Slide 1: Subordinated Notes Offering August 2022
Subordinated Notes Offering August 2022 Filed Pursuant to Rule 433 Supplementing the Preliminary Prospectus Dated August 15, 2022 Registration No. 333 - 260993 August 15, 2022
Slide 2: Forward-Looking Statements & Other Disclaimers
2 Forward - Looking Statements & Other Disclaimers This presentation contains forward - looking statements within the meaning of the federal securities laws . These statements include statements with respect to Flushing Financial Corporation’s (“we”, “our”, “us” or the “Company”) beliefs, plans, obj
Slide 3: Additional Information and Where to Find It
3 Additional Information and Where to Find It The Company has filed a registration statement (including a prospectus) (File No . 333 - 260993 ) and a preliminary prospectus supplement with the Securities and Exchange Commission ("SEC") for the offering to which this presentation relates . Before you
Slide 4: Terms of the Proposed Subordinated Notes Offering
4 Terms of the Proposed Subordinated Notes Offering Flushing Financial Corporation Issuer Subordinated Notes due 2032 Security Fixed - to - Floating Rate Structure 10 - year (non - call for 5 years) Term Book - Running Managers General corporate purposes Use of Proceeds SEC Registered Issuance Type
Slide 5: Investment Highlights
5 Investment Highlights Conservative Underwriting with History of Solid Value Creation ► Leading Community Bank in the Greater NYC Area ► Well Diversified and Low Risk Loan Portfolio ► History of Sound Credit Quality since IPO in 1995 ► Asian Banking Niche ► Well Positioned to Capture Market Share T
Slide 6: Flushing Financial Snapshot
6 Flushing Financial Snapshot (NASDAQ: FFIC) Competitive Advantages Balance Sheet & Market Data Assets $8.3B Loans $6.7B Deposits $6.4B 1 Equity $0.7B Dividend Yield 4.14% 3 Market Cap. $637MM 3 Financial Highlights GAAP/Core ROAA 2 1.06% / 1.00% GAAP/Core ROAE 2 12.91% / 12.08% GAAP/Core PPNR / AA
Slide 7: Strong Asian Banking Market Focus
7 Strong Asian Banking Market Focus 15% of Total Deposits 1 $34B Market Potential (~3% Market Share 1 ) 6.9% FFIC 5 Year Asian Market CAGR vs 3.7% 2 for the Comparable Asian Markets 1 Includes mortgagors’ escrow deposits 2 As of June 30, 2021; Latest FDIC Data; includes Elmhurst Asian Communities –
Slide 8: Experienced Executive Leadership Team
8 Experienced Executive Leadership Team All Senior Executives Have Over 20 Years of Experience in Banking Aligned Investor Interest with Insider Ownership of 6.1%² Allen Brewer SEVP, Chief Information Officer Tom Buonaiuto SEVP, Chief of Staff, Deposit Channel Executive Vincent Giovinco EVP, Commerc
Slide 9: Second Quarter 2022 Highlights
▪ GAAP Net Income $25.0MM, increasing 30% YoY; Core Net Income was $21.5MM 2 , differential driven by life insurance proceeds and net positive fair value adjustments in Q2 ▪ GAAP ROAA and ROAE 1.22% and 15.00%, respectively; Core ROAA and ROAE were 1.05% 2 and 12.90% 2 , respectively ▪ GAAP NIM incr
Slide 10: Record Loan Closings; Loan Pipeline Remains At Elevated Levels
Record Loan Closings; Loan Pipeline Remains At Elevated Levels 10 ▪ Closings accelerated in 2Q22 – Closings up 63.0% YoY excluding PPP – Organic growth opportunity remains – Closings could slow with rising interest rates ▪ Pipeline up 34.7% YoY – Second highest level after a record last quarter – Co
Slide 11: Year Track Record of Steady Growth
11 25 Year Track Record of Steady Growth Core PPNR ($MM)³ Core Net Income ($MM)³ Tangible Book Value Per Share ($) Assets ($B) Total Gross Loans ($B)¹ Total Deposits ($B) ² $3.3 $40.5 1995 2000 2005 2010 2015 2020 YTD 2Q22 $6.3 $59.3 1995 2000 2005 2010 2015 2020 YTD 2Q22 $0.6 $6.4 1995 2000 2005 20
Slide 12: Well-positioned to Benefit from Industry Merger Disruption
12 Well - positioned to Benefit from Industry Merger Disruption • 10 bank mergers have been announced or closed involving Long Island area banks 2 • Out of the $328B of total industry deposits in Nassau, Queens, Kings, and Suffolk Counties, $87B or 27% involve a merger participant 3 • 93% of FFIC’s
Slide 13: Digital Banking Usage Continues to Increase
Digital Banking Usage Continues to Increase 13 Technology Enhancements Remain a Priority 28% Increase in Monthly Mobile Active Users YoY ~25,000 Active Online Banking Users 27% YoY Growth 14% Digital Banking Enrollment YoY Growth Numerated Small Business Lending Platform $10.7MM of Commitments in 1H
Slide 14: 2022 Strategic Objectives: Growth Through Investment
3 4 1 2 Improve and Grow Funding Mix Generate Appropriate ly Priced Loan Growth ▪ Non - interest bearing DDA growth ▪ Increase core deposits ▪ Manage overall deposit costs ▪ Achieve historical loan growth ▪ Price loans in relation to acceptable risk ▪ More emphasis on floating - rate loans Manage As
Slide 15: Increase in Core Loan Yields > Increase in Core Deposit Yields
Increase in Core Loan Yields > Increase in Core Deposit Yields 15 GAAP NIM FTE 3.14% 3.34% 3.29% 3.36% 3.35% $61.3 $62.2 $61.2 $62.7 $64.6 3.14% 3.27% 3.21% 3.31% 3.33% 4.06% 4.09% 4.05% 4.04% 4.15% 0.34% 0.30% 0.25% 0.22% 0.29% -0.25% 0.75% 1.75% 2.75% 3.75% 4.75% 5.75% $10.0 $20.0 $30.0 $40.0 $50.
