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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 September 30, 2004

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.)

1979 Marcus Avenue, Suite E140, Lake Success, New York 11042
(Address of principal executive offices)

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

144-51 Northern Boulevard Flushing, New York 11354
(Former address if changed since last report)

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 (and
                                                                                                    associated Preferred Stock Purchase Rights).

           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 October 29, 2004 was 19,186,859.

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		   9
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk   23
ITEM 4. Controls and Procedures   23
PART II - OTHER INFORMATION    
ITEM 1. Legal proceedings   23
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds   23
ITEM 3. Defaults Upon Senior Securities   23
ITEM 4. Submission of Matters to a Vote of Security Holders   24
ITEM 5. Other Information   24
ITEM 6. Exhibits   25
SIGNATURES   26

i

PART I - FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Financial Condition

(Dollars in thousands, except share data)
 September 30, 2004
 December 31, 2003
(Unaudited)
ASSETS
            
Cash and due from banks   $ 14,096   $ 20,300  
Federal funds sold    13,000    —  
Securities available for sale:  
    Mortgage-backed securities    421,005    479,393  
    Other securities    41,406    56,316  
Loans:  
    Multi-family residential    618,019    541,837  
    Commercial real estate    329,026    290,332  
    One-to-four family - mixed-use property    308,871    226,225  
    One-to-four family - residential    160,609    178,474  
    Co-operative apartment    3,203    3,729  
    Construction    29,754    23,622  
    Small Business Administration    5,121    4,931  
    Commercial business and other    8,480    4,894  
    Unearned loan fees and deferred costs, net    4,173    2,030  
    Allowance for loan losses    (6,546 )  (6,553 )
         Net loans    1,460,710    1,269,521  
Interest and dividends receivable    8,991    8,647  
Real estate owned, net    —    —  
Bank premises and equipment, net    7,186    6,380  
Federal Home Loan Bank of New York stock    21,761    24,462  
Goodwill    3,905    3,905  
Other assets    45,916    41,827  
          Total assets   $ 2,037,976   $ 1,910,751  
LIABILITIES  
Due to depositors:  
    Non-interest bearing   $ 48,979   $ 41,397  
    Interest-bearing:  
       Certificate of deposit accounts    691,602    593,760  
       Passbook savings accounts    216,420    216,988  
       Money market accounts    263,852    263,621  
       NOW accounts    45,030    42,809  
          Total interest-bearing deposits    1,216,904    1,117,178  
Mortgagors' escrow deposits    20,772    11,334  
Borrowed funds    574,743    578,142  
Other liabilities    20,130    15,938  
          Total liabilities    1,881,528    1,763,989  
STOCKHOLDERS' EQUITY  
Preferred stock ($0.01 par value; 5,000,000
    shares authorized)		    —    —  
Common stock ($0.01 par value; 40,000,000
    shares authorized; 19,456,696 shares issued
     and 19,183,119 shares outstanding at
     September 30, 2004, 19,290,601 shares issued
     and outstanding at December 31, 2003)		    195    193  
Additional paid-in capital    36,069    32,783  
Treasury stock, at average cost (273,577
    shares and none at September 30, 2004
    and December 31, 2003, respectively)		    (4,503 )  —  
Unearned compensation    (5,001 )  (7,373 )
Retained earnings    130,711    120,683  
Accumulated other comprehensive income
    (loss), net of taxes		    (1,023 )  476  
          Total stockholders' equity    156,448    146,762  
          Total liabilities and stockholders' equity   $ 2,037,976   $ 1,910,751  

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 nine months
ended September 30,
 ended September 30,
(In thousands, except per share data)
 2004
 2003
 2004
 2003
(Unaudited)
Interest and dividend income                    

