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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

Commission file number 000-24272

FLUSHING FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

11-3209278
(I.R.S. Employer Identification No.)

144-51 Northern Boulevard, Flushing, New York 11354
(Address of principal executive offices)

(718) 961-5400
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock $0.01 par value.

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  X Yes __No

         Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2
of the Exchange Act).  X Yes __No

        The number of shares of the registrant’s Common Stock outstanding as of July 25, 2003 was 12,833,767.

TABLE OF CONTENTS

  PAGE
PART I -- FINANCIAL INFORMATION

ITEM 1. Financial Statements		  

     Consolidated Statements of Financial Condition		 1 

     Consolidated Statements of Income and Comprehensive Income		 2 

     Consolidated Statements of Cash Flows		 3 

     Consolidated Statements of Changes in Stockholders' Equity		 4 

     Notes to Consolidated Statements		 5 

ITEM 2. Management's Discussion and Analysis of Financial Condition
     and Results of Operations 7 

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 		20 

ITEM 4. Controls and Procedures 		20 

PART II. -- OTHER INFORMATION

ITEM 1. Legal Proceedings 		20 

ITEM 2. Changes in Securities and Use of Proceeds 		20 

ITEM 3. Defaults Upon Senior Securities 		20 

ITEM 4. Submission of Matters to a Vote of Security Holders 		21 

ITEM 5. Other Information 		21 

ITEM 6. Exhibits and Reports on Form 8-K 		22 

SIGNATURES 		23 

i

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Financial Condition

(Dollars in thousands, except share data)
 June 30, 2003
 December 31, 2002
(Unaudited)
ASSETS            
Cash and due from banks   $ 19,673   $ 29,119  
Federal funds sold    --    18,500  
Securities available for sale:  
    Mortgage-backed securities    486,801    319,255  
    Other securities    59,991    39,729  
Loans:  
    One-to-four family residential - conventional    220,885    262,944  
    One-to-four family residential - mixed-use property    193,517    170,499  
    Multi-family residential    505,099    452,663  
    Commercial real estate    267,223    257,054  
    Co-operative apartment    4,879    5,205  
    Construction    16,112    17,827  
    Small Business Administration    4,773    4,301  
    Commercial business and other    4,668    4,185  
    Unearned loan fees and deferred costs, net    1,494    1,463  
    Allowance for loan losses    (6,557 )  (6,581 )
         Net loans    1,212,093    1,169,560  
Interest and dividends receivable    8,787    8,409  
Real estate owned, net    --    --  
Bank premises and equipment, net    5,612    5,389  
Federal Home Loan Bank of New York stock    24,713    22,213  
Goodwill    3,905    3,905  
Other assets    34,851    36,879  
          Total assets   $ 1,856,426   $ 1,652,958  
LIABILITIES  
Due to depositors:  
    Non-interest bearing   $ 41,233   $ 35,287  
    Interest-bearing:  
       Certificate of deposit accounts    571,968    543,330  
       Passbook savings accounts    219,974    213,572  
       Money market accounts    233,344    170,029  
       NOW accounts    39,600    39,795  
          Total interest-bearing deposits    1,064,886    966,726  
Mortgagors' escrow deposits    10,755    9,812  
Borrowed funds    543,153    493,164  
Other liabilities    53,286    16,583  
          Total liabilities    1,713,313    1,521,572  
STOCKHOLDERS' EQUITY  
Preferred stock ($0.01 par value; 5,000,000 shares authorized)    --    --  
Common stock ($0.01 par value; 40,000,000 shares
   authorized; 13,852,063 shares issued; 12,941,544 and
   12,598,343 shares outstanding at June 30, 2003 and
   December 31, 2002, respectively		       139     139  
Additional paid-in capital       49,490     47,208  
Treasury stock, at average cost (910,519 and 1,253,720 shares  
   at June 30, 2003 and December 31, 2002, respectively)    (15,891 )  (21,733 )
Unearned compensation    (8,178 )  (7,825 )
Retained earnings    113,450    109,208  
Accumulated other comprehensive income, net of taxes    4,103    4,389  
          Total stockholders' equity    143,113    131,386  
          Total liabilities and stockholders' equity   $ 1,856,426   $ 1,652,958  

The accompanying notes are an integral part of these consolidated financial statements.

-1-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income

For the three months For the six months
ended June 30,
 ended June 30,
(In thousands, except per share data)
 2003
 2002
 2003
 2002
(Unaudited)
Interest and dividend income                    
Interest and fees on loans   $22,993   $22,514   $46,227   $44,315  
Interest and dividends on securities:  
    Interest    4,612    4,028    8,703    8,124  
    Dividends    56    35    90    71  
Other interest income    32    101    117    281  
          Total interest and dividend income    27,693    26,678    55,137    52,791  
Interest expense  
Deposits    7,073    6,954    14,009    13,817  
Other interest expense    6,223    6,540    12,494    13,379  
          Total interest expense    13,296    13,494    26,503    27,196  
Net interest income    14,397    13,184    28,634    25,595  
Provision for loan losses    -    -    -    -  
Net interest income
   after provision for loan losses		       14,397     13,184     28,634     25,595  
Non-interest income  
Other fee income    805    681    1,627    1,380  
Net gain (loss) on sales of securities and loans    105    (4,279 )  151    (4,259 )
Other income    738    702    1,475    1,369  
          Total non-interest income    1,648    (2,896 )  3,253    (1,510 )
Non-interest expense  
Salaries and employee benefits    4,105    3,537    7,932    6,966  
Occupancy and equipment    739    674    1,406    1,329  
Professional services    685    697    1,376    1,393  
Data processing    410    376    820    749  
Depreciation and amortization    294    258    550    515  
Other operating expenses    1,657    1,431    3,055    2,522  
          Total non-interest expense    7,890    6,973    15,139    13,474  
Income before income taxes    8,155    3,315    16,748    10,611  
Provision for income taxes  
Federal    2,445    1,143    5,017    3,406  
State and local    666    131    1,387    626  
          Total taxes    3,111    1,274    6,404    4,032  
Net income   $5,044   $2,041   $10,344   $6,579  
Other comprehensive income, net of tax  
Unrealized gains (losses) on securities:  
   Unrealized holding gains (losses)
      arising during period		     $ (199 ) $ (153 ) $ (296 ) $ (1,070 )
   Reclassification adjustments for (gains)
      losses included in income		       (5 )   2,358     10     2,358  
          Net unrealized holding gains (losses)    (204 )  2,205    (286 )  1,288  
Comprehensive net income   $4,840   $4,246   $10,058   $7,867  
Basic earnings per share     $0.44     $0.17     $0.92     $0.56  
Diluted earnings per share     $0.43     $0.17     $0.88     $0.53  
Dividends per share     $0.10     $0.09     $0.20     $0.18  

The accompanying notes are an integral part of these consolidated financial statements.

