Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — Raymond James Conference 2023
38 slides from Flushing Financial's conference presentation, Sep 6, 2023
Slide 1: Raymond James Conference Presentation September 6, 2023
Raymond James Conference Presentation September 6, 2023
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: Flushing Financial Snapshot (NASDAQ: FFIC)
Flushing Financial Snapshot (NASDAQ: FFIC) Key Messages Balance Sheet Assets $8.5B Loans, net $6.8B Total Deposits $6.7B Equity $0.7B Performance GAAP/Core ROAA 0.41%/0.37%1 GAAP/Core ROAE 5.12%/4.66%1 Tangible Book Value $22.51 Dividend Yield 6.3%2 2Q23 Key Statistics Footprint Deposits primarily f
Slide 4: Initiatives and Actions/Results
Initiative Actions/Results 1) Move towards a more interest rate neutral position • Added over $400 million of asset swaps during 2Q23 • An additional $250 million of forward funding swaps became effective during 2Q23 • Approximately 50% of the loan pipeline are floating rate loans at June 30, 2023 •
Slide 5: Areas of Focus for Long-term Success
5 Areas of Focus for Long-term Success Areas of Focus Interest Rate Risk • Continuing to take significant actions to position the Company’s balance sheet more towards interest rate risk neutral • During 2Q23, the Company added $400 million of interest rate hedges and an additional $250 million of fo
Slide 6: Strong Asian Banking Market Focus
Strong Asian Banking Market Focus 18% of Total Deposits $36B Deposit Market Potential (~3% Market Share1 ) 7.6% FFIC 5 Year Asian Market CAGR vs 3.7%1 for the Comparable Asian Markets Asian Communities – Total Loans $764MM and Deposits $1.2B Multilingual Branch Staff Serves Diverse Customer Base in
Slide 7: Digital Banking Usage Continues to Increase
Digital Banking Usage Continues to Increase 7 Technology Enhancements Remain a Priority to Grow Customer Base and Increase Engagement 22% Increase in Monthly Mobile Deposit Active Users June 2023 YoY ~31,000 Users with Active Online Banking Status 23% June 2023 YoY Growth 12% Digital Banking Enrollm
Slide 8: Key Community Events During 2Q23
▪ Hosted ribbon-cutting ceremony at Hauppauge Branch ▪ Sponsored the HIA-LI 25th Trade Show & Conference , Korean American Real Estate Expo, and Vaisakhi Mela 8 Key Community Events During 2Q23
Slide 9: 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 0.6% of Net Loans Data as of June 30, 2023 38% 12% 10% 8 % 8 % 6 % 5 % 3 % 3 %2 %2 %2 % 1 % 1 % 1 % Multifamily: 38% Non Real Estate: 12% Owner Occupied CRE: 10% One-to-four family - Mixed Use: 8% G
Slide 10: Well-Secured Multifamily and CRE Portfolios
Well-Secured Multifamily and CRE Portfolios 10 Underwrite Real Estate Loans with a Cap Rate in Mid to High 5s and Stress Test Each Loan Multifamily Geography 15% 31% 21% 17% 16% Bronx Kings Manhattan Queens Other $2.6B Portfolio • Average loan size: $1.1MM • Average monthly rent of $1,447 vs $3,0501
Slide 11: Multifamily Lending – Rent Stabilized, Niche Player
Multifamily Lending – Rent Stabilized, Niche Player Our Conservative Lending Standards Lead to Minimal Losses Our Lending Looks More Like This Generally, Not Like This 11
Slide 12: Granular and Low Leveraged Retail Commercial Real Estate Portfolio
Granular and Low Leveraged Retail Commercial Real Estate Portfolio 12 Most of the Retail CRE Loan are Essential to Local Communities and Internet Resistant • Retail CRE includes Shopping Centers (onsite parking), Strip Mall (street parking), Single Tenant, Retail Condominium, Food Service/Restaurant