Interest and fees on loans		   $25,077   $23,460   $72,923   $69,687  
Interest and dividends
  on securities:		  
    Interest    4,800    4,552    15,385    13,255  
    Dividends    84    79    256    169  
Other interest income    61    34    124    151  
          Total interest and
             dividend income		    30,022    28,125    88,688    83,262  
Interest expense  
Deposits    7,247    6,694    21,194    20,703  
Other interest expense    5,903    6,233    17,350    18,727  
          Total interest expense    13,150    12,927    38,544    39,430  
Net interest income    16,872    15,198    50,144    43,832  
Provision for loan losses    --    --    --    --  
Net interest income after
  provision for loan losses		    16,872    15,198    50,144    43,832  
Non-interest income  
Other fee income    911    871    2,753    2,498  
Net gain on sale of loans held for sale    47    76    227    246  
Net gain (loss) on sales of securities    5    25    (11 )  6  
Other income    565    690    1,650    2,165  
          Total non-interest income    1,528    1,662    4,619    4,915  
Non-interest expense  
Salaries and employee benefits    4,114    4,017    13,620    11,949  
Occupancy and equipment    931    799    2,575    2,205  
Professional services    791    758    2,491    2,134  
Data processing    465    530    1,468    1,350  
Depreciation and amortization    371    322    1,096    872  
Other operating expenses    1,470    1,496    4,690    4,551  
          Total non-interest expense    8,142    7,922    25,940    23,061  
Income before income taxes    10,258    8,938    28,823    25,686  
Provision for income taxes  
Federal    2,969    2,620    8,580    7,637  
State and local    1,032    801    2,661    2,188  
          Total taxes    4,001    3,421    11,241    9,825  
Net income   $ 6,257   $5,517   $17,582   $15,861  
Other comprehensive income
  (loss), net of tax		  
Unrealized gains (losses)
  on securities:		  
   Unrealized holding gains
     (losses) arising during period		   $3,613   $(2,855 ) $(1,505 ) $(3,151 )
   Reclassification adjustments
     for (gains) losses included
     in income		    (3 )  (13 )  6    (3 )
          Net unrealized holding
            gains (losses )		    3,610    (2,868 )  (1,499 )  (3,154 )
Comprehensive net income   $9,867   $2,649   $16,083   $12,707  

Basic earnings per share		   $0.36   $0.32   $ 1.01   $ 0.93  
Diluted earnings per share   $0.35   $0.31   $ 0.97   $ 0.90  
Dividends per share   $0.09   $0.073   $ 0.26   $ 0.207  

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 nine months ended
September 30,
(In thousands)
 2004
 2003
(Unaudited)
OPERATING ACTIVITIES            
Net income   $ 17,582   $ 15,861  
Adjustments to reconcile net income to net cash provided
  by operating activities:		  
     Depreciation and amortization of
       bank premises and equipment		    1,096    872  
     Net loss (gain) on sales of securities    11    (6 )
     Net gain on sales of loans    (227 )  (246 )
     Amortization of unearned premium,
       net of accretion of unearned discount		    1,610    2,702  
     Deferred income tax (benefit) provision    (189 )  1,753  
     Deferred compensation    1,138    542  
Origination of loans held for sale    (4,962 )  (9,078 )
Proceeds from sale of loans originated for sale    4,962    9,078  
Net decrease in other assets and liabilities    (773 )  (1,836 )
Unearned compensation    2,396    1,148  
          Net cash provided by operating activities    22,644    20,790  
INVESTING ACTIVITIES  
Purchases of bank premises and equipment    (1,902 )  (1,664 )
Redemptions (purchases) of Federal Home Loan Bank shares    2,701    (3,000 )
Purchases of securities available for sale    (102,186 )  (366,481 )
Proceeds from sales and calls of securities available for sale    78,822    62,391  
Proceeds from maturities and prepayments of securities
  available for sale		    95,794    155,324  
Proceeds from sale of non-performing loans    1,980    3,502  
Net originations and repayment of loans    (193,355 )  (64,982 )
Purchases of loans    --    (789 )
          Net cash used by investing activities    (118,146 )  (215,699 )
FINANCING ACTIVITIES  
Net increase in non-interest bearing deposits    7,582    3,109  
Net increase in interest-bearing deposits    99,726    113,860  
Net increase in mortgagors' escrow deposits    9,438    4,345  
Net decrease in short-term borrowed funds    (25,000 )  --  
Proceeds from long-term borrowed funds    110,000    130,000  
Repayment of long-term borrowed funds    (89,018 )  (70,017 )
Purchases of treasury stock    (8,360 )  (7,069 )
Proceeds from issuance of common stock
  upon exercise of stock options		    2,484    3,425  
Cash dividends paid    (4,554 )  (3,573 )
          Net cash provided by financing activities    102,298    174,080  
Net increase (decrease) in cash and cash equivalents    6,796    (20,829 )
Cash and cash equivalents, beginning of period    20,300    47,619  
         Cash and cash equivalents, end of period   $ 27,096   $ 26,790  
SUPPLEMENTAL CASH FLOW DISCLOSURE  
Interest paid   $ 38,417   $ 39,428  
Income taxes paid    8,835    6,611  