-2-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows

For the six months ended
June 30,
(In thousands)
 2003
 2002
(Unaudited)
OPERATING ACTIVITIES            
Net income   $10,344   $6,579  
Adjustments to reconcile net income to net cash
  provided by operating activities:		  
     Depreciation and amortization of bank premises
        and equipment		    550    515  
     Net loss on sales of securities    19    4,367  
     Net gain on sales of loans    (170 )  (108 )
     Net gain on sales of real estate owned    --    (4 )
     Amortization of unearned premium, net of
        accretion of unearned discount		    1,535    1,452  
     Deferred income tax benefit    (98 )  (208 )
     Deferred compensation    394    181  
Origination of loans held for sale    7,870    1,825  
Proceeds from sale of loans originated for sale    (7,870 )  (1,825 )
Net decrease in other assets and liabilities    (14 )  (1,854 )
Unearned compensation    721    557  
          Net cash provided by operating activities    13,281    11,477  
INVESTING ACTIVITIES  
Purchases of bank premises and equipment    (773 )  (454 )
Redemptions (purchases) of Federal Home Loan Bank shares    (2,500 )  1,958  
Purchases of securities available for sale    (249,547 )  (69,565 )
Proceeds from sales and calls of securities available for sale    10,639    5,390  
Proceeds from maturities and prepayments of securities
   available for sale		    89,478    54,355  
Proceeds from sale of non-performing loans    3,501    --  
Net originations and repayment of loans    (45,123 )  (57,670 )
Purchases of loans    (787 )  (9,994 )
Proceeds from sales of real estate owned    --    97  
          Net cash used by investing activities    (195,112 )  (75,883 )
FINANCING ACTIVITIES  
Net increase in non-interest bearing deposits    5,946    4,941  
Net increase in interest-bearing deposits    98,160    77,663  
Net increase in mortgagors' escrow deposits    943    2,191  
Proceeds from long-term borrowed funds    80,000    30,000  
Repayment of long-term borrowed funds    (30,011 )  (55,260 )
Issuances (purchases) of treasury stock, net    1,153    (7,888 )
Cash dividends paid    (2,306 )  (2,156 )
          Net cash provided by financing activities    153,885    49,491  
Net decrease in cash and cash equivalents    (27,946 )  (14,915 )
Cash and cash equivalents, beginning of period    47,619    38,508  
         Cash and cash equivalents, end of period     $ 19,673   $ 23,593  
SUPPLEMENTAL CASH FLOW DISCLOSURE  
Interest paid   $26,600   $27,286  
Income taxes paid    6,314    5,656  
Non-cash activities:  
   Securities purchased not yet settled    40,422    --  
   Securities sold not yet settled    --    10,296  

The accompanying notes are an integral part of these consolidated financial statements.

-3-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

For the six months ended
(In thousands, except share data)
 June 30, 2003
Common Stock        
Balance, beginning of period   $139  
No activity    -  
         Balance, end of period   $139  
Additional Paid-In Capital  
Balance, beginning of period   $47,208  
Award of shares released from Employee Benefit Trust
   (2,073 common shares)		    27  
Restricted stock awards (54,225 common shares)    154  
Tax benefit of unearned compensation    2,101  
         Balance, end of period   $49,490  
Treasury Stock  
Balance, beginning of period   $(21,733 )
Purchases of common shares outstanding (81,700 common shares)    (1,501 )
Repurchase of restricted stock awards (14,381 common shares)    (292 )
Restricted stock awards (54,225 common shares)    944  
Forfeiture of restricted stock awards (3,060 common shares)    (51 )
Options exercised (388,117 common shares)    6,742  
         Balance, end of period   $(15,891 )
Unearned Compensation  
Balance, beginning of period   $(7,825 )
Restricted stock award expense    452  
Restricted stock awards (54,225 common shares)    (1,098 )
Forfeiture of restricted stock awards (3,060 common shares)    51  
Release of shares from Employee Benefit Trust (47,367 common shares)    242  
         Balance, end of period   $(8,178 )
Retained Earnings  
Balance, beginning of period   $109,208  
Net income    10,344  
Options exercised (388,117 common shares)    (3,796 )
Cash dividends declared and paid    (2,306 )
         Balance, end of period   $113,450  
Accumulated Other Comprehensive Income  
Balance, beginning of period   $4,389  
Change in net unrealized gain, net of taxes of approximately
   $252 on securities available for sale		    (296 )
Less: Reclassification adjustment for losses included
   in net income, net of taxes of approximately $(9)		    10  
         Balance, end of period   $4,103  

The accompanying notes are an integral part of these consolidated financial statements.

-4-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Notes to Consolidated Financial Statements

1. Basis of Presentation

The primary business of Flushing Financial Corporation is the operation of its wholly-owned subsidiary, Flushing Savings Bank, FSB (the "Bank"). The Holding Company also owns a special purpose business trust, Flushing Financial Capital Trust I (the "Trust"). The consolidated financial statements presented in this Form 10-Q include the collective results of the Holding Company, the Trust and the Bank, but reflects principally the Bank's activities.

The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for such periods of Flushing Financial Corporation and Subsidiaries (the "Company"). Such adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for the full year.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The interim financial information should be read in conjunction with the Company's 2002 Annual Report on Form 10-K.

2. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

3. Earnings Per Share

Basic earnings per share for the three and six month periods ended June 30, 2003 and 2002 was computed by dividing net income by the total weighted average number of common shares outstanding, including only the vested portion of restricted stock awards. Diluted earnings per share includes the additional dilutive effect of stock options outstanding and the unvested portion of restricted stock awards during the period. Earnings per share has been computed based on the following:

Three Months Ended Six Months Ended
June 30,
 June 30,
(Amounts in thousands, except per share data)
 2003
 2002
 2003
 2002
Net income     $5,044   $2,041   $10,344   $6,579  
Divided by:  
     Weighted average common shares outstanding    11,370    11,689    11,283    11,829  
     Weighted average common stock equivalents    479    619    479    584  
Total weighted average common shares &
    common stock equivalents		    11,849    12,308    11,762    12,413  
Basic earnings per share    $0.44    $0.17    $0.92    $0.56  
Diluted earnings per share    $0.43    $0.17    $0.88    $0.53  
Dividends per share    $0.10    $0.09    $0.20    $0.18  
Dividend payout ratio    22.73 %  52.94 %  21.74 %  32.14 %

Common stock equivalents that are antidilutive are not included in the computation of diluted earnings per share. Options to purchase 178,100 shares at an average exercise price of $20.32 and 89,100 shares at an average exercise price of $19.00, were not included in the computation of diluted earnings per share for the three months ended June 30, 2003 and 2002, respectively. Unvested restricted stock awards of 54,225 shares at an average price of $20.25 and 10,125 shares at an average price of $19.00, were not included in the computation of diluted earnings per share for the three months ended June 30, 2003 and 2002, respectively. Options to purchase 448,700 shares at an average exercise price of $19.35 and 275,000 shares at an average exercise price of $18.70 were not included in the computation of diluted earnings per share for the six months ended June 30, 2003 and 2002, respectively. Unvested restricted stock awards of 106,025 shares at an average price of $19.45 and 69,075 shares at average price of $18.62 were not included in the computation of diluted earnings per share for the six months ended June 30, 2003 and 2002, respectively.