Slide 16: Continued Growth in Noninterest Bearing Deposits
Continued Growth in Noninterest Bearing Deposits 16 CDs Decline as a Percentage of Average Deposits 1 Total Average Deposits 1 ($MM) 1 Includes mortgage escrow deposits ▪ Average noninterest bearing deposit up 13.1% YoY ▪ Noninterest bearing deposits are 16.2% of average deposits 1 , up from 14.2% a
Slide 17: Limited Deposit Rate Increases in 2Q22
Limited Deposit Rate Increases in 2Q22 17 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 Average Fed Funds Deposit Costs Weighted Average Deposit Beta of 9% in 1H22
Slide 18: Loan Growth Returns; Yields Increase YOY and QoQ
$6,717 $6,627 $6,634 $6,601 $6,752 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2Q21 3Q21 4Q21 1Q22 2Q22 Multifamily Commercial Real Estate Construction 1-4 Family Business Banking Loan Growth Returns; Yields Increase YOY and QoQ 18 Core Loan Yields 4.06% 4.09% 4.05% 4.04% 4.15% Loan Compositio
Slide 19: 46% of the Portfolio to Reprice Upwards Through 2024
46% of the Portfolio to Reprice Upwards Through 2024 19 ▪ Floating rate loans include any loans (including swaps) tied to an index that reprices within 90 days ▪ Loans to reprice ~120 bps higher over time assuming index values as of June 30, 2022 ▪ 15% of loans reprice within a quarter; while 5% and
Slide 20: Swaps Help Protect NIM from Rising Short-Term Rates
$321 $196 $75 $230 $50 2.09% 1.61% 0.57% 0.70% 0.80% 2023 2024 2025 Effective Swaps Maturities Forward Swaps Start Date Effective WA Rate Forward WA Rate $MM 20 Swaps Help Protect NIM from Rising Short - Term Rates ▪ The balance sheet naturally improves over the next two years without any changes in
Slide 21: Loan Composition
21 Loan Composition Mortgage Loans $2.5 48% $1.9 35% $0.6 11% $0.2 5% $0.1 1% Multifamily Residential Commercial Real Estate One - to - Four Family ― Mixed - Use One - to - Four Family ― Residential Construction $5.3B Portfolio Commercial Business Loans $1.5B Portfolio Well Diversified Loan Portfoli
Slide 22: Well Secured Multifamily and CRE Portfolios
Well Secured Multifamily and CRE Portfolios 22 Underwrite Real Estate Loans with a Cap Rate in Mid - 5s and Stress Test Each Loan Multifamily Geography 16% 31% 19% 17% 17% Bronx Kings Manhattan Queens Other $2.5B Portfolio • Average loan size: $1.1MM • Average monthly rent of $1,307 vs $2,974 1 for
Slide 23: Loans Secured by Real Estate Have an Average LTV of <38%
23 Loans Secured by Real Estate Have an Average LTV of <38% Multifamily ▪ Primarily in market lending ▪ Review net operating income and the collateral plus the financial resources and income level of the borrower (including experience in managing or owning similar properties) ▪ ARMs adjust each 5 -
Slide 24: Well Diversified Commercial Business Portfolio
24 Well Diversified Commercial Business Portfolio Commercial Business ▪ Primarily in market lending ▪ Annual sales up to $250MM ▪ Lines of credit and term loans, including owner occupied mortgages ▪ Loans secured by business assets, including account receivables, inventory, equipment and real estate
Slide 25: Net Charge-offs Significantly Better Than the Industry; Strong DSR
▪ Over two decades and multiple credit cycles, Flushing Financial has a history of better than industry credit quality ▪ Average LTVs on the Real Estate portfolio is <38% 4 – Only $21.7MM of real estate loans (0.3% of gross loans) with an LTV of 75% or more 4 Net Charge - offs Significantly Better T
Slide 26: Continued Strong Credit Quality
$2,532 $1,865 $561 $243 $8 $72 $41 $1,431 Multi-family residential Commercial real estate One-to-four family - mixed- use property One-to-four family - residential Co-operative apartments Construction Small Business Administration Commercial business and other Loan Balance ($MM) 1.03% 1.04% 0.87% 0.
