Slide 1: 3Q24 Earnings Conference Call
3Q24 Earnings Conference Call October 25, 2024
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 d
Slide 3: 3Q24 Financial Highlights
▪ Net interest recoveries on nonaccrual and delinquent loans added 5 bps to the 3Q24 NIM (~$0.03 per share); NIM bottomed in July before expanding in August and September ▪ Noninterest income includes back-to-back swap fee income of $0.6 million in 3Q24, $0.5 million in 2Q24, and $1.6 million in 3Q2
Slide 4: Net Charge-offs Significantly Better Than the Industry; Strong DCR
-0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 9M24 FFIC Industry 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 0.00% 20. 0% 40. 0% 60. 0% 80. 0% 10.00% 120.00% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 9M24 FFIC Industry ▪
Slide 5: Low Risk Credit Profile Results
0.45% 0.54% 0.53% 0.61% 0.59% 0.40% 0.39% 0.42% 0.50% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 3Q23 4Q23 1Q24 2Q24 3Q24 FFIC Peer Median* 5 Low Risk Credit Profile Results NPAs / Assets Criticized and Classified Loans / Gross Loans 30-89 Day Past Due /Total Loans ACL by Loan
Slide 6: Strong Credit Quality In Key Portfolios
6 Strong Credit Quality In Key Portfolios Portfolio Data Points Multifamily Investor CRE1 Office CRE NPLs/Loans 33 bps 0 bps 274 bps Criticized and Classified Loans/Loans 55 bps 0 bps 274 bps Weighted Average DCR2 : 1.9x 1.9x 1.9x Portfolio Size: $2.6 billion $1.7 billion $244.7 million Average Loan
Slide 7: Low Risk Multifamily Loan Portfolio
7 Low Risk Multifamily Loan Portfolio • We employ a model to determine loan risk ratings for real estate loans • The model consists of four factors: property condition, current DCR, current LTV, and loan payment history with DCR and LTV combining for 70% of the weight • The model output cannot be ov
Slide 8: Credit Metrics Prove Conservative Underwriting
8 Credit Metrics Prove Conservative Underwriting ▪ Low risk credit profile supported by: – Year to date NCOs of 6 bps compares favorable versus the industry and historical charge-offs are well below industry levels – Noncurrent loans to loans are below industry levels currently and historically – Co
Slide 9: Average Total Deposits Expand YoY and QoQ
$851.7 $873.3 $834.2 $822.9 $845.5 -100 10 30 50 70 90 1100 1300 3Q23 4Q23 1Q24 2Q24 3Q24 12.5% 12.7% 11.8% 11.4% 11.3% 28.0% 26.8% 27.3% 28.0% 25.3% 1.7% 1.6% 1.5% 1.4% 1.4% 23.2% 23.6% 24.4% 23.8% 22.4% 33.6% 34.0% 34.0% 33.9% 38.6% 1.0% 1.3% 1.0% 1.3% 1.0% $6,819 $6,884 $7,081 $7,196 $7,464 0 100
Slide 10: GAAP and Core NIM Near Stabilization
GAAP and Core NIM Near Stabilization 10 GAAP NIM FTE 2.22% 2.29% 2.06% 2.05% 2.10% See Appendix for definitions of Core NII FTE, Core NIM, and Core Loan Yields Net Interest Income and NIM ($ Millions) $42.8 $46.6 $42.4 $42.5 $45.0 2.13% 2.31% 2.06% 2.03% 2.07% 5.26% 5.59% 5.45% 5.47% 5.65% 2.94% 3.1
Slide 11: CDs Expected to Reprice Favorably
11 CDs Expected to Reprice Favorably ▪ CDs have a weighted average rate of 4.64%1 as of September 30, 2024 ▪ Current CD APYs are approximately 3.75-4.75% ▪ Approximately 72%1 of the CD portfolio will mature within one year – $647.2 million in 4Q24 at 4.96%1 – $420.8 million in 1Q25 at 4.70% – $164.6