-5-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Notes to Consolidated Financial Statements

4. Stock Option Plans

As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation", the Company has chosen to apply APB Opinion No. 25, "Accounting for Stock Issued to Employees" and related Interpretations in accounting for its Stock Option Plan. Accordingly, no compensation expense has been recognized for options granted under the Stock Option Plan. Compensation expense is recognized in the financial statements for restricted stock awards. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No.123 to all stock-based employee compensation. However, the present impact of SFAS No. 123 may not be representative of the effect on income in future periods because the options vest over several years and additional option grants may be made each year.

Three months ended Six Months ended
June 30,
 June 30,
(Dollars in thousands, except per share data)
 2003
 2002
 2003
 2002
Net income, as reported     $5,044   $2,041   $10,344   $6,579  
Add: Stock-based employee compensation
   expense included in reported net income,
   net of related tax effects		    202    130    343    223  
Deduct: Total stock-based employee compensation
   expense determined under fair value based
   method for all awards,net of related tax effects		    (391 )  (246 )  (678 )  (449 )
Pro forma net income   $4,855   $1,925   $10,009   $6,353  
Basic earnings per share:  
     As reported    $0.44    $0.17    $0.92    $0.56  
     Pro forma    $0.43    $0.16    $0.89    $0.54  
Diluted earnings per share:  
     As reported    $0.43    $0.17    $0.88    $0.53  
     Pro forma    $0.41    $0.16    $0.85    $0.51  

  

There were stock option grants of 178,100 shares of common stock, at an average exercise price of $20.32, and 275,000 shares of common stock, at an average exercise price of $18.70 granted in the three- and six-month periods ended June 30, 2003 and 2002, respectively. There were restricted stock grants of 54,225 shares of common stock, at an average price of $20.25, and 69,075 shares of common stock, at an average price of $18.62 granted in the three- and six-month periods ended June 30, 2003 and 2002, respectively.

-6-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

GENERAL

Flushing Financial Corporation, a Delaware corporation (the "Holding Company"), was organized in May 1994 to serve as the holding company for Flushing Savings Bank, FSB (the "Bank"), a federally chartered, FDIC insured savings institution, originally organized in 1929. The Holding Company also owns a special purpose business trust, Flushing Financial Capital Trust I ("Trust"). The Bank is a consumer-oriented savings institution and conducts its business through ten banking offices located in Queens, Brooklyn, Manhattan, Bronx and Nassau County. Flushing Financial Corporation's common stock is publicly traded on the Nasdaq National Market under the symbol "FFIC". The following discussion of financial condition and results of operations includes the collective results of the Holding Company, the Bank and the Trust (collectively, the "Company"), but reflects principally the Bank's activities.

The Company's principal business is attracting retail deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, primarily in (1) origination and purchases of one-to-four family residential real estate loans (focusing on mixed-use properties - properties that contain both residential dwelling units and commercial units), multi-family income-producing property loans and commercial real estate loans; (2) mortgage loan surrogates such as mortgage-backed securities; and (3) U.S. government and federal agency securities, corporate fixed-income securities and other marketable securities. To a lesser extent, the Company originates certain other loans, including construction loans, Small Business Administration loans and commercial and consumer loans.

The Company's results of operations depend primarily on net interest income, which is the difference between the income earned on its interest-earning assets and the cost of its interest-bearing liabilities. Net interest income is the result of the Company's interest rate margin, which is the difference between the average yield earned on interest-earning assets and the average cost of interest-bearing liabilities, adjusted for the difference in the average balance of interest-earning assets as compared to the average balance of interest-bearing liabilities. The Company also generates non-interest income from loan fees, service charges on deposit accounts, mortgage servicing fees, late charges and other fees, income earned on Bank Owned Life Insurance, dividends on Federal Home Loan Bank of NY ("FHLB-NY") stock and net gains and losses on sales of securities and loans. The Company's operating expenses consist principally of employee compensation and benefits, occupancy and equipment costs, other general and administrative expenses and income tax expense. The Company's results of operations also can be significantly affected by its periodic provision for loan losses and specific provision for losses on real estate owned. Such results also are significantly affected by general economic and competitive conditions, including changes in market interest rates, the strength of the local economy, government policies and actions of regulatory authorities.

Statements contained in this Quarterly Report relating to plans, strategies, objectives, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of 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, the factors set forth in the preceding paragraph and elsewhere in this Quarterly Report, and in other documents filed by the Company with the Securities and Exchange Commission from time to time, including, without limitation, the Company's 2002 Annual Report to Stockholders and its SEC Report on Form 10-K for the year ended December 31, 2002. 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.

-7-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002

General. Diluted earnings per share increased $0.26 to $0.43 for the three months ended June 30, 2003 from $0.17 for the three months ended June 30, 2002. Net income increased $3.0 million to $5.0 million for the three months ended June 30, 2003 from $2.0 million for the three months ended June 30, 2002. The return on average assets for the three months ended June 30, 2003 increased to 1.14% compared to 0.53% for the three months ended June 30, 2002, while the return on average equity for the three months ended June 30, 2003 increased to 14.70% from 6.30% for the three months ended June 30, 2002. The three months ended June 30, 2002 include an after tax impairment charge of $2.6 million related to the decline in the market value of a $5.1 million investment in a Worldcom Inc. senior note due in 2004. Excluding this impairment charge, net income would have been $4.6 million, or $0.38 per diluted share, for the three months ended June 30, 2002, and diluted earnings per share would have increased 13.2% for the three months ended June 30, 2003 compared to the three months ended June 30, 2002. Return on average assets and return on average equity, excluding the impairment charge, would have been 1.21% and 14.32%, respectively, for the three months ended June 30, 2002.