Non-cash activities:		  
   Securities purchased not yet settled    2,800    9,851  

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 nine months ended
(In thousands, except share data)
 September 30, 2004
Common Stock            
Balance, beginning of period   $    193  
Issuance upon the exercise of stock options
  (166,095 common shares)		         2  
         Balance, end of period   $    195  
Additional Paid-In Capital  
Balance, beginning of period   $    32,783  
Award of shares released from Employee
  Benefit Trust (3,931 common shares)		         57  
Surrender of restricted stock awards (124,650
  common shares) which were replaced with
  restricted stock units		         (227 )
Options exercised (166,095 common shares)         858  
Tax benefit from compensation expense in
  excess of that recognized for financial
  reporting purposes		         2,598  
         Balance, end of period   $    36,069  
Treasury Stock  
Balance, beginning of period   $     --  
Purchases of common shares outstanding
  (453,679 common shares)		         (8,023 )
Surrender of restricted stock awards (124,650
  common shares) which were replaced with
  restricted stock units		         (1,177 )
Repurchase of restricted stock awards (25,066
  common shares) to satisfy tax obligations		         (433 )
Shares issued upon vesting of restricted stock
  unit awards (42,390 common shares)		         579  
Forfeiture of restricted stock awards
  (1,050 common shares)		         (13 )
Issuance for Options exercised
  (288,478 common shares)		         4,564  
         Balance, end of period   $    (4,503 )
Unearned Compensation  
Balance, beginning of period   $    (7,373 )
Restricted stock award expense         1,333  
Surrender of restricted stock awards (124,650
  common shares) which were replaced with
  restricted stock units		         564  
Forfeiture of restricted stock awards
  (1,050 common shares)		         13  
Release of shares from Employee Benefit Trust
  (135,698 common shares)		         462  
         Balance, end of period   $    (5,001 )
Retained Earnings  
Balance, beginning of period   $    120,683  
Net income         17,582  
Options exercised (288,478 common shares)         (2,844 )
Shares issued upon vesting of restricted stock units
  (42,390 common shares)		         (156 )
Cash dividends declared and paid         (4,554 )
         Balance, end of period   $    130,711  
Accumulated Other Comprehensive Income (Loss)  
Balance, beginning of period   $    476  
Change in net unrealized gain (loss),
  net of taxes of approximately $1,200 on
  securities available for sale		        (1,505 )
Less: Reclassification adjustment for losses included
  in net income, net of taxes
  of approximately $(5)		        6  
      Balance, end of period   $    (1,023 )

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 (the "Holding Company") is the operation of its wholly-owned subsidiary, Flushing Savings Bank, FSB (the "Bank"). The consolidated financial statements presented in this Form 10-Q include the collective results of the Holding Company and the Bank, but reflect 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 conformity 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 2003 Annual Report on Form 10-K.

2.       Use of Estimates

The preparation of the consolidated 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 nine month periods ended September 30, 2004 and 2003 was computed by dividing net income by the total weighted average number of common shares outstanding, including only the vested portion of restricted stock and restricted stock unit awards. Diluted earnings per share includes the additional dilutive effect of stock options outstanding and the unvested portion of restricted stock and restricted stock unit awards during the period. Earnings per share has been computed based on the following:

Three months ended Nine months ended
September 30,
 September 30,
(Amounts in thousands, except per share data)
 2004
 2003
 2004
 2003
Net income     $ 6,257   $ 5,517   $ 17,582   $ 15,861  
Divided by:  
      Weighted average common
        shares outstanding		    17,458    17,104    17,424    16,985  
      Weighted average common stock
        equivalents		    593    711    673    713  
Total weighted average common shares &   common stock equivalents    18,051    17,815    18,097    17,698  
 Basic earnings per share   $ 0.36   $ 0.32   $ 1.01   $ 0.93  
 Diluted earnings per share   $ 0.35   $ 0.31   $ 0.97   $ 0.90  
 Dividends per share   $ 0.09   $ 0.073   $ 0.26   $ 0.207  
 Dividend payout ratio    25.00 %  22.92 %  25.74 %  22.14 %