Slide 12: Effective Floating Rate Loans are ~26% of the Loan Portfolio
▪ Floating rate loans include any loans (including back-to-back swaps) tied to an index that reprices within 90 days; Including interest rate hedges of $500 million, $1.8 billion or ~26% of the loan portfolio is effectively floating rate ▪ Through 2026, loans to reprice ~159-199 bps higher assuming
Slide 13: Net Interest Margin to Improve Over Time
13 Net Interest Margin to Improve Over Time ▪ Short-term NIM improvement driven by: – Significant CD repricing at lower roll over rates (likely 50-100 bps in 4Q24) – Meaningful real estate loan repricing 150-200 bps higher over the next couple of years – Approximately 50% of the non-maturity deposit
Slide 14: Slight Increase in Book Value and Tangible Book Value Per Share QoQ
$22.39 $22.54 $22.39 $22.24 $22.29 7.56% 7.64% 7.40% 7.12% 7.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10. 00% 12. 00% 14. 00% 16. 00% 18. 00% 20. 00% $17.00 $18.00 $19.00 $20.00 $21.00 $22.00 $23.00 $24.00 3Q23 4Q23 1Q24 2Q24 3Q24 Tangible Book Value Per Share Tangible Common Equity/Tangible Assets $23.06
Slide 15: Strong Asian Banking Market Focus
Strong Asian Banking Market Focus 17% of Total Deposits $40B Deposit Market Potential (~3% Market Share1 ) 5.8% 1 Year Growth in 2024 vs (1.5)%1 for the Comparable Asian Markets Asian Communities – Total Loans $744 million and Deposits $1.3 billion Multilingual Branch Staff Serves Diverse Customer B
Slide 16: Key Community Events
▪ Lunar New Year Parade in Flushing ▪ Tangram Mall Lunar New Year with Tote Bag 16 Key Community Events – Supporting The Dragon Boat Festival
Slide 17: Outlook
▪ Balance Sheet – Expect stable loans – Focused on improving funding mix; expect normal historical funding patterns ▪ Net Interest Income – NIM outlook is largely dependent on deposit rate competition • If the market moves rates inline with rate cuts, our NIM should be relatively stable to slightly
Slide 18: Key Takeaways – Improving, but Still Challenging Environment
18 ▪ Areas of Focus – Increase NIM and Reduce Volatility • Loan and CD repricing to help NIM over time • Focusing on noninterest bearing deposits – Maintain Credit Discipline • Low risk profile • Conservative loan underwriting • History of low credit losses • Minimal exposure to Manhattan office bui
Slide 19: Appendix
Appendix TIGFLUSHING 19
Slide 20: Digital Banking Usage Continues to Increase
Digital Banking Usage Continues to Increase 20 Technology Enhancements Remain a Priority to Grow Customer Base and Increase Engagement 17% Increase in Monthly Mobile Deposit Active Users September 2024 YoY Growth ~32,000 Users with Active Online Banking Status September 2024 16% Digital Banking Enro
Slide 21: Reported and Core Results
Reported Results EPS $0.96 $2.50 $2.59 $1.18 $1.44 $1.92 ROAA 0.34 % 0.93 % 1.00 % 0.48 % 0.59 % 0.85 % ROAE 4.25 11.44 12.60 5.98 7.35 10.30 NIM FTE 2.24 3.11 3.24 2.85 2.47 2.70 Core1 Results EPS $0.83 $2.49 $2.81 $1.70 $1.65 $1.94 ROAA 0.29 % 0.92 % 1.09 % 0.68 % 0.68 % 0.85 % ROAE 3.69 11.42 13.