Interest Income. Total interest and dividend income increased $1.0 million, or 3.8%, to $27.7 million for the three months ended June 30, 2003 from $26.7 million for the three months ended June 30, 2002. This increase was primarily the result of a $214.7 million increase in the average balance of interest-earning assets for the three months ended June 30, 2003 as compared to the three months ended June 30, 2002. The average balance of mortgage loans, net and mortgage-backed securities increased $75.7 million and $169.0 million, respectively, for the three months ended June 30, 2003 as compared to the three months ended June 30, 2002. These increases were partially offset by a $19.3 million and an $11.6 million decrease in the average balance of other securities and interest earning deposits and federal funds sold, respectively, for the three months ended June 30, 2003 compared to the three months ended June 30, 2002. The yield on interest-earning assets declined 71 basis points to 6.65% for the three months ended June 30, 2003 from 7.36% for the three months ended June 30, 2002. This decrease is primarily due to the declining interest rate environment experienced during the past two years, the effect of which further lowered the yield on assets during 2003. We continued our focus on the origination of higher yielding multi-family residential and commercial real estate mortgage loans, along with the origination of mixed-use property one-to-four family residential mortgage loans, which allowed us to maintain a higher yield on our loan portfolio than we would have otherwise experienced. However, the increase in the lower-yielding mortgage-backed securities portfolio, while increasing interest income, reduced the yield on total interest-earning assets.

Interest Expense. Interest expense decreased $0.2 million, or 1.5%, to $13.3 million for the three months ended June 30, 2003 from $13.5 million for the three months ended June 30, 2002, primarily due to a 59 basis point decline in the cost of interest-bearing liabilities to 3.38% in the three months ended June 30, 2003 from 3.97% in the three months ended June 30, 2002. This decrease was partially offset by a $210.4 million increase in the average balance of interest-bearing liabilities. The decrease in the cost of funds is primarily due to the declining interest rate environment experienced during the past two years, the effect of which further lowered the cost of funds in the second quarter of 2003. This was coupled with an increase in the average balance of lower costing core deposits. This marks the eleventh consecutive quarter that the cost of funds has declined.

Net Interest Income. For the three months ended June 30, 2003, net interest income increased $1.2 million, or 9.2%, to $14.4 million from $13.2 million in the three months ended June 30, 2002. This increase in net interest income is primarily due to a $214.7 million increase in the average balance of interest-earning assets, partially offset by a 12 basis point decrease in the net interest spread. The net interest margin decreased 18 basis points to 3.46% for the three months ended June 30, 2003 from 3.64% for the three months ended June 30, 2002, due to the decrease in the net interest spread and the growth in the average balance of interest-earning assets.

-8-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Provision for Loan Losses. There was no provision for loan losses for the three-month periods ended June 30, 2003 and 2002. In assessing the adequacy of the Company's allowance for loan losses, management considers the Company's historical loss experience, recent trends in losses, collection policies and collection experience, trends in the volume of non-performing loans, changes in the composition and volume of the gross loan portfolio, and local and national economic conditions. Based on these reviews, no provision for loan losses was deemed necessary for either of the three-month periods ended June 30, 2003 and 2002.

Non-Interest Income. Non-interest income increased $4.5 million to $1.6 million for the three months ended June 30, 2003 from a net loss of $2.9 million for the three months ended June 30, 2002. The increase is primarily due to a $4.4 million pretax impairment writedown of the Bank's investment in a WorldCom, Inc. senior note during the three months ended June 30, 2002. Loan fees and banking service fees increased $0.1 million for the three months ended June 30, 2003 compared to the three months ended June 30, 2002.

Non-Interest Expense. Non-interest expense was $7.9 million for the three months ended June 30, 2003, an increase of $0.9 million, or 13.2%, from $7.0 million for the three months ended June 30, 2002. The increase from the prior year period is attributable to the Bank's continued focus on expanding its current product offerings to enhance its ability to serve its customers. Increases were seen in personnel and other expense areas, as we focused on loan and deposit growth. Salaries and benefits also increased due to the increase in our stock price, as certain employee compensation is tied to our stock price, which increased over 20 percent in the three months ended June 30, 2003. Management continues to monitor expenditures resulting in efficiency ratios of 49.20% and 47.62% for the three months ended June 30, 2003 and 2002, respectively.

Income before Income Taxes. Income before the provision for income taxes increased $4.9 million to $8.2 million for the three months ended June 30, 2003 as compared to $3.3 million for the three months ended June 30, 2002, for the reasons discussed above.

Provision For Income Taxes. Income tax expense was $3.1 million for the three months ended June 30, 2003 compared to $1.3 million for the three months ended June 30, 2002. This increase is due to the $4.9 million increase in income before income taxes. The effective rate was 38.15% for the three months ended June 30, 2003 compared to 38.43% for the three months ended June 30, 2002.

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

General. Diluted earnings per share increased 66.0% to $0.88 for the six months ended June 30, 2003 from $0.53 for the six months ended June 30, 2002. Net income for the six months ended June 30, 2003 increased 57.2% to $10.3 million from the $6.6 million reported for the six months ended June 30, 2002. The return on average assets for the six months ended June 30, 2003 was 1.19% compared to 0.86% for the six months ended June 30, 2002, while the return on average equity for the six months ended June 30, 2003 was 15.40% compared to 10.06% for the six months ended June 30, 2002. Excluding the impairment charge discussed above, net income for the six months ended June 30, 2002 would have been $9.2 million, or $0.74 per diluted share, and diluted earnings per share would have increased 18.9% for the three months ended June 30, 2003 compared to the three months ended June 30, 2002. Return on average assets and return on average equity, excluding the impairment charge, would have been 1.20% and 14.04%, respectively, for the six months ended June 30, 2002.

-9-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Interest Income. Total interest and dividend income increased $2.3 million, or 4.4%, to $55.1 million for the six months ended June 30, 2003 from $52.8 million for the six months ended June 30, 2002. This increase was primarily the result of a $186.9 million increase in the average balance of interest-earning assets for the six months ended June 30, 2003 as compared to the six months ended June 30, 2002. The average balance of mortgage loans, net, and mortgage-backed securities increased $87.0 million and $132.3 million, respectively, for the six months ended June 30, 2003 as compared to the six months ended June 30, 2002. These increases were partially offset by a $21.8 million and a $12.3 million decrease in the average balance of other securities and interest-earning deposits and federal funds sold, respectively, for the six months ended June 30, 2003 compared to the six months ended June 30, 2002. The yield on interest-earning assets declined 56 basis points to 6.79% for the six months ended June 30, 2003 from 7.35% for the six months ended June 30, 2002. This decrease is primarily due to the declining interest rate environment experienced during the past two years, the effect of which further lowered the yield on assets during the first six months of 2003. Our focus on the origination of higher yielding multi-family residential and commercial real estate mortgage loans, along with the origination of mixed-use property one-to-four family residential mortgage loans, allowed us to maintain a higher yield on our loan portfolio than we would have otherwise experienced. In addition, the increase in the average balance of the lower-yielding mortgage-backed securities portfolio, while increasing interest income, reduced the yield on total interest-earning assets.