Common stock equivalents that are antidilutive are not included in the computation of diluted earnings per share. There were no common stock equivalents that were considered antidilutive for the three- and nine-month periods ended September 30, 2004. Options to purchase 900 shares, at an average exercise price of $14.70, and unvested restricted stock awards of 450 shares, at an average market price on date of grant of $14.70, were not included in the computation of diluted earnings per share for the three months ended September 30, 2003. Options to purchase 268,050 shares, at an average exercise price of $13.55, and unvested restricted stock awards of 81,787 shares, at an average market price on date of grant of $13.51, were not included in the computation of diluted earnings per share for the nine months ended September 30, 2003.

-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 and restricted stock unit 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 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 Nine months ended
September 30,
 September 30,
(Dollars in thousands, except per share data)
 2004
 2003
 2004
 2003
Net income, as reported     $ 6,257   $ 5,517   $ 17,582   $ 15,861  
Add: Stock-based compensation
  expense included in reported
  net income, net of related
  tax effects		    139    170    1,158    513  
Deduct: Total stock-based compensation
  expense determined under fair
  value based method for all awards,
  net of related tax effects		    (306 )  (365 )  (2,798 )  (1,043 )
Pro forma net income   $ 6,090   $ 5,322   $ 15,942   $ 15,331  
Basic earnings per share:  
     As reported   $ 0.36   $ 0.32   $ 1.01   $ 0.93  
     Pro forma   $ 0.35   $ 0.31   $ 0.91   $ 0.90  
Diluted earnings per share:  
     As reported   $ 0.35   $ 0.31   $ 0.97   $ 0.90  
     Pro forma   $ 0.34   $ 0.30   $ 0.88   $ 0.87  

There were no grants of stock options, restricted stock awards, or restricted stock unit awards in the three-month period ended September 30, 2004. There were stock option grants of 900 shares of common stock, at an average exercise price of $14.70, and restricted stock awards of 450 shares of common stock, at an average market price on date of grant of $14.70, in the three-month period ended September 30, 2003.

There were stock option grants of 201,700 shares of common stock, at an average exercise price of $17.36, and 268,050 shares of common stock, at an average exercise price of $13.55, in the nine-month periods ended September 30, 2004 and 2003, respectively. There were restricted stock and restricted stock unit awards of 73,783 shares of common stock, at an average market price on date of grant of $16.95, and 81,783 shares of common stock, at an average market price on date of grant of $13.51, in the nine-month periods ended September 30, 2004 and 2003, respectively.

The nine-month period ended September 30, 2004 includes a charge to earnings, on an after-tax basis, of $0.2 million or $0.01 per diluted share, recorded in the second quarter of 2004, related to certain restricted stock unit awards in June 2004. In addition to the previously mentioned charge, the nine-month period ended September 30, 2004 includes a charge to earnings (recorded during the three months ended March 31, 2004), on an after-tax basis, of $0.5 million or $0.03 per diluted share, related to an adjustment of compensation expense for certain restricted stock awards made in prior periods. These charges reflect that certain participants under these plans have reached, or are close to reaching, retirement eligibility, at which time such awards will be fully vested. These amounts are included above in stock-based compensation expense.

In addition, the nine-month period ended September 30, 2004 includes, in the deduction for stock-based compensation determined under fair value method, a net after tax charge of $0.4 million or $0.02 per diluted share, related to certain stock option grants awarded in June 2004. In addition to the previously mentioned deduction, the nine-month period ended September 30, 2004 includes, in the deduction for stock-based compensation determined under the fair value method, a net after tax deduction of $0.8 million or $0.04 per diluted share, related to an adjustment of compensation expense using the fair value method for stock option grants awarded during prior periods. These deductions reflect that certain participants under these plans have reached, or are close to reaching, retirement eligibility, at which time such awards will be fully vested.