Slide 27: Liquidity & Securities
27 Liquidity & Securities Liquidity Position & Sources (2Q22) AFS Securities Portfolio (2Q22) HTM Securities Portfolio (2Q22) Agency MBS $7.9 Muni Tax Exempt $66.2 U.S. Treasuries $83.0 MBS $510.9 CLO $126.0 Corporate Bonds $124.5 Other $1.7 Mutual Fund $11.6 $ 74 MM Total Portfolio $858MM Total Por
Slide 28: Double Leverage & Interest Coverage
28 Double Leverage & Interest Coverage Actual Pro Forma For the Twelve Months Ended, Year-to-Date Year-to-Date ($ in thousands) 12/31/2019 12/31/2020 12/31/2021 6/30/2022 6/30/2022 Investment in Subsidiaries $685,975 $728,097 $845,561 $835,830 $884,705 Consolidated Equity $579,672 $618,997 $679,628
Slide 29: Pro Forma Capitalization: Holding Company Sub Debt
29 Pro Forma Capitalization: Holding Company Sub Debt Pro Forma Actual Issuance For Sub Debt ($ in thousands) 6/30/2022 Adjustments 6/30/2022 Holding Company Regulatory Capital Common Equity Tier 1 Capital $686,258 – $686,258 Other Tier 1 Instruments 53,518 – 53,518 Tier 1 Capital Deductions – – – T
Slide 30: Historical Consolidated Regulatory Capital Ratios
30 Historical Consolidated Regulatory Capital Ratios Tangible Common Equity / Tangible Assets (%) Tier 1 Leverage Ratio (%) Tier 1 Ratio (%) Total Risk - Based Capital Ratio (%) 8.2% 7.8% 8.0% 7.5% 8.2% 7.8% 7.8% 2017 2018 2019 2020 2021 June 30 2022 Sub Debt Issuance 9.0% 8.7% 8.7% 8.4% 9.0% 8.9% 8
Slide 31: Key Takeaways
31 ▪ Long history of superior credit quality – Loan losses consistently below industry levels – Average real estate LTVs <38% – Weighted average Debt Service Coverage Ratio of 1.8x for multifamily and NOO CRE ▪ Benefiting from merger disruption – Since March 31, 2021, added 42 people from announced/
Slide 32: Appendix
Appendix IE : _ \ aaa a Ue BHEFLUSHING
Slide 33: Historical Consolidated Balance Sheet
($ in thousands) For the Year Ended December 31, As of Quarter Ended 2017 2018 2019 2020 2021 June 30, 2022 Cash and due from banks $51,546 $118,561 $49,787 $157,388 $81,723 $137,026 Securities held to maturity: Mortgage-backed securities 7,973 7,953 7,934 7,914 7,894 7,885 Other securities 22,913 2
Slide 34: Historical Consolidated Income Statement
34 Historical Consolidated Income Statement ($ in thousands) For the Year Ended December 31, Six Months Ended 2017 2018 2019 2020 2021 June 30, 2022 Interest Income $234,585 $256,998 $278,956 $264,327 $288,562 $145,611 Interest Expense 61,478 89,592 117,016 69,128 40,593 17,402 Net Interest Income $
Slide 35: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 35 Non - cash Fair Value Adjustments to GAAP Earnings The variance in GAAP and core earnings is partly driven by the impact of non - cash net gains and losses from fair value adjustments . These fair value adjustments relate primarily to swaps design
Slide 36: Reconciliation of GAAP Earnings to Core Earnings
36 1 Core diluted earnings per common share may not foot due to rounding 2 Ratios are calculated on an annualized basis Reconciliation of GAAP Earnings to Core Earnings (Dollars in thousands, except per share data) GAAP income before income taxes $ 34,971 $ 24,640 $ 22,826 $ 34,812 $ 25,416 $ 59,611
Slide 37: Reconciliation of GAAP to Core Net Interest Income and NIM
37 1 Excludes purchase accounting average balances for all periods presented Reconciliation of GAAP to Core Net Interest Income and NIM For the three months ended For the six months ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, (Dollars in thousands) 2022 2022 2021 2
Slide 38: Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue
38 Reconciliation of GAAP Revenue & Pre - Provision Pre - Tax Net Revenue (Dollars in thousands) GAAP Net interest income $ 64,730 $ 63,479 $ 62,674 $ 63,364 $ 61,039 $ 128,209 $ 121,931 Net (gain) loss from fair value adjustments on qualifying hedges 60 129 (1,122) (194) 664 189 (763) Net amortizat
Slide 39: Calculation of Tangible Stockholders' Common Equity to Tangible Assets
39 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets
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