Interest Expense. Interest expense decreased $0.7 million, or 2.5%, to $26.5 million for the six months ended June 30, 2003 from $27.2 million for the six months ended June 30, 2002, primarily due to a 57 basis point decline in the cost of interest-bearing liabilities to 3.46% in the six months ended June 30, 2003 from 4.03% in the six months ended June 30, 2002. This decrease was partially offset by a $184.8 million increase in the average balance of interest-bearing liabilities. The decrease in the cost of funds is primarily due to the declining interest rate environment experienced during the past two years, the effect of which further lowered the cost of funds during the first six months of 2003. This was coupled with an increase in the average balance of lower costing core deposits.

Net Interest Income. For the six months ended June 30, 2003, net interest income increased $3.0 million, or 11.9%, to $28.6 million from $25.6 million in the six months ended June 30, 2002. This increase in net interest income is primarily due to a $186.9 million increase in the average balance of interest-earning assets. The net interest margin decreased 3 basis points to 3.53% for the six months ended June 30, 2003 from 3.56% for the six months ended June 30, 2002, due to the increase in the average balance of interest-earning assets.

Provision for Loan Losses. There was no provision for loan losses for the six-month periods ended June 30, 2003 and 2002. In assessing the adequacy of the Company's allowance for loan losses, management considers the Company's historical loss experience, recent trends in losses, collection policies and collection experience, trends in the volume of non-performing loans, changes in the composition and volume of the gross loan portfolio, and local and national economic conditions. Based on these reviews, no provision for loan losses was deemed necessary for either of the six-month periods ended June 30, 2003 and 2002.

Non-Interest Income. Non-interest income increased $4.8 million to $3.3 million for the six months ended June 30, 2003 from a net loss of $1.5 million for the six months ended June 30, 2002. The increase is primarily due to the $4.4 million pretax impairment writedown of the Bank's investment in a WorldCom, Inc. senior note recorded in the six-month period ended June 30, 2002. Loan fees and banking services fees increased $0.2 million for the six months ended June 30, 2003 compared to the six months ended June 30, 2002.

Non-Interest Expense. Non-interest expense was $15.1 million for the six months ended June 30, 2003, an increase of $1.6 million, or 12.4%, from $13.5 million for the six months ended June 30, 2002. The increase from the prior year period is attributable to the Bank's continued focus on expanding its current product offerings to enhance its ability to serve its customers. Increases were seen in personnel and other expense areas, as we focused on loan and deposit growth. Salaries and benefits also increased due to the increase in our stock price, as certain employee compensation is tied to our stock price, which increased over 30 percent in the six months ended June 30, 2003. Management continues to monitor expenditures resulting in efficiency ratios to 47.45% and 47.39% for the six months ended June 30, 2003 and 2002, respectively.

-10-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Income before Income Taxes. Income before the provision for income taxes increased $6.1 million, or 57.8%, to $16.7 million for the six months ended June 30, 2003 as compared to $10.6 million for the six months ended June 30, 2002, for the reasons discussed above.

Provision For Income Taxes. Income tax expense was $6.4 million for the six months ended June 30, 2003 compared to $4.0 million for the six months ended June 30, 2002. This increase is due to the $6.1 million increase in income before income taxes. The effective rate was 38.24% for the six months ended June 30, 2003 compared to 38.00% for the six months ended June 30, 2002.

RECONCILIATION OF NON-GAAP FINANCIAL AMOUNTS AND RATIOS

The preceding discussions include prior year comparable periods that included an after-tax impairment writedown of $2.6 million relating to the Bank's investment in a WorldCom, Inc. senior note. Comparisons of the current year three- and six-month periods to the prior year periods were made excluding this writedown in the prior year periods. Management believes that this impairment writedown was a one-time event that is not likely to be repeated, and is therefore not indicative of the ongoing operating results of the Company. Excluding this writedown presents a better comparison of the Company's ongoing operating results. A reconciliation of amounts and financial ratios of the Company as reported in its financial statements to the adjusted amounts and financial ratios, which exclude this impairment writedown, is shown below.

Three Months Six Months
Ended Ended
(Dollars in thousands, except per share data)
 June 30, 2002
 June 30, 2002
Net income as reported     $2,041   $6,579  
Impairment writedown    4,429    4,429  
Income tax benefit    (1,849 )  (1,849 )
Adjusted net income   $4,621   $9,159  

Basic earnings per share		   $0.17   $0.56  
Impairment writedown    0.23    0.21  
Adjusted basic earnings per share   $0.40   $0.77  

Diluted earnings per share		   $0.17   $0.53  
Impairment writedown    0.21    0.21  
Adjusted diluted earnings per share   $0.38   $0.74  

Non-interest income		   $(2,896 ) $(1,510 )
Impairment writedown    4,429    4,429  
Adjusted non-interest income   $1,533   $2,919  

Return on average assets		    0.53 %  0.86 %
Impairment writedown    0.68 %  0.34 %
Adjusted return on average assets    1.21 %  1.20 %

Return on average equity		    6.30 %  10.06 %
Impairment writedown    8.02 %  3.98 %
Adjusted return on average equity    14.32 %  14.04 %

-11-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

FINANCIAL CONDITION

Assets. Total assets at June 30, 2003 were $1,856.4 million, a $203.5 million increase from December 31, 2002. During the six months ended June 30, 2003, loan originations and purchases were $85.3 million for multi-family real estate loans, $43.6 million for commercial real estate loans, $35.5 million for mixed-use property one-to-four family residential real estate loans, $11.7 million for conventional one-to-four family residential real estate loans, and $9.5 million in construction loans. For the first six months of 2002, loan originations and purchases were $79.6 million for multi-family real estate loans, $26.0 million for commercial real estate loans, $38.1 million for mixed-use property one-to-four family residential real estate loans, $9.6 million for conventional one-to-four family residential real estate loans, and $7.0 million in construction loans. Total loans increased $42.5 million during the six months ended June 30, 2003 to $1,212.1 million from $1,169.6 million at December 31, 2002.

As the Company continues to increase its loan portfolio, management continues to adhere to the Bank's strict underwriting standards. As a result, the Company has been able to minimize charge-offs of losses from impaired loans and maintain asset quality. Non-performing assets were $2.3 million at June 30, 2003 compared to $4.3 million at December 31, 2002 and $1.8 million at June 30, 2002. Total non-performing assets as a percentage of total assets were 0.12% at June 30, 2003 compared to 0.26% at December 31, 2002 and 0.12% at June 30, 2002. The ratio of allowance for loan losses to total non-performing loans was 410% at June 30, 2003 compared to 183% at December 31, 2002 and 586% at June 30, 2002.