-6-

PART I - FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Notes to Consolidated Financial Statements

5.      Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"), which established guidance for determining when an entity should consolidate another entity that meets the definition of a variable interest entity ("VIE"). A VIE exists either when the entity does not have sufficient equity at risk or lacks any one of three characteristics normally associated with a controlling financial interest. If an entity is considered a VIE, judgment and quantitative analysis typically is required to assess whether the company should consolidate the entity as the primary beneficiary. The company is considered the primary beneficiary when it has a variable interest that will absorb a majority of an entity's expected losses, receive a majority of an entity's expected residual returns, or both. In December 2003, the FASB issued a revision to FIN 46, FIN 46R, to address various technical corrections and implementation issues that have arisen since its issuance. The provisions of FIN 46R were effective beginning in the first quarter of 2004.

The Holding Company owns Flushing Financial Capital Trust I (the "Trust"), a special purpose business trust formed to issue capital securities, which is subject to FIN 46 and FIN 46R. Prior to 2004, the Trust was consolidated. Since the Holding Company does not have sufficient equity at risk, as defined in FIN 46R, the Trust was deconsolidated, effective with the first quarter of 2004. Deconsolidation of the Trust has not had a material impact on the Company's financial statements.

6.      Stock Split

On November 18, 2003, the Board of Directors of the Holding Company declared a three-for-two split of the Holding Company's common stock to be paid in the form of a 50% stock dividend, payable on December 15, 2003. Each stockholder received one additional share for every two shares of the Holding Company's common stock held at the record date, December 1, 2003. All historical share and per share amounts reported in this Form 10-Q have been restated to reflect the three-for-two stock split paid in the form of a stock dividend on December 15, 2003.

-7-

PART I - FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES
Notes to Consolidated Financial Statements

7.      Pension and Other Postretirement Benefit Plans

The following table sets forth the components of net expense for the pension and other postretirement benefit plans.

Three months ended Nine months ended
September 30,
 September 30,
 2004
 2003
 2004
 2003
(In thousands)
Employee Pension Plan:                    
     Service cost   $ 156   $ 139   $ 466   $ 416  
     Interest cost    197    188    591    565  
     Amortization of unrecognized loss    20    4    61    13  
     Amortization of past service liability    (4 )  (6 )  (10 )  (18 )
     Expected return on plan assets    (292 )  (271 )  (875 )  (815 )
          Net employee pension expense   $ 77   $ 54   $ 233   $ 161  
Outside Director Pension Plan:  
     Service cost   $ 19   $ 10   $ 56   $ 30  
     Interest cost    12    5    37    15  
     Amortization of unrecognized loss    4    4    11    11  
     Amortization of past service liability    35    29    106    89  
          Net outside director pension expense   $ 70   $ 48   $ 210   $ 145  
Other Postretirement Benefit Plans:  
     Service cost   $ 41   $ 38   $ 124   $ 114  
     Interest cost    54    54    164    163  
     Amortization of unrecognized loss    13    15    38    46  
     Amortization of past service liability    (33 )  (32 )  (98 )  (98 )
          Net other postretirement
            benefit expense		   $ 75   $ 75   $ 228   $ 225  

The Company previously disclosed in its consolidated financial statements for the year ended December 31, 2003 that it expects to contribute $0.9 million, $0.1 million and $0.1 million to the Employee Pension Plan, Outside Director Pension Plan and Other Post Retirement Benefit Plans, respectively, during the year ended December 31, 2004. As of September 30, 2004, the Company has contributed $859,000 to the Employee Pension Plan, $75,000 to the Outside Director Plan, and $70,000 to the Other Postretirement Benefit Plans. As of September 30, 2004, the Company has not revised its expected contributions for the year ending December 31, 2004 for any of these plans.

-8-

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 Bank is a consumer-oriented savings institution and conducts its business through eleven banking offices located in Queens, Brooklyn, Manhattan, Bronx and Nassau County. The Bank has taken steps to close the banking office located in the Bronx during the fourth quarter of 2004. Upon completion, this closing will reduce the number of branches to ten, and the deposits held at this location will be transferred to the main branch in Flushing, Queens. The Holding Company does not anticipate that the closing of this branch will have a material effect on its financial condition or results of operations. 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 and the Bank (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 (focusing on mixed-use properties - properties that contain both residential dwelling units and commercial units), multi-family residential and commercial real estate mortgage 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 other small business 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 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. However, the Company has not recorded a provision for possible loan losses since 1999. 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, projections of results of specific activities or investments 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