Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — 2022 Hovde Group Financial Services Conference
31 slides from Flushing Financial's conference presentation, Nov 2, 2022
Slide 1: 2022 Hovde Group Financial Services Conference
2022 Hovde Group Financial Services Conference November 2 - 4, 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: Flushing Financial Snapshot
3 Flushing Financial Snapshot (NASDAQ: FFIC) Key Messages Balance Sheet Assets $ 8.6B Loans, net $ 6.9B Deposits $ 6.1B 1 Equity $ 0.7B Performance GAAP/Core ROAA 1.11%/0.90% 2 GAAP/Core ROAE 13.91%/11.24% 2 GAAP/Core Exp/Avg Assets 1.69%/1.68% 2 Tangible Book Value $ 21.81 Dividend Yield 4.3% 3 3 Q
Slide 4: Well-positioned to Benefit from Industry Merger Disruption
4 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 $ 363B of total industry deposits in Nassau, Queens, Kings, and Suffolk Counties, $ 85B or 23% involve a merger participant 3 • 93% of FFIC’s
Slide 5: Strong Asian Banking Market Focus
5 Strong Asian Banking Market Focus 16% of Total Deposits 1 $ 36B Deposit Market Potential (~3% Market Share 2 ) 7.6% FFIC 5 Year Asian Market CAGR vs 3.7% 2 for the Comparable Asian Markets Asian Communities – Total Loans $802MM and Deposits $1B Multilingual Branch Staff Serves Diverse Customer Bas
Slide 6: Key Events During 3Q22
Signed Lease for Brooklyn Branch Expanding Asian Banking Footprint Successfully Issued $65.0MM of Subordinated Notes Provides the Bank with regulatory capital flexibility; lowers the CRE concentration ratio Attractive funding as new issue coupons are higher Sponsored and Participated in Fl
Slide 7: Strong Loan Closings; Loan Pipeline Declines
Strong Loan Closings; Loan Pipeline Declines 7 Closings up – Closings up 90.1% YoY in 3Q22 – Loan pull through rates were 79.6% in 3Q22 compared to 75.9% in 2Q22 and 56.4% in 3Q21 Pipeline declines from record levels – Risings rates could slow closings and prepayments – Became more selective in
Slide 8: Loans Secured by Real Estate Have an Average LTV of <37%
8 Loans Secured by Real Estate Have an Average LTV of < 37% 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 9: Well-Secured Multifamily and CRE Portfolios
Well - Secured Multifamily and CRE Portfolios 9 Underwrite Real Estate Loans with a Cap Rate in Mid - 5s and Stress Test Each Loan Multifamily Geography 15% 31% 21% 17% 16% Bronx Kings Manhattan Queens Other $ 2.6B Portfolio • Average loan size: $ 1.0MM • Average monthly rent of $ 1,567 vs $ 2,978 1
Slide 10: Well-Diversified Commercial Business Portfolio
10 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 est
Slide 11: Loans Continue to Increase; Yields Improve
41.0% 38.9% 37.8% 37.9% 37.5% 27.9% 27.5% 26.2% 26.8% 27.6% 0.9% 1.2% 1.2% 0.9% 0.9% 14.0% 13.7% 12.8% 12.8% 11.5% 16.2% 18.7% 22.0% 21.6% 22.5% $5,536 $5,757 $6,702 $6,634 $6,948 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2018 2019 2020 2021 3Q22 Multifamily Commercial Real Estate Constructi
Slide 12: Core Loan Yields Increase 20 bps QoQ; NIM Compresses
$168.3 $164.2 $196.9 $243.3 $60.5 2.72% 2.49% 2.87% 3.17% 3.03% 4.38% 4.51% 4.14% 4.05% 4.35% 1.36% 1.76% 0.82% 0.32% 0.76% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 2018 2019 2020 2021 3Q22 Core NII FTE Core NIM FTE Core Loan Yields Core Deposit Yield Core Lo
Slide 13: 42% of the Loan Portfolio to Reprice Through 2024
Floating rate loans include any loans (including swaps) tied to an index that reprices within 90 days Through 2024, loans to reprice ~200 bps higher assuming index values as of September 30 , 2022 ~15 % reprice with every Fed move and an additional 10 - 15% of loans reprice annually 42% of the
Slide 14: Deposit Rates Rise But At Slower Pace Than Fed Moves
Deposit Rates Rise But At Slower Pace Than Fed Moves 14 Year to Date, Weighted Average Interest Bearing Deposit Beta of 29.9% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Average Fed Funds Interest
Slide 15: Starting to Increase CDs to Lengthen Liability Duration
15 Starting to Increase CDs to Lengthen Liability Duration Average Deposits Composition ($MM) 8.0% 8.1% 11.3% 14.4% 16.7% 29.7% 28.6% 31.1% 33.8% 28.8% 4.9% 4.0% 3.4% 2.5% 2.5% 24.7% 27.3% 30.2% 32.0% 34.0% 31.3% 30.6% 22.6% 16.1% 16.9% 1.4% 1.4% 1.4% 1.2% 1.1% $4,736 $5,013 $5,163 $6,416 $6,277 1.3
Slide 16: Digital Banking Usage Continues to Increase