Mortgage-backed securities increased $167.5 million to $486.8 million at June 30, 2003, while other securities increased $20.3 million to $60.0 million at June 30, 2003. Funds not used during the six months ended June 30, 2003 for loan originations have been invested in readily marketable mortgage-backed securities and shorter-term investment securities to provide readily available funding for future loan originations. In addition, due to the attractive low rates available for medium-term borrowings, the Company borrowed $60.0 million in June 2003 and invested the proceeds in mortgage-backed securities with an initial spread of approximately 180 basis points, based on the current interest rate environment. Other securities primarily consists of securities issued by government agencies and mutual or bond funds that invest in government and government agency securities. At June 30, 2003, loans in process totaled $156.8 million

Liabilities. Total liabilities increased $191.7 million to $1,713.3 million at June 30, 2003 from $1,521.6 million at December 31, 2002. Due to depositors increased $104.1 million as certificate of deposit accounts increased $28.6 million while lower costing core deposits increased $75.5 million. Borrowed funds increased $50.0 million during the six months ended June 30, 2003.

Equity. Total stockholders' equity increased $11.7 million to $143.1 million at June 30, 2003 from $131.4 million at December 31, 2002. Net income of $10.3 million for the six months ended June 30, 2003 was partially offset by $1.5 million in treasury shares purchased through the Company's stock repurchase plans and $2.3 million in cash dividends paid during the six month period. In addition, the exercise of stock options increased stockholders' equity by $4.9 million, including the income tax benefit realized by the Company upon the exercise of stock options. Book value per share was $11.06 per share at June 30, 2003 compared to $10.43 per share at December 31, 2002 and $10.06 at June 30, 2002.

Under its stock repurchase program, the Company repurchased 81,700 shares for the six months ended June 30, 2003, at a total cost of $1.5 million, or an average of $18.37 per share. At June 30, 2003, 548,300 shares remain to be repurchased under the current stock repurchase program.

-12-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Cash flow. During the six months ended June 30, 2003, funds provided by the Company's operating activities amounted to $13.3 million. These funds, together with $153.9 million provided by financing activities and funds available at the beginning of the year, were utilized to fund net investing activities of $195.1 million. The Company's primary business objective is the origination and purchase of one-to-four family residential, multi-family and commercial real estate loans. During the six months ended June 30, 2003, the net total of loan originations less loan repayments was $41.6 million, and the total amount of real estate loans purchased was $0.8 million. The Company also invests in other securities including mortgage loan surrogates such as mortgage-backed securities. During the six months ended June 30, 2003, the Company purchased a total of $249.5 million in securities available for sale. Funds for investment were also provided by $100.1 million in maturities, prepayments, calls and sales of securities available for sale. Additional funds of $4.9 million were provided through the exercise of stock options, including the income tax benefit realized by the Company upon the exercise of stock options. The Company also used funds of $1.5 million for treasury stock repurchases and $2.3 million in dividend payments during the six months ended June 30, 2003.

INTEREST RATE RISK

The consolidated statements of financial position have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in fair value of certain investments due to changes in interest rates. Generally, the fair value of financial investments such as loans and securities fluctuates inversely with changes in interest rates. As a result, increases in interest rates could result in decreases in the fair value of the Company's interest-earning assets which could adversely affect the Company's results of operation if such assets were sold, or, in the case of securities classified as available-for-sale, decreases in the Company's stockholders' equity, if such securities were retained.

The Company manages the mix of interest-earning assets and interest-bearing liabilities on a continuous basis to maximize return and adjust its exposure to interest rate risk. On a quarterly basis, management prepares the "Earnings and Economic Exposure to Changes In Interest Rate" report for review by the Board of Directors, as summarized below. This report quantifies the potential changes in net interest income and net portfolio value should interest rates go up or down (shocked) 300 basis points, assuming the yield curves of the rate shocks will be parallel to each other. Net portfolio value is defined as the market value of assets net of the market value of liabilities. The market value of assets and liabilities is determined using a discounted cash flow calculation. The net portfolio value ratio is the ratio of the net portfolio value to the market value of assets. All changes in income and value are measured as percentage changes from the projected net interest income and net portfolio value at the base interest rate scenario. The base interest rate scenario assumes interest rates at June 30, 2003. Various estimates regarding prepayment assumptions are made at each level of rate shock. Actual results could differ significantly from these estimates. The Company is within the guidelines set forth by the Board of Directors for each interest rate level.

Projected Percentage Change In
Net Interest Net Portfolio
Change in Interest Rate
 Income
 Net Portfolio Value
 Value Ratio
-300 Basis points      -15.12 %  -26.10 %  6.23 %
-200 Basis points    -6.34    -18.96    6.90  
-100 Basis points    -0.63    -6.85    8.03  
Base interest rate    -    -    8.72  
+100 Basis points    -0.83    -2.52    8.68  
+200 Basis points    -3.87    -10.73    8.15  
+300 Basis points    -7.47    -21.89    7.33  

-13-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

REGULATORY CAPITAL POSITION

Under Office of Thrift Supervision ("OTS") capital regulations, the Bank is required to comply with each of three separate capital adequacy standards. At June 30, 2003, the Bank exceeded each of the three OTS capital requirements and is categorized as "well-capitalized" by the OTS under the prompt corrective action regulations. Set forth below is a summary of the Bank's compliance with OTS capital standards as of June 30, 2003.

(Dollars in thousands)
 Amount
 Percent of Assets
Tangible Capital:            
     Capital level   $138,529    7.53 %
     Requirement    27,606    1.50  
     Excess   $110,923    6.03  

Leverage and Core Capital:		  
     Capital level   $138,529    7.53 %
     Requirement    55,212    3.00  
     Excess   $83,317    4.53  

Risk-Based Capital:		  
     Capital level   $145,086    14.44 %
     Requirement    80,385    8.00  
     Excess   $64,701    6.44  

-14-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

AVERAGE BALANCES

Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the relative amount of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them. The following table sets forth certain information relating to the Company's consolidated statements of financial condition and consolidated statements of operations for the three month periods ended June 30, 2003 and 2002, and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from average daily balances. The yields include amortization of fees which are considered adjustments to yields.