Slide 13: Well-Diversified Commercial Business Portfolio
13 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 estat
Slide 14: History of Better Than Industry Credit Quality
▪ 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 <36%4 – Only $18.2MM of real estate loans (0.3% of gross loans) with an LTV of 75% or more4 Net Charge-offs Significantly Better Than
Slide 15: Continued Strong Credit Quality
0.59% 0.58% 0.63% 0.50% 0.47% 0.36% 0.43% 0.29% 0.32% 0.29% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 2Q22 3Q22 4Q22 1Q23 2Q23 FFIC Peer Median* 15 Continued Strong Credit Quality NPAs / Assets Criticized and Classified Loans / Gross Loans ACL / Gross Loans & ACL / NPLs ACL b
Slide 16: Core Loan Yields Improve
37.5% 37.5% 37.6% 37.7% 38.0% 27.6% 27.6% 27.6% 27.6% 28.1% 1.1% 0.9% 1.0% 0.9% 0.8% 12.0% 11.5% 11.5% 11.4% 11.3% 21.8% 22.5% 22.3% 22.4% 21.8% $6,752 $6,948 $6,926 $6,895 $6,830 - 1,0 00 2,0 00 3,0 00 4,0 00 5,0 00 6,0 00 7,0 00 8,0 00 2Q22 3Q22 4Q22 1Q23 2Q23 Multifamily Commercial Real Estate Co
Slide 17: Effective Floating Rate Loans Rise to >21% 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 the $400MM of loan portfolio hedges, effective floating rate loans total $1.46B or >21% of the loan portfolio ▪ Through 2025, loans to reprice ~220-230 bps higher assuming
Slide 18: NIM Stabilizes from March; Cautiously Optimistic
$64.6 $60.5 $53.0 $45.0 $43.3 3.33% 3.03% 2.63% 2.25% 2.17% 4.15% 4.35% 4.63% 4.80% 4.99% 0.29% 0.76% 1.63% 2.30% 2.68% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 2Q22 3Q22 4Q22 1Q23 2Q23 Core NII FTE Core NIM FTE Core Loan Yields Core Deposit Yield GAA
Slide 19: Our Actions Have Reduced Liability Sensitivity
19 Our Actions Have Reduced Liability Sensitivity ▪ The Balance Sheet is structured where liabilities reprice faster than assets (initially) when rates increase ▪ Implementing a swap strategy along with adding floating rate assets – During 2Q23, over $400MM of interest rate hedges were added and $25
Slide 20: Interest Rate Hedges Provide Income and Reduce Rate Sensitivity
20 Interest Rate Hedges Provide Income and Reduce Rate Sensitivity Swap Type Notional ($MM) First Half ‘23 Avg Bal ($MM) First Half ‘23 Yield with Swaps First Half ‘23 Yield Without Swaps Net Benefit Investments $200.0 $961.1 3.52% 3.33% 0.19% Loans $664.2 $6,855.5 4.90% 4.74% 0.16% Funding $872.5 $
Slide 21: Average Total Deposits Increase Driven by CDs
16.2% 16.7% 14.7% 13.2% 12.3% 32.4% 28.8% 29.5% 28.9% 29.4% 2.4% 2.5% 2.2% 2.0% 1.8% 34.8% 34.0% 32.2% 30.2% 25.4% 12.7% 16.9% 20.2% 24.7% 29.7% 1.5% 1.1% 1.2% $6,441 1.0% 1.4% $6,277 $6,678 $6,810 $6,900 0 1 00 0 2 00 0 3 00 0 4 00 0 5 00 0 6 00 0 7 00 0 8 00 0 2Q22 3Q22 4Q22 1Q23 2Q23 Noninterest
Slide 22: CDs Continue to Reprice
22 CDs Continue to Reprice ▪ CDs comprise 33.2% of total deposits with a weighted average rate of 3.75%1 as of June 30, 2023 ▪ Through June 30, 2024, approximately 59%1 of the CD portfolio will mature – $86.1 million in 3Q23 at 2.15%1 – $353.7 million in 4Q23 at 3.99% – $414.4 million in 1Q24 at 3.2
Slide 23: Book Value and Tangible Book Value Per Share Grow YoY
Book Value and Tangible Book Value Per Share Grow YoY 23 528,815 Shares Repurchased in 2Q23 at an Average Price of $12.94 (42.5% Discount to TBV/Share) 3.6% YoY Book Value Per Share Growth 3.7% YoY Increase in Tangible Book Value Per Share $21.71 $21.81 $22.31 $22.18 $22.51 7.82% 7.62% 7.82% 7.73% 7
