 4
Notes to financial statements 5-8
Supplemental schedules:
Item 4i - Schedule of assets held for investment purposes
as of December 31, 1999 9
<PAGE>
Report of Independent Accountants
To the Directors' Examining Committee and
Benefits Committee of Flushing Financial Corporation
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for
benefits present fairly, in all material respects, the net assets available for
benefits of the Flushing Savings Bank, FSB 401(k) Savings Plan in RSI
REetirementTrust (the 'Plan') as of December 31, 1999 and 1998, and the changes
in net assets available for benefits for the year ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules of Assets Held for
Investment Purposes is presented for the purpose of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements, and in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
PricewaterhouseCoopers LLP
New York, New York
October 14, 2000
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Statements of Net Assets Available for Plan Benefits
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------------- -------------------
<S> <C> <C>
Assets:
Investments at fair value (Note 3) $4,592,488 $3,788,326
Participant loans 153,747 199,974
------------------- -------------------
Total assets 4,746,235 3,988,300
------------------- -------------------
Liabilities:
Benefits Payable 271 475
------------------- -------------------
Total liabilities 271 475
------------------- -------------------
Net assets available
for plan benefits $4,745,964 $3,987,825
------------------- -------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1999
<TABLE>
<S> <C>
Additions:
Net appreciation in the fair value of investment $ 591,248
Contributions:
Employer, net of forfeitures 115,903
Participants 317,557
----------------
Total additions 1,024,708
Deductions:
Distributions to participants 266,298
Benefits payable 271
----------------
Net increase in net assets available for plan benefits 758,139
Net assets available for plan benefits-December 31, 1998 3,987,825
----------------
Net assets available for plan benefits-December 31, 1999 $4,745,964
----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements
1. Description of Plan:
The following description of the Flushing Savings Bank, FSB 401(k) Savings Plan
in RSI Retirement Trust (the 'Plan') provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
a. General:
The Plan is a tax-deferred savings plan which began on
September 1, 1987, and covers all salaried employees of Flushing
Savings Bank, FSB (the 'Bank') who have completed one year of
service and are twenty-one years of age or older. The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 ('ERISA').
b. Contributions:
Participant contributions can be no less than 2% nor greater
than 10% of their base compensation for each plan year and cannot
exceed $10,000 annually for the plan year ended December 31, 1999,
adjusted as prescribed under the Internal Revenue Code. The Bank
will match 50% of each participant's basic contributions up to a
maximum of 3% of the participant's base compensation. Of the 50%
match, one half of the match will be invested into the Flushing
Financial Corporation Common Stock Fund. The remaining half of the
match will be invested into corresponding participant directed
investment accounts. Currently, contributions to the Plan are not
subject to Federal, state, or local income taxes until withdrawn
from the Plan. Participant forfeitures serve to reduce the
contribution due from the Bank. Participant's may also contribute
amounts representing distributions from other qualified defined
benefit or defined contribution plans.
c. Participant accounts:
Each participant's account is credited with the participant's
contributions and the Bank's matching contributions. The plan
assets are segregated into eight investment accounts: Core Equity
Fund, Emerging Growth Equity Fund, Value Equity Fund,
Intermediate-Term Bond Fund, Actively Managed Bond Fund,
Short-Term Investment Fund, Retirement System Group Common Stock
Fund and Flushing Financial Corporation Common Stock Fund. The
assets of the Flushing Financial Corporation Common Stock Fund are
held by HSBC Bank USA. The other plan assets are held by the RSI
Retirement Trust.
Certain assets are not allocated to the above investment accounts.
Those unallocated amounts represent contributions pending
allocation to the designed investment accounts. In accordance with
the provisions of the Plan, net assets are to be valued from time
to time, but not less often than monthly, and the increase or
decrease in such value since the last valuation date is allocated
among the participants' accounts so as to preserve each
participant's beneficial interest in the Plan.
d. Vesting:
Participants are immediately 100 percent vested in their salary
deferral contributions plus earnings thereon. Vesting of employer
contributions on behalf of each participant is based on years of
service. A participant is 100 percent vested after six years of
credited service. At December 31, 1999, forfeited nonvested
accounts totaled $9,483, which will be used to reduce future
employer contributions.
Continued
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements, Continued
e. Investment options:
Upon enrollment in the Plan, a participant may direct employee
contributions in one percent increments into the eight
investment accounts.
f. Payment of benefits:
Upon termination of service, a participant is entitled to receive
a lump sum or, in certain circumstances, quarterly, semi-annual,
or annual installments, equal to the value of his or her account
to the extent such funds are vested.
g. Voting rights:
With respect to the Flushing Financial Corporation Common Stock
Fund, each participant is entitled to exercise voting rights
attributable to the shares allocated to his or her account and is
notified by the Trustee prior to the time that such rights are to
be exercised. With respect to shares of stock credited to
participant accounts as to which the Trustee did not receive
timely voting instructions and shares of stock not credited to
participant's account, the Trustee shall vote all such shares
of stock in the same proportion as were voted shares as to which
participants provided timely instructions. The shares held in the
Retirement System Group Common Stock Fund are voted at the
discretion of the Plan Sponsor. For the other stock funds, the
shares are voted at the discretion of the Plan Trustee.
h. Loans to participants:
Loans are made available to all participants on a uniform and
nondiscriminatory basis. All loans must be adequately
collateralized and amortized over a period not to exceed five
years unless the loan is to purchase the principle residence
of a participant, in which case, the term cannot exceed ten years.