For the three months ended June 30,
2003
 2002
Average Average Average Average
(Dollars in thousands)
 Balance
 Interest
 Yield/Cost
 Balance
 Interest
 Yield/Cost
Assets                            
Interest-earning assets:    
   Mortgage loans, net     $ 1,183,342   $ 22,858     7.73 % $ 1,107,636   $ 22,386     8.08 %
   Other loans, net       7,851     135     6.88     6,927     128     7.39  
      Total loans, net       1,191,193     22,993     7.72     1,114,563     22,514     8.08  
   Mortgage-backed securities       404,005     4,171     4.13     235,016     3,316     5.64  
   Other securities       58,285     497     3.41     77,570     747     3.85  
      Total securities       462,290     4,668     4.04     312,586     4,063     5.20  
   Interest-earning deposits
     and federal funds sold		       11,877     32     1.08     23,478     101     1.72  
        Total interest-earning assets       1,665,360     27,693     6.65     1,450,627     26,678     7.36  
Other assets       110,528                 86,212              
        Total assets     $ 1,775,888               $ 1,536,839              
Liabilities and Equity    
Interest-bearing liabilities:    
   Passbook accounts     $ 217,586     503     0.92   $ 208,343     895     1.72  
   NOW accounts       39,043     73     0.75     35,957     90     1.00  
   Money market accounts       229,627     1,243     2.17     113,997     681     2.39  
   Certificate of deposit accounts       567,120     5,241     3.70     490,424     5,274     4.30  
      Total due to depositors       1,053,376     7,060     2.68     848,721     6,940     3.27  
   Mortgagors' escrow deposits       18,562     13     0.28     18,037     14     0.31  
      Total deposits       1,071,938     7,073     2.64     866,758     6,954     3.21  
   Borrowed funds       499,518     6,223     4.98     494,284     6,540     5.29  
        Total interest-bearing
          liabilities		       1,571,456     13,296     3.38     1,361,042     13,494     3.97  
Non-interest bearing deposits       35,815                 30,538              
Other liabilities       31,360                 15,663              
        Total liabilities       1,638,631                 1,407,243              
Equity       137,257                 129,596              
        Total liabilities and equity     $ 1,775,888               $ 1,536,839              
Net interest income /
   net interest spread		           $ 14,397     3.27 %       $ 13,184     3.39 %
Net interest-earning assets /
   Net interest margin		     $ 93,904           3.46 % $ 89,585           3.64 %
Ratio of interest-earning assets to
   interest-bearing liabilities		                   1.06 x               1.07 x

-15-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

AVERAGE BALANCES (continued)

The following table sets forth certain information relating to the Company's consolidated statements of financial condition and consolidated statements of operations for the six month periods ended June 30, 2003 and 2002, and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from average daily balances. The yields include amortization of fees which are considered adjustments to yields.

For the six months ended June 30,
2003
 2002
Average Average Average Average
(Dollars in thousands)
 Balance
 Interest
 Yield/Cost
 Balance
 Interest
 Yield/Cost
Assets                            
Interest-earning assets:    
   Mortgage loans, net     $ 1,175,530   $ 45,948     7.82 % $ 1,088,485   $ 44,078     8.10 %
   Other loans, net       8,330     279     6.70     6,613     237     7.17  
      Total loans, net       1,183,860     46,227     7.81     1,095,098     44,315     8.09  
   Mortgage-backed securities       368,320     7,937     4.31     236,027     6,751     5.72  
   Other securities       50,384     856     3.40     72,230     1,444     4.00  
      Total securities       418,704     8,793     4.20     308,257     8,195     5.32  
   Interest-earning deposits
     and federal funds sold		       21,453     117     1.09     33,787     281     1.66  
        Total interest-earning assets       1,624,017     55,137     6.79     1,437,142     52,791     7.35  
Other assets       110,692                 88,196              
        Total assets     $ 1,734,709               $ 1,525,338              
Liabilities and Equity    
Interest-bearing liabilities:    
   Passbook accounts     $ 215,874     1,029     0.95   $ 204,164     1,745     1.71  
   NOW accounts       39,124     146     0.75     34,812     173     0.99  
   Money market accounts       208,173     2,313     2.22     107,494     1,273     2.37  
   Certificate of deposit accounts       559,463     10,485     3.75     482,498     10,594     4.39  
      Total due to depositors       1,022,634     13,973     2.73     828,968     13,785     3.33  
   Mortgagors' escrow deposits       15,424     36     0.47     15,512     32     0.41  
      Total deposits       1,038,058     14,009     2.70     844,480     13,817     3.27  
   Borrowed funds       495,721     12,494     5.04     504,523     13,379     5.30  
        Total interest-bearing
          liabilities		       1,533,779     26,503     3.46     1,349,003     27,196     4.03  
Non-interest bearing deposits       34,717                 29,118              
Other liabilities       31,917                 16,440              
        Total liabilities       1,600,413                 1,394,561              
Equity       134,296                 130,777              
        Total liabilities and equity     $ 1,734,709               $ 1,525,338              
Net interest income /
   net interest spread		           $ 28,634     3.33 %       $ 25,595     3.32 %
Net interest-earning assets /
   Net interest margin		     $ 90,238           3.53 % $ 88,139           3.56 %
Ratio of interest-earning assets to
   interest-bearing liabilities		                   1.06 x               1.07 x

-16-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

LOANS

The following table sets forth the Company's loan originations (including the net effect of refinancing) and the changes in the Company's portfolio of loans, including purchases, sales and principal reductions for the periods indicated.

Six Months Ended
(In thousands)
 June 30, 2003
 June 30, 2002
Mortgage Loans            
At beginning of period   $1,166,192   $1,066,270  
                 
Mortgage loans originated:  
    One-to-four family residential - conventional    11,063    8,725  
    One-to-four family residential - mixed-use property    35,337    38,056  
    Co-operative apartment    35    194  
    Multi-family residential    85,315    79,623  
    Commercial real estate    43,641    16,646  
    Construction    9,488    6,960  
          Total mortgage loans originated    184,879    150,204  
Mortgage loans purchased:  
    One-to-four family residential - conventional    592    674  
    One-to-four family residential - mixed-use property    190    --  
    Commercial real estate    --    9,315  
          Total acquired loans    782    9,989  
Less:  
    Principal and other reductions    134,637    94,205  
    Sales    9,501    --  
    Mortgage loan foreclosures    --    --  
At end of period   $1,207,715   $1,132,258  
Other Loans  
At beginning of period   $8,486   $6,725  
                 
Other loans originated:  
    Small Business Administration    2,945    2,944  
    Small business    506    855  
    Other    2,201    864  
           Total other loans originated    5,652    4,663  
Less:  
    Sales    1,870    1,825  
    Principal and other reductions    2,827    1,533  
At end of period   $9,441   $8,030  

-17-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

NON-PERFORMING ASSETS

The Company reviews loans in its portfolio on a monthly basis to determine whether any problem loans require classification in accordance with internal policies and applicable regulatory guidelines. The following table sets forth information regarding all non-accrual loans, loans which are 90 days or more delinquent, and real estate owned at the dates indicated

(Dollars in thousands)
 June 30, 2003
 December 31, 2002

Non-accrual mortgage loans		     $1,451   $3,373  
Other non-accrual loans    147    219  
          Total non-accrual loans    1,598    3,592  

