Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — Q3 2021 Earnings Presentation
24 slides from Flushing Financial's earnings presentation, Oct 27, 2021
Slide 1: 3Q21 Earnings Conference Call October 27, 2021
3Q21 Earnings Conference Call October 27, 2021
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: Executing Strategic Objectives Resulting In 3Q21 GAAP EPS $0.81 and Record Core EPS of $0.88
3 4 1 2 Ensure appropriate risk-adjusted returns for loans while optimizing costs of funds Maintain strong historical loan growth .. Sixth consecutive quarter of record net interest income totaling $63.4MM; record core net interest income of $62.1MM .. GAAP NIM increased 20 bps; Core NIM up 13 bps Q
Slide 4: Achieved Empire Goals One Year After Closing
4 1 Gross loans divided by total deposits including mortgage escrow 2 See Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM in Appendix Announced Target Results EPS accretion of 20% • Accretion target met Earn back of 3.2 years • Tangible book value per share of $21.13 increased 5% since 3
Slide 5: Digital Banking Initiatives
Digital Banking Initiatives 5 More Technology Enhancements to Come 39% Increase in Monthly Mobile Active Users YoY ~22,000 Active Online Banking Users 51% YoY Growth 23% Digital Banking Enrollment YoY Growth Numerated Improving Customer Experience through Automated Approval and Origination JAM FINTO
Slide 6: Well-positioned to Benefit from Industry Merger Disruption
6 Well-positioned to Benefit from Industry Merger Disruption • 8 bank mergers have been announced or closed involving Long Island area Banks2 • Out of the $328B of total industry deposits in Nassau, Queens, Kings, and Suffolk Counties, $60B or 18% involve a merger participant3 • 93% of FFIC’s deposi
Slide 7: Positive Loan Growth Outlook
Positive Loan Growth Outlook 7 .. Expected market disruption – 8 bank mergers announced within footprint – Strong organic growth opportunity .. New York is coming back – Asian market activities and events are restarting as restrictions are lifted – Full impact as workers return .. Key lending areas
Slide 8: Deposit Mix Improves; Costs Continue to Fall
Deposit Mix Improves; Costs Continue to Fall 8 Deposits Rise While Costs Fall Total Average Deposits1 ($MM) 1 Includes mortgage escrow deposits .. Average non-interest bearing deposit up 58% YoY .. Non-interest bearing deposits are 14.6% of average deposits1, up from 11.8% a year ago .. 3Q21 checkin
Slide 9: Record Core Net Interest Income FTE for the Sixth Consecutive Quarter
Record Core Net Interest Income FTE for the Sixth Consecutive Quarter 9 Base NIM FTE 2.89% 2.97% 3.01% 3.04% 3.15% GAAP NIM FTE 3.00% 3.08% 3.18% 3.14% 3.34% $49.8 $54.8 $58.7 $61.3 $62.2 2.98% 3.03% 3.06% 3.14% 3.27% 4.07% 4.06% 3.99% 4.06% 4.09% 0.57% 0.47% 0.39% 0.34% 0.29% -0.25% 0.75% 1.75% 2.7
Slide 10: Loans Flat QoQ Excluding PPP; Pipelines Rise
$5,928 $6,702 $6,746 $6,717 $6,627 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 3Q20 4Q20 1Q21 2Q21 3Q21 Multifamily Commercial Real Estate Construction 1-4 Family Business Banking Loans Flat QoQ Excluding PPP; Pipelines Rise 10 Core Loan Yields 4.07% 4.06% 3.99% 4.06% 4.09% Loan Composition Pe
Slide 11: Net Charge-offs Significantly Better Than the Industry
Net Charge-offs Significantly Better Than the Industry 11 NCOs / Average Loans 0.06% 0.30%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 4 basis points of Net Recoveries to Average Loans in 3Q21 1 Note: Includes $11.2MM in taxi med
Slide 12: Stellar Credit Quality
$38.3 $45.2 $45.1 $42.7 $36.4 154.7% 214.3% 212.9% 242.6% 179.9% 0.5 1 1.5 2 2.5 3 3.5 4 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 3Q20 4Q20 1Q21 2Q21 3Q21 LLRs LLRs/NPLs Reserve Coverage 180%; Low NPAs 12 Stellar Credit Quality High Coverage Ratio ($MM) 3Q21 NPAs Have a 34.6%
Slide 13: Achieved 8% TCE Target Early; ~3.7% Dividend Yield
Achieved 8% TCE Target Early; ~3.7% Dividend Yield1 13 Share Repurchases Restarted; 51% of 3Q21 Earnings Returned 5% Book Value Per Share Growth YoY TCE Target Achieved Within 1 Year 1 Calculated using 10/19/21 closing price of $22.93 $20.22 $19.45 $19.99 $20.51 $21.13 8.10% 7.52% 7.60% 7.80% 8.04%
Slide 14: Summary of key takeaways and outlook
14 .. Tangible common equity reached 8% target – Capital priorities remain: • Profitably grow the balance sheet • Return dividends to shareholders • Opportunistically repurchase shares .. Low risk business model; 3.7%1 dividend yield – Average LTV on real estate loans totals <38% – Historical strong
Slide 15: Appendix
Appendix TEIBFLUSHING
Slide 16: PPP: 58% of Lifetime Originations and Acquisitions Forgiven
PPP: 58% of Lifetime Originations and Acquisitions Forgiven 16 Period End PPP Loans ($MM) $111.6 $151.9 $251.0 $197.3 $130.8 Average PPP Loans ($MM) PPP NIM Benefit/(Drag) (0.02)% (0.03)% (0.04)% 0.00% 0.02% .. Lifetime originations and acquisitions of $310MM with a balance of $130.8MM at 3Q21 and r
Slide 17: Coming Out of the Pandemic, Positive Loan Growth is Expected
17 Coming Out of the Pandemic, Positive Loan Growth is Expected Commercial Business Growth Accelerated After the Great Recession Key Lending Areas Accelerated After Great Recession $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Select Loan Balances ($B) Multi
Slide 18: Forward Starting Swaps Help Protect NIM from Rising Short-Term Rates
. The balance sheet naturally improves over the next two years without any changes in rates – $592MM of effective swaps at 1.95%; current drag on NIM; the majority mature by the end of 2023 – $405MM of forward starting swaps at 0.77% that largely replace the current effective swaps – On average the
Slide 19: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 19 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
Slide 20: GAAP to Core Earnings reconciliation table
20 (Dollars in thousands, except per share data) GAAP income before income taxes $ 34,812 $ 25,416 $ 26,224 $ 3,878 $ 18,820 $ 86,452 $ 41,304 Day 1, Provision for Credit Losses - Empire transaction (Provision for credit losses) — — — 1,818 — — — Net (gain) loss from fair value adjustments (Non-inte
Slide 21: GAAP to Core Net Interest Income and NIM reconciliation
21 (Dollars in thousands) GAAP net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467 Net (gain) loss from fair value adjustments on qualifying hedges (194) 664 (1,427) (1,023) (230) (957) 2,208 Net amortization of purchase accounting adjustments (1,100) (565) (922) (11
Slide 22: Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue
22 Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue (Dollars in thousands) GAAP Net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467 Net (gain) loss from fair value adjustments on qualifying hedges (194) 664 (1,427) (1,023) (230) (957) 2,208 Net am
Slide 23: Contact Details
23 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 24: [EaeF LUSHING
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