Digital Banking Usage Continues to Increase 16 Technology Enhancements Remain a Priority 25% Increase in Monthly Mobile Active Users Sept 2022 YoY ~ 26,500 Users with Active Status 22% Sept 2022 YoY Growth 11% Digital Banking Enrollment Sept 2022 YoY Growth Numerated Small Business Lending Platform
Slide 17: Net Charge-offs Significantly Better Than the Industry
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 < 37% 4 – Only $23.1MM of real estate loans ( 0.33% of gross loans) with an LTV of 75% or more 4 Net Charge - offs Significantly Bette
Slide 18: Continued Strong Credit Quality
18 Continued Strong Credit Quality NPAs / Assets Criticized and Classified Loans / Gross Loans Reserves / Gross Loans & Reserves / NPLs ACL by Loan Segment (3Q22) 128.9% 164.1% 214.3% 248.7% 142.3% 0.38% 0.38% 0.67% 0.56% 0.59% 0% 0% 0% 1% 1% 1% 1% 1% 2% 2% 2% 0% 50% 100% 150% 200% 250% 300% 2018 20
Slide 19: Book Value and Tangible Book Value Per Share Grow in 3Q22
Book Value and Tangible Book Value Per Share Grow in 3Q22 19 60 % of Earnings Returned Through the First 9 Months of 2022; 45% in 2021 Book Value Per Share 5 Year CAGR of 4% Tangible Book Value Per Share 5 Year CAGR of 4% $19.64 $20.59 $20.11 $22.26 $22.47 10.98% 10.95% 9.88% 10.86% 10.49% 8.74% 8.7
Slide 20: Key Takeaways and Outlook
20 Managing through rate increases – Controlling deposit rate increases is key for the net interest income outlook – Net interest income generally rises closer to the base case by Year 3 as cumulative loan repricing exceeds deposits costs Opportunistic capital return with strong dividend yield o
Slide 21: Appendix
Appendix [EEUFLUSHING
Slide 22: Experienced Executive Leadership Team
22 Experienced Executive Leadership Team Executive Compensation and Insider Stock Ownership (6.1% 2 ) Aligned with Shareholder Interests John Buran President and CEO Maria Grasso SEVP, COO, Corporate Secretary Susan Cullen SEVP, CFO, Treasurer Francis Korzekwinski SEVP, Chief of Real Estate Michael
Slide 23: Track Record of Steady Growth
23 26 Year Track Record of Steady Growth Core EPS ($) Dividends per Share ($) Tangible Book Value per Share ($) Assets ($B) Total Gross Loans ($B) Total Deposits ($B) 1 $ - $0.84 $0.88 1995 2000 2005 2010 2015 2020 2021 9M22 $ - $2.81 $1.92 1995 2000 2005 2010 2015 2020 2021 9M22 $0.6 $6.1 1995 2000
Slide 24: Environmental, Social, and Governance
24 Environmental, Social, and Governance Environmental – reduction of carbon footprint and assessing climate change through underwriting Social - Building rewarding relationships with communities, customers, and employees See more details in our ESG Report under Investor Relations at FlushingBank.co
Slide 25: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 25 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 borrowing c
Slide 26: Reconciliation of GAAP Earnings and Core Earnings
26 Reconciliation of GAAP Earnings and Core Earnings 1 Core diluted earnings per common share may not foot due to rounding 2 Ratios are calculated on an annualized basis (Dollars In thousands, except per share data) GAAP income (loss) before income taxes $ 109,278 $ 45,182 $ 53,331 $ 65,485 $ 66,134
Slide 27: Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue
27 Reconciliation of GAAP Revenue & Pre - Provision Pre - Tax Net Revenue Efficiency ratio, a non - GAAP measure, was calculated by dividing noninterest expenses (excluding merger expenses, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization o
Slide 28: Reconciliation of GAAP and Core Net Interest Income and NIM
28 Reconciliation of GAAP and Core Net Interest Income and NIM 1 Excludes purchase accounting average balances for the years ended 2021 and 2020 and for the nine months ended September 30 , 2022 and 2021 (Dollars In thousands) GAAP net interest income $ 247,969 $ 195,199 $ 161,940 $ 167,406 $ 173,10
Slide 29: Calculation of Tangible Stockholders' Common Equity to Tangible Assets
29 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets (Dollars in thousands) Total Equity $ 670,719 $ 679,628 $ 618,997 $ 579,672 $ 549,464 $ 532,608 Less: Goodwill (17,636) (17,636) (17,636) (16,127) (16,127) (16,127) Core deposit Intangibles (2,147) (2,562) (3,172) — — — Intang
Slide 30: Contact Details
30 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 31: Flushing Financial Corporation
[age LUSHING Financial Corporation
Flushing Financial — 2022 Hovde Group Financial Services Conference on 6ix