Loans must bear a reasonable rate of interest (currently prime
rounded to the nearest one quarter of one percent). Loans are
limited by the Internal Revenue Code Section 72(p) and may not
exceed the lesser of (i) 50% of the net value of a participant's
vested account balance or (ii) $50,000 reduced by the largest
outstanding loan balance in the Plan during the preceding 12
months. At December 31, 1999, outstanding loans bore interest
rates in the range of 6.0% to 10.0%.
2. Summary of Significant Accounting Policies:
a. Investment Valuation:
The Plan's investments are stated at fair value. Shares of
registered investment companies are valued at quoted market
prices which represent the net asset value of shares held by the
Plan at year-end. Participant notes receivable are
valued at cost which approximates fair value.
The Plan presents in the statement of changes in net assets
available for plan benefits the net appreciation (depreciation)
in the fair value of its funds and common stock, which consists
of the realized gains or losses, unrealized appreciation
(depreciation) and dividend or interest income on securities held
by those funds. Dividend and interest income on investments held
by the funds are reinvested by each fund.
Continued
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements, Continued
b. Expenses:
The ordinary administrative expenses of the Plan, including
compensation of the Trustee and other administrative expenses
of the Trustee, are paid from the Plan unless paid by the Bank at
its discretion. For the year ended December 31, 1999, the Bank
elected to pay the expenses of the Plan.
c. Other:
Interest income on loans is recorded as earned on an accrual
basis.
d. Payment of benefits:
Benefit payments to participants are recorded upon distribution.
e. Estimates:
The preparation of the Plan's financial statements in conformity
with generally accepted accounting principles requires the Plan
Administrator to make estimates and assumptions that affect the
reported amounts of net assets available for benefits at the date
of the financial statements and the changes in net assets
available for benefits during the period and disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
f. Risks and uncertainties:
The Plan provides for various investment options in any
combination of mutual funds and other investment securities.
Investment securities are exposed to various risks, such as
interest rate, market, and credit risks. Due to the level of
risk associated with certain investment securities, it is at
least reasonably possible that changes in the values of
investment will occur in the near term and that such changes could
materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits.
3. Investments
The following presents investments that represent five percent or more
of the Plan's net assets.
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
----------------- ----------------
<S> <C> <C>
Core Equity Fund, 13,767.506 and 13,429.024 shares, respectively $1,577,205 $1,285,114
Emerging Growth Equity Fund, 5,807.006 and 5,241.219
shares, respectively 696,202 356,403
Value Equity Fund, 6,932.797 and 6,421.550 shares, respectively 539,926 437,243
Short Term Investment Fund, 14,062.734 and 13,148.796 shares,
Respectively 330,474 296,768
Flushing Financial Corporation common Stock Fund, 82,047
and 59,234.378 shares, respectively 1,266,818 1,251,979
</TABLE>
Continued
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Notes to Financial Statements, Continued
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$591,248 as follows:
Core Equity Fund $264,553
Emerging Growth Equity Fund 301,655
Value Equity Fund 64,697
Short-term Investment Fund 14,337
Intermediate-term Bond Fund 883
Actively Managed Bond Fund (1,858)
Retirement System Group Inc. Common Stock 55
Flushing Financial Corporation Common Stock Fund (53,074)
-------------------
Total appreciation $591,248
-------------------
4. Plan Termination:
Although it has not expressed any intent to do so,the Bank specifically
reserves the right, at any time, to terminate the Plan or to amend, in
whole or in part, any or all of the provisions of the Plan, subject
to the provisions of ERISA and approval of the Directors. In the event
of termination or partial termination of the Plan or upon complete
discontinuance of contributions under the Plan, the accounts of each
affected participant shall become 100% vested and fully distributable,
in accordance with the Internal Revenue Code and all income tax
regulations promulgated thereunder.
5. Federal Tax Status:
The Internal Revenue Service has determined and informed the Company
by a signed letter dated January 5, 1998 that the Plan and related
trust are designed in accordance with applicable sections of the
Internal Revenue Code. The Plan has been amended since receiving the
determination letter. However, the Plan administrator and the Plan's
tax counsel believe that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the Internal
Revenue Code.
<PAGE>
FLUSHING SAVINGS BANK, FSB 401(k) SAVINGS PLAN
in RSI RETIREMENT TRUST
Item 4i - Schedule of Assets Held for Investment Purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Number of Market
Units or Value Per
Shares Description of Investment Cost* Fair Value Unit/Share
----------------- -------------------------------------- -------------- --------------- -----------------
<S><C> <C> <C> <C> <C>
13,767.506 Core Equity Fund $ 438,082 $ 1,577,205 114.56
5,807.006 Emerging Growth Equity Fund 433,493 696,202 119.89
6,932.797 Value Equity Fund 443,976 539,926 77.88
14,062.734 Short-Term Investment Fund 331,599 330,474 23.50
3,068.597 Actively Managed Bond Fund 119,368 113,170 36.88
1,642.380 Intermediate-Term Bond Fund 58,600 56,646 34.49
458.735 Retirement System Group, Inc. 2,252 2,344 5.11
-- Loans to participants** 153,747 153,747 --
82,047.000 Flushing Financial Corporation 872,017 1,266,818 14.8125
Stock Fund***
-------------- ---------------
Total $ 2,853,134 $ 4,736,532
-------------- ---------------
</TABLE>
* Represents the Plan's percentage of each fund's historical cost.
** Loans bear a rate of interest of prime rounded to the nearest one
quarter of one percent. Interest rate range of 6.0% to 10.0% for all
outstanding loans to participants as of December 31, 1999.
*** Flushing Financial corporation Stock Fund includes $51,497 in cash
equivalents.
