Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — Q4 2021 Earnings Presentation
26 slides from Flushing Financial's earnings presentation, Jan 28, 2022
Slide 1: 4Q21 Earnings Conference Call
4Q21 Earnings Conference Call January 28, 2022
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 : Statements in this Presentation relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not
Slide 3: Record 2021 GAAP and Core EPS; 4Q21 highlights
3 4 1 2 Ensure appropriate risk - adjusted returns for loans while optimizing costs of funds Maintain strong historical loan growth Average non - interest deposits increased 33.6% YoY Record low cost of deposits at 0.25% in 4Q21; Loan yields fell 2 bps QoQ ; Core Loan yields down 4 bps Net int
Slide 4: 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 5: Well-positioned to Benefit from Industry Merger Disruption
5 Well - positioned to Benefit from Industry Merger Disruption • 8 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, $60B or 18% involve a merger participant 3 • 93% of FFIC’s de
Slide 6: Loan Closings Increase; Satisfactions Should Decline
Loan Closings Increase; Satisfactions Should Decline 6 Closings expected to increase – Pipeline remains strong although below the record 3Q21 level – 8 bank mergers announced within footprint – Strong organic growth opportunity Pipeline up 21% YoY – Mix is balanced with real estate and business
Slide 7: Digital Banking Usage Continues to Increase
Digital Banking Usage Continues to Increase 7 Technology Enhancements Remain a Priority 31% Increase in Monthly Mobile Active Users YoY ~23,000 Active Online Banking Users 37% YoY Growth 17% Digital Banking Enrollment YoY Growth Numerated Improving Small Business Customer Experience through Automate
Slide 8: Record Low Deposit Costs with Improving Mix
Record Low Deposit Costs with Improving Mix 8 Deposits Rise While Costs Fall Total Average Deposits 1 ($MM) 1 Includes mortgage escrow deposits Average non - interest bearing deposit up 34% YoY Non - interest bearing deposits are 15.1% of average deposits 1 , up from 13.3% a year ago 4Q21 chec
Slide 9: Business Banking Loans Increase in 4Q21 Excluding PPP
$6,702 $6,746 $6,717 $6,627 $6,634 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 4Q20 1Q21 2Q21 3Q21 4Q21 Multifamily Commercial Real Estate Construction 1-4 Family Business Banking Loans Increase in 4Q21 Excluding PPP 9 Core Loan Yields 4.06% 3.99% 4.06% 4.09% 4.05% Loan Composition Period End
Slide 10: Slight NIM Compression QoQ; Net Interest Income Growth Expected
Slight NIM Compression QoQ; Net Interest Income Growth Expected Primarily From Asset Expansion 10 Base NIM FTE 2.97% 3.01% 3.04% 3.15% 3.13% GAAP NIM FTE 3.08% 3.18% 3.14% 3.34% 3.29% $54.8 $58.7 $61.3 $62.2 $61.2 3.03% 3.06% 3.14% 3.27% 3.21% 4.06% 3.99% 4.06% 4.09% 4.05% 0.47% 0.39% 0.34% 0.29% 0.
