Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — KBW Community Bank Investor Conference 2021
33 slides from Flushing Financial's conference presentation, Aug 3, 2021
Slide 1: KBW Community Bank Investor Conference
“Small Enough To Know You. Large Enough To Help You.” KBW Community Bank Investor Conference August 4, 2021 “Small Enough To Know You. Large Enough To Help You.”
Slide 2: Safe Harbor Statement
Safe Harbor Statement “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 des
Slide 3: Key Messages
Key Messages Conservative Underwriting with History of Solid Value Creation 3 ► Leading Community Bank in the Greater NYC Area ► Well Diversified Loan Portfolio ► History of Sound Credit Quality since IPO in 1995 ► Asian Banking Niche ► 1MM Increase in Share Repurchase Authorization
Slide 4: Returns Strengthened From Pre-Pandemic Levels
Returns Strengthened From Pre-Pandemic Levels • GAAP diluted EPS $1.21 in 1H21 compared to $0.58 a year ago; Core diluted EPS of $1.26, up 129% YoY • GAAP ROAA and ROAE of 0.93% and 12.11%, respectively in 1H21; Core ROAA and ROAE of 0.97% and 12.64%, respectively, and improved significantly YoY • 1
Slide 5: Flushing Financial Snapshot
Flushing Financial Snapshot (NASDAQ: FFIC) Competitive Advantages Balance Sheet Assets $8.2B Loans $6.7B Deposits $6.4B1 Equity $0.7B Performance Core ROAA 1.11% Core ROAE 14.27% Efficiency Ratio2 53.4% Tangible Book Value $20.51 Dividend Yield 3.8%3 2Q21 Key Statistics Footprint Deposits primarily
Slide 6: Strong Asian Banking Market Focus
14% of Total Deposits $28B Market Potential (~3% Market Share1) 7.0% FFIC 5 Year Asian Market CAGR vs 5.7%1 for the Comparable Asian Markets Asian Communities – Total Loans $684MM and Deposits $885M Multilingual Branch Staff Serves Diverse Customer Base in NYC Metro Area Growth Aided by the Asian Ad
Slide 7: Experienced Executive Leadership Team
Experienced Executive Leadership Team Executive Compensation and Insider Stock Ownership (5.7%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 Bingo
Slide 8: Emerging from the Pandemic a Stronger Company
Emerging from the Pandemic a Stronger Company 8 GAAP and Core EPS vs. Street Consensus $0.25 $0.37 $0.37 $0.45 ($0.05) $0.63 $0.50 $0.11 $0.60 $0.61 $0.33 $0.42 $0.48 $0.41 $0.19 $0.36 $0.56 $0.58 $0.54 $0.73 ( $0. 10) $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q2
Slide 9: Positive Outlook Post Pandemic
Positive Outlook Post Pandemic 9 Loan Pipeline Up 39% YoY ($MM) • New York City is re-opening ‒ Asian market activities and events are restarting as restrictions are lifted • Possible market disruption ‒ Numerous bank mergers announced within footprint • Digital Growth Continues1 ‒ Customer base con
Slide 10: 25 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) $- $0.84 $0.42 1995 2000 2005 2010 2015 2020 1H21 $- $1.70 $1.26 1995 2000 2005 2010 2015 2020 1H21 $0.6 $6.1 $6.4 1995 2000 2005 2010 2015 2020 2Q21 $0.3 $6.7 $6.7 1995 2000
Slide 11: Strategic Objectives
Strategic Objectives ENSURE appropriate risk- adjusted returns for loans while optimizing cost of funds MAINTAIN strong historical loan growth ENHANCE core earnings power by improving scalability and efficiency MANAGE asset quality with consistently disciplined underwriting 1 2 3 4 11
Slide 12: Core NIM Expansion Continues in 2021
Core NIM Expansion Continues in 2021 12 1 See Appendix for definitions of Core and Base NII FTE and Core NIM, Net Prepayment Penalties (prepayment penalties received on loans, net of reversals and recoveries of interest from non-accrual loans) and Base Loan Yields $167.1 $173.1 $168.3 $164.2 $196.9
Slide 13: Forward Starting Swaps Help Protect NIM from Rising Short-Term Rates
Forward Starting Swaps Help Protect NIM from Rising Short-Term Rates • NIM stability as assets reprice slower than liabilities • Our balance sheet naturally improves over the next two years without any actions and we can take, or have already taken, the following actions ‒ $592MM of effective swaps
Slide 14: Loan Growth, Excluding PPP, Expected to Accelerate in 2H21
Loan Growth, Excluding PPP, Expected to Accelerate in 2H21; Loan Pipeline Up 39% YoY 2 $4,819 $5,160 $5,536 $5,757 $6,702 $6,717 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2016 2017 2018 2019 2020 2Q21 Multi-family Commercial
Slide 15: Commercial Business Loans are 49% of Total Loans
Commercial Business Loans are 49% of Total Loans • Businesses in the New York City metro area with sales of up to $250MM • Offering lines of credit, term loans including owner occupied mortgages; non-owner occupied CRE generally secured by in market properties • Loans are secured by business assets,
Slide 16: Well Secured Multi-Family and CRE Portfolios with DCR of 1.8x
Well Secured Multi-Family and CRE Portfolios with DCR of 1.8x 16 Underwrite Real Estate Loans with a Cap Rate in Mid-5s and Stress Test Each Loan Multi-Family Geography 17% 30% 17% 18% 18% Bronx Kings Manhattan Queens Other $2.5B Portfolio • Average loan size: $1.1MM • Average monthly rent of $1,307