Slide 22: Over a Year Track Record of Steady Growth
Over a 28 Year Track Record of Steady Growth Core EPS ($) Dividends per Share ($) 2 Tangible Book Value per Share ($) Assets ($B) Total Gross Loans ($B) Total Deposits ($B) $- $0.88 1995 2000 2005 2010 2015 2020 2023 3Q24 $- $0.59 1995 2000 2005 2010 2015 2020 2023 3Q24 $0.6 $7.6 1995 2000 2005 2010
Slide 23: Approach to Real Estate Lending: Low Leverage & Shared Philosophy
Approach to Real Estate Lending: Low Leverage & Shared Philosophy 23 Our Conservative Lending Profile Has Served Us Well Over Many Cycles ▪ Since 1929, we have a long history of lending in metro New York City – Historically, credit quality has outperformed the industry and peers • From 2001-2023, me
Slide 24: Loans Secured by Real Estate Have an Average LTV of ~36%
Loans Secured by Real Estate Have an Average LTV of ~36% Manhattan Office Buildings are Approximately 0.5% of Gross Loans and All Are Performing Data as of September 30, 2024 39% 10% 11% 7 % 6 % 5 % 4 % 4 % 4 % 2 %2 % 2 % 1 % 1 % 1 %1 % Multifamily: 39.0% Owner Occupied CRE: 11.0% Non Real Estate: 1
Slide 25: Multifamily: Conservative Underwriting Standards
▪ All loans underwritten with a 250-300 bps increase in rates at origination; especially when rates were low ▪ Debt coverage ratios (DCR) based on current rents; not projected cash flows ▪ Underwritten Net Operating Income (NOI) at origination includes forecasted increases in expenses and potential
Slide 26: Multifamily: Manageable Repricing Risk
Actual Repricing 26 Multifamily: Manageable Repricing Risk ▪ During 2023, $296 million of loans repriced ~196 bps higher to 6.61%; all loans repriced to contractual rate ▪ For 4Q24, $95.7 million of loans are forecasted to reprice 197 bps higher to a weighted average rate of 6.14%1 ▪ For 2025, $358.
Slide 27: Multifamily: DCR Risks Are Well Contained
Debt Coverage Ratio Details1 Multifamily weighted average DCR 1.9x2 Amount of loans with a DCR of 1.0-1.2x $132.9 million3 LTV of loans with a DCR of 1.0-1.2x 48% Amount of loans with a DCR <1.0x $25.6 million3 LTV of loans with a DCR <1.0x 31% Of the loans with a DCR <1.2x: • None have an LTV >70%
Slide 28: Multifamily: Minimal Interest Only; High Quality Performance
28 Multifamily: Minimal Interest Only; High Quality Performance 1 As of June 30, 2024 2 Excludes co-ops ▪ Interest only loans are typically only offered to relationship customers who have a prior history with the Bank ▪ A client requests an interest only loan when cash flows early in the project are
Slide 29: Multifamily: Rent Regulated Portfolio – Granular and Low Risk
Key Data Points 29 Multifamily: Rent Regulated Portfolio – Granular and Low Risk Portfolio Data Points1 Portfolio Size: $1.6 billion Average Loan Size: $1.4 million Current Weighted Average Coupon: 4.82% Weighted Average LTV: 48% % of Loans with LTV >75% 0.2% Weighted Average DCR: 1.8x2 Average Seas
Slide 30: Investor CRE: Conservative Underwriting Standards
▪ All loans underwritten with a 250-300 bps increase in rates at origination; especially when rates were low ▪ Debt coverage ratios (DCR) based on current rents; not projected cash flows ▪ Underwritten Net Operating Income (NOI) at origination includes forecasted increases in expenses and potential
Slide 31: Geographically Diverse Multifamily and CRE Portfolios
16% 29% 21% 17% 17% Bronx Kings Manhattan Queens Other 10% 18% 17% 18% 5% 7% 8% 3% 14% Bronx Kings Manhattan Queens Other NY Nassau Suffolk NJ CT/Other Multifamily Geography Geographically Diverse Multifamily and CRE Portfolios 31 Underwrite Real Estate Loans with a Cap Rates over 6.6% in 1H24 (5%+
Slide 32: Well-Diversified Commercial Business Portfolio