Slide 11: The Balance Sheet Naturally Reprices Higher Over Time
The Balance Sheet Naturally Reprices Higher Over Time 11 Interest Rate Risk Profile Static Balance Sheet For Base Case Net Interest Income Projections Using a static balance sheet and the year end 2021 yield curve, net interest income should expand 1 – Benefits of swap repricing • Repricing of $59
Slide 12: Preparing for a Rising Rate Environment
Preparing for a Rising Rate Environment 12 Interest Rate Risk Profile Static Balance Sheet For Base Case Net Interest Income Projections Rates Up 200 bps over 24 Months Net Interest Income declines in a rising rate environment – The duration of our assets is greater than liabilities – Approximatel
Slide 13: Net Charge-offs Significantly Better Than the Industry
Net Charge - offs Significantly Better Than the Industry 13 NCOs / Average Loans 0.06% 0.27% 1 -0.2% 0.3% 0.8% 1.3% 1.8% 2.3% 2.8% 3.3% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 YTD 3Q21 FFIC Industry <1 basis point of Net Recoveries to Average Loans in 4Q21; 5 bps of Net Charge - offs in 20
Slide 14: Continued Strong Credit Quality
0.26% 0.26% 0.22% 0.25% 0.19% 0.15% 0.20% 0.25% 0.30% 0.35% 4Q20 1Q21 2Q21 3Q21 4Q21 NPAs / Assets 14 Continued Strong Credit Quality Note: CECL accounting adopted January 1, 2020 NPAs / Assets Criticized and Classified Loans / Gross Loans Reserves / Gross Loans & Reserves / NPLs ACL by Loan Segment
Slide 15: TCE Ratio Expands Even With Share Repurchases; Dividend Yield
TCE Ratio Expands Even With Share Repurchases; ~3.4% Dividend Yield 1 15 150,976 Share Repurchased in 4Q21; 56% of 4Q21 Earnings Returned to Shareholders 11% Book Value Per Share Growth in 2021 11% Increase in Tangible Book Value Per Share YoY 1 Calculated using 1/21/22 closing price of $24.79 $19.4
Slide 16: Noninterest Income and Expense; Net Interest Income/NIM Outlook
16 Noninterest Income and Expense – 4Q21 non - interest income includes $2.0MM ($0.05/share, net of tax) of dividend received on retirement plan investments that is not expected to repeat – The elimination of overdraft, insufficient funds, and transfer fees on consumer checking accounts is expecte
Slide 17: Preparing for higher rates – Forward starting funding swaps start in 2022 and
17 Preparing for higher rates – Forward starting funding swaps start in 2022 and are mostly fully phased in by the end of 2023 – Adding floating - rate assets in the short and medium term to improve rate risk profile – Net Interest Income growth driven from balance sheet expansion which should mor
Slide 18: Appendix
Appendix [EEUFLUSHING 18
Slide 19: PPP: 75% of Lifetime Originations and Acquisitions Forgiven
PPP: 75% of Lifetime Originations and Acquisitions Forgiven 19 Period End PPP Loans ($MM) $151.9 $251.0 $197.3 $130.8 $77.4 Average PPP Loans ($MM) PPP NIM Benefit/(Drag) (0.03)% (0.04)% 0.00% 0.02% 0.03% Lifetime originations and acquisitions of $310MM with a balance of $77.4MM at 4Q21 and remain
Slide 20: Swaps Help Protect NIM from Rising Short-Term Rates
$125 $321 $121 $25 $125 $230 $50 1.86% 2.09% 1.96% 0.47% 0.88% 0.70% 0.80% 2022 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 y
Slide 21: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 21 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 desig
Slide 22: (Dollars in thousands, except per share data) GAAP income before income taxes $ 22,826
22 (Dollars in thousands, except per share data) GAAP income before income taxes $ 22,826 $ 34,812 $ 25,416 $ 26,224 $ 3,878 $ 109,278 $ 45,182 Day 1, Provision for Credit Losses - Empire transaction (Provision for credit losses) — — — — 1,818 — 1,818 Net (gain) loss from fair value adjustments (Non
Slide 23: (Dollars in thousands) GAAP net interest income $ 62,674 $ 63,364 $ 61,039 $
23 (Dollars in thousands) GAAP net interest income $ 62,674 $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 247,969 $ 195,199 Net (gain) loss from fair value adjustments on qualifying hedges (1,122) (194) 664 (1,427) (1,023) (2,079) 1,185 Net amortization of purchase accounting adjustments (462) (1,100) (565)
Slide 24: Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue
24 Reconciliation of GAAP Revenue and Pre - provision Pre - tax Net Revenue (Dollars in thousands) GAAP Net interest income $ 62,674 $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 247,969 $ 195,199 Net (gain) loss from fair value adjustments on qualifying hedges (1,122) (194) 664 (1,427) (1,023) (2,079) 1,18
Slide 25: Contact Details
25 Contact Details Susan K. Cullen SEVP, CFO & Treasurer Phone: (718) 961 - 5400 Email: scullen@flushingbank.com Al Savastano, CFA Director of Investor Relations Phone: (516) 820 - 1146 Email: asavastano@flushingbank.com
Slide 26: Flushing Financial Corporation
[age LUSHING Financial Corporation