Slide 17: Loans Secured by Real Estate Have an Average LTV of 38%
Loans Secured by Real Estate Have an Average LTV of 38% Multi-Family • 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-year period wit
Slide 18: $201MM Office Real Estate Portfolio; WALTV of 55%
$201MM Office Real Estate Portfolio; WALTV of 55% 18 • ~3% of Total Loans ‒ WALTV of 55% ‒ Average loan size of $2.5MM • $5.7MM in Manhattan ‒ Less than 3% of Office CRE ‒ WALTV of 36% • 53% Healthcare or Medical Office ‒ WALTV of 53% Office CRE Geography Portfolio Concentration Property Type $MMs W
Slide 19: PPP: Forgiveness Increases and Should Continue in 2H21
$70 $103 $144 $209 $233 1.80% 1.93% 1.99% 1.98% 3.02% 0 50 100 150 200 250 2Q20 3Q20 4Q20 1Q21 2Q21 PPP Yield PPP: Forgiveness Increases and Should Continue in 2H21 19 2 Period End PPP Loans ($MM) $93.2 $111.6 $151.9 $251.0 $197.3 • Lifetime originations and acquisitions of $310MM with a balance of
Slide 20: In Early Stages of Our Technology Enhancements
In Early Stages of Our Technology Enhancements – More to Come 38% Increase in Monthly Mobile Active Users YoY ~3,500 Monthly Mobile Deposit Items Processed 74% YoY Growth $6.6M+ Monthly Mobile Deposit Volume Processed 231% YoY Growth 21% Digital Banking Enrollment Growth Since 2Q20 ~20,000 Active On
Slide 21: Low Historical Net Charge-Offs
Low Historical Net Charge-Offs • Over two decades and multiple credit cycles, Flushing has a history of better-than-industry credit quality • Average LTV on the real estate portfolio is 38% ‒ Only $38MM of real estate loans with an LTV of 75% or more2 Source: SNL Financial. Financial data as of July
Slide 22: Solid Credit Quality; Outperforming Peers
Solid Credit Quality; Outperforming Peers Rising Coverage Ratio ($MM) 30% LTV on 2Q21 NPAs ($MM) $21.9 $18.1 $16.3 $13.5 $21.1 $17.6 0.36% 0.29% 0.24% 0.19% 0.26% 0.22% 0.66% 0.64% 0.55% 0.46% 0.54% 0.34% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 2016 2017 2018 2019 2020 2Q21 $- $5.0 $10.0 $15.0 $20.0 $25
Slide 23: Outlook and Key Messages
Outlook and Key Messages Loan growth, excluding PPP, poised to accelerate in 2H21 ‒ New York City economy reopening; full reopening expected ‒ Loan pipeline up 39% YoY; 15% QoQ ‒ Line utilization has rebounded ‒ $197MM PPP headwind as forgiveness continues Core Net Interest Income to benefit from lo
Slide 24: Appendix
FLUSHING FFIC | Appendix
Slide 25: Cost of Funds Continues to Decline; Funding Mix Improves
Cost of Funds Continues to Decline; Funding Mix Improves Reduced Reliance on CDs & Borrowings; Increased Non-interest Bearing Deposits Average Deposits Rise While Costs Fall1 ($MM) Improved Funding Mix $4,110 $4,447 $4,735 $5,013 $5,163 $6,511 0.81% 0.91% 1.36% 1.76% 0.82% 0.34% - 1,000 2,000 3,000
Slide 26: Solid Capital Ratios; Low Risk Business Model
Solid Capital Ratios; Low Risk Business Model 1.3MM Remaining Share Repurchase Authorization Book Value of $21.16 Empire National Bank Dilution Recovered in 9 Months $17.40 $18.08 $19.07 $20.02 $19.45 $20.51 8.24% 8.22% 7.83% 8.05% 7.52% 7.80% 6.90% 7.10% 7.30% 7.50% 7.70% 7.90% 8.10% 8.30% 8.50% 8.
Slide 27: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 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 designated to
Slide 28: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 28 (Dollars In thousands, except per share data) GAAP income (loss) before income taxes $ 45,182 $ 53,331 $ 65,485 $ 66,134 $ 106,019 $ 51,640 $ 22,484 Day 1, Provision for Credit Losses - Empire transaction 1,818 — — — — — — Net (gain) loss from fai
Slide 29: Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue
Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue 29 (Dollars In thousands) GAAP Net interest income $ 195,199 $ 161,940 $ 167,406 $ 173,107 $ 167,086 $ 121,931 $ 89,543 Net (gain) loss from fair value adjustments on qualifying hedges 1,185 1,678 — — — (763) 2,438 Net amortization o
Slide 30: Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM
Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM 1 Excludes purchase accounting average balances for the six months ended June 30, 2021, and the year ended December 31, 2020. 30 (Dollars In thousands) GAAP net interest income $ 195,199 $ 161,940 $ 167,406 $ 173,107 $ 167,086 $ 121,931 $ 8
Slide 31: Calculation of Tangible Stockholders' Common Equity to Tangible Assets
Calculation of Tangible Stockholders’ Common Equity to Tangible Assets 31 (Dollars in thousands) Total Equity $ 655,167 $ 618,997 $ 579,672 $ 549,464 $ 532,608 $ 513,853 Less: Goodwill (17,636) (17,636) (16,127) (16,127) (16,127) (16,127) Core deposit Intangibles (2,859) (3,172) — — — — Intangible d
Slide 32: Contact Details
Contact Details Susan K. Cullen SEVP, CFO & Treasurer Phone: (718) 961-5400 Email: susan.cullen@flushingbank.com Al Savastano, CFA Director of Investor Relations Phone: (516) 820-1146 Email: asavastano@flushingbank.com 32
Slide 33: Slide 33
Flushing Financial — KBW Community Bank Investor Conference 2021 on 6ix