32 Well-Diversified Commercial Business Portfolio Commercial Business ▪ Primarily in market lending ▪ Annual sales up to $250 million ▪ Lines of credit and term loans, including owner occupied mortgages ▪ Loans secured by business assets, including account receivables, inventory, equipment, and real
Slide 33: Swap Maturities: >50% of Interest Rate Hedges Mature through 2026
33 Swap Maturities: >50% of Interest Rate Hedges Mature through 2026 Swap Type Notional ($ Million) 2025 Maturities ($ Million) 2026 Maturities ($ Million) 2027 Maturities ($ Million) Annualized Net Interest Income1 ($ Million) Investments $200.0 $0 $50 $75 $3.8 Loans2 $697.4 $140.9 $315.8 $115.0 $1
Slide 34: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 34 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 borrowings carrie
Slide 35: Reconciliation of GAAP to Core Earnings - Quarters
35 1 Core diluted earnings per common share may not foot due to rounding 2 Ratios are calculated on an annualized basis Reconciliation of GAAP to CORE Earnings - Quarters (Dollars in thousands, except per share data) GAAP income before income taxes $ 11,457 $ 7,136 $ 4,997 $ 11,754 $ 10,752 $ 23,590
Slide 36: Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue - Quarters
36 Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue - Quarters Efficiency ratio, a non-GAAP measure, was calculated by dividing core noninterest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of core net interest income and core noninter
Slide 37: Reconciliation of GAAP to Core Net Interest Income and NIM - Quarters
37 1 Excludes purchase accounting average balances for all periods presented Reconciliation of GAAP to Core Net Interest Income and NIM - Quarters (Dollars in thousands) GAAP net interest income $ 45,603 $ 42,776 $ 42,397 $ 46,085 $ 44,427 $ 130,776 $ 133,067 Net (gain) loss from fair value adjustme
Slide 38: Tangible Common Equity to Tangible Assets - Quarters
38 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets - Quarters (Dollars in thousands) Total Equity $ 666,891 $ 665,322 $ 669,827 $ 669,837 $ 666,521 Less: Goodwill (17,636) (17,636) (17,636) (17,636) (17,636) Core deposit intangibles (1,220) (1,322) (1,428) (1,537) (1,651) Tang
Slide 39: Reconciliation of GAAP Earnings and Core Earnings - Years
39 Reconciliation of GAAP Earnings and Core Earnings - Years 1 Core diluted earnings per common share may not foot due to rounding 2 Ratios are calculated on an annualized basis December 31, December 31, December 31, December 31, (Dollars In thousands, except per share data) 2021 2020 2019 2018 GAAP
Slide 40: Reconciliation of GAAP Revenue and Pre-Provision Pre-Tax Net Revenue - Years
40 Reconciliation of GAAP Revenue and Pre-Provision Pre-Tax Net Revenue - Years Efficiency ratio, a non-GAAP measure, was calculated by dividing core noninterest expense (excluding OREO expense and the net gain/loss from the sale of OREO) by the total of core net interest income and core noninterest
Slide 41: Reconciliation of GAAP and Core Net Interest Income and NIM - Years
41 Reconciliation of GAAP and Core Net Interest Income and NIM - Years 1 Excludes purchase accounting average balances for the years ended 2023, 2022, 2021, and 2020 (Dollars In thousands) GAAP net interest income $ 179,152 $ 243,616 $ 247,969 $ 195,199 $ 161,940 $ 167,406 Net (gain) loss from fair
Slide 42: Tangible Common Equity to Tangible Assets - Years
42 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets - Years (Dollars in thousands) Total Equity $ 669,837 $ 677,157 $ 679,628 $ 618,997 $ 579,672 $ 549,464 Less: Goodwill (17,636) (17,636) (17,636) (17,636) (16,127) (16,127) Core deposit intangibles (1,537) (2,017) (2,562) (3,1
Slide 43: Contact Details
43 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 44: [gare LUSHING
[gare LUSHING Financia 1 Corvoration