Slide 24: Key Takeaways – Cautiously Optimistic
24 ▪ Executing on our Action Plan – These actions will result in improved profitability in the future and set the stage for consistent and significantly higher returns ▪ Areas of Focus improved during the quarter – Significantly reduced liability sensitivity – Credit quality improved and underwritin
Slide 25: Appendix
Appendix [EaEFLUs 25
Slide 26: Annual Financial Highlights
26 Annual Financial Highlights Reported Results EPS $2.50 $2.59 $1.18 $1.44 $1.92 $1.41 ROAA 0.93 % 1.00 % 0.48 % 0.59 % 0.85 % 0.66 % ROAE 11.44 12.60 5.98 7.35 10.30 7.74 NIM FTE 3.11 3.24 2.85 2.47 2.70 2.93 Core1 Results EPS $2.49 $2.81 $1.70 $1.65 $1.94 $1.57 ROAA 0.92 % 1.09 % 0.68 % 0.68 % 0.
Slide 27: Long Track Record of Steady Growth
Over a 27 Year Track Record of Steady Growth Core EPS ($) 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 2022 1H23 $- $2.49 $0.36 1995 2000 2005 2010 2015 2020 2022 1H23 $0.6 $6.7 1995 2000 2005
Slide 28: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 28 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 29: Reconciliation of GAAP to Core Earnings - Quarters
29 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 $ 11,805 $ 6,959 $ 12,819 $ 32,422 $ 34,971 $ 18,76
Slide 30: Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue - Quarters
30 Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue - Quarters (Dollars in thousands) GAAP Net interest income $ 43,378 $ 45,262 $ 54,201 $ 61,206 $ 64,730 $ 88,640 $ 128,209 Net (gain) loss from fair value adjustments on qualifying hedges 205 (100) (936) (28) 60 105 189 Net amor
Slide 31: Reconciliation of GAAP to Core Net Interest Income and NIM - Quarters
31 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 $ 43,378 $ 45,262 $ 54,201 $ 61,206 $ 64,730 $ 88,640 $ 128,209 Net (gain) loss from fair value adjustmen
Slide 32: Tangible Stockholders' Common Equity to Tangible Assets - Quarters
32 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets - Quarters (Dollars in thousands) Total Equity $ 671,303 $ 673,459 $ 677,157 $ 670,719 $ 670,812 Less: Goodwill (17,636) (17,636) (17,636) (17,636) (17,636) Core deposit intangibles (1,769) (1,891) (2,017) (2,147) (2,282) Tang
Slide 33: Reconciliation of GAAP Earnings and Core Earnings - Years
33 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 (Dollars In thousands, except per share data) GAAP income (loss) before income taxes $ 104,852 $ 109,278 $ 45,182 $ 53,331
Slide 34: Reconciliation of GAAP Revenue and Pre-Provision Pre-Tax Net Revenue - Years
34 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 35: Reconciliation of GAAP and Core Net Interest Income and NIM - Years
35 Reconciliation of GAAP and Core Net Interest Income and NIM - Years 1 Excludes purchase accounting average balances for the years ended 2022, 2021, and 2020 (Dollars In thousands) GAAP net interest income $ 243,616 $ 247,969 $ 195,199 $ 161,940 $ 167,406 $ 173,107 Net (gain) loss from fair value
Slide 36: Tangible Stockholders' Common Equity to Tangible Assets - Years
36 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets - Years (Dollars in thousands) Total Equity $ 677,157 $ 679,628 $ 618,997 $ 579,672 $ 549,464 Less: Goodwill (17,636) (17,636) (17,636) (16,127) (16,127) Core deposit intangibles (2,017) (2,562) (3,172) — — Intangible deferred
Slide 37: Contact Details
37 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 38: Flushing Financial Corporation
[gc F LUSHING Financial Corporation