Mortgage loans 90 days or more delinquent
     and still accruing		       --     --  
Other loans 90 days or more delinquent
     and still accruing		       --     --  
          Total non-performing loans    1,598    3,592  

Real estate owned (foreclosed real estate)		    --    --  
Investment securities    700    700  
          Total non-performing assets   $2,298   $4,292  
Non-performing loans to gross loans    0.13 %  0.31 %
Non-performing assets to total assets    0.12 %  0.26 %

-18-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

ALLOWANCE FOR LOAN LOSSES

The Company has established and maintains on its books an allowance for loan losses that is designed to provide a reserve against estimated losses inherent in the Company's overall loan portfolio. The allowance is established through a provision for loan losses based on management's evaluation of the risk inherent in the various components of its loan portfolio and other factors, including historical loan loss experience, changes in the composition and volume of the portfolio, collection policies and experience, trends in the volume of non-accrual loans and regional and national economic conditions. The determination of the amount of the allowance for loan losses includes estimates that are susceptible to significant changes due to changes in appraisal values of collateral, national and regional economic conditions and other factors. In connection with the determination of the allowance, the market value of collateral ordinarily is evaluated by the Company's staff appraiser; however, the Company may from time to time obtain independent appraisals for significant properties. Current year charge-offs, charge-off trends, new loan production and current balance by particular loan categories are also taken into account in determining the appropriate amount of allowance. The Board of Directors reviews and approves the adequacy of the loan loss reserves on a quarterly basis.

The following table sets forth the activity in the Bank’s allowance for loan losses for the periods indicated.

Six Months Ended
(Dollars in thousands)
 June 30, 2003
 June 30, 2002
Balance at beginning of period     $ 6,581   $ 6,585  
Provision for loan losses       --     --  
Loans charged-off:    
    One-to-four family residential real estate       --     --  
    Co-operative apartment       --     --  
    Multi-family real estate       --     --  
    Commercial real estate       --     --  
    Construction       --     --  
    Commercial business and other       147     10  
          Total loans charged-off       147     10  
Recoveries:    
    Mortgage loans       123     1  
    Commercial business and other       --     4  
          Total recoveries       123     5  
Balance at end of period     $ 6,557   $ 6,580  
Ratio of net charge-offs during the period to    
    average loans outstanding during the period       0.00 %   0.00 %
Ratio of allowance for loan losses to loans at    
    end of period       0.54 %   0.58 %
Ratio of allowance for loan losses to non-performing    
    assets at end of period       285.37 %   360.97 %
Ratio of allowance for loan losses to non-performing    
    loans at end of period       410.40 %   586.01 %

-19-

PART I — FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the qualitative and quantitative disclosures about market risk, see the information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Interest Rate Risk”.

ITEM 4.      CONTROLS AND PROCEDURES

The Company carried out, under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the quarterly period covered by this Quarterly Report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2003, the design and operation of these disclosure controls and procedures were effective. During the quarterly period covered by this Quarterly Report, there have been no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II-- OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS.

The Company is a defendant in various lawsuits. Management of the Company, after consultation with outside legal counsel, believes that the resolution of these various matters will not result in any material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows.

ITEM 2.      CHANGES IN SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

-20-

PART II — OTHER INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

At the Company's Annual Meeting of Stockholders held on May 20, 2003, as contemplated by the Company's definitive proxy material for the meeting, certain matters were submitted to a vote of stockholders. The following table summarizes the results of voting with respect to each matter.

For
 Against
 Abstain
Election of Directors (three directors were elected to                
serve until the 2006 Annual Meeting of Stockholders  
and until their successors are elected and qualified)  

          Louis C. Grassi		    10,420,912    --    1,224,364  

          Franklin F. Regan, Jr		    8,901,643    --    2,743,633  

          John E. Roe		    10,398,882    --    1,246,394  
   
Approval of an amendment to the Company's 1996 Stock Option Incentive Plan to increase the number of shares available for grants to employees by 300,000, and to increase the number of shares available for grant to outside directors by 300,000    7,723,387    3,852,815    69,074  

Ratification of appointment of PricewaterhouseCoopers		  
LLP as the independent auditors of the Company    11,459,570    161,899    23,807  


ITEM 5.      OTHER INFORMATION.

Not applicable.

-21-

PART II — OTHER INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

a)     EXHIBITS.

Exhibit 3.1 Certificate of Incorporation of Flushing Financial Corporation (1)
Exhibit 3.2 Certificate of Amendment of Certificate of Incorporation of Flushing Financial
                     Corporation (3)
Exhibit 3.3 Certificate of Designations of Series A Junior Participating Preferred Stock of
                     Flushing Financial Corporation (4)
Exhibit 3.4 By-Laws of Flushing Financial Corporation (1)
Exhibit 4.1 Rights Agreement, dated as of September 17, 1996, between Flushing Financial
                     Corporation and State Street Bank and Trust Company, as Rights Agent (2)
Exhibit 31.1 Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by the Chief Executive Officer.
Exhibit 31.2 Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.
Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.
Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.

(1) Incorporated by reference to Exhibits filed with the Registration Statement on Form S-1,
      Registration No. 33-96488.
(2) Incorporated by reference to Exhibits filed with Form 8-K filed September 30, 1996.
(3) Incorporated by reference to Exhibits filed with Form S-8 filed May 31, 2002.
(4) Incorporated by reference to Exhibits filed with Form 10-Q for the quarter ended
      September 30, 2003.

b)    REPORTS ON FORM 8-K.

On April 17, 2003 the Company filed an 8-K announcing the release of its first quarter 2003 results of operations and financial condition.

On May 1, 2003 the Company filed an 8-K announcing that Messrs. Michael J. Hegarty, President and CEO, and John R. Buran, Executive Vice President and COO, would be making a presentation to a group of individual investors and fund managers on May 6, 2003.

On June 16, 2003, the Company filed an 8-K announcing that Messrs. Michael J. Hegarty, President and CEO, and John R. Buran, Executive Vice President and COO, would be making a presentation to several individual investors.

On June 17, 2003, the Company filed an 8-K announcing the appointment of John J. McCabe and John R. Buran to its Board of Directors.

On July 17, 2003, the Company filed an 8-K announcing the release of its second quarter 2003 results of operations and financial condition.

-22-

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

     
     
            Flushing Financial Corporation,    
     
     
Date: August 12, 2003     By:     /s/Michael J. Hegarty    
            Michael J. Hegarty    
            President and Chief Executive Officer    
     
     
Date: August 12, 2003     By:     /s/Monica C. Passick    
            Monica C. Passick    
            Senior Vice President, Treasurer and    
            Chief Financial Officer    

-23-